What changed in this filing

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Item 1. Financial Statements

2020-11-06 compared with 2020-08-07 · 166 added, 161 removed, 785 unchanged (29% of the section changed)

4 unchanged sentences

( in thousands, except share and per share data )

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

ASSETS (unaudited)

26 unchanged sentences

Preferred stock, 10,000,000 shares authorized

Common stock, $ 0.01 par value, 200,000,000 shares authorized, 29,110,362 and 28,945,472 shares issued

Common stock, $ 0.01 par value, 200,000,000 shares authorized, 29,191,876 and 28,945,472 shares issued and outstanding

Additional paid-in capital 233,267 229,205

11 unchanged sentences

( in thousands, except per share data )

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2020 2019 2020 2019

4 unchanged sentences

Selling, general and administrative expenses 37,113 42,328 116,278 126,014

Bad debt provision (benefit) for troubled customers, net of recoveries — ( 2,693 ) — 2,798

Bad debt provision for troubled customers, net of recoveries — — — 2,798

Impairment charges — — 106,062 —

22 unchanged sentences

(in thousands )

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2020 2019 2020 2019

19 unchanged sentences

Shares Amount Total Equity

Balance at March 31, 2020 29,042 $ 290 $ 230,472 $ ( 20,896 ) $ ( 38,294 ) $ 171,572 $ 181 $ 171,753

Net loss — — — ( 2,656 ) — ( 2,656 ) ( 9 ) ( 2,665 )

Balance at June 30, 2020 29,110 $ 291 $ 231,724 $ ( 23,552 ) $ ( 32,172 ) $ 176,291 $ 172 $ 176,463

Net income — — — 1,523 — 1,523 30 1,553

Other comprehensive income, net of tax — — — — 5,963 5,963 4 5,967

1 unchanged sentence

Net settlement of restricted stock units 82 1 ( 50 ) — — ( 49 ) — ( 49 )

Balance at September 30, 2020 29,192 $ 292 $ 233,267 $ ( 22,029 ) $ ( 26,209 ) $ 185,321 $ 206 $ 185,527

Balance at June 30, 2019 28,685 $ 286 $ 228,883 $ 73,691 $ ( 21,777 ) $ 281,083 $ 196 $ 281,279

Balance at March 31, 2019 28,627 $ 286 $ 227,790 $ 66,260 $ ( 25,426 ) $ 268,910 $ 186 $ 269,096

Net income — — — 3,093 — 3,093 ( 6 ) 3,087

1 unchanged sentence

Share-based payments — — 1,682 — — 1,682 — 1,682

Net settlement of restricted stock units — — ( 397 ) — — ( 397 ) — ( 397 )

Balance at June 30, 2019 28,685 $ 286 $ 228,883 $ 73,691 $ ( 21,777 ) $ 281,083 $ 196 $ 281,279

Six months ended

Net settlement of options and restricted stock units 230 3 ( 2,278 ) — — ( 2,275 ) — ( 2,275 )

Balance at September 30, 2019 28,915 $ 289 $ 228,287 $ 76,784 $ ( 27,202 ) $ 278,158 $ 188 $ 278,346

Nine months ended

Common Stock Additional paid-in capital Retained earnings (deficit) Accumulated other comprehensive income (loss) Total Mistras Group, Inc.

2 unchanged sentences

Balance at December 31, 2019 28,945 $ 289 $ 229,205 $ 77,613 $ ( 21,285 ) $ 285,822 $ 200 $ 286,022

Net loss — — — ( 101,165 ) — ( 101,165 ) ( 22 ) ( 101,187 )

Other comprehensive income, net of tax — — — — ( 10,887 ) ( 10,887 ) ( 6 ) ( 10,893 )

Net income (loss) — — — ( 99,642 ) — ( 99,642 ) 8 ( 99,634 )

Other comprehensive (loss), net of tax — — — — ( 4,924 ) ( 4,924 ) ( 2 ) ( 4,926 )

Share-based payments — — 4,391 — — 4,391 — 4,391

Net settlement of restricted stock units 247 3 ( 329 ) — — ( 326 ) — ( 326 )

Balance at June 30, 2020 29,110 $ 291 $ 231,724 $ ( 23,552 ) $ ( 32,172 ) $ 176,291 $ 172 $ 176,463

Balance at September 30, 2020 29,192 $ 292 $ 233,267 $ ( 22,029 ) $ ( 26,209 ) $ 185,321 $ 206 $ 185,527

Balance at December 31, 2018 28,563 $ 285 $ 226,616 $ 71,553 $ ( 27,557 ) $ 270,897 $ 177 $ 271,074

Net income — — — 5,231 — 5,231 13 5,244

Other comprehensive income, net of tax — — — — 5,780 5,780 — 5,780

Other comprehensive income (loss), net of tax — — — — 355 355 ( 2 ) 353

Share-based payments — — 4,598 — — 4,598 — 4,598

1 unchanged sentence

Exercise of stock options 3 — 32 — — 32 — 32

Balance at June 30, 2019 28,685 $ 286 $ 228,883 $ 73,691 $ ( 21,777 ) $ 281,083 $ 196 $ 281,279

Balance at September 30, 2019 28,915 $ 289 $ 228,287 $ 76,784 $ ( 27,202 ) $ 278,158 $ 188 $ 278,346

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

3 unchanged sentences

( in thousands )

Six months ended June 30,

Nine months ended September 30,

Cash flows from operating activities

20 unchanged sentences

Purchase of intangible assets ( 311 ) ( 704 )

Acquisition of business, net of cash acquired — ( 4,822 )

Proceeds from sale of equipment 429 1,173

28 unchanged sentences

Mistras Group, Inc.

and subsidiaries ("the Company") is a leading “one source” global provider of technology-enabled asset protection solutions used to evaluate the structural integrity and reliability of critical energy, industrial, public infrastructure and commercial aerospace components.

The Company combines industry-leading products and technologies, expertise in mechanical integrity (MI), non-destructive testing (NDT) and mechanical services and proprietary data analysis software to deliver a comprehensive portfolio of customized solutions, ranging from routine inspections to complex, plant-wide asset integrity assessments and management.

These mission critical solutions enhance customers’ ability to extend the useful life of their assets, increase productivity, minimize repair costs, comply with governmental safety and environmental regulations, manage risk and avoid catastrophic disasters.

and subsidiaries ("the Company") is a leading “one source” multinational provider of integrated technology-enabled asset protection solutions helping to maximize the safety and operational uptime for civilization’s most critical industrial and civil assets.

Backed by an innovative, data-driven asset protection portfolio, proprietary technologies, and decades-long legacy of industry leadership, the Company helps clients in the oil and gas, aerospace and defense, power generation, infrastructure, and manufacturing industries towards achieving and maintaining operational excellence.

By supporting these organizations that help fuel our vehicles and power our society;

inspecting components that are trusted for commercial, defense, and space craft;

and building real-time monitoring equipment to enable safe travel across bridges, the Company helps the world at large.

The Company enhances value for its clients by integrating asset protection throughout supply chains and centralizing integrity data through a suite of Industrial IoT-connected digital software and monitoring solutions.

The company’s core capabilities also include non-destructive testing (“NDT”) field inspections enhanced by advanced robotics, laboratory quality control and assurance testing, sensing technologies and NDT equipment, asset and mechanical integrity engineering services, and light mechanical maintenance and access services.

The Company serves a global customer base of companies with asset-intensive infrastructure, including companies in the oil and gas, commercial aerospace and defense, fossil and nuclear power, alternative and renewable energy, public infrastructure, chemicals, transportation, primary metals and metalworking, pharmaceutical/biotechnology and food processing industries and research and engineering institutions.

Recent Developments

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to spread throughout the United States.

In March 2020, the World Health Organization declared the outbreak of the COVID-19 coronavirus (COVID-19) as a pandemic, which continues to infect the population throughout the United States and most other parts of the world.

The COVID-19 pandemic has caused significant volatility in domestic and international markets.

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In addition, oil prices have dropped significantly, and airline traffic has experienced a significant decline.

In response to the COVID-19 pandemic, companies within the oil and gas and aerospace industries (including our customers) have announced spending cuts and/or slowdowns (or temporary cessation) in production which, in turn, may result in decreases in awards of new contracts or adjustments, reductions, suspensions or cancellations of existing contracts.

These declines were driven in large measure by various factors surrounding the COVID-19 pandemic and, in the case of the oil and gas market, other macroeconomic events such as the geopolitical tensions between OPEC and Russia.

The COVID-19 pandemic, significant volatility in oil prices and decreased traffic in the aerospace industry have adversely affected the Company's workforce and operations, as well as the operations of its customers, suppliers and contractors.

In response to various factors surrounding the COVID-19 pandemic and, in the case of the oil and gas market, other macroeconomic events, companies within the oil and gas and aerospace industries (including our customers) have reduced spending and/or slowed down (or temporarily ceased) production.

This, in turn, resulted in decreases in awards of new contracts or adjustments, reductions, suspensions or cancellations of existing contracts.

These negative factors have also resulted in significant volatility and uncertainty in the markets in which the Company operates.

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While the Company cannot fully assess the impact that the factors discussed above will have on its operations at this time, there are certain impacts that the Company has identified:

• The financial market volatility that resulted from COVID-19 and the volatility in oil prices required the Company to reassess the goodwill it had recorded related to various prior acquisitions under the guidance of ASC 350 during the first quarter of 2020.

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

first quarter of 2020.

The Company determined that the fair values of various reporting units were less than their carrying values (including goodwill).

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See Note 9- Intangible Assets and Note 13- Leases .

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

To respond to the economic downturn resulting from the factors discussed above, in March 2020 the Company initiated a cost reduction and efficiency program.

As part of this program, named executive officers of the Company have voluntarily taken temporary salary reductions ranging from 25 % to 45 % of their base salary.

As part of this program, named executive officers of the Company took voluntarily temporary salary reductions ranging from 25 % to 45 % of their base salary.

In addition, the Company instituted a reduction for certain other salaried employees, at lower percentages, and suspended the Company's voluntary match under the Company sponsored savings plans for its U.S.

and Canadian employees.

These reductions became effective at the beginning of the second quarter of 2020 and, except for the salary reductions for certain lower salaried employees, will continue through the third quarter.

At the end of the third quarter, management will assess whether to change these cost saving measures.

In addition, the Company’s non-employee directors voluntarily agreed to a $ 3,750 reduction in their second and third quarter 2020 payments.

The Company is currently unable to predict with certainty the overall impact that the factors discussed above may have on its business, results of operations, liquidity or in other ways which the Company cannot yet determine.

These reductions became effective at the beginning of the second quarter of 2020 and, except for the salary reductions for certain lower salaried employees, continued through the end of the third quarter of 2020.

In addition, the Company’s non-employee directors voluntarily agreed to a $ 3,750 reduction in their second and third quarter 2020 director's fee payments.

Beginning in the fourth quarter of 2020, all salary and director fee reductions were removed and pay levels were returned to first quarter levels, though certain other cost reduction measures have remained in place.

The Company is currently unable to predict with certainty the overall impact that the factors discussed above may have on its business, results of operations or liquidity or in other ways which the Company cannot yet determine.

The Company will continue to monitor market conditions and respond accordingly.

3 unchanged sentences

In the opinion of management, the Unaudited Condensed Consolidated Financial Statements include all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods of the years ending December 31, 2020 and December 31, 2019.

The Company follows guidance on the consolidation of variable interest entities (VIEs) that requires companies to utilize a qualitative approach to determine whether it is the primary beneficiary of a VIE.

The process for identifying the primary beneficiary of a VIE requires consideration of the factors that indicate a party has the power to direct the activities that most significantly impact the VIE’s economic performance, including powers granted to the VIE’s program manager, powers contained in the VIE governing board and, to a certain extent, a company’s economic interest in the VIE.

The Company analyzes its joint ventures and classifies them as either:

• a VIE that must be consolidated because the Company is the primary beneficiary, or the joint venture is not a VIE and the Company holds the majority voting interest with no significant participative rights available to the other partners;

• a VIE that does not require consolidation and is treated as an equity method investment because the Company is not the primary beneficiary or the joint venture is not a VIE and the Company does not hold the majority voting interest.

As part of the above analysis, if it is determined that the Company has the power to direct the activities that most significantly impact the joint venture’s economic performance, the Company considers whether or not it has the obligation to absorb losses or rights to receive benefits of the VIE that could potentially be significant to the VIE.

The Company became the primary beneficiary in July 2020 of a VIE in which the Company has a 49 % interest in a limited partnership, and a 49 % shareholder in the corporate general partner of the limited partnership.

The Company consolidated the financial statements of the VIE with the financial statements of the Company.

As of and the for the three months ended September 30, 2020, the VIE had no assets no r did it have any revenue.

The Company is the primary sub-contractor of the VIE.

Certain items included in these statements are based on management’s estimates.

1 unchanged sentence

The results of operations for any interim period are not necessarily indicative of the results expected for the year.

The accompanying Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the notes to the Audited Consolidated Financial Statements contained in the Company's 2019 Annual Report on Form 10-K ("2019 Annual Report").

The accompanying Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the notes to the

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

Audited Consolidated Financial Statements contained in the Company's 2019 Annual Report on Form 10-K ("2019 Annual Report").

Principles of Consolidation

The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of Mistras Group, Inc.

and its wholly and majority-owned subsidiaries.

as well as its wholly-owned subsidiaries, majority-owned subsidiaries and consolidated VIE.

For subsidiaries in which the Company’s ownership interest is less than 100%, the non-controlling interests are reported in stockholders’ equity in the accompanying Condensed Consolidated Balance Sheets.

1 unchanged sentence

All significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassification

Certain amounts in prior periods have been reclassified to conform to the current year presentation.

Such reclassifications did not have a material effect on the Company's financial condition or results of operations as previously reported.

For each of the three and six months ended June 30, 2020 and 2019, no customer represented 10% or more of the Company's revenue.

For each of the nine months ended September 30, 2020 and 2019, no customer represented 10% or more of the Company's revenue.

Significant Accounting Policies

2 unchanged sentences

Since the date of the 2019 Annual Report, there have been no material changes to the Company's significant accounting policies.

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

Income taxes are accounted for under the asset and liability method.

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These standards also provide guidance on de-recognition, measurement, and classification of amounts relating to uncertain tax positions, accounting for and disclosure of interest and penalties, accounting in interim periods and disclosures required.

Interest and penalties related to unrecognized tax positions are recognized as incurred within “provision for income taxes” in the consolidated statements of income.

Interest and penalties related to unrecognized tax positions are recognized as incurred within “provision for income taxes” in the Consolidated Statements of Income (Loss).

ASC 740-270, Income Taxes-Interim Reporting, requires the Company to use an estimated annual effective tax rate (EAETR) for calculating its tax provision for interim periods.

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The Company continues to evaluate its deferred tax assets each period to determine if a valuation allowance is required based on whether it is more likely than not that some portion of these deferred tax assets will not be realized.

As of June 30, 2020, management concluded that it is more likely than not that a substantial portion of the Company's deferred tax assets will be realized.

As part of the Company's analysis, it considered both positive and negative factors that impact profitability and whether those factors would lead to a change in the estimate of the Company's deferred tax assets that may be realized in the future.

In the current period, the impact of the COVID-19 pandemic on the Company's business was more pronounced given the pandemic spanned the full quarter.

The Company will continue to monitor the impacts of the COVID-19 pandemic on its business, and any sustained or prolonged reductions in future earnings periods may change the Company's conclusions on whether it is more likely than not to realize portions of the Company's deferred tax assets.

The Company’s effective income tax rate was approximately 21 % and 37 % for the three months ended June 30, 2020 and 2019, respectively.

The Company’s effective income tax rate was approximately 14 % and 45 % for the six months ended June 30, 2020 and 2019, respectively.

The effective income tax rate for the second quarter of 2020 approximated the statutory rate, as the favorable impact of the CARES Act was offset by the unfavorable impact of taxes in other jurisdictions and other permanent book to tax differences.

The effective income tax rate for the first six-months of 2020 was lower than the statutory rate primarily due to impairments for which the Company will not realize income tax benefits, partially offset by income tax benefits of the CARES Act.

The CARES Act provides a five-year carryback of net operating losses generated in years 2018 through 2020.

As the statutory federal income tax rate applicable to certain years within the carryback period is 35%, carryback to those years of the Company's estimated 2020 annual federal tax loss provides a tax benefit in excess of the current federal statutory rate of 21%, resulting in an increased income tax benefit.

The Company projects that the income tax effects of the CARES Act will result in additional income tax benefit recognized throughout the 2020 tax year and a cash refund in 2021 of taxes paid in prior years.

The effective income tax rate for the three and six months ended June 30, 2019 was higher than the statutory rate due to the impact of discrete items, the global intangible low-taxed income (GILTI), and executive compensation, and other provisions resulting from the December 22, 2017 passage of the Tax Cuts and Jobs Act and foreign tax rates different than statutory rates in the U.S .

As of September 30, 2020, management concluded that it is more likely than not that a substantial portion of the Company's deferred tax assets will

Mistras Group, Inc.

2 unchanged sentences

(tabular dollars and shares in thousands, except per share data)

The Company’s effective income tax rate was approximately 26 % and 61 % for the three months ended September 30, 2020 and 2019, respectively.

The Company’s effective income tax rate was approximately 14 % and 55 % for the nine months ended September 30, 2020 and 2019, respectively.

The effective income tax rate for the third quarter of 2020 was greater than the statutory rate due to the unfavorable impact of taxes in other jurisdictions and other permanent book to tax differences offset by the favorable impact of the CARES act.

The effective income tax rate for the first nine-months of 2020 was lower than the statutory rate primarily due to impairments for which the Company will not realize income tax benefits, partially offset by income tax benefits of the CARES Act.

The CARES Act provides a five-year carryback of net operating losses generated in years 2018 through 2020.

The effective income tax rate for the three and nine months ended September 30, 2019 was higher than the statutory rate due to the impact of discrete items, the global intangible low-taxed income (GILTI), executive compensation, other provisions resulting from the December 22, 2017 passage of the Tax Cuts and Jobs Act and foreign tax rates different than statutory rates in the U.S .

Recent Accounting Pronouncements

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The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers .

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

Performance Obligations

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The Company expects any significant remaining performance obligations to be satisfied within one year .

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

Contract Estimates

8 unchanged sentences

Whenever revisions of estimates, contract costs and/or contract values indicate that the contract costs will exceed estimated revenue, thus creating a loss, a provision for the total estimated loss is recorded in that period.

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

Revenue by Category

1 unchanged sentence

Revenue by industry was as follows:

Three Months Ended June 30, 2020 Services International Products Corp/Elim Total

Three Months Ended September 30, 2020 Services International Products Corp/Elim Total

Oil & Gas $ 72,195 $ 9,749 $ 51 $ — $ 81,995

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Total $ 119,721 $ 26,477 $ 3,932 $ ( 2,236 ) $ 147,894

Three Months Ended June 30, 2019 Services International Products Corp/Elim Total

Three Months Ended September 30, 2019 Services International Products Corp/Elim Total

Oil & Gas $ 100,927 $ 11,561 $ 71 $ — $ 112,559

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(tabular dollars and shares in thousands, except per share data)

Six Months Ended June 30, 2020 Services International Products Corp/Elim Total

Nine Months Ended September 30, 2020 Services International Products Corp/Elim Total

Oil & Gas $ 214,773 $ 26,192 $ 214 $ — $ 241,179

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Total $ 349,271 $ 76,887 $ 10,746 $ ( 5,110 ) $ 431,794

Six Months Ended June 30, 2019 Services International Products Corp/Elim Total

Nine Months Ended September 30, 2019 Services International Products Corp/Elim Total

Oil & Gas $ 301,696 $ 33,033 $ 551 $ — $ 335,280

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Revenue per key geographic location was as follows:

Three Months Ended June 30, 2020 Services International Products Corp/Elim Total

Three Months Ended September 30, 2020 Services International Products Corp/Elim Total

United States $ 100,586 $ 193 $ 1,538 $ ( 912 ) $ 101,405

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Total $ 119,721 $ 26,477 $ 3,932 $ ( 2,236 ) $ 147,894

Three Months Ended June 30, 2019 Services International Products Corp/Elim Total

Three Months Ended September 30, 2019 Services International Products Corp/Elim Total

United States 123,585 $ 128 $ 3,780 $ ( 1,084 ) $ 126,409

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(tabular dollars and shares in thousands, except per share data)

Six Months Ended June 30, 2020 Services International Products Corp/Elim Total

Nine Months Ended September 30, 2020 Services International Products Corp/Elim Total

United States $ 298,372 $ 507 $ 5,150 $ ( 2,433 ) $ 301,596

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Total $ 349,271 $ 76,887 $ 10,746 $ ( 5,110 ) $ 431,794

Six Months Ended June 30, 2019 Services International Products Corp/Elim Total

Nine Months Ended September 30, 2019 Services International Products Corp/Elim Total

United States $ 368,600 $ 461 $ 8,727 $ ( 3,638 ) $ 374,150

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However, the Company sometimes receives advances or deposits from its customers before revenue is recognized, resulting in contract liabilities.

These assets and liabilities are aggregated on an individual contract basis and reported on the Condensed Consolidated Balance Sheets at the end of each reporting period within accounts receivables or accrued expenses and other current liabilities.

Revenue recognized during the six months ended June 30, 2020 and 2019 that was included in the contract liability balance at the beginning of such year was $ 3.2 million and $ 2.7 million, respectively.

These assets and liabilities are aggregated on an individual contract basis and reported on the Condensed Consolidated Balance Sheets at the end of each reporting period within accounts receivable, net or accrued expenses and other current liabilities.

Revenue recognized during the nine months ended September 30, 2020 and 2019 that was included in the contract liability balance at the beginning of such year was $ 4.4 million and $ 3.4 million, respectively.

Changes in the contract asset and liability balances during these periods were not materially impacted by any other factors.

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Stock Options

For the three and six months ended June 30, 2020 and 2019, the Company did no t recognize any share-based compensation expense related to stock option awards, as all outstanding stock options awards were then already fully vested.

No unrecognized compensation costs remained related to stock option awards as of June 30, 2020.

For the three and nine months ended September 30, 2020 and 2019, the Company did no t recognize any share-based compensation expense related to stock option awards, as all outstanding stock options awards were then already fully vested.

No unrecognized compensation costs remained related to stock option awards as of September 30, 2020.

Mistras Group, Inc.

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(tabular dollars and shares in thousands, except per share data)

The following table sets forth a summary of the stock option activity, weighted-average exercise prices and options outstanding as of June 30, 2020 and June 30, 2019:

Six months ended June 30,

The following table sets forth a summary of the stock option activity, weighted-average exercise prices and options outstanding as of September 30, 2020 and September 30, 2019:

Nine months ended September 30,

Outstanding at beginning of period:

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Restricted Stock Unit Awards

For the three months ended June 30, 2020 and June 30, 2019, the Company recognized share-based compensation expense related to restricted stock unit awards of $ 1.4 million and $ 1.1 million, respectively.

For the six months ended June 30, 2020 and June 30, 2019, the Company recognized share-based compensation expense related to restricted stock unit awards of $ 2.1 million and $ 2.0 million, respectively.

As of June 30, 2020, there was $ 6.6 million of unrecognized compensation costs, net of estimated forfeitures, related to restricted stock unit awards, which is expected to be recognized over a remaining weighted-average period of 2.3 years.

For the three months ended September 30, 2020 and September 30, 2019, the Company recognized share-based compensation expense related to restricted stock unit awards of $ 1.1 million and $ 1.0 million, respectively.

For the nine months ended September 30, 2020 and September 30, 2019, the Company recognized share-based compensation expense related to restricted stock unit awards of $ 3.2 million and $ 3.0 million, respectively.

As of September 30, 2020, there was $ 5.5 million of unrecognized compensation costs, net of estimated forfeitures, related to restricted stock unit awards, which is expected to be recognized over a remaining weighted-average period of 2.4 years.

Upon vesting, restricted stock units are generally net share-settled to cover the required withholding tax and the remaining amount is converted into an equivalent number of shares of common stock.

A summary of the vesting activity of restricted stock unit awards, with the respective fair value of the awards, is as follows:

Six months ended June 30,

Nine months ended September 30,

Restricted stock awards vested 183 148

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A summary of the fully-vested common stock the Company issued to its six non-employee directors, in connection with its non-employee director compensation plan, is as follows:

Six months ended June 30,

Nine months ended September 30,

Awards issued 68 30

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A summary of the Company's outstanding, non-vested restricted share units is as follows:

Six months ended June 30,

Nine months ended September 30,

Units Weighted

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A summary of the Company's PRSU activity is as follows:

Six months ended June 30,

Nine months ended September 30,

Units Weighted

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329 $ 11.09 354 $ 16.45

During the six months ended June 30, 2020 and June 30, 2019, the Compensation Committee approved the final calculation of the award metrics for calendar year 2019 and calendar year 2018, respectively.

During the nine months ended September 30, 2020 and September 30, 2019, the Compensation Committee approved the final calculation of the award metrics for calendar year 2019 and calendar year 2018, respectively.

As a result, the calendar year 2019 PRSUs increased by approximately 1,000 units and the calendar year 2018 PRSUs decreased by approximately 3,000 units.

As of June 30, 2020, the final revenue and adjusted EBITDA metrics were not finalized related to the 2020 grant, therefore, approximately 146 thousand shares were liability classified at June 30, 2020.

The liability at June 30, 2020 was less than $ 0.1 million.

The revenue and adjusted EBITDA metrics were finalized in August 2020.

For the three months ended June 30, 2020 and June 30, 2019, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $ 0.3 million and $ 0.4 million, respectively.

For the six months ended June 30, 2020 and June 30, 2019, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $ 0.6 million and $ 0.7 million, respectively.

At June 30, 2020, there was $ 2.0 million of total unrecognized compensation costs related to approximately 474,000 non-vested PRSUs, which is expected to be recognized over a remaining weighted-average period of 2.5 years.

Calendar year 2020 PRSUs decreased by 146,000 units during the nine months ended September 30, 2020 based on forecasted results for calendar year 2020.

Calendar year 2019 PRSUs decreased approximately 33,000 units during the nine months ended September 30, 2019 based on forecasted results for calendar year 2019.

For the three months ended September 30, 2020 and September 30, 2019, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $ 0.2 million and $ 0.5 million, respectively.

For the nine months ended September 30, 2020 and September 30, 2019, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $ 0.8 million and $ 1.2 million, respectively.

At September 30, 2020, there was $ 1.3 million of total unrecognized compensation costs related to approximately 329,000 non-vested PRSUs, which is expected to be recognized over a remaining weighted-average period of 1.8 years.

Mistras Group, Inc.

8 unchanged sentences

The following table sets forth the computations of basic and diluted earnings per share:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2020 2019 2020 2019

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134 227 — 197

29,311 29,156 29,086 29,022

Diluted earnings (loss) per share $ 0.05 $ 0.11 $ ( 3.43 ) $ 0.18

_______________

(1) For the three and six months ended June 30, 2020, 118 thousand shares and 223 thousand shares related to restricted stock were excluded from the calculation of diluted EPS due to the net loss for the period.

(1) For the nine months ended September 30, 2020, 213 thousand shares related to restricted stock were excluded from the calculation of diluted EPS due to the net loss for the period.

Acquisitions and Dispositions

The Company did no t complete any acquisitions during the six months ended June 30, 2020 or 2019.

The Company did no t complete any acquisitions during the nine months ended September 30, 2020.

During September 2019, the Company completed one acquisition that provides pipeline integrity management software and services to energy transportation companies.

The Company acquired all the equity interest of the acquiree in exchange for aggregate consideration of $ 4.4 million in cash, contingent consideration of up to $ 4.3 million to be earned based upon the acquired business achieving specific performance metrics over the initial three years of operations from the acquisition date and working capital adjustments.

The goodwill recorded is primarily attributable to expected synergies and is generally fully deductible for tax purposes.

The Company is still in the process of completing its valuation of the assets acquired and liabilities assumed.

The goodwill recorded is primarily attributable to expected synergies and is generally deductible for tax purposes.

The Company accounted for this transaction in accordance with the acquisition method of accounting for business combinations.

3 unchanged sentences

(tabular dollars and shares in thousands, except per share data)

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed, the Company's allocation of purchase price and any subsequent adjustments made for the September 2019 acquisition:

The following table summarizes the final fair value of the assets acquired and liabilities assumed, the Company's allocation of purchase price and any subsequent adjustments made for the September 2019 acquisition:

Cash paid $ 4,380

11 unchanged sentences

Additionally, the Company adjusts the fair value of acquisition-related contingent consideration liabilities on a quarterly basis.

These amounts are reported as Acquisition-related expense, net on the Unaudited Condensed Consolidated Statements of Income (Loss) and were as follows for the three and six months ended June 30, 2020 and 2019:

Three months ended June 30, Six months ended June 30,

These amounts are reported as Acquisition-related expense, net on the Unaudited Condensed Consolidated Statements of Income (Loss) and were as follows for the three and nine months ended September 30, 2020 and 2019:

Three months ended September 30, Nine months ended September 30,

2020 2019 2020 2019

5 unchanged sentences

Accounts receivable consisted of the following:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Trade accounts receivable $ 122,515 $ 144,282

1 unchanged sentence

Accounts receivable, net $ 114,090 $ 135,997

The Company had $ 16.6 million and $ 22.2 million of unbilled revenue accrued as of June 30, 2020 and December 31, 2019, respectively.

The Company had $ 20.5 million and $ 22.2 million of unbilled revenue accrued as of September 30, 2020 and December 31, 2019, respectively.

These amounts are included in the trade accounts receivable balances above.

5 unchanged sentences

The Company was contracted to perform inspections of welds on various pipeline projects in Texas for a customer.

As of June 30, 2020, approximately $ 1.4 million of past due receivables were outstanding from this customer.

As of September 30, 2020, approximately $ 1.4 million of past due receivables were outstanding from this customer.

The Company received notice from the customer in December 2019, alleging that the work performed was not in compliance with the contract.

The Company filed a lawsuit to recover the $ 1.4 million and other amounts due to the Company and the customer filed a counterclaim, alleging breach of contract and seeking its damages.

Accordingly, the Company recorded a full reserve in the amount of $ 1.4 million during the second half of 2019 for these past due receivables.

The status of the dispute has not changed during 2020.

Accordingly, the Company recorded a reserve of $ 0.3 million during the three months ended September 30, 2019 and $ 1.1 million during the three months ended December 31, 2019 for these past due receivables.

The status of this situation has not changed during 2020.

See Note 14- Commitments and Contingencies for additional details.

9 unchanged sentences

Property, plant and equipment consisted of the following:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Land $ 2,694 $ 2,672

8 unchanged sentences

Property, plant and equipment, net $ 91,771 $ 98,607

Depreciation and amortization expense for the three months ended June 30, 2020 and 2019 was approximately $ 6.0 million and $ 6.1 million, respectively.

Depreciation expense for the six months ended June 30, 2020 and June 30, 2019 was $ 12.1 million and $ 12.2 million, respectively.

Depreciation and amortization expense for the three months ended September 30, 2020 and 2019 was approximately $ 6.2 million and $ 5.8 million, respectively.

Depreciation expense for the nine months ended September 30, 2020 and 2019 was $ 18.3 million and $ 18.0 million, respectively.

Mistras Group, Inc.

9 unchanged sentences

Foreign currency translation ( 3,735 ) ( 163 ) — ( 3,898 )

Balance at June 30, 2020 $ 184,725 $ 14,552 $ — $ 199,277

Balance at September 30, 2020 $ 186,453 $ 15,170 $ — $ 201,623

The Company reviews goodwill for impairment on a reporting unit basis on October 1 of each year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable.

5 unchanged sentences

Based on these factors, the Company concluded that multiple triggering events occurred and, accordingly, an interim quantitative goodwill impairment test was performed as of the testing date for each reporting unit as of March 31, 2020 (“testing date”).

During the first quarter of 2020, the Company also performed an analysis to determine any impairment of long-lived assets (see Note 9– Intangible assets ) as well based on the triggering events noted above.

During the first quarter of 2020, the Company also performed an analysis to determine any impairment of long-lived assets (see Note 9- Intangible Assets ) based on the triggering events noted above.

In performing the interim quantitative goodwill impairment test and consistent with prior practice, the Company determined the fair value of each of the reporting units using a combination of the income approach and the market approach by assessing each of these valuation methodologies based upon availability and relevance of comparable company data and determining the appropriate weighting.

8 unchanged sentences

Based upon the results of the interim quantitative goodwill impairment test during the first quarter of 2020, the Company recorded an aggregate impairment charge of $ 77.1 million, which included $ 57.2 million in the services reporting unit within the Services segment, and $ 19.3 million in the European reporting unit and $ 0.6 million in the Brazilian reporting unit, both within the International segment.

The impairment was calculated based on the difference between the estimated fair value and the carrying value of the reporting units and are included in Impairment charges on the Unaudited Condensed Consolidated Statements of Income (Loss) for the six months ended June 30, 2020.

Subsequent to March 31, 2020 through June 30, 2020, the Company did not identify any changes in circumstances that would indicate the carrying value of goodwill may not be recoverable.

Subsequent to March 31, 2020 through September 30, 2020, the Company did not identify any changes in circumstances that would indicate the carrying value of goodwill may not be recoverable.

Significant adverse changes in future periods could negatively affect the Company's key assumptions and may result in future goodwill impairment charges which could be material.

3 unchanged sentences

(tabular dollars and shares in thousands, except per share data)

The Company's cumulative goodwill impairment as of June 30, 2020 was $ 100.2 million, of which $ 57.2 million related to the Services segment, $ 29.8 million related to the International segment and $ 13.2 million related to the Products and Systems segment.

The Company's cumulative goodwill impairment as of September 30, 2020 was $ 100.2 million, of which $ 57.2 million related to the Services segment, $ 29.8 million related to the International segment and $ 13.2 million related to the Products and Systems segment.

The Company's cumulative goodwill impairment as of December 31, 2019 was $ 23.1 million, of which $ 13.2 million related to the Products and Systems segment and $ 9.9 million related to the International segment.

1 unchanged sentence

The gross amount, accumulated amortization and net carrying amount of intangible assets were as follows:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

(Years) Gross

12 unchanged sentences

For asset groups that required an impairment measurement, similar to the valuations performed to determine the goodwill impairment, the Company used income and market approaches to estimate the fair value of the long-lived assets, which requires significant judgment in evaluation of the useful lives of the assets, economic and industry trends, estimated future cash flows, discount rates, and other factors.

The result of the analysis was an aggregate impairment charge of $ 28.8 million, which included $ 25.9 million to software/technology, $ 2.2 million to customer relationships, $ 0.5 million to other intangibles and $ 0.2 million to covenants not to compete, all of which are in the Services reporting unit within the Services segment and are included in Impairment charges on the Unaudited Condensed Consolidated Statements of Income (Loss) for the six months ended June 30, 2020.

Amortization expense for the three months ended June 30, 2020 and June 30, 2019 was approximately $ 2.6 million and $ 3.5 million, respectively.

Amortization expense for the six months ended June 30, 2020 and June 30, 2019 was $ 5.9 million and $ 7.1 million, respectively.

Amortization expense for the three months ended September 30, 2020 and 2019 was approximately $ 2.6 million and $ 3.4 million, respectively.

Amortization expense for the nine months ended September 30, 2020 and 2019 was $ 8.5 million and $ 10.5 million, respectively.

Mistras Group, Inc.

4 unchanged sentences

Accrued expenses and other current liabilities consisted of the following:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Accrued salaries, wages and related employee benefits $ 28,612 $ 30,072

8 unchanged sentences

Long-term debt consisted of the following:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Senior credit facility $ 135,430 $ 151,773

Senior secured term loan, net of debt issuance costs of $ 0.3 million

Senior secured term loan, net of unamortized debt issuance costs of $ 0.3 million and $ 0.1 million

90,973 94,919

15 unchanged sentences

In addition, the Amendment set a LIBOR floor of 1.0 % applicable to all LIBOR loans, and increased the LIBOR margin range to 1.50 % to 4.15 %, in addition to certain other modifications of the Credit Agreement.

The Amendment also requires that the Company promptly prepay the outstanding amount under the revolving credit facility in an amount equal to the difference between (a) the aggregate sum of cash and cash equivalents of the Company and its subsidiaries held in the United States minus (b) $ 10.0 million if, for a period of two ( 2 ) consecutive business days, (i) the outstanding

Mistras Group, Inc.

2 unchanged sentences

(tabular dollars and shares in thousands, except per share data)

amount under the revolving credit facility exceeds $ 75.0 million and (ii) the such cash and cash equivalents exceeds $ 10.0 million.

held in the United States minus (b) $ 10.0 million if, for a period of two ( 2 ) consecutive business days, (i) the outstanding amount under the revolving credit facility exceeds $ 75.0 million and (ii) the sum of such cash and cash equivalents exceeds $ 10.0 million.

The Credit Amendment, as amended, provides that the Company may not make any acquisitions prior to June 30, 2021, and thereafter only if the Company's Funded Debt Leverage Ratio is less than 2.50 to 1, and after giving effect to such acquisition, its pro forma Funded Debt Leverage Ratio will not be greater than 3.25 to 1.

2 unchanged sentences

Dollar currencies and use up to $ 20 million of the credit limit for the issuance of letters of credit.

As of June 30, 2020, the Company had borrowings of $ 230.2 million and a total of $ 3.9 million of letters of credit outstanding under the Credit Agreement.

The Company has capitalized costs associated with debt modifications of $ 1.3 million as of June 30, 2020, which is included in Other assets on the Condensed Consolidated Balance Sheets.

As of September 30, 2020, the Company had borrowings of $ 226.4 million and a total of $ 4.3 million of letters of credit outstanding under the Credit Agreement.

The Company has capitalized costs associated with debt modifications of $ 1.2 million as of September 30, 2020, which is included in Other Assets on the Condensed Consolidated Balance Sheets.

The Amendment reduced the Company's total available loan capacity, amongst other things, and as a result, the Company expensed approximately $ 0.6 million in capitalized debt issuance costs during the second quarter of 2020, which was included in Selling, general and administrative expenses on the Unaudited Condensed Consolidated Statements of Income (Loss).

As of June 30, 2020, the Company was in compliance with the terms of the Credit Agreement and will continuously monitor its compliance with the covenants contained in its Credit Agreement.

As of September 30, 2020, the Company was in compliance with the terms of the Credit Agreement, as amended, and will continuously monitor its compliance with the covenants contained in its Credit Agreement.

The Company believes that it is probable, based on the amended covenants, that the Company will be able to comply with the financial covenants in the Credit Agreement as modified by the Amendment and that sufficient credit remains available under the Credit Agreement to meet the Company's liquidity needs.

1 unchanged sentence

The Company's other debt includes local bank financing provided at the local subsidiary level used to support working capital requirements and fund capital expenditures.

At June 30, 2020, there was an aggregate of approximately $ 9.2 million outstanding, payable at various times through 2030.

At September 30, 2020, there was an aggregate of approximately $ 10.1 million outstanding, payable at various times through 2030.

Monthly payments range from $ 1 thousand to $ 17 thousand and interest rates range from 0.4 % to 3.5 %.

10 unchanged sentences

The following table represents the changes in the fair value of Level 3 contingent consideration:

Six months ended June 30,

Nine months ended September 30,

Beginning balance $ 3,216 $ 2,365

Acquisitions 200 1,081

Payments ( 1,337 ) ( 755 )

5 unchanged sentences

The Company has evaluated current market conditions and borrower credit quality and has determined that the carrying value of its long-term debt approximates fair value.

The fair value of the Company’s notes payable and capital lease obligations approximates their carrying amounts based on anticipated interest rates which management believes would currently be available to the Company for similar issuances of debt.

The fair value of the Company’s notes payable and finance lease obligations approximates their carrying amounts based on anticipated interest rates which management believes would currently be available to the Company for similar issuances of debt.

The Company leases certain office and operating facilities, machinery, equipment, and vehicles.

8 unchanged sentences

The Company’s Condensed Consolidated Balance Sheets includes the following related to operating leases:

Leases Classification June 30, 2020 December 31, 2019

Leases Classification September 30, 2020 December 31, 2019

ROU assets Other Assets $ 45,497 $ 45,817

3 unchanged sentences

Included within the balance of operating leases is a lease for the Company’s headquarters which is with a related party.

The ROU liability for this facility was approximately $ 4.2 million and $ 4.5 million as of June 30, 2020 and December 31, 2019, respectively.

Total rent payments for this facility were approximately $ 0.2 million for each of the three months ended June 30,

The ROU liability for this facility was approximately $ 4.0 million and $ 4.5 million as of September 30, 2020 and December 31, 2019, respectively.

Total rent payments for this facility were approximately $ 0.1 million and $ 0.2 million for the three months

Mistras Group, Inc.

2 unchanged sentences

(tabular dollars and shares in thousands, except per share data)

2020 and June 30, 2019.

Total rent payments for this facility were approximately $ 0.4 million and $ 0.5 million for the six months ended June 30, 2020 and June 30, 2019, respectively.

As part of the COVID-19 related vendor concessions, an agreement was reached during the second quarter of 2020 with the related party to reduce rental payments by 20 % and defer payments for 90 days for the lease of the Company’s headquarters, starting in June 2020 through December 2020.

As part of other COVID-19 related vendor discussions, the Company has modified the terms of several North America operating lease contracts to provide temporary reductions in monthly rental payments and/or temporary deferrals of monthly rental payments.

Temporary rent reductions and deferred rental payments have been accounted for on a cash basis and is reflected as a reduction of variable lease expense in the chart below.

The total ROU assets attributable to finance leases were approximately $ 17.3 million and $ 19.2 million as of June 30, 2020 and December 31, 2019, respectively, which is included in Property, plant, and equipment, net on the Condensed Consolidated Balance Sheets.

As described in Note 9– Intangible Assets , during the first quarter of 2020 the Company performed an analysis to determine whether there was any impairment of long-lived assets, which included the ROU assets, within the Services, International, and Products and Systems operating segments as well as Corporate.

The result of the analysis was a $ 0.2 million impairment of a ROU asset in an asset group within the Services segment which was included in Impairment charges on the Unaudited Condensed Consolidated Statements of Income (Loss) for the six months ended June 30, 2020.

ended September 30, 2020 and September 30, 2019, respectively.

Total rent payments for this facility were approximately $ 0.5 million and $ 0.7 million for the nine months ended September 30, 2020 and September 30, 2019, respectively.

An agreement was reached with the related party to reduce rental payments by 20 % and defer payments for 90 days for the lease of the Company’s headquarters, starting in June 2020 through December 2020 as part of COVID-19 related vendor concessions.

The total ROU assets attributable to finance leases were approximately $ 16.0 million and $ 19.2 million as of September 30, 2020 and December 31, 2019, respectively, which is included in Property, plant, and equipment, net on the Condensed Consolidated Balance Sheets.

As described in Note 9- Intangible Assets , the Company performed an analysis to determine whether there was any impairment of long-lived assets, which included the ROU assets, within the Services, International, and Products and Systems operating segments as well as Corporate.

The result of the analysis was a $ 0.2 million impairment of a ROU asset in an asset group within the Services segment which is included in Impairment charges on the Condensed Consolidated Statements of Income (Loss) for the nine months ended September 30, 2020.

The components of lease costs were as follows:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

Classification 2020 2019 2020 2019

14 unchanged sentences

Additional information related to leases was as follows:

Six months ended June 30,

Cash paid for amounts included in the measurement of lease liabilities for finance leases

Nine months ended September 30,

Cash paid for amounts included in the measurement of lease liabilities for finance and operating leases

Finance - financing cash flows $ 3,078 $ 3,338

10 unchanged sentences

Operating leases 5.8 % 6.0 %

Maturities of lease liabilities as of June 30, 2020 were as follows:

Maturities of lease liabilities as of September 30, 2020 were as follows:

Finance Operating

20 unchanged sentences

The Company was contracted to perform inspections of welds on various pipeline projects in Texas for a customer.

As of June 30, 2020, approximately $ 1.4 million of past due receivables were outstanding from this customer.

As of September 30, 2020, approximately $ 1.4 million of past due receivables were outstanding from this customer.

The customer provided the Company with notice in December 2019, alleging that the Company’s inspection of 66 welds (out of over 16,000 welds inspected) were not in compliance with the contract, claimed approximately $ 7.6 million in damages, and requested that the Company pay these damages and any other damages incurred.

16 unchanged sentences

Excluding the settlement payment, the Company made monthly payments totaling $ 3.3 million through the time of the final settlement payment, for total payments of $ 4.2 million.

The balance of the estimated total amount of this potential liability as of June 30, 2020 is approximately $ 2.5 million.

The balance of the estimated total amount of this potential liability as of September 30, 2020 is approximately $ 2.5 million.

Severance and labor disputes

7 unchanged sentences

No other assets or liabilities other than those employee benefits related to employees working on the customer contracts were included in the sale.

As of June 30, 2020, the Company has approximately $ 0.4 million of accrued estimated severance payment obligations, which takes into account the Company's estimate with respect to the employees that have been or will be transitioned to the German subsidiaries' other customers.

As of September 30, 2020, the Company has approximately $ 0.3 million of accrued estimated severance payment obligations, which takes into account the Company's estimate with respect to the employees that have been or will be transitioned to the German subsidiaries' other customers.

The $ 0.3 million of estimated obligations is net of $ 0.4 million in payments made and $ 0.9 million in reversals due to employees being transitioned to customer contracts.

5 unchanged sentences

The Company is liable for contingent consideration in connection with certain of its acquisitions.

As of June 30, 2020, total potential acquisition-related contingent consideration ranged from zero to approximately $ 5.7 million and would be payable upon the achievement of specific performance metrics by certain of the acquired companies over the next 2.2 years.

As of September 30, 2020, total potential acquisition-related contingent consideration ranged from zero to approximately $ 4.3 million and would be payable upon the achievement of specific performance metrics by certain of the acquired companies over the next 2.0 years.

During 2018, the Company sold a subsidiary in the Products and Systems segment.

As part of the sale, the Company entered into a three-year agreement to purchase products from the buyer, with a cumulative commitment of $ 2.3 million, of which $ 1.3 million is remaining as of June 30, 2020.

The agreement is based on third-party pricing and the Company's planned purchase requirements over the three-year purchase period to meet the minimum contractual purchases.

13 unchanged sentences

(with intercompany transactions eliminated in Corporate and eliminations)

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2020 2019 2020 2019

8 unchanged sentences

(tabular dollars and shares in thousands, except per share data)

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2020 2019 2020 2019

4 unchanged sentences

$ 47,384 $ 57,769 $ 129,186 $ 166,714

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2020 2019 2020 2019

6 unchanged sentences

Income (loss) from operations by operating segment includes intercompany transactions, which are eliminated in Corporate and eliminations.

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2020 2019 2020 2019

5 unchanged sentences

$ 8,762 $ 9,271 $ 26,759 $ 28,540

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Intangible assets, net

4 unchanged sentences

$ 69,389 $ 109,537

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Services $ 416,532 $ 537,518

7 unchanged sentences

(tabular dollars and shares in thousands, except per share data)

Refer to Note 2 –Revenue, for revenue by geographic area for the three and six months ended June 30, 2020 and June 30, 2019.

Subsequent Events

Joint Venture

On July 3, 2020, a Canadian subsidiary of the Company entered into a joint venture with the Mikisew First Nation through a limited partnership named Mikisew-Mistras Limited Partnership.

The Canadian subsidiary is a limited partner with a 49 % interest in Mikisew-Mistras Limited Partnership (the limited partnership), and a 49 % shareholder in the corporate general partner of the limited partnership.

Mikisew holds the other 51 % interest in the limited partnership and the corporate general partner.

The limited partnership’s purpose is to provide nondestructive testing, inspection and related services to producers and extractors of oil and gas in the Greater Wood Buffalo region of Alberta, Canada.

The limited partnership will subcontract with the Company to provide the nondestructive testing, inspection and related services for the customers of the limited partnership.

The Company will also be providing certain administrative support services for the limited partnership, such as billing and collecting.

None of the Company’s existing contracts will be transferred to the limited partnership, but any new NDT and inspection services in the Greater Wood Buffalo region the Company seeks to perform would be done through the limited partnership.

Refer to Note 2 –Revenue, for revenue by geographic area for the three and nine months ended September 30, 2020 and September 30, 2019.

Mistras Group, Inc.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements