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TI

TEAM INC (TISI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered top-line acceleration with revenue of $248.0M (+8.5% YoY), gross margin dollars +7.1% YoY to $68.1M, and Adjusted EBITDA +12.4% YoY to $24.5M (9.9% margin), driven by strong IHT and U.S. MS performance .
  • Sequential operating improvement: revenue rebounded from seasonally weak Q1 ($198.7M) while Adjusted EBITDA expanded from $5.3M to $24.5M; net loss narrowed from $($29.7M) in Q1 to $($4.3M) in Q2 as loss on debt extinguishment did not recur .
  • Transformation and cost actions advancing: annualized SG&A/other cost savings targeted at ~$10M (≈$6M expected in H2’25), a dedicated Chief Strategy & Transformation Officer appointed, and continued margin focus; management reiterated at least 15% YoY Adjusted EBITDA growth for FY 2025 .
  • Balance sheet/liquidity improved with $49.3M total liquidity (cash $16.6M, undrawn facilities $32.7M) post March refinancing; total debt $370.2M, net debt $349.5M reflecting seasonal working capital needs and refinancing structure .

What Went Well and What Went Wrong

What Went Well

  • IHT segment strength: revenue +15.2% YoY ($130.4M) with U.S. +13.4% and Canada/Int’l +$3.9M; IHT operating income +26.7% YoY to $15.8M; segment Adjusted EBITDA +$3.9M to $19.5M .
  • Margin and EBITDA expansion: consolidated Adjusted EBITDA rose to $24.5M (9.9% of revenue), outpacing top-line growth; Adjusted SG&A improved to 18.9% of revenue, reflecting disciplined cost control .
  • Management tone/confidence: “We delivered strong results… adjusted EBITDA up 12.4% over the prior year… expanded our margin by 40 bps,” and reiterated transformational momentum and expected H2 growth across both segments .

What Went Wrong

  • International MS softness and corporate costs: MS revenue growth of 1.9% masked weak international activity; MS operating income declined ~$0.5M YoY; corporate/shared costs higher by $1.9M due to non-recurring professional services .
  • Gross margin % flat to slightly lower YoY: GM% was 27.5% vs. 27.8% in Q2 2024 despite higher GM dollars, indicating mix/cost dynamics offset some leverage .
  • Free cash flow negative: Q2 cash from operations $(3.3)M and capex $(2.9)M yielded FCF $(6.3)M; Q2 net loss remained $(4.3)M with interest expense ~$11.9M .

Financial Results

Sequential performance (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$213.3 $198.7 $248.0
Gross Margin ($USD Millions)$57.3 $47.3 $68.1
Gross Margin (%)26.9% 23.8% 27.5%
Net Loss ($USD Millions)$(7.2) $(29.7) $(4.3)
Diluted EPS ($USD)$(1.61) $(6.61) $(0.95)
Adjusted EBITDA ($USD Millions)$14.6 $5.3 $24.5
Adjusted EBITDA Margin (%)6.9% 2.7% 9.9%
Adjusted SG&A ($USD Millions)$45.96 $45.10 $46.82

Year-over-year comparison (Q2 2024 → Q2 2025)

MetricQ2 2024Q2 2025
Revenue ($USD Millions)$228.6 $248.0
Gross Margin ($USD Millions)$63.6 $68.1
Gross Margin (%)27.8% 27.5%
Net Loss ($USD Millions)$(2.8) $(4.3)
Diluted EPS ($USD)$(0.63) $(0.95)
Adjusted EBITDA ($USD Millions)$21.8 $24.5

Segment breakdown (Q2 2024 → Q2 2025)

MetricQ2 2024Q2 2025
IHT Revenue ($USD Millions)$113.2 $130.4
MS Revenue ($USD Millions)$115.4 $117.6
IHT Operating Income ($USD Millions)$12.5 $15.8
MS Operating Income ($USD Millions)$10.6 $10.1
Corporate & Shared Op. Loss ($USD Millions)$(11.9) $(13.8)
Consolidated Operating Income ($USD Millions)$11.2 $12.1

KPIs and balance sheet

KPIValue
Total Liquidity ($M)$49.3
Cash & Equivalents ($M)$16.6
Undrawn ABL Availability ($M)$22.7
Second Lien DDTL Availability ($M)$10.0
Total Debt ($M)$370.2
Net Debt ($M)$349.5
Cash from Operations Q2 ($M)$(3.3)
Capital Expenditure Q2 ($M)$(2.9)
Free Cash Flow Q2 ($M)$(6.3)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA YoY GrowthFY 2025At least 15% YoY growth At least 15% YoY growth Maintained
Adjusted EBITDA Margin TargetMedium-termProgress toward ≥10% target Further progress toward ≥10% target Maintained
Top-line Growth CommentaryH2 2025Mid-single-digit FY revenue growth expected H2 top-line growth YoY across both segments Maintained (timing emphasized)
Canadian OperationsFY 2025/H2Expect improvement vs prior year Anticipate continued improvement in H2 Maintained
SG&A/Other Cost SavingsFY 2025Target ≥$10M annualized ~$10M annualized; ~$6M realization in H2’25 Clarified timing

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Tariffs/Macro & Supply ChainMonitoring tariff policy; diversified services help navigate macro Identified sourcing improvements to mitigate potential cost pressure Ongoing mitigation
Cost OptimizationSG&A reduced; additional $10M annualized savings targeted ~$10M savings targeted; ~$6M expected H2’25 Advancing
Canadian OperationsActions to improve performance; expect improvement YoY revenue growth; expect continued improvement in H2 Improving
Capital Structure/LiquidityMarch refinancing; extended maturities; lowered blended rate Liquidity $49.3M at 6/30/25; flexibility as performance improves Strengthening
Higher-Margin Mix (Heat Treating, Lab)Heat treating +22% YoY; lab revenue +64% in Q1 Heat treating revenue nearly +26% YoY; margin gains Strengthening
AI/Technology InitiativesNot discussedNot discussedNeutral

Management Commentary

  • “We delivered strong results… Revenue grew 8.5%… gross margin increasing by 7.1% and adjusted EBITDA up by 12.4… the growth in our adjusted EBITDA outpaced our top line growth.” — CEO Keith Tucker .
  • “We completed actions targeting… cost savings of around $10M; expect ~$6M of those savings to flow through in 2025… appointment of Dan Dolson… will accelerate revenue growth and margin improvement.” — CEO Keith Tucker .
  • “At 06/30/2025, total liquidity $49M (cash $16.6M; $32.7M undrawn facilities)… revenue up 8.5% YoY… adjusted net loss down to $0.9M… adjusted EBITDA $24.5M, margin up 40 bps to 9.9%.” — CFO Nelson Haight .
  • “We remain committed to… at least 15% year over year growth in adjusted EBITDA for full year 2025… and progress towards adjusted EBITDA target margin of at least 10%.” — CEO Keith Tucker .

Q&A Highlights

  • No Q&A session was hosted; the call consisted of prepared remarks only (company indicated no questions would be taken) .
  • Clarifications in prepared comments: International revenue recognition “lumpiness” impacted MS; Canada initiatives beginning to show results; tariff mitigation via supply chain/material sourcing .

Estimates Context

  • S&P Global quarterly consensus for Q2 2025 was unavailable for EPS and revenue; our attempt returned actual revenue only without consensus series and no EPS consensus. Values retrieved from S&P Global.*
    | Metric | Q2 2025 Consensus | Notes | |--------|--------------------|-------| | Revenue Consensus Mean | Unavailable* | Tool returned actual only; no consensus count [functions.GetEstimates]. | | Primary EPS Consensus Mean | Unavailable* | No EPS consensus series returned [functions.GetEstimates]. |

Key Takeaways for Investors

  • Sequential inflection: strong Q2 rebound from Q1 seasonality/adverse weather, with revenue, margins, and Adjusted EBITDA materially higher; momentum expected to carry into H2 .
  • IHT-led growth and mix: IHT strength (U.S. and Canada) and higher-margin heat treating/lab services are expanding segment margins and consolidated EBITDA; watch continued mix shift benefits .
  • Cost program execution: ~$10M annualized savings targeted with ~$6M expected in H2’25; monitor Adjusted SG&A as % of revenue trending down (18.9% in Q2) .
  • Balance sheet/lending flexibility: post-refinancing liquidity at $49.3M and extended maturities to 2030 provide runway; total debt up due to structure and seasonal working capital; net debt $349.5M .
  • Cash generation remains a focus: Q2 free cash flow negative $(6.3)M; watch working capital discipline and H2 conversion as activity levels rise .
  • FY guideposts intact: management reiterates at least 15% YoY Adjusted EBITDA growth for FY 2025 and progress toward ≥10% margin; H2 activity and Canadian improvements are central to the thesis .
  • Trade setup: absent consensus data, stock reactions likely hinge on continued margin expansion, segment mix strength, and visible delivery of H2 cost savings; absence of Q&A reduces near-term surprises risk but limits incremental disclosure .