Team, Inc.

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. Please go ahead.

Thank you, 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. 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, 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 of Team Inc.' 's latest annual and quarterly filings filed with the Securities and Exchange Commission, along with our associated earnings release. Team assumes no obligation 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.

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. 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. 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. 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. Drilling down into the segments, we saw 5.7% overall revenue growth in inspection and heat treating, driven by strong nested and call-out activity in the U.S., and 8.9% growth in our international operations, including Canada. 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. In our mechanical services segment, we saw strong revenue growth of 7.8% 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 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. 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. 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. To that end, in September 2025, we completed the private placement of preferred stock with Stellix Capital Management which strengthened our balance sheet and enhanced financial flexibility. This $75 million investment recognizes the impactful progress made to date in our ongoing program to improve margins and lower our cost structure, as well as reinforces the significant opportunities that remain for further improvements in margins and top-line growth. We are excited to partner with Stellix 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 top-line growth and further improvements to our margins and free cash flow generation. We have seen some outstanding numbers 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 top line growth and we expect to see additional impacts to our full year 2026 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 see top line growth over the prior year across both segments and improved adjusted EBITDA levels for the fourth quarter of 2025. 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. 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 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 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, simplified our capital structure, and extended out our term loan maturities to 2030. In September, we successfully closed on a $75 million private placement of preferred stock and warrants with Stelix that helped us to pay down about $67 million of debt. 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 margins. 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. 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 helped better positioned team to accelerate execution of our long-term strategic plan focused on top-line growth, lowering our cost structure, and strengthening our cash flow. We also look to lean on Stellix as a partner whose insight and expertise we expect will help us achieve our strategic goals faster and more efficiently. 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 does not include the $30 million of potential additional proceeds from any future preferred stock issuances that 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 of 2025, our IHT segment delivered 9.4% of year-over-year growth, In our mechanical service segment, revenue growth of just under 1%. 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. While our absolute adjusted selling, general, and administrative costs, which excludes expenses not representative of our ongoing operations and other non-cash amounts, has marginally increased over the first year. 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. 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. 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. 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 we head into 2026. 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. 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. 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. 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. 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. With that, let me now turn it back over to Keith for some closing comments.

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. 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. 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. 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.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.