Mistras Group, Inc.MG
Mistras Group, Inc. Leases Disclosure
Leases
The Company leases certain office and operating facilities, machinery, equipment, and vehicles. Concurrent with the adoption of ASC 842, the Company recognized a right-of-use ("ROU") asset and lease liability based on the present value of the future lease payments over the lease term for each lease agreement. The Company elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less and will continue to recognize lease expense for these leases on a straight-line basis over the lease term. The Company has leases with both lease components and non-lease components, such as common area maintenance, utilities, or other repairs and maintenance. For all asset classes, the Company decided to utilize the practical expedient to include both fixed lease components and fixed non-lease components in calculating the ROU asset and lease liability. The Company identified variable lease payments, such as maintenance payments based on actual activities performed or costs incurred, at lease commencement by assessing the nature of the payment provisions, including whether the payments are subject to a minimum charge. Many of the Company's leases include one or more options to renew. When it is reasonably certain that the Company will exercise the option, the Company will include the impact of the option in the lease term for purposes of determining future lease payments. As the Company is unable to determine the discount rate implicit in its lease agreements, the Company uses its incremental borrowing rate on the commencement date to calculate the present value of future payments.
The Company’s Consolidated Balance Sheets include the following related to operating leases as of December 31, 2025 and 2024 (in thousands):
| Leases | Classification | 2025 | 2024 | |||||||||||||||||
| Assets: | ||||||||||||||||||||
| ROU assets | $ | 38,937 | $ | 40,401 | ||||||||||||||||
| Liabilities: | ||||||||||||||||||||
| ROU liability - current | $ | 10,882 | $ | 11,375 | ||||||||||||||||
| ROU liability - long-term | 29,378 | 30,279 | ||||||||||||||||||
| Total ROU liabilities | $ | 40,260 | $ | 41,654 | ||||||||||||||||
Included within the balance of operating leases is a lease for the Company’s headquarters which is with a related party. The ROU liability for this facility is approximately $0.8 million as of December 31, 2025 and $1.8 million as of December 31, 2024. Total rent payments for this facility were approximately $1.0 million and $1.0 million during the years ended December 31, 2025 and 2024, respectively.
As of December 31, 2025 and 2024, the total ROU assets attributable to finance leases are approximately $23.5 million and $17.9 million, respectively, which is included in Property, plant, and equipment, net on the Consolidated Balance Sheets.
The components of lease costs for the year ended December 31, 2025 and 2024 are as follows (in thousands):
| Classification | 2025 | 2024 | ||||||||||||||||||
| Finance lease expense: | ||||||||||||||||||||
| Amortization of ROU assets | Depreciation and amortization | $ | 6,298 | $ | 5,491 | |||||||||||||||
| Interest on lease liabilities | Interest expense | 3,832 | 1,062 | |||||||||||||||||
| Operating lease expense | Cost of revenue; Selling, general & administrative expenses | 14,050 | 14,213 | |||||||||||||||||
| Short-term lease expense | Cost of revenue; Selling, general & administrative expenses | 44 | 56 | |||||||||||||||||
| Variable lease expense | Cost of revenue; Selling, general & administrative expenses | 1,986 | 1,683 | |||||||||||||||||
| Total | $ | 26,210 | $ | 22,505 | ||||||||||||||||
Additional information related to leases as of December 31, 2025 and 2024 is as follows:
| 2025 | 2024 | |||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities for finance and operating leases (in thousands): | ||||||||||||||
| Finance - financing cash flows | $ | 6,625 | $ | 5,495 | ||||||||||
| Finance - operating cash flows | 3,832 | 1,062 | ||||||||||||
| Operating - operating cash flows | 14,048 | 14,243 | ||||||||||||
| ROU assets obtained in the exchange for lease liabilities: | ||||||||||||||
| Finance leases | $ | 10,154 | $ | 9,899 | ||||||||||
| Operating leases | 10,014 | 16,254 | ||||||||||||
| Weighted-average remaining lease term (in years): | ||||||||||||||
| Finance leases | 4.4 | 5.0 | ||||||||||||
| Operating leases | 4.8 | 4.7 | ||||||||||||
| Weighted-average discount rate: | ||||||||||||||
| Finance leases | 6.0 | % | 6.5 | % | ||||||||||
| Operating leases | 6.0 | % | 6.1 | % | ||||||||||
Maturities of lease liabilities as of December 31, 2025 is as follows (in thousands):
| Finance | Operating | ||||||||||
| 2026 | $ | 8,278 | $ | 12,922 | |||||||
| 2027 | 7,308 | 10,532 | |||||||||
| 2028 | 5,389 | 8,398 | |||||||||
| 2029 | 3,705 | 5,095 | |||||||||
| 2030 | 1,559 | 3,471 | |||||||||
| Thereafter | 1,098 | 5,944 | |||||||||
| Total | 27,337 | 46,362 | |||||||||
| Less: Present value discount | (2,972) | (6,102) | |||||||||
| Lease liability | $ | 24,365 | $ | 40,260 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 11, 2026 | Showing above |
| 2024 | Mar 11, 2025 | |
| 2023 | Mar 11, 2024 | |
| 2022 | Mar 15, 2023 | |
| 2021 | Mar 14, 2022 | |
| 2020 | Mar 16, 2021 | |
| 2019 | Mar 27, 2020 | |
| 2018 | Mar 18, 2019 | |
| 2017 | Mar 14, 2018 | |
| 2016 | Aug 15, 2016 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.