What changed in this filing

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Item 1. Financial Statements

2025-05-09 compared with 2024-11-04 · 228 added, 301 removed, 476 unchanged (53% of the section changed)

4 unchanged sentences

( in thousands, except share and per share data )

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

ASSETS (unaudited)

Current Assets

39 unchanged sentences

( in thousands, except per share data )

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

2024 2023 2024 2023

Three months ended March 31,

Revenue $ 161,615 $ 184,442

4 unchanged sentences

Reorganization and other costs 3,087 1,558

Goodwill impairment charges — 13,799 — 13,799

Legal settlement and insurance recoveries, net ( 868 ) — ( 808 ) 150

Environmental expense 540 —

Research and engineering 299 343

Depreciation and amortization 2,326 2,447

Acquisition-related expense, net — — 1 5

Income (loss) from operations 11,858 ( 4,682 ) 29,368 ( 2,618 )

Other income ( 1,479 ) — ( 1,479 ) —

(Loss) income from operations ( 1,012 ) 5,553

Interest expense 3,324 4,430

Income (loss) before provision (benefit) for income taxes 9,034 ( 8,849 ) 17,702 ( 14,711 )

Provision for income taxes 2,618 1,489 3,909 229

Net Income (Loss) 6,416 ( 10,338 ) 13,793 ( 14,940 )

net income (loss) attributable to noncontrolling interests, net of taxes 15 ( 40 ) 28 7

Net Income (Loss) attributable to Mistras Group, Inc.

(Loss) income before (benefit) provision for income taxes ( 4,336 ) 1,123

(Benefit) provision for income taxes ( 1,168 ) 119

Net (loss) income ( 3,168 ) 1,004

net income attributable to noncontrolling interests, net of taxes 18 9

Net (loss) income attributable to Mistras Group, Inc.

$ ( 3,186 ) $ 995

Earnings (loss) per common share

Net (loss) income per common share

Basic $ ( 0.10 ) $ 0.03

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(in thousands )

Three months ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Net Income (loss) $ 6,416 $ ( 10,338 ) $ 13,793 $ ( 14,940 )

Three months ended March 31,

Net (loss) income $ ( 3,168 ) $ 1,004

Other comprehensive loss:

Foreign currency translation adjustments $ 2,473 $ ( 4,229 )

Comprehensive Income (loss) 10,577 ( 15,766 ) 12,109 ( 16,013 )

net income (loss) attributable to noncontrolling interest 15 ( 40 ) 28 7

Comprehensive Income (loss) attributable to Mistras Group, Inc $ 10,562 $ ( 15,726 ) $ 12,081 $ ( 16,020 )

Comprehensive Loss ( 695 ) ( 3,225 )

net income attributable to noncontrolling interest 18 9

Foreign currency translation adjustments attributable to noncontrolling interests ( 9 ) —

Comprehensive loss attributable to Mistras Group, Inc.

$ ( 704 ) $ ( 3,234 )

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

5 unchanged sentences

Common stock Additional

paid-in capital Retained

paid-in capital Accumulated

deficit Accumulated

comprehensive income (loss) Total

comprehensive loss Total

Mistras Group,

Stockholders’ Equity Noncontrolling Interest

stockholders’ equity Non-controlling interests

Shares Amount Total Equity

Balance at June 30, 2024 30,977 $ 385 $ 248,524 $ ( 21,578 ) $ ( 34,181 ) $ 193,150 $ 324 $ 193,474

Net income — — — 6,401 — 6,401 15 6,416

Other comprehensive loss, net of tax — — — — 4,161 4,161 — 4,161

Share-based compensation — — 1,492 — — 1,492 — 1,492

Net settlement of restricted stock units 30 — — — — — — —

Balance at September 30, 2024 31,007 $ 385 $ 250,016 $ ( 15,177 ) $ ( 30,020 ) $ 205,204 $ 339 $ 205,543

Balance at June 30, 2023 30,302 $ 302 $ 245,058 $ ( 16,138 ) $ ( 29,035 ) $ 200,187 $ 346 $ 200,533

Balance at December 31, 2024 31,010 $ 402 $ 250,832 $ ( 9,984 ) $ ( 42,682 ) $ 198,568 $ 327 $ 198,895

Net loss — — — ( 3,186 ) ( 3,186 ) 18 ( 3,168 )

Other comprehensive loss, net of tax — — — — 2,482 2,482 ( 9 ) 2,473

Share-based compensation — — 1,017 — — 1,017 — 1,017

Share-based payments — — 2,279 — — 2,279 — 2,279

Net settlement of restricted stock units 316 4 ( 1,482 ) — — ( 1,478 ) — ( 1,478 )

Balance at September 30, 2023 30,353 $ 302 $ 246,075 $ ( 26,436 ) $ ( 34,463 ) $ 185,478 $ 306 $ 185,784

Nine months ended

Common Stock Additional

paid-in capital Retained

(deficit) Accumulated

comprehensive income (loss) Total

Mistras Group,

Stockholders’ Equity Noncontrolling Interest

Shares Amount Total Equity

Balance at March 31, 2025 31,326 $ 406 $ 251,629 $ ( 13,170 ) $ ( 40,200 ) $ 198,665 $ 336 $ 199,001

Balance at December 31, 2023 30,598 $ 305 $ 247,165 $ ( 28,942 ) $ ( 28,336 ) $ 190,192 $ 311 $ 190,503

Net income — — — 995 — 995 9 1,004

Other comprehensive loss, net of tax — — — — ( 1,684 ) ( 1,684 ) — ( 1,684 )

Share-based compensation — — 4,256 — — 4,256 — 4,256

Net settlement of restricted stock units 409 80 ( 1,405 ) — — ( 1,325 ) — ( 1,325 )

Balance at September 30, 2024 31,007 $ 385 $ 250,016 $ ( 15,177 ) $ ( 30,020 ) $ 205,204 $ 339 $ 205,543

Balance at December 31, 2022 29,895 $ 298 $ 243,031 $ ( 11,489 ) $ ( 33,390 ) $ 198,450 $ 299 $ 198,749

Net loss — — — ( 14,947 ) — ( 14,947 ) 7 ( 14,940 )

Other comprehensive loss, net of tax — — — — ( 1,073 ) ( 1,073 ) — ( 1,073 )

Share-based compensation — — 3,985 — — 3,985 — 3,985

Other comprehensive income, net of tax — — — — ( 4,229 ) ( 4,229 ) — ( 4,229 )

Share-based payments — — 1,228 — — 1,228 — 1,228

Net settlement of restricted stock units 313 23 ( 1,064 ) — — ( 1,041 ) — ( 1,041 )

Balance at September 30, 2023 30,353 $ 302 $ 246,075 $ ( 26,436 ) $ ( 34,463 ) $ 185,478 $ 306 $ 185,784

Balance at March 31, 2024 30,911 $ 328 $ 247,329 $ ( 27,947 ) $ ( 32,565 ) $ 187,145 $ 320 $ 187,465

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

3 unchanged sentences

(In Thousands)

Nine months ended September 30,

Three months ended March 31,

Cash flows from operating activities

Net income (loss) $ 13,793 $ ( 14,940 )

Adjustments to reconcile net loss to net cash provided by operating activities

Net (loss) income $ ( 3,168 ) $ 1,004

Adjustments to reconcile net loss to net cash provided by (used in) operating activities

Depreciation and amortization 7,763 8,381

Goodwill impairment charges — 13,799

Deferred income taxes 157 ( 144 )

Share-based compensation expense 2,279 1,228

Change in provision for doubtful accounts 681 346

Foreign currency (gain) loss ( 23 ) 149

Bad debt provision for troubled customers, net of recoveries 360 227

Foreign currency loss (gain) 374 ( 561 )

Other ( 237 ) 15

Changes in operating assets and liabilities

Changes in operating assets and liabilities, net of effect of acquisitions and dispositions

Accounts receivable ( 145 ) ( 8,696 )

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Income taxes payable ( 1,127 ) 80

Payment of contingent consideration liability in excess of acquisition-date fair value — ( 938 )

Net cash provided by operating activities 5,645 604

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Taxes paid related to net share settlement of share-based awards ( 1,479 ) ( 1,557 )

Net cash used in financing activities ( 6,247 ) ( 1,839 )

Net cash (used in) provided by financing activities ( 702 ) 5,127

Effect of exchange rate changes on cash and cash equivalents 690 ( 874 )

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Mistras Group, Inc., together with its 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 with asset-intensive infrastructure 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 towards achieving and maintaining operational excellence.

Backed by an innovative, data-driven asset protection portfolio, proprietary technologies and decades-long legacy of industry leadership, the Company helps customers with asset-intensive infrastructure 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 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 systems to help avoid catastrophic incidents, the Company helps the world at large.

building real-time monitoring equipment to enable safe travel across bridges;

and helping to propel sustainability, 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 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.

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Our segments are as follows:

• North America This segment provides asset protection solutions predominantly 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 safety, structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components.

• North America:

This segment provides asset protection solutions predominantly 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 safety, 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.

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Recent Developments

The Company provides products and services to countries throughout the Middle East, where lawfully permitted, and in accordance with United States regulations.

We continue to monitor the on-going conflicts throughout the Middle East.

These conflicts caused disruptions in the Company's European operations in 2023 with increased costs associated with higher energy costs, amongst others.

These disruptions have largely subsided in 2024 and the Company will continue to monitor market conditions and respond accordingly.

We may experience increased costs associated with tariffs or trade barriers (including recent U.S.

tariffs imposed or threatened to be imposed on China, Canada, Mexico and other countries and any retaliatory actions taken by such countries).

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

Basis of Presentation

The Unaudited Condensed Consolidated Financial Statements contained in this report have been prepared in conformity with U.S.

generally accepted accounting principles ("GAAP") and Securities and Exchange Commission ("SEC") guidance allowing

generally accepted accounting principles ("GAAP") and Securities and Exchange Commission ("SEC") guidance allowing for reduced disclosure for interim periods.

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, 2025 and December 31, 2024.

Mistras Group, Inc.

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

for reduced disclosure for interim periods.

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 statement of the results for the interim periods of the years ending December 31, 2024 and December 31, 2023.

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 2023 Annual Report on Form 10-K ("2023 Annual Report").

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 Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Annual Report").

Principles of Consolidation

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

The results of operations of companies acquired are included from the date of acquisition.

Reclassification

Change in Accounting Principle

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.

The impacts of the reclassifications are shown in the tables below.

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

Change in Classification of Certain Expenses from Selling, General and Administrative Expenses to Cost of Revenue

During the period from January 1, 2025 through March 31, 2025, the Company changed the presentation of certain costs incurred at its operational labs as well as the costs for certain personnel that indirectly support the Company’s delivery of services on its Unaudited Condensed Consolidated Statements of Income (Loss).

This voluntary change in classification of certain overhead and personnel costs, which were determined to be directly related to the Company’s delivery of services, resulted in a decrease in selling, general and administrative expenses and an offsetting increase in cost of revenue.

The Company believes this presentation is preferable as it will provide greater transparency regarding its cost of revenue and better align with how the business is managed.

This change in classification has been applied retrospectively to all periods presented and affects Selling, general and administrative expenses;

Cost of revenue;

and Gross profit on the Company's Unaudited Condensed Consolidated Statements of Income (Loss).

This change in presentation had no impact to Revenue, Income (loss) from operations, Income (loss) before provision (benefit) for income taxes, Provision (benefit) for income taxes, Net income (loss), Earnings (loss) per common share, or other components of equity, net assets or cash flows.

In addition, Selling, general and administrative expenses and Other Expenses information disclosed in Note 14 Segment Disclosure was updated for this change.

The impacts of the update to the presentation of certain indirect costs on the Company’s Condensed Consolidated Financial Statements for the three months ended March 31, 2025 and 2024 are reflected below under the "Effect of change" columns .

Three Months Ended March 31, 2025

Prior Presentation Method Effect of change As Reported

Cost of revenue $ 109,300 $ 5,986 $ 115,286

Gross profit 46,878 ( 5,986 ) 40,892

Selling, general and administrative expenses 41,638 ( 5,986 ) 35,652

Three Months Ended March 31, 2024

As Previously Reported Effect of change As Adjusted

Cost of revenue $ 127,418 $ 4,937 $ 132,355

Gross profit 51,090 ( 4,937 ) 46,153

Selling, general and administrative expenses 41,189 ( 4,937 ) 36,252

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

Significant Accounting Policies

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Any effects of changes in income tax rates or tax laws are included in the provision for income taxes in the period of enactment.

Our net deferred tax assets primarily consist of net operating loss carryforwards, or NOLs.

Our net deferred tax assets primarily consist of net operating loss carry forwards, or NOLs.

A valuation allowance is provided if it is more likely than not that some or all of a deferred income tax asset will not be realized.

A current tax liability or asset is recognized for the estimated taxes payable or refundable on tax returns for the current and prior years.

As of September 30, 2024, management concluded that it is more likely than not that a substantial portion of the Company’s deferred tax assets will be realized.

As of March 31, 2025, management concluded that it is more likely than not that a substantial portion of the Company's deferred tax assets will be realized.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution.

The Company’s effective income tax rate was approximately 29.0 % and ( 16.8 )% for the three months ended September 30, 2024 and 2023, respectively.

The Company’s effective income tax rate was approximately 22.1 % and ( 1.6 )% for the nine months ended September 30, 2024 and 2023, respectively.

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

The effective income tax rate for the three months ended September 30, 2024 was higher than the statutory rate primarily due to the impact of permanent items in the period.

The effective income tax rate for the three months ended September 30, 2023 was lower than the statutory rate due to the impact of permanent tax adjustments related to executive compensation and goodwill impairments.

The effective income tax rate for the nine months ended September 30, 2024 was higher than the statutory rate primarily due to the impact of permanent items.

The effective income tax rate for the nine months ended September 30, 2023 was lower than the statutory rate due primarily to an unfavorable discrete item related to stock compensation.

The Company’s effective income tax rate was approximately 26.9 % and 10.6 % for the three months ended March 31, 2025 and 2024, respectively.

The effective income tax rate benefit for the three months ended March 31, 2025 was higher than the statutory rate primarily due to the impact of a favorable discrete item related to stock compensation.

Recent Accounting Pronouncements

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The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

We do not expect the impact of ASU 2023-07 to be material on our financial statements.

We adopted the provisions of this ASU in the fourth quarter of 2024 and applied the provisions retrospectively to each period presented in the consolidated financial statements.

Adoption of the new standard did not have a material impact on our condensed consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid disclosures.

The new standard is effective for fiscal years beginning after December 15, 2024.

We do not expect the impact of ASU 2023-09 to be material on our financial statements.

We are currently evaluating the impacts this standard will have on our disclosures.

On November 4, 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income (Topic 220):

Expense Disaggregation Disclosures, to require disaggregation of certain expense captions into specified categories in disclosures within the notes of the financial statements.

The standard is effective for fiscal years beginning after December 31, 2026 and early adoption is permitted.

The guidance is required to be applied prospectively and amendments in the ASU may be applied prospectively or retrospectively.

We are currently evaluating the impacts this standard will have on our disclosures.

On March 6, 2024, the SEC adopted the final rule under SEC Release No.

33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors, which will require registrants to provide certain climate-related information in their registration statements and periodic reports.

The required disclosures will include, but are not limited to, specific disclosures about climate-related risks and their actual or likely material impacts on the registrant’s business, strategy, and outlook;

the governance of climate-related risks and relevant risk management processes;

Scope 1 and 2 greenhouse gas (GHG) emissions, if material or included in announced emission targets;

certain climate-related financial statement metrics and related disclosures in a note to the audited financial statements;

and information about climate-related targets and goals.

The rules are effective on

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

a rolling basis for various fiscal years, beginning for the Company with annual reports for the year ending December 31, 2025.

However, in response to various legal challenges, the SEC voluntarily stayed the rules on April 4, 2024, which may impact the ultimate effective date of the rules.

We will continue to monitor any developments on these rules and expected timing for compliance.

The Company derives the majority of its revenue by providing services on a time and material basis, and are short-term in nature.

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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

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

Revenue by Category

The following series of tables present the Company’s disaggregated revenue:

Revenue by industry was as follows:

Three Months Ended September 30, 2024 North America International Products Corp/Elim Total

Oil & Gas $ 90,460 $ 9,040 $ 3 $ — $ 99,503

Aerospace & Defense 16,181 5,663 42 — 21,886

Industrials 12,285 6,749 478 — 19,512

Power Generation & Transmission 8,029 3,081 544 — 11,654

Other Process Industries 7,836 3,900 79 — 11,815

Infrastructure, Research & Engineering 5,189 2,744 797 — 8,730

Petrochemical 3,806 198 — — 4,004

Other 6,059 2,287 1,333 ( 4,089 ) 5,590

Total $ 149,845 $ 33,662 $ 3,276 $ ( 4,089 ) $ 182,694

Three Months Ended September 30, 2023 North America International Products Corp/Elim Total

Oil & Gas $ 94,390 $ 8,827 $ 35 $ — $ 103,252

Aerospace & Defense 14,240 5,778 47 — 20,065

Industrials 10,325 6,018 310 — 16,653

Power Generation & Transmission 7,388 1,653 696 — 9,737

Other Process Industries 6,933 2,864 ( 5 ) — 9,792

Infrastructure, Research & Engineering 6,042 2,383 1,070 — 9,495

Petrochemical 3,313 586 — — 3,899

Other 6,183 2,871 676 ( 3,269 ) 6,461

Total $ 148,814 $ 30,980 $ 2,829 $ ( 3,269 ) $ 179,354

Mistras Group, Inc.

2 unchanged sentences

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

Nine Months Ended September 30, 2024 North America International Products Corp/Elim Total

Revenue by Category

The following series of tables present the Company's disaggregated revenue:

Revenue by industry was as follows:

Three Months Ended March 31, 2025 North America International Products & Systems Corp/Elim Total

Oil & Gas $ 85,731 $ 10,646 $ 187 $ — $ 96,564

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Total $ 128,902 $ 33,214 $ 3,091 $ ( 3,592 ) $ 161,615

Nine Months Ended September 30, 2023 North America International Products Corp/Elim Total

Three Months Ended March 31, 2024 North America International Products & Systems Corp/Elim Total

Oil & Gas $ 103,027 $ 10,066 $ 72 $ — $ 113,165

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Revenue per key geographic location was as follows:

Three Months Ended September 30, 2024 North America International Products Corp/Elim Total

Three Months Ended March 31, 2025 North America International Products & Systems Corp/Elim Total

United States $ 114,333 $ 542 $ 1,373 $ 2,016 $ 118,264

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Total $ 128,902 $ 33,214 $ 3,091 $ ( 3,592 ) $ 161,615

Three Months Ended September 30, 2023 North America International Products Corp/Elim Total

Three Months Ended March 31, 2024 North America International Products & Systems Corp/Elim Total

United States $ 129,458 $ 296 $ 1,600 $ ( 1,515 ) $ 129,839

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

Nine Months Ended September 30, 2024 North America International Products Corp/Elim Total

United States $ 384,522 $ 1,129 $ 4,800 $ ( 3,181 ) $ 387,270

Other Americas 66,829 6,224 960 ( 3,602 ) 70,411

Europe 2,107 89,304 2,081 ( 3,116 ) 90,376

Asia-Pacific 3,130 4,315 2,019 ( 612 ) 8,852

Total $ 456,588 $ 100,972 $ 9,860 $ ( 10,511 ) $ 556,909

Nine Months Ended September 30, 2023 North America International Products Corp/Elim Total

United States $ 369,811 $ 709 $ 4,478 $ ( 1,718 ) $ 373,280

Other Americas 57,218 11,013 673 ( 3,565 ) 65,339

Europe 3,159 75,421 1,275 ( 2,693 ) 77,162

Asia-Pacific 1,107 3,521 3,471 ( 481 ) 7,618

Total $ 431,295 $ 90,664 $ 9,897 $ ( 8,457 ) $ 523,399

Contract Balances

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These assets and liabilities are aggregated on an individual contract basis and reported on the 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, 2024 and 2023 that was included in the contract liability balance at the beginning of such year was $ 6.2 million and $ 5.7 million, respectively, for each period.

Revenue recognized during the three months ended March 31, 2025 and 2024 that was included in the contract liability balance at the beginning of the year was $ 3.3 million and $ 2.9 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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Awards granted under the 2016 Plan may be in the form of stock options, restricted stock units and other forms of share-based incentives, including performance-based restricted stock units, stock appreciation rights and deferred stock rights.

At the annual shareholders meeting on May 14, 2024, the Company’s shareholders approved an amendment to the 2016 Plan, including an increase to the total number of shares that may be issued under the 2016 Plan by 1.3 million, for a total of 6.2 million shares that are authorized for issuance under the 2016 Plan, of which approximately 1,600,000 shares were available for future grants as of September 30, 2024.

At the annual shareholders meeting on May 14, 2024, the Company’s shareholders approved an amendment to increase the total number of shares that may be issued under the 2016 Plan by 1.3 million, for a total of 6.2 million shares that are authorized for issuance under the 2016 Plan, of which approximately 665,000 shares were available for future grants as of March 31, 2025.

Stock Options

On October 11, 2023, Mr.

Stamatakis was granted an award of stock options to purchase 250,000 shares of common stock of the Company, with an exercise price of $ 5.36 , the closing price of the Company's common stock as quoted on the New York Stock Exchange on the grant date (the "Options").

The Options were granted as an inducement for Mr.

Stamatakis to accept the position of Interim President and CEO of the Company and were therefore granted outside the 2016 Plan, as permitted by the rules of the NYSE.

The Options can be exercised any time after the grant date until its expiration date, which is the earlier of 10

On December 31, 2024, the Compensation Committee (the "Compensation Committee") of the Company's Board of Directors approved the grant to Mr.

Stamatakis, of a stock option for the purchase of 375,000 shares of the Company's common stock at an exercise price per share equal to the closing price of the common stock, as reported on the New York Stock Exchange (the "NYSE"), on the grant date of January 6, 2025 (the "Grant Date").

This stock option will vest and become exercisable on the first anniversary of the Grant Date, subject to accelerated vesting and exercisability upon termination of Mr.

Stamatakis's employment due to his death or disability.

In addition, if Mr.

Stamatakis' employment ceases due to his termination by the Company without cause or his resignation with good reason then pursuant to his employment agreement with the Company, the vesting and exercisability of this stock option will also accelerate.

The outside expiration date of this stock option is the tenth anniversary of the Grant Date.

Mistras Group, Inc.

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

years from the grant date or one year following the date Mr.

Stamatakis is no longer serving as an officer, director or in any other capacity of the Company.

The following table sets forth a summary of the stock option activity, weighted-average exercise prices and options outstanding as of September 30, 2024 as follows:

Nine months ended September 30,

The following table sets forth a summary of stock option activity, weighted-average exercise prices and options outstanding as of March 31, 2025 (in thousands, except per share amounts and years):

Three months ended March 31,

Options Weighted

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Expired or forfeited $ — — $ —

Outstanding at end of year:

Outstanding at end of period:

625 $ 7.58 250 $ 5.36

The Company recognized all share-based compensation expense related to the stock options granted in the fourth quarter of 2023 when they were granted and no further unrecognized share-based compensation expense remains as of the end of the current period.

The Company recognized $ 0.5 million of share-based compensation expense within Reorganization and other costs related to the stock options granted in the first quarter of 2025 and $ 1.5 million of share-based compensation expense related to stock options remains unrecognized as of the end of the current period, which is all expected to be recognized during 2025.

Stock Issuances to Non-Employee Directors

As part of its compensation program for non-employee directors, the Company makes semi-annual issuances of fully-vested common stock to its non-employee directors.

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

Nine months ended September 30,

As part of its compensation program for non-employee directors, the Company issues fully-vested common stock to its non-employee directors.

Prior to 2025, the shares of common stock were issued in semi-annual awards during the quarters ended March 31 and September 30.

In 2025, non-employee directors will receive a single award during the quarter ended June 30, 2025.

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

Three months ended March 31,

Awards issued — 31

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Restricted Stock Unit Awards

For the three months ended September 30, 2024 and September 30, 2023, the Company recognized share-based compensation expense related to restricted stock unit awards of $ 1.6 million and $ 0.7 million, respectively.

For the nine months ended September 30, 2024 and 2023, the Company recognized share-based compensation expense related to restricted stock unit awards of $ 3.9 million and $ 2.5 million, respectively.

As of September 30, 2024, there was $ 8.9 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.

For the three months ended March 31, 2025 and March 31, 2024, the Company recognized share-based compensation expense within Selling, general and administrative expenses related to restricted stock unit awards of $ 1.1 million and $ 1.0 million, respectively.

For the three months ended March 31, 2025, the Company recognized share-based compensation expense within Reorganization and other costs related to restricted stock unit awards of $ 0.5 million.

As of March 31, 2025, there was $ 8.8 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 2.5 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:

Nine months ended September 30,

Three months ended March 31,

Restricted stock awards vested 451 364

5 unchanged sentences

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

Nine months ended September 30,

Three months ended March 31,

Units Weighted

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Performance Restricted Stock Units

The Company maintains Performance Restricted Stock Units ("PRSUs") that have been granted to select executives and senior officers.

The ultimate payout of these PRSUs may vary between zero and 200 % of the target award, based on the Company’s performance over a one-year period based on specific metrics approved by the Compensation Committee of the Board of Directors of the Company.

For 2023, the Compensation Committee used the following three performance metrics for PRSUs approved in that year.

The Company maintains Performance Restricted Stock Units ("PRSUs") that have been granted to select executives and senior officers, the ultimate payout of which may vary between zero and 200 % of the target award, based on the Company’s performance over a one-year period based on specific metrics approved by the Compensation Committee of the Board of Directors of the Company.

For 2024, the Compensation Committee used the following three performance metrics for PRSUs awarded in that year.

Free Cash Flow defined as net cash provided by operating activities less purchases of property, plant, equipment and intangible assets and is subject to adjustments approved by the Compensation Committee.

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Compensation cost related to the PRSUs with a market condition is not reversed if the market condition is not achieved, provided the employee requisite service has been rendered.

Earned PRSUs generally vest ratably in four equal annual installments over the four years following completion of the performance period, for a total requisite service period of up to five years , and have no dividend rights.

Mistras Group, Inc.

3 unchanged sentences

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

Nine months ended September 30,

Three months ended March 31,

Units Weighted

4 unchanged sentences

Performance condition adjustments — $ — — $ —

Vested — $ — ( 64 ) $ 5.58

Released ( 3 ) $ 9.84 — $ —

Forfeited ( 9 ) $ 3.68 — $ —

1 unchanged sentence

620 $ 9.92 309 $ 9.00

Performance condition adjustments during the nine months ended September 30, 2024 decreased by approximately 187,000 units based on forecasted results for 2024 as compared to performance metrics determined by the Compensation Committee.

For the three months ended September 30, 2024 and September 30, 2023, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $ 0.0 million and $ 0.1 million, respectively.

For the nine months ended September 30, 2024 and September 30, 2023, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $ 0.3 million and $ 0.6 million, respectively.

At September 30, 2024, there was $ 0.9 million of total unrecognized compensation costs related to approximately 168,000 non-vested PRSUs, which is expected to be recognized over a remaining weighted-average period of 2.4 years.

Earnings (loss) per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares outstanding during the period.

Diluted earnings per share is computed by dividing net income (loss) by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, and (2) the dilutive effect of assumed conversion of equity awards using the treasury stock method.

With respect to the number of weighted-average shares outstanding (denominator), diluted shares reflects:

For the three months ended March 31, 2025 and March 31, 2024, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $ 0.2 million and $ 0.1 million, respectively.

At March 31, 2025, there was $ 5.5 million of total unrecognized compensation costs related to approximately 620,000 non-vested PRSUs, which is expected to be recognized over a remaining weighted-average period of 3.2 years.

(Loss) earnings per Share

Basic (loss) earnings per share is computed by dividing net (loss) income by the weighted-average number of shares outstanding during the period.

Diluted (loss) earnings per share is computed by dividing net (loss) income by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, and (2) the dilutive effect of assumed conversion of equity awards using the treasury stock method.

With respect to the number of weighted-average shares outstanding (denominator), diluted shares reflect:

(i) the exercise of options to acquire common stock to the extent that the options’ exercise prices are less than the average market price of common shares during the period and (ii) the pro forma vesting of restricted stock units.

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

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

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

2024 2023 2024 2023

Basic earnings (loss) per share

Net income (loss) attributable to Mistras Group, Inc.

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

Three months ended March 31,

Basic (loss) earnings per share

Net (loss) income attributable to Mistras Group, Inc.

$ ( 3,186 ) $ 995

Weighted average common shares outstanding 31,095 30,680

Basic earnings (loss) per share $ 0.21 $ ( 0.34 ) $ 0.45 $ ( 0.49 )

Diluted earnings (loss) per share:

Net income (loss) attributable to Mistras Group, Inc.

Basic (loss) earnings per share $ ( 0.10 ) $ 0.03

Diluted (loss) earnings per share:

Net (loss) income attributable to Mistras Group, Inc.

$ ( 3,186 ) $ 995

3 unchanged sentences

31,095 31,356

Diluted earnings (loss) per share $ 0.20 $ ( 0.34 ) $ 0.44 $ ( 0.49 )

_______________

(1) For the three and nine months ended September 30, 2023, 1,508,255 and 926,224 shares related to restricted stock, respectively, were excluded from the calculation of diluted EPS due to the net loss for the period.

Acquisition-Related Expense

In the course of its acquisition activities, the Company incurs costs in connection with due diligence, such as professional fees, and other expenses.

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 nine months ended September 30, 2024 and 2023:

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

Diluted (loss) earnings per share $ ( 0.10 ) $ 0.03

_______________

Due diligence, professional fees and other transaction costs $ — $ — $ 1 $ 5

Adjustments to fair value of contingent consideration liabilities — — — —

Acquisition-related expense, net $ — $ — $ 1 $ 5

The Company's contingent consideration liabilities are included in Accrued expenses and other current liabilities and Other long-term liabilities on the Condensed Consolidated Balance Sheets.

(1) For the three months ended March 31, 2025, 145,000 shares, related to stock options and 808,000 shares, related to restricted stock units were excluded from the calculation of diluted (loss) earnings per share due to the net loss for the period.

Accounts Receivable, net

Accounts receivable consisted of the following:

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

September 30, 2024 December 31, 2023

Accounts receivable consisted of the following (in thousands):

March 31, 2025 December 31, 2024

Trade accounts receivable $ 131,295 $ 129,894

1 unchanged sentence

Accounts receivable, net $ 128,192 $ 127,281

The Company had $ 30.3 million and $ 18.5 million of unbilled revenue accrued as of September 30, 2024 and December 31, 2023, respectively.

The Company had $ 34.4 million and $ 21.3 million of unbilled revenue accrued as of March 31, 2025 and December 31, 2024, respectively.

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

Unbilled revenue is generally billed in the subsequent quarter to their revenue recognition.

The Company considers unbilled receivables as short-term in nature as they are normally converted to trade receivables within 90 days, and thus future changes in economic conditions are unlikely to have a significant effect on the credit loss estimate.

Inventories consisted of the following (in thousands):

September 30, 2024 December 31, 2023

The Company considers unbilled receivables as short-term in nature as they are normally converted to trade receivables within 90 days, thus future changes in economic conditions will not have a significant effect on the credit loss estimate.

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

Inventories consist of the following (in thousands):

March 31, 2025 December 31, 2024

Raw materials $ 5,069 $ 5,344

5 unchanged sentences

Property, plant and equipment, net consisted of the following:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Land $ 2,441 $ 2,429

8 unchanged sentences

Property, plant and equipment, net $ 82,796 $ 80,892

Depreciation expense for the three months ended September 30, 2024 and 2023 was approximately $ 6.1 million and $ 6.6 million, respectively.

Depreciation expense for the nine months ended September 30, 2024 and 2023 was $ 18.9 million and $ 19.0 million, respectively.

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

Depreciation expense for the three months ended March 31, 2025 and 2024 was approximately $ 6.0 million and $ 6.5 million, respectively.

Changes in the carrying amount of goodwill by segment is shown below:

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Foreign currency translation 88 — — 88

Balance at September 30, 2024 $ 185,872 $ — $ — $ 185,872

Balance at March 31, 2025 $ 181,530 $ — $ — $ 181,530

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.

During the third quarter of 2023, a triggering event was identified within the Company's reporting units within the International segment due to decreased gross margin in the current period as a result of inflationary pressures and rising energy costs impacting the International reporting units' operations.

As a result, the Company performed an interim quantitative goodwill impairment test.

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.

Under the income approach, the fair value for each of the reporting units was determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate.

The Company used internal forecasts, updated for recent events, to estimate future cash flows using a terminal value calculation, which incorporates historical and forecasted trends, including an estimate of long-term future growth rates, based on the Company’s most recent views of the long-term outlook for each reporting unit.

The Company's internal forecasts include assumptions about future profitability, including the expected demand for the Company’s goods and services.

Due to the inherent uncertainties involved in making estimates and assumptions, actual results may differ from those assumed in the forecasts.

The Company derived the discount rates using a capital asset pricing model and analyzing published rates for industries relevant to the reporting units to estimate the cost of equity financing.

The Company used discount rates that are commensurate with the risks and uncertainties inherent in the respective businesses and in the Company's internally developed forecasts and which are updated for recent events.

Increased interest rates in the current period increased the discount rate associated with the reporting units which contributed to an unfavorable decrease in the reporting units value.

The market approach valuation was derived from metrics of publicly traded companies or historically completed transactions of comparable businesses.

The selection of comparable businesses was based on the markets in which the reporting units operate, considering risk profiles, size, geography, and diversity of products and services.

Based upon the results of the interim quantitative goodwill impairment test, the Company recorded an impairment charge of $ 13.8 million within the International reporting units.

The impairment was calculated based on the difference between the estimated fair value and the carrying value of the reporting units.

Any significant adverse changes in future periods to the Company’s internal forecasts or the external market conditions, if any, could reasonably be expected to negatively affect its key assumptions and may result in future goodwill impairment charges which could be material.

The Company performed a quantitative annual impairment test as of October 1, 2024 and the Company did not identify any changes in circumstances that would indicate the carrying value of goodwill may not be recoverable.

Additionally, through September 30, 2024, the Company did not identify any changes in circumstances that would indicate the carrying value of goodwill may not be recoverable.

Additionally, through March 31, 2025, 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.

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(Years) Gross

7 unchanged sentences

Total $ 190,199 $ ( 151,012 ) $ 39,187 $ 187,727 $ ( 148,019 ) $ 39,708

Amortization expense for the three months ended September 30, 2024 and 2023 was approximately $ 1.9 million and $ 2.2 million, respectively.

Amortization expense for the nine months ended September 30, 2024 and 2023 was $ 5.8 million and $ 6.5 million, respectively.

Amortization expense for the three months ended March 31, 2025 and 2024 was approximately $ 1.8 million and $ 1.9 million, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Accrued salaries, wages and related employee benefits $ 28,137 $ 27,990

5 unchanged sentences

Total $ 85,485 $ 85,233

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

Long-Term Debt

Long-term debt consisted of the following:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Senior credit facility $ 64,399 $ 59,650

5 unchanged sentences

Long-term debt, net of current portion $ 159,500 $ 158,056

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

Senior Credit Facility

On August 1, 2022, the Company entered into a new credit agreement (the “Credit Agreement”) which provides the Company with a $ 190 million 5-year committed revolving credit facility and a $ 125 million term loan with a balance of $ 109.9 million as of September 30, 2024.

On August 1, 2022, the Company entered into a credit agreement (the “Credit Agreement”), which provides the Company with a $ 190 million 5-year committed revolving credit facility and a $ 125 million term loan with a balance of $ 105.2 million as of March 31, 2025.

The Credit Agreement permits the Company to borrow up to $ 100 million in non-U.S.

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• Borrowings bear interest at Secured Overnight Financing Rate ("SOFR") plus a credit spread adjustment and applicable SOFR margin ranging from 1.25 % to 2.75 %, based upon our Total Consolidated Debt Leverage Ratio (defined below).

under the Prior Credit Agreement, the margin was based upon the LIBOR margin.

◦ Total Consolidated Debt Leverage Ratio means the ratio of (a) Total Consolidated Debt to (b) EBITDA (as defined in the Credit Agreement) for the trailing four consecutive fiscal quarters.

1 unchanged sentence

• The Company has the benefit of the lowest SOFR margin if its Total Consolidated Debt Leverage Ratio is equal to or less than 1.25 to 1.0, and the margin increases as the ratio increases, to the maximum margin if the ratio is greater than 3.75 to 1.0.

The Credit Agreement is secured by liens on substantially all the assets of the Company and certain of its U.S.

subsidiaries and is guaranteed by those U.S.

The Credit Agreement is secured by liens on substantially all the assets of the Company and certain of its U.S subsidiaries and is guaranteed by those U.S.

subsidiaries.

2 unchanged sentences

• The Credit Agreement limits the Company’s ability to, among other things, create liens, make investments, incur more indebtedness, merge or consolidate, make dispositions of property, pay dividends, make distributions to stockholders or repurchase our stock, enter into a new line of business, enter into transactions with affiliates and enter into burdensome agreements.

• The Credit Agreement does not limit the Company’s ability to acquire other businesses or companies except that the acquired business or company must be in the Company's line of business, the Company must be in compliance with the financial covenants on a pro forma basis after taking into account the acquisition, and the Company must provide written notice at least five business days prior to the date of an acquisition of $ 10 million or more.

• Quarterly payments on the term loan of $ 1.56 million through June 30, 2024, then increasing to $ 2.34 million through June 30, 2025, and to $ 3.12 million for each quarterly payment thereafter through maturity.

As of March 31, 2025, the Company had borrowings of $ 169.6 million and a total of $ 3.1 million of letters of credit outstanding under the Credit Agreement.

The Company has capitalized costs associated with debt modifications of $ 0.8 million as of March 31, 2025, which is included in Other Assets on the Condensed Consolidated Balance Sheets and will be amortized into interest expense over the remaining term of the Credit Agreement through July 30, 2027.

As of March 31, 2025, the Company was in compliance with the terms and covenants of the Credit Agreement.

The Company continuously monitors compliance with the covenants contained in the Credit Agreement.

The Company believes that it is probable that the Company will be able to comply with the financial covenants in the Credit Agreement and that sufficient credit remains available under the Credit Agreement to meet the Company's liquidity needs.

However, such matters cannot be predicted with certainty.

Mistras Group, Inc.

2 unchanged sentences

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

the financial covenants on a pro forma basis after taking into account the acquisition, and the Company must provide written notice at least five business days prior to the date of an acquisition of $ 10 million or more.

As of September 30, 2024, the Company had borrowings of $ 186.8 million and a total of $ 3.1 million of letters of credit outstanding under the Credit Agreement.

The Company has capitalized costs associated with debt modifications of $ 0.9 million as of September 30, 2024, which is included in Other assets on the Condensed Consolidated Balance Sheets and will be amortized into interest expense over the remaining term of the Credit Agreement through July 30, 2027.

As of September 30, 2024, the Company was in compliance with the terms of the Credit Agreement.

The Company continuously monitors compliance with the covenants contained in its Credit Agreement.

However, such matters cannot be predicted with certainty.

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

At September 30, 2024, there was an aggregate of approximately $ 2.9 million outstanding, payable at various times through 2030.

At March 31, 2025, there was an aggregate of approximately $ 2.2 million outstanding, payable at various times through 2030.

Monthly payments range from $ 0.7 thousand to $ 16.0 thousand and interest rates range from 0.4 % to 3.5 %.

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It also establishes a three level hierarchy that prioritizes the inputs used to measure fair value.

Financial instruments measured at fair value on a recurring basis

The fair value of contingent consideration liabilities was estimated using a discounted cash flow technique with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820.

The significant inputs in the Level 3 measurement not supported by market activity include the probability assessments of expected future cash flows related to the acquisitions, appropriately discounted considering the uncertainties associated with the obligation, and as calculated in accordance with the terms of the applicable acquisition agreements.

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

Nine months ended September 30,

Beginning balance $ — $ 938

Payments — ( 938 )

Revaluation — —

Ending balance $ — $ —

Financial instruments not measured at fair value on a recurring basis

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

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.

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The DEQ may seek relief if it determines that the improvements are not sufficient to prevent discharges.

The Company intends to comply with the Superior Court's ruling.

In April 2025, Mistras Arizona notified the DEQ of its completed improvements, and the DEQ inspected the improvements.

Following the DEQ site visit, Mistras Arizona commenced its chrome plating operations on April 28, 2025.

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

The Company intends to continue complying with the Superior Court's ruling.

This matter is still in the relatively early stages, including as to factual and expert discovery.

1 unchanged sentence

However, the Company is unable to estimate the range of loss that it may incur.

In addition to the matters covered by the DEQ complaint on or about November 7, 2024, Mistras Arizona received notice from the Maricopa County Department of Air Quality for alleged violations of various regulations regarding air quality.

This matter has been resolved with an immaterial fine paid.

In addition, Mistras Arizona’s operations in Phoenix are located at a leased site within the footprint of the Motorola 52nd Street Superfund Site (the “Motorola Site”).

Mistras Arizona received a General Notice Letter from the US Environmental Protection Agency (the "EPA"), dated May 21, 2024, informing Mistras Arizona that the EPA has identified it as a potentially responsible party in relation to the Motorola Site.

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

On April 29, 2025, the Company received a notice from the EPA requesting information regarding the improvements and other matters related to Phoenix testing facility.

As it relates to this lawsuit, the recorded probable losses remain an estimate, and actual costs arising from this matter could materially differ depending on the actual costs incurred as well as the availability of additional insurance coverage.

Pension Related Contingencies

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The Company has determined that the subsidiary is likely to incur partial or complete withdrawal liability to the other pension fund.

The balance of the estimated total amount of this potential liability as of September 30, 2024 is approximately $ 2.5 million, which were incurred in 2018 and 2019.

The balance of the estimated total amount of this potential liability as of March 31, 2025 is approximately $ 2.5 million, which were incurred in 2018 and 2019.

Segment Disclosure

The Company’s three operating segments are:

The Company’s three operating segments, which are also the Company's reportable segments, are:

• North America:

8 unchanged sentences

Additionally, engineering charges and royalty fees charged to the North America and International segments by the Products and Systems segment are reflected in the operating performance of each segment.

The accounting policies of the reportable segments are the same as those described in Note 1 - Description of Business and Basis of Presentation .

Segment income from operations is one of the primary performance measures used by the chief operating decision maker, to assess the performance of each segment and make resource allocation decisions.

Certain general and administrative costs such as human resources, information technology and training are allocated to the segments.

Segment income from operations excludes interest and other financial charges and income taxes.

The chief operating decision maker ("CODM") reviews financial information at the operating segment level to allocate resources and to assess the operating results and financial performance for each operating segment.

For the year ended December 31, 2024, our CODM was identified as Manny Stamatakis, the Interim Chief Executive Officer, because he has final authority over performance assessment and resource allocation decisions.

Beginning January 1, 2025, our CODM was identified as Natalia Shuman, upon her appointment as our Chief Executive Officer effective January 1, 2025, as she has final authority over performance assessment and resource allocation decisions.

Our segments are based on the type and concentration of customers served, service requirements, methods of distribution and major product lines.

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

Segment income (loss) from operations is the primary performance measure used by the CODM to evaluate segment performance and allocate resources, including considering budget-to-actual variances and prior year-to-actual variances on a monthly basis in accordance with GAAP under ASC 280, Segment Reporting.

Segment income (loss) from operations for each of the Company's reportable segments are comprised of revenue, selling, general & administrative expenses, and "other expenses." "Other expenses" include cost of revenue, bad debt provision for troubled customers, goodwill impairment charges, reorganization and environmental costs, legal settlements and recoveries, acquisition-related expenses, depreciation and amortization and research and engineering.

Corporate and other assets are comprised principally of cash, deposits, property, plant and equipment, domestic deferred taxes, deferred charges and other assets.

Corporate loss from operations consists of administrative charges related to corporate personnel and other charges that cannot be readily identified for allocation to a particular segment.

These items of our operating profit are managed centrally at the corporate level and are excluded from the measure of segment income reviewed by the CODM, as well as the measure of segment performance used for incentive compensation purposes.

The accounting policies of the reportable segments are the same as those described in Note 1 - Description of Business and Basis of Presentation .

Selected consolidated financial information by segment for the periods shown was as follows.

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

For the three months ended March 31, 2025

North America International Products and Systems Total Reportable Segments Corporate and eliminations Total

Revenue $ 128,902 $ 33,214 $ 3,091 $ 165,207 $ ( 3,592 ) $ 161,615

Selling, general & administrative expenses 20,739 7,206 838 28,783 6,869 35,652

Other Expenses 101,648 24,927 1,926 128,501 ( 1,526 ) 126,975

Income (loss) from operations $ 6,515 $ 1,081 $ 327 $ 7,923 $ ( 8,935 ) $ ( 1,012 )

For the three months ended March 31, 2024

North America International Products and Systems Total Reportable Segments Corporate and eliminations Total

Revenue $ 150,349 $ 33,047 $ 3,210 $ 186,606 $ ( 2,164 ) $ 184,442

Selling, general & administrative expenses 20,008 7,400 944 28,352 7,900 36,252

Other Expenses 116,780 24,523 1,952 143,255 ( 618 ) 142,637

Income (loss) from operations $ 13,561 $ 1,124 $ 314 $ 14,999 $ ( 9,446 ) $ 5,553

The tables above only reconcile to income (loss) from operations as our measure of segment profitability and the remainder of the reconciliation to net income (loss) can be seen on the Unaudited Condensed Consolidated Statement of Income (Loss).

Products and Systems segment revenue was comprised of approximately $ 1.0 million and $ 0.9 million of sales to the International segment, which were eliminated upon consolidation, for the three months ended March 31, 2025 and March 31, 2024, respectively.

Intersegment revenue related to sales between other segments was immaterial for each of the three month periods ended March 31, 2025 and March 31, 2024.

Mistras Group, Inc.

4 unchanged sentences

(with intercompany transactions eliminated in Corporate and eliminations):

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

2024 2023 2024 2023

North America $ 149,845 $ 148,814 $ 456,588 $ 431,295

International 33,662 30,980 100,972 90,664

Products and Systems 3,276 2,829 9,860 9,897

Corporate and eliminations ( 4,089 ) ( 3,269 ) ( 10,511 ) ( 8,457 )

$ 182,694 $ 179,354 $ 556,909 $ 523,399

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

2024 2023 2024 2023

North America $ 42,487 $ 44,773 $ 126,813 $ 121,088

International 10,139 8,481 29,667 24,247

Products and Systems 1,933 1,096 5,233 4,773

Corporate and eliminations 18 32 70 73

$ 54,577 $ 54,382 $ 161,783 $ 150,181

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

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

2024 2023 2024 2023

Income (loss) from operations

North America $ 17,455 $ 18,004 $ 49,742 $ 39,719

International 1,778 ( 12,970 ) 4,548 ( 13,031 )

Products and Systems 670 ( 557 ) 1,479 ( 78 )

Corporate and eliminations ( 8,045 ) ( 9,159 ) ( 26,401 ) ( 29,228 )

$ 11,858 $ ( 4,682 ) $ 29,368 $ ( 2,618 )

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

2024 2023 2024 2023

Depreciation and amortization

March 31, 2025 December 31, 2024

Intangible assets, net

North America $ 29,912 $ 30,869

3 unchanged sentences

$ 39,187 $ 39,708

Mistras Group, Inc.

and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

September 30, 2024 December 31, 2023

Intangible assets, net

March 31, 2025 December 31, 2024

North America $ 389,526 $ 390,052

3 unchanged sentences

$ 526,789 $ 523,038

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Long-lived assets

North America $ 268,134 $ 268,608

3 unchanged sentences

$ 303,513 $ 302,042

Refer to Note 2 – Revenue , for revenue by geographic area for the three and nine months ended September 30, 2024 and 2023.

Refer to Note 2 - Revenue , for revenue by geographic area for the three months ended March 31, 2025 and 2024.

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