Mistras Group NYSE: MG reported second-quarter 2026 revenue growth and record second-quarter adjusted EBITDA, as expansion in aerospace and defense, infrastructure and power more than offset lower oil and gas activity.
Revenue rose 4.2% year over year to $193 million, marking the company’s fourth consecutive quarter of year-over-year growth. Adjusted EBITDA increased 7% to a record $25.8 million for a second quarter, while adjusted EBITDA margin expanded 30 basis points to 13.3%.
President and Chief Executive Officer Natalia Shuman said the results reflected progress under the company’s Vision 2030 plan to become a more diversified, technology-enabled and less cyclical business.
“Growth in aerospace and defense, infrastructure, and power more than offset headwinds in oil and gas as our mix continued to shift towards high margins end market with deeper customer relationships and greater long-term visibility,” Shuman said.
Strategic Markets Offset Oil and Gas Decline
Oil and gas revenue declined $8.5 million, or 8.2%, from the prior-year period. Shuman attributed the decline primarily to customer programs exited in 2025 and deferred maintenance and project activity among certain customers. She said a majority of oil and gas deferrals seen during the first half of 2026 are expected to be pushed out further.
After excluding the effects of 2026 turnaround activity and exited 2025 programs, oil and gas revenue increased 1% in the second quarter, according to Shuman. The company expects oil and gas activity to be flat to moderately higher in the third and fourth quarters on that adjusted basis.
Meanwhile, aggregate revenue in Mistras’ strategic end markets rose 28%.
- Aerospace and defense: Revenue increased $3.2 million, or 13.2%, year over year. The company said demand for in-lab testing is outpacing capacity, supported by backlog, customer relationships and the mission-critical nature of its work.
- Infrastructure: Revenue increased $6.2 million, or 76.5%. Mistras cited investment in U.S. LNG infrastructure and data-center construction, including expanding work on Woodside’s Louisiana LNG project.
- Power generation: Revenue rose $3.1 million, or 26.4%, driven primarily by maintenance demand from wind-energy customers, onshore wind development, repowering activity and renewable-energy infrastructure investment.
Shuman said the company has expanded in-lab capabilities in Houston and Los Angeles, adding equipment and services intended to support more complex aerospace manufacturing workflows in single facilities. Mistras expects investments in facilities, automation and process improvement could nearly triple in-lab testing capacity over time. During the question-and-answer session, Shuman said the company projects tripling laboratory capacity by the end of 2027, benefiting both aerospace and defense and industrial customers.
She also said investments in laboratory capacity generally carry a nine- to 12-month lead time before contributing to revenue.
Profitability and Cash Flow Improve
Chief Financial Officer Edward Prajzner said gross margin expanded 10 basis points year over year, while operating income climbed 53.6% to $12.9 million from $8.4 million a year earlier. He attributed the improvement to a shift toward higher-value work along with operational and overhead cost efficiencies.
Selling, general and administrative expense decreased $1.1 million, or 2.7%, year over year. Prajzner noted that the comparison was affected by a 2026 presentation change under which foreign currency gains and losses are now recorded in other income and expense rather than SG&A.
GAAP net income was $7.6 million, or $0.23 per diluted share. On a non-GAAP basis, net income was $9.1 million, or $0.28 per share. Prajzner said GAAP and non-GAAP net income and earnings per share more than doubled from the prior-year quarter.
The company reported a $23.9 million year-over-year improvement in free cash flow, citing higher net income and improved working-capital dynamics. Management pointed to efforts around upfront billing, cycle time, customer escalations and collections, and said it expects to return to historically favorable cash-flow levels in the second half.
Mistras’ bank-defined leverage ratio was approximately 2.2 times as of June 30, down from 2.4 times at March 31 and the lowest level since 2018, according to Prajzner. The company is targeting a 2 times leverage ratio by the end of 2026 and recently extended its credit facility by one year.
Guidance Raised as Demand Remains Favorable
Mistras raised its full-year outlook, projecting 2026 revenue of $740 million to $755 million and adjusted EBITDA of $92 million to $95 million. Shuman said the outlook reflects continued strength in aerospace and defense, infrastructure and power, partially offset by lower oil and gas activity tied to macroeconomic conditions and higher crude oil prices.
Management also discussed efforts to expand technology-enabled services. The company hired an executive director of artificial intelligence to lead AI adoption and establish an AI center of excellence within its data solutions organization. Mistras also launched AEScout, an acoustic-emission monitoring solution designed to help operators gather evidence between conventional inspection intervals.
During the call, Shuman said the company continues to evaluate opportunistic acquisitions that could enhance its capabilities, though Vision 2030 does not depend on a transformative transaction. She said Mistras’ priorities remain executing its strategic plan, improving cash flow and reducing leverage.
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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