Full Transcript: MISTRAS Group Q2 2026 Earnings Call

MISTRAS Group (NYSE: MG ) released second-quarter financial results and hosted an earnings call on Tuesday. Read the complete transcript below. This content is powered APIs. For comprehensive financial data and transcripts, visit The full earnings call is available at Summary MISTRAS Group, Inc.

2% increase in Q2 2026 revenue to $193 million, marking the fourth consecutive quarter of year-over-year growth, driven by strong performance in aerospace, infrastructure, and power markets. 3% margin, reflecting stable operations and a strategic shift towards higher-value markets. The company increased its full-year guidance to $740-$755 million in revenue and $92-$95 million in adjusted EBITDA, citing strong demand in strategic growth markets despite a stable outlook for the oil and gas sector.

Strategic initiatives under Vision 2030 include expanding into higher-margin markets, enhancing operational efficiency through automation and AI, and focusing on technology solutions like the ART crawler and AE Scout. Operational highlights include significant growth in aerospace and defense, infrastructure, and power sectors, with investments in capacity expansion and technology integration to meet demand and improve service capabilities. Full Transcript Lenius, Operator Good day everyone. My name is Lenius and I will be your conference operator today.

At this time I would like to welcome you to the MISTRAS Group, Inc. Q2 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session.

If you would like to ask a question during this time and if you have joined via the webinar, please use the Raise Hand icon which can be found at the bottom of your webinar application. At this time I would like to turn the call over to Thomas Tobolski, Senior Vice President of Finance and Treasurer. Thomas Tobolski, Senior Vice President of Finance & Treasurer Good morning everyone and welcome to MISTRAS Group's second quarter 2026 earnings conference call. I am joined today by Natalia Shuman, President and Chief Executive Officer, and Edward J.

Prajzner, Senior Executive Vice President and Chief Financial Officer. Before we start, I want to remind everyone that remarks made during this conference call, as well as supplemental information provided on our website, contain certain forward-looking statements and involve risks and uncertainties as described in MISTRAS' SEC filings. The company's factors that can cause actual results to differ are discussed in the company's most recent Annual Report on Form 10-K and other reports filed with the SEC. S.

GAAP. S. S. GAAP financial measures can be found in the tables contained in yesterday's press release and the company's related Current Report on Form 8-K.

These reports are available at the company's website, in the Investors section, and on the SEC's website. I will now turn the conference call over to Natalia Shuman. Natalia Shuman, Chief Executive Officer Good morning everyone and thank you for joining us today. Our second quarter results demonstrate continued progress toward the transformation outlined in Vision 2030 as MISTRAS Group becomes a more diversified, technology-enabled and less cyclical company.

This transformation is increasingly evident in our financial performance and business mix. Growth in aerospace and defense, infrastructure, and power more than offset headwinds in oil and gas, as our mix continued to shift toward higher-margin end markets with deeper customer relationships and greater long-term visibility. 2% to $193 million, marking our fourth consecutive quarter of year-over-year growth. 9 million quarter over quarter and continuing to position the business around higher-growth, higher-value end markets.

Let me start with our performance by end markets, which clearly demonstrates the benefits of a more diversified platform. 2%, compared with the prior year period. This was primarily due to the impact of customer programs exited in 2025, of which the majority impact has already been realized. As we discussed last quarter, certain oil and gas customers have deferred some maintenance and project activity amid elevated commodity prices.

This has affected inspection cadence, turnarounds, and other work. We anticipate that a majority of the deferrals from the first half of 2026 will continue to be pushed further out. After adjusting for the level of turnarounds in 2026 and work that we exited in 2025, our oil and gas revenue was up 1% in the second quarter, and we anticipate this outlook to continue over the second half. Within our resilient oil and gas business, we remain selective in the opportunities we pursue, with a clear focus on higher-margin, higher-return engagements rather than volume.

At the same time, the second quarter decline in oil and gas was more than offset by strong growth in our strategic end markets, which were up 28% in the aggregate. 2% year over year. Our in-lab testing business continues to be particularly strong. Demand is temporarily outpacing capacity due to a healthy backlog from strong customer relationships and the mission-critical nature of the work we perform for some of the sector's most demanding customers.

In response, we are investing meaningfully to expand capacity in our in-lab testing operations, with a particular focus on automation and throughput. Along that line, we announced that we have expanded our in-lab capabilities in both Houston and Los Angeles. In these locations, we added equipment and services that allow customers to manage more complex aerospace manufacturing workflows in a single facility, from manufacturing support and defect characterization to weld repair, non-destructive testing, and final certification. Over time, we believe these investments in facility expansion, automation, and process improvements could nearly triple our in-lab testing capacity.

Importantly, these investments are supported by visible customer demand and will expand our service capabilities while strengthening our role as a trusted supply chain partner. 5% year over year, marking another strong quarter for this key growth market. S. LNG infrastructure and data center construction are creating meaningful opportunities for us, particularly as customers require quality assurance, inspection, commissioning support, and asset integrity expertise across increasingly complex projects.

We are shifting more of our focus and resources toward these larger, more complex engagements because they better align with our technical capabilities, deepen customer relationships, and support higher-value, longer-duration work. A good example is our Woodside LNG mega project, where the scope continues to expand across multiple offerings. The growth we are seeing in infrastructure is another clear example of our Vision 2030 diversification strategy translating into profitable growth opportunities. 4% year over year.

This performance was driven primarily by continued maintenance demand from wind energy customers, in addition to onshore wind development, repowering activity, and ongoing investment in renewable energy infrastructure. Power generation is also benefiting from broader investment in power infrastructure, including demand associated with the rapid expansion of data centers. As customers invest across both traditional and renewable generation assets, we are continuing to diversify our customer base and position the business to capture opportunities across multiple technologies and end markets.

Together, our improved sales mix and operational efficiencies contributed to a 10 basis point expansion in gross margin in the second quarter. Combined with disciplined expense management, this helped drive a record second quarter adjusted EBITDA, demonstrating the operating leverage in our model. Let me now take a few minutes to provide an update on the continued execution of the three key strategic priorities within our strategic plan, Vision 2030.

As a reminder, these priorities are: first, expanding wallet share by delivering more comprehensive, integrated, and innovative solutions for our customers; second, diversifying into attractive growth markets; and third, building greater operational leverage through continued efficiency and productivity improvements. With respect to our first strategic priority, expanding wallet share, our proprietary technology solutions, including the ART crawler, monitoring technologies, and PCMS data offerings, continue to play an increasingly important role in our customer inspection programs.

These solutions improve inspection quality, support better decision-making, and provide actionable insights to customers managing complex asset integrity needs. As customers continue to invest in asset integrity and digital transformation, particularly in power and energy, these capabilities are becoming more deeply embedded in customer workflows and helping strengthen long-term partnerships.

To further accelerate our progress, I'm pleased to report that we have hired an Executive Director of AI, leading our AI adoption and forming an AI Center of Excellence for MISTRAS Group's Data Solutions organization, focused on applying AI to asset protection, mechanical integrity, inspection intelligence, engineering, productivity automation, and customer-facing data solutions. On our second strategic priority, diversifying into attractive growth markets, we continue to make meaningful progress.

During the quarter, we secured notable contract wins across wind energy, commercial diving, and marine infrastructure service lines, underscoring the breadth of our capabilities and the value we can deliver beyond traditional NDT offerings. We also hosted a Technology Day in Houston during the second quarter, giving customers a firsthand look at our capabilities and service offerings. The event was well attended, and the feedback was positive across a range of industries. These events help deepen engagement with existing customers and introduce prospective customers to the broader MISTRAS Group platform.

S. Department of Defense, securing additional project awards that reflect the strengths of our technical expertise and our ability to support mission-critical infrastructure and asset integrity requirements. Together, these wins reinforce our strategic focus on broadening our end market exposure while driving sustainable growth across our platform. For our third strategic priority, building greater operational leverage, we continue to advance automation and digital initiatives across the organization.

These efforts are focused on improving workflow efficiency, working capital management, collections activity, information processing, and productivity in support functions. While these AI and automation initiatives are still in the very early phases, they are helping us create a more scalable operating platform by reducing administrative burden and allowing teams to focus on high-value work. As we continue to build innovative solutions and drive operating leverage, labor availability remains an important consideration. The market for qualified technicians remains tight, and we continue to compete for specialized talent.

We have responded by sharpening our recruiting approach and enhancing technicians' benefit plans in targeted areas where demand is the strongest, with the goal of filling labor gaps while maintaining the quality and technical expertise our customers expect. Overall, our strategic plan continues to gain traction and is increasingly evident in our results. We are strengthening technology and service integration, expanding into higher-growth markets, and improving operational efficiency, all of which are positioning MISTRAS Group for more sustainable long-term value creation.

Before Ed walks us through the financials, I want to briefly highlight a few additional achievements from the quarter that reinforce the progress. First, MISTRAS Group was recently recognized by Markets and Markets as a star in both NDT inspection services and NDT inspection equipment, reflecting the strengths of our asset protection platform and technical capabilities. Second, MISTRAS Group was added to several Russell growth and defensive benchmarks as part of the latest reconstitution of the Russell family of indices, which we believe can broaden visibility and support trading liquidity over time.

And finally, we recently launched AE Scout, a rapid-deployment acoustic emission monitoring solution that complements conventional NDT inspections and strengthens risk-based inspection and integrity management programs. AE Scout gives operators a practical way to collect evidence quickly between traditional inspection intervals, helping them prioritize inspection resources, reduce unnecessary disruption, and make more confident decisions. It also supports our emerging Integrity Management as a Service model as we aim to deliver more comprehensive, innovative solutions for our customers.

In summary, we continue to execute against our long-term transformation under Vision 2030. We are expanding in aerospace and defense, infrastructure, and power, managing oil and gas with discipline, and investing in the highest-return areas of the business to support profitable growth. Now I would like to turn the call over to Ed to walk through a more comprehensive overview of our second quarter results. Edward J.

Prajzner, Senior Executive Vice President and Chief Financial Officer Thank you, Natalia, and good morning, everyone. Let me walk you through our financial performance for the second quarter. 2% supported by strong execution across strategic end markets. 6%.

These improvements were driven mainly by our continued focus on a favorable mix shift towards higher value business and continued operational and overhead cost efficiencies achieved across the business. 7%, compared to the prior-year period. 6%. The year-over-year comparison was affected by a change in presentation adopted in 2026 under which foreign currency gains and losses are reported within other income (expense), net.

Previously, these amounts were included within SG&A. The prior-year amounts were not reclassified as the impact was not material. 6%. This represented a nearly 60% conversion of incremental revenue year over year into operating income in the second quarter.

23. 28 per share, respectively. These significantly improved results — GAAP and non-GAAP net income and EPS all more than doubling — reflect our strong performance, particularly given the investments we are continuing to make to support future growth. 8 million, an increase of 7% over the prior-year quarter and represents our highest ever second quarter adjusted EBITDA to date.

3%, up 30 basis points year over year, reflecting stable operating performance, continued cost discipline, and the benefits of our ongoing mix shift. Turning to cash flow. Both cash flow from operations and free cash flow significantly improved during the second quarter. This progress reflects focused management attention on upfront billing, cycle time, customer escalations, and proactive collection efforts.

9 million compared to the prior-year quarter as a result of higher net income generated and significantly improved working capital dynamics. This progress achieved during the second quarter aligns with our previously mentioned focus on driving sustainable cash generation and we remain intently focused on further improving conversion as we continue to view cash generation as a critical area of focus for the business.

We will continue to dedicate significant time and execution attention to strengthening cash flow performance — that includes accelerating the use of automation, including AI, improving internal processes, and working closely with customers to ensure cash collections better reflect the value and benefits that we deliver.