Team, Inc.

Greetings and welcome to the Team Inc. Fourth Quarter and Fiscal Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kevin Smith, Senior Director of Investor Relations. Thank you. You may begin.

Thank you, Doug. Welcome, everyone, to TEAM's fourth quarter and year-end 2020 earnings conference call. With me on today's call are Anne-Marie Nogatti, 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, March 10, 2021. 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 March 17th. The information on how to access these replay features was provided in yesterday's earnings release. Before we continue, I'd like to remind you that this call contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities and Litigations 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 risk factors and uncertainties are described in detail in the company's annual report in the 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. And Marina will begin by highlighting significant events in 2020 and provide an update of our business. Susan will then detail our results and before we take your question, Amarino will discuss the market outlook as well as our near-term and long-term expectations. I would now like to turn the call over to Amarino.

Thank you, Kevin, and good morning, everyone. We appreciate you joining us today, and I hope you and your families are safe and healthy. The last few weeks have been volatile, with record-breaking winter storms hitting many parts of the country, including southern states that do not typically experience cold weather to that magnitude. Now after thawing out positive news on the declining number of COVID cases and a significant increase in the pace of the vaccine rollout we are starting to see the light at the end of the tunnel and our employees are energized and ready. 2020 was a year in which companies around the world faced unprecedented challenges and I am extremely proud of the resilience of our entire organization. While navigating incredibly difficult market conditions We remained focused on managing what was in our control and took a series of proactive steps to ensure we exited the year stronger. Here are five key highlights that we achieved during 2020. First, the quick and progressive cost actions we implemented early in the crisis allowed us to flex our cost structure to align with the dynamic activity levels. We achieved full year cost savings of $110 million. exceeding the previously stated target of $85 to $95 million, of which approximately 40% are permanent. Second, in December we concluded a series of financial transactions to optimize our capital structure, including repurchasing approximately 60% of our senior convertible notes, providing significant financial flexibility and extending our debt maturity profile. Third, we published our inaugural ESG report that further demonstrates our core values and commitment to operate in an environmentally sustainable manner. Fourth, we developed a new strategic organization promoting leadership from within to better position the company for the recovery, continue sector diversification, and enhance client value. I will share more about this new structure later in my prepared remarks. Lastly, and perhaps where I am most proud, is our safety record. we achieved top quartile safety performance, representing the best safety results in the company's history. This achievement would not have happened without the dedication, positive attitudes, and behavior of our people and close collaboration with our clients. Now turning to our financial performance. Consolidated revenues for the second half of 2020 were $426 million, essentially flat with the first half. Activity levels increased during the months of September and October driven by call-out projects and turnarounds and post-hurricane repair work in the Gulf Coast divisions. However, beginning mid-November, further COVID-related global shutdowns and associated travel restrictions negatively impacted activity levels and revenue. While we anticipated a slow holiday season, it was weakened further than expected due to the continued uncertainty in the market. Adjusted EBITDA for the second half of 2020 was $31.3 million, an increase of $22.5 million or up 258% over the first half of the year. On a full year basis, as a result of disciplined cost management, we limited our EBITDA margin decremental to 12.9% despite a 27% reduction in revenue compared to 2019. We generated approximately $33 million of free cash flow in 2020, the highest level since 2016. TEAM remains focused on generating free cash flow to pay down debt. Our 2020 results demonstrate the flexibility of our asset light and scalable operating structure, and coupled with the depth and breadth of our products and services, allow us to flex with business demands. Now I will provide a segment overview. Beginning with mechanical services, as I mentioned, TEAM realized an increase in call-out and projects as well as an increase along the Gulf Coast divisions with hurricane repair work. In fact, activity levels in October reached the highest point of the year, but declined in November and December due to holidays and further global COVID-related shutdowns. However, we did see a few bright spots. MS experienced year-over-year growth in the areas of mineral extraction and steelworks, renewable energy, food and beverage, government and military, and storage tanks and terminals. During the fourth quarter, our West Division began work to repair leaks on a 400-foot long pipeline tunnel under a highway that the client initially believed to be unrepairable. Team specialists presented a repair option using injectable water-seeking grout, hot bolting hardware to replace corroded fasteners, and an epoxy coating to prevent future leaks. The repair saved our client hundreds of millions of dollars in replacement costs and downtime. Inspection and heat treating's nested group is now running between 85 and 90% of pre-COVID levels. Throughout 2020, the quality of our technicians and the strength of our relationships allowed us to retain and further expand our overall nested footprint. Our nested operating model provides team a stable and recurring growth platform. Despite the increase in activity in September and October, and similar to MS, activity levels in November and December were negatively impacted by COVID-related travel restrictions, which led to reduced activity and lower staffing levels at several of our run and maintain sites. Supporting our revenue diversification efforts, IHT experienced year-over-year growth in the areas of pipeline, pharmaceuticals, and pulp and paper. Our IHT segment recently completed customized heat treating work on a turbine at a hydroelectric dam in the US. Due to the shape and configuration of the veins, traditional heat treating methods were not adequate. So our subject matter experts and technicians developed a solution utilizing magnets and flexible ceramic heaters used during the welding process. The client was extremely satisfied with the results and we expect to work on additional projects at their facilities in the future. Quest Integrity's revenue growth continues to be impacted by the overall slowdown in industry activity, COVID-related travel restrictions, and quarantine requirements. As of now, we have only experienced project delays and minimal cancellations. Quest's fourth quarter revenues and adjusted EBITDA were up sequentially, driven by an increase from international subsea inline pipeline inspection and domestic midstream inspection, work that required specialized services for regulatory approval. As an example of cross-segment collaboration, Quest recently worked together with Mechanical Services to complete a corrosion repair and event stack by fabricating steel plates to fit over the damaged areas. Once the plates were in place, a composite repair was applied. Our expert technicians engineered a customized solution for the client using Teams advanced manufacturing capabilities Quest then provided a detailed structural fitness for service assessment using our proprietary software to determine buckling capacity of the repaired vent stack. From a geographic perspective, during the fourth quarter, we faced numerous COVID headwinds around many parts of the world. The United Kingdom went into a second COVID full lockdown in October, along with Europe and parts of Latin America which negatively impacted our ability to travel and perform operations in these regions. However, we are seeing signs of improvement with some restrictions expected to be lifted in the UK and parts of Europe in mid-March. The Middle East is also showing improvement. The vaccine rollout is going smoothly and economic activity is increasing aided by the increase in oil prices and global economic activity. We recently completed a project in Oman and were awarded another project to work on a gas plant in Egypt. Similar patterns of substantial COVID lockdown restrictions are present in the U.S., particularly in California, while other parts of the U.S. have started reducing COVID restrictions. During the fourth quarter, TEAM was awarded a competitively bid contract to perform leak repair work at a large refinery on the West Coast. This job requires as many as 40 on-site technicians throughout the year. As a result of this award, we have been invited to participate in a bid on the client's midstream assets. I will now turn it over to Susan for a more detailed financial review. Susan?