Exhibit 99.1
Team, Inc. Reports Record Fiscal Year 2006 Results
ALVIN, Texas--(BUSINESS WIRE)--Aug. 7, 2006--Team, Inc., (AMEX:TMI) today
reported net income of $4.0 million ($0.42 per diluted share) and $10.6 million
($1.16 per diluted share) for its fourth quarter and full fiscal year ending May
31, 2006, respectively. Net income from continuing operations increased 133% and
148%, respectively, from the corresponding fourth quarter and full year 2005.
"I am proud to report that fiscal year 2006 was a record year for Team. The
fundamentals and outlook remain strong and we expect continued profit growth
going forward," said Phil Hawk, Team's Chairman and CEO.
Overall Fiscal Year 2006 Results
Operating income for the fourth quarter and full fiscal year was $7.8
million and $21.4 million, respectively. Operating profit margins (operating
income as a percent of revenue) for the quarter and full year were 10 percent
and 8 percent, respectively, up substantially from corresponding prior year
periods. The operating leverage achieved on incremental sales growth (defined as
operating income growth as a percentage of revenue growth) was 30 percent and 18
percent for the quarter and full year, respectively.
Due to strong operating results and improvement in accounts receivable days
outstanding, the company reduced overall debt by $10 million in the fourth
quarter. The overall gross debt-to-EBITDA ratio (as defined by our credit
agreement) at the end of the fiscal year was about 1.7 to 1.
Team reported continued strong revenue and profit growth across both
divisions, all service lines, and nearly all geographic areas during both the
fourth quarter and full year. For the fourth quarter, Team's Industrial Services
segment revenues were $76.0 million, up 20 percent from the prior year quarter.
Segment operating income was $11.2 million, up 51 percent. Operating profit
percentage for the segment was 15 percent versus 12 percent for last year's
fourth quarter. For the full fiscal year, segment revenues were $260 million,
segment operating profit was $32.5 million, and the operating income percentage
was 12 percent versus 10 percent last year. "We are pleased with the overall
level of performance of our industrial services business. Our revenue growth,
continuing business development successes, and ability to increase operating
profit margins are noteworthy. We expect continued margin improvement in the
coming year with our continued focus on operations execution, particularly with
a few underperforming branch locations in the TCM Division," reported Phil Hawk.
Revenues for the TMS Division (Team's mechanical service lines of leak
repair, hot tapping, fugitive emissions monitoring, field machining, technical
bolting and field valve repair) for the quarter were $34.7 million, up 28
percent from the prior year. This growth reflected broad-based domestic growth,
significant service activities related to hurricane repairs on the Gulf Coast,
and outstanding growth in Canada. For the fiscal year, TMS revenues were $117
million, up 24 percent. Gross margins for the division were 44 percent and 40
percent for the quarter and for the fiscal year, respectively, reflecting strong
operational performance and execution.
TCM Division (Team's NDE inspection and field heat treating service lines)
revenues for the quarter were $41.2 million, up 15 percent from the prior year
quarter. For the fiscal year, TCM revenues were $143 million, up 44 percent. TCM
gross margins for the quarter and year were about 30 percent which is comparable
to the prior year and three to four percentage points below long-term
expectations for the division. "Margin improvement within the TCM Division is a
priority. While not reflected in our FY06 results, we remain confident that the
initiatives now underway will lead to improved margins in FY07 and beyond," said
Hawk.
The business outlook for FY07 continues to be very attractive. Team
continues to gain market share across all its service lines, as a result of its
service capabilities combined with the continuing customer trend toward
multi-service, multi-location procurement arrangements that favor larger
industry providers like Team. In addition, continued hurricane repair work and a
significant number of refining expansion projects, driven by the robust refining
margins, are increasing overall market demand for at least the next year or so.
Business Outlook/Guidance for Fiscal Year 2007
Based on an assumption of 10% organic revenue growth, the company expects
its net income before accounting for FAS 123R stock option expenses to be $1.50
to $1.65 per diluted share, an increase of approximately 30 to 40 percent from
FY06. Consistent with its past practices, the company is not providing specific
guidance for individual quarters due to the inability to accurately project the
timing of specific service opportunities. The seasonality of results during
FY2007 is expected to be similar to FY2006. The company will confirm or update
its annual guidance at least quarterly.
Effective with the first quarter of fiscal 2007, the Company will be
required to adopt the provisions of SFAS 123(R) "Share-Based Payment". Under
this standard, the cost of employee services received in exchange for equity
instruments, including employee stock options, will be measured on the
grant-date of those instruments. That cost will be recognized as compensation
expense over the service period, which would normally be the vesting period. The
net impact of implementing FAS 123(R) will be non-cash option expenses of
approximately $1.5 to $2.0 million for fiscal 2007 ($0.15 to $0.20 per share).
That amount includes the cost associated with outstanding options at May 31,
2006 plus expected new grants of options for 2007. Nearly all previously granted
options are Incentive Stock Options whose value will not be tax effected under
FAS 123R accounting guidelines. Prospectively, the company intends to modify its
stock option plans and shift toward granting non-qualified options, the expense
for which will be net of tax.
Earnings Conference Call
In connection with this earnings release, the Company will hold its
quarterly conference call on Monday, August 7, 2006 at 1:30 p.m. Central Time
(2:30 p.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 1-877-318-5455, conference
code 7679052.
About Team, Inc.
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,
------------------------- ---------------------------
2006 2005 2006 2005
------------ ------------ ------------- -------------
Revenues $76,010,000 $63,199,000 $259,838,000 $193,035,000
Operating
expenses 48,614,000 42,058,000 170,709,000 128,237,000
------------ ------------ ------------- -------------
Gross Margin 27,396,000 21,141,000 89,129,000 64,798,000
Selling, general
and
administrative
expenses 19,395,000 17,106,000 67,517,000 54,963,000
Non-cash G&A
compensation
cost 226,000 55,000 235,000 287,000
------------ ------------ ------------- -------------
Operating
income--
continuing
operations 7,775,000 3,980,000 21,377,000 9,548,000
Interest expense,
net 1,130,000 796,000 3,992,000 2,306,000
------------ ------------ ------------- -------------
Earnings from
continuing
operations
before income
taxes 6,645,000 3,184,000 17,385,000 7,242,000
Provision for
income taxes 2,642,000 1,467,000 6,755,000 2,958,000
------------ ------------ ------------- -------------
Income from
continuing
operations 4,003,000 1,717,000 10,630,000 4,284,000
------------ ------------ ------------- -------------
Discontinued
operations:
Income (loss)
from
operations of
discontinued
segment - 145,000 (78,000) 818,000
Gain on sale of
segment - - 1,494,000 -
------------ ------------ ------------- -------------
Earnings from
discontinued
operations
before
income taxes - 145,000 1,416,000 818,000
Provision for
income taxes - 67,000 1,410,000 314,000
------------ ------------ ------------- -------------
Income (loss)
from
discontinued
operations - 78,000 6,000 504,000
------------ ------------ ------------- -------------
Net income $4,003,000 $1,795,000 $10,636,000 $4,788,000
============ ============ ============= =============
Earnings per
common share:
Continuing
operations
Basic $0.47 $0.21 $1.26 $0.53
============ ============ ============= =============
Diluted $0.42 $0.19 $1.16 $0.48
============ ============ ============= =============
Discontinued
operations
Basic $- $0.01 $- $0.06
============ ============ ============= =============
Diluted $- $0.01 $- $0.05
============ ============ ============= =============
Net income
Basic $0.47 $0.22 $1.26 $0.59
============ ============ ============= =============
Diluted $0.42 $0.20 $1.16 $0.53
============ ============ ============= =============
Weighted average
number of shares
outstanding:
Basic 8,578,000 8,217,000 8,413,000 8,140,000
============ ============ ============= =============
Diluted 9,478,000 9,085,000 9,199,000 8,982,000
============ ============ ============= =============
Revenues
comprised of:
TMS $34,764,000 $27,206,000 $116,605,000 $93,767,000
TCM 41,246,000 35,993,000 143,233,000 99,268,000
------------ ------------ ------------- -------------
$76,010,000 $63,199,000 $259,838,000 $193,035,000
============ ============ ============= =============
Operating
income--
continuing
operations
comprised of:
Industrial
Services $11,243,000 $7,464,000 $32,467,000 $19,285,000
Corporate costs (3,468,000) (3,484,000) (11,090,000) (9,737,000)
------------ ------------ ------------- -------------
$7,775,000 $3,980,000 $21,377,000 $9,548,000
============ ============ ============= =============
TEAM, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED BALANCE SHEET INFORMATION
MAY 31, 2006 AND 2005
May 31, May 31
2006 2005
-------------- --------------
Cash $2,578,000 $3,993,000
Accounts Receivable $68,752,000 $59,364,000
Other current Assets $13,501,000 $12,168,000
Current assets of discontinued
operations $- $5,486,000
-------------- --------------
Current assets $84,831,000 $81,011,000
Net property, plant and equipment $26,448,000 $24,378,000
Non current assets of discontinued
operations $- $7,883,000
Other non-current assets $28,692,000 $30,054,000
-------------- --------------
Total assets $139,971,000 $143,326,000
============== ==============
Current maturities of long-term debt $5,899,000 $3,835,000
Accounts payable and other current
liabilities $29,713,000 $26,806,000
Current liabilities of discontinued
operations $- $1,281,000
-------------- --------------
Total current liabilities $35,612,000 $31,922,000
Long term debt $39,804,000 $59,907,000
Other non-current liabilities and taxes $670,000 $2,555,000
Stockholders' equity $63,885,000 $48,942,000
-------------- --------------
Total liabilities and stockholders'
equity $139,971,000 $143,326,000
============== ==============
CONTACT: Team, Inc., Houston
Ted W. Owen, 281-331-6154