Team (TISI) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue increased 2% year-over-year to $210.8 million, with U.S. segments up 6% and declines in Canada and international markets.

• Operating income improved to $3.2 million from a $1.3 million loss in Q3 2023, driven by higher IHT margins and lower corporate costs.

• Net loss for Q3 2024 narrowed to $11.1 million, an 8.3% year-over-year improvement.

• Adjusted EBITDA for Q3 was $11.3 million (5.4% margin); for the first nine months, $39.6 million (6.2% margin), up 21% year-over-year.

• Free cash flow for Q3 was $3.9 million, a $4.7 million improvement over 2023.

Financial highlights

• Q3 2024 revenue: $210.8 million (+2% YoY); nine-month revenue: $639.0 million (-1.5% YoY).

• Gross margin for Q3 was 25.4%, with gross profit of $53.5 million.

• Adjusted EBITDA for Q3 was $11.3 million; nine-month adjusted EBITDA was $39.6 million, up from $32.8 million in 2023.

• Net loss for Q3 was $11.1 million ($2.52/share); nine-month net loss was $31.1 million ($7.04/share).

• Free cash flow for the nine months was $(6.3) million, a significant improvement from $(29.5) million in 2023.

Outlook and guidance

• FY 2024 revenue guidance revised to $845–$860 million; gross margin $220–$228 million; adjusted EBITDA $53–$55 million.

• 2025 outlook anticipates low to mid-single-digit revenue growth, improved Canadian operations, and progress toward a 10%+ adjusted EBITDA margin.

• Capital expenditures expected at $9–$11 million for 2024.

• Management believes current working capital, forecasted cash flows, and available credit are sufficient to fund operations and service debt.

• Focus remains on regaining NYSE compliance and maintaining liquidity, with $40.4 million in total liquidity as of November 8, 2024.