Mistras Group, Inc. 10-Q

ITEM 1. Financial Statements Mistras Group, Inc. and Subsidiaries Unaudited Condensed Consolidated Balance Sheets ( in thousands, except share and per share data ) September 30, 2025 December 31, 2024 ASSETS (unaudited) Current Assets Cash and cash equivalents $ 27,805 $ 18,317 Accounts receivable, net 174,787 127,281 Inventories 14,795 14,485 Prepaid expenses and other current assets 20,111 12,387 Total current assets 237,498 172,470 Property, plant and equipment, net 87,658 80,892 Intangible assets, net 38,450 39,708 Goodwill 183,725 181,442 Deferred income taxes 5,066 6,267 Other assets 43,859 42,259 Total assets $ 596,256 $ 523,038 LIABILITIES AND EQUITY Current Liabilities Accounts payable $ 18,375 $ 11,128 Accrued expenses and other current liabilities 87,858 85,233 Current portion of long-term debt 13,035 11,591 Current portion of finance lease obligations 6,079 5,317 Income taxes payable 444 1,656 Total current liabilities 125,791 114,925 Long-term debt, net of current portion 189,235 158,056 Obligations under finance leases, net of current portion 14,635 15,162 Deferred income taxes 2,880 1,973 Other long-term liabilities 35,889 34,027 Total liabilities 368,430 324,143 Commitments and contingencies (Note 13) Equity Preferred stock, 10,000,000 shares authorized — — Common stock, $ 0.01 par value, 200,000,000 shares authorized, 31,548,153 and 31,010,375 shares issued and outstanding 480 402 Additional paid-in capital 255,297 250,832 Accumulated earnings (deficit) 2,955 ( 9,984 ) Accumulated other comprehensive loss ( 31,328 ) ( 42,682 ) Total Mistras Group, Inc. stockholders’ equity 227,404 198,568 Non-controlling interests 422 327 Total equity 227,826 198,895 Total liabilities and equity $ 596,256 $ 523,038 The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements. 1 Table of Contents Mistras Group, Inc. and Subsidiaries Unaudited Condensed Consolidated Statements of Income ( in thousands, except per share data ) Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Revenue $ 195,549 $ 182,694 $ 542,569 $ 556,909 Cost of revenue 131,826 128,064 372,851 392,956 Depreciation 5,530 5,725 16,688 17,556 Gross profit 58,193 48,905 153,030 146,397 Selling, general and administrative expenses 33,478 33,200 108,923 105,632 Reorganization and other costs 1,764 2,143 7,802 4,219 Environmental expense 199 — 1,257 — Legal settlement and insurance recoveries, net — ( 868 ) — ( 808 ) Research and engineering 210 241 778 816 Depreciation and amortization 2,161 2,331 6,473 7,170 Income from operations 20,381 11,858 27,797 29,368 Other income — ( 1,479 ) — ( 1,479 ) Interest expense 3,381 4,303 10,944 13,145 Income before provision for income taxes 17,000 9,034 16,853 17,702 Provision for income taxes 3,797 2,618 3,692 3,909 Net income 13,203 6,416 13,161 13,793 Less: net income attributable to noncontrolling interests, net of taxes 95 15 222 28 Net income attributable to Mistras Group, Inc. $ 13,108 $ 6,401 $ 12,939 $ 13,765 Net income per common share: Basic $ 0.42 $ 0.21 $ 0.41 $ 0.45 Diluted $ 0.41 $ 0.20 $ 0.41 $ 0.44 Weighted-average common shares outstanding: Basic 31,543 31,002 31,361 30,895 Diluted 31,880 31,660 31,920 31,513 The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements. 2 Table of Contents Mistras Group, Inc. and Subsidiaries Unaudited Condensed Consolidated Statements of Comprehensive Income (in thousands ) Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Net income $ 13,203 $ 6,416 $ 13,161 $ 13,793 Other comprehensive income: Foreign currency translation adjustments $ ( 2,985 ) $ 4,161 $ 11,227 $ ( 1,684 ) Comprehensive income 10,218 10,577 24,388 12,109 Less: net income attributable to noncontrolling interest 95 15 222 28 Less: Foreign currency translation adjustments attributable to noncontrolling interests — — ( 127 ) — Comprehensive income attributable to Mistras Group, Inc. $ 10,123 $ 10,562 $ 24,293 $ 12,081 The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements. 3 Table of Contents Mistras Group, Inc. and Subsidiaries Unaudited Condensed Consolidated Statements of Equity ( in thousands ) Three months ended Common stock Additional paid-in capital Accumulated earnings (deficit) Accumulated other comprehensive loss Total Mistras Group, Inc. stockholders’ equity Non-controlling interests Shares Amount Total equity Balance at June 30, 2025 31,538 $ 465 $ 253,879 $ ( 10,153 ) $ ( 28,343 ) $ 215,848 $ 327 $ 216,175 Net income — — — 13,108 — 13,108 95 13,203 Other comprehensive loss, net of tax — — — — ( 2,985 ) ( 2,985 ) — ( 2,985 ) Share-based payments — — 1,465 — — 1,465 — 1,465 Net settlement of restricted stock units 10 15 ( 47 ) — — ( 32 ) — ( 32 ) Balance at September 30, 2025 31,548 $ 480 $ 255,297 $ 2,955 $ ( 31,328 ) $ 227,404 $ 422 $ 227,826 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 income (loss), net of tax — — — — 4,161 4,161 — 4,161 Share-based payments — — 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 Nine months ended Common stock Additional paid-in capital Accumulated earnings (deficit) Accumulated other comprehensive loss Total Mistras Group, Inc. stockholders’ equity Non-controlling interests Shares Amount Total equity Balance at December 31, 2024 31,010 $ 402 $ 250,832 $ ( 9,984 ) $ ( 42,682 ) $ 198,568 $ 327 $ 198,895 Net income — — — 12,939 — 12,939 222 13,161 Other comprehensive income (loss), net of tax — — — — 11,354 11,354 ( 127 ) 11,227 Share-based payments — — 6,067 — — 6,067 — 6,067 Net settlement of restricted stock units 538 78 ( 1,602 ) — — ( 1,524 ) — ( 1,524 ) Balance at September 30, 2025 31,548 $ 480 $ 255,297 $ 2,955 $ ( 31,328 ) $ 227,404 $ 422 $ 227,826 Balance at December 31, 2023 30,598 $ 305 $ 247,165 $ ( 28,942 ) $ ( 28,336 ) $ 190,192 $ 311 $ 190,503 Net income — — — 13,765 — 13,765 28 13,793 Other comprehensive income (loss), net of tax — — — — ( 1,684 ) ( 1,684 ) — ( 1,684 ) Share-based payments — — 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 The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements. 4 Table of Contents Mistras Group, Inc. and Subsidiaries Unaudited Condensed Consolidated Statements of Cash Flows (In Thousands) Nine months ended September 30, 2025 2024 Cash flows from operating activities Net income $ 13,161 $ 13,793 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 23,161 24,726 Deferred income taxes 2,287 ( 2,026 ) Share-based compensation expense 6,067 4,256 Bad debt provision for troubled customers, net of recoveries 901 681 Foreign currency loss (gain) 2,420 ( 23 ) Other ( 1,226 ) ( 1,493 ) Changes in operating assets and liabilities, net of effect of acquisitions and dispositions Accounts receivable ( 44,230 ) ( 11,979 ) Inventories ( 5 ) 431 Prepaid expenses and other assets ( 7,158 ) ( 39 ) Accounts payable 6,679 ( 3,583 ) Accrued expenses and other liabilities 171 ( 138 ) Income taxes payable ( 1,385 ) ( 135 ) Net cash provided by operating activities 843 24,471 Cash flows from investing activities Purchase of property, plant and equipment ( 18,534 ) ( 14,315 ) Purchase of intangible assets ( 3,166 ) ( 3,832 ) Proceeds from sale of equipment 2,736 995 Net cash used in investing activities ( 18,964 ) ( 17,152 ) Cash flows from financing activities Repayment of finance lease obligations ( 4,419 ) ( 4,183 ) Repayment of long-term debt ( 8,441 ) ( 6,537 ) Proceeds from revolver 74,000 53,500 Repayment of revolver ( 33,400 ) ( 47,701 ) Taxes paid related to net share settlement of share-based awards ( 1,524 ) ( 1,326 ) Net cash provided by (used in) financing activities 26,216 ( 6,247 ) Effect of exchange rate changes on cash and cash equivalents 1,393 1,642 Net change in cash and cash equivalents 9,488 2,714 Cash and cash equivalents at beginning of period 18,317 17,646 Cash and cash equivalents at end of period $ 27,805 $ 20,360 Supplemental disclosure of cash paid Interest, net $ 10,070 $ 12,595 Income taxes, net of refunds $ 6,874 $ 4,406 Noncash investing and financing Equipment acquired through finance lease obligations $ 4,393 $ 3,642 . The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements. 5 Table of Contents Mistras Group, Inc. and Subsidiaries Notes to Unaudited Condensed Consolidated Financial Statements (tabular dollars and shares in thousands, except per share data) 1. Description of Business and Basis of Presentation Description of Business Mistras Group, Inc., together with its subsidiaries (the "Company"), is a global leader in technology-enabled industrial asset integrity solutions, serving critical industries including oil & gas, aerospace & defense, power & utilities, manufacturing, and civil infrastructure. The Company provides a diversified portfolio of products and services, ranging from advanced non-destructive testing ("NDT") and pipeline inspections to real-time condition monitoring, maintenance planning, and specialized engineering, powered by a proprietary management software suite that centralizes integrity data for predictive analytics and benchmark analysis. With a long-standing track record of innovation and deep industry expertise, the Company helps clients reduce risk, extend asset life, and optimize operational performance. 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. 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. The Company has three operating segments. 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. Software, digital and data services are included in this segment. • International: This segment 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. • Products and Systems: This segment designs, manufactures, sells, installs and services the Company’s asset protection products and systems, including equipment and instrumentation, predominantly in the United States. Recent Developments We continue to monitor the impact tariffs or trade barriers may have on our business, 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 tariffs have not had a material effect on our business or results of operations to date in 2025, but could result in additional costs to us and could impact the import of materials by our customers which are inspected by us. In the third quarter of 2025, the price of crude oil continued to decline due to multiple macroeconomic and geopolitical forces. The decline in crude oil prices has had an adverse impact on field related services that the Company provides to the oil and gas sector, which could continue if prices remain low. 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 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. 6 Table of Contents Mistras Group, Inc. and Subsidiaries Notes to Unaudited Condensed Consolidated Financial Statements (tabular dollars and shares in thousands, except per share data) Certain items included in these statements are based on management’s estimates. Actual results may differ from those estimates. 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 Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Annual Report"). Principles of Consolidation The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of Mistras Group, Inc. as well as its wholly-owned subsidiaries, majority-owned subsidiaries and consolidated variable interest entities (VIE). For consolidated subsidiaries in which the Company’s ownership interest is less than 100%, the non-controlling interests are reported in stockholders’ equity in the accompanying Unaudited Condensed Consolidated Balance Sheets. The non-controlling interests in net results, net of tax, is classified separately in the accompanying Unaudited Condensed Consolidated Statements of Income. All significant intercompany accounts and transactions have been eliminated in consolidation. Change in Accounting Principle Certain amounts in prior periods have been reclassified to conform to the current year presentation. 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 Beginning on January 1, 2025, the Company changed the presentation of certain costs on its Unaudited Condensed Consolidated Statements of Income, which include costs incurred at the Company's operational labs as well as the costs for certain personnel that indirectly support the Company’s delivery of services. 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. This change in presentation had no impact to revenue, income from operations, income before provision for income taxes, provision for income taxes, net income, earnings 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 were adjusted for this change. The impacts of the update to the presentation of certain indirect costs on the Company’s Unaudited Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2024 are reflected below under the "Effect of change" columns . Three Months Ended September 30, 2024 As Previously Reported Effect of change As Adjusted Cost of revenue $ 122,392 $ 5,672 $ 128,064 Gross profit 54,577 ( 5,672 ) 48,905 Selling, general and administrative expenses 38,872 ( 5,672 ) 33,200 Nine Months Ended September 30, 2024 As Previously Reported Effect of change As Adjusted Cost of revenue $ 377,570 $ 15,386 $ 392,956 Gross profit 161,783 ( 15,386 ) 146,397 Selling, general and administrative expenses 121,018 ( 15,386 ) 105,632 7 Table of Contents 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 The Company’s significant accounting policies are disclosed in Note 1– Summary of Significant Accounting Policies and Practices in the 2024 Annual Report. On an ongoing basis, the Company evaluates its estimates and assumptions, including among other things, those related to revenue recognition, long-lived assets, goodwill and acquisitions. Since the date of the 2024 Annual Report, there have been no material changes to the Company’s significant accounting policies. Income Taxes Income taxes are accounted for under the asset and liability method. We recognize deferred tax assets and liabilities at enacted income tax rates for the temporary differences between the financial reporting bases and the tax bases of our assets and liabilities. 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 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, 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 22.3 % and 29.0 % for the three months ended September 30, 2025 and 2024, respectively. The Company’s effective income tax rate was approximately 21.9 % and 22.1 % for the nine months ended September 30, 2025 and 2024, respectively. The effective income tax rate for the three months ended September 30, 2025, was higher than the statutory rate primarily due to the impact of foreign currency losses. 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 an unfavorable discrete item related to stock compensation. The effective income tax rate for the nine months ended September 30, 2025, was higher than the statutory rate primarily due to the impact of foreign currency losses. The effective income tax rate for the nine months ended September 30, 2024, was higher than the statutory rate primarily due to the reversal of valuation allowances. On July 4, 2025, H.R.1, commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), was enacted, which includes a broad range of tax reform provisions. These tax reform provisions include the extension and modification of certain provisions of the Tax Cuts and Jobs Act and is effective for calendar year 2025. The changes include, but are not limited to, immediate expensing of domestic research and development expenditure, the restoration of 100% bonus depreciation, and an EBITDA-based interest expense limitation. These provisions did not have a material impact on the Company’s financial statements for the three or nine months ended September 30, 2025. Recent Accounting Pronouncements 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. The Company does not expect ASU 2023-09 to have a significant impact on its annual consolidated financial statements and related 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. 8 Table of Contents Mistras Group, Inc. and Subsidiaries Notes to Unaudited Condensed Consolidated Financial Statements (tabular dollars and shares in thousands, except per share data) 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 were scheduled to become effective for the Company beginning with the year ended December 31, 2025. However, in response to various legal challenges, the SEC voluntarily stayed the rules on April 4, 2024, and ended its defense of the rules in response to the pending legal challenges. The company continues to monitor any developments regarding these rules and the expected timing for compliance. 2. Revenue The Company derives the majority of its revenue by providing services on a time and materials basis, which are short-term in nature. The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers . Performance Obligations The Company provides highly integrated and bundled inspection services to its customers. The majority of the Company's contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and is, therefore, not distinct. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using the Company's best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is a relative selling price based on price lists. Contract modifications are not routine in the performance of the Company's contracts. Generally, when contracts are modified, the modification is to account for changes in scope to the goods and services that are provided. In most instances, contract modifications are for goods or services that are distinct, and, therefore, are accounted for as a separate contract. The Company's performance obligations are satisfied over time as work progresses or at a point in time. The majority of the Company's revenue is recognized over time as work progresses for the Company's service deliverables, which includes providing testing, inspection and mechanical services to our customers. Revenue is recognized over time, based on time and material incurred to date which best portrays the transfer of control to the customer. The Company also utilizes an available practical expedient that provides for revenue to be recognized in an amount that corresponds directly with the value to the customer of the Company's performance completed to date. Fixed fee arrangements are determined based on expected labor, material, and overhead to be consumed on fulfillment of such services. For these arrangements, revenue is recognized on a cost-to-cost method tracked on an input basis. The majority of the Company's revenue recognized at a point in time is related to product sales when the customer obtains control of the asset, which is generally upon shipment to the customer. Contract costs include labor, material and overhead. The Company expects any significant remaining performance obligations to be satisfied within one year . 9 Table of Contents Mistras Group, Inc. and Subsidiaries Notes to Unaudited Condensed Consolidated Financial Statements (tabular dollars and shares in thousands, except per share data) Contract Estimates The majority of the Company's revenues are short-term in nature. The Company enters into master service agreements ("MSA"s) with customers that specify an overall framework and contract terms. The actual contracting to provide services or furnish products are triggered by a work order, purchase order, or some similar document issued pursuant to a MSA which sets forth the scope of services and/or identifies the products to be provided. From time-to-time, the Company may enter into longer-term contracts, which can range from several months to several years. Revenue on certain contracts is recognized as work is performed based on total costs incurred to date in relation to the total estimated costs for the performance of the contract at completion. This includes contract estimates of costs to be incurred for the performance of the contract. Cost estimation is based upon the professional knowledge and experience of the Company's project managers, engineers and financial professionals. Factors that are considered in estimating the work to be completed include the availability of materials, the effect of any delays in the Company's project performance and the recoverability of any claims. 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, 2025 North America International Products & Systems Corp/Elim Total Oil & Gas $ 97,484 $ 8,125 $ 60 $ — $ 105,669 Aerospace & Defense 17,675 6,395 137 — 24,207 Industrials 15,469 6,773 360 — 22,602 Power Generation & Transmission 10,074 3,714 696 — 14,484 Other Process Industries 4,722 4,014 38 — 8,774 Infrastructure, Research & Engineering 5,285 3,610 1,674 — 10,569 Petrochemical 3,694 15 — — 3,709 Other 6,206 2,875 1,071 ( 4,617 ) 5,535 Total $ 160,609 $ 35,521 $ 4,036 $ ( 4,617 ) $ 195,549 Three Months Ended September 30, 2024 North America International Products & Systems 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 10 Table of Contents Mistras Group, Inc. and Subsidiaries Notes to Unaudited Condensed Consolidated Financial Statements (tabular dollars and shares in thousands, except per share data) Nine Months Ended September 30, 2025 North America International Products & Systems Corp/Elim Total Oil & Gas $ 275,849 $ 28,714 $ 486 $ — $ 305,049 Aerospace & Defense 48,530 19,690 393 — 68,613 Industrials 38,804 20,887 1,085 — 60,776 Power Generation & Transmission 22,618 6,796 1,516 — 30,930 Other Process Industries 17,100 12,930 46 — 30,076 Infrastructure, Research & Engineering 12,447 10,192 3,211 — 25,850 Petrochemical 9,329 126 — — 9,455 Other 12,826 8,477 3,130 ( 12,613 ) 11,820 Total $ 437,503 $ 107,812 $ 9,867 $ ( 12,613 ) $ 542,569 Nine Months Ended September 30, 2024 North America International Products & Systems Corp/Elim Total Oil & Gas $ 289,843 $ 31,841 $ 240 $ — $ 321,924 Aerospace & Defense 48,152 18,092 100 — 66,344 Industrials 33,047 18,480 1,478 — 53,005 Power Generation & Transmission 18,953 6,017 1,569 — 26,539 Other Process Industries 26,132 12,337 155 — 38,624 Infrastructure, Research & Engineering 14,286 7,762 1,901 — 23,949 Petrochemical 11,467 900 — — 12,367 Other 14,708 5,543 4,417 ( 10,511 ) 14,157 Total $ 456,588 $ 100,972 $ 9,860 $ ( 10,511 ) $ 556,909 Revenue per key geographic location was as follows: Three Months Ended September 30, 2025 North America International Products & Systems Corp/Elim Total United States $ 134,481 $ 549 $ 1,294 $ ( 1,352 ) $ 134,972 Other Americas 24,342 95 121 ( 1,539 ) 23,019 Europe 1,301 34,571 826 ( 1,726 ) 34,972 Asia-Pacific 485 306 1,795 — 2,586 Total $ 160,609 $ 35,521 $ 4,036 $ ( 4,617 ) $ 195,549 Three Months Ended September 30, 2024 North America International Products & Systems Corp/Elim Total United States $ 124,194 $ 402 $ 1,658 $ ( 1,457 ) $ 124,797 Other Americas 25,108 2,008 107 ( 577 ) 26,646 Europe 343 29,458 850 ( 1,655 ) 28,996 Asia-Pacific 200 1,794 661 ( 400 ) 2,255 Total $ 149,845 $ 33,662 $ 3,276 $ ( 4,089 ) $ 182,694 Nine Months Ended September 30, 2025 North America International Products & Systems Corp/Elim Total United States $ 377,825 $ 4,797 $ 3,935 $ ( 2,831 ) $ 383,726 Other Americas 54,959 2,941 349 ( 5,170 ) 53,079 Europe 2,946 98,485 2,027 ( 4,111 ) 99,347 Asia-Pacific 1,773 1,589 3,556 ( 501 ) 6,417 Total $ 437,503 $ 107,812 $ 9,867 $ ( 12,613 ) $ 542,569 11 Table of Contents Mistras Group, Inc. and Subsidiaries Notes to Unaudited Condensed Consolidated Financial Statements (tabular dollars and shares in thousands, except per share data) Nine Months Ended September 30, 2024 North America International Products & Systems 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 Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Unaudited Condensed Consolidated Balance Sheets. Amounts are generally billed as work progresses in accordance with agreed-upon contractual terms, generally at periodic intervals (e.g., weekly, bi-weekly or monthly). Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, the Company sometimes receives advances or deposits from its customers before revenue is recognized, resulting in contract liabilities. These assets and liabilities are aggregated on an individual contract basis and reported on the Unaudited Condensed Consolidated Balance Sheets at the end of each reporting period within accounts receivable, net or accrued expenses and other current liabilities. Revenue recognized during the nine months ended September 30, 2025 and 2024 that was included in the contract liability balance at the beginning of the year was $ 6.8 million and $ 6.2 million, respectively. Changes in the contract asset and liability balances during these periods were not materially impacted by any other factors. The Company applies the practical expedient to expense incremental costs incurred related to obtaining a contract when the amortization period of the asset that the Company otherwise would have recognized is one year or less. 3. Share-Based Compensation The Company grants share-based incentive awards to its eligible employees and non-employee directors under its 2016 Long-Term Incentive Plan (the "2016 Plan"). 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 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 884,000 shares were available for future grants as of September 30, 2025. Stock Options 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 of $ 9.06 , the closing price of the Company's common stock on the New York Stock Exchange (the "NYSE") on the grant date of January 6, 2025. These stock options can be exercised any time on or after January 6, 2026, and expire ten years after the grant date of January 6, 2025, subject to certain exceptions as to the vesting and expiration in case of termination of employment, death or disability. On September 8, 2025, Natalia Shuman, President and Chief Executive Officer of the Company, was awarded options to purchase 35,000 shares of the Company’s common stock, pursuant to the approval of the Compensation Committee. The options have an exercise price of $ 9.71 , the closing price of the Company's common stock on the NYSE on the grant date of September 8, 2025. The options can be exercised any time on or after September 8, 2026, and expire ten years after the grant date of September 8, 2025, in each case subject to certain exceptions as to the vesting and expiration in case of termination of employment, death or disability. 12 Table of Contents Mistras Group, Inc. and Subsidiaries Notes to Unaudited Condensed Consolidated Financial Statements (tabular dollars and shares in thousands, except per share data) The following table sets forth a summary of stock option activity, weighted-average exercise prices and options outstanding as of September 30, 2025 (in thousands, except per share amounts and years): Nine Months Ended September 30, 2025 2024 Common Stock Options Weighted Average Exercise Price Common Stock Options Weighted Average Exercise Price Outstanding at beginning of period: 250 $ 5.36 250 $ 5.36 Granted 435 $ 9.14 — $ — Exercised — $ — — $ — Expired or forfeited — $ — — $ — Outstanding at end of period: 685 $ 7.76 250 $ 5.36 The Company recognized $ 0.5 million of share-based compensation expense within Reorganization and other costs on the Company's Unaudited Condensed Consolidated Statements of Income during the three months ended September 30, 2025 related to the stock options that were granted in the first quarter of 2025. The Company recognized $ 1.5 million of share-based compensation expense within Reorganization and other costs on the Company's Unaudited Condensed Consolidated Statements of Income during the nine months ended September 30, 2025 related to the stock options that were granted in the first quarter of 2025. $ 0.5 million of share-based compensation expense related to stock options that were granted in the first quarter of 2025 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 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 received 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): Nine months ended September 30, 2025 2024 Awards issued 72 60 Grant date fair value of awards issued $ 571 $ 549 Restricted Stock Unit Awards On September 8, 2025, Natalia Shuman was awarded 25,000 restricted stock units (“RSUs”) pursuant to the approval of the Compensation Committee. The RSUs vest in three equal annual installments on the first three anniversary dates of the grant date of September 8, 2025. Upon vesting, each RSU is converted into one share of the Company's common stock. The terms of the award are consistent with the standard terms of RSU awards for senior officers of the Company. For the three months ended September 30, 2025 and September 30, 2024, the Company recognized share-based compensation expense within Selling, general and administrative expenses related to RSU awards of $ 0.7 million and $ 1.6 million, respectively. For the nine months ended September 30, 2025 and September 30, 2024, the Company recognized share-based compensation expense within Selling, general and administrative expenses related to RSU awards of $ 2.8 million and $ 3.9 million, respectively. For the nine months ended September 30, 2025, the Company recognized share-based compensation expense within Reorganization and other costs related to RSU awards of $ 0.5 million. As of September 30, 2025, there was $ 6.2 million of unrecognized compensation costs related to RSU awards, which is expected to be recognized over a remaining weighted-average period of 2.4 years. Upon vesting, RSUs 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. 13 Table of Contents Mistras Group, Inc. and Subsidiaries Notes to Unaudited Condensed Consolidated Financial Statements (tabular dollars and shares in thousands, except per share data) A summary of the vesting activity of RSU awards, with the respective fair value of the awards, is as follows: Nine months ended September 30, 2025 2024 Restricted stock awards vested 592 461 Fair value of awards vested $ 5,628 $ 4,184 A summary of the Company's outstanding, non-vested RSUs is as follows: Nine months ended September 30, 2025 2024 Units Weighted Average Grant-Date Fair Value Units Weighted Average Grant-Date Fair Value Outstanding at beginning of period: 1,231 $ 8.41 1,184 $ 8.07 Granted 395 $ 9.36 726 $ 8.52 Vested ( 592 ) $ 9.51 ( 461 ) $ 9.08 Forfeited ( 218 ) $ 8.53 ( 179 ) $ 8.39 Outstanding at end of period: 816 $ 8.72 1,270 $ 8.39 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 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 2025, the Compensation Committee is using the following three performance metrics for PRSU awards. 1. 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. 2. Adjusted EBITDA defined as net income attributable to the Company plus: interest expense, provision for income taxes, depreciation and amortization, share-based compensation expense and certain acquisition related costs (including transaction due diligence costs and adjustments to the fair value of contingent consideration), foreign exchange (gain) loss and, if applicable, certain special items which are noted. 3. Revenue For PRSUs awarded in 2024, the Compensation Committee utilized the same metrics as 2025 PRSUs, but with different performance goals. PRSUs are equity-classified and compensation costs related to PRSUs with performance conditions are initially measured using the fair value of the underlying stock at the date of grant. Compensation costs related to the PRSUs with performance conditions are subsequently adjusted for changes in the expected outcomes of the performance conditions. 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 equivalent rights. 14 Table of Contents Mistras Group, Inc. and Subsidiaries Notes to Unaudited Condensed Consolidated Financial Statements (tabular dollars and shares in thousands, except per share data) A summary of the Company's PRSU activity is as follows: Nine months ended September 30, 2025 2024 Units Weighted Average Grant-Date Fair Value Units Weighted Average Grant-Date Fair Value Outstanding at beginning of period: 125 $ 9.12 60 $ 9.33 Granted 507 $ 10.08 295 $ 8.76 Performance condition adjustments ( 203 ) $ 8.76 ( 187 ) $ 8.76 Released ( 3 ) $ 9.84 — $ — Forfeited ( 22 ) $ 7.21 — $ — Outstanding at end of period: 404 $ 9.91 168 $ 9.18 Performance condition adjustments during the nine months ended September 30, 2025 decreased the PRSUs outstanding at the end of the period by approximately 203,000 units based on forecasted results for 2025 as compared to performance metrics determined by the Compensation Committee. For the three months ended September 30, 2025 and September 30, 2024, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $ 0.3 million and $ 0.0 million, respectively. For the nine months ended September 30, 2025 and September 30, 2024, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $ 0.9 million and $ 0.3 million, respectively. At September 30, 2025, there was $ 2.9 million of total unrecognized compensation costs related to approximately 404,000 non-vested PRSUs, which is expected to be recognized over a remaining weighted-average period of 2.6 years. 4. Earnings per Share Basic earnings per share is computed by dividing net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is computed by dividing net 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. 15 Table of Contents Mistras Group, Inc. and Subsidiaries Notes to Unaudited Condensed Consolidated Financial Statements (tabular dollars and shares in thousands, except per share data) The following table sets forth the computations of basic and diluted earnings per share: Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Basic earnings per share Numerator: Net income attributable to Mistras Group, Inc. $ 13,108 $ 6,401 $ 12,939 $ 13,765 Denominator: Weighted average common shares outstanding 31,543 31,002 31,361 30,895 Basic earnings per share $ 0.42 $ 0.21 $ 0.41 $ 0.45 Diluted earnings per share: Numerator: Net income attributable to Mistras Group, Inc. $ 13,108 $ 6,401 $ 12,939 $ 13,765 Denominator: Weighted average common shares outstanding 31,543 31,002 31,361 30,895 Dilutive effect of stock options outstanding (1) 99 120 102 103 Dilutive effect of restricted stock units outstanding (1) 238 538 457 515 31,880 31,660 31,920 31,513 Diluted earnings per share $ 0.41 $ 0.20 $ 0.41 $ 0.44 _______________ (1) For the three months ended September 30, 2025, 388,000 shares, related to stock options and 165,000 shares, related to RSUs were anti-dilutive and therefore were excluded from the calculation of diluted earnings per share. For the nine months ended September 30, 2025, 379,000 shares, related to stock options and 227,000 shares, related to RSUs were anti-dilutive and therefore were excluded from the calculation of diluted earnings per share. 5. Accounts Receivable, net Accounts receivable consisted of the following (in thousands): September 30, 2025 December 31, 2024 Trade accounts receivable - billed $ 140,186 $ 108,563 Trade accounts receivable - unbilled 37,839 21,331 Allowance for credit losses ( 3,238 ) ( 2,613 ) Accounts receivable, net $ 174,787 $ 127,281 Trade accounts receivables - unbilled are generally billed in the subsequent quarter to their revenue recognition. The Company considers Trade accounts receivables - unbilled as short-term in nature as they are normally converted to Trade accounts receivables - billed within 90 days, thus future changes in economic conditions will not have a significant effect on the credit loss estimate. 16 Table of Contents Mistras Group, Inc. and Subsidiaries Notes to Unaudited Condensed Consolidated Financial Statements (tabular dollars and shares in thousands, except per share data) 6. Inventories Inventories consist of the following (in thousands): September 30, 2025 December 31, 2024 Raw materials and consumable supplies $ 9,841 $ 8,321 Work in progress 1,143 1,018 Finished goods 3,811 5,146 Inventories $ 14,795 $ 14,485 7. Property, Plant and Equipment, net Property, plant and equipment, net consisted of the following: Useful Life (Years) September 30, 2025 December 31, 2024 Land $ 2,469 $ 2,429 Buildings and improvements 30 - 40 22,114 27,973 Office furniture and equipment 5 - 8 16,979 16,768 Machinery and equipment 5 - 7 307,831 274,907 349,393 322,077 Accumulated depreciation and amortization ( 261,735 ) ( 241,185 ) Property, plant and equipment, net $ 87,658 $ 80,892 Depreciation expense for the three months ended September 30, 2025 and 2024 was approximately $ 6.0 million and $ 6.1 million, respectively. Depreciation expense for the nine months ended September 30, 2025 and 2024 was $ 18.1 million and $ 18.9 million, respectively. 8. Goodwill Changes in the carrying amount of goodwill by segment is shown below: North America International Products and Systems Total Balance at December 31, 2024 $ 181,442 $ — $ — $ 181,442 Foreign currency translation 2,283 — — 2,283 Balance at September 30, 2025 $ 183,725 $ — $ — $ 183,725 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. The Company performed a quantitative annual impairment test as of October 1, 2024 and did not identify any changes in circumstances that would indicate the carrying value of goodwill may not be recoverable. Additionally, through September 30, 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. 17 Table of Contents Mistras Group, Inc. and Subsidiaries Notes to Unaudited Condensed Consolidated Financial Statements (tabular dollars and shares in thousands, except per share data) 9. Intangible Assets The gross amount, accumulated amortization and net carrying amount of intangible assets were as follows: September 30, 2025 December 31, 2024 Useful Life (Years) Gross Amount Accumulated Amortization Net Carrying Amount Gross Amount Accumulated Amortization Net Carrying Amount Customer relationships 5 - 18 $ 109,044 $ ( 95,608 ) $ 13,436 $ 107,704 $ ( 92,220 ) $ 15,484 Software/Technology 3 - 15 61,317 ( 36,595 ) 24,722 57,414 ( 33,930 ) 23,484 Covenants not to compete 2 - 5 12,362 ( 12,357 ) 5 12,391 ( 12,371 ) 20 Other 2 - 12 10,188 ( 9,901 ) 287 10,218 ( 9,498 ) 720 Total $ 192,911 $ ( 154,461 ) $ 38,450 $ 187,727 $ ( 148,019 ) $ 39,708 Amortization expense for the three months ended September 30, 2025 and 2024 was approximately $ 1.7 million and $ 1.9 million, respectively. Amortization expense for the nine months ended September 30, 2025 and 2024 was $ 5.1 million and $ 5.8 million, respectively. 10. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following: September 30, 2025 December 31, 2024 Accrued salaries, wages and related employee benefits $ 31,690 $ 27,990 Accrued workers’ compensation and health benefits 3,180 4,898 Deferred revenue 8,148 8,096 Pension accrual 2,245 2,458 Right-of-use liability - Operating 11,384 11,375 Other accrued expenses 31,211 30,416 Total $ 87,858 $ 85,233 11. Long-Term Debt Long-term debt consisted of the following: September 30, 2025 December 31, 2024 Senior credit facility $ 100,250 $ 59,650 Senior secured term loan, net of unamortized debt issuance costs of $ 0.2 million and $ 0.3 million, respectively 99,810 107,545 Other 2,210 2,452 Total debt 202,270 169,647 Less: Current portion ( 13,035 ) ( 11,591 ) Long-term debt, net of current portion $ 189,235 $ 158,056 18 Table of Contents 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 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 $ 99.8 million as of September 30, 2025. The Credit Agreement permits the Company to borrow up to $ 100 million in non-U.S. dollar currencies and to use up to $ 20 million of the credit limit for the issuance of letters of credit. Both the revolving line of credit and the term loan under the Credit Agreement have a maturity date of July 30, 2027. The Credit Agreement has the following key terms, conditions and financial covenants: • 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). ◦ 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. ◦ Total Consolidated Debt means all indebtedness (including subordinated debt) of the Company on a consolidated basis. • 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. subsidiaries. • The Company is required to maintain a Total Consolidated Debt Leverage Ratio of no more than 4.0 to 1.0 at the end of each quarter through June 30, 2023 and stepping down to a maximum permitted ratio of no more than 3.75 to 1.0 for the remainder of the term. • The Company is required to maintain a Fixed Charge Coverage Ratio of 1.25 to 1.0 for the duration of the Credit Agreement, as defined in the Credit Agreement. • 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 September 30, 2025, the Company had borrowings of $ 200.1 million and a total of $ 3.4 million of letters of credit outstanding under the Credit Agreement. The Company has capitalized costs associated with debt modifications of $ 0.6 million as of September 30, 2025, which are included in Other Assets on the Unaudited 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, 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. 19 Table of Contents Mistras Group, Inc. and Subsidiaries Notes to Unaudited Condensed Consolidated Financial Statements (tabular dollars and shares in thousands, except per share data) Other debt 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, 2025, there was an aggregate of approximately $ 2.2 million outstanding, payable at various times through 2030. 12. Fair Value Measurements The Company performs fair value measurements in accordance with the guidance provided by ASC 820, Fair Value Measurements and Disclosures . ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a three level hierarchy that prioritizes the inputs used to measure fair value. Financial instruments not measured at fair value on a recurring basis The Company has evaluated current market conditions and borrower credit quality and has determined that the carrying value of its long-term debt approximates fair value. The fair value of the Company’s notes payable and finance lease obligations approximates their carrying amounts based on anticipated interest rates which management believes would currently be available to the Company for similar issuances of debt. 13. Commitments and Contingencies Legal Proceedings and Government Investigations The Company is periodically involved in lawsuits, investigations and claims. While uncertainties exist with respect to the ultimate resolution of lawsuits, investigations and claims asserted against it, except as stated below, the Company, based on currently available information, does not believe that any currently pending or threatened legal proceeding to which the Company is a party, or is likely to become a party, will have a material adverse effect on its business, results of operations, cash flows or financial condition. The costs incurred by the Company to defend lawsuits, investigations and claims and amounts the Company pays to other parties because of these matters may be covered by insurance in some circumstances. Litigation and Commercial Claims The Company and a subsidiary of the Company, Mistras Arizona Inspection Services LLC (“Mistras Arizona”), are subject to a lawsuit ("the DEQ Proceeding") filed by the State of Arizona and the Arizona Department of Environmental Quality (collectively “DEQ”). The DEQ Proceeding, captioned State of Arizona v. Mistras Group, Inc., Mistras Arizona Inspection Services, LLC and Naiman Phoenix, Ltd., was originally filed on February 27, 2024, in the Superior Court of the State of Arizona for Maricopa County, CV 2024-003866 (the "DEQ Complaint"). The DEQ Complaint alleges various violations of Arizona environmental laws and regulations by Mistras Arizona in connection with the operation by Mistras Arizona of its testing facility in Phoenix, Arizona. The DEQ Complaint seeks, through injunctive relief, the closing of a chromic acid plating line at the testing facility, implementation of a site assessment plan approved by the DEQ, and corrective and remedial action to bring the testing facility into compliance with laws and regulations. In addition, the DEQ is seeking unspecified penalties and costs in connection with the DEQ Proceeding. The Superior Court held a hearing in September 2024 regarding the DEQ’s request for a preliminary injunction. On October 23, 2024, the Superior Court issued a ruling, which declined to issue the preliminary injunction requested by the DEQ, but imposed the following conditions on the Company and Mistras Arizona unless and until modified by the Superior Court or entry of a final judgment: (1) the Company and Mistras Arizona are prohibited from releasing or permitting any release of chromic acid from the facility; (2) within a reasonable time, the Company and Mistras Arizona must complete improvements to the testing facility designed to prevent future discharges of chromium or chromic acid; (3) the Company and Mistras Arizona must notify the DEQ upon completion of the improvement to enable the DEQ to conduct an inspection; and (4) the Company and Mistras Arizona are prohibited from engaging in any chrome plating operations at the testing facility until they notify the DEQ that the improvements have been completed. The DEQ may seek relief if it determines that the improvements are not sufficient to prevent discharges. In April 2025, Mistras Arizona notified the DEQ that the improvements were completed, which the DEQ 20 Table of Contents Mistras Group, Inc. and Subsidiaries Notes to Unaudited Condensed Consolidated Financial Statements (tabular dollars and shares in thousands, except per share data) then inspected. Following the DEQ site visit, Mistras Arizona commenced its chrome plating operations on April 28, 2025. Mistras Arizona has been and intends to continue complying with the Superior Court's ruling. In the meantime, the DEQ Proceeding is ongoing. It is probable that additional remediation costs, as well as fines and penalties will be imposed related to the DEQ Proceeding. However, the Company is unable to estimate the range of loss that it may incur and whether these amounts will be material to the Company. 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. 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. Mistras Arizona provided the EPA with the requested information in July 2025. Pension Related Contingencies Certain of the Company’s subsidiaries had significant reductions in their unionized workers in 2018. The collective bargaining agreements for the employees of these subsidiaries required contributions for these employees to two national multi-employer pension funds. The reduction in employees resulted in one of the Company's subsidiaries incurring a complete withdrawal to one of the pension funds under the Employee Retirement Income Security Act of 1974 ("ERISA"), which was fully satisfied in 2019. 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, 2025 is approximately $ 2.2 million, which was incurred in 2018 and 2019. 14. Segment Disclosure The Company’s three operating segments, which are also the Company's reportable segments, are: • 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. • International: This segment 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. • Products and Systems: This segment designs, manufactures, sells, installs and services the Company’s asset protection products and systems, including equipment and instrumentation, predominantly in the United States. Costs incurred for general corporate services, including finance, legal, and certain other costs that are provided to the segments are reported within Corporate and eliminations. Sales to the International segment from the Products and Systems segment and subsequent sales by the International segment of the same items are recorded and reflected in the operating performance of both segments. 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 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. 21 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, reorganization and environmental costs, legal settlements and recoveries, 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 September 30, 2025 Segment North America International Products and Systems Total Reportable Segments Corporate and eliminations Total Revenue $ 160,609 $ 35,521 $ 4,036 $ 200,166 $ ( 4,617 ) $ 195,549 Selling, general & administrative expenses 20,377 6,856 918 28,151 5,327 33,478 Other Expenses 117,479 24,827 2,067 144,373 ( 2,683 ) 141,690 Income (loss) from operations $ 22,753 $ 3,838 $ 1,051 $ 27,642 $ ( 7,261 ) $ 20,381 For the three months ended September 30, 2024 Segment North America International Products and Systems Total Reportable Segments Corporate and eliminations Total Revenue $ 149,845 $ 33,662 $ 3,276 $ 186,783 $ ( 4,089 ) $ 182,694 Selling, general & administrative expenses 18,056 7,334 831 26,221 6,979 33,200 Other Expenses 114,334 24,550 1,775 140,659 ( 3,023 ) 137,636 Income (loss) from operations $ 17,455 $ 1,778 $ 670 $ 19,903 $ ( 8,045 ) $ 11,858 22 For the nine months ended September 30, 2025 Segment North America International Products and Systems Total Reportable Segments Corporate and eliminations Total Revenue $ 437,503 $ 107,812 $ 9,867 $ 555,182 $ ( 12,613 ) $ 542,569 Selling, general & administrative expenses 62,061 21,923 2,538 86,522 22,401 108,923 Other Expenses 329,416 76,966 5,615 411,997 ( 6,148 ) 405,849 Income (loss) from operations $ 46,026 $ 8,923 $ 1,714 $ 56,663 $ ( 28,866 ) $ 27,797 For the nine months ended September 30, 2024 Segment North America International Products and Systems Total Reportable Segments Corporate and eliminations Total Revenue $ 456,588 $ 100,972 $ 9,860 $ 567,420 $ ( 10,511 ) $ 556,909 Selling, general & administrative expenses 57,289 22,169 2,727 82,185 23,447 105,632 Other Expenses 349,557 74,255 5,654 429,466 ( 7,557 ) 421,909 Income (loss) from operations $ 49,742 $ 4,548 $ 1,479 $ 55,769 $ ( 26,401 ) $ 29,368 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 can be seen on the Unaudited Condensed Consolidated Statement of Income. Products and Systems segment revenue was comprised of approximately $ 0.6 million and $ 0.9 million of sales to the International segment, which were eliminated upon consolidation, for the three months ended September 30, 2025 and September 30, 2024, respectively. Products and Systems segment revenue was comprised of approximately $ 2.4 million and $ 2.8 million of sales to the International segment, which were eliminated upon consolidation, for the nine months ended September 30, 2025 and September 30, 2024, respectively. Intersegment revenue related to sales between other segments was immaterial for each of the three and nine month periods ended September 30, 2025 and September 30, 2024. Selected consolidated financial information by segment for the periods shown was as follows (with intercompany transactions eliminated in Corporate and eliminations): September 30, 2025 December 31, 2024 Intangible assets, net North America $ 28,869 $ 30,869 International 1,116 1,377 Products and Systems 801 946 Corporate and eliminations 7,664 6,516 Total $ 38,450 $ 39,708 23 September 30, 2025 December 31, 2024 Total assets North America $ 441,233 $ 390,052 International 119,385 97,546 Products and Systems 10,260 11,280 Corporate and eliminations 25,378 24,160 Total $ 596,256 $ 523,038 September 30, 2025 December 31, 2024 Long-lived assets North America $ 273,715 $ 268,608 International 26,490 24,822 Products and Systems 882 1,049 Corporate and eliminations 8,746 7,563 Total $ 309,833 $ 302,042 Refer to Note 2 - Revenue , for revenue by geographic area for the three and nine months ended September 30, 2025 and 2024. 24 Table of Contents Mistras Group, Inc. and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations (tabular dollars are in thousands)