Acuren Corporation - Earnings Call - Q2 2025

Executive Summary

• Q2 revenue was $313.9M, up 1.5% YoY (2.0% organic), with Adjusted EBITDA of $54.6M (17.4% margin) and adjusted gross margin of 28.8%; GAAP net loss was ~$0.2M and GAAP diluted EPS was $(0.00).
• Closed the NV5 merger on Aug 4 (post-quarter), creating a ~$2B TICC and engineering services leader; financing included $875M new term loans (total first lien ~$1.6B) and an expanded revolver to $125M.
• Versus S&P Global consensus: revenue beat ($313.9M* vs $308.4M*), but Primary EPS missed ($0.042* vs $0.106*) and EBITDA missed ($48.4M* vs $54.4M*)—note S&P “EBITDA” differs from company “Adjusted EBITDA” [Values retrieved from S&P Global].
• Guidance: company is reviewing its consolidated outlook post-NV5 and will issue updated revenue and Adjusted EBITDA ranges with Q3 results in November; this update and tangible synergy delivery are likely near-term stock catalysts.

What Went Well and What Went Wrong

• What Went Well

  • Organic growth: 2.0% in Q2 and 4.6% in 1H, driven by new wins, deeper penetration, and strong call-out volumes.
  • Integrated solutions momentum: specific wins in LNG baseline inspections plus remediation and bridge-mounted gas line recoating integrating engineering, rope access, and NDT; management highlighted cross-selling opportunities expanded by NV5.
  • Strategic combination with NV5: management emphasized minimal overlap, strong cross-sell potential, and indicated the $20M synergy target is conservative, with a dedicated integration office established to execute.

• What Went Wrong

  • Margin compression YoY: Adjusted EBITDA margin declined to 17.4% (vs 19.1% prior year) due to normalized business mix and incremental public-company costs.
  • Non-GAAP normalization and one-time costs: public company build-out and acquisition-related expenses weighed on profitability; more transaction costs to flow in Q3.
  • Guidance paused: consolidated guidance withheld until Q3 post-merger; introduces interim uncertainty for estimates and models.

Transcript

Speaker 9

Hello and welcome to Acuren Corporation's second quarter 2025 earnings conference call. Currently, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference call, you may press star, then zero on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Andrew Shen, Director of Investor Relations. Thank you. You may begin.

Speaker 1

Thank you, Operator. Good morning, everyone, and thank you for joining the call. Joining me on the call today for prepared remarks are Tao Pai Zi, Acuren CEO, Kristen Schultes, Acuren's Chief Financial Officer, and Robbie Franklin, Acuren's Executive Chairman. In addition, Sir Martin Franklin, Acuren's Co-Chairman, and Ben Harrod, Acuren's President and Chief Operating Officer, will be joining us for the question and answer session. Before we begin, I would like to remind you that certain statements in the company's earnings press release and on this call are forward-looking statements, which are based on expectations, intentions, and projections regarding the company's future performance, anticipated events or trends, and other matters that are not historical facts.

These statements are not a guarantee of future performance and are subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. In our press release and filings with the SEC, we detailed material risks that may cause our future results to differ from our expectations. Our statements are as of today, August 14, 2025, and we undertake no obligation to update any forward-looking statements we may make except as required by law. As a reminder, we have posted a presentation detailing our second quarter financial performance on the Investor Relations page of our website. Our comments today will also include non-GAAP financial measures and other key operating metrics. The required reconciliations of non-GAAP financial metrics can be found in our press release and our presentation.

Before we begin, let me outline the agenda for our call. Tao will cover business performance and key operational highlights. Kristen will review our financial results and discuss the MV5 transaction. Robbie will share strategic context on our integration priorities and discuss the opportunities ahead for the combined organization. It's my pleasure to now turn the call over to Tao.

Speaker 6

Thank you, Andrew. Good morning, everyone, and thank you for your continued interest in Acuren. Welcome to our second quarter 2025 earnings call. I am proud to share that our second quarter demonstrated the strength and resilience of our business model as we delivered year-over-year top-line growth and stable adjusted gross margins. This was achieved while successfully completing our transformational acquisition of MV5, which marks a major milestone in Acuren's journey as the market leader in testing, inspection, certification, and compliance, or TIC, and engineering services. Our team's unwavering focus on operational excellence, reliability, and safety enables us to build upon our stable foundation. We continue to expand share of wallet with existing customers and win new accounts, positioning Acuren for continued momentum into the second half.

There are three key takeaways I want to emphasize today: our solid business performance, our success with integrated solutions, and our transformative combination with MV5. First, our team delivered steady revenue growth, adjusted gross profit, and solid adjusted EBITDA margin performance in the second quarter. We saw sustained momentum among existing customers and continue to secure new customers. Our call-out activity, which addresses urgent customer needs, was particularly strong in Q2. The essential and mission-critical nature of our asset integrity services continues to drive demand, even when customers are selective with capital spending and operating budgets. Our business fundamentals remain strong, and we believe Acuren is well-positioned for continued growth. Second, I'd like to share a couple of examples where Acuren's integrated service offerings have created a differentiated turnkey solution for our customers. Acuren was recently awarded the NDT maintenance work at a new LNG facility.

Our local NDT leadership recognized the opportunity to cross-sell additional services. We supported the customers through baseline inspections where we identified design and construction flaws, but we also performed remediation services to support the successful plant startup, substantially increasing our contract value. In another example of integrated service offerings, we recently completed the recoating and repair of a gas distribution line suspended from a bridge. The project included Acuren engineering design for a suspended platform in coordination with the local transportation authority. The scope of work included laser ablation to remove existing coatings, mechanical replacement of pipe hangers, rope access platform installation, ultrasonic testing to verify pipe integrity, and final coating application. This work was led by Acuren Corporation's engineering team, supported by rope access mitigation services and Nondestructive Testing crews.

Following successful delivery, Acuren Corporation was sole sourced for a larger similar project in a new jurisdiction based on our reputation for this new turnkey infrastructure work. These two examples provide a good segue to introduce the next third takeaway. The recent combination with MV5 positions us to become a leading provider of integrated TIC and engineering services, dramatically expanding our ability to deliver complementary solutions to a broader customer base and creating substantial cross-selling opportunities. In the asset integrity management business, further connectivity between engineering, inspection, and mitigation will allow us to offer compelling turnkey solutions to our expanding end markets. Before turning to Kristen Schultes, I want to recognize our dedicated team members. Their professionalism, safety mindset, and commitment to our customers, especially during this period of transformation, are what makes Acuren Corporation unique. At Acuren Corporation, a higher level of reliability isn't just a tagline.

It's core to our culture, guiding how we operate every day. Reliability builds trust, ensures stability, and delivers consistent results to our customers, teammates, and investors, independent of the macroeconomic environment. With that, I'll now hand the call over to Kristen Schultes to walk through our financial performance in greater detail.

Speaker 8

Thank you, Tao, and good morning, everyone. Reported service revenues for the three months ended June 30 were $313.9 million, a 1.5% increase compared to $309.3 million in the prior year period. On a constant currency basis, this represents top-line growth of 2.1%, of which 2% was organic. Organic growth was driven by new customer wins, deeper engagement with existing customers, and robust call-out volumes during the quarter. While our run-and-maintain work provides a stable recurring revenue base, call-out work acts as a key driver for revenue growth. Adjusted gross margin for the three months ended June 30 was 28.8%. This represents a 30 basis point decrease compared to the prior year period, which was driven primarily by FX headwinds. Adjusted EBITDA for the second quarter was $54.6 million compared to $59.1 million in the prior year.

This resulted in an adjusted EBITDA margin of 17.4% for the quarter compared to 19.1% in the prior year. The current year margin reflects a more normalized business mix as well as planned incremental public company costs. Turning now to the recently announced transaction. On August 4, we completed our acquisition of MV5. The deal was valued at approximately $1.7 billion, which included the repayment of approximately $208 million of MV5's outstanding debt. We also issued approximately 79 million Acuren shares to MV5's shareholders at closing. In connection with the transaction, we amended our existing credit facility, adding $875 million in new term loan debt under the same terms as our original loan at a rate of S plus 275. This brings our total debt to $1.6 billion.

We also increased our revolver from $75 million to $125 million to match the increased scale of the business, and it remains fully underwritten. We estimate our post-closing net leverage at roughly 4.1 times on a combined LTM basis. We remain committed to reducing net leverage to our long-term target of under three times through a combination of growth, operational execution, and disciplined cash flow generation. Next, turning to our guidance. Following our recent transformational acquisition, we are taking time to fully review and update our financial outlook to reflect the combined business. We plan to share refreshed consolidated guidance, including ranges for revenue and adjusted EBITDA, alongside our third quarter earnings release in November. This timing gives us the opportunity to be thoughtful and to incorporate deeper informational sharing and strategic planning into our full year outlook.

Overall, we are pleased with the team's execution and dedication during this exciting time for Acuren. I look forward to sharing more updates on our progress, including the MV5 integration in coming quarters. With that, I'll turn the call over to our Executive Chairman, Robbie Franklin.

Speaker 4

Thank you, Kristen, and good morning, everyone. We are pleased to have completed our transaction with MV5. Together, we have created a market-leading TIC and engineering firm uniquely positioned to deliver integrated tech-enabled solutions to customers across North America and select international markets. The combination immediately expands our reach into new geographies and end markets and accelerates our ability to provide comprehensive, full asset lifecycle services. We can now support customers from initial design and engineering through construction, commissioning, ongoing maintenance, and decommissioning. We believe our highly complementary service portfolio will enable deeper customer partnerships and unlock substantial cross-selling opportunities. What is unique about this combination is that it is genuinely additive. Acuren Corporation's leadership in nondestructive testing and asset integrity is directly complemented by MV5's depth in engineering consulting and geospatial analytics. There is minimal service overlap, which means we are expanding capability, not just scale.

As we integrate, our priorities are clear: deliver on identified synergy targets, retain and motivate top talent from both organizations, and ensure seamless service delivery for customers. I am encouraged that our initial conversations are surfacing meaningful additional opportunities and believe that the $20 million synergy estimate we've shared is frankly conservative. We expect to grow that figure as we execute over the coming months and will update you on our progress. To support this, we have established a dedicated integration management office led jointly by leaders from both legacy companies to drive accountability and pace. We are focused on near-term execution, identifying quick wins, meeting integration milestones, protecting commercial momentum, and ensuring retention of our key people. Dickerson Wright and Ben Harrod, who have joined our board of directors as planned, bring invaluable expertise and deep knowledge of the MV5 business and its end markets.

We are also pleased to welcome Byron Roth to our board, whose broad industry perspective will further strengthen our governance and oversight. Looking ahead, the combined entity's scale, diversification, and exposure to high growth end markets position us well for sustainable value creation. We believe we can deliver stronger cash flow, expand career opportunities, and enhance customer outcomes. While we are confident in the long-term strategic benefits, we know the work of integration is just beginning. Our teams are energized and focused on delivering results, and we are committed to communicating our progress with transparency. With that, let me turn the call back over to Tao for closing remarks.

Speaker 6

Thanks, Robbie, and thanks, Kristen, for those comprehensive updates. Our second quarter demonstrated steady execution while, at the same time, we closed one of the most significant acquisitions in our industry. Delivering solid operational results while navigating M&A complexity speaks to our team's strength and the resilience of our business model. I want to welcome our new colleagues from MV5 to the Acuren family. Your talent, expertise, and customer relationships are invaluable, and we're excited to work together to serve our expanded customer base and pursue new market opportunities. This transaction positions us to capitalize on key trends driving demand for engineering and asset integrity solutions. Aging infrastructure, increasing regulatory complexity, energy transition, and growing industrial complexity all create demand for integrated solutions we can now provide. We see opportunity across data centers, infrastructure, geospatial, and industrial markets, offering comprehensive solutions from engineering through ongoing asset integrity.

We have created a market leader that is positioned to serve customers and deliver superior value for our shareholders. Thank you to all team members, both legacy Acuren and MV5, for exceptional work during this transaction and continued commitment as we begin this new chapter together. With that, I'd like to open the call for questions. Operator?

Speaker 9

Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For a participant choosing speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, it is star one on your telephone keypad if you would like to ask a question. Our first question is from Katherine Thompson with Thompson Research Group. Please proceed.

Hi. Thank you for taking my questions today. Just a few margin questions that also tie into the top line, I suppose, is you said in this quarter that you returned to a more normalized business mix. Could you clarify what that is? What is more normalized in terms of end market and type? How was it different and how that impacted both top line and margins in the quarter?

Speaker 0

All right. Hi, Katherine. Thanks for the question. I think what we would say is the company's margin is really quite stable, and the end market mix doesn't change much throughout the year other than a slight peak in outage work in Q2 and Q3 with a lesser amount in Q1 and Q4. On our Q1 earnings call, we talked about some of the reasons why Q1 had a lower margin, and those reasons were largely around development of staff and hiring for some run-and-maintain work that we had won and also some utilization issues. There are a few things that suppressed the margin in Q1. We might expect slightly lower margin in Q4, but generally, Q2 and Q3 are quite similar. This margin from Q2 is quite typical.

Okay. It would be helpful if we could better understand what are more one-time costs in the quarter, you know, the business transformation cost, and what are the potential future benefits of these initiatives. It could be business transformation, but also anything transaction-related in terms of one-time costs. Falling back on the business transformation, what are the potential benefits of these initiatives?

Speaker 8

Good morning, Katherine. Thanks for the question. In terms of the one-time costs associated with we're still working through our public company buildup. From a one-time perspective, we have costs in there related to that as well as acquisitions. We will still see some transaction-related expenses in the third quarter related to the MV5 transaction. I think in terms of looking ahead, we feel good about the opportunities we have with MV5 to accelerate our public company infrastructure and return to a normalized level.

Okay, could you give a little bit more color on the transformation and the future benefits?

From a transaction.

Yeah, because I know that you guys had also talked about really enhancing your portfolio of business. It may lead to shedding of lower margin business in order to replace with higher margin business. That's kind of the angle where we're looking to get a little bit more color on the update on that.

Speaker 0

Okay. Sure. I'll speak to some of the revenue cross-selling opportunities, and Kristen can talk to some of the cost synergies. First of all, we're super excited about this acquisition because it creates entirely new end markets for both companies to sell their services in. I'll actually let Ben speak a little bit to some of those synergies and examples. Largely, we see the combined companies as providing deep turnkey capabilities in the asset integrity management area across many end markets, including industrial and infrastructure. As we look at the lifecycle management of an asset, there are periodic requirements for both engineering and TIC or inspection-related requirements. That's true of almost any asset, as small as something like a pressure safety valve to as large as something like a bridge or a municipality or an entire gas plant, for example. There's a lot of back-and-forth opportunities between engineering and inspection.

Maybe, Ben, I could ask you to give Katherine just a couple of examples of some of our early cross-selling initiatives that we've experienced.

Yeah, no problem. We've already got a really robust program and framework in place just to leverage each company's geographies, clients, and expertise. It's looking really, really promising already with some really early wins. Just some specific examples, our geospatial team is now delivering some drone and LIDAR work in Southern California that was previously going to a competitor through Acuren. We've been awarded—MV5 was awarded a pipeline integrity test for a large port, which Acuren can now deliver on that project. Our building digitization team has a large retail contract with thousands of retail stores, and many of those are actually in Canada. We're going through a training program so that the Acuren team can actually deliver on that. We've just submitted a joint proposal for $31 million, which includes engineering consulting along with testing and inspections.

This list is a lot longer and getting longer every day, but we're very, very excited about the opportunities we're seeing already.

Agreed. Thank you for that. Final question, just a high-level question. With all the focus on AI and data center build-out and the energy infrastructure build-out, just some parting thoughts on how Acuren wins against that backdrop.

Speaker 6

Yeah, I think this is a really good one for Ben because MV5 has created real market opportunities supporting AI with data centers. Ben, maybe you could just give some examples of how that is flushing out for the business.

Speaker 0

Yeah, you know, the organic growth that we're seeing through the data center business continues to be strong, both with our international operations. We're really market leaders in Asia-Pacific. We work with all the hyperscalers there, and that's really been replicated in the U.S. over the last 80 months. The growth that we're seeing there is not slowing down. We're very excited around the data centers, both cloud compute and AI. We work in both areas, and we're really looking, you know, part of our growth strategy there is not only continuing to grow the services we already provide, but bringing in, you know, new services that Acuren provides that are applicable. Even, you know, on the MV5 side, power delivery is a huge issue for data centers and something that we're very well positioned with a large degree of technical expertise in that area.

Great. Thank you very much, and best of luck.

Thanks, guys.

Speaker 8

Thanks, Katherine.

Speaker 9

As a reminder, it is star one on your telephone keypad. If you would like to ask a question, we will pause for a brief moment to see if there's any final questions. Our next question is from Chris Marr with CJS Securities. Please proceed.

Hey, good morning, guys. Congrats on the quarter.

Speaker 8

Morning.

Good morning. Wrapping up so quickly on the transaction. Maybe just a follow-up on what Ben Harrod was talking about. Recognizing the integration planning is still pretty early stage, are there opportunities that you've uncovered over the last couple of months that even go beyond what you were thinking about initially?

Speaker 6

Yeah, it's a tough question, Chris, because we have many opportunities we've been thinking of initially. Just to refresh what those are, Ben talked to some very specific things. Maybe one we didn't talk about is across Canada, Acuren has a very strong footprint with smaller engineering facilities in major cities. We think about being able to offer MV5 services from those locations that, you know, we have relationships with existing customers. The Acuren engineering business today kind of generally ends at materials expertise, rotating equipment expertise, failure investigation, fitness for service. MV5 has such depth of experience in infrastructure and buildings that will be an immediate cross-sell for us. Over time, we'll build that expertise locally, but initially, we'll sell it locally. Definitely, we feel very strong.

I gave examples of Acuren, how we've been having several opportunities in the infrastructure space to demonstrate our ability to do inspection, access solutions, and engineering. That just expands significantly with MV5 capabilities. On the MV5 side, they're often in a position as consulting engineers to be a general contractor managing various projects. Generally, you avoid requesting additional services to subcontract. Even in that environment, they are subcontracting nondestructive testing work on occasion. Now we'll seek to include nondestructive testing on those contracts. There's a lot of excitement. Early days, even the day of close, we had calls from MV5 engineers looking for Acuren to supply failure investigation expertise on projects. Every day we are learning new things, but I think what I gave you are the main themes.

Very helpful, and I appreciate that. Obviously, different opinions on where this economy is headed. Assuming there is a meaningful slowdown over the next 12 months, any areas within Acuren or MV5 that are likely to be more impacted?

Sure. I'll speak for the Acuren business, and Ben, maybe you can comment on any end market dynamics that you see. On our side, our business has really been fairly consistent across our end markets, which speaks to the resilience and the essential services that we provide. We do see, particularly in chemical, that some of our customers are more strained with their end markets and their product being oversupplied. That work, they still do the required work, but maybe some of the more discretionary spending, like sustaining capital, could be reduced. Beyond that, we don't see any significant end market headwinds. We did see a slight uptick in fabrication and manufacturing. It could be a sign of reshoring, but I think it's just a modest uptick.

Speaker 0

Yeah, I'm talking out on the MV5 side. I mean, we're really focused on building a business around mandated services. We're not looking to see any issue through any downturn. I think we've already felt the pain of, as far as our geospatial group through the first part of this year, and we're through that now. We feel good about the 12 months ahead.

Perfect. I can't wait to follow up with you later on, but I will leave it there. Congrats again.

Thanks.

Speaker 8

Thanks, Chris.

Speaker 9

Our next question is from Andrew Shen with Baird. Please proceed.

Oh, great. Good morning, everyone. Thanks for taking my question. I guess I just wanted to dig in a little bit more on the results from the quarter. You had the comment that the call-out work, Tao, was very strong in the quarter. I was just hoping you could just kind of drill into that a little bit more. What things have you seen in the quarter that led to the call-out work? Can you just talk about how the implication that that is strong suggests that maybe the run-and-maintain work was not as strong? Could you just give maybe how much, like, what was the growth year-over-year on the call-out work and maybe talk about what the implication is for the run-and-maintain work in the quarter?

Speaker 6

Sure. First of all, I want to emphasize that the variance between our various nature of works, which are run-and-maintain, call-out, outage, and project work, was not really very different than normal. Of course, you can parade anything. When we talk about what's up more than down, call-out stood out as a slight uptick. It's not significant, but it was higher than last quarter. As we look at that, there were a few projects we did across both countries. One that stood out is we had some containment work this year. Containment is an area where automotive parts manufacturers, if they have a defect supplying parts to one of the auto manufacturers, then their customer will put them in containment, which means they need to do 100% inspection of all of those parts before they'll accept them for installation in a vehicle.

We will have semi-trailers show up at one of our labs to do those parts inspections. In the quarter, we had some of that work, which wasn't there in the second quarter last year. That, more than any one thing, probably provided a bit of an uptick in the call-out work. It wasn't really abnormal variance.

Speaker 8

Andy, just to summarize, I think if you look across the service, the nature of work next is we saw growth in our run-and-maintain business, which, as we've talked about before, is the stickiest, most stable recurring revenue that we have. We saw growth in the call-out as well, and less growth on the turnaround side. That is attributable to just timing shifts.

Got it. Thanks. I guess my follow-up question was just trying to understand the prior year just because you weren't public last year. What was it about the prior year quarter comparison that was unusual that had the difference from this year, which was more typical?

Speaker 6

The outages all shift around a little bit quarter to quarter. I've said a few times, just to reiterate, Q1 and Q4 are generally lighter, like maybe half the size of Q2 and Q3. The variance between Q2 and Q3 can change each year. Last year, Q2 was larger than Q3, and this year, we expect Q3 to be larger than Q2. I'm speaking to the outage work, which is just a little over 10% of our total revenue.

Speaker 8

If you're looking at margins on the, you know, from a comparable period, our margins this quarter were 28%, which we feel are more normalized. There was a one-time discrete overhead pickup in the prior year quarter that we didn't see this year, and that affects the comparability. In general, 17% business, you know, our margin for this quarter outperformed our full year of last year, and we feel like this quarter is more indicative of our normalized business.

Great. Thank you for that texture on the quarter. I appreciate it.

Speaker 9

As a reminder, it is star one if you would like to ask any final questions. We'll pause for a brief moment. Our next question is from Josh Chan with UBS. Please proceed.

Hi. Good morning. This is Clarence Ngonya on for Josh. In your prepared remarks, you mentioned that the cost synergies, the $20 million cost synergies from MV5, seem to be pretty conservative. I'm just wondering, are there any other areas of the businesses that you recognize where you can gain some additional cost synergies? Would it just be around the corporate function side?

Speaker 8

Good morning. Yes, to the question.

Go ahead, Kristen.

Okay. Yeah. In terms of business optimization, including cost synergies, the more we learn, the more excited we get. This deal closed 10 days ago. The way the nature of the transaction came about, we did not have a lot of ability to plan the integration or provide more detail on synergies until now. Like Robbie mentioned, the integration management office has been launched, and we are excited to come back in November with a more bottoms-up approach and a refined number. In general, we just continue to be more and more excited about both top-line synergies, revenue synergies, cross-selling opportunities, and also cost optimization within the combined business.

Speaker 4

Yeah. All I would add is that our approach is going from corporate all the way to the branch level, where we want to optimize and cross-sell services at the very local level, across all of our regions. The opportunity is we're not looking at it just as a corporate exercise.

Got it. That's helpful. Thank you.

Speaker 9

With no further questions, I would like to turn the conference back over to Tao for closing remarks.

Speaker 0

All right. Thank you, everyone, for joining us today and for your thoughtful questions. We appreciate your continued support and look forward to updating you on our progress as we come, as the combined organization next quarter. We're excited about the opportunities ahead and remain committed to executing our integration successfully while maintaining our focus on operational excellence and customer service. Thanks again. Have a great day.

Speaker 9

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.