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
third quarter ended September 30, 2024.
Third Quarter 2024
Highlights:
- Generated revenue of
$210.8 million, up 2% over third quarter 2023.
- Maintained gross margin of
25.4%.
- Improved operating income to $3.2
million, up $4.4 million over third quarter 2023.
- Reported third quarter 2024 net
loss of $11.1 million, an 8.3% improvement year over year.
- Delivered consolidated Adjusted
EBITDA1 of $11.3 million (5.4% of consolidated revenue) for
the 2024 third quarter, and $39.6 million (6.2% of consolidated
revenue) for the first nine months of 2024.
- Adjusted Selling, General and
Administrative Expense1 declined to 21.7% of consolidated
revenue.
- Successfully amended and extended
the Company’s ABL Credit Facility to provide additional liquidity
and improved pricing as announced on September 30, 2024.
1 See the accompanying reconciliation of
non-GAAP financial measures at the end of this press release.
“We remain encouraged by the overall trajectory
of our business, with our third quarter results demonstrating the
benefits from our ongoing operational and commercial initiatives.
Overall revenue grew 2% over the prior year period, with revenue in
the core U.S. business up 6%, offset by lower year over year
revenue in Canada and, to a lesser extent, our other international
operations. Although our overall third quarter Adjusted EBITDA of
$11.3 million was consistent with the prior year, we generated a
33% year over year improvement in Adjusted EBITDA from our
Inspection and Heat Treating segment driven by 8% year over year
revenue growth in the U.S. business. Furthermore, we are seeing
encouraging results from commercial initiatives targeting growth in
higher margin revenue streams as demonstrated by a 41% increase in
heat treating revenue and a 32% increase in aerospace revenue in
the third quarter. We also showed tangible progress in our ongoing
efforts to improve cash flow generation, delivering free cash flow
of $3.9 million during the quarter, up $4.7 million over 2023.
Additionally, through the first nine months of 2024, our Adjusted
EBITDA grew by 21% to $39.6 million, a significant improvement over
the prior year,” said Keith D. Tucker, Team’s Chief Executive
Officer.
“We remain aggressively focused on margin
improvement across the organization and in September, as part of
our ongoing cost reduction initiatives, launched targeted actions
that, in the near term, are expected to yield annualized cost
savings of between $6 million and $8 million. We are also taking
steps to address the underperformance of our Canadian and certain
international operations through a mix of top-line initiatives and
cost actions. We are keenly focused on maintaining our positive
margin trajectory and cash flow generation through both top line
growth and cost discipline,” commented Tucker.
“Looking ahead to the fourth quarter, we see
healthy activity levels across both segments and improved Adjusted
EBITDA margin performance versus the 2023 period. Turning to 2025,
based upon the early success of our commercial initiatives,
continued cost discipline and anticipated improvement in our
Canadian and other international operations, we expect top line
growth in the low to mid-single digits and continued progress
towards our targeted Adjusted EBITDA margin of at least 10%.
Finally, this management team is committed to strengthening our
financial performance and growing shareholder value by leveraging
our unparalleled technical capabilities, operational excellence and
safety culture,” concluded Tucker.
Financial Results
Third quarter revenues increased
$4.0 million or 2% to $210.8 million compared to the
prior year period, primarily driven by a 6% increase in U.S.
revenue due to higher activity in nested and turnaround activity in
Inspection and Heat Treating (“IHT”) and valves services within our
Mechanical Services (“MS”) segment, partially offset by lower year
over year revenue from our Canadian operations. Third quarter
consolidated gross margin improved by $0.7 million to $53.5
million, or 25.4% of revenue, consistent with the prior year
period’s gross margin percentage.
Selling, general and administrative expense for
the third quarter was $50.4 million, down $3.7 million or
6.8%, from the third quarter of 2023. 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, was essentially flat compared to
the 2023 period, and declined to 21.7% of consolidated revenue.
Net loss in the third quarter of 2024 was $11.1
million (a loss of $2.52 per share) compared to a net loss of $12.1
million (a loss of $2.78 per share) in the 2023 third quarter. The
Company’s Adjusted EBIT, a non-GAAP measure, increased to $1.8
million in the third quarter of 2024 versus $1.5 million in the
prior year quarter. Consolidated Adjusted EBITDA, a non-GAAP
measure, increased to $11.3 million (5.4% of consolidated revenue)
in the third quarter versus $11.1 million (5.4% of consolidated
revenue) in the prior year quarter.
Adjusted net loss, 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 September 30, 2024 and 2023 (in
thousands):
|
TEAM, INC. AND SUBSIDIARIES |
SEGMENT INFORMATION |
(unaudited, in thousands) |
|
|
|
|
|
|
|
Three Months EndedSeptember
30, |
|
Favorable (Unfavorable) |
|
|
|
2024 |
|
|
|
2023 |
|
|
$ |
|
% |
Revenues |
|
|
|
|
|
|
|
|
IHT |
|
$ |
107,604 |
|
|
$ |
103,857 |
|
|
$ |
3,747 |
|
|
3.6 |
% |
MS |
|
|
103,154 |
|
|
|
102,858 |
|
|
|
296 |
|
|
0.3 |
% |
|
|
$ |
210,758 |
|
|
$ |
206,715 |
|
|
$ |
4,043 |
|
|
2.0 |
% |
|
|
|
|
|
|
|
|
|
Operating income
(loss) |
|
|
|
|
|
|
|
|
IHT |
|
$ |
9,860 |
|
|
$ |
6,412 |
|
|
$ |
3,448 |
|
|
53.8 |
% |
MS |
|
|
4,460 |
|
|
|
6,482 |
|
|
|
(2,022 |
) |
|
(31.2)% |
Corporate and shared support services |
|
|
(11,162 |
) |
|
|
(14,152 |
) |
|
|
2,990 |
|
|
21.1 |
% |
|
|
$ |
3,158 |
|
|
$ |
(1,258 |
) |
|
$ |
4,416 |
|
|
351.0 |
% |
Revenues. IHT revenues
increased by $3.7 million or 3.6%, in the third quarter of 2024
compared to the prior year quarter, primarily due to a
$6.7 million increase in the U.S. revenue resulting from
higher activity in nested and turnaround services, partially offset
by a $3.0 million decrease in Canadian revenue resulting from
lower nested and turnaround activity. MS revenues increased by $0.3
million primarily due to higher turnaround and valve services
revenue from U.S. operations of $2.3 million, partially offset
by lower revenue of $2.0 million from Canada and other
international regions generally attributable to lower project
work.
Operating income (loss). IHT’s
third quarter 2024 operating income increased by $3.4 million or
53.8% to $9.9 million, mainly due to a $4.7 million
improvement in U.S. operating income driven by higher revenue and
lower costs, partially offset by a $1.2 million decrease in
operating income from Canada due to lower activity. MS operating
income decreased by approximately $2.0 million, mainly due to lower
revenue attributable to Canada and other international regions,
partially offset by a $0.6 million increase from U.S. operations.
Corporate and shared support services costs were lower by $3.0
million or 21.1%, mainly due to lower professional fees and the
reversal of legal reserve in the current quarter. Consolidated
operating income improved by $4.4 million driven by the factors
discussed above.
|
TEAM, INC. AND SUBSIDIARIES |
SEGMENT INFORMATION |
(unaudited, in thousands) |
|
|
|
|
|
|
|
Nine Months EndedSeptember
30, |
|
Favorable (Unfavorable) |
|
|
|
2024 |
|
|
|
2023 |
|
|
$ |
|
% |
Revenues |
|
|
|
|
|
|
|
|
IHT |
|
$ |
320,286 |
|
|
$ |
322,426 |
|
|
$ |
(2,140 |
) |
|
(0.7)% |
MS |
|
|
318,690 |
|
|
|
326,058 |
|
|
|
(7,368 |
) |
|
(2.3)% |
|
|
$ |
638,976 |
|
|
$ |
648,484 |
|
|
$ |
(9,508 |
) |
|
(1.5)% |
|
|
|
|
|
|
|
|
|
Operating income
(loss) |
|
|
|
|
|
|
|
|
IHT |
|
$ |
27,504 |
|
|
$ |
17,683 |
|
|
$ |
9,821 |
|
|
55.5 |
% |
MS |
|
|
19,188 |
|
|
|
22,395 |
|
|
|
(3,207 |
) |
|
(14.3)% |
Corporate and shared support services |
|
|
(38,761 |
) |
|
|
(44,486 |
) |
|
|
5,725 |
|
|
12.9 |
% |
|
|
$ |
7,931 |
|
|
$ |
(4,408 |
) |
|
$ |
12,339 |
|
|
279.9 |
% |
Revenues. IHT revenues were
lower by $2.1 million, primarily due to reduced call out and
turnaround activities in Canada and other international regions of
$10.5 million, partially offset by higher U.S. revenue of
$8.4 million driven mainly by higher heat treating and other
activity. MS revenue decreased by $7.4 million or 2.3%, mainly
due to a $7.6 million decrease in Canada revenue related to
lower project activity.
Operating income (loss). IHT
operating income increased by $9.8 million or 55.5%,
reflecting lower costs and improved margins. MS operating income
decreased by $3.2 million primarily due to lower combined
operating income from Canada and other international operations of
$6.0 million due to lower year over year revenue attributable to
projects from the prior year period that did not repeat in 2024,
partially offset by an increase from U.S. operations of
$2.8 million reflecting higher activity and improved margins.
Corporate operating loss decreased by $5.7 million primarily
due to a reduction in professional fees and the reversal of legal
reserve in the current year period.
Balance Sheet and Liquidity
At September 30, 2024, the Company had
$42.9 million of total liquidity, consisting of consolidated
cash and cash equivalents of $14.9 million, (excluding
$4.2 million of restricted cash) and $28.0 million of
undrawn availability under its various credit facilities,
consisting of $18.0 million available, following the execution
of ABL Amendment No.5, under the Revolving Credit Loans and
$10.0 million available under the Incremental Term Loan.
The Company’s total debt as of
September 30, 2024 was $321.2 million as compared to
$311.4 million as of fiscal year end 2023. The increase is
mainly due to $9.7 million of paid in kind interest during the
period and the incurrence of a new equipment finance facility in
March 2024, offset by principal payments made on our various credit
facilities. The Company’s net debt (total debt less cash and cash
equivalents), a non-GAAP financial measure, was $302.1 million at
September 30, 2024.
2024 Outlook
The Company updated the following operating and
cash flow guidance for the 2024 fiscal year:
- Total Company Revenue of $845
million to $860 million (from $850-$900 million previously)
- Gross Margin of between $220
million and $228 million (from $235-$265 million
previously)
- Adjusted EBITDA of between $53
million and $55 million (from $58-$68 million previously)
- Capital expenditures of between $9
million to $11 million (unchanged)
Conference Call
As previously announced, the Company will hold a
conference call to discuss its third quarter 2024 financial and
operating results on Tuesday, November 12, 2024, at 9:00 a.m.
Central Time (10:00 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. Third 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 clients’ 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 |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
210,758 |
|
|
$ |
206,715 |
|
|
$ |
638,976 |
|
|
$ |
648,484 |
|
Operating
expenses |
|
|
157,234 |
|
|
|
153,928 |
|
|
|
473,167 |
|
|
|
487,779 |
|
Gross margin |
|
|
53,524 |
|
|
|
52,787 |
|
|
|
165,809 |
|
|
|
160,705 |
|
Selling, general, and
administrative expenses |
|
|
50,366 |
|
|
|
54,045 |
|
|
|
157,878 |
|
|
|
165,113 |
|
Operating income (loss) |
|
|
3,158 |
|
|
|
(1,258 |
) |
|
|
7,931 |
|
|
|
(4,408 |
) |
Interest expense,
net |
|
|
(11,770 |
) |
|
|
(10,067 |
) |
|
|
(35,777 |
) |
|
|
(43,499 |
) |
Loss on debt
extinguishment |
|
|
— |
|
|
|
(3 |
) |
|
|
— |
|
|
|
(1,585 |
) |
Other (expense)
income, net |
|
|
(2,010 |
) |
|
|
266 |
|
|
|
(1,189 |
) |
|
|
914 |
|
Loss before income
taxes |
|
|
(10,622 |
) |
|
|
(11,062 |
) |
|
|
(29,035 |
) |
|
|
(48,578 |
) |
Provision for income
taxes |
|
|
(504 |
) |
|
|
(1,072 |
) |
|
|
(2,049 |
) |
|
|
(4,020 |
) |
Net loss |
|
$ |
(11,126 |
) |
|
$ |
(12,134 |
) |
|
$ |
(31,084 |
) |
|
$ |
(52,598 |
) |
|
|
|
|
|
|
|
|
|
Loss per common
share: |
|
|
|
|
|
|
|
|
Basic and Diluted |
|
$ |
(2.52 |
) |
|
$ |
(2.78 |
) |
|
$ |
(7.04 |
) |
|
$ |
(12.07 |
) |
Weighted-average
number of shares outstanding: |
|
|
|
|
|
|
|
|
Basic and Diluted |
|
|
4,422 |
|
|
|
4,368 |
|
|
|
4,418 |
|
|
|
4,358 |
|
The following table includes the details of
depreciation and amortization expense:
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Depreciation and amortization: |
|
|
|
|
|
|
|
Amount included in operating expenses |
|
3,429 |
|
|
|
3,613 |
|
|
|
10,520 |
|
|
|
11,026 |
|
Amount included in SG&A expenses |
|
5,605 |
|
|
|
5,783 |
|
|
|
17,414 |
|
|
|
17,455 |
|
Total depreciation and amortization |
$ |
9,034 |
|
|
$ |
9,396 |
|
|
$ |
27,934 |
|
|
$ |
28,481 |
|
|
TEAM, INC. AND SUBSIDIARIES |
SUMMARY CONSOLIDATED BALANCE SHEET
INFORMATION |
(in thousands) |
|
|
|
|
|
September 30, |
|
December 31, |
|
|
2024 |
|
|
|
2023 |
|
|
(unaudited) |
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
19,087 |
|
|
$ |
35,427 |
|
|
|
|
|
Other current
assets |
|
295,804 |
|
|
|
286,674 |
|
|
|
|
|
Property, plant, and
equipment, net |
|
116,490 |
|
|
|
127,057 |
|
|
|
|
|
Other non-current
assets |
|
113,985 |
|
|
|
116,586 |
|
|
|
|
|
Total assets |
$ |
545,366 |
|
|
$ |
565,744 |
|
|
|
|
|
Current portion of
long-term debt and finance lease obligations |
$ |
7,056 |
|
|
$ |
5,212 |
|
|
|
|
|
Other current
liabilities |
|
167,749 |
|
|
|
169,726 |
|
|
|
|
|
Long-term debt and
finance lease obligations, net of current maturities |
|
314,182 |
|
|
|
306,214 |
|
|
|
|
|
Other non-current
liabilities |
|
38,481 |
|
|
|
38,996 |
|
|
|
|
|
Shareholders’
equity |
|
17,898 |
|
|
|
45,596 |
|
|
|
|
|
Total liabilities and shareholders’ equity |
$ |
545,366 |
|
|
$ |
565,744 |
|
|
TEAM INC. AND SUBSIDIARIES |
SUMMARY CONSOLIDATED CASH FLOW INFORMATION |
(unaudited, in thousands) |
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
Net loss |
$ |
(11,126 |
) |
|
$ |
(12,134 |
) |
|
$ |
(31,084 |
) |
|
$ |
(52,598 |
) |
Depreciation and
amortization expense |
|
9,034 |
|
|
|
9,396 |
|
|
|
27,934 |
|
|
|
28,481 |
|
Loss on debt
extinguishment |
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
1,585 |
|
Amortization of debt
issuance costs, debt discounts and deferred financing
costs |
|
1,065 |
|
|
|
697 |
|
|
|
4,690 |
|
|
|
16,926 |
|
Deferred income
taxes |
|
(209 |
) |
|
|
256 |
|
|
|
(754 |
) |
|
|
986 |
|
Non-cash compensation
cost |
|
467 |
|
|
|
232 |
|
|
|
1,744 |
|
|
|
859 |
|
Write-off of software
cost |
|
— |
|
|
|
629 |
|
|
|
— |
|
|
|
629 |
|
Working Capital and
Other |
|
6,378 |
|
|
|
2,469 |
|
|
|
(1,387 |
) |
|
|
(18,937 |
) |
Net cash provided by (used in) operating
activities |
|
5,609 |
|
|
|
1,548 |
|
|
|
1,143 |
|
|
|
(22,069 |
) |
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
Capital
expenditures |
|
(1,695 |
) |
|
|
(2,360 |
) |
|
|
(7,454 |
) |
|
|
(7,433 |
) |
Proceeds from disposal
of assets |
|
10 |
|
|
|
82 |
|
|
|
149 |
|
|
|
414 |
|
Net cash used in investing activities |
|
(1,685 |
) |
|
|
(2,278 |
) |
|
|
(7,305 |
) |
|
|
(7,019 |
) |
|
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
Borrowings (payments)
under ABL Facilities, net |
|
(1,100 |
) |
|
|
(5,000 |
) |
|
|
(509 |
) |
|
|
10,999 |
|
Repayment of APSC Term
Loan |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(37,092 |
) |
Borrowings (payments)
under ME/RE Loans |
|
(710 |
) |
|
|
(847 |
) |
|
|
(2,131 |
) |
|
|
26,551 |
|
Payments under
Convertible Debt |
|
— |
|
|
|
(41,161 |
) |
|
|
— |
|
|
|
(41,161 |
) |
Borrowings (payments)
under Corre Incremental Term Loans |
|
(356 |
) |
|
|
42,500 |
|
|
|
(1,069 |
) |
|
|
42,500 |
|
Payments for debt
issuance costs |
|
(4,571 |
) |
|
|
(3,119 |
) |
|
|
(7,371 |
) |
|
|
(8,446 |
) |
Other |
|
(690 |
) |
|
|
(251 |
) |
|
|
1,153 |
|
|
|
(746 |
) |
Net cash used in financing activities |
|
(7,427 |
) |
|
|
(7,878 |
) |
|
|
(9,927 |
) |
|
|
(7,395 |
) |
|
|
|
|
|
|
|
|
Effect of exchange
rate changes |
|
129 |
|
|
|
(346 |
) |
|
|
(251 |
) |
|
|
(109 |
) |
Net change in cash and cash equivalents |
$ |
(3,374 |
) |
|
$ |
(8,954 |
) |
|
$ |
(16,340 |
) |
|
$ |
(36,592 |
) |
|
TEAM, INC. AND SUBSIDIARIES |
SEGMENT INFORMATION |
(unaudited, in thousands) |
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Revenues |
|
|
|
|
|
|
|
|
IHT |
|
$ |
107,604 |
|
|
$ |
103,857 |
|
|
$ |
320,286 |
|
|
$ |
322,426 |
|
MS |
|
|
103,154 |
|
|
|
102,858 |
|
|
|
318,690 |
|
|
|
326,058 |
|
|
|
$ |
210,758 |
|
|
$ |
206,715 |
|
|
$ |
638,976 |
|
|
$ |
648,484 |
|
|
|
|
|
|
|
|
|
|
Operating income
(loss) |
|
|
|
|
|
|
|
|
IHT |
|
$ |
9,860 |
|
|
$ |
6,412 |
|
|
$ |
27,504 |
|
|
$ |
17,683 |
|
MS |
|
|
4,460 |
|
|
|
6,482 |
|
|
|
19,188 |
|
|
|
22,395 |
|
Corporate and shared support services |
|
|
(11,162 |
) |
|
|
(14,152 |
) |
|
|
(38,761 |
) |
|
|
(44,486 |
) |
|
|
$ |
3,158 |
|
|
$ |
(1,258 |
) |
|
$ |
7,931 |
|
|
$ |
(4,408 |
) |
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBIT1 |
|
|
|
|
|
|
|
|
IHT |
|
$ |
10,070 |
|
|
$ |
6,607 |
|
|
$ |
28,001 |
|
|
$ |
18,911 |
|
MS |
|
|
4,552 |
|
|
|
6,769 |
|
|
|
19,835 |
|
|
|
23,057 |
|
Corporate and shared support services |
|
|
(12,812 |
) |
|
|
(11,877 |
) |
|
|
(37,883 |
) |
|
|
(38,529 |
) |
|
|
$ |
1,810 |
|
|
$ |
1,499 |
|
|
$ |
9,953 |
|
|
$ |
3,439 |
|
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA1 |
|
|
|
|
|
|
|
|
IHT |
|
$ |
12,998 |
|
|
$ |
9,755 |
|
|
$ |
36,936 |
|
|
$ |
28,301 |
|
MS |
|
|
9,056 |
|
|
|
11,425 |
|
|
|
33,553 |
|
|
|
37,170 |
|
Corporate and shared support services |
|
|
(10,743 |
) |
|
|
(10,053 |
) |
|
|
(30,858 |
) |
|
|
(32,692 |
) |
|
|
$ |
11,311 |
|
|
$ |
11,127 |
|
|
$ |
39,631 |
|
|
$ |
32,779 |
|
___________________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, 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, 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, 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 September 30, |
|
Nine Months Ended September 30, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Adjusted Net
Loss: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(11,126 |
) |
|
$ |
(12,134 |
) |
|
$ |
(31,084 |
) |
|
$ |
(52,598 |
) |
Professional fees and other1 |
|
|
318 |
|
|
|
1,452 |
|
|
|
2,915 |
|
|
|
5,820 |
|
Write-off of software cost |
|
|
— |
|
|
|
629 |
|
|
|
— |
|
|
|
629 |
|
Legal costs (credits)2 |
|
|
(1,975 |
) |
|
|
650 |
|
|
|
(1,852 |
) |
|
|
850 |
|
Severance charges, net3 |
|
|
309 |
|
|
|
655 |
|
|
|
959 |
|
|
|
1,177 |
|
Loss on debt extinguishment |
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
1,585 |
|
Tax impact of adjustments and other net tax items4 |
|
|
(64 |
) |
|
|
(37 |
) |
|
|
(202 |
) |
|
|
(122 |
) |
Adjusted Net
Loss |
|
$ |
(12,538 |
) |
|
$ |
(8,782 |
) |
|
$ |
(29,264 |
) |
|
$ |
(42,659 |
) |
|
|
|
|
|
|
|
|
|
Adjusted Net Loss per
common share: |
|
|
|
|
|
|
|
|
Basic and Diluted |
|
$ |
(2.84 |
) |
|
$ |
(2.01 |
) |
|
$ |
(6.62 |
) |
|
$ |
(9.79 |
) |
|
|
|
|
|
|
|
|
|
Consolidated Adjusted
EBIT and Adjusted EBITDA: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(11,126 |
) |
|
$ |
(12,134 |
) |
|
$ |
(31,084 |
) |
|
$ |
(52,598 |
) |
Provision for income taxes |
|
|
504 |
|
|
|
1,072 |
|
|
|
2,049 |
|
|
|
4,020 |
|
Loss (gain) on equipment sale |
|
|
(7 |
) |
|
|
10 |
|
|
|
11 |
|
|
|
(286 |
) |
Interest expense, net |
|
|
11,770 |
|
|
|
10,067 |
|
|
|
35,777 |
|
|
|
43,499 |
|
Professional fees and other1 |
|
|
318 |
|
|
|
1,452 |
|
|
|
2,915 |
|
|
|
5,820 |
|
Write-off of software cost |
|
|
— |
|
|
|
629 |
|
|
|
— |
|
|
|
629 |
|
Legal costs (credits)2 |
|
|
(1,975 |
) |
|
|
650 |
|
|
|
(1,852 |
) |
|
|
850 |
|
Severance charges, net3 |
|
|
309 |
|
|
|
655 |
|
|
|
959 |
|
|
|
1,177 |
|
Foreign currency loss (gain) |
|
|
2,128 |
|
|
|
(742 |
) |
|
|
1,504 |
|
|
|
(776 |
) |
Pension credit5 |
|
|
(111 |
) |
|
|
(163 |
) |
|
|
(326 |
) |
|
|
(481 |
) |
Loss on debt extinguishment |
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
1,585 |
|
Consolidated Adjusted
EBIT |
|
|
1,810 |
|
|
|
1,499 |
|
|
|
9,953 |
|
|
|
3,439 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
Amount included in operating expenses |
|
|
3,429 |
|
|
|
3,613 |
|
|
|
10,520 |
|
|
|
11,026 |
|
Amount included in SG&A expenses |
|
|
5,605 |
|
|
|
5,783 |
|
|
|
17,414 |
|
|
|
17,455 |
|
Total depreciation and amortization |
|
|
9,034 |
|
|
|
9,396 |
|
|
|
27,934 |
|
|
|
28,481 |
|
Non-cash share-based compensation costs |
|
|
467 |
|
|
|
232 |
|
|
|
1,744 |
|
|
|
859 |
|
Consolidated Adjusted
EBITDA |
|
$ |
11,311 |
|
|
$ |
11,127 |
|
|
$ |
39,631 |
|
|
$ |
32,779 |
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow: |
|
|
|
|
|
|
|
|
Cash provided by (used in) operating activities |
|
$ |
5,609 |
|
|
$ |
1,548 |
|
|
$ |
1,143 |
|
|
$ |
(22,069 |
) |
Capital expenditures |
|
|
(1,695 |
) |
|
|
(2,360 |
) |
|
|
(7,454 |
) |
|
|
(7,433 |
) |
Free Cash
Flow |
|
$ |
3,914 |
|
|
$ |
(812 |
) |
|
$ |
(6,311 |
) |
|
$ |
(29,502 |
) |
____________________________1 For the
three and nine months ended September 30, 2024, includes $0.3
million and $2.7 million, respectively, related to debt financing,
and for the nine months ended September 30, 2024, includes $0.2
million related to support costs. For the three and nine months
ended September 30, 2023, includes $1.5 million and $4.7 million,
respectively, related to debt financing, and for the nine months
ended September 30, 2023, $1.1 million related to lease
extinguishment charges and other project costs.
2 Primarily relates to accrued legal
matters and legal fees. Legal credits during the three and nine
months ended September 30, 2024 relate to a $2.0 million reduction
in the legal accrual.
3 Represents customary severance costs
associated with staff reductions.
4 Represents the tax effect of the
adjustments.
5 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 September 30, |
|
Nine Months Ended September 30, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
Segment Adjusted EBIT
and Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IHT |
|
|
|
|
|
|
|
|
Operating income |
|
$ |
9,860 |
|
|
$ |
6,412 |
|
|
$ |
27,504 |
|
|
$ |
17,683 |
|
Severance charges, net1 |
|
|
210 |
|
|
|
195 |
|
|
|
457 |
|
|
|
400 |
|
Professional fees and other2 |
|
|
— |
|
|
|
— |
|
|
|
40 |
|
|
|
828 |
|
Adjusted EBIT |
|
|
10,070 |
|
|
|
6,607 |
|
|
|
28,001 |
|
|
|
18,911 |
|
Depreciation and amortization |
|
|
2,928 |
|
|
|
3,148 |
|
|
|
8,935 |
|
|
|
9,390 |
|
Adjusted EBITDA |
|
$ |
12,998 |
|
|
$ |
9,755 |
|
|
$ |
36,936 |
|
|
$ |
28,301 |
|
|
|
|
|
|
|
|
|
|
MS |
|
|
|
|
|
|
|
|
Operating income |
|
$ |
4,460 |
|
|
$ |
6,482 |
|
|
$ |
19,188 |
|
|
$ |
22,395 |
|
Severance charges, net1 |
|
|
92 |
|
|
|
287 |
|
|
|
466 |
|
|
|
595 |
|
Professional fees and other2 |
|
|
— |
|
|
|
— |
|
|
|
140 |
|
|
|
67 |
|
Legal costs |
|
|
— |
|
|
|
— |
|
|
|
41 |
|
|
|
— |
|
Adjusted EBIT |
|
|
4,552 |
|
|
|
6,769 |
|
|
|
19,835 |
|
|
|
23,057 |
|
Depreciation and amortization |
|
|
4,504 |
|
|
|
4,656 |
|
|
|
13,718 |
|
|
|
14,113 |
|
Adjusted EBITDA |
|
$ |
9,056 |
|
|
$ |
11,425 |
|
|
$ |
33,553 |
|
|
$ |
37,170 |
|
|
|
|
|
|
|
|
|
|
Corporate and shared
support services |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(25,446 |
) |
|
$ |
(25,028 |
) |
|
$ |
(77,776 |
) |
|
$ |
(92,676 |
) |
Provision for income taxes |
|
|
504 |
|
|
|
1,072 |
|
|
|
2,049 |
|
|
|
4,020 |
|
Loss (gain) on equipment sale |
|
|
(7 |
) |
|
|
10 |
|
|
|
11 |
|
|
|
(286 |
) |
Interest expense, net |
|
|
11,770 |
|
|
|
10,067 |
|
|
|
35,777 |
|
|
|
43,499 |
|
Foreign currency loss (gain) |
|
|
2,128 |
|
|
|
(742 |
) |
|
|
1,504 |
|
|
|
(776 |
) |
Pension credit4 |
|
|
(111 |
) |
|
|
(163 |
) |
|
|
(326 |
) |
|
|
(481 |
) |
Professional fees and other2 |
|
|
318 |
|
|
|
1,452 |
|
|
|
2,735 |
|
|
|
4,925 |
|
Write-off of software cost |
|
|
— |
|
|
|
629 |
|
|
|
— |
|
|
|
629 |
|
Legal costs (credits)3 |
|
|
(1,975 |
) |
|
|
650 |
|
|
|
(1,893 |
) |
|
|
850 |
|
Severance charges, net1 |
|
|
7 |
|
|
|
173 |
|
|
|
36 |
|
|
|
182 |
|
Loss on debt extinguishment |
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
1,585 |
|
Adjusted EBIT |
|
|
(12,812 |
) |
|
|
(11,877 |
) |
|
|
(37,883 |
) |
|
|
(38,529 |
) |
Depreciation and amortization |
|
|
1,602 |
|
|
|
1,592 |
|
|
|
5,281 |
|
|
|
4,978 |
|
Non-cash share-based compensation costs |
|
|
467 |
|
|
|
232 |
|
|
|
1,744 |
|
|
|
859 |
|
Adjusted EBITDA |
|
$ |
(10,743 |
) |
|
$ |
(10,053 |
) |
|
$ |
(30,858 |
) |
|
$ |
(32,692 |
) |
___________________1 Represents customary severance costs
associated with staff reductions.
2 For the three and nine months ended
September 30, 2024, includes $0.3 million and $2.7 million,
respectively, related to debt financing, and for the nine months
ended September 30, 2024, includes $0.2 million related to support
costs. For the three and nine months ended September 30, 2023,
includes $1.5 million and $4.7 million, respectively, related to
debt financing, and for the nine months ended September 30, 2023,
$1.1 million related to lease extinguishment charges and other
project costs.
3 Primarily relates to accrued legal
matters and legal fees. Legal credits during the three and nine
months ended September 30, 2024 relate to a $2.0 million reduction
in the legal accrual.
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 except percentage) |
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative expenses |
|
$ |
50,366 |
|
|
$ |
54,045 |
|
|
$ |
157,878 |
|
|
$ |
165,113 |
|
Less: |
|
|
|
|
|
|
|
|
Depreciation and Amortization in SG&A
expenses |
|
|
5,605 |
|
|
|
5,783 |
|
|
|
17,414 |
|
|
|
17,455 |
|
Non-cash share-based compensation costs |
|
|
467 |
|
|
|
232 |
|
|
|
1,744 |
|
|
|
859 |
|
Professional fees and other1 |
|
|
318 |
|
|
|
1,452 |
|
|
|
2,915 |
|
|
|
5,820 |
|
Legal costs (credits)2 |
|
|
(1,975 |
) |
|
|
650 |
|
|
|
(1,852 |
) |
|
|
850 |
|
Severance charges included in SG&A
expenses |
|
|
298 |
|
|
|
500 |
|
|
|
918 |
|
|
|
845 |
|
Total non-cash/non-recurring items |
|
|
4,713 |
|
|
|
8,617 |
|
|
|
21,139 |
|
|
|
25,829 |
|
Adjusted Selling,
General and Administrative Expense |
|
$ |
45,653 |
|
|
$ |
45,428 |
|
|
$ |
136,739 |
|
|
$ |
139,284 |
|
As percentage of
revenue |
|
|
21.7 |
% |
|
|
22.0 |
% |
|
|
21.4 |
% |
|
|
21.5 |
% |
___________________1 For the three and
nine months ended September 30, 2024, includes $0.3 million and
$2.7 million, respectively, related to debt financing, and for the
nine months ended September 30, 2024, includes $0.2 million related
to support costs. For the three and nine months ended September 30,
2023, includes $1.5 million and $4.7 million, respectively, related
to debt financing, and for the nine months ended September 30,
2023, $1.1 million related to lease extinguishment charges and
other project costs.
2 Primarily relates to accrued legal
matters and legal fees. Legal credits during the three and nine
months ended September 30, 2024 relate to a $2.0 million reduction
in the legal accrual.
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