Exhibit 99.1
Team, Inc. Reports Fiscal Year 2005 Results
ALVIN, Texas--(BUSINESS WIRE)--Aug. 9, 2005--Team, Inc. (AMEX:TMI)
today reported net income of $1.8 million ($0.20 per diluted share)
and $4.8 million ($0.53 per diluted share) for its fourth quarter and
full fiscal year ending May 31, 2005. For the corresponding periods in
the prior fiscal year, net income was $1.9 million ($0.22 per diluted
shares) and $5.8 million ($0.69 per diluted share), respectively.
Team's results for the fourth quarter reflect continued strong
revenue growth across all service lines. Quarterly revenues were $68
million, a 20% increase from the third quarter and more than double
the prior year amount (including the impact of the first quarter
acquisition of the Cooperheat business). Margin trends were mixed for
the quarter. TCM gross margins continued to improve, but were offset
by a decline in gross margins within TMS. Additionally, the quarter
was impacted by a significant increase in Team's effective tax rate.
The quarterly income results also reflect nearly $1.7 million in
additional pre-tax expenses related to Sarbanes-Oxley Act of 2002
(SOX) compliance activities, wrap-up integration activities, and a
legal matter. Total SOX costs incurred in the quarter were $1.1
million, more than double the prior estimate. Integration expenses
were about $200,000. Team also accrued $300,000 for future service
price discounts related to the settlement of a dispute with a major
customer. The after-tax effect on the quarter of these additional
charges was about $0.11 per diluted share.
Industrial Services Segment
For the fourth quarter, Team's Industrial Services segment
revenues were $63.2 million, up 126% from the prior year quarter.
Operating income for the segment was $7.5 million, up 81%. Operating
profit percentage for the segment was 12% versus 15% for last year's
fourth quarter. For the full fiscal year, segment revenues were $193
million, segment operating profit was $19.3 million and the operating
income percentage was 10% versus 15% last year.
TCM's (Team's NDE inspection and field heat treating service
lines) revenues for the quarter were $36.0 million, six times larger
than the prior year quarter, reflecting the acquisition of the
Cooperheat MQS business. For the fiscal year, TCM revenues were $99.3
million. TCM gross margins for the quarter improved to 32%, a two
percentage point increase from third quarter levels. "We expect to
benefit from the improved margin levels throughout the coming year,"
said Phil Hawk, Team's Chairman and CEO.
TMS's (Team's mechanical service lines of leak repair, hot
tapping, fugitive emissions monitoring, field machining, technical
bolting, and field valve repair) revenues for the quarter were $27.2
million, up 23% from the prior year. This growth reflected broad-based
domestic growth and outstanding growth in Canada. For the fiscal year,
TMS revenues were $93.8 million, up 18%. Gross margins for the
division decreased 6% points for the quarter and 4% points for the
fiscal year. About half the margin decline within the division for
both the quarter and year related to international activities, in
particular a large project in the Caribbean basin. "We have already
addressed several specific problem areas and expect a two to three
percentage point improvement in gross margins in the current year,"
stated Phil Hawk.
"Looking at our industrial services business as a whole, I am
pleased with our growth and continuing business development successes.
We have good momentum across the business unit rolling into the new
fiscal year," reported Phil Hawk.
Equipment Sales and Rental Business Segment
The Equipment Sales and Rental (Climax) business segment posted
revenues for the fourth quarter and year to date of $4.6 million and
$16.0 million, up 21% and 22%, respectively, from the prior year
results. Operating income for the same periods was $0.3 million and
$1.5 million, respectively. Operating income growth for the year was
19%. "Climax had a solid year and is poised for another year of
double-digit revenue and profit growth," said Mr. Hawk.
Sarbanes-Oxley Act of 2002 Compliance
SOX compliance has required Team to undertake a thorough
documentation of key aspects of our internal financial control and
financial reporting systems. We have also tested the effectiveness of
key controls within our system and developed our assessment of the
overall effectiveness of our controls. Based upon the results of these
tests, we believe that our internal controls over financial reporting
are effective. Management's report, along with the report of our
auditors, will be included in our Form 10-K, which is expected to be
filed on August 15, 2005.
The magnitude of the task to meet all of the documentation and
testing requirements of the statute was far greater than we had
estimated. It consumed more resources and management time than
expected, particularly in the fourth quarter of 2005, as well as
during the first quarter of fiscal 2006. In future years, we will be
able build upon this year's work with respect to the overall control
system description and documentation. However, there will be ongoing
significant efforts and costs associated with both ongoing internal
testing of financial controls by Team as well as extensive system
assessment and testing by our external auditor.
Business Outlook/Guidance for Fiscal Year 2006
The company now expects its earnings for fiscal year 2006 to be in
the range of $1.15 and $1.30 per share (fully diluted basis). This
outlook is based on expectations of continued "double digit" organic
revenue growth, the realization of the inherent operating leverage
associated with this revenue growth, plus the continuation of
additional expenses related to SOX compliance and audit activities.
In the past, the company has not provided specific guidance for
individual quarters due to the inability to accurately project the
timing of specific service opportunities. However, the company expects
its first quarter earnings to be minimal due to the historical
seasonal decline in turnaround activity, plus additional SOX related
expenses.
"Overall, we are well positioned for the coming year, and we
expect to see the benefits of our major acquisitions in this year's
financial results," reported Phil Hawk.
Earnings Conference Call
In connection with this earnings release, the Company will hold
its quarterly conference call on Wednesday, August 10, 2005 at 10:00
a.m. Central Time (11:00 a.m. Eastern). The call will be broadcast
over the web and can be accessed on Team's website,
www.teamindustrialservices.com. Individuals wishing to participate in
the conference call by phone can call 1-888-896-0862 and ask to join
the Team IR call.
Team, Inc. is a professional, full-service provider of specialty
industrial services. Team's current industrial service offering
encompasses on-stream leak repair, hot tapping, fugitive emissions
monitoring, field machining, technical bolting, field valve repair,
NDE inspection and field heat treating. All these services are
required in maintaining high temperature, high pressure piping systems
and vessels utilized extensively in the refining, petrochemical,
power, pipeline, and other heavy industries. Team's inspection
services also serve the aerospace and automotive industries.
Headquartered in Alvin, Texas, the Company operates in over 50
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."
Certain 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 the 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 the forward-looking
statements contained herein will occur or that objectives will be
achieved.
TEAM, INC. AND SUBSIDIARIES
SUMMARY OF OPERATING RESULTS
Three Months Ended Twelve Months Ended
May 31, May 31,
------------------------- ---------------------------
2005 2004 2005 2004
------------ ------------ ------------- -------------
Total Revenues $67,762,000 $31,807,000 $209,045,000 $107,669,000
============ ============ ============= =============
Gross Margin $22,936,000 $12,402,000 $71,315,000 $42,684,000
Selling, general
and
administrative
expenses $18,559,000 $9,240,000 $60,011,000 $32,589,000
Non-cash
compensation
charge $55,000 $250,000 $287,000 $344,000
------------ ------------ ------------- -------------
Operating income $4,322,000 $2,912,000 $11,017,000 $9,751,000
============ ============ ============= =============
Pre-tax income $3,329,000 $2,954,000 $8,060,000 $9,222,000
Income tax
expense $1,534,000 $1,072,000 $3,272,000 $3,446,000
------------ ------------ ------------- -------------
Net income $1,795,000 $1,882,000 $4,788,000 $5,776,000
============ ============ ============= =============
Net income per
common share-
basic $0.22 $0.24 $0.59 $0.75
============ ============ ============= =============
Net income per
common share-
diluted $0.20 $0.22 $0.53 $0.69
============ ============ ============= =============
Weighted average
shares
outstanding:
Basic 8,217,000 7,946,000 8,140,000 7,709,000
Diluted 9,085,000 8,752,000 8,982,000 8,429,000
Revenues
Comprised of:
Industrial
Services
Team
Mechnical
Services $27,206,000 $22,095,000 $93,767,000 $79,279,000
Team
Cooperheat-
MQS 35,993,000 5,928,000 99,268,000 15,267,000
------------ ------------ ------------- -------------
Total
Industrial
services $63,199,000 $28,023,000 $193,035,000 $94,546,000
Equipment sales
and rentals 4,563,000 3,784,000 16,010,000 13,123,000
------------ ------------ ------------- -------------
Total Revenues $67,762,000 $31,807,000 $209,045,000 $107,669,000
============ ============ ============= =============
Gross Margins
Comprised of:
Industrial
Services
Team
Mechnical
Services $9,461,000 $9,029,000 $34,615,000 $32,124,000
Team
Cooperheat-
MQS 11,680,000 1,810,000 30,183,000 4,834,000
------------ ------------ ------------- -------------
Total
Industrial
services $21,141,000 $10,839,000 $64,798,000 $36,958,000
Equipment sales
and rentals 1,795,000 1,563,000 6,517,000 5,726,000
------------ ------------ ------------- -------------
Total gross
margin $22,936,000 $12,402,000 $71,315,000 $42,684,000
============ ============ ============= =============
Operating income,
by segment:
Industrial
Services $7,464,000 $4,117,000 $19,285,000 $13,953,000
Equipment sales
and rentals 342,000 474,000 1,469,000 1,230,000
Corporate (3,484,000) (1,679,000) (9,737,000) (5,432,000)
------------ ------------ ------------- -------------
$4,322,000 $2,912,000 $11,017,000 $9,751,000
============ ============ ============= =============
TEAM, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED BALANCE SHEET INFORMATION
MAY 31, 2005 AND MAY 31, 2004
May 31 May 31
2005 2004
------------- ------------
Current Assets $81,010,000 $41,267,000
Net Property, Plant and Equipment $28,770,000 $15,885,000
Other non-current assets $33,546,000 $17,244,000
------------- ------------
Total Assets $143,326,000 $74,396,000
============= ============
Current Liabilities $31,922,000 $13,555,000
Long term debt $59,907,000 $17,095,000
Other non-current liabilities and taxes $2,437,000 $1,447,000
Stockholders' equity $49,060,000 $42,299,000
------------- ------------
Total liabilities and Stockholders'
Equity $143,326,000 $74,396,000
============= ============
CONTACT: Team, Inc., Alvin
Philip J. Hawk or Ted W. Owen, 281-331-6154