Mistras Group, Inc.

Second-quarter revenue was $193 million, up 4.2% year over year. Gross margin expanded by 10 basis points, adjusted EBITDA was $25.8 million, and adjusted EBITDA margin was 13.3%. Operating income increased 53.6% to $12.9 million from $8.4 million, GAAP EPS was $0.23 versus $0.28 non-GAAP EPS, and GAAP/non-GAAP net income were $7.6 million and $9.1 million, respectively. Free cash flow improved by $23.9 million year over year, and the bank-defined leverage ratio was about 2.2x at June 30, down from 2.4x at March 31. For 2026, management raised guidance to revenue of $740 million-$755 million and adjusted EBITDA of $92 million-$95 million; the full-year tax rate is expected to be about 25%.

Natalia Shuman framed the quarter as evidence that Vision 2030 is working, with Mistras becoming more diversified, more technology-enabled, and less cyclical. She emphasized that growth in aerospace and defense, infrastructure, and power more than offset oil and gas weakness, and said the company is deliberately shifting toward higher-margin, longer-duration work. Her tone was constructive and confident, especially around capacity expansion in in-lab testing, new AI initiatives, and the view that strategic growth markets will support the rest of the year.

Ed Prajzner highlighted the operating leverage in the model, pointing to 53.6% growth in operating income to $12.9 million, 30 basis points of gross margin expansion, and adjusted EBITDA of $25.8 million, up 7% year over year. He said SG&A fell 2.7% year over year, free cash flow improved sharply due to better net income and working capital, and the company expects to return to historically favorable cash flow levels in the second half. He also noted interest expense of $4.1 million, an effective tax rate of 23.1% in the quarter, expected full-year tax rate of about 25%, and leverage of approximately 2.2x, with a goal to reach 2x by the end of 2026.

Analysts focused on how much of the raised guidance comes from aerospace/defense and infrastructure versus oil and gas, and Natalia confirmed the lift is mainly from the strategic growth markets while oil and gas is expected to be roughly flat to moderately growing in the second half after adjustments. Questions also probed in-lab capacity, where management said expansions in Houston and Los Angeles could nearly triple capacity by the end of 2027, but revenue realization typically lags investment by 9 to 12 months. On backlog and M&A, management said visibility comes more from recurring contracts and reserve capacity than a single backlog metric, and that the company is still building an opportunistic M&A pipeline but does not rely on transformative acquisitions.