Press Release

05/09/16
Team, Inc. Reports First Quarter 2016 Results

SUGAR LAND, Texas, May 09, 2016 (GLOBE NEWSWIRE) -- Team, Inc. (NYSE:TISI) today released full financial results for the first quarter ended March 31, 2016. Team reported an adjusted net loss of $0.2 million ($0.01 loss per diluted share) for the current quarter versus adjusted net income of $5.3 million ($0.25 earnings per diluted share) for the prior year quarter. Revenues for the current quarter increased by 30% to $250.9 million compared to revenues of $192.4 million for the prior year quarter. Revenues for the current quarter include $70.3 million related primarily to the recent acquisitions of Qualspec Group and Furmanite. Excluding incremental revenues from acquisitions, current quarter revenues declined by 6% compared to the prior year quarter. (Adjusted earnings in the current quarter exclude certain non-routine items that are not indicative of Team's ongoing operating activities of $6.2 million (net of tax), or $0.26 per diluted share, as detailed in the accompanying schedule).

"The weak results for the first quarter reflect continued soft market conditions; all business units were impacted by project deferrals and reduced plant turnaround activities versus the prior year quarter. Operating margins declined in the current quarter on reduced activity levels and lower average margin service mix as higher margin advanced and specialty services normally tied to large turnaround projects were lower in the current quarter. We anticipate continued market headwinds across all business units during the remainder of 2016 while our customers' maintenance and inspection spending levels remain depressed due to generally weak energy sector conditions," said Ted Owen, Team's President and CEO. "As a result of the soft business environment, we are implementing $20 million of cost reduction initiatives in our legacy businesses that will be fully realized by 2017," said Mr. Owen. "This is in addition to the merger related synergies we have previously identified of $20-25 million associated with the Furmanite acquisition."

"Our focus in 2016 is to build the premier global industrial services company in our space. The integration of Furmanite and Qualspec and the implementation of a new ERP platform will provide a stronger, more competitively distinct foundation for our company as our end markets improve," said Mr. Owen. "Looking beyond the current market headwinds and business integration activities, we remain very optimistic about the earnings and growth potential of our company--capitalizing on the combined strengths of the legacy Team, Qualspec and Furmanite businesses."

GAAP Earnings

Team's net income reported in accordance with generally accepted accounting principles (including non-routine items) was a net loss of $6.4 million ($0.27 loss per diluted share) for the current quarter as compared to net income of $3.3 million ($0.15 earnings per diluted share) in the prior year quarter. Certain non-routine items that are not indicative of Team's ongoing operating activities have been excluded when arriving at adjusted earnings. In the current quarter, the most significant non-routine items pertained to acquisition costs associated with the Furmanite transaction ($6.1 million), professional fees for acquired business integration and changing the fiscal year end ($2.2 million) and non-capitalized ERP implementation costs ($1.3 million). Costs associated with the Furmanite transaction include $4.8 million incurred by the legacy Furmanite business primarily associated with change of control and severance payments. A reconciliation of net income (loss), reported in accordance with generally accepted accounting principles, to adjusted net income (loss) is contained in the accompanying schedule.

Earnings Conference Call

In connection with this earnings release, Team will hold its quarterly conference call on Tuesday, May 10, 2016 at 8:00 a.m. Central Time (9:00 a.m. Eastern).  The call will be broadcast over the Web and can be accessed on Team's website, www.teaminc.com. Individuals wishing to participate in the conference call by phone may call 888-699-2378 and use conference code 2591190 when prompted.

About Team, Inc.

Headquartered near Houston, Texas, Team Inc. is a leading provider of specialty industrial services, including inspection, mechanical services and engineering assessment, required in maintaining and installing high-temperature and high-pressure piping systems and vessels that are utilized extensively in the refining, petrochemical, power, pipeline and other heavy industries. Team offers these services across its 220 branch locations and more than 20 countries throughout the world.  Team's common stock is traded on the New York Stock Exchange under the ticker symbol "TISI".

Certain forward-looking information contained herein is being provided in accordance with the provisions of the Private Securities Litigation Reform Act of 1995. We have made reasonable efforts to ensure that the information, assumptions and beliefs upon which this forward-looking information is based are current, reasonable and complete. Such forward-looking statements involve estimates, assumptions, judgments and uncertainties. There are known and unknown factors that could cause actual results or outcomes to differ materially from those addressed in the forward-looking information. Such known factors are detailed in the Company's Annual Report on Form 10-K and in the Company's Quarterly Reports on Form 10-Q 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 will occur or that objectives will be achieved. 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.


TEAM, INC. AND SUBSIDIARIES 
SUMMARY OF OPERATING RESULTS 
(in thousands, except per share data) 
         
     Three Months Ended 
      March 31,  
      2016   2015  
     (unaudited) (unaudited) 
Revenues    $  250,854  $  192,407  
Operating expenses      184,872     138,364  
Gross margin      65,982     54,043  
         
Selling, general and administrative expenses    73,362     46,344  
Operating income (loss)     (7,380)    7,699  
          
Foreign currency loss       38     374  
Loss on investment in Venezuela     -      1,177  
Other expense / (income), net     (10)    2  
Interest expense, net      2,935     567  
Earnings (loss) from continuing operations before income taxes   (10,343)    5,579  
          
Provision (benefit) for income taxes     (3,783)    2,213  
Income (loss) from continuing operations  (6,560)  3,366  
         
Income from discontinued operations    126     -   
Net income (loss)      (6,434)    3,366  
          
Less: Income attributable to non-controlling interest    -   60  
Net income (loss) available to common shareholders $  (6,434) $  3,306  
          
Basic earnings (loss) per share:      
 Continuing operations   $  (0.27) $  0.16  
 Discontinued operations    -      -   
  Net income (loss)  $  (0.27) $  0.16  
          
Diluted earnings (loss) per share:      
 Continuing operations  $  (0.27) $  0.15  
 Discontinued operations    -      -   
 Net income (loss)  $  (0.27) $  0.15  
         
          
Weighted average number of shares outstanding:      
 Basic      24,030      20,396  
 Diluted       24,030     21,592  
  
  
TEAM, INC. AND SUBSIDIARIES 
ADDITIONAL FINANCIAL INFORMATION 
(in thousands, except per share data) 
         
     Three Months Ended
 
      March 31,  
      2016   2015  
     (unaudited)  (unaudited) 
Adjusted Net income (loss):      
Net income (loss) available to common shareholders $  (6,434) $  3,306  
Non-routine acquisition costs (Corporate)    6,071     -   
Non-routine legal fees (Quest)     72     1,096  
Non-routine professional fees (Corporate)    2,223     -   
Non-routine ERP costs (Corporate)    1,298     -   
Non-routine EA asset writeoff (Team Furmanite)    -      383  
Non-routine loss on investment in Venezuela    -      1,177  
Non-routine foreign currency loss     -      673  
Tax impact of adjustments     (3,445)    (1,321) 
Adjusted Net income (loss)  $  (215) $  5,314  
         
Adjusted Net income (loss) per common share:     
 Basic   $  (0.01) $  0.26  
 Diluted    $  (0.01) $  0.25  
         
Adjusted EBITDA:       
Operating income (loss) ("EBIT")  $  (7,380) $  7,699  
Non-routine acquisition costs (Corporate)    6,071     -   
Non-routine legal fees (Quest)     72     1,096  
Non-routine professional fees (Corporate)    2,223     -   
Non-routine EA asset writeoff (Team Furmanite)    -      383  
Non-routine ERP costs (Corporate)    1,298     -   
Adjusted EBIT      2,284     9,178  
Depreciation and amortization     10,023     5,690  
Non-cash share-based compensation costs    1,706     1,286  
Adjusted EBITDA   $  14,013   $  16,154  
         
Segment Data:       
Revenues:         
 Team QualSpec  $  136,262  $  107,191  
 Team Furmanite      100,594     69,352  
  Quest      13,998     15,864  
     $  250,854  $  192,407  
         
Adjusted EBIT:       
 Team QualSpec  $  7,944  $  10,375  
 Team Furmanite     7,039     4,824  
 Quest      (685)    2,359  
 Corporate and shared support    (12,014)    (8,380) 
     $  2,284  $  9,178  
         
Adjusted EBITDA:       
 Team QualSpec   $  12,998  $  12,515  
 Team Furmanite     10,363     6,669  
 Quest      597     3,794  
 Corporate and shared support    (9,945)    (6,824) 
     $  14,013  $  16,154  
         

 

TEAM, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED BALANCE SHEET INFORMATION
MARCH 31, 2016 AND  DECEMBER 31, 2015
(in thousands)
          
      March 31, December 31 ,
       2016   2015 
      (unaudited)  
         
Current assets    $  509,764   $  314,559 
         
Property, plant and equipment, net      201,015     124,983 
          
Other non-current assets      469,775     359,449 
          
Total assets    $  1,180,554  $  798,991 
         
Current liabilities    $  139,954  $  92,160 
         
Long term debt net of current maturities     416,886     351,383 
         
Other non-current liabilities      74,530     17,302 
         
Stockholders' equity       549,184     338,146 
         
Total liabilities and stockholders' equity  $  1,180,554  $  798,991 
         

 

           
TEAM, INC. AND SUBSIDIARIES   
SUMMARY CONSOLIDATED CASH FLOW INFORMATION   
MARCH 31, 2016 AND MARCH 31, 2015   
(in thousands)   
           
       Three Months Ended 
        March 31,  
        2016   2015   
       (unaudited) (unaudited) 
Net income (loss)      $  (6,434) $  3,366  
           
Depreciation, amortization and non-cash share-based compensation expense    12,158     6,976  
           
Working capital changes        14,737     (4,787) 
           
Other items affecting operating cash flow      1,038     4,350  
           
Net cash provided by operating activities   $  21,499  $  9,905  
           
Capital expenditures        (11,580)    (7,648) 
           
Cash used for business acquisitions, net      (33,077)    -   
            
Proceeds from sale of assets       1,232     52  
           
Other items affecting investing cash flow      92     (519) 
           
Net cash used in investing activities    ($43,333) ($8,115) 
           
Borrowings of debt, net         64,950     10,670  
           
Purchase of treasury stock       (1,720)    (21,138) 
           
Debt issuance costs        (380)    -   
           
Cash associated with share-based payment arrangements, net     1,108     1,621  
           
Net cash provided by (used in) financing activities   $63,958  ($8,847) 
           
Effect of exchange rate changes       1,360     (1,925) 
           
Change in cash and cash equivalents    $  43,484  $  (8,982) 
           


Contact: Greg L. Boane (281) 388-5541

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Source: Team, Inc.

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