Mistras sees 15% reduction in administrative headcount, 12M in 2024 cost savings

Mistras provided an update on the status of Project Phoenix, the company’s program to increase Income from operations through reductions in corporate administrative overhead and enhancements to pricing. The company said, “The following is a brief overview of the additional actions being implemented as a result of Project Phoenix: The Company has developed and will be further enhancing a proactive structural pricing strategy intended to address inflationary costs experienced in our business. The Company’s goal is to reduce selling, general, and administrative expenses (“SG&A”) to approximately 21% of total revenues by the end of 2024, primarily through a rationalization of the overhead workforce, including a targeted 15% reduction in administrative headcount, without adversely impacting the Company’s technician base or ability to support operations and service its customers. As part of the Company’s transformation plan to improve shareholder value by lowering SG&A, improving free cash flow, and accelerating growth, the Board made recent changes to senior leadership within the Company to further strengthen the organization and enhance the execution of the various initiatives comprising Project Phoenix… The actions completed by the Company during the nine months ended September 30, 2023, are expected to yield annualized projected 2024 cost savings of approximately $12 million, of which approximately $7 million is expected to be realized in 2023, due to actions completed as of September 30, 2023 including the transformation of the Company’s Products and Systems segment announced on October 2, 2023, in addition to other ancillary initiatives. Subsequent to September 30, 2023, and prior to the release of the Company’s third quarter 2023 financial results, the Company completed further actions that are expected to yield incremental annualized projected 2024 cost reductions of approximately $12 million including the optimization of North America administrative support functions, of which approximately $2 million is expected to be realized in the fourth quarter of 2023. These initiatives, including those previously disclosed, combine to yield a projected annualized cost savings of approximately $24 million, of which approximately $9 million is expected to be realized in fiscal 2023, with the full $24 million benefit expected to be realized in fiscal 2024. This would result in an approximate $15 million incremental benefit from Project Phoenix in 2024 as compared to 2023. The Company will be working to finalize additional opportunities in the fourth quarter of 2023… In addition to the aforementioned projected cost savings, the Company is focused on the implementation of strategic price increases which will improve revenue in 2023 by approximately $1 million and are expected to provide an additional $6 million revenue benefit in 2024.”