Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. Mistras Group, Inc. (1436126) 10-Q published on Aug 06, 2019 at 3:21 pm
Reporting Period: Jun 29, 2019
During the first six months of 2019, the Company sold to an unaffiliated third party, without recourse, its remaining outstanding receivables in an unrelated bankruptcy proceeding, which the Company had initially recorded as a charge during the second quarter of 2017. During the first quarter of 2019, the Company recorded a recovery of $0.2 million and during the six months ending June 30, 2019, the Company recorded a recovery $1.9 million, related to a bad debt provision related to this customer.
The Company's revolving credit agreement with its banking group ("Credit Agreement") provides the Company with a $300 million revolving line of credit, which, under certain circumstances, can be increased to $450 million with the approval of the banks. In addition, the Credit Agreement provided the Company with a $100 million senior secured term loan A facility. Both the revolving line of credit and the term loan A facility under the Credit Agreement have a maturity date of December 12, 2023. The Company may borrow up to $100 million in non-U.S. Dollar currencies and use up to $20 million of the credit limit for the issuance of letters of credit. As of June 30, 2019, the Company had borrowings of $261.8 million and a total of $5.4 million of letters of credit outstanding under the Credit Agreement. The Company has capitalized costs associated with debt modifications of $1.0 million as of June 30, 2019, which is included in other long-term assets within the accompanying condensed consolidated balance sheet.
A Company vehicle was involved in an accident in which individuals were injured, property was damaged, and businesses allegedly impacted by the accident have claimed economic losses. One lawsuit has been filed by one of the injured individuals in the U.S. District Court for the District of Colorado, McAllister v. Mistras Group, Inc. The Company has insurance for these types of matters. Most of the claims have been settled, including the claims covered by the McAllister case, and the two remaining unresolved claims are for economic loss and property damage only, and all of the claims, including the two that have not yet been resolved, will be fully covered by the Company's insurance.
In the six months ended June 30, 2019, total revenues decreased 1% due to a combination of mid-single-digit acquisition growth, offset by low single-digit organic decline and low single-digit unfavorable impact of foreign exchange rates. Services segment revenues increased 3%, driven by mid single-digit acquisition growth, offset by low single-digit organic decline and unfavorable impact of foreign exchange rates. International segment revenues decreased 9%, driven by mid-single-digit unfavorable impact of foreign exchange rates and low single-digit organic decline. Products and Systems segment revenues decreased by 33% driven by lower sales volume and by the sale of a subsidiary in this segment during the third quarter of 2018.
The Company’s effective income tax rate was approximately 37% and 29% for the three months ended June 30, 2019 and 2018, respectively. The Company's effective income tax rate was approximately 45% and 31% for the six months ended June 30, 2019 and 2018, respectively. The effective income tax rate for the first quarter of 2019 and 2018 was higher than the statutory rate due to the impact of discrete items, GILTI and executive compensation provisions resulting from the passage of the Tax Act, foreign tax rates different than statutory rates in the U.S., and an increase in the reserve for uncertain tax provisions. The discrete items had an impact on our effective income tax rate of 2% and 9% for the three and six months ended June 30, 2019, respectively, and 0% and 2% for the three and six months ended June 30, 2018, respectively.