A global provider of technology-enabled asset integrity and testing services, Mistras Group checks the health of critical equipment and infrastructure. Its teams perform non-destructive testing (NDT), pipeline inspections, and in-house lab work, with the OneSuite cloud platform pulling asset data into predictive analytics and its PCMS software used by about half of U.S. refiners. Customers span oil & gas, aerospace & defense, power generation, and civil infrastructure.
Operating income rose 53.6% as restructuring costs fell, while cash flow turned positive after ERP-driven delays.
Restructuring costs fell sharply, lifting even as growth remained modest. Revenue rose 4.2% to $193.1 million and operating income climbed 53.6% to $12.9 million, driven by a $1.4 million drop in reorganization costs and a 5.8% increase in North America. The company generated positive of $14.9 million in the quarter, a reversal from the prior year's cash use, but the ERP system conversion continues to weigh on .
Key takeaways
rose 53.6% to $12.9 million, as reorganization and other costs fell $1.4 million to $1.5 million and an environmental expense declined $0.1 million.
increased 4.2% to $193.1 million, with North America up 5.8% to $156.6 million on growth in aerospace and defense, power generation, and infrastructure end markets, while International fell 2.7% to $38.0 million on lower market demand.
was essentially flat at 29.2%, as a 0.2-point improvement in North America from better business mix and operating efficiencies was offset by a 2.0-point decline in Products and Systems on a less favorable sales mix.
Section summaries
Management's Discussion and Analysis
Q2 FY2026 revenue rose 4.2% to $193.1M and operating income jumped 53.6% on lower restructuring costs.
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Total increased 4.2% to $193.1M in Q2 FY2026, driven by low-single-digit in aerospace & defense, power generation & transmission, infrastructure, research & engineering, and petrochemical end markets.
North America grew 5.8% to $156.6M, while International fell 2.7% to $38.0M on lower market demand, and Products and Systems surged 43.0% to $3.9M on higher sales volume and shipments.
for the quarter was $14.9 million, compared to a use of $9.3 million a year ago, as collections improved; for the first half, operating cash flow was $17.7 million, up $21.3 million .
rose 25.5% to $14.9 million, with the margin expanding 130 to 7.7% of .
fell 9.7% to $159.3 million, and liquidity stood at $128.3 million including cash and undrawn capacity.
What changed
The ERP system conversion invoicing delays that depressed to $33.0 million in FY 2025 showed signs of easing: Q2 FY2026 operating cash flow was $14.9 million, a $24.2 million improvement from the prior-year quarter's negative $9.3 million, though first-half remained positive at $10.1 million only after a negative Q1.
The shift away from oil and gas , which fell to 51% of total revenue in Q1 FY2026 from 60% a year ago, continued as aerospace and defense, power generation, and infrastructure drove North America's 5.8% growth in Q2.
Reorganization costs, which more than doubled to $12.7 million in FY 2025, dropped to $1.5 million in Q2 FY2026 from $2.9 million a year ago, narrowing the gap between and .
The 14.2% decline in Products and Systems flagged in Q1 FY2026 reversed: the rose 43.0% in Q2 on higher sales volume and shipments.
What to watch
Whether the ERP system conversion's lingering effect on fully resolves in the second half of FY2026, or whether the cash conversion cycle has structurally lengthened despite the Q2 improvement.
Whether the 43.0% increase in Products and Systems represents sustainable demand or a one-quarter shipment pattern, given the 's 14.2% decline in Q1.
Whether the International 's 2.7% decline on lower market demand extends into subsequent quarters, particularly if foreign-exchange tailwinds fade.
Whether the credit agreement's maximum total remains manageable with at $159.3 million and acquisitions still paused, if trailing contracts alongside any further North America weakness.
margin was essentially flat at 29.2% versus 29.1% a year ago, with North America up 0.2 points on improved business mix and operating efficiencies, while Products and Systems margin fell 2.0 points on less favorable sales mix.
Operating expenses declined 4.4% to $43.5M, as reorganization and other costs dropped $1.4M to $1.5M and environmental expense fell $0.1M, partially offset by a $0.6M increase in and .
rose 53.6% to $12.9M, and income from operations before special items increased 25.5% to $14.9M, with the margin up 130 to 7.7% of .
Cash provided by operating activities was $17.7M for the first half of FY2026, up $21.3M , driven by higher and stronger collections; cash and equivalents stood at $22.0M with $106.3M of unused credit commitments.
Quantitative and Qualitative Disclosures About Market Risk
There have been no significant changes to our quantitative and qualitative disclosures about market risk as discussed in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk,” included in the 2025 Annual Report.
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There have been no significant changes to our quantitative and qualitative disclosures about market risk as discussed in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk,” included in the 2025 Annual Report.
See Note 13 - Commitments and Contingencies to the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for a description of our legal proceedings. There have been no material legal proceedings and no material developments with regard…
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See Note 13 - Commitments and Contingencies to the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for a description of our legal proceedings. There have been no material legal proceedings and no material developments with regard to any matters disclosed under Part I, Item 3 "Legal Proceedings" in our 2025 Annual Report, except as disclosed herein under Note 13 - Commitments and Contingencies to the Notes to the Unaudited Condensed Consolidated Financial Statements.
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 2025 Annual Report. There have been no material changes to the risk factors previously disclosed in the 2025 Annual Report.