TEAM INC Q3 FY2024 earnings call

• Over the past two years, the company has executed a strategic roadmap to simplify the business, address capital structure and balance sheet, improve margins, and position for growth.
• Third quarter results showed solid performance with positive free cash flow, year-over-year improvements in revenue, operating income, adjusted EBITDA, and lower expenses.
• Made progress in cost management with SG&A expense down nearly $4 million year-over-year, and adjusted SG&A as a percentage of revenue down 30 basis points.
• In September 2024, launched actions expected to yield annualized cost savings of $6 - $8 million. Also implementing actions to improve Canadian operations, with results expected in Q4 2024 and 2025.
• Benefited from improved job mix with 41% increase in Heat Treating revenue and 32% increase in aerospace revenue in the third quarter.

For the third quarter, revenue was up 2% compared to Q3 2023. The U.S. Inspection and Heat Treating and Mechanical Services segments saw a 6% increase in revenue due to strong turnaround and nested activity. However, Canadian segments had lower revenue year-over-year due to lower turnaround, nested activity, and less project work. Adjusted EBITDA for the third quarter was $11.3 million, driven by strong U.S. operations. Through the first nine months of 2024, adjusted EBITDA was nearly $40 million, a 21% improvement over the first nine months of 2023. Selling general and administrative expense for the third quarter was nearly $4 million lower than the prior year period, and on an adjusted basis, it was 21.7% of revenue, down 30 basis points from 2023.

• 2024 full-year guidance revised: total company revenue between $845 million and $860 million, gross margin between $220 million and $228 million, adjusted EBITDA between $53 million and $55 million; capital expenditure guidance unchanged.
• 2025 outlook: expects low-to-mid single-digit revenue growth, improved performance from Canadian operations, and further progress towards adjusted EBITDA margin of at least 10%, leading to growth and shareholder value.

• Underperformance in Canadian business and certain international operations led to revising 2024 operating and cash flow guidance.

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

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