tisi-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________________________________

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-08604

TEAM, INC.


(Exact Name of Registrant as Specified in Its Charter)
Delaware						74-1765729
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)
13131 Dairy Ashford, Suite 600, Sugar Land, Texas						77478
(Address of Principal Executive Offices)						(Zip Code)
(281) 331-6154
(Registrant’s Telephone Number, Including Area Code)
None
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.30 par value	TISI	New York Stock Exchange
Preferred Stock Purchase Rights	N/A	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

Smaller reporting company

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The Registrant had 4,415,201 shares of common stock, par value $0.30, outstanding as of May 10, 2024.

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INDEX


		Page No.
PART I—FINANCIAL INFORMATION		1
ITEM 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets as of March 31, 2024 (Unaudited) and December 31, 2023	2
	Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023	3
	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2024 and 2023	4
	Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended March 31, 2024 and 2023	5
	Unaudited Condensed Consolidated Statements of Cash Flows for Three Months Ended March 31, 2024 and 2023	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	30
ITEM 4.	Controls and Procedures	30
PART II—OTHER INFORMATION		31
ITEM 1.	Legal Proceedings	31
ITEM 1A.	Risk Factors	31
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
ITEM 3.	Defaults Upon Senior Securities	31
ITEM 4.	Mine Safety Disclosures	31
ITEM 5.	Other Information	31
ITEM 6.	Exhibits	33
SIGNATURES		34

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PART I—FINANCIAL INFORMATION


ITEM 1.			FINANCIAL STATEMENTS

TEAM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	March 31, 2024		December 31, 2023
ASSETS	(unaudited)

Current assets:
Cash and cash equivalents	$	24,190	$	35,427
Accounts receivable, net of allowance of $3,625 and $3,738 respectively	174,701		181,185
Inventory	38,663		38,853
Income tax receivable	365		644

Prepaid expenses and other current assets	60,283		65,992
Total current assets	298,202		322,101
Property, plant and equipment, net	123,137		127,057
Intangible assets, net	59,555		62,693
Operating lease right-of-use assets	39,614		40,498
Defined benefit pension asset	4,479		4,323
Other assets, net	8,645		7,847
Deferred tax asset	1,851		1,225
Total assets	$	535,483	$	565,744
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt and finance lease obligations	$	7,123	$	5,212
Current portion of operating lease obligations	14,014		14,232
Accounts payable	35,423		36,389
Other accrued liabilities	113,066		118,089
Income tax payable	1,380		1,016
Total current liabilities	171,006		174,938
Long-term debt and finance lease obligations	300,038		306,214
Operating lease obligations	29,088		29,962
Deferred tax liabilities	5,799		5,742
Other long-term liabilities	3,261		3,292
Total liabilities	509,192		520,148
Commitments and contingencies
Equity:
Preferred stock, 500,000 shares authorized, none issued	—		—
Common stock, par value $0.30 per share, 12,000,000 shares authorized; 4,415,201 and 4,415,147 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	1,325		1,315
Additional paid-in capital	459,269		458,614
Accumulated deficit	(394,596)		(377,401)
Accumulated other comprehensive loss	(39,707)		(36,932)
Total equity	26,291		45,596
Total liabilities and equity	$	535,483	$	565,744

See accompanying notes to unaudited condensed consolidated financial statements.

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TEAM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)


	Three Months Ended March 31,
		2024		2023

Revenues		$	199,600	$	202,277
Operating expenses		150,869		155,275
Gross margin		48,731		47,002
Selling, general and administrative expenses		55,117		54,748

Operating loss		(6,386)		(7,746)
Interest expense, net		(12,098)		(16,741)
Other income, net		1,362		635
Loss before income taxes		(17,122)		(23,852)
Provision for income taxes		(73)		(859)
Net loss		$	(17,195)	$	(24,711)


Loss per common share:
Basic and Diluted		$	(3.89)	$	(5.69)


Weighted-average number of shares outstanding:
Basic and Diluted		4,415		4,344

See accompanying notes to unaudited condensed consolidated financial statements.

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TEAM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE LOSS

(in thousands)

(Unaudited)


	Three Months Ended March 31,
		2024		2023

Net loss		$	(17,195)	$	(24,711)
Other comprehensive income (loss) before tax:
Foreign currency translation adjustment		(2,862)		778
Defined benefit pension plans:
Amortization of prior service cost		8		—
Amortization of net actuarial loss		79		—
Other comprehensive income (loss), before tax		(2,775)		778
Tax provision attributable to other comprehensive income (loss)		—		(23)
Other comprehensive income (loss), net of tax		(2,775)		755
Total comprehensive loss		$	(19,970)	$	(23,956)

See accompanying notes to unaudited condensed consolidated financial statements.

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TEAM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

(Unaudited)


	Common Stock				Additional Paid-in Capital			Retained Earnings (Deficit)	Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Shares			Amount

Balance at December 31, 2023	4,415	$	1,315			$	458,614		$	(377,401)	$	(36,932)	$	45,596


Net loss	—	—				—			(17,195)		—		(17,195)
Net settlement of vested stock awards	—	10				(10)			—		—		—
Foreign currency translation adjustment, net of tax	—	—				—			—		(2,862)		(2,862)

Defined benefit pension plans, net of tax	—	—				—			—		87		87
Non-cash compensation	—	—				665			—		—		665

Balance at March 31, 2024	4,415	$	1,325			$	459,269		$	(394,596)	$	(39,707)	$	26,291

Balance at December 31, 2022	4,343	$	1,303			$	457,133		$	(301,679)	$	(38,997)	$	117,760
Net loss	—	—				—			(24,711)		—		(24,711)
Net settlement of vested stock awards	14	4				(52)			—		—		(48)
Foreign currency translation adjustment, net of tax	—	—				—			—		755		755
Non-cash compensation	—	—				382			—		—		382
Balance at March 31, 2023	4,357	$	1,307			$	457,463		$	(326,390)	$	(38,242)	$	94,138

See accompanying notes to unaudited condensed consolidated financial statements.

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TEAM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net loss	$	(17,195)	$	(24,711)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	9,640		9,546
Amortization of debt issuance costs, debt discounts, and deferred financing costs	1,975		8,486
Paid-in-kind interest	3,122		3,485
Allowance for credit (gains) losses	40		(201)
Foreign currency gains	(1,239)		(177)
Deferred income taxes	(626)		(37)
Loss (gain) on asset disposal	5		(260)
Non-cash compensation costs	665		382
Other, net	(204)		(947)
Changes in operating assets and liabilities:
Accounts receivable	5,352		9,350
Inventory	10		(1,473)
Prepaid expenses and other assets	2,856		(1,282)
Accounts payable	340		(66)
Other accrued liabilities	(3,527)		(20,294)
Income taxes	672		436
Net cash provided by (used in) operating activities	1,886		(17,763)
Cash flows from investing activities:
Capital expenditures	(3,016)		(2,692)
Proceeds from disposal of assets	—		332
Net cash used in investing activities	(3,016)		(2,360)
Cash flows from financing activities:
Borrowings under Revolving Credit Loans	—		6,622
Payments under Revolving Credit Loans	(9,909)		(12,623)



Payments under ME/RE Loans	(711)		—
Payments under Corre Incremental Term Loans	(356)		—

Payments for debt issuance costs	(1,400)		—

Other	2,542		(235)
Net cash used in financing activities	(9,834)		(6,236)
Effect of exchange rate changes on cash	(273)		153
Net decrease in cash and cash equivalents	(11,237)		(26,206)
Cash and cash equivalents at beginning of period	35,427		58,075
Cash and cash equivalents at end of period	$	24,190	$	31,869

See accompanying notes to unaudited condensed consolidated financial statements.

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TEAM, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business. Unless otherwise indicated, the terms “we,” “our,” “us,” “Team,” and “the Company” are used in this report to refer to either Team, Inc., to one or more of our consolidated subsidiaries, or to all of them taken as a whole. Our stock is traded on the New York Stock Exchange (the “NYSE”) under the symbol “TISI”.

We are a global, leading provider of specialty industrial services offering clients access to a full suite of conventional, specialized, and proprietary mechanical, heat-treating, and inspection services. We deploy conventional to highly specialized inspection, condition assessment, maintenance and repair services that result in greater safety, reliability, and operational efficiency for our clients’ most critical assets. We conduct operations in two segments: Inspection and Heat Treating (“IHT”) and Mechanical Services (“MS”). Through the capabilities and resources in these two segments, we believe that we are uniquely qualified to provide integrated solutions involving: inspection to assess condition; engineering assessment to determine fitness for purpose in the context of industry standards and regulatory codes; and mechanical services to repair, rerate or replace based upon the client’s election. In addition, we are capable of escalating with the client’s needs, as dictated by the severity of the damage found and the related operating conditions, from standard services to some of the most advanced services and integrated asset integrity and reliability management solutions available in the industry. We also believe that we are unique in our ability to provide these services in three distinct client demand profiles: (i) turnaround or project services, (ii) call-out services, and (iii) nested or run-and-maintain services.

IHT provides conventional and advanced non-destructive testing services primarily for the process, pipeline and power sectors, pipeline integrity management services, and field heat treating services, as well as associated engineering and condition assessment services. These services can be offered while facilities are running (on-stream), during facility turnarounds or during new construction or expansion activities. In addition, IHT provides comprehensive non-destructive testing services and metallurgical and chemical processing services to the aerospace industry, covering a range of components including finished machined and in-service components. IHT also provides advanced digital imaging including remote digital video imaging.

MS provides solutions designed to serve clients’ unique needs during both the operational (onstream) and off-line states of their assets. Our onstream services include our range of standard to custom-engineered leak repair and composite solutions; emissions control and compliance; hot tapping and line stopping; and on-line valve insertion solutions, which are delivered while assets are in an operational condition, which maximizes client production time. Asset shutdowns can be planned, such as a turnaround maintenance event, or unplanned, such as those due to component failure or equipment breakdowns. Our specialty maintenance, turnaround and outage services are designed to minimize client downtime and are primarily delivered while assets are off-line and often through the use of cross-certified technicians, whose multi-craft capabilities deliver the production needed to achieve tight time schedules. These critical services include on-site field machining; bolted-joint integrity; vapor barrier plug testing; and valve management solutions.

We market our services to companies in a diverse array of heavy industries which include:

•Energy (refining, power, renewables, nuclear, offshore oil and gas, and liquefied natural gas);

•Manufacturing and Process (chemical, petrochemical, pulp and paper industries, automotive, and mining);

•Midstream (valves, terminals and storage, and pipeline);

•Public Infrastructure (construction and building, roads, dams, amusement parks, bridges, ports, and railways); and

•Aerospace and Defense.

Basis of presentation. These condensed consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results for such periods. The results of operations for any interim period are not necessarily indicative of results for the full year. Certain disclosures have been condensed or omitted from the interim financial statements included in this report. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC (“our Annual Report on Form 10-K”).

Consolidation. The condensed consolidated financial statements include the accounts of our subsidiaries where we have control over operating and financial policies. All material intercompany accounts and transactions have been eliminated in consolidation.

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Reclassifications. Certain amounts in prior periods have been reclassified to conform to the current year presentation. Such reclassifications did not have any effect on our financial condition or results of operations as previously reported.

Significant Accounting Policies. Our significant accounting policies are disclosed in Note 1 - Summary of Significant Accounting Policies and Practices in our Annual Report on Form 10-K. On an ongoing basis, we evaluate the estimates and assumptions, including among other things, those related to long-lived assets. Since the date of our Annual Report on Form 10-K, there have been no material changes to our significant accounting policies.

2. REVENUE

Disaggregation of revenue. Essentially all of our revenues are associated with contracts with customers. A disaggregation of our revenue from contracts with customers by geographic region, by reportable operating segment and by service type is presented below:

Geographic area (in thousands):

Three Months Ended March 31, 2024

Three Months Ended March 31, 2023

(unaudited)

United States and Canada

Other Countries

Total

United States and Canada

SEC Form 10-Q filed by Team Inc.