Christopher Sakai's questions to Mistras Group (MG) leadership • Q2 2025
Question
Christopher Sakai of Singular Research questioned the sustainability of the quarter's significant gross profit margin improvement. He also asked about the expected benefits from the new ERP system in the second half, particularly concerning unbilled receivables, and sought clarity on the outlook for reorganization costs for the remainder of the year.
Answer
CEO Natalia Shuman attributed the 200 basis point gross margin expansion to diversification into higher-margin businesses and operational efficiencies, stating she expects the improved margin level to be largely sustainable. CFO Edward Prajzner explained that while the new ERP system caused a temporary Q2 buildup in receivables, he is confident that cash flow will improve significantly in the second half as the company overcomes the learning curve. Both executives indicated that while cost calibration is an ongoing effort, major reorganization costs are not expected in the second half, and the charges will moderate significantly from H1 levels.