Team, Inc. (NYSE: TISI) (“TEAM” or the “Company”),
a global leading provider of integrated, digitally-enabled asset
performance assurance and optimization solutions, today reported
its financial results for the third quarter ended September 30,
2022.
Third Quarter 2022 Financial and
Operational
Results1:
- Announced the closing of the sale of its Quest Integrity
business to Baker Hughes on November 1, 2022 for cash of
approximately $279.0 million, reflecting certain estimated
post-closing adjustments, allowing for a significant term debt
paydown and materially improving liquidity to approximately $83
million as of November 4, 2022. In connection with the sale, the
operating results of Quest Integrity have been reclassified to
discontinued operations for periods presented.
- Increased third quarter 2022
revenues by 10% to $218.3 million compared to the third quarter of
2021.
- Grew gross margin by 26% to $56.0
million (25.7% of revenues), from $44.5 million (22.5% of revenues)
in the third quarter of 2021.
- Reported GAAP net loss from our
continuing operations was $26.6 million
- Generated consolidated Adjusted
EBITDA of $10.6 million, up $11.9 million from the third quarter of
2021.
1 Unless otherwise specified, the
financial information and discussion in this earnings release is
based on the Company’s continuing operations (IHT and MS segments)
and excludes results of its discontinued operations (Quest
Integrity). “For the third quarter,
combined revenue from our core Inspection and Heat Treating (IHT)
and Mechanical Services (MS) segments grew more than 10% over the
prior year, as both segments benefited from higher activity levels
and favorable project mix,” said Keith D. Tucker, TEAM’s Interim
Chief Executive Officer. “While we continue to contend with
inflationary cost pressure in both our supply chain and with labor
costs, we are seeing benefits from the steps taken to date to
reduce costs and increase margins. To that end, our third quarter
gross margin improved to 25.7% of revenues, and Adjusted EBITDA was
up significantly over the prior year. As part of our ongoing review
of our cost structure, we have actioned additional cost reductions
in October and identified incremental structural and operational
opportunities to further reduce costs and improve our margins
without impacting our ability to safely deliver world class service
to our customers. We expect to realize the benefits from these
actions as we move through the fourth quarter and into 2023.”
“With respect to the sale of Quest Integrity,
our smallest segment in terms of revenue, we received an attractive
valuation resulting in net cash proceeds allowing for a significant
term debt paydown that reduced our senior term loan balance to $36
million and our gross outstanding debt by almost 47%, as well as
materially improved our liquidity. The closing of the sale
represented a significant milestone in our efforts to deleverage
the Company’s balance sheet and simplify our operations while also
demonstrating the significant intrinsic value of the Company’s
assets.”
“Looking ahead, we believe stronger industry
activity, coupled with the Company’s growing operating and
financial momentum, will position TEAM to continue the positive
trend in revenue and margins into 2023. While we are pleased with
the Company’s progress to date, there is more work to do to improve
margins and cash flow and simplify our operating structure in order
to fully capitalize on the Company’s extensive technical
capabilities and strong market position. Finally, we expect to
present our progress on our longer-term commercial, operational,
and balance sheet improvement plans in greater detail in 2023”
concluded Tucker.
Financial Results
As noted above, on November 1, 2022, the Company
announced the closing of the sale of its Quest Integrity business.
Financial information, performance metrics and discussions for
periods presented are based on the Company’s continuing operations
(IHT and MS segments) and excludes results of discontinued
operations (Quest Integrity) except where stated otherwise.
Consolidated revenue for the third quarter of
2022 was $218.3 million, an increase of 10.3% from $197.9 million
in the prior year quarter. Unfavorable foreign currency exchange
movements reduced third quarter 2022 consolidated revenue by
approximately $5.0 million, or 2%. In the third quarter of 2022,
consolidated gross margin was $56.0 million, or 25.7%, compared to
$44.5 million, or 22.5%, in the same quarter a year ago. Gross
margin was positively impacted by direct margin improvement and
lower indirect costs as a percent of revenue attributable to the
Company’s ongoing expense reduction program, improved pricing and
favorable project mix.
Selling general and administrative expense for
the third quarter of 2022 was $57.7 million, down $2.7 million, or
4.5%, from the third quarter of 2021. Selling, general and
administrative expense for the third quarter of 2022 and 2021
included charges not representative of TEAM’s ongoing operations of
$2.7 million and $4.4 million, respectively. The 2022 third quarter
included professional fees of $0.5 million, legal charges and fees
of $1.5 million and severance charges of $0.7 million, while the
2021 third quarter included professional fees of $1.3 million,
legal charges and fees of $2.7 million and severance charges of
$0.4 million. The Company’s consolidated Adjusted EBIT from
continuing operations, a non-GAAP measure, was income of $1.0
million in the third quarter of 2022, a significant improvement
compared to a loss of $11.9 million in the prior year quarter.
Consolidated net loss from continuing operations
in the third quarter of 2022 was $26.6 million ($0.62 loss per
share) compared to a loss of $90.4 million ($2.92 loss per share)
in the third quarter of 2021. Consolidated Adjusted EBITDA from
continuing operations, a non-GAAP measure, was $10.6 million for
the third quarter of 2022, an increase of $11.9 million as compared
to a negative $1.3 million for the prior year quarter. The
year-over-year improvement in consolidated Adjusted EBITDA from
continuing operations is attributed to higher revenues and lower
operating expense incurred during the quarter and improved
operating income in IHT and MS segments as well as lower expenses
at the Company’s corporate and shared support services segment as a
result of the Company’s ongoing expense reduction program.
Adjusted net loss, consolidated Adjusted EBIT,
and consolidated Adjusted EBITDA are non-GAAP financial measures
that exclude certain items that are not indicative of TEAM’s
ongoing operations. A reconciliation of these non-GAAP financial
measures to the most comparable GAAP financial measures is
presented at the end of this earnings release.
Segment Results
The following table illustrates the composition
of the Company’s revenue and operating income (loss) by segment for
the quarters ended September 30, 2022 and 2021 (in thousands):
|
Three Months Ended September 30, |
|
Increase (Decrease) |
|
|
2022 |
|
|
|
2021 |
|
|
$ |
% |
|
(unaudited) |
|
(unaudited) |
|
|
|
Revenues by business
segment: |
|
|
|
|
|
|
IHT |
$ |
110,312 |
|
|
$ |
101,476 |
|
|
$ |
8,836 |
8.7% |
MS |
|
108,027 |
|
|
|
96,403 |
|
|
|
11,624 |
12.1% |
Total |
$ |
218,339 |
|
|
$ |
197,879 |
|
|
$ |
20,460 |
10.3% |
Operating income (loss): |
|
|
|
|
|
|
IHT |
$ |
7,390 |
|
|
|
3,065 |
|
|
$ |
4,325 |
141.1% |
MS 2 |
|
7,655 |
|
|
|
(53,242 |
) |
|
|
60,897 |
NM |
Corporate and shared support services |
|
(16,774 |
) |
|
|
(22,051 |
) |
|
|
5,277 |
23.9% |
Total |
$ |
(1,729 |
) |
|
$ |
(72,228 |
) |
|
$ |
70,499 |
97.6% |
___________________
1 NM - Not
meaningful2 Operating income (loss) for MS for the
three months ended September 30, 2021 includes a $55.8 million
goodwill impairment charge.
IHT’s year-over-year revenue increased 8.7%,
primarily driven by higher turnaround, callout and nested activity
in U.S. and Canada markets. IHT’s operating income increased 141%
year-over-year and benefited from higher activity and improved
revenue realization, as well as the Company’s ongoing expense
reduction initiatives.
MS’s revenue grew by 12.1% year-over-year due to
higher activity in the Company’s US and Latin America operations
related to leak repair, hot tapping and the Company’s domestic
valves business, partially offset by lower activity in the United
Kingdom due to non-repeating project work in the 2021 period. After
adjusting 2021 third quarter operating income for a $55.8 million
noncash goodwill impairment charge that did not repeat in 2022, the
increase in 2022 operating income was approximately $5.1 million.
The improvement was primarily due to the factors noted above as
well as realized cost improvements in the Company’s equipment
centers, manufacturing and engineering functions.
Liquidity
Consolidated cash and cash equivalents were
$56.4 million at September 30, 2022, of which $25.7 million was
restricted mainly as collateral for outstanding letters of credit.
Additionally, the Company had approximately $20.5 million in
undrawn availability under its various credit facilities at
September 30, 2022. The Company’s gross debt and finance
obligations were $511.2 million, of which $506.4 million was
classified as current at September 30, 2022, compared to gross debt
of $405.9 million at December 31, 2021.
On November 1, 2022, the Company completed the
sale of its Quest Integrity business to Baker Hughes for cash
proceeds of approximately $279.0 million, reflecting certain
estimated post-closing adjustments. The net proceeds to the Company
(after payment of transaction related expenses and certain other
fees) were approximately $270 million. The Company used
approximately $238 million of the proceeds to pay down term debt
and to pay certain fees associated with that repayment and related
accrued interest, with the remainder reserved for general corporate
purposes. As of November 4, 2022, the Company had consolidated cash
and cash equivalents of $76.0 million, of which $6.8 million was
restricted mainly as collateral for outstanding letters of credit
and approximately $13.7 million of undrawn availability under its
various credit facilities, resulting in total liquidity of $82.9
million.
Quarterly Earnings Conference
Call
The Company will not host an earnings call this
quarter due to its previously announced strategic review process
and ongoing execution of its operational and financial turnaround
plan.
Non-GAAP Financial Measures
The non-GAAP measures in this earnings release
are provided to enable investors, analysts, and management to
evaluate TEAM’s performance excluding the effects of certain items
that management believes impact the comparability of operating
results between reporting periods. These measures should be used in
addition to, and not in lieu of, results prepared in conformity
with generally accepted accounting principles (GAAP). A
reconciliation of each of the non-GAAP financial measures to the
most directly comparable historical GAAP financial measure is
contained in the accompanying schedule for each of the fiscal
periods indicated.
About Team, Inc.
Headquartered in Sugar Land, Texas, Team Inc.
(NYSE: TISI) is a global leading provider of integrated,
digitally-enabled asset performance assurance and optimization
solutions. We deploy conventional to highly specialized inspection,
condition assessment, maintenance and repair services that result
in greater safety, reliability and operational efficiency for our
client’s most critical assets. Through locations in more than 20
countries, we unite the delivery of technological innovation with
over a century of progressive, yet proven integrity and reliability
management expertise to fuel a better tomorrow. For more
information, please visit www.teaminc.com.
Certain forward-looking information contained
herein is being provided in accordance with the provisions of the
Private Securities Litigation Reform Act of 1995. The Company has
made reasonable efforts to ensure that the information,
assumptions, and beliefs upon which this forward-looking
information is based are current, reasonable, and complete.
However, such forward-looking statements involve estimates,
assumptions, judgments, and uncertainties. All statements other
than statements of historical or current fact included in this
report are forward-looking statements including but not limited to
statements concerning the Company’s financial prospects and the
implementation of cost saving measures. Many factors could cause
actual results or outcomes to differ materially from those
addressed in the forward-looking information. Although it is not
possible to identify all of these factors, they include, among
others, the Company's ability to hire a permanent chief executive
officer in the near future, if necessary; the impact of negative
market conditions, including inflation, foreign exchange rate
fluctuations, volatility in the financial and credit markets, and
future economic uncertainties, particularly in industries in which
we are heavily dependent; the impact of the ongoing conflict in
Ukraine; the duration and magnitude of accidents, extreme weather,
natural disasters, and public health crises (such as COVID-19) and
related economic effects, the Company’s liquidity and ability to
obtain additional financing, the Company’s ability to execute on
its cost management actions, the impact of new or changes to
existing governmental laws and regulations and their application,
including tariffs requirements; the outcome of tax examinations,
changes in tax laws, and other tax matters; foreign currency
exchange rate and interest rate fluctuations; the Company’s ability
to successfully divest assets on terms that are favorable to the
Company; the Company’s ability to repay, refinance or restructure
its debt and the debt of certain of its subsidiaries; anticipated
or expected purchases or sales of assets; the Company’s continued
listing on the New York Stock Exchange; and such known factors as
are detailed in the Company’s Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, each as filed
with the Securities and Exchange Commission, and in other reports
filed by the Company with the Securities and Exchange Commission
from time to time. Accordingly, there can be no assurance that the
forward-looking information contained herein, including statement
regarding the Company’s financial prospects and the implementation
of cost saving measures, will occur or that objectives will be
achieved and actual results may differ materially from those that
are expected. We assume no obligation to publicly update or revise
any forward-looking statements made today or any other
forward-looking statements made by the Company, whether as a result
of new information, future events or otherwise, except as may be
required by law.
Contact:Nelson HaightExecutive Vice President,
Chief Financial Officer(281) 388-5521
TEAM, INC. AND SUBSIDIARIES |
SUMMARY OF CONSOLIDATED OPERATING RESULTS |
(unaudited, in thousands, except per share
data) |
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
218,339 |
|
|
$ |
197,879 |
|
|
$ |
628,917 |
|
|
$ |
591,043 |
|
Operating
expenses |
|
|
162,322 |
|
|
|
153,369 |
|
|
|
479,656 |
|
|
|
458,237 |
|
Gross margin |
|
|
56,017 |
|
|
|
44,510 |
|
|
|
149,261 |
|
|
|
132,806 |
|
Selling, general and
administrative expenses |
|
|
57,746 |
|
|
|
60,444 |
|
|
|
184,174 |
|
|
|
182,624 |
|
Restructuring and
other related charges, net |
|
|
— |
|
|
|
457 |
|
|
|
16 |
|
|
|
2,317 |
|
Goodwill impairment
charge |
|
|
— |
|
|
|
55,837 |
|
|
|
— |
|
|
|
55,837 |
|
Operating loss |
|
|
(1,729 |
) |
|
|
(72,228 |
) |
|
|
(34,929 |
) |
|
|
(107,972 |
) |
Interest expense,
net |
|
|
(26,653 |
) |
|
|
(9,913 |
) |
|
|
(63,708 |
) |
|
|
(28,764 |
) |
Other income
(expense) |
|
|
3,227 |
|
|
|
(904 |
) |
|
|
9,664 |
|
|
|
(1,790 |
) |
Loss from continuing
operations before income taxes |
|
|
(25,155 |
) |
|
|
(83,045 |
) |
|
|
(88,973 |
) |
|
|
(138,526 |
) |
Provision for income
taxes |
|
|
(1,465 |
) |
|
|
(7,401 |
) |
|
|
(4,182 |
) |
|
|
(8,420 |
) |
Net loss continuing
operations |
|
$ |
(26,620 |
) |
|
$ |
(90,446 |
) |
|
$ |
(93,155 |
) |
|
$ |
(146,946 |
) |
Discontinued
operations: |
|
|
|
|
|
|
|
|
Income (loss) from
discontinued operations, net of income tax |
|
$ |
3,747 |
|
|
$ |
(736 |
) |
|
$ |
16,268 |
|
|
$ |
3,980 |
|
Net loss |
|
$ |
(22,873 |
) |
|
$ |
(91,182 |
) |
|
$ |
(76,887 |
) |
|
$ |
(142,966 |
) |
|
|
|
|
|
|
|
|
|
Basic and diluted net
loss per common share: |
|
|
|
|
|
|
|
|
Loss from continuing operations |
|
|
(0.62 |
) |
|
|
(2.92 |
) |
|
|
(2.25 |
) |
|
|
(4.75 |
) |
Income (loss) from discontinued operations |
|
|
0.09 |
|
|
|
(0.02 |
) |
|
|
0.39 |
|
|
|
0.13 |
|
Total |
|
$ |
(0.53 |
) |
|
$ |
(2.94 |
) |
|
$ |
(1.86 |
) |
|
$ |
(4.62 |
) |
|
|
|
|
|
|
|
|
|
Weighted-average
number of shares outstanding: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
43,224 |
|
|
|
30,980 |
|
|
|
41,388 |
|
|
|
30,933 |
|
TEAM, INC. AND SUBSIDIARIES |
SUMMARY CONSOLIDATED BALANCE SHEET
INFORMATION |
(in thousands) |
|
|
|
|
|
September 30, |
|
December 31, |
|
|
2022 |
|
|
2021 |
|
(unaudited) |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
56,387 |
|
|
$ |
55,193 |
|
|
|
|
Other current
assets |
|
290,913 |
|
|
|
264,000 |
|
|
|
|
Current assets
associated with discontinued operations |
|
88,670 |
|
|
|
83,096 |
|
|
|
|
Property, plant and
equipment, net |
|
138,497 |
|
|
|
145,480 |
|
|
|
|
Other non-current
assets |
|
139,222 |
|
|
|
158,775 |
|
|
|
|
Total assets |
$ |
713,689 |
|
|
$ |
706,544 |
|
|
|
|
Current portion of
long-term debt and finance lease obligations |
$ |
506,414 |
|
|
$ |
667 |
|
|
|
|
Other current
liabilities |
|
166,275 |
|
|
|
171,204 |
|
|
|
|
Current liabilities of
discontinued operations |
|
19,375 |
|
|
|
16,396 |
|
|
|
|
Long-term debt and
finance lease obligations, net of current maturities |
|
4,810 |
|
|
|
405,184 |
|
|
|
|
Other non-current
liabilities |
|
45,545 |
|
|
|
61,226 |
|
|
|
|
Stockholders’
(deficit) equity |
|
(28,730 |
) |
|
|
51,867 |
|
|
|
|
Total liabilities and stockholders’ equity |
$ |
713,689 |
|
|
$ |
706,544 |
TEAM INC. AND SUBSIDIARIES |
SUMMARY CONSOLIDATED CASH FLOW INFORMATION
1 |
(unaudited, in thousands) |
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(76,887 |
) |
|
$ |
(142,966 |
) |
|
|
|
|
|
Depreciation and
amortization |
|
|
28,591 |
|
|
|
31,416 |
|
|
|
|
|
|
Allowance for credit
losses |
|
|
(362 |
) |
|
|
1,985 |
|
|
|
|
|
|
Deferred income
taxes |
|
|
382 |
|
|
|
5,083 |
|
|
|
|
|
|
Non-cash compensation
costs |
|
|
571 |
|
|
|
5,576 |
|
|
|
|
|
|
Write-off of deferred
financing costs |
|
|
2,748 |
|
|
|
— |
|
|
|
|
|
|
Changes in operating
assets and liabilities |
|
|
(35,344 |
) |
|
|
158 |
|
|
|
|
|
|
Goodwill impairment
charges |
|
|
— |
|
|
|
55,837 |
|
|
|
|
|
|
Other |
|
|
33,936 |
|
|
|
7,050 |
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(46,365 |
) |
|
|
(35,861 |
) |
|
|
|
|
|
Capital
expenditures |
|
|
(21,002 |
) |
|
|
(12,376 |
) |
|
|
|
|
|
Proceeds from disposal
of assets |
|
|
7,165 |
|
|
|
154 |
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(13,837 |
) |
|
|
(12,222 |
) |
|
|
|
|
|
Net borrowings under
ABL facilities |
|
|
67,816 |
|
|
|
45,100 |
|
|
|
|
|
|
Issuance of common
stock |
|
|
9,696 |
|
|
|
— |
|
|
|
|
|
|
Payments for debt
issuance costs |
|
|
(13,609 |
) |
|
|
(2,899 |
) |
|
|
|
|
|
Taxes paid for net
share settlement of share-based awards, net |
|
|
— |
|
|
|
(102 |
) |
|
|
|
|
|
Other |
|
|
(615 |
) |
|
|
(356 |
) |
|
|
|
|
|
Net cash provided by financing activities |
|
|
63,288 |
|
|
|
41,743 |
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents |
|
|
(1,373 |
) |
|
|
(1,274 |
) |
|
|
|
|
|
Net change in cash and
cash equivalents |
|
$ |
1,713 |
|
|
$ |
(7,614 |
) |
|
|
|
|
|
_________________1 Consolidated
statements of cash flows include cash flows from discontinued
operations.
|
September 30, 2022 |
|
September 30, 2021 |
Cash and cash equivalents from continuing operations |
$ |
56,387 |
|
$ |
12,009 |
Cash and cash equivalents from
discontinued operations |
|
10,641 |
|
|
4,963 |
Total |
$ |
67,028 |
|
$ |
16,972 |
TEAM, INC. AND SUBSIDIARIES |
SEGMENT INFORMATION |
(unaudited, in thousands) |
|
|
|
|
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenues |
|
|
|
|
|
|
|
|
IHT |
|
$ |
110,312 |
|
|
$ |
101,476 |
|
|
$ |
320,033 |
|
|
$ |
310,077 |
|
MS |
|
|
108,027 |
|
|
|
96,403 |
|
|
|
308,884 |
|
|
|
280,966 |
|
|
|
$ |
218,339 |
|
|
$ |
197,879 |
|
|
$ |
628,917 |
|
|
$ |
591,043 |
|
|
|
|
|
|
|
|
|
|
Operating income
(loss) (“EBIT”) - continuing operations |
|
|
|
|
|
|
|
|
IHT |
|
$ |
7,390 |
|
|
$ |
3,065 |
|
|
$ |
13,038 |
|
|
$ |
10,824 |
|
MS 1 |
|
|
7,655 |
|
|
|
(53,242 |
) |
|
|
15,152 |
|
|
|
(50,799 |
) |
Corporate and shared support services |
|
|
(16,774 |
) |
|
|
(22,051 |
) |
|
|
(63,119 |
) |
|
|
(67,997 |
) |
|
|
$ |
(1,729 |
) |
|
$ |
(72,228 |
) |
|
$ |
(34,929 |
) |
|
$ |
(107,972 |
) |
|
|
|
|
|
|
|
|
|
Segment Adjusted EBIT
- continuing operations |
|
|
|
|
|
|
|
|
IHT |
|
$ |
7,540 |
|
|
$ |
3,155 |
|
|
$ |
13,230 |
|
|
$ |
11,399 |
|
MS |
|
|
7,690 |
|
|
|
2,734 |
|
|
|
15,241 |
|
|
|
5,532 |
|
Corporate and shared support services |
|
|
(14,208 |
) |
|
|
(17,838 |
) |
|
|
(46,528 |
) |
|
|
(56,585 |
) |
|
|
$ |
1,022 |
|
|
$ |
(11,949 |
) |
|
$ |
(18,057 |
) |
|
$ |
(39,654 |
) |
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA - continuing operations |
|
|
|
|
|
|
|
|
IHT |
|
$ |
10,562 |
|
|
$ |
6,303 |
|
|
$ |
22,602 |
|
|
$ |
21,287 |
|
MS |
|
|
12,394 |
|
|
$ |
7,684 |
|
|
|
29,463 |
|
|
|
20,964 |
|
Corporate and shared support services |
|
|
(12,318 |
) |
|
$ |
(15,312 |
) |
|
|
(42,102 |
) |
|
|
(46,928 |
) |
|
|
$ |
10,638 |
|
|
$ |
(1,325 |
) |
|
$ |
9,963 |
|
|
$ |
(4,677 |
) |
___________________1 Operating
income (loss) (“EBIT”) - continuing operations for MS for the three
and nine months ended September 30, 2021 includes a $55.8 million
goodwill impairment charge.
TEAM, INC. AND
SUBSIDIARIESNon-GAAP Financial
Measures(Unaudited)
The Company uses supplemental non-GAAP financial
measures which are derived from the condensed consolidated
financial information including adjusted net income (loss);
adjusted net income (loss) per diluted share, earnings before
interest and taxes (“EBIT”); adjusted EBIT (defined below);
adjusted earnings before interest, taxes, depreciation and
amortization (“adjusted EBITDA”) and free cash flow to supplement
financial information presented on a U.S. generally accepted
accounting principles (“GAAP”) basis.
The Company defines adjusted net income (loss),
adjusted net income (loss) per diluted share and adjusted EBIT to
exclude the following items: costs associated with our past
integration and transformation program, costs associated with the
Company’s new strategic organizational structure implemented in
January 2021 (“Operating Group Reorganization”), non-routine legal
costs and settlements, restructuring charges, certain severance
charges, goodwill impairment charges and certain other items that
we believe are not indicative of core operating activities.
Consolidated adjusted EBIT, as defined by us, excludes the costs
excluded from adjusted net income (loss) as well as income tax
expense (benefit), interest charges, foreign currency (gain) loss,
and items of other (income) expense. Consolidated adjusted EBITDA
further excludes from consolidated adjusted EBIT depreciation,
amortization and non-cash share-based compensation costs. Segment
adjusted EBIT is equal to segment operating income (loss) excluding
costs associated with our past integration and transformation
program, costs associated with the Operating Group Reorganization,
non-routine legal costs and settlements, restructuring charges,
certain severance charges, goodwill impairment charges and certain
other items as determined by management. Segment adjusted EBITDA
further excludes from segment adjusted EBIT depreciation,
amortization, and non-cash share-based compensation costs. Free
cash flow is defined as net cash provided by (used in) operating
activities minus capital expenditures. Net debt is defined as the
sum of the current and long-term portions of debt, including
finance lease obligations, less cash and cash equivalents.
Management believes these non-GAAP financial
measures are useful to both management and investors in their
analysis of our financial position and results of operations. In
particular, adjusted net income (loss), adjusted net income (loss)
per diluted share, consolidated adjusted EBIT, and consolidated
adjusted EBITDA are meaningful measures of performance which are
commonly used by industry analysts, investors, lenders and rating
agencies to analyze operating performance in our industry, perform
analytical comparisons, benchmark performance between periods, and
measure our performance against externally communicated targets.
Our segment adjusted EBIT and segment adjusted EBITDA is also used
as a basis for the Chief Operating Decision Maker to evaluate the
performance of our reportable segments. Free cash flow is used by
our management and investors to analyze our ability to service and
repay debt and return value directly to stakeholders.
Non-GAAP measures have important limitations as
analytical tools, because they exclude some, but not all, items
that affect net earnings and operating income. These measures
should not be considered substitutes for their most directly
comparable GAAP financial measures and should be read only in
conjunction with financial information presented on a GAAP basis.
Further, our non-GAAP financial measures may not be comparable to
similarly titled measures of other companies who may calculate
non-GAAP financial measures differently, limiting the usefulness of
those measures for comparative purposes. The liquidity measure of
free cash flow does not represent a precise calculation of residual
cash flow available for discretionary expenditures. Reconciliations
of each non-GAAP financial measure to its most directly comparable
GAAP financial measure are presented below.
TEAM, INC. AND SUBSIDIARIES |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
(unaudited, in thousands except per share
data) |
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Adjusted Net Income
(Loss) from continuing operations: |
|
|
|
|
|
|
|
|
Net loss from continuing operations |
|
$ |
(26,620 |
) |
|
$ |
(90,446 |
) |
|
$ |
(93,155 |
) |
|
$ |
(146,946 |
) |
Professional fees and other1 |
|
|
539 |
|
|
|
1,273 |
|
|
|
10,576 |
|
|
|
3,107 |
|
Legal costs2 |
|
|
1,543 |
|
|
|
2,736 |
|
|
|
3,271 |
|
|
|
6,845 |
|
Severance charges, net3 |
|
|
670 |
|
|
|
433 |
|
|
|
3,028 |
|
|
|
2,530 |
|
Natural disaster insurance recovery |
|
|
— |
|
|
|
— |
|
|
|
(872 |
) |
|
|
— |
|
Goodwill impairment charges |
|
|
— |
|
|
|
55,837 |
|
|
|
— |
|
|
|
55,837 |
|
Tax impact of adjustments and other net tax items4 |
|
|
(24 |
) |
|
|
(305 |
) |
|
|
(31 |
) |
|
|
(368 |
) |
Adjusted net loss from
continuing operations |
|
$ |
(23,892 |
) |
|
$ |
(30,472 |
) |
|
$ |
(77,183 |
) |
|
$ |
(78,995 |
) |
|
|
|
|
|
|
|
|
|
Adjusted net loss per
common share: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.55 |
) |
|
$ |
(0.98 |
) |
|
$ |
(1.86 |
) |
|
$ |
(2.55 |
) |
|
|
|
|
|
|
|
|
|
Consolidated Adjusted
EBIT and Adjusted EBITDA from continuing operations: |
|
|
|
|
|
|
|
|
Net loss from continuing operations |
|
$ |
(26,620 |
) |
|
$ |
(90,446 |
) |
|
$ |
(93,155 |
) |
|
$ |
(146,946 |
) |
Provision for income taxes |
|
|
1,465 |
|
|
|
7,401 |
|
|
|
4,182 |
|
|
|
8,420 |
|
Gain on equipment sale |
|
|
(786 |
) |
|
|
— |
|
|
|
(4,269 |
) |
|
|
— |
|
Interest expense, net |
|
|
26,653 |
|
|
|
9,913 |
|
|
|
63,708 |
|
|
|
28,764 |
|
Professional fees and other1 |
|
|
539 |
|
|
|
1,273 |
|
|
|
10,576 |
|
|
|
3,107 |
|
Legal costs2 |
|
|
1,543 |
|
|
|
2,736 |
|
|
|
3,271 |
|
|
|
6,845 |
|
Severance charges, net3 |
|
|
670 |
|
|
|
433 |
|
|
|
3,028 |
|
|
|
2,530 |
|
Foreign currency (gain) loss5 |
|
|
(2,264 |
) |
|
|
1,077 |
|
|
|
(3,955 |
) |
|
|
2,309 |
|
Pension credit6 |
|
|
(178 |
) |
|
|
(173 |
) |
|
|
(571 |
) |
|
|
(520 |
) |
Natural disaster insurance recovery |
|
|
— |
|
|
|
— |
|
|
|
(872 |
) |
|
|
— |
|
Goodwill impairment charges |
|
|
— |
|
|
|
55,837 |
|
|
|
— |
|
|
|
55,837 |
|
Consolidated Adjusted
EBIT - continuing operations |
|
$ |
1,022 |
|
|
$ |
(11,949 |
) |
|
|
(18,057 |
) |
|
|
(39,654 |
) |
Depreciation and amortization |
|
|
|
|
|
|
|
|
Amount included in operating expenses |
|
|
3,771 |
|
|
|
4,381 |
|
|
|
11,843 |
|
|
|
13,951 |
|
Amount included in SG&A expenses |
|
|
5,216 |
|
|
|
5,135 |
|
|
|
15,607 |
|
|
|
15,450 |
|
Total depreciation and amortization |
|
|
8,987 |
|
|
|
9,516 |
|
|
|
27,450 |
|
|
|
29,401 |
|
Non-cash share-based compensation costs |
|
|
629 |
|
|
|
1,108 |
|
|
|
570 |
|
|
|
5,576 |
|
Consolidated Adjusted
EBITDA from continuing operations |
|
$ |
10,638 |
|
|
$ |
(1,325 |
) |
|
$ |
9,963 |
|
|
$ |
(4,677 |
) |
|
|
|
|
|
|
|
|
|
Free Cash Flow from
continuing operations: |
|
|
|
|
|
|
|
|
Cash provided by (used in) operating activities |
|
$ |
5,913 |
|
|
$ |
(2,628 |
) |
|
$ |
(50,573 |
) |
|
$ |
(38,808 |
) |
Capital expenditures |
|
|
(5,883 |
) |
|
|
(791 |
) |
|
|
(17,299 |
) |
|
|
(11,391 |
) |
Free Cash
Flow |
|
$ |
30 |
|
|
$ |
(3,419 |
) |
|
$ |
(67,872 |
) |
|
$ |
(50,199 |
) |
____________________________________
1 For the three and nine months
ended September 30, 2022, includes $0.5 million and $10.5 million,
respectively, related to costs associated with the debt financing
and corporate support costs. For the three and nine months ended
September 30, 2021, includes $0.2 million and $1.7 million,
respectively, of costs associated with the Operating Group
Reorganization (exclusive of restructuring costs).
2 For the three and nine months
ended September 30, 2022, primarily relates to accrued legal
matters. For the three and nine months ended September 30, 2021,
primarily relates to accrued legal matters and legal fees.
3 For the three months ended
September 30, 2022 includes $0.7 million primarily related to
customary severance costs associated with staff reductions. For the
nine months ended September 30, 2022, includes $1.3 million related
to customary severance costs associated with executive departures
and $1.7 million associated with severance across multiple
corporate departments. For the three months and nine months ended
September 30, 2021, $0.4 million and $2.5 million, respectively,
associated with the Operating Group Reorganization and other
continuing restructuring measures.
4 Represents the tax effect of
the adjustments. Beginning in Q2 2021, we use the statutory tax
rate, net of valuation allowance by legal entity to determine the
tax effect of the adjustments. Prior to Q2 2021, we used an assumed
marginal tax rate of 21%.
5 Represents foreign currency
(gains) losses.
6 Represents pension credits
for the U.K. pension plan based on the difference between the
expected return on plan assets and the cost of the discounted
pension liability. The pension plan has had no new participants
added since the plan was frozen in 1994 and accruals for future
benefits ceased in connection with a plan curtailment in 2013.
TEAM, INC. AND SUBSIDIARIES |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Continued) |
(unaudited, in thousands) |
|
|
|
|
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
Segment Adjusted EBIT
and Adjusted EBITDA from continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IHT |
|
|
|
|
|
|
|
|
Operating income |
|
$ |
7,390 |
|
|
$ |
3,065 |
|
|
$ |
13,038 |
|
|
$ |
10,824 |
|
Severance charges, net1 |
|
|
150 |
|
|
|
90 |
|
|
|
192 |
|
|
|
575 |
|
Adjusted EBIT |
|
|
7,540 |
|
|
|
3,155 |
|
|
|
13,230 |
|
|
|
11,399 |
|
Depreciation and amortization |
|
|
3,022 |
|
|
|
3,148 |
|
|
|
9,372 |
|
|
|
9,888 |
|
Adjusted EBITDA |
|
$ |
10,562 |
|
|
$ |
6,303 |
|
|
$ |
22,602 |
|
|
$ |
21,287 |
|
|
|
|
|
|
|
|
|
|
MS |
|
|
|
|
|
|
|
|
Operating income |
|
$ |
7,655 |
|
|
$ |
(53,242 |
) |
|
$ |
15,152 |
|
|
$ |
(50,799 |
) |
Severance charges, net1 |
|
|
35 |
|
|
|
139 |
|
|
|
89 |
|
|
|
494 |
|
Goodwill impairment charges |
|
|
— |
|
|
|
55,837 |
|
|
|
— |
|
|
|
55,837 |
|
Adjusted EBIT |
|
|
7,690 |
|
|
|
2,734 |
|
|
|
15,241 |
|
|
|
5,532 |
|
Depreciation and amortization |
|
|
4,704 |
|
|
|
4,950 |
|
|
|
14,222 |
|
|
|
15,432 |
|
Adjusted EBITDA |
|
$ |
12,394 |
|
|
$ |
7,684 |
|
|
$ |
29,463 |
|
|
$ |
20,964 |
|
|
|
|
|
|
|
|
|
|
Corporate and shared
support services |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(41,665 |
) |
|
$ |
(40,269 |
) |
|
$ |
(121,345 |
) |
|
$ |
(106,971 |
) |
Provision for income taxes |
|
|
1,465 |
|
|
|
7,401 |
|
|
|
4,182 |
|
|
|
8,420 |
|
Gain on equipment sale |
|
|
(786 |
) |
|
|
— |
|
|
|
(4,269 |
) |
|
|
— |
|
Interest expense, net |
|
|
26,653 |
|
|
|
9,913 |
|
|
|
63,708 |
|
|
|
28,764 |
|
Foreign currency (gain) losses2 |
|
|
(2,264 |
) |
|
|
1,077 |
|
|
|
(3,955 |
) |
|
|
2,309 |
|
Pension credit3 |
|
|
(178 |
) |
|
|
(173 |
) |
|
|
(571 |
) |
|
|
(520 |
) |
Professional fees and other4 |
|
|
539 |
|
|
|
1,273 |
|
|
|
10,576 |
|
|
|
3,107 |
|
Legal costs5 |
|
|
1,543 |
|
|
|
2,736 |
|
|
|
3,271 |
|
|
|
6,845 |
|
Severance charges, net1 |
|
|
485 |
|
|
|
204 |
|
|
|
2,747 |
|
|
|
1,461 |
|
Natural disaster insurance recovery |
|
|
— |
|
|
|
— |
|
|
|
(872 |
) |
|
|
— |
|
Adjusted EBIT |
|
|
(14,208 |
) |
|
|
(17,838 |
) |
|
|
(46,528 |
) |
|
|
(56,585 |
) |
Depreciation and amortization |
|
|
1,261 |
|
|
|
1,418 |
|
|
|
3,856 |
|
|
|
4,081 |
|
Non-cash share-based compensation costs |
|
|
629 |
|
|
|
1,108 |
|
|
|
570 |
|
|
|
5,576 |
|
Adjusted EBITDA |
|
$ |
(12,318 |
) |
|
$ |
(15,312 |
) |
|
$ |
(42,102 |
) |
|
$ |
(46,928 |
) |
___________________
1 For the three months ended
September 30, 2022 includes $0.7 million primarily related to
customary severance costs associated with staff reductions. For the
nine months ended September 30, 2022, includes $1.3 million related
to customary severance costs associated with executive departures
and $1.7 million associated with severance across multiple
corporate departments. For the three months and nine months ended
September 30, 2021, $0.4 million and $2.5 million, respectively,
associated with the Operating Group Reorganization and other
continuing restructuring measures.
2 Represents foreign currency
(gains) losses.
3 Represents pension credits
for the U.K. pension plan based on the difference between the
expected return on plan assets and the cost of the discounted
pension liability. The pension plan has had no new participants
added since the plan was frozen in 1994 and accruals for future
benefits ceased in connection with a plan curtailment in 2013.
4 For the three and nine months
ended September 30, 2022, includes $0.5 million and $10.5 million,
respectively, related to costs associated with the debt financing
and corporate support costs. For the three and nine months ended
September 30, 2021, includes $0.2 million and $1.7 million,
respectively, of costs associated with the Operating Group
Reorganization (exclusive of restructuring costs).
5 For the three and nine months ended September
30, 2022, primarily relates to accrued legal matters. For the three
and nine months ended September 30, 2021, primarily relates to
accrued legal matters and legal fees.
Team (NYSE:TISI)
Historical Stock Chart
Von Mär 2024 bis Apr 2024
Team (NYSE:TISI)
Historical Stock Chart
Von Apr 2023 bis Apr 2024