Team, Inc. (NYSE: TISI) (“TEAM” or the “Company”), a global leading
provider of integrated, digitally-enabled asset performance
assurance and optimization solutions, today reported its financial
results for the second quarter ended June 30, 2022.
Second Quarter 2022 Financial and
Operational Results:
- Second quarter 2022 revenues were
$251.3 million, an increase of 5.2% over the prior year
quarter
- Gross margin was $70.0 million
(27.8% of revenues), up $7.2 million from $62.8 million (26.3% of
revenues) in Q2 2021
- GAAP net loss was $21.6
million
- Consolidated Adjusted EBITDA was
$14.3 million, up 57% as compared to $9.1 million in the 2021
period; and
- Announced strategic sale of Quest
Integrity Business to Baker Hughes for $280 million cash, before
customary post-closing adjustments.
“Our second quarter results reflected the
underlying strength of the business with revenue in the Quest
Integrity and Mechanical Services (MS) segments exceeding the prior
year quarter by 23% and 11%, respectively,” said Keith D. Tucker,
TEAM’s Interim Chief Executive Officer. “Both segments experienced
higher activity levels year to date while operationally contending
with the delayed start of certain projects, industry-wide
challenges around labor availability and inflationary and supply
chain pressures. These challenges primarily impacted our Inspection
and Heat Treating (IHT) segment, where we saw slightly lower
quarterly revenue resulting from project timing and staffing
challenges in select markets, which we are actively working to
address.”
“During the quarter, we continued our ongoing
examination of our cost structure and took steps to lower costs in
order to improve margins and cash flow while maintaining our
ability to safely deliver world class service to our customers. We
expect the impact of these actions will begin to be realized in the
third quarter.
“As announced earlier today, after a thorough
assessment of the Company’s portfolio, our Board of Directors
determined selling Quest Integrity would be a key step in our plan
to strengthen our balance sheet and is in the best interests of our
shareholders. The Quest Integrity sale is an important step in our
transformation plan and allows the Company to make a substantial
debt paydown, improve liquidity, and focus on its core IHT and MS
businesses.
“Looking ahead, we will focus on refining and
accelerating the execution of our go forward plan, including
addressing our capital structure and driving additional financial
and operational improvements, while continuing to invest in
opportunities to capitalize on the Company’s extensive capabilities
to grow our revenue in our IHT and MS segments. Following the close
of the Quest transaction, which is expected by the end of this
year, we anticipate being in a position to present our longer-term
commercial, operational and balance sheet improvement plans in
greater detail,” concluded Tucker.
Financial Results
Consolidated revenue for the second quarter of
2022 was $251.3 million, an increase of 5.2% from $238.9 million in
the prior year quarter. Unfavorable foreign currency exchange
movements reduced second quarter 2022 consolidated revenue by
approximately $5.0 million, or 2%. In the second quarter of 2022,
consolidated gross margin was $70.0 million, or 27.8%, compared to
$62.8 million, or 26.3%, in the same quarter a year ago. Gross
margin was positively impacted by direct margin improvement as well
as lower indirect costs as a percent of revenue.
Selling general and administrative expenses for
the second quarter of 2022 was $72.7 million, up $4.3 million, or
6.2%, from the second quarter of 2021. The Company’s adjusted
measure of net income/loss, consolidated Adjusted EBIT, a non-GAAP
measure, was income of $4.1 million in the second quarter of 2022,
a significant improvement compared to a loss of $3.4 million the
prior year quarter.
Consolidated net loss in the second quarter of
2022 was $21.6 million ($0.50 loss per diluted share) compared to a
loss of $17.5 million ($0.57 loss per diluted share) in the
second quarter of 2021. Consolidated Adjusted EBITDA, a non-GAAP
measure, was $14.3 million for the second quarter of 2022 compared
to $9.1 million for the prior year quarter. The year-over-year
improvement in Consolidated Adjusted EBITDA is attributed to higher
revenues and lower operating expense incurred during the quarter
and improved operating income mainly in Quest Integrity and MS
Segments.
Second quarter 2022 reported results include
certain net charges not indicative of TEAM’s core operating
activities, including: $4.7 million of professional fees,
$1.0 million of severance costs and $1.2 million for
accrued legal matters and other legal fees. Net of tax, these items
totaled $6.9 million or $0.16 per basic and diluted share.
Adjusted net loss, consolidated Adjusted EBIT,
and consolidated Adjusted EBITDA are non-GAAP financial measures
that exclude certain items that are not indicative of TEAM’s core
operating activities. A reconciliation of these non-GAAP financial
measures to the most comparable GAAP financial measures is
presented at the end of this earnings release.
Segment Results
The following table illustrates the composition
of the Company’s revenue and operating income (loss) by segment for
the quarters ended June 30, 2022 and 2021 (in thousands):
|
Three Months Ended June 30, |
|
Increase (Decrease) |
|
|
2022 |
|
|
|
2021 |
|
|
$ |
% |
|
(unaudited) |
|
(unaudited) |
|
|
|
Revenues by business
segment: |
|
|
|
|
|
|
IHT |
$ |
114,124 |
|
|
$ |
117,462 |
|
|
$ |
(3,338 |
) |
(2.8) |
% |
MS |
|
107,416 |
|
|
|
97,167 |
|
|
|
10,249 |
|
10.5 |
% |
Quest Integrity |
|
29,725 |
|
|
|
24,244 |
|
|
|
5,481 |
|
22.6 |
% |
Total |
$ |
251,265 |
|
|
$ |
238,873 |
|
|
$ |
12,392 |
|
5.2 |
% |
Operating income (loss): |
|
|
|
|
|
|
IHT |
$ |
5,514 |
|
|
|
7,395 |
|
|
$ |
(1,881 |
) |
(25.4) |
% |
MS |
|
6,984 |
|
|
|
2,328 |
|
|
|
4,656 |
|
NM |
Quest Integrity |
|
8,014 |
|
|
|
5,702 |
|
|
|
2,312 |
|
40.5 |
% |
Corporate and shared support services |
|
(23,292 |
) |
|
|
(21,419 |
) |
|
|
(1,873 |
) |
(8.7) |
% |
Total |
$ |
(2,780 |
) |
|
$ |
(5,994 |
) |
|
$ |
3,214 |
|
53.6 |
% |
1 NM - Not meaningful
IHT’s year-over-year revenue declined 2.8%,
primarily driven by delays in project activity levels in select
U.S. markets and lower Canadian turnaround activity. IHT’s
operating income declined year-over-year due to the above mentioned
revenue decline and the elimination of certain pandemic-related
cost actions.
MS’s revenue grew by 10.5% year-over-year due to
increases in the Canadian and US markets and the Company’s valves
business, partially offset by lower activity in the UK and Europe.
The increase in operating income was primarily due to revenue
growth and realized cost improvements in the Company’s equipment
centers, manufacturing and engineering functions.
Quest Integrity’s results include a significant
22.6% year-over-year increase in revenue and a substantial increase
in operating income to $8.0 million. The increase in Quest
Integrity’s revenue was due to increased demand in core and growth
markets across most geographies, and $1.3 million in 2021 deferred
projects executed in Q2 2022. Quest Integrity operating income
increased $2.3 million due to increased utilization and a favorable
project mix.
Liquidity
Consolidated cash and cash equivalents were
$67.4 million at June 30, 2022, of which $26.3 million was
restricted mainly as collateral for outstanding letters of credit.
Additionally, the Company had approximately $24.5 million in
undrawn availability under its various credit facilities at June
30, 2022. The Company’s gross debt and finance obligations were
$491.9 million, of which $487.2 million was classified as current
at June 30, 2022, compared to gross debt of $405.9 million at
December 31, 2021.
The sale of Quest is expected to be completed in
the fourth quarter of 2022, subject to customary closing conditions
and regulatory approvals. The sales proceeds of $280 million,
before customary post-closing adjustments, are expected to be
utilized to pay down debt and improve liquidity.
Quarterly Earnings Conference
Call
The Company will not host an earnings call this
quarter due to its previously announced strategic review process
and ongoing execution of its operational and financial turnaround
plan.
Non-GAAP Financial Measures
The non-GAAP measures in this earnings release
are provided to enable investors, analysts, and management to
evaluate TEAM’s performance excluding the effects of certain items
that management believes impact the comparability of operating
results between reporting periods. These measures should be used in
addition to, and not in lieu of, results prepared in conformity
with generally accepted accounting principles (GAAP). A
reconciliation of each of the non-GAAP financial measures to the
most directly comparable historical GAAP financial measure is
contained in the accompanying schedule for each of the fiscal
periods indicated.
About Team, Inc.
Headquartered in Sugar Land, Texas, Team Inc.
(NYSE: TISI) is a global leading provider of integrated,
digitally-enabled asset performance assurance and optimization
solutions. We deploy conventional to highly specialized inspection,
condition assessment, maintenance and repair services that result
in greater safety, reliability and operational efficiency for our
client’s most critical assets. Through locations in more than 20
countries, we unite the delivery of technological innovation with
over a century of progressive, yet proven integrity and reliability
management expertise to fuel a better tomorrow. For more
information, please visit www.teaminc.com.
Certain forward-looking information contained
herein is being provided in accordance with the provisions of the
Private Securities Litigation Reform Act of 1995. We have made
reasonable efforts to ensure that the information, assumptions, and
beliefs upon which this forward-looking information is based are
current, reasonable, and complete. However, such forward-looking
statements involve estimates, assumptions, judgments, and
uncertainties. They include but are not limited to the Company’s
financial prospects and the implementation of cost saving measures.
Many factors could cause actual results or outcomes to differ
materially from those addressed in the forward-looking information.
Although it is not possible to identify all of these factors, they
include, among others, the Company's ability to hire a permanent
chief executive officer in the near future, if necessary; the
duration and magnitude of accidents, extreme weather, natural
disasters, and pandemics (such as COVID-19) and related economic
effects, the Company’s liquidity and ability to obtain additional
financing, the Company’s ability to execute on its cost management
actions, the impact of new or changes to existing governmental laws
and regulations and their application, including tariffs and
COVID-19 vaccination requirements; the outcome of tax examinations,
changes in tax laws, and other tax matters; foreign currency
exchange rate and interest rate fluctuations; the Company’s ability
to successfully divest assets on terms that are favorable to the
Company; our ability to repay, refinance or restructure our debt
and the debt of certain of our subsidiaries; anticipated or
expected purchases or sales of assets; the Company’s continued
listing on the New York Stock Exchange, and such known factors as
are detailed in the Company’s Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, each as filed
with the Securities and Exchange Commission, and in other reports
filed by the Company with the Securities and Exchange Commission
from time to time. Accordingly, there can be no assurance that the
forward-looking information contained herein, including statement
regarding the Company’s financial prospects and the implementation
of cost saving measures, will occur or that objectives will be
achieved. We assume no obligation to publicly update or revise any
forward-looking statements made today or any other forward-looking
statements made by the Company, whether as a result of new
information, future events or otherwise, except as may be required
by law.
Contact:
Christopher Robinson, CFAVice President,
Corporate Development & Investor Relations(281) 388-5551
TEAM, INC. AND SUBSIDIARIES |
SUMMARY OF CONSOLIDATED OPERATING RESULTS |
(unaudited, in thousands, except per share
data) |
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
251,265 |
|
|
$ |
238,873 |
|
|
$ |
469,841 |
|
|
$ |
433,491 |
|
Operating
expenses |
|
|
181,312 |
|
|
|
176,109 |
|
|
|
344,790 |
|
|
|
327,026 |
|
Gross margin |
|
|
69,953 |
|
|
|
62,764 |
|
|
|
125,051 |
|
|
|
106,465 |
|
Selling, general and
administrative expenses |
|
|
72,733 |
|
|
|
68,478 |
|
|
|
144,018 |
|
|
|
134,602 |
|
Restructuring and
other related charges, net |
|
|
— |
|
|
|
280 |
|
|
|
16 |
|
|
|
2,157 |
|
Operating loss |
|
|
(2,780 |
) |
|
|
(5,994 |
) |
|
|
(18,983 |
) |
|
|
(30,294 |
) |
Interest expense,
net |
|
|
(18,480 |
) |
|
|
(9,598 |
) |
|
|
(37,085 |
) |
|
|
(18,994 |
) |
Other income
(expense) |
|
|
1,476 |
|
|
|
(1,044 |
) |
|
|
4,178 |
|
|
|
(1,994 |
) |
Loss before income
taxes |
|
|
(19,784 |
) |
|
|
(16,636 |
) |
|
|
(51,890 |
) |
|
|
(51,282 |
) |
Provision for income
taxes |
|
|
(1,768 |
) |
|
|
(857 |
) |
|
|
(2,124 |
) |
|
|
(502 |
) |
Net loss |
|
$ |
(21,552 |
) |
|
$ |
(17,493 |
) |
|
$ |
(54,014 |
) |
|
$ |
(51,784 |
) |
|
|
|
|
|
|
|
|
|
Loss per common
share: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.50 |
) |
|
$ |
(0.57 |
) |
|
$ |
(1.34 |
) |
|
$ |
(1.68 |
) |
|
|
|
|
|
|
|
|
|
Weighted-average
number of shares outstanding: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
43,179 |
|
|
|
30,940 |
|
|
|
40,454 |
|
|
|
30,909 |
|
TEAM, INC. AND SUBSIDIARIES |
SUMMARY CONSOLIDATED BALANCE SHEET
INFORMATION |
(in thousands) |
|
|
|
|
|
June 30, |
|
December 31, |
|
2022 |
|
2021 |
|
(unaudited) |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
67,446 |
|
$ |
65,315 |
|
|
|
|
Other current
assets |
|
326,362 |
|
|
287,743 |
|
|
|
|
Property, plant and
equipment, net |
|
157,039 |
|
|
161,359 |
|
|
|
|
Other non-current
assets |
|
172,949 |
|
|
190,068 |
|
|
|
|
Total assets |
$ |
723,796 |
|
$ |
704,485 |
|
|
|
|
Current portion of
long-term debt and finance lease obligations |
$ |
487,204 |
|
$ |
669 |
|
|
|
|
Other current
liabilities |
|
181,553 |
|
|
183,456 |
|
|
|
|
Long-term debt and
finance lease obligations, net of current maturities |
|
4,656 |
|
|
405,191 |
|
|
|
|
Other non-current
liabilities |
|
49,834 |
|
|
63,302 |
|
|
|
|
Stockholders’
equity |
|
549 |
|
|
51,867 |
|
|
|
|
Total liabilities and stockholders’ equity |
$ |
723,796 |
|
$ |
704,485 |
TEAM INC. AND SUBSIDIARIES |
SUMMARY CONSOLIDATED CASH FLOW INFORMATION |
(unaudited, in thousands) |
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(54,014 |
) |
|
$ |
(51,784 |
) |
Depreciation and
amortization |
|
|
19,609 |
|
|
|
21,306 |
|
Allowance for credit
losses |
|
|
30 |
|
|
|
965 |
|
Deferred income
taxes |
|
|
(357 |
) |
|
|
(2,318 |
) |
Non-cash compensation
(credits) costs |
|
|
(59 |
) |
|
|
4,468 |
|
Write-off of deferred
financing costs |
|
|
2,748 |
|
|
|
— |
|
Changes in operating
assets and liabilities |
|
|
(38,042 |
) |
|
|
(11,789 |
) |
Other |
|
|
16,694 |
|
|
|
4,353 |
|
Net cash used in operating activities |
|
|
(53,391 |
) |
|
|
(34,799 |
) |
Capital
expenditures |
|
|
(14,001 |
) |
|
|
(9,220 |
) |
Proceeds from disposal
of assets |
|
|
5,119 |
|
|
|
49 |
|
Net cash used in investing activities |
|
|
(8,882 |
) |
|
|
(9,171 |
) |
Net borrowings under
ABL facilities |
|
|
66,053 |
|
|
|
40,300 |
|
Issuance of common
stock |
|
|
9,696 |
|
|
|
— |
|
Payments for debt
issuance costs |
|
|
(10,640 |
) |
|
|
(2,326 |
) |
Taxes paid for net
share settlement of share-based awards, net |
|
|
— |
|
|
|
(102 |
) |
Other |
|
|
(323 |
) |
|
|
(206 |
) |
Net cash provided by financing activities |
|
|
64,786 |
|
|
|
37,666 |
|
Effect of exchange
rate changes on cash and cash equivalents |
|
|
(382 |
) |
|
|
73 |
|
Net change in cash and
cash equivalents |
|
$ |
2,131 |
|
|
$ |
(6,231 |
) |
|
|
|
|
|
TEAM, INC. AND SUBSIDIARIES |
SEGMENT INFORMATION |
(unaudited, in thousands) |
|
|
|
|
|
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenues |
|
|
|
|
|
|
|
|
IHT |
|
$ |
114,124 |
|
|
$ |
117,462 |
|
|
$ |
209,721 |
|
|
$ |
208,601 |
|
MS |
|
|
107,416 |
|
|
|
97,167 |
|
|
|
200,857 |
|
|
|
184,563 |
|
Quest Integrity |
|
|
29,725 |
|
|
|
24,244 |
|
|
|
59,263 |
|
|
|
40,327 |
|
|
|
$ |
251,265 |
|
|
$ |
238,873 |
|
|
$ |
469,841 |
|
|
$ |
433,491 |
|
|
|
|
|
|
|
|
|
|
Operating income
(loss) (“EBIT”) |
|
|
|
|
|
|
|
|
IHT |
|
$ |
5,514 |
|
|
$ |
7,395 |
|
|
$ |
5,648 |
|
|
$ |
7,759 |
|
MS |
|
|
6,984 |
|
|
|
2,328 |
|
|
|
7,497 |
|
|
|
2,443 |
|
Quest Integrity |
|
|
8,014 |
|
|
|
5,702 |
|
|
|
14,218 |
|
|
|
5,450 |
|
Corporate and shared support services |
|
|
(23,292 |
) |
|
|
(21,419 |
) |
|
|
(46,346 |
) |
|
|
(45,946 |
) |
|
|
$ |
(2,780 |
) |
|
$ |
(5,994 |
) |
|
$ |
(18,983 |
) |
|
$ |
(30,294 |
) |
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBIT |
|
|
|
|
|
|
|
|
IHT |
|
$ |
5,539 |
|
|
$ |
7,405 |
|
|
$ |
5,689 |
|
|
$ |
8,244 |
|
MS |
|
|
7,038 |
|
|
|
2,544 |
|
|
|
7,551 |
|
|
|
2,798 |
|
Quest Integrity |
|
|
8,026 |
|
|
|
5,744 |
|
|
|
14,230 |
|
|
|
5,701 |
|
Corporate and shared support services |
|
|
(16,472 |
) |
|
|
(19,064 |
) |
|
|
(32,321 |
) |
|
|
(38,746 |
) |
|
|
$ |
4,131 |
|
|
$ |
(3,371 |
) |
|
$ |
(4,851 |
) |
|
$ |
(22,003 |
) |
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA |
|
|
|
|
|
|
|
|
IHT |
|
$ |
8,635 |
|
|
$ |
10,675 |
|
|
$ |
12,039 |
|
|
$ |
14,984 |
|
MS |
|
|
11,672 |
|
|
|
7,587 |
|
|
|
17,069 |
|
|
|
13,280 |
|
Quest Integrity |
|
|
8,595 |
|
|
|
6,454 |
|
|
|
15,376 |
|
|
|
7,123 |
|
Corporate and shared support services |
|
|
(14,628 |
) |
|
|
(15,602 |
) |
|
|
(29,785 |
) |
|
|
(31,616 |
) |
|
|
$ |
14,274 |
|
|
$ |
9,114 |
|
|
$ |
14,699 |
|
|
$ |
3,771 |
|
|
|
|
|
|
|
|
|
|
TEAM, INC. AND
SUBSIDIARIESNon-GAAP Financial
Measures(Unaudited)
The Company uses supplemental non-GAAP financial
measures which are derived from the consolidated financial
information including adjusted net income (loss); adjusted net
income (loss) per diluted share, earnings before interest and taxes
(“EBIT”); adjusted EBIT (defined below); adjusted earnings before
interest, taxes, depreciation and amortization (“adjusted EBITDA”)
and free cash flow to supplement financial information presented on
a U.S. generally accepted accounting principles (“GAAP”) basis.
The Company defines adjusted net income (loss),
adjusted net income (loss) per diluted share and adjusted EBIT to
exclude the following items: costs associated with our past
integration and transformation program, costs associated with the
Company’s new strategic organizational structure implemented in
January 2021 (“Operating Group Reorganization”), non-routine legal
costs and settlements, restructuring charges, certain severance
charges, goodwill impairment charges and certain other items that
we believe are not indicative of core operating activities.
Consolidated adjusted EBIT, as defined by us, excludes the costs
excluded from adjusted net income (loss) as well as income tax
expense (benefit), interest charges, foreign currency (gain) loss,
and items of other (income) expense. Consolidated adjusted EBITDA
further excludes from consolidated adjusted EBIT depreciation,
amortization and non-cash share-based compensation costs. Segment
adjusted EBIT is equal to segment operating income (loss) excluding
costs associated with our past integration and transformation
program, costs associated with the Operating Group Reorganization,
non-routine legal costs and settlements, restructuring charges,
certain severance charges, goodwill impairment charges and certain
other items as determined by management. Segment adjusted EBITDA
further excludes from segment adjusted EBIT depreciation,
amortization, and non-cash share-based compensation costs. Free
cash flow is defined as net cash provided by (used in) operating
activities minus capital expenditures. Net debt is defined as the
sum of the current and long-term portions of debt, including
finance lease obligations, less cash and cash equivalents.
Management believes these non-GAAP financial
measures are useful to both management and investors in their
analysis of our financial position and results of operations. In
particular, adjusted net income (loss), adjusted net income (loss)
per diluted share, consolidated adjusted EBIT, and consolidated
adjusted EBITDA are meaningful measures of performance which are
commonly used by industry analysts, investors, lenders and rating
agencies to analyze operating performance in our industry, perform
analytical comparisons, benchmark performance between periods, and
measure our performance against externally communicated targets.
Our segment adjusted EBIT and segment adjusted EBITDA is also used
as a basis for the Chief Operating Decision Maker to evaluate the
performance of our reportable segments. Free cash flow is used by
our management and investors to analyze our ability to service and
repay debt and return value directly to stakeholders.
Non-GAAP measures have important limitations as
analytical tools, because they exclude some, but not all, items
that affect net earnings and operating income. These measures
should not be considered substitutes for their most directly
comparable GAAP financial measures and should be read only in
conjunction with financial information presented on a GAAP basis.
Further, our non-GAAP financial measures may not be comparable to
similarly titled measures of other companies who may calculate
non-GAAP financial measures differently, limiting the usefulness of
those measures for comparative purposes. The liquidity measure of
free cash flow does not represent a precise calculation of residual
cash flow available for discretionary expenditures. Reconciliations
of each non-GAAP financial measure to its most directly comparable
GAAP financial measure are presented below.
TEAM, INC. AND SUBSIDIARIES |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
(unaudited, in thousands except per share
data) |
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Adjusted Net Income
(Loss): |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(21,552 |
) |
|
$ |
(17,493 |
) |
|
$ |
(54,014 |
) |
|
$ |
(51,784 |
) |
Professional fees and other1 |
|
|
4,693 |
|
|
|
688 |
|
|
|
10,036 |
|
|
|
1,834 |
|
Legal costs2 |
|
|
1,200 |
|
|
|
1,634 |
|
|
|
1,728 |
|
|
|
4,109 |
|
Severance charges, net3 |
|
|
1,020 |
|
|
|
301 |
|
|
|
2,370 |
|
|
|
2,348 |
|
Natural disaster insurance recovery |
|
|
(872 |
) |
|
|
— |
|
|
|
(872 |
) |
|
|
— |
|
Tax impact of adjustments and other net tax items4 |
|
|
(2 |
) |
|
|
(40 |
) |
|
|
(6 |
) |
|
|
(63 |
) |
Adjusted net
loss |
|
$ |
(15,513 |
) |
|
$ |
(14,910 |
) |
|
$ |
(40,758 |
) |
|
$ |
(43,556 |
) |
|
|
|
|
|
|
|
|
|
Adjusted net loss per
common share: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.36 |
) |
|
$ |
(0.48 |
) |
|
$ |
(1.01 |
) |
|
$ |
(1.41 |
) |
|
|
|
|
|
|
|
|
|
Consolidated Adjusted
EBIT and Adjusted EBITDA: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(21,552 |
) |
|
$ |
(17,493 |
) |
|
$ |
(54,014 |
) |
|
$ |
(51,784 |
) |
Provision (benefit) for income taxes |
|
|
1,768 |
|
|
|
857 |
|
|
|
2,124 |
|
|
|
502 |
|
Gain on equipment sale |
|
|
(1,170 |
) |
|
|
— |
|
|
|
(3,483 |
) |
|
|
— |
|
Interest expense, net |
|
|
18,480 |
|
|
|
9,598 |
|
|
|
37,085 |
|
|
|
18,994 |
|
Professional fees and other1 |
|
|
4,693 |
|
|
|
688 |
|
|
|
10,036 |
|
|
|
1,834 |
|
Legal costs2 |
|
|
1,200 |
|
|
|
1,634 |
|
|
|
1,728 |
|
|
|
4,109 |
|
Severance charges, net3 |
|
|
1,020 |
|
|
|
301 |
|
|
|
2,370 |
|
|
|
2,348 |
|
Foreign currency (gain) loss5 |
|
|
754 |
|
|
|
1,218 |
|
|
|
569 |
|
|
|
2,341 |
|
Pension credit6 |
|
|
(190 |
) |
|
|
(174 |
) |
|
|
(393 |
) |
|
|
(347 |
) |
Natural disaster insurance recovery |
|
|
(872 |
) |
|
|
— |
|
|
|
(872 |
) |
|
|
— |
|
Consolidated Adjusted
EBIT |
|
$ |
4,131 |
|
|
$ |
(3,371 |
) |
|
$ |
(4,850 |
) |
|
$ |
(22,003 |
) |
Depreciation and amortization |
|
|
|
|
|
|
|
|
Amount included in operating expenses |
|
|
4,333 |
|
|
|
5,036 |
|
|
|
8,912 |
|
|
|
10,550 |
|
Amount included in SG&A expenses |
|
|
5,245 |
|
|
|
5,311 |
|
|
|
10,697 |
|
|
|
10,756 |
|
Total depreciation and amortization |
|
|
9,578 |
|
|
|
10,347 |
|
|
|
19,609 |
|
|
|
21,306 |
|
Non-cash share-based compensation costs |
|
|
565 |
|
|
|
2,138 |
|
|
|
(59 |
) |
|
|
4,468 |
|
Consolidated Adjusted
EBITDA |
|
$ |
14,274 |
|
|
$ |
9,114 |
|
|
$ |
14,700 |
|
|
$ |
3,771 |
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow: |
|
|
|
|
|
|
|
|
Cash provided by (used in) operating activities |
|
$ |
(3,385 |
) |
|
$ |
(17,616 |
) |
|
$ |
(53,391 |
) |
|
$ |
(34,799 |
) |
Capital expenditures |
|
|
(6,933 |
) |
|
|
(5,807 |
) |
|
|
(14,001 |
) |
|
|
(9,220 |
) |
Free Cash
Flow |
|
$ |
(10,318 |
) |
|
$ |
(23,423 |
) |
|
$ |
(67,392 |
) |
|
$ |
(44,019 |
) |
1 |
For the three and six months ended June 30, 2022, includes $4.7
million and $10.0 million, respectively, related to costs
associated with the debt financing and corporate support costs. For
the three and six months ended June 30, 2021, includes $0.7 million
and $1.5 million, respectively, of costs associated with the
Operating Group Reorganization (exclusive of restructuring
costs). |
2 |
For the
three and six months ended June 30, 2022, primarily relates to
accrued legal matters. For the three and six months ended June 30,
2021, primarily relates to accrued legal matters and other legal
fees. |
3 |
For the
three months ended June 30, 2022 includes $1.0 million primarily
related to customary severance costs associated with staff
reductions. For the six months ended June 30, 2022, includes $1.3
million related to customary severance costs associated with
executive departures and $1.1 million associated with severance
across multiple corporate departments. For the three months and six
months ended June 30, 2021, $0.3 million and $2.2 million,
respectively, associated with the Operating Group
Reorganization. |
4 |
Represents the tax effect of the adjustments. Beginning in Q2 2021,
we use the statutory tax rate, net of valuation allowance by legal
entity to determine the tax effect of the adjustments. Prior to Q2
2021, we used an assumed marginal tax rate of 21%. |
5 |
Represents foreign currency losses primarily due to strengthening
USD against EUR, GBP, CAN and AUD. |
6 |
Represents pension credits for the U.K. pension plan based on the
difference between the expected return on plan assets and the cost
of the discounted pension liability. The pension plan has had no
new participants added since the plan was frozen in 1994 and
accruals for future benefits ceased in connection with a plan
curtailment in 2013. |
TEAM, INC. AND SUBSIDIARIES |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Continued) |
(unaudited, in thousands) |
|
|
|
|
|
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
Segment Adjusted EBIT
and Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IHT |
|
|
|
|
|
|
|
|
Operating income |
|
$ |
5,514 |
|
|
$ |
7,395 |
|
|
$ |
5,648 |
|
|
$ |
7,759 |
|
Severance charges, net1 |
|
|
25 |
|
|
|
10 |
|
|
|
41 |
|
|
|
485 |
|
Adjusted EBIT |
|
|
5,539 |
|
|
|
7,405 |
|
|
|
5,689 |
|
|
|
8,244 |
|
Depreciation and amortization |
|
|
3,096 |
|
|
|
3,270 |
|
|
|
6,350 |
|
|
|
6,740 |
|
Adjusted EBITDA |
|
$ |
8,635 |
|
|
$ |
10,675 |
|
|
$ |
12,039 |
|
|
$ |
14,984 |
|
|
|
|
|
|
|
|
|
|
MS |
|
|
|
|
|
|
|
|
Operating income |
|
$ |
6,984 |
|
|
$ |
2,328 |
|
|
$ |
7,497 |
|
|
$ |
2,443 |
|
Severance charges, net1 |
|
|
54 |
|
|
|
216 |
|
|
|
54 |
|
|
|
355 |
|
Adjusted EBIT |
|
|
7,038 |
|
|
|
2,544 |
|
|
|
7,551 |
|
|
|
2,798 |
|
Depreciation and amortization |
|
|
4,634 |
|
|
|
5,043 |
|
|
|
9,518 |
|
|
|
10,482 |
|
Adjusted EBITDA |
|
$ |
11,672 |
|
|
$ |
7,587 |
|
|
$ |
17,069 |
|
|
$ |
13,280 |
|
|
|
|
|
|
|
|
|
|
Quest
Integrity |
|
|
|
|
|
|
|
|
Operating income (loss) |
|
$ |
8,014 |
|
|
$ |
5,702 |
|
|
$ |
14,218 |
|
|
$ |
5,450 |
|
Severance charges, net1 |
|
|
12 |
|
|
|
42 |
|
|
|
12 |
|
|
|
251 |
|
Adjusted EBIT |
|
|
8,026 |
|
|
|
5,744 |
|
|
|
14,230 |
|
|
|
5,701 |
|
Depreciation and amortization |
|
|
569 |
|
|
|
710 |
|
|
|
1,146 |
|
|
|
1,422 |
|
Adjusted EBITDA |
|
$ |
8,595 |
|
|
$ |
6,454 |
|
|
$ |
15,376 |
|
|
$ |
7,123 |
|
|
|
|
|
|
|
|
|
|
Corporate and shared
support services |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(42,031 |
) |
|
$ |
(32,918 |
) |
|
$ |
(81,398 |
) |
|
$ |
(67,436 |
) |
Provision (benefit) for income taxes |
|
|
1,768 |
|
|
|
857 |
|
|
|
2,124 |
|
|
|
502 |
|
Gain on equipment sale |
|
|
(1,203 |
) |
|
|
— |
|
|
|
(3,463 |
) |
|
|
— |
|
Interest expense, net |
|
|
18,480 |
|
|
|
9,598 |
|
|
|
37,085 |
|
|
|
18,994 |
|
Foreign currency (gain) losses2 |
|
|
754 |
|
|
|
1,218 |
|
|
|
569 |
|
|
|
2,341 |
|
Pension credit3 |
|
|
(190 |
) |
|
|
(174 |
) |
|
|
(393 |
) |
|
|
(347 |
) |
Professional fees and other4 |
|
|
4,693 |
|
|
|
688 |
|
|
|
10,036 |
|
|
|
1,834 |
|
Legal costs5 |
|
|
1,200 |
|
|
|
1,634 |
|
|
|
1,728 |
|
|
|
4,109 |
|
Severance charges, net1 |
|
|
929 |
|
|
|
33 |
|
|
|
2,263 |
|
|
|
1,257 |
|
Natural disaster insurance recovery |
|
|
(872 |
) |
|
|
— |
|
|
|
(872 |
) |
|
|
— |
|
Adjusted EBIT |
|
|
(16,472 |
) |
|
|
(19,064 |
) |
|
|
(32,321 |
) |
|
|
(38,746 |
) |
Depreciation and amortization |
|
|
1,279 |
|
|
|
1,324 |
|
|
|
2,595 |
|
|
|
2,662 |
|
Non-cash share-based compensation costs |
|
|
565 |
|
|
|
2,138 |
|
|
|
(59 |
) |
|
|
4,468 |
|
Adjusted EBITDA |
|
$ |
(14,628 |
) |
|
$ |
(15,602 |
) |
|
$ |
(29,785 |
) |
|
$ |
(31,616 |
) |
1 |
For the three months ended June 30, 2022 includes $1.0 million
primarily related to customary severance costs associated with
staff reductions. For the six months ended June 30, 2022, includes
$1.3 million related to customary severance costs associated with
executive departures and $1.1 million associated with severance
across multiple corporate departments. For the three months and six
months ended June 30, 2021, $0.3 million and $2.2 million,
respectively, associated with the Operating Group
Reorganization. |
2 |
Represents foreign currency losses primarily due to strengthening
USD against EUR, GBP, CAN and AUD. |
3 |
Represents pension credits for the U.K. pension plan based on the
difference between the expected return on plan assets and the cost
of the discounted pension liability. The pension plan has had no
new participants added since the plan was frozen in 1994 and
accruals for future benefits ceased in connection with a plan
curtailment in 2013. |
4 |
For the
three and six months ended June 30, 2022, includes $4.7 million and
$10.0 million, respectively, related to costs associated with the
debt financing and corporate support costs. For the three and six
months ended June 30, 2021, includes $0.7 million and $1.5 million,
respectively, of costs associated with the Operating Group
Reorganization (exclusive of restructuring costs). |
5 |
For the
three and six months ended June 30, 2022, primarily relates to
accrued legal matters. For the three and six months ended June 30,
2021, primarily relates to accrued legal matters and other legal
fees. |
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