Mistras Group (NYSE:MG) reported fourth-quarter 2025 revenue growth and what management described as record profitability for a fourth quarter, citing stronger performance in aerospace and defense, power generation, and infrastructure that more than offset a decline in oil and gas tied to project timing and the closure of unprofitable laboratories.
Fourth-quarter performance driven by mix, pricing, and efficiency
President and CEO Natalia Shuman said consolidated revenue increased 5.1% year-over-year in the fourth quarter as the company executed initiatives aimed at restarting growth in the second half of 2025. Shuman highlighted double-digit gains across several end markets, led by aerospace and defense, which she called the company’s long-term growth engine.
- Aerospace and defense revenue increased $4.5 million, up 21.9% versus the prior-year quarter.
- Power generation rose $3.3 million, representing 33.2% growth.
- Industrials increased 6.7% year-over-year.
- Infrastructure grew $2.5 million, up 26.8% in the quarter.
The improved business mix helped lift fourth-quarter gross margin by 190 basis points to 28.4% on gross profit of nearly $51.5 million. Shuman said the quarter produced GAAP net income of $3.9 million and EPS of $0.12, while non-GAAP net income and EPS were $7.9 million and $0.20, respectively. Adjusted EBITDA was $24.8 million, up 18.2% year-over-year, and represented a 13.7% margin, a 160-basis-point improvement. Shuman said it was the company’s highest fourth-quarter Adjusted EBITDA and margin in its history and emphasized that results reflected pricing discipline, favorable mix, and operating efficiency rather than one-time actions alone.
Full-year results and cost actions
For full-year 2025, Shuman said consolidated revenue was $724 million, “slightly up year-over-year, excluding the impact of laboratory closures,” with growth in aerospace and defense, industrials, power generation, and infrastructure. She said the international segment posted nearly 6% revenue growth for the year, supported by industrials and aerospace and defense.
Senior Executive Vice President and CFO Ed Prajzner said gross profit was nearly $205 million for full-year 2025, up 6.4% from $192 million in the prior year, with gross margin improving to 28.4% from 26.3%. He also noted that the company reclassified certain overhead and personnel expenses from SG&A to cost of revenue for comparative periods in 2024, which did not affect operating income, net income, or Adjusted EBITDA comparability.
SG&A rose $3.6 million in the fourth quarter and $4.4 million for the full year, which Prajzner attributed to strategic investments to grow the business and unfavorable foreign currency translation. The company also changed its presentation of foreign currency gains and losses during the fiscal year, moving them to other expense and income, net.
GAAP income from operations was $10.4 million in the fourth quarter, compared to $10.5 million a year earlier. For the full year, GAAP operating income increased to $40.6 million from $39.8 million. Non-GAAP operating income improved to $15.7 million from $14.3 million in the quarter and to $55.0 million from $46.2 million for the year.
The company recorded $12.6 million of reorganization and other costs in 2025, including $4.8 million in the fourth quarter, related to efforts to reduce and recalibrate overhead and other actions. Prajzner said the effective tax rate for 2025 was 24.7% and that the company expects a mid-25% effective tax rate in 2026.
For the full year, the company reported GAAP net income of $16.8 million, or $0.53 per diluted share, and non-GAAP net income of $28.1 million, or $0.88 per diluted share. Prajzner said results compared with GAAP net income of $19.0 million ($0.60 per diluted share) and non-GAAP net income of $22.7 million ($0.72 per diluted share) in the prior year, with the year-over-year GAAP decline primarily tied to higher reorganization and other costs.
Cash flow, working capital, and leverage
Prajzner said Mistras delivered positive free cash flow in the fourth quarter, generating $32.1 million in cash from operations and $24.6 million of free cash flow, compared with $25.7 million and $20.8 million, respectively, in the prior-year quarter. For full-year 2025, cash from operations was $33.0 million and free cash flow was $3.8 million, down from $50.1 million and $27.1 million in the prior year.
Management attributed the full-year free cash flow decline to three factors: elevated days sales outstanding during an ERP stabilization period, higher restructuring activity, and growth-related capital expenditures. Prajzner said two of the three factors were moderating and the company expects improved cash flow conversion through 2026. The company also said it hired a vice president of working capital management to help accelerate order-to-cash performance and reduce accounts receivable.
Accounts receivable rose to $154.7 million at December 31, 2025, from $127.3 million a year earlier. Prajzner said the company is focused on reducing receivables below fiscal 2024 levels during 2026.
Capital expenditures increased to $29.2 million in 2025 from $23.0 million in the prior year, with spending focused on lab capacity expansion and field equipment. Prajzner said the company expects CapEx to remain elevated at roughly 4.5% of revenue in 2026, with spending intended to address capacity constraints in aerospace and defense labs and improve utilization and throughput.
Gross debt was $178.0 million at year-end 2025, up from $169.7 million, while net debt decreased slightly to $150.0 million from $151.3 million. The bank-defined leverage ratio was about 2.5 times, within the maximum allowable 3.75 times. Prajzner said the company plans to prioritize debt reduction with residual free cash flow and is targeting approximately $20 million of debt paydown in fiscal 2026 to reach roughly 2.0 times leverage by year-end 2026.
Strategic plan updates: data solutions and diversification
Shuman outlined progress under the company’s “Vision 2030” strategy, including expansion of data solutions and diversification beyond core markets. She said the Plant Condition Management Software (PCMS) offering grew 20.7% in the fourth quarter and 25.2% for the full year, driven by market demand, new customer adoption, and more in-house implementations. Shuman described PCMS as part of the company’s broader OneSUI asset protection software ecosystem and said the company plans to expand its platform from compliance-focused tools toward risk-based inspection and, eventually, predictive maintenance and AI-centric capabilities.
On diversification, Shuman highlighted U.S. bridge monitoring contract wins and said infrastructure revenue increased $4.5 million, or 13.2%, for the full year. She also pointed to a long-term construction project win with Bechtel related to a new LNG terminal for Woodside in South Louisiana, as well as continued pursuit of data center work, including a partnership with Batcheller & Kimball to provide inspection services to data center projects.
2026 outlook and market commentary
For 2026, Shuman said the company expects revenue of $730 million to $750 million and Adjusted EBITDA of $91 million to $93 million, with margins expected to remain “resilient” despite higher CapEx and targeted operating investments. She added that the company expects net income and EPS to exceed 2025 performance. Management said the outlook does not assume a macro acceleration or a strong rebound in oil and gas activity and does not include contributions from acquisitions.
During Q&A, Shuman said Mistras has “great visibility” into aerospace and defense demand through regular customer engagement, but acknowledged capacity constraints that the company plans to address with investment to increase throughput and convert demand into revenue. She said the company is adding new customers and expanding capabilities beyond NDT testing into services such as welding, machining, repairs, and cleaning. On acquisitions, she said valuations are currently “very pricey,” and management believes the highest return is organic expansion.
On oil and gas, Shuman said customers remain cautious and suggested 2026 may not be as robust for turnarounds as 2025, while adding that maintenance budgets and asset life-extension needs could be supportive. She also said the company had not seen a material direct impact from Middle East disruptions due to a limited footprint in the region, but is monitoring developments.
In discussing longer-term targets, management said its strategic plan envisions approximately 5% CAGR through 2030 and an aspiration to reach a 15% EBITDA margin.
About Mistras Group (NYSE:MG)
Mistras Group, Inc is a global provider of technology-enabled asset protection solutions and services, with a primary focus on nondestructive testing (NDT), inspection, and monitoring of critical infrastructure and industrial assets. The company’s offerings span a wide range of techniques—such as ultrasonic testing, eddy current detection, magnetic particle inspection, radiography and acoustic emission—to help clients in energy, petrochemical, aerospace, manufacturing and other sectors identify and address potential failures before they occur.
In addition to traditional NDT services, Mistras delivers engineered materials solutions, including composite repairs and specialty coatings, along with predictive maintenance and condition monitoring programs.
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