10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

Or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __ to __

Commission file number 001- 34481

Mistras Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware	22-3341267
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
195 Clarksville Road Princeton Junction, New Jersey	08550
(Address of principal executive offices)	(Zip Code)

(609) 716-4000

(Registrant’s telephone number, including area code) 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

ý Yes  o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

ý Yes  o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer x
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)	Emerging Growth Company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes  ý No

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	MG	New York Stock Exchange

As of August 2, 2019, the registrant had 28,694,680 shares of common stock outstanding.

TABLE OF CONTENTS

			PAGE
PART I—FINANCIAL INFORMATION
	ITEM 1.	Financial Statements	1
		Condensed Consolidated Balance Sheets as of June 30, 2019 (unaudited) and December 31, 2018	1
		Unaudited Condensed Consolidated Statements of Income for the three and six months ended June 30, 2019 and June 30, 2018	2
		Unaudited Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2019 and June 30, 2018	3
		Unaudited Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2019 and June 30, 2018	4
		Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and June 30, 2018	5
		Notes to Unaudited Condensed Consolidated Financial Statements	6
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
	ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	35
	ITEM 4	Controls and Procedures	35
PART II—OTHER INFORMATION
	ITEM 1.	Legal Proceedings	37
	ITEM 1.A.	Risk Factors	37
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
	ITEM 3.	Defaults Upon Senior Securities	37
	ITEM 4.	Mine Safety Disclosures	37
	ITEM 5.	Other Information	37
	ITEM 6.	Exhibits	38
SIGNATURES			39

i

PART I—FINANCIAL INFORMATION

ITEM 1.Financial Statements

Mistras Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

	June 30, 2019			December 31, 2018
ASSETS	(unaudited)
Current Assets
Cash and cash equivalents	$	12,501		$	25,544
Accounts receivable, net	155,043			148,324
Inventories	13,685			13,053
Prepaid expenses and other current assets	16,765			15,870
Total current assets	197,994			202,791
Property, plant and equipment, net	95,442			93,895
Intangible assets, net	107,753			111,395
Goodwill	283,017			279,259
Deferred income taxes	2,882			1,930
Other assets	46,385			4,767
Total assets	$	733,473		$	694,037
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	18,840		$	13,863
Accrued expenses and other current liabilities	82,897			73,895
Current portion of long-term debt	7,056			6,833
Current portion of finance lease obligations	3,680			3,922
Income taxes payable	2,497			1,958
Total current liabilities	114,970			100,471
Long-term debt, net of current portion	263,381			283,787
Obligations under finance leases, net of current portion	9,826			9,075
Deferred income taxes	25,041			23,148
Other long-term liabilities	38,976			6,482
Total liabilities	452,194			422,963
Commitments and contingencies
Equity
Preferred stock, 10,000,000 shares authorized	—			—
Common stock, $0.01 par value, 200,000,000 shares authorized, 28,685,486 and 28,562,608 shares issued	286			285
Additional paid-in capital	228,883			226,616
Retained earnings	73,691			71,553
Accumulated other comprehensive loss	(21,777		)	(27,557		)
Total Mistras Group, Inc. stockholders’ equity	281,083			270,897
Non-controlling interests	196			177
Total equity	281,279			271,074
Total liabilities and equity	$	733,473		$	694,037

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

Mistras Group, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Income

(in thousands, except per share data)

	Three months ended						Six months ended
	June 30, 2019			June 30, 2018			June 30, 2019		June 30, 2018
Revenue	$	200,616		$	191,793		$	377,403	$	379,423
Cost of revenue	135,063			131,084			257,480		264,872
Depreciation	5,482			5,626			10,978		11,323
Gross profit	60,071			55,083			108,945		103,228
Selling, general and administrative expenses	41,923			41,267			83,686		80,301
Bad debt provision for troubled customers, net of recoveries	(2,693		)	—			2,798		—
Pension withdrawal expense	—			—			534		—
Research and engineering	754			913			1,611		1,669
Depreciation and amortization	4,119			2,965			8,291		5,916
Acquisition-related expense (benefit), net	549			(366		)	1,002		(1,360		)
Income from operations	15,419			10,304			11,023		16,702
Interest expense	3,579			1,895			7,106		3,686
Income before provision for income taxes	11,840			8,409			3,917		13,016
Provision for income taxes	4,397			2,409			1,760		4,096
Net income	7,443			6,000			2,157		8,920
Less: net income attributable to non-controlling interests, net of taxes	12			—			19		12
Net income attributable to Mistras Group, Inc.	$	7,431		$	6,000		$	2,138	$	8,908
Earnings per common share:
Basic	$	0.26		$	0.21		$	0.07	$	0.31
Diluted	$	0.26		$	0.20		$	0.07	$	0.30
Weighted average common shares outstanding:
Basic	28,657			28,346			28,616		28,325
Diluted	28,862			29,334			28,918		29,349

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

Mistras Group, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Comprehensive Income

(in thousands)

	Three months ended					Six months ended
	June 30, 2019		June 30, 2018			June 30, 2019		June 30, 2018
Net income	$	7,443	$	6,000		$	2,157	$	8,920
Other comprehensive income:
Foreign currency translation adjustments	3,649		(5,565		)	5,780		(4,065		)
Comprehensive income	11,092		435			7,937		4,855
Less: comprehensive income (loss) attributable to non-controlling interest	10		(4		)	19		10
Comprehensive income attributable to Mistras Group, Inc.	$	11,082	$	439		$	7,918	$	4,845

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Mistras Group, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Equity

(in thousands)

	Three months ended
	Common Stock			Additional paid-in capital			Retained earnings		Accumulated other comprehensive income (loss)			Total Mistras Group, Inc. Stockholders’ Equity			Noncontrolling Interest
	Shares	Amount																Total Equity
Balance at March 31, 2019	28,627	$	286	$	227,790		$	66,260	$	(25,426	)	$	268,910		$	186		$	269,096
Net income	—	—		—			7,431		—			7,431			12			7,443
Other comprehensive income, net of tax	—	—		—			—		3,649			3,649			(2		)	3,647
Share-based payments	58	—		1,490			—		—			1,490			—			1,490
Net settlement on vesting of restricted stock units	—	—		(397		)	—		—			(397		)	—			(397		)
Balance at June 30, 2019	28,685	$	286	$	228,883		$	73,691	$	(21,777	)	$	281,083		$	196		$	281,279
Balance at March 31, 2018	28,314	$	282	$	223,576		$	67,624	$	(15,305	)	$	276,177		$	187		$	276,364
Net income	—	—		—			6,000		—			6,000			—			6,000
Other comprehensive loss, net of tax	—	—		—			—		(5,565		)	(5,565		)	(4		)	(5,569		)
Share-based payments	60	1		1,670			—		—			1,671			—			1,671
Net settlement on vesting of restricted stock units	—	—		(612		)	—		—			(612		)	—			(612		)
Balance at June 30, 2018	28,374	$	283	$	224,634		$	73,624	$	(20,870	)	$	277,671		$	183		$	277,854

	Six months ended
	Common Stock			Additional paid-in capital			Retained earnings		Accumulated other comprehensive income (loss)			Total Mistras Group, Inc. Stockholders’ Equity			Noncontrolling Interest
	Shares	Amount																Total Equity
Balance at December 31, 2018	28,563	$	285	$	226,616		$	71,553	$	(27,557	)	$	270,897		$	177		$	271,074
Net income	—	—		—			2,138		—			2,138			19			2,157
Other comprehensive income, net of tax	—	—		—			—		5,780			5,780			—			5,780
Share-based payments	119	1		2,916			—		—			2,917			—			2,917
Net settlement on vesting of restricted stock units	—	—		(681		)	—		—			(681		)	—			(681		)
Exercise of stock options	3	—		32			—		—			32			—			32
Balance at June 30, 2019	28,685	$	286	$	228,883		$	73,691	$	(21,777	)	$	281,083		$	196		$	281,279
Balance at December 31, 2017	28,295	$	282	$	222,425		$	64,716	$	(16,805	)	$	270,618		$	173		$	270,791
Net income	—	—		—			8,908		—			8,908			12			8,920
Other comprehensive loss, net of tax	—	—		—			—		(4,065		)	(4,065		)	(2		)	(4,067		)
Share-based payments	79	1		2,864			—		—			2,865			—			2,865
Net settlement on vesting of restricted stock units	—	—		(655		)	—		—			(655		)	—			(655		)
Balance at June 30, 2018	28,374	$	283	$	224,634		$	73,624	$	(20,870	)	$	277,671		$	183		$	277,854

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Mistras Group, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands) 

	Six months ended
	June 30, 2019			June 30, 2018
Cash flows from operating activities
Net income	$	2,157		$	8,920
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	19,269			17,239
Deferred income taxes	420			601
Share-based compensation expense	2,867			2,829
Bad debt provision for troubled customers, net of recoveries	2,798			—
Fair value adjustments to contingent consideration	672			(990		)
Foreign currency (gain) loss	(1,218		)	372
Other	(395		)	164
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions
Accounts receivable	(8,792		)	(8,405		)
Inventories	(594		)	(1,171		)
Prepaid expenses and other assets	(625		)	(1,248		)
Accounts payable	4,945			4,475
Accrued expenses and other liabilities	(988		)	(78		)
Income taxes payable	589			(2,613		)
Net cash provided by operating activities	21,105			20,095
Cash flows from investing activities
Purchase of property, plant and equipment	(11,562		)	(10,963		)
Purchase of intangible assets	(441		)	(265		)
Proceeds from sale of equipment	955			941
Net cash used in investing activities	(11,048		)	(10,287		)
Cash flows from financing activities
Repayment of finance lease obligations	(2,411		)	(3,109		)
Proceeds from borrowings of long-term debt	566			1,334
Repayment of long-term debt	(3,445		)	(1,322		)
Proceeds from revolver	10,000			19,100
Repayment of revolver	(27,200		)	(33,100		)
Payment of contingent consideration for business acquisitions	—			(1,506		)
Taxes paid related to net share settlement of share-based awards	(681		)	(655		)
Proceeds from exercise of stock options	32			—
Net cash used in financing activities	(23,139		)	(19,258		)
Effect of exchange rate changes on cash and cash equivalents	39			(561		)
Net change in cash and cash equivalents	(13,043		)	(10,011		)
Cash and cash equivalents at beginning of period	25,544			27,541
Cash and cash equivalents at end of period	$	12,501		$	17,530
Supplemental disclosure of cash paid
Interest	$	7,016		$	3,456
Income taxes	$	2,565		$	7,011
Noncash investing and financing
Equipment acquired through finance lease obligations	$	2,887		$	2,546

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

1.Description of Business and Basis of Presentation

Description of Business

Mistras Group, Inc. and subsidiaries ("the Company") is a leading “one source” global provider of technology-enabled asset protection solutions used to evaluate the structural integrity and reliability of critical energy, industrial and materials and public infrastructure and commercial aerospace components. The Company combines industry-leading products and technologies, expertise in mechanical integrity (MI), non-destructive testing (NDT) and mechanical services and proprietary data analysis software to deliver a comprehensive portfolio of customized solutions, ranging from routine inspections to complex, plant-wide asset integrity assessments and management. These mission critical solutions enhance customers’ ability to extend the useful life of their assets, increase productivity, minimize repair costs, comply with governmental safety and environmental regulations, manage risk and avoid catastrophic disasters. The Company serves a global customer base of companies with asset-intensive infrastructure, including companies in the oil and gas, commercial aerospace and defense, fossil and nuclear power, alternative and renewable energy, public infrastructure, chemicals, transportation, primary metals and metalworking, pharmaceutical/biotechnology and food processing industries and research and engineering institutions.

Basis of Presentation

The condensed consolidated financial statements contained in this report are unaudited. In the opinion of management, the condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods of the years ending December 31, 2019 and 2018. Certain items included in these statements are based on management’s estimates. Actual results may differ from those estimates. The results of operations for any interim period are not necessarily indicative of the results expected for the year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the notes to the audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K (“2018 Annual Report”) for the year ended December 31, 2018, dated March 15, 2019.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Mistras Group, Inc. and its wholly and majority-owned subsidiaries. For subsidiaries in which the Company’s ownership interest is less than 100%, the non-controlling interests are reported in stockholders’ equity in the accompanying condensed consolidated balance sheets. The non-controlling interests in net income, net of tax, is classified separately in the accompanying condensed consolidated statements of income. All significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassification

Certain amounts in prior periods have been reclassified to conform to the current year presentation. Such reclassifications did not have a material effect on the Company's financial condition or results of operations as previously reported.

Customers

For the three and six months ended June 30, 2019 and 2018, there were no customers that represented 10% or more of revenue.

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in Note 1 — Summary of Significant Accounting Policies and Practices in the 2018 Annual Report. On an ongoing basis, the Company evaluates its estimates and assumptions, including among other things, those related to revenue recognition, long-lived assets, goodwill and acquisitions. Since the date of the 2018 Annual Report, there have been no material changes to the Company's significant accounting policies, other than its adoption of the new leasing standard on January 1, 2019.

6

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

Income Taxes

On December 22, 2017, the United States enacted fundamental changes to federal tax law following the passage of the Tax Cuts and Jobs Act (the “Tax Act”). The Company’s financial statements for the periods ended June 30, 2019 and June 30, 2018 reflected provisions of the Tax Act effective for periods beginning after December 31, 2017, which includes the reduced federal corporate tax rate of from 35% to 21%, adjustments made to executive compensation and meals and entertainment rules, and the inclusion of new categories of income, global intangible low-taxes income (“GILTI”) and foreign derived intangible income (“FDII”). The Company’s effective income tax rate was approximately 37% and 29% for the three months ended June 30, 2019 and 2018, respectively. The Company's effective income tax rate was approximately 45% and 31% for the six months ended June 30, 2019 and 2018, respectively. The effective income tax rate for the second quarter and first six-months of 2019 and 2018 was higher than the statutory rate due to the impact of discrete items, GILTI and executive compensation provisions resulting from the passage of the Tax Act, foreign tax rates different than statutory rates in the U.S., and an increase in the reserve for uncertain income tax provision.

The Company has completed the accounting for the adoption of the Tax Act. The amounts recorded in 2019 for the Tax Act related to the calculations of the GILTI, FDII, executive compensation and meals and entertainment are the Company’s best estimates based on the current data and guidance available. The Company is continuing to evaluate the state tax conformity to the Tax Act, including the GILTI provisions. Given the complexity of the new GILTI tax rules, the Company is continuing to evaluate this provision of the Tax Act and the application of ASC 740. Under U.S. GAAP, the Company is allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). In 2018, the Company made an accounting policy election to account for these effects under the period cost method.

Mistras and its subsidiaries file tax returns in the U.S., including various state and local returns, and in other foreign jurisdictions. The Company believes adequate provision has been made for all income tax uncertainties.  

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842), which the Company adopted as of January 1, 2019. Topic 842 requires the recognition of lease rights and obligations as assets and liabilities on the balance sheet. The Company elected the modified retrospective method permitted by the standard, upon which prior-period information has not been restated.

The standard provided for several practical expedient options for use in transition. The Company elected to utilize the “package of practical expedients,” which permits the Company not to reassess previous conclusions reached on lease identification, lease classification and initial direct costs. The Company also elected to utilize the practical expedient available to not separate lease and non-lease components within the lease and has therefore accounted for all lease components as a single lease component.

Adoption of the new standard resulted in the recording of a right-of-use (ROU) asset and liability related to the Company’s operating leases of approximately $38 million as of January 1, 2019. The new standard did not have a material impact to our statements of income or cash flows.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350). This amendment eliminates Step Two of the goodwill impairment test. Under the amendments in this update, entities should perform the annual goodwill impairment test by comparing the carrying value of their reporting units to their fair value. An entity should record an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Tax deductibility of goodwill should be considered in evaluating any reporting unit's impairment loss to be taken. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company early adopted ASU 2017-04 in the third quarter of 2017 for its condensed consolidated financial statements and related disclosures.

2. Revenue

The majority of the Company's revenues are derived from providing services on a time and material basis and are short-term in nature. The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which was adopted on January 1, 2018.

7

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

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.  A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and is, therefore, not distinct. The Company provides highly integrated and bundled inspection services to its customers. Some of our contracts have multiple performance obligations, most commonly due to the contract providing both goods and services. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is a relative selling price based on price lists.

Contract modifications are not routine in the performance of our contracts. Generally, when contracts are modified, the modification is to account for changes in scope to the goods and services that are provided. In most instances, contract modifications are for goods or services that are distinct, and, therefore, are accounted for as a separate contract.

Our performance obligations are satisfied over time as work progresses or at a point in time. The majority of our revenue recognized over time as work progresses is related to our service deliverables, which includes providing testing, inspection and mechanical services to our customers. Revenue is recognized over time based on time and material incurred to date which best portrays the transfer of control to the customer. The Company also utilizes an available practical expedient that provides for revenue to be recognized in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date. Fixed fee arrangements are determined based on expected labor, material, and overhead to be consumed on fulfillment of such services. Revenue is recognized on a cost-to-cost method tracked on an input basis.

The majority of our revenue recognized at a point in time is related to product sales when the customer obtains control of the asset, which is generally upon shipment to the customer. Contract costs include labor, material and overhead.

The Company expects any significant remaining performance obligations to be satisfied within one year.

Contract Estimates

The majority of our revenues are short-term in nature. The Company has many Master Service Agreements (MSAs) that specify an overall framework and contract terms when the Company and customers agree upon services or products to be provided. The actual contracting to provide services or furnish products is triggered by a work order, purchase order, or some similar document issued pursuant to a MSA which sets forth the scope of services and/or identifies the products to be provided. From time-to-time, the Company may enter into long-term contracts, which can range from several months to several years. Revenue on such long-term contracts is recognized as work is performed based on total costs incurred to date in relation to the total estimated costs for the performance of the contract at completion. This includes contract estimates of costs to be incurred for the performance of the contract. Cost estimation is based upon the professional knowledge and experience of our project managers, engineers and financial professionals. Factors that are considered in estimating the work to be completed include the availability of materials, the effect of any delays in our project performance and the recoverability of any claims. Whenever revisions of estimates, contract costs and/or contract values indicate that the contract costs will exceed estimated revenues, thus creating a loss, a provision for the total estimated loss is recorded in that period.

8

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

Revenue by Category

The following series of tables present our disaggregated revenues:

Revenue by industry was as follows:

Three Months Ended June 30, 2019	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	109,103	$	11,767	$	465	$	—		$	121,335
Aerospace & Defense	13,511		10,504		315		—			24,330
Industrials	19,638		5,459		647		—			25,744
Power generation & Transmission	8,352		2,499		619		—			11,470
Other Process Industries	6,384		2,504		68		—			8,956
Infrastructure, Research & Engineering	2,806		2,517		1,059		—			6,382
Other	1,416		1,840		1,096		(1,953		)	2,399
Total	$	161,210	$	37,090	$	4,269	$	(1,953	)	$	200,616

Three Months Ended June 30, 2018	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	95,288	$	9,716	$	375	$	—		$	105,379
Aerospace & Defense	13,371		14,086		770		—			28,227
Industrials	16,607		6,942		925		—			24,474
Power generation & Transmission	9,137		2,806		554		—			12,497
Other Process Industries	6,138		2,909		33		—			9,080
Infrastructure, Research & Engineering	3,914		2,552		1,261		—			7,727
Other	3,263		2,100		1,468		(2,422		)	4,409
Total	$	147,718	$	41,111	$	5,386	$	(2,422	)	$	191,793

Six Months Ended June 30, 2019	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	200,769	$	21,472	$	480	$	—		$	222,721
Aerospace & Defense	26,305		22,158		622		—			49,085
Industrials	35,762		10,534		1,079		—			47,375
Power generation & Transmission	14,614		3,921		2,000		—			20,535
Other Process Industries	12,702		4,746		73		—			17,521
Infrastructure, Research & Engineering	5,396		5,250		1,905		—			12,551
Other	5,959		4,171		1,542		(4,057		)	7,615
Total	$	301,507	$	72,252	$	7,701	$	(4,057	)	$	377,403

9

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

Six Months Ended June 30, 2018	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	197,036	$	17,844	$	937	$	—		$	215,817
Aerospace & Defense	25,828		28,551		1,436		—			55,815
Industrials	28,324		13,342		1,465		—			43,131
Power generation & Transmission	17,038		3,526		2,110		—			22,674
Other Process Industries	11,545		4,699		38		—			16,282
Infrastructure, Research & Engineering	6,094		5,071		1,761		—			12,926
Other	7,448		6,534		3,823		(5,027		)	12,778
Total	$	293,313	$	79,567	$	11,570	$	(5,027	)	$	379,423

Revenue per key geographic location was as follows:

Three Months Ended June 30, 2019	Services		International		Products		Corp/Elim			Total
United States	$	131,880	$	57	$	2,977	$	(1,274	)	$	133,640
Other Americas	28,804		1,686		71		(207		)	30,354
Europe	271		33,740		436		(472		)	33,975
Asia-Pacific	255		1,607		785		—			2,647
Total	$	161,210	$	37,090	$	4,269	$	(1,953	)	$	200,616

Three Months Ended June 30, 2018	Services		International		Products		Corp/Elim			Total
United States	$	122,835	$	157	$	2,782	$	(649	)	$	125,125
Other Americas	22,676		1,955		278		(743		)	24,166
Europe	2,133		37,645		815		(969		)	39,624
Asia-Pacific	74		1,354		1,511		(61		)	2,878
Total	$	147,718	$	41,111	$	5,386	$	(2,422	)	$	191,793

Six Months Ended June 30, 2019	Services		International		Products		Corp/Elim			Total
United States	$	245,015	$	334	$	4,947	$	(2,554	)	$	247,742
Other Americas	55,513		3,915		137		(264		)	59,301
Europe	698		65,280		857		(1,235		)	65,600
Asia-Pacific	281		2,723		1,760		(4		)	4,760
Total	$	301,507	$	72,252	$	7,701	$	(4,057	)	$	377,403

Six Months Ended June 30, 2018	Services		International		Products		Corp/Elim			Total
United States	$	246,398	$	424	$	6,040	$	(1,746	)	$	251,116
Other Americas	44,459		3,857		360		(996		)	47,680
Europe	2,288		71,845		1,934		(2,195		)	73,872
Asia-Pacific	168		3,441		3,236		(90		)	6,755
Total	$	293,313	$	79,567	$	11,570	$	(5,027	)	$	379,423

10

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the condensed consolidated balance sheet. Amounts are generally billed as work progresses in accordance with agreed-upon contractual terms, generally at periodic intervals (e.g., weekly, bi-weekly or monthly). Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, the Company sometimes receives advances or deposits from our customers before revenue is recognized, resulting in contract liabilities. These assets and liabilities are aggregated on an individual contract basis and reported on the condensed consolidated balance sheet at the end of each reporting period within accrued expenses and other current liabilities.

Revenue recognized in 2019, that was included in the contract liability balance at the beginning of the year was $2.7 million. Changes in the contract asset and liability balances during the quarter ended June 30, 2019, were not materially impacted by any other factors. The Company has elected to utilize a practical expedient to expense incremental costs incurred related to obtaining a contract. The Company’s expenses are expected to be amortized over a period less than one year.

3.Share-Based Compensation

The Company has share-based incentive awards outstanding to its eligible employees and non-employee directors under three equity incentive plans: (i) the 2007 Stock Option Plan (the "2007 Plan"), (ii) the 2009 Long-Term Incentive Plan (the "2009 Plan") and (iii) the 2016 Long-Term Incentive Plan (the "2016 Plan"). No further awards may be granted under the 2007 and 2009 Plans, although awards granted under the 2007 and 2009 Plans remain outstanding in accordance with their terms. Awards granted under the 2016 Plan may be in the form of stock options, restricted stock units and other forms of share-based incentives, including performance restricted stock units, stock appreciation rights and deferred stock rights.

Stock Options

For the three and six months ended June 30, 2019 and 2018, the Company did not recognize any share-based compensation expense related to stock option awards, as all outstanding stock options awards are fully vested.

No unrecognized compensation costs remained related to stock option awards as of June 30, 2019.

The following table sets forth a summary of the stock option activity, weighted average exercise prices and options outstanding as of June 30, 2019 and June 30, 2018:

	Six months ended June 30,
	2019				2018
	Common Stock Options		Weighted Average Exercise Price		Common Stock Options	Weighted Average Exercise Price
Outstanding at beginning of period:	2,105		$	13.47	2,130	$	13.43
Granted	—		$	—	—	$	—
Exercised	(4	)	$	10.00	—	$	—
Expired or forfeited	(7	)	$	10.00	—	$	—
Outstanding at end of period:	2,094		$	13.48	2,130	$	13.43

Restricted Stock Unit Awards

For the three months ended June 30, 2019 and June 30, 2018, the Company recognized share-based compensation expense related to restricted stock unit awards of $1.1 million and $1.2 million, respectively. For the six months ended June 30, 2019 and June 30, 2018, the Company recognized share-based compensation expense related to restricted stock unit awards of $2.0 million and $2.0 million, respectively. As of June 30, 2019, there was $8.8 million of unrecognized compensation costs, net of estimated forfeitures, related to restricted stock unit awards, which is expected to be recognized over a remaining weighted average period of 2.7 years.

11

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

A summary of the vesting activity of restricted stock unit awards, with the respective fair value of the awards, is as follows:

	Six months ended June 30,
	2019		2018
Restricted stock awards vested	77		35
Fair value of awards vested	$	1,052	$	704

Upon vesting, restricted stock units are generally net share-settled to cover the required minimum withholding tax and the remaining amount is converted into an equivalent number of shares of common stock.

A summary of the fully-vested common stock the Company issued to its five non-employee directors, in connection with its non-employee director compensation plan, is as follows:

	Six months ended June 30,
	2019		2018
Awards issued	15		10
Grant date fair value of awards issued	$	210	$	200

A summary of the Company's outstanding, non-vested restricted share units is as follows:

	Six months ended June 30,
	2019				2018
	Units		Weighted Average Grant-Date Fair Value		Units		Weighted Average Grant-Date Fair Value
Outstanding at beginning of period:	443		$	20.55	532		$	21.05
Granted	334		$	14.04	211		$	19.20
Released	(77	)	$	19.88	(35	)	$	21.44
Forfeited	(23	)	$	19.35	(24	)	$	20.17
Outstanding at end of period:	677		$	17.46	684		$	20.49

Performance Restricted Stock Units

The Company maintains Performance Restricted Stock Units (PRSUs) that have been granted to select executives and senior officers whose ultimate payout is based on the Company’s performance over a one-year period based on three metrics, as defined: (1) Operating Income, (2) Adjusted EBITDAS (defined as net income attributable to MISTRAS Group, Inc. plus: interest expense, provision for income taxes, depreciation and amortization, share-based compensation expense and certain acquisition related costs (including transaction due diligence costs and adjustments to the fair value of contingent consideration), foreign exchange (gain) loss and, if applicable, certain special items which are noted) and (3) Revenue. There also is a discretionary portion of the PRSUs based on individual performance, granted at the discretion of the Compensation Committee (Discretionary PRSUs). PRSUs and Discretionary PRSUs generally vest ratably on each of the first four anniversary dates upon completion of the performance period, for a total requisite service period of up to five years and have no dividend rights.

PRSUs are equity-classified and compensation costs are initially measured using the fair value of the underlying stock at the date of grant, assuming that the target performance conditions will be achieved. Compensation costs related to the PRSUs are subsequently adjusted for changes in the expected outcomes of the performance conditions.

12

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

Discretionary PRSUs are liability-classified and adjusted to fair value (with a corresponding adjustment to compensation expense) based upon the targeted number of shares to be awarded and the fair value of the underlying stock each reporting period until approved by the Compensation Committee, at which point they are classified as equity.

A summary of the Company's PRSU activity is as follows:

	Six months ended June 30,
	2019				2018
	Units		Weighted Average Grant-Date Fair Value		Units		Weighted Average Grant-Date Fair Value
Outstanding at beginning of period:	277		$	17.80	278		$	17.00
Granted	190		$	13.63	123		$	19.46
Performance condition adjustments	(3	)	$	18.46	(4	)	$	19.67
Released	(77	)	$	15.86	(61	)	$	15.04
Forfeited	—		$	—	(12	)	$	16.16
Outstanding at end of period:	387		$	15.94	324		$	18.15

During the six months ended June 30, 2019 and June 30, 2018, the Compensation Committee approved the final calculation of the award metrics for calendar year 2018 and calendar year 2017, respectively. As a result, the calendar year 2018 PRSUs decreased by approximately 3,000 units and the calendar year 2017 PRSUs increased by approximately 4,000 units. There was a decrease of approximately 8,000 units for the six months ended June 30, 2018 based on forecasted results for calendar year 2018. These adjustments comprise the performance condition adjustments for the six months ended June 30, 2018 noted above.

As of June 30, 2019, the liability related to Discretionary PRSUs was less than $0.1 million and is classified within accrued expenses and other current liabilities on the condensed consolidated balance sheet.

For the three months ended June 30, 2019 and June 30, 2018, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $0.4 million and $0.5 million, respectively. For the six months ended June 30, 2019 and June 30, 2018, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $0.7 million and $0.6 million, respectively. At June 30, 2019, there was $3.7 million of total unrecognized compensation costs related to approximately 387,000 non-vested PRSUs, which is expected to be recognized over a remaining weighted average period of 2.6 years.

4.Earnings per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, and (2) the dilutive effect of assumed conversion of equity awards using the treasury stock method. With respect to the number of weighted-average shares outstanding (denominator), diluted shares reflects: (i) the exercise of options to acquire common stock to the extent that the options’ exercise prices are less than the average market price of common shares during the period and (ii) the pro forma vesting of restricted stock units.

13

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

The following table sets forth the computations of basic and diluted earnings per share:

	Three months ended				Six months ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Basic earnings per share:
Numerator:
Net income attributable to Mistras Group, Inc.	$	7,431	$	6,000	$	2,138	$	8,908
Denominator:
Weighted average common shares outstanding	28,657		28,346		28,616		28,325
Basic earnings per share	$	0.26	$	0.21	$	0.07	$	0.31
Diluted earnings per share:
Numerator:
Net income attributable to Mistras Group, Inc.	$	7,431	$	6,000	$	2,138	$	8,908
Denominator:
Weighted average common shares outstanding	28,657		28,346		28,616		28,325
Dilutive effect of stock options outstanding	46		660		131		702
Dilutive effect of restricted stock units outstanding	159		328		171		322
	28,862		29,334		28,918		29,349
Diluted earnings per share	$	0.26	$	0.20	$	0.07	$	0.30

5.Acquisitions

During the six months ended June 30, 2019 and June 30, 2018, the Company did not complete any acquisitions.

The Company accounts for acquisitions in accordance with the acquisition method of accounting for business combinations. The assets and liabilities of the one business acquired in the fourth quarter of 2018 was included in the Company's condensed consolidated balance sheet based upon its estimated fair value on the date of acquisition as determined in a preliminary purchase price allocation, using available information and making assumptions management believed were reasonable. The Company is still in the process of completing its valuation of the assets, both tangible and intangible, and liabilities acquired for the acquisition completed during 2018. The results of operations for this acquisition have been included in the Services segment's results from the date of acquisition. Goodwill of $83.2 million primarily relates to expected synergies and the assembled workforce, and is not deductible for tax purposes. Other intangible assets, primarily related to technology, customer relationships and covenants not to compete, were $59.6 million.

14

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

Acquisition-Related Expense

In the course of its acquisition activities, the Company incurs costs in connection with due diligence, professional fees, and other expenses. Additionally, the Company adjusts the fair value of acquisition-related contingent consideration liabilities on a quarterly basis. These amounts are recorded as acquisition-related expense (benefit), net, on the condensed consolidated statements of income and were as follows for the three and six months ended June 30, 2019 and 2018:

	Three months ended June 30,					Six months ended June 30,
	2019		2018			2019		2018
Due diligence, professional fees and other transaction costs	$	182	$	(409	)	$	330	$	(370	)
Adjustments to fair value of contingent consideration liabilities	367		43			672		(990		)
Acquisition-related expense (benefit), net	$	549	$	(366	)	$	1,002	$	(1,360	)

The Company's contingent consideration liabilities are recorded on the balance sheet in accrued expenses and other liabilities.

6.Accounts Receivable, net

Accounts receivable consisted of the following:

	June 30, 2019			December 31, 2018
Trade accounts receivable	$	160,978		$	152,511
Allowance for doubtful accounts	(5,935		)	(4,187		)
Accounts receivable, net	$	155,043		$	148,324

The Company had $25.6 million and $16.1 million of unbilled revenues accrued as of June 30, 2019 and December 31, 2018, respectively, and such amounts are included within the trade accounts receivable balances above. Unbilled revenues are generally billed in the subsequent quarter to their revenue recognition.

In the fourth quarter of 2018, the Company recorded a reserve of $0.7 million for a renewable energy industry customer, based in part on the available information about the financial difficulties of the customer.  This customer filed for a voluntary insolvency proceeding on April 9, 2019 at which time payments under the previously agreed upon payment plan ceased. As a result, during the first quarter of 2019, the Company recorded an additional charge of $5.7 million to fully reserve for the amount of the exposure related to this customer. During the second quarter, the Company reversed $1.0 million of this reserve based on additional information obtained during the quarter.  

During the first six months of 2019, the Company sold to an unaffiliated third party, without recourse, its remaining outstanding receivables in an unrelated bankruptcy proceeding, which the Company had initially recorded as a charge during the second quarter of 2017. During the first quarter of 2019, the Company recorded a recovery of $0.2 million and during the six months ending June 30, 2019, the Company recorded a recovery $1.9 million, related to a bad debt provision related to this customer.

15

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

7.Property, Plant and Equipment, net

Property, plant and equipment consisted of the following:

	Useful Life (Years)	June 30, 2019			December 31, 2018
Land		$	2,680		$	2,680
Buildings and improvements	30-40	24,408			24,338
Office furniture and equipment	5-8	16,791			16,170
Machinery and equipment	5-7	218,281			208,245
		262,160			251,433
Accumulated depreciation and amortization		(166,718		)	(157,538		)
Property, plant and equipment, net		$	95,442		$	93,895

Depreciation expense for each of the three months ended June 30, 2019 and June 30, 2018 was approximately $6.1 million.

Depreciation expense for each of the six months ended June 30, 2019 and June 30, 2018 was approximately $12.2 million.

8.     Goodwill

Changes in the carrying amount of goodwill by segment is shown below:

	Services		International			Products and Systems		Total
Balance at December 31, 2018	$	243,476	$	35,783		$	—	$	279,259
Goodwill acquired during the period	—		—			—		—
Adjustments to preliminary purchase price allocations	—		—			—		—
Foreign currency translation	3,963		(205		)	—		3,758
Balance at June 30, 2019	$	247,439	$	35,578		$	—	$	283,017

The Company reviews goodwill for impairment on a reporting unit basis on October 1 of each year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. As of June 30, 2019, the Company did not identify any changes in circumstances that would indicate the carrying value of goodwill may not be recoverable.

The Company's cumulative goodwill impairment as of June 30, 2019 and December 31, 2018 was $23.1 million, of which $13.2 million related to the Products and Systems segment and $9.9 million related to the International segment.

9.Intangible Assets

The gross amount, accumulated amortization and net carrying amount of intangible assets were as follows:

		June 30, 2019							December 31, 2018
	Useful Life (Years)	Gross Amount		Accumulated Amortization			Net Carrying Amount		Gross Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	5-14	$	113,154	$	(64,632	)	$	48,522	$	112,624	$	(60,993	)	$	51,631
Software/Technology	3-15	70,348		(15,896		)	54,452		67,240		(13,319		)	53,921
Covenants not to compete	2-5	12,669		(11,277		)	1,392		12,593		(10,825		)	1,768
Other	2-12	10,381		(6,994		)	3,387		10,317		(6,242		)	4,075
Total		$	206,552	$	(98,799	)	$	107,753	$	202,774	$	(91,379	)	$	111,395

16

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

Amortization expense for the three months ended June 30, 2019 and June 30, 2018 was approximately $3.5 million and $2.5 million, respectively.

Amortization expense for the six months ended June 30, 2019 and June 30, 2018 was approximately $7.1 million and $5.0 million, respectively.

10.Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

	June 30, 2019		December 31, 2018
Accrued salaries, wages and related employee benefits	$	30,367	$	29,959
Contingent consideration, current portion	3,095		1,687
Accrued workers’ compensation and health benefits	4,859		5,086
Deferred revenue	4,067		5,046
Pension accrual	4,009		5,585
Right-of-use liability - operating	9,575		—
Other accrued expenses	26,925		26,532
Total accrued expenses and other current liabilities	$	82,897	$	73,895

11.Long-Term Debt

Long-term debt consisted of the following:

	June 30, 2019			December 31, 2018
Senior credit facility	$	164,397		$	181,656
Senior secured term loan, net of debt issuance costs of $0.1 million	97,407			99,897
Notes payable	71			68
Other	8,562			8,999
Total debt	270,437			290,620
Less: Current portion	(7,056		)	(6,833		)
Long-term debt, net of current portion	$	263,381		$	283,787

Senior Credit Facility

The Company's revolving credit agreement with its banking group ("Credit Agreement") provides the Company with a $300 million revolving line of credit, which, under certain circumstances, can be increased to $450 million with the approval of the banks. In addition, the Credit Agreement provided the Company with a $100 million senior secured term loan A facility. Both the revolving line of credit and the term loan A facility under the Credit Agreement have a maturity date of December 12, 2023. The Company may borrow up to $100 million in non-U.S. Dollar currencies and use up to $20 million of the credit limit for the issuance of letters of credit. As of June 30, 2019, the Company had borrowings of $261.8 million and a total of $5.4 million of letters of credit outstanding under the Credit Agreement. The Company has capitalized costs associated with debt modifications of $1.0 million as of June 30, 2019, which is included in other long-term assets within the accompanying condensed consolidated balance sheet.

17

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

Loans under the Credit Agreement bear interest at the London Interbank Offered Rate ("LIBOR") plus an applicable LIBOR margin ranging from 1% to 2%, or a base rate less a margin of 1.25% to 0.375%, at the option of the Company, based upon the Company’s Funded Debt Leverage Ratio. Funded Debt Leverage Ratio is generally the ratio of (1) all outstanding indebtedness for borrowed money and other interest-bearing indebtedness as of the date of determination to (2) EBITDA (which is (a) net income, less (b) income (or plus loss) from discontinued operations and extraordinary items, plus (c) income tax expenses, plus (d) interest expense, plus (e) depreciation, depletion, and amortization (including non-cash loss on retirement of assets), plus (f) stock compensation expense, less (g) cash expense related to stock compensation, plus (h) certain amounts of EBITDA of acquired business for the prior twelve months, plus (i) certain expenses related to the closing of the Credit Agreement, plus (j) non-cash expenses which do not (in the current or any future period) represent a cash item (excluding non-cash gains which increase net income), plus (k) non-recurring charges (not to exceed $10.0 million in the four consecutive quarters immediately preceding the date of determination) for items such as severance, lease termination charges, asset write-offs and litigation settlements paid, and multi-employer pension plan withdrawal liabilities, all determined for the period of four consecutive fiscal quarters immediately preceding the date of determination of EBITDA. The Company has the benefit of the lowest margin if its Funded Debt Leverage Ratio is equal to or less than 1.0 to 1, and the margin increases as the ratio increases, to the maximum margin if the ratio is greater than 3.25 to 1. The Company will also bear additional costs for market disruption, regulatory changes effecting the lenders’ funding costs, and default pricing of an additional 2% interest rate margin on any amounts not paid when due. Amounts borrowed under the Credit Agreement are secured by liens on substantially all of the assets of the Company and is guaranteed by some of our subsidiaries.

The Credit Agreement contains financial covenants requiring that the Company maintain a Funded Debt Leverage Ratio of no greater than 4.25 to 1 through December 31, 2018, reducing to a maximum permitted ratio of 4.0 to 1 as of March 31, 2019 to September 30, 2019, a maximum permitted ratio of 3.75 to 1 as of December 31, 2019 and a maximum permitted ratio of 3.50 to 1 as of March 31, 2020 and all quarterly periods thereafter, and a Fixed Charge Coverage Ratio of at least 1.25 to 1. Fixed Charge Coverage Ratio means the ratio, as of any date of determination, of (a) (i) EBITDA for the 12 month period immediately preceding the date of determination, taken together as one accounting period, less (ii) the aggregate amount of all capital expenditures made during the period, less (iii) taxes paid in cash during the period, less (iv) Restricted Payments (as defined in the Credit Agreement) paid in cash during the period, -to- (b) the sum of (i) all interest, premium payments, debt discount, fees, charges and related expenses of us and our subsidiaries in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case, to the extent treated as interest in accordance with U.S. generally accepted accounting principles ("GAAP") and to the extent paid in cash during the period, (ii) the aggregate principal amount of all redemptions or similar acquisitions for value of outstanding debt for borrowed money or regularly scheduled principal payments made during the period, but excluding any such payments to the extent refinanced through the incurrence of additional Indebtedness otherwise expressly permitted under the Credit Agreement, and (iii) payments made during the period under all leases that have been or should be, in accordance with GAAP as in effect for the Company's 2017 audited financial statement, recorded as capitalized leases. Beginning in 2020, the Company can elect to increase the maximum Funded Debt Leverage Ratio to 4.0 to 1 for four fiscal quarters immediately following the fiscal quarter in which the Company acquires another business, with the maximum permitted ratio reducing back to 3.5 to 1 in the fifth fiscal quarter following such acquisition. The Company can make this election twice during the term of the Credit Agreement.

The Credit Agreement also limits the Company’s ability to, among other things, create liens, make investments, incur more indebtedness, merge or consolidate, make dispositions of property, pay dividends and make distributions to stockholders or repurchase our stock, enter into a new line of business, enter into transactions with affiliates and enter into burdensome agreements. The Credit Agreement does not limit the Company’s ability to acquire other businesses or companies except that the acquired business or company must be in the Company's line of business, the Company must be in compliance with the financial covenants on a pro forma basis after taking into account the acquisition, and, if the acquired business is a separate subsidiary, in certain circumstances the lenders will receive the benefit of a guaranty of the subsidiary and liens on its assets and a pledge of its stock.

As of June 30, 2019, the Company was in compliance with the terms of the Credit Agreement and will continuously monitor its compliance with the covenants contained in its Credit Agreement.

18

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

Notes Payable and Other

In connection with certain of its acquisitions, the Company issued subordinated notes payable to the sellers. The maturity of the notes remain outstanding through June 30, 2019 and bear interest at the prime rate for the Bank of Canada, currently 3.95% as of June 30, 2019. The balance outstanding at June 30, 2019 was paid in July 2019. Interest expense is recorded in the condensed consolidated statements of income.

The Company's other debt includes local bank financing provided at the local subsidiary levels used to support working capital requirements and fund capital expenditures. At June 30, 2019, there was approximately $8.6 million outstanding, payable at various times from 2019 to 2029. Monthly payments range from $1 thousand to $17 thousand. Interest rates range from 0.4% to 6.2% and is recorded in the condensed consolidated statements of income.

12.Fair Value Measurements

The Company performs fair value measurements in accordance with the guidance provided by ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Financial instruments measured at fair value on a recurring basis

The fair value of contingent consideration liabilities was estimated using a discounted cash flow technique with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820. The significant inputs in the Level 3 measurement not supported by market activity include the probability assessments of expected future cash flows related to the acquisitions, appropriately discounted considering the uncertainties associated with the obligation, and as calculated in accordance with the terms of the applicable acquisition agreements.

The following table represents the changes in the fair value of Level 3 contingent consideration:

	Six months ended June 30,
	2019		2018
Beginning balance	$	2,365	$	5,508
Acquisitions	—		—
Payments	—		(1,506		)
Accretion of liability	75		108
Revaluation	597		(1,098		)
Foreign currency translation	58		(105		)
Ending balance	$	3,095	$	2,907

Financial instruments not measured at fair value on a recurring basis

The Company has evaluated current market conditions and borrower credit quality and has determined that the carrying value of its long-term debt approximates fair value. The fair value of the Company’s notes payable and capital lease obligations approximates their carrying amounts based on anticipated interest rates which management believes would currently be available to the Company for similar issuances of debt.

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Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

13. Leases

The Company leases certain office and operating facilities, machinery, equipment, and vehicles. Concurrent with the adoption of ASC 842, the Company recognized a right-of-use (ROU) asset and lease liability based on the present value of the future lease payments over the lease term for each lease agreement. The Company has elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less and will continue to recognize lease expense for these leases on a straight-line basis over the lease term. The Company has leases with both lease components and non-lease components, such as common area maintenance, utilities, or other repairs and maintenance. For all asset classes, the Company decided to utilize the practical expedient to include both fixed lease components and fixed non-lease components in calculating the ROU asset and lease liability. The Company identified variable lease payments, such as maintenance payments based on actual activities performed or costs incurred, at lease commencement by assessing the nature of the payment provisions, including whether the payments are subject to a minimum charge. Many of our leases include one or more options to renew. When it is reasonably certain that we will exercise the option, we include the impact of the option in the lease term for purposes of determining future lease payments. As the Company is unable to determine the discount rate implicit in its lease agreements, the Company uses its incremental borrowing rate on the commencement date to calculate the present value of future payments.

The Company’s Condensed Consolidated Balance Sheet includes the following related to operating leases:

Leases	Classification	June 30, 2019
Assets
Right-of-use assets	Other Assets	$	41,868
Liabilities
Right-of-use liability - current	Accrued and other current liabilities	$	9,575
Right-of-use liability - long term	Other liabilities	33,030
Total right-of-use liabilities		$	42,605

Included within the balance of operating leases is a lease for the Company’s headquarters which is with a related party. The ROU liability for this facility is approximately $4.9 million as of June 30, 2019 and total rent payments made during the three and six months ended June 30, 2019 were approximately $0.2 million and $0.5 million, respectively.

As of June 30, 2019, the total ROU assets attributable to finance leases is approximately $15.0 million, which is classified within Property, Plant, & Equipment on the accompanying condensed consolidated balance sheet.

The components of lease costs were as follows:

	Classification	Three months ended June 30, 2019		Six months ended June 30, 2019
Finance lease expense
Amortization of ROU assets	Depreciation and amortization	$	1,226	$	2,403
Interest on lease liabilities	Interest expense	189		380
Operating lease expense	Costs of goods sold or Selling, General & Administrative expenses	3,139		6,259
Short-term lease expense	Costs of goods sold or Selling, General & Administrative expenses	2		6
Variable lease expense	Costs of goods sold or Selling, General & Administrative expenses	273		518
Total		$	4,829	$	9,566

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Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

Other information related to leases was as follows:

	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities for finance leases
Finance - financing cash flows	$	2,411
Finance - operating cash flows	$	380
Operating - operating cash flows	$	6,196
ROU assets obtained in the exchange for lease liabilities
Finance leases	$	2,887
Operating leases	$	8,962
Weighted average remaining lease term (in years)
Finance leases	5.8
Operating leases	6.0
Weighted average discount rate
Finance leases	6.3		%
Operating leases	6.0		%

Maturities of lease liabilities as of June 30, 2019 were as follows:

	Finance			Operating
Remaining of 2019	$	3,563		$	6,122
2020	4,301			10,759
2021	2,825			8,030
2022	1,952			6,110
2023	1,037			5,468
Thereafter	998			15,104
Total	14,676			51,593
Less: Present value discount	(1,170		)	(8,988		)
Lease liability	$	13,506		$	42,605

Pursuant to the Company’s adoption of the new lease accounting guidance using a modified retrospective transition approach, as permitted, comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. As previously disclosed in its 2018 Annual Report, the following table presents the Company’s future minimum operating lease commitments as of December 31, 2018:

2019	$	10,939
2020	8,764
2021	6,327
2022	4,826
2023	4,239
Thereafter	10,667
Total	$	45,762

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Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

14.Commitments and Contingencies

Legal Proceedings and Government Investigations

The Company is subject to periodic lawsuits, investigations and claims that arise in the ordinary course of business. The Company cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against it. Except possibly for certain of the matters described below, the Company does not believe that any currently pending legal proceeding to which the Company is a party will have a material adverse effect on its business, results of operations, cash flows or financial condition. The costs of defense and amounts that may be recovered against the Company may be covered by insurance for certain matters.

Litigation and Commercial Claims

The Company’s subsidiary in France has been involved in a dispute with a former owner of a business purchased by the Company’s French subsidiary. The former owner received a judgment in his favor in the amount of $0.4 million for payment of the contingent consideration portion of the purchase price for the business. The Company recorded an accrual for this judgment during 2016. The Company's subsidiary appealed the judgment and the entire judgment was overturned on appeal. The appeal process was completed in July 2018 in the Company's favor, and accordingly, the Company reversed the accrual as of June 30, 2018.

The Company was a defendant in a lawsuit, Triumph Aerostructures, LLC d/b/a Triumph Aerostructures-Vought Aircraft Division v. Mistras Group, Inc., pending in Texas State district court, 193rd Judicial District, Dallas County, Texas, filed September 2016. The plaintiff alleged that in 2014 Mistras delivered a defective Ultrasonic inspection system and alleged damages of approximately $2.3 million, the amount it paid for the system. In January 2018, the Company agreed to settle this matter for a payment of $1.6 million and Mistras subsequently obtained ownership of the underlying ultrasonic inspection components. A charge for $1.6 million was recorded in 2017 and payment was made in February 2018.

A Company vehicle was involved in an accident in which individuals were injured, property was damaged, and businesses allegedly impacted by the accident have claimed economic losses. One lawsuit has been filed by one of the injured individuals in the U.S. District Court for the District of Colorado, McAllister v. Mistras Group, Inc. The Company has insurance for these types of matters. Most of the claims have been settled, including the claims covered by the McAllister case, and the two remaining unresolved claims are for economic loss and property damage only, and all of the claims, including the two that have not yet been resolved, will be fully covered by the Company's insurance.

Government Investigations

In May 2015, the Company received a notice from the U.S. Environmental Protection Agency (“EPA”) that it performed a preliminary assessment at a leased facility the Company operates in Cudahy, California. Based upon the preliminary assessment, the EPA is conducting an investigation of the site, which includes taking groundwater and soil samples. The purpose of the investigation is to determine whether any hazardous materials were released from the facility. The Company has been informed that certain hazardous materials and pollutants have been found in the ground water in the general vicinity of the site and the EPA is attempting to ascertain the origination or source of these materials and pollutants. Given the historic industrial use of the site, the EPA determined that the site of the Cudahy facility should be examined, along with numerous other sites in the vicinity. In addition, in 2018, the California Department of Toxic Substances Control notified the owner of the property that it will be performing an additional investigation at the property. At this time, the Company is unable to determine whether it has any liability in connection with this matter and if so, the amount or range of any such liability, and accordingly, has not established any accruals for this matter.

Pension Related Contingencies

The workforce of certain of the Company’s subsidiaries are unionized and the terms of employment for these workers are governed by collective bargaining agreements, or CBAs.  Under these CBAs, the Company’s subsidiaries are required to contribute to the national pension funds for the unions representing these employees, which are multi-employer pension plans. The Company was notified that a significant project was awarded to another contractor in January 2018, and as a result, one of the Company’s subsidiaries experienced a significant reduction in the number of its employees covered by one of the CBAs.

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Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

Under certain circumstances, such a reduction in the number of employees participating in multi-employer pension plans pursuant to this CBA could result in a complete or partial withdrawal liability to these multi-employer pension plans under the Employee Retirement Income Security Act of 1974 ("ERISA"). Management explored options to retain a level of union work that would avoid withdrawal liability to the pension plans, but concluded during the third quarter of 2018 that the Company's subsidiaries probably would not obtain sufficient union work to avoid withdrawal liability.  Therefore, the Company determined that it is probable that its subsidiary will incur a withdrawal liability related to these multi-employer pension plans. Accordingly, the Company recorded a charge of $5.9 million during the third quarter of 2018 and $0.5 million during the three and six months ended June 30, 2019 for this potential withdrawal liability. The balance of the estimated total amount of this potential liability as of June 30, 2019 is approximately $4.0 million, which is net of $2.4 million of payments made to one of the pension plans.

Severance and labor disputes

During the third quarter of 2018, the Company recorded approximately $1.2 million in charges related to labor claims for its Brazilian subsidiary, which are included within Selling, General and Administrative expenses. These claims related to employees in a company acquired by the Brazilian subsidiary in a prior period. The Company believes it is entitled to indemnification from the sellers of the acquired company for most of these charges, but has not recorded the expected recovery of indemnification for these labor claims as the amount and timing of collection is uncertain as of June 30, 2019.

The Company’s German subsidiary provides employees to customers under temporary staff leasing arrangements. In April 2017, the German Labor Lease Act was passed in Germany limiting the duration of temporary workers to eighteen months, or longer as subsequently agreed with by a customer appropriate authority.  Since the passing of the German Labor Lease Act, the Company explored selling its staff leasing services and concluded during the third quarter of 2018 that a sale would not be probable. As a result, the Company decided that it would not renew several of these leasing services contracts when they expire beginning in 2019. Due to the cap on the length of service allowed under the German Labor Lease Act, employees will have to be transitioned off the customer contracts. It is expected that the German subsidiary then will either terminate these employees, creating a severance obligation to the terminated employees, or transition them to the Company's other customers. As of June 30, 2019, the Company estimated approximately $1.4 million in severance payment obligations, which takes into account the Company's estimate with respect to the employees that would be transitioned to the German subsidiaries' other customers and is net of $0.1 million in payments and $0.1 million in reversals due to employees being transitioned to customer contracts.

Acquisition and disposition related contingencies

The Company is liable for contingent consideration in connection with certain of its acquisitions. As of June 30, 2019, total potential acquisition-related contingent consideration ranged from zero to approximately $5.6 million and would be payable upon the achievement of specific performance metrics by certain of the acquired companies over the next year. See Note 5 - Acquisitions to these condensed consolidated financial statements for further discussion of the Company’s acquisitions.

During the third quarter of 2018, the Company sold a subsidiary in the Products and Systems segment. As part of the sale, the Company entered into a three-year agreement to purchase products from the buyer, with a cumulative commitment of $2.3 million, of which $1.7 million is remaining as of June 30, 2019. The agreement is based on third party pricing and the Company's planned purchase requirements over the three year purchase period to meet the minimum contractual purchases.

15.Segment Disclosure

The Company’s three operating segments are:

• Services. This segment provides asset protection solutions predominantly in North America, with the largest concentration in the United States, followed by Canada, consisting primarily of NDT and inspection and engineering services that are used to evaluate the safety, structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components.

• International. This segment offers services, products and systems similar to those of the other segments to select markets within Europe, the Middle East, Africa, Asia and South America, but not to customers in China and South Korea, which are served by the Products and Systems segment.

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Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

• Products and Systems. This segment designs, manufactures, sells, installs and services the Company’s asset protection products and systems, including equipment and instrumentation, predominantly in the United States.

Costs incurred for general corporate services, including finance, legal, and certain other costs that are provided to the segments are reported within Corporate and eliminations. Sales to the International segment from the Products and Systems segment and subsequent sales by the International segment of the same items are recorded and reflected in the operating performance of both segments. Additionally, engineering charges and royalty fees charged to the Services and International segments by the Products and Systems segment are reflected in the operating performance of each segment. All such intersegment transactions are eliminated in the Company’s consolidated financial reporting.

Selected consolidated financial information by segment for the periods shown was as follows: (intercompany transactions are eliminated in Corporate and eliminations)

	Three months ended						Six months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Revenues
Services	$	161,210		$	147,718		$	301,507		$	293,313
International	37,090			41,111			72,252			79,567
Products and Systems	4,269			5,386			7,701			11,570
Corporate and eliminations	(1,953		)	(2,422		)	(4,057		)	(5,027		)
	$	200,616		$	191,793		$	377,403		$	379,423

	Three months ended					Six months ended
	June 30, 2019			June 30, 2018		June 30, 2019			June 30, 2018
Gross profit
Services	$	47,208		$	40,127	$	84,573		$	74,837
International	11,058			12,689		21,418			23,396
Products and Systems	1,825			2,213		3,064			5,103
Corporate and eliminations	(20		)	54		(110		)	(108		)
	$	60,071		$	55,083	$	108,945		$	103,228

	Three months ended						Six months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Income (loss) from operations
Services	$	20,905		$	16,328		$	24,958		$	28,603
International	2,450			2,455			2,234			3,375
Products and Systems	(405		)	(656		)	(1,733		)	(384		)
Corporate and eliminations	(7,531		)	(7,823		)	(14,436		)	(14,892		)
	$	15,419		$	10,304		$	11,023		$	16,702

Income (loss) from operations by operating segment includes intercompany transactions, which are eliminated in Corporate and eliminations.

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Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share data)

	Three months ended					Six months ended
	June 30, 2019		June 30, 2018			June 30, 2019		June 30, 2018
Depreciation and amortization
Services	$	7,209	$	5,970		$	14,478	$	11,941
International	2,042		2,260			4,131		4,541
Products and Systems	300		366			589		729
Corporate and eliminations	50		(5		)	71		28
	$	9,601	$	8,591		$	19,269	$	17,239

	June 30, 2019		December 31, 2018
Intangible assets, net
Services	$	95,321	$	98,362
International	10,797		11,143
Products and Systems	1,275		1,438
Corporate and eliminations	360		452
	$	107,753	$	111,395

	June 30, 2019		December 31, 2018
Total assets
Services	$	548,182	$	523,506
International	152,929		146,535
Products and Systems	13,621		12,264
Corporate and eliminations	18,741		11,732
	$	733,473	$	694,037

Refer to Footnote 2 - Revenue, for revenues by geographic area for the three and six months ended June 30, 2019 and 2018.

16. Repurchase of Common Stock

The Company's Board of Directors approved a $50 million stock repurchase plan in 2015. The Company retired all its repurchased shares during the fourth quarter of 2017. There were no repurchases of common stock during the six months ended June 30, 2019, and the Board of Directors approved the termination of the stock repurchase plan effective on April 1, 2019.

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Mistras Group, Inc. and Subsidiaries

Management's Discussion and Analysis of Financial Condition and Results of Operations

(tabular dollars are in thousands)

ITEM 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis (“MD&A”) includes a narrative explanation and analysis of our results of operations and financial condition for the three and six months ended June 30, 2019 and June 30, 2018. The MD&A should be read together with our condensed consolidated financial statements and related notes included in Item 1 in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2018, dated March 15, 2019 (“2018 Annual Report”). Unless otherwise specified or the context otherwise requires, “Mistras,” “the Company,” “we,” “us” and “our” refer to Mistras Group, Inc. and its consolidated subsidiaries. The MD&A includes disclosure in the following areas:

•Forward-Looking Statements

•Overview

•Results of Operations

•Liquidity and Capital Resources

•Critical Accounting Policies and Estimates

Forward-Looking Statements

This report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934 (“Exchange Act”). Such forward-looking statements include those that express plans, anticipation, intent, contingency, goals, targets or future development and/or otherwise are not statements of historical fact. These forward-looking statements are based on our current expectations and projections about future events and they are subject to risks and uncertainties known and unknown that could cause actual results and developments to differ materially from those expressed or implied in such statements.

In some cases, you can identify forward-looking statements by terminology, such as “goals,” or “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “could,” “should,” “would,” “predicts,” “appears,” “projects,” or the negative of such terms or other similar expressions. You are urged not to place undue reliance on any such forward-looking statements, any of which may turn out to be wrong due to inaccurate assumptions, various risks, uncertainties or other factors known and unknown. Factors that could cause or contribute to differences in results and outcomes from those in our forward-looking statements include, without limitation, those discussed in the “Business—Forward-Looking Statements,” and “Risk Factors” sections of our 2018 Annual Report as well as those discussed in this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission (“SEC”).

Overview

We offer our customers “OneSource for Asset Protection Solutions®” and are a leading global provider of technology-enabled asset protection solutions used to evaluate the safety, structural integrity and reliability of critical energy, industrial and public infrastructure, and commercial aerospace components.

Our asset protections are intended to help maximize safety and uptime of our customers' assets and facilities. These mission critical solutions enhance our customers’ ability to comply with governmental safety and environmental regulations, extend the useful life of their assets, increase productivity, minimize repair costs, manage risk and avoid catastrophic disasters. We deliver value through a comprehensive “OneSource” portfolio of customized solutions, utilizing a proven systematic method that creates a closed-loop lifecycle for addressing continuous asset protection and improvement.

Our specialized asset protection solutions include:

• Field Inspections

• Consulting

• Maintenance

• Data Management

• Access

• Monitoring

• Laboratory Quality Assurance/Control (QA/QC)

• Equipment

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Mistras Group, Inc. and Subsidiaries

Management's Discussion and Analysis of Financial Condition and Results of Operations

(tabular dollars are in thousands)

Our OneSource model emphasizes the integration of these solutions to service our customers throughout their assets’ lifetimes. Under this business model, many customers outsource their inspection and other asset protection needs to us on a “run-and maintain” basis to ensure the continued safety and structural and operational integrity of their assets.

We have established long-term relationships as a critical solutions provider to many of the leading companies with assetintensive infrastructure in our target markets. These markets include:

• Oil & Gas (Downstream, Midstream, Upstream and Petrochemical)

• Aerospace & Defense

• Industrial

• Power Generation and Transmission

• Public Infrastructure, Research and Engineering

• Process Industries

Asset protection plays a crucial role in assuring the integrity and reliability of critical infrastructure. As an asset protection solutions provider, MISTRAS seeks to maximize the uptime and safety of critical infrastructure, by helping customers to detect, locate, mitigate and prevent damages such as corrosion, cracks, leaks, manufacturing flaws and other concerns to operating and structural integrity. In addition to these core utilities, the storage and analysis of collected inspection and mechanical integrity data is also a key aspect of asset protection.

NDT has historically been a prominent solution in the asset protection industry due to its capacity to detect defects without compromising the integrity of the tested materials or equipment. The supply of NDT inspection services has traditionally come from many small vendors, who provide services to a small geographic region. A trend has emerged, however, for customers to engage a select few vendors capable of providing a wider spectrum of asset protection solutions for global infrastructure, in addition to an increased demand for advanced non-destructive testing (ANDT) solutions and data acquisition software, both of which require a highly-trained workforce.

Due to these trends, we believe those vendors offering integrated solutions, scalable operations skilled personnel and a global footprint have a distinct competitive advantage. 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.

Our operations consist of three reportable segments: Services, International and Products and Systems.

• Services provides asset protection solutions predominantly in North America with the largest concentration in the United States, followed by Canada, consisting primarily of NDT and inspection, mechanical and engineering services that are used to evaluate the safety, structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components.

• International offers services, products and systems similar to those of our Services and Products and Systems segments to select markets within Europe, the Middle East, Africa, Asia and South America, but not to customers in China and South Korea, which are served by the Products and Systems segment.

• Products and Systems designs, manufactures, sells, installs and services our asset protection products and systems, including equipment and instrumentation, predominantly in the United States.

Most of our revenues are generated by deploying technicians at our customers' locations. However, the majority of our revenues from aerospace and certain manufacturing clients are generated by performing inspections and testing at our various in-house laboratories.

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Mistras Group, Inc. and Subsidiaries

Management's Discussion and Analysis of Financial Condition and Results of Operations

(tabular dollars are in thousands)

We have focused on providing our advanced asset protection solutions to our customers using proprietary, technology-enabled software and testing instruments, including those developed by our Products and Systems segment. We have made numerous acquisitions in an effort to grow our base of experienced, certified personnel, expand our service lines and technical capabilities, increase our geographical reach and leverage our fixed costs. 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. We believe these actions, including the acquisitions made will enhance our advantages over our competition.

Our Onstream acquisition, which was completed in December 2018, helps support many of our Corporate initiatives. Onstream's strong presence in inline inspection provides us with a strong foundation within the midstream oil and gas market, which is an important piece of our overall growth strategy. We expect to generate new business opportunities through introduction of our inline inspection capabilities to existing midstream customers. The acquisition of Onstream also provides us with an additional digital solution for our customers, the Streamview™ software, which is an innovative application of advanced digital technology.

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:

Extending the Useful Life of Aging Infrastructure While Increasing Utilization. Due to the prohibitive costs and challenges of building new infrastructure, many companies have chosen to extend the useful life of existing assets through enhancements, rather than replacing these assets. This has resulted in the significant aging and increased utilization of existing infrastructure in our target markets. Increasing demand for refined petroleum products, combined with high plant-utilization rates, are driving refineries to upgrade facilities to make them more efficient and expand capacities. Because aging infrastructure requires more frequent inspection and maintenance in comparison to new infrastructure, companies and public authorities continue to spend on asset protection to ensure their aging infrastructure assets continue to operate effectively.

Outsourcing of Non-Core Activities and Technical Resource Constraints. 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. The increased availability and low cost of crude oil from areas such as shale plays and oil sands resources have led to the use of lower-grade raw materials and feedstock. This leads to higher rates of corrosion, especially in refining processes involving petroleum with higher sulfur content, which in turn increases the need for asset protection solutions to detect and/or proactively prevent corrosion-related issues.

Increasing Use of Advanced Materials. Customers in various of our target markets, particularly aerospace and defense, are increasingly utilizing advanced materials, such as composites and other unique technologies in their assets. These materials often cannot be tested using traditional NDT techniques. We believe that demand for more advanced testing and assessment solutions will increase along with the demand for these advanced materials during the design, manufacturing, operating and quality control phases.

Meeting Safety Regulations. Owners and operators of refineries, pipelines and petrochemical and chemical plants increasingly face strict government regulations and more stringent process safety enforcement standards. This includes the continued implementation of the Occupational Safety and Health Administration’s (OSHA) National Emphasis Program (NEP). Failure to meet these standards can result in significant financial liabilities, increased scrutiny by government and industry regulators, higher insurance premiums and tarnished corporate brand value. As a result, these owners and operators are seeking highly reliable asset protection suppliers with a track record of assisting organizations in meeting increasingly stringent regulations. Our customers benefit from MISTRAS’ 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 their facilities.

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.

28

Mistras Group, Inc. and Subsidiaries

Management's Discussion and Analysis of Financial Condition and Results of Operations

(tabular dollars are in thousands)

Expanding Aerospace Industry. We believe that increased demand will continue to come from the aerospace 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.

Crude Oil Prices. We believe that this present range for crude oil prices is expected to persist for the foreseeable future. As a result, we expect relatively stable oil and gas customer spend for inspection services throughout the remainder of the year, with spending on maintenance shutdowns in 2019 to remain steady. This demand will be balanced against our continued focus on process efficiencies and cost savings initiatives.

Note About Non-GAAP Measures

In this MD&A under the heading "Income (loss) from Operations", the non-GAAP financial performance measure "Income (loss) before special items” is used for each of our three segments, the Corporate segment and the "Total Company", with tables reconciling the measure to a financial measure under GAAP. This non-GAAP measure excludes from the GAAP measure "Income (loss) from Operations" (a) transaction expenses related to acquisitions, such as professional fees and due diligence costs, (b) the net changes in the fair value of acquisition-related contingent consideration liabilities, (c) impairment charges, (d) reorganization and other costs, which includes items such as severance, labor relations matters and asset and lease termination costs and (e) other special items. These adjustments have been excluded from the GAAP measure because these expenses and credits are not related to the Company’s or Segment’s core business operations. The acquisition related costs and special items can be a net expense or credit in any given period.

We believe investors and other users of our financial statements benefit from the presentation of "Income (loss) before special items" for each of our three segments, the Corporate segment and the Total Company in evaluating our performance. Income (loss) before special items excludes the identified adjustments, which provides additional tools to compare our core business operating performance on a consistent basis and measure underlying trends and results in our business. Income (loss) before special items is not used to determine incentive compensation for executives or employees, nor is it a replacement for GAAP and/or necessarily comparable to the non-GAAP financial measures of other companies.

29

Mistras Group, Inc. and Subsidiaries

Management's Discussion and Analysis of Financial Condition and Results of Operations

(tabular dollars are in thousands)

Results of Operations

Condensed consolidated results of operations for the three and six months ended June 30, 2019 and June 30, 2018 were as follows:

	Three months ended						Six months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Revenues	$	200,616		$	191,793		$	377,403		$	379,423
Gross profit	60,071			55,083			108,945			103,228
Gross profit as a % of Revenue	29.9		%	28.7		%	28.9		%	27.2		%
Total operating expenses	44,652			44,779			97,922			86,526
Operating expenses as a % of Revenue	22.3		%	23.3		%	25.9		%	22.8		%
Income from operations	15,419			10,304			11,023			16,702
Income from Operations as a % of Revenue	7.7		%	5.4		%	2.9		%	4.4		%
Interest expense	3,579			1,895			7,106			3,686
Income before provision for income taxes	11,840			8,409			3,917			13,016
Provision for income taxes	4,397			2,409			1,760			4,096
Net income	7,443			6,000			2,157			8,920
Less: net income attributable to non-controlling interests, net of taxes	12			—			19			12
Net income attributable to Mistras Group, Inc.	$	7,431		$	6,000		$	2,138		$	8,908

Revenue

Revenues for the three months ended June 30, 2019 were $200.6 million, an increase of $8.8 million, or 5%, compared with the three months ended June 30, 2018. Revenues for the six months ended June 30, 2019 were $377.4 million, a decrease of $2.0 million, or 1%, compared with the six months ended June 30, 2018.

Revenues by segment for the three and six months ended June 30, 2019 and June 30, 2018 were as follows:

	Three months ended						Six months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Revenues
Services	$	161,210		$	147,718		$	301,507		$	293,313
International	37,090			41,111			72,252			79,567
Products and Systems	4,269			5,386			7,701			11,570
Corporate and eliminations	(1,953		)	(2,422		)	(4,057		)	(5,027		)
	$	200,616		$	191,793		$	377,403		$	379,423

Three Months

In the three months ended June 30, 2019, total revenues increased5% due to a combination of mid-single-digit acquisition growth and a low single-digit organic growth, offset by low single-digit unfavorable impact of foreign exchange rates. Services segment revenues increased9%, driven by mid-single-digit acquisition growth and low single-digit organic growth, offset by low-single unfavorable impact of foreign exchange rates. International segment revenues decreased10%, driven by high single-digit unfavorable impact of foreign exchange rates, as well as a mid-single-digit organic decline. Products and Systems segment revenues decreased by 21%, due to a combination of lower sales volume within the core business and the sale of a subsidiary within the segment during the third quarter of 2018.

30

Mistras Group, Inc. and Subsidiaries

Management's Discussion and Analysis of Financial Condition and Results of Operations

(tabular dollars are in thousands)

Oil and gas customer revenues comprised approximately 61% and 55% of total revenues for the three months ended June 30, 2019 and 2018, respectively. Aerospace and defense customer revenues comprised approximately 12% and 15% of total revenues for the three months ended June 30, 2019 and 2018, respectively. This decrease in aerospace and defense customer revenues is attributed to the run-off of the German staff leasing contracts in the International segment. The Company’s top ten customers comprised approximately 39% of total revenues for the three months ended June 30, 2019, as compared to 35% for the three months ended June 30, 2018, with no customer accounting for 10% or more of total revenues in either three-month period.

Six months

In the six months ended June 30, 2019, total revenues decreased1% due to a combination of mid-single-digit acquisition growth, offset by low single-digit organic decline and low single-digit unfavorable impact of foreign exchange rates. Services segment revenues increased3%, driven by mid single-digit acquisition growth, offset by low single-digit organic decline and unfavorable impact of foreign exchange rates. International segment revenues decreased9%, driven by mid-single-digit unfavorable impact of foreign exchange rates and low single-digit organic decline. Products and Systems segment revenues decreased by 33% driven by lower sales volume and by the sale of a subsidiary in this segment during the third quarter of 2018.

Oil and gas customer revenues comprised approximately 59% and 57% of total revenues for the six months ended June 30, 2019 and 2018, respectively. Aerospace and defense customer revenues comprised approximately 13% and 15% of total revenues for the six months ended June 30, 2019 and 2018, respectively. This decrease in aerospace and defense customer revenues is attributed to the run-off of the German staff leasing contracts in the International segment. The Company’s top ten customers comprised approximately 39% of total revenues for the six months ended June 30, 2019, as compared to 37% for the six months ended June 30, 2018, with no customer accounting for 10% or more of total revenues in either six-month period.

Gross Profit

Gross profit increased by $5.0 million, or 9%, in the three months ended June 30, 2019, on a sales increase of 5%. Gross profit increased by $5.7 million, or 6%, in the six months ended June 30, 2019, on a sales decrease of 1%.

Gross profit by segment for the three and six months ended June 30, 2019 and June 30, 2018 was as follows:

	Three months ended						Six months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Gross profit
Services	$	47,208		$	40,127		$	84,573		$	74,837
% of segment revenue	29.3		%	27.2		%	28.1		%	25.5		%
International	11,058			12,689			21,418			23,396
% of segment revenue	29.8		%	30.9		%	29.6		%	29.4		%
Products and Systems	1,825			2,213			3,064			5,103
% of segment revenue	42.8		%	41.1		%	39.8		%	44.1		%
Corporate and eliminations	(20		)	54			(110		)	(108		)
	$	60,071		$	55,083		$	108,945		$	103,228
% of total revenue	29.9		%	28.7		%	28.9		%	27.2		%

Three months

Gross profit margin was 29.9% and 28.7% for the three month periods ended June 30,2019 and 2018, respectively. Services segment gross profit margins had a year-on-year increase of 210 basis points to 29.3% in the three months ended June 30, 2019, due primarily to mix of sales, increase in sales volume related to its recent acquisition, and favorable operating leverage. International segment gross margins had a year-on-year decline of 110 basis points to 29.8% in the three months ended June 30, 2019, due primarily to mix of sales and manpower utilization. Products and Systems segment gross margin had a year-on-year increase of 170 basis points to 42.8% in the three months ended June 30, 2019.

31

Mistras Group, Inc. and Subsidiaries

Management's Discussion and Analysis of Financial Condition and Results of Operations

(tabular dollars are in thousands)

Six months

Gross profit margin was 28.9%and 27.2% for the six months ended June 30, 2019 and 2018, respectively. Services segment gross profit margins had a year-on-year increase of 260 basis points to 28.1% in the six months ended June 30, 2019, due primarily to favorable operating leverage, mix of sales, and increase in sales volume related to its recent acquisition. International segment gross margins had a year-on-year increase of 20 basis points to 29.6% in the six months ended June 30, 2019. Products and Systems segment gross margin had a year-on-year decline of 430 basis points to 39.8% in the six months ended June 30, 2019. This decrease was primarily driven by a lower sales volume and less favorable sales mix.

Income from Operations

The following table shows a reconciliation of the income from operations to income before special items for each of the Company's three segments and for the Company in total:

	Three months ended						Six months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Services:
Income from operations (GAAP)	$	20,905		$	16,328		$	24,958		$	28,603
Bad debt provision for troubled customers, net of recoveries	(1,977		)	—			2,778			—
Reorganization and other costs	77			—			77			—
Pension withdrawal expense	—			—			534			—
Acquisition-related expense (benefit), net	397			43			702			(990		)
Income before special items (non-GAAP)	19,402			16,371			29,049			27,613
International:
Income from operations (GAAP)	2,450			2,455			2,234			3,375
Reorganization and other costs	107			492			265			581
Acquisition-related expense (benefit), net	—			(409		)	—			(409		)
Bad debt provision for troubled customers, net of recoveries	(716		)	—			20			—
Income before special items (non-GAAP)	1,841			2,538			2,519			3,547
Products and Systems:
Loss from operations (GAAP)	(405		)	(656		)	(1,733		)	(384		)
Reorganization and other costs	—			29			—			29
Loss before special items (non-GAAP)	(405		)	(627		)	(1,733		)	(355		)
Corporate and Eliminations:
Loss from operations (GAAP)	(7,531		)	(7,823		)	(14,436		)	(14,892		)
Reorganization and other costs	—			—			60			—
Acquisition-related expense, net	152			—			300			39
Loss before special items (non-GAAP)	(7,379		)	(7,823		)	(14,076		)	(14,853		)
Total Company:
Income from operations (GAAP)	$	15,419		$	10,304		$	11,023		$	16,702
Pension withdrawal expense	—			—			534			—
Bad debt provision for troubled customers, net of recoveries	(2,693		)	—			2,798			—
Reorganization and other costs	184			521			402			610
Acquisition-related expense (benefit), net	549			(366		)	1,002			(1,360		)
Income before special items (non-GAAP)	$	13,459		$	10,459		$	15,759		$	15,952

32

Mistras Group, Inc. and Subsidiaries

Management's Discussion and Analysis of Financial Condition and Results of Operations

(tabular dollars are in thousands)

Three months

For the three months ended June 30, 2019, income from operations (GAAP) increased$5.1 million, or 50%, compared with the three months ended June 30, 2018, while income before special items (non-GAAP) increased$3.0 million, or 29%. As a percentage of revenues, income before special items increased by 120 basis points to 6.7% in the three months ended June 30, 2019 from 5.5% in the three months ended June 30, 2018.

Operating expenses (GAAP), as a percentage of revenue, decreased to 22% for the three and six months ended June 30, 2019 from 23% for the three and six months ended June 30, 2018. Operating expenses, excluding special items, (non-GAAP), as a percentage of revenues, was 23% of revenue for the three months ended June 30, 2019 compared to 23% for the three and six months ended June 30, 2018. The table above highlights the special expense items that resulted in a higher GAAP operating expense percentage for 2019 compared to 2018. In addition to the special items, for both GAAP and non-GAAP comparisons, there was $3.2 million of operating expenses for the Onstream acquisition, inclusive of depreciation and amortization of $1.3 million.

In the fourth quarter of 2018, we recorded a reserve of $0.7 million for a renewable energy industry customer of the Company’s Services Division, based in part on the available information about the financial difficulties of the customer.  This customer filed for a voluntary insolvency proceeding on April 9, 2019 at which time payments under the previously agreed to payment plan ceased. As a result, in the first quarter of 2019, we recorded an additional charge of $5.7 million to fully reserve for the amount of the exposure related to this customer.  During the second quarter of 2019, the Company obtained additional information and reversed $1.0 million of this reserve related to exposure with this customer.  

During the first six months of 2019, the Company sold to an unaffiliated third party, without recourse, its remaining outstanding receivables in an unrelated bankruptcy proceeding, which the Company had initially recorded as a charge during the second quarter of 2017. During the first quarter of 2019, the Company recorded a recovery of $0.2 million and during the six months ending June 30, 2019, the Company recorded a recovery $1.9 million, related to a bad debt provision related to this customer.

The Company was notified that a significant project was awarded to another contractor in January 2018, and as a result, one of the Company’s subsidiaries experienced a significant reduction in the number of its employees covered by one of the CBAs. Under certain circumstances, such a reduction in the number of employees participating in multi-employer pension plans pursuant to this CBA could result in a complete or partial withdrawal liability to these multi-employer pension plans under the Employee Retirement Income Security Act of 1974 ("ERISA"). Management has explored options to retain a level of union work that would avoid withdrawal liability to the pension plans, but concluded during the third quarter of 2018 that the Company's subsidiaries probably would not obtain sufficient union work to avoid withdrawal liability.  Therefore, the Company determined that it is probable that its subsidiary will incur a withdrawal liability related to these multi-employer pension plans. Accordingly, the Company recorded a charge of $5.9 million during the third quarter of 2018 and $0.5 million during the three and six months ended June 30, 2019 for this potential withdrawal liability. The balance of the estimated total amount of this potential liability as of June 30, 2019 is approximately $4.0 million, which is net of $2.4 million of payments made to one of the pension plans.

Six months

For the six months ended June 30, 2019, income from operations (GAAP) decreased$5.7 million, compared with the six months ended June 30, 2018, while income before special items (non-GAAP) decreased$0.2 million, or 1%. As a percentage of revenues, income before special items was consistent at 4.2% for the six months ended June 30, 2019 and six months ended June 30, 2018, respectively.

Operating expenses (GAAP), as a percentage of revenue, increased to 26% for the six months ended June 30, 2019 from 23% for the six months ended June 30, 2018. Operating expenses, excluding special items (non-GAAP), as a percentage of revenues, increased to 25% of revenues for the six months ended June 30, 2019 from 23% for the six months ended June 30, 2018. The chart above highlights the special expense items that resulted in a higher GAAP operating expense percentage for 2019 compared to 2018. In addition to the special items, for both GAAP and non-GAAP comparisons, there was $6.3 million of operating expenses for the Onstream acquisition, inclusive of depreciation and amortization of $2.6 million.

33

Mistras Group, Inc. and Subsidiaries

Management's Discussion and Analysis of Financial Condition and Results of Operations

(tabular dollars are in thousands)

Interest Expense

Interest expense was approximately $3.6 million and $1.9 million for the three months ended June 30, 2019 and 2018, respectively. Interest expense was approximately $7.1 million and $3.7 million for the six months ended June 30, 2019 and 2018, respectively. The increases were due to borrowings on the Company's Credit Agreement attributable primarily to the acquisition completed during the fourth quarter of 2018, and to a lesser extent, from an increase in the base borrowing rate.

Income Taxes

The Company’s effective income tax rate was approximately 37% and 29% for the three months ended June 30, 2019 and 2018, respectively. The Company's effective income tax rate was approximately 45% and 31% for the six months ended June 30, 2019 and 2018, respectively. The effective income tax rate for the first quarter of 2019 and 2018 was higher than the statutory rate due to the impact of discrete items, GILTI and executive compensation provisions resulting from the passage of the Tax Act, foreign tax rates different than statutory rates in the U.S., and an increase in the reserve for uncertain tax provisions. The discrete items had an impact on our effective income tax rate of 2% and 9% for the three and six months ended June 30, 2019, respectively, and 0% and 2% for the three and six months ended June 30, 2018, respectively.

Liquidity and Capital Resources

Cash flows are summarized in the table below:

	Three months ended
	June 30, 2019			June 30, 2018
Net cash provided by (used in):
Operating activities	$	21,105		$	20,095
Investing activities	(11,048		)	(10,287		)
Financing activities	(23,139		)	(19,258		)
Effect of exchange rate changes on cash	39			(561		)
Net change in cash and cash equivalents	$	(13,043	)	$	(10,011	)

Cash Flows from Operating Activities

During the six months ended June 30, 2019, cash provided by operating activities was $21.1 million, representing a year-on-year increase of $1.0 million, or 5%. The increase was primarily attributable to movements in working capital.

Cash Flows from Investing Activities

During the six months ended June 30, 2019, cash used in investing activities was $11.0 million, compared with $10.3 million in 2018. Capital expenditures were $12.0 million for the first six months of 2019, compared with $11.2 million in the comparable 2018 period.

Cash Flows from Financing Activities

Net cash used by financing activities was $23.1 million for the six months ended June 30, 2019. The Company paid down $19.7 million, net, on its Credit Agreement, inclusive of quarterly payments of the Term Loan, as well as payments of $2.8 million of other debt and capital lease obligations. For the comparable period in 2018, net cash used by financing activities was $19.3 million. The Company paid down $14.0 million, net, on its Credit Agreement as well as $3.1 million payments of debt and capital lease obligations.

Effect of Exchange Rate Changes on Cash and Cash Equivalents

The effect of exchange rate changes on our cash and cash equivalents was a net impact of $0.0 million in the first six months of 2019, compared to a $0.6 million decrease for the first six months of 2018.

34

Mistras Group, Inc. and Subsidiaries

Management's Discussion and Analysis of Financial Condition and Results of Operations

(tabular dollars are in thousands)

Cash Balance and Credit Facility Borrowings

The terms of our Credit Agreement have not changed from those set forth in Part II, Item 7 of our 2018 Annual Report under the Section “Liquidity and Capital Resources”, under the heading “Cash Balance and Credit Facility Borrowings,” and in Note 11 - Long-Term Debt to these condensed consolidated financial statements in this Quarterly Report, under the heading “Senior Credit Facility.”

As of June 30, 2019, we had cash and cash equivalents totaling $12.5 million and available borrowing capacity of $130.2 million under our Credit Agreement with borrowings of $261.8 million and $5.4 million of letters of credit outstanding. We finance operations primarily through our existing cash balances, cash collected from operations, bank borrowings and capital lease financing. We believe these sources are sufficient to fund our operations for the foreseeable future.

As of June 30, 2019, the Company was in compliance with the terms of the Credit Agreement and will continuously monitor its compliance with the covenants contained in its Credit Agreement.

Contractual Obligations

There have been no significant changes in our contractual obligations and outstanding indebtedness as disclosed in the 2018 Annual Report.

Off-balance Sheet Arrangements

During the six months ended June 30, 2019, 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.

Critical Accounting Policies and Estimates

There have been no significant changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the 2018 Annual Report.

ITEM 3.Quantitative and Qualitative Disclosures about Market Risk

There have been no significant changes to the Company’s quantitative and qualitative disclosures about market risk as discussed in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk,” included in the 2018 Annual Report.

ITEM 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of June 30, 2019, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as such term is defined in Rule 13a-15(e) of the Exchange Act. Based on the evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

Changes in Internal Control Over Financial Reporting

35

There has been no change in the Company’s internal control over financial reporting that occurred during the Company’s quarter ended June 30, 2019 that has materially affected, or is reasonably likely to materially affect, such internal control over financial reporting.

36

PART II—OTHER INFORMATION

ITEM 1.Legal Proceedings

See Note 14 - Commitments and Contingencies to the condensed consolidated financial statements included in this Quarterly Report for a description of our legal proceedings. There have been no material developments with regard to any matters disclosed under Part I, Item 3 "Legal Proceedings" in our 2018 Annual Report, except as disclosed in such Note 14.

ITEM 1.A.Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors discussed under the “Risk Factors” section included in our 2018 Annual Report. There have been no material changes to the risk factors previously disclosed in the 2018 Annual Report.

ITEM 2.Unregistered Sale of Equity Securities and Use of Proceeds

(a) Sales of Unregistered Securities

None.

(b) Use of Proceeds from Public Offering of Common Stock

None.

(c) Repurchases of Our Equity Securities

The following table sets forth the shares of our common stock we acquired during the quarter as a result of the surrender of shares by employees to satisfy 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)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
April 30, 2019	6,441	$	13.52	—	$	—
May 31, 2019	22,150	$	13.82	—	$	—
June 30, 2019	205	$	14.15	—	$	—

(1) - On October 7, 2015, the Company announced that its Board of Directors approved a share repurchase plan, which authorized the expenditure of up to $50.0 million for the purchase of the Company's common stock. Effective April 1, 2019, the Company's Board of Directors terminated its share repurchase plan, of which $25.1 million was remaining before the aforementioned termination of the plan.

ITEM 3.Defaults Upon Senior Securities

None.

ITEM 4.Mine Safety Disclosures

Not applicable.

ITEM 5.Other Information

None.

37

ITEM 6.Exhibits

Exhibit No.	Description
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.LAB	XBRL Labels Linkbase Document
101.PRE	XBRL Presentation Linkbase Document
101.DEF	XBRL Definition Linkbase Document

38

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MISTRAS GROUP, INC.
By:	/s/ Edward J. Prajzner
	Edward J. Prajzner
	Senior Vice President, Chief Financial Officer and Treasurer
	(Principal Financial and Accounting Officer and duly authorized officer)

Date: August 6, 2019

39

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13A-14(a) OF THE SECURITIES

EXCHANGE ACT OF 1934

I, Dennis Bertolotti, certify that:

1. I have reviewed this report on Form 10-Q of Mistras Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2019

/s/ Dennis Bertolotti

Dennis Bertolotti

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13A-14(a) OF THE SECURITIES

EXCHANGE ACT OF 1934

I, Edward J. Prajzner, certify that:

1. I have reviewed this report on Form 10-Q of Mistras Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2019

/s/ Edward J. Prajzner

Edward J. Prajzner

Senior Vice President, Chief Financial Officer and Treasurer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned hereby certifies, for the purposes of section 1350 of chapter 63 of title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Mistras Group, Inc. (the “Company”), that, to his knowledge, the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2019 (the “Report”), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. This written statement is being furnished to the Securities and Exchange Commission as an exhibit to the Report.

Dated: August 6, 2019

/s/ Dennis Bertolotti

Dennis Bertolotti

President and Chief Executive Officer

(Principal Executive Officer)

/s/ Edward J. Prajzner

Edward J. Prajzner

Senior Vice President, Chief Financial Officer and Treasurer

(Principal Financial Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 02, 2019
Document and Entity Information
Entity Registrant Name	Mistras Group, Inc.
Entity Central Index Key	0001436126
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		28,694,680
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Current Assets
Cash and cash equivalents	$ 12,501	$ 25,544
Accounts receivable, net	155,043	148,324
Inventories	13,685	13,053
Prepaid expenses and other current assets	16,765	15,870
Total current assets	197,994	202,791
Property, plant and equipment, net	95,442	93,895
Intangible assets, net	107,753	111,395
Goodwill	283,017	279,259
Deferred income taxes	2,882	1,930
Other assets	46,385	4,767
Total assets	733,473	694,037
Current Liabilities
Accounts payable	18,840	13,863
Accrued expenses and other current liabilities	82,897	73,895
Current portion of long-term debt	7,056	6,833
Current portion of finance lease obligations	3,680
Current portion of finance lease obligations		3,922
Income taxes payable	2,497	1,958
Total current liabilities	114,970	100,471
Long-term debt, net of current portion	263,381	283,787
Obligations under finance leases, net of current portion	9,826
Obligations under finance leases, net of current portion		9,075
Deferred income taxes	25,041	23,148
Other long-term liabilities	38,976	6,482
Total liabilities	452,194	422,963
Commitments and contingencies
Equity
Preferred stock, 10,000,000 shares authorized	0	0
Common stock, $0.01 par value, 200,000,000 shares authorized, 28,685,486 and 28,562,608 shares issued	286	285
Additional paid-in capital	228,883	226,616
Retained earnings	73,691	71,553
Accumulated other comprehensive loss	(21,777)	(27,557)
Total Mistras Group, Inc. stockholders’ equity	281,083	270,897
Non-controlling interests	196	177
Total equity	281,279	271,074
Total liabilities and equity	$ 733,473	$ 694,037

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	28,685,486	28,562,608

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Unaudited Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Statement [Abstract]
Revenue	$ 200,616	$ 191,793	$ 377,403	$ 379,423
Cost of revenue	135,063	131,084	257,480	264,872
Depreciation	5,482	5,626	10,978	11,323
Gross profit	60,071	55,083	108,945	103,228
Selling, general and administrative expenses	41,923	41,267	83,686	80,301
Bad debt provision for troubled customers, net of recoveries	(2,693)	0	2,798	0
Pension withdrawal expense	0	0	534	0
Research and engineering	754	913	1,611	1,669
Depreciation and amortization	4,119	2,965	8,291	5,916
Acquisition-related expense (benefit), net	549	(366)	1,002	(1,360)
Income from operations	15,419	10,304	11,023	16,702
Interest expense	3,579	1,895	7,106	3,686
Income before provision for income taxes	11,840	8,409	3,917	13,016
Provision for income taxes	4,397	2,409	1,760	4,096
Net income	7,443	6,000	2,157	8,920
Less: net income attributable to non-controlling interests, net of taxes	12	0	19	12
Net income attributable to Mistras Group, Inc.	$ 7,431	$ 6,000	$ 2,138	$ 8,908
Earnings per common share:
Basic (in dollars per share)	$ 0.26	$ 0.21	$ 0.07	$ 0.31
Diluted (in dollars per share)	$ 0.26	$ 0.20	$ 0.07	$ 0.30
Weighted average common shares outstanding:
Basic (in shares)	28,657	28,346	28,616	28,325
Diluted (in shares)	28,862	29,334	28,918	29,349

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Unaudited Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement of Comprehensive Income [Abstract]
Net income	$ 7,443	$ 6,000	$ 2,157	$ 8,920
Other comprehensive income:
Foreign currency translation adjustments	3,649	(5,565)	5,780	(4,065)
Comprehensive income	11,092	435	7,937	4,855
Less: comprehensive income (loss) attributable to non-controlling interest	10	(4)	19	10
Comprehensive income attributable to Mistras Group, Inc.	$ 11,082	$ 439	$ 7,918	$ 4,845

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Unaudited Condensed Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands	Total	Total Mistras Group, Inc. Stockholders’ Equity	Common Stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive income (loss)	Noncontrolling Interest
Beginning balance (in shares) at Dec. 31, 2017			28,295
Beginning balance at Dec. 31, 2017	$ 270,791	$ 270,618	$ 282	$ 222,425	$ 64,716	$ (16,805)	$ 173
Increase (Decrease) in Stockholders' Equity
Net income	8,920	8,908			8,908		12
Other comprehensive income, net of tax	(4,067)	(4,065)				(4,065)	(2)
Share-based payments (in shares)			79
Share-based payments	2,865	2,865	$ 1	2,864
Net settlement on vesting of restricted stock units	$ (655)	(655)		(655)
Exercise of stock options (in shares)	0
Ending balance (in shares) at Jun. 30, 2018			28,374
Ending balance at Jun. 30, 2018	$ 277,854	277,671	$ 283	224,634	73,624	(20,870)	183
Beginning balance (in shares) at Mar. 31, 2018			28,314
Beginning balance at Mar. 31, 2018	276,364	276,177	$ 282	223,576	67,624	(15,305)	187
Increase (Decrease) in Stockholders' Equity
Net income	6,000	6,000			6,000
Other comprehensive income, net of tax	(5,569)	(5,565)				(5,565)	(4)
Share-based payments (in shares)			60
Share-based payments	1,671	1,671	$ 1	1,670
Net settlement on vesting of restricted stock units	(612)	(612)		(612)
Ending balance (in shares) at Jun. 30, 2018			28,374
Ending balance at Jun. 30, 2018	277,854	277,671	$ 283	224,634	73,624	(20,870)	183
Beginning balance (in shares) at Dec. 31, 2018			28,563
Beginning balance at Dec. 31, 2018	271,074	270,897	$ 285	226,616	71,553	(27,557)	177
Increase (Decrease) in Stockholders' Equity
Net income	2,157	2,138			2,138		19
Other comprehensive income, net of tax	5,780	5,780				5,780
Share-based payments (in shares)			119
Share-based payments	2,917	2,917	$ 1	2,916
Net settlement on vesting of restricted stock units	$ (681)	(681)		(681)
Exercise of stock options (in shares)	4		3
Exercise of stock options	$ 32	32		32
Ending balance (in shares) at Jun. 30, 2019			28,685
Ending balance at Jun. 30, 2019	281,279	281,083	$ 286	228,883	73,691	(21,777)	196
Beginning balance (in shares) at Mar. 31, 2019			28,627
Beginning balance at Mar. 31, 2019	269,096	268,910	$ 286	227,790	66,260	(25,426)	186
Increase (Decrease) in Stockholders' Equity
Net income	7,443	7,431			7,431		12
Other comprehensive income, net of tax	3,647	3,649				3,649	(2)
Share-based payments (in shares)			58
Share-based payments	1,490	1,490		1,490
Net settlement on vesting of restricted stock units	(397)	(397)		(397)
Ending balance (in shares) at Jun. 30, 2019			28,685
Ending balance at Jun. 30, 2019	$ 281,279	$ 281,083	$ 286	$ 228,883	$ 73,691	$ (21,777)	$ 196

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Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities
Net income	$ 2,157	$ 8,920
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	19,269	17,239
Deferred income taxes	420	601
Share-based compensation expense	2,867	2,829
Bad debt provision for troubled customers, net of recoveries	2,798	0
Fair value adjustments to contingent consideration	672	(990)
Foreign currency (gain) loss	(1,218)	372
Other	(395)	164
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions
Accounts receivable	(8,792)	(8,405)
Inventories	(594)	(1,171)
Prepaid expenses and other assets	(625)	(1,248)
Accounts payable	4,945	4,475
Accrued expenses and other liabilities	(988)	(78)
Income taxes payable	589	(2,613)
Net cash provided by operating activities	21,105	20,095
Cash flows from investing activities
Purchase of property, plant and equipment	(11,562)	(10,963)
Purchase of intangible assets	(441)	(265)
Proceeds from sale of equipment	955	941
Net cash used in investing activities	(11,048)	(10,287)
Cash flows from financing activities
Repayment of finance lease obligations	(2,411)	(3,109)
Proceeds from borrowings of long-term debt	566	1,334
Repayment of long-term debt	(3,445)	(1,322)
Proceeds from revolver	10,000	19,100
Repayment of revolver	(27,200)	(33,100)
Payment of contingent consideration for business acquisitions	0	(1,506)
Taxes paid related to net share settlement of share-based awards	(681)	(655)
Proceeds from exercise of stock options	32	0
Net cash used in financing activities	(23,139)	(19,258)
Effect of exchange rate changes on cash and cash equivalents	39	(561)
Net change in cash and cash equivalents	(13,043)	(10,011)
Cash and cash equivalents at beginning of period	25,544	27,541
Cash and cash equivalents at end of period	12,501	17,530
Supplemental disclosure of cash paid
Interest	7,016	3,456
Income taxes	2,565	7,011
Noncash investing and financing
Equipment acquired through finance lease obligations	$ 2,887	$ 2,546

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Description of Business and Basis of Presentation

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business and Basis of Presentation

Description of Business and Basis of Presentation

Description of Business

Mistras Group, Inc. and subsidiaries ("the Company") is a leading “one source” global provider of technology-enabled asset protection solutions used to evaluate the structural integrity and reliability of critical energy, industrial and materials and public infrastructure and commercial aerospace components. The Company combines industry-leading products and technologies, expertise in mechanical integrity (MI), non-destructive testing (NDT) and mechanical services and proprietary data analysis software to deliver a comprehensive portfolio of customized solutions, ranging from routine inspections to complex, plant-wide asset integrity assessments and management. These mission critical solutions enhance customers’ ability to extend the useful life of their assets, increase productivity, minimize repair costs, comply with governmental safety and environmental regulations, manage risk and avoid catastrophic disasters. The Company serves a global customer base of companies with asset-intensive infrastructure, including companies in the oil and gas, commercial aerospace and defense, fossil and nuclear power, alternative and renewable energy, public infrastructure, chemicals, transportation, primary metals and metalworking, pharmaceutical/biotechnology and food processing industries and research and engineering institutions.

Basis of Presentation

The condensed consolidated financial statements contained in this report are unaudited. In the opinion of management, the condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods of the years ending December 31, 2019 and 2018. Certain items included in these statements are based on management’s estimates. Actual results may differ from those estimates. The results of operations for any interim period are not necessarily indicative of the results expected for the year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the notes to the audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K (“2018 Annual Report”) for the year ended December 31, 2018, dated March 15, 2019.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Mistras Group, Inc. and its wholly and majority-owned subsidiaries. For subsidiaries in which the Company’s ownership interest is less than 100%, the non-controlling interests are reported in stockholders’ equity in the accompanying condensed consolidated balance sheets. The non-controlling interests in net income, net of tax, is classified separately in the accompanying condensed consolidated statements of income. All significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassification

Certain amounts in prior periods have been reclassified to conform to the current year presentation. Such reclassifications did not have a material effect on the Company's financial condition or results of operations as previously reported.

Customers

For the three and six months ended June 30, 2019 and 2018, there were no customers that represented 10% or more of revenue.

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in Note 1 — Summary of Significant Accounting Policies and Practices in the 2018 Annual Report. On an ongoing basis, the Company evaluates its estimates and assumptions, including among other things, those related to revenue recognition, long-lived assets, goodwill and acquisitions. Since the date of the 2018 Annual Report, there have been no material changes to the Company's significant accounting policies, other than its adoption of the new leasing standard on January 1, 2019.

Income Taxes

On December 22, 2017, the United States enacted fundamental changes to federal tax law following the passage of the Tax Cuts and Jobs Act (the “Tax Act”). The Company’s financial statements for the periods ended June 30, 2019 and June 30, 2018 reflected provisions of the Tax Act effective for periods beginning after December 31, 2017, which includes the reduced federal corporate tax rate of from 35% to 21%, adjustments made to executive compensation and meals and entertainment rules, and the inclusion of new categories of income, global intangible low-taxes income (“GILTI”) and foreign derived intangible income (“FDII”). The Company’s effective income tax rate was approximately 37% and 29% for the three months ended June 30, 2019 and 2018, respectively. The Company's effective income tax rate was approximately 45% and 31% for the six months ended June 30, 2019 and 2018, respectively. The effective income tax rate for the second quarter and first six-months of 2019 and 2018 was higher than the statutory rate due to the impact of discrete items, GILTI and executive compensation provisions resulting from the passage of the Tax Act, foreign tax rates different than statutory rates in the U.S., and an increase in the reserve for uncertain income tax provision.

The Company has completed the accounting for the adoption of the Tax Act. The amounts recorded in 2019 for the Tax Act related to the calculations of the GILTI, FDII, executive compensation and meals and entertainment are the Company’s best estimates based on the current data and guidance available. The Company is continuing to evaluate the state tax conformity to the Tax Act, including the GILTI provisions. Given the complexity of the new GILTI tax rules, the Company is continuing to evaluate this provision of the Tax Act and the application of ASC 740. Under U.S. GAAP, the Company is allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). In 2018, the Company made an accounting policy election to account for these effects under the period cost method.

Mistras and its subsidiaries file tax returns in the U.S., including various state and local returns, and in other foreign jurisdictions. The Company believes adequate provision has been made for all income tax uncertainties.  

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842), which the Company adopted as of January 1, 2019. Topic 842 requires the recognition of lease rights and obligations as assets and liabilities on the balance sheet. The Company elected the modified retrospective method permitted by the standard, upon which prior-period information has not been restated.

The standard provided for several practical expedient options for use in transition. The Company elected to utilize the “package of practical expedients,” which permits the Company not to reassess previous conclusions reached on lease identification, lease classification and initial direct costs. The Company also elected to utilize the practical expedient available to not separate lease and non-lease components within the lease and has therefore accounted for all lease components as a single lease component.

Adoption of the new standard resulted in the recording of a right-of-use (ROU) asset and liability related to the Company’s operating leases of approximately $38 million as of January 1, 2019. The new standard did not have a material impact to our statements of income or cash flows.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350). This amendment eliminates Step Two of the goodwill impairment test. Under the amendments in this update, entities should perform the annual goodwill impairment test by comparing the carrying value of their reporting units to their fair value. An entity should record an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Tax deductibility of goodwill should be considered in evaluating any reporting unit's impairment loss to be taken. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company early adopted ASU 2017-04 in the third quarter of 2017 for its condensed consolidated financial statements and related disclosures.

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Revenue

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

The majority of the Company's revenues are derived from providing services on a time and material basis and are short-term in nature. The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which was adopted on January 1, 2018.

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.  A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and is, therefore, not distinct. The Company provides highly integrated and bundled inspection services to its customers. Some of our contracts have multiple performance obligations, most commonly due to the contract providing both goods and services. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is a relative selling price based on price lists.

Contract modifications are not routine in the performance of our contracts. Generally, when contracts are modified, the modification is to account for changes in scope to the goods and services that are provided. In most instances, contract modifications are for goods or services that are distinct, and, therefore, are accounted for as a separate contract.

Our performance obligations are satisfied over time as work progresses or at a point in time. The majority of our revenue recognized over time as work progresses is related to our service deliverables, which includes providing testing, inspection and mechanical services to our customers. Revenue is recognized over time based on time and material incurred to date which best portrays the transfer of control to the customer. The Company also utilizes an available practical expedient that provides for revenue to be recognized in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date. Fixed fee arrangements are determined based on expected labor, material, and overhead to be consumed on fulfillment of such services. Revenue is recognized on a cost-to-cost method tracked on an input basis.

The majority of our revenue recognized at a point in time is related to product sales when the customer obtains control of the asset, which is generally upon shipment to the customer. Contract costs include labor, material and overhead.

The Company expects any significant remaining performance obligations to be satisfied within one year.

Contract Estimates

The majority of our revenues are short-term in nature. The Company has many Master Service Agreements (MSAs) that specify an overall framework and contract terms when the Company and customers agree upon services or products to be provided. The actual contracting to provide services or furnish products is triggered by a work order, purchase order, or some similar document issued pursuant to a MSA which sets forth the scope of services and/or identifies the products to be provided. From time-to-time, the Company may enter into long-term contracts, which can range from several months to several years. Revenue on such long-term contracts is recognized as work is performed based on total costs incurred to date in relation to the total estimated costs for the performance of the contract at completion. This includes contract estimates of costs to be incurred for the performance of the contract. Cost estimation is based upon the professional knowledge and experience of our project managers, engineers and financial professionals. Factors that are considered in estimating the work to be completed include the availability of materials, the effect of any delays in our project performance and the recoverability of any claims. Whenever revisions of estimates, contract costs and/or contract values indicate that the contract costs will exceed estimated revenues, thus creating a loss, a provision for the total estimated loss is recorded in that period.

Revenue by Category

The following series of tables present our disaggregated revenues:

Revenue by industry was as follows:

Three Months Ended June 30, 2019	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	109,103	$	11,767	$	465	$	—		$	121,335
Aerospace & Defense	13,511		10,504		315		—			24,330
Industrials	19,638		5,459		647		—			25,744
Power generation & Transmission	8,352		2,499		619		—			11,470
Other Process Industries	6,384		2,504		68		—			8,956
Infrastructure, Research & Engineering	2,806		2,517		1,059		—			6,382
Other	1,416		1,840		1,096		(1,953		)	2,399
Total	$	161,210	$	37,090	$	4,269	$	(1,953	)	$	200,616

Three Months Ended June 30, 2018	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	95,288	$	9,716	$	375	$	—		$	105,379
Aerospace & Defense	13,371		14,086		770		—			28,227
Industrials	16,607		6,942		925		—			24,474
Power generation & Transmission	9,137		2,806		554		—			12,497
Other Process Industries	6,138		2,909		33		—			9,080
Infrastructure, Research & Engineering	3,914		2,552		1,261		—			7,727
Other	3,263		2,100		1,468		(2,422		)	4,409
Total	$	147,718	$	41,111	$	5,386	$	(2,422	)	$	191,793

Six Months Ended June 30, 2019	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	200,769	$	21,472	$	480	$	—		$	222,721
Aerospace & Defense	26,305		22,158		622		—			49,085
Industrials	35,762		10,534		1,079		—			47,375
Power generation & Transmission	14,614		3,921		2,000		—			20,535
Other Process Industries	12,702		4,746		73		—			17,521
Infrastructure, Research & Engineering	5,396		5,250		1,905		—			12,551
Other	5,959		4,171		1,542		(4,057		)	7,615
Total	$	301,507	$	72,252	$	7,701	$	(4,057	)	$	377,403

Six Months Ended June 30, 2018	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	197,036	$	17,844	$	937	$	—		$	215,817
Aerospace & Defense	25,828		28,551		1,436		—			55,815
Industrials	28,324		13,342		1,465		—			43,131
Power generation & Transmission	17,038		3,526		2,110		—			22,674
Other Process Industries	11,545		4,699		38		—			16,282
Infrastructure, Research & Engineering	6,094		5,071		1,761		—			12,926
Other	7,448		6,534		3,823		(5,027		)	12,778
Total	$	293,313	$	79,567	$	11,570	$	(5,027	)	$	379,423

Revenue per key geographic location was as follows:

Three Months Ended June 30, 2019	Services		International		Products		Corp/Elim			Total
United States	$	131,880	$	57	$	2,977	$	(1,274	)	$	133,640
Other Americas	28,804		1,686		71		(207		)	30,354
Europe	271		33,740		436		(472		)	33,975
Asia-Pacific	255		1,607		785		—			2,647
Total	$	161,210	$	37,090	$	4,269	$	(1,953	)	$	200,616

Three Months Ended June 30, 2018	Services		International		Products		Corp/Elim			Total
United States	$	122,835	$	157	$	2,782	$	(649	)	$	125,125
Other Americas	22,676		1,955		278		(743		)	24,166
Europe	2,133		37,645		815		(969		)	39,624
Asia-Pacific	74		1,354		1,511		(61		)	2,878
Total	$	147,718	$	41,111	$	5,386	$	(2,422	)	$	191,793

Six Months Ended June 30, 2019	Services		International		Products		Corp/Elim			Total
United States	$	245,015	$	334	$	4,947	$	(2,554	)	$	247,742
Other Americas	55,513		3,915		137		(264		)	59,301
Europe	698		65,280		857		(1,235		)	65,600
Asia-Pacific	281		2,723		1,760		(4		)	4,760
Total	$	301,507	$	72,252	$	7,701	$	(4,057	)	$	377,403

Six Months Ended June 30, 2018	Services		International		Products		Corp/Elim			Total
United States	$	246,398	$	424	$	6,040	$	(1,746	)	$	251,116
Other Americas	44,459		3,857		360		(996		)	47,680
Europe	2,288		71,845		1,934		(2,195		)	73,872
Asia-Pacific	168		3,441		3,236		(90		)	6,755
Total	$	293,313	$	79,567	$	11,570	$	(5,027	)	$	379,423

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the condensed consolidated balance sheet. Amounts are generally billed as work progresses in accordance with agreed-upon contractual terms, generally at periodic intervals (e.g., weekly, bi-weekly or monthly). Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, the Company sometimes receives advances or deposits from our customers before revenue is recognized, resulting in contract liabilities. These assets and liabilities are aggregated on an individual contract basis and reported on the condensed consolidated balance sheet at the end of each reporting period within accrued expenses and other current liabilities.

Revenue recognized in 2019, that was included in the contract liability balance at the beginning of the year was $2.7 million. Changes in the contract asset and liability balances during the quarter ended June 30, 2019, were not materially impacted by any other factors. The Company has elected to utilize a practical expedient to expense incremental costs incurred related to obtaining a contract. The Company’s expenses are expected to be amortized over a period less than one year.

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Share-Based Compensation

6 Months Ended

Jun. 30, 2019

Share-based Payment Arrangement [Abstract]

Share-Based Compensation

Share-Based Compensation

The Company has share-based incentive awards outstanding to its eligible employees and non-employee directors under three equity incentive plans: (i) the 2007 Stock Option Plan (the "2007 Plan"), (ii) the 2009 Long-Term Incentive Plan (the "2009 Plan") and (iii) the 2016 Long-Term Incentive Plan (the "2016 Plan"). No further awards may be granted under the 2007 and 2009 Plans, although awards granted under the 2007 and 2009 Plans remain outstanding in accordance with their terms. Awards granted under the 2016 Plan may be in the form of stock options, restricted stock units and other forms of share-based incentives, including performance restricted stock units, stock appreciation rights and deferred stock rights.

Stock Options

For the three and six months ended June 30, 2019 and 2018, the Company did not recognize any share-based compensation expense related to stock option awards, as all outstanding stock options awards are fully vested.

No unrecognized compensation costs remained related to stock option awards as of June 30, 2019.

The following table sets forth a summary of the stock option activity, weighted average exercise prices and options outstanding as of June 30, 2019 and June 30, 2018:

	Six months ended June 30,
	2019				2018
	Common Stock Options		Weighted Average Exercise Price		Common Stock Options	Weighted Average Exercise Price
Outstanding at beginning of period:	2,105		$	13.47	2,130	$	13.43
Granted	—		$	—	—	$	—
Exercised	(4	)	$	10.00	—	$	—
Expired or forfeited	(7	)	$	10.00	—	$	—
Outstanding at end of period:	2,094		$	13.48	2,130	$	13.43

Restricted Stock Unit Awards

For the three months ended June 30, 2019 and June 30, 2018, the Company recognized share-based compensation expense related to restricted stock unit awards of $1.1 million and $1.2 million, respectively. For the six months ended June 30, 2019 and June 30, 2018, the Company recognized share-based compensation expense related to restricted stock unit awards of $2.0 million and $2.0 million, respectively. As of June 30, 2019, there was $8.8 million of unrecognized compensation costs, net of estimated forfeitures, related to restricted stock unit awards, which is expected to be recognized over a remaining weighted average period of 2.7 years.

A summary of the vesting activity of restricted stock unit awards, with the respective fair value of the awards, is as follows:

	Six months ended June 30,
	2019		2018
Restricted stock awards vested	77		35
Fair value of awards vested	$	1,052	$	704

Upon vesting, restricted stock units are generally net share-settled to cover the required minimum withholding tax and the remaining amount is converted into an equivalent number of shares of common stock.

A summary of the fully-vested common stock the Company issued to its five non-employee directors, in connection with its non-employee director compensation plan, is as follows:

	Six months ended June 30,
	2019		2018
Awards issued	15		10
Grant date fair value of awards issued	$	210	$	200

A summary of the Company's outstanding, non-vested restricted share units is as follows:

	Six months ended June 30,
	2019				2018
	Units		Weighted Average Grant-Date Fair Value		Units		Weighted Average Grant-Date Fair Value
Outstanding at beginning of period:	443		$	20.55	532		$	21.05
Granted	334		$	14.04	211		$	19.20
Released	(77	)	$	19.88	(35	)	$	21.44
Forfeited	(23	)	$	19.35	(24	)	$	20.17
Outstanding at end of period:	677		$	17.46	684		$	20.49

Performance Restricted Stock Units

The Company maintains Performance Restricted Stock Units (PRSUs) that have been granted to select executives and senior officers whose ultimate payout is based on the Company’s performance over a one-year period based on three metrics, as defined: (1) Operating Income, (2) Adjusted EBITDAS (defined as net income attributable to MISTRAS Group, Inc. plus: interest expense, provision for income taxes, depreciation and amortization, share-based compensation expense and certain acquisition related costs (including transaction due diligence costs and adjustments to the fair value of contingent consideration), foreign exchange (gain) loss and, if applicable, certain special items which are noted) and (3) Revenue. There also is a discretionary portion of the PRSUs based on individual performance, granted at the discretion of the Compensation Committee (Discretionary PRSUs). PRSUs and Discretionary PRSUs generally vest ratably on each of the first four anniversary dates upon completion of the performance period, for a total requisite service period of up to five years and have no dividend rights.

PRSUs are equity-classified and compensation costs are initially measured using the fair value of the underlying stock at the date of grant, assuming that the target performance conditions will be achieved. Compensation costs related to the PRSUs are subsequently adjusted for changes in the expected outcomes of the performance conditions.

Discretionary PRSUs are liability-classified and adjusted to fair value (with a corresponding adjustment to compensation expense) based upon the targeted number of shares to be awarded and the fair value of the underlying stock each reporting period until approved by the Compensation Committee, at which point they are classified as equity.

A summary of the Company's PRSU activity is as follows:

	Six months ended June 30,
	2019				2018
	Units		Weighted Average Grant-Date Fair Value		Units		Weighted Average Grant-Date Fair Value
Outstanding at beginning of period:	277		$	17.80	278		$	17.00
Granted	190		$	13.63	123		$	19.46
Performance condition adjustments	(3	)	$	18.46	(4	)	$	19.67
Released	(77	)	$	15.86	(61	)	$	15.04
Forfeited	—		$	—	(12	)	$	16.16
Outstanding at end of period:	387		$	15.94	324		$	18.15

During the six months ended June 30, 2019 and June 30, 2018, the Compensation Committee approved the final calculation of the award metrics for calendar year 2018 and calendar year 2017, respectively. As a result, the calendar year 2018 PRSUs decreased by approximately 3,000 units and the calendar year 2017 PRSUs increased by approximately 4,000 units. There was a decrease of approximately 8,000 units for the six months ended June 30, 2018 based on forecasted results for calendar year 2018. These adjustments comprise the performance condition adjustments for the six months ended June 30, 2018 noted above.

As of June 30, 2019, the liability related to Discretionary PRSUs was less than $0.1 million and is classified within accrued expenses and other current liabilities on the condensed consolidated balance sheet.

For the three months ended June 30, 2019 and June 30, 2018, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $0.4 million and $0.5 million, respectively. For the six months ended June 30, 2019 and June 30, 2018, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $0.7 million and $0.6 million, respectively. At June 30, 2019, there was $3.7 million of total unrecognized compensation costs related to approximately 387,000 non-vested PRSUs, which is expected to be recognized over a remaining weighted average period of 2.6 years.

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Earnings per Share

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Earnings per Share

Earnings per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, and (2) the dilutive effect of assumed conversion of equity awards using the treasury stock method. With respect to the number of weighted-average shares outstanding (denominator), diluted shares reflects: (i) the exercise of options to acquire common stock to the extent that the options’ exercise prices are less than the average market price of common shares during the period and (ii) the pro forma vesting of restricted stock units.

The following table sets forth the computations of basic and diluted earnings per share:

	Three months ended				Six months ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Basic earnings per share:
Numerator:
Net income attributable to Mistras Group, Inc.	$	7,431	$	6,000	$	2,138	$	8,908
Denominator:
Weighted average common shares outstanding	28,657		28,346		28,616		28,325
Basic earnings per share	$	0.26	$	0.21	$	0.07	$	0.31
Diluted earnings per share:
Numerator:
Net income attributable to Mistras Group, Inc.	$	7,431	$	6,000	$	2,138	$	8,908
Denominator:
Weighted average common shares outstanding	28,657		28,346		28,616		28,325
Dilutive effect of stock options outstanding	46		660		131		702
Dilutive effect of restricted stock units outstanding	159		328		171		322
	28,862		29,334		28,918		29,349
Diluted earnings per share	$	0.26	$	0.20	$	0.07	$	0.30

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Acquisitions

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Acquisitions

Acquisitions

During the six months ended June 30, 2019 and June 30, 2018, the Company did not complete any acquisitions.

The Company accounts for acquisitions in accordance with the acquisition method of accounting for business combinations. The assets and liabilities of the one business acquired in the fourth quarter of 2018 was included in the Company's condensed consolidated balance sheet based upon its estimated fair value on the date of acquisition as determined in a preliminary purchase price allocation, using available information and making assumptions management believed were reasonable. The Company is still in the process of completing its valuation of the assets, both tangible and intangible, and liabilities acquired for the acquisition completed during 2018. The results of operations for this acquisition have been included in the Services segment's results from the date of acquisition. Goodwill of $83.2 million primarily relates to expected synergies and the assembled workforce, and is not deductible for tax purposes. Other intangible assets, primarily related to technology, customer relationships and covenants not to compete, were $59.6 million.

Acquisition-Related Expense

In the course of its acquisition activities, the Company incurs costs in connection with due diligence, professional fees, and other expenses. Additionally, the Company adjusts the fair value of acquisition-related contingent consideration liabilities on a quarterly basis. These amounts are recorded as acquisition-related expense (benefit), net, on the condensed consolidated statements of income and were as follows for the three and six months ended June 30, 2019 and 2018:

	Three months ended June 30,					Six months ended June 30,
	2019		2018			2019		2018
Due diligence, professional fees and other transaction costs	$	182	$	(409	)	$	330	$	(370	)
Adjustments to fair value of contingent consideration liabilities	367		43			672		(990		)
Acquisition-related expense (benefit), net	$	549	$	(366	)	$	1,002	$	(1,360	)

The Company's contingent consideration liabilities are recorded on the balance sheet in accrued expenses and other liabilities.

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Accounts Receivable, net

6 Months Ended

Jun. 30, 2019

Receivables [Abstract]

Accounts Receivable, net

Accounts Receivable, net

Accounts receivable consisted of the following:

	June 30, 2019			December 31, 2018
Trade accounts receivable	$	160,978		$	152,511
Allowance for doubtful accounts	(5,935		)	(4,187		)
Accounts receivable, net	$	155,043		$	148,324

The Company had $25.6 million and $16.1 million of unbilled revenues accrued as of June 30, 2019 and December 31, 2018, respectively, and such amounts are included within the trade accounts receivable balances above. Unbilled revenues are generally billed in the subsequent quarter to their revenue recognition.

In the fourth quarter of 2018, the Company recorded a reserve of $0.7 million for a renewable energy industry customer, based in part on the available information about the financial difficulties of the customer.  This customer filed for a voluntary insolvency proceeding on April 9, 2019 at which time payments under the previously agreed upon payment plan ceased. As a result, during the first quarter of 2019, the Company recorded an additional charge of $5.7 million to fully reserve for the amount of the exposure related to this customer. During the second quarter, the Company reversed $1.0 million of this reserve based on additional information obtained during the quarter.  

During the first six months of 2019, the Company sold to an unaffiliated third party, without recourse, its remaining outstanding receivables in an unrelated bankruptcy proceeding, which the Company had initially recorded as a charge during the second quarter of 2017. During the first quarter of 2019, the Company recorded a recovery of $0.2 million and during the six months ending June 30, 2019, the Company recorded a recovery $1.9 million, related to a bad debt provision related to this customer.

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Property, Plant and Equipment, net

6 Months Ended

Jun. 30, 2019

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment, net

Property, Plant and Equipment, net

Property, plant and equipment consisted of the following:

	Useful Life (Years)	June 30, 2019			December 31, 2018
Land		$	2,680		$	2,680
Buildings and improvements	30-40	24,408			24,338
Office furniture and equipment	5-8	16,791			16,170
Machinery and equipment	5-7	218,281			208,245
		262,160			251,433
Accumulated depreciation and amortization		(166,718		)	(157,538		)
Property, plant and equipment, net		$	95,442		$	93,895

Depreciation expense for each of the three months ended June 30, 2019 and June 30, 2018 was approximately $6.1 million.

Depreciation expense for each of the six months ended June 30, 2019 and June 30, 2018 was approximately $12.2 million.

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Goodwill

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

Changes in the carrying amount of goodwill by segment is shown below:

	Services		International			Products and Systems		Total
Balance at December 31, 2018	$	243,476	$	35,783		$	—	$	279,259
Goodwill acquired during the period	—		—			—		—
Adjustments to preliminary purchase price allocations	—		—			—		—
Foreign currency translation	3,963		(205		)	—		3,758
Balance at June 30, 2019	$	247,439	$	35,578		$	—	$	283,017

The Company reviews goodwill for impairment on a reporting unit basis on October 1 of each year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. As of June 30, 2019, the Company did not identify any changes in circumstances that would indicate the carrying value of goodwill may not be recoverable.

The Company's cumulative goodwill impairment as of June 30, 2019 and December 31, 2018 was $23.1 million, of which $13.2 million related to the Products and Systems segment and $9.9 million related to the International segment.

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Intangible Assets

6 Months Ended

Jun. 30, 2019

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Intangible Assets

Intangible Assets

The gross amount, accumulated amortization and net carrying amount of intangible assets were as follows:

		June 30, 2019							December 31, 2018
	Useful Life (Years)	Gross Amount		Accumulated Amortization			Net Carrying Amount		Gross Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	5-14	$	113,154	$	(64,632	)	$	48,522	$	112,624	$	(60,993	)	$	51,631
Software/Technology	3-15	70,348		(15,896		)	54,452		67,240		(13,319		)	53,921
Covenants not to compete	2-5	12,669		(11,277		)	1,392		12,593		(10,825		)	1,768
Other	2-12	10,381		(6,994		)	3,387		10,317		(6,242		)	4,075
Total		$	206,552	$	(98,799	)	$	107,753	$	202,774	$	(91,379	)	$	111,395

Amortization expense for the three months ended June 30, 2019 and June 30, 2018 was approximately $3.5 million and $2.5 million, respectively.

Amortization expense for the six months ended June 30, 2019 and June 30, 2018 was approximately $7.1 million and $5.0 million, respectively.

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Accrued Expenses and Other Current Liabilities

6 Months Ended

Jun. 30, 2019

Payables and Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

	June 30, 2019		December 31, 2018
Accrued salaries, wages and related employee benefits	$	30,367	$	29,959
Contingent consideration, current portion	3,095		1,687
Accrued workers’ compensation and health benefits	4,859		5,086
Deferred revenue	4,067		5,046
Pension accrual	4,009		5,585
Right-of-use liability - operating	9,575		—
Other accrued expenses	26,925		26,532
Total accrued expenses and other current liabilities	$	82,897	$	73,895

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Long-Term Debt

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

Long-term debt consisted of the following:

	June 30, 2019			December 31, 2018
Senior credit facility	$	164,397		$	181,656
Senior secured term loan, net of debt issuance costs of $0.1 million	97,407			99,897
Notes payable	71			68
Other	8,562			8,999
Total debt	270,437			290,620
Less: Current portion	(7,056		)	(6,833		)
Long-term debt, net of current portion	$	263,381		$	283,787

Senior Credit Facility

The Company's revolving credit agreement with its banking group ("Credit Agreement") provides the Company with a $300 million revolving line of credit, which, under certain circumstances, can be increased to $450 million with the approval of the banks. In addition, the Credit Agreement provided the Company with a $100 million senior secured term loan A facility. Both the revolving line of credit and the term loan A facility under the Credit Agreement have a maturity date of December 12, 2023. The Company may borrow up to $100 million in non-U.S. Dollar currencies and use up to $20 million of the credit limit for the issuance of letters of credit. As of June 30, 2019, the Company had borrowings of $261.8 million and a total of $5.4 million of letters of credit outstanding under the Credit Agreement. The Company has capitalized costs associated with debt modifications of $1.0 million as of June 30, 2019, which is included in other long-term assets within the accompanying condensed consolidated balance sheet.

Loans under the Credit Agreement bear interest at the London Interbank Offered Rate ("LIBOR") plus an applicable LIBOR margin ranging from 1% to 2%, or a base rate less a margin of 1.25% to 0.375%, at the option of the Company, based upon the Company’s Funded Debt Leverage Ratio. Funded Debt Leverage Ratio is generally the ratio of (1) all outstanding indebtedness for borrowed money and other interest-bearing indebtedness as of the date of determination to (2) EBITDA (which is (a) net income, less (b) income (or plus loss) from discontinued operations and extraordinary items, plus (c) income tax expenses, plus (d) interest expense, plus (e) depreciation, depletion, and amortization (including non-cash loss on retirement of assets), plus (f) stock compensation expense, less (g) cash expense related to stock compensation, plus (h) certain amounts of EBITDA of acquired business for the prior twelve months, plus (i) certain expenses related to the closing of the Credit Agreement, plus (j) non-cash expenses which do not (in the current or any future period) represent a cash item (excluding non-cash gains which increase net income), plus (k) non-recurring charges (not to exceed $10.0 million in the four consecutive quarters immediately preceding the date of determination) for items such as severance, lease termination charges, asset write-offs and litigation settlements paid, and multi-employer pension plan withdrawal liabilities, all determined for the period of four consecutive fiscal quarters immediately preceding the date of determination of EBITDA. The Company has the benefit of the lowest margin if its Funded Debt Leverage Ratio is equal to or less than 1.0 to 1, and the margin increases as the ratio increases, to the maximum margin if the ratio is greater than 3.25 to 1. The Company will also bear additional costs for market disruption, regulatory changes effecting the lenders’ funding costs, and default pricing of an additional 2% interest rate margin on any amounts not paid when due. Amounts borrowed under the Credit Agreement are secured by liens on substantially all of the assets of the Company and is guaranteed by some of our subsidiaries.

The Credit Agreement contains financial covenants requiring that the Company maintain a Funded Debt Leverage Ratio of no greater than 4.25 to 1 through December 31, 2018, reducing to a maximum permitted ratio of 4.0 to 1 as of March 31, 2019 to September 30, 2019, a maximum permitted ratio of 3.75 to 1 as of December 31, 2019 and a maximum permitted ratio of 3.50 to 1 as of March 31, 2020 and all quarterly periods thereafter, and a Fixed Charge Coverage Ratio of at least 1.25 to 1. Fixed Charge Coverage Ratio means the ratio, as of any date of determination, of (a) (i) EBITDA for the 12 month period immediately preceding the date of determination, taken together as one accounting period, less (ii) the aggregate amount of all capital expenditures made during the period, less (iii) taxes paid in cash during the period, less (iv) Restricted Payments (as defined in the Credit Agreement) paid in cash during the period, -to- (b) the sum of (i) all interest, premium payments, debt discount, fees, charges and related expenses of us and our subsidiaries in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case, to the extent treated as interest in accordance with U.S. generally accepted accounting principles ("GAAP") and to the extent paid in cash during the period, (ii) the aggregate principal amount of all redemptions or similar acquisitions for value of outstanding debt for borrowed money or regularly scheduled principal payments made during the period, but excluding any such payments to the extent refinanced through the incurrence of additional Indebtedness otherwise expressly permitted under the Credit Agreement, and (iii) payments made during the period under all leases that have been or should be, in accordance with GAAP as in effect for the Company's 2017 audited financial statement, recorded as capitalized leases. Beginning in 2020, the Company can elect to increase the maximum Funded Debt Leverage Ratio to 4.0 to 1 for four fiscal quarters immediately following the fiscal quarter in which the Company acquires another business, with the maximum permitted ratio reducing back to 3.5 to 1 in the fifth fiscal quarter following such acquisition. The Company can make this election twice during the term of the Credit Agreement.

The Credit Agreement also limits the Company’s ability to, among other things, create liens, make investments, incur more indebtedness, merge or consolidate, make dispositions of property, pay dividends and make distributions to stockholders or repurchase our stock, enter into a new line of business, enter into transactions with affiliates and enter into burdensome agreements. The Credit Agreement does not limit the Company’s ability to acquire other businesses or companies except that the acquired business or company must be in the Company's line of business, the Company must be in compliance with the financial covenants on a pro forma basis after taking into account the acquisition, and, if the acquired business is a separate subsidiary, in certain circumstances the lenders will receive the benefit of a guaranty of the subsidiary and liens on its assets and a pledge of its stock.

As of June 30, 2019, the Company was in compliance with the terms of the Credit Agreement and will continuously monitor its compliance with the covenants contained in its Credit Agreement.

Notes Payable and Other

In connection with certain of its acquisitions, the Company issued subordinated notes payable to the sellers. The maturity of the notes remain outstanding through June 30, 2019 and bear interest at the prime rate for the Bank of Canada, currently 3.95% as of June 30, 2019. The balance outstanding at June 30, 2019 was paid in July 2019. Interest expense is recorded in the condensed consolidated statements of income.

The Company's other debt includes local bank financing provided at the local subsidiary levels used to support working capital requirements and fund capital expenditures. At June 30, 2019, there was approximately $8.6 million outstanding, payable at various times from 2019 to 2029. Monthly payments range from $1 thousand to $17 thousand. Interest rates range from 0.4% to 6.2% and is recorded in the condensed consolidated statements of income.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company performs fair value measurements in accordance with the guidance provided by ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Financial instruments measured at fair value on a recurring basis

The fair value of contingent consideration liabilities was estimated using a discounted cash flow technique with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820. The significant inputs in the Level 3 measurement not supported by market activity include the probability assessments of expected future cash flows related to the acquisitions, appropriately discounted considering the uncertainties associated with the obligation, and as calculated in accordance with the terms of the applicable acquisition agreements.

The following table represents the changes in the fair value of Level 3 contingent consideration:

	Six months ended June 30,
	2019		2018
Beginning balance	$	2,365	$	5,508
Acquisitions	—		—
Payments	—		(1,506		)
Accretion of liability	75		108
Revaluation	597		(1,098		)
Foreign currency translation	58		(105		)
Ending balance	$	3,095	$	2,907

Financial instruments not measured at fair value on a recurring basis

The Company has evaluated current market conditions and borrower credit quality and has determined that the carrying value of its long-term debt approximates fair value. The fair value of the Company’s notes payable and capital lease obligations approximates their carrying amounts based on anticipated interest rates which management believes would currently be available to the Company for similar issuances of debt.

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Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

Leases

The Company leases certain office and operating facilities, machinery, equipment, and vehicles. Concurrent with the adoption of ASC 842, the Company recognized a right-of-use (ROU) asset and lease liability based on the present value of the future lease payments over the lease term for each lease agreement. The Company has elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less and will continue to recognize lease expense for these leases on a straight-line basis over the lease term. The Company has leases with both lease components and non-lease components, such as common area maintenance, utilities, or other repairs and maintenance. For all asset classes, the Company decided to utilize the practical expedient to include both fixed lease components and fixed non-lease components in calculating the ROU asset and lease liability. The Company identified variable lease payments, such as maintenance payments based on actual activities performed or costs incurred, at lease commencement by assessing the nature of the payment provisions, including whether the payments are subject to a minimum charge. Many of our leases include one or more options to renew. When it is reasonably certain that we will exercise the option, we include the impact of the option in the lease term for purposes of determining future lease payments. As the Company is unable to determine the discount rate implicit in its lease agreements, the Company uses its incremental borrowing rate on the commencement date to calculate the present value of future payments.

The Company’s Condensed Consolidated Balance Sheet includes the following related to operating leases:

Leases	Classification	June 30, 2019
Assets
Right-of-use assets	Other Assets	$	41,868
Liabilities
Right-of-use liability - current	Accrued and other current liabilities	$	9,575
Right-of-use liability - long term	Other liabilities	33,030
Total right-of-use liabilities		$	42,605

Included within the balance of operating leases is a lease for the Company’s headquarters which is with a related party. The ROU liability for this facility is approximately $4.9 million as of June 30, 2019 and total rent payments made during the three and six months ended June 30, 2019 were approximately $0.2 million and $0.5 million, respectively.

As of June 30, 2019, the total ROU assets attributable to finance leases is approximately $15.0 million, which is classified within Property, Plant, & Equipment on the accompanying condensed consolidated balance sheet.

The components of lease costs were as follows:

	Classification	Three months ended June 30, 2019		Six months ended June 30, 2019
Finance lease expense
Amortization of ROU assets	Depreciation and amortization	$	1,226	$	2,403
Interest on lease liabilities	Interest expense	189		380
Operating lease expense	Costs of goods sold or Selling, General & Administrative expenses	3,139		6,259
Short-term lease expense	Costs of goods sold or Selling, General & Administrative expenses	2		6
Variable lease expense	Costs of goods sold or Selling, General & Administrative expenses	273		518
Total		$	4,829	$	9,566

Other information related to leases was as follows:

	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities for finance leases
Finance - financing cash flows	$	2,411
Finance - operating cash flows	$	380
Operating - operating cash flows	$	6,196
ROU assets obtained in the exchange for lease liabilities
Finance leases	$	2,887
Operating leases	$	8,962
Weighted average remaining lease term (in years)
Finance leases	5.8
Operating leases	6.0
Weighted average discount rate
Finance leases	6.3		%
Operating leases	6.0		%

Maturities of lease liabilities as of June 30, 2019 were as follows:

	Finance			Operating
Remaining of 2019	$	3,563		$	6,122
2020	4,301			10,759
2021	2,825			8,030
2022	1,952			6,110
2023	1,037			5,468
Thereafter	998			15,104
Total	14,676			51,593
Less: Present value discount	(1,170		)	(8,988		)
Lease liability	$	13,506		$	42,605

Pursuant to the Company’s adoption of the new lease accounting guidance using a modified retrospective transition approach, as permitted, comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. As previously disclosed in its 2018 Annual Report, the following table presents the Company’s future minimum operating lease commitments as of December 31, 2018:

2019	$	10,939
2020	8,764
2021	6,327
2022	4,826
2023	4,239
Thereafter	10,667
Total	$	45,762

Leases

Leases

The Company leases certain office and operating facilities, machinery, equipment, and vehicles. Concurrent with the adoption of ASC 842, the Company recognized a right-of-use (ROU) asset and lease liability based on the present value of the future lease payments over the lease term for each lease agreement. The Company has elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less and will continue to recognize lease expense for these leases on a straight-line basis over the lease term. The Company has leases with both lease components and non-lease components, such as common area maintenance, utilities, or other repairs and maintenance. For all asset classes, the Company decided to utilize the practical expedient to include both fixed lease components and fixed non-lease components in calculating the ROU asset and lease liability. The Company identified variable lease payments, such as maintenance payments based on actual activities performed or costs incurred, at lease commencement by assessing the nature of the payment provisions, including whether the payments are subject to a minimum charge. Many of our leases include one or more options to renew. When it is reasonably certain that we will exercise the option, we include the impact of the option in the lease term for purposes of determining future lease payments. As the Company is unable to determine the discount rate implicit in its lease agreements, the Company uses its incremental borrowing rate on the commencement date to calculate the present value of future payments.

The Company’s Condensed Consolidated Balance Sheet includes the following related to operating leases:

Leases	Classification	June 30, 2019
Assets
Right-of-use assets	Other Assets	$	41,868
Liabilities
Right-of-use liability - current	Accrued and other current liabilities	$	9,575
Right-of-use liability - long term	Other liabilities	33,030
Total right-of-use liabilities		$	42,605

Included within the balance of operating leases is a lease for the Company’s headquarters which is with a related party. The ROU liability for this facility is approximately $4.9 million as of June 30, 2019 and total rent payments made during the three and six months ended June 30, 2019 were approximately $0.2 million and $0.5 million, respectively.

As of June 30, 2019, the total ROU assets attributable to finance leases is approximately $15.0 million, which is classified within Property, Plant, & Equipment on the accompanying condensed consolidated balance sheet.

The components of lease costs were as follows:

	Classification	Three months ended June 30, 2019		Six months ended June 30, 2019
Finance lease expense
Amortization of ROU assets	Depreciation and amortization	$	1,226	$	2,403
Interest on lease liabilities	Interest expense	189		380
Operating lease expense	Costs of goods sold or Selling, General & Administrative expenses	3,139		6,259
Short-term lease expense	Costs of goods sold or Selling, General & Administrative expenses	2		6
Variable lease expense	Costs of goods sold or Selling, General & Administrative expenses	273		518
Total		$	4,829	$	9,566

Other information related to leases was as follows:

	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities for finance leases
Finance - financing cash flows	$	2,411
Finance - operating cash flows	$	380
Operating - operating cash flows	$	6,196
ROU assets obtained in the exchange for lease liabilities
Finance leases	$	2,887
Operating leases	$	8,962
Weighted average remaining lease term (in years)
Finance leases	5.8
Operating leases	6.0
Weighted average discount rate
Finance leases	6.3		%
Operating leases	6.0		%

Maturities of lease liabilities as of June 30, 2019 were as follows:

	Finance			Operating
Remaining of 2019	$	3,563		$	6,122
2020	4,301			10,759
2021	2,825			8,030
2022	1,952			6,110
2023	1,037			5,468
Thereafter	998			15,104
Total	14,676			51,593
Less: Present value discount	(1,170		)	(8,988		)
Lease liability	$	13,506		$	42,605

Pursuant to the Company’s adoption of the new lease accounting guidance using a modified retrospective transition approach, as permitted, comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. As previously disclosed in its 2018 Annual Report, the following table presents the Company’s future minimum operating lease commitments as of December 31, 2018:

2019	$	10,939
2020	8,764
2021	6,327
2022	4,826
2023	4,239
Thereafter	10,667
Total	$	45,762

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal Proceedings and Government Investigations

The Company is subject to periodic lawsuits, investigations and claims that arise in the ordinary course of business. The Company cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against it. Except possibly for certain of the matters described below, the Company does not believe that any currently pending legal proceeding to which the Company is a party will have a material adverse effect on its business, results of operations, cash flows or financial condition. The costs of defense and amounts that may be recovered against the Company may be covered by insurance for certain matters.

Litigation and Commercial Claims

The Company’s subsidiary in France has been involved in a dispute with a former owner of a business purchased by the Company’s French subsidiary. The former owner received a judgment in his favor in the amount of $0.4 million for payment of the contingent consideration portion of the purchase price for the business. The Company recorded an accrual for this judgment during 2016. The Company's subsidiary appealed the judgment and the entire judgment was overturned on appeal. The appeal process was completed in July 2018 in the Company's favor, and accordingly, the Company reversed the accrual as of June 30, 2018.

The Company was a defendant in a lawsuit, Triumph Aerostructures, LLC d/b/a Triumph Aerostructures-Vought Aircraft Division v. Mistras Group, Inc., pending in Texas State district court, 193rd Judicial District, Dallas County, Texas, filed September 2016. The plaintiff alleged that in 2014 Mistras delivered a defective Ultrasonic inspection system and alleged damages of approximately $2.3 million, the amount it paid for the system. In January 2018, the Company agreed to settle this matter for a payment of $1.6 million and Mistras subsequently obtained ownership of the underlying ultrasonic inspection components. A charge for $1.6 million was recorded in 2017 and payment was made in February 2018.

A Company vehicle was involved in an accident in which individuals were injured, property was damaged, and businesses allegedly impacted by the accident have claimed economic losses. One lawsuit has been filed by one of the injured individuals in the U.S. District Court for the District of Colorado, McAllister v. Mistras Group, Inc. The Company has insurance for these types of matters. Most of the claims have been settled, including the claims covered by the McAllister case, and the two remaining unresolved claims are for economic loss and property damage only, and all of the claims, including the two that have not yet been resolved, will be fully covered by the Company's insurance.

Government Investigations

In May 2015, the Company received a notice from the U.S. Environmental Protection Agency (“EPA”) that it performed a preliminary assessment at a leased facility the Company operates in Cudahy, California. Based upon the preliminary assessment, the EPA is conducting an investigation of the site, which includes taking groundwater and soil samples. The purpose of the investigation is to determine whether any hazardous materials were released from the facility. The Company has been informed that certain hazardous materials and pollutants have been found in the ground water in the general vicinity of the site and the EPA is attempting to ascertain the origination or source of these materials and pollutants. Given the historic industrial use of the site, the EPA determined that the site of the Cudahy facility should be examined, along with numerous other sites in the vicinity. In addition, in 2018, the California Department of Toxic Substances Control notified the owner of the property that it will be performing an additional investigation at the property. At this time, the Company is unable to determine whether it has any liability in connection with this matter and if so, the amount or range of any such liability, and accordingly, has not established any accruals for this matter.

Pension Related Contingencies

The workforce of certain of the Company’s subsidiaries are unionized and the terms of employment for these workers are governed by collective bargaining agreements, or CBAs.  Under these CBAs, the Company’s subsidiaries are required to contribute to the national pension funds for the unions representing these employees, which are multi-employer pension plans. The Company was notified that a significant project was awarded to another contractor in January 2018, and as a result, one of the Company’s subsidiaries experienced a significant reduction in the number of its employees covered by one of the CBAs. Under certain circumstances, such a reduction in the number of employees participating in multi-employer pension plans pursuant to this CBA could result in a complete or partial withdrawal liability to these multi-employer pension plans under the Employee Retirement Income Security Act of 1974 ("ERISA"). Management explored options to retain a level of union work that would avoid withdrawal liability to the pension plans, but concluded during the third quarter of 2018 that the Company's subsidiaries probably would not obtain sufficient union work to avoid withdrawal liability.  Therefore, the Company determined that it is probable that its subsidiary will incur a withdrawal liability related to these multi-employer pension plans. Accordingly, the Company recorded a charge of $5.9 million during the third quarter of 2018 and $0.5 million during the three and six months ended June 30, 2019 for this potential withdrawal liability. The balance of the estimated total amount of this potential liability as of June 30, 2019 is approximately $4.0 million, which is net of $2.4 million of payments made to one of the pension plans.

Severance and labor disputes

During the third quarter of 2018, the Company recorded approximately $1.2 million in charges related to labor claims for its Brazilian subsidiary, which are included within Selling, General and Administrative expenses. These claims related to employees in a company acquired by the Brazilian subsidiary in a prior period. The Company believes it is entitled to indemnification from the sellers of the acquired company for most of these charges, but has not recorded the expected recovery of indemnification for these labor claims as the amount and timing of collection is uncertain as of June 30, 2019.

The Company’s German subsidiary provides employees to customers under temporary staff leasing arrangements. In April 2017, the German Labor Lease Act was passed in Germany limiting the duration of temporary workers to eighteen months, or longer as subsequently agreed with by a customer appropriate authority.  Since the passing of the German Labor Lease Act, the Company explored selling its staff leasing services and concluded during the third quarter of 2018 that a sale would not be probable. As a result, the Company decided that it would not renew several of these leasing services contracts when they expire beginning in 2019. Due to the cap on the length of service allowed under the German Labor Lease Act, employees will have to be transitioned off the customer contracts. It is expected that the German subsidiary then will either terminate these employees, creating a severance obligation to the terminated employees, or transition them to the Company's other customers. As of June 30, 2019, the Company estimated approximately $1.4 million in severance payment obligations, which takes into account the Company's estimate with respect to the employees that would be transitioned to the German subsidiaries' other customers and is net of $0.1 million in payments and $0.1 million in reversals due to employees being transitioned to customer contracts.

Acquisition and disposition related contingencies

The Company is liable for contingent consideration in connection with certain of its acquisitions. As of June 30, 2019, total potential acquisition-related contingent consideration ranged from zero to approximately $5.6 million and would be payable upon the achievement of specific performance metrics by certain of the acquired companies over the next year. See Note 5 - Acquisitions to these condensed consolidated financial statements for further discussion of the Company’s acquisitions.

During the third quarter of 2018, the Company sold a subsidiary in the Products and Systems segment. As part of the sale, the Company entered into a three-year agreement to purchase products from the buyer, with a cumulative commitment of $2.3 million, of which $1.7 million is remaining as of June 30, 2019. The agreement is based on third party pricing and the Company's planned purchase requirements over the three year purchase period to meet the minimum contractual purchases.

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Segment Disclosure

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Segment Disclosure

Segment Disclosure

The Company’s three operating segments are:

• Services. This segment provides asset protection solutions predominantly in North America, with the largest concentration in the United States, followed by Canada, consisting primarily of NDT and inspection and engineering services that are used to evaluate the safety, structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components.

• International. This segment offers services, products and systems similar to those of the other segments to select markets within Europe, the Middle East, Africa, Asia and South America, but not to customers in China and South Korea, which are served by the Products and Systems segment.

• Products and Systems. This segment designs, manufactures, sells, installs and services the Company’s asset protection products and systems, including equipment and instrumentation, predominantly in the United States.

Costs incurred for general corporate services, including finance, legal, and certain other costs that are provided to the segments are reported within Corporate and eliminations. Sales to the International segment from the Products and Systems segment and subsequent sales by the International segment of the same items are recorded and reflected in the operating performance of both segments. Additionally, engineering charges and royalty fees charged to the Services and International segments by the Products and Systems segment are reflected in the operating performance of each segment. All such intersegment transactions are eliminated in the Company’s consolidated financial reporting.

Selected consolidated financial information by segment for the periods shown was as follows: (intercompany transactions are eliminated in Corporate and eliminations)

	Three months ended						Six months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Revenues
Services	$	161,210		$	147,718		$	301,507		$	293,313
International	37,090			41,111			72,252			79,567
Products and Systems	4,269			5,386			7,701			11,570
Corporate and eliminations	(1,953		)	(2,422		)	(4,057		)	(5,027		)
	$	200,616		$	191,793		$	377,403		$	379,423

	Three months ended					Six months ended
	June 30, 2019			June 30, 2018		June 30, 2019			June 30, 2018
Gross profit
Services	$	47,208		$	40,127	$	84,573		$	74,837
International	11,058			12,689		21,418			23,396
Products and Systems	1,825			2,213		3,064			5,103
Corporate and eliminations	(20		)	54		(110		)	(108		)
	$	60,071		$	55,083	$	108,945		$	103,228

	Three months ended						Six months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Income (loss) from operations
Services	$	20,905		$	16,328		$	24,958		$	28,603
International	2,450			2,455			2,234			3,375
Products and Systems	(405		)	(656		)	(1,733		)	(384		)
Corporate and eliminations	(7,531		)	(7,823		)	(14,436		)	(14,892		)
	$	15,419		$	10,304		$	11,023		$	16,702

Income (loss) from operations by operating segment includes intercompany transactions, which are eliminated in Corporate and eliminations.

	Three months ended					Six months ended
	June 30, 2019		June 30, 2018			June 30, 2019		June 30, 2018
Depreciation and amortization
Services	$	7,209	$	5,970		$	14,478	$	11,941
International	2,042		2,260			4,131		4,541
Products and Systems	300		366			589		729
Corporate and eliminations	50		(5		)	71		28
	$	9,601	$	8,591		$	19,269	$	17,239

	June 30, 2019		December 31, 2018
Intangible assets, net
Services	$	95,321	$	98,362
International	10,797		11,143
Products and Systems	1,275		1,438
Corporate and eliminations	360		452
	$	107,753	$	111,395

	June 30, 2019		December 31, 2018
Total assets
Services	$	548,182	$	523,506
International	152,929		146,535
Products and Systems	13,621		12,264
Corporate and eliminations	18,741		11,732
	$	733,473	$	694,037

Refer to Footnote 2 - Revenue, for revenues by geographic area for the three and six months ended June 30, 2019 and 2018.

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Repurchase of Common Stock

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Repurchase of Common Stock

Repurchase of Common Stock

The Company's Board of Directors approved a $50 million stock repurchase plan in 2015. The Company retired all its repurchased shares during the fourth quarter of 2017. There were no repurchases of common stock during the six months ended June 30, 2019, and the Board of Directors approved the termination of the stock repurchase plan effective on April 1, 2019.

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Description of Business and Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The condensed consolidated financial statements contained in this report are unaudited. In the opinion of management, the condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods of the years ending December 31, 2019 and 2018. Certain items included in these statements are based on management’s estimates. Actual results may differ from those estimates. The results of operations for any interim period are not necessarily indicative of the results expected for the year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the notes to the audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K (“2018 Annual Report”) for the year ended December 31, 2018, dated March 15, 2019.

Principles of Consolidation

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Mistras Group, Inc. and its wholly and majority-owned subsidiaries. For subsidiaries in which the Company’s ownership interest is less than 100%, the non-controlling interests are reported in stockholders’ equity in the accompanying condensed consolidated balance sheets. The non-controlling interests in net income, net of tax, is classified separately in the accompanying condensed consolidated statements of income. All significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassification

Reclassification

Certain amounts in prior periods have been reclassified to conform to the current year presentation. Such reclassifications did not have a material effect on the Company's financial condition or results of operations as previously reported.

Income Taxes

The Company has completed the accounting for the adoption of the Tax Act. The amounts recorded in 2019 for the Tax Act related to the calculations of the GILTI, FDII, executive compensation and meals and entertainment are the Company’s best estimates based on the current data and guidance available. The Company is continuing to evaluate the state tax conformity to the Tax Act, including the GILTI provisions. Given the complexity of the new GILTI tax rules, the Company is continuing to evaluate this provision of the Tax Act and the application of ASC 740. Under U.S. GAAP, the Company is allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). In 2018, the Company made an accounting policy election to account for these effects under the period cost method.

Mistras and its subsidiaries file tax returns in the U.S., including various state and local returns, and in other foreign jurisdictions. The Company believes adequate provision has been made for all income tax uncertainties.  

Income Taxes

On December 22, 2017, the United States enacted fundamental changes to federal tax law following the passage of the Tax Cuts and Jobs Act (the “Tax Act”).

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842), which the Company adopted as of January 1, 2019. Topic 842 requires the recognition of lease rights and obligations as assets and liabilities on the balance sheet. The Company elected the modified retrospective method permitted by the standard, upon which prior-period information has not been restated.

The standard provided for several practical expedient options for use in transition. The Company elected to utilize the “package of practical expedients,” which permits the Company not to reassess previous conclusions reached on lease identification, lease classification and initial direct costs. The Company also elected to utilize the practical expedient available to not separate lease and non-lease components within the lease and has therefore accounted for all lease components as a single lease component.

Adoption of the new standard resulted in the recording of a right-of-use (ROU) asset and liability related to the Company’s operating leases of approximately $38 million as of January 1, 2019. The new standard did not have a material impact to our statements of income or cash flows.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350). This amendment eliminates Step Two of the goodwill impairment test. Under the amendments in this update, entities should perform the annual goodwill impairment test by comparing the carrying value of their reporting units to their fair value. An entity should record an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Tax deductibility of goodwill should be considered in evaluating any reporting unit's impairment loss to be taken. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company early adopted ASU 2017-04 in the third quarter of 2017 for its condensed consolidated financial statements and related disclosures.

Revenue

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the condensed consolidated balance sheet. Amounts are generally billed as work progresses in accordance with agreed-upon contractual terms, generally at periodic intervals (e.g., weekly, bi-weekly or monthly). Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, the Company sometimes receives advances or deposits from our customers before revenue is recognized, resulting in contract liabilities. These assets and liabilities are aggregated on an individual contract basis and reported on the condensed consolidated balance sheet at the end of each reporting period within accrued expenses and other current liabilities.

Revenue

The majority of the Company's revenues are derived from providing services on a time and material basis and are short-term in nature. The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which was adopted on January 1, 2018.

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.  A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and is, therefore, not distinct. The Company provides highly integrated and bundled inspection services to its customers. Some of our contracts have multiple performance obligations, most commonly due to the contract providing both goods and services. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is a relative selling price based on price lists.

Contract modifications are not routine in the performance of our contracts. Generally, when contracts are modified, the modification is to account for changes in scope to the goods and services that are provided. In most instances, contract modifications are for goods or services that are distinct, and, therefore, are accounted for as a separate contract.

Our performance obligations are satisfied over time as work progresses or at a point in time. The majority of our revenue recognized over time as work progresses is related to our service deliverables, which includes providing testing, inspection and mechanical services to our customers. Revenue is recognized over time based on time and material incurred to date which best portrays the transfer of control to the customer. The Company also utilizes an available practical expedient that provides for revenue to be recognized in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date. Fixed fee arrangements are determined based on expected labor, material, and overhead to be consumed on fulfillment of such services. Revenue is recognized on a cost-to-cost method tracked on an input basis.

The majority of our revenue recognized at a point in time is related to product sales when the customer obtains control of the asset, which is generally upon shipment to the customer. Contract costs include labor, material and overhead.

The Company expects any significant remaining performance obligations to be satisfied within one year.

Contract Estimates

The majority of our revenues are short-term in nature. The Company has many Master Service Agreements (MSAs) that specify an overall framework and contract terms when the Company and customers agree upon services or products to be provided. The actual contracting to provide services or furnish products is triggered by a work order, purchase order, or some similar document issued pursuant to a MSA which sets forth the scope of services and/or identifies the products to be provided. From time-to-time, the Company may enter into long-term contracts, which can range from several months to several years. Revenue on such long-term contracts is recognized as work is performed based on total costs incurred to date in relation to the total estimated costs for the performance of the contract at completion. This includes contract estimates of costs to be incurred for the performance of the contract. Cost estimation is based upon the professional knowledge and experience of our project managers, engineers and financial professionals. Factors that are considered in estimating the work to be completed include the availability of materials, the effect of any delays in our project performance and the recoverability of any claims. Whenever revisions of estimates, contract costs and/or contract values indicate that the contract costs will exceed estimated revenues, thus creating a loss, a provision for the total estimated loss is recorded in that period.

Fair Value Measurements

Financial instruments not measured at fair value on a recurring basis

The Company has evaluated current market conditions and borrower credit quality and has determined that the carrying value of its long-term debt approximates fair value. The fair value of the Company’s notes payable and capital lease obligations approximates their carrying amounts based on anticipated interest rates which management believes would currently be available to the Company for similar issuances of debt.

Fair Value Measurements

The Company performs fair value measurements in accordance with the guidance provided by ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Financial instruments measured at fair value on a recurring basis

The fair value of contingent consideration liabilities was estimated using a discounted cash flow technique with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820. The significant inputs in the Level 3 measurement not supported by market activity include the probability assessments of expected future cash flows related to the acquisitions, appropriately discounted considering the uncertainties associated with the obligation, and as calculated in accordance with the terms of the applicable acquisition agreements.

Leases

Leases

The Company leases certain office and operating facilities, machinery, equipment, and vehicles. Concurrent with the adoption of ASC 842, the Company recognized a right-of-use (ROU) asset and lease liability based on the present value of the future lease payments over the lease term for each lease agreement. The Company has elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less and will continue to recognize lease expense for these leases on a straight-line basis over the lease term. The Company has leases with both lease components and non-lease components, such as common area maintenance, utilities, or other repairs and maintenance. For all asset classes, the Company decided to utilize the practical expedient to include both fixed lease components and fixed non-lease components in calculating the ROU asset and lease liability. The Company identified variable lease payments, such as maintenance payments based on actual activities performed or costs incurred, at lease commencement by assessing the nature of the payment provisions, including whether the payments are subject to a minimum charge. Many of our leases include one or more options to renew. When it is reasonably certain that we will exercise the option, we include the impact of the option in the lease term for purposes of determining future lease payments. As the Company is unable to determine the discount rate implicit in its lease agreements, the Company uses its incremental borrowing rate on the commencement date to calculate the present value of future payments.

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Revenue (Tables)

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregated Revenues by Industry and Key Geographic Location

The following series of tables present our disaggregated revenues:

Revenue by industry was as follows:

Three Months Ended June 30, 2019	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	109,103	$	11,767	$	465	$	—		$	121,335
Aerospace & Defense	13,511		10,504		315		—			24,330
Industrials	19,638		5,459		647		—			25,744
Power generation & Transmission	8,352		2,499		619		—			11,470
Other Process Industries	6,384		2,504		68		—			8,956
Infrastructure, Research & Engineering	2,806		2,517		1,059		—			6,382
Other	1,416		1,840		1,096		(1,953		)	2,399
Total	$	161,210	$	37,090	$	4,269	$	(1,953	)	$	200,616

Three Months Ended June 30, 2018	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	95,288	$	9,716	$	375	$	—		$	105,379
Aerospace & Defense	13,371		14,086		770		—			28,227
Industrials	16,607		6,942		925		—			24,474
Power generation & Transmission	9,137		2,806		554		—			12,497
Other Process Industries	6,138		2,909		33		—			9,080
Infrastructure, Research & Engineering	3,914		2,552		1,261		—			7,727
Other	3,263		2,100		1,468		(2,422		)	4,409
Total	$	147,718	$	41,111	$	5,386	$	(2,422	)	$	191,793

Six Months Ended June 30, 2019	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	200,769	$	21,472	$	480	$	—		$	222,721
Aerospace & Defense	26,305		22,158		622		—			49,085
Industrials	35,762		10,534		1,079		—			47,375
Power generation & Transmission	14,614		3,921		2,000		—			20,535
Other Process Industries	12,702		4,746		73		—			17,521
Infrastructure, Research & Engineering	5,396		5,250		1,905		—			12,551
Other	5,959		4,171		1,542		(4,057		)	7,615
Total	$	301,507	$	72,252	$	7,701	$	(4,057	)	$	377,403

Six Months Ended June 30, 2018	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	197,036	$	17,844	$	937	$	—		$	215,817
Aerospace & Defense	25,828		28,551		1,436		—			55,815
Industrials	28,324		13,342		1,465		—			43,131
Power generation & Transmission	17,038		3,526		2,110		—			22,674
Other Process Industries	11,545		4,699		38		—			16,282
Infrastructure, Research & Engineering	6,094		5,071		1,761		—			12,926
Other	7,448		6,534		3,823		(5,027		)	12,778
Total	$	293,313	$	79,567	$	11,570	$	(5,027	)	$	379,423

Revenue per key geographic location was as follows:

Three Months Ended June 30, 2019	Services		International		Products		Corp/Elim			Total
United States	$	131,880	$	57	$	2,977	$	(1,274	)	$	133,640
Other Americas	28,804		1,686		71		(207		)	30,354
Europe	271		33,740		436		(472		)	33,975
Asia-Pacific	255		1,607		785		—			2,647
Total	$	161,210	$	37,090	$	4,269	$	(1,953	)	$	200,616

Three Months Ended June 30, 2018	Services		International		Products		Corp/Elim			Total
United States	$	122,835	$	157	$	2,782	$	(649	)	$	125,125
Other Americas	22,676		1,955		278		(743		)	24,166
Europe	2,133		37,645		815		(969		)	39,624
Asia-Pacific	74		1,354		1,511		(61		)	2,878
Total	$	147,718	$	41,111	$	5,386	$	(2,422	)	$	191,793

Six Months Ended June 30, 2019	Services		International		Products		Corp/Elim			Total
United States	$	245,015	$	334	$	4,947	$	(2,554	)	$	247,742
Other Americas	55,513		3,915		137		(264		)	59,301
Europe	698		65,280		857		(1,235		)	65,600
Asia-Pacific	281		2,723		1,760		(4		)	4,760
Total	$	301,507	$	72,252	$	7,701	$	(4,057	)	$	377,403

Six Months Ended June 30, 2018	Services		International		Products		Corp/Elim			Total
United States	$	246,398	$	424	$	6,040	$	(1,746	)	$	251,116
Other Americas	44,459		3,857		360		(996		)	47,680
Europe	2,288		71,845		1,934		(2,195		)	73,872
Asia-Pacific	168		3,441		3,236		(90		)	6,755
Total	$	293,313	$	79,567	$	11,570	$	(5,027	)	$	379,423

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Share-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2019

Share-based Payment Arrangement [Abstract]

Schedule of Stock Option Activity

The following table sets forth a summary of the stock option activity, weighted average exercise prices and options outstanding as of June 30, 2019 and June 30, 2018:

	Six months ended June 30,
	2019				2018
	Common Stock Options		Weighted Average Exercise Price		Common Stock Options	Weighted Average Exercise Price
Outstanding at beginning of period:	2,105		$	13.47	2,130	$	13.43
Granted	—		$	—	—	$	—
Exercised	(4	)	$	10.00	—	$	—
Expired or forfeited	(7	)	$	10.00	—	$	—
Outstanding at end of period:	2,094		$	13.48	2,130	$	13.43

Schedule of Vesting Activity of Restricted Stock Unit Awards

A summary of the vesting activity of restricted stock unit awards, with the respective fair value of the awards, is as follows:

	Six months ended June 30,
	2019		2018
Restricted stock awards vested	77		35
Fair value of awards vested	$	1,052	$	704

Schedule of Fully-vested Common Stock Issued to Non-employee Directors

A summary of the fully-vested common stock the Company issued to its five non-employee directors, in connection with its non-employee director compensation plan, is as follows:

	Six months ended June 30,
	2019		2018
Awards issued	15		10
Grant date fair value of awards issued	$	210	$	200

Schedule of Company's Outstanding, Nonvested Restricted Share Units and Performance Restricted Stock Units

A summary of the Company's outstanding, non-vested restricted share units is as follows:

	Six months ended June 30,
	2019				2018
	Units		Weighted Average Grant-Date Fair Value		Units		Weighted Average Grant-Date Fair Value
Outstanding at beginning of period:	443		$	20.55	532		$	21.05
Granted	334		$	14.04	211		$	19.20
Released	(77	)	$	19.88	(35	)	$	21.44
Forfeited	(23	)	$	19.35	(24	)	$	20.17
Outstanding at end of period:	677		$	17.46	684		$	20.49

A summary of the Company's PRSU activity is as follows:

	Six months ended June 30,
	2019				2018
	Units		Weighted Average Grant-Date Fair Value		Units		Weighted Average Grant-Date Fair Value
Outstanding at beginning of period:	277		$	17.80	278		$	17.00
Granted	190		$	13.63	123		$	19.46
Performance condition adjustments	(3	)	$	18.46	(4	)	$	19.67
Released	(77	)	$	15.86	(61	)	$	15.04
Forfeited	—		$	—	(12	)	$	16.16
Outstanding at end of period:	387		$	15.94	324		$	18.15

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Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Schedule of Computations of Basic and Diluted Earnings per Share

The following table sets forth the computations of basic and diluted earnings per share:

	Three months ended				Six months ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Basic earnings per share:
Numerator:
Net income attributable to Mistras Group, Inc.	$	7,431	$	6,000	$	2,138	$	8,908
Denominator:
Weighted average common shares outstanding	28,657		28,346		28,616		28,325
Basic earnings per share	$	0.26	$	0.21	$	0.07	$	0.31
Diluted earnings per share:
Numerator:
Net income attributable to Mistras Group, Inc.	$	7,431	$	6,000	$	2,138	$	8,908
Denominator:
Weighted average common shares outstanding	28,657		28,346		28,616		28,325
Dilutive effect of stock options outstanding	46		660		131		702
Dilutive effect of restricted stock units outstanding	159		328		171		322
	28,862		29,334		28,918		29,349
Diluted earnings per share	$	0.26	$	0.20	$	0.07	$	0.30

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Acquisitions (Tables)

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Schedule of Acquisition-Related Expenses

In the course of its acquisition activities, the Company incurs costs in connection with due diligence, professional fees, and other expenses. Additionally, the Company adjusts the fair value of acquisition-related contingent consideration liabilities on a quarterly basis. These amounts are recorded as acquisition-related expense (benefit), net, on the condensed consolidated statements of income and were as follows for the three and six months ended June 30, 2019 and 2018:

	Three months ended June 30,					Six months ended June 30,
	2019		2018			2019		2018
Due diligence, professional fees and other transaction costs	$	182	$	(409	)	$	330	$	(370	)
Adjustments to fair value of contingent consideration liabilities	367		43			672		(990		)
Acquisition-related expense (benefit), net	$	549	$	(366	)	$	1,002	$	(1,360	)

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Accounts Receivable, net (Tables)

6 Months Ended

Jun. 30, 2019

Receivables [Abstract]

Schedule of Accounts Receivable, Net

Accounts receivable consisted of the following:

	June 30, 2019			December 31, 2018
Trade accounts receivable	$	160,978		$	152,511
Allowance for doubtful accounts	(5,935		)	(4,187		)
Accounts receivable, net	$	155,043		$	148,324

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Property, Plant and Equipment, net (Tables)

6 Months Ended

Jun. 30, 2019

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant and Equipment, Net

Property, plant and equipment consisted of the following:

	Useful Life (Years)	June 30, 2019			December 31, 2018
Land		$	2,680		$	2,680
Buildings and improvements	30-40	24,408			24,338
Office furniture and equipment	5-8	16,791			16,170
Machinery and equipment	5-7	218,281			208,245
		262,160			251,433
Accumulated depreciation and amortization		(166,718		)	(157,538		)
Property, plant and equipment, net		$	95,442		$	93,895

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Goodwill (Tables)

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

Changes in the carrying amount of goodwill by segment is shown below:

	Services		International			Products and Systems		Total
Balance at December 31, 2018	$	243,476	$	35,783		$	—	$	279,259
Goodwill acquired during the period	—		—			—		—
Adjustments to preliminary purchase price allocations	—		—			—		—
Foreign currency translation	3,963		(205		)	—		3,758
Balance at June 30, 2019	$	247,439	$	35,578		$	—	$	283,017

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Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2019

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Schedule of Gross Amount, Accumulated Amortization and Net Carrying Amount of Intangibles

The gross amount, accumulated amortization and net carrying amount of intangible assets were as follows:

		June 30, 2019							December 31, 2018
	Useful Life (Years)	Gross Amount		Accumulated Amortization			Net Carrying Amount		Gross Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	5-14	$	113,154	$	(64,632	)	$	48,522	$	112,624	$	(60,993	)	$	51,631
Software/Technology	3-15	70,348		(15,896		)	54,452		67,240		(13,319		)	53,921
Covenants not to compete	2-5	12,669		(11,277		)	1,392		12,593		(10,825		)	1,768
Other	2-12	10,381		(6,994		)	3,387		10,317		(6,242		)	4,075
Total		$	206,552	$	(98,799	)	$	107,753	$	202,774	$	(91,379	)	$	111,395

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Accrued Expenses and Other Current Liabilities (Tables)

6 Months Ended

Jun. 30, 2019

Payables and Accruals [Abstract]

Schedule of Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

	June 30, 2019		December 31, 2018
Accrued salaries, wages and related employee benefits	$	30,367	$	29,959
Contingent consideration, current portion	3,095		1,687
Accrued workers’ compensation and health benefits	4,859		5,086
Deferred revenue	4,067		5,046
Pension accrual	4,009		5,585
Right-of-use liability - operating	9,575		—
Other accrued expenses	26,925		26,532
Total accrued expenses and other current liabilities	$	82,897	$	73,895

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Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

Long-term debt consisted of the following:

	June 30, 2019			December 31, 2018
Senior credit facility	$	164,397		$	181,656
Senior secured term loan, net of debt issuance costs of $0.1 million	97,407			99,897
Notes payable	71			68
Other	8,562			8,999
Total debt	270,437			290,620
Less: Current portion	(7,056		)	(6,833		)
Long-term debt, net of current portion	$	263,381		$	283,787

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Schedule of Changes in Fair Value of Level 3 Contingent Consideration

The following table represents the changes in the fair value of Level 3 contingent consideration:

	Six months ended June 30,
	2019		2018
Beginning balance	$	2,365	$	5,508
Acquisitions	—		—
Payments	—		(1,506		)
Accretion of liability	75		108
Revaluation	597		(1,098		)
Foreign currency translation	58		(105		)
Ending balance	$	3,095	$	2,907

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Leases (Tables)

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Schedule of Supplemental Balance Sheet Information

The Company’s Condensed Consolidated Balance Sheet includes the following related to operating leases:

Leases	Classification	June 30, 2019
Assets
Right-of-use assets	Other Assets	$	41,868
Liabilities
Right-of-use liability - current	Accrued and other current liabilities	$	9,575
Right-of-use liability - long term	Other liabilities	33,030
Total right-of-use liabilities		$	42,605

Schedule of Components of Lease Costs and Other Information Related to Leases

The components of lease costs were as follows:

	Classification	Three months ended June 30, 2019		Six months ended June 30, 2019
Finance lease expense
Amortization of ROU assets	Depreciation and amortization	$	1,226	$	2,403
Interest on lease liabilities	Interest expense	189		380
Operating lease expense	Costs of goods sold or Selling, General & Administrative expenses	3,139		6,259
Short-term lease expense	Costs of goods sold or Selling, General & Administrative expenses	2		6
Variable lease expense	Costs of goods sold or Selling, General & Administrative expenses	273		518
Total		$	4,829	$	9,566

Other information related to leases was as follows:

	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities for finance leases
Finance - financing cash flows	$	2,411
Finance - operating cash flows	$	380
Operating - operating cash flows	$	6,196
ROU assets obtained in the exchange for lease liabilities
Finance leases	$	2,887
Operating leases	$	8,962
Weighted average remaining lease term (in years)
Finance leases	5.8
Operating leases	6.0
Weighted average discount rate
Finance leases	6.3		%
Operating leases	6.0		%

Schedule of Maturities of Finance Lease Liabilities

Maturities of lease liabilities as of June 30, 2019 were as follows:

	Finance			Operating
Remaining of 2019	$	3,563		$	6,122
2020	4,301			10,759
2021	2,825			8,030
2022	1,952			6,110
2023	1,037			5,468
Thereafter	998			15,104
Total	14,676			51,593
Less: Present value discount	(1,170		)	(8,988		)
Lease liability	$	13,506		$	42,605

Schedule of Maturities of Finance Lease Liabilities

Maturities of lease liabilities as of June 30, 2019 were as follows:

	Finance			Operating
Remaining of 2019	$	3,563		$	6,122
2020	4,301			10,759
2021	2,825			8,030
2022	1,952			6,110
2023	1,037			5,468
Thereafter	998			15,104
Total	14,676			51,593
Less: Present value discount	(1,170		)	(8,988		)
Lease liability	$	13,506		$	42,605

Schedule of Future Minimum Operating Lease Commitments Under Previous Lease Accounting Guidance

Pursuant to the Company’s adoption of the new lease accounting guidance using a modified retrospective transition approach, as permitted, comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. As previously disclosed in its 2018 Annual Report, the following table presents the Company’s future minimum operating lease commitments as of December 31, 2018:

2019	$	10,939
2020	8,764
2021	6,327
2022	4,826
2023	4,239
Thereafter	10,667
Total	$	45,762

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Segment Disclosure (Tables)

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Schedule of Consolidated Financial Information by Segment

Selected consolidated financial information by segment for the periods shown was as follows: (intercompany transactions are eliminated in Corporate and eliminations)

	Three months ended						Six months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Revenues
Services	$	161,210		$	147,718		$	301,507		$	293,313
International	37,090			41,111			72,252			79,567
Products and Systems	4,269			5,386			7,701			11,570
Corporate and eliminations	(1,953		)	(2,422		)	(4,057		)	(5,027		)
	$	200,616		$	191,793		$	377,403		$	379,423

	Three months ended					Six months ended
	June 30, 2019			June 30, 2018		June 30, 2019			June 30, 2018
Gross profit
Services	$	47,208		$	40,127	$	84,573		$	74,837
International	11,058			12,689		21,418			23,396
Products and Systems	1,825			2,213		3,064			5,103
Corporate and eliminations	(20		)	54		(110		)	(108		)
	$	60,071		$	55,083	$	108,945		$	103,228

	Three months ended						Six months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Income (loss) from operations
Services	$	20,905		$	16,328		$	24,958		$	28,603
International	2,450			2,455			2,234			3,375
Products and Systems	(405		)	(656		)	(1,733		)	(384		)
Corporate and eliminations	(7,531		)	(7,823		)	(14,436		)	(14,892		)
	$	15,419		$	10,304		$	11,023		$	16,702

Income (loss) from operations by operating segment includes intercompany transactions, which are eliminated in Corporate and eliminations.

	Three months ended					Six months ended
	June 30, 2019		June 30, 2018			June 30, 2019		June 30, 2018
Depreciation and amortization
Services	$	7,209	$	5,970		$	14,478	$	11,941
International	2,042		2,260			4,131		4,541
Products and Systems	300		366			589		729
Corporate and eliminations	50		(5		)	71		28
	$	9,601	$	8,591		$	19,269	$	17,239

	June 30, 2019		December 31, 2018
Intangible assets, net
Services	$	95,321	$	98,362
International	10,797		11,143
Products and Systems	1,275		1,438
Corporate and eliminations	360		452
	$	107,753	$	111,395

	June 30, 2019		December 31, 2018
Total assets
Services	$	548,182	$	523,506
International	152,929		146,535
Products and Systems	13,621		12,264
Corporate and eliminations	18,741		11,732
	$	733,473	$	694,037

Refer to Footnote 2 - Revenue, for revenues by geographic area for the three and six months ended June 30, 2019 and 2018.

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Description of Business and Basis of Presentation (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Jan. 01, 2019
Concentration Risk [Line Items]
Effective income tax rate	37.00%	29.00%	45.00%	31.00%
ROU operating assets	$ 41,868		$ 41,868
ROU operating lease liabilities	$ 42,605		$ 42,605
ASU 2016-02
Concentration Risk [Line Items]
ROU operating assets					$ 38,000
ROU operating lease liabilities					$ 38,000

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Revenue - Additional Information (Details) $ in Millions	6 Months Ended
	Jun. 30, 2019 USD ($)
Revenue from Contract with Customer [Abstract]
Revenue, remaining performance obligation, expected timing of satisfaction period	1 year
Revenue recognized that was included in contract liability balance at the beginning of the year	$ 2.7
Revenue, practical expedient, incremental cost of obtaining a contract, maximum period	1 year

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Revenue - Disaggregation of Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Disaggregation of Revenue [Line Items]
Revenues	$ 200,616	$ 191,793	$ 377,403	$ 379,423
United States
Disaggregation of Revenue [Line Items]
Revenues	133,640	125,125	247,742	251,116
Other Americas
Disaggregation of Revenue [Line Items]
Revenues	30,354	24,166	59,301	47,680
Europe
Disaggregation of Revenue [Line Items]
Revenues	33,975	39,624	65,600	73,872
Asia-Pacific
Disaggregation of Revenue [Line Items]
Revenues	2,647	2,878	4,760	6,755
Oil & Gas
Disaggregation of Revenue [Line Items]
Revenues	121,335	105,379	222,721	215,817
Aerospace & Defense
Disaggregation of Revenue [Line Items]
Revenues	24,330	28,227	49,085	55,815
Industrials
Disaggregation of Revenue [Line Items]
Revenues	25,744	24,474	47,375	43,131
Power generation & Transmission
Disaggregation of Revenue [Line Items]
Revenues	11,470	12,497	20,535	22,674
Other Process Industries
Disaggregation of Revenue [Line Items]
Revenues	8,956	9,080	17,521	16,282
Infrastructure, Research & Engineering
Disaggregation of Revenue [Line Items]
Revenues	6,382	7,727	12,551	12,926
Other
Disaggregation of Revenue [Line Items]
Revenues	2,399	4,409	7,615	12,778
Operating segments | Services
Disaggregation of Revenue [Line Items]
Revenues	161,210	147,718	301,507	293,313
Operating segments | Services | United States
Disaggregation of Revenue [Line Items]
Revenues	131,880	122,835	245,015	246,398
Operating segments | Services | Other Americas
Disaggregation of Revenue [Line Items]
Revenues	28,804	22,676	55,513	44,459
Operating segments | Services | Europe
Disaggregation of Revenue [Line Items]
Revenues	271	2,133	698	2,288
Operating segments | Services | Asia-Pacific
Disaggregation of Revenue [Line Items]
Revenues	255	74	281	168
Operating segments | Services | Oil & Gas
Disaggregation of Revenue [Line Items]
Revenues	109,103	95,288	200,769	197,036
Operating segments | Services | Aerospace & Defense
Disaggregation of Revenue [Line Items]
Revenues	13,511	13,371	26,305	25,828
Operating segments | Services | Industrials
Disaggregation of Revenue [Line Items]
Revenues	19,638	16,607	35,762	28,324
Operating segments | Services | Power generation & Transmission
Disaggregation of Revenue [Line Items]
Revenues	8,352	9,137	14,614	17,038
Operating segments | Services | Other Process Industries
Disaggregation of Revenue [Line Items]
Revenues	6,384	6,138	12,702	11,545
Operating segments | Services | Infrastructure, Research & Engineering
Disaggregation of Revenue [Line Items]
Revenues	2,806	3,914	5,396	6,094
Operating segments | Services | Other
Disaggregation of Revenue [Line Items]
Revenues	1,416	3,263	5,959	7,448
Operating segments | International
Disaggregation of Revenue [Line Items]
Revenues	37,090	41,111	72,252	79,567
Operating segments | International | United States
Disaggregation of Revenue [Line Items]
Revenues	57	157	334	424
Operating segments | International | Other Americas
Disaggregation of Revenue [Line Items]
Revenues	1,686	1,955	3,915	3,857
Operating segments | International | Europe
Disaggregation of Revenue [Line Items]
Revenues	33,740	37,645	65,280	71,845
Operating segments | International | Asia-Pacific
Disaggregation of Revenue [Line Items]
Revenues	1,607	1,354	2,723	3,441
Operating segments | International | Oil & Gas
Disaggregation of Revenue [Line Items]
Revenues	11,767	9,716	21,472	17,844
Operating segments | International | Aerospace & Defense
Disaggregation of Revenue [Line Items]
Revenues	10,504	14,086	22,158	28,551
Operating segments | International | Industrials
Disaggregation of Revenue [Line Items]
Revenues	5,459	6,942	10,534	13,342
Operating segments | International | Power generation & Transmission
Disaggregation of Revenue [Line Items]
Revenues	2,499	2,806	3,921	3,526
Operating segments | International | Other Process Industries
Disaggregation of Revenue [Line Items]
Revenues	2,504	2,909	4,746	4,699
Operating segments | International | Infrastructure, Research & Engineering
Disaggregation of Revenue [Line Items]
Revenues	2,517	2,552	5,250	5,071
Operating segments | International | Other
Disaggregation of Revenue [Line Items]
Revenues	1,840	2,100	4,171	6,534
Operating segments | Products
Disaggregation of Revenue [Line Items]
Revenues	4,269	5,386	7,701	11,570
Operating segments | Products | United States
Disaggregation of Revenue [Line Items]
Revenues	2,977	2,782	4,947	6,040
Operating segments | Products | Other Americas
Disaggregation of Revenue [Line Items]
Revenues	71	278	137	360
Operating segments | Products | Europe
Disaggregation of Revenue [Line Items]
Revenues	436	815	857	1,934
Operating segments | Products | Asia-Pacific
Disaggregation of Revenue [Line Items]
Revenues	785	1,511	1,760	3,236
Operating segments | Products | Oil & Gas
Disaggregation of Revenue [Line Items]
Revenues	465	375	480	937
Operating segments | Products | Aerospace & Defense
Disaggregation of Revenue [Line Items]
Revenues	315	770	622	1,436
Operating segments | Products | Industrials
Disaggregation of Revenue [Line Items]
Revenues	647	925	1,079	1,465
Operating segments | Products | Power generation & Transmission
Disaggregation of Revenue [Line Items]
Revenues	619	554	2,000	2,110
Operating segments | Products | Other Process Industries
Disaggregation of Revenue [Line Items]
Revenues	68	33	73	38
Operating segments | Products | Infrastructure, Research & Engineering
Disaggregation of Revenue [Line Items]
Revenues	1,059	1,261	1,905	1,761
Operating segments | Products | Other
Disaggregation of Revenue [Line Items]
Revenues	1,096	1,468	1,542	3,823
Corp/Elim
Disaggregation of Revenue [Line Items]
Revenues	(1,953)	(2,422)	(4,057)	(5,027)
Corp/Elim | United States
Disaggregation of Revenue [Line Items]
Revenues	(1,274)	(649)	(2,554)	(1,746)
Corp/Elim | Other Americas
Disaggregation of Revenue [Line Items]
Revenues	(207)	(743)	(264)	(996)
Corp/Elim | Europe
Disaggregation of Revenue [Line Items]
Revenues	(472)	(969)	(1,235)	(2,195)
Corp/Elim | Asia-Pacific
Disaggregation of Revenue [Line Items]
Revenues	0	(61)	(4)	(90)
Corp/Elim | Oil & Gas
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Corp/Elim | Aerospace & Defense
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Corp/Elim | Industrials
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Corp/Elim | Power generation & Transmission
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Corp/Elim | Other Process Industries
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Corp/Elim | Infrastructure, Research & Engineering
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Corp/Elim | Other
Disaggregation of Revenue [Line Items]
Revenues	$ (1,953)	$ (2,422)	$ (4,057)	$ (5,027)

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Share-Based Compensation - Equity Incentive Plans (Details)	6 Months Ended
	Jun. 30, 2019 plan shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of employee stock ownership plans (plan) | plan	3
2007 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards that may be granted (in shares)	0
2009 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards that may be granted (in shares)	0

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Share-Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation costs	$ 0		$ 0
Common Stock Options (in shares)
Outstanding at the beginning of the period: (in shares)			2,105	2,130
Granted (in shares)			0	0
Exercised (in shares)			(4)	0
Expired or forfeited (in shares)			(7)	0
Outstanding at the end of the period: (in shares)	2,094	2,130	2,094	2,130
Weighted Average Exercise Price (in dollar per share)
Outstanding at the beginning of period: (in dollars per share)			$ 13.47	$ 13.43
Granted (in dollars per share)			0.00	0.00
Exercised (in dollars per share)			10.00	0.00
Expired or forfeited (in dollars per share)			10.00	0.00
Outstanding at the end of period: (in dollars per share)	$ 13.48	$ 13.43	$ 13.48	$ 13.43
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Recognized share-based compensation expense	$ 0	$ 0	$ 0	$ 0

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Share-Based Compensation - Restricted Stock Unit Awards - Narrative (Details) - Restricted Stock Unit Awards - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Recognized share-based compensation expense (benefit)	$ 1.1	$ 1.2	$ 2.0	$ 2.0
Unrecognized compensation cost, net of estimated forfeitures	$ 8.8		$ 8.8
Weighted-average period over which unrecognized compensation cost is expected to be recognized (years)			2 years 8 months 12 days

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Share-Based Compensation - Vesting Activity of Restricted Stock Unit Awards (Details) - Restricted Stock Unit Awards - USD ($) shares in Thousands, $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock awards vested (in shares)	77	35
Fair value of awards vested	$ 1,052	$ 704

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Share-Based Compensation - Fully-vested Common Stock Issued to Non-employee Directors (Details) - Common Stock - Non-employee directors shares in Thousands, $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($) director shares	Jun. 30, 2018 USD ($) shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of non-employee directors to whom fully vested common stock is granted | director	5
Awards issued (in shares) | shares	15	10
Grant date fair value of awards issued | $	$ 210	$ 200

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Share-Based Compensation - Restricted Stock Units Awards - Activity (Details) - Restricted Stock Unit Awards - $ / shares shares in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Restricted Stock Units Awards (Units)
Outstanding at beginning of period: (in shares)	443	532
Granted (in shares)	334	211
Released (in shares)	(77)	(35)
Forfeited (in shares)	(23)	(24)
Outstanding at end of period: (in shares)	677	684
Weighted Average Grant-Date Fair Value (in dollars per share)
Outstanding at the beginning of period: (in dollars per share)	$ 20.55	$ 21.05
Granted (in dollars per share)	14.04	19.20
Released (in dollars per share)	19.88	21.44
Forfeited (in dollars per share)	19.35	20.17
Outstanding at end of period: (in dollars per share)	$ 17.46	$ 20.49

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Share-Based Compensation - Performance Restricted Stock Units - Narrative (Details) - PRSUs shares in Thousands, $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019 USD ($) shares	Jun. 30, 2018 USD ($) shares	Jun. 30, 2019 USD ($) performance_metric shares	Jun. 30, 2018 USD ($) shares	Dec. 31, 2018 shares	Dec. 31, 2017 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of units increased (decreased) during the period (in shares) | shares				(8)	(3)	4
Current liability related to discretionary PSUs (less than) | $	$ 0.1		$ 0.1
Recognized share-based compensation expense (benefit) | $	0.4	$ 0.5	0.7	$ 0.6
Unrecognized compensation cost | $	$ 3.7		$ 3.7
Nonvested shares outstanding (in shares) | shares	387	324	387	324	277	278
Weighted-average period over which unrecognized compensation cost is expected to be recognized (years)			2 years 7 months 6 days
Awards granted (in shares) | shares			190	123
Executive and Senior Officers
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance period (years)			1 year
Number of performance award metrics | performance_metric			3
Requisite service period (years)			5 years
Executive and Senior Officers | Anniversary 1
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights, percentage			25.00%
Executive and Senior Officers | Anniversary 2
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights, percentage			25.00%
Executive and Senior Officers | Anniversary 3
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights, percentage			25.00%
Executive and Senior Officers | Anniversary 4
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights, percentage			25.00%

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Share-Based Compensation - Performance Restricted Stock Units - Activity (Details) - PRSUs - $ / shares shares in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Performance Restricted Stock (Units)
Outstanding at beginning of period: (in shares)	277	278
Granted (in shares)	190	123
Performance condition adjustments (in shares)	(3)	(4)
Released (in shares)	(77)	(61)
Forfeited (in shares)	0	(12)
Outstanding at end of period: (in shares)	387	324
Weighted Average Grant-Date Fair Value (in dollars per share)
Outstanding at the beginning of period: (in dollars per share)	$ 17.80	$ 17.00
Granted (in dollars per share)	13.63	19.46
Performance condition adjustments (in dollars per share)	18.46	19.67
Released (in dollars per share)	15.86	15.04
Forfeited (in dollars per share)	0.00	16.16
Outstanding at end of period: (in dollars per share)	$ 15.94	$ 18.15

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Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Basic earnings per share:
Net income attributable to Mistras Group, Inc.	$ 7,431	$ 6,000	$ 2,138	$ 8,908
Denominator:
Weighted average common shares outstanding (in shares)	28,657	28,346	28,616	28,325
Basic earnings (loss) per share (in dollars per share)	$ 0.26	$ 0.21	$ 0.07	$ 0.31
Denominator:
Weighted average common shares outstanding (in shares)	28,657	28,346	28,616	28,325
Dilutive effect of stock options outstanding (in shares)	46	660	131	702
Dilutive effect of restricted stock units outstanding (in shares)	159	328	171	322
Weighted average common shares outstanding, diluted (in shares)	28,862	29,334	28,918	29,349
Diluted earnings (loss) per share (in dollars per share)	$ 0.26	$ 0.20	$ 0.07	$ 0.30

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Acquisitions - Additional Information (Details) $ in Millions	3 Months Ended	6 Months Ended
	Dec. 31, 2018 USD ($) entity	Jun. 30, 2019 entity	Jun. 30, 2018 entity
Acquisitions
Number of acquisitions | entity	1	0	0
Business deductible for tax purposes	$ 83.2
Customer Relationships and Covenants Not To Compete
Acquisitions
Intangible assets acquired	$ 59.6

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Acquisitions - Acquisition-Related Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Business Combinations [Abstract]
Due diligence, professional fees and other transaction costs	$ 182	$ (409)	$ 330	$ (370)
Adjustments to fair value of contingent consideration liabilities	367	43	672	(990)
Acquisition-related expense (benefit), net	$ 549	$ (366)	$ 1,002	$ (1,360)

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Accounts Receivable, net (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Receivables [Abstract]
Trade accounts receivable	$ 160,978	$ 152,511
Allowance for doubtful accounts	(5,935)	(4,187)
Accounts receivable, net	155,043	148,324
Unbilled revenues accrued	$ 25,600	$ 16,100

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Accounts Receivable, net - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Unbilled revenues accrued	$ 25,600		$ 16,100		$ 25,600
Bad debt provision (reversal) for doubtful accounts receivables	(2,693)			$ 0	2,798	$ 0
Renewable Energy Industry Customer | Services
Accounts, Notes, Loans and Financing Receivable [Line Items]
Bad debt provision (reversal) for doubtful accounts receivables	$ (1,000)	$ 5,700	$ 700
Recovery from unrelated bad debt provision		$ 200			$ 1,900

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Property, Plant and Equipment, net (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Property, Plant and Equipment, net
Property, plant and equipment, gross	$ 262,160		$ 262,160		$ 251,433
Accumulated depreciation and amortization	(166,718)		(166,718)		(157,538)
Property, plant and equipment, net	95,442		95,442		93,895
Depreciation expense	6,100	$ 6,100	12,200	$ 12,200
Land
Property, Plant and Equipment, net
Property, plant and equipment, gross	2,680		2,680		2,680
Buildings and improvements
Property, Plant and Equipment, net
Property, plant and equipment, gross	24,408		$ 24,408		24,338
Buildings and improvements | Minimum
Property, Plant and Equipment, net
Useful Life (Years)			30 years
Buildings and improvements | Maximum
Property, Plant and Equipment, net
Useful Life (Years)			40 years
Office furniture and equipment
Property, Plant and Equipment, net
Property, plant and equipment, gross	16,791		$ 16,791		16,170
Office furniture and equipment | Minimum
Property, Plant and Equipment, net
Useful Life (Years)			5 years
Office furniture and equipment | Maximum
Property, Plant and Equipment, net
Useful Life (Years)			8 years
Machinery and equipment
Property, Plant and Equipment, net
Property, plant and equipment, gross	$ 218,281		$ 218,281		$ 208,245
Machinery and equipment | Minimum
Property, Plant and Equipment, net
Useful Life (Years)			5 years
Machinery and equipment | Maximum
Property, Plant and Equipment, net
Useful Life (Years)			7 years

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Goodwill - Changes in Carrying Amount of Goodwill (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Goodwill [Roll Forward]
Balance at December 31, 2018	$ 279,259
Goodwill acquired during the period	0
Adjustments to preliminary purchase price allocations	0
Foreign currency translation	3,758
Balance at June 30, 2019	283,017
Services
Goodwill [Roll Forward]
Balance at December 31, 2018	243,476
Goodwill acquired during the period	0
Adjustments to preliminary purchase price allocations	0
Foreign currency translation	3,963
Balance at June 30, 2019	247,439
International
Goodwill [Roll Forward]
Balance at December 31, 2018	35,783
Goodwill acquired during the period	0
Adjustments to preliminary purchase price allocations	0
Foreign currency translation	(205)
Balance at June 30, 2019	35,578
Products and Systems
Goodwill [Roll Forward]
Balance at December 31, 2018	0
Goodwill acquired during the period	0
Adjustments to preliminary purchase price allocations	0
Foreign currency translation	0
Balance at June 30, 2019	$ 0

XML

Goodwill - Additional Information (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Goodwill [Line Items]
Goodwill cumulative impairment loss	$ 23.1	$ 23.1
Products and Systems
Goodwill [Line Items]
Goodwill cumulative impairment loss	13.2	13.2
International
Goodwill [Line Items]
Goodwill cumulative impairment loss	$ 9.9	$ 9.9

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Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Gross Amount	$ 206,552		$ 206,552		$ 202,774
Accumulated Amortization	(98,799)		(98,799)		(91,379)
Net Carrying Amount	107,753		107,753		111,395
Amortization expense	3,500	$ 2,500	7,100	$ 5,000
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Gross Amount	113,154		113,154		112,624
Accumulated Amortization	(64,632)		(64,632)		(60,993)
Net Carrying Amount	48,522		$ 48,522		51,631
Customer relationships | Minimum
Finite-Lived Intangible Assets [Line Items]
Useful Life (Years)			5 years
Customer relationships | Maximum
Finite-Lived Intangible Assets [Line Items]
Useful Life (Years)			14 years
Software/Technology
Finite-Lived Intangible Assets [Line Items]
Gross Amount	70,348		$ 70,348		67,240
Accumulated Amortization	(15,896)		(15,896)		(13,319)
Net Carrying Amount	54,452		$ 54,452		53,921
Software/Technology | Minimum
Finite-Lived Intangible Assets [Line Items]
Useful Life (Years)			3 years
Software/Technology | Maximum
Finite-Lived Intangible Assets [Line Items]
Useful Life (Years)			15 years
Covenants not to compete
Finite-Lived Intangible Assets [Line Items]
Gross Amount	12,669		$ 12,669		12,593
Accumulated Amortization	(11,277)		(11,277)		(10,825)
Net Carrying Amount	1,392		$ 1,392		1,768
Covenants not to compete | Minimum
Finite-Lived Intangible Assets [Line Items]
Useful Life (Years)			2 years
Covenants not to compete | Maximum
Finite-Lived Intangible Assets [Line Items]
Useful Life (Years)			5 years
Other
Finite-Lived Intangible Assets [Line Items]
Gross Amount	10,381		$ 10,381		10,317
Accumulated Amortization	(6,994)		(6,994)		(6,242)
Net Carrying Amount	$ 3,387		$ 3,387		$ 4,075
Other | Minimum
Finite-Lived Intangible Assets [Line Items]
Useful Life (Years)			2 years
Other | Maximum
Finite-Lived Intangible Assets [Line Items]
Useful Life (Years)			12 years

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Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Payables and Accruals [Abstract]
Accrued salaries, wages and related employee benefits	$ 30,367	$ 29,959
Contingent consideration, current portion	3,095	1,687
Accrued workers’ compensation and health benefits	4,859	5,086
Deferred revenue	4,067	5,046
Pension accrual	4,009	5,585
Right-of-use liability - operating	9,575
Other accrued expenses	26,925	26,532
Total accrued expenses and other current liabilities	$ 82,897	$ 73,895

XML

Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Total debt	$ 270,437	$ 290,620
Less: Current portion	(7,056)	(6,833)
Long-term debt, net of current portion	263,381	283,787
Senior credit facility
Debt Instrument [Line Items]
Total debt	164,397	181,656
Senior credit facility | Term A Loan Facility
Debt Instrument [Line Items]
Total debt	97,407	99,897
Debt issuance costs	100	100
Notes payable
Debt Instrument [Line Items]
Total debt	71	68
Other
Debt Instrument [Line Items]
Total debt	$ 8,562	$ 8,999

XML

Long-Term Debt - Additional Information (Details)			6 Months Ended
	Dec. 08, 2017 USD ($) quarter	Oct. 31, 2014 quarter	Jun. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)
Notes Payable and Other
Debt outstanding			$ 270,437,000	$ 290,620,000
Senior credit facility
Senior Credit Facility
Maximum borrowing capacity			300,000,000
Line of credit facility, higher borrowing capacity option			450,000,000
Maximum borrowing capacity in non-U.S. Dollar currencies			100,000,000.0
Maximum amount available for the issuance of letters of credit			20,000,000.0
Outstanding borrowings			261,800,000
Outstanding letters of credit			5,400,000
Capitalized debt modification costs			1,000,000
Amount of non-recurring charges used as threshold used for calculation of funded debt leverage ratio	$ 10,000,000.0
Number of consecutive fiscal quarters used for calculating funded debt leverage ratio | quarter	4	4
Funded debt leverage ratio at which the entity will have the benefit of lowest interest margin (less than or equal to)		1.0
Funded debt leverage ratio at which the entity will bear the maximum interest rate margin (greater than)		3.25
Additional interest rate margin if funded debt leverage ratio exceeds threshold (as a percent)		2.00%
Interest coverage ratio (greater than)		1.25
Preceding period used for calculating interest coverage ratio		12 months
Number of fiscal quarters to temporary increase funded debt leverage ratio | quarter	4
Notes Payable and Other
Debt outstanding			164,397,000	181,656,000
Senior credit facility | Through December 31, 2018
Senior Credit Facility
Funded debt leverage ratio for additional interest payment (less than)		4.25
Senior credit facility | From March 31, 2019 to September 30, 2019
Senior Credit Facility
Funded debt leverage ratio for additional interest payment (less than)		4.0
Senior credit facility | As of December 31, 2019
Senior Credit Facility
Funded debt leverage ratio for additional interest payment (less than)		3.75
Senior credit facility | Minimum
Senior Credit Facility
Temporary increase in funded debt leverage ratio	3.5
Senior credit facility | Minimum | As of March 31, 2020 and all quarterly periods thereafter
Senior Credit Facility
Funded debt leverage ratio for additional interest payment (less than)	3.50
Senior credit facility | Maximum
Senior Credit Facility
Temporary increase in funded debt leverage ratio	4.0
Senior credit facility | LIBOR
Senior Credit Facility
Reference rate, description		"LIBOR"
Senior credit facility | LIBOR | Minimum
Senior Credit Facility
Margin (as a percent)		1.00%
Senior credit facility | LIBOR | Maximum
Senior Credit Facility
Margin (as a percent)		2.00%
Senior credit facility | Base rate
Senior Credit Facility
Reference rate, description		base rate
Senior credit facility | Base rate | Minimum
Senior Credit Facility
Margin (as a percent)		(0.375%)
Senior credit facility | Base rate | Maximum
Senior Credit Facility
Margin (as a percent)		(1.25%)
Senior credit facility | Term A Loan Facility
Senior Credit Facility
Maximum borrowing capacity			100,000,000
Notes Payable and Other
Debt outstanding			$ 97,407,000	99,897,000
Notes payable
Notes Payable and Other
Interest rate (as a percent)			3.95%
Debt outstanding			$ 71,000	68,000
Other
Notes Payable and Other
Debt outstanding			$ 8,562,000	$ 8,999,000
Other | Minimum
Notes Payable and Other
Interest rate (as a percent)			0.40%
Debt monthly periodic payments			$ 1,000
Other | Maximum
Notes Payable and Other
Interest rate (as a percent)			6.20%
Debt monthly periodic payments			$ 17,000

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Fair Value Measurements (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Contingent Consideration Liability [Roll Forward]
Revaluation	$ 367	$ 43	$ 672	$ (990)
Level 3
Contingent Consideration Liability [Roll Forward]
Beginning balance			2,365	5,508
Acquisitions			0	0
Payments			0	(1,506)
Accretion of liability			75	108
Revaluation			597	(1,098)
Foreign currency translation			58	(105)
Ending balance	$ 3,095	$ 2,907	$ 3,095	$ 2,907

XML

Leases - Supplemental Balance Sheet Information (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Leases [Abstract]
Right-of-use assets	$ 41,868
Right-of-use liability - current	9,575
Right-of-use liability - long term	33,030
Total right-of-use liabilities	$ 42,605

XML

Leases - Additional Information (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)
Lessee, Lease, Description [Line Items]
ROU operating lease liabilities	$ 42,605	$ 42,605
Operating rental payments		6,196
ROU finance lease assets	15,000	15,000
Operating Lease Arrangement | Company's Headquarters
Lessee, Lease, Description [Line Items]
ROU operating lease liabilities	4,900	4,900
Operating rental payments	$ 200	$ 500

XML

Leases - Components of Lease Costs (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Finance lease expense
Amortization of ROU assets	$ 1,226	$ 2,403
Interest on lease liabilities	189	380
Operating lease expense	3,139	6,259
Short-term lease expense	2	6
Variable lease expense	273	518
Total	$ 4,829	$ 9,566

XML

Leases - Other Information Related to Leases (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Cash paid for amounts included in the measurement of lease liabilities for finance leases
Finance - financing cash flows	$ 2,411
Finance - operating cash flows	380
Operating - operating cash flows	6,196
ROU assets obtained in the exchange for lease liabilities
Finance leases	2,887
Operating leases	$ 8,962
Weighted average remaining lease term (in years)
Finance leases	5 years 9 months 18 days
Operating leases	6 years
Weighted average discount rate
Finance leases	6.30%
Operating leases	6.00%

XML

Leases - Maturity of Lease Liabilities (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Finance
Remaining of 2019	$ 3,563
2020	4,301
2021	2,825
2022	1,952
2023	1,037
Thereafter	998
Total	14,676
Less: Present value discount	(1,170)
Lease liability	13,506
Operating
Remaining of 2019	6,122
2020	10,759
2021	8,030
2022	6,110
2023	5,468
Thereafter	15,104
Total	51,593
Less: Present value discount	(8,988)
Lease liability	$ 42,605

XML

Leases - Future Minimum Operating Lease Commitments Under Previous Accounting Guidance (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Leases [Abstract]
2019	$ 10,939
2020	8,764
2021	6,327
2022	4,826
2023	4,239
Thereafter	10,667
Total	$ 45,762

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Commitments and Contingencies (Details)	1 Months Ended			3 Months Ended			6 Months Ended		12 Months Ended
	Jan. 31, 2018 USD ($)	Apr. 30, 2017	Sep. 30, 2016 USD ($)	Jun. 30, 2019 USD ($) subsidiary claim arrangement	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) subsidiary claim arrangement	Jun. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2018 USD ($)
Litigation
Number of remaining unresolved claims | claim				2			2
Charges related to potential liability for withdrawal from multi-employer pension plan				$ 0		$ 0	$ 534,000	$ 0
Pension accrual				4,009,000			4,009,000				$ 5,585,000
Payment to pension plan							2,400,000
Dispute with former owner of company's French subsidiary | Settled Litigation | AGL Services Company v. Mistras Group | Affiliated Entity
Litigation
Litigation settlement, amount awarded to other party										$ 400,000
Defective ultrasound inspection system | Settled Litigation
Litigation
Amount of damages claimed			$ 2,300,000
Defective ultrasound inspection system | Settled Litigation | Triumph Aerostructures-Vought Aircraft Division v. Mistras Group
Litigation
Litigation settlement, amount awarded to other party	$ 1,600,000
Litigation expenses									$ 1,600,000
Pension related contingencies
Litigation
Charges related to potential liability for withdrawal from multi-employer pension plan				$ 500,000	$ 5,900,000		$ 500,000
Pension related contingencies | Pending Litigation
Litigation
Number of Company's subsidiaries that could experience significant decline in employees covered by collective-bargaining arrangement | subsidiary				1			1
Number of collective-bargaining agreements with significant decline in employees covered | arrangement				1			1
Severance and labor disputes | Affiliated Entity | GERMANY | Selling, General and Administrative Expenses
Litigation
Estimated severance obligations				$ 1,400,000			$ 1,400,000
Payments of severance obligations							100,000
Reversal of severance obligations							100,000
Severance and labor disputes | Pending Litigation | NDT Do Brazil, LTDA | Selling, General and Administrative Expenses
Litigation
Contingency charges					$ 1,200,000
Severance and labor disputes | Pending Litigation | Affiliated Entity | GERMANY
Litigation
Temporary employment contract period		18 months
Acquisition-related contingencies
Litigation
Potential acquisition-related contingent consideration, low end of range				0			0
Potential acquisition-related contingent consideration, high end of range				5,600,000			$ 5,600,000
Remaining period over which potential acquisition-related contingent consideration would be payable							1 year
Products and Systems | Foreign Subsidiaries | Disposal Group, Disposed of by Sale, Not Discontinued Operations
Litigation
Term of agreement to purchase products from the buyer on sale of subsidiary					3 years
Amount of purchased commitment to buy products from the buyer on sale of subsidiary					$ 2,300,000
Remaining balance under purchase commitment agreement				$ 1,700,000			$ 1,700,000

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Segment Disclosure (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) segment	Jun. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Segment Reporting [Abstract]
Number of operating segments | segment			3
Financial information by segment
Revenues	$ 200,616	$ 191,793	$ 377,403	$ 379,423
Gross profit	60,071	55,083	108,945	103,228
Income (loss) from operations	15,419	10,304	11,023	16,702
Depreciation and amortization	9,601	8,591	19,269	17,239
Intangible assets, net	107,753		107,753		$ 111,395
Total assets	733,473		733,473		694,037
Operating segments | Services
Financial information by segment
Revenues	161,210	147,718	301,507	293,313
Gross profit	47,208	40,127	84,573	74,837
Income (loss) from operations	20,905	16,328	24,958	28,603
Depreciation and amortization	7,209	5,970	14,478	11,941
Intangible assets, net	95,321		95,321		98,362
Total assets	548,182		548,182		523,506
Operating segments | International
Financial information by segment
Revenues	37,090	41,111	72,252	79,567
Gross profit	11,058	12,689	21,418	23,396
Income (loss) from operations	2,450	2,455	2,234	3,375
Depreciation and amortization	2,042	2,260	4,131	4,541
Intangible assets, net	10,797		10,797		11,143
Total assets	152,929		152,929		146,535
Operating segments | Products and Systems
Financial information by segment
Revenues	4,269	5,386	7,701	11,570
Gross profit	1,825	2,213	3,064	5,103
Income (loss) from operations	(405)	(656)	(1,733)	(384)
Depreciation and amortization	300	366	589	729
Intangible assets, net	1,275		1,275		1,438
Total assets	13,621		13,621		12,264
Corporate and eliminations
Financial information by segment
Revenues	(1,953)	(2,422)	(4,057)	(5,027)
Gross profit	(20)	54	(110)	(108)
Income (loss) from operations	(7,531)	(7,823)	(14,436)	(14,892)
Depreciation and amortization	50	$ (5)	71	$ 28
Intangible assets, net	360		360		452
Total assets	$ 18,741		$ 18,741		$ 11,732

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Repurchase of Common Stock (Details) - Stock Repurchase Plan - USD ($)	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2015
Class of Stock [Line Items]
Stock repurchase plan, amount approved		$ 50,000,000
Repurchases of common stock (in shares)	0