Team Inc. Reports Earnings for Third Quarter
ALVIN, Texas--(BUSINESS WIRE)--March 26, 2003--Team Inc.
(AMEX:TMI) today reported net income of $.06 per diluted share for its
third quarter ending February 28, 2003, unchanged from the $.06 per
share earned in the prior year third quarter. Year-to-date earnings
for Team were $.36 per diluted share, up 16% from $.31 for the prior
year period.
For the three months ended February 28, 2003, the Company reported
revenue of $21.8 million, up 14% from the prior year; pretax earnings
of $879,000, up 4% from prior year; and net income of $538,000, up 2%.
For the year to date, Company revenues were $66.9 million, up 11% from
the prior year. Year-to-date net income was $3.1 million, up 19% from
the prior year.
"We are pleased with our continued revenue and market share growth
in difficult market conditions. While Team's total earnings have
increased 19% year-to-date, we did not achieve the operating leverage
and associated profit growth we expected in the recently completed
quarter and have taken a number of steps to address the issue," said
Phil Hawk, Team's chairman and CEO.
"Given the revenue growth achieved and our expected 25%
incremental operating profit margin with our business model, our
pretax operating profit for the quarter was about $700,000 below our
target," said Hawk. "The profit growth shortfall is attributed to
three areas -- unusual insurance reserve increases, low job profit
margins in several branch locations, and cost increases related to
both our field and headquarters support activities. In those branches
where job margin declines have occurred, we have reviewed our margin
management processes and tools with all appropriate managers. Our
focus is on strengthening our on-going processes and improving our
skills in this area, rather than just addressing a handful of low
profit jobs. We continue to achieve very satisfactory job margins in
the majority of our locations. With respect to field and headquarters
support costs, some of these increased costs versus the prior year
quarter were related to 'one-off' expenditures and timing. However, we
have reduced field personnel in branches where our personnel growth
got ahead of business growth and have also taken steps to streamline
some of our business segment and corporate support costs."
Business Segment Detail
The Industrial Services business segment revenue for the quarter
was $19.1 million, up 15% from the prior year quarter. Operating
profit for the segment was $2.1 million, down 4%. Both our traditional
services (on-stream leak repair, hot tapping, fugitive emissions
monitoring) and our newer services (field machining, technical bolting
services, and NDT inspection services) achieved significant growth
versus the prior year. NDT inspection services demand remains
relatively weak, with growth during the quarter of 5% versus the
double digit growth for the other service lines. Year to date,
industrial services business segment revenue is $58.9 million, up 11%,
and operating profit is $8.4 million, up 6%.
The Equipment Sales and Rentals business segment revenue for the
quarter was $2.7 million, up 13% from the prior year quarter.
Operating profit was $0.2 million versus a loss in the prior year
quarter. Third quarter results for the prior year reflected a
severance expense related to business restructuring of $173 thousand.
For the year to date, segment revenue was $8.1 million, up 11%, and
operating profit was $0.6 million versus a small prior year loss.
Corporate costs for the quarter were $1.3 million, up $0.3 million
or 25% from the prior year quarter. For the year to date, total
corporate costs were $3.6 million, up $0.6 million or 20% versus the
prior year period. The increases reflect the non-cash compensation
charge associated with the performance-based stock options (a new
charge this year), increased legal expenses, and a severance-related
charge.
Fourth Quarter and Full Year Outlook
In our March 5, 2003 press release, we suggested that a more
conservative near-term outlook was appropriate in light of the war as
well as the turbulent energy markets that could significantly affect
many of our major customer segments. We are maintaining our previously
announced earnings guidance of $0.50 to $0.58 per diluted share for
the full fiscal year ending May 31, 2003.
Stock Buy Back Program
The company continues to purchase its stock in the open market.
During the second quarter, Team purchased approximately 53,000 shares.
In addition, since our March 5th press release, Team has purchased an
additional 153,000 shares.
As previously reported in the Company's Form 10-Q for the second
quarter filed January 14, 2003, the Company has been authorized by its
board of directors and senior lender to expend an additional $2.5
million (plus proceeds from exercises of stock options) to repurchase
its stock on the open market. At the present time, the company
currently has authorization to make additional purchases up to $1.4
million without additional approval. Since we initiated this program
about two years ago, we have purchased a total of 1.2 million shares,
almost 15% of the then outstanding shares.
Quarterly Conference Call
As previously announced, the Company will conduct a conference
call to discuss third quarter results at 10:00 am (CST) on Thursday,
March 27, 2003. Individuals wishing to participate in the conference
call by phone can call 719/457-2625 and ask to join conference
#622746. The call can be also be accessed on Team's Web site,
www.teamindustrialservices.com.
Team Inc. is a professional, full-service provider of specialized
industrial services and portable field-machining tools. Headquartered
in Alvin, Texas, the Company operates in over 40 customer service
locations throughout the United States. The Company also serves the
international market through both its own international subsidiaries
as well as through licensed arrangements in 14 countries. Team Inc.
common stock is traded on the American Stock Exchange under the ticker
symbol "TMI".
Any forward-looking information contained herein is being provided
in accordance with the provisions of the Private Securities Litigation
Reform Act. Such information is subject to certain assumptions and
beliefs based on current information known to the Company and is
subject to factors that could result in actual results differing
materially from those anticipated in any forward-looking statements
contained herein. Such factors include domestic and international
economic activity, interest rates, and market conditions for the
Company's customers, regulatory changes and legal proceedings, and the
Company's successful implementation of its internal operating plans.
Accordingly, there can be no assurance that any forward-looking
statements contained herein will occur or that objectives will be
achieved.
TEAM INC. AND SUBSIDIARIES
SUMMARY OF OPERATING RESULTS
Three Months Ended Nine Months Ended
February 28, February 28,
------------------------- -------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Total Revenues $21,777,000 $19,047,000 $66,945,000 $60,469,000
============ ============ ============ ============
Gross Margin $8,451,000 $7,879,000 $27,089,000 $25,105,000
Selling, general
and administrative
expenses $7,402,000 $6,634,000 $21,604,000 $20,056,000
Non-cash
compensation
charge $31,000 - $83,000 -
Other expense $- $173,000 $- $173,000
------------ ------------ ------------ ------------
Earnings before
interest and
taxes $1,018,000 $1,072,000 $5,402,000 $4,876,000
============ ============ ============ ============
Pre-tax income $879,000 $849,000 $4,948,000 $4,156,000
Income tax
expense $341,000 $323,000 $1,898,000 $1,584,000
------------ ------------ ------------ ------------
Net income $538,000 $526,000 $3,050,000 $2,572,000
============ ============ ============ ============
Net income per
common share-
basic $0.07 $0.07 $0.39 $0.34
============ ============ ============ ============
Net income per
common share-
diluted $0.06 $0.06 $0.36 $0.31
============ ============ ============ ============
Weighted average
shares
outstanding:
Basic 7,751,000 7,661,000 7,736,000 7,667,000
Diluted 8,398,000 8,260,000 8,468,000 8,174,000
Revenues Comprised of:
Industrial
Services:
Traditional(a) $13,638,000 $11,985,000 $41,499,000 $37,133,000
New(b) 5,487,000 4,707,000 17,376,000 16,055,000
------------ ------------ ------------ ------------
19,125,000 16,692,000 58,875,000 53,188,000
Equipment sales
and rentals 2,652,000 2,355,000 8,070,000 7,281,000
------------ ------------ ------------ ------------
Total Revenues $21,777,000 $19,047,000 $66,945,000 $60,469,000
============ ============ ============ ============
EBIT, by segment:
Industrial
Services $2,091,000 $2,186,000 $8,385,000 $7,919,000
Equipment sales
and rentals 204,000 (93,000) 598,000 (52,000)
Corporate (1,277,000) (1,021,000) (3,581,000) (2,991,000)
------------ ------------ ------------ ------------
$1,018,000 $1,072,000 $5,402,000 $4,876,000
============ ============ ============ ============
(a) Traditional services include leak repair, hot tapping and
emissions monitoring.
(b) New services include mechanical inspection, field machining, and
technical bolting.
TEAM INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED BALANCE SHEET INFORMATION
February 28, 2003 and May 31, 2002
Feb. 28, May 31,
2003 2002
------------ ------------
Current Assets $27,450,000 $28,073,000
Net Property, Plant and
Equipment $12,321,000 $11,937,000
Other non-current assets $10,417,000 $11,179,000
------------ ------------
Total Assets $50,188,000 $51,189,000
============ ============
Current Liabilities $6,520,000 $9,380,000
Long term debt $11,357,000 $11,978,000
Other non-current liabilities
and taxes $1,287,000 $1,649,000
Stockholders' equity $31,024,000 $28,182,000
------------ ------------
Total liabilities and
Stockholders' Equity $50,188,000 $51,189,000
============ ============
CONTACT: Team Inc., Alvin
Philip J. Hawk or Ted W. Owen, 281/331-6154