Mistras Group Inc (NYSE:MG) beat the Street’s revenue forecasts in the fourth quarter but fell short of earnings estimates as the engineering services company exited certain lower-margin contracts and continued down the acquisition trail.
CEO Dennis Bertolli is particularly bullish on the company’s improved margins and its $143 million acquisition of Onstream Pipeline Inspection last December, which allows for its expansion into the pipeline inspection market.
“We ended the year with strong momentum, with fourth quarter consolidated gross margin reaching 28.9%, the best fourth-quarter margin in three years,” Bertolli said in a statement.
The company’s move to leave select lower margin contracts reduced its organic revenue growth in 2018 but drove the improvement in its margins. The company’s takeover of Onstream also “contributed nicely” to margin expansion, according to Bertolli.
“I am very excited about our recent Onstream acquisition, which further diversifies our midstream business in to the in-line pipeline inspection market,” he added.
In its latest reporting period, Mistras posted a loss of $0.04 on revenue of $180.8 million, which beat the consensus of sales of $178.64 million. On an adjusted basis, meanwhile, its earnings came in at $0.06, falling short of the consensus of $0.22 analysts had predicted.
For the year, the company swung to a profit and posted net income of $6.8 million, or $0.23 per share, and revenue of $742.4 million.
Looking ahead, Mistras forecasts that revenue in 2019 will range from $765 million to $785 million.
Headquartered in Princeton Junction, New Jersey, Mistras offers non-destructive testing and inspection and engineering services as well as asset-condition monitoring services and inspection and monitoring equipment.
Mistras shares dropped $2.37 to hit $13.13 in morning trade on Tuesday.
Contact Ellen Kelleher at [email protected]