Team, Inc. (TISI) Q1 2026 Earnings Call Prepared Remarks Transcript

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Overview

The earnings call highlights strong financial performance with record Q1 revenue and significant EBITDA growth, supported by cost efficiency and market share expansion. Despite the absence of 2026 guidance due to CEO transition, optimistic long-term growth and strategic initiatives are outlined. Risks include geopolitical uncertainties and operational challenges, but these are mitigated by strategic workforce and leadership enhancements. The overall sentiment is positive, with anticipated revenue and margin growth in 2026, suggesting a likely stock price increase of 2% to 8%.

Key Financial Performance

Revenue First quarter 2026 revenue rose 8.3% year-over-year to $215 million. This growth was driven by robust performance across both the Inspection and Heat Treating and Mechanical Service segments.

Adjusted EBITDA Adjusted EBITDA increased by 45.2% year-over-year to $7.7 million. This improvement was attributed to higher revenue and cost efficiency measures.

Adjusted EBITDA Margin Adjusted EBITDA margin improved by 90 basis points year-over-year, reflecting better operating leverage and cost efficiency.

Inspection and Heat Treating Segment Revenue Revenue increased by $9.8 million or 8.6% year-over-year, driven by increased project and call-out activity in the U.S. and Canada.

Mechanical Services Segment Revenue Revenue increased by $6.6 million or 7.8% year-over-year, supported by higher project and turnaround activity with both new and existing customers.

Operating Income Operating income increased by $2.6 million or 43.8% year-over-year, driven by stronger revenue in both the U.S. and Canada and lower corporate costs.

Adjusted SG&A Expense Adjusted SG&A expense as a percentage of revenue decreased by 150 basis points year-over-year, indicating improved scalability and leverage.

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Operating Highlights

Core Markets Stability: Team has stability in core markets like refining and petrochemicals, with long-term opportunities due to aging refineries and high utilization rates.

Targeted Growth Markets: Team is focusing on LNG, midstream, data centers, power, and aerospace as growth markets. LNG and midstream are benefiting from geopolitical events, while AI-driven data center construction and aerospace growth are creating new opportunities.

Revenue Growth: Q1 2026 revenue increased by 8.3% year-over-year to $215 million, the highest Q1 revenue since 2019.

Profitability Gains: Adjusted EBITDA rose by 45.2% to $7.7 million, with a 90 basis point improvement in adjusted EBITDA margin.

Cost Efficiency: Focused on cost optimization, including supply chain improvements, process simplification, and system investments to lower costs and expand margins.

Workforce Investment: Team is enhancing employee retention through career path programs, wellness benefits, and satisfaction surveys to improve engagement.

Market Share Expansion: Prioritizing margin-accretive growth and disciplined market share expansion in targeted end markets.

Leadership Enhancements: Strategic additions to the leadership team to improve capabilities and accountability.

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Risk or Challenges

Middle East conflict impact: While the Middle East conflict has had minimal direct impact on Team, it is affecting the oil and gas industry, leading to increased refining run times and pushing some turnaround scopes later into the year. This creates potential scheduling and operational challenges.

Cost efficiency and supply chain optimization: There is an ongoing need to improve cost efficiency, particularly in supply chain integration, process simplification, and system investments. Failure to achieve these improvements could hinder scalability and margin expansion.

Workforce retention and leadership gaps: Although Team has an industry-leading retention rate, there is a focus on improving workforce engagement and addressing leadership gaps through strategic additions. Failure to address these could impact operational execution and employee satisfaction.

Market competition and growth prioritization: Team is focusing on margin-accretive and less cyclical growth opportunities. However, prioritizing healthy growth over growth at any cost may limit immediate revenue expansion in competitive markets.

Economic and geopolitical uncertainties: Geopolitical events and economic uncertainties, such as those driving natural gas demand, could impact the company's ability to capitalize on growth opportunities in LNG, midstream, and other targeted markets.

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Guidance & Outlook

Revenue Growth: Team, Inc. expects full-year 2026 revenue to grow approximately 4% at the midpoint of the guidance range of $920 million to $945 million compared to 2025 actuals.

Gross Margin: The company forecasts gross margin for 2026 to be between $240 million and $260 million, representing an 8% increase at the midpoint compared to 2025.

Adjusted EBITDA: Adjusted EBITDA guidance for 2026 is projected to increase by 16% at the midpoint, ranging between $68 million and $73 million.

Market Opportunities: Team anticipates strong growth opportunities in LNG, midstream, AI-driven data center construction, and commercial aerospace, driven by geopolitical events, increased demand for natural gas, and defense spending.

Operational Efficiency: The company plans to focus on cost efficiency, including supply chain optimization, process simplification, and system investments to improve scalability and expand margins. Specific cost reduction targets will be provided in the Q2 2026 earnings release.

Strategic Workforce Enhancements: Team aims to make strategic additions to its leadership team, enhance communication, and improve decision-making analytics to better meet customer needs and achieve first-mover advantages.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Review of Unclear Management Responses

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

TISI Transcript

Team, Inc. (TISI) Q1 2026 Earnings Call Prepared Remarks Transcript

Positive5-14

Team, Inc. (TISI) Q4 2025 Earnings Call Prepared Remarks Transcript

Unknown3-13

The earnings call highlights positive financial performance and strategic initiatives, such as revenue growth and margin expansion. However, the lack of 2026 guidance due to CEO transition and existing debt levels pose uncertainties. The Q&A section did not provide additional insights, indicating neutral sentiment. Overall, the absence of guidance and potential market uncertainties balance the positive financial metrics, leading to a neutral stock price prediction.

Team, Inc. (TISI) Q3 2025 Earnings Call Prepared Remarks Transcript

Positive11-13

The earnings call summary indicates strong financial performance with revenue and EBITDA growth, margin expansion, and improved liquidity. The strategic partnership with Stellex Capital Management and focus on high-margin industries further bolster the outlook. Despite some risks, such as macroeconomic uncertainty and working capital challenges, the positive guidance and strategic initiatives suggest a positive stock price movement over the next two weeks.

Team, Inc. (TISI) Q2 2025 Earnings Conference Call Transcript

Positive8-13

The earnings call reflects positive sentiment due to strong revenue growth, improved margins, and cost savings initiatives. Despite international revenue challenges, U.S. operations showed resilience. Management's optimistic guidance for adjusted EBITDA growth and successful cost reduction efforts further boost confidence. The Q&A section did not reveal significant negative concerns. However, macroeconomic uncertainties and execution risks from transformation initiatives are noted. Overall, the positive financial performance and strategic initiatives suggest a positive stock price movement over the next two weeks.

TISI Report

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