Team(TISI) - 2025 Q2 - Quarterly Results

Q2 2025 Earnings Release Financial Highlights Team, Inc. reported strong Q2 2025 growth with 8.5% revenue increase to $248.0 million and 12.4% Adjusted EBITDA rise to $24.5 million, despite a net loss Q2 2025 Key Financial Metrics (in millions) | Metric | Q2 2025 | Q2 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $248.0 | $228.6 | +$19.4 | +8.5% | | Gross Margin | $68.1 | $63.6 | +$4.5 | +7.1% | | Net Loss | ($4.3) | ($2.8) | -$1.5 | -53.6% | | Adjusted EBITDA | $24.5 | $21.8 | +$2.7 | +12.4% | | Adjusted EBITDA Margin | 9.9% | 9.5% | +40 bps | N/A | - Adjusted Selling, General and Administrative (SG&A) expenses improved as a percentage of revenue, decreasing to 18.9% in Q2 2025 from 19.8% in Q2 2024[5][8] Management Commentary and Business Outlook Management is pleased with the transformation, noting strong IHT segment performance and a $10 million annualized cost optimization program, projecting continued top-line growth and 15% YoY Adjusted EBITDA growth - A cost optimization program is expected to generate approximately $10 million in annualized SG&A and other cost savings, with about $6 million to be realized in the second half of 2025[4] - Dan Dolson has been appointed to lead the transformation program to accelerate revenue growth and margin improvement[6] - The company projects second-half top-line growth over the prior year for both segments and maintains its full-year guidance for at least 15% YoY growth in Adjusted EBITDA[7] Consolidated Financial Performance Q2 2025 consolidated revenues grew 8.5% to $248.0 million, driven by IHT and U.S. MS, with gross margin rate at 27.5% and a net loss of $4.3 million - Q2 revenue growth was primarily driven by a $17.2 million (15.2%) increase in the Inspection and Heat Treating (IHT) segment[7] - Consolidated gross margin was $68.1 million (27.5% of revenue), compared to $63.6 million (27.8% of revenue) in the prior year period[7] - SG&A expenses were $56.0 million, up from $52.4 million in Q2 2024 Adjusted SG&A was $46.8 million, up slightly from the prior year[8] - Net loss for Q2 2025 was $4.3 million ($0.95 per share), compared to a net loss of $2.8 million ($0.63 per share) in Q2 2024[9] Segment Performance IHT segment showed strong Q2 and H1 2025 revenue and operating income growth, while MS segment saw modest Q2 revenue increase but H1 decline due to international weakness Three Months Ended June 30, 2025 Q2 2025 IHT revenue grew 15.2% to $130.4 million with 26.7% operating income surge, while MS revenue rose 1.9% to $117.6 million but operating income declined 4.7% Q2 2025 Segment Performance (in thousands) | Segment | Revenue | % Change YoY | Operating Income | % Change YoY | | :--- | :--- | :--- | :--- | :--- | | IHT | $130,396 | 15.2% | $15,780 | 26.7% | | MS | $117,630 | 1.9% | $10,137 | (4.7)% | - IHT revenue growth was driven by a $13.3 million (13.4%) increase in the U.S. and a $3.6 million increase in Canada[12] - MS revenue performance was mixed, with a $4.5 million (6.6%) increase in U.S. turnaround activities offset by a $2.3 million decrease in Canada and other international locations[12] Six Months Ended June 30, 2025 H1 2025 IHT revenue grew 11.3% to $236.6 million with 38.7% operating income growth, while MS revenue declined 2.5% to $210.1 million and operating income fell 38.7% Six Months 2025 Segment Performance (in thousands) | Segment | Revenue | % Change YoY | Operating Income | % Change YoY | | :--- | :--- | :--- | :--- | :--- | | IHT | $236,611 | 11.3% | $24,473 | 38.7% | | MS | $210,070 | (2.5)% | $9,026 | (38.7)% | - IHT's six-month revenue growth was led by a $21.1 million (11.3%) increase in the U.S. from turnaround, nested, callout, and laboratory services[15] - MS's six-month revenue decrease was due to short-term weakness in its international business, which offset a modest $1.1 million revenue increase in the U.S[15] Balance Sheet and Liquidity As of June 30, 2025, total liquidity was $49.3 million, with total debt increasing to $370.2 million due to refinancing and working capital needs, resulting in $349.5 million net debt - Total liquidity was $49.3 million, consisting of $16.6 million in cash (excluding restricted cash) and $32.7 million available under credit facilities[17] - Total debt was $370.2 million as of June 30, 2025, an increase from $325.1 million at the end of fiscal 2024[19] - The increase in debt is attributed to a refinancing in March 2025 and higher borrowings to fund seasonal working capital demands[19] Financial Statements Unaudited financial statements for Q2 and H1 2025 show increased revenues but wider net loss, higher total assets and long-term debt, and negative operating/investing cash flow Consolidated Operating Results H1 2025 revenues grew to $446.7 million, but a $11.9 million loss on debt extinguishment led to a net loss of $34.0 million, up from $20.0 million in H1 2024 Consolidated Operating Results (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenues | $446,681 | $428,218 | | Gross Margin | $115,355 | $112,285 | | Operating Income | $6,100 | $4,773 | | Loss on debt extinguishment | ($11,853) | $0 | | Net Loss | ($33,984) | ($19,958) | | Loss Per Share (Basic & Diluted) | ($7.56) | ($4.52) | Consolidated Balance Sheet As of June 30, 2025, total assets were $548.4 million, long-term debt increased to $366.4 million, and shareholders' equity became a deficit of $22.9 million Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $20,709 | $35,545 | | Total assets | $548,361 | $528,365 | | Long-term debt and finance lease obligations | $366,381 | $318,626 | | Shareholders' equity (deficit) | ($22,924) | $1,738 | Consolidated Cash Flow H1 2025 saw $32.0 million net cash used in operations, $4.3 million in investing, and $21.2 million net cash provided by financing activities Consolidated Cash Flow (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($32,005) | ($4,466) | | Net cash used in investing activities | ($4,316) | ($5,620) | | Net cash provided by (used in) financing activities | $21,161 | ($2,500) | | Net change in cash and cash equivalents | ($14,836) | ($12,966) | Non-GAAP Financial Measures and Reconciliations Non-GAAP measures, including Adjusted Net Loss and Adjusted EBITDA, provide insight into core operations, with Q2 2025 Consolidated Adjusted EBITDA at $24.5 million and Adjusted Net Loss at $0.9 million - Management uses non-GAAP measures like Adjusted EBITDA to evaluate performance, benchmark between periods, and analyze operating results excluding items not indicative of core operations[33][35] Reconciliation of Net Loss to Consolidated Adjusted EBITDA (Q2, in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net loss | ($4,266) | ($2,763) | | Adjustments (Taxes, Interest, D&A, etc.) | $28,737 | $24,576 | | Consolidated Adjusted EBITDA | $24,471 | $21,813 | Reconciliation of Net Loss to Adjusted Net Loss (Q2, in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net loss | ($4,266) | ($2,763) | | Adjustments (Professional fees, legal, severance, etc.) | $3,385 | $756 | | Adjusted Net Loss | ($881) | ($2,007) |