Exhibit 99.1
Team, Inc. Reports Third Quarter Results;
Affirms Full Year Earnings Guidance
ALVIN, Texas--(BUSINESS WIRE)--April 4, 2007--Team, Inc.,
(NASDAQ:TISI) today reported net income of $2.4 million, or earnings
of $0.26 per diluted share, for its third quarter ended February 28,
2007. This compared to net income of $2.3 million, or $0.25 per
diluted share, for the same quarter last year. Team's revenues
increased 17% to $73.3 million, and operating profits improved 5% to
$5.1 million, compared to last year's quarter. For the fiscal year
through the end of the third quarter, Team's net income was $9.4
million, or $1.01 per diluted share, which represents a 42%
improvement from the corresponding prior year period when net income
was $6.6 million or $0.72 per diluted share. Revenues increased 21% to
$222.2 million, and operating profits improved 40% to $19.0 million.
"We continue to be very pleased with the direction and growth of
our business, and we expect our full-year results to be in line with
our previously issued earnings guidance of $1.50 to $1.65 per share,"
said Phil Hawk, Team's Chairman and CEO.
Discussion of Third Quarter Performance
Third quarter revenues for the TMS division (which includes our
mechanical service lines) increased $6.0 million or 21% to $34.7
million compared to $28.7 million in the prior year period. Third
quarter revenues for the TCM division (which includes our inspection
and field heat treating services) were $38.6 million compared to $33.9
million in the prior year quarter, an increase of $4.7 million or 14%.
For the fiscal year to date, TMS revenues improved 30% to $106.0
million, and TCM revenues increased 14% to $116.2 million. Revenue
growth continues to be broad based across the service lines and
geographic regions of both divisions.
Gross margin from continuing operations in the quarter ended
February 28, 2007 was $24.1 million compared to $21.0 million for the
prior year quarter ended February 28, 2006, an increase of $3.1
million or 15%. Gross margin as a percentage of sales was 33% in the
current quarter compared to 34% in the prior year quarter. The decline
reflects a three percentage point decline in TMS margins offset by an
increase of one percentage point in TCM margins. The decrease in TMS
gross margin as a percentage of sales reflects higher indirect field
expenses associated with lower than expected utilization levels around
the year-end holiday season and start-up costs incurred in connection
with new service initiatives. For the fiscal year to date, total gross
margin from continuing operations was $76.3 million, an increase of
$14.6 million or 24%. Year-to-date gross margin as a percentage of
sales was consistent with the prior year at 34%.
SG&A in the quarter ended February 28, 2007 was $19.0 million
compared to $16.2 million in the prior year quarter ended February 28,
2006, an increase of $2.8 million or 17%. SG&A directly attributable
to field operations was $15.7 million, an increase of $1.9 million or
14%. This reflects investments in human and other resources to support
the continued growth of our branch operations. SG&A attributable to
corporate administration was $3.3 million, an increase of $0.9 million
or 37% from the prior year quarter. The increase in SG&A attributable
to corporate administration is primarily due to stock option related
expense of $0.4 million and professional fees of $0.6 million stemming
from the completion of an independent investigation. For the fiscal
year to date, total SG&A expenses were $57.3 million, up $9.1 million
or 19%.
"We are very pleased with activity levels coming out of the third
quarter," reported Hawk. "Overall demand levels and job profit margins
remain strong, which should lead to strong performance and profit
growth for the full year and beyond."
Completion of Investigation
In March 2007, an independent investigation was completed with
respect to irregularities involving one of Team's branch locations.
The investigation, which was fully discussed in our second quarter
press release and 10-Q filing, confirmed that the irregularities were
limited to a single branch location and had no material effect on any
of our previously issued financial statements. Third quarter results
reflect $0.6 million of costs associated with the investigation. The
matter is expected to have no significant financial impact beyond the
current quarter.
Earnings Conference Call
In connection with this earnings release, Team will hold its
quarterly conference call on Thursday, April 5, 2007 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 Web site,
www.teamindustrialservices.com. Individuals wishing to participate in
the conference call by phone may call 1-877-318-5455 and use
conference code 8650116.
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 NASDAQ Global Select Market under the
ticker symbol "TISI".
Certain forward-looking information contained herein is being
provided in accordance with the provisions of the Private Securities
Litigation Reform Act of 1995. We have made every reasonable effort to
ensure that the information, assumptions and beliefs upon which this
forward-looking information is based are current, reasonable and
complete. However, a variety of factors could cause actual results to
differ materially from those anticipated in any
forward-looking information. Those factors include domestic and
international economic activity, interest rates and market conditions
for the Company's customers and their levels of capital and
maintenance expenditures, compliance with regulations and changes to
regulations, general liability claims and legal proceedings,
competition in the marketplace, ability to hire and retain a skilled
technical workforce, availability of attractive acquisitions and
unforeseen integration difficulty with future acquisitions, and the
Company's successful implementation of its internal operating plans.
Accordingly, there can be no assurance that the
forward-looking information contained herein will occur or that
objectives will be achieved. We assume no obligation to publicly
update or revise any forward-looking statements made today or any
other forward-looking statements made by the company, whether as a
result of new information, future events or otherwise.
TEAM, INC. AND SUBSIDIARIES
SUMMARY OF OPERATING RESULTS
(in thousands, except per share data)
Three Months Ended Nine Months Ended
February 28, February 28,
----------------------- -----------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues $73,291 $62,630 $222,215 $183,828
Operating expenses 49,216 41,584 145,932 122,095
----------- ----------- ----------- -----------
Gross margin 24,075 21,046 76,283 61,733
Selling, general and
administrative
expenses 19,025 16,216 57,269 48,131
----------- ----------- ----------- -----------
Operating income 5,050 4,830 19,014 13,602
Interest expense, net 1,047 1,083 3,167 2,862
----------- ----------- ----------- -----------
Earnings before income
taxes 4,003 3,747 15,847 10,740
Provision for income
taxes 1,561 1,468 6,416 4,113
----------- ----------- ----------- -----------
Income from continuing
operations 2,442 2,279 9,431 6,627
Income from
discontinued
operations, net of
tax - - - 6
----------- ----------- ----------- -----------
Net income $2,442 $2,279 $9,431 $6,633
=========== =========== =========== ===========
Earnings per common
share:
Continuing operations:
Basic $0.28 $0.27 $1.08 $0.79
=========== =========== =========== ===========
Diluted $0.26 $0.25 $1.01 $0.72
=========== =========== =========== ===========
Discontinued
operations:
Basic $- $- $- $-
=========== =========== =========== ===========
Diluted $- $- $- $-
=========== =========== =========== ===========
Net income:
Basic $0.28 $0.27 $1.08 $0.79
=========== =========== =========== ===========
Diluted $0.26 $0.25 $1.01 $0.72
=========== =========== =========== ===========
Weighted average
number of shares
outstanding:
Basic 8,808 8,433 8,720 8,354
=========== =========== =========== ===========
Diluted 9,553 9,282 9,377 9,181
=========== =========== =========== ===========
Continuing operations
data:
Revenues comprised of:
TCM Division $38,596 $33,935 $116,206 $101,988
TMS Division 34,695 28,695 106,009 81,840
----------- ----------- ----------- -----------
$73,291 $62,630 $222,215 $183,828
=========== =========== =========== ===========
Gross margin comprised
of:
TCM Division $11,567 $9,902 $35,697 $30,562
TMS Division 12,508 11,144 40,586 31,171
----------- ----------- ----------- -----------
$24,075 $21,046 $76,283 $61,733
=========== =========== =========== ===========
Operating income
comprised of:
Industrial Services $8,381 $7,261 $29,119 $21,223
Corporate (3,331) (2,431) (10,105) (7,621)
----------- ----------- ----------- -----------
$5,050 $4,830 $19,014 $13,602
=========== =========== =========== ===========
TEAM, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED BALANCE SHEET INFORMATION
FEBRUARY 28, 2007 AND MAY 31, 2006
(in thousands)
February 28, May 31,
2007 2006
------------ ------------
(unaudited)
Current assets $89,094 $84,831
Net property, plant and equipment 32,026 26,448
Other non-current assets 28,081 28,692
------------ ------------
Total assets $149,201 $139,971
============ ============
Current liabilities $30,993 $35,612
Long term debt net of current maturities 41,101 39,804
Other non-current liabilities and minority
interests 510 670
Stockholders' equity 76,597 63,885
------------ ------------
Total liabilities and stockholders' equity $149,201 $139,971
============ ============
CONTACT: Team Inc., Alvin
Ted W. Owen, 281-331-6154