Mistras Group NYSE: MG reported higher first-quarter revenue and improved profitability, with management pointing to growth in aerospace and defense, infrastructure and power generation as offsets to a planned decline in lower-margin oil and gas work.
On the company’s Q1 2026 earnings call, President and Chief Executive Officer Natalia Shuman said Mistras delivered “top-line growth of nearly 5%,” reflecting a more diversified platform and execution under its Vision 2030 strategic plan. Chief Financial Officer Ed Prajzner said revenue increased 4.6% in the quarter, while gross profit margin expanded 120 basis points year over year.
The company generated income from operations of $4.7 million and GAAP net income of $2.4 million, or $0.07 per diluted share. Adjusted EBITDA rose 18.7% to $14.3 million from $12 million a year earlier, and adjusted EBITDA margin increased to 8.5% from 7.4%.
Aerospace, Infrastructure Drive Growth
Shuman said aerospace and defense remained a major growth engine for Mistras, with revenue in the end market increasing $7.2 million, or 35.5%, from the prior year. She attributed the growth to higher volume, capacity added in the second half of 2025 and pricing initiatives begun last year.
In response to an analyst question from Alex Rygiel of Texas Capital Securities, Shuman said demand remains strong across commercial aerospace and defense, while supplier capacity, labor availability and materials remain constraints for the industry. She said customers value Mistras’ capacity, quality and speed, and that the company serves major operators through long-term relationships.
Prajzner added that the capacity being built is tied to “new aircraft deliveries,” “rocket and satellite launches” and new naval hardware, describing it as long-cycle backlog. Shuman also said some customers are willing to co-invest with Mistras to expand capacity, particularly in ultrasonic testing.
Infrastructure revenue increased $6.1 million, or 84%, in the quarter. Shuman cited demand from data centers, new construction and infrastructure development, along with larger and more complex customer projects. She said the company is involved in projects such as bridges, amusement parks and public sector infrastructure, and that those projects typically carry margins at or above the company average.
Power generation revenue grew $1.9 million, or 40%, helped by expansion in at-height offerings, particularly in wind, where Mistras is using expanded capabilities and technologies to access hard-to-reach areas on large structures while meeting safety standards.
Oil and Gas Decline Reflects Deferrals and Margin Discipline
The company’s oil and gas revenue declined $11.1 million, or 11.5%, in the quarter. Shuman said the decrease was expected and was not the result of lost market share or competitiveness. She pointed to two factors: maintenance and inspection deferrals by clients during a busy period in upstream and downstream activity, and the company’s decision to avoid bids that did not meet margin and return thresholds.
“We are intentionally prioritizing profitability and long-term value creation over the near-term low margin volume,” Shuman said.
During the Q&A session, John Franzreb of Sidoti & Company asked whether the company had exited business it held in calendar 2025. Shuman confirmed that Mistras made a strategic decision in late 2025 and during the quarter to selectively exit low-margin run-and-maintain business so technician capacity could be used for higher-value work.
In response to Gowshihan Sriharan of Singular Research, Shuman said about two-thirds of the $11 million oil and gas decline was attributable to those decisions. She said some impact may persist into the second and third quarters, but the company intends to offset it with higher-value work and expanded Integrated Field Solutions offerings, including welding, cleaning and light craft work.
Shuman also said oil and gas demand remains present, though some operators and producers are delaying maintenance while prices and production activity remain high. She said the company could see some impact in the second quarter, but described the issue as a near-term development.
Vision 2030 Emphasizes Integrated Solutions
Management said Mistras continues to execute on Vision 2030, which focuses on expanding share of wallet through integrated solutions, diversifying into growth markets and improving operating leverage.
Shuman said customers in oil and gas and other energy markets are consolidating vendor spending and accelerating digital transformation. She said this trend supports Mistras’ efforts to combine services, technology, data and analytics into a unified offering.
The company’s PCMS offering grew more than 10% in the first quarter compared with the prior year. In response to Sriharan, Shuman said PCMS added 11 new logos and 29 expansions during the quarter. She said Mistras expects double-digit growth in that area and is investing in AI capabilities to improve the insights provided to customers.
Prajzner said the company has merged its Data Analytical Solutions revenue into Field Services revenue and renamed the grouping Integrated Field Solutions in its disaggregated revenue disclosure. He said the change does not affect total revenue but reflects how customers increasingly buy and value the company’s offerings.
Cash Flow Remains a Focus
Free cash flow was negative $4.5 million in the quarter, down $4.3 million from the prior-year period. Prajzner attributed the decrease to unfavorable working capital dynamics, including lower accrued expenses, and a $1.4 million increase in capital expenditures.
He said the capital spending was focused on expanding in-laboratory testing capabilities and strategic equipment to improve safety and field efficiency. Prajzner also noted that the first half of the year is typically working-capital intensive for Mistras, making the second half a better indicator of sustainable free cash flow.
The company’s accounts receivable balance declined to $151.4 million as of March 31, 2026, from $154.7 million at Dec. 31, 2025, despite higher revenue activity. Prajzner said cash flow performance remains below management’s expectations and that the company is intensifying efforts to improve collections and sustainable cash generation.
Interest expense was $2.9 million, down $0.4 million from the prior-year quarter. The company’s bank-defined leverage ratio was approximately 2.4x at March 31, down from 2.5x at year-end 2025. Prajzner said capital allocation remains focused on using residual free cash flow to pay down debt toward a targeted 2x leverage ratio by the end of 2026, while also investing in higher-growth areas.
Guidance Reaffirmed
Mistras reaffirmed its full-year 2026 guidance for revenue of $730 million to $750 million and adjusted EBITDA of $91 million to $93 million. Shuman said the range continues to be driven primarily by the timing and spending levels in the oil and gas end market, while strategic growth markets remain solid.
Management also highlighted several recognitions during the quarter, including Frost & Sullivan naming Mistras company of the year in global non-destructive testing field inspection services. Shuman said the company was also nominated for the Gulf Coast Safety Award at a long-term evergreen site and received the 2025 American Equity Underwriters Safety Award.
About Mistras Group NYSE: MG
Mistras Group, Inc is a global provider of technology-enabled asset protection solutions and services, with a primary focus on nondestructive testing (NDT), inspection, and monitoring of critical infrastructure and industrial assets. The company's offerings span a wide range of techniques—such as ultrasonic testing, eddy current detection, magnetic particle inspection, radiography and acoustic emission—to help clients in energy, petrochemical, aerospace, manufacturing and other sectors identify and address potential failures before they occur.
In addition to traditional NDT services, Mistras delivers engineered materials solutions, including composite repairs and specialty coatings, along with predictive maintenance and condition monitoring programs.
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