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What changed in Mistras Group, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Mistras Group, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+285 added−258 removedSource: 10-K (2025-03-11) vs 10-K (2024-03-11)

Top changes in Mistras Group, Inc.'s 2024 10-K

285 paragraphs added · 258 removed · 228 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

97 edited+28 added−11 removed128 unchanged
Biggest changeMost of the projects are in our target markets, however, a few of the projects could lead to other future market opportunities. Intellectual Property Our success depends, in part, on our ability to maintain and protect our proprietary technology and to conduct our business without infringing on the proprietary rights of others.
Biggest changeIntellectual Property Our success depends, in part, on our ability to maintain and protect our proprietary technology and to conduct our business without infringing on the proprietary rights of others. We utilize a combination of intellectual property safeguards, including patents, copyrights, trademarks and trade secrets, as well as employee and third-party confidentiality agreements, to protect our intellectual property.
Field Inspections 4 Table of Contents Our field inspections portfolio includes traditional and advanced NDT techniques and inline inspection for pipelines. We offer these solutions on an individual basis, or as parts of enterprise inspection and testing programs. NDT is the examination of an asset without materially impacting its structural integrity.
Field Inspections Our field inspections portfolio includes traditional and advanced NDT techniques and inline inspection for pipelines. We offer these solutions on an individual basis, or as parts of enterprise inspection and testing programs. 4 Table of Contents NDT is the examination of an asset without materially impacting its structural integrity.
These monitoring solutions are often installed in hazardous or hard-to-reach locations, helping to enhance safety by reducing the need to send technicians into unsafe locations. 5 Table of Contents Laboratory Testing Our network of in-house laboratories located across North America and Europe offers quality assurance and quality control ("QA/QC") solutions for new and existing metal and alloy components, materials, and composites.
These monitoring solutions are often installed in hazardous or hard-to-reach locations, helping to enhance safety by reducing the need to send technicians into unsafe locations. 5 Table of Contents In-house Laboratory Testing Our network of in-house laboratories located across North America and Europe offers quality assurance and quality control ("QA/QC") solutions for new and existing metal and alloy components, materials, and composites.
In the energy market, there are various economic indicators that drive our business, especially in the U.S. domestic markets. It is unclear what the short and long term effects of the war between Russia and Ukraine is likely to have on the world economy and certain of our target markets, including particularly the oil and gas market.
In the energy market, there are various economic indicators that drive our business, especially in the U.S. domestic markets. It is unclear what the short- and long-term effects of the war between Russia and Ukraine are likely to have on the world economy and certain of our target markets, including particularly the oil and gas market.
A community of caring professionals with a genuine passion for helping people and making a difference together – that is the heart of the program we call “Caring Connects.” 16 Table of Contents Our Safety-Conscious Culture We consider safety the backbone of our operations.
A community of caring professionals with a genuine passion for helping people and making a difference together – that is the heart of the program we call “Caring Connects.” Our Safety-Conscious Culture 16 Table of Contents We consider safety the backbone of our operations.
Other key trademarks or service marks that we utilize in localized markets or product advertising include: • Onstream® (word and logo) • PCMS® (word and logo) • Ropeworks® • MISTRAS Digital ® • OneSuite™ • Sensoria™ • OneSource™ • CALIPERAY™ (word and logo) • Physical Acoustics PAC logo • Streamview™ • Sensor Highway™ • TankPAC ® • VPAC™ • Transformer Clinic™ • FieldCal™ • UTwin® • AEwin® • Pocket AE® • Pocket UT® 18 Table of Contents Many elements of our asset protection solutions involve proprietary know-how, technology or data that are not covered by patents or patent applications because they are not patentable or would be difficult to enforce, including technical processes, algorithms and procedures.
Other key trademarks or service marks that we utilize in localized markets or product advertising include: • Onstream® (word and logo) • PCMS® (word and logo) • Ropeworks® • MISTRAS Digital ® • OneSuite™ • Sensoria™ • OneSource™ • CALIPERAY™ (word and logo) • Physical Acoustics PAC logo • Streamview™ • Sensor Highway™ • TankPAC ® • VPAC™ • Transformer Clinic™ • FieldCal™ • UTwin® • AEwin® • Pocket AE® • Pocket UT® Many elements of our asset protection solutions involve proprietary know-how, technology or data that are not covered by patents or patent applications because they are not patentable or would be difficult to enforce, including technical processes, 18 Table of Contents algorithms and procedures.
Online monitoring and permanently-mounted sensors provide real-time data to petrochemical owners and operators and provide an opportunity for us to synergistically leverage our asset protection solutions into our MISTRAS Digital platform, OneSuite. Digital transmission of data in various industry sectors, with built-in analytic functions, will allow our customers to better leverage inspection data that is being generated in the field.
Online monitoring and permanently-mounted sensors provide real-time data to petrochemical owners and operators and provide an opportunity for us to synergistically leverage our asset protection solutions into our platform, OneSuite. Digital transmission of data in various industry sectors, with built-in analytic functions, will allow our customers to better leverage inspection data that is being generated in the field.
We believe long-term growth can be realized in our target markets. Our business and financial results are impacted by world-wide macro- and micro-economic conditions generally, as well as those within our target markets. Among other things, we expect the timing of our oil and gas customers inspection expenditures to be impacted by oil price fluctuations.
We believe long-term growth can be realized in our target markets. Our business and financial results are impacted by world-wide macro- and micro-economic conditions generally, as well as those within our target markets. Among other things, we expect the timing of our oil and gas customers inspection and maintenance expenditures to be impacted by oil price fluctuations.
Our competition with respect to our PCMS software includes UltraPIPE, Lloyd’s Register Capstone, Inc. and Meridium Systems. In the traditional NDT market, we believe the principal competitive factors include project management, availability of qualified personnel, execution, price, reputation and quality, whereas in the advanced NDT market, reputation, quality and size tend to be the most significant competitive factors.
Our competition with respect to PCMS includes UltraPIPE, Lloyd’s Register Capstone, Inc. and Meridium Systems. In the traditional NDT market, we believe the principal competitive factors include project management, availability of qualified personnel, execution, price, reputation and quality, whereas in the advanced NDT market, reputation, quality and size tend to be the most significant competitive factors.
Data Analytical Solutions revenues are comprised of revenue derived from data software sales & subscriptions, implementation services and analytics that offer insights and recommendations to improve asset integrity. Data Analytical Solutions revenue is derived from work performed by Mistras employees in our facilities, or at customer locations, using our proprietary portfolio of software applications.
Data Analytical Solutions revenues are comprised of revenue derived from data software sales & subscriptions, implementation services and analytics that offer insights and recommendations to improve asset integrity. Data Analytical Solutions revenue is derived from work performed by our employees in our facilities, or at customer locations, using our proprietary portfolio of software applications.
These markets primarily consist of: • Oil and Gas (Downstream, Midstream and Upstream) • Aerospace and Defense • Industrial • Power Generation and Transmission • Infrastructure, Research and Engineering • Other Process Industries • Petrochemical A majority of our revenues are generated by deploying technicians at our customers' locations.
These markets primarily consist of: • Oil and Gas (Downstream, Midstream and Upstream) • Aerospace and Defense • Industrial • Power Generation and Transmission • Infrastructure, Research and Engineering • Other Process Industries • Petrochemical A majority of our revenues are generated by deploying technicians and inspectors at our customers' locations.
The following discussions should be read in conjunction with the sections of this Annual Report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.” OUR BUSINESS Overview Mistras Group, Inc. is a leading "one source" multinational provider of integrated technology-enabled asset protection solutions, helping to maximize the safety and operational uptime for civilization’s most critical industrial and civil assets.
The following discussions should be read in conjunction with the sections of this Annual Report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.” OUR BUSINESS Overview Mistras Group, Inc. is a leading "one source" multinational provider of integrated technology-enabled asset integrity solutions, helping to maximize the safety and operational uptime for civilization’s most critical industrial and civil assets.
Prajzner joined Mistras in January 2018 as our Senior Vice President, Chief Financial Officer and Treasurer, was subsequently promoted to Executive Vice President and on March 26, 2023, was promoted to become our Senior Executive Vice President and Chief Financial Officer. Prior to joining Mistras, Mr.
Prajzner joined Mistras in January 2018 as our Senior Vice President, Chief Financial Officer and Treasurer, was subsequently promoted to Executive Vice President and on March 26, 2023, was promoted to our Senior Executive Vice President and Chief Financial Officer. Prior to joining Mistras, Mr.
This allows us to provide our customers with industry-leading insights across all their facilities and enables us to provide additional software and solutions to these customers and perform recurring maintenance where necessary.
This allows us to provide our customers with industry-leading insights across all of their facilities and enables us to provide additional software and solutions to these customers and perform recurring maintenance where necessary.
Backed by an innovative, data-driven asset protection portfolio, proprietary technologies, and a decades-long legacy of industry leadership, the Company helps customers with asset-intensive infrastructure in the oil and gas, petrochemical, aerospace and defense, industrials, power generation and transmission (including alternative and renewable energy), other process industries and infrastructure, research and engineering and other industries towards achieving and maintaining operational excellence.
Backed by an innovative, data-driven asset protection portfolio, proprietary technologies, and a decades-long legacy of industry leadership, the Company helps customers with asset-intensive and mission critical infrastructure in the oil and gas, petrochemical, aerospace and defense, industrials, power generation and transmission (including alternative and renewable energy), other process industries and infrastructure, research and engineering and other industries towards achieving and maintaining operational excellence.
Our solutions help identify conditions that if not remedied, could lead to potential catastrophic failures in tanks, vessels, valves, buried and above ground pipelines, pumps, motors, compressors and other critical assets found throughout the petrochemical production process. We actively seek to evolve our solutions through technological enhancements and R&D to discover new applications.
Our solutions help identify conditions that if not remedied, could lead to potential catastrophic failures in tanks, vessels, valves, buried and above ground pipelines, pumps, motors, compressors and other critical assets found throughout the petrochemical production process. We actively seek to evolve our solutions through technological enhancements and research and development ("R&D") to discover new applications.
Revenue Overview Revenue by Industry The following charts represent our disaggregated revenue by industry for the years ended December 31, 2023, 2022 and 2021. 11 Table of Contents 12 Table of Contents Our Target Markets Overview We operate in a highly competitive, but fragmented market. Domestically, the market is serviced by several national competitors and many regional and/or local companies.
Revenue Overview Revenue by Industry The following charts represent our disaggregated revenue by industry for the years ended December 31, 2024, 2023 and 2022. 11 Table of Contents 12 Table of Contents Our Target Markets Overview We operate in a highly competitive, but fragmented market. Domestically, the market is serviced by several national competitors and many regional and/or local companies.
Our deep knowledge base in asset protection services and equipment enables us to offer technology packages, in which our field technicians utilize our proprietary and specialized testing procedures and hardware, advanced pattern recognition, neural network software and databases to compare test results against our prior testing data or national and international structural integrity standards.
Our extensive knowledge base in asset protection services and equipment enables us to offer technology packages, in which our field technicians utilize our proprietary and specialized testing procedures and hardware, advanced pattern recognition, neural network software and databases to compare test results against our prior testing data or national and international structural integrity standards.
Smith began his career as a non-destructive testing (NDT) technician with CONAM Inspection and Engineering Services before launching his own business, Elite Inspection Services Company. He owned and operated Elite for 16 years, until Mistras acquired the company in 2008. During his NDT career, Mr. Smith held multiple certifications from the American Society for Nondestructive Testing (ASNT).
Smith began his career as a NDT technician with CONAM Inspection and Engineering Services before launching his own business, Elite Inspection Services Company ("Elite"). He owned and operated Elite for 16 years, until Mistras acquired Elite in 2008. During his NDT career, Mr. Smith held multiple certifications from the American Society for Nondestructive Testing (ASNT).
We have increased our capabilities and the size of our customer base through the development of applied technologies and managed support services, organic growth and the integration of acquired companies. These acquisitions have provided us with additional service lines, technologies, resources and customers, which we believe will enhance our advantages over our competition.
We have increased our capabilities and the size of our customer base through the development of applied technologies and managed support services, organic growth and the integration of acquired companies. These acquisitions have provided us with additional service offerings, technologies, resources and customers, which we believe will enhance our advantages over our competition.
Our light mechanical services are often offered as complementary, value-added solutions to inspections, such as removing insulation in order to inspect piping, then re-installing insulation. Our multi-disciplined technicians offer maintenance and light mechanical services in hard-to-access areas, in combination with rope access or diving strategies.
Our light mechanical services are often offered as complementary, value-added solutions to inspections, such as removing insulation in order to inspect piping, then re-installing insulation. Our multi-disciplined technicians offer maintenance and light mechanical services in hard-to-access areas, and in some cases in combination with rope access or diving strategies.
We believe that few, if any, of our competitors currently provide the full range of asset protection and NDT products, enterprise software ("PCMS") and the traditional and advanced services solutions that we offer. Our competition with respect to NDT services include Acuren, SGS Group, the Team IHT Segment and APPLUS RTD.
We believe that few, if any, of our competitors currently provide the full range of asset protection and NDT products, PCMS and the traditional and advanced services solutions that we offer. Our competition with respect to NDT services include Acuren, SGS Group, the Team IHT Segment and APPLUS RTD.
Due to the increasing sophistication and automation of NDT programs, a decreasing supply of skilled professionals and increasing governmental regulations, companies are increasingly outsourcing NDT to third-party providers with advanced solution portfolios, engineering expertise and trained workforces. Increasing Corrosion from Low-Quality Inputs .
Due to the increasing sophistication and automation of asset protection programs, a decreasing supply of skilled professionals and increasing governmental regulations, companies are increasingly outsourcing NDT to third-party providers with advanced solution portfolios, engineering expertise and trained workforces. Increasing Corrosion from Low-Quality Inputs .
We anticipate sharp growth in these types of plants as natural gas pricing remains low, and the environmental impacts of coal remain unattractive to the public. We also offer solutions for inspection, maintenance, monitoring and data services for wind turbines and their components.
We anticipate increased growth in these types of plants as natural gas pricing remains low, and the environmental impacts of coal remain unattractive to the public. We also offer solutions for inspection, maintenance, monitoring and data services for wind turbines and their components.
The release of our OneSuite ecosystem underscores our dedication to continue deepening synergies between our solutions to provide our customers with uniquely-integrated offerings, which we believe makes us a more attractive vendor for customers seeking to centralize their asset protection.
The release of our OneSuite ecosystem underscores our dedication to continue deepening synergies between our solutions to provide our customers with uniquely-integrated offerings, which we believe makes us a more attractive partner for customers seeking to centralize their asset protection.
As a result, these owners and operators are seeking highly-reliable asset protection suppliers with a track record of assisting customers in meeting increasingly stringent regulations. Our customers benefit from our extensive engineering consulting base that supports them in devising mechanical integrity programs that both meet regulatory compliance standards and enable enhanced safety and uptime at the customer's facilities.
As a result, these owners and operators are seeking highly-reliable asset protection suppliers with a track record of assisting customers in meeting increasingly stringent regulations. Our customers benefit from our extensive engineering consulting base that supports them in devising MI programs that both meet regulatory compliance standards and enable enhanced safety and uptime at the customer's facilities.
We believe we have significant opportunities to expand our customer base in relatively new end markets, including the renewable energy industry, specifically, wind and other alternative energy, natural gas transportation industries, pipeline integrity and additive manufacturing.
We believe we have significant opportunities to expand our customer base in relatively new end markets, including the renewable energy industry, specifically, wind and other alternative energy, natural gas transportation industries, data centers, pipeline integrity and additive manufacturing.
Research and Development Our research and development is principally conducted by engineers and scientists at our Princeton Junction, New Jersey headquarters, and supplemented by other employees in the United States and throughout the world, including Canada, France, Greece the United Kingdom, Brazil and the Netherlands.
Research and Development Our R&D is principally conducted by engineers and scientists at our Princeton Junction, New Jersey headquarters, and supplemented by other employees in the United States and throughout the world, including Canada, France, Greece the United Kingdom, Brazil and the Netherlands.
As of December 31, 2023, the primary trademarks and service marks that we held in the United States included MISTRAS ® , our stylized globe design and our tag line "One Source for Asset Protection Solutions".
As of December 31, 2024, the primary trademarks and service marks that we held in the United States included MISTRAS ® , our stylized globe design and our tag line "One Source for Asset Protection Solutions".
Some of the advanced inspection technologies developed by our internal research and development teams include an automated radiographic testing ("aRT") crawler for corrosion under insulation ("CUI") inspections in above ground pipelines and piping; our Large Structure Inspection ("LSI") scanner, and our real-time radiography ("RTR") crawler for 360° inspections of pipeline girth welds. Collaborating with Our Customers .
Some of the advanced inspection technologies developed by our internal research and development teams include an automated radiographic testing crawler for corrosion under insulation ("CUI") inspections in above ground pipelines and piping; our Large Structure Inspection scanner, and our real-time radiography crawler for 360° inspections of pipeline girth welds. Collaborating with Our Customers .
We have gained this through our industry leadership in developing advanced asset protection solutions, including research and development of advanced NDT technologies and applications, process engineering technologies, online plant asset integrity management with sensor fusion; and enterprise software solutions for plant-wide and fleet-wide inspection data archiving and management. Technological Research and Development.
We have gained this through our industry leadership in developing advanced asset protection solutions, including research and development of advanced NDT technologies and applications, process engineering technologies, online plant asset integrity management with sensor fusion; and enterprise software solutions for plant-wide and fleet-wide inspection data archiving and management. 9 Table of Contents Technological Research and Development.
Human Capital As of December 31, 2023, we had approximately 4,800 employees worldwide, of which 3,200 were located in the United States, 500 in Canada and 1,100 in our other non-U.S. locations. Our employees include full and part time employees throughout our organization.
Human Capital As of December 31, 2024, we had approximately 4,800 employees worldwide, of which 3,200 were located in the United States, 500 in Canada and 1,100 in our other non-U.S. locations. Our employees include full, part time and contract employees throughout our organization.
Stamatakis has held multiple board and chairmanship positions over the years, including Chairman of the Delaware River Port Authority, The Drexel College of Medicine, the Pennsylvania Supreme Court Investment Advisory Board, and the Philadelphia Shipyard Development Corporation which was the catalyst to bringing shipbuilding back to the Philadelphia region.
Stamatakis has held multiple board and chairmanship positions over the years, including Chairman of the Delaware River Port Authority, The Drexel College of Medicine, the Pennsylvania Supreme Court Investment Advisory Board, and the Philadelphia Shipyard Development 19 Table of Contents Corporation which was the catalyst to bringing shipbuilding back to the Philadelphia region.
We have established long-term relationships as a critical solutions provider to many of the leading companies with asset-intensive infrastructure in our target markets.
We have established long-term relationships as a critical solutions provider to many of the leading companies with asset-intensive and mission-critical infrastructure in our target markets.
While energy prices recovered in 2017 and 2018, they once more declined, and subsequently rebounded in the second half of 2021 and the first half of 2022 with near record high prices and crack spreads. This resulted in refineries delaying turnarounds during 2022 until oil prices decreased and stabilized in the second half of 2022.
While energy prices recovered in 2017 and 2018, they once more declined, and subsequently rebounded in the second half of 2021 and the first half of 2022 with near record high prices and crack spreads. This resulted in refineries delaying turnarounds during 2022 until oil prices decreased and 8 Table of Contents stabilized in the second half of 2022.
We place a data-centric focus on asset protection, enabling our customers to ease some of their biggest areas of concern (particularly the timely and accurate transfer of asset integrity data from the field to their IDMS, as well as the data’s visibility and accessibility once uploaded).
We place a data-centric focus on asset protection, enabling our customers to ease some of their biggest areas of concern (particularly the timely and accurate transfer of asset integrity data from the field to the data management systems, as well as the data’s visibility and accessibility once uploaded).
Moreover, we believe that vendors that are able to effectively deliver both 7 Table of Contents advanced solutions and data analytics, by virtue of their access to customers’ data, create a significant barrier to entry for competitors, leading to the opportunity to further create significant recurring revenues.
Moreover, we believe that vendors that are able to effectively deliver both advanced solutions and data analytics, by virtue of their access to customers’ data, create a significant barrier to entry for competitors, leading to the opportunity to further create significant recurring revenues.
In addition, materials we file with the SEC may be read and copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. 20 Table of Contents
In addition, materials we file with the SEC may be read and copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
Our Asset Integrity Management ("AIMS") and Mechanical Integrity ("MI") services help improve asset reliability and regulatory compliance through a systematic, engineering-based approach to ensure the ongoing integrity and safety of equipment and industrial facilities. AIMS/MI services can include conducting an inventory of infrastructure assets; developing, implementing and training personnel in executing inspection and maintenance procedures; and managing MI programs.
Our AIMS and Mechanical Integrity ("MI") services help improve asset reliability and regulatory compliance through a systematic, engineering-based approach to ensure the on going integrity and safety of equipment and industrial facilities. AIMS/MI services can include conducting an inventory of infrastructure assets; developing, implementing and training personnel in executing inspection and maintenance procedures; and managing MI programs.
Our revenues are diversified, with our top ten customers accounting for approximately 35%, 33% and 33% of our revenues during the years ended December 31, 2023, 2022 and 2021, respectively, with no customer accounting for greater than 10% of our revenues in any such year.
Our revenues are diversified, with our top ten customers accounting for approximately 36%, 35% and 33% of our revenues during the years ended December 31, 2024, 2023 and 2022, respectively, with no customer accounting for greater than 10% of our revenues in any such year.
In 2019, we acquired a company that provides pipeline integrity management software and services to energy transportation companies. We acquired an inline inspection provider in 2018 and have implemented our PCMS software for several pipeline operators to support their integrity data management. Expanding our Mechanical Services Portfolio.
In 2019, we acquired a company that provides pipeline integrity management software and services to energy transportation companies. We acquired an inline inspection provider in 2018 and have implemented our PCMS software for several pipeline operators to support their integrity data management.
No customer represented 10% or more of our revenue in any of the years ended December 31, 2023, 2022 or 2021. Geographic Areas We have operations in 10 countries and occasionally conduct business in a few other countries.
No customer represented 10% or more of our revenue in any of the years ended December 31, 2024, 2023 or 2022. Geographic Areas We have operations in 11 countries and occasionally conduct business in a few other countries.
The stabilization continued throughout 2023 without major peaks and fluctuations as seen in prior periods. The on-going war in Ukraine and the conflict in the Middle East between Israel and 8 Table of Contents Hamas, coupled with continued macroeconomic uncertainty in 2024, are expected to continue to significantly influence oil prices for the foreseeable future.
The stabilization continued throughout 2023 without major peaks and fluctuations as seen in prior periods. The on-going war in Ukraine and the conflict in the Middle East between Israel and Hamas, coupled with continued macroeconomic uncertainty throughout 2024, are expected to continue to significantly influence oil prices for the foreseeable future.
Our data acquisition capabilities capture asset data to help our customers follow regulatory compliance, ensure mechanical integrity, and reduce unplanned outages. We capture data using manned and automated techniques that minimize the impact on our customers' operations.
Our data analytical solutions capabilities capture asset data to help our customers follow regulatory compliance, ensure mechanical integrity, and reduce unplanned outages. We capture data using manned and automated techniques that minimize the impact on our customers' operations.
Expanding Addressable End-Markets . The continued emergence of and advances in asset protection technologies and software-based systems are increasing the demand for asset protection solutions in applications where existing techniques were previously ineffective. Expanding Aerospace and Defense Industry .
Expanding Addressable End-Markets . The continued emergence of and advances in asset protection technologies and software-based systems are increasing the demand for asset protection solutions in applications where existing techniques were previously ineffective.
Our COEs include: • Acoustic Emission • American Petroleum Institute ("API") Turnarounds • AIMS/MI/Engineering • Automated Ultrasonics • Fossil Power • Guided Wave Ultrasonics • Mechanical Services • Nuclear Power • Phased Array • Rope Access • Wind • Tank Inspection • Tube Inspection • Unmanned Systems ASSET PROTECTION INDUSTRY OVERVIEW Asset protection plays a crucial role in assuring the integrity and reliability of critical infrastructure.
Our COE experts cover: • Acoustic Emission • American Petroleum Institute ("API") Turnarounds • AIMS/MI/Engineering • Automated Ultrasonics • Fossil Power • Guided Wave Ultrasonics • Mechanical Services • Nuclear Power • Phased Array • Rope Access • Wind • Tank Inspection • Tube Inspection • Unmanned Systems ASSET PROTECTION INDUSTRY OVERVIEW Asset protection plays a crucial role in assuring the integrity and reliability of critical infrastructure.
Key Dynamics of the Asset Protection Industry We believe the following represent key dynamics of the asset protection industry, and that the market available to us will continue to grow as these macro-market trends continue to develop: Digital Transformation of Asset Protection.
Key Dynamics of the Asset Protection Industry 7 Table of Contents We believe the following represent key dynamics of the asset protection industry, and that the market available to us will continue to grow as these macro-market trends continue to develop: Digital Transformation of Asset Protection.
Excerpted below are forecasts from various Energy Information Administration (EIA) outlook reports, which are subject to change based on these factors: 13 Table of Contents Electricity generation from coal is projected to fall throughout the mid 2020s and the decrease will be partially offset by an increase in the forecast of combined utility-scale solar and wind generation.
Excerpted below are forecasts from various Energy Information Administration ("EIA") outlook reports, which are subject to change based on these factors: 13 Table of Contents Electricity generation from coal is projected to continue to fall throughout the mid to late 2020s and the decrease will be partially offset by an increase in the forecast of combined utility-scale solar and wind generation, along with other sources.
The NDT industry continues to move towards more advanced, automated solutions, requiring service providers to find safer and more cost-efficient inspection techniques. We believe that we remain ahead of the 9 Table of Contents technological curve by backing our extensive industry expertise with the investment of resources in research and development.
The inspection and testing industry continues to move towards more advanced, automated solutions, requiring service providers to find safer and more cost-efficient inspection techniques. We believe that we remain ahead of the technological curve by backing our extensive industry expertise with the investment of resources in research and development.
Field Services revenues are comprised of revenue derived primarily by technicians performing asset inspections and maintenance services for our customers at locations other than Mistras properties. Shop Laboratory revenues are comprised of quality assurance inspections of components and materials at our Mistras in-house laboratory facilities.
Field Services revenue is comprised of revenue derived primarily by technicians performing asset inspections and maintenance services for our customers at locations other than our properties. Shop Laboratory revenue is comprised of quality assurance inspections of components and materials at our in-house laboratory facilities.
Our Segments We have three operating segments: (i) North America (which we previously referred to as our Services segment), (ii) International and (iii) Products and Systems: North America provides asset protection solutions with the largest concentration in the United States, followed by Canada, consisting primarily of NDT, inspection, mechanical and engineering services that are used to evaluate the structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components.
Our Segments We have three operating segments: (i) North America, (ii) International and (iii) Products and Systems: North America provides asset protection solutions with the largest concentration in the United States, followed by Canada, consisting primarily of NDT, inspection, in-laboratory testing, mechanical and engineering services that are used to evaluate the structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components.
A majority of our revenues from aerospace and defense as well as certain manufacturing customers are generated by performing inspections and testing at our various in-house laboratories. We generated revenues of $705.5 million, $687.4 million and $677.1 million for the years ended December 31, 2023, 2022 and 2021, respectively.
A majority of our revenues from aerospace and defense as well as certain manufacturing customers are generated by performing inspections and testing at our various in-house laboratories. We generated revenues of $729.6 million, $705.5 million and $687.4 million for the years ended December 31, 2024, 2023 and 2022, respectively.
We have also developed key initiatives and strategies regarding our talent and people initiatives. Below, we describe some of the key initiatives and values around health and safety. Management regularly updates our Board of Directors with regards to our safety and people strategy and how we are performing in these areas.
We have also developed key initiatives and strategies regarding our talent and people initiatives. Below, we describe some of the key initiatives and values around health and safety. Management regularly updates our board of directors (the "Board") with regards to our safety and employee strategy and our performance in these areas.
The EIA noted U.S. crude oil production averaged 11.9 million barrels per day (bpd) in 2022 and rose to an average 12.9 million bpd in 2023. The EIA forecasts production to continue to increase to an average 13.3 million bpd in 2024 and further increase to 13.5 million bpd in 2025.
The EIA noted U.S. crude oil production averaged 11.9 million barrels per day (bpd) in 2022, rose to an average 12.9 million bpd in 2023 and rose again in 2024 to an average 13.2 million bpd in 2024. The EIA forecasts production to continue to increase to an average of 13.5 million bpd in 2025.
The Company’s core capabilities also include NDT field inspections enhanced by advanced robotics, laboratory quality control, laboratory materials services, shop laboratory assurance testing, sensing technologies and NDT equipment, asset and mechanical integrity engineering services, and light mechanical maintenance and access services.
The Company’s core capabilities also include non-destructive testing ("NDT") field inspections enhanced by advanced robotics, laboratory quality control, laboratory materials services, in-house laboratory assurance testing, sensing technologies and NDT equipment, asset and mechanical integrity engineering services, and light mechanical maintenance and access services.
We intend to continue broadening our solutions for the pipeline market. Recent industry regulations significantly expanded pipeline integrity management regulations, requiring pipeline owner/operators to inspect, document, and assess the risk of operating conditions for existing lines. This provides us with the opportunity to provide asset protection solutions for both the new construction and integrity phases.
Recent industry regulations significantly expanded pipeline integrity management regulations, requiring pipeline owner/operators to inspect, document, and assess the risk of operating conditions for existing lines. This provides us with the opportunity to provide asset protection solutions for both the new construction and integrity phases.
Oil and Gas We supply oil and gas asset protection solutions to downstream (refining), midstream (transportation and storage) and upstream (exploration and production) operations.
Oil and Gas We supply oil and gas asset protection solutions to downstream (refining), midstream (transportation and storage) and upstream (exploration and production) operations of our customers.
We help to identify gaps between existing and desired practices and establish quality assurance standards for fabrication, engineering and installation of infrastructure assets. Access 6 Table of Contents Much of our work is conducted in hard-to-access locations, including those in at-height, subsea and confined locations.
We help customers to identify gaps between existing and desired practices and establish quality assurance standards for fabrication, engineering and installation of infrastructure assets. Access Some of our work is conducted in hard-to-access locations, including those in at-height, subsea and confined locations.
Most of our revenues are derived from our U.S., Canadian and European operations and we do not have operations in Russia, and we do not do business in Russia, Ukraine or other areas which are impacted by the Russian invasion of Ukraine.
Most of our revenues are derived from our U.S., Canadian and European operations and we do not have operations in Russia, and we do not do business in Russia, Ukraine or other areas which are impacted by the on going war between Russian and Ukraine.
By supporting these customers that help fuel our vehicles and power our society; inspecting components that are trusted for commercial, defense, and private space; and building monitoring equipment to help avoid catastrophic incidents, the Company helps the world at large.
By supporting these customers that help fuel our vehicles and power our society; inspecting components that are trusted for commercial, defense, and private space; and building monitoring equipment to help avoid catastrophic incidents, the Company helps the world at large with its asset integrity risk mitigation.
There are a number of economic factors which drive the aerospace market, including: • The multi-year backlog for next generation commercial aircraft to be built, including several large and mid-sized aircraft built by Boeing and Airbus, among other manufacturers; and • The continuing regulatory scrutiny to ensure public safety serves to ensure the continued need for inspection and mechanical services to be performed.
There are a number of economic factors which drive the aerospace market, including: • the multi-year backlog for next generation commercial aircraft to be built, including several large and mid-sized aircraft built by Boeing and Airbus, among other manufacturers; • continued growth of private space and increased number of launches for future space exploration; and • the continuing regulatory scrutiny to ensure public safety ensures the continued need for inspection and mechanical services to be performed.
We are also actively seeking to optimize our customers’ asset protection workflows and processes, by creating digital paths between data applications to increase data visibility and reduce manual data entry and human error. Expand Our Focus in the Aerospace and Defense Industries .
We are also actively seeking to optimize our customers’ asset protection workflows and processes, by creating digital paths between data applications to increase data visibility and reduce manual data entry and human error.
We also work with customers to develop new products or applications for our technology, including: • Testing of new composites • Detecting crack propagation • Wireless and communications technologies • Development of permanently embedded inspection systems to provide continuous, online, in-service monitoring of critical structural components Research and development expenses are reflected in our Consolidated Statements of Income (Loss) as research and engineering expenses.
We also work with customers to develop new products or applications for our technology, including: • Testing of new composites; • Detecting crack propagation; • Wireless and communications technologies; and • Development of permanently embedded inspection systems to provide continuous, online, in-service monitoring of critical structural components.
We generated net loss of $17.4 million, a net income of $6.6 million and net loss of $3.9 million for the years ended December 31, 2023, 2022, and 2021, respectively. For the years ended December 31, 2023, 2022 and 2021, we generated approximately 82%, 83% and 82%, respectively, of our revenues from our North America segment.
We generated net income of $19.0 million, net loss of $17.4 million and net income of $6.6 million for the years ended December 31, 2024, 2023, and 2022, respectively. For the years ended December 31, 2024, 2023 and 2022, we generated approximately 81%, 82% and 83%, respectively, of our revenues from our North America segment.
We believe that increased demand will continue to come over the next several years from the commercial industry due to the approximately decade-long backlog for next-generation commercial aircraft to be built, driving the need for advanced solutions that drive cost and quality efficiencies.
We believe that increased demand in the defense and private space industries will continue to grow over the next several years in the commercial industry due to the approximately decade-long backlog for next-generation commercial aircraft to be built, driving the need for advanced solutions that improve cost and quality efficiencies.
We believe that expanding our solution offerings and merging and visualizing data across facilities for enterprise data analysis, combined with the trend of customers outsourcing asset protection to service providers with integrated offerings, provides opportunities for significant additional recurring revenues. 10 Table of Contents Continue to Expand Our Customer Base into New End Markets .
We believe that expanding our solution offerings and merging and visualizing data across facilities for enterprise data analysis, combined with the trend of customers outsourcing asset protection to service providers with integrated offerings, provides opportunities for significant additional recurring revenues.
Other revenues are comprised of locations that perform both asset inspection services and testing of components and materials at in-house Mistras laboratories.
Other revenue is comprised of locations that perform both asset inspection services and testing of components and materials at our in-house laboratories.
We file reports with the SEC, including Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, Current Reports on Form 8-K and Proxy Statements. All of the materials we file with or furnish to the SEC are available free of charge on our website at http://investors.mistrasgroup.com/sec.cfm, as soon as reasonably practicable after having been electronically submitted to the SEC.
All of the materials we file with or furnish to the SEC are available free of charge on our website at http://investors.mistrasgroup.com/sec.cfm, as soon as reasonably practicable after having been electronically submitted to the SEC.
Our engineering consultations include plant operations and management support, turnaround/shutdown planning, profit improvement, facilities planning studies, engineering design, process safety reviews, energy optimization evaluations, benchmarking/key performance indicator development and technical training.
Engineering Consulting We provide a broad range of engineering consulting services, primarily for process equipment, technologies and facilities. Our engineering consultations include plant operations and management support, turnaround/shutdown planning, profit improvement, facilities planning studies, engineering design, process safety reviews, energy optimization evaluations, benchmarking/key performance indicator development and technical training.
Stamatakis joined Mistras Board of Directors in 2002, became the Chair of the Governance Committee as well as a member of the Audit Committee and Compensation Committee in 2009 and Lead Director in 2010. On October 9, 2023, Mr.
Smith, our Executive Vice President and President of Services. Manuel "Manny" N. Stamatakis joined our Board in 2002, became the Chair of the Governance Committee as well as a member of the Audit Committee and Compensation Committee in 2009 and Lead Director in 2010. On October 9, 2023, Mr.
Our laboratory and field personnel are trained to operate according to strict safety and quality standards so that our processes and procedures regarding hazardous materials, worker safety, and accident prevention are sound and effective.
Our laboratory and field personnel are trained to operate according to strict safety and quality standards so that our processes and procedures regarding hazardous materials, worker safety, and accident prevention are sound and effective. Further to this, we are constantly evaluating these processes and procedures to ensure that they remain of high quality and are effective.
These solutions typically include NDT and inspection services, and can also include a wide range of 3 Table of Contents mechanical services, including heat tracing, pre-inspection insulation stripping, coating applications, re-insulation, engineering assessments and long-term condition-monitoring.
These solutions typically include NDT and inspection services, and can also include a wide range of mechanical services, including heat tracing, pre-inspection insulation stripping, coating applications, re-insulation, engineering assessments and long-term condition-monitoring. 3 Table of Contents Under our business model, many customers outsource their inspection to us on a “run and maintain” basis.
Executive Officers The following were our executive officers for the year ended December 31, 2023 and their background and experience. Name Age Position Manuel N. Stamatakis 76 Chairman of the Board and Interim President and Chief Executive Officer Edward J.
Executive Officers The following table and text sets forth our executive officers for the year ended December 31, 2024 and their background and experience. Name Age Position Manuel N. Stamatakis 77 Executive Chairman of the Board* Natalia Shuman 51 President and Chief Executive Officer* Edward J.
With our ability to integrate asset protection throughout supply chains and centralizing data management, we are able to provide insights and actionable recommendations to our customers through a suite of Industrial Internet of Things ("IoT")-connected digital software and monitoring solutions, including OneSuite™, which serves as an ecosystem platform, pulling together all of the Company’s software and data services capabilities, for the benefit of its customers.
The Company enhances value for its customers by integrating asset integrity protection throughout supply chains and centralizing integrity data through a suite of Industrial Internet of Things ("IoT")-connected digital software and monitoring solutions, including OneSuite™, which serves as an ecosystem platform, pulling together all of the Company’s software and data services capabilities, for the benefit of its customers.
Integrated Data Management: Our expertise and proprietary research and development in data analytical solutions throughout the asset protection cycle provides a competitive advantage. With solutions for integrated data acquisition, storage, visualization and analytics, our integrated data analytical solutions well-position us for the oil and gas increasing movement towards digitalizing and centralizing asset protection to fewer, highly-skilled and multi-disciplined vendors.
With solutions for integrated data acquisition, storage, visualization and analytics, our integrated data analytical solutions have us well-positioned for the oil and gas industry's increasing movement towards digitalizing and centralizing asset protection to fewer, highly-skilled and multi-disciplined vendors.
Due to our current debt levels and restrictions related to the debt covenants in our credit facility, we do not expect to make any acquisitions in 2024 other than small acquisitions with the banks’ approval. However, once we reduce our debt, we expect to make selective acquisitions beyond 2024.
Due to our focus on organic revenue growth and restrictions related to the debt covenants in our credit facility, we do not expect to make any acquisitions in 2025 other than small acquisitions with the approval from the lenders under our credit facility. However, we expect to make selective acquisitions beyond 2025.
U.S. refineries’ non-peak periods are generally in the fall, when they are retooling to produce more heating oil for winter, and in the spring, when they are retooling to produce more gasoline for summer.
This seasonality relates primarily to our oil and gas target market, and to a lesser extent within our other target markets. U.S. refineries’ non-peak periods are generally in the fall, when they are retooling to produce more heating oil for winter, and in the spring, when they are retooling to produce more gasoline for summer.
We have actively continued to develop technologies that enhance the flow of data throughout multiple operational phases and facilities, through our integrated pipeline integrity data portfolio, and our cloud-based monitoring data portal. Expand our Solution Offerings to Existing Customers .
We have actively continued to develop technologies that enhance the flow of data throughout 10 Table of Contents multiple operational phases and facilities, through our integrated pipeline integrity data portfolio, and our cloud-based monitoring data portal. Our focus is to provide our customers with a comprehensive solution for all of their asset protection needs.
Our total professional staff includes employees who hold Ph.D.’s and engineers and employees who hold Level III certification, the highest level of certification from the American Society of Non-Destructive Testing (ASNT). 17 Table of Contents We make strategic research and development investments in our data analytical solutions technologies that support integration with our other solution offerings to enhance cost- and time-efficiencies, maximize uptime and safety and improve the flow of data from field technicians to inspection databases.
We make strategic R&D investments in our data analytical solutions technologies that support integration with our other solution offerings to enhance cost- and time-efficiencies, maximize uptime and safety and improve the flow of data from field 17 Table of Contents technicians to inspection databases.
We work to help ensure that our customers are in full compliance with all federal, state, and local regulations. Our practices, policies and procedures are designed to help ensure we perform our duties through the use of safe, industry-best practices, seeking to minimize risk wherever possible.
Our practices, policies and procedures are designed to help ensure we perform our duties through the use of safe, industry-best practices, seeking to minimize risk wherever possible. We emphasize a “MISTRAS’ safety-conscious” culture with the intent that it becomes embedded in the day-to-day work of all our employees.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny of these factors, individually or with one or more of the other factors, or other unforeseen impacts of climate change could have a material adverse effect on our results of operations, financial condition and liquidity. 21 Table of Contents In addition, changes in international, federal, state and local legislation and regulation based on concerns about climate change and increasing climate-related disclosures, including the rules proposed by the SEC, could result in increased compliance and data collection costs if, and when, such laws and regulations become effective.
Biggest changeIn addition, changes in international, federal, state and local legislation and regulation based on concerns about climate change and increasing climate-related disclosures, including the rules proposed by the SEC, could result in increased compliance and data collection costs if, and when, such laws and regulations become effective. Our international operations are subject to risks relating to non-U.S. operations.
These provisions: • allow the authorized number of directors to be changed only by resolution of our board of directors; • require that vacancies on the board of directors, including newly created directorships, be filled only by a majority vote of directors then in office; 27 Table of Contents • authorize our board of directors to issue, without stockholder approval, preferred stock that, if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our board of directors; • require that stockholder actions must be effected at a duly called stockholder meeting by prohibiting stockholder action by written consent; • prohibit cumulative voting in the election of directors, which may otherwise allow holders of less than a majority of stock to elect some directors; and • establish advance notice requirements for stockholder nominations to our board of directors or for stockholder proposals that can be acted on at stockholder meetings and limit the right to call special meetings of stockholders to the Chairman of our board, our Chief Executive Officer, our board of directors acting pursuant to a resolution adopted by a majority of directors or our Secretary upon the written request of stockholders entitled to cast not less than 35% of all the votes entitled to be cast at such meeting.
These provisions: • allow the authorized number of directors to be changed only by resolution of our Board; • require that vacancies on the Board, including newly created directorships, be filled only by a majority vote of directors then in office; • authorize our Board to issue, without stockholder approval, preferred stock that, if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our Board; • require that stockholder actions must be effected at a duly called stockholder meeting by prohibiting stockholder action by written consent; • prohibit cumulative voting in the election of directors, which may otherwise allow holders of less than a majority of stock to elect some directors; and • establish advance notice requirements for stockholder nominations to our Board or for stockholder proposals that can be acted on at stockholder meetings and limit the right to call special meetings of stockholders to the Chairman of our board, our Chief Executive Officer, our Board acting pursuant to a resolution adopted by a majority of directors or our 28 Table of Contents Secretary upon the written request of stockholders entitled to cast not less than 35% of all the votes entitled to be cast at such meeting.
We believe that it is probable, based on the New Credit Agreement (as defined herein), that we will be able to comply with the financial covenants in our existing credit agreement and that sufficient credit remains available under the credit agreement to meet our liquidity needs.
We believe that it is probable, based on the Credit Agreement (as defined herein), that we will be able to comply with the financial covenants in our existing credit agreement and that sufficient credit remains available under the credit agreement to meet our liquidity needs.
There are numerous risks inherent in doing business in international markets, including: • fluctuations in currency exchange rates and interest rates; • regional micro and macro-economic pressures, inflationary costs, energy costs and geopolitical factors; • compliance with applicable foreign regulations and licensing requirements, and U.S. laws and regulation with respect to conducting business in other countries, including export controls, sanctions, anti-terrorist and anti-bribery laws; • the cost and uncertainty of obtaining data and creating solutions that are relevant to particular geographic markets; • the need to provide sufficient levels of technical support in different locations; • the complexity of maintaining effective policies and procedures in locations around the world; • political instability, war or conflicts and civil unrest; • increased risk of hacking, malware or security breaches of our data and databases; • restrictions or limitations on outsourcing contracts or services abroad; • restrictions or limitations on the repatriation of funds, or tax consequences on the non-repatriation of overseas operationally generated funds; and • other potentially adverse tax consequences.
There are numerous risks inherent in doing business in international markets, including: • fluctuations in currency exchange rates and interest rates; • regional micro and macro-economic pressures, inflationary costs, energy costs and geopolitical factors; • compliance with applicable foreign regulations and licensing requirements, and U.S. laws and regulation with respect to conducting business in other countries, including export controls, sanctions, anti-terrorist and anti-bribery laws; • the cost and uncertainty of obtaining data and creating solutions that are relevant to particular geographic markets; • the need to provide sufficient levels of technical support in different locations; • the complexity of maintaining effective policies and procedures in locations around the world; • political instability, war or conflicts and civil unrest; • increased risk of hacking, malware or security breaches of our data and databases; • restrictions or limitations on outsourcing contracts or services abroad; • the imposition of domestic and international tariffs, trade barriers and other trade restrictions; • restrictions or limitations on the repatriation of funds, or tax consequences on the non-repatriation of overseas operationally generated funds; and • other potentially adverse tax consequences.
At this time, we do not believe there is a material impact on our operations, however the future impact of the conflict, and additional sanctions imposed, are uncertain. 26 Table of Contents Any such events could cause a serious business disruption that reduces our customers’ need or interest in purchasing our asset protection solutions.
At this time, we do not believe there is a material impact on our operations, however the future impact of the conflict, and additional sanctions imposed, are uncertain. Any such events could cause a serious business disruption that reduces our customers’ need or interest in purchasing our asset protection solutions.
An accident or incident for which we are found partially or fully responsible, even if fully insured, or even an incident at a customer or site for which we provide services although we were found not to be responsible, may also result in negative publicity, which would harm our reputation among our customers and the public, cause us to lose existing and future contracts or make it more difficult for us to compete effectively, thereby significantly harming our operating performance.
An accident or incident for which we are found partially or fully responsible, even if fully insured, or even an incident at a customer or site for which we provide services although we were 23 Table of Contents found not to be responsible, may also result in negative publicity, which would harm our reputation among our customers and the public, cause us to lose existing and future contracts or make it more difficult for us to compete effectively, thereby significantly harming our operating performance.
Our operating results could be adversely affected by a reduction in business with our significant customers. We derive a significant amount of revenues from a few customers. Taken as a group, our top ten customers were responsible for approximately 35%, 33%, and 33% of our revenues for the years ended December 31, 2023, 2022 and 2021, respectively.
Our operating results could be adversely affected by a reduction in business with our significant customers. We derive a significant amount of revenues from a few customers. Taken as a group, our top ten customers were responsible for approximately 36%, 35%, and 33% of our revenues for the years ended December 31, 2024, 2023 and 2022, respectively.
If we lose key members of our senior management team upon whom we are dependent, we may be less effective in managing our operations and may have more difficulty achieving our strategic objectives. 28 Table of Contents Our future success depends to a considerable degree upon the availability, contributions, vision, skills, experience and effort of our senior management team.
If we lose key members of our senior management team upon whom we are dependent, we may be less effective in managing our operations and may have more difficulty achieving our strategic objectives. Our future success depends to a considerable degree upon the availability, contributions, vision, skills, experience and effort of our senior management team.
If the price of oil reaches record, or near record levels as it did in 2022, we may experience delays or deferrals in performing inspection services to customers in the oil and gas industry.
If the price of oil reaches record, or near record levels as it did in 2023, we may experience delays or deferrals in performing inspection services to customers in the oil and gas industry.
Many of our customers have strict requirements concerning safety or loss time occurrences and if we are unable to meet these requirements it could result in lost 22 Table of Contents revenues. In the future, governmental agencies may seek to change current regulations or impose additional regulations on our business.
Many of our customers have strict requirements concerning safety or loss time occurrences and if we are unable to meet these requirements it could result in lost revenues. In the future, governmental agencies may seek to change current regulations or impose additional regulations on our business.
Vahaviolos and his family have significant control over the Company and they have the ability to exert substantial influence over all matters requiring approval by our stockholders, including the election and removal of directors, amendments to our certificate of incorporation, and any proposed merger, consolidation or sale of all or substantially all of our assets and other corporate transactions.
Vahaviolos has significant control over the Company and they have the ability to exert substantial influence over all matters requiring approval by our stockholders, including the election and removal of directors, amendments to our certificate of incorporation, and any proposed merger, consolidation or sale of all or substantially all of our assets and other corporate transactions.
In addition, it is unclear what effects the on-going war between Russia and Ukraine and the conflict in the Middle East between Israel and Hamas are likely to have on the world economy and certain of our target markets, including particularly the oil and gas market, in the near and long term.
For example, it is unclear what effects the on-going war between Russia and Ukraine and the conflict in the Middle East between Israel and Hamas are likely to have on the world economy and certain of our target markets, including particularly the oil and gas market, in the near and long term.
If our software or system produces inaccurate information or are incompatible with the systems used by our customers and make us unable to successfully provide our solutions, it could lead to a loss of revenues and customers. 23 Table of Contents Our software and systems are complex and, accordingly, may contain undetected errors or failures.
If our software or system produces inaccurate information or are incompatible with the systems used by our customers and make us unable to successfully provide our solutions, it could lead to a loss of revenues and customers. Our software and systems are complex and, accordingly, may contain undetected errors or failures.
However, an unplanned loss or interruption of the service of numerous key members of our senior management team could harm our business, financial condition and results of operations and could significantly reduce our ability to manage our operations and implement our strategy. Intellectual property may impact our business and results of operations.
However, an unplanned loss or interruption of the service of numerous key members of our senior management team could harm our business, financial condition and results of operations and could significantly reduce our ability to manage our operations and implement our strategy. 29 Table of Contents Intellectual property may impact our business and results of operations.
In addition, headcount reductions can result in lower employee morale and result in employees deciding to leave the Company, which would further adversely impact our businesses. 24 Table of Contents We operate in competitive markets and if we are unable to compete successfully, we could lose market share and revenues and our margins could decline.
In addition, headcount reductions can result in lower employee morale and result in employees deciding to leave the Company, which would further adversely impact our businesses. We operate in competitive markets and if we are unable to compete successfully, we could lose market share and revenues and our margins could decline.
This concentration of ownership could be disadvantageous to other stockholders with differing interests from Dr. Vahaviolos and his family. We currently have no plans to pay dividends on our common stock.
This concentration of ownership could be disadvantageous to other stockholders with differing interests from the family of Dr. Vahaviolos. We currently have no plans to pay dividends on our common stock.
Future deterioration in industry or economic conditions in which we operate, including increased inflationary costs, energy costs, labor costs, social pressures and disruptions in Europe, the Middle East or elsewhere as a result of the war between Russia and Ukraine and the conflict between Israel and Hamas, disruptions to our business, not effectively integrating acquired businesses, macroeconomic factors or other factors, may cause impairment charges to our goodwill in future periods.
Future deterioration in industry or economic conditions in which we operate, including increased inflationary costs, costs associated with proposed tariffs or other trade restrictions, energy costs, labor costs, social pressures and disruptions in Europe, the Middle East or elsewhere as a result of the war between Russia and Ukraine and the conflict between Israel and Hamas, disruptions to our business, not effectively integrating acquired businesses, macroeconomic factors or other factors, may cause impairment charges to our goodwill in future periods.
This concentration pertains almost exclusively to our North America segment, which accounted for 82%, 83% and 82% of our revenues for the years ended December 31, 2023, 2022 and 2021, respectively. These customers are primarily in the oil and gas sector.
This concentration pertains almost exclusively to our North America segment, which accounted for 81%, 82% and 83% of our revenues for the years ended December 31, 2024, 2023 and 2022, respectively. These customers are primarily in the oil and gas 22 Table of Contents sector.
We rely on certification of our NDT solutions by industry standards-setting bodies. We and/or our subsidiaries currently have International Organization for Standardization (ISO) 9001:2008 certification, ISO 14001:2004 certification and OHSAS 18001:2007 certification. In addition, we currently have Nadcap (formerly National Aerospace and Defense Contractors Accreditation Program) and similar certifications for certain of our locations.
We rely on certification of our NDT solutions by industry standards-setting bodies. We and/or our subsidiaries currently have International Organization for Standardization (ISO) 9001:2008 certification, ISO 14001:2004 certification and OHSAS 18001:2007 certification. In addition, we currently have Nadcap and similar certifications for certain of our locations.
In addition, these events could disrupt commodity prices or financial markets or have other negative macroeconomic impacts, such as the conflict in the Middle East between Hamas and Israel and the on-going war between Ukraine and Russia, which could harm our business. Risks Related to Our Common Stock A significant stockholder has significant influence over the direction of our business.
In addition, these events could disrupt commodity prices or financial markets or have other negative macroeconomic impacts, such as the conflict in the Middle East between Hamas and Israel and the on-going war between Ukraine and Russia, which could harm our business. 27 Table of Contents Risks Related to Our Common Stock The family of our late founder and Chairman Emeritus has significant influence over the direction of our business.
In addition, low oil prices could depress the level of new exploration and construction, which would adversely affect our market opportunities. If the price of oil were to decrease, our revenues, profits and cash flows may be reduced.
However, economic slowdowns or low oil prices have, and could continue to, result in cutbacks in contracts for our services. In addition, low oil prices could depress the level of new exploration and construction, which would adversely affect our market opportunities. If the price of oil were to decrease, our revenues, profits and cash flows may be reduced.
The extent of our future success depends on how successful we are in these endeavors. In 2023, we commenced a broad review of our operations, which we refer to as "Project Phoenix". Through Project Phoenix, we have been exploring ways to improve profitability and Adjusted EBITDA, through meaningful margin improvement and sustained cost savings.
In 2023, we commenced a broad review of our operations, which we refer to as "Project Phoenix". Through Project Phoenix, we have been exploring ways to improve profitability and Adjusted EBITDA, through meaningful margin improvement and sustained cost savings.
Vahaviolos, our fo under and Chairman Emeritus, owns approximately 6% of our outstanding common stock, his three adult children own an additional 6%, in the aggregate, and a grantor retained annuity trust he created, for which his daughter is the sole trustee, owns approximately 22%. As a result, Dr.
Vahaviolos, our late fo under and Chairman Emeritus, who passed away on February 6, 2025, owned at the time of his passing, approximately 6% of our outstanding common stock, his three adult children owned, at the time of his passing an additional 6%, in the aggregate, and a grantor retained annuity trust he created, for which his daughter is the sole trustee, owned approximately 22% at the time of his passing.
In addition, due to our current debt levels and restrictions related to the debt covenants in our credit facility, we do not expect to make any acquisitions in 2024 other than small acquisitions with the banks’ approval. We face risks regarding our information technology and security.
In addition, due to our current debt levels and restrictions related to the debt covenants in our credit facility, we do not expect to make any acquisitions in 2025 other than small acquisitions with the approval of the lenders under our Credit Agreement.
Our international operations are subject to risks relating to non-U.S. operations. For the years ended December 31, 2023, 2022 and 2021, we generated approximately 29%, 29%, and 30% of our revenues outside the United States, respectively. In addition, our international operations as a percentage of our business may increase over time.
For the years ended December 31, 2024, 2023 and 2022, we generated approximately 31%, 29%, and 29% of our revenues outside the United States, respectively. In addition, our international operations as a percentage of our business may increase over time. Our primary operations outside the United States are in Canada, Germany, France, the United Kingdom, the Netherlands, and Brazil.
In addition, if our costs of labor or related costs increase for other reasons or if new or revised labor laws, rules or regulations or healthcare laws are adopted or implemented that further increase our labor costs, our financial performance could be materially adversely affected.
In addition, if our costs of labor or related costs increase for other reasons or if new or revised labor laws, rules or regulations or healthcare laws are adopted or implemented that further increase our labor costs, our financial performance could be materially adversely affected. 24 Table of Contents Our initiatives to improve our financial performance may not achieve results within expected time frames, or at expected levels.
Significant disruptions of our information technology systems or breaches of information security could adversely affect our business. We rely upon information technology systems to operate many parts of our business. We routinely collect, store and transmit large amounts of sensitive or confidential information, including data from the results of our testing and inspections.
We rely upon information technology systems to operate many parts of our business. We routinely collect, store and transmit large amounts of sensitive or confidential information, including data from the results of our testing and inspections. We deploy and operate various technical and procedural controls to maintain the confidentiality and integrity of such sensitive or confidential information.
We deploy and operate various technical and procedural controls to maintain the confidentiality and integrity of such sensitive or confidential information. Furthermore, as we automate more of our inspection process and procedures, including through the use of MISTRAS Digital, we become more vulnerable to security breaches and other system disruptions.
Furthermore, as we automate more of our inspection process and procedures, including through the use of MISTRAS Digital, we become more vulnerable to security breaches and other system disruptions.
If we fail to comply with financial or other covenants in our credit agreement, we may be required to repay indebtedness to our existing lenders, which may harm our liquidity. 25 Table of Contents Our credit agreement contains financial covenants that require us to maintain compliance with specified financial ratios.
Our credit agreement contains financial and operating restrictions that may limit our access to credit. If we fail to comply with financial or other covenants in our credit agreement, we may be required to repay indebtedness to our existing lenders, which may harm our liquidity.
Our European operations are currently experiencing increased costs associated with higher energy costs, among others, due in part to the Russian-Ukrainian war. We may be affected by climate change and market or regulatory responses to climate change Climate change could have a material adverse effect on our results of operations, financial condition, and liquidity.
We may be affected by climate change and market or regulatory responses to climate change Climate change could have a material adverse effect on our results of operations, financial condition, and liquidity.
Risks Related to Our Business Due to our dependency on customers in the oil and gas industry, we are susceptible to prolonged negative trends relating to this industry that could adversely affect our operating results. Our customers in the oil and gas industry have accounted for a substantial portion of our historical revenues.
Accordingly, you should not consider the following to be a complete discussion of all risks and uncertainties pertaining to us and our common stock. Risks Related to Our Business Due to our dependency on customers in the oil and gas industry, we are susceptible to prolonged negative trends relating to this industry that could adversely affect our operating results.
If the market for our asset protection solutions does not continue to develop, our ability to grow our business would be limited and we might not be able to maintain profitability. If we cannot convince our customers of the advantages and value of our advanced NDT services, we could lose large contracts or suffer lower profit margin.
If the market for our asset protection 25 Table of Contents solutions does not continue to develop, our ability to grow our business would be limited and we might not be able to maintain profitability.
We have completed most phases of the project, wherein efficiency and profitability opportunities were identified, actionable initiatives were validated, and many of these actions have been implemented prospectively. Project Phoenix has resulted in significant cost reductions, primarily through headcount reductions, more efficient workflows, and streamlining of processes, and also led to developing and initiating action plans to increase revenue.
Project Phoenix has resulted in significant cost reductions, primarily through headcount reductions, more efficient workflows, and streamlining of processes, and also led to developing and initiating action plans to increase revenue. We believe our Project Phoenix initiatives will benefit the Company and our stockholders in the long run.
However, during 2022, we experienced unfavorable foreign currency exchange impacts as it relates to our European operations. Additionally, the Russian-Ukrainian war continues to create disruptions in the oil and gas market and the supply chain in general, which is resulting in some disruption to our business operations.
However, the on-going war between Russia and Ukraine continues to create disruptions in the oil and gas market and the supply chain in general, which is resulting in some disruption to our business operations.
Specifically, they accounted for approximately 59%, 56%, and 54% of our revenues for the years ended December 31, 2023, 2022 and 2021, respectively. Although we have expanded our customer base into industries other than the oil and gas industry, we still receive a majority of our revenues from this industry.
Our customers in the oil and gas industry have accounted for a substantial portion of our historical revenues. Specifically, they accounted for approximately 57%, 59%, and 56% of our revenues for the years ended December 31, 2024, 2023 and 2022, respectively.
Our initiatives to improve our financial performance may not achieve results within expected time frames, or at expected levels. We have undertaken strategies to transform our business so that we may operate more effectively, streamline and rationalize our cost structures, and look for strategic opportunities to expand our revenue and become more profitable.
We have undertaken strategies to transform our business so that we may operate more effectively, streamline and rationalize our cost structures, and look for strategic opportunities to expand our revenue and become more profitable. The extent of our future success depends on how successful we are in these endeavors.
Although we obligate our employees to confidentiality, we cannot be certain that these obligations will be honored or enforceable in all circumstances. We may require additional capital to support business growth, which might not be available.
Although we obligate our employees to confidentiality, we cannot be certain that these obligations will be honored or enforceable in all circumstances. Social, political and economic changes or instability, or other circumstances beyond our control could affect our business operations.
The seasonal nature of our business reduces our revenues and profitability in the winter and summer and related cash flows. Our business is seasonal.
If we cannot convince our customers of the advantages and value of our advanced NDT services, we could lose large contracts or suffer lower profit margin. The seasonal nature of our business reduces our revenues and profitability in the winter and summer and related cash flows. Our business is seasonal.
Our services are vital to the operators of plants, refineries, and pipelines, and we have expanded our services offerings, such as expanding our mechanical and in-line inspection services capabilities. However, economic slowdowns or low oil prices have, and could continue to, result in cutbacks in contracts for our services.
Although we have expanded our customer base into industries other than the oil and gas industry, we still receive a majority of our revenues from this industry. Our services are vital to the operators of plants, refineries, and pipelines, and we have expanded our services offerings, such as expanding our mechanical and in-line inspection services capabilities.
Our primary operations outside the United States are in Canada, Germany, France, the United Kingdom, the Netherlands and Brazil. We also have operations in Belgium, Greece and India.
We also have operations in Belgium, Greece, India and Mexico.
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For example, the COVID-19 pandemic has had a dramatic negative impact on the health of citizens of many countries, and resulted in major disruptions in economies and markets around the world, including our key markets.
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In addition, macroeconomic factors such as inflation, unemployment, interest rates, and tariffs or trade barriers (including recent U.S. tariffs imposed or threatened to be imposed on China, Canada, Mexico and other countries and any retaliatory actions take by such countries) amongst others, will impact our business.
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In addition, macroeconomic factors such as inflation, unemployment, and interest rates, amongst others, will impact our business. Accordingly, you should not consider the following to be a complete discussion of all risks and uncertainties pertaining to us and our common stock.
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Our European operations are currently experiencing increased costs associated with higher energy costs, among 21 Table of Contents others, due in part to the on-going war between Russia and Ukraine.
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We believe our Project Phoenix initiatives will benefit the Company and our stockholders in the long run.
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We may also experience increased costs associated with tariffs or trade barriers (including recent U.S. tariffs imposed or threatened to be imposed on China, Canada, Mexico and other countries and any retaliatory actions taken by such countries).
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Our credit agreement contains financial and operating restrictions that may limit our access to credit.
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Any of these factors, individually or with one or more of the other factors, or other unforeseen impacts of climate change could have a material adverse effect on our results of operations, financial condition and liquidity.
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We have completed most phases of the project in 2023, wherein efficiency and profitability opportunities were identified, actionable initiatives were validated, and many of these actions have been implemented prospectively throughout 2024.
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Our credit agreement contains financial covenants that require us to maintain compliance with specified financial ratios.
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Currency exchange rate fluctuations in various currencies in which we do business, especially the Euro and the U.S. dollar, could have a material adverse effect on our business, results of operations and financial condition.
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Most of our revenues are denominated in U.S. dollars, with the remaining amounts largely in euros, British pound sterling, the Brazilian Real, the Canadian Dollar and the Indian rupee. We have foreign currency exposure related to our operations in foreign locations and our foreign currency exposure arises primarily from the translation of our foreign subsidiaries’ financial statements into U.S. dollars.
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The exchange rates between the euro and other currencies in which we incur costs or receive revenues, on the one hand, and the U.S. dollar, on the other hand, have changed substantially in recent years and may fluctuate substantially in the future.
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See Item 7A-“Quantitative and Qualitative Disclosures about Market Risk.” Our results of operations have been adversely affected and could be further adversely affected by certain movements in exchange rates, particularly if the foreign currencies in which we incur expenses appreciate against the U.S. dollar or if the foreign currencies in which we receive revenues depreciate against the U.S. dollar.
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For example, a portion of our annual sales and operating costs are denominated in British Pound Sterling and we have exposure related to sales and operating costs increasing or decreasing based on changes in currency exchange rates. If the U.S. Dollar increases in value against these foreign currencies, the value in U.S.
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Dollars of the assets and liabilities originally recorded in these foreign currencies will decrease. Conversely, if the U.S. Dollar decreases in value against these foreign currencies, the value in U.S. Dollars of the assets and liabilities originally recorded in these foreign currencies will increase. Thus, increases and decreases in the value of the U.S.
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Dollar relative to these foreign currencies have a direct impact on the value in U.S. Dollars of our foreign currency denominated 26 Table of Contents assets and liabilities, even if the value of these items has not changed in their original currency. We do not currently enter into forward exchange contracts to hedge exposures denominated in foreign currencies.
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We may consider entering into hedging or forward exchange contracts in the future, as sales in international currencies increase due to growth in our International segment. We face risks regarding our information technology and security. Significant disruptions of our information technology systems or breaches of information security could adversely affect our business.
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Our business may be adversely affected by social, political and economic instability, unrest or disruption, including legal, regulatory and policy changes by a new presidential administration in the U.S., protests, demonstrations, strikes, riots, civil disturbance, disobedience, insurrection, or social and other political unrest.
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Such events may result in restrictions, curfews or other actions and give rise to significant changes in regional and global economic conditions and cycles, which may adversely affect our financial condition and operations.
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Changes in federal policy, including tax policies, and at regulatory agencies occur over time through policy and personnel changes following elections, which can lead to changes involving the level of oversight and focus on certain industries and corporate entities.
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The nature, timing, and economic and political effects of potential changes to the current legal and regulatory frameworks affecting the industries in which we operate remain highly uncertain.
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Additionally, changes in federal policy that affect the geopolitical landscape, such as the imposition of tariffs and changes to U.S. trade policy, have, and could in the future, lead to adverse effects on the U.S. domestic economy and our business operations. We may require additional capital to support business growth, which might not be available.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe IT Risk team is responsible for governance and compliance related to regulations and frameworks for data classification, data privacy, handling of private data and CUI, and internal policies and procedures. The Cyber Security team is responsible for identifying and implementing technologies to mitigate IT risk, enhance data security, and identify and defend against attacks.
Biggest changeThe Chief Information Officer manages both an Information Security team and an IT Risk team within the Department of Information Technology. The IT Risk team works closely with our Data Privacy Officer for governance and compliance related to regulations and frameworks for data classification, data privacy, handling of private data and controlled unclassified information, and internal policies and procedures.
Web site, code, and configuration vulnerability scans are performed as necessary to ensure that changes do not introduce vulnerabilities into our systems. Information Security and IT Risk personnel receive regular training to ensure up-to-date expert knowledge. To supplement our cybersecurity risk assessment, identification, management, and mitigation efforts, we engage third party cyber security experts.
Web site, code, and configuration vulnerability scans are performed as necessary to ensure that changes do not introduce vulnerabilities into our systems. Information Security and IT Risk personnel receive regular training to ensure these individuals have up-to-date expert knowledge. To supplement our cybersecurity risk assessment, identification, management, and mitigation efforts, we engage third party cyber security experts.
The Audit Committee, Enterprise Risk Committee, and the Information Technology Leadership Team support the Board in the oversight of our information security program and are focused on cybersecurity and data privacy risk, including compliance with all applicable laws and regulations, incident response planning, timely identification and assessment of incidents, incident recovery and business continuity considerations.
The Audit Committee, Enterprise Risk Committee, and the Information Technology Leadership Team support the Board in the oversight of our information security program and are focused on cybersecurity and data privacy risk, including compliance with all applicable laws and regulations, incident response 30 Table of Contents planning, timely identification and assessment of incidents, incident recovery and business continuity considerations.
While we have implemented measures to safeguard our operational and technology systems and have established a culture of continuous learning, monitoring and improvement, the evolving nature of cybersecurity attacks and vulnerabilities means that these protections may 30 Table of Contents not always be effective.
While we have implemented measures to safeguard our operational and technology systems and have established a culture of continuous learning, monitoring and improvement, the evolving nature of cybersecurity attacks and vulnerabilities means that these protections may not always be effective.
We understand that threats from hackers and other cyber criminals continues to adapt and become more sophisticated, and so must our response to these threats. Governance Our Board of Directors (“the Board”) is responsible for oversight of our information security program.
We understand that threats from hackers and other cyber criminals continues to adapt and become more sophisticated, and so must our response to these threats. Governance Our Board is responsible for oversight of our cybersecurity program.
We perform a thorough review of the cyber security measures in place, including any documented third-party audits, for any partners who process our data. Sign-off is required by the Information Security team before agreements can be put in place.
We recognize the importance of overseeing and identifying material risks from cybersecurity threats associated with our use of third-party vendors. We perform a thorough review of the cyber security measures in place, including any documented third-party audits, for any partners who process our data. Sign-off is required by the Information Security team before agreements can be put in place.
Cyber security assessments are performed at least annually, results are documented and reviewed, and mitigation plans are put in place to reduce any threats identified. The classification of data processed by any system is considered when implementing mitigations. We recognize the importance of overseeing and identifying material risks from cybersecurity threats associated with our use of third-party vendors.
Cyber security assessments are performed at least annually, results are documented and reviewed, and 31 Table of Contents mitigation plans are put in place to reduce any threats identified. The classification of data processed by any system is considered when implementing mitigations.
All IT assets are reviewed against a broad range of risks twice a year and are evaluated for likelihood of occurrence and impact should they occur. These risks are then mapped to our global inventory of systems and the type of data as well as the number of systems to which a risk applies are evaluated.
These risks are then mapped to our global inventory of systems and the type of data as well as the number of systems to which a risk applies are evaluated.
Both teams work closely together to establish the cybersecurity policies for the Company, evaluate the current risk profile, and to prevent, investigate, mitigate, and remediate any cyber-attacks on the Company. Risk Management and Strategy The IT Risk team uses an asset-based risk approach for evaluating cybersecurity risks and appropriate risk mitigation.
The Cyber Security team is responsible for identifying and implementing technologies to mitigate IT risk, enhance data security, and identify and defend against attacks. Both teams work closely together to establish the cybersecurity policies for the Company, evaluate the current risk profile, and to prevent, investigate, mitigate, and remediate any cyber-attacks on the Company.
The Divisional Vice President of IT and members of the Information Technology Leadership Team maintain industry recognized credentials relevant to their roles. The Divisional Vice President of IT manages both an Information Security team and an IT Risk team within the Department of Information Technology.
The Chief Information Officer has over 20 years of IT leadership and cybersecurity experience, and the Information Technology Leadership Team overall has a combined fifteen years of cybersecurity experience. The Chief Information Officer and members of the Information Technology Leadership Team maintain industry recognized credentials relevant to their roles and stay informed on the latest trends and technologies.
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The Divisional Vice President of IT has a biannual meeting with the Audit Committee and other senior executives to provide an update of our current cyber security posture, IT Risk assessment, and compliance with multiple applicable regulations, frameworks, and other privacy initiatives.
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Our cybersecurity risk management and internal controls program are aligned to ISO27001 Standards and the National Institute of Standards and Technology (NIST) framework. As part of our cybersecurity program management activities and our continuing efforts to evaluate and enhance the effectiveness of our cybersecurity policies and procedures, we actively engage internal and prominent external experts, as well as industry participants.
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The Divisional Vice President of IT, along with the Information Technology Leadership Team, also meet with other senior executives every other week throughout the year to discuss on-going cyber security and governance initiatives and risk mitigations.
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Our cybersecurity program is managed by the Chief Information Officer who has biannual meetings with the Audit Committee and provides periodic reports and updates concerning our cybersecurity program to our Chief Executive Officer and other members of our senior management, as appropriate.
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The Divisional Vice President of IT has fifteen years of cybersecurity 29 Table of Contents experience, including ten years with Mistras Group, and the Information Technology Leadership Team has a combined fifteen years of cybersecurity experience, including a combined ten years with Mistras Group.
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These reports include updates on our cyber risk and threats, the status of projects to strengthen our information network and data security, assessments of our information security program, and the emerging threat landscape. We have established governance committees to provide us with cybersecurity oversight with supportive roles to advance the effectiveness of our cybersecurity program.
Added
Risk Management and Strategy The IT Risk team uses an asset-based risk approach for evaluating cybersecurity risks and appropriate risk mitigation. All IT assets are reviewed against a broad range of risks twice a year and are evaluated for likelihood of occurrence and impact should they occur.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWhile we lease most of our facilities, as of December 31, 2023, we owned properties located in Monroe, North Carolina; Trainer, Pennsylvania; LaPorte, Texas; Burlington, Washington; Evanston, Wyoming; and Jonquiere, Quebec, Canada. Our North America segment utilizes approximately 70 facilities throughout North America (including Canada and Mexico).
Biggest changeWhile we lease most of our facilities, as of December 31, 2024, we owned properties located in Monroe, North Carolina; Trainer, Pennsylvania; LaPorte, Texas; Burlington, Washington; Evanston, Wyoming; and Jonquiere, Quebec, Canada. Our North America segment utilizes approximately 71 facilities throughout North America (including Canada and Mexico).
Our Products and Systems segment’s primary location is in our Princeton Junction, New Jersey facility. Our International segment has approximately 35 facilities including locations in Belgium, Brazil, France, Germany, Greece, India, the Netherlands and the United Kingdom. We believe that all of our facilities are well maintained and are suitable and adequate for the foreseeable future.
Our Products and Systems segment’s primary location is in our Princeton Junction, New Jersey facility. Our International segment has approximately 30 facilities including locations in Belgium, Brazil, France, Germany, Greece, India, the Netherlands and the United Kingdom. We believe that all of our facilities are well maintained and are suitable and adequate for the foreseeable future.
ITEM 2. PROPERTIES As of December 31, 2023, we operated approximately 110 facilities in 11 countries, with our corporate headquarters located in Princeton Junction, New Jersey. Our headquarters in Princeton Junction is our primary location, where most of our manufacturing and research and development is conducted.
ITEM 2. PROPERTIES As of December 31, 2024, we operated approximately 105 facilities in 11 countries, with our corporate headquarters located in Princeton Junction, New Jersey. Our headquarters in Princeton Junction is our primary location, where most of our manufacturing and research and development is conducted.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeStock Performance 31 Table of Contents The line graph below compares the cumulative total shareholder value return of our common shares with the cumulative total returns of an overall stock market index, the Russell 3000, and our peer group index.
Biggest changeStock Performance The line graph below compares the cumulative total shareholder value return of our common shares with the cumulative total returns of an overall stock market index, the Russell 3000, and our peer group index. This graph assumes an investment of $100 in our common shares and each index (with all dividends reinvested) on December 31, 2019.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES Market for Common Stock Our common stock currently trades on the New York Stock Exchange under the ticker symbol “MG.” Holders of Record As of March 6, 2024, there were 10 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES Market for Common Stock Our common stock currently trades on the New York Stock Exchange under the ticker symbol “MG.” Holders of Record 32 Table of Contents As of March 7, 2025, th ere were 10 holders of record of our common stock.
All purchases were effected pursuant to the surrender of shares by employees to satisfy minimum tax withholding obligations in connection with the vesting of restricted stock units.
Purchases of Equity Securities The following table sets forth the shares of our common stock we acquired during the fourth quarter of 2024. All purchases were effected pursuant to the surrender of shares by employees to satisfy minimum tax withholding obligations in connection with the vesting of restricted stock units.
Month Ending Total Number of Shares (or Units) Purchased Average Price Paid per Share (or Unit) October 31, 2023 27,352 $ 5.42 November 30, 2023 108 $ 6.71 December 31, 2023 118,102 $ 6.95 `ITEM 6. [RESERVED] 32 Table of Contents
Month Ending Total Number of Shares (or Units) Purchased Average Price Paid per Share (or Unit) October 31, 2024 — $ — November 30, 2024 726 $ 10.12 December 31, 2024 12,270 $ 9.06 `ITEM 6. [RESERVED] 33 Table of Contents
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This graph assumes an investment of $100 in our common shares and each index (with all dividends reinvested) on December 31, 2018. Purchases of Equity Securities The following table sets forth the shares of our common stock we acquired during the fourth quarter of 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIncome (Loss) from Operations The following table shows a reconciliation of segment income (loss) from operations to income (loss) before special items (unaudited) for the years ended December 31, 2023 and 2022: For the year ended December 31, 2023 2022 ($ in thousands) North America: Income from operations (GAAP) $ 55,170 $ 49,616 Bad debt provision for troubled customers, net of recoveries — 42 Reorganization and other costs 960 99 Legal settlement and insurance (recoveries) charges, net 1,058 (841) Acquisition-related expense, net — 45 Income before special items (non-GAAP) $ 57,188 $ 48,961 International: Income (loss) from operations (GAAP) $ (12,229) $ 3,566 Goodwill Impairment charges 13,799 — Reorganization and other costs 351 (43) Income before special items (non-GAAP) $ 1,921 $ 3,523 Products and Systems: Income (loss) from operations (GAAP) $ 267 $ (992) Reorganization and other costs 382 — Income (loss) before special items (non-GAAP) $ 649 $ (992) Corporate and Eliminations: Loss from operations (GAAP) $ (45,112) $ (32,391) Legal settlement and insurance (recoveries) charges, net — (153) Loss on debt modification — 693 Reorganization and other costs 10,576 139 Acquisition-related expense, net 9 31 Loss before special items (non-GAAP) $ (34,527) $ (31,681) Total Company: Income (loss) from operations (GAAP) $ (1,904) $ 19,799 Goodwill Impairment charges 13,799 — Bad debt provision for troubled customers, net of recoveries — 42 Legal settlement and insurance (recoveries) charges, net 1,058 (994) Loss on debt modification — 693 Reorganization and other costs 12,269 195 Acquisition-related expense, net 9 76 Income before special items (non-GAAP) $ 25,231 $ 19,811 See " Note about Non-GAAP Measures" in this Annual Report for an explanation of our use of non-GAAP measures. 39 Table of Contents Total Company income from operations (GAAP) decreased by $21.7 million, or 109.6% compared to the year ended December 31, 2022.
Biggest changeIncome (Loss) from Operations The following table shows a reconciliation of segment income (loss) from operations to income (loss) before special items (unaudited) for the years ended December 31, 2024 and 2023: For the year ended December 31, 2024 2023 ($ in thousands) North America: Income from operations (GAAP) $ 62,286 $ 55,170 Reorganization and other costs 2,046 960 Legal settlement and insurance (recoveries) charges, net (808) 1,058 Income before special items (non-GAAP) $ 63,524 $ 57,188 International: Income (loss) from operations (GAAP) $ 6,275 $ (12,229) Goodwill Impairment charges — 13,799 Reorganization and other costs 1,086 351 Income before special items (non-GAAP) $ 7,361 $ 1,921 Products and Systems: Income from operations (GAAP) $ 2,510 $ 267 Reorganization and other costs 184 382 Income before special items (non-GAAP) $ 2,694 $ 649 Corporate and Eliminations: Loss from operations (GAAP) $ (31,245) $ (45,112) Environmental expense 1,660 — Reorganization and other costs 2,199 10,576 Acquisition-related expense, net 2 9 Loss before special items (non-GAAP) $ (27,384) $ (34,527) Total Company: Income (loss) from operations (GAAP) $ 39,826 $ (1,904) Goodwill Impairment charges — 13,799 Legal settlement and insurance (recoveries) charges, net (808) 1,058 Environmental expense 1,660 — Reorganization and other costs 5,515 12,269 Acquisition-related expense, net 2 9 Income before special items (non-GAAP) $ 46,195 $ 25,231 See " Note about Non-GAAP Measures" in this Annual Report for an explanation of our use of non-GAAP measures.
Increased interest rates in the current period increased the discount rate associated with the reporting units which contributed in an unfavorable decrease in the reporting units value. The market approach valuation was derived from metrics of publicly traded companies or historically completed transactions of comparable businesses.
Increased interest rates in the current period increased the discount rate associated with the reporting units which contributed to an unfavorable decrease in the reporting units value. The market approach valuation was derived from metrics of publicly traded companies or historically completed transactions of comparable businesses.
Management believes that our existing cash and cash equivalents, anticipated cash flows from operating activities, and available borrowings under our New Credit Agreement will be more than sufficient to meet anticipated cash needs over the next 12 months and for the foreseeable future.
Management believes that our existing cash and cash equivalents, anticipated cash flows from operating activities, and available borrowings under our Credit Agreement will be more than sufficient to meet anticipated cash needs over the next 12 months and for the foreseeable future.
Off-Balance Sheet Arrangements During the years ended December 31, 2023 and 2022, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Off-Balance Sheet Arrangements During the years ended December 31, 2024 and 2023, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Any significant adverse changes in future periods to the Company’s internal forecasts or the external market conditions, if any, could reasonably be expected to negatively affect its key assumptions and may result in future goodwill impairment charges which could be material. We elected to perform a quantitative assessment of goodwill on October 1, 2023.
Any significant adverse changes in future periods to the Company’s internal forecasts or the external market conditions, if any, could reasonably be expected to negatively affect its key assumptions and may result in future goodwill impairment charges which could be material. We elected to perform a quantitative assessment of goodwill on October 1, 2024.
By supporting these customers that help fuel our vehicles and power our society; inspecting components that are trusted for commercial, defense, and space craft; building real-time monitoring equipment to enable safe travel across bridges; and helping to propel sustainability, MISTRAS helps the world at large.
By supporting these customers that help fuel our vehicles and power our society; inspecting components that are trusted for commercial, defense, and space craft; building real-time monitoring equipment to enable safe travel across bridges; and helping to propel sustainability, the Company helps the world at large.
After considering all positive and negative evidence for the assessment as of September 30, 2023, we concluded that it was not more likely than not that our carrying values exceeded fair values and as such, no additional impairment was indicated. Additionally, as of December 31, 2023, there are no indicators of an impairment.
After considering all positive and negative evidence for the assessment as of September 30, 2024, we concluded that it was not more likely than not that our carrying values exceeded fair values and as such, no additional impairment was indicated. Additionally, as of December 31, 2024, there are no indicators of an impairment.
In this MD&A under the heading "Income (loss) from Operations", the non-GAAP financial performance measure "Income (loss) from operations before special items” is used for each of our three operating segments, the Corporate segment and the "Total Company", with tables reconciling the measure to a financial measure under GAAP.
In this MD&A under the heading "Income (loss) from Operations", the non-GAAP financial performance measure "Income (loss) from operations before special items” is used for each of our three operating segments, the "Corporate" segment and for the "Total Company", with tables reconciling the "Income (loss) from operations before special items" to "Income (loss) from operations", which is a financial measure under GAAP.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis (this “MD&A”) provides a discussion of our results of operations and financial position for the year ended December 31, 2023. This section generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis (this “MD&A”) provides a discussion of our results of operations and financial position for the year ended December 31, 2024. This section generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
We have continued providing our customers with an innovative asset protection software ecosystem through our MISTRAS OneSuite platform. The software platform offers functions of MISTRAS' software and services brands as integrated apps on a cloud environment.
We have continued providing our customers with an innovative asset protection software ecosystem through our OneSuite platform. The software platform offers functions of our software and services brands as integrated apps on a cloud environment.
We believe that the following critical accounting policies comprise the more significant estimates and assumptions used in the preparation of our consolidated financial statements. Revenue Recognition 42 Table of Contents The majority of our revenues are derived from providing services on a time and material basis and are short-term in nature.
We believe that the following critical accounting policies comprise the more significant estimates and assumptions used in the preparation of our consolidated financial statements. Revenue Recognition The majority of our revenues are derived from providing services on a time and material basis and are short-term in nature.
We historically spend approximately 2% to 3% of our total revenues on capital expenditures, excluding acquisitions, and expect to fund these expenditures through a combination of cash and lease financing. Our cash capital expenditures, excluding acquisitions, for each of the years ended December 31, 2023 and 2022 were approximately 3.4% and 2.0% of revenues, respectively.
We historically spend approximately 2% to 3% of our total revenues on capital expenditures, excluding acquisitions, and expect to fund these expenditures through a combination of cash and lease financing. Our cash capital expenditures, excluding acquisitions, for each of the years ended December 31, 2024 and 2023 were approximately 3.2% and 3.4% of revenues, respectively.
The increase was due to increased sales volume related to our commercial aerospace and industrials end markets. Data Analytical Solutions revenues are comprised of revenue derived from data software sales & subscriptions, implementation services and analytics that offer insights and recommendations to improve asset integrity.
The increase was due to increased sales volume related to our commercial aerospace and industrials end markets. Data Analytical Solutions revenue is comprised of revenue derived from data software sales & subscriptions, implementation services and analytics that offer insights and recommendations to improve asset integrity.
Liquidity and Capital Resources Outlook Future Sources of Cash 41 Table of Contents We expect our future sources of cash to include cash flow generated from our operating activities and borrowings under our New Credit Agreement. Our revolving credit facility is available for cash advances required for working capital and for letters of credit to support our operations.
Liquidity and Capital Resources Outlook Future Sources of Cash We expect our future sources of cash to include cash flow generated from our operating activities and borrowings under our Credit Agreement. Our revolving credit facility is available for cash advances required for working capital and for letters of 42 Table of Contents credit to support our operations.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 are included in Part II–Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on March 15, 2023, which discussion is incorporated herein by reference.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 are included in Part II–Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 11, 2024, which discussion is incorporated herein by reference.
We account for revenue in accordance with Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC Topic 606.
We account for revenue in accordance with Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers. 43 Table of Contents Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC Topic 606.
This MD&A includes the following sections: • Forward-Looking Statements • COVID-19 and Other Updates • Overview • Note about Non-GAAP Measures • Consolidated Results of Operations • Liquidity and Capital Resources • Critical Accounting Estimates • Recent Accounting Pronouncements Forward-Looking Statements This Annual Report on Form 10-K, including this MD&A, contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act.
This MD&A includes the following sections: • Forward-Looking Statements • Overview • Note about Non-GAAP Measures • Consolidated Results of Operations • Liquidity and Capital Resources • Critical Accounting Estimates • Recent Accounting Pronouncements Forward-Looking Statements This Annual Report on Form 10-K, including this MD&A, contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act.
Any legislation or regulations that may be adopted to implement these measures may negatively impact our customers in the oil and gas market over the long-term, which presently is our largest market, although this initiative will likely benefit the alternative energy market, such as wind energy, for which we provide products and services.
Any legislation or regulations that may be adopted to implement these measures may negatively impact our customers in the oil and gas market over the long-term, which presently is our largest market, although this initiative will likely benefit the 35 Table of Contents alternative energy market, such as wind energy, for which we provide products and services.
The allocation methodology and assumptions made are consistent for the years presented. Field Services revenues are comprised of revenue derived primarily by technicians performing asset inspections and maintenance services for our customers at locations other than Mistras properties.
The allocation methodology and assumptions made are consistent for the years presented. Field Services revenue is comprised of revenue derived primarily by technicians performing asset inspections and maintenance services for our customers at locations other than our properties.
Specifically, we considered changes in macroeconomic conditions, industry and market conditions, our internal forecasts of future revenue and expenses, our stock price, any significant events affecting the Company and actual changes in the carrying values of our net assets.
Specifically, we considered changes in macroeconomic conditions, industry and market conditions, our internal forecasts of future revenue and expenses, our stock price, any significant events affecting the Company and actual changes in 45 Table of Contents the carrying values of our net assets.
Because Income (loss) from operations before special items may not be calculated in the same manner by all companies, this measure may not be comparable to other similarly titled measures used by other companies. 35 Table of Contents Consolidated Results of Operations Year ended December 31, 2023 vs.
Because Income (loss) from operations before special items may not be calculated in the same manner by all companies, this measure may not be comparable to other similarly titled measures used by other companies. 36 Table of Contents Consolidated Results of Operations Year ended December 31, 2024 vs.
Aerospace and defense customer revenue comprised approximately 11% and 12% of total revenue for the years ended December 31, 2023 and 2022, respectively.
Aerospace and defense customer revenue comprised approximately 12% and 11% of total revenue for the years ended December 31, 2024 and 2023, respectively.
Backed by an innovative, data-driven asset protection portfolio, proprietary technologies, strong commitment to Environmental, Social, and Governance ("ESG") initiatives, and a decades-long legacy of industry leadership, MISTRAS leads customers in the oil and gas, petrochemical, aerospace and defense, renewable and nonrenewable power, civil infrastructure, and manufacturing industries towards achieving operational and environmental excellence.
Backed by an innovative, data-driven asset protection portfolio, proprietary technologies, strong commitment to Environmental, Social, and Governance ("ESG") initiatives, and a decades-long legacy of industry leadership, the Company helps customers with asset-intensive infrastructure in the oil and gas, petrochemical, aerospace and defense, renewable and nonrenewable power, civil infrastructure, and manufacturing industries towards achieving operational and environmental excellence.
The Company is currently unable to predict with certainty the overall impact that the factors discussed above and the effect of inflationary pressures may have on its business, results of operations or liquidity or in other ways which the Company cannot yet determine.
The Company is currently unable to predict with certainty the overall impact that the factors discussed above and the effect of continuing inflationary pressures or increased costs due to tariffs and trade barriers may have on its business, results of operations or liquidity or in other ways which the Company cannot yet determine.
In addition, we will use cash to fund our operating leases, finance leases, long-term debt repayments and various other obligations as they arise as noted within Note 11-Long-Term Debt and Note 17 - Leases.
In addition, we will use cash to fund our operating leases, finance leases, long-term debt repayments and various other obligations as they arise as noted within Note 11-Long-Term Debt and Note 17 - Leases of the notes to the consolidated financial statements .
We are currently unable to predict with certainty the effects that inflationary pressures and the Russian-Ukrainian war may have on our business, results of operations or liquidity or in other ways which we cannot yet determine.
Other Updates We are currently unable to predict with certainty the effects that inflationary pressures and the ongoing war between Russia and Ukraine war may have on our business, results of operations or liquidity or in other ways which we cannot yet determine.
The Products and Systems segment increased by $0.3 million, or 2.0%, driven by higher sales volume. Oil and gas customer revenue comprised approximately 59% and 56% of total revenue for the years ended December 31, 2023 and 2022, respectively.
The Products and Systems segment increased by $0.7 million, or 5.2%, driven by higher sales volume. Oil and gas customer revenue comprised approximately 57% and 59% of total revenue for the years ended December 31, 2024 and 2023, respectively.
The increase was due primarily to increased sales volume within PCMS, Onstream and other Data Analytical Solutions offerings within our North America segment. 37 Table of Contents Other revenues are comprised of locations that perform both asset inspection services and testing of components and materials at in-house Mistras laboratories.
The decrease was due primarily to decreased sales volume within PCMS, Onstream and other Data Analytical Solutions offerings within our North America segment. 38 Table of Contents Other revenue are comprised of locations that perform both asset inspection services and testing of components and materials at our in-house laboratories.
Interest Expense Interest expense was $16.8 million and $10.5 million for the years ended December 31, 2023 and December 31, 2022, respectively. The increase was due to increased interest rates in the current period.
Interest Expense Interest expense was $17.1 million and $16.8 million for the years ended December 31, 2024 and December 31, 2023, respectively. The increase was due to increased interest rates in the current period.
As of December 31, 2023 and December 31, 2022, we had $81.0 million and $77.6 million in net property, plant and equipment, respectively, and $44.0 million and $49.0 million in intangible assets, net, respectively. 43 Table of Contents Goodwill Goodwill represents the excess purchase price of acquired businesses over the fair values attributed to underlying net tangible assets and identifiable intangible assets.
As of December 31, 2024 and December 31, 2023, we had $80.9 million and $81.0 million in net property, plant and equipment, respectively, and $39.7 million and $44.0 million in intangible assets, net, respectively. 44 Table of Contents Goodwill Goodwill represents the excess purchase price of acquired businesses over the fair values attributed to underlying net tangible assets and identifiable intangible assets.
Our quantitative assessment considered relevant events and circumstances occurring since our interim quantitative goodwill impairment test performed as of September 44 Table of Contents 30, 2023.
Our quantitative assessment considered relevant events and circumstances occurring since our interim quantitative goodwill impairment test performed as of September 30, 2024.
Downstream customer revenue increased $12.2 million, or 8%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, due to increased sales volume at customer refineries and increased customer turnarounds. The following table presents revenue by type, explained directly below the table.
Downstream customer revenue increased $5.7 million, or 4%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, due to increased sales volume at customer refineries and increased customer turnarounds. The following table presents revenue by type, explained directly below the table.
We generated operating cash flows of $26.7 million and $26.4 million for the years ended December 31, 2023 and 2022, respectively.
We generated operating cash flows of $50.1 million and $26.7 million for the years ended December 31, 2024 and 2023, respectively.
Effect of Exchange Rate Changes on Cash and Cash Equivalents The effect of exchange rate changes on our cash and cash equivalents was a decrease of $0.2 million for the year ended December 31, 2023, compared to a decrease of $1.5 million for the year ended December 31, 2022.
Effect of Exchange Rate Changes on Cash and Cash Equivalents The effect of exchange rate changes on our cash and cash equivalents was a decrease of $0.7 million for the year ended December 31, 2024, compared to an increase of $0.2 million for the year ended December 31, 2023.
The increase was mainly attributable to movements in working capital driven primarily by an increase in net accounts receivable collections, an increase in accrued expenses and other liabilities, and an increase in accounts payable in the current year as compared to the prior year.
The increase was mainly attributable to movements in working capital driven primarily by an increase in operating results and an increase in net accounts receivable collections in the current year as compared to the prior year.
Future Uses of Cash We expect our future uses of cash will primarily be for repayment of debt, purchases or manufacture of field-testing equipment to support growth, additional investments in technology and software products and the replacement of existing assets and equipment used in our operations.
Acquisitions, if any, are funded through available cash and borrowings under the Credit Agreement. Future Uses of Cash We expect our future uses of cash will primarily be for repayment of debt, purchases or manufacture of field-testing equipment to support growth, additional investments in technology and software products and the replacement of existing assets and equipment used in our operations.
Capital expenditures for the purchase of property, plant and equipment and of intangible assets was $23.6 million and $13.4 million for the years ended December 31, 2023 and 2022, respectively. 40 Table of Contents Cash Flows Table The following table summarizes our cash flows for the years ended December 31, 2023 and 2022: For the year ended December 31, ($ in thousands) 2023 2022 Net cash provided by (used in): Operating activities $ 26,748 $ 26,406 Investing activities (22,133) (12,238) Financing activities (7,706) (16,323) Effect of exchange rate changes on cash and cash equivalents 249 (1,467) Net change in cash and cash equivalents $ (2,842) $ (3,622) Cash Flows from Operating Activities Cash provided by operating activities for the year ended December 31, 2023 was $26.7 million, an increase of $0.3 million from the prior year period.
Capital expenditures for the purchase of property, plant and equipment and of intangible assets was $23.0 million and $23.6 million for the years ended December 31, 2024 and 2023, respectively. 41 Table of Contents Cash Flows Table The following table summarizes our cash flows for the years ended December 31, 2024 and 2023: For the year ended December 31, ($ in thousands) 2024 2023 Net cash provided by (used in): Operating activities $ 50,129 $ 26,748 Investing activities (21,366) (22,133) Financing activities (27,398) (7,706) Effect of exchange rate changes on cash and cash equivalents (694) 249 Net change in cash and cash equivalents $ 671 $ (2,842) Cash Flows from Operating Activities Cash provided by operating activities for the year ended December 31, 2024 was $50.1 million, an increase of $23.4 million from the prior year period.
Data Analytical Solutions revenue is derived from work performed by Mistras employees in our facilities, or at customer locations, using our proprietary portfolio of software applications. Data Analytical Solutions revenue increased $10.0 million, or 16.1%, for the twelve months ended December 31, 2023 as compared to the twelve months ended December 31, 2022.
Data Analytical Solutions revenue is derived from work performed by our employees in our facilities, or at customer locations, using our proprietary portfolio of software applications. Data Analytical Solutions revenue decreased $3.3 million, or 4.6%, for the twelve months ended December 31, 2024 as compared to the twelve months ended December 31, 2023.
Field Services revenue increased $15.4 million, or 3.4%, for the twelve months ended December 31, 2023 as compared to the twelve months ended December 31, 2022. The increase was due to increased sales volume in our oil and gas end market for our North America and International segments.
Field Services revenue increased $32.4 million, or 6.9%, for the twelve months ended December 31, 2024 as compared to the twelve months ended December 31, 2023. The increase was due to increased sales volume in our oil and gas and power generation and transmission end markets for our North America and International segments.
Gross profit margin was 28.9% and 28.8% for the years ended December 31, 2023 and 2022, respectively, due to favorable sales mix. North America segment gross profit margins had a year-on-year increase of 60 basis points to 28.3% for the year ended December 31, 2023, due primarily to favorable sales mix.
Gross profit margin was 29.2% and 28.9% for the years ended December 31, 2024 and 2023, respectively, with the increase due to favorable sales mix. North America segment gross profit margins had a year-on-year decrease of 40 basis points to 27.9% for the year ended December 31, 2024, due primarily to unfavorable sales mix.
Our top ten customers comprised approximately 35% of total revenue for the years ended December 31, 2023 and 2022, with no customer accounting for 10% or more of total revenue in either period. 36 Table of Contents For the year ended December 31, 2023 2022 ($ in thousands) Oil and Gas Revenue by sub-category Upstream $ 157,828 $ 146,056 Midstream 101,278 97,005 Downstream 156,889 144,691 Total $ 415,995 $ 387,752 Oil and gas upstream customer revenue increased approximately $11.8 million, or 8%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, due to continued market share gains and expanded exploration operations, as compared to the prior year period.
Our top ten customers comprised approximately 36% of total revenue for the years ended December 31, 2024 and 2023, with no customer accounting for 10% or more of total revenue in either period. 37 Table of Contents For the year ended December 31, 2024 2023 ($ in thousands) Oil and Gas Revenue by sub-category Upstream $ 167,741 $ 157,828 Midstream 88,630 101,278 Downstream 162,552 156,889 Total $ 418,923 $ 415,995 Oil and gas upstream customer revenue increased approximately $9.9 million, or 6%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, due to continued market share gains and expanded exploration operations, as compared to the prior year period.
The increase was driven by the North America segment, which experienced a revenue increase of $6.0 million, or 1.0%, driven by single-digit organic growth in certain end markets. The International segment revenues increased by $12.0 million, or 10.7%, due predominantly to low single-digit favorable impact of foreign exchange rates and by mid single-digit organic growth.
The increase was driven by the North America segment, which experienced a revenue increase of $14.2 million, or 2.5%, driven by single-digit organic growth in certain end markets. The International segment revenue increased by $11.6 million, or 9.3%, due predominantly to low single-digit favorable impact of foreign exchange rates and by high single-digit organic growth.
Midstream customer revenues increased approximately $4.3 million, or 4%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, due to increased pipe inspection services.
Midstream customer revenues decreased approximately $12.6 million, or 12%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, due to decreased pipe inspection services.
Gross Profit (Loss) Gross profit (loss) by segment for the years ended December 31, 2023 and 2022 were as follows: For the year ended December 31, 2023 2022 ($ in thousands) Gross profit (loss) North America $ 163,960 $ 159,049 % of segment revenue 28.3 % 27.7 % International 33,610 33,591 % of segment revenue 27.0 % 29.9 % Products and Systems 6,457 5,490 % of segment revenue 49.7 % 43.1 % Corporate and eliminations (220) 43 $ 203,807 $ 198,173 % of total revenue 28.9 % 28.8 % Gross profit increased $5.6 million, or 2.8%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, with a sales increase of $18.1 million, or 2.6%.
Gross Profit Gross profit by segment for the years ended December 31, 2024 and 2023 were as follows: For the year ended December 31, 2024 2023 ($ in thousands) Gross profit North America $ 165,679 $ 163,960 % of segment revenue 27.9 % 28.3 % International 39,812 33,610 % of segment revenue 29.3 % 27.0 % Products and Systems 7,526 6,457 % of segment revenue 55.1 % 49.7 % Corporate and eliminations 92 (220) $ 213,109 $ 203,807 % of total revenue 29.2 % 28.9 % Gross profit increased $9.3 million, or 4.6%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, with a sales increase of $24.2 million, or 3.4%.
Shop Laboratory revenues are comprised of quality assurance inspections of components and materials at our Mistras in-house laboratory facilities. Shop revenues increased $9.4 million, or 19.2%, for the twelve months ended December 31, 2023 as compared to the twelve months ended December 31, 2022.
Shop Laboratory revenue is comprised of quality assurance inspections of components and materials at our in-house laboratory facilities. Shop Laboratory revenue increased $6.4 million, or 11.0%, for the twelve months ended December 31, 2024 as compared to the twelve months ended December 31, 2023.
As of December 31, 2023, we were in compliance with the terms of the New Credit Agreement and will continuously monitor our compliance with the covenants contained in the New Credit Agreement. See Note 11-Long-Term Debt of the notes to the consolidated financial statements for additional information.
As of December 31, 2024, we were in compliance with the terms of the Credit Agreement and will continuously monitor our compliance with the covenants contained in the Credit Agreement. The terms of our Credit Agreement are described in Note 11-Long-Term Debt of the notes to the consolidated financial statements, under the heading " Senior Credit Facility ".
To date, our European operations have experienced increased costs associated with higher energy costs, among others, due in part to the on-going war between Russia & Ukraine. We will continue to monitor market conditions and respond accordingly.
Our European operations have experienced increased costs associated with higher energy costs during 2023, among others, due in part to the on-going war between Russia and Ukraine.
For the year ended December 31, 2023 2022 ($ in thousands) Revenue by type Field Services $ 470,433 $ 455,051 Shop Laboratories 58,188 48,809 Data Analytical Solutions 72,458 62,410 Other 104,394 121,103 Total $ 705,473 $ 687,373 In presenting the allocation of revenues by type in the table above, management makes certain assumptions in its allocation of revenues from laboratories that provide more than one type of service.
For the year ended December 31, 2024 2023 ($ in thousands) Revenue by type Field Services $ 502,810 $ 470,433 Shop Laboratories 64,564 58,188 Data Analytical Solutions 69,152 72,458 Other 93,114 104,394 Total $ 729,640 $ 705,473 In presenting the allocation of revenues by type in the table above, management makes certain assumptions in its allocation of revenue from laboratories that provide more than one type of service.
Year ended December 31, 2022 The following table summarizes our Consolidated Statements of Income (Loss) for the years ended December 31, 2023 and 2022: For the year ended December 31, 2023 2022 ($ in thousands) Revenue $ 705,473 $ 687,373 Gross profit 203,807 198,173 Gross profit as a % of Revenue 28.9 % 28.8 % Income (loss) from operations (1,904) 19,799 Income from operations as a % of Revenue (0.3) % 2.9 % Income (loss) before provision for income taxes (18,665) 9,294 Net income (loss) (17,445) 6,574 Net income (loss) attributable to Mistras Group, Inc. $ (17,453) $ 6,499 Revenues Revenues by segment for the years ended December 31, 2023 and 2022 were as follows: For the year ended December 31, 2023 2022 ($ in thousands) Revenue North America $ 579,330 $ 573,336 International 124,414 112,425 Products and Systems 12,986 12,727 Corporate and eliminations (11,257) (11,115) $ 705,473 $ 687,373 Revenue was $705.5 million for the year ended December 31, 2023, an increase of $18.1 million, or 2.6%, compared with the year ended December 31, 2022.
Year ended December 31, 2023 The following table summarizes our Consolidated Statements of Income (Loss) for the years ended December 31, 2024 and 2023: For the year ended December 31, 2024 2023 ($ in thousands) Revenue $ 729,640 $ 705,473 Gross profit 213,109 203,807 Gross profit as a % of Revenue 29.2 % 28.9 % Income (loss) from operations 39,826 (1,904) Income from operations as a % of Revenue 5.5 % (0.3) % Income (loss) before provision for income taxes 24,244 (18,665) Net income (loss) 18,970 (17,445) Net income (loss) attributable to Mistras Group, Inc. $ 18,958 $ (17,453) Revenue Revenue by segment for the years ended December 31, 2024 and 2023 were as follows: For the year ended December 31, 2024 2023 ($ in thousands) Revenue North America $ 593,527 $ 579,330 International 135,969 124,414 Products and Systems 13,661 12,986 Corporate and eliminations (13,517) (11,257) $ 729,640 $ 705,473 Revenue was $729.6 million for the year ended December 31, 2024, an increase of $24.2 million, or 3.4%, compared with the year ended December 31, 2023.
Other investments in infrastructure, training and software may also be required to match our growth, but we plan to continue using a disciplined approach to building our business.
Our future capital spending may increase as we pursue growth opportunities and acquire additional equipment to meet or pursue business opportunities. Other investments in infrastructure, training and software may also be required to match our growth, but we plan to continue using a disciplined approach to building our business.
Our operations consist of three reportable segments: North America (which we previously referred to as our Services segment), International, and Products and Systems. • North America provides asset protection solutions with the largest concentration in the United States, followed by Canada, consisting primarily of NDT, inspection, mechanical and engineering services that are used to evaluate the structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components.
The Company’s core capabilities also include non-destructive testing ("NDT") field and in-line inspections enhanced by advanced robotics, laboratory quality control and assurance testing, sensing technologies and NDT equipment, asset and mechanical integrity engineering services, and light mechanical maintenance and access services. 34 Table of Contents Our operations consist of three reportable segments: North America (which we previously referred to as our Services segment), International, and Products and Systems. • North America provides asset protection solutions with the largest concentration in the United States, followed by Canada, consisting primarily of NDT, inspection, mechanical and engineering services that are used to evaluate the structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components.
The primary driver for the increase in total company income before special items was increased sales in 2023 compared to 2022. Income before special items as a percentage of revenue increased by 70 basis points to 3.6% for the year ended December 31, 2023 from 2.9% for the year ended December 31, 2022.
Total Company income before special items as a percentage of revenue increased by 270 basis points to 6.3% for the year ended December 31, 2024, from 3.6% for the year ended December 31, 2023.
We continue to take steps to reduce spending and preserve cash. Our New Credit Agreement does not limit the Company’s ability to acquire other businesses or companies except for certain provisions as described within Note 11-Long-Term Debt. Our future capital spending may increase as we pursue growth opportunities and acquire additional equipment to meet or pursue business opportunities.
We continue to take steps to reduce spending and preserve cash. Our Credit Agreement does not limit our ability to acquire other businesses or companies except for certain provisions as described within Note 11-Long-Term Debt of the notes to the consolidated financial statements .
International segment gross margins had a year-on-year decrease of 290 basis points to 27.0% for the year ended December 31, 2023, due primarily to increased inflationary pressures. Products and Systems segment gross margins increased by 660 basis points for the year ended December 31, 2023 to 49.7%, driven by favorable sales mix.
International segment gross margins had a year-on-year increase of 230 basis points to 29.3% for the year ended December 31, 2024, due primarily to decreased inflationary pressures. Products and Systems segment gross margins increased by 540 basis points for the year ended December 31, 2024 to 55.1%, driven by favorable sales mix.
We finance our operations primarily through our existing cash balances, cash collected from operations, bank borrowings and lease financing. We believe these sources are sufficient to fund our operations for the foreseeable future.
Borrowings of $167.2 million and letters of credit of $3.1 million were outstanding under the Credit Agreement at December 31, 2024. We finance our operations primarily through our existing cash balances, cash collected from operations, bank borrowings and lease financing. We believe these sources are sufficient to fund our operations for the foreseeable future.
Total company income before special items (non-GAAP) increased by $5.4 million or 27.4% compared with the year ended December 31, 2022. Operating expenses, excluding special items (non-GAAP), as a percentage of revenue, was 25.3% for the year ended December 31, 2023 compared to 25.9% for the year ended December 31, 2022.
Operating expenses, excluding special items (non-GAAP), as a percentage of revenue, 40 Table of Contents was 22.9% for the year ended December 31, 2024 compared to 25.3% for the year ended December 31, 2023. The primary driver for the increase in Total Company income before special items was increased sales in 2024 compared to 2023.
Cash Flows from Investing Activities Net cash used in investing activities for the year ended December 31, 2023 was $22.1 million, an increase of $9.9 million used in investing activities from the prior year period. The Company used $10.2 million more cash for purchases of property, plant and equipment and intangible assets in 2023 compared to 2022.
Cash Flows from Investing Activities Net cash used in investing activities for the year ended December 31, 2024 was $21.4 million, a decrease of $0.8 million used in investing activities from the prior year period. The Company used $0.7 million less cash for purchases of property, plant and equipment and intangible assets in 2024 compared to 2023.
Operating Expenses Operating expenses for the years ended December 31, 2023 and 2022 was as follows: For the year ended December 31, 2023 2022 ($ in thousands) Operating Expenses Selling, general and administrative expenses $ 166,749 $ 166,400 Goodwill Impairment charges 13,799 — Bad debt provision for troubled customers, net of recoveries — 42 Reorganization and other costs 12,269 195 Research and engineering 1,723 1,994 Depreciation and amortization 10,104 10,661 Acquisition-related expense, net 9 76 Legal settlement and litigation charges (benefit), net 1,058 (994) $ 205,711 $ 178,374 % of total revenue 29.2 % 26.0 % Operating expenses increased $27.3 million, or 15.3%, for the year ended December 31, 2023 compared to the year ended December 31, 2022 due primarily to impairment charges and reorganization charges recorded in the current period that were not 38 Table of Contents in the prior period.
Operating Expenses Operating expenses for the years ended December 31, 2024 and 2023 was as follows: For the year ended December 31, 2024 2023 ($ in thousands) Operating Expenses Selling, general and administrative expenses $ 156,388 $ 166,749 Goodwill impairment charges — 13,799 Reorganization and other costs 5,515 12,269 Environmental expense 1,660 — Research and engineering 1,119 1,723 Depreciation and amortization 9,407 10,104 Acquisition-related expense, net 2 9 Legal settlement and litigation charges (benefit), net (808) 1,058 $ 173,283 $ 205,711 % of total revenue 23.7 % 29.2 % Operating expenses decreased $32.4 million, or 15.8%, for the year ended December 31, 2024 compared to the year ended December 31, 2023 due primarily to goodwill impairment charges being recorded in the prior period and reduced 39 Table of Contents reorganization charges recorded in the current period as compared to the prior period, which were a result of our Project Phoenix initiatives.
We are currently evaluating the impact of this guidance on our consolidated financial position, results of operations, and cash flows, but does not expect it to have a material impact. Further in response to the COVID-19 pandemic, the American Rescue Plan Act was signed into law on March 11, 2021.
We are currently evaluating the impact of this guidance on our consolidated financial position, results of operations, and cash flows, but do not expect it to have a material impact. On August 19, 2022, the United States enacted the Inflation Reduction Act, (the "Inflation Act"), a package intended to reduce inflation.
Other revenues in 2023 decreased primarily due to decreased sales within the aerospace and defense sector and due to declines in our other end markets within the North America and International segments as compared to the prior year period.
Other revenue decreased $11.3 million, or 10.8%, for the twelve months ended December 31, 2024 as compared to the twelve months ended December 31, 2023. Other revenue for the year ended December 31, 2024 decreased primarily due to decreased sales within the other end markets within the North America and International segments as compared to the prior year period.
Selling, general and administrative expenses increased $0.3 million, or 0.2% for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to unfavorable foreign currency exchange.
Selling, general and administrative expenses decreased $10.4 million, or 6.2% for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to actions taken related to our Project Phoenix initiatives to reduce selling, general and administrative expenses.
The impairment was calculated based on the difference between the estimated fair value and the carrying value of the reporting units and is included in Goodwill impairment charges on the condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2023.
The impairment was calculated based on the difference between the estimated fair value and the carrying value of the reporting units.
Income Taxes Our effective income tax rate was approximately 6.5% for the year ended December 31, 2023, compared to 29.3% for the year ended December 31, 2022.
Income Taxes Our effective income tax rate was approximately 21.8% for the year ended December 31, 2024, compared to 6.5% for the year ended December 31, 2023. The increase in effective tax rate was primarily driven by an impairment of $13.8 million impairment in year ended December 31, 2023, partially offset by the releasing of valuation allowance of $1.8 million.
Cash Flows from Financing Activities Net cash used in financing activities for the year ended December 31, 2023 was $7.7 million, compared to $16.3 million for the year ended December 31, 2022. During the year ended December 31, 2022, we entered into the New Credit Agreement which replaced our prior credit agreement, as detailed more in Note 11-Long-Term Debt.
Cash Flows from Financing Activities Net cash used in financing activities for the year ended December 31, 2024 was $27.4 million, compared to $7.7 million for the year ended December 31, 2023. Net repayment of our revolving credit facility and term loan was approximately $19.5 million higher compared to 2023.
As part of the New Credit Agreement, the prior revolving credit facility and term loan were repaid in full. Net repayment of debt and revolver was approximately $9.6 million higher compared to 2022. In addition, for the year ended December 31, 2023, we incurred approximately $0.6 million more taxes paid related to net share settlement of share-based awards.
In addition, for the year ended December 31, 2024, we incurred approximate ly $0.3 million less in taxes paid related to net share settlement of share-based awards than the prior period.
As of December 31, 2023, we had cash and cash equivalents totaling $17.6 million and available borrowing capacity of up to $116.0 million under our New Credit Agreement. Borrowings of $186.4 million and letters of credit of $2.9 million were outstanding under the New Credit Agreement at December 31, 2023.
The primary driver of the change was foreign currency fluctuations during the year ended December 31, 2024 related to the Euro and the US Dollar. Cash Balance and Credit Facility Borrowings As of December 31, 2024, we had cash and cash equivalents totaling $18.3 million and available borrowing capacity of up to $119.2 million under our Credit Agreement.
OneSuite serves as a single access portal for customers' data activities and provides access to 90 plus applications being offered on one centralized platform. 2023 Developments The Russian-Ukrainian war and the conflict in the Middle East between Israel and Hamas continue to create disruptions in the oil and gas market and the supply chain in general, which is resulting in some disruption to our business operations primarily in Europe due to increased energy costs in connection with the Russian-Ukrainian war.
OneSuite serves as a single access portal for customers' data activities and provides access to 90 plus applications being offered on one centralized platform. 2024 Developments The Company provides products and services to countries throughout the Middle East, where lawfully permitted, and in accordance with United States regulations. We continue to monitor the on-going conflicts throughout the Middle East.
At the time of this Annual Report, the effects of the COVID-19 pandemic have subsided, and our operations are continuing to normalize to pre-pandemic levels. 34 Table of Contents Our cash position and liquidity remain strong. As of December 31, 2023, our cash and cash equivalents balance was approximately $17.6 million and our Credit Agreement provides us with significant liquidity.
As of December 31, 2024, our cash and cash equivalents balance was approximately $18.3 million and our Credit Agreement provides us with significant liquidity.
The Company will continue to monitor market conditions and respond accordingly. Refer to Item 1A. Risk Factors in Part I of our 2023 Annual Report. Note about Non-GAAP Measures The Company prepares its consolidated financial statements in accordance with U.S. GAAP.
Vahaviolos, our founder and Chairman Emeritus. On February 7, 2025, we announced the termination of John A. Smith as our Executive Vice President and President of Services. Note about Non-GAAP Measures The Company prepares its consolidated financial statements in accordance with U.S. GAAP.
Removed
COVID-19 and Other Updates While our business and operations were negatively impacted the past several years by the COVID-19 pandemic, at the time of this Annual Report, the effects of the COVID-19 pandemic have subsided and our operations have normalized to pre-pandemic levels.
Added
We may also experience increased costs associated with tariffs or trade barriers (including recent U.S. tariffs imposed or threatened to be imposed on China, Canada, Mexico and other countries and any retaliatory actions taken by such countries). We will continue to monitor market conditions and respond accordingly.
Removed
The Company’s core 33 Table of Contents capabilities also include non-destructive testing ("NDT") field and in-line inspections enhanced by advanced robotics, laboratory quality control and assurance testing, sensing technologies and NDT equipment, asset and mechanical integrity engineering services, and light mechanical maintenance and access services.
Added
These conflicts caused disruptions in the Company's European operations in 2023 with increased costs associated with higher energy costs, amongst others. These disruptions have largely subsided in 2024, and the Company will continue to monitor market conditions and respond accordingly. Our cash position and liquidity remain strong.
Removed
In 2022, the Company eliminated substantially all of the COVID related cost reduction initiatives undertaken in 2020, including re-installment of the savings plan employer match and increasing wages back to pre-pandemic amounts.
Added
The Company's European operations are currently experiencing higher energy costs, among other increased costs, due in part to the on-going war between Russia and Ukraine and the conflict in the Middle East between Israel and Hamas. The Company will continue to monitor market conditions and respond accordingly. Refer to Item 1A.
Removed
During the third quarter of 2023, a triggering event was identified within the Company's reporting units within the International segment due to decreased gross margin in the current period as a result of inflationary pressures and rising energy costs. This resulted in goodwill impairment charges of $13.8 million within the International reporting units during the third quarter of 2023.
Added
Risk Factors in Part I of our 2024 Annual Report. On December 5, 2024, our Board of Directors (the “Board”), in furtherance of its management succession planning, appointed Natalia Shuman, as the Company’s President and Chief Executive Officer, and Manny Stamatakis will continue as the Executive Chairman of the Company effective as of January 1, 2025. Mr.
Removed
Other revenues decreased $16.7 million, or 13.8%, for the twelve months ended December 31, 2023 as compared to the twelve months ended December 31, 2022.
Added
Stamatakis served as our Chairman of the Board and Interim President and Chief Executive Officer until December 31, 2024. On December 12, 2024, we announced the appointment of Hani Hammad to the position of Executive Vice President and Chief Operating Officer effective as of January 1, 2025. On February 6, 2025, we announced the passing of Dr. Sotirios J.
Removed
The decrease in effective tax rate was primarily driven by a $1.7 million US R&D tax credit benefit in 2022, partially offset by the recording of a $1.1 million valuation allowance recorded in 2022 which was related to certain Canadian entities .

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFair Value of Financial Instruments We do not have material exposure to market risk with respect to investments, as our investments consist primarily of highly liquid investments purchased with a remaining maturity of three months or less.
Biggest changeWe may c onsider entering into hedging or forward exchange contracts in the future, as sales in international currencies increase due to growth in our International segment. 46 Table of Contents Fair Value of Financial Instruments We do not have material exposure to market risk with respect to investments, as our investments consist primarily of highly liquid investments purchased with a remaining maturity of three months or less.
For the year ended December 31, 2023, a 10% movement, favorable or unfavorable, in the average U.S. Dollar exchange rates would cause a change in adjusted operating income of approximately $1.5 million. We do not currently enter into forward exchange contracts to hedge exposures denominated in foreign currencies.
For the year ended December 31, 2024, a 10% movement, favorable or unfavorable, in the average U.S. Dollar exchange rates would cause a change in adjusted operating income of approximately $1.5 million. We do not currently enter into forward exchange contracts to hedge exposures denominated in foreign currencies.
We do not use derivative financial instruments for speculative or trading purposes; however, this does not preclude our adoption of specific hedging strategies in the future. 46 Table of Contents
We do not use derivative financial instruments for speculative or trading purposes; however, this does not preclude our adoption of specific hedging strategies in the future. 47 Table of Contents
Borrowings under our $190 million revolving credit facility as well as our $125 million term loan bear interest at SOFR, plus a credit spread adjustment and applicable SOFR margin, ranging from 1.25% to 2.75%, based upon our Total Consolidated D ebt Leverage Ratio.
Borrowings under our $190 million revolving credit facility as well as our $125 million term loan bear interest at Secured Overnight Financing Rate ("SOFR"), plus a credit spread adjustment and applicable SOFR margin, ranging from 1.25% to 2.75%, based upon our Total Consolidated D ebt Leverage Ratio.
Based on the amount of our variable rate debt of $186.4 million at December 31, 2023 , an increase in interest rates by one hundred basis points from our current rate would increase annual interest expense by approximately $1.9 million. 45 Table of Contents Foreign Currency Risk We have foreign currency exposure related to our operations in foreign locations.
Based on the amount of our variable rate debt of $167.2 million at December 31, 2024 , an increase in inter est rates by one hundred basis points from our current rate would increase annual interest expense by approximately $1.9 million. Foreign Currency Risk We have foreign currency exposure related to our operations in foreign locations.
Removed
We may consider entering into hedging or forward exchange contracts in the future, as sales in international currencies increase due to growth in our International segment.

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