TEAM INC Q1 FY2025 earnings call

Management Statement and Operational Highlights:

• Over the past two years, the company worked to simplify business, expand margins, and address capital structure.
• In first quarter 2025, midstream end markets revenue grew nearly 15%.
• Adjusted EBITDA for first quarter was $5.3 million. Selling, general and administrative expense lower by about $2 million versus prior year period.
• Kicked off actions targeting further cost optimization and improved operating efficiency, expected to yield annualized cost savings of around $10 million.
• Implemented steps to improve Canadian operations, with results expected in 2025 and full year impact in 2026.
• Strong activity levels in second quarter expected, with top-line growth across segments and improved adjusted EBITDA.

Segment Performance:

• Inspection & Heat Treating segment: Revenue up 6.8% year-over-year and 8.8% in core U.S. operations. Adjusted EBITDA improved 39% year-over-year, driven by nearly 22% revenue growth in higher margin heat treating services and 64% from the laboratory testing and inspection services facility in Cincinnati, Ohio.
• Mechanical Service segment: Lower callout revenue and delays in project and turnaround activity shifted revenue into future periods, offsetting growth in the IHT segment. Overall, revenues were essentially flat year-over-year, with consideration of seasonal factors and adverse weather in January impacting the top-line.

Guidance:

• Expect full year 2025 year-over-year revenue growth.
• Target at least 15% year-over-year growth in adjusted EBITDA.
• Second quarter expected to have top-line growth over prior year and improved adjusted EBITDA levels.
• Actions for cost and operational improvement expected to show results in 2025 with full impact in 2026.

Risks:

• Closely monitoring potential impact of tariff policies and related effects on end markets.