Mistras Group Has Another Go at IPO

Oct. 7.09 | About: MISTRAS Group, (MG)

Mistras Group (NYSE:MG), a company which provides non-disruptive infrastructure testing to the energy market, is expected to price its IPO this week. This is the company's second try at an IPO. The previous attempt was sunk by the downturn in the markets two years ago.

Business Overview (from prospectus)

We are a leading global provider of technology-enabled asset protection solutions used to evaluate the structural integrity of critical energy, industrial and public infrastructure. We combine industry-leading products and technologies, expertise in mechanical integrity (MI) and non-destructive testing (NDT) services and proprietary data analysis software to deliver a comprehensive portfolio of customized solutions, ranging from routine inspections to complex, plant-wide asset integrity assessments and management. These mission critical solutions enhance our customers’ ability to extend the useful life of their assets, increase productivity, minimize repair costs, comply with governmental safety and environmental regulations, manage risk and avoid catastrophic disasters. Given the role our services play in ensuring the safe and efficient operation of infrastructure, we have historically provided a majority of our services to our customers on a regular, recurring basis. We serve a global customer base of companies with asset-intensive infrastructure, including companies in the oil and gas, fossil and nuclear power, public infrastructure, chemicals, aerospace and defense, transportation, primary metals and metalworking, pharmaceuticals and food processing industries. As of August 1, 2009, we had approximately 2,000 employees, including 29 Ph.D.’s and more than 100 other degreed engineers and highly-skilled, certified technicians, in 68 offices across 15 countries. We have established long-term relationships as a critical solutions provider to many leading companies, including American Electric Power (NYSE:AEP), Bayer, Bechtel, BP (NYSE:BP), Chevron (NYSE:CVX), Dow Chemical (NYSE:DOW), Duke Energy (DUKE), DuPont (NYSE:DD), Embraer (NYSE:ERJ), ExxonMobil (NYSE:XOM), First Energy, General Electric (NYSE:GE), Pfizer (NYSE:PFE), Rio Tinto (RTP), Alcan, Rolls Royce (OTCPK:RYCEY), Shell (NYSE:RDS.A), The Boeing Company and Valero (NYSE:VLO), and to various federal, state and local governmental infrastructure and defense authorities, including the departments of transportation of several states.

Offering: 8.7 million shares at $14 - $16 per share. Net proceeds of approximately $89.8 million will be used general corporate purposes, including working capital and possible acquisitions.

Lead Underwriters: J.P. Morgan (NYSE:JPM), Credit Suisse (NYSE:CS), BofA Merrill Lynch (NYSE:BAC)

Financial Highlights:

Revenues increased $56.9 million, or 37.3% [ from $152,268,000 to $209,133,000], for fiscal 2009 compared to fiscal 2008 as a result of growth in all our segments...Our gross profit increased $14.4 million, or 26.3% [from $54,831,000 to $69,266,000] , in fiscal 2009 compared to fiscal 2008...Our income from operations of $14.8 million for fiscal 2009 decreased $1.5 million, or 9.4% [from $16,358,000 to $14,825,000], compared to fiscal 2008...Our net income for fiscal 2009 of $5.5 million, or 2.6% of our revenues, was $2.0 million lower than our net income for fiscal 2008, which was $7.4 million, or 4.9% of revenues.


We operate in a highly competitive, but fragmented, market. Our primary competitors are divisions of large companies, and many of our other competitors are small companies, limited to a specific product or technology and focused on a niche market or geographic region. We believe that none of our competitors currently provides the full range of asset protection and NDT products, enterprise software and the traditional and advanced services solutions that we offer. Our major competitors with respect to NDT services include the Acuren division of Rockwood Service Corporation, SGS Group, the TCM division of Team, Inc. and APPLUS RTD, which is majority-owned by The Carlyle Group. Our major competitor with respect to our PCMS software is UltraPIPE, a division of Siemens, and to a lesser extent, Lloyd’s Register Capstone, Inc. Our major competitors with respect to our ultrasonic products are GE Inspection Technologies and Olympus NDT. In the traditional NDT market, we believe the principal competitive factors

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