Jefferies 2014 Global Industrials Conference New York August 14, 2014 D E L I V E R I N G A S S E T P R OT EC T I O N S O LU T I O N S GLO BALLY 1
Forward-looking Statements The following information contains forward-looking statements. These forward-looking statements are based on management s current expectations and beliefs, as well as a number of assumptions concerning future events. These statements are subject to risks, uncertainties, assumptions and other important factors. You are cautioned not to put undue reliance on such forward-looking statements because actual results may vary materially from those expressed or implied. A list of these risks can be found in our reports filed with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q and our current reports on Form 8-K. Mistras Group, Inc. assumes no obligation to, and expressly disclaims any obligation to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This presentation also includes non-gaap measures. Information about these measurements are set forth in these materials and in our reports filed with the SEC. 2
Sotirios Vahaviolos, Ph.D. Chairman and Chief Executive Officer 3
Leading Global Provider of Proprietary, Technology-enabled Asset Protection Solutions Mistras Group founded in 1978 IPO in 2009 on the New York Stock Exchange trading under the symbol : MG Headquarters: Princeton, NJ USA Employees: ~5300 Locations: ~ 100 offices across 16 countries delivered globally Full suite of solutions Integrated Asset Protection Solutions The only pure-play publicly listed asset protection company for the industrial and public infrastructure 4
What Drives the TIC Market
Non-Destructive Testing (NDT) & Destructive (DT) Services, Software and Products Help to Prevent Wind Turbine Tower Nacelle Problems Refinery & Petrochemical Accidents Off Shore Platform Collapses Boiler Tube Ruptures Transformer Malfunctions Infrastructure Collapses Gas Turbine Damage Vessel Cracking or Collapse 6
Industry, Market and Size as per Rothschild Estimates for TIC TIC ~$100-125 B Industrial ~21.4 B 7
Mistras is a Leading Global One Source Provider of Technology Enabled Asset Protection Solutions. the Standard for Data Driven Maintenance Combining industry-leading products and technologies, expertise in Mechanical Integrity (MI), Non-Destructive Testing (NDT), Destructive Testing (DT) and Proprietary Data Analysis & Management Software including Risk Based Inspection (RBI) Allows Customers to Extend the useful life of Assets.Reliably Comply with Codes, Standards and Government Safety Regulations One Source Products Services Software Proprietary products, systems and know how Delivering run and maintain quality Inspection and engineering services Proprietary enterprise software that glues it together Outsource Inspection, Destructive Testing and Engineering Services Manage risk and avoid catastrophic disasters Reduce Outages or Turn Around Schedules Eliminate Unnecessary Time Scheduled Maintenance 8
Providing Asset Protection Solutions Perform NDT & Destructive Inspection Services Traditional Advanced Professional Engineering Services Mechanical & Analytical Materials Testing Manufacture & Market Products & Systems Acoustic Emission (AE) & Ultrasonic (UT) equipment & sensors AE monitoring systems Vibration equipment & sensors Develop Application Software PCMS/ Enterprise AE/UT Analysis Tank Screening Vessel Modeling Transformer Analysis Software Services 9
24/7 un-attended on-line asset protection management Asset Protection Solutions Regulatory compliance Safety Smart Grid Data analysis & RBI Life extension Future Inspection plans & reports 10
Destructive Testing DT A Perfect Combination of Services Experienced technical staff: Materials Engineers, Materials Technicians, Materials Tester, Mechanical-technological Materials Testing Materialography and Image Analysis Damage Investigations Material Qualification... especially advanced composites 11
AIMS: Asset Integrity Management Services Providing Insight into the level of Plant Readiness How to best manage the integrity of assets + How to extend the useful life of assets ISOTrac 12
Other major markets and growth opportunities Smart Grid: Power Generation and Transmission Power Generation (Nuclear) 120 On-line installed systems; Over 1,100 tests in database Advanced Composites/Materials (Aerospace) Serving the industry for 40 years Bridges and Other Infrastructure Advanced composites require new complex UT and Thermographic imaging technologies Predictive Maintenance Pharmaceutical & Chemical Of the 589,950 steel bridges listed in USA s National Bridge Inventory, 164,548 are structurally deficient and are functionally obsolete. Alternative Energy - Wind Predictive and Proactive Maintenance technologies required for implementing a "World Class Maintenance" program. Permanently installed on-line systems on aircraft or wind turbines provide remote health monitoring, Rope Access 13
Jonathan Wolk Executive Vice President and Chief Financial Officer 14
Standing Out in a Highly Fragmented Market MISTRAS Group Competitive Differentiators: Unique Single Source Provider of Technology-enabled asset protection solutions Technology Leader. #1 in R&D, Advanced Services, ERP Software, Niche Products Delivering a Compelling ROI.. Saving Customers Millions, documented via KPIs; new Gain Sharing Revenue Model.Value Added Solutions Nationwide North American Lab Network, plus Global Reach in more than one dozen countries. ~ 100 labs worldwide Strong Customer Service Orientation Customer Retention in the High 90s MISTRAS Group Accomplishments: Top NDT Market Services Provider in USA Revenue Growth of 32% Compounded from 2003 thru 2014 (50% Organic) Approximately 70% of Revenues are Recurring. MISTRAS Outsources Clients Inspection Departments via Run and Maintain Contracts, Turnarounds and Projects are Extra Benefit 15
Acquisition Model Acquisition Highlights Highly fragmented asset protection solutions industry offers numerous potential acquisition opportunities We have demonstrated a proven ability integrating complementary businesses > 35 acquisitions in last five fiscal years Seamless integration (30-60 days) Disciplined acquisition strategy focuses on bolton s of ~$5 to $15 million in deal size and seeks to: Strategic companies to compliment service offerings Broaden geographic presence Expand sales channels But always looks for corporate cultures match Organic growth follows after customer s acceptance of one source new provider Acquired customer base provides ability to offer higher-margin advanced asset protection What We Acquire Customers, new footprint and revenues Certified technicians, staff & management* Additional base for growth and opportunity Strong retention of entrepreneurial management Enhances future organic growth Limited Products Acquisition Model The Mistras The advantage Mistras advantage -Experience & scale -Management record -Infrastructure Experience & scale Management track record Infrastructure Technology Global Footprint Strong Brand Broad Product Offering Leading Edge Tech Skilled Resource s Access to Capital Mistras leverages >30 years of industry experience to improve operations and profitability of acquired assets by successfully integrating and selling a comprehensive suite of solutions to customers of acquired businesses 16
Focused in the US and in Oil & Gas, while Selectively Diversifying into Other Markets Revenues by: Vertical Market Infrastructure 5% Chemical 9% Other Revenues by: Country Asia 3% Industrial 11% Power Gen 9% Aerospace 13% Oil & Gas 49% S. America 2% Canada 7% Europe 25% USA 62% 17
Financial Picture Historical Revenues Adjusted EBITDA* $209 $272 $339 $437 $529 $623 $31 $39 $52 $65 $68 $70 2009 2010 2011 2012 2013 2014 Net Debt to EBITDA 2.4 1.2 1.0 0.8 0.3 0.5 2009 2010 2011 2012 2013 2014 40% 35% 2009 2010 2011 2012 2013 2014 Organic Growth Organic Acquisition 30% 23% 25% 12% 13% 20% 8% 15% 19% 9% 10% 16% 18% 16% 16% 5% 9% 0% 3% 2009 2010 2011 2012 2013 2014 Services Organic Growth in 2013 6% and 2014 12% 18
Expectations for the Future Top Line Growth MISTRAS Revenue Growth: 2009-2014 Total Revenue Tripled, to Over $623 Million. 24% CAGR Growth Driven evenly by Organic and Acquisitions US represented 55% of this growth (primarily Organic), while International represented 45% (primarily Acquisition) MISTRAS Annual Revenue Growth: 2015 - Forward Organic Growth Expectation: 7% to 12% Acquisition Growth Expectation: 3% Total Revenue Growth Expectation: 10% to 15% 19
Expectations for the Future Bottom Line MISTRAS EBITDA Growth: 2009-2014 More than Doubled, from $31 million to $70 Million. 18% CAGR US Operating Income Margins rose from 6% in 2009 to 7% in 2014 International Operating Margins still in low single digits MISTRAS EBITDA Growth: 2015 - Forward We Will Grow Faster than Revenue, Driven by: Profit as Top Priority; Reduced Top Line Growth Rate Enables Focus on Best Practices International Integrations Process Efficiencies Improvements in Revenue Mix Working Capital Efficiencies 20
Operating Results and 2015 Guidance 2009 to 2014 History FY 2015 2009 2014 CAGR Low High Revenue $209 $623 24% $680 $705 vs 2014 +9% +13% Adj EBITDA $31 $70 18% $78 $84 vs 2014 +11% +19% EPS $0.42 $0.77 13% $0.85 $0.89 vs 2014 +10% +16% 21
Thank You Jefferies 2014 Global Industrials Conference New York August 14, 2014 D E L I V E R I N G A S S E T P R OT EC T I O N S O LU T I O N S GLO BALLY 22