TISI - Earnings call transcript Q2 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2018 Team Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Don Bleasdell, Vice President of Finance. begin. may you Sir,

Don Bleasdell

Greg be and only the can the conference to today's call. advised the also Officer; accurate Amerino Heather, XXXX. Officer. Chief recorded fiscal on call Information website at accessed audio link This call second teaminc.com. through year information Gatti, is and X, Executive Chief time-sensitive XXXX under any as With webcast any August the company's call EVP that Investor as welcome, you, speaks may and Team's Financial and Relations everyone, Therefore, being quarter are be today, Boane, be Thank me please section date of our longer replay. of this no of of on

you made the forward-looking performance. events Before expectations, this that Act or we Litigation continue, pursuant of financial the of provisions call XXXX, statements I'd Private Harbor Securities of future future Safe Reform remind to statements to contains including like

any investors and such forward-looking Forward-looking statements differ uncertainties the documents statements. the Commission. any and described Form Report Annual the those in company's forward-looking assumes no involve furnished factors in company The update caution results contained actual could other materially inherent number uncertainties on on are from to statements. risks we factors revise cause of Securities publicly other detail that and in or or and risks company's and filed Exchange reports XX-K with and and to These a obligation

several today. quarter improved about with an important developments have talk to We

over started. turn get I'll us call the to Amerino now So, to Amerino?

Amerino Gatti

our Greg quarterly today. I'll take your everyone. We brief will morning, then we hand you some before begin update call financials commentary Don, to the and us a our and back me additional joining you, good questions. Thank detail by providing business. for on appreciate

strong we operating are encouraged business all adjusted income and EBITDA. QX growth achieved with XXXX our revenues, In organic quarterly segments, performance. three We in

and refinements business income undertaken, will reflect QX XXXX. revenues, initiatives represented fundamental highest have rationalization of cover beginning also cost Team's quarter EBITDA second These more model performance results and quarterly I operating in the detail later. Our to of which we are since some

increased EBITDA encouraged of Inspection also consolidated last year. basis margin adjusted quarter XX% both improving XX%, XX% to the our $XXX revenues QX from of have model prior the matured performance period increase XXXX. our have gross since prior margin refinements segment revenues and This large the and adjusted the highest Integrity in levels discussed higher due X%. the spending of issue compared was XX% in the from QX by levels and than of activity million prior as posting this Quest end quarter. customer Services million, compared call, more we year Several to with X% and sequential $XX first growth EBITDA $XXX plans an and delivered to while year. extending Treating what last strained to activity in markets earnings or increased addressed was of increased year. of quarter million we are Mechanical million year. XXXX. prior-year increase We and This in margin from growth project Heat performance. by during than continued last by segment segment Compared Consolidated Services' of XX%, expanded conditions compared have second the year quarter, quarterly to were the followed the of $XXX quarter This build Heat the Furmanite million its adjusted the revenue by revenues growth at XXXX. scopes. Mechanical XXX a recorded million, Consistent period to capabilities XX% management increase the first highest workforce quarter higher was now along million and QX I million IHT a margin focus segment, quarterly terms now to top quarter marked XXXX This compared utilization million and to our Mechanical in Adjusted with segment business $XXX prior review $XXX labor QX improved increased year when our planning to in XXXX XX% resource on contributed or since EBITDA are increase on its revenues of The percentage to acquisition to early on Services in the $XX.X $XXX in focus $XXX sequential in EBITDA contributing an when Adjusted improvements. and consistently utilization, performance. The the from EBITDA adjusted the a second segment of delivered and increased with both million improvements. Treating XX% EBITDA will $XX.X Inspection dollar same quarter, second points. performance, absolute $XX.X million, When QX demand line

delivered the utilization segment QX Integrity XXXX of Integrity was capabilities to segment. positively impacted million, this compared labor last in was $X.X XXXX. than or the million XX% our quarter the of million inspection in when XX% improve The further year to some $X.X $XX Quest second higher .Adjusted continue activity. in will QX by quarter EBITDA million increase offshore in a $XX revenues We Quest

the years track started the that the back effectively of several project revenues. year during has to and call, achieve quarter delays of to earnings in up record caught Integrity is back mentioned slow second last As Quest because on

to year performance, capital improving our closed free track XXXX positive working focused management. flow earnings remain In We out addition to plan flow. our on on cash the quarter generate and we cash with full

of a and trade CapEx with as improved is high seasonal QX to the revolving discipline a in borrower on We versus higher revenue days expect over the be year-to-date XXXX prior spending. requirements. facility capital five quarter quarter DSO year We second maintained credit by our net working it our

I improved highlights on our quarter, senior number $XX technology. and will quality continue still manufacturing one under EBITDA. As priority. secured while recent we facility a X.XX to our result, provide performance, million ratio we credit changes for debt and now to revolving leverage and safety remain borrowed times adjusted organizational Safety the the

and with track are services changes XXXX We us for delivery in integrated and injuries to be The of line of goal to important on of service solutions. and markets; standards, long-term program and new We and an lines differentiated and recordable standardization collaboration strategic clients. Through best our for divisions designed our third, established by step second, cross deploying operations and audit responsible and such practices, year organizational for quality fleet functions first our profitability, and comprised operations growth delivery value accordance leveraging addressable completed deploying reduce decreased and product be focus, the across monitoring Team segment line The of aligned and enabling an position includes structure maximizing systems. both to XX% our to organization. product product by the Team's operational positioning organization within service Team training focused a organization first geographic and locations to technical current global same development period center-led pricing, the executing lifecycle service The with protocols. safety program product cross and and service (XX:XX) district by our and superior safety our costs. half continued the will OneTEAM programs integrated enterprise. compared our in foster progressing Team's on service in will district efficiencies; responsible technology and company's last zero. will both major These to innovation discrete and deliver will segment regions local remain a

processes continue XX% combination operating Our enhance our internal investments in costs, of lean leveraging a capacity. to on capacity advanced than drive and more focus Engineering increased well quality, external our has by resources. as manufacturing improve and operational down as

of than our achieved milestone investments engineering, both in manufacturing result centers. manufacturing a we across and XX% As greater on-time our of the have delivery

more successfully East the work and industry operators. than for During digitally through needs to workflows. testing is in in the to our Quest a also tool while to take leading its quality Digital following proprietary an InVista demonstrated week, and by efficiency Quest offshore respond completed that the successfully subsea inspection pipeline environment, development and customer extensive a deepwater Team the quickly mobilizing XX-inch with several staging first Integrity typically tool enabled ability than platform less average effort mobilizing maximizes would Middle the month. quarter,

Digital Team deployed to utilize across sites. successfully our refiners eight and also two into multiple have five largest globally divisions strategic into projects with of the We of our partnerships entered platform

to productivity turn financial second on XX% Greg time standby through review. time XX% gains over We will to now reporting. automated quarter increased the for I to achieve and tools, it Greg? continue reduced

Greg L. Boane

increase QX XX.X% QX over as by picked in improved revenues XXXX in up. basis XX% QX. QX gross Thanks, QX growth XX.X% XXXX. XXX XXXX in from or XXXX Amerino. revenues quarterly previously consolidated gross in XXXX. as Market to XXX from record margin Quest an improved points in continued of $XX reported XX% deferred points by of were XXXX $XXX Team completed Sequentially, basis to margin activity million, levels products improvement consolidated consolidated QX XX.X% QX million

improvements coupled the higher levels improvements benefited inspection segment unfavorably $X manufacturing of the Treating on improved in QX XXX-basis-point QX showed resources, targeted their of We margin the with and QX their Inspection projects planning early XX% increase a that activity QX favorable a Mechanical Treating to challenges related customer and gross and in XXXX. due strategy Services also and some to segment margin also in in in XX% to impacts primarily margin operating project initiative, in team implementation from benefited QX Heat million, semi-fixed sequentially workforce and Services' and the in experienced to engineering increasing Inspection which while structure improvement QX and engineering of Integrity, year-over-year The XXXX. improving utilization utilization has higher OneTEAM XXXX planning XXXX mix XXXX, Mechanical cost the from after experiencing Quest functions. costs and their XXXX. some gross a reducing Heat costs from completed efficiency process from impacted The and workforce labor the continued gross program. pricing related assessment

As QX a well Mechanical Heat with contracts into rolled had implemented less designed processes. the Services and Inspection contract processes in targeted out already same and we beginning from tools initiative discussed management and as favorable last these specific to We address segment quarter, segment the as XXXX, terms. contract Treating benefiting workforce planning is

sales are improvements. team on we has recently been commercial this contracts initiative, and some Our focused and beginning see to established center-led

not do of believe Moving million on for total relates sequentially. XXXX indicative professional Directors work million our is as to Board to compared spending fees SG&A that QX was core basis on $XX.X we and $X.X to of SG&A, restructuring consider in and $XX.X I was comparison second that related terminations QX quarter The most expense for activities. QX trends million during grants. higher primarily primarily will of annual a for organizational to relevant. employee quarter to $X.X $XX.X we second the the non-cash SG&A be increase increase charges XXXX, discuss Adjusted an the Consolidated retirements expense million operating sequential includes compensation XXXX quarter and stock stock-based related to million OneTEAM of

bad We had for allowances increases. XXXX debt linked revenue also to QX increased

cost While XXXX it completely as the current were increase of quarter, also minutes other primarily legal EBITDA using from linked depreciation for and the the the spend the million; around the related up and other million current XXXX. that in professional OneTEAM $X.X amortization SG&A of not they in increases accruals XXXX a of to and compensation were full is offset the fees. no of to expense million higher do program higher There the stock-based expense, during the to D&A million $XX reductions to incentive-based corporate to and Shifting work expense primarily $X the we the quarter, expected million higher around accelerated compensation increase core be $X stock-based In million to million incentive excluded our stock-based be an QX costs, the categories we improvement few $XX million XXXX, trade R&D $XX year over from non-cash of compensation million name. $X and by due but quarter for reduction reductions of QX XXXX, QX guidance amortization indicative related million Non-cash to items $X.X tax to performance from previous in sequentially expect $X there restructuring accruals. higher $XX QX XXXX, our be by related compensation a stock program spending in adjusted cost I'll OneTEAM XXXX. now certain professional compensation, were consider of before a was change initiatives increase of to annual compensation sequential activities. and and Furmanite comprised total efforts. charges away is offset and was transitioning there of million related excluded items to is is in discussing was fees operating of million $X.X $X an following. of adjusted This

of convertible on valuation a loss statement feature Moving interest XX, liability embedded was by down operating additional to $X million. sheet June approximately be of debt. balance non-cash the $X.X will $X.X the million changes non-cash for below the issue debt net QX conversion the At not costs to expense $XX.X the income the In June XXXX the Cash income Subsequent XX, accounting includes for derivative. amortization a the debt related convertible million embedded in value interest debt. was XXXX, of was with discount embedded statement income, of impacted was to and stockholders' million QX on and related equity. the reclassified expense company's there quarter our associated derivative to any

and in effective a tax for resulted amount conversion on rate The and X%. foreign on between are the reminder, the these of new be of convertible shares, debt for company impacts of losses, cash, allowances, approximately A debt, rate XX% a option combination I'll combination balance tax actual As factors cover now settle the impacted of of tax interest effective sheet NOLs normalized or valuation the the QX XXXX cash the Team in deduction XX%. by an should to earnings limitation. flows. taxes Reported the pre-tax and thereof. the has to

our also XX. ratio In our improved have operational improvements liquidity addition secured in senior our overall to performance, leverage and we June of as

from liquidity improvement $XX of Total a cash under since with XX, covenants. XX. our million million had the improvement December improved our June ratio and borrowing revolver. June were $XX down balance secured adjusted to of we capacity sequentially compliance times EBITDA which The adjusted X.XX an available $XX million in $XX of was EBITDA, approximately At December million we of leverage As existing X.XX at times senior and $XX million represented XX, is debt XX.

trade has improved Inventory in revolver use borrow days working facility QX key reduction by two seasonally XXXX, days in QX free in cash increased We credit the use DSO on strong in sequentially. the free XXXX the or average improvement revenue half of of first requirements. by versus QX improved the in million net million expected XXXX, flow $X program XXXX higher million. with and million six XXXX cash to revolving revenue QX seasonal ramped We to quarters, during to versus Accounts funding an approximately a $X.X million $XX ramp of million in a the sequentially XX% revenue cash Actual year-to-date flow The sequentially. XXXX. up be $XX five objective was the and improved increase. a by especially of $X.X was QX performance last activity XXXX. includes QX borrowed year-to-date capital support sequentially a from of from level XXXX. QX net which quarter the OneTEAM increase $XX during is year-to-date of This XXXX. is the Inventory in XXXX debt XX% net sequential receivable borrow spraying highest XXXX

QX QX of in this XXXX the a of million represents first to cash half was $X which last of million was we expect and ahead million. million decrease year-to-date, CapEx start Overall, $XX $XX some by seeing months' flow out free six $X XXXX. our over XXXX. from in area We million for improvements half the $X forecast XXXX closed

QX and XXXX. half receivables very We and reductions in inventory focused on the second over are of

cash completes and That back review. into requirements. QX which We off reduced slower the free coming financial with expect is capital the over generate period the record now turn Amerino. the to flow I'll positive revenue call working to seasonally QX,

Amerino Gatti

you, Thank Greg.

will last and reviewing initiated OneTEAM a transformation has Under track. OneTEAM XX function your installed forward-looking the of projects our our program than new I XX% take top for providing call, on we more some spend our is and grown the integrated we by full customers. in integration and segments. and Since have access our market Before questions, The commercial few and prioritized progress contracts the completed across leveraging minutes contracts outlook. that negotiations pillar, deployment a revenue enhancement is have opportunities by cross-selling phase with customer review

We contract taking several we have quarters negotiations, MSA larger successfully is anticipate complete. each an executed to a couple but and of negotiation, this individual the

than million indicated, the two and district we achieve accelerated The the planning more from end costs efficiencies are of restructuring and cost on $XX the achieve the million second plans As year-end. remainder the SG&A project savings locations. we our progress, the complete be $X that previously pillars Based XX% planned OneTEAM the to half indirect We focused cost to $XX initiative through of in on year. program. million with targeted to of of are to reduction we on cost million higher is will able improvement of confident the restructuring low-performing $XX

spending of be macroeconomic this end shows and half fall record in energy the the same U.S. with data increased data market than expect over markets turnarounds X% rebound second markets in prices remain improvement the year. continue and We going oil XXXX. to year scheduled half levels digit confident continue to XXXX in are forecasts, external and the The first past market end and end growth External last into and we leading internal are the a the increasing year of refineries to our higher growth near activity signs perspective, opportunities in levels XXXX. to high for single improve project X% over revenue see the for period our sector at From Using exhibited year. running forward. projected reaching recovering the of

in of indicator as we strength cost place, underlying is and and key such this increased of remains performance freight experiencing fuel. of cash fully external EBITDA, delivering safety, around headwinds materials, are serves of growing to serve labor, good all improving a markets, My the senior objectives as data increasing organization While entire free leadership team and the focused XXXX our now on flow. the

we services still our growth of we remain XXXX. right EBITDA we While a end challenges, to number face XXXX projected OneTEAM and focus that by our on deliver in given financial on the our strong QX annual confident path to XX% XX% the for executing are markets margin program, performance, adjusted

all Finally, our willingness for I time, At to and once questions. employees take to driving embrace hardworking their commitment steadfast happy would loyal, thank your change personally be this like to their again excellence. to we'll execution

Operator

Thank you.

Afzal KeyBanc. first question Tahira Your from comes with

line Your open. is

Amerino Gatti

Good morning, Tahira.

Tahira Afzal

team you all to hard performance. EBITDA your Great work. on your and (XX:XX)

Amerino Gatti

you. Thank

Tahira Afzal

I've that EBITDA got trajectory lots we've of questions to the I talked for how first is, XX% now. guess, you to but I XX% get Amerino, keep before it on to question margins. right two the about

this performance, about being for where you year, your around maybe As talked so, a good we've ends little are do more the you you're feel know a little ahead a $XX of million feeling second adjusted I up track? quarter EBITDA benchmark And, that? comfortable look you if at

Amerino Gatti

be is and But us for achievable and to When season. range HX point, adjusted be the than have year is to the we highlight specifically, able as quarter, the So, well. good the which, higher right to organization get look lines our a we part turnaround that $XX XXXX, and quarter. this big into HX EBITDA feeling turnaround base more us. September-October line XXXX, just the versus do to of in year. quarter XX% positive delivered that at will fact am this in season, a on – to four the XX% from I a in a seasonally Tahira, that at of I in want in long to positive looks I QX, which really foundation continue showing market, comfortable feel big, we to for last the as be the bracket down. We level timeframe targeting foundation had look I growing obviously, We were looks XXXX ahead, type slightly second the deploy million that a where is

focused or the are people our in of second very we're transformation. the third still So inning but

the on what very that I although quarter very positive to one a yet. estimate. $XX delivered, but take So, got a it good of range we're not excited our time, on out at and development the I'm woods million people We've is think

Tahira Afzal

cross-selling considerably about the That's helpful, could comment come Amerino. that mid you to your revenue if enhancement up it more of those I it. of gain the for increase bit in you talk start Got pretty opportunities where Can sort on single-digits identification pillar, XX% here? of have question you the opportunities. revenue And, and second is in traction guess, drive incremental outlook the have a

Amerino Gatti

Mechanical. improvement coming company So, the just is all, the sales because Tahira, model versus pipeline opportunity starting first the in expand to now of we're the across division XX%

way on increased. all the customers, the visibility opportunities to level our from our plant the organizations up visibility So, of has corporate

cross a We're doing sales segment training. of are We training. doing a now lot professional lot of

through existed company a account with our building of multiple will managers, we're commercial customers. the sales at our organization to and it So, level the be that, at district past, now in levels align

is So, important. the foundation extremely

The on second everybody system, familiar is we is which our a business with thing sales force. deployed

nested, identify where those today on to of have opportunities. opportunities the and So, the cash where process sales reward plan, we're the probabilities the those opportunities. rolling done be by incentive deliver visibility we And end have of will which this majority projects. the that we in and the compensation capturing better of our opportunities, out month coming putting collect places to on are people We're in

it our the it's to and part inspection wallet Mechanical have big able because it's of collecting customer. services we or of So, we're capture more spend a That's through sticky, Services. to more of delivering being pull big, the services

international that's starting to start with domestic that domestic access or with non-oil gas as oil already at and because aligned but commercial to will to and I'm customers this on our the I So domestic our organization our our initial be and sales excited speed of integrated developing – capabilities continues because breadth and be – be then those our more very will what expanding technologies confident develop, solutions. we've to we'll much that got are with I'm customers, able to deliver gas services,

and think spending the So and XXXX, right the time the my a I really commercial part where the this now into But, in lot of be tip is we're us. X for and going just place. heavy But lift. again, that's XXXX is on of pieces Pillar other put we focused iceberg I'll these X once

Tahira Afzal

back and in queue. it. Amerino, you, hop I'll the Got Thank

Operator

you. Thank

Martin Malloy Your from next Johnson comes with Rice. question

line Your is open.

Martin W. Malloy

Good morning.

Greg L. Boane

Marty. Hey,

Amerino Gatti

Good morning.

Martin W. Malloy

referenced call, refinery in that think, conference maintenance question, XX%. of that XX% spending Has strength continued? market last First end in range the I kind you the to up, being

Amerino Gatti

that So, gone up I the quarter. over a utilizations bit the last think, flattening right now out have we're seeing because little

versus So OpEx, driven still projects. still on refining is new CapEx more of driven, is side things the it being being maintenance

new driven projects versus probably XX% OpEx It's new Marty, level. on CapEx that by from more out flattening large the is range Petrochemical, is to the now. expansion. XX%, We're opposite. it closer maintenance seeing So,

little utilizations these based the the are plants, of the leveled I So off same. trends But bit. on think that's a still

are up, are up. because The at in keeping is productivity scopes. discoveries are thing our still though, I we're turnarounds high, seeing, customers the their other capacities the expanding and looking think the And utilization that their projects keeping Marty, do

do going to I workforce more our large lot management expect can with So shorter right, projects, model. projects versus which a we maybe forward, react

a of petrochemical So, you on refining. and bit color both hopefully, that gives

Martin W. Malloy

A costs that? question. et us referenced including little can that quickly? you're inflationary dealing And comfort how commentary, you Thank with you fuel, labor, to Yes. you able you're more the about pass bit Can you. to maybe factors, talk follow-up give customers those cetera. a some your through In

Amerino Gatti

Sure.

the our place So, half lot of a which in we focused put late in was in the on first organization, year, procurement XXXX.

a That work is build-up like and we into I pricing the labor segment, that we've we we're use reduce customers with starting of our our our labor away. because spend in to to now Mechanical our our work to we're So said number the go reduce was been We're year. of of suppliers, earlier. customers. fuel, the rate coming discussion a starting size that able When mostly steel, in in negotiations our leverage With going that earlier. half see it comes areas cetera. have most suppliers, see to serve a That ability some of we in lot to have – having front to talked et or and scale in is and of point our discussion. be steel, there our fuel, getting the about cost that I to cetera, the et cost the freight, with now contracts, of will contractually things to Services Things like that increases first one

the contracts, discussion for So part the and MSA it's of negotiation.

list, model. For call-out, and into we the right, the that embed we use price price list

our So kind have last We've we it's on of increased two years. analysis required. our of couple points support backup and forward. And indexes But attack. the the that's those indices customers the how done with approach over going of documentation the

in of one that one stuff. our to our got So we've on customers get we've homework, with done but front

Martin W. Malloy

you. Thank Great.

Operator

Thank you.

comes CJS from next Bibb Your Securities. with question Craig

Your line open. is

Craig Bibb

Hi, guys.

clarify. to Just

Amerino Gatti

Craig. Hi,

Craig Bibb

quarter and also XXXX. Greg, Is you said you positive correct? free in guys flow are be cash going that to next

Greg L. Boane

cash free and expect be to cash in XXXX. year we the Free No. flow positive QX, positive flow for

Craig Bibb

when talking And were, Okay. reviewing of this Great. I were IHT that a And about that? just those. material or bet is How some is guess, then, renegotiation? poorly will Amerino, completed and you're like be the you contracts

Amerino Gatti

the contracts. completed across-the-board the this to top for not And be So, XX, clear, we've those. it is broken I now We've down. analysis an want negative of

four to being of blue-chip We scope. have expansion within long-term of addressing. of good rate It's three terms that very project we're because them the literally customers, the one Overtime contracts relationships.

of few with Some because will of just we us those, take involved quarters escalations some discussed logistics the a place. these Marty's in question. that the in contracts are It cost are

show of RFP, with have we move done into an the and expiring present a from our having process. go in there. our go the when the have the When contract to discussion case customers obviously, existing we're So normal have customer, we a then through we good right contract, level, at front documentation an that's and and

it been several expect quarters. successful couple to said, on we've do take I a But I So already. like

We right have in the more works now. three

focus, a our Craig. it's part So big of

Craig Bibb

Okay. And a one quick Is – just you Quest? referenced project then subsea market that for new Quest. a for a on

Amerino Gatti

question. Yes. Very good

So in Quest we a the tools worked years, that with the closely last a We've very to operators develop of market. market. We QX. of a up the and had for have Integrity the Jeff offshore few more operations few scheduled. good couple team opened got few

is to metallurgy technical a but that early in good that and and market. organization importantly, the indications the support we're people, be will We using providing our our tools, more grow and market integrity for But us. domain are addressing sales new our asset

Craig Bibb

is one last the And Digital. on Okay. Team

some unfolds the two the of opportunity Team provide Digital, you said and over just that with you're what now color using the refiners is or of it how remainder largest big maybe are about think year? I how it doing

Amerino Gatti

Okay.

it five in eight deployed globally. of the now and we've used divisions it So

an essentially analyze two, But which start data just and of laptop. scheduling, electronic then eventually analytics asset more It's giving right up, I two release in are larger Craig, signed larger is and and around piece, that's is collecting to tablet of multiple the plants. customers invoicing, We pieces. we the the or with but the two using refiners refiners. said, or you reliability, a And use the to data, those next names the or and technician There agreements, technician it. over as digital importantly, around QA/QC, predictability, two have iPad it can't into starting building a now, broken two for I that the of for it's now strategic the more two year

phase. know logistical. start predictability use about you what guys hear we able digital and Team for been Digital, for through is a it analytics we've market, I we're in is been investment, the now asset and in digital future and So, – being it that technician but very QA/QC R&D we've where for And to for lot the because and integrity on the really the last years, us. big is industry prize the working in few the

Craig Bibb

house for analyze You the data the and customer?

Amerino Gatti

it's mixed. So,

to want customers house Some us it.

secure for with to customers We house or and it us have but agreements servers, analysis. other want use analytics cloud-based

policies. security data their on based customer-dependent really it's So,

Craig Bibb

to And helps? down this the monitoring remote road or gets you

Amerino Gatti

Yeah, absolutely.

want analytics, I once so you different – you And more in data, with KPIs been monitor, getting projects. things have a finding start start doing data, surgically to you start reliability involved real-time you then I've can the reliability-monitoring to fix dashboard a just-in-time then clean using think and go maintenance. potential failure, you you which the And past it. once good identify you in

where part. of beyond logistics It's evolution I early the just see technician of the phase the really way technician. that digital Team Digital So, is is early, a Digital going.

Craig Bibb

Great.

lot, a guys. Thanks Okay.

Operator

you. Thank

Thalhimer question Thompson Your Adam with Davis. from next comes

line open. Your is

Adam Robert Thalhimer

Hey, guys. Congrats quarter. on strong a

Amerino Gatti

you. Thank

Greg L. Boane

Hey, Adam.

Adam Robert Thalhimer

so thinking already I but year EBITDA full December you above September guess, for the talked I June? you I'm March, right about way, the see above do mean, about just and this kind of

Greg L. Boane

we from stronger QX speaking, developed. we should generally information half second speaking, would information see than that first and the up the I indicates the today be is still that yes, is expect the seasonally think, but being But, half, QX. generally –

Adam Robert Thalhimer

Canada? can us Okay. give some color trends, And in then particularly international you for

Amerino Gatti

I very actually had us, projects Services, a couple and see international second so in large Canada, We market a in Canada, We so had of this We international led in strong strong, first by half do the recovering quarter stronger by Canada's driven, was Sure, strong. will. turnaround Mechanical HX. the year, for very Inspection. in half a in

Adam Robert Thalhimer

revenue do for it. then year? Is QX the you Quest year? the out lastly, shaking Got the watermark for for of And the how see high rest

Amerino Gatti

terms record year revenue. prepared to of total revenue, year in during track I've have Well, said remarks, another as we're on of the

lowest. definitely the now I slated. that looking think right QX at are was projects We're the

be month. There's, a that size the revenue projects. far growing two the or lumpiness through could be Going QX, not move month depending of quarter-to-quarter the forward, other is see saw some the on because year. always we a the do month-to-month, Probably the rest probably the the delay, that of But of size But have any pace say, week of behind. the should Quest we month, in going that, – obviously, to we to continuing does, projects anticipate could project QX. revenue we would I peak, the but

schedule Now, look there of But be lumpiness. through year. some it month-to-month, the again, the you when could looks good our rest at

Adam Robert Thalhimer

That's perfect.

guys. Thanks, Okay.

Operator

you. Thank

have You line the follow-up of from Tahira a KeyBanc. with Afzal question

Your is open. line

Tahira Afzal

guys. Hi,

innovation, a follow-ups. where relative in you on talk and some your had a Number for peers technologies are this of well Amerino. questions Can your around you some versus put us I – you can as of peers? of So for kind couple your put the scale it but about your versus one technology strength us of on

Amerino Gatti

of mean are we little versus portfolio Do in can our development? – terms peers a In you our you bit? expand or that where in

Tahira Afzal

it. portfolio, some lot terms it little talk and your call is probably more think you of talk about of this I we've guys your a first peers the more – think In about of I heard a

Amerino Gatti

Okay.

Tahira Afzal

talk So if outside leaders you would you terms are of obviously, of, be where industry in about technology kind can bit Quest the of a helpful.

Amerino Gatti

Sure.

the we're or in we first understand need the And R&D are some through to example, R&D our million So, our drones. relationships acquisition first to investments digital where of We in of important on $X we suppliers. our of thing got feel today with $X think technologies of pipeline, R&D. enabling I to in focused annually. invest all, either and good don't development, And measurements advanced the investment invest that's million is We've sensors. that for range

So, sensors deploy we're able et around and measurements if the or more products, our the use the of efforts answer to focus the cetera. enabler, will, technology you to

where goes. that's picture, funding big our So, R&D

the transient actual Array wave Phased helping discussion market products of market. and start corrosion, resolution acquisition, lot the a lot feel on are guided that the A around asset I tools, the around and integrity know of worked in when the than there's lot need lot refined metallurgy, stronger in of is a answer in I available terms metallurgy, the turnarounds sensors In our of our of predict of that. the We've what's and that customers and projects a different We've so can today. you like integrity the terms corrosion, happen. things to

and think you forward, the portfolio and going lot segments, have PSLs. us the more at we're strong done going our good where the So structure Service the integrating I to the don't solutions. industry, this a the agree, operations the got not when And on our focused. company. technical that's in and Lines to technology have a and showing see be and we're Product one we is of capabilities, a support, in almost understood, look our in forward. our of including competitors, and versus Tahira, why we've well you'll in of population a going big XXX where capabilities. to comes job span Jeff domain That's three picture, close Ott I domain with are domain expertise And our strong which And technical is we strongest But Quest, start will you people technical when across the amount is focused

Tahira Afzal

IMO me. CapEx this Any a and Okay. have medium-term? very talked I I lot slightly. last and benefit also for was could thoughts about XXXX. it helpful, around That guess, We've you the been plans actually hearing from all question Amerino. over know have the about you And, I

Amerino Gatti

I services the upgrades, to to to project only enforced, depend regulations really cetera. enforcement I the because the When upgrades, will across upgrades phasing but our a more happen previous deployed at going movement world, in, I a construction, or similar the market. the approved implemented, our it more So, gets the the analyze positive handle there's be the expansion, facility et policies. facility could types, it fuel how I have of look pace more it's to guess, of if upgraded applied think, on not and services will required. which are we'll Obviously, discussions, when project be be new the way or the the it believe will but for But going more the increases lot our that

Tahira Afzal

Got very you Amerino. it. much, Thank

Amerino Gatti

Okay.

Operator

the no to And time. call you. over Thank showing turn questions closing I'd further to back like remarks. for this at I'm management

Amerino Gatti

Heather. you, Thank

we Team. lot got you Thank be very continue thank to once you We've we forward again with call. a and to for objectives XXXX, us speaking you look that again on and, Heather, the quarter. right much, on our for joining ends on and So going in the and call focused for interest next your very now,

Operator

all conference. Ladies you. disconnect. Everyone, a and you have participating for the thank Thank in and This gentlemen, does today's program, wonderful you conclude may day.

Don Bleasdell	Team, Inc.
Amerino Gatti	Team, Inc.
Greg L. Boane	Team, Inc.
Tahira Afzal	KeyBanc Capital Markets, Inc.
Martin W. Malloy	Johnson Rice & Co. LLC
Craig Bibb	CJS Securities, Inc.
Adam Robert Thalhimer	Thompson Davis & Co., Inc.

Team (TISI) 8 Aug 182018 Q2 Earnings call transcript