Mistras Group Inc

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Thank you for joining Mr. Group's conference call for its fourth quarter and fiscal year ended December 31st, 2022. My name is Michelle and I will be your event manager today. Participating on the call from Mr. Group will be Dennis Bertolatti, the company's president and chief executive officer, and Ed Parsner, executive vice president and chief financial officer. I wanted to remind everyone that remarks made during this conference call will include forward-looking statements. The company's actual results could differ materially from those projected. Some of those 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. The discussion on this conference call will also include certain financial measures that were not prepared in accordance with U.S. GAAP, reconciliation of these non-U.S. GAAP financial measures to the most directly compared U.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 8k The reports are also available at the company's website in the investors Section of the SEC's website. I will now turn the conference over to Dennis Bertolatti Okay.

Thank you, Michelle. Good morning, everyone. Thank you for joining us as a result of a solid fourth quarter of we met our most recent top line and exceeded our bottom line guidance for the year. We continue to organically grow revenue despite the adverse effect of foreign currency exchange. While significantly improving profitability, up, mid, and downstream revenue were all up in 2022, driven by the continued improvement at our customers and strong demand for our services. Aerospace and defense revenue was also up, led by strength in commercial aerospace, offset by project delays in defense revenue during the fourth quarter. Gross margin improved to over 30% for the second consecutive quarter, in part due to pricing actions taken earlier in the year, helping to offset the wage inflation that we had been absorbing in additional to lower employee benefit expenses. With these customer pricing actions now in place, we expect some benefit to both reoccurring revenue and gross margin for 23. In the fourth quarter of 2022, we were able to leverage our gross profit margin expansion into 152% increase in operating income through continued cost discipline with selling general and administrative expenses down from the year-ago quarter despite the impact of inflationary costs. Our financial strength was also significantly improved over the prior year. with net debt reduced to 170.8 million from 178.5 at the end of last year. Over the past four years, gross debt has decreased by almost 100 million and our leverage ratio is at the lowest level it has been since immediately prior to the acquisition of OnStream in December of 2018. Additionally, our bank refinancing completed in August of 22 added incremental capacity to our total available credit while also providing more favorable credit terms and further improving our financial flexibility. Our core markets have shown resiliency, and we are seeing a surge in demand for our state-of-the-art data solutions offering. I am pleased to announce that we have surpassed our goal of installing 100 patented Sensoria wind blade monitoring systems in 22, having installed them in over 130 wind turbines during this past year. This significant milestone demonstrates to our commitment of providing exceptional value to our renewable energy customers by enhancing their uptime and safety. The growing demand and our existing customer base present us with numerous opportunities to expand our portfolio to long-term contracts and offer renewable energy customers our one source solution, which takes a comprehensive approach to providing everything they need to keep their onshore and offshore wind turbines operating smoothly. This includes monitoring, inspection, and maintenance service, among other offerings. Moreover, our data solutions offerings which serve our core markets have experienced strong demand with the MISRES digital field execution platform and one suite asset protection software ecosystems leading the charge. Customers who have adopted both applications are now embracing our revolutionary technology as a bundled solution at an ever-increasing number of sites. We are excited to offer our clients yet another solution that maximizes their asset protection and operational efficiency and further supports our brand promise of one source for asset protection solutions. Having implemented OneSuite at over 160 customer sites and issued licenses to more than 1200 individual subscriptions, the adoption of OneSuite and its suite of 90 integrated applications now combined with Mistrust Digital, is setting a new standard in the industry. We are confident that our recent accomplishments signify substantial progress towards achieving our vision of becoming the go-to integrated solution partner. Looking ahead, by continuing to leverage our expertise in technology, innovation, and customer service, our brands continue to remain aligned and dedicated to our customers' evolving requirements. We have kicked off our operational review with Alex Partners, which we will refer to as Project Phoenix. This review is designed to accelerate profitable growth and meaningful adjusted EBITDA improvement opportunities, while also identifying steps to achieve sustained cost savings. We and our board are laser focused on taking steps to position us for success to drive shareholder value. We will provide updates on the status of this project throughout 23 as they become available. Despite the lingering effects that the pandemic and more recently inflation have had on our business, we have learned to do more with less. And we expect both market demand and activity to return to pre-pandemic levels in 23. Given our successes in this otherwise challenging year of 22, We are nevertheless on pace to return to our pre-pandemic growth trajectory this year, while also providing the financial strength and flexibility to achieve consistent, sustainable growth over the long term as well. We are confident we can continue to grow the business, improve our profitability, and positive cash flow through our core business and exciting new product offerings. Ed will provide additional commentary on our results, but I wanted to quickly review the highlights for the quarter by market. In our largest market, we had strong revenue growth in the quarter, led by both down and upstream sectors. Consequently, oil and gas revenues ended the year up 6%, and were the primary driver to our consolidated revenue growth. While higher oil prices should sustain the strength of the upstream market, the downstream market remained somewhat less predictable, primarily due to tighter customer budgets and reductions in the scope of work. we expect midstream to bounce back on the continued strength of on-stream, which had a record year in 2022. We have spoken about the lagging impact of pay rate increases throughout 22, occurring in advance of any related customer pricing increase, and the drag this had on our result. I am pleased to report that we have been successful in negotiating price increases with many of our customers, particularly in the oil and gas market. These increases reflect passing along of the wage inflation we had previously absorbed, and we expect these price increases to benefit our gross margin in 23. Aerospace and defense had a great year, growing 18% compared to last year. In the fourth quarter, we saw this general trend continue where there is an ongoing recovery in commercial aerospace, new opportunities into the private space market, and our own expansion into adjacent services. The defense side was down primarily due to a large contract that experienced a temporary reduction activity during the fourth quarter due to a delay in building materials. We remain optimistic about our growth prospects in the defense sector. There's a large market for many of our services from inspecting wells to cycle time reduction solutions and other services where the defense industry is experiencing a shortage of qualified personnel and contractors. The aerospace and defense industry is positioned to show continued strong growth. Our data solutions revenue increased again this quarter, most notably those related to OneSuite. In particular, our digital offerings are not only making us more connected, they're also continuing to bring in additional work as our users see the benefits of centralizing and digitizing their data. We see this trend continuing as customers look to implement Misrosa's offerings at more of their locations and utilize more of our data solutions capabilities. We continue to demonstrate the viability of our technology, which enables us to provide our customers with valuable data and insights, which proves the value of our technology. To quickly recap, we experienced a strong finish to yet another year of steady progress. We stabilized our two core operations, oil and gas, and aerospace and defense, both of which grew at a combined rate of 8% in 2022. We've made significant strides in our new initiatives and renewable energy and data solutions. And we reduced our leverage to the lowest level in years, freeing capital to invest across the organization and all of the exciting opportunities we see in our end markets. While renewing and improving our financing, under our new credit facility. Net income for the year was 6.5 million and EPS was 21 cents, up 68% and 62% respectively from a year ago. Consequently, given this bottom line profitability improvement, our adjusted EBITDA exceeded our most recent guidance for 22. I will now turn the call over to Ed to give you more detail on our financial results for the fourth quarter and full year 22.