What changed in this filing

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Item 1. Business

2024-03-11 compared with 2023-03-15 · 149 added, 193 removed, 384 unchanged (47% of the section changed)

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The following discussions should be read in conjunction with the sections of this Annual Report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.”

We are 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 a decades-long legacy of industry leadership, we help clients with asset-intensive infrastructure in the oil and gas, petrochemical, aerospace and defense, renewable and non-renewable energy, civil 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, we help the world move, innovate and create a safe and sustainable future for generations to come.

Our core capabilities 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.

We enhance value for our clients by integrating asset protection throughout supply chains and centralizing integrity data through a suite of Industrial Internet of Things ("IIoT") -connected digital software and monitoring solutions.

We offer our customers “One Source for Asset Protection Solutions ® ” and are a leading global provider of technology-enabled asset protection solutions used to evaluate the safety, structural integrity and reliability of critical energy, industrial and public infrastructure.

Our asset protection solutions are intended to help maximize safety and uptime of our customers' assets and facilities.

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

We deliver value through a comprehensive “OneSource™” portfolio of customized solutions, utilizing a proven systematic method that creates a closed-loop lifecycle for addressing continuous asset protection and improvement.

Our specialized asset protection solutions include:

• Field Inspections

• Data Management and Services

• Laboratory Testing

• Maintenance

• Engineering Consulting

Our OneSource model emphasizes the integration of these solutions and the asset integrity data associated with them to service our customers throughout their assets’ lifetimes and are delivered to our customers in three primary ways:

data services, field operations, and shop work.

Under this business model, many customers outsource their inspection, integrity data management and other asset protection needs to us on a “run-and-maintain” basis to ensure the continued safety and structural and operational integrity of their assets.

Revenue streams include data services revenue derived from the selling of licenses and analyzing and synthesizing customer data through our OneSuite™ platform;

field operations revenue derived from work performed in the field at customer locations;

and shop work revenue derived from inspecting and testing materials in our laboratories for our customers.

Mistras Group, Inc.

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 a decades-long legacy of industry leadership, the Company helps customers with asset-intensive infrastructure in the oil and gas, petrochemical, aerospace and defense, industrials, power generation and transmission (including alternative and renewable energy), other process industries and infrastructure, research and engineering and other industries towards achieving and maintaining operational excellence.

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

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

and building monitoring equipment to help avoid catastrophic incidents, the Company helps the world at large.

The Company enhances value for its customers by providing data driven solutions that digitalize the asset protection process and provide valuable insights to our customers that maximize uptime of the assets monitored.

Our data analytical solutions offerings, coupled with the traditional non-destructive testing ("NDT"), provide us a competitive advantage over our competitors.

With our ability to integrate asset protection throughout supply chains and centralizing data management, we are able to provide insights and actionable recommendations to our customers through a suite of Industrial Internet of Things ("IoT")-connected digital software and monitoring solutions, including OneSuite™, which serves as an ecosystem platform, pulling together all of the Company’s software and data services capabilities, for the benefit of its customers.

The Company’s core capabilities also include NDT field inspections enhanced by advanced robotics, laboratory quality control, laboratory materials services, shop laboratory assurance testing, sensing technologies and NDT equipment, asset and mechanical integrity engineering services, and light mechanical maintenance and access services.

Given the role our solutions play in enhancing the safe and efficient operation of our customers' infrastructure, we have historically provided a majority of our solutions to our customers on a regular, recurring basis.

We perform these services largely at our customers’ facilities, while primarily servicing our aerospace customers at our network of state-of-the-art, in-house laboratories.

These solutions typically include NDT and inspection services, and can also include a wide range of

mechanical services, including heat tracing, pre-inspection insulation stripping, coating applications, re-insulation, engineering assessments and long-term condition-monitoring.

Our traditional NDT solutions, coupled with our data analytical solutions offerings, allow us to provide accessible and easily understood data to our customers that allows them to identify when an asset may fail, in order to prioritize inspections and repair.

Under our business model, many customers outsource their inspection to us on a “run and maintain” basis.

We have established long-term relationships as a critical solutions provider to many of the leading companies with asset-intensive infrastructure in our target markets.

These markets include companies in the oil and gas, aerospace and defense, industrials, power generation and transmission (including alternative and renewable energy), other process industries and infrastructure, research and engineering and other industries.

We have focused on providing our advanced asset protection solutions to our customers using proprietary, technology-enabled software and testing instruments, including those developed by our Products and Systems segment.

In the past, we have made numerous acquisitions in an effort to grow our base of experienced, certified personnel, expand our service lines and technical capabilities, increase our geographical reach, complement our existing offerings, and leverage our fixed costs.

We have increased our capabilities and the size of our customer base through the development of applied technologies and managed support services, organic growth and the integration of acquired companies.

These acquisitions have provided us with additional service lines, technologies, resources and customers, which we believe will enhance our advantages over our competition.

We believe long-term growth can be realized in our target markets.

Our business and financial results are impacted by world-wide macro- and micro-economic conditions generally, as well as those within our target markets.

Among other things, we expect the timing of our oil and gas customers inspection expenditures to be impacted by oil price fluctuations.

We have continued providing our customers with an innovative asset protection software ecosystem through our MISTRAS OneSuite platform.

The OneSuite platform offers functions of MISTRAS' software and services brands as integrated applications on a cloud environment.

OneSuite serves as a single access portal for customers' data activities and provides access to 90 plus applications being offered on one centralized platform.

We have established long-term relationships as a critical solutions provider to many of the leading companies with asset-intensive infrastructure in our target markets.

These markets primarily consist of:

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A majority of our revenues are generated by deploying technicians at our customers' locations.

Most of our revenues from aerospace and defense as well as certain manufacturing customers are generated by performing inspections and testing at our various in-house laboratories.

A majority of our revenues from aerospace and defense as well as certain manufacturing customers are generated by performing inspections and testing at our various in-house laboratories.

We generated revenues of $705.5 million, $687.4 million and $677.1 million for the years ended December 31, 2023, 2022 and 2021, respectively.

We generated net income of $6.6 million, a net income of $3.9 million and net loss of $99.5 million for the years ended December 31, 2022, 2021, and 2020, respectively.

For the years ended December 31, 2022, 2021 and 2020, we generated approximately 83%, 82% and 80%, respectively, of our revenues from our Services segment.

We generated net loss of $17.4 million, a net income of $6.6 million and net loss of $3.9 million for the years ended December 31, 2023, 2022, and 2021, respectively.

For the years ended December 31, 2023, 2022 and 2021, we generated approximately 82%, 83% and 82%, respectively, of our revenues from our North America segment.

Our revenues are diversified, with our top ten customers accounting for approximately 35%, 33% and 33% of our revenues during the years ended December 31, 2023, 2022 and 2021, respectively, with no customer accounting for greater than 10% of our revenues in any such year.

OUR SPECIALIZED SOLUTIONS

As a OneSource provider of asset protection solutions, we combine our industry-leading services, products, data management solutions and technologies to provide a unique, custom-tailored solution for each customer’s individual asset protection needs, ranging from routine inspections to complex, plant-wide asset integrity management.

As a provider of asset protection solutions, we combine our industry-leading services, products, data management and analytical solutions technologies to provide a unique and custom-tailored solution for each customer’s individual asset protection needs, ranging from routine inspections to complex, plant-wide asset integrity management programs.

Field Inspections

Our field inspections portfolio includes traditional and advanced NDT techniques, along with predictive maintenance assessments of fixed and rotating assets and inline inspection for pipelines.

Our field inspections portfolio includes traditional and advanced NDT techniques and inline inspection for pipelines.

We offer these solutions on an individual basis, or as parts of enterprise inspection and testing programs.

NDT is the examination of an asset without materially impacting its integrity.

NDT is the examination of an asset without materially impacting its structural integrity.

The ability to inspect infrastructure assets and not interfere with their operating performance makes NDT a highly-attractive alternative to many traditional techniques, which may require shutting down an asset or entire facility.

Typical issues for which our technicians inspect include corrosion, cracking, leaking, faults and flaws in piping, storage tanks and pressure vessels, as well as a wide range of other industrial assets and public infrastructure.

Our automated data acquisition solutions utilize smart sensing and monitoring, robotic inspection systems, and digitized spot inspections to provide asset integrity data with greater insight into current and future asset conditions.

Typical issues for which our technicians inspect include potential corrosion, cracking, pitting, leaking, faults and flaws in piping, storage tanks and pressure vessels, as well as a wide range of other industrial assets and public infrastructure.

Field inspection services lend themselves to integration with our other offerings, and as such have often served as the initial entry point to more advanced customer engagements that require additional solutions.

After an initial field inspection is performed, we are able to provide multiple supplemental solutions that further serve to solidify our relationships with our customers and drive additional revenue.

Data Solutions

The asset protection solutions that we provide throughout our customers’ asset lifecycles generate asset integrity data that needs to be effectively archived, managed, and analyzed.

A common difficulty that our customers face is the ability to easily access and analyze data from multiple data collection and input contractors.

We recognize that this data is most valuable to our customers when it is accessible and integrated (regardless of vendor, tool, or facility), and have taken significant steps to digitalizing asset protection processes through the release of the first-ever asset protection software ecosystem MISTRAS OneSuite.

The OneSuite software platform offers functions of our popular software and services brands as integrated apps on a cloud environment.

OneSuite serves as a single access portal for customers' data activities and provides access to 90 plus integrated applications being offered on one centralized platform.

Plant Condition Management Software (PCMS®).

Our world-class enterprise inspection database management software ("IDMS") - Plant Condition Management Software ("PCMS") - was developed specifically for process industries and equipment, and enables the storage, organization and analysis of inspection data.

PCMS offers wide-ranging support for mechanical integrity programs, including:

• Comprehensive inspection tracking, scheduling and analysis

• Corrosion analysis and trending

• Integrated risk-based inspection ("RBI") calculators

• Safety relief valve management

PCMS compares data to prior operations, similar assets, industrial standards and specific risk conditions, such as use with highly-flammable or corrosive materials.

It also develops asset integrity management plans based on RBI calculations that specify an optimal schedule for the testing, maintenance and retirement of assets.

In many instances, customers of our field inspections and consulting services also have licensed PCMS for storage and analysis of collected inspection and Mechanical Integrity ("MI") data.

We believe PCMS is one of the most widely used plant condition management software systems in North American refineries.

We estimate it is currently used by approximately 50% of the U.S.

refiners, as well as by leading midstream pipeline energy companies and major energy companies in Canada and Europe.

This provides us with recurring maintenance and support fees and marketing opportunities for additional software and solutions.

Pipeline Data.

Following our acquisitions of companies such as Onstream and New Century Software, that support the midstream sector of the oil and gas industry, we believe we provide among the most comprehensive, data-driven pipeline protection solutions available to the industry.

These proprietary pipeline data analysis solutions enable deep integration of inline inspection ("ILI") big data with real-time risk analytics and business intelligence ("BI") to provide capabilities for supporting pipeline integrity, which we believe provides us with an important competitive advantage.

MISTRAS Digital ® .

We have also invested resources in digitalizing and optimizing the collection, transfer, and visibility of field inspection data.

MISTRAS Digital is an electronic platform that digitally delivers field inspection assignments and related data, captures inspection results, and delivers electronic reporting and productivity tracking via relevant key performance indicators ("KPIs") to multiple members of a customer organization, including those not directly associated with the inspection function.

Customers have made clear that the timely and accurate delivery of field data to their "IDMS" is an important feature for them.

MISTRAS Digital integrates with PCMS and other inspection data management systems to provide additional productivity improvements.

Online Monitoring.

Our online condition-monitoring solutions provide real-time reports and analysis of infrastructure to alert facility personnel to damages before critical failures occur, while our flexible, IIoT-compatible, cloud-based online monitoring portal centralizes and analyzes all collected monitoring data.

After an initial field inspection is performed, we are able to provide multiple supplemental solutions, such as maintenance services, engineering consulting and data analytical solutions services we provide, that further serve to solidify our relationships with our customers and drive additional revenue.

Data Analytical Solutions

The asset protection solutions that we provide throughout our customers’ asset lifecycles generate mechanical integrity data that needs to be effectively archived, managed, and analyzed.

A common difficulty that our customers face is the ability to easily access and analyze large volumes of data from multiple data collection and input sources.

We recognize that this data is most valuable to our customers when it is accessible and integrated (regardless of vendor, tool, or facility), and we have taken significant steps to digitalizing asset protection processes through our data analytical solutions product offerings.

Our data acquisition capabilities capture asset data to help our customers follow regulatory compliance, ensure mechanical integrity, and reduce unplanned outages.

We capture data using manned and automated techniques that minimize the impact on our customers' operations.

Customers can access our collected data for all facilities, structures, and assets that we manage from one easy to use dashboard, which enables customers to evaluate trending and benchmarking across multiple sites seamlessly.

Customer data is managed in our asset protection software ecosystem, OneSuite.

Our OneSuite software platform offers functions of our popular software and services brands as integrated applications in a cloud environment.

Our OneSuite software platform serves as a single access portal for customers' data activities and provides access to 90 plus integrated applications being offered in one centralized platform.

Many customers take advantage of our data analytics capabilities that utilize technology to automatically generate insights and actionable recommendations that can be implemented to improve our customers' overall productivity.

Our managed services integrate our data capabilities with data analysts, field personnel and engineers to provide a comprehensive solution to our customers that reduces our customers' overall costs.

Our customers within the oil and gas and petrochemical industries take advantage of our industry-leading application Plant Condition Management Software (PCMS®).

This application is one of the most widely used asset integrity management systems (“AIMS”).

We estimate that our PCMS application is currently used by approximately 50% of the U.S.

refiners, as well as by leading midstream pipeline energy companies and major oil and gas companies in Canada and Europe.

This allows us to provide our customers with industry-leading insights across all their facilities and enables us to provide additional software and solutions to these customers and perform recurring maintenance where necessary.

Our pipeline customers utilize our Onstream® services and New Century® software platform to capture, manage and analyze pipeline integrity data in the midstream and upstream sectors of the oil and gas industry.

We provide among the most comprehensive, data-driven pipeline protection solutions available to the industry.

Our proprietary pipeline data analysis solutions enable deep integration of inline inspection ("ILI") big data with real-time risk analytics and business intelligence ("BI") to provide capabilities for supporting pipeline integrity, which we believe provides us with an important competitive advantage.

Our wind, power and infrastructure customers implement our online condition-monitoring solutions that provide real-time reports and analysis of infrastructure to alert facility personnel to damages before critical failures occur, while our flexible, IIoT compatible, cloud-based online monitoring portal centralizes and analyzes all collected monitoring data.

These monitoring solutions are often installed in hazardous or hard-to-reach locations, helping to enhance safety by reducing the need to send technicians into unsafe locations.

We offer monitoring solutions for a wide range of assets and applications, including:

• Wind Turbine Blades

• Tube Leaking

• Power Transformer Health and Reliability

• Stator Vane Cracking

• Bridge Structural Health Monitoring

• Wall Thickness Tracking

• High-Energy Piping (HEP) Integrity

• Fluid Corrosivity

• Through-Valve Leaking

We have continued to develop new technologies to provide monitoring of wind blade integrity through our Sensoria™ blade monitoring technology.

Sensoria helps provide real-time monitoring and damage detection of wind turbine blades and allows our customers to maximize uptime, performance and safety of wind turbine blades.

This tool provides additional growth and expansion of our capabilities to serve both new and existing wind turbines and greatly enhances our product offerings within the renewable energy industry.

With expertise in monitoring hardware and services, we design and install monitoring systems, and provide commissioning, training, reporting, technical support and annual maintenance services.

We offer a variety of secure, web-based solutions that monitor structural integrity and analyze conditions against our library of historical inspection data, allowing users to stay aware of potential concerns and prioritize future inspections and maintenance.

We also offer custom-developed software that integrates with sensing technologies, reporting platforms, and onsite IDMSs;

stores and trends monitoring data;

and provides immediate automated data analysis.

Much of our monitoring is based on acoustical emissions technology.

Laboratory Testing

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Our engineering consultations include plant operations and management support, turnaround/shutdown planning, profit improvement, facilities planning studies, engineering design, process safety reviews, energy optimization evaluations, benchmarking/key performance indicator development and technical training.

Our Asset Integrity Management ("AIMS") and MI services help improve asset reliability and regulatory compliance through a systematic, engineering-based approach to ensure the ongoing integrity and safety of equipment and industrial facilities.

Our Asset Integrity Management ("AIMS") and Mechanical Integrity ("MI") services help improve asset reliability and regulatory compliance through a systematic, engineering-based approach to ensure the ongoing integrity and safety of equipment and industrial facilities.

AIMS/MI services can include conducting an inventory of infrastructure assets;

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• Automated Ultrasonics

• Data Solutions

• Fossil Power

• Guided Wave Ultrasonics

• Infrastructure

• PCMS Software and Services

• Mechanical Services

• MISTRAS Digital®

• Nuclear Power

• Phased Array

• Power Generation

• Predictive Maintenance

• Refractory Inspection

• Rope Access/Wind

• Substation Reliability

• Rope Access

• Tank Inspection

• Transportation

• Tube Inspection

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In addition to these core utilities, the storage and analysis of collected inspection and MI data is also a key aspect of asset protection.

NDT has historically been a prominent solution in the asset protection industry due to its capacity to detect defects without compromising the integrity of the tested materials or equipment.

NDT has historically been a prominent solution in the asset protection industry due to its capacity to detect defects without compromising the structural integrity of the tested materials or equipment.

Traditionally, the supply of NDT inspection services has been provided by many relatively small vendors, who provide services in a more localized geographic region.

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Due to these trends, those vendors offering integrated solutions, scalable operations, skilled personnel and a global footprint are expected to have a distinct competitive advantage.

Moreover, we believe that vendors that are able to effectively deliver both advanced solutions and data analytics, by virtue of their access to customers’ data, create a significant barrier to entry for competitors, leading to the opportunity to further create significant recurring revenues.

Moreover, we believe that vendors that are able to effectively deliver both

advanced solutions and data analytics, by virtue of their access to customers’ data, create a significant barrier to entry for competitors, leading to the opportunity to further create significant recurring revenues.

Key Dynamics of the Asset Protection Industry

We believe the following represent key dynamics of the asset protection industry, and that the market available to us will continue to grow as these macro-market trends continue to develop:

Digital Transformation of Asset Protection.

Plants in the oil and gas, petrochemical and other process industries are recognizing the need to evolve their traditional, paper-based mechanical integrity programs in favor of digitalized solutions.

The rise of big data intelligence, and our data analytical solutions offerings, provide our customers with actionable insights from raw asset integrity data.

The growing digitization of asset protection provides opportunities for contractors with a wide range of asset protection expertise and integrated data platforms to provide customers with data analytical solutions to help customers maximize uptime while controlling costs.

Extending the Useful Life of Aging Infrastructure While Increasing Utilization .

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This has resulted in the significant aging and increased utilization of existing infrastructure in our target markets.

Demand for refined petroleum products, combined with high plant-utilization rates, drives refineries to upgrade facilities to make them more efficient and expand capacities.

Because aging infrastructure requires more frequent inspection and maintenance in comparison to new infrastructure, companies and public authorities continue to spend on asset protection to ensure their aging infrastructure assets continue to operate effectively.

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Due to the increasing sophistication and automation of NDT programs, a decreasing supply of skilled professionals and increasing governmental regulations, companies are increasingly outsourcing NDT to third-party providers with advanced solution portfolios, engineering expertise and trained workforces.

Digital Transformation of Asset Protection.

Plants in the oil and gas and process industries are recognizing the need to evolve their traditional, paper-based mechanical integrity programs in favor of digitalized solutions.

The rise of big data intelligence and the need to gain actionable insights from raw asset integrity data are growing trends that provide opportunities for contractors with a wide range of asset protection expertise and integrated data platforms to help customers maximize uptime while controlling costs.

Increasing Corrosion from Low-Quality Inputs .

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Failure to meet these standards can result in significant financial liabilities, increased scrutiny by government and industry regulators, higher insurance premiums and tarnished corporate brand value.

As a result, these owners and operators are seeking highly-reliable asset protection suppliers with a track record of assisting organizations in meeting increasingly stringent regulations.

As a result, these owners and operators are seeking highly-reliable asset protection suppliers with a track record of assisting customers in meeting increasingly stringent regulations.

Our customers benefit from our extensive engineering consulting base that supports them in devising mechanical integrity programs that both meet regulatory compliance standards and enable enhanced safety and uptime at the customer's facilities.

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The continued emergence of and advances in asset protection technologies and software-based systems are increasing the demand for asset protection solutions in applications where existing techniques were previously ineffective.

This has been true for the wind energy market, which has been receptive to updating traditional blade inspection processes in favor of unattended, remote monitoring solutions such as Sensoria.

Expanding Aerospace and Defense Industry .

We believe that increased demand will continue to come over the next several years from the commercial industry due to the approximately decade-long backlog for next-generation commercial aircraft to be built, driving the need for advanced solutions that drive cost and quality efficiencies.

Demand continues to be stable in the defense industry while demand in the outerspace industry is growing.

Demand continues to be stable in the defense industry while demand in the private space industry is growing.

Crude Oil Prices.

Volatility in the energy sector has been profound during the 2015-2022 period.

Volatility in the energy sector has been profound during the 2015-2022 period with moderation occurring during 2023.

The collapse of world oil prices in 2015 and 2016 undermined industry expansion.

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This resulted in refineries delaying turnarounds during 2022 until oil prices decreased and stabilized in the second half of 2022.

The on-going war in Ukraine, coupled with macroeconomic uncertainty in 2023, are expected to continue to significantly impact oil prices for the foreseeable future.

The stabilization continued throughout 2023 without major peaks and fluctuations as seen in prior periods.

The on-going war in Ukraine and the conflict in the Middle East between Israel and

Hamas, coupled with continued macroeconomic uncertainty in 2024, are expected to continue to significantly influence oil prices for the foreseeable future.

Expanding Pipeline Integrity Regulations:

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OneSource Provider for Asset Protection Solutions .

We believe we have one of the most comprehensive portfolios of integrated asset protection solutions worldwide, which positions us to be a leading single-source provider for our customers’ asset

protection requirements.

We believe we have one of the most comprehensive portfolios of integrated asset protection solutions worldwide, which positions us to be a leading single-source provider for our customers’ asset protection requirements.

This is particularly a competitive strength in regards to turnarounds and shutdowns - during which facilities temporarily cease portions of their operations in order to perform plant-wide inspections, maintenance and repairs - as the services being requested and performed during these work stoppages make up significant portions of refinery, process and power plant maintenance budgets.

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Integrated Data Management:

Our expertise and proprietary research and development in data solutions throughout the asset protection cycle provides a competitive advantage.

With solutions for integrated data acquisition, storage, visualization and analytics, our integrated data solutions well-position us for the oil and gas increasing movement towards digitalizing and centralizing asset protection to fewer, highly-skilled and multi-disciplined vendors.

Many of our data solutions are platform-agnostic, allowing us to integrate into customers' existing operations, and thereby expanding the potential customer pool for our solutions.

Our expertise and proprietary research and development in data analytical solutions throughout the asset protection cycle provides a competitive advantage.

With solutions for integrated data acquisition, storage, visualization and analytics, our integrated data analytical solutions well-position us for the oil and gas increasing movement towards digitalizing and centralizing asset protection to fewer, highly-skilled and multi-disciplined vendors.

Many of our data analytical solutions are platform-agnostic, allowing us to integrate into customers' existing operations, and thereby expanding the potential customer pool for our solutions.

Our expertise and experience also allow us to tailor our offerings to meet specific customer needs, which sets us apart from our competitors.

Our presence in our customers’ operations throughout their asset lifecycles also ideally positions us to be their primary vendor to centralize their asset integrity data collection, management and analysis, creating mutually-beneficial opportunities to scale our relationships.

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The NDT industry continues to move towards more advanced, automated solutions, requiring service providers to find safer and more cost-efficient inspection techniques.

We believe that we remain ahead of the technological curve by backing our extensive industry expertise with the investment of resources in research and development.

Some of the advanced inspection technologies developed by our internal research and development teams include our Sensoria wind blade monitoring technology, an automated radiographic testing ("aRT") crawler for corrosion under insulation ("CUI") inspections in aboveground pipelines and piping;

We believe that we remain ahead of the

technological curve by backing our extensive industry expertise with the investment of resources in research and development.

Some of the advanced inspection technologies developed by our internal research and development teams include an automated radiographic testing ("aRT") crawler for corrosion under insulation ("CUI") inspections in above ground pipelines and piping;

our Large Structure Inspection ("LSI") scanner, and our real-time radiography ("RTR") crawler for 360° inspections of pipeline girth welds.

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We place a data-centric focus on asset protection, enabling our customers to ease some of their biggest areas of concern (particularly the timely and accurate transfer of asset integrity data from the field to their IDMS, as well as the data’s visibility and accessibility once uploaded).

We expect that the demand for big data intelligence and remote data visibility will continue to grow, and are investing in data solutions that help our customers visualize and generate actionable insight from their asset integrity data, regardless of data input.

We expect that the demand for our data analytical solutions which provides big data intelligence and remote data visibility will continue to grow, and we are investing in data analytical solutions that help our customers visualize and generate actionable insight from their asset integrity data, regardless of data input.

We are also actively seeking to optimize our customers’ asset protection workflows and processes, by creating digital paths between data applications to increase data visibility and reduce manual data entry and human error.

We have continued providing our customers with innovative asset protection software ecosystem through our MISTRAS OneSuite platform.

The software platform offers functions of our popular software and services brands as integrated apps on a cloud environment.

OneSuite serves as a single access portal for customers' data activities and provides access to 90 plus integrated applications being offered on one centralized platform.

Expand Our Focus in the Aerospace and Defense Industries .

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The recent interest in the use of additive manufacturing techniques to create components also necessitates advanced inspection and testing solutions.

We consummated two acquisitions of aerospace inspection companies in 2017, enhancing our capabilities and focus on providing solutions to our customers in the aerospace and defense industries throughout their manufacturing value chains in this growing area.

Expand Our Focus in the Pipeline Integrity Industry.

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The release of our OneSuite ecosystem underscores our dedication to continue deepening synergies between our solutions to provide our customers with uniquely-integrated offerings, which we believe makes us a more attractive vendor for customers seeking to centralize their asset protection.

We have actively continued to develop technologies that enhance the flow of data throughout multiple operational phases and facilities, through solutions such as MISTRAS Digital, our integrated pipeline integrity data portfolio, and our cloud-based monitoring data portal, and Sensoria, our wind blade monitoring technology.

We have actively continued to develop technologies that enhance the flow of data throughout multiple operational phases and facilities, through our integrated pipeline integrity data portfolio, and our cloud-based monitoring data portal.

Expand our Solution Offerings to Existing Customers .

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Continue to Expand Our Customer Base into New End Markets .

We believe we have significant opportunities to expand our customer base in relatively new end markets, including wind and other alternative energy, natural gas transportation industries pipeline integrity and additive manufacturing.

We believe that the development of our Sensoria tool, which allows our customers to maximize uptime, performance and safety of wind turbine blades, provides additional growth and expansion of our capabilities to serve both new and existing wind turbines and greatly enhances our product offerings within the renewable energy industry.

The expansion of our addressable markets is being driven by the increased recognition and adoption of advanced asset protection technologies that are supplanting traditional methods.

We believe we have significant opportunities to expand our customer base in relatively new end markets, including the renewable energy industry, specifically, wind and other alternative energy, natural gas transportation industries, pipeline integrity and additive manufacturing.

The expansion of our addressable markets is being driven by the increased recognition and adoption of advanced asset protection technologies (such as unmanned drone inspection devices, robotics, etc.) that are supplanting traditional methods.

Capitalize on Acquisitions .

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We have three operating segments:

(i) Services, (ii) International and (iii) Products and Systems:

Services provides asset protection solutions in North America, with the largest concentration in the United States, followed by Canada, consisting primarily of NDT, inspection, mechanical and engineering services that are used to evaluate the structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components.

This segment includes data services revenue derived from the selling of licenses and analyzing and synthesizing customer data through our OneSuite platform, field operations revenue derived from work performed in the field at customer locations, and shop revenue derived from operations designing, building, and customizing products in our laboratories for our customers.

PCMS software and pipeline related software and data analysis solutions are included in this segment.

(i) North America (which we previously referred to as our Services segment), (ii) International and (iii) Products and Systems:

North America provides asset protection solutions with the largest concentration in the United States, followed by Canada, consisting primarily of NDT, inspection, mechanical and engineering services that are used to evaluate the structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components.

Software, digital and data services are included in this segment.

International offers services, products and systems similar to those of the other segments to select markets within Europe, the Middle East, Africa, Asia and South America, but not to customers in China and South Korea, which are served by the Products and Systems segment

This segment includes data services revenue derived from the selling of licenses and analyzing and synthesizing customer data through our OneSuite platform, field operations revenue derived from work performed in the field at customer locations, and shop revenue derived from operations designing, building and customizing products in our laboratories for our customers.

Products and Systems designs, manufactures, sells, installs and services our asset protection products and systems, including equipment and instrumentation, predominantly in the United States.

Products and Systems designs, manufactures, sells, installs and services the Company’s asset protection products and systems, including equipment and instrumentation, predominantly in the United States.

For a discussion of segment revenues, operating results and other financial information, including geographic areas in which we generated revenues, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7, as well as Note 2-Revenue and Note 19-Segment Disclosure in the notes to our audited consolidated financial statements in Item 8 of this Annual Report.

Revenue Overview

Revenue by Industry

The following charts represent our disaggregated revenue by industry for the years ended December 31, 2023, 2022 and 2021.

Our Target Markets

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We perform inspection and mechanical services for customers in both industries.

Our revenues are comprised of services offerings at our laboratories and at customer facilities.

Data Analytical Solutions revenues are comprised of revenue derived from data software sales & subscriptions, implementation services and analytics that offer insights and recommendations to improve asset integrity.

Data Analytical Solutions revenue is derived from work performed by Mistras employees in our facilities, or at customer locations, using our proprietary portfolio of software applications.

Field Services revenues are comprised of revenue derived primarily by technicians performing asset inspections and maintenance services for our customers at locations other than Mistras properties.

Shop Laboratory revenues are comprised of quality assurance inspections of components and materials at our Mistras in-house laboratory facilities.

Other revenues are comprised of locations that perform both asset inspection services and testing of components and materials at in-house Mistras laboratories.

There are a number of economic factors which drive the aerospace market, including:

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The EIA forecasts production to continue to increase to an average 13.3 million bpd in 2024 and further increase to 13.5 million bpd in 2025.

Revenue by Target Market

The following charts represent our revenue by target market for the years ended December 31, 2022, 2021 and 2020.

The petrochemical market was previously consolidated within the oil and gas target market for the year ended December 31, 2020.

We have separately broken out this information beginning with the year ended December 31, 2020, as we have continued to provide services and products to this market, and continue to expect increases in future periods.

For comparability purposes, Petrochemical comprised 3% of total revenues for the year ended December 31, 2020, which was included within the oil and gas target market previously.

We supply oil and gas asset protection solutions to downstream (refining), midstream (transportation and storage) and upstream (exploration and production) operations.

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In general, the oil and gas market is poised to leverage digital solutions to facilitate process improvements as well as increase plant reliability and improve process and personnel safety.

This provides an opportunity for us to synergistically leverage our digital asset protection solutions, including MISTRAS Digital and OneSuite.

This provides an opportunity for us to synergistically leverage our digital asset protection solutions.

Digital transmission of data in various industry sectors, with built-in analytic functions, will allow our customers to better leverage inspection data that is being generated in the field.

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We serve this rapidly growing target market by providing a full range of inspection, testing, machining, mechanical, finishing, additive manufacturing and equipment solutions, for which we are Nadcap certified.

Our state-of-the-art in-house labratories maintain numerous accreditations from industry organizations, including Nadcap, and some of the largest manufacturers in the world, such as Boeing, Safran, Airbus, Bombardier and Embraer.

Our state-of-the-art in-house laboratories maintain numerous accreditations from industry organizations, including Nadcap, and some of the largest manufacturers in the world, such as Boeing, Safran, Airbus, Bombardier and Embraer.

Advanced composite materials found in new classes of aircraft require advanced asset protection solutions, including x-ray of critical engine components, ultrasonic fatigue testing of complete aircraft structures and corrosion detection and other critical components.

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We believe that in recent years, acceptance of asset protection solutions has grown in this industry due to the aging of critical power generation and transmission infrastructure.

During the fourth quarter of 2021, we received a U.S.

patent for the technology behind Sensoria, our innovative 24/7/365 rotor blade monitoring system and sensors that enable blade integrity management for wind turbine owners and operators.

Sensoria is a remote rotor blade monitor that detects and reports damages in real-time, including cracks, lightning strikes, skin ruptures and perforations, delaminations, and more.

By sending immediate damage alerts to operators, Sensoria enables them to maximize blade uptime and generating capacity while preventing damages from worsening.

This tool provides additional growth and expansion of our capabilities to serve both new and existing wind turbines and greatly enhances our product offerings within the renewable energy industry.

The growing availability of cheap natural gas, along with environmental concerns with coal, has stimulated the construction of new natural gas-fired power plants across North America, creating opportunities for us to provide specialized solutions in multiple phases.

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We believe that high-profile infrastructure catastrophes have caused public authorities to more actively seek ways to prevent similar events from occurring.

Public authorities tasked with new construction and maintenance of existing public infrastructure

increasingly use asset protection solutions to inspect these assets, including the use of embedded sensors to enable online monitoring throughout the life of the asset.

We have provided testing and structural health monitoring and data solutions on bridges and structures worldwide, including some of the largest and most well-known bridges in the United States and United Kingdom.

Public authorities tasked with new construction and maintenance of existing public infrastructure increasingly use asset protection solutions to inspect these assets, including the use of embedded sensors to enable online monitoring throughout the life of the asset.

We have provided testing and structural health monitoring and data analytical solutions on bridges and structures worldwide, including some of the largest and most well-known bridges in the United States and United Kingdom.

Our sensors continuously monitor these assets, alerting owner/operators when defects are detected.

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As of December 31, 2023, we had approximately 4,800 employees worldwide, of which 3,200 were located in the United States, 500 in Canada and 1,100 in our other non-U.S.

Our employees include full and part time employees throughout our organization.

As described below, we value our employees and have established various programs to promote the satisfaction, health and safety of our employees.

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Leveraging this experience and expertise, our senior management team is able to continuously review our organizational structure and provide opportunities for the growth and development for our employees.

This process helps us develop leaders at all levels within the organization, and to engage employees with rewarding opportunities, competitive salary and benefits, to advance their careers and contribute to our success.

As part of our continued commitment to our employees, we have established various programs to promote lifelong learning and development opportunities for our employees.

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All local minimum wage requirements are met and where no wage laws are in place, employees are compensated competitively, in accordance with industry standards.

We also provide leadership development using third-party leadership organizations to members of our executive management team, and we make available coaching and leadership development to all levels of management, including our General Managers who work in the field.

Our human rights policy places a high priority on diversity and equal opportunity and provides our employees with management’s expectations related to human rights and labor practices.

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We consider safety the backbone of our operations.

Our asset protection solutions aim to ensure that industrial assets and facilities remain in safe, reliable working condition, which in turn enhances safety for our clients, the public, and the environment.

Our labratory and field personnel are trained to operate according to strict safety and quality standards so that our processes and procedures regarding hazardous materials, worker safety, and accident prevention are sound and effective.

Further to this, we are constantly evaluating these processes and procedures to ensure that they remain of high quality and are effective, and consider changes in the manner in which work is performed or lessons that have been learned from any sources, such as industry data.

We work to help ensure that our clients are in full compliance with all federal, state, and local regulations.

Our asset protection solutions aim to ensure that industrial assets and facilities remain in safe, reliable working condition, which in turn enhances safety for our customers, the public, and the environment.

Our laboratory and field personnel are trained to operate according to strict safety and quality standards so that our processes and procedures regarding hazardous materials, worker safety, and accident prevention are sound and effective.

Further to this, we are constantly evaluating these processes and procedures to ensure that they remain of high quality and are effective, and we consider changes in the manner in which work is performed or lessons that have been learned from any sources, such as industry data.

We work to help ensure that our customers are in full compliance with all federal, state, and local regulations.

Our practices, policies and procedures are designed to help ensure we perform our duties through the use of safe, industry-best practices, seeking to minimize risk wherever possible.

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We continuously monitor our safety performance through analysis of our company-wide safety statistics, which help us to determine behavioral trends while also instilling a culture of proactivity.

For the year ended December 31, 2022, our Total Recordable Incident Rate was 0.41 while Days Away, Restricted and Transferred Rate was 0.15 and Lost Work Day Rate

remained at historical lows of 0.03.

For the year ended December 31, 2021, our Total Recordable Incident Rate (“TRIR”) was 0.15, when excluding COVID-19 related cases.

For the year ended December 31, 2023, our Total Recordable Incident Rate ("TRIR") was 0.3 while Days Away, Restricted and Transferred Rate was 0.18 and Lost Work Day Rate remained 0.12.

For the year ended December 31, 2022, our TRIR was 0.41.

Our business is seasonal.

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The peak periods for these customers are the summer and winter months, when they run at peak capacity and are not retooling or performing turnarounds or shut downs.

As a result, our revenues in the summer and winter months are typically lower than our revenues in the fall and spring, when demand for our asset protection solutions from the oil and gas as well as the fossil and nuclear power industries increases during their non-peak production periods.

As a result, our revenues in the summer and winter months are typically lower than our revenues in the fall and spring, when demand for our asset protection solutions from the oil and gas as well as the fossil power industries increases during their non-peak production periods.

Because we are increasing our work in the fall and spring, our cash flows are lower in those quarters than in the summer and winter, as collections of receivables lag behind revenues.

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We operate in a highly competitive, but fragmented, market.

Our primary competitors are divisions of large companies and various small companies which generally are limited to a specific product or technology and focused on a niche market or geographic region.

Our primary competitors include large public and private companies, divisions of large companies and various small companies which generally are limited to a specific product or technology and focused on a niche market or geographic region.

We believe that few, if any, of our competitors currently provide the full range of asset protection and NDT products, enterprise software ("PCMS") and the traditional and advanced services solutions that we offer.

Our competition with respect to NDT services include Acuren, SGS Group, the Team Qualspec division of Team, Inc.

and APPLUS RTD.

Our competition with respect to NDT services include Acuren, SGS Group, the Team IHT Segment and APPLUS RTD.

Our competition with respect to our PCMS software includes UltraPIPE, Lloyd’s Register Capstone, Inc.

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Research and Development

Our research and development is principally conducted by engineers and scientists at our Princeton Junction, New Jersey headquarters, and supplemented by other employees in the United States and throughout the world, including France, Greece the United Kingdom, Brazil and the Netherlands.

Our research and development is principally conducted by engineers and scientists at our Princeton Junction, New Jersey headquarters, and supplemented by other employees in the United States and throughout the world, including Canada, France, Greece the United Kingdom, Brazil and the Netherlands.

Our total professional staff includes employees who hold Ph.D.’s and engineers and employees who hold Level III certification, the highest level of certification from the American Society of Non-Destructive Testing (ASNT).

We make strategic research and development investments in technologies that support integration with our other solution offerings to enhance cost- and time-efficiencies, maximize uptime and safety and improve the flow of data from field technicians to inspection databases.

We have invested, and continue to invest, resources in the development of MISTRAS Digital, an electronic platform that digitally delivers field inspection assignments and related data, capture inspection results, and provide electronic reporting and productivity tracking.

We make strategic research and development investments in our data analytical solutions technologies that support integration with our other solution offerings to enhance cost- and time-efficiencies, maximize uptime and safety and improve the flow of data from field technicians to inspection databases.

These strategic investments enable us to enhance our service offerings to customers and provide valuable insights and predictive analysis.

We have also invested significant research and development in pre-machining and advanced testing technologies in a purpose-built facility for an aerospace customer, with the goal of reducing the customer’s production cycle logistics and costs.

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We utilize a combination of intellectual property safeguards, including patents, copyrights, trademarks and trade secrets, as well as employee and third-party confidentiality agreements, to protect our intellectual property.

As of December 31, 2022, we held seven U.S.

patents by direct ownership and six patent applications pending in the United States.

As of December 31, 2023, we held 12 U.S.

patents by direct ownership and 5 patent applications pending in the United States.

All the patent applications pending have been filed since 2018.

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Executive Officers

The following were our executive officers as of December 31, 2022 and their background and experience.

On February 8, 2023, we terminated Jonathan's Wolk's employment with us, with immediate effect, and Dennis Bertolotti, our President and Chief Executive Officer, temporarily assumed Mr.

Wolk's duties.

The following were our executive officers for the year ended December 31, 2023 and their background and experience.

Name Age Position

Vahaviolos 76 Executive Chairman and Director

Dennis Bertolotti 63 President, Chief Executive Officer and Director

Prajzner 56 Executive Vice President, Chief Financial Officer and Treasurer

Stamatakis 76 Chairman of the Board and Interim President and Chief Executive Officer

Prajzner 57 Senior Executive Vice President and Chief Financial Officer

Gennaro D'Alterio 52 Executive Vice President, Chief Commercial Officer

Keefe 67 Executive Vice President, General Counsel and Secretary

Lange 63 Senior Group Executive Vice President

Wolk 61 Senior Executive Vice President and Chief Operating Officer

Vahaviolos has been our Executive Chairman since August 10, 2017.

Prior to being named Executive Chairman, Dr.

Vahaviolos had been our Chairman and Chief Executive Officer since he founded Mistras in 1978 under the name Physical Acoustics Corporation and was also our President until June 1, 2016.

Prior to founding the Company, Dr.

Vahaviolos worked at AT&T Bell Laboratories.

Vahaviolos received a B.S.

in Electrical Engineering and graduated first in his engineering class from Fairleigh Dickinson University and received Masters Degrees in Electrical Engineering and Philosophy and a Ph.D.

(EE) from the Columbia University School of Engineering.

Vahaviolos’ career in non-destructive testing, he has been elected Fellow of The Institute of Electrical and Electronics Engineers, a member of The American Society for Nondestructive Testing ("ASNT") where he served as its President from 1992-1993 and its Chairman from 1993-1994, a member of Acoustic Emission Working Group ("AEWG") and an honorary life member of the International Committee for Nondestructive Testing.

Additionally, he was the recipient of ASNT’s Gold Medal in 2001 and AEWG’s Gold Medal in 2005.

He was also one of the six founders of NDT Academia International in 2008 headquartered in Brescia, Italy.

Dennis Bertolotti joined Mistras when Conam Inspection Services was acquired in 2003, where Mr.

Bertolotti was a Vice President at the time of the acquisition.

Since then, Mr.

Bertolotti has had increasing levels of responsibility with Mistras, and became our President and Chief Executive Officer and Director, effective August 10, 2017.

From June 1, 2016 to August 9, 2017, Mr.

Bertolotti was our President and Chief Operating Officer.

Bertolotti has been in the NDT business for over 40 years, and previously held ASNT Level III certifications and various American Petroleum Institute, or API, certifications, and received his Associate of Science degree in NDT from Moraine Valley Community College in 1983.

Bertolotti has also received a Bachelor of Science and MBA from Otterbein College.

Prajzner joined Mistras in January 2018 as our Senior Vice President, Chief Financial Officer and Treasurer becoming our Executive Vice President, Chief Financial Officer and Treasurer effective February 27, 2020.

Smith 54 Executive Vice President and President of Services

Manuel "Manny" N.

Stamatakis joined Mistras Board of Directors in 2002, became the Chair of the Governance Committee as well as a member of the Audit Committee and Compensation Committee in 2009 and Lead Director in 2010.

On October 9, 2023, Mr.

Stamatakis became the Chairman of the Board, and on the same day became our Interim President Chief Executive Officer to replace our prior President and Chief Executive Officer, Dennis Bertolotti.

At that same time, Mr.

Stamatakis resigned from all the committees of the Board and as our lead director.

Stamatakis currently chairs the Project Phoenix Steering Committee, an initiative for which he is both the chief architect and driving force.

An accomplished entrepreneur for over 30 years, Mr.

Stamatakis is an executive officer of Capital Management Enterprises, Inc., a financial services and employee benefits consulting firm based in Pennsylvania.

Stamatakis has held multiple board and chairmanship positions over the years, including Chairman of the Delaware River Port Authority, The Drexel College of Medicine, the Pennsylvania Supreme Court Investment Advisory Board, and the Philadelphia Shipyard Development Corporation which was the catalyst to bringing shipbuilding back to the Philadelphia region.

He earned a B.S.

in Industrial Engineering from Pennsylvania State University and received an honorary Doctor of Business Administration from Drexel University.

Prajzner joined Mistras in January 2018 as our Senior Vice President, Chief Financial Officer and Treasurer, was subsequently promoted to Executive Vice President and on March 26, 2023, was promoted to become our Senior Executive Vice President and Chief Financial Officer.

Prior to joining Mistras, Mr.

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in accountancy from Villanova University, his MBA in finance from Temple University and is a certified public accountant.

Gennaro "Jerry" D'Alterio joined Mistras on September 11, 2023, as Executive Vice President and Chief Commercial Officer.

Prior to joining Mistras, Mr.

D'Alterio most recently served as the Vice President of Product Management and Director, Global Business Development at CECO Environmental Corporation’s Fluid Handling & Filtration segment, where he also held the positions of President and Global President.

With over 20 years of proven executive leadership and demonstrated ability to drive both revenue growth and profitability, across a wide range of industries, Mr.

D’Alterio excels at driving best-in-class commercial operating models and transformations while fostering success-oriented, winning cultures.

D'Alterio holds an MBA and a Bachelor of Science in Mechanical Engineering from Villanova University.

He is certified in LEAN enterprise and manufacturing, is member of the Hydraulic Institute and the International Desalination Association, and serves on the Board of the Aquatic Animal Life Support Operators organization.

Keefe joined Mistras in December 2009.

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Keefe worked at International Fight League, a then publicly-traded sports promotion company, from 2007 until 2009, in various executive positions.

From 1990 until 2006,

Keefe served in various legal roles with Lucent Technologies and AT&T, the last four years as Vice President, Corporate and Securities Law and Assistant Secretary.

From 1990 until 2006, Mr.

Keefe served in various legal roles with Lucent Technologies and AT&T, the last four years of which he served as Vice President, Corporate and Securities Law and Assistant Secretary.

Keefe received a BS in Business Administration (Accounting) from Seton Hall University and a J.D.

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Lange received an Associate of Science degree in NDT from the Spartan School of Aeronautics.

Wolk joined Mistras in November 2013 and his active employment ended with the Company on February 8, 2023.

During his employment at Mistras, Mr.

Wolk served as Executive Vice President, Chief Financial Officer and Treasurer until August 10, 2017, when Mr.

Wolk became Senior Executive Vice President and Chief Operating Officer.

Wolk was also acting Chief Financial Officer from August 10, 2017 until the appointment of Mr.

Prajzner on January 5, 2018.

Smith joined Mistras in 2008 and has held various positions, including Vice President of Operations, then became Senior Vice President of Operations in 2018 before becoming Executive Vice President and President of Services on October 1, 2023.

Smith began his career as a non-destructive testing (NDT) technician with CONAM Inspection and Engineering Services before launching his own business, Elite Inspection Services Company.

He owned and operated Elite for 16 years, until Mistras acquired the company in 2008.

During his NDT career, Mr.

Smith held multiple certifications from the American Society for Nondestructive Testing (ASNT).

Our executive officers are appointed by, and serve at the discretion of, our board of directors.

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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-K

Item 1. Business