Executive Summary

Q3 2024 revenue was $182.7M (+1.9% YoY), diluted EPS $0.20, gross margin 29.9%; Adjusted EBITDA rose 11.5% to $23.3M, reflecting operating leverage and pricing actions amid a softer downstream oil & gas turnaround season .
Management cut FY2024 guidance: revenue to $725–$730M (from $725–$750M), Adjusted EBITDA to $80–$82M (from $84–$89M), and free cash flow to $18–$22M (from $34–$38M) due to project pushouts and elevated accounts receivable; preliminary FY2025 outlook calls for low single-digit organic revenue growth and low double-digit Adjusted EBITDA expansion .
International segment led growth (+8.7% YoY), while Aerospace & Defense (+9.1%), Industrials (+17.2%), and Power Generation & Transmission (+19.7%) outperformed; downstream oil & gas declined as expected given a moderate fall turnaround season .
Cash generation inflected: Q3 operating cash flow $19.4M and free cash flow $13.2M; gross debt fell to $189.7M (lowest since Onstream acquisition), leverage ratio ~2.6x TTM EBITDA; management is intensifying AR/WIP processes and planning an ERP upgrade in 2025 .

What Went Well and What Went Wrong

What Went Well

Operating leverage and pricing drove bottom-line outperformance: Adjusted EBITDA +11.5% YoY to $23.3M, with SG&A down 1.7% YoY and 5.1% sequentially; “bottom line growing significantly faster than the top line” .
Strong segment/industry mix: International revenue +8.7% YoY; Aerospace & Defense +9.1%, Industrials +17.2%, Power Generation & Transmission +19.7% on consolidated basis .
Cash flow improvement and deleveraging: Q3 operating cash flow $19.4M and free cash flow $13.2M, with gross debt at $189.7M and net debt $169.3M; management paid down >$10M borrowings in Q3 .

What Went Wrong

Guidance cut for FY2024 (revenue narrowed, EBITDA and FCF lowered) due to project pushouts and elevated AR; mix shift (lighter high-margin Aerospace/Data) pressured EBITDA vs prior guidance .
Gross margin contraction vs prior year quarter (40 bps) from higher healthcare claims; North America gross margin down 170 bps to 28.4% .
Data Analytical Solutions revenue “flat” on implementation delays and customer pushouts; Aerospace had unanticipated project pushouts (especially international) given supply-chain dynamics (e.g., engine parts constraints) .

Financial Results

Consolidated Performance (Sequential trend Q1→Q3)

Metric	Q1 2024	Q2 2024	Q3 2024
Revenue ($USD Millions)	$184.4	$189.8	$182.7
Diluted EPS ($)	$0.03	$0.20	$0.20
Gross Profit ($USD Millions)	$51.1	$56.1	$54.6
Gross Profit Margin (%)	27.7%	29.6%	29.9%
Income from Operations ($USD Millions)	$5.6	$12.0	$11.9
Adjusted EBITDA ($USD Millions, non-GAAP)	$16.2	$22.1	$23.3
Net Income ($USD Millions)	$1.0	$6.4	$6.4
SG&A ($USD Millions)	$41.2	$41.0	$38.9

Year-over-Year Snapshot (Q3 2024 vs Q3 2023)

Metric	Q3 2023	Q3 2024
Revenue ($USD Millions)	$179.4	$182.7
Diluted EPS ($)	($0.34)	$0.20
Gross Profit ($USD Millions)	$54.4	$54.6
Gross Profit Margin (%)	30.3% (implied) vs 29.9% reported contraction of 40 bps	29.9%

Segment Breakdown (Revenue)

Segment Revenue ($USD Millions)	Q1 2024	Q2 2024	Q3 2024
North America	$150.3	$156.4	$149.8
International	$33.0	$34.3	$33.7
Products & Systems	$3.2	$3.4	$3.3
Corporate & Eliminations	($2.2)	($4.3)	($4.1)
Total	$184.4	$189.8	$182.7

Industry Mix (Q3 YoY)

Industry ($USD Millions)	Q3 2023 Total	Q3 2024 Total
Oil & Gas	$103.3	$99.5
Aerospace & Defense	$20.1	$21.9
Industrials	$16.7	$19.5
Power Generation & Transmission	$9.7	$11.7
Other Process Industries	$9.8	$11.8
Infrastructure, Research & Engineering	$9.5	$8.7
Petrochemical	$3.9	$4.0
Other	$6.5	$5.6

Oil & Gas Sub-Category (Q3 YoY)

Sub-Category ($USD Millions)	Q3 2023	Q3 2024
Upstream	$38.0	$43.8
Midstream	$26.2	$21.5
Downstream	$39.0	$34.1
Total	$103.3	$99.5

KPIs and Balance Sheet

KPI ($USD Millions unless noted)	Q1 2024	Q2 2024	Q3 2024
Operating Cash Flow	$0.6	$4.5	$19.4
Free Cash Flow (non-GAAP)	($5.3)	($1.6)	$13.2
Gross Debt	$198.4	$199.7	$189.7
Net Debt	$181.6	$182.5	$169.3
Cash & Equivalents (Period-End)	$16.9	$17.2	$20.4

Note: Non-GAAP metrics per company definitions and reconciliations in press release tables .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2024	$725–$750M	$725–$730M	Narrowed, lower top end (lowered)
Adjusted EBITDA	FY 2024	$84–$89M	$80–$82M	Lowered
Free Cash Flow	FY 2024	$34–$38M	$18–$22M	Lowered
Preliminary Outlook	FY 2025	N/A	Low single-digit organic revenue growth; low double-digit Adjusted EBITDA expansion	New qualitative outlook

Drivers: project pushouts, current market conditions, unanticipated AR buildup (collections timing) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2024)	Current Period (Q3 2024)	Trend
Data Analytical Solutions	Q1: slower start from project delays; expected growth later in year; digitization roadmap	Q3: revenue $17.9M flat YoY; delays/pushouts; expect mid-teens growth in 2025	Near-term delay; medium-term positive
Aerospace & Defense	Q1: ~19% growth; North America back to pre-pandemic; capacity additions (Georgia)	Q3: +9.1% despite project pushouts; mid-teens growth expected in 2025; private space robust	Growth intact; supply chain constrains timing
Oil & Gas Turnarounds	Q1: robust spring (upstream/mid/downstream up); fall expected to moderate	Q3: downstream moderate; upstream strong (+15.2% YoY), midstream down on nonrecurring prior-year project	Seasonal normalization; resilient overall YTD
Pricing Strategy	Q1: ~2.5–3% contribution to growth; strategy expanding from smaller to larger accounts	Q3: modest price increases; volume flatter; pricing supported revenue	Sustained pricing tailwind
SG&A/Project Phoenix	Q1: SG&A down, target ~21% of revenue; cost discipline	Q3: SG&A 21.3% of revenue; reorg costs continue; further improvements expected in 2025	Ongoing efficiency; residual reorg costs
Working Capital/AR	Q2: AR elevated; FCF negative in H1	Q3: OCF/FCF improved; AR still elevated; ERP upgrade planned; process intensity increased	Improving collections posture
Healthcare Claims	Q1: higher claims partly offset margin gains	Q3: margin hit from a few high-cost claimants; millions-level impact; not structural	Transient headwind

Management Commentary

“Revenue was up nearly 2% during the quarter, led by growth in the International Segment… Adjusted EBITDA was up over 11%… third consecutive quarter generating Net Income.” – Manuel Stamatakis, Interim CEO .
“We generated $19.4M of operating cash flow and $13.2M of free cash flow… gross debt is the lowest level since the acquisition of Onstream in December 2018.” – Edward Prajzner, CFO .
“We anticipate a meaningful improvement in net income, with a low double-digit expansion in Adjusted EBITDA and low single-digit organic revenue growth for fiscal 2025.” – Management outlook .
“International segment third quarter revenue was $33.7M, up 8.7%… gross margin 30.1%, up 270 bps, attributable to improved operating leverage and sales mix.” .

Q&A Highlights

Free cash flow reduction vs prior guide driven by elevated AR (billed/unbilled); management intensifying WIP/collections and planning ERP upgrade to accelerate invoicing and workflows .
Pricing contributed a “couple of percent” to Q3 revenue amid flatter volume; no exit from unprofitable work, but active remediation with customers and selectivity on margins .
Healthcare claims expense pressured gross margins by “millions”; viewed as non-structural with impact from a few high-cost claimants .
Downstream outlook: strong spring vs moderate fall in 2024; 2025 could invert seasonality with fall stronger than spring; crude prices at current levels seen as non-impactful to 2025 plans .
EBITDA guide lowered at the same revenue range due to unfavorable mix (lighter high-margin Aerospace/Data); reorganization costs persist into 2025 as continuous improvement investments .

Estimates Context

Wall Street consensus (S&P Global) for Q3 2024 EPS and revenue was unavailable due to S&P daily request limit constraints; as a result, we cannot quantify beats/misses versus consensus for this quarter [SPGI error via GetEstimates].
Management stated results were “in line with our expectations” and emphasized bottom-line outperformance vs top-line growth, but that is internal framing, not Street consensus .

Key Takeaways for Investors

Mix shift matters: When high-margin Aerospace/Data underperform due to timing, EBITDA is more sensitive than revenue; monitor segment cadence and supply-chain signals in A&D, particularly international .
Collections and AR are the key 2024 swing factor: Q3 OCF/FCF inflection is positive, but sustained progress on AR/WIP and ERP-led process upgrades will drive FY FCF delivery and deleveraging pace in 2025 .
Pricing remains an incremental tailwind, supporting margins amid flatter volumes; continued contract optimization and renewal success should underpin 2025 profitability .
International momentum and diversified industrial demand support resilience; watch downstream turnaround timing and midstream project comparables for quarterly volatility .
Healthcare claims were a non-structural headwind; margin trajectory should benefit as claims normalize and mix shifts back to higher-margin portfolios .
FY2024 guide reset lowers near-term expectations; preliminary FY2025 outlook signals profitable growth (low single-digit revenue, low double-digit EBITDA) as operating leverage initiatives compound .
Tactical implication: Near term, stock reaction may hinge on confidence in cash collections and segment mix recovery; medium term, execution on A&D growth, Data analytics ramp, and SG&A discipline under Project Phoenix can expand valuation as EBITDA scales .

Appendix: Additional Data Points

Revenue by Type (Q3 YTD Context)

Revenue Type ($USD Millions)	Q3 2023	Q3 2024
Field Services	$122.7	$127.2
Shop Laboratories	$14.8	$15.0
Data Analytical Solutions	$18.0	$17.9
Other	$23.8	$22.6
Total	$179.4	$182.7

Non-GAAP EPS Bridge (Q3)

Item ($USD Thousands)	Q3 2023	Q3 2024
Net income (loss) attributable (GAAP)	($10,298)	$6,401
Special items, net of tax	$15,848	($146)
Non-GAAP net income	$5,550	$6,255
Diluted EPS (GAAP)	($0.34)	$0.20
Diluted EPS excl. special items	$0.18	$0.20

All non-GAAP reconciliations per company disclosures .

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