Workflow
Team (TISI) Earnings Increase Y/Y in Q2, Revenues Decline
TISITeam(TISI) ZACKS·2024-08-12 17:16

Financial Performance - The company reported a Q2 2024 loss per share of 45 cents, significantly narrower than the 2.55lossinthesamequarterofthepreviousyear[3]−Revenuesdeclinedby4.52.55 loss in the same quarter of the previous year [3] - Revenues declined by 4.5% year-over-year to 228.6 million from 239.5millioninQ22023[3]−Operatingincomeimprovedto239.5 million in Q2 2023 [3] - Operating income improved to 11.2 million, up from 4.6millioninQ22023,drivenbycostreductionsandmarginexpansion[9]−Grossmarginincreasedby240basispointsto27.84.6 million in Q2 2023, driven by cost reductions and margin expansion [9] - Gross margin increased by 240 basis points to 27.8%, contributing to a 2.6 million increase in gross profit to 63.6million[9]−AdjustedEBITDArose2563.6 million [9] - Adjusted EBITDA rose 25% year-over-year to 21.8 million, representing 9.5% of revenues compared to 7.3% in the prior-year period [9] - The net loss narrowed significantly to 2.8millionfrom2.8 million from 15.8 million in Q2 2023, reflecting lower operating expenses and improved margins [10] Segmental Performance - The Inspection and Heat Treating (IHT) segment reported a 3% revenue decline to 113.2million,primarilyduetoreducedactivityinCanadaandinternationalmarkets[6]−Despitetherevenuedecline,IHT′soperatingincomesurged90.3113.2 million, primarily due to reduced activity in Canada and international markets [6] - Despite the revenue decline, IHT's operating income surged 90.3% to 12.5 million, driven by cost reductions and better margins in U.S. operations [7] - The Mechanical Services (MS) segment experienced a 6% revenue decline to 115.4million,mainlyduetolowerprojectactivityintheU.S.,Canada,andinternationalregions[7]−MSsegment′soperatingincomedropped16.4115.4 million, mainly due to lower project activity in the U.S., Canada, and international regions [7] - MS segment's operating income dropped 16.4% to 10.6 million, attributed to reduced earnings from international and Canada operations [8] Expense Management - Total operating expenses decreased by 7.6% to 165.1 million, reflecting the company's cost-cutting initiatives [11] - Selling, general, and administrative (SG&A) expenses declined by 7% to 52.4 million, driven by lower professional fees and overall cost reductions [12] Liquidity and Debt - As of June 30, 2024, the company reported total liquidity of 40.1million,including40.1 million, including 17.9 million in cash and cash equivalents and 22.2millioninundrawncreditfacilities[13]−Totaldebtincreasedto22.2 million in undrawn credit facilities [13] - Total debt increased to 320.1 million, up from 311.4millionattheendof2023,primarilyduetopaid−in−kindinterestandanewequipmentfinancefacility[14]−Netdebtstoodat311.4 million at the end of 2023, primarily due to paid-in-kind interest and a new equipment finance facility [14] - Net debt stood at 297.6 million as of June 30, 2024 [14] Management Guidance - The company reiterated its 2024 revenue guidance of 850millionto850 million to 900 million, with a gross margin projected between 235millionand235 million and 265 million [15] - Adjusted EBITDA guidance for 2024 is 58millionto58 million to 68 million, reflecting a 48% improvement at the midpoint compared to 2023 [15] Strategic Initiatives - The company launched targeted commercial initiatives in Q2 2024, focusing on revenue growth in core markets and expansion into new segments such as aerospace and midstream [16] - The aerospace facility in Cincinnati reported a 46% year-over-year revenue increase, driven by strong demand and recent capacity investments [16] - The company's strategic focus on improving job mix and growing higher-margin service lines is expected to contribute positively to financial performance in the second half of 2024 [17]