Mistras Group Inc

Good day, everyone. My name is Layla, and I will be your conference operator today. At this time, I would like to welcome you to Mistress Group Q3 2025 Earnings Conference 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 Tobolsky, Senior Vice President of Finance and Treasurer.

Good morning, everyone, and welcome to Mistrush Group's third quarter 2025 earnings conference call. I'm joined today by Natalia Schumann, President and Chief Executive Officer, and Ed Preissner, 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 major factors that can cause Mistras' 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 in this conference call will also include certain non-GAAP financial measures that we believe are useful to investors evaluating the company's performance, but that were not prepared in accordance with U.S. GAAP. Reconciliation of these non-U.S. GAAP financial measures to the most directly comparable U.S. GAAP financial measures can be found in the tables contained in yesterday's press release and in the company's related current report on Form 8K. These reports are available at the company's website in the investor section and on the SEC's website. I will now turn the conference over to Natalia Schuman.

Thank you, Tommy. Good morning, everyone. Thank you for joining us today. It is my pleasure to report on our Q3 results and update you on the progress made to date on our strategic initiatives. Let's start with our third quarter results. I am pleased to report that third quarter was highlighted by consolidated revenue growth of 7% versus the prior year. As we planned and communicated early in the year, our goal was to grow revenue in the second half of 2025 year-over-year, and we achieved this in the third quarter. With the improved revenue, we generated an expanded bottom-line result in the third quarter with net income of $13.1 million or earnings per diluted share of $0.41, and our record quarterly adjusted EBITDA of 30.2 million. With regards to the performance within our end market, we have delivered year-over-year revenue growth for Q3 in each of our five largest industry verticals. Energy market, consistent of our oil and gas and power generation industries, led the way, growing 8.1%. Oil and gas was up 6.2 million, or 6.2%, and power generation was up 2.8 million, representing 24.3% growth year-over-year. These results are attributable to strong turnaround activity, PCMS projects, and market conditions in power generations, driven by increased demand for rope access services within our renewable business. Aerospace and defense, our second largest market, was up 10.6% or 2.3 million due to a solid volume gain across the private space and defense industries and in addition to the successful price increase strategies. Our largest customers in this market continue to forecast future growth in their businesses over both the short and long term, as evidenced by their robust backlogs. With its higher-than-company-average margin profile, aerospace and defense is one of our top strategic priorities for both top-line revenue generation and margin improvements. Industrial and infrastructure markets were both up in the third quarter of a prior year. We achieved 15.8% growth, or an increase of 3.1 million in industrials, driven by the increased demand of manufacturing. And we achieved 21.1% growth, or a $1.8 million increase in infrastructure, driven by the increased activity in construction and capital projects. Overall, this diversified revenue growth across our five largest end markets and across geographies, including growth of 5.5% within our international segment, was driven by the broad market demand for our services and demonstrates the success of our differentiated solution and our ability to deliver on customer expectations. Turning to profitability, gross profit increased by $9.3 million, or 19%, with gross margin expanded by 300 basis points to 29.8% over the prior year quarter. The increase in gross margin was due to favorable business mix, closure of unprofitable labs early in the year, and operational efficiencies as a result of a streamlined operational structure and better focus and accountability. Consolidated adjusted EBITDA generated in the third quarter was $30.2 million, resulting in a 15.4% EBITDA margin. This represented an increase of $6.9 million, or 29.6% versus the prior year period, underscoring the improved operating leverage in our business model. Let's now shift to a brief overview of our progress against our three key priorities in our strategic plan, Vision 2030, the first of which is expanding and transforming our current services to a more comprehensive and integrated solutions for our existing and new customers. Our entire leadership team has continued to be keenly focused on meeting with as many customers as possible to hear their voice directly and better understand their perception of mistrust. Our integrated offerings and solutions are finding broader adoption and use cases, as indicated by the strengths of our recent results. And there is more to come as we continue to unlock mistrust value. For example, there is an opportunity for many of our field services customers to utilize our proven PCMS solution, which, as we demonstrated, would drive efficiency and improve their operational execution. This offering illustrates the value of bringing our whole integrated solution to our customers. Since only a very small percentage of our field services customers currently use our data analytics and software solutions, this is an exciting opportunity for us. And in addition to doing more of existing and new customers in our core markets, We are also winning projects with brand-new customers in new and adjacent markets. These efforts form the basis for the second key priority of our strategic plan, diversification, expanding our client base into new industries while protecting our core business. Our recent announcement of wins with Batchelor and Kimball related to data center projects and Bechtel on the Hanford Peat project for the United States Department of Energy are examples of recently awarded long-term construction projects outside of our core energy markets. The third strategic priority of Vision 2030 is focused on building operational leverage by doing what we do today, but better, through efficiency and productivity gains. Beyond these positive sales efforts and in reflection in our growth, I have continued to strengthen Mistrust capabilities and build a scalable leading asset integrity and testing platform as Manny Stamatakis, our executive chairman, started last year to ensure long-term sustainability of our results. During the third quarter, I added a new Chief Human Resources Officer and a new Chief Legal Officer. In addition, we have strengthened our sales and marketing team, continued with commercial discipline, and have further integrated our sales force. We have also reinforced our operational management team throughout 2025 with several new hires who all bring industry expertise and experience and a fresh perspective to our lab operations. These new managers are already demonstrating early wins and contributing to our operating results. Their early success highlights the intensity, urgency, and accountability at each of our locations across all our divisions. Mistrust has the foundation, technical know-how, proven expertise, and people to win. We are advancing our organizational systems, empowering our technicians with digital tools, and investing in the relationships with our customers to drive ROI and shareholders' value. I'm confident that we will execute with continuous improvement, and I plan to be very transparent in assessing and communicating our progress and reporting to you. I will share additional highlights of our Vision 2030 strategy later, but let me now turn the call over to Ed for more details on the financial results.