Q2 2024 Team Inc Earnings Call
Good day and welcome to the team Inc. Second quarter update conference call.
Today, all participants will be in a listen only mode should you need assistance during todays call. Please signal for a conference specialist by pressing the star key followed by zero.
[music].
Please note that today's event is being recorded I would now like to turn the conference over to Nelson Haight CFO. Please go ahead Sir.
Thank you operator, good morning, everyone and welcome to the team Inc. Discussion about our second quarter 2020 for operational and financial results under discussion today are Keith Tucker, our Chief Executive Officer, and myself Nelson Haight, Chief Financial Officer, I want to remind you that management's commentary today may include forward looking statements, including without <unk>.
Good day and welcome to the team Inc. Second quarter update conference call.
Today, all participants will be in a listen only mode.
You need assistance during todays call. Please signal for a conference specialist by pressing the star key followed by zero.
Speaker Change: Limitation those regarding revenue gross margin operating expenses other income and expense taxes adjusted EBITDA.
Please note that today's event is being recorded I would now like to turn the conference over to Nelson Haight CFO. Please go ahead Sir.
Speaker Change: Cash flow and future business outlook, which by their nature are uncertain and outside of the company's control. Although these forward looking statements are based on management's current expectations and beliefs actual results may differ materially for a discussion of some of the risk factors that could cause actual results to differ please refer to the risk factors section.
Thank you operator, good morning, everyone and welcome to the <unk> discussion about our second quarter 2020 for operational and financial results on the discussion today are Keith Tucker, our Chief Executive Officer, and myself Nelson Haight, Chief Financial Officer.
Speaker Change: In <unk> latest annual and quarterly filings filed with Securities Exchange Commission.
I want to remind you that management's commentary today may include forward looking statements, including without limitation those regarding revenue gross margin operating expenses other income and expense taxes, adjusted EBITDA cash flow and future business outlook, which by their nature are uncertain and outside of the Companys control.
Speaker Change: Along with our associated earnings release.
<unk> assumes no obligation to update any forward statements or information, which speak as of their respective date.
Speaker Change: As a reminder, a reconciliation of the non-GAAP financial measures referenced during this call is available in our earnings release.
Although these forward looking statements are based on management's current expectations and beliefs actual results may differ materially for a discussion of some of the risk factors that could cause actual results to differ please refer to the risk factors section of <unk> latest annual and quarterly filings filed with the Securities and Exchange Commission along with our associates.
Speaker Change: I will turn it over to Keith Tucker Chief Executive.
Keith Tucker: Thank you welcome everyone and thank you for joining us for review, our recent accomplishments and our second quarter results.
Speaker Change: In may as a reintroduction to team we posted an updated presentation with commentary by Nelson and me.
<unk> earnings release, <unk> assumes no obligation to update any forward looking statements or information, which speak as of their respective dates as a reminder, a reconciliation of the non-GAAP financial measures referenced during this call is available in our earnings release with that I will turn it over to Keith Tucker, Our Chief Executive Officer.
Speaker Change: I'd encourage everyone to listen to it as it provides additional information on our strategy and market leading capability.
Nelson Haight: <unk> has a rich history and an impressive track record and our industry. However, when I took over as CEO in 2022, we faced a number of internal and external challenges.
Now some welcome everyone and thank you for joining to review, our recent accomplishments and our second quarter results.
Nelson Haight: For the past two years, we have been executing a strategic road map in order to better position team to succeed in the future.
In may as a reintroduction to team we posted an updated presentation with commentary by Nelson and me.
Nelson Haight: Amplified the business.
Nelson Haight: To address our capital structure and balance sheet improved our margins and we are well positioned to grow once again.
I encourage everyone to listen to it as it provides additional information on our strategy and market leading capabilities.
Nelson Haight: With respect to our second quarter results, we built up the positive momentum we established during the first quarter and demonstrated continued progress in lowering costs.
<unk> has a rich history and an impressive track record and our industry. However, when I took over as CEO in 2022, we faced a number of internal and external challenges.
Nelson Haight: Banding margins and improving cash flow generation for.
Nelson Haight: For the second quarter gross margin dollars grew nearly 3 million to $63 $6 million and our gross margin improved 240 basis.
The past two years, we have been executing a strategic roadmap in order to better position team to succeed in the future. We have simplified the business worked to address our capital structure and balance sheet improved our margins and we are well positioned to grow once again.
Nelson Haight: So over the prior year period.
Nelson Haight: Our adjusted selling general and administrative expense, which is a rough measure of cash SG&A costs were 2 billion lower over the prior year period and these factors contributed to an adjusted EBITDA margin for the quarter expanded to nine 5% of consolidated revenue.
With respect to our second quarter results, we built up the positive momentum we established during the first quarter and demonstrated continued progress in lowering costs.
<unk> margins and improving cash flow generation for.
Nelson Haight: And adjusted EBITDA of $21 8 million up 25% from the 2023 period.
For the second quarter gross margin dollars grew nearly 3 million to $63 6 million and our gross margin improved 240 basis points over the prior year period our.
Nelson Haight: Our ongoing efforts to lower costs have led to margin expansion that we believe we can continue to build upon.
Our adjusted selling general and administrative expense, which is a rough measure of cash SG&A costs were 2 billion lower over the prior year period and these factors contributed to an adjusted EBITDA margin for the quarter and expanded to nine 5% of consolidated revenue.
Nelson Haight: As we have noted previously our goal has been to grow adjusted EBITDA margins to 10% or more at our first half results are a significant step towards achieving this goal.
Nelson Haight: While we remain focused on cost discipline and operational execution. During the second quarter, we launched a series of targeted commercial initiatives designed to drive revenue growth within our core markets accelerate our expansion into higher growth and higher margin end markets, such as aerospace and midstream and <unk>.
And adjusted EBITDA of $21 8 million up 25% from the 2023 period.
Our ongoing efforts to lower costs have led to margin expansion that we believe we can continue to build upon.
Nelson Haight: Our commercial discipline. These initiatives continue to gain traction and we expect to see meaningful progress in the second half of 2024, we continue to see strong demand at our state of the art Aerospace facility in Cincinnati with revenue up 46% and we recently approved in <unk>.
As we have noted previously our goal has been to grow adjusted EBITDA margins to 10% or more at our first half results are a significant step towards achieving this goal.
We remain focused on cost discipline and operational execution during the second quarter, we launched a series of targeted commercial initiatives designed to drive revenue growth within our core markets accelerate our expansion into higher growth and higher margin end markets, such as aerospace and midstream and <unk>.
Mental investment in that facility that will further expand our aerospace capacity by the end of 2020 for.
Nelson Haight: Our results are also benefiting from an improving job mix driven by an increased focus on higher margin revenue streams with stronger pricing I'm also pleased to note that we recently made strategic additions to our operations management team in the midstream and aerospace side to further drive growth.
Our commercial discipline. These initiatives continue to gain traction and we expect to see meaningful progress in the second half of 2024, we continue to see strong demand at our state of the art Aerospace facility in Cincinnati with revenue up 46% and we recently approved in <unk>.
Nelson Haight: Attractive high margin sectors. We expect these actions together with our continued emphasis on cost efficiency.
Parental investment in that facility that will further expand our aerospace capacity by the end of 2020 for.
Nelson Haight: Further strengthen our financial position and accelerate our cash flow growth ultimately leading to enhanced shareholder value.
Our results are also benefiting from an improving job mix driven by an increased focus on higher margin revenue streams with stronger pricing I'm also pleased to note that we recently made strategic additions to our operations management team in the midstream and aerospace segments to further drive growth.
Nelson Haight: Looking ahead to the second half of 2024.
Nelson Haight: Strong activity levels across both our segments, particularly in turnaround activity and project related work and expect further improvement in margin performance as well as improved financial performance versus the first half of 2024 from our international and Canadian operations. We expect these factors.
These attractive high margin sectors. We expect these actions together with our continued emphasis on cost efficiency to further strengthen our financial position and accelerate our cash flow growth ultimately leading to enhanced shareholder value.
Nelson Haight: Gather with growing traction on our commercial initiatives to provide top line growth in the second half of 2024 as compared to the prior year.
Nelson Haight: These efforts have resulted in solid operational performance and improving financial results and we remain sharply focused on continuing this trajectory and strengthening our balance sheet I wanted to take this opportunity to point out that our full year 2024, adjusted EBITDA guidance is between <unk>.
Looking ahead to the second half of 2024, we see strong activity levels across both our segments, particularly in turnaround activity and project related work and expect further improvement in margin performance as well as improved financial performance versus the first half of 2024 from our international and <unk>.
Nelson Haight: 8% to $68 million, representing a 48% improvement at the midpoint over 2023.
In operations.
We expect these factors together with growing traction on our commercial initiatives to provide top line growth in the second half of 2024 as compared to the prior year.
Nelson Haight: With our strong second quarter and first half results. We remain on track to hit this guidance and continue on this positive trajectory with that I would like to turn it over to Nelson to discuss our financial accomplishments.
All of these efforts have resulted in solid operational performance and improving financial results and we remain sharply focused on continuing this trajectory and strengthening our balance sheet I wanted to take this opportunity to point out that our full year 2024, adjusted EBITDA guidance is between.
Nelson Haight: Thank you Keith and thank you for joining our call.
Our second quarter 2024 results confirm our progress made to date in improving our margins despite slightly lower year over year revenue, our gross margin operating income and adjusted EBITDA All increased significantly we improved our gross margin by 240 basis points to 27, 8% our operating income increased by almost.
<unk> 58, and $68 million, representing a 48% improvement at the midpoint over 2023 with.
With our strong second quarter and first half results. We remain on track to hit this guidance and continue on this positive trajectory with that I would like to turn it over to Nelson to discuss our financial accomplishments.
Nelson Haight: Most of 150%.
Nelson Haight: Improved cash flow from operating activities by $19 million and adjusted EBITDA grew by 25% to $21 $8 million on a year over year basis, our consolidated net loss for the quarter was $2 8 million a $13 million improvement over the 2023 period.
Thank you Keith and thank you for joining our call.
Our second quarter 2024 results confirm our progress made to date in improving our margins despite slightly lower year over year revenue or gross margin operating income and adjusted EBITDA. All increased significantly we improved our gross margin by 240 basis points to 27, 8% our operating income increased by almost.
We believe that our solid first half 2024 financial and operational performance will continue into the second half of the year.
Nelson Haight: We are confident in the strategic roadmap, we laid out in may to improve our cost structure and streamline our operations. We expect our ongoing program will further demonstrate a sustainable benefit to margins and cash flow as Keith pointed out over the last two plus years, we work to stabilize the business and focus our efforts on the execution of our strategic.
Most of 150%, we improved cash flow from operating activities by $19 million and adjusted EBITDA grew by 25% to $21 8 million on a year over year basis, our consolidated net loss for the quarter was $2 8 million a $13 million improvement over the 2023 period.
Speaker Change: Roadmap the results of which can be seen in our improved profitability. We have increased our adjusted EBITDA every year since 2021 with a compounded annual growth rate of 34% from 2020 to the mid point of our 2024 guidance, which we're well on our way to achieving given our strong second quarter and first half 2024 results.
We believe that our solid first half 2024 financial and operational performance will continue into the second half of the year.
We are confident in the strategic roadmap, we laid out in may to improve our cost structure and streamline our operations. We expect our ongoing program will further demonstrate a sustainable benefit to margins and cash flow.
Speaker Change: In addition, our adjusted EBITDA margin has improved dramatically over the same period and our margin at the midpoint of our 2024 guidance would represent the highest margin at least six years.
As Keith pointed out over the last two plus years, we work to stabilize the business and focus our efforts on the execution of our strategic roadmap the results of which can be seen in our improved profitability. We have increased our adjusted EBITDA every year since 2021 with a compounded annual growth rate of 34% from 2020 to the mid point of our.
Speaker Change: More importantly, we see a clear path toward achieving our goal of a 10% or more adjusted EBITDA margin in the near future.
Speaker Change: We expect improved cash flow and EBITDA generation to provide increased liquidity that would further strengthen the balance sheet, while also lowering our leverage ratio and allowing for debt pay down we continue to work on these priorities and are already working on our plan to address our next debt maturity, which is in August of 2025.
2024 guidance, which we're well on our way to achieving given our strong second quarter and first half 2024 results. In addition, our adjusted EBITDA margin has improved dramatically over the same period and our margin at the midpoint of our 2024 guidance would represent the highest margin at least six years.
Speaker Change: I'd like to thank our supportive stakeholders, who not only know our business, let's see the inherent potential and are aligned with our strategic roadmap.
Speaker Change: We have started the year off on the right foot and we expect to build on this positive momentum, which we which can be seen in our 2020 for full year outlook. We are focused on high grading our project portfolio with further cost savings and margin expansion efforts that will continue to grow our margin and adjusted EBITDA allow for incremental revenue growth to be highly margin accretive.
More importantly, we see a clear path toward achieving our goal of a 10% or more of adjusted EBITDA margin in the near future.
We expect improved cash flow and EBITDA generation to provide increased liquidity that would further strengthen the balance sheet, while also lowering our leverage ratio and allowing for debt pay down we continue to work on these priorities and are already working on our plan to address our next debt maturity, which is in August of 2025.
Speaker Change: As Keith stated earlier, we are projecting a 48% increase in adjusted EBITDA at the midpoint of our 2024 outlook as compared to 2023.
I'd like to thank our supportive stakeholders, who not only know our business, let's see the inherent potential and are aligned with our strategic roadmap.
Speaker Change: We are in a much improved position now compared to where we were three years ago and I am confident in our ability to continue the successful execution of our strategic vision. We're excited to deliver improved results that we expect will lead to growth in shareholder value and with that let me turn it back over to Keith for some closing comments.
We have started the year off on the right foot and we expect to build on this positive momentum, which we which can be seen in our 2020 for full year outlook. We are focused on high grading our project portfolio with further cost savings and margin expansion efforts that will continue to grow our margin and adjusted EBITDA allow for incremental revenue growth to be highly margin accretive.
Keith Tucker: Thanks, Nelson we are encouraged with the progress that we've made and the overall trajectory of our business as you can see we have accomplished a lot with this leadership team believes there is quite a bit more to play for here.
Greetings.
As Keith stated earlier, we are projecting a 48% increase in adjusted EBITDA at the midpoint of our 2024 outlook as compared to 2023.
Speaker Change: We have a committed and experienced workforce.
We are in a much improved position now compared to where we were three years ago and I am confident in our ability to continue the successful execution of our strategic vision.
Keith Tucker: Clearly focused on executing our strategic plan and unlocking the value. We believe is inherent in this franchise I am very proud of our safety culture, and our focus on continuous improvement because at the end of the day. Our people are our most vital asset and no job is too important not to be done safely.
We're excited to deliver improved results that we expect will lead to growth in shareholder value.
With that let me turn it back over to Keith for some closing comments.
Thanks, Nelson we are encouraged with the progress that we've made and the overall trajectory of our business as you can see we have accomplished a lot with this leadership team believes there is quite a bit more to play for here.
Keith Tucker: Im a firm believer in team our operational capabilities talented employees and this leadership team I want to thank our employees for their dedication hard work and commitment to safe operations. None of this would be possible without them.
We have a committed and experienced workforce that is squarely focused on executing our strategic plan and unlocking the value. We believe is inherent in this franchise I am very proud of our safety culture, and our focus on continuous improvement because at the end of the day. Our people are our most vital asset in <unk>.
Keith Tucker: In closing I believe that there is a meaningful opportunity to further unlock the value that is inherent in team. We have gone through a period of underperformance without a clear strategy and a clear focus and we are not only fixing that but we are delivering improving results. The work we've done over the past two.
No job is too important not to be done safely.
A firm believer in team our operational capabilities talented employees and this leadership team I want to thank our employees for their dedication hard work and commitment to safe operations. None of this would be possible without them in closing I believe that there is a meaningful opportunity to further on.
Speaker Change: And a half years has yielded some encouraging results and we believe that we are well positioned to sustainably and profitably grow team for the remainder of 2024 and into the future. Thank you for joining us today and your continued interest in team.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
The value that is inherent in team we have gone through a period of underperformance without a clear strategy and a clear focus and we are not only fixing that but we are delivering improving results. The work we've done over the past two and a half years has yielded some encouraging results and we believe that we are.
Speaker Change: Okay.
Speaker Change: Well positioned to sustainably and profitably grow team for the remainder of 2024 and into the future. Thank you for joining us today and your continued interest in team.
Speaker Change: [music].
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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Operator: Good day, and welcome to the Team Inc second quarter update conference call. Today, all participants will be in a listen-only mode. Should you need assistance during today's call, please signal for a conference specialist by pressing the star key followed by zero. Please note that today's event is being recorded. I would now like to turn the conference over to Nelson Haight.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Nelson Haight: Thank you, operator. Good morning, everyone, and welcome to the Team Inc discussion about our second quarter 2024 operational and financial results. We are having a discussion today with Keith Tucker, our Chief Executive Officer, and myself, Nelson Haight, the Chief Financial Officer. I want to remind you that management's commentary today may include forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expense, other income and expense, taxes, adjusted EBITDA, cash flows, and future business outlooks, which, by their nature, are uncertain and outside of a healthy range.
Speaker Change: Okay.
Speaker Change: Yes.
Nelson Haight: Team Inc's latest annual and quarterly filings, where today's conclusion was in a statement. Along with our associated earnings release regarding revenue, Team Inc. assumes no obligation to update any coordinates, statements, or information regarding taxes as of their received date of cash flow.
Keith Tucker: Thank you, Nelson, welcome everyone, and thank you for joining us to review our recent accomplishments and our second quarter results. In May, the reintroduction of the Team Inc.
Keith Tucker: with commentary by Nelson Ruiz. I would encourage everyone to listen to it as it provides additional information on our strategy and market leadership skills. The team has a rich history and an impressive track record in our industry.
Keith Tucker: Robert, when I took over as CEO in 2022, we faced a number of internal and external challenges. Over the past two years, we have been executing a strategic roadmap in order to better position teams for the future. We posted an updated presentation, worked to address our capital structure and balance sheet, improved our margin, and we are well positioned to grow once again.
Keith Tucker: We're back to it, and then we're well positioned to grow a bunch of, on our strength, respect on our side.
Keith Tucker: and our industry continued progress in lowering costs, expanding margins, and improving cash flow generation. For the second quarter, gross market dollars grew nearly double.
Keith Tucker: $1.2 million through nearly $3 million to $63 million in our gross margin and career future.
Keith Tucker: Welcome.
Keith Tucker: and the crew to report an adjusted EBITDA margin for the quarter that expanded to $9.50.
Keith Tucker: of Consolidated Revenue and Adjusted EBITDA of $21.25 gross margin.
Keith Tucker: As we have noted previously, our goal has been to grow the justice system.
Keith Tucker: Hello, good to have you here today, but I want to measure 10% or more in our first half result. You will be able to work in terms of that here.
Keith Tucker: And these factors contribute to an adjustment in the cost of the plant. In the second quarter, we launched a...
Keith Tucker: We launched a series of targeted commercial initiatives designed to drive revenue growth within our core market, accelerate our expansion into higher-growth and higher-margin markets for the aerospace industry, and strengthen our commercial discipline.
Keith Tucker: to strengthen our commercial disability plot.
Keith Tucker: Our goal is to see meaningful progress in the second half of 2020. We continue to see strong demand at our state-of-the-art aerospace facility in Cincinnati, with revenue up 46%, and we recently approved an incremental investment in that facility that will further expand our footprint.
Keith Tucker: to drive revenue growth within Our results have also been added to improve job lifege focus on higher margin rev
Keith Tucker: I'm also pleased to note that we recently made strategic additions to our Operations.
Keith Tucker: and the Mid-Screen and Aerospace sites see superficial growth but are detracted from by high margins of security and sensitivity.
Keith Tucker: We expect these actions, together with our continued emphasis on positive people, to further strengthen our financial position and accelerate our growth-sharing capacity, ultimately leading to enhanced shareholder value. Our results are also demonstrating improved engagement, driven by an increasing focus on strong, bold revenue streams, particularly in turnaround activity and project-initiative work, and we expect further improvement in margin performance, as well as improved financial performance versus the first half of 2024 for our international and Canadian operations. We expect these actions, together with our continued emphasis on positive people, to further strengthen our financial position and accelerate our cash flow growth, ultimately leading to enhanced shareholder value.
Keith Tucker: and we remain sharply focused on continuing this trajectory and strengthening our balance. I want to take this opportunity to point out that our full year 2024 adjusted EBITDA guidance is between 58 and 68 million, representing a 48% improvement.
Keith Tucker: With our strong second quarter and first half results, we remain on track to hit this guy and continue on this path.
Nelson Haight: Thank you, Keith, and thank you for joining our call. Our second quarter 2024 results confirm our progress made to date in improving our margins. Despite slightly lower year-over-year revenue, our gross margin, operating income, and adjusted EBITDA all increased significantly. We improved our gross margin by 240 basis points to 27.8%. And our operating income increased by almost 100%.
Nelson Haight: Our consolidated net loss for the quarter was $2.8 million, a $13 million improvement over the 20-year period.
Nelson Haight: for financial and operational performance will continue in just seconds until all increased signals are received.
Nelson Haight: We are confident in the improvement road map we laid out in May to improve our cost structure.
Nelson Haight: We expect our ongoing program will further demonstrate a sustainable benefit to the larger community.
Keith Tucker: As Keith pointed out, over the last two plus years, we've worked to stabilize the business and focus our efforts.
Keith Tucker: and strategic growth and net loss, the results of which can be seen in our $13 million improvement.
Keith Tucker: and every year since 2021, with a compounded annual growth rate of 31% from 2020 to 2021.
Keith Tucker: We are confident in the strategic roadmap we laid out that day in order to improve our company structure and streamline our operations. In addition, our just-debuted stock market has improved dramatically over the same period.
Nelson Haight: In addition, our Just-E-Bit-DAH margin has improved dramatically over the same period, and our margin at the midpoint of our 2024 guidance would represent the highest margin in at least six years. More importantly, we see a clear path toward achieving our goal of a 10% or more Just-E-Bit-DAH margin in the near future. We expect improved cash flow and E-Bit-DAH generation to provide increased liquidity and further strengthen the balance sheet.
Nelson Haight: I would like to thank our supportive stakeholders.
Nelson Haight: I would like to thank our supportive stakeholders who not only know our business but see the inherent potential and are aligned with our strategic growth next year. We had more garbage the year off on the right. We have been asked back to gentlemen, our cause of the momentum when we were more. It can't be seen in our 2024 full-year outlook.
Keith Tucker: Thanks, Nelson. We are encouraged by the progress that we have made and the overall trajectory of our business. As you can see, we have accomplished a lot, but this leadership team believes there is quite a bit more to play for here.
Keith Tucker: I am very proud of our safety culture and our focus on continuous improvement.
Keith Tucker: I am a firm believer in the team and the overall professional
Keith Tucker: I want to thank our employees for their dedication, hard work, and commitment to safe aviation.
Keith Tucker: and Commitment to Safety Operations; none of this would be possible without them.
Keith Tucker: I am very proud of our series of underperformance without a clear strategy and a clear focus. And we are not only fixing that; we are delivering on that.
Keith Tucker: and the work that we've done over the past two and a half years has yielded an incurable case.
Keith Tucker: and our operational capabilities, and we believe that we are well positioned to sustainably and profitably...
Keith Tucker: for their dedication, hard work, and commitment to safe operation. None of this would be possible without them.
Operator: The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect. Thank you for joining us today and for your continued interest in TEAM. The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.
Keith Tucker: With that, I would like to thank you.
Nelson Haight: We have been focused on high-grade, and our project general will provide. When cruiser cost savings in margin, the advantage, and the average level continue to grow, our large, and our leverage of radiation will allow for incremental revenue growth, we can march on the priorities in our early or save our early end to a direct impact on just when you would die at the mid-point. I would like to thank our government for the state care system.
Operator: 3-2-2-1 Nelson Haight, Keith Tucker, Team Inc Nelson Haight, Keith Tucker, Team Inc Nelson Haight, Keith Tucker, Team Inc Nelson Haight, Keith Tucker, Team Inc Nelson Haight, Keith Tucker, Team Inc [inaudible]
Nelson Haight: We're not only in no more business, but we see the end. We are in so much proof of this now compared to where we worked three years ago. And I mean, it's hard to then hear our ability to win.