Team, Inc. Reports Second Quarter 2023 Results
- Q2 2023 revenue increases by 8% YoY
- Gross margin improves by 190 basis points
- Net loss improves by $12.4 million YoY
- Consolidated Adjusted EBITDA increases to $17.4 million
- Ongoing cash selling, general and administrative expenses reduced by $3.2 million YoY
- Successful repayment of convertible notes
- None.
Second Quarter 2023 Revenue Increased
Gross Margin Improved by 190 basis points Over Second Quarter 2022
SUGAR LAND, Texas, Aug. 10, 2023 (GLOBE NEWSWIRE) -- Team, Inc. (NYSE: TISI) (“TEAM” or the “Company”), a global, leading provider of specialty industrial services offering clients access to a full suite of conventional, specialized, and proprietary mechanical, heat-treating, and inspection services, today reported its financial results for the second quarter ended June 30, 2023.
Second Quarter 2023 Highlights1:
- Increased revenues to
$239.5 million , up8% over the 2022 second quarter. - Improved gross margin to
$60.9 million and25.4% of revenue, up roughly 190 basis points from the 2022 second quarter. - Reported net loss of
$15.8 million , an improvement of$12.4 million over the 2022 second quarter. - Grew consolidated Adjusted EBITDA2 to
$17.4 million (7.3% of consolidated revenue), up from$5.7 million (2.6% of consolidated revenue) in the 2022 second quarter. - Reduced ongoing cash selling, general and administrative expenses by
$3.2 million over the 2022 period, and a total of$8.3 million year-to-date in 2023. - On August 1, 2023, successfully repaid the Company’s remaining
$41.2 million of convertible notes with proceeds from the previously announced June 2023 refinancing transaction.
1. Unless otherwise specified, the financial information and discussion in this earnings release is based on the Company’s continuing operations (IHT and MS segments) and excludes results of its discontinued operations (Quest Integrity).
2. See the accompanying reconciliation of non-GAAP financial measures at the end of this press release.
“We are encouraged with the progress reflected in our second quarter results, which delivered strong revenue growth and Adjusted EBITDA of
Mr. Tucker then went on to note the Company’s recent financing transactions, “In June, we successfully closed a series of refinancing transactions that allowed us to repay in full our existing senior secured term loan and, on August 1, repaid in full our remaining outstanding convertible notes. These transactions simplified our capital structure, extended our next debt maturity to August 2025 and successfully eliminated the conditions that led to the going concern disclosure in our 2022 fiscal year-end annual report and our first quarter report.”
“Looking to the third quarter, we see generally stronger activity levels across both our segments, driven by healthy customer end markets, which should provide further opportunities to capture accretive revenue growth. We are particularly excited about our state-of-the-art aerospace facility, where our activity levels continue to increase. Additionally, while we have made significant progress throughout our operation in reducing costs and improving cash flow, management remains focused on addressing underperforming components of the business and identifying further opportunities to improve efficiency and margins, the details of which we expect to share during the third quarter,” concluded Tucker.
Financial Results
On November 1, 2022, the Company closed the sale of its Quest Integrity business. Financial information, performance metrics and discussions for comparative period 2022 are based on the Company’s continuing operations (Inspection and Heat Treating (IHT) and Mechanical Services (MS) segments) and exclude results of discontinued operations (Quest Integrity) except where stated otherwise.
Second quarter revenues were up
Selling, general and administrative expenses for the second quarter were
Consolidated net loss in the second quarter of 2023 was
Adjusted Net Loss, consolidated Adjusted EBIT, and consolidated Adjusted EBITDA are non-GAAP financial measures that exclude certain items that are not indicative of TEAM’s ongoing operations. A reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures is presented at the end of this earnings release.
Segment Results
The following table illustrates the composition of the Company’s revenue and operating income (loss) by segment for the quarter ended June 30, 2023 and 2022 (in thousands):
TEAM, INC. AND SUBSIDIARIES | |||||||||||||||
SEGMENT INFORMATION | |||||||||||||||
(unaudited, in thousands) | |||||||||||||||
Three Months Ended June 30, | Better (Worse) | ||||||||||||||
2023 | 2022 | $ | % | ||||||||||||
Revenues | |||||||||||||||
IHT | $ | 116,740 | $ | 114,124 | $ | 2,616 | 2.3 | % | |||||||
MS | 122,752 | 107,416 | 15,336 | 14.3 | % | ||||||||||
$ | 239,492 | $ | 221,540 | $ | 17,952 | 8.1 | % | ||||||||
Operating income (loss) | |||||||||||||||
IHT | $ | 6,548 | $ | 5,514 | $ | 1,034 | 18.8 | % | |||||||
MS | 12,720 | 6,984 | 5,736 | 82.1 | % | ||||||||||
Corporate and shared support services | (14,672 | ) | (23,292 | ) | 8,620 | 37.0 | % | ||||||||
$ | 4,596 | $ | (10,794 | ) | $ | 15,390 | 142.6 | % | |||||||
Revenues. IHT revenues increased by
Operating income (loss). IHT operating income increased by
TEAM, INC. AND SUBSIDIARIES | |||||||||||||||
SEGMENT INFORMATION | |||||||||||||||
(unaudited, in thousands) | |||||||||||||||
Six Months Ended June 30, | Better (Worse) | ||||||||||||||
2023 | 2022 | $ | % | ||||||||||||
Revenues | |||||||||||||||
IHT | $ | 218,569 | $ | 209,721 | $ | 8,848 | 4.2 | % | |||||||
MS | 223,200 | 200,857 | 22,343 | 11.1 | % | ||||||||||
$ | 441,769 | $ | 410,578 | $ | 31,191 | 7.6 | % | ||||||||
Operating income (loss) | |||||||||||||||
IHT | $ | 11,271 | $ | 5,648 | $ | 5,623 | 99.6 | % | |||||||
MS | 15,913 | 7,497 | 8,416 | 112.3 | % | ||||||||||
Corporate and shared support services | (30,334 | ) | (46,346 | ) | 16,012 | 34.5 | % | ||||||||
$ | (3,150 | ) | $ | (33,201 | ) | $ | 30,051 | 90.5 | % | ||||||
Revenues. IHT revenues increased by
Operating income (loss). IHT operating income increased by
Balance Sheet and Liquidity
On June 30, 2023, the Company had
The Company’s total debt as of June 30, 2023 was
On August 8, 2023, after repaying the Company’s convertible notes on August 1, the Company had
Non-GAAP Financial Measures
The non-GAAP financial measures in this earnings release are provided to enable investors, analysts and management to evaluate TEAM’s performance excluding the effects of certain items that management believes impact the comparability of operating results between reporting periods. These measures should be used in addition to, and not in lieu of, results prepared in conformity with generally accepted accounting principles (“GAAP”). A reconciliation of each of the non-GAAP financial measures to the most directly comparable historical GAAP financial measure is contained in the accompanying schedule for each of the fiscal periods indicated.
About Team, Inc.
Headquartered in Sugar Land, Texas, Team, Inc. (NYSE: TISI) is a global, leading provider of specialty industrial services offering clients access to a full suite of conventional, specialized, and proprietary mechanical, heat-treating, and inspection services. We deploy conventional to highly specialized inspection, condition assessment, maintenance, and repair services that result in greater safety, reliability, and operational efficiency for our client’s most critical assets. Through locations in more than 20 countries, we unite the delivery of technological innovation with over a century of progressive, yet proven integrity and reliability management expertise to fuel a better tomorrow. For more information, please visit www.teaminc.com.
Certain forward-looking information contained herein is being provided in accordance with the provisions of the Private Securities Litigation Reform Act of 1995. We have made reasonable efforts to ensure that the information, assumptions, and beliefs upon which this forward-looking information is based are current, reasonable, and complete. However, such forward-looking statements involve estimates, assumptions, judgments, and uncertainties. They include but are not limited to statements regarding the Company’s financial prospects and the implementation of cost saving measures. There are known and unknown factors that could cause actual results or outcomes to differ materially from those addressed in the forward-looking information. Although it is not possible to identify all of these factors, they include, among others, the Company’s ability to continue as a going concern; the Company’s ability to execute on its cost management actions; the Company’s ability to generate sufficient cash from operations, access its credit facility, or maintain its compliance with covenants under its credit facility and credit agreement; the Company’s ability to manage inflationary pressures on its operating costs; the Company’s ability to successfully divest assets on terms that are favorable to the Company; the Company’s ability to repay, refinance or restructure our debt and the debt of certain of our subsidiaries; anticipated or expected purchases or sales of assets; the impact to the Company’s business, financial condition, results of operations and cash flows due to negative market conditions, including from the lingering impact of widespread public health crises, epidemics and pandemics, threats of domestic and global economic recession and future economic uncertainties, particularly in industries in which we are heavily dependent; seasonal and other variation, such as severe weather conditions (including conditions influenced by climate change) and the nature of the Company’s clients’ industry; the Company’s ability to expand into new markets (including low carbon energy transition) and attract clients in new industries may be limited due to its competition’s breadth of service offerings and intellectual property; the Company’s significant debt and high leverage which could have a negative impact on its financing options, liquidity position and ability to manage increases in interest rates; the timing of new client contracts and termination of existing contracts may result in unpredictable fluctuations in the Company’s cash flows and financial results; the risk of non-payment and/or delays in payment of receivables from the Company’s clients; the Company may not be able to continue to meet the New York Stock Exchange’s (“NYSE”) continued listing requirements and rules, and the NYSE may delist the Company’s common stock, which could negatively affect the Company, the price of the Company’s common stock and its shareholders’ ability to sell the Company’s common stock; the Company’s financial forecasts are based upon estimates and assumptions that may materially differ from actual results; the Company may incur liabilities and suffer negative financial or reputational impacts relating to occupational health and safety matters; changes in laws or regulations in the local jurisdictions that the Company conducts its business; the outcome of tax examinations; changes in tax laws, and other tax matters; foreign currency exchange rate and interest rate fluctuations; the inherently uncertain outcome of current and future litigation; if the Company fails to maintain effective internal controls, it may not be able to report its financial results accurately or timely or prevent or detect fraud, which could have a material adverse effect on its business; acts of terrorism, war or political or civil unrest in the U.S. or elsewhere, changes in laws and regulations, or the imposition of economic or trade sanctions affecting international commercial transactions and such known factors as are detailed in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, each as filed with the Securities and Exchange Commission, and in other reports filed by the Company with the Securities and Exchange Commission from time to time. Accordingly, there can be no assurance that the forward-looking information contained herein, including statement regarding the Company’s financial prospects and the implementation of cost saving measures, will occur or that objectives will be achieved. We assume no obligation to publicly update or revise any forward-looking statements made today or any other forward-looking statements made by the Company, whether as a result of new information, future events or otherwise, except as may be required by law.
Contact:
Nelson M. Haight
Executive Vice President, Chief Financial Officer
(281) 388-5521
TEAM, INC. AND SUBSIDIARIES | ||||||||||||||||
SUMMARY OF CONSOLIDATED OPERATING RESULTS | ||||||||||||||||
(unaudited, in thousands, except per share data) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenues | $ | 239,492 | $ | 221,540 | $ | 441,769 | $ | 410,578 | ||||||||
Operating expenses | 178,576 | 169,426 | 333,851 | 317,334 | ||||||||||||
Gross margin | 60,916 | 52,114 | 107,918 | 93,244 | ||||||||||||
Selling, general, and administrative expenses | 56,320 | 62,908 | 111,068 | 126,429 | ||||||||||||
Restructuring and other related charges, net | — | — | — | 16 | ||||||||||||
Operating income (loss) | 4,596 | (10,794 | ) | (3,150 | ) | (33,201 | ) | |||||||||
Interest expense, net | (16,691 | ) | (18,476 | ) | (33,432 | ) | (37,055 | ) | ||||||||
Loss on debt extinguishment | (1,582 | ) | — | (1,582 | ) | — | ||||||||||
Other income, net | 13 | 3,259 | 648 | 6,438 | ||||||||||||
Loss before income taxes | (13,664 | ) | (26,011 | ) | (37,516 | ) | (63,818 | ) | ||||||||
Less: (Provision) benefit for income taxes | (2,089 | ) | (2,191 | ) | (2,948 | ) | (2,717 | ) | ||||||||
Net loss from continuing operations | (15,753 | ) | (28,202 | ) | (40,464 | ) | (66,535 | ) | ||||||||
Net income from discontinued operations | — | 6,650 | — | 12,521 | ||||||||||||
Net loss | $ | (15,753 | ) | $ | (21,552 | ) | $ | (40,464 | ) | $ | (54,014 | ) | ||||
Basic net loss per common share: | ||||||||||||||||
Loss from continuing operations | (3.61 | ) | (6.53 | ) | (9.30 | ) | (16.45 | ) | ||||||||
Income from discontinued operations | — | 1.54 | — | 3.10 | ||||||||||||
Total | $ | (3.61 | ) | $ | (4.99 | ) | $ | (9.30 | ) | $ | (13.35 | ) | ||||
Weighted-average number of shares outstanding: | ||||||||||||||||
Basic | 4,362 | 4,318 | 4,353 | 4,045 | ||||||||||||
TEAM, INC. AND SUBSIDIARIES | |||||||
SUMMARY CONSOLIDATED BALANCE SHEET INFORMATION | |||||||
(in thousands) | |||||||
June 30, | December 31, | ||||||
2023 | 2022 | ||||||
(unaudited) | |||||||
Cash and cash equivalents | $ | 30,437 | $ | 58,075 | |||
Other current assets | 296,318 | 289,478 | |||||
Property, plant, and equipment, net | 131,956 | 138,099 | |||||
Other non-current assets | 127,974 | 130,993 | |||||
Total assets | $ | 586,685 | $ | 616,645 | |||
Current portion of long-term debt and finance lease obligations | $ | 4,547 | $ | 280,993 | |||
Other current liabilities | 154,019 | 167,871 | |||||
Long-term debt and finance lease obligations, net of current maturities | 306,334 | 4,942 | |||||
Other non-current liabilities | 41,913 | 45,079 | |||||
Stockholders’ equity | 79,872 | 117,760 | |||||
Total liabilities and stockholders’ equity | $ | 586,685 | $ | 616,645 | |||
TEAM INC. AND SUBSIDIARIES | ||||||||
SUMMARY CONSOLIDATED CASH FLOW INFORMATION1 | ||||||||
(unaudited, in thousands) | ||||||||
Six Months Ended June 30, | ||||||||
2023 | 20221 | |||||||
Net loss | $ | (40,464 | ) | $ | (54,014 | ) | ||
Depreciation and amortization expense | 19,085 | 19,609 | ||||||
Loss on debt extinguishment | 1,582 | — | ||||||
Amortization of debt issuance costs, debt discounts and deferred financing costs | 16,229 | 12,077 | ||||||
Deferred income taxes | 730 | (357 | ) | |||||
Non-cash compensation cost | 627 | (59 | ) | |||||
Write-off of deferred loan costs | — | 2,748 | ||||||
Working Capital and Other | (21,406 | ) | (33,395 | ) | ||||
Net cash used in operating activities | (23,617 | ) | (53,391 | ) | ||||
Capital expenditures | (5,073 | ) | (14,001 | ) | ||||
Proceeds from disposal of assets | 332 | 5,119 | ||||||
Net cash used in investing activities | (4,741 | ) | (8,882 | ) | ||||
Borrowings (payments) under ABL Facility, net | (21,093 | ) | 66,053 | |||||
Borrowings under Eclipse Term Loans | 27,398 | — | ||||||
Payments for debt issuance costs | (5,327 | ) | (10,640 | ) | ||||
Issuance of common stock, net of issuance costs | — | 9,696 | ||||||
Other | (495 | ) | (323 | ) | ||||
Net cash provided by financing activities | 483 | 64,786 | ||||||
Effect of exchange rate changes | 237 | (382 | ) | |||||
Net change in cash and cash equivalents | $ | (27,638 | ) | $ | 2,131 |
1 | Consolidated statement of cash flow for 2022 includes cash flows from discontinued operations. | |
TEAM, INC. AND SUBSIDIARIES | ||||||||||||||||
SEGMENT INFORMATION | ||||||||||||||||
(unaudited, in thousands) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenues | ||||||||||||||||
IHT | $ | 116,740 | $ | 114,124 | $ | 218,569 | $ | 209,721 | ||||||||
MS | 122,752 | 107,416 | 223,200 | 200,857 | ||||||||||||
$ | 239,492 | $ | 221,540 | $ | 441,769 | $ | 410,578 | |||||||||
Operating income (loss) | ||||||||||||||||
IHT | $ | 6,548 | $ | 5,514 | $ | 11,271 | $ | 5,648 | ||||||||
MS | 12,720 | 6,984 | 15,913 | 7,497 | ||||||||||||
Corporate and shared support services | (14,672 | ) | (23,292 | ) | (30,334 | ) | (46,346 | ) | ||||||||
$ | 4,596 | $ | (10,794 | ) | $ | (3,150 | ) | $ | (33,201 | ) | ||||||
Segment Adjusted EBIT1 | ||||||||||||||||
IHT | $ | 7,541 | $ | 5,539 | $ | 12,304 | $ | 5,689 | ||||||||
MS | 12,819 | 7,038 | 16,288 | 7,551 | ||||||||||||
Corporate and shared support services | (12,699 | ) | (16,473 | ) | (26,652 | ) | (32,321 | ) | ||||||||
$ | 7,661 | $ | (3,896 | ) | $ | 1,940 | $ | (19,081 | ) | |||||||
Segment Adjusted EBITDA1 | ||||||||||||||||
IHT | $ | 10,729 | $ | 8,635 | $ | 18,546 | $ | 12,039 | ||||||||
MS | 17,523 | 11,672 | 25,745 | 17,069 | ||||||||||||
Corporate and shared support services | (10,807 | ) | (14,629 | ) | (22,639 | ) | (29,785 | ) | ||||||||
$ | 17,445 | $ | 5,678 | $ | 21,652 | $ | (677 | ) |
___________________
1 | See the accompanying reconciliation of non-GAAP financial measures at the end of this earnings release. | |
TEAM, INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
(Unaudited)
The Company uses supplemental non-GAAP financial measures which are derived from the consolidated financial information, including adjusted net income (loss); adjusted net income (loss) per share; earnings before interest and taxes (“EBIT”); Adjusted EBIT; adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”) and free cash flow to supplement financial information presented on a GAAP basis.
The Company defines adjusted net income (loss) and adjusted net income (loss) per share to exclude the following items: non-routine legal costs and settlements, non-routine professional fees, restructuring charges, loss on debt extinguishment, certain severance charges, and certain other items that we believe are not indicative of core operating activities. Consolidated Adjusted EBIT, as defined by us, excludes the costs excluded from adjusted net income (loss) as well as income tax expense (benefit), interest charges, foreign currency (gain) loss, and items of other (income) expense. Consolidated Adjusted EBITDA further excludes from consolidated Adjusted EBIT depreciation, amortization and non-cash share-based compensation costs. Segment Adjusted EBIT is equal to segment operating income (loss) excluding costs associated with non-routine legal costs and settlements, non-routine professional fees, loss on debt extinguishment, certain severance charges, and certain other items as determined by management. Segment Adjusted EBITDA further excludes from segment Adjusted EBIT depreciation, amortization, and non-cash share-based compensation costs. Free cash flow is defined as net cash provided by (used in) operating activities minus capital expenditures. Net debt is defined as the sum of the current and long-term portions of debt, including finance lease obligations, less cash and cash equivalents.
Management believes these non-GAAP financial measures are useful to both management and investors in their analysis of our financial position and results of operations. In particular, adjusted net income (loss), adjusted net income (loss) per share, consolidated Adjusted EBIT, and consolidated Adjusted EBITDA are meaningful measures of performance that are commonly used by industry analysts, investors, lenders, and rating agencies to analyze operating performance in our industry, perform analytical comparisons, benchmark performance between periods, and measure our performance against externally communicated targets. Our segment Adjusted EBIT and segment Adjusted EBITDA are also used as a basis for the chief operating decision maker to evaluate the performance of our reportable segments. Free cash flow is used by our management and investors to analyze our ability to service and repay debt and return value directly to stakeholders.
Non-GAAP financial measures have important limitations as analytical tools, because they exclude some, but not all, items that affect net earnings and operating income. These measures should not be considered substitutes for their most directly comparable U.S. GAAP financial measures and should be read only in conjunction with financial information presented on a GAAP basis. Further, our non-GAAP financial measures may not be comparable to similarly titled measures of other companies who may calculate non-GAAP financial measures differently, limiting the usefulness of those measures for comparative purposes. The liquidity measure of free cash flow does not represent a precise calculation of residual cash flow available for discretionary expenditures. Reconciliations of each non-GAAP financial measure to its most directly comparable GAAP financial measure are presented below.
TEAM, INC. AND SUBSIDIARIES | ||||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
(unaudited, in thousands except per share data) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Adjusted Net Loss: | ||||||||||||||||
Net loss | $ | (15,753 | ) | $ | (28,202 | ) | $ | (40,464 | ) | $ | (66,535 | ) | ||||
Professional fees and other1 | 2,647 | 4,693 | 4,368 | 10,037 | ||||||||||||
Legal costs2 | 200 | 1,200 | 200 | 1,728 | ||||||||||||
Severance charges, net3 | 217 | 1,008 | 522 | 2,358 | ||||||||||||
Natural disaster insurance recovery | — | (872 | ) | — | (872 | ) | ||||||||||
Loss on debt extinguishment | 1,582 | — | 1,582 | — | ||||||||||||
Tax impact of adjustments and other net tax items4 | (7 | ) | (3 | ) | (85 | ) | (7 | ) | ||||||||
Adjusted Net Loss | $ | (11,114 | ) | $ | (22,176 | ) | $ | (33,877 | ) | $ | (53,291 | ) | ||||
Adjusted Net Loss per common share: | ||||||||||||||||
Basic | $ | (2.55 | ) | $ | (5.14 | ) | $ | (7.78 | ) | $ | (13.17 | ) | ||||
Consolidated Adjusted EBIT and Adjusted EBITDA: | ||||||||||||||||
Net loss | $ | (15,753 | ) | $ | (28,202 | ) | $ | (40,464 | ) | $ | (66,535 | ) | ||||
Provision for income taxes | 2,089 | 2,191 | 2,948 | 2,717 | ||||||||||||
Gain on equipment sale | 7 | (1,172 | ) | (296 | ) | (3,485 | ) | |||||||||
Interest expense, net | 16,691 | 18,476 | 33,432 | 37,055 | ||||||||||||
Professional fees and other1 | 2,647 | 4,693 | 4,368 | 10,037 | ||||||||||||
Legal costs2 | 200 | 1,200 | 200 | 1,728 | ||||||||||||
Severance charges, net3 | 217 | 1,008 | 522 | 2,358 | ||||||||||||
Foreign currency gain | 143 | (1,029 | ) | (34 | ) | (1,691 | ) | |||||||||
Pension credit5 | (162 | ) | (189 | ) | (318 | ) | (393 | ) | ||||||||
Natural disaster insurance recovery | — | (872 | ) | — | (872 | ) | ||||||||||
Loss on debt extinguishment | 1,582 | — | 1,582 | — | ||||||||||||
Consolidated Adjusted EBIT | 7,661 | (3,896 | ) | 1,940 | (19,081 | ) | ||||||||||
Depreciation and amortization | ||||||||||||||||
Amount included in operating expenses | 3,694 | 3,914 | 7,413 | 8,072 | ||||||||||||
Amount included in SG&A expenses | 5,845 | 5,095 | 11,672 | 10,391 | ||||||||||||
Total depreciation and amortization | 9,539 | 9,009 | 19,085 | 18,463 | ||||||||||||
Non-cash share-based compensation costs | 245 | 565 | 627 | (59 | ) | |||||||||||
Consolidated Adjusted EBITDA | $ | 17,445 | $ | 5,678 | $ | 21,652 | $ | (677 | ) | |||||||
Free Cash Flow: | ||||||||||||||||
Cash used in operating activities | $ | (5,854 | ) | $ | (511 | ) | $ | (23,617 | ) | $ | (56,486 | ) | ||||
Capital expenditures | (2,381 | ) | (5,279 | ) | (5,073 | ) | (11,416 | ) | ||||||||
Free Cash Flow | $ | (8,235 | ) | $ | (5,790 | ) | $ | (28,690 | ) | $ | (67,902 | ) |
____________________________________
1 | For the three and six months ended June 30, 2023, includes | |
2 | Primarily relates to accrued legal matters and legal fees. | |
3 | For the three and six months ended June 30, 2023, primarily related to costs associated with staff reductions. For the three months ended June 30, 2022, includes | |
4 | Represents the tax effect of the adjustments. | |
5 | Represents pension credits for the U.K. pension plan based on the difference between the expected return on plan assets and the cost of the discounted pension liability. The pension plan was frozen in 1994 and no new participants have been added since that date. Accruals for future benefits ceased in connection with a plan curtailment in 2013. | |
TEAM, INC. AND SUBSIDIARIES | ||||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Continued) | ||||||||||||||||
(unaudited, in thousands) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Segment Adjusted EBIT and Adjusted EBITDA: | ||||||||||||||||
IHT | ||||||||||||||||
Operating income | $ | 6,548 | $ | 5,514 | $ | 11,271 | $ | 5,648 | ||||||||
Severance charges, net1 | 165 | 25 | 205 | 41 | ||||||||||||
Professional fees and other | 828 | — | 828 | — | ||||||||||||
Adjusted EBIT | 7,541 | 5,539 | 12,304 | 5,689 | ||||||||||||
Depreciation and amortization | 3,188 | 3,096 | 6,242 | 6,350 | ||||||||||||
Adjusted EBITDA | $ | 10,729 | $ | 8,635 | $ | 18,546 | $ | 12,039 | ||||||||
MS | ||||||||||||||||
Operating income | $ | 12,720 | $ | 6,984 | $ | 15,913 | $ | 7,497 | ||||||||
Severance charges, net1 | 52 | 54 | 308 | 54 | ||||||||||||
Professional fees and other | 47 | — | 67 | — | ||||||||||||
Adjusted EBIT | 12,819 | 7,038 | 16,288 | 7,551 | ||||||||||||
Depreciation and amortization | 4,704 | 4,634 | 9,457 | 9,518 | ||||||||||||
Adjusted EBITDA | $ | 17,523 | $ | 11,672 | $ | 25,745 | $ | 17,069 | ||||||||
Corporate and shared support services | ||||||||||||||||
Net loss | $ | (35,021 | ) | $ | (40,700 | ) | $ | (67,648 | ) | $ | (79,680 | ) | ||||
Provision for income taxes | 2,089 | 2,191 | 2,948 | 2,717 | ||||||||||||
Gain on equipment sale | 7 | (1,172 | ) | (296 | ) | (3,485 | ) | |||||||||
Interest expense, net | 16,691 | 18,476 | 33,432 | 37,055 | ||||||||||||
Foreign currency gain | 143 | (1,029 | ) | (34 | ) | (1,691 | ) | |||||||||
Pension credit2 | (162 | ) | (189 | ) | (318 | ) | (393 | ) | ||||||||
Professional fees and other3 | 1,772 | 4,693 | 3,473 | 10,037 | ||||||||||||
Legal costs4 | 200 | 1,200 | 200 | 1,728 | ||||||||||||
Severance charges, net1 | — | 929 | 9 | 2,263 | ||||||||||||
Loss on debt extinguishment | 1,582 | — | 1,582 | — | ||||||||||||
Natural disaster insurance recovery | — | (872 | ) | — | (872 | ) | ||||||||||
Adjusted EBIT | (12,699 | ) | (16,473 | ) | (26,652 | ) | (32,321 | ) | ||||||||
Depreciation and amortization | 1,647 | 1,279 | 3,386 | 2,595 | ||||||||||||
Non-cash share-based compensation costs | 245 | 565 | 627 | (59 | ) | |||||||||||
Adjusted EBITDA | $ | (10,807 | ) | $ | (14,629 | ) | $ | (22,639 | ) | $ | (29,785 | ) |
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1 | For the three and six months ended June 30, 2023, primarily related to costs associated with staff reductions. For the three months ended June 30, 2022, includes | |
2 | Represents pension credits for the U.K. pension plan based on the difference between the expected return on plan assets and the cost of the discounted pension liability. The pension plan was frozen in 1994 and no new participants have been added since that date. Accruals for future benefits ceased in connection with a plan curtailment in 2013. | |
3 | For the three and six months ended June 30, 2023, includes | |
4 | Primarily relates to accrued legal matters and legal fees. | |