Team Q3 2025 Earnings Results & Report

Team EPS Results

• Actual EPS: -$1.48
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Team Revenue Results

• Actual Revenue: $224.98 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Team (NYSE:TISI) is an industrial services company that provides inspection, maintenance, engineering and specialized technical services for critical infrastructure. Its customers include operators in the energy, petrochemical, refining, chemical processing, power generation and other industrial markets.

The company’s services are designed to help customers assess asset condition, improve reliability and maintain compliance with safety and operating requirements. Its offerings have included nondestructive testing and inspection, mechanical integrity services, heat treatment, turnaround and maintenance support, rope access, engineering and other field-based services for piping, pressure vessels, storage tanks and related equipment.

Founded in 1973, Team has served industrial customers through operations in North America and other international markets. The company has historically been headquartered in Sugar Land, Texas, and has operated through a network of technical personnel and service locations supporting facilities in the United States and abroad.

Team Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Revenue grew nearly 7% year-over-year (~$14M), gross margin rose 8.4%, and adjusted EBITDA increased 28.6% to the highest Q3 level since at least 2016, with adjusted EBITDA margin up 110 bps to 6.5% of consolidated revenue.
• Positive Sentiment: Both segments showed top-line strength—Inspection & Heat Treating up 5.7% (including strong U.S. nested and call-out activity and international/Canada up 8.9%) and Mechanical Services up 7.8% driven by U.S. turnarounds and improved Canada performance.
• Positive Sentiment: The company strengthened its balance sheet via a $75 million private placement with Stellux (used to pay down ~$67M of debt), a March refinancing that cut blended interest rates by >100 bps and extended maturities, and increased liquidity to $57.1M (cash + undrawn facilities).
• Positive Sentiment: Management sees a clear path to full-year 2025 targets—about 5% revenue growth and ~13% adjusted EBITDA growth—and expects Q4 YoY revenue growth and continued margin improvement toward a long-term adjusted EBITDA target of at least 10%.
• Negative Sentiment: Year-to-date free cash flow was hurt by non-recurring refinancing/transaction fees and adverse working capital (AR and payables), though management expects these headwinds to ease in Q4 and reduce one-time fees going forward.

Presentation

[Operator]

Good morning and welcome to the Team, Inc third quarter update call. I would now like to turn the conference over to Nelson Haight, Chief Financial Officer. Please go ahead.

[Nelson Haight, CFO at Team]

Thank you, Operator. Good morning, everyone, and welcome to Team's discussion about our third quarter 2025 operational and financial results. On the discussion today is Keith Tucker, our Chief Executive Officer, and myself, Nelson Haight, Chief Financial Officer. I want to remind you that management's commentary today may include forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expense, other income and expense, taxes, agenda dock, cash flow, and future business outlook, which, by their nature, are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results may differ materially. For a discussion of some of the risk factors that could cause actual results to differ, please refer to the risk factors section of Team's latest annual and quarterly filings filed with the Securities and Exchange Commission, along with our associated earnings release.

[Nelson Haight, CFO at Team]

Team assumes no obligations to update any forward-looking statements or information which speak as of their respective dates. With that, I will turn it over to Keith Tucker, our CEO.

[Keith Tucker, CEO at Team]

Thank you, Nelson. Welcome, everyone, and thank you for joining us to review our third quarter operational and financial highlights. I want to start off by thanking our employees for their hard work, which has made many of our recent successes possible. In the third quarter of 2025, we continue to deliver improved operational and financial results with year-over-year growth in revenue, margin, and Adjusted EBITDA, all while expenses continue to trend lower as a percentage of revenue. Revenue grew almost 7%, or about $14 million, year-over-year, with gross margin increasing by 8.4% and Adjusted EBITDA up to 28.6%, to the highest level for a third quarter since at least 2016. As you can see, the growth in our Adjusted EBITDA outpaced our top-line growth, which is a testament to the solid progress we continue to make on our ongoing cost and margin improvement initiatives.

[Keith Tucker, CEO at Team]

Drilling down into the segments, we saw 5.7% overall revenue growth in inspection and heat treating, driven by strong nested and call-out activity in the U.S., and 8.9% growth in our international operations, including Canada. We have now seen multiple quarters of growth in our Canadian operations, demonstrating the increasing traction of our ongoing initiatives to strengthen our commercial and financial performance in that area. In our mechanical services segment, we saw strong revenue growth of 7.8%, or $8 million, led by increased turnaround demand in our U.S. operations and improved year-over-year top-line performance in Canada. With both our IHT and MS segments demonstrating top-line growth, it should come as no surprise that our Adjusted EBITDA for the third quarter increased by $3.2 million year-over-year, with Adjusted EBITDA margin up 110 basis points to 6.5% of our consolidated revenue.

[Keith Tucker, CEO at Team]

Additionally, we continue to see benefits from our cost discipline in the third quarter, lowering our adjusted selling, general, and administrative expense, which excludes expenses not representative of Team's ongoing operations, such as non-recurring fees and non-cash expenses, to 20.8% of consolidated revenue versus 21.7% in the third quarter of 2024. We believe that our ability to continuously deliver on our cost control and margin expansion initiatives and improving our balance sheet will continue to drive future shareholder value and stock appreciation. To that end, in September 2025, we completed the private placement of preferred stock with Stellux Capital Management, which strengthened our balance sheet and enhanced financial flexibility. This $75 million investment recognizes the impactful progress made to date in our ongoing program to improve margins and lower our cost structure, as well as reinforces the significant opportunities that remain for further improvements in margins and top-line growth.

[Keith Tucker, CEO at Team]

We are excited to partner with Stellux and look forward to working together to accelerate our value creation plan. We believe that our ongoing actions and continued focus on executing our strategic vision will help lead to more top-line growth and further improvements to our margins and free cash flow generation. We have seen some outstanding numbers reported in our 2025 results from our actions thus far, and during the third quarter, we continued to work on identifying additional opportunities to improve cost efficiencies and accelerate top-line growth, and we expect to see additional impacts to our full 2026 operational and financial results. Looking ahead, we believe our diversified portfolio of service offerings across multiple industries and our geographic footprint positions us to better navigate macroeconomic uncertainty. We see top-line growth over the prior year across both segments and improved Adjusted EBITDA levels for the fourth quarter of 2025.

[Keith Tucker, CEO at Team]

We have line of sight to full year 2025 revenue growth of approximately 5% and Adjusted EBITDA growth of approximately 13%. Our organization is focused on the things we can control, which are continued cost and capital discipline and execution on our commercial initiatives that include aggressively leveraging our technical expertise and in-markets with attractive margin profiles, such as power, aerospace, and LNG, into increased wallet share. We remain committed to delivering profitable growth that enhances our financial results and drives shareholder value. With that, I would like to turn it over to Nelson to discuss our financial accomplishments.

[Nelson Haight, CFO at Team]

Thank you, Keith. Before I go into third quarter financial results, I would like to discuss in more detail the recent actions we have taken to strengthen our balance sheet. Over the last several years, we have diligently improved our balance sheet and enhanced our financial flexibility, and in 2025, we made further improvements. In March, we closed a refinancing transaction that lowered our blended interest rate by over 100 basis points, simplified our capital structure, and extended our term loan maturities to 2030. In September, we successfully closed on a $75 million private placement of preferred stock and warrants with Stellux that helped us to pay down about $67 million of debt.

[Nelson Haight, CFO at Team]

As part of that same transaction, we also amended our ABL credit facility to increase the commitment by $20 million in order to provide additional flexibility during the seasonal spring and fall demands on our working capital and to reduce the applicable interest rate margin. We also amended our first-lien term loan facility to reduce the applicable interest rate margin and improve financial flexibility. Finally, the private placement includes a delayed draw feature that will allow the company to raise up to an additional $30 million in proceeds through the placement of additional preferred stock and warrants over the next 24 months.

[Nelson Haight, CFO at Team]

Our success since 2022 in improving our financial and operating performance helped make these transactions possible, and we believe these improvements to our balance sheet help better position Team to accelerate execution of our long-term strategic plan focused on top-line growth, lowering our cost structure, and strengthening our cash flow. We also look to lean on Stellux as a partner whose insight and expertise we expect will help us achieve our strategic goals faster and more efficiently. These actions have helped to increase our liquidity, which at September 30, 2025, had increased to $57.1 million, consisting of unrestricted cash of $10.6 million and $46.5 million of undrawn availability under various credit facilities. This does not include the $30 million of potential additional proceeds from any future preferred stock issuances that I spoke about earlier.

[Nelson Haight, CFO at Team]

Turning to our financial results, we are very pleased to see strong top-line growth in both of our segments in the third quarter. For the first nine months of 2025, our IHT segment delivered 9.4% year-over-year growth, and our mechanical services segment delivered revenue growth of just under 1%. On a combined basis, this is almost $33 million of additional year-over-year revenue. Thus far in 2025, we've also seen a 12% improvement in Adjusted EBITDA, or about $5 million year-over-year, while our absolute adjusted selling, general, and administrative costs, which excludes expenses not representative of our ongoing operations and other non-cash amounts, have marginally increased over the first nine months of 2025. Those expenses, as a percentage of consolidated revenue, are down 70 basis points year-over-year to 20.7% of revenue.

[Nelson Haight, CFO at Team]

Our adjusted net loss for the first nine months of 2025 is also down almost $7 million compared to the first nine months of 2024. We have generated over $44 million in Adjusted EBITDA through the first nine months of 2025, and we are on pace to deliver strong year-over-year growth. We have increased our Adjusted EBITDA every year since 2021, and we are forecasting approximately 13% growth in Adjusted EBITDA for the full year 2025 and believe that our continued focus on expanding our margins through cost discipline and growing higher margin work will help us accomplish this goal while building positive momentum as we head into 2026. As you have heard from both Keith and myself this morning, we are executing on our strategic roadmap designed to deliver profitable growth and improved cash flow generation.

[Nelson Haight, CFO at Team]

Year to date, our free cash flow has been negatively affected by non-recurring refinancing and transaction fees and related expenses, as well as negative working capital impacts specifically around accounts receivable and payables. Looking forward, we expect fewer non-recurring professional fees, and we expect these adverse working capital trends to begin reversing in the fourth quarter, all of which should help improve our future free cash flow generation. Over the last three-plus years, we've made significant progress in improving the financial position and operating performance of the company. The balance sheet is healthier, margins have improved, and the top line is growing, while the company continues to safely deliver best-in-class technical solutions to our customers.

[Nelson Haight, CFO at Team]

With our employees' continued focus and dedication, I'm confident in our ability to build off our progress to date with further improvements in our overall financial and operating performance that will ultimately unlock the inherent value in Team. With that, let me now turn it back over to Keith for some closing comments.

[Keith Tucker, CEO at Team]

Thanks, Nelson. We've worked hard to streamline our business, expand our margins, and simplify our cost structure and improve our balance sheet. Looking ahead, we expect to continue seeing strong operational and financial results in the fourth quarter of 2025, with year-over-year growth in the top line, continued improved performance from our Canadian and other international operations, and further meaningful progress towards our Adjusted EBITDA target margin of at least 10%, all of which we believe will enhance shareholder value. I'm very proud of our safety culture and our focus on continuous improvement because, at the end of the day, our people are our most vital asset, and no job is too important not to be done safely. In closing, I remain confident about our future because I am a firm believer in our capabilities, talented employees, and this leadership team.

[Keith Tucker, CEO at Team]

We have delivered improving results over the past three years, and we remain committed to continuous improvement in margin, cost discipline, and cash flow generation. I believe that we are well-positioned to sustainably and profitably grow Team well into the future. Thank you for joining us today and for your continued interest in Team.

[Operator]

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Nelson Haight, CFO
• Keith Tucker, CEO