Exhibit 99.1
Team, Inc. Reports Strong First Quarter Results
ALVIN, Texas--(BUSINESS WIRE)--Oct. 4, 2006--Team, Inc. (AMEX:TMI) today
reported earnings of $0.16 per share (diluted) for the first quarter of fiscal
2007, versus $0.06 in the corresponding prior year period. Revenues increased
21% to $65.7 million, compared to $54.2 million for the corresponding prior year
period. For the quarter, Team's operating income improved 120% to $3.7 million
and net income improved 177% to $1.5 million. Operating profit, net income and
earnings per share in the current year were impacted by $245,000 of non-cash
compensation expense, not reflected in prior periods, relating to the expensing
of stock options as a result of new accounting principles.
"We are pleased with the continued strong performance in the first quarter
and maintain our positive outlook and reaffirm our guidance for the full year,"
said Phil Hawk, Team's Chairman and CEO.
Discussion of First Quarter Performance
Team's results reflect broad based growth across the majority of geographic
regions and service lines making up Team's two divisions. Revenues for the TCM
division in the period ended August 31, 2006 were $33.6 million compared to
$29.7 million in the period ended August 31, 2005, an increase of $3.9 million
or 13%. Revenues for the TMS division in the current quarter were $32.1 million
compared to $24.4 million in the prior year quarter, an increase of $7.7
million, or 32%.
Gross margin from continuing operations in the period ended August 31, 2006
was $21.8 million compared to $17.3 million in the period ended August 31, 2005,
an increase of $4.5 million or 26%. Gross margin as a percentage of sales was
33% in the current period as opposed to 32% in the prior period. The improvement
in gross margin as a percentage of sales was equally attributable to both
divisions and resulted from improved pricing and productivity that more than
offset increased labor expenses in this tighter labor environment.
SG&A in the period ended August 31, 2006 was $18.1 million compared to
$15.6 million in the period ended August 31, 2005, an increase of $2.5 million
or 16%. SG&A attributable to field operations was $14.5 million and SG&A
attributable to corporate administration was $3.6 million, which includes
non-cash compensation expense of $245,000. Operating profit as a percent of
revenue was 6% versus 3% in last year's quarter, reflecting the continuing
operating leverage of the business. Operating profit attributable to field
operations was 11%, compared to 8% in last year's quarter.
Business Outlook/Guidance for Fiscal Year 2007
"We are comfortable reaffirming our earlier guidance that strong organic
growth will lead to net income for fiscal year 2007 of $1.35 to $1.50 per
diluted share, which reflects expected FAS 123R stock option expense of $0.15
per share," continued Mr. Hawk. "With over $31 million of unused borrowing
capacity on our existing credit facilities, we also remain well positioned
financially."
Effective with the first quarter of fiscal 2007, Team adopted the
provisions of SFAS 123R "Share-Based Payment". Under this standard, the cost of
employee services received in exchange for equity instruments, including
employee stock options, are measured on the grant-date of those instruments
recognized as compensation expense over the service period, which would normally
be the vesting period. Team has elected to use the modified prospective
transition method permitted under the new accounting pronouncement, which
requires no charges to prior periods. As a result, the net impact of
implementing FAS 123R in the current period was a non-cash compensation charge
of $245,000. While many factors can affect the future expense attributable to
various forms of share-based compensation, Team expects share-based compensation
expense of approximately $1.5 million for fiscal 2007. That amount includes the
cost associated with outstanding options at May 31, 2006 plus expected new
grants of options for 2007, which are expected to be approximately 3% of
outstanding shares. Most of the fiscal year 2007 grants are expected to occur in
the quarter ending November 30, 2006.
Earnings Conference Call
In connection with this earnings release, the Company will hold its
quarterly conference call on Thursday, October 5, 2006 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 1-877-318-5455,
conference code 7877075.
About Team, Inc.
Headquartered in Alvin, Texas, Team, Inc. is a leading provider of
specialty and construction services required in maintaining high-temperature and
high-pressure piping systems and vessels that are utilized extensively in the
refining, petrochemical, power, pipeline and other heavy industries. The
Company's inspection services also serve a broader customer base that includes
the aerospace and automotive industries. Team offers these services in over 70
locations throughout the United States, Aruba, Canada, Singapore, Trinidad and
Venezuela. The Company licenses its proprietary techniques and materials to
various companies outside the United States and receives royalties based upon
revenues earned by its licensees. 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
(in thousands, except per share data)
Three Months Ended
August 31,
-----------------------
2006 2005
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(unaudited) (unaudited)
Revenues $65,739 $54,152
Operating expenses 43,947 36,869
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Gross Margin 21,792 17,283
Selling, general and administrative expenses 18,090 15,598
Operating income--continuing operations 3,702 1,685
Interest expense, net 1,050 837
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Earnings from continuing operations before
income taxes 2,652 848
Provision for income taxes 1,130 331
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Income from continuing operations 1,522 517
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Income from discontinued operations, net
of tax - 32
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Net income $1,522 $549
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Earnings per common share:
Continuing operations
Basic $0.18 $0.07
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Diluted $0.16 $0.06
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Discontinued operations
Basic $- $0.00
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Diluted $- $0.00
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Net income
Basic $0.18 $0.07
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Diluted $0.16 $0.06
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Weighted average number of shares outstanding:
Basic 8,649 8,266
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Diluted 9,292 9,122
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Revenues comprised of:
TCM Division $33,653 $29,745
TMS Division 32,086 24,407
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$65,739 $54,152
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Operating income of continuing operations
comprised of:
Industrial services $7,294 $4,520
Corporate costs (3,592) (2,835)
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$3,702 $1,685
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TEAM, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED BALANCE SHEET INFORMATION
AUGUST 31 AND MAY 31, 2006
(in thousands)
August 31 May 31
2006 2006
----------- -----------
(unaudited)
Current assets $83,466 $84,831
Net property, plant and equipment 27,660 26,448
Other non-current assets 28,417 28,692
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Total assets $139,543 $139,971
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Current liabilities $31,404 $35,612
Long term debt 40,783 39,804
Other non-current liabilities and taxes 961 670
Stockholders' equity 66,395 63,885
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Total liabilities and stockholders' equity $139,543 $139,971
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CONTACT: Team, Inc., Alvin
Ted W. Owen, 281-331-6154