TEAM INC (TISI)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 revenue was $0.199B and gross margin was 23.8%; Adjusted EBITDA was $5.3M (2.7% margin), reflecting strong IHT performance offset by weaker MS callout activity and weather-related delays that pushed projects into Q2 .
• Net loss widened to $29.7M ($6.61 loss per share), primarily due to an $11.9M loss on debt extinguishment from the March refinancing; Adjusted net loss was $14.9M .
• Management completed a refinancing in March 2025, extending maturities to 2030 and lowering blended interest cost by >100 bps; launched the next phase of cost optimization targeting ≥$10M annualized savings, with measurable improvements expected in Canada and other international operations .
• Outlook: management expects Q2 2025 year-over-year top-line growth across both segments and higher Adjusted EBITDA; for FY 2025, remains committed to top-line growth and ≥15% Adjusted EBITDA growth with progress toward a ≥10% Adjusted EBITDA margin target—potential narrative catalysts around execution of cost savings and margin expansion .

What Went Well and What Went Wrong

• What Went Well

  • IHT segment delivered revenue up 6.8% YoY to $106.2M, with U.S. IHT revenue up 8.8%; IHT operating income rose 67.7% to $8.7M and IHT Adjusted EBITDA increased to $11.6M .
  • Heat treating services grew nearly 22% YoY; Cincinnati lab testing revenue rose 64%, driving higher-margin mix within IHT. “Our Inspection and Heat Treating segment generated a 39% year over year improvement in Adjusted EBITDA…” .
  • Corporate and shared support costs declined 13.3% YoY; Adjusted SG&A fell to 22.7% of revenue, reflecting cost discipline .

• What Went Wrong

  • Mechanical Services revenue fell 7.7% YoY to $92.4M; MS operating income swung from +$4.1M to −$1.1M, driven by lower U.S. callouts and international project delays .
  • Gross margin compressed to 23.8% from 24.4% in Q1 2024 and from 26.9% in Q4 2024, reflecting mix and the MS softness/deferrals .
  • Free cash flow was −$30.1M, and net debt increased to $336.8M alongside total debt of $353.6M post-refinancing; working capital draw and debt issuance costs weighed on cash generation in the quarter .

Financial Results

Segment breakdown (YoY comparison):

KPIs and balance sheet/cash flow:

Estimate comparison (S&P Global):

Values retrieved from S&P Global.*

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Strategic execution and margin focus: “We remain focused on generating top-line growth, cost discipline, and building off our positive margin trajectory to increase cash flow generation” — CEO Keith D. Tucker .
• Segment momentum: “Our Inspection and Heat Treating segment generated a 39% year over year improvement in Adjusted EBITDA… nearly 22% year over year growth in our higher margin heat treating services and a 64% increase in revenue from our laboratory… in Cincinnati” — CEO .
• Outlook and risks: “We… see overall second quarter top-line growth over the prior year across both segments and improved Adjusted EBITDA… [and] closely monitor the potential impact of tariff policies…” — CEO .
• Balance sheet actions: “Closed a refinancing transaction that lowered our blended interest rate by over 100 basis points, simplified our capital structure and extended our term loan maturities out to 2030” — CFO Nelson M. Haight .

Q&A Highlights

• The company did not host Q&A on the call (“The Company will not host questions during the call.”) .
• Management’s prepared remarks emphasized: (1) cost savings trajectory, (2) segment mix shift to higher-margin services, (3) expected Q2 YoY top-line and EBITDA improvement, and (4) tariff monitoring .

Estimates Context

• Wall Street consensus for Q1 2025 EPS, revenue, and EBITDA was unavailable via S&P Global for TISI; coverage appears limited and the dataset returned actuals only. As a result, comparisons to consensus are not possible this quarter. Values retrieved from S&P Global.*
• Implication: Estimate revisions may focus on margin cadence (IHT strength vs MS recovery timing), cash flow trajectory post-refinancing, and the pace of cost savings realization.

Key Takeaways for Investors

• IHT-led resilience with higher-margin mix continues to underpin margin improvement; MS weakness was transitory (weather and callout/project delays) with activity pushed into Q2 .
• Cost program escalation (≥$10M annualized) plus Canadian/international improvement are key levers to reach ≥15% YoY Adjusted EBITDA growth and advance toward the ≥10% margin target in 2025; execution here is the primary narrative driver .
• Refinancing meaningfully improved duration and reduced interest costs; expect lower interest burden and improved financial flexibility to support margin/cash flow progression through 2025 .
• Near-term trading: watch Q2 print for rebound in MS, confirmation of YoY top-line growth and EBITDA improvement; any slip in MS recovery or cost savings cadence would be a negative surprise .
• Medium-term thesis: margin expansion via mix (heat treat, lab), disciplined SG&A, and international ops improvement, plus lower cost of capital post-refinancing; liquidity tighter in Q1 but expected to rebuild with improved operations .
• Risk monitor: tariff policy uncertainty and weather-seasonality can impact project timing; management highlighted diversification and geographic footprint to navigate macro volatility .
• Non-GAAP lens: Adjusted metrics exclude notable items (legal/professional, severance, debt extinguishment); track GAAP-to-non-GAAP reconciliation and free cash flow consistency to validate underlying improvements .