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“Looking to the second quarter, we believe the strong activity levels across both of our segments, coupled with our continued focus on cost optimization, will drive improved margins and cash flow compared to last year’s second quarter. Furthermore, we anticipate this strength to continue into the second half of the year and as such, our full year 2024 Adjusted EBITDA guidance of $58 million to $68 million represents a 48% improvement at the midpoint over 2023. This is further evidence of our tangible progress to date and our confidence in the underlying strength of our franchise.”

“Finally, on Tuesday, May 21, we will present an updated investor presentation that discusses our first quarter results and our longer-term strategic and financial objectives designed to further unlock the intrinsic value of TEAM,” concluded Tucker.

Financial Results

First quarter revenues were down $2.7 million to $199.6 million as compared to $202.3 million in the prior-year period. This decrease was primarily driven by an Inspection and Heat Treating (“IHT”) revenue decline of $2.4 million due to lower activity in call out and turnaround services, and a decline in Mechanical Services (“MS”) revenue of $0.3 million, reflecting lower project activity in our Canada region. Despite lower revenues in the first quarter of 2024, consolidated gross margin was $48.7 million, or 24.4% of revenue, up 120 basis points from 23.2% or $47.0 million, in the same quarter a year ago. Gross margin for the quarter was impacted by favorable project mix, improved pricing, and lower overall direct costs due to the Company’s cost reduction efforts.

Selling, general and administrative expenses for the first quarter were $55.1 million, up by $0.4 million, or 0.7%, from the first quarter of 2023. Adjusted Selling, General, and Administrative Expense, which excludes expenses not representative of TEAM’s ongoing operations as well as non-cash expenses such as depreciation and amortization and share-based compensation expense, declined by $0.8 million as compared to the 2023 period.

Net loss in the first quarter of 2024 was $17.2 million (a loss of $3.89 per share) compared to a net loss of $24.7 million (a loss of $5.69 per share) in the 2023 first quarter. The Company’s Adjusted EBIT, a non-GAAP measure, was a loss of $3.8 million in the 2024 first quarter compared to a loss of $5.7 million in the prior year quarter. Consolidated Adjusted EBITDA, a non-GAAP measure, was $6.5 million for the first quarter of 2024 up 54.7% as compared to $4.2 million for 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 March 31, 2024 and 2023 (in thousands):

Revenues. IHT revenues decreased by $2.4 million, or 2.3%, for the 2024 first quarter as compared to prior year period, primarily due to lower callout and turnaround activities in the U.S. and Canada regions. MS revenue decreased by $0.3 million, or 0.3%, for the quarter, with lower period over period revenue in Canada of $4.3 million due to turnaround projects that did not repeat in the 2024 quarter, partially offset by a $1.2 million increase in U.S. operations and a $2.8 million increase in other international operations mainly attributable to higher nested and turnaround activity.

Operating income (loss). IHT’s first quarter 2024 operating income increased by $0.5 million to $5.2 million primarily driven by lower direct costs and improved margins resulting from the Company’s ongoing cost reduction efforts and improved job mix. MS operating income was higher compared to prior year quarter by approximately $0.9 million or 28.1%. MS operating income from the U.S. and other international operations increased by $1.9 million, and $0.6 million, respectively, driven by higher activity and improved margins, partially offset by a decrease of $1.6 million in Canada, primarily driven by non-repeating projects in the 2023 period. Corporate and shared support services costs remained consistent with the prior year period. Consolidated operating loss improved by $1.4 million to a loss of $6.4 million driven by the factors discussed above.

Balance Sheet and Liquidity

At March 31, 2024, the Company had $35.9 million of total liquidity, consisting of consolidated cash and cash equivalents of $19.2 million, (excluding $5.0 million of restricted cash) and $16.7 million of undrawn availability under its various credit facilities.

At May 10, 2024, the Company had $36.7 million of total liquidity, consisting of consolidated cash and cash equivalents of $15.4 million (excluding $5.1 million of cash held mainly as collateral for letters of credit) and approximately $21.3 million of undrawn availability under its various credit facilities. The Company typically experiences negative working capital and liquidity impacts in the run up to the higher activity routinely experienced during the spring and fall turnaround seasons, when these negative working capital trends have historically reversed.

The Company’s total debt as of March 31, 2024 was $307.2 million as compared to $311.4 million as of fiscal year end 2023. The Company’s net debt (total debt less cash and cash equivalents), a non-GAAP financial measure, was $283.0 million at March 31, 2024.

2024 Outlook

For fiscal year 2024, the Company has provided the following operating and cash flow guidance:

• 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

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. Haight
Executive Vice President, Chief Financial Officer
(281) 388-5521

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1   See the accompanying reconciliation of non-GAAP financial measures at the end of this earnings release.

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 (defined below); 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 us, 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 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 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 from segment Adjusted EBIT depreciation, amortization, and non-cash share-based compensation costs. 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. Our segment Adjusted EBIT and segment Adjusted EBITDA are 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 U.S. 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.

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