Mistras Group, Inc.

Previous wording

The following Management’s Discussion and Analysis (“MD&A”) provides a discussion of our results of operations and financial position for the three months ended March 31, 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:

Current wording

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:

Previous wording

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 and changes to the

Current wording

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

Previous wording

U.S. trade policy, 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.

Current wording

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.

Previous wording

Our cash position and liquidity remains strong. As of March 31, 2025, our cash balance was approximately $18.5 million and, with our Credit Agreement, provides us with significant liquidity.

Current wording

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.

Previous wording

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 conflict in the Middle East between Israel and Hamas. The Company will continue to monitor market conditions and respond accordingly.

Current wording

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.

Previous wording

Condensed consolidated results of operations for the three months ended March 31, 2025 and 2024 were as follows:

Current wording

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

Previous wording

Revenue was $161.6 million for the three months ended March 31, 2025, a decrease of $22.8 million, or 12.4%, compared with the three months ended March 31, 2024.

Current wording

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.

Previous wording

Revenue by segment for the three months ended March 31, 2025 and 2024 were as follows:

Current wording

Revenue by segment for the three and six months ended June 30, 2025 and 2024 were as follows:

Previous wording

Oil and gas customer revenue comprised approximately 60% and 61% of total revenue for the three months ended March 31, 2025 and 2024, respectively. Aerospace and defense customer revenue comprised approximately 13% and 12% of total revenue for the three months ended March 31, 2025 and 2024, respectively. The Company’s top ten customers comprised approximately 37% of total revenue for the three months ended March 31, 2025, as compared to 39% for the three months ended March 31, 2024, with no customer accounting for 10% or more of total revenue in either three-month period.

Current wording

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.

Previous wording

In the three months ended March 31, 2025, total revenue decreased 12.4% versus the prior year comparable period due predominantly to a high single-digit organic decrease. North America segment revenue decreased 14.3%, 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 0.5%, due predominantly to low double-digit organic growth and low single-digit favorable impact of foreign exchange rates. Products and Systems segment revenue decreased by 3.7%, due to decreased sales volume and shipments as compared to the prior year comparable period.

Current wording

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.

Previous wording

Oil and gas upstream customer revenue decreased approximately $1.5 million, or 4%, due primarily to market share losses and decreased exploration activity as compared to the prior year comparable period. Midstream customer revenues decreased approximately $5.6 million, or 26%, due to decreased pipe inspection services performed as compared to the prior year comparable period. Downstream customer revenues decreased $9.5 million or, 19%, primarily due to decreased customer turnarounds in the current year that were delayed in the prior year comparable period.

Current wording

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.

Previous wording

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 $16.2 million as compared to the prior year comparable period, 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.

Current wording

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.

Previous wording

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 $2.2 million as compared to the prior year comparable period due to decreased sales volumes in our aerospace and defense end market in our North America and International segments.

Current wording

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.

Previous wording

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 decreased by $1.6 million as compared to the prior year comparable period due to decreased sales volume within PCMS and other Data Analytical Solutions offerings within our North America segment.

Current wording

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.

Previous wording

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 decreased by $2.9 million as compared to the prior year comparable period primarily due to decreased sales within the defense sector within the North America segment.

Current wording

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.

Previous wording

expenses to cost of revenue (see Note 1 - Description of Business and Basis of Presentation), decreased by $5.3 million, or 11.4%, in the three months ended March 31, 2025 versus the prior year comparable period primarily due to a decrease in revenue of 12.4%, partially offset by lower healthcare claims expense in the current year period and a favorable sales mix.

Current wording

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 toan improved business mix and operating efficiencies.

Previous wording

Gross profit by segment for the three months ended March 31, 2025 and 2024 was as follows:

Current wording

Gross profit by segment for the three and six months ended June 30, 2025 and 2024 was as follows:

Previous wording

Gross profit margin was 25.3% and 25.0% for the three-month periods ended March 31, 2025 and 2024, respectively. Gross profit margin for the North America segment was flat during the three months ended March 31, 2025 as compared to the prior year comparable period. International segment realized a 0.6% decline in gross profit margin to 27.4% during the three months ended March 31, 2025 as compared to the prior year comparable period due primarily to an unfavorable sales mix and increased energy costs in the current year period. Products and Systems segment gross margin had an increase of 2.3% in gross profit margin to 52.5% during the three months ended March 31, 2025 due to increased sales volume as compared to the prior period.

Current wording

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.

Previous wording

Operating expenses for the three months ended March 31, 2025 and 2024 was as follows:

Current wording

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

Previous wording

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 for the current period, which were not incurred during the prior year comparable period. Reorganization and other costs increased by $1.5 million to $3.1 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 $0.1 million during the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Current wording

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.

Previous wording

Operating expenses increased $1.3 million, or 3.2%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Selling, general and administrative expenses decreased $0.6 million during the three months ended March 31, 2025 compared to the three months ended March 31, 2024, due to continued cost discipline and our focus on the calibration of our overhead costs relative to revenue achieved, partially offset by an unfavorable foreign exchange impact as compared to the prior year comparable period. As discussed in Note 1 - Description of Business and Basis of Presentation,

Current wording

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.

Previous wording

For the three months ended March 31, 2025, (loss) income from operations (GAAP) decreased $6.6 million or 118.2%, compared with the three months ended March 31, 2024, while the income from operations before special items (non-GAAP) decreased by $4.5 million, or 63.2%. As a percentage of revenue, income (loss) before special items decreased by 230 basis points to 1.6% in the three months ended March 31, 2025 compared to 3.9% in the three months ended March 31, 2024.

Current wording

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.

Previous wording

Interest expense was approximately $3.3 million and $4.4 million for the three months ended March 31, 2025 and 2024, respectively. The decrease was a result of lower overall borrowings in comparison to the prior period.

Current wording

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.

Previous wording

The effective income tax rate for the three months ended March 31, 2025 was higher than the statutory rate primarily due to the impact of favorable discrete items related to stock compensation. The effective income tax rate for the three months ended March 31, 2024 was lower than the statutory rate primarily due to the impact of a favorable discrete item related to stock compensation.

Current wording

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.

Previous wording

During the three months ended March 31, 2025, cash provided by operating activities was $5.6 million, representing a year-on-year increase of $5.0 million, or 835%. The increase was primarily attributable to a decrease in days sales outstanding and movements in working capital, as compared to the prior year comparable period.

Current wording

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 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.

Previous wording

During the three months ended March 31, 2025, cash used in investing activities was $5.4 million, representing a $0.2 million decrease, primarily attributable to decreased expenditures for property, plant, and equipment.

Current wording

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.

Previous wording

Net cash used in financing activities was $0.7 million for the three months ended March 31, 2025, compared to net cash provided by financing activities of $5.1 million for the three months ended March 31, 2024. During the three months ended March 31, 2025, net borrowings of debt were approximately $6.0 million lower as compared to the prior year comparable period resulting in net debt borrowings during the period. The decrease in net cash provided by financing activities is partially offset by $0.1 million less taxes paid related to net share settlement of share-based awards during the three months ended March 31, 2025.

Current wording

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.

Previous wording

The effect of exchange rate changes on our cash and cash equivalents was an increase of $0.7 million in the three months ended March 31, 2025, compared to an decrease of $0.9 million for the three months ended March 31, 2024.

Current wording

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.

Previous wording

As of March 31, 2025, we had cash and cash equivalents totaling $18.5 million and $114.0 million of unused commitments under our Credit Agreement with borrowings of $169.6 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.

Current wording

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.

Previous wording

During the three months ended March 31, 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.

Current wording

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.