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Item 1A. “Risk Factors,” Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in this Item 1. We undertake no obligation to (and expressly disclaim any obligation to) revise or update any forward-looking statements made herein whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. However, you should consult any further disclosures we may make on these or related topics in our reports on Form 8-K or Form 10-Q filed with the Securities and Exchange Commission ("SEC").
Our Board is responsible for oversight of our cybersecurity program. The Audit Committee, Enterprise Risk Committee, and the Information Technology Leadership Team support the Board in the oversight of our information security program and are focused on cybersecurity and data privacy ris k, including compliance with all applicable laws and regulations, incident response planning, timely identification and assessment of incidents, incident recovery and business continuity considerations.
We recognize the importance of overseeing and identifying material risks from cybersecurity threats associated with our use of third-party vendors. We perform a thorough review of the cyber security measures in place, including any documented third-party audits, for any partners who process our data. Sign-off is required by the Information Security team before agreements can be put in place.
The following discussions should be read in conjunction with the sections of this Annual Report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.”
OUR BUSINESS
Overview
Mistras Group, Inc., together with its subsidiaries (the "Company"), is a global leader in technology-enabled industrial asset integrity and laboratory testing solutions, serving critical industries including oil & gas, aerospace & defense, power & utilities, manufacturing, and civil infrastructure.
The Company provides a diversified portfolio of products and services, ranging from advanced non-destructive testing ("NDT") and pipeline inspections to real-time condition monitoring, maintenance planning, and specialized engineering, powered by a proprietary management software suite that centralizes integrity data for predictive analytics and benchmark analysis. With a long-standing track record of innovation and deep industry expertise, the Company helps clients reduce risk, extend asset life, and optimize operational performance.
The Company enhances value for its customers by integrating asset integrity protection throughout supply chains and centralizing integrity data through a suite of Industrial Internet of Things ("IoT")-connected software and monitoring solutions, including OneSuite®, which serves as a cloud-based ecosystem that pulls together the Company’s software and data services capabilities.The Company enhances value for its customers by integrating asset integrity protection throughout supply chains and centralizing integrity data through a suite of Industrial Internet of Things ("IoT")-connected digital software and monitoring solutions, including OneSuite™, which serves as an ecosystem platform, pulling together all of the Company’s software and data services capabilities, for the benefit of its customers. This integrated approach enables customers to make data-driven decisions that improve asset reliability, enhance safety, reduce operational risk, and optimize performance across the asset lifecycle.
The Company’s core capabilities include NDT field inspections enhanced by advanced robotics, laboratory quality control, laboratory materials services, in-house laboratory assurance testing, sensing technologies and NDT equipment, asset and mechanical integrity engineering services, and light mechanical maintenance and access services.
Given the role the Company's solutions play in supporting the safe and efficient operation of customer infrastructure, the Company historically has provided a majority of its services on a recurring basis.Given the role our solutions play in enhancing the safe and efficient operation of our customers' infrastructure, we have historically provided a majority of our solutions to our customers on a regular, recurring basis. Services are primarily performed at customer facilities, with the exception of aerospace and defense customers, which are largely served through the Company’s network of state-of-the-art laboratories. These services may include NDT and inspection services, as well as complementary mechanical services such as heat tracing, pre-inspection insulation stripping, coating applications, re-insulation, engineering assessments, and long-term condition-monitoring. These solutions typically include NDT and inspection services, and can also include a wide range of mechanical services, including heat tracing, pre-inspection insulation stripping, coating applications, re-insulation, engineering assessments and long-term condition-monitoring.
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Under our operating model, many customers outsource inspection and integrity management activities to the Company on a “run and maintain” basis. The Company maintains long-term relationships with leading asset-intensive operators across oil and gas, aerospace and defense, industrial, power generation and transmission, infrastructure, research and engineering, petrochemical, and other process industries.
The Company continues to invest in proprietary, technology-enabled software and testing instruments, including those developed within its Products and Systems segment. Growth has been supported by selective acquisitions, organic expansion, and the integration of applied technologies and managed support services.
The Company believes long-term growth exists across its target markets, although results may be impacted by macro- and micro-economic conditions, supply chain disruptions, customer capital spending cycles, and commodity price fluctuations.
We generated revenues of $724.0 million, $729.6 million and $705.5 million for the years ended December 31, 2025, 2024 and 2023, respectively. We generated net income of $16.9 million, net income of $19.0 million and net loss of $17.4 million for the years ended December 31, 2025, 2024, and 2023, respectively. We generated net income of $19.0 million, net loss of $17.4 million and net income of $6.6 million for the years ended December 31, 2024, 2023, and 2022, respectively. For the years ended December 31, 2025, 2024 and 2023, we generated approximately 81%, 81% and 82%, respectively, of our revenues from our North America segment. Our revenues are diversified, with our top ten customers accounting for approximately 36%, 36% and 35% of our revenues during the years ended December 31, 2025, 2024 and 2023, respectively, with no customer accounting for greater than 10% of our revenues in any such year.
OUR SPECIALIZED SOLUTIONS
The Company delivers asset protection solutions that combine inspection services, products, data management, analytics, and engineering expertise. Solutions range from routine inspections to enterprise-wide asset integrity management programs designed to support safety, compliance, and operational efficiency.
Field Services
The Company’s field services portfolio includes traditional and advanced NDT techniques. These solutions are offered on an individual basis or as part of an enterprise inspection and testing program to our customers. We offer these solutions on an individual basis, or as parts of enterprise inspection and testing programs.
NDT is the examination of an asset without materially impacting its structural integrity.4Table of ContentsNDT is the examination of an asset without materially impacting its structural integrity. The ability to inspect mission-critical assets and not interfere with their operating performance makes NDT a highly-attractive alternative to many traditional techniques, which may require shutting down an asset or entire facility. The ability to inspect infrastructure assets and not interfere with their operating performance makes NDT a highly-attractive alternative to many traditional techniques, which may require shutting down an asset or entire facility. Typical issues inspected by MISTRAS technicians include potential corrosion, cracking, pitting, leaking, faults and flaws in piping, storage tanks and pressure vessels, as well as a wide range of other industrial assets and public infrastructure. Typical issues for which our technicians inspect include potential corrosion, cracking, pitting, leaking, faults and flaws in piping, storage tanks and pressure vessels, as well as a wide range of other industrial assets and public infrastructure.
Asset inspections often require pre- and post-inspection industrial services, along with advanced access techniques to inspect and maintain equipment in at-height or subsea locations. Typical ancillary services provided by MISTRAS technicians include coating, insulation, and mechanical and construction support, delivered via rope access, diving, or aerial lifts.
Automated data acquisition solutions use smart sensing and monitoring, robotic/unmanned inspection systems, and digitized spot inspections to deliver asset integrity data with greater insight into current and potentially future asset conditions. Our automated data acquisition solutions utilize smart sensing and monitoring, robotic inspection systems, and digitized spot inspections to provide asset integrity data with greater insight into current and potentially future asset conditions. Field inspections frequently serve as the entry point for broader engagements that may include engineering assessments, maintenance support, and data analytical solutions, driving additional revenue opportunities for the Company.
Data Analytical Solutions
Asset protection services generate significant volumes of mechanical integrity data that must be archived, managed, and analyzed to support regulatory compliance and risk-based decision-making. Customers often face challenges consolidating data across assets, facilities, and inspection methods.
Customer data is managed within the Company’s asset protection software ecosystem, OneSuite, which provides a centralized, cloud-based platform for accessing, visualizing, and analyzing asset integrity data. OneSuite integrates more than 90 applications that support trending, benchmarking, reporting, and analytics across assets and facilities, enabling customers to gain enterprise-level visibility into asset condition and performance.
The Company’s data analytical solutions include industry-leading applications such as Plant Condition Management Software (“PCMS®”), one of the most widely-used asset integrity management systems (“AIMS”). Approximately 50% of U.S. refiners,
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as well as midstream pipeline operators and energy companies in Canada and Europe utilize PCMS. PCMS supports asset integrity management, inspection planning, compliance documentation, and long-term condition assessment across facilities.
Pipeline customers use MISTRAS’ Onstream Pipeline Inspection inline inspection (“ILI”) services and New Century Software platform to capture, manage, and analyze pipeline integrity data. These solutions enable integration of inline inspection ILI data with risk analytics and business intelligence tools to support integrity assessments, prioritization, and compliance activities.
MISTRAS also provides online condition monitoring solutions for customers in wind, power, and infrastructure markets. These solutions deliver real-time monitoring and analysis, often in hazardous or hard-to-reach environments, and support early detection of damage or degradation while enhancing safety by reducing the need for on-site inspections.
Many customers leverage the Company’s managed data and analytical services, which combine software platforms with engineering, analytical, and field expertise. These services generate actionable insights, support maintenance planning, reduce unplanned outages, and improve overall operational efficiency for our customers.
In-house Lab Services
MISTRAS operates a network of in-house laboratories across North America and Europe that provide quality assurance and quality control (“QA/QC”) solutions for new and existing metal and alloy components, materials, and composites. The Company’s laboratories support customers throughout the component lifecycle, from preparation and production through post-processing and in-service monitoring, with a focus on meeting manufacturing and regulatory requirements and optimizing production logistics. In-house laboratory services include non-destructive evaluation and inspection (“NDE”/“NDI”), destructive testing (“DT”), metallurgical testing, chemical analysis, mechanical and machining services, pre-machining, casting repair solutions, and finishing services.
MISTRAS laboratories hold a wide variety of certifications, such as: Nadcap (formerly NADCAP, the National Aerospace and Defense Contractors Accreditation Program), AS9100/ISO-9001, Federal Aviation Administration Repair Station, and the International Traffic in Arms Regulations/Export Administration Regulations, which allow the Company to perform inspections that meet or exceed stringent regulatory and manufacturers' requirements. Our laboratories hold a wide variety of certifications, such as: Nadcap (formerly NADCAP, the National Aerospace and Defense Contractors Accreditation Program), AS9100/ISO-9001, Federal Aviation Administration Repair Station, and the International Traffic in Arms Regulations/Export Administration Regulations, that allow us to perform inspections which meet or exceed stringent regulatory and manufacturers' requirements. With these certifications come a comprehensive range of approvals from prime contractors of major projects, militaries and internationally-renowned original equipment manufacturers ("OEMs") from many key markets, including oil and gas, aerospace and defense, power generation, and industrial markets.
Maintenance
We perform maintenance and light mechanical services to prepare assets for inspection and to return them to working condition post inspection. These services include corrosion removal, mitigation and prevention; insulation installation and removal; electrical services; heat tracing, industrial cleaning; pipefitting; and welding. Our light mechanical services are often offered as complementary, value-added solutions to inspections, such as removing insulation in order to inspect piping, then re-installing insulation.
Our multi-disciplined technicians offer maintenance and light mechanical services in hard-to-access areas, and in some cases in combination with rope access or diving strategies.
Engineering Consulting
We provide a broad range of engineering consulting services, primarily for process equipment, technologies and facilities. Our engineering consultations include plant operations and management support, turnaround/shutdown planning, profit improvement, facilities planning studies, engineering design, process safety reviews, energy optimization evaluations, benchmarking/key performance indicator development and technical training.
Our AIMS and Mechanical Integrity ("MI") services help improve asset reliability and regulatory compliance through a systematic, engineering-based approach to ensure the on going integrity and safety of equipment and industrial facilities. AIMS/MI services can include conducting an inventory of infrastructure assets; developing, implementing and training personnel in executing inspection and maintenance procedures; and managing MI programs. We help customers to identify gaps between existing and desired practices and establish quality assurance standards for fabrication, engineering and installation of infrastructure assets.
Access
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Some of our work is conducted in hard-to-access locations, including those in at-height, subsea and confined locations. We utilize scaffolding and rope access to access at-height and confined assets; certified divers for subsea inspection and maintenance; and unmanned (drone) aerial, land-based and subsea systems to deliver a wide range of inspection applications, with an emphasis on minimizing at-height access and confined space entry.
Equipment
We design and manufacture portable, handheld, wireless and turnkey NDT equipment, along with corresponding data acquisition sensors and software, for spot inspections and long-term, unattended monitoring applications.
We sell these solutions as individual components, or as complete systems, which include a combination of sensors, amplifiers, signal processing electronics, knowledge-based software and decision and feedback electronics. We also sell integrated service-and-system technology packages, in which our field technicians utilize our proprietary and specialized testing procedures and hardware, advanced pattern recognition, neural network software and databases to compare test results against our prior testing data or industry standards.
We provide a range of acoustic emission ("AE") products and are a leader in the design and manufacture of AE sensors, instruments and turnkey systems used for monitoring and testing materials, pressure components, processes, and structures. We also design and manufacture ultrasonic testing ("UT") equipment.
Most of our hardware products are fabricated, assembled and tested in our ISO-9001-certified facility in Princeton Junction, New Jersey. We also design and manufacture automated ultrasonic systems and scanners in France.
Centers of Excellence
Another differentiator in our business model is our Centers of Excellence ("COEs"), which offer support for asset, technology or industry-specific solutions. Our subject matter experts engage in strategic sales opportunities to offer customers value-added solutions using advanced technologies and methods. The COEs help to standardize our approach to common problems in our key market segments. Our COE experts cover:
•Acoustic Emission
•American Petroleum Institute ("API") Turnarounds
•AIMS/MI/Engineering
•Automated Ultrasonics
•Fossil Power
•Guided Wave Ultrasonics
•Mechanical Services
•Nuclear Power
•Phased Array
•Rope Access
•Wind
•Tank Inspection
•Tube Inspection
•Unmanned Systems
ASSET PROTECTION INDUSTRY OVERVIEW
Asset protection plays a critical role in maintaining the integrity, reliability, and availability of mission-critical infrastructure across asset-intensive industries. Asset protection solutions are used to detect, mitigate, and prevent degradation mechanisms such as corrosion, cracking, leaks, and manufacturing defects that may impact safety, regulatory compliance, or operational performance.
Demand for asset protection solutions is driven by aging infrastructure, regulatory requirements, increasing safety and environmental expectations, and the growing complexity of industrial assets. Many customers operate assets beyond their original design life, requiring ongoing inspection, testing, and monitoring to support continued operation.
NDT has historically been a foundational element of the asset protection industry due to its ability to assess asset condition without disrupting operations. In recent years, customers have increasingly adopted advanced non-destructive testing solutions, automation, robotics, and digital monitoring technologies to improve inspection efficiency, data quality, and safety outcomes. At the same time, the volume and importance of inspection and mechanical integrity data have increased. Customers are
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seeking solutions that enable centralized data management, support regulatory compliance, and facilitate risk-based decision-making across their assets and facilities.
The asset protection industry has traditionally consisted of many localized service providers. However, customers are increasingly consolidating programs with service providers capable of delivering integrated inspection, data, and analytical solutions at scale. Service providers with advanced technology capabilities, a skilled workforce, and a global footprint are positioned to support recurring, long-term asset integrity programs.
We believe the following represent key dynamics of the asset protection industry, and that the market available to us will continue to grow as these macro-market trends continue to develop:
Digital Transformation of Asset Protection. Plants in the oil and gas, petrochemical and other process industries are recognizing the need to evolve their traditional, paper-based mechanical integrity programs in favor of digitalized solutions. The rise of big data intelligence, and our data analytical solutions offerings, provide our customers with actionable insights from raw asset integrity data. The growing digitization of asset protection provides opportunities for contractors with a wide range of asset protection expertise and integrated data platforms to provide customers with data analytical solutions to help customers maximize uptime while controlling costs.
Extending the Useful Life of Aging Infrastructure While Increasing Utilization. Due to the prohibitive costs and challenges of building new infrastructure, many companies have chosen to extend the useful life of existing assets through enhancements, rather than replacing these assets. This has resulted in the significant aging and increased utilization of existing infrastructure in our target markets. Because aging infrastructure requires more frequent inspection and maintenance in comparison to new infrastructure, companies and public authorities continue to spend on asset protection services to ensure their aging infrastructure assets continue to operate effectively.
Outsourcing of Non-Core Activities and Technical Resource Constraints. Due to the increasing sophistication and automation of asset protection programs, a decreasing supply of skilled professionals and increasing governmental regulations, companies are increasingly outsourcing NDT to third-party service providers with advanced solution portfolios, engineering expertise and trained workforces.
Increasing Corrosion from Low-Quality Inputs. The increased availability and low cost of crude oil from areas such as shale plays and oil sands resources have led to the use of lower-grade raw materials and feedstock. This leads to higher rates of corrosion, especially in refining processes involving petroleum with higher sulfur content, which increases the need for asset protection solutions to detect and/or proactively prevent corrosion-related issues.
Increasing Use of Advanced Materials. Customers in various target markets - particularly aerospace and defense - are increasingly utilizing advanced materials, such as composites and other unique technologies in their assets. These materials often cannot be tested using traditional NDT techniques. We believe that demand for more advanced testing and assessment solutions will increase as the utilization of these advanced materials increases during the design, manufacturing, operating and quality control phases.
Meeting Safety Regulations. Owners and operators of refineries, pipelines and petrochemical and chemical plants increasingly face strict government regulations and more stringent process safety enforcement standards. This includes the continued implementation of the Occupational Safety and Health Administration’s National Emphasis Program. Failure to meet these standards can result in significant financial liabilities, increased scrutiny by government and industry regulators, higher insurance premiums and tarnished corporate brand value. As a result, these owners and operators are seeking highly-reliable asset protection suppliers with a track record of assisting customers in meeting increasingly stringent regulations. Our customers benefit from our extensive engineering consulting base that supports them in devising MI programs that both meet regulatory compliance standards and enable enhanced safety and uptime at the customer's facilities.
Expanding Addressable End-Markets. The continued emergence of and advances in asset protection technologies and software-based systems are increasing the demand for asset protection solutions in applications where existing techniques were previously ineffective. Our range of service offerings and advanced digital technologies allows us to meet the requirements of chemical producers to continuously monitor and provide advanced digital analytical solutions for our customers. Also, our advanced digital analytical solutions allow us to provide real-time monitoring to a variety of customers across infrastructure end markets.
Expanding Aerospace and Defense Industry. We believe that increased demand in the defense and private space industries will continue to grow over the next several years in the commercial industry due to the approximately decade-long backlog for next-generation commercial aircraft to be built, driving the need for advanced solutions that improve cost and quality efficiencies. Demand continues to be stable in the defense industry while demand in the private space industry is growing.
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We continue to optimize our in-house laboratories to meet the growing demands of commercial aerospace and private space end markets. We continue to implement operational efficiencies and new technologies to be able to meet customer demand and needs as they arise. As a result, we are a trusted partner in the private space industry for our customers.
Crude Oil Prices. Volatility in the energy sector has been significant over the past decade. The decline in global crude oil prices in 2015 and 2016 constrained industry expansion, followed by a recovery in 2017 and 2018. Prices declined again during the early stages of the COVID-19 pandemic before rebounding in the second half of 2021 and the first half of 2022 to elevated levels. These conditions contributed to the deferral of certain refinery turnarounds in 2022 until market conditions moderated later that year. During 2023 and 2024, crude oil prices were generally more stable relative to prior periods, and this trend continued into 2025, although energy markets remained influenced by geopolitical developments, including the war in Ukraine and conflict in the Middle East, including the recent conflict between the U.S. and Iran, the imposition of U.S. tariffs, trade restrictions and the responses from other countries, as well as broader macroeconomic conditions.
Expanding Pipeline Integrity Regulations: The United States Pipeline & Hazardous Materials Safety Administration’s “Mega Rule” adopted in October 2019, expands pipeline integrity regulations on more than 500,000 miles of pipelines that carry natural gas, oil and other hazardous materials throughout the United States. Some of these requirements will take operators decades to fulfill. These regulations require inspection and integrity data records throughout a pipeline’s lifetime to be “reliable, traceable, verifiable, and complete,” increasing the demand for integrated inspection, engineering, monitoring, and data management and analysis solutions.
Consolidation of Refineries: Consolidation of refinery ownership will create both pressure on refinery service providers due to increased customer purchasing power and provide an opportunity to those same refinery service providers to become preferred providers to these larger customers.
Our Competitive Strengths
We believe the following competitive strengths contribute to our being a leading provider of asset protection solutions and will allow us to further capitalize on growth opportunities in our industry:
OneSource Provider for Asset Protection Solutions. We believe we have one of the most comprehensive portfolios of integrated asset protection solutions worldwide, which positions us to be a leading single-source provider for our customers’ asset protection requirements. This is particularly a competitive strength in regards to turnarounds and shutdowns - during which facilities temporarily cease portions of their operations in order to perform plant-wide inspections, maintenance and repairs - as the services being requested and performed during these work stoppages make up significant portions of refinery, process and power plant maintenance budgets. Demand for our solutions increases during these outages, as facilities seek third-party providers to perform a wide spectrum of asset protection operations while the plant is offline. In addition, as companies are increasingly outsourcing their NDT needs to third-party providers, we believe that the ability to offer a comprehensive package of solutions provides us with a competitive advantage.
Integrated Data Management: Our expertise and proprietary research and development in data analytical solutions throughout the asset protection cycle provides us with a competitive advantage. With solutions for integrated data acquisition, storage, visualization and analytics, our integrated data analytical solutions have us well-positioned for the oil and gas industry's increasing movement towards digitalizing and centralizing asset protection to fewer, highly-skilled and multi-disciplined vendors. Many of our data analytical solutions are platform-agnostic, allowing us to integrate into customers' existing operations, and thereby expanding the potential customer pool for our solutions. Our expertise and experience also allow us to tailor our offerings to meet specific customer needs, which sets us apart from our competitors. Our presence in our customers’ operations throughout their asset lifecycles also ideally positions us to be their primary vendor to centralize their asset integrity data collection, management and analysis, creating mutually-beneficial opportunities to scale our relationships.
Long-Standing Trusted Provider to a Diversified and Growing Customer Base. We have become a trusted partner to a large and growing customer base across numerous global markets through our proven, decades-long track record of successful operations. Our customers include some of the largest and most well-recognized firms in the oil and gas, chemicals, power generation and transmission and aerospace and defense industries, as well as public authorities.
Repository of Customer-Specific Inspection Data. Through our world-class enterprise data management and analysis software, PCMS, we have accumulated extensive, proprietary process data that allows us to provide our customers with value-added services, such as benchmarking, "RBI" and reliability-centered maintenance.
Proprietary Products, Software and Technology Packages. Our extensive knowledge base in asset protection services and equipment enables us to offer technology packages, in which our field technicians utilize our proprietary and specialized testing procedures and hardware, advanced pattern recognition, neural network software and databases to compare test results against our prior testing data or national and international structural integrity standards.
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Deep Domain Knowledge and Extensive Industry Experience. We have extensive asset protection experience and data, dating back several decades of operations. We have gained this through our industry leadership in developing advanced asset protection solutions, including research and development of advanced NDT technologies and applications, process engineering technologies, online plant asset integrity management with sensor fusion; and enterprise software solutions for plant-wide and fleet-wide inspection data archiving and management.
Technological Research and Development. The inspection and testing industry continues to move towards more advanced, automated solutions, requiring service providers to find safer and more cost-efficient inspection techniques. We believe that we remain ahead of the technological curve by backing our extensive industry expertise with the investment of resources in research and development. Some of the advanced inspection technologies developed by our internal research and development teams include an automated radiographic testing crawler for corrosion under insulation ("CUI") inspections in above ground pipelines and piping; our Large Structure Inspection scanner, and our real-time radiography crawler for 360° inspections of pipeline girth welds.
Collaborating with Our Customers. We have historically expanded our asset protection solutions portfolio in response to our customers’ unique performance specifications. We have historically expanded our asset protection solution portfolio in response to our customers’ unique performance specifications. Our technology packages have often been developed in close cooperation and partnership with key customers and industry organizations.
Experienced Management Team. Our management team has a track record of asset protection organizational leadership. These individuals also have successfully driven operational growth organically and through acquisitions, which we believe is important to facilitate future growth in the asset protection industry.
Our Growth Strategy
The Company's growth strategy emphasizes the following key elements:
Continue to Digitalize Asset Protection Data and Processes: The Company places a data-centric focus on asset protection, enabling customers to ease areas of concern through the ability to make data-driven decisions, particularly related to the timely and accurate transfer of asset integrity data from the field to data management systems and the visibility and accessibility of that data once uploaded. The Company expects demand for data analytical solutions that provide big data intelligence and remote data visibility to continue to grow and continues to invest in capabilities that help customers visualize and generate actionable insights from asset integrity data, regardless of data source. We expect that the demand for our data analytical solutions which provides big data intelligence and remote data visibility will continue to grow, and we are investing in data analytical solutions that help our customers visualize and generate actionable insight from their asset integrity data, regardless of data input. The Company is also focused on optimizing asset protection workflows by creating digital connections between applications to increase data visibility and reduce manual data entry and human error. By combining digital solutions with traditional testing and inspection services, the Company delivers value-added services that unlock long-term customer value and demonstrate the breadth and depth of its technologies.Field inspection services lend themselves to integration with our other offerings, and as such have often served as the initial entry point to more advanced customer engagements that require additional solutions.
Expand Our Focus in the Aerospace and Defense Industries: The Company believes that the introduction of next-generation airframes, aircraft engines, and the increasing demand for private space flight have created sustained demand for inspection, testing, machining, and mechanical services required for part production. MISTRAS also sees increased adoption of additive manufacturing techniques driving demand for advanced inspection and testing solutions. The Company remains optimistic about growth in the defense industry as legacy systems are extended and next-generation platforms are deployed, positioning MISTRAS to support evolving customer requirements through its inspection and testing capabilities.
Expand Our Focus in the Pipeline Integrity Industry: The Company intends to continue broadening its solutions for the pipeline market. Recent regulatory developments have expanded pipeline integrity management requirements, increasing the need for inspection, documentation, and risk assessment of existing infrastructure. This environment creates opportunities for MISTRAS to support customers across both new construction and integrity management phases. The Company has strengthened its capabilities through prior acquisitions of pipeline integrity management software and inline inspection providers and through the deployment of PCMS software for pipeline operators, enhancing MISTRAS’ ability to deliver integrated, data-driven insights efficiently.
Expand our Mechanical Services Portfolio: The Company believes that providing mechanical services that complement inspection activities, such as insulation removal and replacement or surface preparation for coating or painting, represents an important market differentiator. Many customers already require these services but rely on multiple vendors, creating opportunities for MISTRAS to deliver greater value through integrated service delivery and improved efficiency.
Continue to Develop Technology-Enabled and Digital Asset Protection Solutions: The Company intends to maintain and enhance its technological leadership through continued investment in new technologies, applications, and data services. The OneSuite ecosystem reflects MISTRAS’ focus on deepening integration across solutions to deliver unified offerings for customers seeking to centralize asset protection activities. Ongoing development efforts include technologies that improve data
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flow across operational phases and facilities, supported by integrated pipeline integrity data solutions and cloud-based monitoring platforms.
Expand our Solution Offerings to Existing Customers: The Company believes that expanding into adjacent and complementary services increases its value proposition and ability to capture additional business. Many customers operate assets across multiple locations and increasingly seek integrated solutions that consolidate data and services at an enterprise level. MISTRAS believes that expanding solution offerings and enabling cross-facility data visibility supports additional recurring revenue opportunities and deeper customer relationships. The Company remains focused on strengthening its inspection and testing services while diversifying the end markets it serves.
Continue to Expand Our Customer Base into New End Markets: The Company believes there are significant opportunities to expand into emerging and adjacent end markets, including renewable energy, alternative power generation, natural gas transportation, data centers, pipeline integrity, and additive manufacturing. MISTRAS expects growth in these markets to be supported by increased adoption of advanced asset protection technologies, including robotics, automation, and unmanned inspection tools, which are increasingly replacing traditional inspection methods.
Capitalize on Acquisitions: The Company has completed acquisitions to enhance its solutions, expand its customer base, and extend its geographic reach. Due to a focus on organic growth and constraints under existing debt covenants, MISTRAS does not expect to complete acquisitions in 2026 other than limited transactions subject to lender approval. Beyond 2026, the Company expects to pursue selective acquisitions aligned with its strategic and financial objectives.
Our Segments
We have three operating segments: (i) North America, (ii) International and (iii) Products and Systems:
North America provides asset protection solutions with the largest concentration in the United States, followed by Canada, consisting primarily of NDT, inspection, in-laboratory testing, mechanical and engineering services that are used to evaluate the structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components. Software, digital and data analytical solutions and services are included in this segment.
International offers services, products and systems similar to those of the other segments to select markets within Europe, the Middle East, Africa, Asia and South America, which are served by the Products and Systems segment.
Products and Systems designs, manufactures, sells, installs and services the Company’s asset protection monitoring products and systems, including equipment and instrumentation, predominantly in the United States.
For a discussion of segment revenues, operating results and other financial information, including geographic areas in which we generated revenues, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7, as well as Note 2 - Revenue and Note 18 - Segment Disclosure in the notes to our audited consolidated financial statements in Item 8 of this Annual Report.
Revenue Overview
Revenue by Industry
The following charts represent our disaggregated revenue by industry for the years ended December 31, 2025, 2024 and 2023.
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Our Target Markets
Overview
We operate in a highly competitive, but fragmented market. Domestically, the market is serviced by several national competitors and many regional and/or local companies. Internationally, our primary competitors are divisions of large companies, with additional competition from small independent local companies which may be limited to a specific product, service or technology and focused on a niche market or geographic region. We focus our strategic sales, marketing and product development efforts on a range of infrastructure-intensive based industries and governmental authorities. We view energy-related infrastructure and commercial aerospace as our largest market opportunities. We perform inspection and mechanical services for customers in both industries.
Our revenues are comprised of services offerings at our laboratories and at customer facilities. Data Analytical Solutions revenues are comprised of revenue derived from data software sales & subscriptions, implementation services and analytics that offer insights and recommendations to improve asset integrity. Data Analytical Solutions revenue is derived from work performed by our employees in our facilities, or at customer locations, using our proprietary portfolio of software applications. Field Services revenue is comprised of revenue derived primarily by technicians performing asset inspections and maintenance services for our customers at locations other than our properties. Laboratories revenue is comprised of quality assurance inspections of components and materials at our in-house laboratory facilities. Shop Laboratory revenue is comprised of quality assurance inspections of components and materials at our in-house laboratory facilities. Other revenue is comprised of locations that perform both asset inspection services and testing of components and materials at our in-house laboratories.
There are a number of economic factors which drive the aerospace market, including:
•the multi-year backlog for next generation commercial aircraft to be built, including several large and mid-sized aircraft built by Boeing and Airbus, among other manufacturers;
•continued growth of private space and increased number of launches for future space exploration; and
•the continuing regulatory scrutiny to ensure public safety ensures the continued need for inspection and mechanical services to be performed.
In the energy market, there are various economic indicators that drive our business, especially in the U.S. domestic markets. It is unclear what the short and long-term effects of the war between Russia and Ukraine are likely to have on the world economy and certain of our target markets, including particularly the oil and gas market. Excerpted below are forecasts from various Energy Information Administration ("EIA") outlook reports, which are subject to change based on these factors:
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Electricity generation from coal is projected to continue declining through the mid to late 2020s, partially offset by growth in utility-scale solar, wind, and other renewable sources. These trends, along with continued investment in infrastructure integrity, refining efficiency, and energy transition initiatives, are expected to influence customer spending patterns and demand for the Company’s inspection and asset protection services.
The EIA noted U.S. crude oil production averaged 12.9 million barrels per day (bpd) in 2023, rose to an average 13.2 million bpd in 2024 and rose again in 2025 to an average 13.6 million bpd in 2025. The EIA forecasts production to remain relatively flat at an average of 13.5 million bpd in 2026.
Oil and Gas
We supply oil and gas asset protection solutions to downstream (refining), midstream (transportation and storage) and upstream (exploration and production) operations of our customers.
We use our vast solutions portfolio to help identify current and future asset performance, and actively prevent, mitigate or otherwise address potential issues, including corrosion, cracking, leaking and other damages that may lead to safety, productivity or environmental concerns. Our solutions help identify conditions that if not remedied, could lead to potential catastrophic failures in tanks, vessels, valves, buried and above ground pipelines, pumps, motors, compressors and other critical assets found throughout the oil and gas production and delivery supply chain.
We actively seek to evolve our solutions through technological enhancements and research and development to discover new applications. Online monitoring and permanently-mounted sensors, as well as the use of drones and other alternative delivery devices, are all being considered as oil and gas infrastructure owners look to “smart” technologies that reduce human intervention, while delivering highly-accurate inspection and integrity data. We also have actively sought to further enhance our integrated approach to asset protection, through the development of our complementary mechanical service portfolio.
In general, the oil and gas market is poised to leverage digital solutions to facilitate process improvements as well as increase plant reliability and improve process and personnel safety. This provides an opportunity for us to synergistically leverage our digital asset protection solutions. Digital transmission of data in various industry sectors, with built-in analytic functions, will allow our customers to better leverage inspection data that is being generated in the field.
While we expect off-stream inspection of critical assets to remain a routine practice, we anticipate an increase in the demand for non-invasive or on-stream inspections. Non-invasive inspections enable companies to minimize the costs associated with shutting down equipment during testing, while enabling the economic and safety advantages of advanced planning and/or predictive maintenance.
Aerospace and Defense
The aerospace industry continued to experience increased backlog and production levels in 2025, with such levels approaching and exceeding pre-COVID-19 pandemic levels for certain OEMs throughout 2025. We serve this rapidly growing target market by providing a full range of inspection, testing, machining, mechanical, finishing, additive manufacturing and equipment solutions, for which we are Nadcap certified. Our state-of-the-art in-house testing laboratories maintain numerous accreditations from industry organizations, including Nadcap, and some of the largest manufacturers in the world, such as Boeing, Safran, Airbus, Bombardier and Embraer.
Advanced composite materials found in new classes of aircraft require advanced asset protection solutions, including x-ray of critical engine components, ultrasonic fatigue testing of complete aircraft structures and corrosion detection and other critical components. Many OEMs are shifting towards condition-based maintenance utilizing embedded monitoring sensors to track component structural and operational integrity over time as opposed to performing maintenance on time-based intervals. We expect demand for our solutions to increase with the adoption of these new-age materials and distributed online sensor networks. We also expect demand for asset protection solutions to increase with the continued adoption of additive manufacturing techniques.
Industrials
The quality control requirements driven by the need for zero-to-low-defect component tolerance within automated, robotic-intensive industries such as automotive, consumer electronics and medical industries serve as key drivers for increased demand in asset protection, particularly for in-house inspection and testing. We expect that increasingly stringent quality-control requirements and competitive forces will drive the demand for more-costly finishing and polishing which, in turn, creates opportunities for integrated partnerships between us and our customers throughout the production lifecycle.
Power Generation and Transmission
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We provide asset protection solutions for customers in the combined cycle, fossil, nuclear, transmission and distribution and wind/alternative energy industries. We believe that in recent years, acceptance of asset protection solutions has grown in this industry due to the aging of critical power generation and transmission infrastructure.
The growing availability of cheap natural gas, along with environmental concerns with coal, has stimulated the construction of new natural gas-fired power plants across North America, creating opportunities for us to provide specialized solutions in multiple phases. These include facility design consultations, NDT services during construction and plant operations and long-term condition monitoring. We anticipate increased growth in these types of plants as natural gas pricing remains low, and the environmental impacts of coal remain unattractive to the public.
We also offer solutions for inspection, maintenance, monitoring and data services for wind turbines and their components. These include NDT services — often performed through rope and/or drone access — to identify corrosion, cracking, and other defects that can affect the safety and operational effectiveness of wind turbines, along with remedial solutions to repair minor damages identified during inspections.
Other Process Industries
Our asset protection solutions are crucial for process industries, or industries in which raw materials are treated or prepared in a series of stages, including chemicals, pharmaceuticals, food processing, pulp and paper and metals and mining. As the process facilities are increasingly facing aging infrastructure, high utilization, growing capacity constraints and increasing capital costs, we believe asset protection solutions will continue to grow in importance in maintenance planning, quality and cost control and prevention of catastrophic failure.
Infrastructure, Research and Engineering
We believe that high-profile infrastructure catastrophes have caused public authorities to more actively seek ways to prevent similar events from occurring. Public authorities tasked with new construction and maintenance of existing public infrastructure increasingly use asset protection solutions to inspect these assets, including the use of embedded sensors to enable online monitoring throughout the life of the asset.
We have provided testing and structural health monitoring and data analytical solutions on bridges and structures worldwide, including some of the largest and most well-known bridges in the United States and United Kingdom. In addition to structural applications, we also perform testing and ongoing monitoring for data centers, ensuring the reliability and operational continuity of these critical facilities. Our sensors continuously monitor these assets, alerting owner/operators when defects are detected. Our monitoring teams also provide regular reports that include early warnings of suspect areas before an alarm is generated.
Petrochemical
We provide asset protection NDT services for customers within the petrochemical industry, as they transform byproducts into goods which are utilized in many end products such as plastics, soaps, fertilizers, synthetic fibers and rubber. Our solutions help identify conditions that if not remedied, could lead to potential catastrophic failures in tanks, vessels, valves, buried and above ground pipelines, pumps, motors, compressors and other critical assets found throughout the petrochemical production process.
We actively seek to evolve our solutions through technological enhancements and research and development ("R&D") to discover new applications. Online monitoring and permanently-mounted sensors provide real-time data to petrochemical owners and operators and provide an opportunity for us to synergistically leverage our asset protection solutions into our platform, OneSuite. Digital transmission of data in various industry sectors, with built-in analytic functions, will allow our customers to better leverage inspection data that is being generated in the field. We also have actively sought to further enhance our integrated approach to asset protection, through the development of our complementary mechanical service portfolio.
Customers
We provide our asset protection solutions to a global customer base of diverse companies primarily in our target markets. No customer represented 10% or more of our revenue in any of the years ended December 31, 2025, 2024 or 2023.
Geographic Areas
We have operations in 11 countries and occasionally conduct business in a few other countries. Most of our revenues are derived from our U.S., Canadian and European operations and we do not have operations in Russia, and we do not do business in Russia, Ukraine or other areas which are impacted by the on going war between Russian and Ukraine. See Note 2 - Revenue
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and Note 18 - Segment Disclosure to our audited consolidated financial statements in this Annual Report for further disclosure of our revenues, long-lived assets and other financial information regarding our international operations.
Sales and Marketing
We sell our asset protection solutions through our direct sales and marketing activities worldwide. In addition, our project and laboratory managers, as well as our management, are trained on our solutions and often are the source of sales leads and customer contacts. Our direct sales and marketing teams work closely with our customers to demonstrate the benefits and capabilities of our asset protection solutions, refine our asset protection solutions based on changing market and customer needs and identify potential opportunities. We divide our sales and marketing efforts into services sales, products and systems sales and marketing and utilize marketing automation and customer relationship management ("CRM") systems to collect, manage and collaborate customer information with our teams globally. Our CRM systems also provide critical data to provide accurate forecasting and reporting.
Manufacturing
Most of our hardware products are manufactured in our Princeton Junction, New Jersey facility. This facility includes the capabilities and personnel to fully produce all of our AE products and NDT Automation Ultrasonic equipment. We also design and manufacture automated ultrasonic systems and scanners in France.
Human Capital
As of December 31, 2025, we had approximately 4,800 employees worldwide, of which 3,200 were located in the United States, 500 in Canada and 1,100 in our other non-U.S. locations. Our employees include full, part time and contract employees throughout our organization. As described below, we value our employees and have established various programs to promote the satisfaction, health and safety of our employees. Less than 1.00% of our employees in the United States are unionized.
Our employees are key to achieving our goals and strategy. We have committed resources throughout our organization to ensure that we are attracting, developing, and retaining talented employees needed to support all aspects of our activities. Our core values and business ethics guide and direct all activities undertaken by us.
The health and safety of our employees is paramount. We have also developed key initiatives and strategies regarding our talent and people initiatives. Below, we describe some of the key initiatives and values around health and safety. Management regularly updates our board of directors (the "Board") with regards to our safety and employee strategy and our performance in these areas. In 2020, our Board established the Environmental, Social and Safety Committee. This Committee, which consists of independent directors, monitors and oversees the strategic direction of our initiatives in support of our core values and our environmental, social and governance initiatives.
Talent, Leadership and Employee Development
Employee development and engagement begins with our senior management team, which has considerable industry experience and expertise.
We provide employees the ability to gain additional professional certifications to contribute to their career advancement. We utilize a web-based training center which is available to field technicians for career advancement and includes over 500 web-based classes. In addition, we are committed to ensuring all employees are compensated at a living wage. All local minimum wage requirements are met and where no wage laws are in place, employees are compensated competitively, in accordance with industry standards.
Our human rights policy places a high priority on diversity and equal opportunity and provides our employees with management’s expectations related to human rights and labor practices.
We also instituted a program that focuses on our connection by a common thread of caring – about one another, our customers, the environment, and the work we do. We seek to foster a culture of togetherness, safety, respect, and contribution, which enables each individual member of our Company to feel that he or she is a part of something bigger. A community of caring professionals with a genuine passion for helping people and making a difference together – that is the heart of the program we call “Caring Connects.”
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Our Safety-Conscious Culture
We consider safety the backbone of our operations. Our asset protection solutions aim to ensure that industrial assets and facilities remain in safe, reliable working condition, which in turn enhances safety for our customers, the public, and the environment. Our laboratory and field personnel are trained to operate according to strict safety and quality standards so that our processes and procedures regarding hazardous materials, worker safety, and accident prevention are sound and effective. Further to this, we are constantly evaluating these processes and procedures to ensure that they remain of high quality and are effective. We also consider changes in the manner in which work is performed as a result of lessons that have been learned from any sources, such as industry data. We work to help ensure that our customers are in full compliance with all federal, state, and local regulations. Our practices, policies and procedures are designed to help ensure we perform our duties through the use of safe, industry-best practices, seeking to minimize risk wherever possible.
We emphasize a “MISTRAS’ safety-conscious” culture with the intent that it becomes embedded in the day-to-day work of all our employees. We use various training tools and other practices to instill attitudes, beliefs, perceptions, and values that all employees share in the mandate to create and maintain a safe work environment for all.
We continuously monitor our safety performance through analysis of our company-wide safety statistics, which help us to determine behavioral trends while also instilling a culture of proactivity. For the year ended December 31, 2025, our Total Recordable Incident Rate ("TRIR") was 0.35 while Days Away, Restricted and Transferred Rate was 0.17 and Lost Work Day Rate was 0.03. For the year ended December 31, 2024, our TRIR was 0.19.
Seasonality
Our business is seasonal. This seasonality relates primarily to our oil and gas target market, and to a lesser extent within our other target markets. U.S. refineries’ non-peak periods are generally in the fall, when they are retooling to produce more heating oil for winter, and in the spring, when they are retooling to produce more gasoline for summer. The peak periods for these customers are the summer and winter months, when they run at peak capacity and are not retooling or performing turnarounds or shut downs. As a result, our revenues in the summer and winter months are typically lower than our revenues in the fall and spring, when demand for our asset protection solutions from the oil and gas as well as the fossil power industries increases during their non-peak production periods. Because we are increasing our work in the fall and spring, our cash flows are lower in those quarters than in the summer and winter, as collections of receivables lag behind revenues. We expect that this seasonality will continue.
Competition
We operate in a highly competitive, but fragmented, market. Our primary competitors include large public and private companies, divisions of large companies and various small companies which generally are limited to a specific product or technology and focused on a niche market or geographic region. We believe that few, if any, of our competitors currently provide the full range of asset protection and NDT products, PCMS and the traditional and advanced services solutions that we offer. Our competition with respect to NDT services include TIC Solutions, SGS Group, the Team IHT Segment and APPLUS RTD. Our competition with respect to NDT services include Acuren, SGS Group, the Team IHT Segment and APPLUS RTD. In addition, in our in-house laboratory testing services, particularly within the aerospace and defense end market, we compete with Element Materials Technology. Our competition with respect to PCMS includes UltraPIPE, Lloyd’s Register Capstone, Inc. and Meridium Systems. In the traditional NDT market, we believe the principal competitive factors include project management, availability of qualified personnel, execution, price, reputation and quality, whereas in the advanced NDT market, reputation, quality and size tend to be the most significant competitive factors. We believe that the NDT market has significant barriers to entry which would make it difficult for new competitors to enter the market. These barriers include: (i) having to acquire or develop advanced NDT services, products and systems technologies, which in our case occurred over many years of customer engagements and at significant internal research and development expense, (ii) complex regulations and safety codes that require significant industry experience, (iii) license requirements and evolved quality and safety programs, (iv) costly and time-consuming certification processes, (v) capital requirements and (vi) emphasis by large customers on size and critical mass, length of relationship and past service record.
Research and Development
Our research and development ("R&D") is principally conducted by engineers and scientists at our Princeton Junction, New Jersey headquarters, and supplemented by other employees in the United States and throughout the world, including Canada, France, Greece the United Kingdom, Brazil and the Netherlands. Our total professional staff includes employees who hold
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Ph.D.’s and engineers and employees who hold Level III certification, the highest level of certification from the American Society of Non-Destructive Testing ("ASNT").
We make strategic R&D investments in our data analytical solutions technologies that support integration with our other solution offerings to enhance cost- and time-efficiencies, maximize uptime and safety and improve the flow of data from field technicians to inspection databases. These strategic investments enable us to enhance our service offerings to customers and provide valuable insights and predictive analysis.
We have also invested significant research and development in pre-machining and advanced testing technologies in a purpose-built facility for an aerospace customer, with the goal of reducing the customer’s production cycle logistics and costs.
We also work with customers to develop new products or applications for our technology, including:
•Testing of new composites;
•Detecting crack propagation;
•Wireless and communications technologies; and
•Development of permanently embedded inspection systems to provide continuous, online, in-service monitoring of critical structural components.
R&D expenses are reflected in our Consolidated Statements of Income (Loss) as research and engineering expenses. Our company-sponsored research and engineering expenses were approximately $1.0 million, $1.1 million and $1.7 million for the years ended December 31, 2025, 2024 and 2023, respectively. While we have historically funded most of our R&D expenditures, from time to time we also receive customer-sponsored R&D funding. Most of the projects are in our target markets, however, a few of the projects could lead to other future market opportunities.
Intellectual Property
Our success depends, in part, on our ability to maintain and protect our proprietary technology and to conduct our business without infringing on the proprietary rights of others. We utilize a combination of intellectual property safeguards, including patents, copyrights, trademarks and trade secrets, as well as employee and third-party confidentiality agreements, to protect our intellectual property.
As of December 31, 2025, we held 12 U.S. patents by direct ownership and had 5 patent applications pending in the United States. All the patent applications pending have been filed since 2018. While we do not rely on these patents or licenses to provide a majority of our proprietary asset protection solutions, certain of these patents do provide us with a competitive advantage and we believe they will be an asset to our growth strategy. Our trademarks and service marks provide us and our solutions with a certain amount of brand recognition in our markets. We do not consider any single patent, trademark or service mark material to our financial condition or results of operations.
As of December 31, 2025, the primary trademarks and service marks that we held in the United States included MISTRAS®, our stylized globe design and our tag line "One Source for Asset Protection Solutions". Other key trademarks or service marks that we utilize in localized markets or product advertising include:
•Onstream® (word and logo)
•PCMS® (word and logo)
•Ropeworks®
•MISTRAS Digital®
•OneSuite™
•Sensoria™
•OneSource™
•CALIPERAY™ (word and logo)
•Physical Acoustics PAC logo
•Streamview™
•Sensor Highway™
•TankPAC®
•VPAC™
•Transformer Clinic™
•FieldCal™
•UTwin®
•AEwin®
•Pocket AE®
•Pocket UT®
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Many elements of our asset protection solutions involve proprietary know-how, technology or data that are not covered by patents or patent applications because they are not patentable or would be difficult to enforce, including technical processes, algorithms and procedures. We believe that this proprietary know-how, technology and data is the most important component of our intellectual property used in our asset protection solutions and is a primary differentiator of our solutions from those of our competitors. We rely on various trade secret protection techniques and agreements with our customers, service providers and vendors to protect these assets. All of our employees are subject to confidentiality requirements through our employee handbook. In addition, many of our employees have entered into confidentiality and proprietary information agreements with us. Our employee handbook and these agreements require our employees not to use or disclose our confidential information and to assign to us all the inventions, designs and technologies they develop during the course of employment with us, as well as addressing other intellectual property protection issues. We also seek confidentiality agreements from our customers and business partners before we disclose any sensitive aspects of our technologies or business strategies. We are not currently involved in any material intellectual property claims.
Governmental Regulations
We are subject to numerous environmental, legal and regulatory requirements related to our operations worldwide. In the United States, these laws and regulations include, among others: the Comprehensive Environmental Response, Compensation, and Liability Act, the Resources Conservation and Recovery Act, the Clean Air Act, the Federal Water Pollution Control Act, the Toxic Substances Control Act, the Atomic Energy Act, the Energy Reorganization Act of 1974, and applicable regulations. In addition to the federal laws and regulations, states and other countries where we do business often have numerous environmental, legal and regulatory requirements by which we must abide. We evaluate and address the environmental impact of our operations by assessing properties in order to avoid future liabilities and comply with environmental, legal and regulatory requirements. See “Risk Factors” in Item 1A for a discussion of risks relating to federal, state, local and international laws and regulations applicable to our business.
Executive Officers
The following table and text sets forth our executive officers for the year ended December 31, 2025 and their background and experience.
*On September 15, 2025, Eileen Coggins joined Mistras as Executive Vice President and Chief Legal Officer and assumed the role of General Counsel and Secretary as of November 15, 2025.
Manuel "Manny" N. Stamatakis joined our Board in 2002, became the Chair of the Governance Committee as well as a member of the Audit Committee and Compensation Committee in 2009 and Lead Director in 2010. On October 9, 2023, Mr. Stamatakis became the Chairman of the Board, and on the same day became our Interim President Chief Executive Officer to replace our prior President and Chief Executive Officer, Dennis Bertolotti. At that same time, Mr. Stamatakis resigned from all the committees of the Board and as our lead director. Mr. Stamatakis chaired the Project Phoenix Steering Committee, an initiative for which he was both the chief architect and driving force. Stamatakis currently chairs the Project Phoenix Steering Committee, an initiative for which he is both the chief architect and driving force. Mr. Stamatakis currently serves as our Executive Chairman of the Board following Ms. Shuman’s appointment as President and Chief Executive Office of Mistras, effective January 1, 2025.
An accomplished entrepreneur for over 30 years, Mr. Stamatakis is an executive officer of Capital Management Enterprises, Inc., a financial services and employee benefits consulting firm based in Pennsylvania. Mr. Stamatakis has held multiple board and chairmanship positions over the years, including Chairman of the Delaware River Port Authority, The Drexel College of Medicine, the Pennsylvania Supreme Court Investment Advisory Board, and the Philadelphia Shipyard Development Corporation which was the catalyst to bringing shipbuilding back to the Philadelphia region. He earned a B.S. in Industrial Engineering from Pennsylvania State University and received an honorary Doctor of Business Administration from Drexel University.
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Natalia Shuman joined Mistras as President and Chief Executive Officer, effective January 1, 2025. Prior to joining the Company, from October 2021 until October 2024, Ms. Shuman was an executive at Eurofins Scientific Group (“Eurofins"), a global leader in the testing, inspection, and certification (“TIC”) industry. Ms. Shuman served as Executive Vice President - Europe and Asia and as President - Biopharma and AgTech Services at Eurofins, and also served as a member of the Group Operating Council during her tenure at Eurofins, where she led over 12,000 employees, driving growth strategies, operational excellence, and strategic value creation. Prior to joining Eurofins, Ms. Shuman served from April 2017 to September 2021 as the Chief Executive Officer of Bureau Veritas - North America, Inc. (“Bureau Veritas”), also a leader in the TIC industry, where she oversaw approximately 7,000 employees, 130 branches and laboratories across the US, Canada and Mexico and served on the Bureau Veritas’s Group Executive Committee.
Prior to joining Bureau Veritas, Ms. Shuman spent over 20 years at Kelly Services, a U.S.-based staffing and human resources outsourcing company. At Kelly Services, Ms. Shuman served as a head of international business, overseeing Asia Pacific and EMEA regions and led large accounts operations serving Kelly Services’ customers. Ms. Shumans’s 20+ year tenure at Kelly Services included progressive leadership positions in New York, and several international assignments including leading Kelly Services’s joint venture with a Japanese staffing company, the largest in North Asia. On behalf of Kelly Services, Ms. Shuman served on the board of directors of the World Employment Confederation in Brussels during part of her time at Kelly Services. Ms. Shuman received a dual Master of Business Administration ("MBA") from Columbia Business School and London Business School.
Edward J. Prajzner joined Mistras in January 2018 as our Senior Vice President, Chief Financial Officer and Treasurer, was subsequently promoted to Executive Vice President and on March 26, 2023, was promoted to our Senior Executive Vice President and Chief Financial Officer. Prior to joining Mistras, Mr. Prajzner worked at CECO Environmental Corp., a global service provider to environmental, energy and filtration industries, and served as Chief Financial Officer and Secretary from 2014 to 2017, Vice President of Finance and Chief Accounting Officer from 2013 until his appointment as Chief Financial Officer in 2014, and Corporate Controller and Chief Accounting Officer from 2012 to 2013. Mr. Prajzner also served in senior finance roles at CDI Corporation (now AE Industrial Partners) and American Infrastructure (now Allan Myers). Mr. Prajzner began his career in public accounting at Ernst & Young, received his B.S. in accountancy from Villanova University, his MBA in finance from Temple University and is a certified public accountant.
Hani Hammad joined Mistras as Executive Vice President and Chief Transformation Officer in March 2024. Effective January 1, 2025, Mr. Hammad was promoted to our Executive Vice President and Chief Operating Officer. As Chief Transformation Officer, Mr. Hammad oversaw the Company's Project Phoenix initiative which focused on identifying and implementing value-creation opportunities that enhanced the Company's profitability. Prior to joining Mistras, from January 2020 to March 2024, Mr. Hammad was a director at the global consultancy, AlixPartners, where he focused on leading operational and financial transformations within field service-oriented companies. Prior to joining AlixPartners, Mr. Hammad worked at PwC's Strategy & focused on developing and implementing operational strategies for various oil & gas companies. Mr. Hammad also held various key roles in manufacturing and supply chain management at Baker Hughes Company and General Electric Company. Mr. Hammad received a Master of Professional Studies in Supply Chain Management from Pennsylvania State University and a Bachelor of Science degree in Electrical Engineering from Louisiana Tech University.
Gennaro "Jerry" D'Alterio joined Mistras on September 11, 2023, as Executive Vice President and Chief Commercial Officer. Prior to joining Mistras, Mr. D'Alterio most recently served as the Vice President of Product Management and Director, Global Business Development at CECO Environmental Corporation’s Fluid Handling & Filtration segment, where he also held the positions of President and Global President. With over 20 years of proven executive leadership and demonstrated ability to drive both revenue growth and profitability, across a wide range of industries, Mr. D’Alterio excels at driving best-in-class commercial operating models and transformations while fostering success-oriented, winning cultures. Mr. D'Alterio holds an MBA and a Bachelor of Science in Mechanical Engineering from Villanova University. He is certified in LEAN enterprise and manufacturing, is member of the Hydraulic Institute and the International Desalination Association, and serves on the Board of the Aquatic Animal Life Support Operators organization.
Eileen Coggins joined Mistras on September 15, 2025, as Chief Legal Officer and assumed the role of General Counsel and Secretary as of November 15, 2025. She brings extensive experience as a senior legal officer across regulated industries, including public companies, private enterprises, and private equity–backed organizations. Ms. Coggins has held senior leadership roles at AmeriHealth Caritas, Univita Health Inc., and Genesis HealthCare Corp. At AmeriHealth Caritas, she expanded the legal function while helping drive revenue growth from $6 billion to more than $23 billion. She also oversaw legal, regulatory, and government affairs at Univita Health, and guided governance through major transactions at Genesis HealthCare, including a company sale and tax-exempt spin-off. She holds a Juris Doctor from Widener University School of Law and a Bachelor of Arts from West Chester University. Ms. Coggins also serves on the Boards of Share Food Inc., as Vice Chair and Chair of the Nominating and Governance Committee, and Casa Farnase.
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Our Website and Available Information
Our website address is www.mistrasgroup.com. We file reports with the SEC, including Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, Current Reports on Form 8-K and Proxy Statements. All of the materials we file with or furnish to the SEC are available free of charge on our website at http://investors.mistrasgroup.com/sec.cfm, as soon as reasonably practicable after having been electronically submitted to the SEC. Information contained on or connected to our website is not incorporated by reference into this Annual Report and should not be considered part of this Annual Report or any other filing with the SEC. All of our SEC filings are also available at the SEC’s website at www.sec.gov. In addition, materials we file with the SEC may be read and copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
ITEM 1A. RISK FACTORS
This section describes the major risks to us, our business and our common stock. You should carefully read and consider the risks described below, together with the other information contained in this Annual Report, including our financial statements and the notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” before making an investment decision. The statements contained in this section constitute cautionary statements under the Private Securities Litigation Reform Act of 1995. If any of these risks occur, our business, financial condition, results of operations and future growth prospects may be adversely affected. As a result, the trading price of our common stock would likely decline, and you may lose all or part of your investment. You should understand that it is not possible to predict or identify all risk factors that could impact us. For example, ongoing geopolitical conflicts, including the war between Russia and Ukraine, the unrest in the Middle East, including the recent conflict between the U.S. and Iran, and the recent intervention in Venezuela, continue to contribute to global energy market volatility, supply chain disruption, and economic uncertainty that could affect certain of our end markets, particularly oil and gas. Broader macroeconomic conditions, including inflationary pressures, higher interest rates, labor market tightness, and evolving trade policies or tariffs and retaliatory responses, may also impact our costs, customer spending, and project timing. In addition, emerging regulatory and market developments related to climate change, the use of AI, cybersecurity, and sustainability reporting may introduce new compliance requirements or operational risks. Accordingly, the following discussion should not be viewed as an exhaustive list of all risks and uncertainties that could impact our business or the value of our common stock. Accordingly, you should not consider the following to be a complete discussion of all risks and uncertainties pertaining to us and our common stock.
Risks Related to Our Business
Due to our dependency on customers in the oil and gas industry, we are susceptible to prolonged negative trends relating to this industry that could adversely affect our operating results.
Our customers in the oil and gas industry have accounted for a substantial portion of our historical revenues. Specifically, they accounted for approximately 55%, 57%, and 59% of our revenues for the years ended December 31, 2025, 2024 and 2023, respectively. Although we have expanded our customer base into industries other than the oil and gas industry, we still receive a majority of our revenues from this industry. Our services remain critical to the integrity and safety of energy infrastructure, including refineries, pipelines, offshore platforms, and petrochemical facilities. We have broadened our portfolio to include enhanced mechanical and in-line inspection services, digital and data-driven integrity solutions, and asset protection technologies. However, the oil and gas industry is cyclical and subject to fluctuations in commodity prices, capital spending, and production activity. In addition, economic slowdowns or low oil prices have, and could continue to, result in cutbacks in contracts for our services. However, economic slowdowns or low oil prices have, and could continue to, result in cutbacks in contracts for our services. While oil prices have generally stabilized in 2025 following periods of volatility in prior years, any sustained decline could lead to reduced maintenance spending and deferrals of nonessential projects by our customers, which would adversely affect demand for our services and our results of operations. Conversely, sustained periods of elevated oil prices can also negatively impact our business if our customers delay inspection and maintenance activities due to higher operating costs, supply chain constraints, or labor shortages.
Demand for a substantial portion of our products and services depends on the level of capital expenditures invested in the oil and natural gas industry. Ongoing uncertainties related to future crude oil demand and the willingness of operators to invest in U.S. land-based drilling, completion and production activities given efficiencies gained and regulatory pressures may result in a material adverse impact on our financial condition, results of operations and cash flows. Any prolonged reduction in the overall level of exploration and production activities, whether resulting from changes in oil and natural gas prices or otherwise, could have an adverse effect on our equipment utilization, revenues, cash flows and profitability; our ability to obtain additional capital to finance our business and the cost of that capital; and our ability to attract and retain skilled personnel.
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We continue to diversify our business across other end markets, including aerospace and defense, power generation and transmission, chemical processing, and infrastructure, as well as emerging opportunities in renewable energy and advanced materials. These industries, however, are also cyclical and can be affected by economic slowdowns, supply chain challenges, and changes in government policies or investment levels. Geopolitical instability, including the ongoing war between Russia and Ukraine, conflict in the Middle East, including the recent conflict between the U.S. and Iran, and the recent intervention in Venezuela, continues to contribute to energy market volatility and broader macroeconomic uncertainty. These conflicts have disrupted global supply chains and contributed to elevated energy and material costs in certain regions, particularly impacting our European operations.
Additionally, evolving trade policies, tariffs, and other regulatory or retaliatory actions affecting the flow of goods and materials, particularly between the United States, China, and other major trading partners, could increase our operating costs or impact customer demand in certain markets. Any of these factors could adversely affect our revenues, profitability, and cash flows.
If we are unable to successfully execute our growth strategy, our business, financial condition, and results of operations could be materially and adversely affected
Our long‑term growth strategy depends on expanding and digitalizing our asset‑protection solutions, increasing our presence in certain end markets, broadening our mechanical services, enhancing technology‑enabled offerings, and expanding our solutions to new and existing customers. Successful execution of our long-term growth strategy requires ongoing innovation, effective technology development, sufficient capital investment, scalable operations, qualified personnel, and strong customer and partner relationships.
We may not achieve the growth contemplated by our strategic plans. Our growth initiatives could take longer or cost more than expected, may not generate anticipated returns, or may be constrained by customer adoption rates, competitive pressures, regulatory changes, or operational limitations. If we fail to implement these growth initiatives successfully, or if they do not produce the expected benefits, our revenue trajectory, profitability, and competitive position could be materially harmed. As a result, our actual performance may differ materially from our expectations.
We may be affected by climate change and market or regulatory responses to climate change
Climate change and related legislative, regulatory, and market developments could have a material adverse effect on our results of operations, financial condition, and liquidity. Restrictions on emissions, including those that have already been adopted and others that are expected to be adopted in the future, could affect our customers that (i) use commodities to produce energy, (ii) use significant amounts of fossil fuel to produce or deliver commodities, or (iii) manufacture or produce goods that consume significant amounts of fossil fuels or burn fossil fuels. Significant cost increases, government regulation, or changes of consumer preferences for goods or services relating to alternative sources of energy or emissions reductions could materially affect the markets we serve (including the oil and gas industry), which in turn could have a material adverse effect on our results of operations, financial condition and liquidity. Government incentives encouraging the use of alternative sources of energy also could affect certain of our customers and the markets we serve in an unpredictable manner. Any of these factors, individually or with one or more of the other factors, or other unforeseen impacts of climate change could have a material adverse effect on our results of operations, financial condition and liquidity.
In addition, government incentives supporting renewable energy development and the broader energy transition may cause shifts in capital allocation away from traditional oil and gas infrastructure, which could reduce activity levels in markets we serve. Conversely, increased investment in renewable and alternative energy sources may create new opportunities for our services; however, the pace and scale of such transitions remain uncertain. New and evolving international, federal, state, and local legislation and regulation based on concerns about climate change, including emerging climate disclosure and reporting requirements such as the SEC’s final climate-related disclosure rules, which were stayed in April 2024, may also increase our compliance, data collection, and reporting costs.In addition, changes in international, federal, state and local legislation and regulation based on concerns about climate change and increasing climate-related disclosures, including the rules proposed by the SEC, could result in increased compliance and data collection costs if, and when, such laws and regulations become effective. In addition, in October 2023, California enacted the Climate Corporate Data Accountability Act (“SB-253”), which mandates the disclosure of greenhouse gas emissions, including Scope 1, Scope 2 and Scope 3 emissions; and the Climate-Related Financial Risk Act (“SB-261”), which mandates the disclosure of climate-related financial risks, and measures adopted to reduce and adapt to such risks. California has delayed formal rulemaking for SB-253 until the first quarter of 2026. As of the date of this Annual Report, SB-261 is subject to a court injunction on its implementation. We continue to monitor and review developments relating to SB-253 and SB-261. Meeting these evolving regulatory and stakeholder expectations may require additional investment in systems, processes, and personnel, and noncompliance could result in reputational or legal risks. Any of these factors, individually or collectively, could adversely affect our results of operations, financial condition, and liquidity.
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Our international operations are subject to risks relating to non-U.S. operations.
For the years ended December 31, 2025, 2024 and 2023, we generated approximately 30%, 31%, and 29% of our revenues outside the United States, respectively. In addition, our international operations as a percentage of our business may increase over time. Our primary operations outside the United States are in Canada, Germany, France, the United Kingdom, the Netherlands, and Brazil. We also have operations in Belgium, Greece, India and Mexico. From time to time, we may conduct business in other jurisdictions where we do not maintain significant or core operations. There are numerous risks inherent in doing business in international markets, including:
•fluctuations in currency exchange rates and interest rates;
•regional micro and macro-economic pressures, inflationary costs, energy costs and geopolitical factors;
•compliance with applicable foreign regulations and licensing requirements, and U.S. laws and regulation with respect to conducting business in other countries, including export controls, sanctions, anti-terrorist and anti-bribery laws;
•the cost and uncertainty of obtaining data and creating solutions that are relevant to particular geographic markets;
•the need to provide sufficient levels of technical support in different locations;
•the complexity of maintaining effective policies and procedures in locations around the world;
•political instability, war or conflicts and civil unrest;
•increased risk of hacking, malware or security breaches of our data and databases;
•restrictions or limitations on outsourcing contracts or services abroad;
•the imposition of domestic and international tariffs, trade barriers and other trade restrictions;
•restrictions or limitations on the repatriation of funds, or tax consequences on the non-repatriation of overseas operationally generated funds; and
•other potentially adverse tax consequences.
Our operating results could be adversely affected by a reduction in business with our significant customers.
We derive a significant amount of revenues from a few customers. Taken as a group, our top ten customers were responsible for approximately 36%, 36%, and 35% of our revenues for the years ended December 31, 2025, 2024 and 2023, respectively. Taken as a group, our top ten customers were responsible for approximately 36%, 35%, and 33% of our revenues for the years ended December 31, 2024, 2023 and 2022, respectively. This concentration pertains almost exclusively to our North America segment, which accounted for 81%, 81%, and 82% of our revenues for the years ended December 31, 2025, 2024 and 2023, respectively. These customers are primarily in the oil and gas sector. These customers are primarily in the oil and gas 22Table of Contentssector. Generally, our customers do not have an obligation to make purchases from us and may stop ordering our products and services or may terminate existing orders or contracts at any time with little or no financial penalty. The loss of any of our significant customers, any substantial decline in sales to these customers or any significant change in the timing or volume of purchases by our significant customers could result in lower revenues and could harm our business, financial condition or results of operations.
Our business, and the industries we currently serve, are currently subject to governmental regulation, and may become subject to modified or new government regulation that may negatively impact our ability to market our asset protection solutions.
We are required to comply with various government regulations and licensing requirements. For example, the transportation and overnight storage of radioactive materials used in providing certain of our asset protection solutions such as radiography are subject to regulation under federal and state laws and licensing requirements. Our North America segment is currently licensed to handle radioactive materials by the U.S. Nuclear Regulatory Commission, more than 30 state regulatory agencies and the Canadian Nuclear Safety Commission. If we allegedly fail to comply with these regulations, we may be investigated and incur significant legal expenses associated with such investigations, and if we are found to have violated these regulations, we may be fined or lose one or more of our licenses or permits, which would prevent or restrict our ability to provide radiography services. In addition, while we are being investigated, we may be required to suspend work on the projects associated with our alleged noncompliance, resulting in loss of profits or customers, and damage to our reputation. Many of our customers have strict requirements concerning safety or loss time occurrences and if we are unable to meet these requirements it could result in lost revenues. In the future, governmental agencies may seek to change current regulations or impose additional regulations on our
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business. Any modified or new government regulation applicable to our current or future asset protection solutions may negatively impact the marketing and provision of those solutions and increase our costs of providing these solutions and have a corresponding adverse effect on our margins.
Additionally, greenhouse gases that result from human activities, including burning of fossil fuels, have been the focus of increased scientific and political scrutiny and are being subjected to various legal requirements. International agreements, national laws, state laws and various regulatory schemes limit or otherwise regulate emissions of greenhouse gases, and additional restrictions are under consideration by different governmental entities. We derive a significant amount of revenues and profits from such industries, including oil and gas, power generation and transmission, and chemicals processing. Such regulations could negatively impact our customers, which could negatively impact the market for the services and products we provide. This could materially adversely affect our business, financial condition, results of operations and cash flows.
We rely on certification of our NDT solutions by industry standards-setting bodies. We and/or our subsidiaries currently have International Organization for Standardization (ISO) 9001:2008 certification, ISO 14001:2004 certification and OHSAS 18001:2007 certification. In addition, we currently have Nadcap and similar certifications for certain of our locations. We continually review our NDT solutions for compliance with the requirements of industry specification standards and the Nadcap special processes quality requirements. However, if we fail to maintain our ISO, Nadcap or other certifications, our business may be harmed because our customers generally require that we have these certifications before they purchase our NDT solutions.
An accident or incident involving our asset protection solutions could expose us to claims, harm our reputation and adversely affect our ability to compete for business and, as a result, harm our operating performance.
We could be exposed to liabilities arising out of the solutions we provide. For instance, we furnish the results of our testing and inspections for use by our customers in their assessment of their assets, facilities, plants and other structures. If such results were to be incorrect or incomplete, as a result of, for instance, poorly designed inspections, malfunctioning testing equipment or our employees’ failure to adequately test or properly record data, we could be subject to claims. Further, if an accident or incident involving a structure we tested occurs and causes personal injuries or property damage, such as the collapse of a bridge or an explosion in a facility, and particularly if these injuries or damages could have been prevented by our customers had we provided them with correct or complete results, we would likely face significant claims relating to personal injury, property damage or other losses. Even if our results are correct and complete, we may face claims for such injuries or damage simply because we tested the structure or facility in question. In addition, during the course of a single engagement, such as the inspection of a pipeline, we often perform tests on thousands of welds. Even if the accuracy of only a small number of these test results are questioned, a customer may attempt to refuse payment for the entire project. While we do have insurance, our insurance coverage does not cover non-payment by customers and may not be adequate to cover the damages from any of the prior referenced claims, forcing us to bear these uninsured damages directly, which could harm our operating results and may result in additional expenses and possible loss of revenues. An accident or incident for which we are found partially or fully responsible, even if fully insured, or even an incident at a customer or site for which we provide services although we were found not to be responsible, may also result in negative publicity, which would harm our reputation among our customers and the public, cause us to lose existing and future contracts or make it more difficult for us to compete effectively, thereby significantly harming our operating performance. An accident or incident for which we are found partially or fully responsible, even if fully insured, or even an incident at a customer or site for which we provide services although we were 23Table of Contentsfound not to be responsible, may also result in negative publicity, which would harm our reputation among our customers and the public, cause us to lose existing and future contracts or make it more difficult for us to compete effectively, thereby significantly harming our operating performance. In addition, the occurrence of an accident or incident might also make it more expensive or extremely difficult for us to insure against similar events in the future.
Many of the sites at which we work are inherently dangerous workplaces. If we fail to maintain a safe work environment, we may incur losses and lose business.
Many of our customers, particularly in the oil and gas and chemical industries, require their inspectors and other contractors working at their facilities to have good safety records because of the inherent danger at these sites. If our employees are injured at the work place, we could incur costs for the injuries and lost productivity. In addition, safety records are impacted by the number and amount of workplace incidents involving a contractor’s employees. If our safety record is not within the levels required by our customers, or compares unfavorably to our competitors, we could lose business, be prevented from working at certain facilities or suffer other adverse consequences, all of which could negatively impact our business, revenues, reputation and profitability.
If our software or system produces inaccurate information or are incompatible with the systems used by our customers and make us unable to successfully provide our solutions, it could lead to a loss of revenues and customers.
Our software and systems are complex and, accordingly, may contain undetected errors or failures. Software or system defects or inaccurate data may cause incorrect recording, reporting or display of information related to our asset protection solutions.
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Any such failures, defects and inaccurate data may prevent us from successfully providing our asset protection solutions, which could result in lost revenues. Software or system defects or inaccurate data may lead to customer dissatisfaction and could cause our customers to seek to hold us liable for any damages incurred. As a result, we could lose customers, our reputation may be harmed and our financial condition and results of operations could be materially adversely affected.
We currently serve a commercial, and industrial customer base that uses a wide variety of constantly changing hardware, software solutions and operating systems. Our asset protection solutions need to interface with these systems in order to gather and assess data. Our business depends on the following factors, among others:
•our ability to integrate our technology with new and existing hardware and software systems, of either Mistras or a customer;
•our ability to anticipate and support new standards, especially internet-based standards; and
•our ability to integrate additional software modules under development by either us or a customer, with our existing technology and operational processes.
If we are unable to adequately address any of these factors, our results of operations and prospects for growth and profitability
would be adversely impacted.
If we are unable to attract and retain a sufficient number of trained certified technicians, engineers and scientists at competitive wages, changes in laws and other labor issues could materially affect our financial performance.
We believe that our success depends, in part, upon our ability to attract, develop and retain a sufficient number of trained certified technicians, engineers and scientists at competitive wages. The demand for such employees fluctuates as the demand for NDT and inspection services fluctuates. When the demand for qualified technicians increases, we will often experience increased labor costs, which we may not recover in the amounts we can charge our customers. The markets for our products and services require us to use personnel trained and certified in accordance with standards set by domestic or international standard-setting bodies, such as the American Society of Non-Destructive Testing or the API. Because of the limited supply of these certified technicians, we expend substantial resources maintaining in-house training and certification programs. If we fail to attract sufficient new personnel or fail to motivate and retain our current personnel, our ability to perform under existing contracts and orders or to pursue new business may be harmed, preventing us from growing our business or causing us to lose customers and revenues, and the costs of performing such contracts and orders may increase, which would likely reduce our margins.
In addition, if our costs of labor or related costs increase for other reasons or if new or revised labor laws, rules or regulations or healthcare laws are adopted or implemented that further increase our labor costs, our financial performance could be materially adversely affected.
Our initiatives to improve our financial performance may not achieve results within expected time frames, or at expected levels.24Table of ContentsOur initiatives to improve our financial performance may not achieve results within expected time frames, or at expected levels.
We have undertaken strategies to transform our business so that we may operate more effectively, streamline and rationalize our cost structures, and look for strategic opportunities to expand our revenue and become more profitable. The extent of our future success depends on how successful we are in these endeavors.
In 2023, we initiated a broad operational review, referred to as “Project Phoenix,” aimed at improving profitability and Adjusted EBITDA through meaningful margin enhancement and sustained cost savings. Most phases of Project Phoenix were completed in 2023, including the identification of efficiency and profitability opportunities, validation of actionable initiatives, implementation of key changes throughout 2024, and the continuation of ongoing cost containment and related initiatives during 2025. These efforts have resulted in cost reductions through headcount optimization, streamlined workflows, and process improvements, as well as the development of plans to increase revenue. We have completed most phases of the project in 2023, wherein efficiency and profitability opportunities were identified, actionable initiatives were validated, and many of these actions have been implemented prospectively throughout 2024. Project Phoenix has resulted in significant cost reductions, primarily through headcount reductions, more efficient workflows, and streamlining of processes, and also led to developing and initiating action plans to increase revenue.
While we believe Project Phoenix and ongoing cost containment initiatives will benefit the Company and its stockholders over the long term, there is no certainty that the initiatives will produce the intended results on our expected timeframes or at all. Cost reductions and operational changes could inadvertently disrupt our business, weaken internal controls or procedures, limit growth opportunities, or otherwise adversely affect operations. Additionally, headcount reductions and process changes may negatively impact employee morale, potentially leading to higher turnover, loss of key personnel, and further operational challenges, which could materially affect our financial performance.
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We operate in competitive markets and if we are unable to compete successfully, we could lose market share and revenues and our margins could decline.
We face strong competition from NDT and a variety of niche asset protection providers, both larger and smaller than we are. Some of our competitors have greater financial resources than we do and could focus their substantial financial resources to develop a competing business model or develop products or services that are more attractive to potential customers than what we offer. Some of our competitors are business units of companies substantially larger than us and could attempt to combine asset protection solutions into an integrated offering to customers who already purchase other types of products or services from them. Our competitors may offer asset protection solutions at lower prices than ours in order to attempt to gain market share. Smaller niche competitors with small customer bases could be aggressive in their pricing in order to retain customers. These competitive factors could reduce our market share, revenues and profits.
The success of our businesses depends, in part, on our ability to develop new asset protection solutions, increase the functionality of our current offerings and meet the needs and demands of our customers.
The market for asset protection solutions is impacted by technological change, uncertain product lifecycles, shifts in customer demands and evolving industry standards and regulations. If we fail to execute effective business strategies, or fail to successfully develop and market new asset protection solutions that comply with present or emerging industry regulations and technology standards, our competitive standing and results could suffer. Also, new regulations or technology standards could increase our cost of doing business.
From time to time, our customers have requested greater value and functionality in our solutions. As part of our strategy to enhance our asset protection solutions and grow our business, we continue to make investments in the research and development of new technologies, inspection tools and methodologies. We believe our future success will depend, in part, on our ability to continue to design new, competitive and broader asset protection solutions, enhance our current solutions and provide new, value-added services. Many traditional NDT and inspection services are subject to price competition by our customers. Accordingly, the need to demonstrate our value-added services is becoming more important. Developing new solutions will require continued investment, and we may experience unforeseen technological or operational challenges. In addition, our asset protection software is complex and can be expensive to develop, and new software and software enhancements can require long development and testing periods. If we are unable to develop new asset protection solutions or enhancements that meet market demands on a timely basis, including against possible alternative products developed and marketed by our competitors, we may experience a loss of customers or otherwise be likely to lose opportunities to earn revenues and to gain customers or access to markets, and our business and results of operations will be adversely affected.
Even if we develop new solutions, if our customers, or potential customers, do not see the value our solutions have over competing products and services, our operating results could be adversely impacted. In addition, because the asset protection solutions industry is evolving, we could lose insight into trends that may be emerging, which would further harm our competitive position by making it difficult to predict and respond to customer needs. If the market for our asset protection solutions does not continue to develop, our ability to grow our business would be limited and we might not be able to maintain profitability. If the market for our asset protection 25Table of Contentssolutions does not continue to develop, our ability to grow our business would be limited and we might not be able to maintain profitability. If we cannot convince our customers of the advantages and value of our advanced NDT services, we could lose large contracts or suffer lower profit margin.
The seasonal nature of our business reduces our revenues and profitability in the winter and summer and related cash flows.
Our business is seasonal. The fall and spring revenues are typically higher than our revenues in the winter and summer because demand for our asset protection solutions from the oil and gas as well as the fossil and nuclear power industries increases during their non-peak production periods. For instance, U.S. refineries’ non-peak periods are generally in the fall, when they are retooling to produce more heating oil for winter, and in the spring, when they are retooling to produce more gasoline for summer. As a result of these trends, we generally have reduced cash flows in the fall and spring, as collections of receivables lag behind revenues, normally requiring us to increase our borrowings under our credit agreement. In addition, most of our operating expenses, such as employee compensation and property rental expense, are relatively fixed over the short term. Moreover, our spending levels are based in part on our expectations regarding future revenues. As a result, if revenues for a particular quarter are below expectations, we may not be able to proportionately reduce operating expenses for that quarter. We expect that the impact of seasonality will continue.
Our credit agreement contains financial and operating restrictions that may limit our access to credit. If we fail to comply with financial or other covenants in our credit agreement, we may be required to repay indebtedness to our existing lenders, which may harm our liquidity.
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Our credit agreement contains financial covenants that require us to maintain compliance with specified financial ratios. If we fail to comply with these covenants, the lenders could prevent us from borrowing under our credit agreement, require us to pay all amounts outstanding, require that we cash collateralize letters of credit issued under the credit agreement and restrict us from making acquisitions. If wefail to comply with these covenants, the lenders could prevent us from borrowing under our credit agreement, require us to payall amounts outstanding, require that we cash collateralize letters of credit issued under the credit agreement and restrict us frommaking acquisitions. If the maturity of our indebtedness is accelerated, we then may not have sufficient funds available for repayment or the ability to borrow or obtain sufficient funds to replace the accelerated indebtedness on terms acceptable to us, or at all. If the maturity of our indebtedness is accelerated, we then may not have sufficient funds available forrepayment or the ability to borrow or obtain sufficient funds to replace the accelerated indebtedness on terms acceptable to us,or at all. We believe that it is probable, based on the Credit Agreement (as defined herein), that we will be able to comply with the financial covenants in our existing credit agreement and that sufficient credit remains available under the credit agreement to meet our liquidity needs. We believe that it is probable, based on the Credit Agreement (as defined herein), that we will be able to complywith the financial covenants in our existing credit agreement and that sufficient credit remains available under the credit agreement to meet our liquidity needs. However, due to the uncertainties being caused by the significant volatility in oil prices and volatility in the aerospace production, such matters cannot be predicted with certainty.
Our current credit agreement also imposes restrictions on our ability to engage in certain activities, such as creating liens, making certain investments, incurring more debt, disposing of certain property, paying dividends and making distributions and entering into a new line of business.Our current credit agreement also imposes restrictions on our ability to engage in certain activities, such as creating liens,making certain investments, incurring more debt, disposing of certain property, paying dividends and making distributions andentering into a new line of business. While these restrictions have not impeded our business operations to date, if our plans change, these restrictions could be burdensome or require that we pay fees to have the restrictions waived. While these restrictions have not impeded our business operations to date, if our planschange, these restrictions could be burdensome or require that we pay fees to have the restrictions waived. In addition, due to our current debt levels and restrictions related to the debt covenants in our credit facility, we do not expect to make any acquisitions in 2026 other than small acquisitions with the approval of the lenders under our Credit Agreement. In addition, due toour current debt levels and restrictions related to the debt covenants in our credit facility, we do not expect to make anyacquisitions in 2025 other than small acquisitions with the approval of the lenders under our Credit Agreement.
Currency exchange rate fluctuations in various currencies in which we do business, especially the Euro and the U.S. dollar, could have a material adverse effect on our business, results of operations and financial condition.
Most of our revenues are denominated in U.S. dollars, with the remaining amounts largely in euros, British pound sterling, the Brazilian Real, the Canadian Dollar and the Indian rupee. We have foreign currency exposure related to our operations in foreign locations and our foreign currency exposure arises primarily from the translation of our foreign subsidiaries’ financial statements into U.S. dollars. The exchange rates between the euro and other currencies in which we incur costs or receive revenues, on the one hand, and the U.S. dollar, on the other hand, have changed substantially in recent years and may fluctuate substantially in the future. See Item 7A - “Quantitative and Qualitative Disclosures about Market Risk. See Item 7A-“Quantitative and Qualitative Disclosures about Market Risk. ”
Our results of operations have been adversely affected and could be further adversely affected by certain movements in exchange rates, particularly if the foreign currencies in which we incur expenses appreciate against the U.S. dollar or if the foreign currencies in which we receive revenues depreciate against the U.S. dollar. For example, a portion of our annual sales and operating costs are denominated in British Pound Sterling and we have exposure related to sales and operating costs increasing or decreasing based on changes in currency exchange rates. If the U.S. Dollar increases in value against these foreign currencies, the value in U.S. Dollars of the assets and liabilities originally recorded in these foreign currencies will decrease. Conversely, if the U.S. Dollar decreases in value against these foreign currencies, the value in U.S. Dollars of the assets and liabilities originally recorded in these foreign currencies will increase. Thus, increases and decreases in the value of the U.S. Dollar relative to these foreign currencies have a direct impact on the value in U.S. Dollars of our foreign currency denominated assets and liabilities, even if the value of these items has not changed in their original currency. We do not currently enter into forward exchange contracts to hedge exposures denominated in foreign currencies. We may consider entering into hedging or forward exchange contracts in the future, as sales in international currencies increase due to growth in our International segment.
We face risks regarding our information technology and security.
We rely extensively on information technology systems to operate and support many aspects of our business, including data management, customer communications, and financial and operational processes. We routinely collect, store, process, and transmit significant amounts of sensitive, confidential, or proprietary information, including customer data, intellectual property, and the results of our testing and inspection services. As we continue to automate and digitize our inspection processes, deploy cloud-based applications, and use remote connectivity tools, our exposure to cybersecurity threats has increased. Cybersecurity incidents, whether resulting from malicious attacks (such as ransomware, phishing, or other network intrusions), employee or contractor error, system malfunction, or inadequate security practices by third parties, could compromise the confidentiality, integrity, or availability of our systems and data. These threats continue to evolve in frequency, scale, and sophistication and may be difficult to prevent, detect, or mitigate. Although we employ a range of security measures, including technical, administrative, and physical safeguards, as well as incident response procedures and cyber liability insurance, these controls and safeguards may not prevent or mitigate all cybersecurity incidents or service interruptions.
Furthermore, we rely on third-party vendors and cloud service providers for various elements of our information technology infrastructure. A cybersecurity breach or failure of a third-party vendor’s systems could expose our confidential information or disrupt our operations. Any such event, whether involving our systems or those of a third party, could result in the loss, unauthorized access, or disclosure of sensitive data; interruptions in our operations; reputational harm; loss of customers;
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regulatory investigations; litigation; or other financial losses. Our cyber liability insurance coverage may not be sufficient to offset all costs or consequences arising from a significant cybersecurity incident.
In addition, much of our computer and communications hardware is located at a primary facility, and although we maintain a geographically separate backup data center, a natural disaster, human error, fire, flood, power loss, telecommunications failure, cyberattack, or similar event could cause temporary interruptions of our key functions and capabilities.
Events such as natural disasters, industrial accidents, epidemics, pandemics, war and acts of terrorism, and adverse weather conditions could disrupt our business or the business of our customers, which could significantly harm our operations, financial results and cash flow.Events such as natural disasters, industrial accidents, epidemics, pandemics, war and acts of terrorism, and adverse weatherconditions could disrupt our business or the business of our customers, which could significantly harm our operations, financial results and cash flow.
Our operations, and those of our customers, are susceptible to catastrophic events outside our control, including natural disasters, severe weather events, industrial accidents, epidemics or pandemics, acts of war or terrorism, and other large-scale disruptions. Any such events could cause significant business interruption, property damage, or supply chain disruption that could adversely affect our operations, financial results, and cash flows. Any such failures, defects and inaccurate data may prevent us from successfully providing our asset protection solutions, which could result in lost revenues. We continue to monitor geopolitical instability, including the ongoing war between Russia and Ukraine, the conflict in the Middle East, including the recent conflict between the U.S. and Iran, and the recent intervention in Venezuela, as well as sanctions and other government actions arising from these conflicts. While, to date, these events have not had a material impact on our operations, their duration, escalation, or economic ripple effects, such as volatility in energy markets, supply chain challenges, or inflationary pressures, could adversely affect our customers, particularly those in the oil and gas, power generation, and chemical processing industries.
Our business can also be affected by severe weather and natural disasters. Many of our customers operate in regions such as the Gulf of Mexico that are vulnerable to hurricanes and tropical storms. In the past, hurricane-related disruptions to customer operations have adversely impacted our revenues, and similar events in the future could result in delays to our projects, lost equipment, or reduced demand for our services. Likewise, severe winter weather and other adverse conditions can cause temporary work stoppages, reduced field activity, and customer facility closures.
Beyond physical disruptions, these events can also negatively impact commodity prices, financial markets, and overall customer spending levels. Extended or repeated disruptions from such events could materially affect our ability to provide services, damage customer relationships, and negatively impact our results of operations, financial condition, and cash flows.
We may use artificial intelligence in our business, which could result in reputational harm, competitive harm, and legal liability, and adversely affect our business, results of operations and financial condition.
We are increasingly integrating digital technologies, data analytics, and artificial intelligence (“AI”), including machine learning and generative AI, into our operations, service delivery, and business support functions. For example, we may use AI-driven tools to assist in data interpretation, automate aspects of inspection and analysis, enhance asset integrity assessments, improve workflow efficiency, and support back-office and administrative functions. We also utilize, and may further adopt, third-party software and platforms that incorporate AI technology. While we believe these technologies offer opportunities to enhance our productivity and competitiveness, their use presents new and evolving risks. Our competitors or other third parties may adopt and implement AI tools more rapidly or effectively than we do, which could adversely affect our competitive position. In addition, AI systems can be complex and may produce unintended or inaccurate outputs, particularly when trained on incomplete or biased data. Misapplication or errors in AI-generated analyses could negatively affect service quality, lead to flawed asset integrity assessments, or otherwise result in operational or reputational harm. The legal requirements relating to AI continue to evolve and remain uncertain, including how legal developments could impact our business and ability to enforce our proprietary rights or protect against infringement of those rights.
Cybersecurity threat actors may utilize AI tools to automate and enhance cybersecurity attacks against us. Such cybersecurity attacks, if successful, could lead to data breaches, loss of confidential or sensitive information, and financial or reputational harm.
In addition, investors, analysts, and other market participants may use AI tools to process, summarize or interpret our financial information or other data about us. The use of AI tools in financial and market analysis may introduce risks similar to those described above, including an inaccurate interpretation of our financial or operational performance or market trends or conditions, which in turn could result in inaccurate conclusions or investment recommendations.
The regulatory and legal framework governing AI use is rapidly developing across multiple jurisdictions, including emerging requirements around transparency, accountability, cybersecurity, and data privacy. Compliance with these evolving laws and
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regulations could increase our operating costs or limit our ability to deploy certain AI-enabled tools. Moreover, there has been a notable rise in AI-related litigation and regulatory actions involving areas such as intellectual property, privacy, product liability, consumer protection, and defamation. If our use of AI or that of our vendors results in errors, misuse, data breaches, or regulatory non-compliance—or is perceived as unethical or unsafe—our reputation, customer relationships, and brand value could be harmed. Any of these outcomes could adversely affect our business, financial condition, results of operations, or cash flows.
Changes to U.S. tariff and import/export regulations may have a negative effect on us.
There have been significant changes to United States trade policies, treaties and tariffs, and in the future there may be additional significant changes. These and any future developments, and continued uncertainty surrounding trade policies, treaties and tariffs, may have a material adverse effect on global economic conditions, inflation and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the United States. Such uncertainty limits our ability to anticipate, plan for, or effectively mitigate the adverse impacts of such measures on our operations and supply chain costs. Any of these factors could depress economic activity and restrict our access to suppliers or customers, increase our supply-chain costs and expenses and could have material adverse effects on our business, financial condition and results of operations.
Risks Related to Our Common Stock
The family of our late founder and Chairman Emeritus may be able to exert significant influence over the direction of our business. The concentrated ownership of our common stock may prevent other stockholders from influencing significant corporate decisions.
The widow of Dr. Sotirios J. Vahaviolos, our late founder and Chairman Emeritus, who passed away on February 6, 2025, and his three adult children beneficially own, to our knowledge, approximately 33.7% of our outstanding common stock. As a result, these shareholders, acting individually or potentially as a group, have significant control and the ability to exert influence over all matters requiring approval by our stockholders. This concentration of ownership could be disadvantageous to our other stockholders with interests differing from interests of the family members. This concentration of ownership could be disadvantageous to other stockholders with differing interests from the family of Dr.
We currently have no plans to pay dividends on our common stock.
We have not declared or paid any cash dividends on our common stock to date, and we do not anticipate declaring or paying any dividends on our common stock in the foreseeable future. To the extent we do not pay dividends on our common stock, investors must look solely to stock appreciation for a return on their investment.
Shares eligible for future sale may cause the market price for our common stock to decline even if our business is doing well.
Future sales by us or by our existing stockholders of substantial amounts of our common stock in the public market, or the perception that these sales may occur, could cause the market price of our common stock to decline. This could also impair our ability to raise additional capital in the future through the sale of our equity securities. We cannot predict the size of future issuances of our common stock or the effect, if any, that future sales and issuances of shares of our common stock, or the perception of such sales or issuances, would have on the market price of our common stock. We currently have approximately 168 million shares of common stock available for issuance as of the date of this Annual Report. We currently have approximately 170 million shares of common stock available for issuance.
Provisions of our certificate of incorporation, bylaws and of Delaware law could discourage, delay or prevent a change of control of our company, which may adversely affect the market price of our common stock.
Certain provisions of our certificate of incorporation and bylaws could discourage, delay or prevent a merger, acquisition, or other change of control that stockholders may consider favorable, including transactions in which our stockholders might otherwise receive a premium for their shares. These provisions also could limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. Stockholders who wish to participate in these transactions may not have the opportunity to do so. Furthermore, these provisions could prevent or frustrate attempts by our stockholders to replace or remove our management. These provisions:
•allow the authorized number of directors to be changed only by resolution of our Board;
•require that vacancies on the Board, including newly created directorships, be filled only by a majority vote of directors then in office;
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•authorize our Board to issue, without stockholder approval, preferred stock that, if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our Board;
•require that stockholder actions must be effected at a duly called stockholder meeting by prohibiting stockholder action by written consent;
•prohibit cumulative voting in the election of directors, which may otherwise allow holders of less than a majority of stock to elect some directors; and
•establish advance notice requirements for stockholder nominations to our Board or for stockholder proposals that can be acted on at stockholder meetings and limit the right to call special meetings of stockholders to the Chairman of our board, our Chief Executive Officer, our Board acting pursuant to a resolution adopted by a majority of directors or our Secretary upon the written request of stockholders entitled to cast not less than 35% of all the votes entitled to be cast at such meeting.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may, unless certain criteria are met, prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a prescribed period of time.
General Risk Factors
Our stock price could fluctuate for numerous reasons, including variations in our results.
Our quarterly operating results have fluctuated in the past and may do so in the future. Accordingly, we believe that period-to-period comparisons of our results of operations may be the best indicators of our business. Accordingly, we believe thatperiod-to-period comparisons of our results of operations may be the best indicators of our business. You should not rely upon the results of one quarter as an indication of future performance. You should not rely uponthe results of one quarter as an indication of future performance. Our revenues and operating results may fall below the expectations of securities analysts or investors in any future period. Our failure to meet these expectations may cause the market price of our common stock to decline, perhaps substantially. Our quarterly revenues and operating results may vary depending on a number of factors, including those listed previously under “Risks Related to Our Business.” In addition, the price of our common stock is subject to general economic, market, industry, and competitive conditions, the risk factors discussed herein and numerous other conditions outside of our control.” In addition, the price of ourcommon stock is subject to general economic, market, industry, and competitive conditions, the risk factors discussed hereinand numerous other conditions outside of our control.
Deteriorations in economic conditions in certain markets or other factors may cause us to recognize additional impairment charges for our goodwill.
During the year ended December 31, 2023, we recognized goodwill impairment charges of $13.8 million within the International reporting units. Future deterioration in industry or economic conditions in which we operate, including increased inflationary costs, costs associated with tariffs or other trade restrictions, energy costs, labor costs, social pressures and disruptions in Europe, the Middle East, including the recent conflict between the U.S. and Iran, or elsewhere as a result of the ongoing war between Russia and Ukraine and the conflict between Israel, Hamas and other actors, disruptions to our business, not effectively integrating acquired businesses, macroeconomic factors, other geopolitical tensions or other factors, may cause impairment charges to our goodwill in future periods.
We are subject to privacy and data security/protection laws in the jurisdictions in which we operate and may be exposed to substantial costs and liabilities associated with such laws and regulations.
The regulatory environment surrounding information security and privacy is increasingly demanding, with frequent imposition of new and changing requirements. The European Union's General Data Protection Regulation (“GDPR”), which became effective in May 2018, imposed significant new requirements on how companies process and transfer personal data, as well as significant fines for non-compliance. In addition to GDPR, many states in the U.S. and provinces in Canada have enacted, or are considering, data privacy requirements similar to GDPR, and thus we will need to ensure our procedures comply with these various state and provincial laws. Compliance with changes in privacy and information security laws and standards may result in significant expense due to increased investment in technology and the development of new operational processes, which could have a material adverse effect on our financial condition and results of operations. In addition, the payment of potentially significant fines or penalties in the event of a breach of privacy and information security laws, as well as the negative publicity associated with such a breach, could damage our reputation and adversely impact product demand and customer relationships.
If we lose key members of our senior management team upon whom we are dependent, we may be less effective in managing our operations and may have more difficulty achieving our strategic objectives.
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Our future success depends to a considerable degree upon the availability, contributions, vision, skills, experience and effort of our senior management team. We have in place various compensation programs, such as an annual cash incentive program, equity incentive program and a severance policy, each designed to incentivize and retain our key senior managers. At this time, we do not have any reason to believe that we may lose the services of any of these key persons in the foreseeable future and we believe our compensation programs will help us retain these individuals. However, an unplanned loss or interruption of the service of numerous key members of our senior management team could harm our business, financial condition and results of operations and could significantly reduce our ability to manage our operations and implement our strategy.
Intellectual property may impact our business and results of operations.
Our ability to compete effectively depends in part upon the maintenance and protection of the intellectual property related to our asset protection solutions. Patent protection is unavailable for certain aspects of the technology and operational processes important to our business and any patent or patent applications, trademarks or copyrights held by us or to be issued to us, may not adequately protect us. To date, we have relied principally on copyright, trademark and trade secrecy laws, as well as confidentiality agreements and licensing arrangements, and more recently, patent protection, to establish and protect our intellectual property. However, we have not obtained confidentiality agreements from all our customers. Although we obligate our employees to confidentiality, we cannot be certain that these obligations will be honored or enforceable in all circumstances.
Social, political and economic changes or instability, or other circumstances beyond our control could affect our business operations.
Our business may be adversely affected by social, political and economic instability, unrest or disruption, including legal, regulatory and policy changes by a new presidential administration in the U.S., protests, demonstrations, strikes, riots, civil disturbance, disobedience, insurrection, or social and other political unrest. Such events may result in restrictions, curfews or other actions and give rise to significant changes in regional and global economic conditions and cycles, which may adversely affect our financial condition and operations.
Changes in federal policy, including tax policies, and at regulatory agencies occur over time through policy and personnel changes following elections, which can lead to changes involving the level of oversight and focus on certain industries and corporate entities. The nature, timing, and economic and political effects of potential changes to the current legal and regulatory frameworks affecting the industries in which we operate remain highly uncertain. Additionally, changes in federal policy that affect the geopolitical landscape, such as the imposition of tariffs and changes to U.S. trade policy, have, and could in the future, lead to adverse effects on the U.S. domestic economy and our business operations.
We may require additional capital to support business growth, which might not be available.
We intend to continue making investments to support our business growth and may require additional funds to respond to business challenges or opportunities, including the need to develop new, or enhance our current, asset protection solutions, enhance our operating infrastructure or acquire businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through further issuances of equity or convertible debt securities, our current stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Our current credit facility meets our current needs, except that due to our current debt levels, the facility limits our ability to make acquisitions without the banks' approval until our debt ratio improves. If we were to secure other debt financing in the future, it could involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. In addition, no assurance can be given that adequate or acceptable financing will be available to us, in which case we may not be able to grow our business, including through acquisitions, or respond to business challenges.
Changes in Tax Laws, Including the One Big Beautiful Bill Act, Could Adversely Affect Our Effective Tax Rates, Financial Condition, and Results of Operations
We are a U.S.-based multinational company subject to taxes in multiple U.S. and foreign jurisdictions. Our operations and results are affected by U.S. federal and state tax laws, as well as foreign tax laws in the countries in which we conduct business. These laws and related guidance, regulations, and interpretations are subject to change, and changes could be retroactive or have unanticipated consequences, which could materially increase our tax obligations or affect our financial results.
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In July 2025, the U.S. federal government enacted the One Big Beautiful Bill Act (“OBBBA”), implementing significant corporate tax reforms. OBBBA allows for immediate deductibility of domestic research and experimental expenses for tax years beginning after December 31, 2024, and provides elections to accelerate deductions for previously capitalized research and experimental expenses from 2022 through 2024. Corporations may deduct remaining unamortized amounts either fully in their first taxable year beginning after December 31, 2024, or ratably over two years. OBBBA also increased the effective tax rate associated with international operations and reduced the benefit of certain foreign-derived deductions for U.S.-domiciled corporations. In addition, the Base Erosion and Anti-Abuse Tax (BEAT) rate applicable to payments from U.S. corporations to foreign subsidiaries treated as Controlled Foreign Corporations was increased.
The U.S. Treasury Department is expected to issue extensive guidance addressing implementation and transition rules, and Congress may enact technical corrections. The ultimate impact of such guidance and corrections on our business, including our effective tax rate and cash flows, is uncertain at this time.
In addition, the Organization for Economic Cooperation and Development (“OECD”) has developed frameworks, including its global minimum corporate tax under Pillar 2, intended to prevent base erosion and profit shifting. While the United States has withdrawn support for Pillar 2, certain foreign jurisdictions in which we operate have adopted legislation to impose minimum “Top Up” taxes or other non-income-based taxes, including digital services or revenue-based taxes.
Due to our international business activities, changes under OBBBA or other U.S. or foreign tax reforms, new legislation, or the adoption of OECD-based rules could increase our worldwide effective tax rate, increase the amount of non-income taxes imposed on our business, and materially harm our financial position, results of operations, or cash flows. Such changes could apply retroactively, and there can be no assurance that future tax law changes will not increase our tax liabilities, limit deductions or credits, or otherwise negatively impact our business and operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
We prioritize the protection of our data assets, the private data of our employees, customers, and vendors, and personal information. To assess, identify, and manage the risks of cybersecurity threats to our information systems and the associated costs, we maintain a robust cybersecurity program that is integrated into the Company’s overall Enterprise Risk Management strategy. We understand that threats from hackers and other cyber criminals continues to adapt and become more sophisticated, and so must our response to these threats.
Governance
As part of our cybersecurity program management activities and our continuing efforts to evaluate and enhance the effectiveness of our cybersecurity policies and procedures, we actively engage internal and prominent external experts, as well as industry participants. Our cybersecurity program is managed by the Chief Information Officer who has biannual meetings with the Audit Committee and provides periodic reports and updates concerning our cybersecurity program to our Chief Executive Officer and other members of our senior management, as appropriate. These reports include updates on our cyber risk and threats, the status of projects to strengthen our information network and data security, assessments of our information security program, and the emerging threat landscape. We have established governance committees to provide us with cybersecurity oversight with supportive roles to advance the effectiveness of our cybersecurity program. The Chief Information Officer has over 20 years of IT leadership and cybersecurity experience, and the Information Technology Leadership Team overall has a combined fifteen years of cybersecurity experience. The Chief Information Officer and members of the Information Technology Leadership Team maintain industry recognized credentials relevant to their roles and stay informed on the latest trends and technologies.
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The Chief Information Officer manages both an Information Security team and an IT Risk team within the Department of Information Technology. The IT Risk team works closely with our Data Privacy Officer for governance and compliance related to regulations and frameworks for data classification, data privacy, handling of private data and controlled unclassified information, and internal policies and procedures. The Cyber Security team is responsible for identifying and implementing technologies to mitigate IT risk, enhance data security, and identify and defend against attacks. Both teams work closely together to establish the cybersecurity policies for the Company, evaluate the current risk profile, and to prevent, investigate, mitigate, and remediate any cyber-attacks on the Company.
Risk Management and Strategy
Our IT Risk team conducts assessments of the Company’s most significant IT and cybersecurity risks. Assessment results are leveraged by IT leadership, along with other inputs, to mitigate and manage these risks. Although no system can eliminate all risks, our risk-based approach ensures that reasonably known threats are identified, and material risks are appropriately addressed.
We have several physical, automated, and administrative controls in place to mitigate the success and extent of any cyber breaches. We have several physical, automated, and administrative controls in place to mitigate the success and extent of any cyber breaches. Our controls are designed to require review of tasks which may occur in the normal course of business but are also common vectors of attack. Automated controls are implemented in all cases where one is feasible, and in other cases standard procedures or documented instructions are in place to ensure that actions are proper and approved before they occur.
Policies related to cybersecurity risks are documented, reviewed annually, and published internally, which define the correct processes for identifying, containing, remediating, and responding to cybersecurity incidents. Our data protection policies define the establishment of the classification of types of data. Based upon this data classification, we determine an incident’s materiality and establish the appropriate response, the incident management team, and the communications required to be distributed to third parties. Incident management policies are in place to establish the proper communication channels and responsible parties for different levels of materiality of an incident. We practice these policies and procedures in a tabletop or simulated fashion multiple times annually.
Each employee plays a role in safeguarding our data assets, and the protection of our data is ingrained in every employee’s day to day activities. Employees must participate in annual cyber security training. Simulated testing occurs multiple times throughout the year, including drop testing and SPAM / PHISHING campaigns, and the results are tracked for compliance and we address any weaknesses identified in such trainings and testing as necessary.
We have established an AI Oversight Committee, which is responsible for governance and oversight of the use of AI technologies. In addition, we have adopted an enterprise AI policy that establishes guardrails for the use of AI by our employees, including requirements related to data protection, confidentiality, and cybersecurity risk management.
The Information Security team performs internal threat hunting, vulnerability scanning, log aggregation, and identity monitoring on an on-going basis. Web site, code, and configuration vulnerability scans are performed as necessary to ensure that changes do not introduce vulnerabilities into our systems. Information Security and IT Risk personnel receive regular training to ensure these individuals have up-to-date expert knowledge.
To supplement our cybersecurity risk assessment, identification, management, and mitigation efforts, we engage third party cyber security experts. Cyber security assessments are performed at least annually, results are documented and reviewed, and mitigation plans are put in place to reduce any threats identified. Cyber security assessments are performed at least annually, results are documented and reviewed, and 31Table of Contentsmitigation plans are put in place to reduce any threats identified. The classification of data processed by any system is considered when implementing mitigations.
We believe that our current preventative actions and response activities provide adequate measures of protection against security breaches and generally reduce our cybersecurity risks. However, cybersecurity threats are constantly evolving, are becoming more frequent and more sophisticated and are being made by groups of individuals with a wide range of expertise and motives, which increases the difficulty of detecting and successfully defending against them. While we have implemented measures to safeguard our operational and technology systems and have established a culture of continuous learning, monitoring and improvement, the evolving nature of cybersecurity attacks and vulnerabilities means that these protections may
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not always be effective. However, as of the date of this Annual Report, management has determined that none of the cybersecurity attacks that we have experienced has resulted in a material impact on our financial condition, results of operations or business strategy. In addition, as of the date of this Annual Report, we are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations and financial condition.
For additional information regarding how cybersecurity threats have affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition, see Part I, Item 1A, “Risk Factors—Risks Related to Our Business—We face risks regarding our information technology and security”.
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