Frank JoyceThank you Sotirios, first I want to remind everyone that our discussions during this conference call will include forward-looking statements. Actual results could differ materially from those projected and factors that could cause actual results to differ are discussed in our annual report on Form 10-K filed for the period ending May 31, 2010. Also, the discussions during this conference call will include certain financial measures that were not prepared in accordance with US Generally Accepted Accounting Principles. Reconciliations of these non-US GAAP financial measures to the most directly comparable US GAAP financial measures can be found in Mistras Group’s current report on Form 8-K, dated October 12, 2010. These reports are available on our website at www.mistrasgroup.com in the Investors section under financial information and reports, and on the website of the Securities & Exchange Commission. Now I would like to present a summary of the financial results in our first fiscal quarter ended August 31, 2010. As a reminder, we have a fiscal year which ends on May 31. I’m very pleased to announce that revenues in the first quarter of fiscal 2011 increased by 22% to $68.4 million versus $56.1 million in the first quarter of fiscal 2010. Each of our operating segments contributed to the increase, with services generating a 21% increase in revenues for the quarter, while products and international produced revenue gains of 46% and 17% respectively. Gross profit grew by 21% to $20.8 million in the first quarter of 2011 versus $17.2 million in Q1 of fiscal 2010. Gross margins of 30.4% in Q1 of 2011 were relatively flat with the gross margins of 30.6% reported in the prior year. SG&A for the first quarter of fiscal 2011 was $15.5 million or 22.6% of revenues as compared to $13.2 million or 23.4% of revenues for the first quarter of fiscal 2010. SG&A decreased as a percentage of revenues in Q1 2011, despite an increase in stock comp expense of $0.5 million for Q1 2010.
Operating income increased 19% to $3.3 million in Q1 2011 versus $2.8 million in Q1 2010. Operating income was negatively impacted by $0.3 legal provision in Q1 2011, unfavorably impacted by $0.3 reversal of a legal provision in the Q1 2010 quarter. After adjusting both periods for legal provisions, operating income increased 43% in Q1 2011 versus the prior year.Net income attributable to Mistras Group nearly doubled in Q1 of 2011 to $1.6 million versus $0.08 million in Q1 2010. Diluted earnings per share were $0.06 in the quarter versus $0.04 per share in last year’s first quarter. As you might expect, year-over-year comparisons of net income and EPS were similarly impacted by the legal provisions mentioned above. Adjusted EBITDA increased to $8.5 million or 12.4% of revenues in Q1 2011 versus $7 million or also 12.4% of revenues in the first quarter of fiscal 2010. This represents a year-over-year in adjusted EBITDA of 21%. We think EBITDA is one of the best metrics for measuring the operating results of our business, due to the significant amount of depreciation and amortization that exists in our business model both at the gross margin level and also in operating expenses. Now I would like to make a few brief comments on our cash flows and balance sheet. The company continues to generate strong cash flows and in Q1 2011, net cash provided by operating activities increased by more than 50% to $8.3 million, versus $5.4 million in Q1 2010. Similarly free cash flow increased by more than 50% to $6.4 million versus $4.1 million in Q1 2010. For this calculation free cash flow is defined as net cash provided by operating activities, less capital expenditures. Read the rest of this transcript for free on seekingalpha.com