Sotirios Vahaviolos - Chairman and Chief Executive Officer Jonathan Wolk - Executive Vice President and Chief Financial Officer Dennis Bertolotti - Executive Vice President, President, Services Americas.

Andrew Obin - Bank of America Merrill Lynch Matt Duncan - Stephens Inc. Andrew Wittmann - Robert W. Baird & Company Matthew Tucker - KeyBanc Capital Markets.

Good morning, ladies and gentlemen, and welcome to Mistras Group's Earnings Conference Call for its Fourth Quarter Ended May 31, 2016. My name is Karen and I will be your event manager today. We will be expecting questions after management's prepared remarks. Participating on the call from Mistras Group will be Dr.

Sotirios Vahaviolos, Chairman and CEO; Jon Wolk, Senior Executive Vice President and CFO; and Dennis Bertolotti, Mistras Group President and COO. I'll now turn the conference over to Dr. Vahaviolos. Please begin..

first, helping our existing customers realize more value for their spend while engaging in productive discussions with potential customers to do the same. When we reducing our costs by eliminating wasted time, wasteful processes, and management would choose not to focus on either of these two priorities.

Our performance in fiscal year 2016 has proven that when you do these two things, revenues can improve, even in a declining market, and profits and cash flows also improve. Despite the challenge presented by the difficult market, Mistras grew adjusted EBITDA by over 20% during fiscal year 2016, and its operating cash flow by over 35%.

We set new records for operating income and adjusted EBITDA, not only for the entire fiscal year 2016, but we also set or tied record highs in every quarter.

Mistras also achieved new records for annual revenues and annual cash flows, and achieved positive organic revenue growth in the fourth quarter and for the entire fiscal year, while many of our competitors saw organic revenues and profits decline.

Because of our productivity, safety, and reliability, and the outstanding value we provide, our customer retention has been extremely good. In addition, we have won some important new run and maintain evergreen contracts, including a very important new multi-year European aerospace contract that Dennis will describe.

This new contract is very exciting, because it is a great opportunity to provide outstanding value for our customer. And it demonstrates the power of our diverse business model, both outside of oil and gas and outside of North America.

Jon will now explain our results and provide guidance for fiscal year that commenced June 1, 2016, and then Dennis will provide more color on our operations. Afterward, I will have closing remarks, and then we will take your questions.

Jon?.

Thank you, Sotirios. I remind everyone that remarks made during this conference call will include some forward-looking statements. The Company's actual results could differ materially from those projected.

Some of the factors that could cause actual results to differ are discussed in the Company's most recent Annual Report on Form 10-K and in other reports filed with the SEC. The discussion in this conference call will include certain financial measures that were not prepared in accordance with U.S. GAAP.

Reconciliations of those non-US GAAP financial measures to the most directly comparable U.S. GAAP financial measures can be found in the Company's current report on Form 8-K filed yesterday. These reports are available on the Company's website in the Investor Section and on the SEC website.

As we announced last month, results for the fourth quarter of fiscal year 2016 included a $6.3 million pretax charge to recognize the cost of a class-action legal settlement concerning claims related to California and federal wage and hour, and other labor laws.

Our prior-year Q4 results included $4.7 million of pretax charges related primarily to the loss on sales of two international subsidiaries, and severance. My commentary concerning Q4 and full fiscal year results exclude these, items unless otherwise noted.

Revenues for the fourth quarter of fiscal year 2016 were $184.2 million, 5% higher than in the prior year's Q4. Organic revenues during Q4 grew by mid-to-high single-digits, offset in part by the negative impact of foreign exchange and the absence of revenues from prior year dispositions.

Services Q4 revenues increased 5% over prior year, as mid single-digit organic growth was offset in part by adverse foreign exchange. Services Q4 revenues benefited from the timing of some project and turnaround work, but were also reduced by the Canadian oil sands fires.

International segment Q4 revenues grew 11% as double-digit organic growth was slightly reduced by foreign exchange and dispositions. Products and Systems segment revenues had an organic contraction in Q4, driven by timing.

Revenues for the entire fiscal year came in at $719 million, 1% higher than last year and $4 million more than the upper-end of our most recent guidance. Excluding about $25 million of reductions from foreign exchange and prior year dispositions, revenue grew by $34 million or 5%.

Most of this growth was organically driven by our International and Services segments, and was delivered in a global market where competitors' revenue declines have become prevalent. Despite the challenging market, the Company's profit picture continued to improve.

Operating income before special items grew by 210 basis points in Q4 to 6.3% of revenues, and by 270 basis points for the full fiscal year to 6.9%. Operating income before special items improved more than 55% in both Q4 and for the full fiscal year. Gross margin improvements continued to be the primary driver.

Gross profit margin improved by 250 basis points to 28.2% in Q4, and by 220 basis points to 28.2% for the full fiscal year. These improvements were driven by our Company-wide focus and execution on improving utilization of technicians, and improved sales mix and managing contracts to better margins.

Breaking this down by segment, services operating income, excluding special items, improved by $2.6 million or 23% over the prior-year's Q4 on revenue growth of 5%. Services Q4 gross margins improved by 140 basis points over the prior year; while operating margins, excluding special items, grew by 150 basis points.

Services full-year operating income, excluding special items, grew by $9.5 million, or 20%, on a 2% revenue increase.

Gross margin improved 130 basis points; while operating margin, excluding special items, improved 150 basis points, driven by sound execution in managing contracts, improved staff utilization, and better matching of changes in labor rates with changes in pricing.

International gross margins improved nearly 900 basis points and operating margin, excluding special items, improved over 1,000 basis points compared with the prior year's Q4. Full fiscal year gross margin improved 700 basis points and operating margins, excluding special items, improved by approximately 800 basis points.

Drivers throughout 2016 included improved utilization of personnel, organic growth, an improved sales mix, and cost reductions made in the prior fiscal year.

Our international operating profit margin of 6.8% for fiscal year 2016 was still nearly 400 basis points less than out of our Services segment, so there remains plenty of room for continued improvement. Products and systems had a challenging fourth quarter and second half compared with a tough prior year comp.

But gross margin for the entire fiscal year improved by 50 basis points. And operating margin, excluding special items, improved by 30 basis points, driven by cost control and an improved sales mix.

For the total Company, adjusted EBITDA for the fourth quarter grew by $3.5 million or 20% over prior-year, improving our Q4 adjusted EBITDA margin to 11.6% from 10.1% in the prior year. Adjusted EBITDA for the full fiscal year improved 23% to $88.1 million or 12.2% of revenue, compared with $71.9 million or 10.1% of revenue in the prior year.

Net income for Q4 of 2016 including the legal settlement, was $2.8 million or $0.09 per diluted share and $6.7 million or $0.22, excluding the legal settlement.

Net income for the full fiscal year 2016 was $24.7 million or $0.82 per diluted share, including the legal settlement; and $28.6 million or $0.96 per diluted share, excluding the legal settlement. Excluding special items in both years, net income and earnings per diluted share both increased more than 40% over prior-year.

Cash flow was another strong positive. Operating cash flow for fiscal 2016 improved by $18 million or 37% to $68.1 million. Free cash flow improved by $18 million, or 53%, to $51.9 million. Drivers to these improvements were the improved earnings, plus a two-day reduction in day’s sales outstanding.

Total CapEx, including non-cash capital lease outlays, were $24.4 million or 3.4% of revenue compared with 3.4% in the prior year. Total debt and capital lease obligations, net of cash, was $83.6 million at May 31, 2016, compared with $122 million one-year ago.

Net debt to adjusted EBITDA was 0.9 times at May 31, 2016, down from two times at one point last year. We did not buyback shares during Q4. However, we did announce yesterday that our Board has tentatively approved the buyback of up to 1 million shares owned by Dr. Vahaviolos.

We expect terms and conditions to be agreed shortly, which will enable the Company to buyback stock at a discount to its trailing average stock price, and below the stock's intrinsic value, while at the same time maintaining our float.

Turning now to guidance for our new fiscal year that started on June 1, 2016, we expect market spending for NDT inspection for the remainder of calendar 2016 will continue to be flat to slightly down, with the potential for some market growth in calendar 2017.

Against this backdrop, we will establish our initial revenue guidance from $720 million to $735 million, representing an increase of from 0% to 2% over fiscal 2016's $719 million. We expect to build upon last year's gains, and continue to improve profit margins.

We expect adjusted EBITDA will be in a range of from $89 million to $95 million, representing an improvement of from 1% to 8%. Adjusted EBITDA margins, based on revenues and adjusted EBITDA in the middle of these two ranges, imply an improvement of approximately 40 basis points.

We are also introducing EPS guidance of from $0.99 to $1.12 per diluted share, up approximately 3% to 17% above our fiscal-year 2016 results of $0.96 per diluted share, excluding legal settlement costs.

In terms of seasonality, the first quarter of the prior fiscal year benefited from an unusually high level of turnaround and project work, driven by refinery strikes that had occurred early in calendar year 2015. The situation did not reoccur in calendar 2016.

Consequently, we expect revenues, adjusted EBITDA, net income, and earnings per diluted share will be healthy in the first quarter of fiscal year 2017, but below the record levels from the first quarter of fiscal year 2016.

However, we also expect results in the subsequent quarters of fiscal year 2017 will more than offset the expected unfavorable Q1 comparisons. And with that, I turn this over to Dennis Bertolotti, President and Chief Operating Officer.

Dennis?.

Thank you, Jon. I will now provide updates on our business segments. We are very proud of our global team and how we performed in this tough market. Our plan is working in North America and all of our key countries, as reflected in the results that Jon just shared with you.

Our success reflects the commitment of our global team to pull together and support each other and our customers. I will provide some color and key developments in our business. In our services segment, approximately 60% of services revenues are in the oil and gas sector, and this market remains challenged.

The price of oil seems to have stabilized in the low- to mid-40s. And at this level, many of our oil and gas customers are clearly trying to spend less. We continue to meet with both existing and prospective customers, exploring ways to improve their productivity and the value that we provide them.

Services had low single-digit organic growth in the fiscal year, and mid single-digit organic growth in Q4, in a market where many of our competitors experience the opposite. The adverse market conditions have impacted us, as well, as we experience organic declines in Q4 in regions that have been hit the hardest, namely in the Southwest U.S.

and in Western Canada. The Canadian oil sands fires also helped shave a couple percent of organic growth from our Q4 results. But services had important new customers in the Canadian oil sands and in other parts of the U.S., which more than offset the market's negative impact in Q4.

In addition, as Jon mentioned, services benefited from additional work scopes at a handful of key customers, and from a small number of spring turnarounds in the Western U.S. that ran a bit longer than we had planned. So, while we benefited from timing in Q4, we will get hit somewhat by timing in Q1 of fiscal year 2017.

Our turnaround volume was relatively consistent in fiscal 2016, taken as a whole. Some of our labs did very well, while some saw lower turnaround spend than in the prior year. Overall, this part of the business was slightly positive compared with prior year, similar to our overall services organic revenue trend.

Our services team executed extremely well in fiscal year 2016, growing its revenue and improving operating income, before special items, over $9 million or 20%.

Our services team is focused on continuing to improve processes and managing staffing resources efficiently, while at the same time striving to help both existing and prospective customers become more efficient in their spend.

In our international segment, we had a dramatic improvement, swinging to an operating profit of over $9 million in fiscal year 2016 from an operating loss in fiscal year 2015. The largest market for our international segment is aerospace, which has more favorable conditions in oil and gas.

This dynamic, plus strong execution, led our international team to achieve positive organic growth throughout fiscal year 2016. Our international team executed on an aggressive plan to improve its cost structure.

We implemented our corporate ERP system in France and in the UK, and we have already started to see the improvements in their contract profitability. We have also identified additional opportunities to improve. Each of our four largest international companies experienced organic revenue growth and improved profits in fiscal year 2016.

The biggest contributor for profit growth was our German Company, whose primary industry is aerospace and whose strong management team has positioned the Company to benefit from that industry's increasing utilization of composite airframe components.

Our new general managers in France and in Belgium had strong years, leading both subsidiaries to big improvements. And we welcome new general managers in our UK and Netherlands businesses as we continue to transition our international segment into an important and consistent contributor to our global results.

As Sotirios mentioned, we are very excited that our French subsidiary was just awarded a multi-year exclusive inspection contract to perform a wide range of non-destructive and destructive testing services for a major manufacturer of aircraft engines.

We believe this contract will start up in early calendar 2017 and, after an initial phase-in period, will favorably impact margins and further our already strong position in this strategically important vertical market. As indicated in yesterday's press, we believe we will have more to say about this exciting development shortly.

Turning our thoughts to our new fiscal year, we believe market conditions are relatively stable, albeit at lower levels than two years ago. We had two recent indications that are conflicting, which feels pretty representative of today's market.

On the positive side, customer attendance at our recent user group for our industry-leading data mining and management software was much higher than in previous years. On the negative side, attendance at a recent world NDT conference was less inspiring.

Our conversations with oil and gas customers suggests a sense of relief compared with one year ago, but few are starting new projects or seeking to spend more.

During this new fiscal year, Mistras will be making some small investments and possibly some acquisitions to broaden our service offerings in areas that are adjacent and complementary to NDT inspection, but not in conflict with NDT, as some customers perceive some of our competitors offerings to be.

Although we expect our first quarter will suffer from a comparison against the prior year record that was driven in part by very unusual market conditions, we have several encouraging sales cycles going, and we feel good about our guidance for fiscal 2017. And now for Sotirios's closing remarks..

Thank you very much, Dennis. One year ago, we started this market with a sense of realism and adjusted our cost structure accordingly. We took aggressive actions instead of hoping the market would improve.

We generated more EBITDA internally, making appropriate investments to improve, and with much less risk compared with attempting large risk acquisitions. We changed internally some managers and reduced stocking levels. We created a team of experts that is helping our labs become more efficient.

And we are continually sliding our operation to drive further gains. We run our business assuming today's oil price is the new normal. When the new market improves, we believe our new operating philosophy will drive very aggressive results.

But until that day, we will continue to gain market share and improve our profit margins, driven by a focused team of Mistras managers who know how to deliver terrific value to customers in this market, and in any market. During fiscal year 2016, we proved that Mistras can drive, even in a very difficult market.

Our customers have big challenges, and we are the solution provider that can be counted on them to protect their assets. I am counting on our team. We look forward to building upon our successes and having another strong year in 2017; and even stronger, if the oil and gas industry starts investing again in 2017.

I want to personally thank our management team, our loyal employees for their commitment to safety and quality, and our loyal and valued customers and shareholders. We’ll now open the floor for questions.

Karen?.

Thank you. [Operator Instructions] Our first question comes from the line of Andrew Obin from Bank of America Merrill Lynch..

Hi, guys. Good morning..

Good morning, Andrew..

Just a question – and you did touch on it, how your clients think about oil prices and demand. So last year, you highlighted that oil price volatility, rather than price level, per se, was a big deterrent for investment or just ability to come up with an investment plan.

Now that oil prices have settled, based on the conversations with your customers, how much longer until you guys start getting better visibility on their plans? How long do you think oil prices need to be fairly stable for them to really start to get a sense of normalcy?.

Andrew, this is Dennis. I will take that. The stability has caused our customers to settle down on negotiations. They believe what we've got in place; and the contracts and the values that we are delivering are enough that there's no new conversations on that. But their planning cycle for capital and budgets is long.

They are probably doing that now for 2017. So I don't know what number exactly suits them. You are talking differences for upstream than you would for mid or downstream, certainly. I think the refinery market's probably a lot more comfortable with what's going on, and looking at their capital then would be still the upstream side.

So I think there's still a little bit of diversity in that. But, they are at least comfortable where it's at, and they know it's not going too much up and down. Whether or not they are planning huge capital outlays, we haven't seen that yet..

And just a follow-up question, one of the things that Mistras has done well is cash flow.

And now that you are implementing these operating changes, as you look at the level of your receivables and I don't necessarily look for the guidance for next year, but what do you think is the world-class level of receivables for Mistras? How much cash flow do you think you can squeeze out of it, in the long run?.

That's a great question, Andrew. It's Jon. I will take that. Our DSO is still in the high 60s, and payment terms are typically closer to 30 days, 30 to 45 perhaps. So we clearly have an awful lot of process opportunity embedded in that DSO.

The reason that DSO tends to be longer than the payment terms call for is because of difficulties that we have in getting approved works signed off, and getting it processed timely and accurately the first time, getting it submitted and approved by customers, et cetera. So the whole cash chain really has an awful lot of opportunity to be compressed.

We are working on that. That's one of our to-dos. That is one of my to-dos personally, and certainly for the business. Dennis is also a partner in that. And our teams are working on that. And I really expect that we should be able to reduce DSO in the not too distant future by five to 10 days. I think there's bigger potential than that going forward..

Fantastic, thank you very much. Great quarter..

Thank you..

Thank you..

Thank you. And our next question comes from the line of Matt Duncan from Stephens..

Hey. Good morning, guys..

Good morning, Matt..

So kind of a back on outlook here for a minute, your customers, in some instances, are hinting that they may take advantage of downtime to increase maintenance. And I assume that that means more time for inspection. And we have been seeing turnaround activity get pushed out for quite a while now.

I know the thought process has always been, it's hard to push that stuff more than a year before you start to run into safety issues. It sounds like maybe you guys are thinking things could start to improve a little as we get into 2017.

But can you talk a little bit about sort of what you are hearing from your customers, and what your thoughts are on the sort of the give and take on whether or not we will see that improvement when we get to 2017?.

Sure, Matt. This is Dennis. First I'll answer the first part of your question about the compression of a turnaround. Typically they have X amount of equipment outside of discovery that they have to get done, going into it. The length of time is based on how much overtime and how hard they work the group.

So if they have a little bit more time to get it done, they are going to see a savings that they don't have to work double time on Sundays and add more volume. So, to them, it may not be that much more work. They just could get it done a little bit more efficiently.

As far as the second part you are asking about - and, again, it takes months to see that. But what you're asking about is where are they at, and what is their capital spend.

We generally would be talking now and hearing now about things - not only in the fall, because the things that are going on in fall now are pretty much planned, they are going to start talking now about the spring. So we are hearing about that, and it seems to be a little bit better.

But it doesn't seem that there is that much more capital out there to spend. It's more on just a - maybe a more thorough maintenance turnaround plan that they have..

Dennis, is it maybe a little early for them to know what the capital is going to look like, though? I mean typically, you would see your customers, on the major integrated side especially, start to form up budgets at this point. But for the last couple years, given the uncertainty in the market, I know budgets have been pretty late to get finalized.

So is it a situation where we could maybe see improvement in budgets, and if we do see that, we can start to maybe feel better about that spring season?.

Yes, you are absolutely right, Matt. The capital budgets that we have seen for the owners really hasn't come out yet in the oil and gas sector. And if they come out a little bit stronger, like they are talking about, we've had a lot of inspectors say they feel better about some projects than they had in the past. But that is still anecdotal.

If the capital budgets come out to support it, you're absolutely right; we could see it..

Okay.

On the aerospace win in Europe, is there any help you can give us on what the revenue opportunity is there on an annual basis, once it ramps up?.

Yes, thanks, Matt. Yes, I mean we are really excited about that. As both Sotirios and Dennis said, strategically we think this is a wonderful opportunity to add more value into that sector, and to hopefully continue to grow and be more relevant there.

We think that the contract is certainly going to be for a number of years, and the aggregate value of the contract is going to be north of $50 million. We think that it will be a little bit slow to ramp in calendar 2017. But I think as we get into the sweet spot of this thing, it will be between $5 million and $10 million per year..

Okay, all right. Very helpful. And then last thing, just Sotirios for you, can you talk a little bit more about the decision to start selling some stock? Obviously you've got most of your wealth in Mistras Group stock, so I don't fault you for wanting to diversify.

But just curious about the reasoning behind the timing of - why now? And is the 1 million shares probably all you're going to sell for the time being? Or should we assume that maybe there's more behind that?.

Definitely that's - I will not sell more than 1 million at this price, okay? To start with you know basically, we have some family needs. You know, I have kids. I have kids that are going to college now. They are going to go to college.

So we need some cash, okay? And if you notice, I have not really pulled a dime, not only since the acquisition I'm sorry -since we went public, I have never pulled a dime; even in the old days, when I used to be the owner of Mistras..

Sure. Okay. Thank you for the color, guys. I appreciate it..

Thank you, Matt..

Thank you..

Thank you. And our next question comes from the line of Andy Wittmann from Robert W. Baird..

Hey, guys I wanted to just talk about the oil sands in particular. We've seen some of the thermal facilities out there actually just not even come back online from the fires.

Is that affecting your specific locations? Or are you guys kind of back up and running there now, like you were prior to the fire?.

Andy, I got this. This is Dennis. The fires took us out for probably about two months, mostly. I mean, there were some dramatic things that happened in there. And a big part of the problem was the entire city of Fort Mac really didn't get back up for a long time, so they couldn't support those facilities.

But we didn't experience, on our contracts, anything more than the couple weeks to a month, or a month and a half. The one contracts we are on, we've been back up since, I don't know, about 30 days ago or so, or maybe a little bit more. So there are some that haven't come back, true. But where we are at now we've come back in our sites.

They are trying to make up the work as best they can. But again, their infrastructure is really their biggest hurdle..

Got it. You said in the prepared remarks, I think you said a couple percent.

Was that of the segment growth rate that it hit, or the total Company growth rate?.

Total Company..

Total Company. Okay, great. I guess maybe just to pick up on the buyback, how quickly - I guess a couple questions.

How quickly do you think you're looking at for the 1 million share buyback, Jon? And would you be correspondingly - given that your authorizations for more than $25 million or $30 million here, will you be correspondingly in the open market as well? Or do you feel like you will probably focus on Sotirios's shares more?.

Andy, I think that depending upon pricing, we will focus on Dr. Vahaviolos's share buyback first. And we expect that that will take over 12 to 18 months, so let's say that rough period of time. If the price should drop for some reason, we would look to be perhaps more opportunistic in the market. But it depends upon our capital deployment opportunities.

We've got - as we are thinking about 2017, we are thinking roughly a third, a third, a third, in terms of share buyback, acquisition, and debt repayment. But certainly that blend could change, depending upon how market opportunities come our way..

Got it, that's helpful. And I guess maybe my final question is just on that - I guess it's a second half ramp, for lack of a better term. You mentioned that kind of flat to down at least in the calendar - flat to down for the calendar year-end.

But as we move into really the second half of your fiscal year, what's the confidence? Where do you derive the confidence in that second half ramp? Is it this contract with aerospace in Europe? Or are there other things that you can point to that give you that confidence?.

Yes, I think Andy. It's a great question. It's sort of several things. I think what Dennis just alluded to in his commentary just now, in terms of anecdotal discussions with customers I mean no one is telling us that they are going to have record-breaking spending, or anything like that, in 2017.

But we see the opportunity, perhaps based on some of the conversations we are having for some increases, the contract that we are talking about for 2017 also, of course, makes us feel good. But I am not sure that we are expecting very much revenue in the back half of the fiscal year, as much as maybe later in the calendar year, for that contract..

Okay, great. Thank you for your time..

Thank you..

[Operator Instructions] Our next question comes from the line of Matt Tucker from KeyBanc..

Good morning. Congrats on the quarter and the year..

Thank you, Matt..

I just want to start with the guidance. I understand, and I think it makes sense to kind of assume similar kind of oil and products environment that were in today.

But if calendar 2017 does turn out to be a lot stronger for turnaround spending, like some people expect, maybe not record; but if it turns out a lot stronger than you are kind of assuming based on your qualitative commentary, could you talk about how that would impact the guidance? Would it push you towards the upper end of the ranges? Would you think the impact would be more on the revenue side or margins? If you could just comment on that..

Yes. I will speak for all three of us, Matt, or at least I will take the first attempt at that. I think that if we actually saw a rebound of any magnitude that would imply upside above our guidance. I think certainly we would be at the upper end.

But I think there would be absolutely an opportunity to exceed the guidance, if the market were to really start to come back in any meaningful way..

And I think we are prepared to take advantage of that..

Absolutely..

Great.

And I guess with respect to where would you see the impact more do you think - on the top line, on the margins? I guess what's more influenced by external factors versus maybe what's more under your control?.

I think - again, it's Jon - I think that the way we are operating today, the way that we are operating as a Company and the collaboration we've got, I think if there is revenue gains from a market rebound, we will be quite accretive on that, given where we are operating today.

So I would expect that all the right metrics that we would want to benefit from that, will benefit, if that comes about..

Exactly..

Great. And then I guess, not to be pessimistic, but given it seems like you are already taking a fairly conservative approach to the guidance in terms of your end markets, I guess what - it seems like the guidance is fairly skewed to the upside.

I guess what could create downside to the low end of your guidance?.

Matt, I can tell you - this is Dennis - we feel very comfortable in the guidance we got. I mean obviously some horrific market changes can always affect it. But from across international to domestic, from oil and gas and aerospace, we feel we have a good plan, a good budget in place that we have a high chance of succeeding.

So I don't know; there could be a meteor strike or something like that that can always hit. But outside of that, I don't think there is anything that we see that's a very high risk in our budget, right now..

Okay. I will try to build that meteor strike into my model..

Give us a heads-up if it's coming..

Thanks. And then, you alluded to potential acquisitions, some kind of adjacent-type services to NDT. Was wondering if you would be willing to elaborate on that a little bit, and maybe speak to timing..

Dennis again. We see - we call it non-destructive inspection, but there's always a lot of mechanical work that goes around things. So there's opportunities for us to do things. We don't have any imminent large-scale plans right now. But we are listening to customers, and they are talking about value and how to reduce spend.

And inside of that, it's all about how many times does a piece of equipment have to be touched to have a complete inspection, from pre-inspection activities through the inspection and post-activities, putting things back on, and all that. And there is a lot of complexity to that.

And to the extent that we can find savings and value to the customer, it's a win for them and it's a win for us. So we are having those negotiations about what does it look like to do more around the inspection cycle..

Yes, and there's a lot of opportunities because of the rope access. We are very - we are working very hard now on rope access. That created some new opportunities. I would like to take advantage..

Thanks, guys. And then it seems pretty evident that you've been gaining market share, and it sounds like you think that could continue. I'm just curious if you have run into any issues with any of your large customers where they are hesitant to give you any more of their work, just to maintain some diversity and competition between suppliers..

I don't think we have seen anything like that..

Matt, it's Dennis. There are some customers who are comfortable with single source, or some that have always been multiple source. And we are comfortable in either environment. But I can say that this type of environment makes customers looking for value. And it creates a lot of turbulence, and we think we can thrive inside that..

Makes sense. Thanks a lot, guys..

Thank you, Matt..

Thank you. End of Q&A.

Thank you. And that concludes our question-and-answer session for today. I would like to turn the conference back over to Mistras for any closing comments..

Thank you very much. And I would like to everyone listening, we thank you very much. And have a great day, okay. That's it. Thank you, Karen..

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. And you may now disconnect. Everyone have a great day..