Acuren Corp(TIC) - 2024 Q3 - Quarterly Results

Performance Overview and Corporate Developments Third Quarter 2024 Financial Highlights Acuren reported 14.1% revenue growth and 14.8% Adjusted EBITDA growth in Q3 2024, offset by a significant net loss from acquisition impacts Q3 2024 vs. Q3 2023 Combined Financial Results | Metric | Q3 2024 (Combined) | Q3 2023 (Predecessor) | Change | | :--- | :--- | :--- | :--- | | Revenue | $303.0M | $265.5M | +14.1% | | Gross Profit | $74.7M | $64.2M | +16.4% | | Adjusted Gross Profit | $89.8M | $77.8M | +15.4% | | Adjusted Gross Margin | 29.6% | 29.3% | +30 bps | | Net Income (Loss) | ($85.9M) | $1.0M | N/A | | Adjusted EBITDA | $51.3M | $44.7M | +14.8% | | Adjusted EBITDA Margin | 16.9% | 16.8% | +10 bps | Nine Months 2024 Financial Highlights Acuren's nine-month combined revenue grew 7.1% and Adjusted EBITDA increased 15.2%, but reported a $92.6 million net loss due to acquisition impacts Nine Months 2024 vs. Nine Months 2023 Combined Financial Results | Metric | Nine Months 2024 (Combined) | Nine Months 2023 (Predecessor) | Change | | :--- | :--- | :--- | :--- | | Revenue | $835.4M | $779.9M | +7.1% | | Gross Profit | $211.2M | $180.6M | +16.9% | | Adjusted Gross Profit | $244.8M | $221.6M | +10.5% | | Adjusted Gross Margin | 29.3% | 28.4% | +90 bps | | Net Income (Loss) | ($92.6M) | $8.2M | N/A | | Adjusted EBITDA | $145.9M | $126.7M | +15.2% | | Adjusted EBITDA Margin | 17.5% | 16.2% | +130 bps | Management Commentary Management attributes strong performance to demand and pricing, highlighting the S-4 effectiveness and confidence in future value creation - CEO Tal Pizzey stated that strong results were driven by increased demand from recurring customers, new sales in target markets, and pricing initiatives from 2023[6] - Co-Chairman Robert A.E. Franklin highlighted the company's strong balance sheet, including over $130 million in cash, and significant EBITDA growth as foundations for delivering long-term value[6] - The company's S-4 registration statement has been declared effective, paving the way for an imminent OTC trading debut and a planned NYSE listing in the new year[6] Planned Relisting and Corporate Developments Acuren completed a $1.88 billion acquisition, re-domiciled to Delaware, and plans OTC trading by year-end with an NYSE listing in Q1 2025 - The company completed the ASP Acuren Acquisition for $1.88 billion on July 30, 2024[7] - On December 16, 2024, the company's Form S-4 was declared effective, and it re-domiciled into a Delaware corporation[7] - Acuren plans to begin trading on the OTC Market by the end of 2024 and apply for an NYSE listing during Q1 2025[7] Consolidated Financial Statements Condensed Consolidated Balance Sheets Total assets increased to $2.33 billion by Sep 30, 2024, driven by the ASP Acuren acquisition, with total liabilities rising to $1.12 billion Balance Sheet Highlights (in thousands) | Account | Sep 30, 2024 (Successor) | Dec 31, 2023 (Predecessor) | | :--- | :--- | :--- | | Cash and cash equivalents | $132,458 | $87,061 | | Total current assets | $426,705 | $333,913 | | Goodwill | $898,165 | $511,501 | | Intangible assets, net | $768,693 | $264,335 | | Total assets | $2,328,115 | $1,262,615 | | Total current liabilities | $117,785 | $112,884 | | Debt, net of current portion | $748,294 | $668,031 | | Total liabilities | $1,116,752 | $880,616 | | Total equity | $1,211,363 | $381,999 | Condensed Consolidated Statements of Operations Combined revenue for the nine months was $835.4 million, but a $92.6 million net loss was incurred, largely due to the Successor period's operating loss Nine Months Ended Sep 30 - Statement of Operations (in thousands) | Metric | 2024 Successor (Jul 30-Sep 30) | 2024 Predecessor (Jan 1-Jul 29) | 2023 Predecessor (Jan 1-Sep 30) | | :--- | :--- | :--- | :--- | | Service revenue | $201,485 | $633,866 | $779,923 | | Gross profit | $49,204 | $161,985 | $180,591 | | Income (loss) from operations | ($79,185) | $36,148 | $44,699 | | Net income (loss) | ($89,824) | ($2,778) | $8,193 | Third Quarter - Statement of Operations (in thousands) | Metric | 2024 Successor (Jul 30-Sep 30) | 2024 Predecessor (Jul 1-Jul 29) | 2023 Predecessor (Jul 1-Sep 30) | | :--- | :--- | :--- | :--- | | Service revenue | $201,485 | $101,512 | $265,535 | | Gross profit | $49,204 | $25,518 | $64,207 | | Income (loss) from operations | ($79,185) | $2,405 | $16,112 | | Net income (loss) | ($89,824) | $3,943 | $1,018 | Condensed Consolidated Statements of Cash Flows Operating activities provided $3.98 million cash, while investing activities used $1.89 billion for the ASP Acuren acquisition, funded by $1.43 billion from financing - Net cash used in investing activities for the nine-month period was dominated by the $1.83 billion payment for the ASP Acuren acquisition[26] - Financing activities provided a net $1.42 billion in cash, largely from borrowings of $775 million and proceeds from the issuance of ordinary shares of $666.6 million[26] - The company's cash and cash equivalents decreased from $87.1 million at the start of the year to a combined $132.5 million at the end of the period, after accounting for cash acquired in the acquisition[26] Non-GAAP Measures and Reconciliations Explanation of Non-GAAP Financial Measures Acuren uses non-GAAP measures like Combined Revenue and Adjusted EBITDA to assess operational performance and trends, aiding consistent period-to-period comparisons - The company presents combined financial information by mathematically adding Predecessor and Successor period data to help management and investors assess ongoing performance and trends[13] - Management uses non-GAAP measures to view performance, compare with peers, determine incentive compensation, and provide consistent period-to-period comparisons[15] Reconciliation of Combined Revenue This section details the calculation of Combined Revenue for Q3 and the first nine months of 2024 by summing Predecessor and Successor periods Combined Revenue Reconciliation (in thousands) | Period | Predecessor Revenue | Successor Revenue | Total Combined Revenue | | :--- | :--- | :--- | :--- | | Nine Months ended Sep 30, 2024 | $633,866 | $201,485 | $835,351 | | Three Months ended Sep 30, 2024 | $101,512 | $201,485 | $302,997 | Reconciliation of Adjusted Gross Profit Acuren reconciles GAAP Gross Profit to Adjusted Gross Profit by adding back depreciation, with the Combined Adjusted Gross Profit Margin improving to 29.3% for the nine months Nine Months Adjusted Gross Profit Reconciliation (in thousands) | Metric | Nine Months 2024 (Combined) | Nine Months 2023 (Predecessor) | | :--- | :--- | :--- | | Gross Profit | $211,189 | $180,591 | | Depreciation expense add-back | $33,604 | $40,989 | | Adjusted Gross Profit | $244,793 | $221,580 | | Adjusted Gross Margin % | 29.3% | 28.4% | Reconciliation of Adjusted EBITDA Combined Adjusted EBITDA for the nine months reached $145.9 million, a 15.2% increase, with margin expanding to 17.5%, after significant non-cash and transaction cost adjustments Nine Months Adjusted EBITDA Reconciliation (in thousands) | Metric | Nine Months 2024 (Combined) | Nine Months 2023 (Predecessor) | | :--- | :--- | :--- | | Net Income (Loss) | ($92,602) | $8,193 | | Adjustments (Taxes, Interest, D&A) | $108,820 | $107,602 | | EBITDA | $16,218 | $115,795 | | Other Adjustments | $129,720 | $10,901 | | Adjusted EBITDA | $145,938 | $126,696 | | Adjusted EBITDA Margin % | 17.5% | 16.2% | - Major adjustments for the nine months of 2024 included $69.8 million in one-time non-cash equity charges and $29.8 million in ASP Acuren transaction-related expenses[35]