Q3 2025 Team Inc Earnings Call
Key financial Officer. Please go ahead.
Thank you operator, good morning, everyone and welcome to the team Inc. 's discussion of our third quarter 2025 operational and financial results on the discussion today keep 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 limitation those regarding revenue gross margin operating expense other income and expense taxes, EBITDA cash flow and future business outlook, which by their nature are uncertain and outside of the company's control. Although these forward looking.
Speaker #1: Good morning. And welcome to the Team Inc third quarter update call. I would now like to turn the conference over to Nelson Haight, Chief Financial Officer.
Speaker #1: Please go ahead.
Speaker #2: Thank you,
Speaker #2: Operator. Good morning, everyone, and welcome to Team Inc's discussion about our third quarter 2025 operational and financial results. On the discussion today is Keith Tucker, our Chief Executive Officer, and myself, Nelson Haight, Chief Financial Officer.
These statements are based on management's current expectations and beliefs actual results may differ materially.
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 associated earnings release.
Speaker #2: want to remind you that management's commentary I today may include forward-looking statements, including that limitation those regarding revenue, gross margin, operating expense, other income and expense, taxes, cash flow, and future business outlook, which by their nature are uncertain and outside of the company's control.
<unk> assumes no obligations to update any forward looking statements or information, which speak as of their respective dates with that I will turn it over to Keith Tucker our CEO.
Speaker #2: 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 Team Inc's latest annual and quarterly filings filed with the securities and exchange commission.
Thank you Allison and welcome everyone and thank you for joining us to review, our third quarter operational and financial highlights I want to start off by thanking our employees for their hard work, which has made many of our recent success as possible in the third quarter of 2025, we continued to delay other improved.
Speaker #2: Along with our associated earnings release, Team assumes no obligations to update any forward-looking statements or information which speak as of their respective dates. With that, I will turn it over to Keith Tucker, our CEO.
<unk> financial results with year over year growth in revenue margin and adjusted EBITDA, All while expenses continued to trend lower as a percentage of revenue.
Speaker #3: Thank you, Nelson. Welcome, everyone, and thank you for joining us to review our third quarter operational and financial highlights. I want to start off by thanking our employees for their hard work, which has made many of our recent successes possible.
<unk> grew almost 7% or about $14 million year over year with gross margin, increasing by eight 4% and adjusted EBITDA up to 28, 6% to the highest level for any third quarter since at least 2016.
Speaker #3: In the third quarter of 2025, we continue to deliver improved operational and financial results with year-over-year growth in revenue, margin, and adjusted EBITDA. All while expenses continue to trend lower as a percentage of revenue.
As you can see the growth in our adjusted EBITDA outpaced our topline growth, which is a testament to the solid progress we continue to make on our ongoing cost and margin improvement initiatives drilling down into the segments. We saw a five 7% overall revenue growth and inspection and heat treating driven by <unk>.
Speaker #3: Revenue grew almost 7% or about 14 million year over year, with gross margin increasing by 8.4% and adjusted EBITDA up to 28.6% to the highest level for a third quarter since at least 2016.
Strong nested and call out activity in the U S and eight 9% growth in our international operations, including Canada.
Speaker #3: As you can see, the growth in our adjusted EBITDA outpaced our top-line growth, which is a testament to the solid progress we continue to make on our ongoing cost and margin improvement initiatives.
I've now seen multiple quarters of growth in our Canadian operations, demonstrating the increasing traction of our ongoing initiatives to strengthen our commercial and financial performance in that area.
Speaker #3: Drilling down into the segments, we saw a 5.7% overall revenue growth in inspection and heat treating, driven by strong nested and callout activity in the U.S., and 8.9% growth in our international operations, including Canada.
In our mechanical services segment, we saw strong revenue growth of seven 8% or $8 million led by increased turnaround demand in our U S operations and improved year over year top line performance in Canada.
With both our IHT and MS segments, demonstrating topline growth it should come as no surprise that our adjusted EBITDA for the third quarter increased by $3 $2 million year over year with adjusted EBITDA margin up 110 basis points to six 5% of our consolidated revenue.
Speaker #3: We have now seen multiple quarters of growth in our Canadian operations, demonstrating the increasing traction of our ongoing initiatives to strengthen our commercial and financial performance in that area.
Speaker #3: In our mechanical services segment, we saw strong revenue growth of 7.8% or 8 million, led by increased turnaround demand in our US operations and improved year-over-year top line performance in Canada.
Additionally, we continue to see benefits from our cost discipline in the third quarter lowering our adjusted selling general and administrative expense, which excludes expenses not representative of team's ongoing operations, such as non reoccurring fees and noncash expenses to 28% of consolidate.
Speaker #3: With both our IHT and MS segments demonstrating top line growth, it should come as no surprise that our adjusted EBITDA for the third quarter increased by 3.2 million year over year, with adjusted EBITDA margin up 110 basis points to 6.5% of our consolidated revenue.
<unk> revenue versus 21, 7% in the third quarter of 2024.
We believe that our ability to continuously deliver on our cost control and margin expansion initiatives and improving our balance sheet will continue to drive future shareholder value and stock appreciation. So that end in September 2025, we completed the private placement of preferred stock with <unk> capital.
Speaker #3: Additionally, we continue to see benefits from our cost discipline in the third quarter, lowering our adjusted selling general and administrative expense which excludes expenses not representative of Teams' ongoing operations, such as non-reoccurring fees and non-cash expenses, to 20.8% of consolidated revenue versus 21.7% in the third quarter of 2024.
Management, which strengthened our balance sheet and enhanced financial flexibility. This $75 million investment recognizes the impactful progress made to date and our ongoing program to improve margins and lower our cost structure as well as reinforces the significant opportunities that remain for further improvements in margin.
Speaker #3: We believe that our ability to continuously deliver on our cost control and margin expansion initiatives and improving our balance sheet will continue to drive future shareholder value and stock appreciation.
And topline growth.
Speaker #3: To that end, in September 2025, we completed the private placement of preferred stock with Stellux Capital Management, which strengthened our balance sheet and enhanced financial flexibility.
We are excited to partner with <unk> and look forward to working together to accelerate our value creation plan.
We believe that our ongoing actions and continued focus on executing our strategic vision will help lead to more topline growth and further improvements to our margins and free cash flow generation.
Speaker #3: This 75 million investment recognizes the impactful ongoing program to improve margins and progress made to date in our lower our cost structure, as well as reinforces the significant opportunities that remain for further improvements in margins and top line growth.
I've seen some outstanding numbers are reported in our 2025 results from our actions, thus far and during the third quarter. We continued to work on identifying additional opportunities to improve cost efficiencies and accelerate topline growth and we expect to see additional impacts to our full year 'twenty.
Speaker #3: with Stellux and look forward to working We are excited to partner together to accelerate our value creation plan. We believe that our ongoing actions and continued focus on executing our strategic vision will help lead to more top line growth and further improvements to our margins and free cash flow generation.
Operational and financial results.
Looking ahead, we believe our diversified portfolio of service offerings across multiple industries, and our geographic footprint positions us to better navigate macroeconomic uncertainty we.
Speaker #3: seen some outstanding numbers reported in We have our 2025 results from our actions thus far, and during the third quarter, we continue to work on identifying additional opportunities to improve cost efficiencies and accelerate top line growth, and we expect to see additional impacts to our full year 2026 operational and financial results.
We see top line growth over the prior year across both segments and improved adjusted EBITDA levels for the fourth quarter of 2025.
Have line of sight to full year 2025 revenue growth of approximately 5% and adjusted EBITDA growth of approximately 13%. Our organization is focused on the things we can control, which are continued cost and capital discipline and execution on our commercial initiatives that include aggressive.
Speaker #3: Looking ahead, we believe our diversified portfolio of service offerings across multiple industries and our geographic footprint positions us to better navigate macroeconomic uncertainty. We see top line growth over the prior year across both segments and improved adjusted EBITDA levels for the fourth quarter of 2025.
Leveraging our technical expertise and end markets with attractive margin profiles suggest power aerospace and LNG into increased wallet share we remain committed to delivering profitable growth that enhances our financial results and drive shareholder value with that I would like to turn it over.
Speaker #3: We have line of sight to full year 2025 revenue growth of approximately 5% and adjusted EBITDA growth of approximately 13%. Our organization is focused on the things we can control, which are continued cost and capital discipline, and execution on our commercial initiatives that include aggressively leveraging our technical expertise and in-markets with attractive margin profiles such as power, aerospace, and LNG into increased wallet share.
Nelson to discuss our financial accomplishments.
Thank you Keith.
Before I go into third quarter financial results I would like to discuss in more detail. The recent actions we have taken to strengthen our balance sheet.
Over the last several years, we have diligently improve their balance sheet and enhanced our financial flexibility.
Speaker #3: We remain committed to delivering profitable growth that enhances our financial results and drives shareholder value. With that, I would like to turn it over to Nelson to discuss our financial
2025, we made further improvements in March we closed the refinancing transaction that lowered our blended interest rate by over 100 basis points simplified our capital structure and extended our term loan maturities through 2030 in September we successfully closed on a $75 million private placement.
Speaker #3: accomplishments. Thank you, Keith.
Speaker #2: Before I go into third quarter financial results, I would like to discuss in more detail the recent actions we have taken to strengthen our balance sheet.
Our preferred stock and warrants with Astellas that helped us to pay down about $67 million of debt.
Speaker #2: Over the last several years, we have diligently improved our balance sheet and enhanced our financial flexibility. And in 2025, we made further improvements. In March, we closed a refinancing transaction that lowered our blended interest rate by over 100 basis points.
As part of the same transaction, we also amended our ABL credit facility to increase the commitment by $20 million in order to provide additional flexibility during the seasonal spring and fall demands on our working capital and to reduce the applicable interest rate margin.
Speaker #2: Simplified our capital structure and extended our term loan maturities to 2030. In September, we successfully closed on a $75 million private placement of preferred stock and warrants with Stellux that helped us to pay down about 67 million of debt.
We also amended our first lien term loan facility to reduce the applicable interest rate margin and improved financial flexibility. Finally, the private placement includes a delayed draw feature that will allow the company to raise up to an additional $30 million in proceeds through the placement of additional preferred stock and warrants over the next 24 months.
Speaker #2: As part of that same transaction, we also amended our ABL credit facility to increase the commitment by 20 million. In order to provide additional flexibility during the seasonal spring and fall demands on our working capital, and to reduce the applicable interest rate margin.
Our success since 2022, and improving our financial and operating performance helped make these transactions possible and we believe these improvements to our balance sheet to help better position team to accelerate execution of our long term strategic plan focused on top line growth.
Speaker #2: We also amended our first-lien term loan facility to reduce the applicable interest rate margin and improve financial flexibility. Finally, the private placement includes a delayed draw feature that will allow the company to raise up to an additional $30 million in proceeds through the placement of additional preferred stock and warrants over the next 24 months.
Lowering our cost structure and strengthening our cash flow.
We also look to lean astellas as a partner, whose insight and expertise, we expect will help us achieve our strategic goals faster and more efficiently.
Speaker #2: Our success since 2022 in improving our financial and operating performance helped make these transactions possible. And we believe these improvements to our balance sheet help better position Teams to accelerate execution of our long-term strategic plan focused on top line growth, lowering our cost structure, and strengthening our cash flow.
These actions have helped to increase our liquidity, which at September 32025, and increased to $57 1 million consisting of unrestricted cash of $10 6 million and $46 5 million of Undrawn availability under our various credit facilities. This does not include the $30 million of potential additional proceeds from any future.
Speaker #2: We also look to lean on Stellux as a partner whose insight and expertise we expect will help us achieve our strategic goals faster and more efficiently.
First stock issuance as I spoke about earlier.
Turning to our financial results. We are very pleased to see strong top line growth in both of our segments in the third quarter for the first nine months nine months of 2025, our IHT segment delivered nine 4% of year over year growth in our mechanical services segment with revenue growth of just under 1% on a combined basis.
Speaker #2: These actions have helped to increase our liquidity, which at September 30, 2025, had increased to 57.1 million, consisting of unrestricted cash of 10.6 million and 46.5 million of undrawn availability under various credit facilities.
This is almost $33 million of additional year over year revenue thus.
Speaker #2: $30 million of potential additional issuances that I spoke about This does not include the proceeds from any future preferred stock earlier. Turning to our financial results, we are very pleased to see strong top line growth in both of our segments in the third quarter.
Thus far in 2025, we have also seen a 12% improvement in adjusted EBITDA or about $5 million year over year, while our absolute adjusted selling general and administrative costs, which excludes expenses not representative of ongoing operations and other noncash amounts.
Speaker #2: For the first nine months of 2025, our IHT segment delivered 9.4% of year-over-year growth, and our mechanical services segment revenue growth of just under 1%.
As marginally increased over the first nine.
Nine months of 2025, those expenses as a percentage of consolidated revenue are down 70 basis points year over year to 27% of revenue or.
Speaker #2: On a combined basis, this is almost 33 million of additional year-over-year revenue. Thus far, in 2025, we've also seen a 12% improvement in adjusted EBITDA, or about 5 million year-over-year.
Our adjusted net loss for the first nine months of 2025 is also down almost 7 million compared to the first nine months of 2024.
Speaker #2: While our absolute adjusted selling, general and administrative costs, which exclude expenses not representative of our ongoing operations and other non-cash amounts, have marginally increased over the first nine months of 2025, those expenses as a percentage of consolidated revenue are down 70 basis points year-over-year to 20.7% of revenue.
We have generated over $44 million and adjusted EBITDA through the first nine months of 2025.
On pace to deliver strong year over year growth.
We have increased our adjusted EBITDA every year since 2021, and we are forecasting approximately 13% growth in adjusted EBITDA for the full year 2025.
Leave that our continued focus on expanding our margins through cost discipline and growing higher margin work will help us accomplish this goal while building positive momentum as we head into 2026.
Speaker #2: Our adjusted net loss for the first nine months of 2025 is also down almost 7 million compared to the first nine months of 2024.
Speaker #2: We have generated over 44 million in adjusted EBITDA through the first nine months of 2025, and we are on pace to deliver strong year-over-year growth.
As you've heard from both Keith and myself. This morning, we are executing on our strategic roadmap designed to deliver profitable growth and improved cash flow generation.
Speaker #2: We have increased our adjusted EBITDA every year since 2021, and we are forecasting approximately 13% growth in adjusted EBITDA for the full year 2025, and believe that our continued focus on expanding our margins through cost discipline and growing higher margin work will help us accomplish this goal while building positive momentum as 2026.
Year to date, our free cash flow has been negatively affected by nonrecurring refinancing and transaction fees and related expenses as well as negative working capital impacts specifically around accounts receivable and payables.
Looking forward, we expect fewer nonrecurring professional fees and we expect these adverse working capital trends to begin reversing in the fourth quarter, all of which should help improve our future free cash flow generation.
Speaker #2: As you've heard from both we head into Keith and myself this morning, we are executing on our strategic roadmap designed to deliver profitable growth and improved cash flow generation.
Over the last three plus years, we've made significant progress in improving the financial position and operating performance of the company.
Speaker #2: Year to date, our free cash flow has been negatively affected by non-recurring refinancing and transaction fees and related expenses, as well as negative working capital impacts specifically around accounts receivable and payables.
Our balance sheet is healthier margins have improved and the topline is growing while the company continues to safely deliver best in class technical solutions to our customers.
Speaker #2: Looking forward, we expect fewer non-recurring professional fees and we expect these adverse working capital trends to begin reversing in the fourth quarter, all of which should help improve our future free cash flow generation.
With our employees continued focus and dedication I'm confident in our ability to build on our progress to date with further improvements in our overall financial and operating performance that will ultimately unlock the inherent value and team with that let me now turn it back over to Keith for some closing comments.
Speaker #2: Over the last three plus years, we've made significant progress in improving the financial position and operating performance of the company. The balance sheet is healthier, margins have improved, and the top line is growing while the company continues to safely deliver best-in-class technical solutions to our customers.
Thanks, Nelson, we've worked hard to streamline our business expand our margins and simplify our cost structure and improve our balance sheet. Looking ahead, we expect to continue seeing strong operational and financial results in the fourth quarter of 2025 with year over year growth in the topline continued improved.
Speaker #2: With our employees' continued focus and dedication, I'm confident in our ability to build off our progress to date with further improvements in our overall financial and operating performance that will ultimately unlock the inherent value in Team.
Performance from our Canadian and other international operations and further meaningful progress towards our adjusted EBITDA target margin of at least 10% all of which we believe will enhance shareholder value I'm very proud of our safety culture and our focus on continuous improvement because at the end of the day.
Speaker #2: With that, let me now turn it back over to Keith for some closing comments.
Speaker #1: Thanks, Nelson. We've worked hard to streamline our business, expand our margins, and simplify our cost structure and improve our balance sheet. Looking ahead, we expect to continue seeing strong operational and financial results in the fourth quarter of 2025 with year-over-year growth in the top line, continued improved performance from our Canadian and other international operations, and further meaningful progress towards our adjusted EBITDA target margin of at least 10%, all of which we believe will enhance shareholder value.
Our people are our most vital asset and no job is too important not to be done safely.
In closing I remain confident about our future because I am a firm believer in our capabilities talented employees and this leadership team we have delivered improving results over the past three years, and we remain committed to continuous improvement and margin cost discipline and cash flow generation I believe that we are well positioned.
Speaker #1: I'm 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.
<unk> to sustainably and profitably grow team well into the future. Thank you for joining us today and for your continued interest in team.
Speaker #1: In closing, I remain confident about our future because I am a firm believer in our capabilities, talented employees, and this leadership team. We have delivered improving results over the past three years, and we remain committed to continuous improvement in margin, cost discipline, and cash flow generation.
Thank you the conference has now concluded.
You for attending today's presentation you may now disconnect.
Speaker #1: I believe that we are well positioned to sustainably and profitably grow Team well into the future. Thank you for joining us today and for your continued interest in Team.