Companies: 10,796     total market cap: โ‚น13321.341 T
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MISTRAS Group
MG
#7179
Rank
โ‚น50.40 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
โ‚น1,584
Share price
-0.70%
Change (1 day)
96.83%
Change (1 year)
๐Ÿ’ผ Professional services๐Ÿ‘ท Engineering
Categories
  1. MISTRAS Group
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2025 Q2

MISTRAS Group - 10-Q quarterly report FY2025 Q2


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025
 
Or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __ to __
 
Commission file number 001-34481

Mistras Group, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware 22-3341267
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification No.)
   
195 Clarksville Road
Princeton Junction,New Jersey 08550
(Address of principal executive offices) (Zip Code)
 
(609) 716-4000
(Registrant’s telephone number, including area code)
 
 

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueMGNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
ý Yes  o No
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
ý Yes  o No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller
reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
o 
Accelerated filer
x
Non-accelerated filer
o 
Smaller reporting company
☐
 Emerging Growth Company☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes  ý No


As of August 6, 2025, the registrant had 31,538,050 shares of common stock outstanding.


TABLE OF CONTENTS
 
 PAGE
 
  
 
1
    
  
1
    
  
Unaudited Condensed Consolidated Statements of Income (Loss) for the three and six months ended June 30, 2025 and June 30, 2024
2
    
  
3
    
Unaudited Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2025 and June 30, 2024
4
  
Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and June 30, 2024
5
    
  
6
    
 
25
    
 
36
    
 
36
  
 
  
 
37
    
 
37
    
 
37
    
 
37
    
 
37
    
 
37
    
 
38
  
39
 
i
PART I—FINANCIAL INFORMATION
 
ITEM 1.    Financial Statements
 


Mistras Group, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
June 30, 2025December 31, 2024
ASSETS(unaudited) 
Current Assets  
Cash and cash equivalents$19,957 $18,317 
Accounts receivable, net159,823 127,281 
Inventories15,118 14,485 
Prepaid expenses and other current assets18,409 12,387 
Total current assets213,307 172,470 
Property, plant and equipment, net85,909 80,892 
Intangible assets, net39,571 39,708 
Goodwill185,125 181,442 
Deferred income taxes6,693 6,267 
Other assets40,438 42,259 
Total assets$571,043 $523,038 
LIABILITIES AND EQUITY  
Current Liabilities  
Accounts payable$18,238 $11,128 
Accrued expenses and other current liabilities90,482 85,233 
Current portion of long-term debt13,069 11,591 
Current portion of finance lease obligations5,677 5,317 
Income taxes payable1,028 1,656 
Total current liabilities128,494 114,925 
Long-term debt, net of current portion176,345 158,056 
Obligations under finance leases, net of current portion15,894 15,162 
Deferred income taxes2,216 1,973 
Other long-term liabilities31,919 34,027 
Total liabilities354,868 324,143 
Commitments and contingencies (Note 13)
Equity  
Preferred stock, 10,000,000 shares authorized
— — 
Common stock, $0.01 par value, 200,000,000 shares authorized, 31,538,050 and 31,010,375 shares issued and outstanding
465 402 
Additional paid-in capital253,879 250,832 
Accumulated deficit(10,153)(9,984)
Accumulated other comprehensive loss(28,343)(42,682)
Total Mistras Group, Inc. stockholders’ equity215,848 198,568 
Non-controlling interests327 327 
Total equity216,175 198,895 
Total liabilities and equity$571,043 $523,038 
 
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

1
Mistras Group, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Income (Loss)
(in thousands, except per share data)
 Three months ended June 30,Six months ended June 30,
 2025202420252024
  
Revenue$185,405 $189,773 $347,020 $374,215 
Cost of revenue125,739 132,536 241,025 264,892 
Depreciation5,721 5,897 11,158 11,831 
Gross profit53,945 51,340 94,837 97,492 
Selling, general and administrative expenses39,793 36,181 75,445 72,431 
Reorganization and other costs2,951 518 6,038 2,076 
Environmental expense518 — 1,058 — 
Legal settlement and insurance recoveries, net— 60 — 60 
Research and engineering269 231 568 575 
Depreciation and amortization1,986 2,391 4,312 4,839 
Income from operations8,428 11,959 7,416 17,511 
Interest expense4,239 4,413 7,563 8,842 
Income (loss) before provision (benefit) for income taxes4,189 7,546 (147)8,669 
Provision (benefit) for income taxes1,063 1,173 (105)1,292 
Net income (loss) 3,126 6,373 (42)7,377 
Less: net income attributable to noncontrolling interests, net of taxes109 4 127 13 
Net income (loss) attributable to Mistras Group, Inc.$3,017 $6,369 $(169)$7,364 
Net income (loss) per common share  
Basic$0.10 $0.21 $— $0.24 
Diluted$0.10 $0.20 $— $0.23 
Weighted-average common shares outstanding:  
Basic31,439 30,979 31,268 30,842 
Diluted31,693 31,293 31,268 31,358 
 
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

2
Mistras Group, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
 
 Three months ended June 30,Six months ended June 30,
 2025202420252024
Net income (loss) $3,126 $6,373 $(42)$7,377 
Other comprehensive income:
Foreign currency translation adjustments$11,739 $(1,616)$14,212 $(5,845)
Comprehensive income14,865 4,757 14,170 1,532 
Less: net income attributable to noncontrolling interest109 4 127 13 
Less: Foreign currency translation adjustments attributable to noncontrolling interests(118)— (127)— 
Comprehensive income attributable to Mistras Group, Inc.$14,874 $4,753 $14,170 $1,519 
 
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

3
Mistras Group, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Equity
(in thousands)
Three months ended
Common stockAdditional
paid-in capital		Accumulated
deficit		Accumulated
other
comprehensive loss		Total
Mistras Group,
Inc.
stockholders’ equity		Non-controlling interests 
SharesAmountTotal Equity
Balance at March 31, 202531,326 $406 $251,629 $(13,170)$(40,200)$198,665 $336 $199,001 
Net income— — — 3,017 — 3,017 109 3,126 
Other comprehensive income (loss), net of tax— — — — 11,857 11,857 (118)11,739 
Share-based payments— — 2,323 — — 2,323 — 2,323 
Net settlement of restricted stock units212 59 (73)— — (14)— (14)
Balance at June 30, 202531,538 $465 $253,879 $(10,153)$(28,343)$215,848 $327 $216,175 
Balance at March 31, 202430,911 $328 $247,329 $(27,947)$(32,565)$187,145 $320 $187,465 
Net income— — — 6,369 — 6,369 4 6,373 
Other comprehensive loss, net of tax— — — — (1,616)(1,616)— (1,616)
Share-based payments— — 1,536 — — 1,536 — 1,536 
Net settlement of restricted stock units66 57 (341)— — (284)— (284)
Balance at June 30, 202430,977 $385 $248,524 $(21,578)$(34,181)$193,150 $324 $193,474 

Six months ended
Common stockAdditional
paid-in capital		Accumulated
deficit		Accumulated
other
comprehensive loss		Total
Mistras Group,
Inc.
stockholders’ equity		Non-controlling interests 
SharesAmountTotal Equity
Balance at December 31, 202431,010 $402 $250,832 $(9,984)$(42,682)$198,568 $327 $198,895 
Net loss— — — (169)— (169)127 (42)
Other comprehensive income (loss), net of tax— — — — 14,339 14,339 (127)14,212 
Share-based payments— — 4,602 — — 4,602 — 4,602 
Net settlement of restricted stock units528 63 (1,555)— — (1,492)— (1,492)
Balance at June 30, 202531,538 $465 $253,879 $(10,153)$(28,343)$215,848 $327 $216,175 
Balance at December 31, 202330,598 $305 $247,165 $(28,942)$(28,336)$190,192 $311 $190,503 
Net income— — — 7,364 — 7,364 13 7,377 
Other comprehensive loss, net of tax— — — — (5,845)(5,845)— (5,845)
Share-based payments— — 2,764 — — 2,764 — 2,764 
Net settlement of restricted stock units379 80 (1,405)— — (1,325)— (1,325)
Balance at June 30, 202430,977 $385 $248,524 $(21,578)$(34,181)$193,150 $324 $193,474 


The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

4
Mistras Group, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(In Thousands)
 Six months ended June 30,
 20252024
Cash flows from operating activities  
Net (loss) income$(42)$7,377 
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization15,470 16,670 
Deferred income taxes(48)(1,513)
Share-based compensation expense4,602 2,764 
Bad debt provision for troubled customers, net of recoveries553 414 
Foreign currency loss (gain)3,155 (789)
Other(712)(306)
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions
Accounts receivable(28,384)(19,103)
Inventories(206)(88)
Prepaid expenses and other assets(6,306)(6,064)
Accounts payable6,376 (2,920)
Accrued expenses and other liabilities2,325 8,537 
Income taxes payable(402)136 
Net cash (used in) provided by operating activities(3,619)5,115 
Cash flows from investing activities
Purchase of property, plant and equipment(10,002)(9,599)
Purchase of intangible assets(2,292)(2,404)
Proceeds from sale of equipment878 786 
Net cash used in investing activities(11,416)(11,217)
Cash flows from financing activities
Repayment of finance lease obligations(3,027)(2,832)
Repayment of long-term debt(5,171)(3,831)
Proceeds from revolver47,000 33,500 
Repayment of revolver(22,400)(20,250)
Taxes paid related to net share settlement of share-based awards(1,492)(1,326)
Net cash provided by financing activities14,910 5,261 
Effect of exchange rate changes on cash and cash equivalents1,765 372 
Net change in cash and cash equivalents1,640 (469)
Cash and cash equivalents at beginning of period18,317 17,646 
Cash and cash equivalents at end of period$19,957 $17,177 
Supplemental disclosure of cash paid
Interest, net$6,908 $8,349 
Income taxes, net of refunds$6,776 $1,508 
Noncash investing and financing
Equipment acquired through finance lease obligations$3,731 $2,099 
.

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
5
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 leading "one source" multinational provider of integrated technology-enabled asset protection solutions helping to maximize the safety and operational uptime for civilization’s most critical industrial and civil assets.

Backed by an innovative, data-driven asset protection portfolio, proprietary technologies and decades-long legacy of industry leadership, the Company helps customers with asset-intensive infrastructure in the oil and gas, aerospace and defense, industrials, power generation and transmission (including alternative and renewable energy), other process industries and infrastructure, research and engineering and other industries towards achieving and maintaining operational excellence. By supporting these organizations that help fuel our vehicles and power our society; inspecting components that are trusted for commercial, defense, and space craft; building real-time monitoring equipment to enable safe travel across bridges; and helping to propel sustainability, the Company helps the world at large.

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 non-destructive testing ("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 may continue to experience increased costs associated with tariffs or trade barriers, 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. We will continue to monitor market conditions and respond accordingly.

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
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 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 (Loss). 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 (Loss), 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 (Loss). This change in presentation had no impact to Revenue, Income (loss) from operations, Income (loss) before provision (benefit) for income taxes, Provision (benefit) for income taxes, Net income (loss), Earnings (loss) 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 was updated for this change. The impacts of the update to the presentation of certain indirect costs on the Company’s Condensed Consolidated Financial Statements for the three and six month periods ended June 30, 2024 are reflected below under the "Effect of change" columns.
Three Months Ended June 30, 2024
As Previously ReportedEffect of changeAs Adjusted
Cost of revenue$127,760 $4,776 $132,536 
Gross profit56,116 (4,776)51,340 
Selling, general and administrative expenses40,957 (4,776)36,181 

Six Months Ended June 30, 2024
As Previously ReportedEffect of changeAs Adjusted
Cost of revenue$255,179 $9,713 $264,892 
Gross profit107,205 (9,713)97,492 
Selling, general and administrative expenses82,144 (9,713)72,431 


7
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 June 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 25.4% and 15.5% for the three months ended June 30, 2025 and 2024, respectively. The Company’s effective income tax rate was approximately 71.4% and 14.9% for the six months ended June 30, 2025 and 2024, respectively.

The effective income tax rate for the three months ended June 30, 2025, was higher than the statutory rate primarily due to the impact of a favorable discrete item related to stock compensation. The effective income tax rate for the three months ended June 30, 2024, was lower than the statutory rate primarily due to the impact of a favorable discrete item related to stock compensation.

The effective income tax rate for the six months ended June 30, 2025, was higher than the statutory rate primarily due to the impact of a favorable discrete item related to stock compensation. The effective income tax rate for the six months ended June 30, 2024, was lower 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. We are currently evaluating the impact of the OBBBA.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, Segment Reporting (Topic 280) to expand the disclosures about a public entity's reportable segments and address requests from investors for additional, more detailed information about a reportable segment's expenses. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We adopted the provisions of this ASU in the fourth quarter of 2024 and applied the provisions retrospectively to each period presented in the consolidated financial statements. Adoption of the new standard did not have a material impact on our condensed consolidated financial statements.

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. We are currently evaluating the impacts this standard will have on our disclosures.

8
Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
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.

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 are effective on a rolling basis for various fiscal years, beginning for the Company with annual reports for the year ending December 31, 2025. However, in response to various legal challenges, the SEC voluntarily stayed the rules on April 4, 2024, which may impact the ultimate effective date of the rules. We will continue to monitor any developments on these rules and expected timing for compliance.

2.    Revenue

The Company derives the majority of its revenue by providing services on a time and material basis, and 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 entity’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 our 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
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 June 30, 2025North AmericaInternationalProducts & SystemsCorp/ElimTotal
Oil & Gas$92,634 $9,943 $239 $— $102,816 
Aerospace & Defense16,848 7,014 140 — 24,002 
Industrials 11,647 7,597 360 — 19,604 
Power Generation & Transmission9,320 2,097 376 — 11,793 
Other Process Industries5,877 5,172 — — 11,049 
Infrastructure, Research & Engineering3,461 4,020 579 — 8,060 
Petrochemical3,112 1 — — 3,113 
Other5,093 3,233 1,046 (4,404)4,968 
Total$147,992 $39,077 $2,740 $(4,404)$185,405 

Three Months Ended June 30, 2024North AmericaInternationalProducts & SystemsCorp/ElimTotal
Oil & Gas$96,356 $12,735 $165 $— $109,256 
Aerospace & Defense16,596 5,697 47 — 22,340 
Industrials 11,853 5,878 563 — 18,294 
Power Generation & Transmission7,332 1,254 447 — 9,033 
Other Process Industries10,368 4,504 37 — 14,909 
Infrastructure, Research & Engineering5,125 2,813 695 — 8,633 
Petrochemical3,848 171 — — 4,019 
Other4,916 1,212 1,419 (4,258)3,289 
Total$156,394 $34,264 $3,373 $(4,258)$189,773 
10
Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
Six Months Ended June 30, 2025North AmericaInternationalProducts & SystemsCorp/ElimTotal
Oil & Gas$178,365 $20,589 $426 $— $199,380 
Aerospace & Defense30,855 13,295 256 — 44,406 
Industrials23,335 14,114 725 — 38,174 
Power Generation & Transmission12,544 3,082 820 — 16,446 
Other Process Industries12,378 8,916 8 — 21,302 
Infrastructure, Research & Engineering7,162 6,582 1,537 — 15,281 
Petrochemical5,635 111 — — 5,746 
Other6,620 5,602 2,059 (7,996)6,285 
Total$276,894 $72,291 $5,831 $(7,996)$347,020 

Six Months Ended June 30, 2024North AmericaInternationalProducts & SystemsCorp/ElimTotal
Oil & Gas$199,383 $22,801 $237 $— $222,421 
Aerospace & Defense31,971 12,429 58 — 44,458 
Industrials20,762 11,731 1,000 — 33,493 
Power Generation & Transmission10,924 2,936 1,025 — 14,885 
Other Process Industries18,296 8,437 76 — 26,809 
Infrastructure, Research & Engineering9,097 5,018 1,104 — 15,219 
Petrochemical7,661 702 — — 8,363 
Other8,649 3,257 3,083 (6,422)8,567 
Total$306,743 $67,311 $6,583 $(6,422)$374,215 

Revenue per key geographic location was as follows:
Three Months Ended June 30, 2025North AmericaInternationalProducts & SystemsCorp/ElimTotal
United States$129,011 $3,706 $1,268 $(3,495)$130,490 
Other Americas17,202 15 212 (487)16,942 
Europe979 35,132 450 (388)36,173 
Asia-Pacific800 224 810 (34)1,800 
Total$147,992 $39,077 $2,740 $(4,404)$185,405 

Three Months Ended June 30, 2024North AmericaInternationalProducts & SystemsCorp/ElimTotal
United States$130,870 $432 $1,542 $(209)$132,635 
Other Americas24,594 1,921 675 (2,787)24,403 
Europe611 31,183 580 (1,115)31,259 
Asia-Pacific319 728 576 (147)1,476 
Total$156,394 $34,264 $3,373 $(4,258)$189,773 
Six Months Ended June 30, 2025North AmericaInternationalProducts & SystemsCorp/ElimTotal
United States$243,344 $4,248 $2,641 $(1,479)$248,754 
Other Americas30,617 2,846 228 (3,631)30,060 
Europe1,645 63,914 1,201 (2,385)64,375 
Asia-Pacific1,288 1,283 1,761 (501)3,831 
Total$276,894 $72,291 $5,831 $(7,996)$347,020 
11
Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)
Six Months Ended June 30, 2024North AmericaInternationalProducts & SystemsCorp/ElimTotal
United States$260,328 $728 $3,142 $(1,724)$262,474 
Other Americas41,721 4,216 852 (3,027)43,762 
Europe1,764 59,846 1,231 (1,461)61,380 
Asia-Pacific2,930 2,521 1,358 (210)6,599 
Total$306,743 $67,311 $6,583 $(6,422)$374,215 

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 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 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 six months ended June 30, 2025 and 2024 that was included in the contract liability balance at the beginning of the year was $5.3 million and $4.8 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 823,000 shares were available for future grants as of June 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 per share equal to the closing price of the common stock, as reported on the New York Stock Exchange (the "NYSE"), on the grant date of January 6, 2025 (the "Grant Date"). This stock option will vest and become exercisable on the first anniversary of the Grant Date, subject to accelerated vesting and exercisability upon termination of Mr. Stamatakis's employment due to his death or disability. In addition, if Mr. Stamatakis' employment ceases due to his termination by the Company without cause or his resignation with good reason, then pursuant to his employment agreement with the Company, the vesting and exercisability of this stock option will accelerate. The outside expiration date of this stock option is the tenth anniversary of the Grant Date.
12
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 June 30, 2025 (in thousands, except per share amounts and years):

 Six Months Ended June 30,
 20252024
 Common
Stock
Options		Weighted
Average
Exercise
Price		Common Stock OptionsWeighted Average Exercise Price
Outstanding at beginning of period:250 $5.36 250 $5.36 
Granted375 $9.06 — $— 
Exercised— $— — $— 
Expired or forfeited— $— — $— 
Outstanding at end of period:625 $7.58 250 $5.36 

The Company recognized $1.0 million of share-based compensation expense within Reorganization and other costs during the six months ended June 30, 2025 related to the stock options that were granted in the first quarter of 2025. $1.0 million of share-based compensation expense related to stock options 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):
 Six months ended June 30,
 20252024
Awards issued72 31 
Grant date fair value of awards issued$571 $274 
 
Restricted Stock Unit Awards
 
For the three months ended June 30, 2025 and June 30, 2024, the Company recognized share-based compensation expense within Selling, general and administrative expenses related to restricted stock unit awards of $0.9 million and $1.3 million, respectively. For the six months ended June 30, 2025 and June 30, 2024, the Company recognized share-based compensation expense within Selling, general and administrative expenses related to restricted stock unit awards of $2.1 million and $2.3 million, respectively. For the three months ended June 30, 2025, the Company recognized share-based compensation expense within Reorganization and other costs related to restricted stock unit awards of $0.5 million. As of June 30, 2025, there was $7.1 million of unrecognized compensation costs related to restricted stock unit awards, which is expected to be recognized over a remaining weighted-average period of 2.6 years. Upon vesting, restricted stock units 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.

A summary of the vesting activity of restricted stock unit awards, with the respective fair value of the awards, is as follows:

 Six months ended June 30,
 20252024
Restricted stock awards vested589 461 
Fair value of awards vested$5,596 $4,184 

13
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 outstanding, non-vested restricted share units is as follows:

 Six months ended June 30,
 20252024
 UnitsWeighted
Average
Grant-Date
Fair Value		UnitsWeighted
Average
Grant-Date
Fair Value
Outstanding at beginning of period:1,231 $8.41 1,184 $8.07 
Granted350 $9.32 726 $8.52 
Vested(589)$9.51 (461)$9.08 
Forfeited(141)$8.55 (56)$8.49 
Outstanding at end of period:851 $8.65 1,393 $8.38 

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 2024, the Compensation Committee used the following three performance metrics for PRSUs awarded in that year.

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 2025, the Compensation Committee utilized the same metrics as 2024 PRSUs, but with revised 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
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:

 Six months ended June 30,
20252024
 UnitsWeighted
Average
Grant-Date
Fair Value		UnitsWeighted
Average
Grant-Date
Fair Value
Outstanding at beginning of period:125 $9.12 60 $9.33 
Granted507 $10.08 295 $8.76 
Performance condition adjustments(127)$8.76 — $— 
Released(3)$9.84 — $— 
Forfeited(9)$3.68 — $— 
Outstanding at end of period:493 $9.93 355 $9.00 

For the three months ended June 30, 2025 and June 30, 2024, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $0.4 million and $0.3 million, respectively. For the six months ended June 30, 2025 and June 30, 2024, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $0.6 million and $0.3 million, respectively. At June 30, 2025, there was $3.9 million of total unrecognized compensation costs related to approximately 493,000 non-vested PRSUs, which is expected to be recognized over a remaining weighted-average period of 2.9 years.

4.    Earnings (loss) per Share
 
Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) 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
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 (loss) per share:
 
 Three months ended June 30,Six months ended June 30,
 2025202420252024
Basic earnings (loss) per share
Numerator:
Net income (loss) attributable to Mistras Group, Inc.$3,017 $6,369 $(169)$7,364 
Denominator:
Weighted average common shares outstanding31,439 30,979 31,268 30,842 
Basic earnings (loss) per share$0.10 $0.21 $— $0.24 
Diluted earnings (loss) per share:
Numerator:
Net income (loss) attributable to Mistras Group, Inc.$3,017 $6,369 $(169)$7,364 
Denominator:
Weighted average common shares outstanding31,439 30,979 31,268 30,842 
Dilutive effect of stock options outstanding (1)
91 97 — 93 
Dilutive effect of restricted stock units outstanding (1)
163 217 — 423 
31,693 31,293 31,268 31,358 
Diluted earnings (loss) per share$0.10 $0.20 $— $0.23 
_______________
(1) For the three months ended June 30, 2025, 375,000 shares, related to stock options and 877,000 shares, related to restricted stock units were anti-dilutive and therefore were excluded from the calculation of diluted earnings (loss) per share. For the six months ended June 30, 2025, 106,000 shares, related to stock options and 867,000 shares, related to restricted stock units were excluded from the calculation of diluted earnings (loss) per share due to the net loss for the period.


5.    Accounts Receivable, net
 
Accounts receivable consisted of the following (in thousands):
 
 June 30, 2025December 31, 2024
Trade accounts receivable$162,727 $129,894 
Allowance for credit losses(2,904)(2,613)
Accounts receivable, net$159,823 $127,281 
 
The Company had $41.0 million and $21.3 million of unbilled revenue accrued as of June 30, 2025 and December 31, 2024, respectively. These amounts are included in the trade accounts receivable balances above. Unbilled revenue is generally billed in the subsequent quarter to their revenue recognition. The Company considers unbilled receivables as short-term in nature as they are normally converted to trade receivables within 90 days, thus future changes in economic conditions will not have a significant effect on the credit loss estimate.








16
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):
 June 30, 2025December 31, 2024
Raw materials and consumable supplies$9,771 $8,321 
Work in progress1,036 1,018 
Finished goods4,311 5,146 
Inventories$15,118 $14,485 
 
7.    Property, Plant and Equipment, net
 
Property, plant and equipment, net consisted of the following:
 
Useful Life
(Years)
June 30, 2025December 31, 2024
Land $2,470 $2,429 
Buildings and improvements
30-40
23,118 27,973 
Office furniture and equipment
5-8
16,419 16,768 
Machinery and equipment
5-7
302,803 274,907 
  344,810 322,077 
Accumulated depreciation and amortization (258,901)(241,185)
Property, plant and equipment, net $85,909 $80,892 
 
Depreciation expense for the three months ended June 30, 2025 and 2024 was approximately $6.1 million and $6.4 million, respectively.

Depreciation expense for the six months ended June 30, 2025 and 2024 was $12.1 million and $12.8 million, respectively.

8.    Goodwill
 
Changes in the carrying amount of goodwill by segment is shown below:
 North AmericaInternationalProducts and SystemsTotal
Balance at December 31, 2024$181,442 $— $— $181,442 
Foreign currency translation3,683 — — 3,683 
Balance at June 30, 2025$185,125 $— $— $185,125 
 
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 the Company did not identify any changes in circumstances that would indicate the carrying value of goodwill may not be recoverable. Additionally, through June 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
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:
 
  June 30, 2025December 31, 2024
 Useful Life
(Years)
Gross
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Amount
Accumulated
Amortization
Net
Carrying
Amount
Customer relationships
5-18
$109,356 $(95,242)$14,114 $107,704 $(92,220)$15,484 
Software/Technology
3-15
61,043 (35,933)25,110 57,414 (33,930)23,484 
Covenants not to compete
2-5
12,396 (12,386)10 12,391 (12,371)20 
Other
2-12
10,233 (9,896)337 10,218 (9,498)720 
Total $193,028 $(153,457)$39,571 $187,727 $(148,019)$39,708 
 
Amortization expense for the three months ended June 30, 2025 and 2024 was approximately $1.6 million and $1.9 million, respectively.

Amortization expense for the six months ended June 30, 2025 and 2024 was $3.4 million and $3.9 million, respectively.

10.    Accrued Expenses and Other Current Liabilities
 
Accrued expenses and other current liabilities consisted of the following:
 June 30, 2025December 31, 2024
Accrued salaries, wages and related employee benefits$30,820 $27,990 
Accrued workers’ compensation and health benefits3,548 4,898 
Deferred revenue9,811 8,096 
Pension accrual2,480 2,458 
Right-of-use liability - Operating11,237 11,375 
Other accrued expenses32,586 30,416 
Total$90,482 $85,233 
 
11.    Long-Term Debt
 
Long-term debt consisted of the following:
 June 30, 2025December 31, 2024
Senior credit facility$84,250 $59,650 
Senior secured term loan, net of unamortized debt issuance costs of $0.2 million and $0.3 million, respectively
102,909 107,545 
Other2,255 2,452 
Total debt189,414 169,647 
Less: Current portion(13,069)(11,591)
Long-term debt, net of current portion$176,345 $158,056 
 

18
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 $102.9 million as of June 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 June 30, 2025, the Company had borrowings of $187.2 million and a total of $3.1 million of letters of credit outstanding under the Credit Agreement. The Company has capitalized costs associated with debt modifications of $0.7 million as of June 30, 2025, which is 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 June 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. The Company believes that it is probable that the Company will be able to comply with the financial covenants in the Credit Agreement and that sufficient credit remains available under the Credit Agreement to meet the Company's liquidity needs. However, such matters cannot be predicted with certainty.
 


19
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 June 30, 2025, there was an aggregate of approximately $2.3 million outstanding, payable at various times through 2030. Monthly payments range from $0.7 thousand to $16.9 thousand and interest rates range from 0.4% to 3.5%.

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, 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, including those proceedings identified in this Note 13, 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 filed by the State of Arizona and the Arizona Department of Environmental Quality (collectively “DEQ”). The lawsuit, 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 the Company and 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 Complaint seeks unspecified penalties and costs.

The Superior Court held a hearing 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 judgement: (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 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 of its completed improvements, and the DEQ inspected the improvements. Following the DEQ site visit, Mistras Arizona commenced its chrome plating operations on April 28, 2025.
20
Mistras Group, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
(tabular dollars and shares in thousands, except per share data)

The Company intends to continue complying with the Superior Court's ruling. This matter is still in the relatively early stages, including as to factual and expert discovery. It is probable that remediation costs, fines and penalties may be imposed related to this lawsuit. However, the Company is unable to estimate the range of loss that it may incur.

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.

As it relates to this lawsuit, the recorded probable losses remain an estimate, and actual costs arising from this matter could materially differ depending on the actual costs incurred as well as the availability of additional insurance coverage.

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 June 30, 2025 is approximately $2.5 million, which were 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, bad debt provision for troubled customers, goodwill impairment charges, reorganization and environmental costs, legal settlements and recoveries, acquisition-related expenses, 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 June 30, 2025
Segment
North AmericaInternationalProducts and SystemsTotal Reportable SegmentsCorporate and eliminationsTotal
Revenue$147,992 $39,077 $2,740 $189,809 $(4,404)$185,405 
Selling, general & administrative expenses20,944 7,860 782 29,586 10,207 39,793 
Other Expenses110,290 27,213 1,622 139,125 (1,941)137,184 
Income (loss) from operations$16,758 $4,004 $336 $21,098 $(12,670)$8,428 


For the three months ended June 30, 2024
Segment
North AmericaInternationalProducts and SystemsTotal Reportable SegmentsCorporate and eliminationsTotal
Revenue$156,394 $34,264 $3,373 $194,031 $(4,258)$189,773 
Selling, general & administrative expenses19,263 7,435 952 27,650 8,531 36,181 
Other Expenses118,404 25,182 1,926 145,512 (3,879)141,633 
Income (loss) from operations$18,727 $1,647 $495 $20,869 $(8,910)$11,959 









22


For the six months ended June 30, 2025
Segment
North AmericaInternationalProducts and SystemsTotal Reportable SegmentsCorporate and eliminationsTotal
Revenue$276,894 $72,291 $5,831 $355,016 $(7,996)$347,020 
Selling, general & administrative expenses41,683 15,066 1,620 58,369 17,076 75,445 
Other Expenses211,938 52,140 3,548 267,626 (3,467)264,159 
Income (loss) from operations$23,273 $5,085 $663 $29,021 $(21,605)$7,416 

For the six months ended June 30, 2024
Segment
North AmericaInternationalProducts and SystemsTotal Reportable SegmentsCorporate and eliminationsTotal
Revenue$306,743 $67,311 $6,583 $380,637 $(6,422)$374,215 
Selling, general & administrative expenses39,271 14,834 1,896 56,001 16,430 72,431 
Other Expenses235,185 49,706 3,878 288,769 (4,496)284,273 
Income (loss) from operations$32,287 $2,771 $809 $35,867 $(18,356)$17,511 
  
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 (loss) can be seen on the Unaudited Condensed Consolidated Statement of Income (Loss). Products and Systems segment revenue was comprised of approximately $0.5 million and $1.0 million of sales to the International segment, which were eliminated upon consolidation, for the three months ended June 30, 2025 and June 30, 2024, respectively. Products and Systems segment revenue was comprised of approximately $1.5 million and $1.8 million of sales to the International segment, which were eliminated upon consolidation, for the six months ended June 30, 2025 and June 30, 2024, respectively. Intersegment revenue related to sales between other segments was immaterial for each of the three and six month periods ended June 30, 2025 and June 30, 2024.

Selected consolidated financial information by segment for the periods shown was as follows: (with intercompany transactions eliminated in Corporate and eliminations):

 June 30, 2025December 31, 2024
Intangible assets, net  
North America$30,100 $30,869 
International1,120 1,377 
Products and Systems822 946 
Corporate and eliminations7,529 6,516 
 $39,571 $39,708 
 

23

 June 30, 2025December 31, 2024
Total assets  
North America$416,056 $390,052 
International117,504 97,546 
Products and Systems10,892 11,280 
Corporate and eliminations26,591 24,160 
 $571,043 $523,038 


June 30, 2025December 31, 2024
Long-lived assets
North America$273,403 $268,608 
International27,589 24,822 
Products and Systems902 1,049 
Corporate and eliminations8,711 7,563 
$310,605 $302,042 
 
Refer to Note 2 - Revenue, for revenue by geographic area for the three and six months ended June 30, 2025 and 2024.
 

24
Mistras Group, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)

ITEM 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following Management’s Discussion and Analysis (“MD&A”) provides a discussion of our results of operations and financial position for the three and six months ended June 30, 2025 and 2024. The MD&A should be read together with our Unaudited Condensed Consolidated Financial Statements and related notes included in Item 1 in this Quarterly Report on Form 10-Q (the "Quarterly Report") and our audited consolidated financial statements and related notes included in our 2024 Annual Report. Unless otherwise specified or the context otherwise requires, “Mistras,” “the Company,” “we,” “us” and “our” refer to Mistras Group, Inc. and its consolidated subsidiaries. The MD&A includes the following sections:
 
•Forward-Looking Statements
•Overview
•Note about Non-GAAP Measures
•Consolidated Results of Operations
•Liquidity and Capital Resources
•Critical Accounting Policies and Estimates

Forward-Looking Statements
 
This Quarterly Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934 (“Exchange Act”). Such forward-looking statements include those that express plans, anticipation, intent, contingency, goals, targets or future development and/or otherwise are not statements of historical fact. These forward-looking statements are based on our current expectations and projections about future events and they are subject to risks and uncertainties known and unknown that could cause actual results and developments to differ materially from those expressed or implied in such statements.
 
In some cases, you can identify forward-looking statements by terminology, such as “goals,” or “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “could,” “should,” “would,” “predicts,” “appears,” “projects,” or the negative of such terms or other similar expressions. You are urged not to place undue reliance on any such forward-looking statements, any of which may turn out to be wrong due to inaccurate assumptions, various risks, uncertainties or other factors known and unknown. Factors that could cause or contribute to differences in results and outcomes from those in our forward-looking statements, including any impacts from the imposition of tariffs or other trade restrictions, changes to the
U.S. trade policy and impacts from the implementation of our new ERP (as defined below) system, include, without limitation, those discussed in the “Business—Forward-Looking Statements,” and “Risk Factors” sections of our 2024 Annual Report as well as those discussed in this Quarterly Report and in our other filings with the SEC. In addition, there are various developments discussed below which could create risks and uncertainty about our business, results of operations or liquidity.


Overview
 
We are a leading "one source" multinational provider of integrated technology-enabled asset protection solutions, helping to maximize the safety and operational uptime for civilization’s most critical industrial and civil assets.

Backed by an innovative, data-driven asset protection portfolio, proprietary technologies, and a decades-long legacy of industry leadership, the Company helps customers with asset-intensive infrastructure in the oil and gas, aerospace and defense, industrials, power generation and transmission (including alternative and renewable energy), other process industries and infrastructure, research and engineering and other industries towards achieving and maintaining operational excellence. By supporting these organizations that help fuel our vehicles and power our society; inspecting components that are trusted for commercial, defense, and space craft; building real-time monitoring equipment to enable safe travel across bridges; and helping to propel sustainability, the Company helps the world at large.

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.

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Mistras Group, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)

The Company’s core capabilities also include non-destructive testing (“NDT”) field inspections enhanced by advanced robotics, laboratory quality control and assurance testing, sensing technologies and NDT equipment, asset and mechanical integrity engineering services, and light mechanical maintenance and access services.

Our operations consist of three reportable segments: North America, International, and Products and Systems.
•North America 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 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 designs, manufactures, sells, installs and services the Company’s asset protection products and systems, including equipment and instrumentation, predominantly in the United States.

Given the role our solutions play in enhancing the safe and efficient operation of infrastructure, we have historically provided a majority of our solutions to our customers on a regular, recurring basis. We perform these services largely at our customers’ facilities, while primarily servicing our aerospace customers at our network of state-of-the-art, in-house laboratories. These solutions typically include NDT and inspection services, and can also include a wide range of mechanical services, including heat tracing, pre-inspection insulation stripping, coating applications, re-insulation, engineering assessments and long-term condition-monitoring. Under this business model, many customers outsource their inspection to us on a “run and maintain” basis. We have established long-term relationships as a critical solutions provider to many of the leading companies with asset-intensive infrastructure in our target markets. These markets include companies in the oil and gas, aerospace and defense, industrials, power generation and transmission (including alternative and renewable energy), other process industries and infrastructure, research and engineering and other industries.

We have focused on providing our advanced asset protection solutions to our customers using proprietary, technology-enabled software and testing instruments, including those developed by our Products and Systems segment. We have made numerous acquisitions in the past in an effort to grow our base of experienced, certified personnel, expand our service lines and technical capabilities, increase our geographical reach, complement our existing offerings, and leverage our fixed costs. We have increased our capabilities and the size of our customer base through the development of applied technologies and managed support services, organic growth and the integration of acquired companies. These acquisitions have provided us with additional service lines, technologies, resources and customers which we believe enhance our advantages over our competition.

We believe long-term growth can be realized in our target markets. Our level of business and financial results are impacted by world-wide macro- and micro-economic conditions generally, as well as those within our target markets. Among other things, we expect the timing of our oil and gas customers inspection spend to be impacted by oil price fluctuations.

We have continued providing our customers with an innovative asset protection software ecosystem through our OneSuite platform. The software platform offers functions of our software and services brands as integrated apps on a cloud environment. OneSuite serves as a single access portal for customers' data activities and provides access to 90 plus applications being offered on one centralized platform.

Recent Developments

Our cash position and liquidity remains strong. As of June 30, 2025, our cash balance was approximately $20.0 million and, with our Credit Agreement, provides us with significant liquidity.

As discussed above in Note 1 - Description of Business and Basis of Presentation, we changed the presentation of certain costs incurred at our operational labs as well as for certain lab personnel on our Unaudited Condensed Consolidated Statements of Income (Loss). This voluntary change in classification of certain overhead and personnel costs, which were determined to be directly related to the delivery of our services, resulted in a decrease in from Selling, general and administrative expenses and
26
Mistras Group, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)

an offsetting increase in Cost of revenue. We believe this presentation is preferable as it will provide greater transparency regarding our cost of revenue and better align with how our business is managed.

The Company is currently unable to predict with certainty the overall impact of continuing inflationary pressures or increased costs due to the imposition of tariffs and other trade barriers or changes to U.S. trade policy may have on its business, results of operations or liquidity or in other ways which the Company cannot yet determine. The Company’s European operations are currently experiencing higher energy costs, among other increased costs, due in part to the on-going war between Russia and Ukraine and the conflicts in the Middle East between Israel and Hamas and between Israel and Iran. The Company will continue to monitor market conditions and respond accordingly.

Note About Non-GAAP Measures
 
The Company prepares its consolidated financial statements in accordance with GAAP. In this MD&A under the heading "Income (loss) from Operations", the non-GAAP financial performance measure "Income (loss) from operations before special items” is used for each of our three operating segments, the Corporate segment and the "Total Company", with tables reconciling the measure to a financial measure under GAAP. This presentation excludes from "Income (loss) from Operations" (a) transaction expenses related to acquisitions, such as professional fees and due diligence costs, (b) the net changes in the fair value of acquisition-related contingent consideration liabilities, (c) impairment charges, (d) reorganization and other costs, which includes items such as severance, labor relations matters and asset and lease termination costs and (e) other special items. These adjustments have been excluded from the GAAP measure because these expenses and credits are not related to our or any individual segment's core business operations. The acquisition related costs and special items can be a net expense or credit in any given period. Our management uses this non-GAAP measure as a measure of operating performance and liquidity to assist in comparing performance from period to period on a consistent basis, as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations. We believe investors and other users of our financial statements benefit from the presentation of this non-GAAP measure in evaluating our performance. Income (loss) before special items excludes the identified adjustments, which provides additional tools to compare our core business operating performance on a consistent basis and measure underlying trends and results in our business. Income (loss) before special items is not used to determine incentive compensation for executives or employees, nor is it a replacement for the reported GAAP financial performance and/or necessarily comparable to the non-GAAP financial measures of other companies. Any measure that eliminates the foregoing items has material limitations as a performance or liquidity measure and should not be considered alternatives to net income (loss) or any other measures derived in accordance with GAAP. Because Income (loss) from operations before special items may not be calculated in the same manner by all companies, this measure may not be comparable to other similarly titled measures used by other companies.

Results of Operations
 
Condensed consolidated results of operations for the three and six months ended June 30, 2025 and 2024 were as follows:

 Three Months Ended June 30,Six Months Ended June 30,
 2025202420252024
Revenue$185,405 $189,773 $347,020 $374,215 
Gross profit53,945 51,340 94,837 97,492 
Gross profit as a % of Revenue29.1 %27.1 %27.3 %26.1 %
Income from operations8,428 11,959 7,416 17,511 
Income from operations as a % of Revenue4.5 %6.3 %2.1 %4.7 %
Income (loss) before provision (benefit) for income taxes4,189 7,546 (147)8,669 
Net income (loss) 3,126 6,373 (42)7,377 
Net income (loss) attributable to Mistras Group, Inc.$3,017 $6,369 $(169)$7,364 
 


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Mistras Group, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)

Revenue
 
Revenue was $185.4 million for the three months ended June 30, 2025, a decrease of $4.4 million, or 2.3%, compared with the three months ended June 30, 2024.

Revenue by segment for the three and six months ended June 30, 2025 and 2024 were as follows:
 Three months ended June 30,Six months ended June 30,
 2025202420252024
Revenue  
North America$147,992 $156,394 $276,894 $306,743 
International39,077 34,264 72,291 67,311 
Products and Systems2,740 3,373 5,831 6,583 
Corporate and eliminations(4,404)(4,258)(7,996)(6,422)
Total$185,405 $189,773 $347,020 $374,215 
 
Three Months

In the three months ended June 30, 2025, total revenue decreased 2.3% versus the prior year comparable period due predominantly to a low single-digit organic decrease driven by voluntary laboratory consolidations. North America segment revenue decreased 5.4%, driven predominantly by a decrease in our Oil and Gas market revenue and declines in demand in other key markets due to macroeconomic factors such as uncertainties driven by continuing inflationary pressures and increased costs due to the imposition of tariffs. International segment revenue increased 14.0%, due predominantly to high single-digit organic growth and mid-single-digit favorable impact of foreign exchange rates. Products and Systems segment revenue decreased by 18.8%, due to decreased sales volume and shipments as compared to the prior year comparable period.

Oil and gas customer revenue comprised approximately 55% and 58% of total revenue for the three months ended June 30, 2025 and 2024, respectively. Aerospace and defense customer revenue comprised approximately 13% and 12% of total revenue for the three months ended June 30, 2025 and 2024, respectively. The Company’s top ten customers comprised approximately 35% of total revenue for the three months ended June 30, 2025, as compared to 35% for the three months ended June 30, 2024, with no customer accounting for 10% or more of total revenue in either three-month period.

Six Months

In the six months ended June 30, 2025, total revenue decreased 7.3% versus the prior year comparable period due predominantly to a high single-digit organic decrease. North America segment revenue decreased 9.7%, driven predominantly by a decrease in our Oil and Gas market revenue and declines in demand in other key markets due to macroeconomic factors such as uncertainties driven by continuing inflationary pressures and increased costs due to the imposition of tariffs. International segment revenue increased 7.4%, due predominantly to mid-single-digit organic growth and low single-digit favorable impact of foreign exchange rates. Products and Systems segment revenue decreased by 11.4%, due to decreased sales volume and shipments as compared to the prior year comparable period.

Oil and gas customer revenue comprised approximately 57% and 59% of total revenue for the six months ended June 30, 2025 and 2024, respectively. Aerospace and defense customer revenue comprised approximately 13% and 12% of total revenue for the six months ended June 30, 2025 and 2024, respectively. The Company’s top ten customers comprised approximately 37% of total revenue for the six months ended June 30, 2025, as compared to 35% for the six months ended June 30, 2024, with no customer accounting for 10% or more of total revenue in either six-month period.








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Mistras Group, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)

The Company has retrospectively reclassified certain Oil and Gas sub-category revenues for each quarterly period in 2024 and the first quarter of 2025 in order to conform the classification with the current period presentation. Total Oil and Gas sub-category revenues were unchanged in total in each quarterly period and for the full year ended December 31, 2024 and for the quarter ended March 31, 2025. The table below presents the reclassified balances for each quarterly period in the prior year and the first quarter of 2025.
 2024 Quarterly Revenues
 Three months ended March 31,Three months ended June 30,Three months ended September 30,Three months ended December 31,
Oil and Gas Revenue by sub-category  
Upstream$39,514 $41,013 $40,756 $36,753 
Midstream18,533 20,786 20,790 20,033 
Downstream55,118 47,457 37,957 40,212 
Total$113,165 $109,256 $99,503 $96,998 

 2025 Quarterly Revenues
 Three months ended March 31,
Oil and Gas Revenue by sub-category 
Upstream$36,820 
Midstream15,341 
Downstream44,403 
Total$96,564 
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Oil and Gas Revenue by sub-category
Upstream$38,180 $41,013 $75,000 $80,527 
Midstream18,575 20,786 33,916 39,319 
Downstream46,061 47,457 90,464 102,575 
Total$102,816 $109,256 $199,380 $222,421 


Oil and gas upstream customer revenue decreased approximately $5.5 million, or 7%, for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, and $2.8 million, or 7%, for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, due primarily to market share losses and decreased exploration activity as compared to the prior year comparable period.

Midstream customer revenues decreased approximately $5.4 million, or 14%, for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, and $2.2 million, or 11%, for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, due to decreased pipe inspection services as compared to the prior year comparable period.

Downstream customer revenue decreased $12.1 million, or 12%, for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, and $1.4 million, or 3%, for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, primarily due to decreased customer turnarounds in the current year that were delayed in the prior year comparable period.
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Mistras Group, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)

Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Revenue by type
Field Services$123,484 $134,528 $233,659 $260,883 
Shop Laboratories15,682 16,938 30,711 34,133 
Data Analytical Solutions18,330 18,342 32,311 33,881 
Other27,909 19,965 50,339 45,318 
Total$185,405 $189,773 $347,020 $374,215 

In presenting the allocation of revenue by type in the table above, management makes certain assumptions in its allocation of revenue from laboratories that provide more than one type of service. The allocation methodology and assumptions made are consistent for the years presented.

Field Services revenue is comprised of revenue derived primarily by technicians performing asset inspections and maintenance services for our customers at locations other than Mistras properties. Field Services revenue decreased by $11.0 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 and decreased by $27.2 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to decreases in sales volume in our oil and gas, industrials and infrastructure, research and engineering end markets within our North America segment and oil and gas end market within our International segment.

Shop Laboratory revenue is comprised of quality assurance inspections of components and materials at our Mistras in-house laboratory facilities. Shop Laboratory revenue decreased by $1.3 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 and decreased by $3.4 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to decreased sales volumes in our aerospace and defense end market in our North America and International segments.

Data Analytical Solutions revenue is comprised of revenue derived from data software sales & subscriptions, implementation services and analytics which offer insights and generate value from asset protection. Data Analytical Solutions revenue is derived from work performed by our employees in our facilities, or at customer locations. Data Analytical Solutions revenue remained flat for the three months ended June 30, 2025 as compared to the prior year comparable period. Data Analytical Solutions revenue decreased by $1.6 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to decreased sales volume within PCMS and other Data Analytical Solutions offerings within our North America segment.

Other revenue is comprised of locations that perform both asset inspection services and testing of components and materials at in-house Mistras laboratories. Other revenue increased by $7.9 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 and increased by $5.0 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to increased sales within the defense sector within the North America segment.

Gross Profit

Gross profit, which reflects the reclassification of certain overhead and personnel costs from selling, general and administrative
expenses to cost of revenue (see Note 1 - Description of Business and Basis of Presentation), increased by $2.6 million, or 5.1%, in the three months ended June 30, 2025 versus the prior year comparable period primarily due to an improved business mix and operating efficiencies.









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Mistras Group, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)

Gross profit by segment for the three and six months ended June 30, 2025 and 2024 was as follows:
 
 Three months ended June 30,Six months ended June 30,
 2025202420252024
Gross profit (1)
  
North America$40,384 $39,874 $70,549 $75,250 
   % of segment revenue27.3 %25.5 %25.5 %24.5 %
International12,270 9,890 21,358 19,157 
   % of segment revenue31.4 %28.9 %29.5 %28.5 %
Products and Systems1,337 1,555 2,960 3,036 
   % of segment revenue48.8 %46.1 %50.8 %46.1 %
Corporate and eliminations(46)21 (30)49 
 $53,945 $51,340 $94,837 $97,492 
   % of total revenue29.1 %27.1 %27.3 %26.1 %
(1) As noted in Note 1, the Company changed the presentation of certain costs incurred at its operational labs as well as the costs for certain personnel that indirectly support the Company’s delivery of services on its Consolidated Statements of Income (Loss). This voluntary change in classification of certain overhead and employee 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 impact on gross profit of this change in classification for the year ended December 31, 2024 was approximately $20.9 million.

Three Months

Gross profit margin was 29.1% and 27.1% for the three-month periods ended June 30, 2025 and 2024, respectively. Gross profit margin for the North America segment increased by 1.8% during the three months ended June 30, 2025 as compared to the prior year comparable period primarily due to an improved business mix and operating efficiencies. International segment realized a 2.5% increase in gross profit margin to 31.4% during the three months ended June 30, 2025 as compared to the prior year comparable period primarily due to a favorable sales mix in the current year period. Products and Systems segment gross margin had an increase of 2.7% in gross profit margin to 48.8% during the three months ended June 30, 2025 primarily due to a favorable sales mix as compared to the prior period.

Six Months

Gross profit margin was 27.3% and 26.1% for the six-month periods ended June 30, 2025 and 2024, respectively. Gross profit margin for the North America segment realized a 1.0% increase in gross profit margin to 25.5% during the six months ended June 30, 2025 as compared to the prior year comparable period primarily due to a favorable sales mix and operating efficiencies. International segment realized a 1.0% increase in gross profit margin to 29.5% during the six months ended June 30, 2025 as compared to the prior year comparable period primarily due to a favorable sales mix. Products and Systems segment gross margin had an increase of 4.7% in gross profit margin to 50.8% during the six months ended June 30, 2025 primarily due to a favorable sales mix as compared to the prior period.
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Mistras Group, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)

Operating Expenses

Operating expenses for the three and six months ended June 30, 2025 and 2024 was as follows:

Three months ended June 30,Six Months Ended June 30,
2025202420252024
($ in thousands)
Operating Expenses
Selling, general and administrative expenses$39,793 $36,181 $75,445 $72,431 
Reorganization and other costs2,951 518 6,038 2,076 
Environmental expense518 — 1,058 — 
Legal settlement and insurance recoveries, net— 60 — 60 
Research and engineering269 231 568 575 
Depreciation and amortization1,986 2,391 4,312 4,839 
$45,517 $39,381 $87,421 $79,981 
% of total revenue24.6 %20.8 %25.2 %21.4 %

Three Months

Operating expenses increased $6.1 million, or 15.6%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Selling, general and administrative expenses increased $3.6 million during the three months ended June 30, 2025 compared to the three months ended June 30, 2024, due to adverse foreign exchange impact, partially offset by ongoing cost containment activities. As discussed in Note 1 - Description of Business and Basis of Presentation, Selling, general and administrative expenses reflect the classification change for certain overhead and personnel costs from Selling, general and administrative expenses to Cost of revenue. Environmental expense increased by $0.5 million as compared to the prior year comparable period due to environmental costs incurred during the three months ended June 30, 2025, which were not incurred during the prior year comparable period. Reorganization and other costs increased by $2.4 million to $3.0 million as compared to the prior year comparable period due to continued calibration of the Company’s headcount and other related costs. Depreciation and amortization decreased $0.4 million during the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Six Months

Operating expenses increased $7.4 million, or 9%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Selling, general and administrative expenses increased $3.0 million during the six months ended June 30, 2025 compared to the six months ended June 30, 2024, due to an unfavorable foreign exchange impact as compared to the prior year comparable period, partially offset by continued cost discipline and our focus on the calibration of our overhead costs relative to revenue achieved. As discussed in Note 1 - Description of Business and Basis of Presentation, Selling, general and administrative expenses reflect the classification change for certain overhead and personnel costs from Selling, general and administrative expenses to Cost of revenue. Environmental expense increased by $1.1 million as compared to the prior year comparable period due to environmental costs incurred during the six months ended June 30, 2025, which were not incurred during the prior year comparable period. Reorganization and other costs increased by $4.0 million to $6.0 million as compared to the prior year comparable period due to continued calibration of the Company’s headcount and other related costs. Depreciation and amortization decreased by $0.5 million during the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

32
Mistras Group, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)

Income (loss) from Operations

The following table shows a reconciliation of the income from operations to income (loss) from operations before special items for each of our three segments, Corporate and Elimination and for the Company in total:
Three months ended June 30,Six months ended June 30,
2025202420252024
($ in thousands)($ in thousands)
North America:
Income from operations (GAAP)$16,758 $18,727 $23,273 $32,287 
Reorganization and other costs1,113 92 2,471 92 
Legal settlement and insurance recoveries, net— 60 — 60 
Income from operations before special items (non-GAAP)$17,871 $18,879 $25,744 $32,439 
International:
Income from operations (GAAP)$4,004 $1,647 $5,085 $2,771 
Reorganization and other costs92 161 270 263 
Income from operations before special items (non-GAAP)$4,096 $1,808 $5,355 $3,034 
Products and Systems:
Income from operations (GAAP)$336 $495 $663 $809 
Reorganization and other costs— — 151 2 
Income from operations before special items (non-GAAP)$336 $495 $814 $811 
Corporate and Eliminations:
Loss from operations (GAAP)$(12,670)$(8,910)$(21,605)$(18,356)
Environmental expense518 — 1,058 — 
Reorganization and other costs1,746 265 3,146 1,719 
Loss from operations before special items (non-GAAP)$(10,406)$(8,645)$(17,401)$(16,637)
Total Company:
Income from operations (GAAP)$8,428 $11,959 $7,416 $17,511 
Environmental expense518 — 1,058 — 
Reorganization and other costs2,951 518 6,038 2,076 
Legal settlement and insurance recoveries, net— 60 — 60 
Income from operations before special items (non-GAAP)$11,897 $12,537 $14,512 $19,647 
    

See section Note About Non-GAAP Measures in this Quarterly Report for an explanation of the use of non-GAAP measurements.
 
Three Months

For the three months ended June 30, 2025, income from operations (GAAP) decreased $3.5 million or 29.5%, compared with the three months ended June 30, 2024, while income from operations before special items (non-GAAP) decreased by $0.6 million, or 5.1%. As a percentage of revenue, income from operations before special items decreased by 20 basis points to 6.4% in the three months ended June 30, 2025 compared to 6.6% in the three months ended June 30, 2024.
 
Six Months

For the six months ended June 30, 2025, income from operations (GAAP) decreased $10.1 million or 58%, compared with the six months ended June 30, 2024, while income from operations before special items (non-GAAP) decreased by $5.1 million, or 26%. As a percentage of revenue, income from operations before special items decreased by 110 basis points to 4.2% in the six months ended June 30, 2025 compared to 5.3% in the six months ended June 30, 2024.

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Mistras Group, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)

Interest Expense
 
Interest expense was approximately $4.2 million and $4.4 million for the three months ended June 30, 2025 and 2024, respectively. This decrease of $0.2 million in interest expense was a result of lower debt balances during the three months ended June 30, 2025 in comparison to the prior year comparable period. Interest expense was approximately $7.6 million and $8.8 million for the six months ended June 30, 2025 and 2024, respectively. This decrease of $1.2 million in interest expense was a result of lower debt balances during the six months ended June 30, 2025 in comparison to the prior year comparable period.

Income Taxes

Our effective income tax rate was approximately 25.4% and 15.5% for the three months ended June 30, 2025 and 2024, respectively. Our effective income tax rate was approximately 71.4% and 14.9% for the six months ended June 30, 2025 and 2024, respectively.

The effective income tax rate for the three months ended June 30, 2025, was higher than the statutory rate primarily due to the impact of a favorable discrete item related to stock compensation. The effective income tax rate for the three months ended June 30, 2024 was lower than the statutory rate primarily due to the impact of a favorable discrete item related to stock compensation.

The effective income tax rate for the six months ended June 30, 2025, was higher than the statutory rate primarily due to the impact of a favorable discrete item related to stock compensation. The effective income tax rate for the six months ended June 30, 2024, was lower than the statutory rate primarily due to the reversal of valuation allowances.

Income tax expense varies as a function of pre-tax income and the level of non-deductible expenses, such as certain amounts of meals and entertainment expense, valuation allowances, and other permanent differences. It is also affected by discrete items that may occur in any given year but are not consistent from year to year. Our effective income tax rate may fluctuate over the next few years due to many variables including the amount and future geographic distribution of our pre-tax income, changes resulting from our acquisition strategy, and increases or decreases in our permanent differences.

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. We are currently evaluating the impact of the OBBBA.


Liquidity and Capital Resources
 
Cash flows are summarized in the table below:
 
Six months ended June 30,
 20252024
Net cash (used in) provided by:  
Operating activities$(3,619)$5,115 
Investing activities(11,416)(11,217)
Financing activities14,910 5,261 
Effect of exchange rate changes on cash1,765 372 
Net change in cash and cash equivalents$1,640 $(469)
 
Cash Flows from Operating Activities
 
During the six months ended June 30, 2025, cash used in operating activities was $3.6 million, representing a year-on-year decrease of $8.7 million, or 171%. This decrease was primarily attributable to an increase in days sales outstanding and movements in working capital, as compared to the prior year comparable period. Specifically, during the second quarter of 2025, we had a buildup in unbilled accounts receivable and a delay in invoicing related to our conversion to a new enterprise resource planning (“ERP”) system effective as of April 1, 2025. Although unbilled and billed accounts receivable balances
34
Mistras Group, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations
(tabular dollars are in thousands)

increased during the period ended June 30, 2025 related to the ERP implementation, we expect a reduction in these balances over the remainder of the year.

Cash Flows from Investing Activities
 
During the six months ended June 30, 2025, cash used in investing activities was $11.4 million, representing a $0.2 million increase compared to the prior year comparable period, primarily attributable to increased expenditures for property, plant, and equipment.

Cash Flows from Financing Activities

Net cash provided by financing activities was $14.9 million for the six months ended June 30, 2025, compared to net cash provided by financing activities of $5.3 million for the six months ended June 30, 2024. During the six months ended June 30, 2025, net borrowings of debt were approximately $9.8 million higher than compared to the prior year comparable period resulting in net debt borrowings during the period. The increase in net cash provided by financing activities is partially offset by $0.2 million more in taxes paid related to net share settlement of share-based awards during the six months ended June 30, 2025.


Effect of Exchange Rate Changes on Cash and Cash Equivalents
 
The effect of exchange rate changes on our cash and cash equivalents was an increase of $1.8 million in the six months ended June 30, 2025, compared to an increase of $0.4 million for the six months ended June 30, 2024.

Cash Balance and Credit Facility Borrowings
 
As of June 30, 2025, we had cash and cash equivalents totaling $20.0 million and $102.6 million of unused commitments under our Credit Agreement with borrowings of $187.2 million and $3.1 million of letters of credit outstanding. We finance operations primarily through our existing cash balances, cash collected from operations, bank borrowings and capital lease financing. We believe these sources are sufficient to fund our operations for the foreseeable future.
 
As of June 30, 2025, we were in compliance with the terms of the Credit Agreement and will continuously monitor our compliance with the covenants contained in the Credit Agreement.

The terms of our Credit Agreement are described in Note 11 - Long-Term Debt of the Notes to the Unaudited Condensed Consolidated Financial Statements, under the heading "Senior Credit Facility".

Contractual Obligations

There have been no significant changes in our contractual obligations and outstanding indebtedness as disclosed in the 2024 Annual Report.

Off-balance Sheet Arrangements
 
During the six months ended June 30, 2025, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
 
35
Critical Accounting Policies and Estimates

There have been no significant changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the 2024 Annual Report.
 
ITEM 3.    Quantitative and Qualitative Disclosures about Market Risk
 
There have been no significant changes to our quantitative and qualitative disclosures about market risk as discussed in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk,” included in the 2024 Annual Report.
 
ITEM 4.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Exchange Act, our management carried out an evaluation, under the supervision and with the participation of our President and Chief Executive Officer and our Senior Executive Vice President, Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls (as defined in Rule 13a-15(e) of the Exchange Act) and procedures. Based upon that evaluation, our President and Chief Executive Officer and our Senior Executive Vice President, Chief Financial Officer concluded that, as of June 30, 2025, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
36
PART II—OTHER INFORMATION
 
ITEM 1.    Legal Proceedings
 
See Note 13 - Commitments and Contingencies to the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for a description of our legal proceedings. There have been no material legal proceedings and no material developments with regard to any matters disclosed under Part I, Item 3 "Legal Proceedings" in our 2024 Annual Report, except as disclosed herein under Note 13 - Commitments and Contingencies to the Notes to the Unaudited Condensed Consolidated Financial Statements.
 
ITEM 1.A.    Risk Factors
 
In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors discussed under the “Risk Factors” section included in our 2024 Annual Report. There have been no material changes to the risk factors previously disclosed in the 2024 Annual Report.
 
ITEM 2.    Unregistered Sale of Equity Securities and Use of Proceeds
 
(a) Sales of Unregistered Securities
 
None.
 
(b) Use of Proceeds from Public Offering of Common Stock
 
None.
 
(c) Repurchases of Our Equity Securities
 
The following table sets forth the shares of our common stock we acquired during the quarter as a result of the surrender of shares by employees to satisfy tax withholding obligations in connection with the vesting or settlement of restricted stock units.
 
Month EndingTotal Number of Shares (or
Units) Purchased		Average Price Paid per
Share (or Unit)
April 30, 2025— $— 
May 31, 20251,800 $7.44 
June 30, 2025— $— 


ITEM 3.    Defaults Upon Senior Securities
 
None.
 
ITEM 4.    Mine Safety Disclosures
 
Not applicable.
 
ITEM 5.    Other Information
 
Rule 10b5-1 Trading Plans
During the three and six months ended June 30, 2025, none of the Company's directors or officers, as defined in Section 16 of the Securities Exchange Act of 1934, adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K of the Securities Exchange Act of 1934.
 
During the three and six months ended June 30, 2025, the Company did not adopt, terminate or modify a Rule 10b5-1
trading arrangement.
37
Table of Contents
ITEM 6.    Exhibits
 
Exhibit No. Description
 
  
 
 
   
101.INS Inline XBRL Instance Document
   
101.SCH Inline XBRL Schema Document
   
101.CAL Inline XBRL Calculation Linkbase Document
   
101.LAB Inline XBRL Labels Linkbase Document
   
101.PRE Inline XBRL Presentation Linkbase Document
   
101.DEF Inline XBRL Definition Linkbase Document





38
Signatures
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 MISTRAS GROUP, INC.
   
 By:/s/ Edward J. Prajzner
  Edward J. Prajzner
  Senior Executive Vice President and Chief Financial Officer
  (Principal Financial and Accounting Officer and duly authorized officer)
 
Date: August 11, 2025

39

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