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With that, I will turn it over to Keith Tucker, our CEO. Thank you, Alison. Welcome, everyone, and thank you for joining us to review our first quarter of twenty twenty five operational and financial highlights. During the first quarter of twenty twenty five, we continue to make progress against our strategic road map designed to better position Team for success and improve financial performance. Over the past two years, we have worked to simplify our business, expand our margins and address our capital structure and balance sheet.
7m 42s
Our success to date on these initiatives has team well positioned to grow the top line and market share. The tangible improvements we have delivered in operating performance and cash flow generating over the past two years were key to completing the refinancing we announced in March 2025. Which simplified our capital structure, lowered our blended interest rate by more than 100 basis points and extended our term loan maturities out to 2,030. Nelson will go into more detail about this, but I believe the hard work from all of our employees and team has helped to make our success possible. Turning to the first quarter of twenty twenty five. We continued to deliver solid results We made significant progress against one of our core commercial initiatives growing revenue from midstream end markets by nearly 15% in the quarter. Our Inspection and Heat Treating segment delivered strong top line growth with revenue up 6.8% over the prior year and up 8.8% in our core U. S. Operations. In our Mechanical Service segment, lower callout revenue and delays in project and turnaround activity shifted revenue into future periods, which offset the growth in our IH segment. Overall, revenues were essentially flat year over year but I want to remind you that our work is seasonal while winter is usually our slowest time, we also experienced negative impacts to the top line from adverse weather in January that adversely impacted our customers and our activity levels.
9m 22s
Having said that, we expect to see increases in year over year activity for the full year 2025. We delivered adjusted EBITDA for the first quarter of 5,300,000.0 Notably, our Inspection and Heat Treating segment generated a 39% year over year improvement in adjusted EBITDA. Driven by year over year revenue growth of nearly 22% in our higher margin heat treating services and 64% from our laboratory testing and inspection services facility in Cincinnati, Ohio. We continue to see benefits from our cost discipline in the first quarter with our selling, general and administrative expense lower by about $2,000,000 versus prior year period. We remain focused on driving revenue growth strict cost discipline and improving operational execution. As previously discussed, in the first quarter, we kicked off a series of actions targeting further improvement in costs and operating efficiency that are expected to yield annualized cost savings of around 10,000,000 In addition, we have implemented steps to the performance of our Canadian operations. These actions are a mix of top line growth initiatives and improvements to our cost structure and margins. Expect to begin to see the results from these actions in our 2025 results with the full year impact realized in 2026.
10m 56s
Looking ahead, we continue to closely monitor the potential impact of tariff policies and related effect on our end markets, we've experienced strong activity levels to start the second quarter and expect second quarter top line growth over the prior year across both segments and improved adjusted EBITDA levels. We believe our diversified portfolio of service offerings across multiple industries and our geographic footprint positions us to better navigate recent macroeconomic uncertainty around tariff policies. Our management team is focused on the things that we can control. Which are continued cost discipline and execution on our commercial initiatives. And we remain committed to delivering top line growth for the full year and at least 15% year over year growth in adjusted EBITDA. With that, I would like to turn it over to Nelson to discuss our financial accomplishments.
11m 59s
Thank you, Keith. Before I go into our first quarter results, would like to discuss in more detail the recent actions we've taken to strengthen our balance sheet. As Keith mentioned in March, we closed the refinancing that lowered our blended interest rate by over 100 basis points simplified our capital structure and extended our term loan maturities out to 2,030. Our new first lien term loan facility consists of a funded $175,000,000 term loan that matures in 02/1930 and a $50,000,000 delayed draw term loan available to the company subject to satisfying certain conditions. We use the initial proceeds to repay about $158,000,000 of outstanding debt consisting of our delayed draw term loan and equipment and real estate loans under our ABL credit facility and a portion of the outstanding balance of our prior senior secured term loan. All remaining outstanding debt under the prior senior secured term loan rolled over into a new $97,400,000 second lien term loan also maturing in 02/1930. The completion of this transaction addressed all our near term maturities and lowered our cost of capital while also providing the company financial flexibility as the company's performance continues to improve. Turning now to our first quarter financial results, our revenue was essentially flat year over year and our gross margin was 23.8%.
13m 20s
Our adjusted selling, general and administrative costs which excludes expenses not representative of our ongoing operations and non cash amounts such as depreciation and share based compensation declined by almost $1,000,000 and represented 22.7% of consolidated revenue. Our adjusted net loss for the quarter was 14,900,000.0 also essentially flat with the first quarter of twenty twenty four. We delivered solid adjusted EBITDA of 5,300,000.0 and continue to focus on expanding our margins through cost discipline and a focus on growing higher margin work. Since 2021, we have increased our adjusted EBITDA every year and we believe that we will continue that trend in 2025. As Keith noted, we have continued to build off our strategic roadmap and during the first quarter we launched the next phase, targeting further cost optimization and improved workforce utilization. We expect this phase of our ongoing program to generate sustainable improvements to margins and cash flow They're targeting annualized cost savings of at least 10,000,000 We are in a significantly improved position compared to where we were three years ago, and I remain confident in our ability to continue building off our progress to date. In improving our overall financial and operating performance. We expect to continue delivering improvements in our results that will ultimately lead to growth in shareholder value.
14m 42s
With that, let me now turn it back over to Keith for some closing comments.
14m 46s
Thanks, Nelson. Over the past several years, we've made significant progress against our strategic plan to designed to drive improved operational and financial performance. We expect to continue building off that progress in 2025. For the full year, we expect to see year over year growth in revenue, improved performance from our Canadian operations at least 15% year over year growth in adjusted EBITDA and further meaningful progress towards our adjusted EBITDA target margin of at least 10%. All of which we believe will lead to further growth in shareholder value. Our progress to date would not be possible without our outstanding and experienced workforce that is working every day to safely execute our strategic plan and unlock the inherent value here at Team. I am very proud of our safety culture and our focus on continuous improvement. Because at the end of the day, our people are our most vital asset and no job is too important not to be done safely. In closing, I remain confident about our future because I am a firm believer in our capabilities talented employees and our leadership team. We have delivered improved results over the past three years and we remain committed to continuous improvement in margin, cost discipline and cash flow generation.
16m 14s
I believe that we are well positioned to sustainably and profitably grow team well into the future. Thank you for joining us today. For your continued interest in Team.
16m 28s
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Key Insights
Team, Inc. (TISI) reported essentially flat year-over-year revenue for Q1 2025, with strong growth in the Inspection and Heat Treating segment (up 6.8% overall and 8.8% in core U.S. operations), but Mechanical Service segment revenue was impacted by lower callout activity and project delays.
The company completed a refinancing in March 2025, lowering its blended interest rate by over 100 basis points, simplifying its capital structure, and extending term loan maturities to 2030, providing greater financial flexibility.
Adjusted EBITDA for Q1 2025 was $5.3 million, with the Inspection and Heat Treating segment showing a 39% year-over-year improvement in adjusted EBITDA, driven by 22% growth in higher margin heat treating services and 64% growth at the Cincinnati laboratory facility.
Cost discipline remains a focus, with selling, general, and administrative expenses reduced by about $2 million year-over-year; new cost optimization initiatives are expected to yield annualized savings of around $10 million, with full impact in 2026.
For full year 2025, management expects year-over-year revenue growth, at least 15% growth in adjusted EBITDA, improved Canadian operations, and continued progress toward an adjusted EBITDA margin target of at least 10%.
