Team, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Team, Inc. first quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference to your speaker today, Don Blaisdell, Vice President, Finance. Please go ahead, sir.

Thank you, Joelle. Welcome, everyone, to TEAM's 2020 First Quarter Conference Call. With me on today's call are Amarino Gatti, our Chairman and Chief Executive Officer, and our Chief Financial Officer, Susan Ball. This call is also being webcast and can be accessed through the audio link under the Investor Relations section of our website at teaminc.com. Information recorded on this call speaks only as of today, June 18, 2020. Therefore, please be advised that any time-sensitive information may no longer be accurate as of the date of any replay listening or transcript reading. There will be a replay of today's call, and it will be available via webcast by going to the company's website, teaminc.com. In addition, a telephonic replay will be available until June 25th. The information on how to access these replay features was provided and yesterday's earnings release. Before we continue, I'd like to remind you that this call contains forward-looking statements made pursuant to the State Harbor provisions of the Private Securities and Migration Reform Act of 1995, including statements of expectations, future events, or future financial performance. Forward-looking statements involve inherent risks and uncertainties, and we caution investors that a number of factors could cause actual results to differ materially from those contained in any forward-looking statements. These factors and other risks and uncertainties are detailed on the company's annual report on Form 10-K and in the company's other documents and reports filed or furnished with the Securities and Exchange Commission. The company assumes no obligation to publicly update or revise any forward-looking statements except as may be required by law. I would now like to turn the call over to Anne-Marie. Anne-Marie?

Thank you, Don, and good morning, everyone. We appreciate you joining us today, and I hope you and your families are safe and healthy. During this challenging and dynamic period, I would also like to thank the healthcare workers and those on the front lines of containment for their efforts and dedication. These are extraordinary times, and this quarter's earnings call will be far from routine. My management team and I remain focused on the well-being of our employees and their families, as well as supporting our clients and the community. We will provide transparency around three key initiatives that ensure teams' corporate health and position us for the recovery. First, the safety of our people and business continuity. Second, the previously announced decisive actions taken to align the business and our capacity with the near-term decrease in activity. And third, our end market revenue diversification strategy. This morning, I will start with a high-level financial review and outline how we are managing our business through the pandemic. Susan will then detail our first quarter results and financial position, after which I will provide an overview of the market trends and an update on our One Team program. Our first quarter results were noticeably impacted by adverse market conditions. Consolidated first quarter revenues were $237 million, down 12% from a year ago. Despite lower year-over-year quarterly revenues of $33 million, First quarter gross margin was $57.5 million, or 24.3%, on par with 24.5% in the prior year quarter. In addition, we were able to generate positive operating cash flow of approximately $1 million and reduce SG&A expenses by $3.8 million when compared to the first quarter of 2019. Turning to our segment performance, mechanical services, First quarter revenues were $104.5 million, down 14% from the first quarter of 2019, and adjusted EBITDA was $6.6 million, a decline of 40% when compared to the same period last year. After a slow start to the quarter, mechanical services experienced increased field work from mid-January into March until activity was impacted by the pandemic and the drop in global demand. While the quarter did not meet our expectations, mechanical services saw a step change in its midstream work as pipeline operators performed ongoing integrity management programs. As an example, the team was engaged to supply over 250 hot tap and line stop fittings for an integrity remediation project. We manufactured and delivered high-quality, state-of-the-art fittings on time, and as a result, The client awarded us a significant portion of their field activities for the remainder of 2020. Inspection and heat treating revenues in the first quarter were $107.9 million, down 15.1% from the first quarter of 2019, and adjusted EBITDA was $3.6 million, a decline of 43% from the prior year quarter. Despite IHT's disappointing quarterly results, primarily in our downstream markets, we saw growth in power, and pulp and paper sectors. This is an example of our successful revenue diversification initiative to leverage our skill sets and subject matter expertise across different industries and geographies. Quest Integrity continued its strong performance by increasing revenues by 16% and improving operating income by 271% over Q1 2019. During the first quarter, Quest completed its largest ever LNG reactor turnaround and inspection in the Middle East. Using high resolution ultrasonic technology, Quest inspected the reactors with our proprietary common header delivery system. Our advanced engineering group performed a fitness for service assessment that enabled the client to prioritize repairs and resume production quickly and safely. Overall, Activity was negatively affected by the unprecedented economic crisis triggered by COVID-19 pandemic and volatility in commodity prices driven by the oil and gas supply and demand imbalance. The first quarter 2020 revenue impact from these events was approximately $23 million. In addition, the decision by OPEC Plus in early March to increase production combined with the spread of COVID-19 into North America created an oversupply, causing oil demand to fall to an all-time low. Many of our clients reprioritized their operations, resulting in scope reductions on certain ongoing work, deferrals or suspensions of planned maintenance projects, and cuts in capital spend. In order to proactively address the impact of the pandemic and the oil and gas supply and demand imbalance, We quickly mobilized four task forces addressing health, business continuity, client engagement, and cost and cash management, each led by members of my executive team. First, the health task force. The health and safety of our employees is our top priority, and the pandemic has significantly disrupted the day-to-day lives of many of our people. Following the guidelines set by our critical response team, we are taking the necessary precautions to protect our employees worldwide. On-site personnel were limited to those that are crucial to client operations and implemented social distancing protocols, which include working in shifts to minimize the risk of exposure. The majority of teams and markets cannot be run remotely. Therefore, many of our refinery clients implemented temperature monitoring and screening to safely continue operations. Along with our clients, we have empowered our technicians to stop work and report any activities they deem to be unsafe. TEAM is also strengthening worksite standards, policies and procedures and developed decision-making protocols for both our districts and client locations. We have responded to more than 100 client inquiries to provide detailed information about our pandemic response plan, including PPE measures and improvements, exposure procedures and return to work directives. team procured and distributed critical supplies to over 80 districts globally. We're also helping our employees and their families by providing guidance on how to minimize the spread of the virus and sharing resources that our employees can utilize at home. The Business Continuity Task Force was established to proactively monitor fluctuations in our end markets and prepare for multiple scenarios with respect to project activity and our global workforces. Together with our workforce management and supply chain functions, we accomplished the following. Transitioned most non-built employees to operate remotely and implemented a work-from-home protocol to minimize risk exposure. Limited travel and instituted shelter-in-place directives. Ordered excess reserves of manufacturing materials to mitigate supply chain disruptions. And finally executed company-wide cost measures. Team's global workforce management function allows us to centrally coordinate and forecast employee utilization, communicate more effectively with our on-site field technicians, and provide ongoing logistical support to respond and mobilize in this dynamic environment. With clients' frequent changes to project scopes, our workforce management function has been diligently managing job requirements and the furlough schedule. to ensure the capacity of our resource pool is balanced with our clients' needs. As a result, despite the slowdown in activity, we have been able to maintain our high technician utilization rates, ranging between 85 and 90%. I mentioned earlier that our clients are reevaluating their 2020 project schedule and capital spending plans. We established the Sales and Client Engagement Task Force to proactively connect with each client to find creative, cost-effective solutions to their pressing challenges. For example, after a recent refinery explosion, our nested crew recommended Quest Integrity's unmanned aerial system to safely capture images and data of the damaged structures, equipment, and components. The Client Engagement Task Force is also looking beyond our current footprint and service offerings to support new industries by leveraging the skill sets of our technicians, and Advanced Technologies. We are focused on diversifying into markets and industries that are experiencing less disruption. By prioritizing those products and services that can best support the midstream power, renewables, utilities, infrastructure and process related industries. We will leverage the strength of our three segments, engineering and manufacturing capabilities and integrated solutions to lead the recovery. Finally, our Cost and Cash Management Task Force immediately implemented decisive aggressive actions to ensure that costs remain aligned with the reduced activity levels. These specific actions included reducing director, executive, and employee compensation, enacting furloughs and restricting unbilled time, executing a reduction in force, eliminating all non-essential spend, and working with our supply chain partners to reduce costs. These quick and decisive actions implemented during the last few weeks of March delivered more than $5 million of savings in the first quarter. While we remain mindful of capital investments that may be required to create competitive advantages, from a cash perspective, we are laser focused on cash flow improvements, which include collections, billing, cap-ex management, and inventory reductions. We will leverage the four task forces through the recovery phase in order to prepare our workforce and best position team for the future. I will now turn it over to Susan for a detailed financial review and then share more about our market trends and OneTune progress. Susan?