Team, Inc. (TISI) Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Revenue: $229 million, down from $248 million year-over-year.

Inspection and Heat Treating Revenue: $131 million, a 5% decrease, primarily due to reduced turnaround activities.

Mechanical Services Revenue: $97 million, an 11% decrease, attributed to deferred maintenance and turnaround work.

Adjusted EBITDA: $13.7 million, down from $24.5 million in Q2 2025, reflecting lower activity and unfavorable revenue mix.

Selling, General and Administrative Expenses: $46.6 million, a decrease of 7.8% year-over-year.

Cash Flow: Cash used in operating activities was $0.7 million, with capital expenditures of $3.9 million.

Liquidity: Total liquidity at $51.2 million and net debt at $300.3 million.

2Strategic Updates and Business Highlights

Leadership Changes: New appointments include a Chief Operating Officer and a Chief Human Resources Officer to strengthen leadership and accountability.

Transformation Initiatives: Focus on improving commercial execution, operational efficiency, and labor utilization. Identified potential annual savings of $20 million to $35 million.

Market Expansion: Growth in new markets such as LNG, aerospace, and nuclear power, with over 10% year-on-year growth expected to continue.

Customer Relationships: Emphasis on deepening existing relationships and capturing a greater share of work in core markets.

3Forward Guidance and Outlook

Revenue Guidance: Reaffirmed full-year 2026 revenue outlook of $920 million to $945 million, with expectations leaning towards the lower half of this range due to ongoing uncertainties.

Deferred Activity: Anticipation that some deferred Mechanical Services activity will return in the second half of 2026, although timing is uncertain.

Cost Improvement Initiatives: Expected benefits of $8 million to $15 million in the second half of 2026, with full annualized savings projected by 2027.

4Bad News, Challenges, or Points of Concern

Revenue Decline: Significant decrease in revenue due to deferred turnaround and maintenance activities, primarily driven by the ongoing conflict in the Middle East, which has negatively impacted revenues by over $20 million in the first half of 2026.

Margin Compression: Lower contribution from turnaround work has resulted in a less favorable sales mix, affecting labor utilization and operating leverage.

Market Uncertainty: The timing of recovery in deferred maintenance is contingent on macroeconomic factors and customer decisions, creating uncertainty in revenue projections.

5Notable Q&A Insights

Stellex Capital Management: Increased ownership viewed as a strong vote of confidence in Team's strategy and transformation efforts.

Cost Implementation: Anticipated one-time costs of $5 million to $10 million associated with structural improvements and technology upgrades.

Growth in New Markets: Management highlighted growth potential in new sectors and the importance of structuring the sales organization to capture these opportunities effectively.

Cash Flow Improvement: Focus on optimizing working capital and reducing accounts receivable to enhance liquidity, with a targeted cash flow improvement of $5 million to $10 million by year-end. Overall, Team, Inc. is navigating a challenging environment marked by deferred maintenance activity and macroeconomic uncertainties, while simultaneously pursuing strategic initiatives aimed at improving operational efficiency and expanding into new markets.