Mistras Group Inc (MG) Second Quarter Fiscal Year 2015 Earnings Call Transcript

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We have grown total revenues by more than 20% for three consecutive quarters. Now the last year’s BP Alaska contract has reached its one-year anniversary, revenue growth might slowdown a bit in the second half of the fiscal year, but should still be healthy. In recognition of our strangled first half performance, we increased our revenue guidance to a range from $720 million to $740 million and we believe that our EBITDA will be towards the high-end of our guidance range of $78 million to $84 million.

As I conclude this conference call, let me thank our 5800 loyal employees for their commitment to quality and safety and our loyal customers and valued shareholders for believing in us. That concludes our prepared remarks. We would like to now open the floor to questions.

Question and Answer Session:

Operator
Thank you. (Operator Instructions) Our first question comes from Matt Duncan with Stephens. Your line is open.

Matt Duncan, Stephens Inc.
Good morning, guys and congrats on a great quarter.

Sotirios J. Vahaviolos, Chairman, President, and CEO, MISTRAS Group, Inc.
Thank you, Matt.

Jonathan H. Wolk, EVP, CFO, and Treasurer, MISTRAS Group, Inc.
Thanks, Matt.

Matt Duncan, Stephens Inc.
Sotirios, you gave us, I think, a lot of color on what has been driving the strong organic growth in the services segment. It sounds like the Alaska contract is certainly a contributor, but can you talk maybe a little bit more.Were there any specific large projects that you guys had in the fall that helped that may not repeat or was this really just a good indication of the momentum in your business?

Sotirios J. Vahaviolos, Chairman, President, and CEO, MISTRAS Group, Inc.
Actually, you know, Matt, the turnaround was really standard turnarounds that they used to be in the old days, okay? Things did not stop at any point because of cost. If anything else, people really received the services that we always give. They were what we would like to call them healthy turnarounds. That helped a lot. Plus also some new business that we created during this quarter.

Matt Duncan, Stephens Inc.
Okay. Can you talk about NACHER? It sounds like maybe it is doing a bit better than you thought it would out the gate? How much revenue did they contribute in the quarter and what is the outlook like for that business?

Sotirios J. Vahaviolos, Chairman, President, and CEO, MISTRAS Group, Inc.
Jon, go ahead.

Jonathan H. Wolk, EVP, CFO, and Treasurer, MISTRAS Group, Inc.
Well, Matt,we would rather, for competitive reasons, not provide precise numbers, but I would say that the reason that we went from the mid-teens to the mid 20s in the acquisition growth year-over-year from first quarter to second quarter was primarily NACHER. The outlook is very positive. We are very excited about the business. Our customers are telling us NACHER has unique attributes that they are excited about, but having said that, it is a new business to us and we are just learning their seasonality patterns and so forth. It is a little bit tricky for us looking forward to really specifically guide you.

Matt Duncan, Stephens Inc.
Okay.

Sotirios J. Vahaviolos, Chairman, President, and CEO, MISTRAS Group, Inc.
I think in the future also we hope that, that would help our entity business in the offshore business that is very, very minimal at this stage.

Matt Duncan, Stephens Inc.
Okay. Looking at the guidance for a second, guys, the guide on revenues implies the second half would be below first half and I suspect that there is probably some level of conservatism in that. Is there any reason to believe that you had things happen from a revenue perspective in the first half that you cannot repeat in the second half? Or should we really view this as more of just a conservative approach to guidance?

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