Team, Inc. Q2 FY2025 earnings call

• Delivered strong second quarter results with revenue growing 8.5% year-over-year, gross margin increasing by 7.1%, and adjusted EBITDA up by 12.4%.
• IHT segment had 15% overall revenue growth, Canada operations in IHT saw 31% year-over-year revenue growth, and heat trading revenue up nearly 26%.
• MS segment's U.S. operations grew 7% year-over-year, offsetting international weakness.
• Adjusted selling, general and administrative expense (excluding nonrecurring and noncash expenses) lowered to 18.9% of consolidated revenue from 19.8% in Q2 2024.
• Completed actions targeting cost savings, expecting $6 million in savings in the second half of 2025.
• Appointed Dan Dolson as Executive Vice President, Chief Strategy & Transformation Officer to lead transformation efforts.

In the Inspection and Heat Treating (IHT) segment, overall revenue grew 15% year-over-year. U.S. operations in IHT saw over 13% revenue increase, Canada operations had 31% year-over-year revenue growth, and heat trading revenue increased nearly 26% year-over-year. This drove 25% growth in IHT segment adjusted EBITDA and an 118 basis point improvement in the IHT segment adjusted EBITDA margin. In the Mechanical Services (MS) segment, U.S. operations led with a 7% year-over-year revenue increase, offsetting short-term revenue weakness in international business, resulting in 2% growth in total MS revenue. Adjusted EBITDA for the second quarter was $24.5 million, up 12.4% year-over-year, with adjusted EBITDA margin at 9.9% of consolidated revenue.

• Expect top line growth over the prior year across both segments and improved adjusted EBITDA levels in the second half of 2025.
• Aim for at least 15% year-over-year growth in adjusted EBITDA for full year 2025.
• Full year impact of ongoing actions expected in 2026.

Risk factors that could cause actual results to differ are discussed in Team, Inc.'s annual and quarterly filings with the Securities and Exchange Commission, along with the associated earnings release. Team assumes no obligation to update forward-looking statements.