Team, Inc. Reports Second Quarter 2014 Results; Affirms FY2014 Guidance

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| Source: Team, Inc.

SUGAR LAND, Texas, Jan. 7, 2014 (GLOBE NEWSWIRE) -- Team, Inc. (NYSE:TISI) today announced financial results for the fiscal year 2014 second quarter ended November 30, 2013. Team reported net income available to shareholders of $14.4 million ($0.68 per diluted share). Excluding a non-routine revaluation gain, adjusted net income available to shareholders was $13.1 million ($0.62 per diluted share). Revenues for the current year quarter were $200 million, approximately the same as the prior year quarter. For the six months ended November 30, 2013, adjusted earnings were $0.85 per diluted share on revenues of $375 million.

Team is affirming its full fiscal year 2014 earnings guidance (adjusted) of $1.55 to $1.85 per share and continues to expect full year revenues to be in the range of $765 million to $790 million.

Key Points

  • Adjusted operating income (also referred to as "EBIT") for the quarter of $21.7 million, or 11% of revenues.
  • Adjusted EBITDA for the quarter of $28.4 million, or 14% of revenues.
  • Record second quarter for Quest Integrity Group:
    -- $20 million in revenue, up 29% over prior year quarter.
    -- $5.5 million in EBIT, up 85% over prior year quarter.
  • Inspection & Heat Treating ("IHT") and Mechanical Services combined business segment revenues declined 3% in the quarter, compared to a very strong prior year quarter, which had a record level of large project activity:
    -- IHT Inspection services up 8%.
    -- On-stream services up 13%.
    -- Turnaround services down 24%.
  • Combined gross margins of IHT and Mechanical Services were virtually flat with prior year quarter (29%), reflecting progress in margin improvement initiatives.
  • Repurchased 370,000 shares of our common stock in the quarter for a total consideration of approximately $13 million, leaving a remaining share repurchase authorization of about $12 million.
  • Recognized a non-cash accounting gain of $2.1 million upon the revaluation of contingent consideration in a recent acquisition.

"We are pleased with the overall results of our second quarter, which reflect the strong rebound by Quest, as expected, and a stabilizing of our job margins after several quarters of cost pressure" said Phil Hawk, Team's Chairman and Chief Executive Officer. "We remain confident in both our near-term and long-term growth and performance potential."

Earnings Conference Call

In connection with this earnings release, Team will hold its quarterly conference call on Wednesday, January 8, 2014 at 8:00 a.m. Central Time (9:00 a.m. Eastern). The call will be broadcast over the Web and can be accessed on Team's Website, www.teamindustrialservices.com. Individuals wishing to participate in the conference call by phone may call 866-515-2915 and use conference code 52443864 when prompted.

About Team, Inc.

Headquartered near Houston, Texas, Team Inc. is a leading provider of specialty industrial services, including inspection and assessment, required in maintaining and installing high-temperature and high-pressure piping systems and vessels that are utilized extensively in the refining, petrochemical, power, pipeline and other heavy industries. Team offers these services in over 125 locations throughout the world. Team's common stock is traded on the New York Stock Exchange under the ticker symbol "TISI".

Certain forward-looking information contained herein is being provided in accordance with the provisions of the Private Securities Litigation Reform Act of 1995. We have made reasonable efforts to ensure that the information, assumptions and beliefs upon which this forward-looking information is based are current, reasonable and complete. Such forward-looking statements involve estimates, assumptions, judgments and uncertainties. There are known and unknown factors that could cause actual results or outcomes to differ materially from those addressed in the forward-looking information. Such known factors are detailed in the Company's Annual Report on Form 10-K and in the Company's Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission, and in other reports filed by the Company with the Securities and Exchange Commission from time to time. Accordingly, there can be no assurance that the forward-looking information contained herein will occur or that objectives will be achieved.  We assume no obligation to publicly update or revise any forward-looking statements made today or any other forward-looking statements made by the company, whether as a result of new information, future events or otherwise.

TEAM, INC. AND SUBSIDIARIES
SUMMARY OF OPERATING RESULTS
(in thousands, except per share data)
         
  Three Months Ended Six Months Ended
  November 30, November 30, 
  2013 2012 2013 2012
  (unaudited) (unaudited) (unaudited) (unaudited)
Revenues  $ 200,493  $ 200,648  $ 374,804  $ 362,140
Operating expenses  135,678  138,184  260,992  250,140
Gross margin  64,815  62,464  113,812  112,000
         
Selling, general and administrative expenses  43,422  39,928  84,757  77,002
Earnings from unconsolidated affiliates  350  504  793  866
Gain from revaluation of contingent consideration  2,138  --   2,138  -- 
Operating income  23,881  23,040  31,986  35,864
         
Foreign currency loss   140  114  530  188
Interest expense, net  811  677  1,419  1,276
Earnings before income taxes  22,930  22,249  30,037  34,400
         
Provision for income taxes  8,333  8,232  10,963  12,728
Net income 14,597 14,017 19,074 21,672
         
Less: Income attributable to non-controlling interest 172 81 139  175
Net income available to common shareholders  $ 14,425  $ 13,936  $ 18,935  $ 21,497
         
Earnings per common share:        
Basic  $ 0.71  $ 0.69  $ 0.93  $ 1.08
Diluted   $ 0.68  $ 0.66  $ 0.89  $ 1.03
         
Weighted average number of shares outstanding:        
Basic  20,409  20,052  20,459  19,963
Diluted   21,233  20,994  21,323  20,932
         
         
TEAM, INC. AND SUBSIDIARIES
ADDITIONAL FINANCIAL INFORMATION
(in thousands, except per share data)
         
  Three Months Ended Six Months Ended
  November 30, November 30, 
  2013 2012 2013 2012
  (unaudited) (unaudited) (unaudited) (unaudited)
Adjusted Net income:        
 Net income available to common shareholders  $ 14,425  $ 13,936  $ 18,935  $ 21,497
 Non-routine revaluation contingent consideration  (2,138)  --   (2,138)  -- 
 Non-routine severance costs  --   --   742  -- 
 Tax impact of adjustments  780  --   505  -- 
Adjusted Net income  $ 13,067  $ 13,936  $ 18,044  $ 21,497
         
Adjusted Net income per common share:        
Basic  $ 0.64  $ 0.69  $ 0.88  $ 1.08
Diluted   $ 0.62  $ 0.66  $ 0.85  $ 1.03
         
Adjusted EBITDA:        
 Operating income ("EBIT")  $ 23,881  $ 23,040  $ 31,986  $ 35,864
 Non-routine revaluation contingent consideration  (2,138)  --   (2,138)  -- 
 Non-routine severance costs  --   --   742  -- 
Adjusted EBIT  21,743  23,040  30,590  35,864
 Depreciation and amortization  5,308  5,081  10,691  9,654
 Non-cash share-based compensation costs  1,340  1,237  2,210  2,120
Adjusted EBITDA  $ 28,391  $ 29,358  $ 43,491  $ 47,638
         
Segment Data:        
 Revenues:        
IHT  $ 109,427  $ 108,935  $ 205,260  $ 191,145
MS  70,987  76,171  136,756  141,498
Quest  20,079  15,542  32,788  29,497
   $ 200,493  $ 200,648  $ 374,804  $ 362,140
         
 Adjusted EBIT:        
IHT  $ 15,562  $ 16,313  $ 25,745  $ 25,972
MS  7,380  10,459  14,181  17,703
Quest  5,512  2,985  4,816  6,006
Corporate and shared support  (6,711)  (6,717)  (14,152)  (13,817)
   $ 21,743  $ 23,040  $ 30,590  $ 35,864
         
         
Revenues by Service Type:        
Inspection and assessment  $ 109,483  $ 98,275  $ 198,069  $ 176,317
Turnaround  50,562  66,746  96,204  116,008
On-stream services  40,448  35,627  80,531  69,815
   $ 200,493  $ 200,648  $ 374,804  $ 362,140
         
     
TEAM, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED BALANCE SHEET INFORMATION
NOVEMBER 30, 2013 AND MAY 31, 2013
(in thousands)
     
  November 30, May 31,
  2013 2013
  (unaudited)  
     
Current assets  $ 259,083  $ 246,918
     
Property, plant and equipment, net  79,728  74,939
     
Other non-current assets  149,155  138,346
     
Total assets  $ 487,966  $ 460,203
     
Current liabilities  $ 71,587  $ 72,804
     
Long term debt net of current maturities  91,708  72,946
     
Other non-current liabilities  23,696  22,263
     
Stockholders' equity  300,975  292,190
     
Total liabilities and stockholders' equity  $ 487,966  $ 460,203
     
     
TEAM, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED CASH FLOW INFORMATION
NOVEMBER 30, 2013 AND NOVEMBER 30, 2012
(in thousands)
     
  Six Months Ended
  November 30,
  2013 2012
  (unaudited) (unaudited)
Net income  $ 19,074  $ 21,672
     
Depreciation, amortization and non-cash share based compensation expense 12,901 11,774
     
Gain on contingent consideration revaluation (2,138)  --
     
Working capital changes (12,819) (15,198)
     
Other items affecting operating cash flow 3,200 1,471
     
 Net cash provided by operating activities  $ 20,218  $ 19,719
     
Capital expenditures (13,619) (12,654)
     
Cash used for business acquisitions, net (10,175) (18,144)
     
Other items affecting investing cash flow 207 (8)
     
 Net cash used in investing activities ($23,587) ($30,806)
     
Borrowings of debt, net 18,000 19,000
     
Repurchases of common stock (13,334)  --
     
Cash associated with share-based payment arrangements, net 974 3,874
     
 Net cash provided by financing activities $5,640 $22,874
     
Effect of exchange rate changes 159 221
     
Change in cash and cash equivalents  $ 2,430  $ 12,008
     
Ted W. Owen
(281) 331-6154