"MISTRAS Group, Inc. (MG: NYSE), a leading multinational provider of integrated technology-enabled asset protection solutions, announced its financial results for Q1 2023. The company reported revenue of $168.0 million, reflecting a 3.9% increase in the quarter. The revenue increased 5.5% in constant currency, excluding the impact of unfavorable foreign currency exchange. The gross profit margin expanded by 270 basis points compared to the same period last year, reaching 27.4%. The improvement was primarily due to lower healthcare expenses and an improved sales mix in the current year. The selling, general and administrative expenses were $42.8 million, up from $41.9 million in the same period in 2022. The consolidated net loss decreased to $5.0 million, while the adjusted EBITDA increased by 88.1% to $10.4 million.
MISTRAS Group’s CEO, Dennis Bertolotti, said the company is making significant progress capitalizing on its strong market position and innovative new technologies to grow and improve profitability. The CEO stated that the first quarter of 2023 was evidence of this, as the revenue grew 5.5% in constant currency, the gross margin expanded by 270 basis points, and they drove SG&A as a percentage of revenue down by over 40 basis points, resulting in an adjusted EBITDA increase of 88%. He added that the company's overall financial condition also continued to improve, with their bank-defined leverage ratio reduced to just under 3.25X as of quarter end, the lowest level it has been since immediately prior to the Onstream acquisition in December 2018.
Bertolotti also said that the company saw strength in its Energy business, which is benefiting from the rapid growth of its Data Solutions revenues. He was particularly pleased with the growth of Data Solutions, which includes their Flagship OneSuite, PCMS, New Century, and the majority of their Onstream business, along with various other data monitoring services, including Sensoria, as well as their sensor technology. Data Solutions now represent 10.0% of their total consolidated revenue, as compared to 7.7% in Q1 2022.
The Onstream inline inspection testing (ILI) business continued its record 2022 performance into Q1 2023. Onstream generates a considerable proportion of its revenues from Data Solutions, and it serves both the Upstream and Midstream markets. This versatility is helping to generate robust growth and margins, which the company expects to continue in 2023. Bertolotti concluded by stating that the revenue, gross margin, and bottom-line financial results all improved over last year, driven by strength across most of their end markets, including their largest end market, wherein they saw growth fostered by their Data Solutions offerings."
