Team Stock Jumps 14.3% Despite Reporting Wider Y/Y Loss in Q2

Core Viewpoint - Team, Inc. has demonstrated solid performance in Q2 2025, with significant revenue growth and improvements in adjusted EBITDA, despite a net loss widening, indicating progress in its transformation initiatives [12]. Financial Performance - Revenues for Q2 2025 reached $248 million, an 8.5% increase from $228.6 million in the same quarter last year [2]. - Gross margin expanded to $68.1 million, reflecting a 7.1% year-over-year increase [2]. - The company reported a net loss of $4.3 million, compared to a loss of $2.8 million in the prior-year quarter, while adjusted EBITDA improved by 12.4% to $24.5 million from $21.8 million [2]. Segment Performance - Inspection and Heat Treating (IHT) revenues grew 15.2% year over year to $130.4 million, with U.S. operations up 13.4% and Canadian operations up 31.4% [3]. - Mechanical Services (MS) revenues increased by 1.9% to $117.6 million, with U.S. operations gaining 6.6%, but international markets showed weakness [4]. Balance Sheet and Liquidity - Liquidity at the end of the quarter totaled $49.3 million, including $16.6 million in cash and $32.7 million in undrawn credit availability [5]. - Total debt increased to $370.2 million from $325.1 million at the end of 2024, reflecting refinancing and seasonal working capital demands [5]. Management Insights - CEO Keith D. Tucker highlighted progress in the transformation program, with double-digit growth in the IHT segment and ongoing cost optimization efforts expected to yield approximately $10 million in annualized savings [6]. - CFO Nelson M. Haight noted the benefits of refinancing, which lowered the blended interest rate by over 100 basis points and extended loan maturities to 2030 [7]. Revenue Drivers and Challenges - Revenue growth was primarily driven by strong U.S. and Canadian operations in the IHT segment, while the MS segment faced challenges in international markets, particularly the U.K. and Trinidad [8]. - Gross margin expansion was attributed to higher volumes and improved cost management, with SG&A expenses representing 18.9% of revenues, down from 19.8% last year [9]. Future Guidance - Management anticipates continued revenue and margin improvements in the second half of 2025, reaffirming a target of at least 15% growth in adjusted EBITDA for the year [10]. - The company is committed to driving margin expansion, cost discipline, and operational resilience to enhance shareholder value [10]. Organizational Developments - Team appointed Dan Dolson as executive vice president, chief strategy and transformation officer, to accelerate transformation initiatives focused on revenue growth and margin improvement [11].