Team, Inc. (NYSE: TISI) (“TEAM” or the “Company”),
a global, leading provider of specialty industrial services
offering clients access to a full suite of conventional,
specialized, and proprietary mechanical, heat-treating, and
inspection services, today reported its financial results for the
second quarter ended June 30, 2024.
Second Quarter 2024
Highlights:
- Generated second quarter 2024
revenues of $228.6 million.
- Improved gross margin by 240 basis
points to 27.8%.
- Reported second quarter 2024 net
loss of $2.8 million, a $13.0 million improvement over the
2023 second quarter.
- Increased consolidated Adjusted
EBITDA1 to $21.8 million (9.5% of consolidated revenue), up
25.0% from $17.4 million (7.3% of consolidated revenue) in the
2023 second quarter.
- Adjusted Selling, General and
Administrative Expense1 was 19.8% of consolidated revenue and
declined by $2.0 million as compared to the 2023 second
quarter.
- Reiterated 2024 full year
guidance.
1 See the accompanying reconciliation of
non-GAAP financial measures at the end of this press release.
“Our second quarter results demonstrated
continued progress in our ongoing program to lower costs, expand
margins and increase cash flow from operations. We expanded gross
margin by 240 basis points, driving a nearly $3 million improvement
to $63.6 million, and our Adjusted EBITDA margin expanded 230 basis
points to 9.5%, leading to a 25% increase in Adjusted EBITDA over
the prior year period,” said Keith D. Tucker, Team’s Chief
Executive Officer. “These results reflect meaningful progress in
our ongoing efforts to improve operating leverage and lower cash
overhead costs. Going forward, we expect to build on these
improvements while also accelerating our program to improve our job
mix and grow our higher margin service lines.”
“While we remain focused on cost discipline and
operational execution, during the second quarter, we launched a
series of targeted commercial initiatives designed to drive revenue
growth within our core markets and accelerate our expansion into
attractive end markets such as aerospace and midstream. These
initiatives, including the strategic addition of senior operations
leaders dedicated to growing these specific end markets, continue
to gain traction and we expect to see measurable progress in the
second half of 2024. New business and strong demand at our
state-of-the-art aerospace facility in Cincinnati drove a 46%
revenue increase in the second quarter over the prior year period,
and our recent add on investment in that facility will further grow
our aerospace capacity by the end of 2024, driving incremental
revenue at attractive margins. Additionally, we’ve made progress
with our commercial initiative to improve our job mix by refocusing
on higher margin revenue streams with more favorable pricing and we
expect this and other ongoing initiatives to drive future top line
growth,” commented Tucker.
“Looking ahead to the second half of 2024, we
see strong activity levels across both of our segments,
particularly in turnaround activity and project related work, year
over year top line growth and improved margin performance over the
first half of 2024 from our international and Canadian operations.
We are keenly focused on continuing our positive margin trajectory
through both enhanced top line growth and cost discipline and thus
reiterate our full year 2024 Adjusted EBITDA guidance of $58
million to $68 million, which represents a 48% improvement at the
midpoint over fiscal year 2023,” concluded Tucker.
Financial Results
Second quarter revenues were down
$10.9 million to $228.6 million as compared to
$239.5 million in the prior year quarter. The decrease was
primarily driven by a decline in Mechanical Services (“MS”) revenue
of $7.4 million, reflecting lower project work and repair and
maintenance activities, and a $3.5 million decline in
Inspection and Heat Treating (“IHT”) revenue due to lower call out
and turnaround activity. Revenue in our U.S. IHT business was up
$2.6 million compared to the prior year period, while our U.S. MS
revenue was down $2.7 million, mainly due to project timing.
Despite lower revenues, second quarter consolidated gross margin
improved by $2.6 million to $63.6 million, or 27.8% of revenue, up
240 basis points from 25.4% in the prior year quarter, driven by
higher margin projects, improved pricing, and lower overall costs
due to the Company’s ongoing cost reduction initiatives.
Selling, general and administrative expense for
the second quarter was $52.4 million, down $3.9 million
or 7.0%, from the second quarter of 2023, reflecting the Company’s
continued focus on reducing costs. Adjusted Selling, General, and
Administrative Expense, which excludes expenses not representative
of TEAM’s ongoing operations such as non-recurring professional,
legal financing and severance expenses as well as non-cash expenses
such as depreciation and amortization and share-based compensation
expense, declined by $2.0 million or 4.2% as compared to the prior
year quarter, and represented 19.8% of consolidated revenue for the
period.
Net loss in the second quarter of 2024 was $2.8
million (a loss of $0.63 per share) compared to a net loss of $15.8
million (a loss of $3.61 per share) in the 2023 second quarter. The
Company’s Adjusted EBIT, a non-GAAP measure, improved by $4.2
million to $11.9 million in the 2024 second quarter versus $7.7
million in the prior year quarter. Consolidated Adjusted EBITDA, a
non-GAAP measure, expanded 25% to $21.8 million (9.5% of
consolidated revenue) in the second quarter of 2024 versus $17.4
million (7.3% of consolidated revenue) in the prior year quarter,
with the improvement largely driven by the factors noted above.
Adjusted net loss, consolidated Adjusted EBIT,
Adjusted EBITDA and Adjusted Selling, General and Administrative
Expense 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 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 quarter ended June 30, 2024 and 2023 (in thousands):
|
TEAM, INC. AND SUBSIDIARIES |
|
SEGMENT INFORMATION |
|
(unaudited, in thousands) |
| |
|
|
|
|
| |
Three Months Ended June
30, |
|
Favorable (Unfavorable) |
| |
2024 |
|
2023 |
|
$ |
|
% |
| Revenues |
|
|
|
|
|
|
|
|
IHT |
$ |
113,234 |
|
|
$ |
116,740 |
|
|
$ |
(3,506 |
) |
|
(3.0)% |
|
MS |
|
115,384 |
|
|
|
122,752 |
|
|
|
(7,368 |
) |
|
(6.0)% |
| |
$ |
228,618 |
|
|
$ |
239,492 |
|
|
$ |
(10,874 |
) |
|
(4.5)% |
| |
|
|
|
|
|
|
|
| Operating income
(loss) |
|
|
|
|
|
|
|
|
IHT |
$ |
12,459 |
|
|
$ |
6,548 |
|
|
$ |
5,911 |
|
|
90.3% |
|
MS |
|
10,637 |
|
|
|
12,720 |
|
|
|
(2,083 |
) |
|
(16.4)% |
|
Corporate and shared support services |
|
(11,937 |
) |
|
|
(14,672 |
) |
|
|
2,735 |
|
|
18.6% |
| |
$ |
11,159 |
|
|
$ |
4,596 |
|
|
$ |
6,563 |
|
|
142.8% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues. IHT revenues
decreased by $3.5 million or 3.0%, in the second quarter of 2024 as
compared to the prior year period, primarily due to a $5.4 million
decrease in Canada’s nested and turnaround services revenue, a $0.7
million decrease in other international regions, partially offset
by a $2.6 million revenue increase in U.S. operations. MS revenues
decreased by $7.4 million or 6.0%, in the 2024 second quarter
primarily due to a $2.7 million decrease in revenue from U.S.
operations attributable to project timing, a $2.1 million decrease
in revenue from Canada project work and a $2.5 million revenue
decrease in other international regions due to generally lower
activity levels.
Operating income (loss). IHT’s
second quarter 2024 operating income expanded by $5.9 million or
90.3% to $12.5 million, mainly due to lower costs in all regions
and improved U.S. margins. MS operating income was lower compared
to prior year quarter by approximately $2.1 million or 16.4%,
mainly due to lower operating income attributable to international
regions of $1.9 million and a $0.5 million decrease from Canada
operations, partially offset by an increase from U.S operations.
Corporate and shared support services costs decreased by $2.7
million or 18.6%, mainly due to lower professional fees in the
current quarter and lower overall costs due to the Company’s
ongoing cost reduction efforts. Consolidated operating income
improved by $6.6 million or 142.8% to $11.2 million, driven by the
factors discussed above.
|
TEAM, INC. AND SUBSIDIARIES |
|
SEGMENT INFORMATION |
|
(unaudited, in thousands) |
| |
|
|
|
|
| |
Six Months EndedJune 30, |
|
Favorable (Unfavorable) |
| |
2024 |
|
2023 |
|
$ |
|
% |
| Revenues |
|
|
|
|
|
|
|
|
IHT |
$ |
212,682 |
|
|
$ |
218,569 |
|
|
$ |
(5,887 |
) |
|
(2.7)% |
|
MS |
|
215,536 |
|
|
|
223,200 |
|
|
|
(7,664 |
) |
|
(3.4)% |
| |
$ |
428,218 |
|
|
$ |
441,769 |
|
|
$ |
(13,551 |
) |
|
(3.1)% |
| |
|
|
|
|
|
|
|
| Operating income
(loss) |
|
|
|
|
|
|
|
|
IHT |
$ |
17,644 |
|
|
$ |
11,271 |
|
|
$ |
6,373 |
|
|
56.5% |
|
MS |
|
14,728 |
|
|
|
15,913 |
|
|
|
(1,185 |
) |
|
(7.4)% |
|
Corporate and shared support services |
|
(27,599 |
) |
|
|
(30,334 |
) |
|
|
2,735 |
|
|
9.0% |
| |
$ |
4,773 |
|
|
$ |
(3,150 |
) |
|
$ |
7,923 |
|
|
251.5% |
| |
Revenues. IHT revenues
decreased by $5.9 million or 2.7%, primarily driven by
decreased call out and turnaround activities in Canada and other
international regions, partially offset by a $1.8 million increase
in aerospace related revenue. MS revenues decreased by
$7.7 million or 3.4%, mainly due to a $6.5 million decrease in
Canada operations due to lower project activity and a $1.4 million
decrease in U.S. operations.
Operating income (loss). IHT
operating income increased by $6.4 million or 56.5%, driven by
lower costs and improved margins. MS operating income decreased by
$1.2 million as compared to the prior year period primarily
due to lower operating income from Canada and other international
operations of $2.1 million and $1.3 million, respectively, mainly
due to less project work; partially offset by an increase in
operating income from U.S. operations of $2.2 million driven by
higher activity and improved margins. Corporate operating loss
decreased by $2.7 million due to lower costs resulting from
the Company’s ongoing cost reduction efforts.
Balance Sheet and Liquidity
At June 30, 2024, the Company had
$40.1 million of total liquidity, consisting of consolidated
cash and cash equivalents of $17.9 million, (excluding
$4.6 million of restricted cash) and $22.2 million of
undrawn availability under its various credit facilities.
The Company’s total debt as of June 30,
2024 was $320.1 million as compared to $311.4 million as
of fiscal year end 2023. The increase is mainly due to $6.4 million
of paid in kind interest during the period and the incurrence of a
new equipment finance facility in March 2024. The Company’s net
debt (total debt less cash and cash equivalents), a non-GAAP
financial measure, was $297.6 million at June 30, 2024.
2024 Outlook
The Company reaffirms the following operating
and cash flow guidance for the 2024 fiscal year:
- Total Company Revenue of $850
million to $900 million
- Gross Margin of between $235
million and $265 million
- Adjusted EBITDA of between $58
million and $68 million
- Capital expenditures of between $9
million to $11 million
Conference Call
As previously announced, the Company will hold a
conference call to discuss its second quarter 2024 financial and
operating results on Friday, August 9, 2024, at 10:00 a.m. Central
Time (11:00 a.m. Eastern Time). Interested parties in the United
States may participate toll-free by dialing (877) 270-2148.
Interested parties internationally may dial (412) 902-6510.
Participants should ask to join “TEAM, Inc. Second Quarter 2024
Conference Call.” The Company will not host questions during the
call. This call will also be webcast on TEAM’s website at
www.teaminc.com. An audio replay will be available on the Company’s
website following the call.
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 specialty industrial
services offering clients access to a full suite of conventional,
specialized, and proprietary mechanical, heat-treating, and
inspection services. 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 15 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 statements
regarding the Company’s financial prospects and the implementation
of cost-saving measures. There are known and unknown factors that
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 generate sufficient cash from
operations, access its credit facility, or maintain its compliance
with covenants under its credit facility and debt agreement, the
duration and magnitude of accidents, extreme weather, natural
disasters, and pandemics and related global economic effects and
inflationary pressures, the Company’s liquidity and ability to
obtain additional financing, the Company’s ability to continue as a
going concern, 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; 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 statements 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:Nelson M. HaightExecutive Vice
President, Chief Financial Officer(281) 388-5521
|
|
|
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, |
| |
2024 |
|
2023 |
|
2024 |
|
2023 |
| |
|
|
|
|
|
|
|
|
Revenues |
$ |
228,618 |
|
|
$ |
239,492 |
|
|
$ |
428,218 |
|
|
$ |
441,769 |
|
| Operating
expenses |
|
165,064 |
|
|
|
178,576 |
|
|
|
315,933 |
|
|
|
333,851 |
|
|
Gross margin |
|
63,554 |
|
|
|
60,916 |
|
|
|
112,285 |
|
|
|
107,918 |
|
| Selling, general, and
administrative expenses |
|
52,395 |
|
|
|
56,320 |
|
|
|
107,512 |
|
|
|
111,068 |
|
|
Operating income (loss) |
|
11,159 |
|
|
|
4,596 |
|
|
|
4,773 |
|
|
|
(3,150 |
) |
| Interest expense,
net |
|
(11,909 |
) |
|
|
(16,691 |
) |
|
|
(24,007 |
) |
|
|
(33,432 |
) |
| Loss on debt
extinguishment |
|
— |
|
|
|
(1,582 |
) |
|
|
— |
|
|
|
(1,582 |
) |
| Other (expense)
income, net |
|
(541 |
) |
|
|
13 |
|
|
|
821 |
|
|
|
648 |
|
| Loss before income
taxes |
|
(1,291 |
) |
|
|
(13,664 |
) |
|
|
(18,413 |
) |
|
|
(37,516 |
) |
| Provision for income
taxes |
|
(1,472 |
) |
|
|
(2,089 |
) |
|
|
(1,545 |
) |
|
|
(2,948 |
) |
| Net loss |
$ |
(2,763 |
) |
|
$ |
(15,753 |
) |
|
$ |
(19,958 |
) |
|
$ |
(40,464 |
) |
| |
|
|
|
|
|
|
|
| Loss per common
share: |
|
|
|
|
|
|
|
|
Basic and Diluted |
$ |
(0.63 |
) |
|
$ |
(3.61 |
) |
|
$ |
(4.52 |
) |
|
$ |
(9.30 |
) |
| Weighted-average
number of shares outstanding: |
|
|
|
|
|
|
|
|
Basic and Diluted |
|
4,416 |
|
|
|
4,362 |
|
|
|
4,415 |
|
|
|
4,353 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TEAM, INC. AND SUBSIDIARIES |
|
SUMMARY CONSOLIDATED BALANCE SHEET
INFORMATION |
|
(in thousands) |
| |
|
|
|
| |
June 30, |
|
December 31, |
| |
2024 |
|
2023 |
| |
(unaudited) |
|
|
| |
|
|
|
|
Cash and cash equivalents |
$ |
22,461 |
|
$ |
35,427 |
| |
|
|
|
| Other current
assets |
|
292,843 |
|
|
286,674 |
| |
|
|
|
| Property, plant, and
equipment, net |
|
120,147 |
|
|
127,057 |
| |
|
|
|
| Other non-current
assets |
|
114,196 |
|
|
116,586 |
| |
|
|
|
|
Total assets |
$ |
549,647 |
|
$ |
565,744 |
| |
|
|
|
| Current portion of
long-term debt and finance lease obligations |
$ |
7,087 |
|
$ |
5,212 |
| |
|
|
|
| Other current
liabilities |
|
166,372 |
|
|
169,726 |
| |
|
|
|
| Long-term debt and
finance lease obligations, net of current maturities |
|
313,020 |
|
|
306,214 |
| |
|
|
|
| Other non-current
liabilities |
|
39,293 |
|
|
38,996 |
| |
|
|
|
| Shareholders’
equity |
|
23,875 |
|
|
45,596 |
| |
|
|
|
|
Total liabilities and shareholders’ equity |
$ |
549,647 |
|
$ |
565,744 |
| |
|
|
|
|
|
|
TEAM INC. AND SUBSIDIARIES |
|
SUMMARY CONSOLIDATED CASH FLOW INFORMATION |
|
(unaudited, in thousands) |
| |
|
| |
Six Months Ended |
| |
June 30, |
| |
2024 |
|
2023 |
| Cash flows from
operating activities: |
|
|
|
|
Net loss |
$ |
(19,958 |
) |
|
$ |
(40,464 |
) |
| Depreciation and
amortization expense |
|
18,900 |
|
|
|
19,085 |
|
| Loss on debt
extinguishment |
|
— |
|
|
|
1,582 |
|
| Amortization of debt
issuance costs, debt discounts and deferred financing
costs |
|
3,625 |
|
|
|
16,229 |
|
| Deferred income
taxes |
|
(545 |
) |
|
|
730 |
|
| Non-cash compensation
cost |
|
1,277 |
|
|
|
627 |
|
| Working Capital and
Other |
|
(7,765 |
) |
|
|
(21,406 |
) |
|
Net cash used in operating activities |
|
(4,466 |
) |
|
|
(23,617 |
) |
| |
|
|
|
| Cash flows from
investing activities: |
|
|
|
| Capital
expenditures |
|
(5,759 |
) |
|
|
(5,073 |
) |
| Proceeds from disposal
of assets |
|
139 |
|
|
|
332 |
|
|
Net cash used in investing activities |
|
(5,620 |
) |
|
|
(4,741 |
) |
| |
|
|
|
| Cash flows from
financing activities: |
|
|
|
| Borrowings under ABL
Facilities, net |
|
591 |
|
|
|
15,999 |
|
| Repayment of APSC Term
Loan |
|
— |
|
|
|
(37,092 |
) |
| Borrowings (payments)
under ME/RE Loans |
|
(1,421 |
) |
|
|
27,398 |
|
| Payments under Corre
Incremental Term Loans |
|
(713 |
) |
|
|
— |
|
| Payments for debt
issuance costs |
|
(2,800 |
) |
|
|
(5,327 |
) |
| Other |
|
1,843 |
|
|
|
(495 |
) |
|
Net cash provided by (used in) financing
activities |
|
(2,500 |
) |
|
|
483 |
|
| |
|
|
|
| Effect of exchange
rate changes |
|
(380 |
) |
|
|
237 |
|
|
Net change in cash and cash equivalents |
$ |
(12,966 |
) |
|
$ |
(27,638 |
) |
| |
|
|
|
|
TEAM, INC. AND SUBSIDIARIES |
|
SEGMENT INFORMATION |
|
(unaudited, in thousands) |
| |
| |
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
| |
2024 |
|
2023 |
|
2024 |
|
2023 |
| Revenues |
|
|
|
|
|
|
|
|
IHT |
$ |
113,234 |
|
|
$ |
116,740 |
|
|
$ |
212,682 |
|
|
$ |
218,569 |
|
|
MS |
|
115,384 |
|
|
|
122,752 |
|
|
|
215,536 |
|
|
|
223,200 |
|
| |
$ |
228,618 |
|
|
$ |
239,492 |
|
|
$ |
428,218 |
|
|
$ |
441,769 |
|
| |
|
|
|
|
|
|
|
| Operating income
(loss) |
|
|
|
|
|
|
|
|
IHT |
$ |
12,459 |
|
|
$ |
6,548 |
|
|
$ |
17,644 |
|
|
$ |
11,271 |
|
|
MS |
|
10,637 |
|
|
|
12,720 |
|
|
|
14,728 |
|
|
|
15,913 |
|
|
Corporate and shared support services |
|
(11,937 |
) |
|
|
(14,672 |
) |
|
|
(27,599 |
) |
|
|
(30,334 |
) |
| |
$ |
11,159 |
|
|
$ |
4,596 |
|
|
$ |
4,773 |
|
|
$ |
(3,150 |
) |
| |
|
|
|
|
|
|
|
| Segment Adjusted
EBIT1 |
|
|
|
|
|
|
|
|
IHT |
$ |
12,611 |
|
|
$ |
7,541 |
|
|
$ |
17,931 |
|
|
$ |
12,304 |
|
|
MS |
|
10,785 |
|
|
|
12,819 |
|
|
|
15,283 |
|
|
|
16,288 |
|
|
Corporate and shared support services |
|
(11,455 |
) |
|
|
(12,699 |
) |
|
|
(25,071 |
) |
|
|
(26,652 |
) |
| |
$ |
11,941 |
|
|
$ |
7,661 |
|
|
$ |
8,143 |
|
|
$ |
1,940 |
|
| |
|
|
|
|
|
|
|
| Segment Adjusted
EBITDA1 |
|
|
|
|
|
|
|
|
IHT |
$ |
15,589 |
|
|
$ |
10,729 |
|
|
$ |
23,938 |
|
|
$ |
18,546 |
|
|
MS |
|
15,350 |
|
|
|
17,523 |
|
|
|
24,497 |
|
|
|
25,745 |
|
|
Corporate and shared support services |
|
(9,126 |
) |
|
|
(10,807 |
) |
|
|
(20,115 |
) |
|
|
(22,639 |
) |
| |
$ |
21,813 |
|
|
$ |
17,445 |
|
|
$ |
28,320 |
|
|
$ |
21,652 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
___________________
1 See the accompanying reconciliation of
non-GAAP financial measures at the end of this earnings
release.
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 share; earnings before interest and taxes
(“EBIT”); Adjusted EBIT; adjusted earnings before interest, taxes,
depreciation, and amortization (“Adjusted EBITDA”), free cash flow
and net debt to supplement financial information presented on a
GAAP basis.
The Company defines adjusted net income (loss)
and adjusted net income (loss) per share to exclude the following
items: non-routine legal costs and settlements, non-routine
professional fees, (gain) loss on debt extinguishment, certain
severance charges, non-routine write off of assets and certain
other items that we believe are not indicative of core operating
activities. Consolidated Adjusted EBIT, as defined by the Company,
excludes the costs excluded from adjusted net income (loss) as well
as income tax expense (benefit), interest charges, foreign currency
(gain) loss, pension credit, and items of other (income) expense.
Consolidated Adjusted EBITDA further excludes depreciation,
amortization and non-cash share-based compensation costs from
consolidated Adjusted EBIT. Segment Adjusted EBIT is equal to
segment operating income (loss) excluding costs associated with
non-routine legal costs and settlements, non-routine professional
fees, certain severance charges, and certain other items as
determined by management. Segment Adjusted EBITDA further excludes
depreciation, amortization, and non-cash share-based compensation
costs from segment Adjusted EBIT. Adjusted Selling, General and
Administrative Expense is defined to exclude non-routine legal
costs and settlements, non-routine professional fees, certain
severance charges, certain other items that we believe are not
indicative of core operating activities and non-cash expenses such
as depreciation and amortization and non-cash compensation. 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 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.
Segment Adjusted EBIT and segment Adjusted EBITDA are also used as
a basis for the Chief Operating Decision Maker (Chief Executive
Officer) to evaluate the performance of the Company’s reportable
segments. Free cash flow is used by the management and investors to
analyze the Company’s ability to service and repay debt and return
value directly to its 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 U.S. GAAP financial measures and should be read only in
conjunction with financial information presented on a GAAP basis.
Further, the Company’s 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, |
| |
2024 |
|
2023 |
|
2024 |
|
2023 |
| Adjusted Net
Loss: |
|
|
|
|
|
|
|
|
Net loss |
$ |
(2,763 |
) |
|
$ |
(15,753 |
) |
|
$ |
(19,958 |
) |
|
$ |
(40,464 |
) |
|
Professional fees and other1 |
|
516 |
|
|
|
2,647 |
|
|
|
2,597 |
|
|
|
4,368 |
|
|
Legal costs |
|
41 |
|
|
|
200 |
|
|
|
123 |
|
|
|
200 |
|
|
Severance charges, net2 |
|
225 |
|
|
|
217 |
|
|
|
650 |
|
|
|
522 |
|
|
Loss on debt extinguishment |
|
— |
|
|
|
1,582 |
|
|
|
— |
|
|
|
1,582 |
|
|
Tax impact of adjustments and other net tax items3 |
|
(26 |
) |
|
|
(7 |
) |
|
|
(138 |
) |
|
|
(85 |
) |
| Adjusted Net
Loss |
$ |
(2,007 |
) |
|
$ |
(11,114 |
) |
|
$ |
(16,726 |
) |
|
$ |
(33,877 |
) |
| |
|
|
|
|
|
|
|
| Adjusted Net Loss per
common share: |
|
|
|
|
|
|
|
|
Basic and Diluted |
$ |
(0.45 |
) |
|
$ |
(2.55 |
) |
|
$ |
(3.79 |
) |
|
$ |
(7.78 |
) |
| |
|
|
|
|
|
|
|
| Consolidated Adjusted
EBIT and Adjusted EBITDA: |
|
|
|
|
|
|
|
|
Net loss |
$ |
(2,763 |
) |
|
$ |
(15,753 |
) |
|
$ |
(19,958 |
) |
|
$ |
(40,464 |
) |
|
Provision for income taxes |
|
1,472 |
|
|
|
2,089 |
|
|
|
1,545 |
|
|
|
2,948 |
|
|
Loss (gain) on equipment sale |
|
28 |
|
|
|
7 |
|
|
|
18 |
|
|
|
(296 |
) |
|
Interest expense, net |
|
11,909 |
|
|
|
16,691 |
|
|
|
24,007 |
|
|
|
33,432 |
|
|
Professional fees and other1 |
|
516 |
|
|
|
2,647 |
|
|
|
2,597 |
|
|
|
4,368 |
|
|
Legal costs |
|
41 |
|
|
|
200 |
|
|
|
123 |
|
|
|
200 |
|
|
Severance charges, net2 |
|
225 |
|
|
|
217 |
|
|
|
650 |
|
|
|
522 |
|
|
Foreign currency loss (gain) |
|
615 |
|
|
|
143 |
|
|
|
(624 |
) |
|
|
(34 |
) |
|
Pension credit4 |
|
(102 |
) |
|
|
(162 |
) |
|
|
(215 |
) |
|
|
(318 |
) |
|
Loss on debt extinguishment |
|
— |
|
|
|
1,582 |
|
|
|
— |
|
|
|
1,582 |
|
| Consolidated Adjusted
EBIT |
|
11,941 |
|
|
|
7,661 |
|
|
|
8,143 |
|
|
|
1,940 |
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
Amount included in operating expenses |
|
3,508 |
|
|
|
3,694 |
|
|
|
7,091 |
|
|
|
7,413 |
|
|
Amount included in SG&A expenses |
|
5,752 |
|
|
|
5,845 |
|
|
|
11,809 |
|
|
|
11,672 |
|
|
Total depreciation and amortization |
|
9,260 |
|
|
|
9,539 |
|
|
|
18,900 |
|
|
|
19,085 |
|
|
Non-cash share-based compensation costs |
|
612 |
|
|
|
245 |
|
|
|
1,277 |
|
|
|
627 |
|
| Consolidated Adjusted
EBITDA |
$ |
21,813 |
|
|
$ |
17,445 |
|
|
$ |
28,320 |
|
|
$ |
21,652 |
|
| |
|
|
|
|
|
|
|
| Free Cash
Flow: |
|
|
|
|
|
|
|
|
Cash used in operating activities |
$ |
(6,352 |
) |
|
$ |
(5,854 |
) |
|
$ |
(4,466 |
) |
|
$ |
(23,617 |
) |
|
Capital expenditures |
|
(2,743 |
) |
|
|
(2,381 |
) |
|
|
(5,759 |
) |
|
|
(5,073 |
) |
| Free Cash
Flow |
$ |
(9,095 |
) |
|
$ |
(8,235 |
) |
|
$ |
(10,225 |
) |
|
$ |
(28,690 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
___________________
1 For the three and
six months ended June 30, 2024, includes $0.5 million and $2.4
million, respectively, related to debt financing, and for the six
months ended June 30, 2024, includes $0.2 million related to
support costs. For the three and six months ended June 30, 2023,
includes $1.6 million and $3.2 million, respectively, related to
debt financing and $0.7 million and $0.8 million, respectively,
related to lease extinguishment charges, and for the three and six
months ended June 30, 2023, includes $0.3 million of support
costs.
2 Represents
customary severance costs associated with staff reductions.
3 Represents the tax
effect of the adjustments.
4 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 was frozen in 1994 and no new
participants have been added since that date.
|
|
|
TEAM, INC. AND SUBSIDIARIES |
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Continued) |
|
(unaudited, in thousands) |
| |
|
|
|
| |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
| |
2024 |
|
2023 |
|
2024 |
|
2023 |
| |
|
|
|
|
|
|
|
| Segment Adjusted EBIT
and Adjusted EBITDA: |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| IHT |
|
|
|
|
|
|
|
|
Operating income |
$ |
12,459 |
|
|
$ |
6,548 |
|
|
$ |
17,644 |
|
|
$ |
11,271 |
|
|
Severance charges, net1 |
|
152 |
|
|
|
165 |
|
|
|
247 |
|
|
|
205 |
|
|
Professional fees and other2 |
|
— |
|
|
|
828 |
|
|
|
40 |
|
|
|
828 |
|
|
Adjusted EBIT |
|
12,611 |
|
|
|
7,541 |
|
|
|
17,931 |
|
|
|
12,304 |
|
|
Depreciation and amortization |
|
2,978 |
|
|
|
3,188 |
|
|
|
6,007 |
|
|
|
6,242 |
|
|
Adjusted EBITDA |
$ |
15,589 |
|
|
$ |
10,729 |
|
|
$ |
23,938 |
|
|
$ |
18,546 |
|
| |
|
|
|
|
|
|
|
| MS |
|
|
|
|
|
|
|
|
Operating income |
$ |
10,637 |
|
|
$ |
12,720 |
|
|
$ |
14,728 |
|
|
$ |
15,913 |
|
|
Severance charges, net1 |
|
49 |
|
|
|
52 |
|
|
|
374 |
|
|
|
308 |
|
|
Professional fees and other2 |
|
58 |
|
|
|
47 |
|
|
|
140 |
|
|
|
67 |
|
|
Legal costs |
|
41 |
|
|
|
— |
|
|
|
41 |
|
|
|
— |
|
|
Adjusted EBIT |
|
10,785 |
|
|
|
12,819 |
|
|
|
15,283 |
|
|
|
16,288 |
|
|
Depreciation and amortization |
|
4,565 |
|
|
|
4,704 |
|
|
|
9,214 |
|
|
|
9,457 |
|
|
Adjusted EBITDA |
$ |
15,350 |
|
|
$ |
17,523 |
|
|
$ |
24,497 |
|
|
$ |
25,745 |
|
| |
|
|
|
|
|
|
|
| Corporate and shared
support services |
|
|
|
|
|
|
|
|
Net loss |
$ |
(25,859 |
) |
|
$ |
(35,021 |
) |
|
$ |
(52,330 |
) |
|
$ |
(67,648 |
) |
|
Provision for income taxes |
|
1,472 |
|
|
|
2,089 |
|
|
|
1,545 |
|
|
|
2,948 |
|
|
Loss (gain) on equipment sale |
|
28 |
|
|
|
7 |
|
|
|
18 |
|
|
|
(296 |
) |
|
Interest expense, net |
|
11,909 |
|
|
|
16,691 |
|
|
|
24,007 |
|
|
|
33,432 |
|
|
Foreign currency loss (gain) |
|
615 |
|
|
|
143 |
|
|
|
(624 |
) |
|
|
(34 |
) |
|
Pension credit3 |
|
(102 |
) |
|
|
(162 |
) |
|
|
(215 |
) |
|
|
(318 |
) |
|
Professional fees and other2 |
|
458 |
|
|
|
1,772 |
|
|
|
2,417 |
|
|
|
3,473 |
|
|
Legal costs |
|
— |
|
|
|
200 |
|
|
|
82 |
|
|
|
200 |
|
|
Severance charges, net1 |
|
24 |
|
|
|
— |
|
|
|
29 |
|
|
|
9 |
|
|
Loss on debt extinguishment |
|
— |
|
|
|
1,582 |
|
|
|
— |
|
|
|
1,582 |
|
|
Adjusted EBIT |
|
(11,455 |
) |
|
|
(12,699 |
) |
|
|
(25,071 |
) |
|
|
(26,652 |
) |
|
Depreciation and amortization |
|
1,717 |
|
|
|
1,647 |
|
|
|
3,679 |
|
|
|
3,386 |
|
|
Non-cash share-based compensation costs |
|
612 |
|
|
|
245 |
|
|
|
1,277 |
|
|
|
627 |
|
|
Adjusted EBITDA |
$ |
(9,126 |
) |
|
$ |
(10,807 |
) |
|
$ |
(20,115 |
) |
|
$ |
(22,639 |
) |
___________________
1 Represents customary severance
costs associated with staff reductions.
2 For the three and
six months ended June 30, 2024, includes $0.5 million and $2.4
million, respectively, related to debt financing, and for the six
months ended June 30, 2024, includes $0.2 million related to
support costs. For the three and six months ended June 30, 2023,
includes $1.6 million and $3.2 million, respectively, related to
debt financing and $0.7 million and $0.8 million, respectively,
related to lease extinguishment charges, and for the three and six
months ended June 30, 2023, includes $0.3 million of support
costs.
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 was frozen in 1994 and no new
participants have been added since that date.
|
|
|
TEAM, INC. AND SUBSIDIARIES |
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Continued) |
|
(unaudited, in thousands except percentage) |
| |
|
|
|
|
|
|
|
| |
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
| |
2024 |
|
2023 |
|
2024 |
|
2023 |
| |
|
|
|
|
|
|
|
|
Selling, general, and administrative expenses |
$ |
52,395 |
|
|
$ |
56,320 |
|
|
$ |
107,512 |
|
|
$ |
111,068 |
|
| Less: |
|
|
|
|
|
|
|
|
Depreciation and Amortization in SG&A
expenses |
|
5,752 |
|
|
|
5,845 |
|
|
|
11,809 |
|
|
|
11,672 |
|
|
Non-cash share-based compensation costs |
|
612 |
|
|
|
245 |
|
|
|
1,277 |
|
|
|
627 |
|
|
Professional fees and other1 |
|
516 |
|
|
|
2,647 |
|
|
|
2,597 |
|
|
|
4,368 |
|
|
Legal costs |
|
41 |
|
|
|
200 |
|
|
|
123 |
|
|
|
200 |
|
|
Severance charges included in SG&A
expenses |
|
194 |
|
|
|
126 |
|
|
|
620 |
|
|
|
346 |
|
|
Total non-cash/non-recurring items |
|
7,115 |
|
|
|
9,063 |
|
|
|
16,426 |
|
|
|
17,213 |
|
| Adjusted Selling,
General and Administrative Expense |
$ |
45,280 |
|
|
$ |
47,257 |
|
|
$ |
91,086 |
|
|
$ |
93,855 |
|
| As percentage of
revenue |
|
19.8 |
% |
|
|
19.7 |
% |
|
|
21.3 |
% |
|
|
21.2 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
___________________
1 For the three and
six months ended June 30, 2024, includes $0.5 million and $2.4
million, respectively, related to debt financing, and for the six
months ended June 30, 2024, includes $0.2 million related to
support costs. For the three and six months ended June 30, 2023,
includes $1.6 million and $3.2 million, respectively, related to
debt financing and $0.7 million and $0.8 million, respectively,
related to lease extinguishment charges, and for the three and six
months ended June 30, 2023, includes $0.3 million of support
costs.
Team (NYSE:TISI)
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Team (NYSE:TISI)
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From Dec 2023 to Dec 2024
