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 September 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) 

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

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
	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

As of October 31, 2019, the registrant had 28,915,088 shares of common stock outstanding.

TABLE OF CONTENTS

			PAGE
PART I—FINANCIAL INFORMATION
	ITEM 1.	Financial Statements	1
		Condensed Consolidated Balance Sheets as of September 30, 2019 (unaudited) and December 31, 2018	1
		Unaudited Condensed Consolidated Statements of Income (Loss) for the three and nine months ended September 30, 2019 and September 30, 2018	2
		Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2019 and September 30, 2018	3
		Unaudited Condensed Consolidated Statements of Equity for the three and nine months ended September 30, 2019 and September 30, 2018	4
		Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and September 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	27
	ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	37
	ITEM 4	Controls and Procedures	37
PART II—OTHER INFORMATION
	ITEM 1.	Legal Proceedings	39
	ITEM 1.A.	Risk Factors	39
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
	ITEM 3.	Defaults Upon Senior Securities	39
	ITEM 4.	Mine Safety Disclosures	39
	ITEM 5.	Other Information	39
	ITEM 6.	Exhibits	40
SIGNATURES			41

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)

	September 30, 2019			December 31, 2018
ASSETS	(unaudited)
Current Assets
Cash and cash equivalents	$	14,372		$	25,544
Accounts receivable, net	148,024			148,324
Inventories	13,419			13,053
Prepaid expenses and other current assets	17,135			15,870
Total current assets	192,950			202,791
Property, plant and equipment, net	95,502			93,895
Intangible assets, net	106,893			111,395
Goodwill	283,121			279,259
Deferred income taxes	2,780			1,930
Other assets	46,781			4,767
Total assets	$	728,027		$	694,037
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	13,428		$	13,863
Accrued expenses and other current liabilities	86,452			73,895
Current portion of long-term debt	6,563			6,833
Current portion of finance lease obligations	3,751			3,922
Income taxes payable	1,049			1,958
Total current liabilities	111,243			100,471
Long-term debt, net of current portion	260,753			283,787
Obligations under finance leases, net of current portion	10,799			9,075
Deferred income taxes	27,458			23,148
Other long-term liabilities	39,428			6,482
Total liabilities	449,681			422,963
Commitments and contingencies
Equity
Preferred stock, 10,000,000 shares authorized	—			—
Common stock, $0.01 par value, 200,000,000 shares authorized, 28,915,088 and 28,562,608 shares issued	289			285
Additional paid-in capital	228,287			226,616
Retained earnings	76,784			71,553
Accumulated other comprehensive loss	(27,202		)	(27,557		)
Total Mistras Group, Inc. stockholders’ equity	278,158			270,897
Non-controlling interests	188			177
Total equity	278,346			271,074
Total liabilities and equity	$	728,027		$	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 (Loss)

(in thousands, except per share data)

	Three months ended						Nine months ended
	September 30, 2019			September 30, 2018			September 30, 2019		September 30, 2018
Revenue	$	192,192		$	182,169		$	569,595	$	561,592
Cost of revenue	129,241			124,260			386,721		389,131
Depreciation	5,182			5,577			16,160		16,902
Gross profit	57,769			52,332			166,714		155,559
Selling, general and administrative expenses	42,328			41,931			126,014		122,232
Bad debt provision for troubled customers, net of recoveries	—			—			2,798		—
Pension withdrawal expense (benefit)	(45		)	5,886			489		5,886
Gain on sale of subsidiary	—			(2,384		)	—		(2,384		)
Research and engineering	650			745			2,261		2,414
Depreciation and amortization	4,089			2,920			12,380		8,834
Acquisition-related expense (benefit), net	(32		)	217			970		(1,143		)
Income from operations	10,779			3,017			21,802		19,720
Interest expense	2,959			1,894			10,065		5,581
Income before provision for income taxes	7,820			1,123			11,737		14,139
Provision for income taxes	4,733			2,133			6,493		6,229
Net income (loss)	3,087			(1,010		)	5,244		7,910
Less: Net income (loss) attributable to non-controlling interests, net of taxes	(6		)	1			13		13
Net income (loss) attributable to Mistras Group, Inc.	$	3,093		$	(1,011	)	$	5,231	$	7,897
Earnings (loss) per common share:
Basic	$	0.11		$	(0.04	)	$	0.18	$	0.28
Diluted	$	0.11		$	(0.04	)	$	0.18	$	0.27
Weighted-average common shares outstanding:
Basic	28,800			28,429			28,678		28,360
Diluted	29,156			28,429			29,022		29,447

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 (Loss)

(in thousands)

	Three months ended						Nine months ended
	September 30, 2019			September 30, 2018			September 30, 2019		September 30, 2018
Net income (loss)	$	3,087		$	(1,010	)	$	5,244	$	7,910
Other comprehensive income:
Foreign currency translation adjustments	(5,425		)	14			355		(4,051		)
Comprehensive income (loss)	(2,338		)	(996		)	5,599		3,859
Less: comprehensive income (loss) attributable to non-controlling interest	(8		)	—			11		10
Comprehensive income (loss) attributable to Mistras Group, Inc.	$	(2,330	)	$	(996	)	$	5,588	$	3,849

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 June 30, 2019	28,685	$	286	$	228,883		$	73,691		$	(21,777	)	$	281,083		$	196		$	281,279
Net income	—	—		—			3,093			—			3,093			(6		)	3,087
Other comprehensive income, net of tax	—	—		—			—			(5,425		)	(5,425		)	(2		)	(5,427		)
Share-based payments	—	—		1,682			—			—			1,682			—			1,682
Net settlement of options and restricted stock units	230	3		(2,278		)	—			—			(2,275		)	—			(2,275		)
Balance at September 30, 2019	28,915	$	289	$	228,287		$	76,784		$	(27,202	)	$	278,158		$	188		$	278,346
Balance at June 30, 2018	28,374	$	283	$	224,634		$	73,624		$	(20,870	)	$	277,671		$	183		$	277,854
Net loss	—	—		—			(1,011		)	—			(1,011		)	1			(1,010		)
Other comprehensive loss, net of tax	—	—		—			—			14			14			(1		)	13
Share-based payments	—	—		1,899			—			—			1,899			—			1,899
Net settlement of restricted stock units	97	1		(752		)	—			—			(751		)	—			(751		)
Exercise of stock options	25	—		273			—			—			273			—			—
Balance at September 30, 2018	28,496	$	284	$	226,054		$	72,613		$	(20,856	)	$	278,095		$	183		$	278,278

	Nine 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	—	—		—			5,231		—			5,231			13			5,244
Other comprehensive income, net of tax	—	—		—			—		355			355			(2		)	353
Share-based payments	—	—		4,598			—		—			4,598			—			4,598
Net settlement of options and restricted stock units	349	4		(2,959		)	—		—			(2,955		)	—			(2,955		)
Exercise of stock options	3	—		32			—		—			32			—			32
Balance at September 30, 2019	28,915	$	289	$	228,287		$	76,784	$	(27,202	)	$	278,158		$	188		$	278,346
Balance at December 31, 2017	28,295	$	282	$	222,425		$	64,716	$	(16,805	)	$	270,618		$	173		$	270,791
Net income	—	—		—			7,897		—			7,897			13			7,910
Other comprehensive loss, net of tax	—	—		—			—		(4,051		)	(4,051		)	(3		)	(4,054		)
Share-based payments	—	—		4,763			—		—			4,763			—			4,763
Net settlement on vesting of restricted stock units	176	2		(1,407		)	—		—			(1,405		)	—			(1,405		)
Exercise of stock options	25	—		273			—		—			273			—			273
Balance at September 30, 2018	28,496	$	284	$	226,054		$	72,613	$	(20,856	)	$	278,095		$	183		$	278,278

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) 

	Nine months ended
	September 30, 2019			September 30, 2018
Cash flows from operating activities
Net income	$	5,244		$	7,910
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	28,540			25,736
Deferred income taxes	3,151			3,188
Share-based compensation expense	4,598			4,760
Bad debt provision for troubled customers, net of recoveries	2,798			—
Fair value adjustments to contingent consideration	537			(808		)
Foreign currency (gain) loss	(1,010		)	618
Gain on sale of subsidiary	—			(2,384		)
Other	(143		)	207
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions
Accounts receivable	(3,098		)	(20,258		)
Inventories	(391		)	(1,746		)
Prepaid expenses and other assets	439			918
Accounts payable	(261		)	3,019
Accrued expenses and other liabilities	(2,465		)	7,456
Income taxes payable	2,537			(4,432		)
Net cash provided by operating activities	40,476			24,184
Cash flows from investing activities
Purchase of property, plant and equipment	(17,275		)	(15,386		)
Disposition of business, net of cash sold	—			4,800
Purchase of intangible assets	(704		)	(385		)
Acquisition of business, net of cash acquired	(4,822		)	—
Proceeds from sale of equipment	1,173			1,140
Net cash used in investing activities	(21,628		)	(9,831		)
Cash flows from financing activities
Repayment of finance lease obligations	(3,338		)	(4,464		)
Proceeds from borrowings of long-term debt	684			1,743
Repayment of long-term debt	(5,189		)	(1,857		)
Proceeds from revolver	20,500			28,076
Repayment of revolver	(38,500		)	(43,990		)
Payment of contingent consideration for business acquisitions	(755		)	(2,282		)
Taxes paid related to net share settlement of share-based awards	(2,955		)	(1,404		)
Proceeds from exercise of stock options	32			273
Net cash used in financing activities	(29,521		)	(23,905		)
Effect of exchange rate changes on cash and cash equivalents	(499		)	(916		)
Net change in cash and cash equivalents	(11,172		)	(10,468		)
Cash and cash equivalents at beginning of period	25,544			27,541
Cash and cash equivalents at end of period	$	14,372		$	17,073
Supplemental disclosure of cash paid
Interest	$	9,944		$	5,418
Income taxes	$	4,011		$	9,658
Noncash investing and financing
Equipment acquired through finance lease obligations	$	5,536		$	3,850

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, 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 results, net of tax, is classified separately in the accompanying Unaudited Condensed Consolidated Statements of Income (Loss). 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 each of the nine months ended September 30, 2019 and 2018, no customer represented 10% or more of the Company's 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 September 30, 2019 and September 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 61% and 190% for the three months ended September 30, 2019 and 2018, respectively. The Company's effective income tax rate was approximately 55% and 44% for the nine months ended September 30, 2019 and 2018, respectively. The effective income tax rate for the third quarter and first nine-months of 2019 and 2018 was higher than the statutory rate due to the impact of discrete items, GILTI, executive compensation, and other provisions resulting from the passage of the Tax Act and foreign tax rates different than statutory rates in the U.S..

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 September 30, 2019	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	100,927	$	11,561	$	71	$	—		$	112,559
Aerospace & Defense	12,420		9,626		438		—			22,484
Industrials	15,612		5,453		506		—			21,571
Power generation & Transmission	7,215		3,462		461		—			11,138
Other Process Industries	6,942		2,674		304		—			9,920
Infrastructure, Research & Engineering	4,205		1,964		2,964		—			9,133
Other	5,251		2,310		777		(2,951		)	5,387
Total	$	152,572	$	37,050	$	5,521	$	(2,951	)	$	192,192

Three Months Ended September 30, 2018	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	90,584	$	8,843	$	115	$	—		$	99,542
Aerospace & Defense	12,287		13,117		400		—			25,804
Industrials	17,523		6,080		1,191		—			24,794
Power generation & Transmission	6,341		3,202		1,334		—			10,877
Other Process Industries	6,677		1,650		11		—			8,338
Infrastructure, Research & Engineering	2,629		1,777		1,576		—			5,982
Other	5,299		2,002		1,089		(1,558		)	6,832
Total	$	141,340	$	36,671	$	5,716	$	(1,558	)	$	182,169

Nine Months Ended September 30, 2019	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	301,696	$	33,033	$	551	$	—		$	335,280
Aerospace & Defense	38,725		31,783		1,060		—			71,568
Industrials	51,373		15,987		1,585		—			68,945
Power generation & Transmission	21,829		7,383		2,328		—			31,540
Other Process Industries	19,644		7,420		376		—			27,440
Infrastructure, Research & Engineering	9,601		7,214		4,869		—			21,684
Other	11,211		6,482		2,453		(7,008		)	13,138
Total	$	454,079	$	109,302	$	13,222	$	(7,008	)	$	569,595

9

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

Nine Months Ended September 30, 2018	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	287,620	$	27,512	$	1,052	$	—		$	316,184
Aerospace & Defense	38,115		42,468		1,836		—			82,419
Industrials	45,847		20,298		2,656		—			68,801
Power generation & Transmission	23,378		6,728		3,444		—			33,550
Other Process Industries	18,222		6,349		49		—			24,620
Infrastructure, Research & Engineering	8,723		6,848		3,337		—			18,908
Other	12,748		6,035		4,912		(6,585		)	17,110
Total	$	434,653	$	116,238	$	17,286	$	(6,585	)	$	561,592

Revenue per key geographic location was as follows:

Three Months Ended September 30, 2019	Services		International		Products		Corp/Elim			Total
United States	$	123,585	$	128	$	3,780	$	(1,084	)	$	126,409
Other Americas	26,981		1,842		72		32			28,927
Europe	1,157		31,817		513		(1,844		)	31,643
Asia-Pacific	849		3,263		1,156		(55		)	5,213
Total	$	152,572	$	37,050	$	5,521	$	(2,951	)	$	192,192

Three Months Ended September 30, 2018	Services		International		Products		Corp/Elim			Total
United States	$	118,415	$	82	$	2,806	$	(849	)	$	120,454
Other Americas	21,712		1,894		192		(141		)	23,657
Europe	748		33,654		1,184		(557		)	35,029
Asia-Pacific	465		1,041		1,534		(11		)	3,029
Total	$	141,340	$	36,671	$	5,716	$	(1,558	)	$	182,169

Nine Months Ended September 30, 2019	Services		International		Products		Corp/Elim			Total
United States	$	368,600	$	461	$	8,727	$	(3,638	)	$	374,150
Other Americas	82,494		5,757		209		(232		)	88,228
Europe	1,855		97,098		1,370		(3,079		)	97,244
Asia-Pacific	1,130		5,986		2,916		(59		)	9,973
Total	$	454,079	$	109,302	$	13,222	$	(7,008	)	$	569,595

Nine Months Ended September 30, 2018	Services		International		Products		Corp/Elim			Total
United States	$	364,813	$	506	$	8,846	$	(2,595	)	$	371,570
Other Americas	66,170		5,751		552		(1,138		)	71,335
Europe	3,037		105,499		3,118		(2,752		)	108,902
Asia-Pacific	633		4,482		4,770		(100		)	9,785
Total	$	434,653	$	116,238	$	17,286	$	(6,585	)	$	561,592

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 Sheets. 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 Sheets at the end of each reporting period within accounts receivables or 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 $3.4 million. Changes in the contract asset and liability balances during the quarter ended September 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 two equity incentive plans: (i) the 2009 Long-Term Incentive Plan (the "2009 Plan") and (ii) the 2016 Long-Term Incentive Plan (the "2016 Plan"). No further awards may be granted under the 2009 Plan, although awards granted under the 2009 Plan 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 nine months ended September 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 September 30, 2019.

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

	Nine months ended September 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	(2,093	)	$	13.45	(25	)	$	10.75
Expired or forfeited	(7	)	$	10.00	—		$	—
Outstanding at end of period:	5		$	22.35	2,105		$	13.47

Restricted Stock Unit Awards

For the three months ended September 30, 2019 and September 30, 2018, the Company recognized share-based compensation expense related to restricted stock unit awards of $1.0 million and $1.3 million, respectively. For the nine months ended September 30, 2019 and September 30, 2018, the Company recognized share-based compensation expense related to restricted stock unit awards of $3.0 million and $3.3 million, respectively. As of September 30, 2019, there was $7.8 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 2.6 years. 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.

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:

	Nine months ended September 30,
	2019		2018
Restricted stock awards vested	148		158
Fair value of awards vested	$	2,168	$	3,406

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

	Nine months ended September 30,
	2019		2018
Awards issued	30		19
Grant date fair value of awards issued	$	450	$	400

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

	Nine months ended September 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	(148	)	$	20.17	(158	)	$	20.66
Forfeited	(36	)	$	18.38	(34	)	$	20.36
Outstanding at end of period:	593		$	17.08	551		$	20.37

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 equity-classified.

12

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 Company's PRSU activity is as follows:

	Nine months ended September 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	(36	)	$	14.06	(28	)	$	19.49
Released	(77	)	$	15.86	(61	)	$	15.04
Forfeited	—		$	—	(12	)	$	16.16
Outstanding at end of period:	354		$	16.45	300		$	18.05

During the nine months ended September 30, 2019 and September 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. Calendar year 2019 PRSUs decreased approximately 33,000 units during the nine months ended September 30, 2019 based on forecasted results for calendar year 2019. Calendar year 2018 PRSUs decreased approximately 32,000 units during the nine months ended September 30, 2018 based on forecasted results for calendar year 2018.

As of September 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 Sheets.

For the three months ended September 30, 2019 and September 30, 2018, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $0.5 million and $0.4 million, respectively. For the nine months ended September 30, 2019 and September 30, 2018, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $1.2 million and $1.0 million, respectively. At September 30, 2019, there was $3.1 million of total unrecognized compensation costs related to approximately 354,000 non-vested PRSUs, which is expected to be recognized over a remaining weighted-average period of 2.3 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					Nine months ended
	September 30, 2019		September 30, 2018			September 30, 2019		September 30, 2018
Basic earnings per share:
Numerator:
Net income (loss) attributable to Mistras Group, Inc.	$	3,093	$	(1,011	)	$	5,231	$	7,897
Denominator:
Weighted-average common shares outstanding	28,800		28,429			28,678		28,360
Basic earnings per share	$	0.11	$	(0.04	)	$	0.18	$	0.28
Diluted earnings per share:
Numerator:
Net income (loss) attributable to Mistras Group, Inc.	$	3,093	$	(1,011	)	$	5,231	$	7,897
Denominator:
Weighted-average common shares outstanding	28,800		28,429			28,678		28,360
Dilutive effect of stock options outstanding(1)	129		—			147		739
Dilutive effect of restricted stock units outstanding(1)	227		—			197		348
	29,156		28,429			29,022		29,447
Diluted earnings per share	$	0.11	$	(0.04	)	$	0.18	$	0.27

⁽¹⁾ For the three months ended September 30, 2018, 805 and 364 shares related to stock options and restricted stock, respectively, were excluded from the calculation of diluted EPS due to the net loss for the period.

5.Acquisitions and Dispositions

Acquisitions

During the nine months ended September 30, 2019, the Company completed one acquisition that provides pipeline integrity management software and services to energy transportation companies. The Company acquired all the equity interest of the acquiree in exchange for aggregate consideration of $4.8 million in cash, contingent consideration of up to $4.3 million to be earned based upon the acquired business achieving specific performance metrics over the initial three years of operations from the acquisition date and working capital adjustments, which have not been finalized. The Company accounted for this transaction in accordance with the acquisition method of accounting for business combinations.

14

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 summarizes the allocation of the preliminary purchase price to the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition, with the excess recorded as goodwill:

Cash paid	$	4,843
Contingent consideration	1,081
Total consideration	$	5,924
Current assets	$	1,282
Property, plant and equipment	65
Intangible assets	3,467
Goodwill	1,753
Current liabilities	(643		)
Net assets acquired	$	5,924

The assets and liabilities of the business acquired in 2019 are included in the Condensed Consolidated Balance Sheets based upon their estimated fair values on the date of acquisition as determined in a preliminary purchase price allocation, using available information and making assumptions management believes are reasonable. The Company is still in the process of completing its valuation of the assets acquired and liabilities assumed. Goodwill primarily relates to expected synergies and is generally fully deductible for tax purposes. Intangible assets primarily relate to technology and customer relationships.

The results of operations of the business acquired in 2019 have been included in the Services segment within the Unaudited Condensed Consolidated Statements of Income (Loss) from the closing date of this transaction and approximates $0.6 million for revenues and $0.1 million operating loss for the three and nine months ended September 30, 2019.

During the nine months ended September 30, 2018, the Company did not complete any acquisitions.

The Company completed one acquisition during the fourth quarter of 2018. The acquired company primarily provides services to the midstream area within the oil and gas industry, with headquarters in Canada and a location in the U.S. The Company acquired 100% of the equity interests of the acquiree's Canadian and U.S. entities in exchange for aggregate consideration of $143.1 million in cash. The Company accounted for this transaction in accordance with the acquisition method of accounting for business combinations.

During the three months ended September 30, 2019, the Company adjusted provisional amounts recorded and related effects as follows:

• The Company decreased the $8.5 million provisional fair value of property, plant and equipment by $0.6 million with a corresponding increase to goodwill.

• The Company increased the $5.0 million provisional fair value of debt and other liabilities by $0.4 million with a corresponding increase to goodwill.

The Company is still in the process of completing the remaining valuation of the assets acquired.

The Company has filed a claim with the seller and the Company's insurance carrier through which the Company has representations and warranty insurance with respect to certain matters that may impact the purchase price. This matter is currently being investigated and discussed with the seller and the Company's insurance carrier.

15

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, such as 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 reported as Acquisition-related expense (benefit), net on the Unaudited Condensed Consolidated Statements of Income (Loss) and were as follows for the three and nine months ended September 30, 2019 and 2018:

	Three months ended September 30,					Nine months ended September 30,
	2019			2018		2019		2018
Due diligence, professional fees and other transaction costs	$	93		$	35	$	433	$	(334	)
Adjustments to fair value of contingent consideration liabilities	(125		)	182		537		(809		)
Acquisition-related expense (benefit), net	$	(32	)	$	217	$	970	$	(1,143	)

The Company's contingent consideration liabilities are included in Accrued expenses and other current liabilities and Other long-term liabilities on the Condensed Consolidated Balance Sheets.

Dispositions

During the third quarter of 2018, substantially all of the assets and liabilities of a subsidiary in the Products and Systems segment were sold for approximately $4.3 million, inclusive of a $0.5 million post-closing adjustment. For the nine months ended September 30, 2018, the Company recognized a gain of approximately $2.4 million related to the sale, which is reported as a Gain on sale of subsidiary on the Unaudited Condensed Consolidated Statement of Income (Loss). The sale also included a three-year agreement to purchase products from the buyer, with a cumulative commitment of $2.3 million (see Note 14–Commitments and Contingencies).

6.Accounts Receivable, net

Accounts receivable consisted of the following:

	September 30, 2019			December 31, 2018
Trade accounts receivable	$	154,250		$	152,511
Allowance for doubtful accounts	(6,226		)	(4,187		)
Accounts receivable, net	$	148,024		$	148,324

The Company had $32.3 million and $16.1 million of unbilled revenues accrued as of September 30, 2019 and December 31, 2018, respectively. These amounts are included in 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 of 2019, the Company reversed $1.0 million of this reserve based on additional information obtained during the quarter. There were no changes during the third quarter of 2019.

16

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

During 2019, the Company sold to an unaffiliated third party, without recourse, its remaining outstanding receivables owed from a customer which filed for bankruptcy, and for which the Company had initially recorded 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 second quarter of 2019, the Company recorded a recovery $1.7 million, related to a bad debt provision for the receivables due from this customer. This matter is considered fully resolved.

7.Property, Plant and Equipment, net

Property, plant and equipment consisted of the following:

	Useful Life (Years)	September 30, 2019			December 31, 2018
Land		$	2,657		$	2,680
Buildings and improvements	30-40	24,031			24,338
Office furniture and equipment	5-8	18,037			16,170
Machinery and equipment	5-7	221,555			208,245
		266,280			251,433
Accumulated depreciation and amortization		(170,778		)	(157,538		)
Property, plant and equipment, net		$	95,502		$	93,895

Depreciation expense for each of the three months ended September 30, 2019 and September 30, 2018 was approximately $5.8 million and $6.0 million, respectively.

Depreciation expense for each of the nine months ended September 30, 2019 and September 30, 2018 was approximately $18.0 million and $18.2 million, respectively.

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	1,753		—			—		1,753
Adjustments to preliminary purchase price allocations	923		—			—		923
Foreign currency translation	2,830		(1,644		)	—		1,186
Balance at September 30, 2019	$	248,982	$	34,139		$	—	$	283,121

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 September 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 September 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.

17

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

9.Intangible Assets

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

		September 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	$	112,592	$	(65,615	)	$	46,977	$	112,624	$	(60,993	)	$	51,631
Software/Technology	3-15	72,198		(17,071		)	55,127		67,240		(13,319		)	53,921
Covenants not to compete	2-5	12,735		(11,416		)	1,319		12,593		(10,825		)	1,768
Other	2-12	10,726		(7,256		)	3,470		10,317		(6,242		)	4,075
Total		$	208,251	$	(101,358	)	$	106,893	$	202,774	$	(91,379	)	$	111,395

Amortization expense for the three months ended September 30, 2019 and September 30, 2018 was approximately $3.4 million and $2.5 million, respectively.

Amortization expense for the nine months ended September 30, 2019 and September 30, 2018 was approximately $10.5 million and $7.5 million, respectively.

10.Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

	September 30, 2019		December 31, 2018
Accrued salaries, wages and related employee benefits	$	34,020	$	29,959
Contingent consideration, current portion	2,732		1,687
Accrued workers’ compensation and health benefits	4,882		5,086
Deferred revenue	5,153		5,046
Pension accrual	3,064		5,585
Right-of-use liability - operating	9,636		—
Other accrued expenses	26,965		26,532
Total	$	86,452	$	73,895

11.Long-Term Debt

Long-term debt consisted of the following:

	September 30, 2019			December 31, 2018
Senior credit facility	$	163,233		$	181,656
Senior secured term loan, net of debt issuance costs of $0.1 million	96,163			99,897
Notes payable	—			68
Other	7,920			8,999
Total debt	267,316			290,620
Less: Current portion	(6,563		)	(6,833		)
Long-term debt, net of current portion	$	260,753		$	283,787

18

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

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 provides 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 September 30, 2019, the Company had borrowings of $259.4 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 $0.9 million as of September 30, 2019, which is included in Other assets on the Condensed Consolidated Balance Sheets.

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 certain 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, June 30, and 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 the Company and its 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

19

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

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 September 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

The Company's other debt includes local bank financing provided at the local subsidiary level used to support working capital requirements and fund capital expenditures. At September 30, 2019, there was an aggregate of approximately $7.9 million outstanding, payable at various times from 2019 to 2029. Monthly payments range from $1 thousand to $17 thousand and interest rates range from 0.4% to 6.2%.

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:

	Nine months ended September 30,
	2019			2018
Beginning balance	$	2,365		$	5,508
Acquisitions	1,081			—
Payments	(755		)	(2,282		)
Accretion of liability	85			149
Revaluation	452			(957		)
Foreign currency translation	50			(65		)
Ending balance	$	3,278		$	2,353

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.

20

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 Sheets includes the following related to operating leases:

Leases	Classification	Nine months ended September 30, 2019
Assets
Right-of-use assets	Other Assets	$	42,433
Liabilities
Right-of-use liability - current	Accrued and other current liabilities	$	9,636
Right-of-use liability - long-term	Other liabilities	33,531
Total right-of-use liabilities		$	43,167

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 $4.7 million as of September 30, 2019 and total rent payments made during the three and nine months ended September 30, 2019 were approximately $0.2 million and $0.7 million, respectively.

As of September 30, 2019, the total ROU assets attributable to finance leases are approximately $16.5 million, which is included in Property, plant, and equipment, net on the Condensed Consolidated Balance Sheets.

The components of lease costs were as follows:

	Classification	Three months ended September 30, 2019		Nine months ended September 30, 2019
Finance lease expense
Amortization of ROU assets	Depreciation and amortization	$	1,205	$	3,605
Interest on lease liabilities	Interest expense	194		578
Operating lease expense	Selling, General & Administrative expenses	3,230		9,453
Short-term lease expense	Selling, General & Administrative expenses	12		18
Variable lease expense	Selling, General & Administrative expenses	282		828
Total		$	4,923	$	14,482

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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)

Additional information related to leases was as follows:

	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities for finance leases
Finance - financing cash flows	$	3,338
Finance - operating cash flows	$	578
Operating - operating cash flows	$	9,361
ROU assets obtained in the exchange for lease liabilities
Finance leases	$	5,536
Operating leases	$	12,766
Weighted-average remaining lease term (in years)
Finance leases	6.0
Operating leases	6.1
Weighted-average discount rate
Finance leases	6.2		%
Operating leases	6.0		%

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

	Finance			Operating
Remainder of 2019	$	1,761		$	3,130
2020	5,119			11,431
2021	3,420			8,955
2022	2,550			6,877
2023	1,661			5,976
Thereafter	1,465			15,677
Total	15,976			52,046
Less: Present value discount	(1,426		)	(8,879		)
Lease liability	$	14,550		$	43,167

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

22

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, have been or 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 and would be investigating the site. The purpose of the investigation was 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. The Company has not received any further notices from EPA regarding this matter. 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.

23

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 nine months ended September 30, 2019 for this potential withdrawal liability. The Company’s subsidiary reached an agreement with one of the pension funds in September 2019, for a final payment of $0.9 million in complete satisfaction of the withdrawal liability of the subsidiary. This payment was subsequently paid in October 2019. The balance of the estimated total amount of this potential liability as of September 30, 2019 is approximately $3.1 million, which includes the $0.9 million paid in October 2019.

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 September 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 limit 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 September 30, 2019, the Company accrued approximately $1.1 million for estimated 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. The $1.1 million of estimated obligations is net of $0.2 million in payments and $0.2 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 September 30, 2019, total potential acquisition-related contingent consideration ranged from zero to approximately $7.9 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 and Dispositions 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 $1.6 million is remaining as of September 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.

24

Mistras Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

• 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: (with intercompany transactions eliminated in Corporate and eliminations)

	Three months ended						Nine months ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Revenues
Services	$	152,572		$	141,340		$	454,079		$	434,653
International	37,050			36,671			109,302			116,238
Products and Systems	5,521			5,716			13,222			17,286
Corporate and eliminations	(2,951		)	(1,558		)	(7,008		)	(6,585		)
	$	192,192		$	182,169		$	569,595		$	561,592

	Three months ended				Nine months ended
	September 30, 2019		September 30, 2018		September 30, 2019			September 30, 2018
Gross profit
Services	$	43,330	$	38,838	$	127,903		$	113,675
International	11,695		10,877		33,113			34,273
Products and Systems	2,739		2,604		5,803			7,707
Corporate and eliminations	5		13		(105		)	(96		)
	$	57,769	$	52,332	$	166,714		$	155,559

	Three months ended						Nine months ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Income (loss) from operations
Services	$	15,757		$	8,289		$	40,715		$	36,892
International	2,921			(662		)	5,155			2,713
Products and Systems	509			2,415			(1,224		)	2,032
Corporate and eliminations	(8,408		)	(7,025		)	(22,844		)	(21,917		)
	$	10,779		$	3,017		$	21,802		$	19,720

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

25

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				Nine months ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Depreciation and amortization
Services	$	6,882	$	5,951	$	21,360	$	17,892
International	2,027		2,179		6,158		6,720
Products and Systems	312		362		901		1,091
Corporate and eliminations	50		5		121		33
	$	9,271	$	8,497	$	28,540	$	25,736

	September 30, 2019		December 31, 2018
Intangible assets, net
Services	$	95,350	$	98,362
International	9,982		11,143
Products and Systems	1,247		1,438
Corporate and eliminations	314		452
	$	106,893	$	111,395

	September 30, 2019		December 31, 2018
Total assets
Services	$	545,863	$	523,506
International	147,844		146,535
Products and Systems	15,029		12,264
Corporate and eliminations	19,291		11,732
	$	728,027	$	694,037

Refer to Note 2–Revenue, for revenues by geographic area for the three and nine months ended September 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. The Board of Directors approved the termination of the stock repurchase plan effective on April 1, 2019. There were no repurchases of common stock during 2019.

26

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 nine months ended September 30, 2019 and September 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

27

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 asset intensive infrastructure in our target markets. These markets include:

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

• Aerospace & Defense

• Industrial

• Power Generation and Transmission (including nuclear and renewable)

• 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. We believe these trends also enable us to be opportunistic as we consider strategic acquisitions of smaller providers of inspection services. 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 structural integrity and reliability of critical energy, industrial and materials, 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.

28

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 have already generated 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. Aging infrastructure requires more frequent inspection and maintenance in comparison to new infrastructure,thereby requiring companies and public authorities to 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.

29

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. With the prices lower, we have seen reductions in NDT and maintenance spending, but not to the extent as in recent years due to the price stabilization. We do believe customers will defer inspection or maintenance spending from time to time, which we will see occurring in later 2019 into early 2020.

More Effective NDT Services. We believe customers are constantly looking for ways to reduce their overall inspection and maintenance spending, while maintaining the reliability and safety of their operations. Accordingly, we believe providers of NDT and inspection services that utilize data analytics, risk-based inspection planning and other advanced tools and platforms that can provide customers with effective inspections at an overall lower cost will be more successful and gain market share.

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.

30

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 nine months ended September 30, 2019 and September 30, 2018 were as follows:

	Three months ended						Nine months ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Revenues	$	192,192		$	182,169		$	569,595		$	561,592
Gross profit	57,769			52,332			166,714			155,559
Gross profit as a % of Revenue	30.1		%	28.7		%	29.3		%	27.7		%
Total operating expenses	46,990			49,315			144,912			135,839
Operating expenses as a % of Revenue	24.4		%	27.1		%	25.4		%	24.2		%
Income from operations	10,779			3,017			21,802			19,720
Income from Operations as a % of Revenue	5.6		%	1.7		%	3.8		%	3.5		%
Interest expense	2,959			1,894			10,065			5,581
Income before provision for income taxes	7,820			1,123			11,737			14,139
Provision for income taxes	4,733			2,133			6,493			6,229
Net income (loss)	3,087			(1,010		)	5,244			7,910
Less: Net income (loss) attributable to non-controlling interests, net of taxes	(6		)	1			13			13
Net income (loss) attributable to Mistras Group, Inc.	$	3,093		$	(1,011	)	$	5,231		$	7,897

Revenue

Revenues for the three months ended September 30, 2019 were $192.2 million, an increase of $10.0 million, or 6%, compared with the three months ended September 30, 2018. Revenues for the nine months ended September 30, 2019 were $569.6 million, an increase of $8.0 million, or 1%, compared with the nine months ended September 30, 2018.

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

	Three months ended						Nine months ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Revenues
Services	$	152,572		$	141,340		$	454,079		$	434,653
International	37,050			36,671			109,302			116,238
Products and Systems	5,521			5,716			13,222			17,286
Corporate and eliminations	(2,951		)	(1,558		)	(7,008		)	(6,585		)
	$	192,192		$	182,169		$	569,595		$	561,592

Three Months

In the three months ended September 30, 2019, total revenues increased6% due to a combination of mid-single-digit acquisition growth and a low single-digit organic growth, partially offset by the unfavorable impact of foreign exchange rates. Services segment revenues increased8%, driven by mid-single-digit acquisition growth and low single-digit organic growth, partially offset by the low-single digit unfavorable impact of foreign exchange rates. International segment revenues increased1%, driven by mid-single-digit organic growth, partially offset by the mid-single-digit unfavorable impact of foreign exchange rates. Products and Systems segment revenues decreased by 3%, due primarily to the sale of a subsidiary within the segment during the third quarter of 2018.

31

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 59% and 55% of total revenues for the three months ended September 30, 2019 and 2018, respectively. Aerospace and defense customer revenues comprised approximately 12% and 14% of total revenues for the three months ended September 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, as more fully described in Note 14–Commitments and Contingencies to the condensed consolidated financial statements in this Quarterly Report, and the increase in volume in the oil and gas market is due to the Onstream acquisition completed in the fourth quarter of 2018. The Company’s top ten customers comprised approximately 34% of total revenues for the three months ended September 30, 2019, as compared to 32% for the three months ended September 30, 2018, with no customer accounting for 10% or more of total revenues in either three-month period.

Nine months

In the nine months ended September 30, 2019, total revenues increased1% due to a combination of mid-single-digit acquisition growth, partially offset by low single-digit organic decline and low single-digit unfavorable impact of foreign exchange rates. Services segment revenues increased5%, driven by mid-single-digit acquisition growth, partially offset by low single-digit organic decline and the unfavorable impact of foreign exchange rates. International segment revenues decreased6%, driven by the unfavorable impact of foreign exchange rates. Products and Systems segment revenues decreased by 24% 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 56% of total revenues for the nine months ended September 30, 2019 and 2018, respectively. Aerospace and defense customer revenues comprised approximately 13% and 15% of total revenues for the nine months ended September 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, as more fully described in Note 14–Commitments and Contingencies to the condensed consolidated financial statements in this Quarterly Report, and the increased volume in the oil and gas market is due to the Onstream acquisition completed in the fourth quarter of 2018. The Company’s top ten customers comprised approximately 35% of total revenues for both the nine months ended September 30, 2019 and the nine months ended September 30, 2018, with no customer accounting for 10% or more of total revenues in either nine-month period.

Gross Profit

Gross profit increased by $5.4 million, or 10%, in the three months ended September 30, 2019, on an increase in sales of 6%. Gross profit increased by $11.2 million, or 7%, in the nine months ended September 30, 2019, on an increase in sales of 1%.

Gross profit by segment for the nine months ended September 30, 2019 and September 30, 2018 was as follows:

	Three months ended						Nine months ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Gross profit
Services	$	43,330		$	38,838		$	127,903		$	113,675
% of segment revenue	28.4		%	27.5		%	28.2		%	26.2		%
International	11,695			10,877			33,113			34,273
% of segment revenue	31.6		%	29.7		%	30.3		%	29.5		%
Products and Systems	2,739			2,604			5,803			7,707
% of segment revenue	49.6		%	45.6		%	43.9		%	44.6		%
Corporate and eliminations	5			13			(105		)	(96		)
	$	57,769		$	52,332		$	166,714		$	155,559
% of total revenue	30.1		%	28.7		%	29.3		%	27.7		%

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

Gross profit margin was 30.1% and 28.7% for the three month periods ended September 30,2019 and 2018, respectively. Services segment gross profit margins had a year-on-year increase of 90 basis points to 28.4% during the three months ended September 30, 2019, due primarily to mix of sales, increase in sales volume related to the acquisition completed in the fourth quarter of 2018 and favorable operating leverage. International segment gross margins had a year-on-year increase of 190 basis points to 31.6% during the three months ended September 30, 2019, due primarily to favorable sales mix and improved labor utilization. Products and Systems segment gross margin had a year-on-year increase of 400 basis points to 49.6% during the three months ended September 30, 2019 due to a favorable sales mix.

Nine months

Gross profit margin was 29.3%and 27.7% for the nine months ended September 30, 2019 and 2018, respectively. Services segment gross profit margins had a year-on-year increase of 200 basis points to 28.2% during the nine months ended September 30, 2019, due primarily to favorable operating leverage and service mix, and increase in sales volume related the acquisition completed in the fourth quarter of 2018. International segment gross margins had a year-on-year increase of 80 basis points to 30.3% during the nine months ended September 30, 2019 due to a favorable sales mix. Products and Systems segment gross margin had a year-on-year decline of 70 basis points to 43.9% in the nine months ended September 30, 2019. This decrease was primarily driven by a lower sales volume and less favorable sales mix.

33

Mistras Group, Inc. and Subsidiaries

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

(tabular dollars are in thousands)

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						Nine months ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Services:
Income from operations (GAAP)	$	15,757		$	8,289		$	40,715		$	36,892
Bad debt provision for troubled customers, net of recoveries	—			—			2,778			—
Reorganization and other costs	125			292			202			292
Pension withdrawal expense (benefit)	(45		)	5,886			489			5,886
Acquisition-related expense (benefit), net	(125		)	181			577			(809		)
Income before special items (non-GAAP)	15,712			14,648			44,761			42,261
International:
Income (loss) from operations (GAAP)	2,921			(662		)	5,155			2,713
Reorganization and other costs	90			2,808			355			3,544
Acquisition-related expense (benefit), net	—			—			—			(409		)
Bad debt provision for troubled customers, net of recoveries	—			—			20			—
Income before special items (non-GAAP)	3,011			2,146			5,530			5,848
Products and Systems:
Income (loss) from operations (GAAP)	509			2,415			(1,224		)	2,032
Gain on sale of subsidiary	—			(2,384		)	—			(2,384		)
Reorganization and other costs	218			—			218			29
Income (loss) before special items (non-GAAP)	727			31			(1,006		)	(323		)
Corporate and Eliminations:
Loss from operations (GAAP)	(8,408		)	(7,025		)	(22,844		)	(21,917		)
Reorganization and other costs	44			305			104			305
Acquisition-related expense, net	93			36			393			75
Loss before special items (non-GAAP)	(8,271		)	(6,684		)	(22,347		)	(21,537		)
Total Company:
Income from operations (GAAP)	$	10,779		$	3,017		$	21,802		$	19,720
Pension withdrawal expense	(45		)	5,886			489			5,886
Gain on sale of subsidiary	—			(2,384		)	—			(2,384		)
Bad debt provision for troubled customers, net of recoveries	—			—			2,798			—
Reorganization and other costs	477			3,405			879			4,170
Acquisition-related expense (benefit), net	(32		)	217			970			(1,143		)
Income before special items (non-GAAP)	$	11,179		$	10,141		$	26,938		$	26,249

Three months

For the three months ended September 30, 2019, income from operations (GAAP) increased$7.8 million, or 257%, compared with the three months ended September 30, 2018, while income before special items (non-GAAP) increased$1.0 million, or 10%. As a percentage of revenues, income before special items increased by 20 basis points to 5.8% in the three months ended September 30, 2019 from 5.6% in the three months ended September 30, 2018.

34

Mistras Group, Inc. and Subsidiaries

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

(tabular dollars are in thousands)

Operating expenses (GAAP), as a percentage of revenue, decreased to 24% for the three months ended September 30, 2019 from 27% for the three months ended September 30, 2018. Operating expenses, excluding special items, (non-GAAP), as a percentage of revenues, was 24% of revenue for the three months ended September 30, 2019 compared to 23% for the three months ended September 30, 2018. The table above highlights the special expense items that resulted in a lower GAAP operating expense percentage for 2019 compared to 2018. In addition to the special items, for both GAAP and non-GAAP comparisons, there was $3.3 million of operating expenses relating to the Onstream acquisition, inclusive of depreciation and amortization of $1.3 million for the three months ended September 30, 2019.

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 nine months ended September 30, 2019 for this potential withdrawal liability. The Company’s subsidiary reached an agreement with one of the pension funds in September 2019, for a final payment of $0.9 million in complete satisfaction of the withdrawal liability of the subsidiary. This payment was subsequently paid in October 2019. The balance of the estimated total amount of this potential liability as of September 30, 2019 is approximately $3.1 million, which includes the $0.9 million paid in October 2019.

Nine months

For the nine months ended September 30, 2019, income from operations (GAAP) increased$2.1 million, compared with the nine months ended September 30, 2018, while income before special items (non-GAAP) increased$0.7 million, or 3%. As a percentage of revenues, income before special items was consistent at 4.7% for the nine months ended September 30, 2019 and nine months ended September 30, 2018, respectively.

Operating expenses (GAAP), as a percentage of revenue, increased to 25% for the nine months ended September 30, 2019 from 24% for the nine months ended September 30, 2018. Operating expenses, excluding special items (non-GAAP), as a percentage of revenues, increased to 25% of revenues for the nine months ended September 30, 2019 from 23% for the nine months ended September 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 $9.6 million of operating expenses for the Onstream acquisition, inclusive of depreciation and amortization of $3.9 million for the nine months ended September 30, 2019.

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 of 2019, the Company reversed $1.0 million of this reserve based on additional information obtained during the quarter. There was no change during the third quarter of 2019.

During 2019, the Company sold to an unaffiliated third party, without recourse, its remaining outstanding receivables from a customer which filed a voluntary 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 second quarter of 2019, the Company recorded a recovery $1.7 million, related to a bad debt provision for the receivables due from this customer. This matter is considered fully resolved.

35

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 $3.0 million and $1.9 million for the three months ended September 30, 2019 and 2018, respectively. Interest expense was approximately $10.1 million and $5.6 million for the nine months ended September 30, 2019 and 2018, respectively. The increases were due to higher average levels of borrowing on the Company's Credit Agreement attributable primarily to borrowings for 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 61% and 190% for the three months ended September 30, 2019 and 2018, respectively. The Company's effective income tax rate was approximately 55% and 44% for the nine months ended September 30, 2019 and 2018, respectively. The effective income tax rate for the three and nine months ended September 30, 2019 and 2018 was higher than the statutory rate due to the impact of discrete items, GILTI and executive compensation, and other provisions resulting from the passage of the Tax Act and foreign tax rates different than statutory rates in the U.S. The discrete items had an impact on our effective tax rate of approximately 17% and 15% for the three and nine months ended September 30, 2019, respectively, and approximately 119% and 12% for the three and nine months ended September 30, 2018, respectively.

Liquidity and Capital Resources

Cash flows are summarized in the table below:

	Nine months ended
	September 30, 2019			September 30, 2018
Net cash provided by (used in):
Operating activities	$	40,476		$	24,184
Investing activities	(21,628		)	(9,831		)
Financing activities	(29,521		)	(23,905		)
Effect of exchange rate changes on cash	(499		)	(916		)
Net change in cash and cash equivalents	$	(11,172	)	$	(10,468	)

Cash Flows from Operating Activities

During the nine months ended September 30, 2019, cash provided by operating activities was $40.5 million, representing a year-on-year increase of $16.3 million, or 67%. The increase was primarily attributable to movements in working capital.

Cash Flows from Investing Activities

During the nine months ended September 30, 2019, cash used in investing activities was $21.6 million, compared with $9.8 million in 2018. Capital expenditures were $18.0 million for the first nine months of 2019, compared with $15.8 million in the comparable 2018 period. During the nine months ended September 30, 2019, the Company paid $4.8 million for an acquisition. During the nine months ended September 30, 2018, the Company received $4.8 million from the sale of a subsidiary in the Products segment. (see Note 5–Acquisitions and Dispositions to the condensed consolidated financial statements in this Quarterly Report)

Cash Flows from Financing Activities

Net cash used in financing activities was $29.5 million for the nine months ended September 30, 2019. The Company paid down $21.8 million, net, on its Credit Agreement, inclusive of quarterly payments of the Term Loan, as well as payments of $4.1 million of finance lease obligations and other debt. For the comparable period in 2018, net cash used in financing activities was $23.9 million. The Company paid down $15.9 million, net, on its Credit Agreement, inclusive of quarterly payments of the Term Loan, as well as $4.6 million payments of capital lease obligations and other debt.

36

Mistras Group, Inc. and Subsidiaries

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

(tabular dollars are in thousands)

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 $0.5 million in the first nine months of 2019, compared to a net impact of $0.9 million for the first nine months of 2018.

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 September 30, 2019, we had cash and cash equivalents totaling $14.4 million and available borrowing capacity of $131.4 million under our Credit Agreement with borrowings of $259.4 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 September 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 nine months ended September 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 September 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.

37

Changes in Internal Control Over Financial Reporting

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

38

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–Commitments and Contingencies.

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)
July 31, 2019	4,831	$	15.02	—	$	—
August 31, 2019	140,680	$	15.65	—	$	—
September 30, 2019	—	$	—	—	$	—

(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.

39

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

40

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: November 6, 2019

41

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: November 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: November 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 September 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: November 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

Accounts Receivable, net (Tables)

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

Schedule of accounts receivable, net

Accounts receivable consisted of the following:

	September 30, 2019			December 31, 2018
Trade accounts receivable	$	154,250		$	152,511
Allowance for doubtful accounts	(6,226		)	(4,187		)
Accounts receivable, net	$	148,024		$	148,324

XML

Commitments and Contingencies

9 Months Ended

Sep. 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, have been or 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 and would be investigating the site. The purpose of the investigation was 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. The Company has not received any further notices from EPA regarding this matter. 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 nine months ended September 30, 2019 for this potential withdrawal liability. The Company’s subsidiary reached an agreement with one of the pension funds in September 2019, for a final payment of $0.9 million in complete satisfaction of the withdrawal liability of the subsidiary. This payment was subsequently paid in October 2019. The balance of the estimated total amount of this potential liability as of September 30, 2019 is approximately $3.1 million, which includes the $0.9 million paid in October 2019.

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 September 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 limit 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 September 30, 2019, the Company accrued approximately $1.1 million for estimated 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. The $1.1 million of estimated obligations is net of $0.2 million in payments and $0.2 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 September 30, 2019, total potential acquisition-related contingent consideration ranged from zero to approximately $7.9 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 and Dispositions 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 $1.6 million is remaining as of September 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.

XML

Revenue (Tables)

9 Months Ended

Sep. 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 September 30, 2019	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	100,927	$	11,561	$	71	$	—		$	112,559
Aerospace & Defense	12,420		9,626		438		—			22,484
Industrials	15,612		5,453		506		—			21,571
Power generation & Transmission	7,215		3,462		461		—			11,138
Other Process Industries	6,942		2,674		304		—			9,920
Infrastructure, Research & Engineering	4,205		1,964		2,964		—			9,133
Other	5,251		2,310		777		(2,951		)	5,387
Total	$	152,572	$	37,050	$	5,521	$	(2,951	)	$	192,192

Three Months Ended September 30, 2018	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	90,584	$	8,843	$	115	$	—		$	99,542
Aerospace & Defense	12,287		13,117		400		—			25,804
Industrials	17,523		6,080		1,191		—			24,794
Power generation & Transmission	6,341		3,202		1,334		—			10,877
Other Process Industries	6,677		1,650		11		—			8,338
Infrastructure, Research & Engineering	2,629		1,777		1,576		—			5,982
Other	5,299		2,002		1,089		(1,558		)	6,832
Total	$	141,340	$	36,671	$	5,716	$	(1,558	)	$	182,169

Nine Months Ended September 30, 2019	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	301,696	$	33,033	$	551	$	—		$	335,280
Aerospace & Defense	38,725		31,783		1,060		—			71,568
Industrials	51,373		15,987		1,585		—			68,945
Power generation & Transmission	21,829		7,383		2,328		—			31,540
Other Process Industries	19,644		7,420		376		—			27,440
Infrastructure, Research & Engineering	9,601		7,214		4,869		—			21,684
Other	11,211		6,482		2,453		(7,008		)	13,138
Total	$	454,079	$	109,302	$	13,222	$	(7,008	)	$	569,595

Nine Months Ended September 30, 2018	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	287,620	$	27,512	$	1,052	$	—		$	316,184
Aerospace & Defense	38,115		42,468		1,836		—			82,419
Industrials	45,847		20,298		2,656		—			68,801
Power generation & Transmission	23,378		6,728		3,444		—			33,550
Other Process Industries	18,222		6,349		49		—			24,620
Infrastructure, Research & Engineering	8,723		6,848		3,337		—			18,908
Other	12,748		6,035		4,912		(6,585		)	17,110
Total	$	434,653	$	116,238	$	17,286	$	(6,585	)	$	561,592

Revenue per key geographic location was as follows:

Three Months Ended September 30, 2019	Services		International		Products		Corp/Elim			Total
United States	$	123,585	$	128	$	3,780	$	(1,084	)	$	126,409
Other Americas	26,981		1,842		72		32			28,927
Europe	1,157		31,817		513		(1,844		)	31,643
Asia-Pacific	849		3,263		1,156		(55		)	5,213
Total	$	152,572	$	37,050	$	5,521	$	(2,951	)	$	192,192

Three Months Ended September 30, 2018	Services		International		Products		Corp/Elim			Total
United States	$	118,415	$	82	$	2,806	$	(849	)	$	120,454
Other Americas	21,712		1,894		192		(141		)	23,657
Europe	748		33,654		1,184		(557		)	35,029
Asia-Pacific	465		1,041		1,534		(11		)	3,029
Total	$	141,340	$	36,671	$	5,716	$	(1,558	)	$	182,169

Nine Months Ended September 30, 2019	Services		International		Products		Corp/Elim			Total
United States	$	368,600	$	461	$	8,727	$	(3,638	)	$	374,150
Other Americas	82,494		5,757		209		(232		)	88,228
Europe	1,855		97,098		1,370		(3,079		)	97,244
Asia-Pacific	1,130		5,986		2,916		(59		)	9,973
Total	$	454,079	$	109,302	$	13,222	$	(7,008	)	$	569,595

Nine Months Ended September 30, 2018	Services		International		Products		Corp/Elim			Total
United States	$	364,813	$	506	$	8,846	$	(2,595	)	$	371,570
Other Americas	66,170		5,751		552		(1,138		)	71,335
Europe	3,037		105,499		3,118		(2,752		)	108,902
Asia-Pacific	633		4,482		4,770		(100		)	9,785
Total	$	434,653	$	116,238	$	17,286	$	(6,585	)	$	561,592

XML

Share-Based Compensation - Vesting Activity of Restricted Stock Unit Awards (Details) - Restricted Stock Unit Awards - USD ($) shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock awards vested (in shares)	148	158
Fair value of awards vested	$ 2,168	$ 3,406

XML

Revenue - Disaggregation of Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of Revenue [Line Items]
Revenues	$ 192,192	$ 182,169	$ 569,595	$ 561,592
United States
Disaggregation of Revenue [Line Items]
Revenues	126,409	120,454	374,150	371,570
Other Americas
Disaggregation of Revenue [Line Items]
Revenues	28,927	23,657	88,228	71,335
Europe
Disaggregation of Revenue [Line Items]
Revenues	31,643	35,029	97,244	108,902
Asia-Pacific
Disaggregation of Revenue [Line Items]
Revenues	5,213	3,029	9,973	9,785
Oil & Gas
Disaggregation of Revenue [Line Items]
Revenues	112,559	99,542	335,280	316,184
Aerospace & Defense
Disaggregation of Revenue [Line Items]
Revenues	22,484	25,804	71,568	82,419
Industrials
Disaggregation of Revenue [Line Items]
Revenues	21,571	24,794	68,945	68,801
Power generation & Transmission
Disaggregation of Revenue [Line Items]
Revenues	11,138	10,877	31,540	33,550
Other Process Industries
Disaggregation of Revenue [Line Items]
Revenues	9,920	8,338	27,440	24,620
Infrastructure, Research & Engineering
Disaggregation of Revenue [Line Items]
Revenues	9,133	5,982	21,684	18,908
Other
Disaggregation of Revenue [Line Items]
Revenues	5,387	6,832	13,138	17,110
Operating segments | Services
Disaggregation of Revenue [Line Items]
Revenues	152,572	141,340	454,079	434,653
Operating segments | Services | United States
Disaggregation of Revenue [Line Items]
Revenues	123,585	118,415	368,600	364,813
Operating segments | Services | Other Americas
Disaggregation of Revenue [Line Items]
Revenues	26,981	21,712	82,494	66,170
Operating segments | Services | Europe
Disaggregation of Revenue [Line Items]
Revenues	1,157	748	1,855	3,037
Operating segments | Services | Asia-Pacific
Disaggregation of Revenue [Line Items]
Revenues	849	465	1,130	633
Operating segments | Services | Oil & Gas
Disaggregation of Revenue [Line Items]
Revenues	100,927	90,584	301,696	287,620
Operating segments | Services | Aerospace & Defense
Disaggregation of Revenue [Line Items]
Revenues	12,420	12,287	38,725	38,115
Operating segments | Services | Industrials
Disaggregation of Revenue [Line Items]
Revenues	15,612	17,523	51,373	45,847
Operating segments | Services | Power generation & Transmission
Disaggregation of Revenue [Line Items]
Revenues	7,215	6,341	21,829	23,378
Operating segments | Services | Other Process Industries
Disaggregation of Revenue [Line Items]
Revenues	6,942	6,677	19,644	18,222
Operating segments | Services | Infrastructure, Research & Engineering
Disaggregation of Revenue [Line Items]
Revenues	4,205	2,629	9,601	8,723
Operating segments | Services | Other
Disaggregation of Revenue [Line Items]
Revenues	5,251	5,299	11,211	12,748
Operating segments | International
Disaggregation of Revenue [Line Items]
Revenues	37,050	36,671	109,302	116,238
Operating segments | International | United States
Disaggregation of Revenue [Line Items]
Revenues	128	82	461	506
Operating segments | International | Other Americas
Disaggregation of Revenue [Line Items]
Revenues	1,842	1,894	5,757	5,751
Operating segments | International | Europe
Disaggregation of Revenue [Line Items]
Revenues	31,817	33,654	97,098	105,499
Operating segments | International | Asia-Pacific
Disaggregation of Revenue [Line Items]
Revenues	3,263	1,041	5,986	4,482
Operating segments | International | Oil & Gas
Disaggregation of Revenue [Line Items]
Revenues	11,561	8,843	33,033	27,512
Operating segments | International | Aerospace & Defense
Disaggregation of Revenue [Line Items]
Revenues	9,626	13,117	31,783	42,468
Operating segments | International | Industrials
Disaggregation of Revenue [Line Items]
Revenues	5,453	6,080	15,987	20,298
Operating segments | International | Power generation & Transmission
Disaggregation of Revenue [Line Items]
Revenues	3,462	3,202	7,383	6,728
Operating segments | International | Other Process Industries
Disaggregation of Revenue [Line Items]
Revenues	2,674	1,650	7,420	6,349
Operating segments | International | Infrastructure, Research & Engineering
Disaggregation of Revenue [Line Items]
Revenues	1,964	1,777	7,214	6,848
Operating segments | International | Other
Disaggregation of Revenue [Line Items]
Revenues	2,310	2,002	6,482	6,035
Operating segments | Products
Disaggregation of Revenue [Line Items]
Revenues	5,521	5,716	13,222	17,286
Operating segments | Products | United States
Disaggregation of Revenue [Line Items]
Revenues	3,780	2,806	8,727	8,846
Operating segments | Products | Other Americas
Disaggregation of Revenue [Line Items]
Revenues	72	192	209	552
Operating segments | Products | Europe
Disaggregation of Revenue [Line Items]
Revenues	513	1,184	1,370	3,118
Operating segments | Products | Asia-Pacific
Disaggregation of Revenue [Line Items]
Revenues	1,156	1,534	2,916	4,770
Operating segments | Products | Oil & Gas
Disaggregation of Revenue [Line Items]
Revenues	71	115	551	1,052
Operating segments | Products | Aerospace & Defense
Disaggregation of Revenue [Line Items]
Revenues	438	400	1,060	1,836
Operating segments | Products | Industrials
Disaggregation of Revenue [Line Items]
Revenues	506	1,191	1,585	2,656
Operating segments | Products | Power generation & Transmission
Disaggregation of Revenue [Line Items]
Revenues	461	1,334	2,328	3,444
Operating segments | Products | Other Process Industries
Disaggregation of Revenue [Line Items]
Revenues	304	11	376	49
Operating segments | Products | Infrastructure, Research & Engineering
Disaggregation of Revenue [Line Items]
Revenues	2,964	1,576	4,869	3,337
Operating segments | Products | Other
Disaggregation of Revenue [Line Items]
Revenues	777	1,089	2,453	4,912
Corp/Elim
Disaggregation of Revenue [Line Items]
Revenues	(2,951)	(1,558)	(7,008)	(6,585)
Corp/Elim | United States
Disaggregation of Revenue [Line Items]
Revenues	(1,084)	(849)	(3,638)	(2,595)
Corp/Elim | Other Americas
Disaggregation of Revenue [Line Items]
Revenues	32	(141)	(232)	(1,138)
Corp/Elim | Europe
Disaggregation of Revenue [Line Items]
Revenues	(1,844)	(557)	(3,079)	(2,752)
Corp/Elim | Asia-Pacific
Disaggregation of Revenue [Line Items]
Revenues	(55)	(11)	(59)	(100)
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	$ (2,951)	$ (1,558)	$ (7,008)	$ (6,585)

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Share-Based Compensation - Performance Restricted Stock Units - Activity (Details) - PRSUs - $ / shares shares in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 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)	(36)	(28)
Released (in shares)	(77)	(61)
Forfeited (in shares)	0	(12)
Outstanding at end of period (in shares)	354	300
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)	14.06	19.49
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)	$ 16.45	$ 18.05

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Long-Term Debt - Narrative (Details)			9 Months Ended
	Dec. 08, 2017 quarter	Oct. 31, 2014	Sep. 30, 2019 USD ($) quarter	Dec. 31, 2018 USD ($)
Notes Payable and Other
Debt outstanding			$ 267,316,000	$ 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			259,400,000
Outstanding letters of credit			5,400,000
Capitalized costs associated with debt modifications			900,000
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
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			$ 163,233,000	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 | As of March 31, June 30, and 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 Loan A Facility
Senior Credit Facility
Maximum borrowing capacity			$ 100,000,000
Notes Payable and Other
Debt outstanding			96,163,000	99,897,000
Other
Notes Payable and Other
Debt outstanding			$ 7,920,000	$ 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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Leases - Components of Lease Costs (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Finance lease expense
Amortization of ROU assets	$ 1,205	$ 3,605
Interest on lease liabilities	194	578
Operating lease expense	3,230	9,453
Short-term lease expense	12	18
Variable lease expense	282	828
Total	$ 4,923	$ 14,482

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Goodwill - Narrative (Details) - USD ($) $ in Millions	Sep. 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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Acquisitions and Dispositions - Acquisitions Narrative (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($)	Dec. 31, 2018 USD ($) entity	Sep. 30, 2019 USD ($) entity	Sep. 30, 2018 entity	Jun. 30, 2019 USD ($)
Business Acquisition [Line Items]
Number of acquisitions | entity				0
Revenues from business acquired			$ 600
Operating loss of business acquired			$ 100
Acquisition that Provides Pipeline Integrity Management Software
Business Acquisition [Line Items]
Number of acquisitions | entity			1
Cash consideration paid			$ 4,843
Contingent consideration, maximum amount	$ 4,300		$ 4,300
Contingent consideration payment period based upon achievement of specific performance metrics			3 years
Revenues from business acquired	600
Operating loss of business acquired	100
Provisional fair value of property, plant, and equipment	65		$ 65
Acquisition 2018
Business Acquisition [Line Items]
Number of acquisitions | entity		1
Cash consideration paid		$ 143,100
Percentage of equity interest acquired		100.00%
Acquisition 2018 | Previously Reported
Business Acquisition [Line Items]
Provisional fair value of property, plant, and equipment					$ 8,500
Provisional fair value of debt and other liabilities					$ 5,000
Acquisition 2018 | Restatement Adjustment
Business Acquisition [Line Items]
Decrease in fair value of property, plant and equipment	600
Increase in fair value of debt and other liabilities	$ 400

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Accounts Receivable, net (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Receivables [Abstract]
Trade accounts receivable	$ 154,250	$ 152,511
Allowance for doubtful accounts	(6,226)	(4,187)
Accounts receivable, net	$ 148,024	$ 148,324

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Description of Business and Basis of Presentation

9 Months Ended

Sep. 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, 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 results, net of tax, is classified separately in the accompanying Unaudited Condensed Consolidated Statements of Income (Loss). 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 each of the nine months ended September 30, 2019 and 2018, no customer represented 10% or more of the Company's 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 September 30, 2019 and September 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 61% and 190% for the three months ended September 30, 2019 and 2018, respectively. The Company's effective income tax rate was approximately 55% and 44% for the nine months ended September 30, 2019 and 2018, respectively. The effective income tax rate for the third quarter and first nine-months of 2019 and 2018 was higher than the statutory rate due to the impact of discrete items, GILTI, executive compensation, and other provisions resulting from the passage of the Tax Act and foreign tax rates different than statutory rates in the U.S..

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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Segment Disclosure (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) segment	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Segment Reporting [Abstract]
Number of operating segments | segment			3
Financial information by segment
Revenues	$ 192,192	$ 182,169	$ 569,595	$ 561,592
Gross profit	57,769	52,332	166,714	155,559
Income (loss) from operations	10,779	3,017	21,802	19,720
Depreciation and amortization	9,271	8,497	28,540	25,736
Intangible assets, net	106,893		106,893		$ 111,395
Total assets	728,027		728,027		694,037
Operating segments | Services
Financial information by segment
Revenues	152,572	141,340	454,079	434,653
Gross profit	43,330	38,838	127,903	113,675
Income (loss) from operations	15,757	8,289	40,715	36,892
Depreciation and amortization	6,882	5,951	21,360	17,892
Intangible assets, net	95,350		95,350		98,362
Total assets	545,863		545,863		523,506
Operating segments | International
Financial information by segment
Revenues	37,050	36,671	109,302	116,238
Gross profit	11,695	10,877	33,113	34,273
Income (loss) from operations	2,921	(662)	5,155	2,713
Depreciation and amortization	2,027	2,179	6,158	6,720
Intangible assets, net	9,982		9,982		11,143
Total assets	147,844		147,844		146,535
Operating segments | Products and Systems
Financial information by segment
Revenues	5,521	5,716	13,222	17,286
Gross profit	2,739	2,604	5,803	7,707
Income (loss) from operations	509	2,415	(1,224)	2,032
Depreciation and amortization	312	362	901	1,091
Intangible assets, net	1,247		1,247		1,438
Total assets	15,029		15,029		12,264
Corporate and eliminations
Financial information by segment
Revenues	(2,951)	(1,558)	(7,008)	(6,585)
Gross profit	5	13	(105)	(96)
Income (loss) from operations	(8,408)	(7,025)	(22,844)	(21,917)
Depreciation and amortization	50	$ 5	121	$ 33
Intangible assets, net	314		314		452
Total assets	$ 19,291		$ 19,291		$ 11,732

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Unaudited Condensed Consolidated Statements of Income (Loss) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Statement [Abstract]
Revenue	$ 192,192	$ 182,169	$ 569,595	$ 561,592
Cost of revenue	129,241	124,260	386,721	389,131
Depreciation	5,182	5,577	16,160	16,902
Gross profit	57,769	52,332	166,714	155,559
Selling, general and administrative expenses	42,328	41,931	126,014	122,232
Bad debt provision for troubled customers, net of recoveries	0	0	2,798	0
Pension withdrawal expense (benefit)	(45)	5,886	489	5,886
Gain on sale of subsidiary	0	(2,384)	0	(2,384)
Research and engineering	650	745	2,261	2,414
Depreciation and amortization	4,089	2,920	12,380	8,834
Acquisition-related expense (benefit), net	(32)	217	970	(1,143)
Income from operations	10,779	3,017	21,802	19,720
Interest expense	2,959	1,894	10,065	5,581
Income before provision for income taxes	7,820	1,123	11,737	14,139
Provision for income taxes	4,733	2,133	6,493	6,229
Net income (loss)	3,087	(1,010)	5,244	7,910
Less: Net income (loss) attributable to non-controlling interests, net of taxes	(6)	1	13	13
Net income (loss) attributable to Mistras Group, Inc.	$ 3,093	$ (1,011)	$ 5,231	$ 7,897
Earnings (loss) per common share:
Basic (in dollars per share)	$ 0.11	$ (0.04)	$ 0.18	$ 0.28
Diluted (in dollars per share)	$ 0.11	$ (0.04)	$ 0.18	$ 0.27
Weighted-average common shares outstanding:
Basic (in shares)	28,800	28,429	28,678	28,360
Diluted (in shares)	29,156	28,429	29,022	29,447

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Accounts Receivable, net

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

Accounts Receivable, net

Accounts Receivable, net

Accounts receivable consisted of the following:

	September 30, 2019			December 31, 2018
Trade accounts receivable	$	154,250		$	152,511
Allowance for doubtful accounts	(6,226		)	(4,187		)
Accounts receivable, net	$	148,024		$	148,324

The Company had $32.3 million and $16.1 million of unbilled revenues accrued as of September 30, 2019 and December 31, 2018, respectively. These amounts are included in 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 of 2019, the Company reversed $1.0 million of this reserve based on additional information obtained during the quarter. There were no changes during the third quarter of 2019.

During 2019, the Company sold to an unaffiliated third party, without recourse, its remaining outstanding receivables owed from a customer which filed for bankruptcy, and for which the Company had initially recorded 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 second quarter of 2019, the Company recorded a recovery $1.7 million, related to a bad debt provision for the receivables due from this customer. This matter is considered fully resolved.

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Accrued Expenses and Other Current Liabilities

9 Months Ended

Sep. 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:

	September 30, 2019		December 31, 2018
Accrued salaries, wages and related employee benefits	$	34,020	$	29,959
Contingent consideration, current portion	2,732		1,687
Accrued workers’ compensation and health benefits	4,882		5,086
Deferred revenue	5,153		5,046
Pension accrual	3,064		5,585
Right-of-use liability - operating	9,636		—
Other accrued expenses	26,965		26,532
Total	$	86,452	$	73,895

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Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Schedule of long-term debt

Long-term debt consisted of the following:

	September 30, 2019			December 31, 2018
Senior credit facility	$	163,233		$	181,656
Senior secured term loan, net of debt issuance costs of $0.1 million	96,163			99,897
Notes payable	—			68
Other	7,920			8,999
Total debt	267,316			290,620
Less: Current portion	(6,563		)	(6,833		)
Long-term debt, net of current portion	$	260,753		$	283,787

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Property, Plant and Equipment, net (Tables)

9 Months Ended

Sep. 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)	September 30, 2019			December 31, 2018
Land		$	2,657		$	2,680
Buildings and improvements	30-40	24,031			24,338
Office furniture and equipment	5-8	18,037			16,170
Machinery and equipment	5-7	221,555			208,245
		266,280			251,433
Accumulated depreciation and amortization		(170,778		)	(157,538		)
Property, plant and equipment, net		$	95,502		$	93,895

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Description of Business and Basis of Presentation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Jan. 01, 2019
Concentration Risk [Line Items]
Effective income tax rate	61.00%	190.00%	55.00%	44.00%
ROU operating assets	$ 42,433		$ 42,433
ROU operating lease liabilities	$ 43,167		$ 43,167
ASU 2016-02
Concentration Risk [Line Items]
ROU operating assets					$ 38,000
ROU operating lease liabilities					$ 38,000

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Earnings per Share - Narrative (Details) shares in Thousands	3 Months Ended
	Sep. 30, 2018 shares
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common stock excluded from computation of diluted earnings per share due to net loss for the period (in shares)	805
Restricted Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common stock excluded from computation of diluted earnings per share due to net loss for the period (in shares)	364

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Acquisitions and Dispositions - Dispositions (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain on sale of subsidiary	$ 0	$ 2,384	$ 0	$ 2,384
Foreign Subsidiaries | Products and Systems | Disposal Group, Disposed of by Sale, Not Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration received on sale of subsidiary		4,300		4,300
Post-closing adjustment included in consideration received from sale of subsidiary		$ 500		500
Gain on sale of subsidiary				$ 2,400
Term of agreement to purchase products from the buyer on sale of subsidiary		3 years		3 years
Amount of purchased commitment to buy products from the buyer on sale of subsidiary		$ 2,300		$ 2,300

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Goodwill - Changes in Carrying Amount of Goodwill (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Goodwill [Roll Forward]
Balance at December 31, 2018	$ 279,259
Goodwill acquired during the period	1,753
Adjustments to preliminary purchase price allocations	923
Foreign currency translation	1,186
Balance at September 30, 2019	283,121
Services
Goodwill [Roll Forward]
Balance at December 31, 2018	243,476
Goodwill acquired during the period	1,753
Adjustments to preliminary purchase price allocations	923
Foreign currency translation	2,830
Balance at September 30, 2019	248,982
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	(1,644)
Balance at September 30, 2019	34,139
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 September 30, 2019	$ 0

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Oct. 31, 2019
Document and Entity Information
Entity Registrant Name	Mistras Group, Inc.
Entity Central Index Key	0001436126
Document Type	10-Q
Document Period End Date	Sep. 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		28,915,088
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3

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Repurchase of Common Stock (Details) - Stock Repurchase Plan - USD ($)	9 Months Ended
	Sep. 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

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Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 3,087	$ (1,010)	$ 5,244	$ 7,910
Other comprehensive income:
Foreign currency translation adjustments	(5,425)	14	355	(4,051)
Comprehensive income (loss)	(2,338)	(996)	5,599	3,859
Less: comprehensive income (loss) attributable to non-controlling interest	(8)	0	11	10
Comprehensive income (loss) attributable to Mistras Group, Inc.	$ (2,330)	$ (996)	$ 5,588	$ 3,849

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Revenue

9 Months Ended

Sep. 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 September 30, 2019	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	100,927	$	11,561	$	71	$	—		$	112,559
Aerospace & Defense	12,420		9,626		438		—			22,484
Industrials	15,612		5,453		506		—			21,571
Power generation & Transmission	7,215		3,462		461		—			11,138
Other Process Industries	6,942		2,674		304		—			9,920
Infrastructure, Research & Engineering	4,205		1,964		2,964		—			9,133
Other	5,251		2,310		777		(2,951		)	5,387
Total	$	152,572	$	37,050	$	5,521	$	(2,951	)	$	192,192

Three Months Ended September 30, 2018	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	90,584	$	8,843	$	115	$	—		$	99,542
Aerospace & Defense	12,287		13,117		400		—			25,804
Industrials	17,523		6,080		1,191		—			24,794
Power generation & Transmission	6,341		3,202		1,334		—			10,877
Other Process Industries	6,677		1,650		11		—			8,338
Infrastructure, Research & Engineering	2,629		1,777		1,576		—			5,982
Other	5,299		2,002		1,089		(1,558		)	6,832
Total	$	141,340	$	36,671	$	5,716	$	(1,558	)	$	182,169

Nine Months Ended September 30, 2019	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	301,696	$	33,033	$	551	$	—		$	335,280
Aerospace & Defense	38,725		31,783		1,060		—			71,568
Industrials	51,373		15,987		1,585		—			68,945
Power generation & Transmission	21,829		7,383		2,328		—			31,540
Other Process Industries	19,644		7,420		376		—			27,440
Infrastructure, Research & Engineering	9,601		7,214		4,869		—			21,684
Other	11,211		6,482		2,453		(7,008		)	13,138
Total	$	454,079	$	109,302	$	13,222	$	(7,008	)	$	569,595

Nine Months Ended September 30, 2018	Services		International		Products		Corp/Elim			Total
Oil & Gas	$	287,620	$	27,512	$	1,052	$	—		$	316,184
Aerospace & Defense	38,115		42,468		1,836		—			82,419
Industrials	45,847		20,298		2,656		—			68,801
Power generation & Transmission	23,378		6,728		3,444		—			33,550
Other Process Industries	18,222		6,349		49		—			24,620
Infrastructure, Research & Engineering	8,723		6,848		3,337		—			18,908
Other	12,748		6,035		4,912		(6,585		)	17,110
Total	$	434,653	$	116,238	$	17,286	$	(6,585	)	$	561,592

Revenue per key geographic location was as follows:

Three Months Ended September 30, 2019	Services		International		Products		Corp/Elim			Total
United States	$	123,585	$	128	$	3,780	$	(1,084	)	$	126,409
Other Americas	26,981		1,842		72		32			28,927
Europe	1,157		31,817		513		(1,844		)	31,643
Asia-Pacific	849		3,263		1,156		(55		)	5,213
Total	$	152,572	$	37,050	$	5,521	$	(2,951	)	$	192,192

Three Months Ended September 30, 2018	Services		International		Products		Corp/Elim			Total
United States	$	118,415	$	82	$	2,806	$	(849	)	$	120,454
Other Americas	21,712		1,894		192		(141		)	23,657
Europe	748		33,654		1,184		(557		)	35,029
Asia-Pacific	465		1,041		1,534		(11		)	3,029
Total	$	141,340	$	36,671	$	5,716	$	(1,558	)	$	182,169

Nine Months Ended September 30, 2019	Services		International		Products		Corp/Elim			Total
United States	$	368,600	$	461	$	8,727	$	(3,638	)	$	374,150
Other Americas	82,494		5,757		209		(232		)	88,228
Europe	1,855		97,098		1,370		(3,079		)	97,244
Asia-Pacific	1,130		5,986		2,916		(59		)	9,973
Total	$	454,079	$	109,302	$	13,222	$	(7,008	)	$	569,595

Nine Months Ended September 30, 2018	Services		International		Products		Corp/Elim			Total
United States	$	364,813	$	506	$	8,846	$	(2,595	)	$	371,570
Other Americas	66,170		5,751		552		(1,138		)	71,335
Europe	3,037		105,499		3,118		(2,752		)	108,902
Asia-Pacific	633		4,482		4,770		(100		)	9,785
Total	$	434,653	$	116,238	$	17,286	$	(6,585	)	$	561,592

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 Sheets. 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 Sheets at the end of each reporting period within accounts receivables or 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 $3.4 million. Changes in the contract asset and liability balances during the quarter ended September 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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Acquisitions and Dispositions

9 Months Ended

Sep. 30, 2019

Business Combinations [Abstract]

Acquisitions and Dispositions

Acquisitions and Dispositions

Acquisitions

During the nine months ended September 30, 2019, the Company completed one acquisition that provides pipeline integrity management software and services to energy transportation companies. The Company acquired all the equity interest of the acquiree in exchange for aggregate consideration of $4.8 million in cash, contingent consideration of up to $4.3 million to be earned based upon the acquired business achieving specific performance metrics over the initial three years of operations from the acquisition date and working capital adjustments, which have not been finalized. The Company accounted for this transaction in accordance with the acquisition method of accounting for business combinations.

The following table summarizes the allocation of the preliminary purchase price to the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition, with the excess recorded as goodwill:

Cash paid	$	4,843
Contingent consideration	1,081
Total consideration	$	5,924
Current assets	$	1,282
Property, plant and equipment	65
Intangible assets	3,467
Goodwill	1,753
Current liabilities	(643		)
Net assets acquired	$	5,924

The assets and liabilities of the business acquired in 2019 are included in the Condensed Consolidated Balance Sheets based upon their estimated fair values on the date of acquisition as determined in a preliminary purchase price allocation, using available information and making assumptions management believes are reasonable. The Company is still in the process of completing its valuation of the assets acquired and liabilities assumed. Goodwill primarily relates to expected synergies and is generally fully deductible for tax purposes. Intangible assets primarily relate to technology and customer relationships.

The results of operations of the business acquired in 2019 have been included in the Services segment within the Unaudited Condensed Consolidated Statements of Income (Loss) from the closing date of this transaction and approximates $0.6 million for revenues and $0.1 million operating loss for the three and nine months ended September 30, 2019.

During the nine months ended September 30, 2018, the Company did not complete any acquisitions.

The Company completed one acquisition during the fourth quarter of 2018. The acquired company primarily provides services to the midstream area within the oil and gas industry, with headquarters in Canada and a location in the U.S. The Company acquired 100% of the equity interests of the acquiree's Canadian and U.S. entities in exchange for aggregate consideration of $143.1 million in cash. The Company accounted for this transaction in accordance with the acquisition method of accounting for business combinations.

During the three months ended September 30, 2019, the Company adjusted provisional amounts recorded and related effects as follows:

• The Company decreased the $8.5 million provisional fair value of property, plant and equipment by $0.6 million with a corresponding increase to goodwill.

• The Company increased the $5.0 million provisional fair value of debt and other liabilities by $0.4 million with a corresponding increase to goodwill.

The Company is still in the process of completing the remaining valuation of the assets acquired.

The Company has filed a claim with the seller and the Company's insurance carrier through which the Company has representations and warranty insurance with respect to certain matters that may impact the purchase price. This matter is currently being investigated and discussed with the seller and the Company's insurance carrier.

Acquisition-Related Expense

In the course of its acquisition activities, the Company incurs costs in connection with due diligence, such as 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 reported as Acquisition-related expense (benefit), net on the Unaudited Condensed Consolidated Statements of Income (Loss) and were as follows for the three and nine months ended September 30, 2019 and 2018:

	Three months ended September 30,					Nine months ended September 30,
	2019			2018		2019		2018
Due diligence, professional fees and other transaction costs	$	93		$	35	$	433	$	(334	)
Adjustments to fair value of contingent consideration liabilities	(125		)	182		537		(809		)
Acquisition-related expense (benefit), net	$	(32	)	$	217	$	970	$	(1,143	)

The Company's contingent consideration liabilities are included in Accrued expenses and other current liabilities and Other long-term liabilities on the Condensed Consolidated Balance Sheets.

Dispositions

During the third quarter of 2018, substantially all of the assets and liabilities of a subsidiary in the Products and Systems segment were sold for approximately $4.3 million, inclusive of a $0.5 million post-closing adjustment. For the nine months ended September 30, 2018, the Company recognized a gain of approximately $2.4 million related to the sale, which is reported as a Gain on sale of subsidiary on the Unaudited Condensed Consolidated Statement of Income (Loss). The sale also included a three-year agreement to purchase products from the buyer, with a cumulative commitment of $2.3 million (see Note 14–Commitments and Contingencies).

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Intangible Assets

9 Months Ended

Sep. 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:

		September 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	$	112,592	$	(65,615	)	$	46,977	$	112,624	$	(60,993	)	$	51,631
Software/Technology	3-15	72,198		(17,071		)	55,127		67,240		(13,319		)	53,921
Covenants not to compete	2-5	12,735		(11,416		)	1,319		12,593		(10,825		)	1,768
Other	2-12	10,726		(7,256		)	3,470		10,317		(6,242		)	4,075
Total		$	208,251	$	(101,358	)	$	106,893	$	202,774	$	(91,379	)	$	111,395

Amortization expense for the three months ended September 30, 2019 and September 30, 2018 was approximately $3.4 million and $2.5 million, respectively.

Amortization expense for the nine months ended September 30, 2019 and September 30, 2018 was approximately $10.5 million and $7.5 million, respectively.

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Revenue - Narrative (Details) $ in Millions	9 Months Ended
	Sep. 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	$ 3.4
Revenue, practical expedient, incremental cost of obtaining a contract, maximum period	1 year

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 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:

	Nine months ended September 30,
	2019			2018
Beginning balance	$	2,365		$	5,508
Acquisitions	1,081			—
Payments	(755		)	(2,282		)
Accretion of liability	85			149
Revaluation	452			(957		)
Foreign currency translation	50			(65		)
Ending balance	$	3,278		$	2,353

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Goodwill (Tables)

9 Months Ended

Sep. 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	1,753		—			—		1,753
Adjustments to preliminary purchase price allocations	923		—			—		923
Foreign currency translation	2,830		(1,644		)	—		1,186
Balance at September 30, 2019	$	248,982	$	34,139		$	—	$	283,121

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Leases

9 Months Ended

Sep. 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 Sheets includes the following related to operating leases:

Leases	Classification	Nine months ended September 30, 2019
Assets
Right-of-use assets	Other Assets	$	42,433
Liabilities
Right-of-use liability - current	Accrued and other current liabilities	$	9,636
Right-of-use liability - long-term	Other liabilities	33,531
Total right-of-use liabilities		$	43,167

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 $4.7 million as of September 30, 2019 and total rent payments made during the three and nine months ended September 30, 2019 were approximately $0.2 million and $0.7 million, respectively.

As of September 30, 2019, the total ROU assets attributable to finance leases are approximately $16.5 million, which is included in Property, plant, and equipment, net on the Condensed Consolidated Balance Sheets.

The components of lease costs were as follows:

	Classification	Three months ended September 30, 2019		Nine months ended September 30, 2019
Finance lease expense
Amortization of ROU assets	Depreciation and amortization	$	1,205	$	3,605
Interest on lease liabilities	Interest expense	194		578
Operating lease expense	Selling, General & Administrative expenses	3,230		9,453
Short-term lease expense	Selling, General & Administrative expenses	12		18
Variable lease expense	Selling, General & Administrative expenses	282		828
Total		$	4,923	$	14,482

Additional information related to leases was as follows:

	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities for finance leases
Finance - financing cash flows	$	3,338
Finance - operating cash flows	$	578
Operating - operating cash flows	$	9,361
ROU assets obtained in the exchange for lease liabilities
Finance leases	$	5,536
Operating leases	$	12,766
Weighted-average remaining lease term (in years)
Finance leases	6.0
Operating leases	6.1
Weighted-average discount rate
Finance leases	6.2		%
Operating leases	6.0		%

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

	Finance			Operating
Remainder of 2019	$	1,761		$	3,130
2020	5,119			11,431
2021	3,420			8,955
2022	2,550			6,877
2023	1,661			5,976
Thereafter	1,465			15,677
Total	15,976			52,046
Less: Present value discount	(1,426		)	(8,879		)
Lease liability	$	14,550		$	43,167

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 Sheets includes the following related to operating leases:

Leases	Classification	Nine months ended September 30, 2019
Assets
Right-of-use assets	Other Assets	$	42,433
Liabilities
Right-of-use liability - current	Accrued and other current liabilities	$	9,636
Right-of-use liability - long-term	Other liabilities	33,531
Total right-of-use liabilities		$	43,167

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 $4.7 million as of September 30, 2019 and total rent payments made during the three and nine months ended September 30, 2019 were approximately $0.2 million and $0.7 million, respectively.

As of September 30, 2019, the total ROU assets attributable to finance leases are approximately $16.5 million, which is included in Property, plant, and equipment, net on the Condensed Consolidated Balance Sheets.

The components of lease costs were as follows:

	Classification	Three months ended September 30, 2019		Nine months ended September 30, 2019
Finance lease expense
Amortization of ROU assets	Depreciation and amortization	$	1,205	$	3,605
Interest on lease liabilities	Interest expense	194		578
Operating lease expense	Selling, General & Administrative expenses	3,230		9,453
Short-term lease expense	Selling, General & Administrative expenses	12		18
Variable lease expense	Selling, General & Administrative expenses	282		828
Total		$	4,923	$	14,482

Additional information related to leases was as follows:

	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities for finance leases
Finance - financing cash flows	$	3,338
Finance - operating cash flows	$	578
Operating - operating cash flows	$	9,361
ROU assets obtained in the exchange for lease liabilities
Finance leases	$	5,536
Operating leases	$	12,766
Weighted-average remaining lease term (in years)
Finance leases	6.0
Operating leases	6.1
Weighted-average discount rate
Finance leases	6.2		%
Operating leases	6.0		%

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

	Finance			Operating
Remainder of 2019	$	1,761		$	3,130
2020	5,119			11,431
2021	3,420			8,955
2022	2,550			6,877
2023	1,661			5,976
Thereafter	1,465			15,677
Total	15,976			52,046
Less: Present value discount	(1,426		)	(8,879		)
Lease liability	$	14,550		$	43,167

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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Description of Business and Basis of Presentation (Policies)

9 Months Ended

Sep. 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 results, net of tax, is classified separately in the accompanying Unaudited Condensed Consolidated Statements of Income (Loss). 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

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 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

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 Sheets. 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 Sheets at the end of each reporting period within accounts receivables or 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

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.

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.

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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Acquisitions and Dispositions (Tables)

9 Months Ended

Sep. 30, 2019

Business Combinations [Abstract]

Schedule of estimated fair value of assets acquired and liabilities assumed at the date of acquisition

The following table summarizes the allocation of the preliminary purchase price to the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition, with the excess recorded as goodwill:

Cash paid	$	4,843
Contingent consideration	1,081
Total consideration	$	5,924
Current assets	$	1,282
Property, plant and equipment	65
Intangible assets	3,467
Goodwill	1,753
Current liabilities	(643		)
Net assets acquired	$	5,924

Schedule of acquisition-related expenses

These amounts are reported as Acquisition-related expense (benefit), net on the Unaudited Condensed Consolidated Statements of Income (Loss) and were as follows for the three and nine months ended September 30, 2019 and 2018:

	Three months ended September 30,					Nine months ended September 30,
	2019			2018		2019		2018
Due diligence, professional fees and other transaction costs	$	93		$	35	$	433	$	(334	)
Adjustments to fair value of contingent consideration liabilities	(125		)	182		537		(809		)
Acquisition-related expense (benefit), net	$	(32	)	$	217	$	970	$	(1,143	)

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Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Basic earnings per share:
Net income (loss) attributable to Mistras Group, Inc.	$ 3,093	$ (1,011)	$ 5,231	$ 7,897
Denominator:
Weighted-average common shares outstanding (in shares)	28,800	28,429	28,678	28,360
Basic earnings (loss) per share (in dollars per share)	$ 0.11	$ (0.04)	$ 0.18	$ 0.28
Denominator:
Weighted-average common shares outstanding (in shares)	28,800	28,429	28,678	28,360
Dilutive effect of stock options outstanding (in shares)	129	0	147	739
Dilutive effect of restricted stock units outstanding (in shares)	227	0	197	348
Weighted average common shares outstanding, diluted (in shares)	29,156	28,429	29,022	29,447
Diluted earnings (loss) per share (in dollars per share)	$ 0.11	$ (0.04)	$ 0.18	$ 0.27

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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	9 Months Ended
	Sep. 30, 2019 USD ($) director shares	Sep. 30, 2018 USD ($) 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	6
Awards issued (in shares) | shares	30	19
Grant date fair value of awards issued | $	$ 450	$ 400

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Share-Based Compensation - Equity Incentive Plans (Details)	9 Months Ended
	Sep. 30, 2019 plan shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of employee stock ownership plans | plan	2
2009 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards that may be granted (in shares) | shares	0

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Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Total debt	$ 267,316	$ 290,620
Less: Current portion	(6,563)	(6,833)
Long-term debt, net of current portion	260,753	283,787
Senior credit facility
Debt Instrument [Line Items]
Total debt	163,233	181,656
Senior credit facility | Term Loan A Facility
Debt Instrument [Line Items]
Total debt	96,163	99,897
Debt issuance costs	100	100
Notes payable
Debt Instrument [Line Items]
Total debt	0	68
Other
Debt Instrument [Line Items]
Total debt	$ 7,920	$ 8,999

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Leases - Narrative (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2019 USD ($)
Lessee, Lease, Description [Line Items]
ROU operating lease liabilities	$ 43,167	$ 43,167
Operating rental payments		9,361
ROU finance lease assets	16,500	16,500
Operating Lease Arrangement | Company's Headquarters
Lessee, Lease, Description [Line Items]
ROU operating lease liabilities	4,700	4,700
Operating rental payments	$ 200	$ 700

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 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)	28,915,088	28,562,608

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Commitments and Contingencies (Details)	1 Months Ended				3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 31, 2019 USD ($)	Jan. 31, 2018 USD ($)	Apr. 30, 2017	Sep. 30, 2016 USD ($)	Sep. 30, 2019 USD ($) subsidiary claim arrangement	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) subsidiary claim plaintiff arrangement	Sep. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2018 USD ($)
Litigation
Number of lawsuits filed | claim							1
Number of injured individuals filing lawsuit | plaintiff							1
Number of remaining unresolved claims | claim					2		2
Charges related to potential liability for withdrawal from multi-employer pension plan					$ (45,000)	$ 5,886,000	$ 489,000	$ 5,886,000
Pension accrual					$ 3,064,000		3,064,000				$ 5,585,000
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						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					$ 1,100,000		$ 1,100,000
Payments of severance obligations							200,000
Reversal of severance obligations							200,000
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					7,900,000		7,900,000
Subsequent Event
Litigation
Payment to pension plan	$ 900,000
Subsequent Event | Pension Related Contingencies
Litigation
Charges related to potential liability for withdrawal from multi-employer pension plan	$ 900,000
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		3 years
Amount of purchased commitment to buy products from the buyer on sale of subsidiary						$ 2,300,000		$ 2,300,000
Remaining balance under purchase commitment agreement					$ 1,600,000		$ 1,600,000

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Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities
Net income	$ 5,244	$ 7,910
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	28,540	25,736
Deferred income taxes	3,151	3,188
Share-based compensation expense	4,598	4,760
Bad debt provision for troubled customers, net of recoveries	2,798	0
Fair value adjustments to contingent consideration	537	(808)
Foreign currency (gain) loss	(1,010)	618
Gain on sale of subsidiary	0	(2,384)
Other	(143)	207
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions
Accounts receivable	(3,098)	(20,258)
Inventories	(391)	(1,746)
Prepaid expenses and other assets	439	918
Accounts payable	(261)	3,019
Accrued expenses and other liabilities	(2,465)	7,456
Income taxes payable	2,537	(4,432)
Net cash provided by operating activities	40,476	24,184
Cash flows from investing activities
Purchase of property, plant and equipment	(17,275)	(15,386)
Disposition of business, net of cash sold	0	4,800
Purchase of intangible assets	(704)	(385)
Acquisition of business, net of cash acquired	(4,822)	0
Proceeds from sale of equipment	1,173	1,140
Net cash used in investing activities	(21,628)	(9,831)
Cash flows from financing activities
Repayment of finance lease obligations	(3,338)	(4,464)
Proceeds from borrowings of long-term debt	684	1,743
Repayment of long-term debt	(5,189)	(1,857)
Proceeds from revolver	20,500	28,076
Repayment of revolver	(38,500)	(43,990)
Payment of contingent consideration for business acquisitions	(755)	(2,282)
Taxes paid related to net share settlement of share-based awards	(2,955)	(1,404)
Proceeds from exercise of stock options	32	273
Net cash used in financing activities	(29,521)	(23,905)
Effect of exchange rate changes on cash and cash equivalents	(499)	(916)
Net change in cash and cash equivalents	(11,172)	(10,468)
Cash and cash equivalents at beginning of period	25,544	27,541
Cash and cash equivalents at end of period	14,372	17,073
Supplemental disclosure of cash paid
Interest	9,944	5,418
Income taxes	4,011	9,658
Noncash investing and financing
Equipment acquired through finance lease obligations	$ 5,536	$ 3,850

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Acquisitions and Dispositions - Estimated Fair Value of the Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Business Acquisition [Line Items]
Goodwill	$ 283,121	$ 279,259
Acquisition that Provides Pipeline Integrity Management Software
Business Acquisition [Line Items]
Cash paid	4,843
Contingent consideration	1,081
Total consideration	5,924
Current assets	1,282
Property, plant and equipment	65
Intangible assets	3,467
Goodwill	1,753
Current liabilities	(643)
Net assets acquired	$ 5,924

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Accounts Receivable, net - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended					9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Unbilled revenues accrued	$ 32,300			$ 16,100		$ 32,300
Bad debt provision (reversal) for doubtful accounts receivables	$ 0				$ 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		$ 1,700	$ 200

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Segment Disclosure (Tables)

9 Months Ended

Sep. 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: (with intercompany transactions eliminated in Corporate and eliminations)

	Three months ended						Nine months ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Revenues
Services	$	152,572		$	141,340		$	454,079		$	434,653
International	37,050			36,671			109,302			116,238
Products and Systems	5,521			5,716			13,222			17,286
Corporate and eliminations	(2,951		)	(1,558		)	(7,008		)	(6,585		)
	$	192,192		$	182,169		$	569,595		$	561,592

	Three months ended				Nine months ended
	September 30, 2019		September 30, 2018		September 30, 2019			September 30, 2018
Gross profit
Services	$	43,330	$	38,838	$	127,903		$	113,675
International	11,695		10,877		33,113			34,273
Products and Systems	2,739		2,604		5,803			7,707
Corporate and eliminations	5		13		(105		)	(96		)
	$	57,769	$	52,332	$	166,714		$	155,559

	Three months ended						Nine months ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Income (loss) from operations
Services	$	15,757		$	8,289		$	40,715		$	36,892
International	2,921			(662		)	5,155			2,713
Products and Systems	509			2,415			(1,224		)	2,032
Corporate and eliminations	(8,408		)	(7,025		)	(22,844		)	(21,917		)
	$	10,779		$	3,017		$	21,802		$	19,720

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

	Three months ended				Nine months ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Depreciation and amortization
Services	$	6,882	$	5,951	$	21,360	$	17,892
International	2,027		2,179		6,158		6,720
Products and Systems	312		362		901		1,091
Corporate and eliminations	50		5		121		33
	$	9,271	$	8,497	$	28,540	$	25,736

	September 30, 2019		December 31, 2018
Intangible assets, net
Services	$	95,350	$	98,362
International	9,982		11,143
Products and Systems	1,247		1,438
Corporate and eliminations	314		452
	$	106,893	$	111,395

	September 30, 2019		December 31, 2018
Total assets
Services	$	545,863	$	523,506
International	147,844		146,535
Products and Systems	15,029		12,264
Corporate and eliminations	19,291		11,732
	$	728,027	$	694,037

Refer to Note 2–Revenue, for revenues by geographic area for the three and nine months ended September 30, 2019 and 2018.

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Accrued Expenses and Other Current Liabilities (Tables)

9 Months Ended

Sep. 30, 2019

Payables and Accruals [Abstract]

Schedule of accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following:

	September 30, 2019		December 31, 2018
Accrued salaries, wages and related employee benefits	$	34,020	$	29,959
Contingent consideration, current portion	2,732		1,687
Accrued workers’ compensation and health benefits	4,882		5,086
Deferred revenue	5,153		5,046
Pension accrual	3,064		5,585
Right-of-use liability - operating	9,636		—
Other accrued expenses	26,965		26,532
Total	$	86,452	$	73,895

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Long-Term Debt

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

Long-term debt consisted of the following:

	September 30, 2019			December 31, 2018
Senior credit facility	$	163,233		$	181,656
Senior secured term loan, net of debt issuance costs of $0.1 million	96,163			99,897
Notes payable	—			68
Other	7,920			8,999
Total debt	267,316			290,620
Less: Current portion	(6,563		)	(6,833		)
Long-term debt, net of current portion	$	260,753		$	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 provides 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 September 30, 2019, the Company had borrowings of $259.4 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 $0.9 million as of September 30, 2019, which is included in Other assets on the Condensed Consolidated Balance Sheets.

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 certain 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, June 30, and 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 the Company and its 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 September 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

The Company's other debt includes local bank financing provided at the local subsidiary level used to support working capital requirements and fund capital expenditures. At September 30, 2019, there was an aggregate of approximately $7.9 million outstanding, payable at various times from 2019 to 2029. Monthly payments range from $1 thousand to $17 thousand and interest rates range from 0.4% to 6.2%.

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Share-Based Compensation

9 Months Ended

Sep. 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 two equity incentive plans: (i) the 2009 Long-Term Incentive Plan (the "2009 Plan") and (ii) the 2016 Long-Term Incentive Plan (the "2016 Plan"). No further awards may be granted under the 2009 Plan, although awards granted under the 2009 Plan 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 nine months ended September 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 September 30, 2019.

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

	Nine months ended September 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	(2,093	)	$	13.45	(25	)	$	10.75
Expired or forfeited	(7	)	$	10.00	—		$	—
Outstanding at end of period:	5		$	22.35	2,105		$	13.47

Restricted Stock Unit Awards

For the three months ended September 30, 2019 and September 30, 2018, the Company recognized share-based compensation expense related to restricted stock unit awards of $1.0 million and $1.3 million, respectively. For the nine months ended September 30, 2019 and September 30, 2018, the Company recognized share-based compensation expense related to restricted stock unit awards of $3.0 million and $3.3 million, respectively. As of September 30, 2019, there was $7.8 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 2.6 years. 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 vesting activity of restricted stock unit awards, with the respective fair value of the awards, is as follows:

	Nine months ended September 30,
	2019		2018
Restricted stock awards vested	148		158
Fair value of awards vested	$	2,168	$	3,406

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

	Nine months ended September 30,
	2019		2018
Awards issued	30		19
Grant date fair value of awards issued	$	450	$	400

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

	Nine months ended September 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	(148	)	$	20.17	(158	)	$	20.66
Forfeited	(36	)	$	18.38	(34	)	$	20.36
Outstanding at end of period:	593		$	17.08	551		$	20.37

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 equity-classified.

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

	Nine months ended September 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	(36	)	$	14.06	(28	)	$	19.49
Released	(77	)	$	15.86	(61	)	$	15.04
Forfeited	—		$	—	(12	)	$	16.16
Outstanding at end of period:	354		$	16.45	300		$	18.05

During the nine months ended September 30, 2019 and September 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. Calendar year 2019 PRSUs decreased approximately 33,000 units during the nine months ended September 30, 2019 based on forecasted results for calendar year 2019. Calendar year 2018 PRSUs decreased approximately 32,000 units during the nine months ended September 30, 2018 based on forecasted results for calendar year 2018.

As of September 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 Sheets.

For the three months ended September 30, 2019 and September 30, 2018, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $0.5 million and $0.4 million, respectively. For the nine months ended September 30, 2019 and September 30, 2018, the Company recognized aggregate share-based compensation expense related to the awards described above of approximately $1.2 million and $1.0 million, respectively. At September 30, 2019, there was $3.1 million of total unrecognized compensation costs related to approximately 354,000 non-vested PRSUs, which is expected to be recognized over a remaining weighted-average period of 2.3 years.

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Property, Plant and Equipment, net

9 Months Ended

Sep. 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)	September 30, 2019			December 31, 2018
Land		$	2,657		$	2,680
Buildings and improvements	30-40	24,031			24,338
Office furniture and equipment	5-8	18,037			16,170
Machinery and equipment	5-7	221,555			208,245
		266,280			251,433
Accumulated depreciation and amortization		(170,778		)	(157,538		)
Property, plant and equipment, net		$	95,502		$	93,895

Depreciation expense for each of the three months ended September 30, 2019 and September 30, 2018 was approximately $5.8 million and $6.0 million, respectively.

Depreciation expense for each of the nine months ended September 30, 2019 and September 30, 2018 was approximately $18.0 million and $18.2 million, respectively.

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Segment Disclosure

9 Months Ended

Sep. 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: (with intercompany transactions eliminated in Corporate and eliminations)

	Three months ended						Nine months ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Revenues
Services	$	152,572		$	141,340		$	454,079		$	434,653
International	37,050			36,671			109,302			116,238
Products and Systems	5,521			5,716			13,222			17,286
Corporate and eliminations	(2,951		)	(1,558		)	(7,008		)	(6,585		)
	$	192,192		$	182,169		$	569,595		$	561,592

	Three months ended				Nine months ended
	September 30, 2019		September 30, 2018		September 30, 2019			September 30, 2018
Gross profit
Services	$	43,330	$	38,838	$	127,903		$	113,675
International	11,695		10,877		33,113			34,273
Products and Systems	2,739		2,604		5,803			7,707
Corporate and eliminations	5		13		(105		)	(96		)
	$	57,769	$	52,332	$	166,714		$	155,559

	Three months ended						Nine months ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Income (loss) from operations
Services	$	15,757		$	8,289		$	40,715		$	36,892
International	2,921			(662		)	5,155			2,713
Products and Systems	509			2,415			(1,224		)	2,032
Corporate and eliminations	(8,408		)	(7,025		)	(22,844		)	(21,917		)
	$	10,779		$	3,017		$	21,802		$	19,720

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

	Three months ended				Nine months ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Depreciation and amortization
Services	$	6,882	$	5,951	$	21,360	$	17,892
International	2,027		2,179		6,158		6,720
Products and Systems	312		362		901		1,091
Corporate and eliminations	50		5		121		33
	$	9,271	$	8,497	$	28,540	$	25,736

	September 30, 2019		December 31, 2018
Intangible assets, net
Services	$	95,350	$	98,362
International	9,982		11,143
Products and Systems	1,247		1,438
Corporate and eliminations	314		452
	$	106,893	$	111,395

	September 30, 2019		December 31, 2018
Total assets
Services	$	545,863	$	523,506
International	147,844		146,535
Products and Systems	15,029		12,264
Corporate and eliminations	19,291		11,732
	$	728,027	$	694,037

Refer to Note 2–Revenue, for revenues by geographic area for the three and nine months ended September 30, 2019 and 2018.

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Share-Based Compensation (Tables)

9 Months Ended

Sep. 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 September 30, 2019 and September 30, 2018:

	Nine months ended September 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	(2,093	)	$	13.45	(25	)	$	10.75
Expired or forfeited	(7	)	$	10.00	—		$	—
Outstanding at end of period:	5		$	22.35	2,105		$	13.47

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:

	Nine months ended September 30,
	2019		2018
Restricted stock awards vested	148		158
Fair value of awards vested	$	2,168	$	3,406

Schedule of fully-vested common stock issued to non-employee directors

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

	Nine months ended September 30,
	2019		2018
Awards issued	30		19
Grant date fair value of awards issued	$	450	$	400

Schedule of company's outstanding, nonvested restricted share units and performance restricted stock units

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

	Nine months ended September 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	(36	)	$	14.06	(28	)	$	19.49
Released	(77	)	$	15.86	(61	)	$	15.04
Forfeited	—		$	—	(12	)	$	16.16
Outstanding at end of period:	354		$	16.45	300		$	18.05

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

	Nine months ended September 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	(148	)	$	20.17	(158	)	$	20.66
Forfeited	(36	)	$	18.38	(34	)	$	20.36
Outstanding at end of period:	593		$	17.08	551		$	20.37

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Leases - Other Information Related to Leases (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Cash paid for amounts included in the measurement of lease liabilities for finance leases
Finance - financing cash flows	$ 3,338
Finance - operating cash flows	578
Operating - operating cash flows	9,361
ROU assets obtained in the exchange for lease liabilities
Finance leases	5,536
Operating leases	$ 12,766
Weighted-average remaining lease term (in years)
Finance leases	6 years 1 day
Operating leases	6 years 1 month 6 days
Weighted-average discount rate
Finance leases	6.20%
Operating leases	6.00%

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Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Gross Amount	$ 208,251		$ 208,251		$ 202,774
Accumulated Amortization	(101,358)		(101,358)		(91,379)
Net Carrying Amount	106,893		106,893		111,395
Amortization expense	3,400	$ 2,500	10,500	$ 7,500
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Gross Amount	112,592		112,592		112,624
Accumulated Amortization	(65,615)		(65,615)		(60,993)
Net Carrying Amount	46,977		$ 46,977		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	72,198		$ 72,198		67,240
Accumulated Amortization	(17,071)		(17,071)		(13,319)
Net Carrying Amount	55,127		$ 55,127		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	12,735		$ 12,735		12,593
Accumulated Amortization	(11,416)		(11,416)		(10,825)
Net Carrying Amount	1,319		$ 1,319		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	10,726		$ 10,726		10,317
Accumulated Amortization	(7,256)		(7,256)		(6,242)
Net Carrying Amount	$ 3,470		$ 3,470		$ 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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Fair Value Measurements (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Contingent Consideration Liability [Roll Forward]
Revaluation	$ (125)	$ 182	$ 537	$ (809)
Level 3
Contingent Consideration Liability [Roll Forward]
Beginning balance			2,365	5,508
Acquisitions			1,081	0
Payments			(755)	(2,282)
Accretion of liability			85	149
Revaluation			452	(957)
Foreign currency translation			50	(65)
Ending balance	$ 3,278	$ 2,353	$ 3,278	$ 2,353

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Share-Based Compensation - Performance Restricted Stock Units - Narrative (Details) - PRSUs shares in Thousands, $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019 USD ($) shares	Sep. 30, 2018 USD ($) shares	Sep. 30, 2019 USD ($) performance_metric shares	Sep. 30, 2018 USD ($) 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			(33)	(32)	(3)	4
Current liability related to discretionary PSUs	$ 0.1		$ 0.1
Recognized share-based compensation expense (benefit)	0.5	$ 0.4	1.2	$ 1.0
Unrecognized compensation cost	$ 3.1		$ 3.1
Nonvested shares outstanding (in shares) | shares	354	300	354	300	277	278
Weighted-average period over which unrecognized compensation cost is expected to be recognized (years)			2 years 3 months 15 days
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 - Restricted Stock Unit Awards - Narrative (Details) - Restricted Stock Unit Awards - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Recognized share-based compensation expense (benefit)	$ 1.0	$ 1.3	$ 3.0	$ 3.3
Unrecognized compensation cost, net of estimated forfeitures	$ 7.8		$ 7.8
Weighted-average period over which unrecognized compensation cost is expected to be recognized (years)			2 years 7 months 6 days

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Repurchase of Common Stock

9 Months Ended

Sep. 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. The Board of Directors approved the termination of the stock repurchase plan effective on April 1, 2019. There were no repurchases of common stock during 2019.

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Earnings per Share (Tables)

9 Months Ended

Sep. 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					Nine months ended
	September 30, 2019		September 30, 2018			September 30, 2019		September 30, 2018
Basic earnings per share:
Numerator:
Net income (loss) attributable to Mistras Group, Inc.	$	3,093	$	(1,011	)	$	5,231	$	7,897
Denominator:
Weighted-average common shares outstanding	28,800		28,429			28,678		28,360
Basic earnings per share	$	0.11	$	(0.04	)	$	0.18	$	0.28
Diluted earnings per share:
Numerator:
Net income (loss) attributable to Mistras Group, Inc.	$	3,093	$	(1,011	)	$	5,231	$	7,897
Denominator:
Weighted-average common shares outstanding	28,800		28,429			28,678		28,360
Dilutive effect of stock options outstanding(1)	129		—			147		739
Dilutive effect of restricted stock units outstanding(1)	227		—			197		348
	29,156		28,429			29,022		29,447
Diluted earnings per share	$	0.11	$	(0.04	)	$	0.18	$	0.27

⁽¹⁾ For the three months ended September 30, 2018, 805 and 364 shares related to stock options and restricted stock, respectively, were excluded from the calculation of diluted EPS due to the net loss for the period.

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Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Payables and Accruals [Abstract]
Accrued salaries, wages and related employee benefits	$ 34,020	$ 29,959
Contingent consideration, current portion	2,732	1,687
Accrued workers’ compensation and health benefits	4,882	5,086
Deferred revenue	5,153	5,046
Pension accrual	3,064	5,585
Right-of-use liability - operating	9,636	0
Other accrued expenses	26,965	26,532
Total	$ 86,452	$ 73,895

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Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Assets
Right-of-use assets	$ 42,433
Liabilities
Right-of-use liability - current	9,636	$ 0
Right-of-use liability - long-term	33,531
Total right-of-use liabilities	$ 43,167

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Leases - Maturity of Lease Liabilities (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Finance
Remainder of 2019	$ 1,761
2020	5,119
2021	3,420
2022	2,550
2023	1,661
Thereafter	1,465
Total	15,976
Less: Present value discount	(1,426)
Lease liability	14,550
Operating
Remainder of 2019	3,130
2020	11,431
2021	8,955
2022	6,877
2023	5,976
Thereafter	15,677
Total	52,046
Less: Present value discount	(8,879)
Lease liability	$ 43,167

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Share-Based Compensation - Restricted Stock Units Awards - Activity (Details) - Restricted Stock Unit Awards - $ / shares shares in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Restricted Stock Units Awards (Units)
Outstanding at beginning of period (in shares)	443	532
Granted (in shares)	334	211
Released (in shares)	(148)	(158)
Forfeited (in shares)	(36)	(34)
Outstanding at end of period (in shares)	593	551
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)	20.17	20.66
Forfeited (in dollars per share)	18.38	20.36
Outstanding at end of period (in dollars per share)	$ 17.08	$ 20.37

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Share-Based Compensation - Stock Options (Details) $ / shares in Units, shares in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($) $ / shares shares	Sep. 30, 2018 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation costs | $	$ 0
Common Stock Options
Outstanding at the beginning of the period (in shares) | shares	2,105	2,130
Granted (in shares) | shares	0	0
Exercised (in shares) | shares	(2,093)	(25)
Expired or forfeited (in shares) | shares	(7)	0
Outstanding at the end of the period (in shares) | shares	5	2,105
Weighted Average Exercise Price
Outstanding at the beginning of period (in dollars per share) | $ / shares	$ 13.47	$ 13.43
Granted (in dollars per share) | $ / shares	0.00	0.00
Exercised (in dollars per share) | $ / shares	13.45	10.75
Expired or forfeited (in dollars per share) | $ / shares	10.00	0.00
Outstanding at the end of period (in dollars per share) | $ / shares	$ 22.35	$ 13.47
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Recognized share-based compensation expense | $	$ 0	$ 0

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current Assets
Cash and cash equivalents	$ 14,372	$ 25,544
Accounts receivable, net	148,024	148,324
Inventories	13,419	13,053
Prepaid expenses and other current assets	17,135	15,870
Total current assets	192,950	202,791
Property, plant and equipment, net	95,502	93,895
Intangible assets, net	106,893	111,395
Goodwill	283,121	279,259
Deferred income taxes	2,780	1,930
Other assets	46,781	4,767
Total assets	728,027	694,037
Current Liabilities
Accounts payable	13,428	13,863
Accrued expenses and other current liabilities	86,452	73,895
Current portion of long-term debt	6,563	6,833
Current portion of finance lease obligations	3,751
Current portion of finance lease obligations		3,922
Income taxes payable	1,049	1,958
Total current liabilities	111,243	100,471
Long-term debt, net of current portion	260,753	283,787
Obligations under finance leases, net of current portion	10,799
Obligations under finance leases, net of current portion		9,075
Deferred income taxes	27,458	23,148
Other long-term liabilities	39,428	6,482
Total liabilities	449,681	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, 28,915,088 and 28,562,608 shares issued	289	285
Additional paid-in capital	228,287	226,616
Retained earnings	76,784	71,553
Accumulated other comprehensive loss	(27,202)	(27,557)
Total Mistras Group, Inc. stockholders’ equity	278,158	270,897
Non-controlling interests	188	177
Total equity	278,346	271,074
Total liabilities and equity	$ 728,027	$ 694,037

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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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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 (loss)	7,910	7,897			7,897		13
Other comprehensive income, net of tax	(4,054)	(4,051)				(4,051)	(3)
Share-based payments	4,763	4,763		4,763
Net settlement of options and restricted stock units (in shares)			176
Net settlement of options and restricted stock units	$ (1,405)	(1,405)	$ 2	(1,407)
Exercise of stock options (in shares)	25		25
Exercise of stock options	$ 273	273		273
Ending balance (in shares) at Sep. 30, 2018			28,496
Ending balance at Sep. 30, 2018	278,278	278,095	$ 284	226,054	72,613	(20,856)	183
Beginning balance (in shares) at Jun. 30, 2018			28,374
Beginning balance at Jun. 30, 2018	277,854	277,671	$ 283	224,634	73,624	(20,870)	183
Increase (Decrease) in Stockholders' Equity
Net income (loss)	(1,010)	(1,011)			(1,011)		1
Other comprehensive income, net of tax	13	14				14	(1)
Share-based payments	1,899	1,899		1,899
Net settlement of options and restricted stock units (in shares)			97
Net settlement of options and restricted stock units	(751)	(751)	$ 1	(752)
Exercise of stock options (in shares)			25
Exercise of stock options	0	273		273
Ending balance (in shares) at Sep. 30, 2018			28,496
Ending balance at Sep. 30, 2018	278,278	278,095	$ 284	226,054	72,613	(20,856)	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 (loss)	5,244	5,231			5,231		13
Other comprehensive income, net of tax	353	355				355	(2)
Share-based payments	4,598	4,598		4,598
Net settlement of options and restricted stock units (in shares)			349
Net settlement of options and restricted stock units	$ (2,955)	(2,955)	$ 4	(2,959)
Exercise of stock options (in shares)	2,093		3
Exercise of stock options	$ 32	32		32
Ending balance (in shares) at Sep. 30, 2019			28,915
Ending balance at Sep. 30, 2019	278,346	278,158	$ 289	228,287	76,784	(27,202)	188
Beginning balance (in shares) at Jun. 30, 2019			28,685
Beginning balance at Jun. 30, 2019	281,279	281,083	$ 286	228,883	73,691	(21,777)	196
Increase (Decrease) in Stockholders' Equity
Net income (loss)	3,087	3,093			3,093		(6)
Other comprehensive income, net of tax	(5,427)	(5,425)				(5,425)	(2)
Share-based payments	1,682	1,682		1,682
Net settlement of options and restricted stock units (in shares)			230
Net settlement of options and restricted stock units	(2,275)	(2,275)	$ 3	(2,278)
Ending balance (in shares) at Sep. 30, 2019			28,915
Ending balance at Sep. 30, 2019	$ 278,346	$ 278,158	$ 289	$ 228,287	$ 76,784	$ (27,202)	$ 188

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Acquisitions and Dispositions - Acquisition-Related Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Business Combinations [Abstract]
Due diligence, professional fees and other transaction costs	$ 93	$ 35	$ 433	$ (334)
Adjustments to fair value of contingent consideration liabilities	(125)	182	537	(809)
Acquisition-related expense (benefit), net	$ (32)	$ 217	$ 970	$ (1,143)

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Property, Plant and Equipment, net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Property, Plant and Equipment, net
Property, plant and equipment, gross	$ 266,280		$ 266,280		$ 251,433
Accumulated depreciation and amortization	(170,778)		(170,778)		(157,538)
Property, plant and equipment, net	95,502		95,502		93,895
Depreciation expense	5,800	$ 6,000	18,000	$ 18,200
Land
Property, Plant and Equipment, net
Property, plant and equipment, gross	2,657		2,657		2,680
Buildings and improvements
Property, Plant and Equipment, net
Property, plant and equipment, gross	24,031		$ 24,031		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	18,037		$ 18,037		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	$ 221,555		$ 221,555		$ 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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Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Schedule of supplemental balance sheet information

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

Leases	Classification	Nine months ended September 30, 2019
Assets
Right-of-use assets	Other Assets	$	42,433
Liabilities
Right-of-use liability - current	Accrued and other current liabilities	$	9,636
Right-of-use liability - long-term	Other liabilities	33,531
Total right-of-use liabilities		$	43,167

Schedule of components of lease costs and other information related to leases

The components of lease costs were as follows:

	Classification	Three months ended September 30, 2019		Nine months ended September 30, 2019
Finance lease expense
Amortization of ROU assets	Depreciation and amortization	$	1,205	$	3,605
Interest on lease liabilities	Interest expense	194		578
Operating lease expense	Selling, General & Administrative expenses	3,230		9,453
Short-term lease expense	Selling, General & Administrative expenses	12		18
Variable lease expense	Selling, General & Administrative expenses	282		828
Total		$	4,923	$	14,482

Additional information related to leases was as follows:

	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities for finance leases
Finance - financing cash flows	$	3,338
Finance - operating cash flows	$	578
Operating - operating cash flows	$	9,361
ROU assets obtained in the exchange for lease liabilities
Finance leases	$	5,536
Operating leases	$	12,766
Weighted-average remaining lease term (in years)
Finance leases	6.0
Operating leases	6.1
Weighted-average discount rate
Finance leases	6.2		%
Operating leases	6.0		%

Schedule of maturities of finance lease liabilities

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

	Finance			Operating
Remainder of 2019	$	1,761		$	3,130
2020	5,119			11,431
2021	3,420			8,955
2022	2,550			6,877
2023	1,661			5,976
Thereafter	1,465			15,677
Total	15,976			52,046
Less: Present value discount	(1,426		)	(8,879		)
Lease liability	$	14,550		$	43,167

Schedule of maturities of finance lease liabilities

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

	Finance			Operating
Remainder of 2019	$	1,761		$	3,130
2020	5,119			11,431
2021	3,420			8,955
2022	2,550			6,877
2023	1,661			5,976
Thereafter	1,465			15,677
Total	15,976			52,046
Less: Present value discount	(1,426		)	(8,879		)
Lease liability	$	14,550		$	43,167

Schedule of future minimum operating lease commitments under previous lease accounting guidance

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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Intangible Assets (Tables)

9 Months Ended

Sep. 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:

		September 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	$	112,592	$	(65,615	)	$	46,977	$	112,624	$	(60,993	)	$	51,631
Software/Technology	3-15	72,198		(17,071		)	55,127		67,240		(13,319		)	53,921
Covenants not to compete	2-5	12,735		(11,416		)	1,319		12,593		(10,825		)	1,768
Other	2-12	10,726		(7,256		)	3,470		10,317		(6,242		)	4,075
Total		$	208,251	$	(101,358	)	$	106,893	$	202,774	$	(91,379	)	$	111,395

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Earnings per Share

9 Months Ended

Sep. 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					Nine months ended
	September 30, 2019		September 30, 2018			September 30, 2019		September 30, 2018
Basic earnings per share:
Numerator:
Net income (loss) attributable to Mistras Group, Inc.	$	3,093	$	(1,011	)	$	5,231	$	7,897
Denominator:
Weighted-average common shares outstanding	28,800		28,429			28,678		28,360
Basic earnings per share	$	0.11	$	(0.04	)	$	0.18	$	0.28
Diluted earnings per share:
Numerator:
Net income (loss) attributable to Mistras Group, Inc.	$	3,093	$	(1,011	)	$	5,231	$	7,897
Denominator:
Weighted-average common shares outstanding	28,800		28,429			28,678		28,360
Dilutive effect of stock options outstanding(1)	129		—			147		739
Dilutive effect of restricted stock units outstanding(1)	227		—			197		348
	29,156		28,429			29,022		29,447
Diluted earnings per share	$	0.11	$	(0.04	)	$	0.18	$	0.27

⁽¹⁾ For the three months ended September 30, 2018, 805 and 364 shares related to stock options and restricted stock, respectively, were excluded from the calculation of diluted EPS due to the net loss for the period.

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Goodwill

9 Months Ended

Sep. 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	1,753		—			—		1,753
Adjustments to preliminary purchase price allocations	923		—			—		923
Foreign currency translation	2,830		(1,644		)	—		1,186
Balance at September 30, 2019	$	248,982	$	34,139		$	—	$	283,121

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 September 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 September 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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Fair Value Measurements

9 Months Ended

Sep. 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:

	Nine months ended September 30,
	2019			2018
Beginning balance	$	2,365		$	5,508
Acquisitions	1,081			—
Payments	(755		)	(2,282		)
Accretion of liability	85			149
Revaluation	452			(957		)
Foreign currency translation	50			(65		)
Ending balance	$	3,278		$	2,353

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.