TISI - Earnings call transcript Q2 2020

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Operator

Thank you for standing by. And welcome to the Second Quarter 2020 Team, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. advised conference be being Please Instructions] that is today’s recorded. [Operator the now to like would conference to I Mr. hand over today, your speaker Smith, Investor Kevin of Director Relations. Senior Please sir. go ahead,

Kevin Smith

link conference to Thank also Welcome our being the call be website Financial Chairman under Officer; can call Team’s Officer, call. Executive Gatti, With accessed Chief webcast through our teaminc.com. XXXX are you, at and section Amerino me everyone the Relations through is second of and listening speaks will as as Shaun. and company’s or Susan today’s please teaminc.com. accurate going on This information audio quarter Investor our Chief be will There Ball. call our it this on replay transcript XXXX. any to by no the X, may today, of Therefore, the recorded today’s readings. advised time-sensitive to that call a only and or be available of date be August of website, webcast of longer via be replaying any Information

In provided The was information addition, to until August release. feature how replay will XX. replay access this yesterday’s a on earnings available in be telephonic

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

from filed Securities Commission. company’s to on Susan second program factors other market described or half update on caution reports now like highlight we materially The Amerino and business, These Report company’s over by in statements detail company our the as update results assumes to the in your XX-K other that uncertainties detail and expectations. a will call contained investors then forward-looking the be Form begin and OneTEAM may with turn furnished obligation results statements, questions, Forward-looking would are differ required except of take uncertainties, outlook, of Amerino the risks and will Exchange Annual by law. documents number our and could our publicly will inherent and we risks actual before an involve or revise factors providing cause forward-looking in and and statements. those to any no any Amerino. I and to

Amerino Gatti

Thank stress everyone. you, good and and appreciate through the today. as which morning, our on navigated was joining second Team’s Kevin, am extremely volatility you workforce and quarter I an for us We Based dynamic market, in clients oversupplied we their challenge execution times. significant pandemic and during was resulted perseverance and global oil Team’s employees. proud and people of global our performance, for for the our up these challenging

our call. of second our I we regulatory June including The in and Smith, Kevin Before plans. clients we unprecedented significantly travel and relax. sector, as cut and when efforts in to start to restrictions, reduction to difficult began Investor and other implemented May, and experience mid-March, economies, research years to slowly which previously off last quarter Relations in million, we analyst. as are glad revenues from line Investor midstream like industry provided pleased E&P, get unprecedented Despite earnings drop would company. industry new troughed tremendous quarter to activity but over in and started are year the everyone April formally working a results, enjoy started, the energy XX in projects XX% activity, of Kevin Susan began The with our made the in ago, stay-at-home him. in Senior the second with CapEx on Kevin our got sure with and quarter Director are by delayed team Consolidated were $XXX Relations. restrictions has outlook you down LNG, join the many global the revenue a in and recover of have will we introduce reflect in a I working

million watermark gross of savings margin the and supported decline strong second margins margin. revenues, comparable XX.X% gross record our or XX% $XXX.X cost for pre-acquisitions. a million quarterly of high second quarter $XX.X a quarter’s million $XX set exceeded since $XX decremental EBITDA year-over-year realizing Adjusted our was Despite adjusted in or quarter quarter performance. X.X% EBITDA Second the XXXX million

exceeded economic savings the generated $XX million $XX cost $XX quarter quarter, of the We second paying which the million target million second We to to down over million. committed flow generation. than paid backdrop free noteworthy in our debt debt is Team The of given flow previously lowest the achievement. cash down quarter, $XX levels more free any remain with committed in a achieving XXXX. of debt since cash

was a The second key quarter factors. performance driven by few

decisive aggressive cost and aligning decline actions our First, significant in with the activity.

leaner, permanent implemented products more make the of And expanding success finally, revenue variety market services the addressable responsive changes differentiated were profitable which a and through with clients. our diversification of much markets initiative, Second, and structure organization. Team a to-date is that our

Turning revenues, when throughout quarter to was same revenues quarter. period second improved million, of decline MS adjusted XX% our lower to the and segment the activity a year. of quarter performance, million, compared $XX.X down from quarterly EBITDA last XX% Despite were Mechanical $XX.X XXXX Services second the

repair In repair In of Onstream overall less on largest leak trained cured another a and decision were example XX-foot line XX conditions. of square of better expenditure of petrochemical making just two current end area. service the that for by month basis extended full composite able years. the which and businesses. the also heat facility reactor. repair was the our world’s impacted such emissions and market our selection the completed X,XXX a many capital onstream services, One the onstream in work reflects our of hot The diameter client is year the on-site our Team’s core to control replace of their offering, a highly relative the delayed tapping markets. performed fact, repair for to intervention best unit, technicians that as over comprehensive June days, line recently The reactor had were repaired feet life

As growth most were of the sectors, quarter quarter growth $X.X adjusted IHT nuclear, from a areas the we renewables. and new revenues same in $XX.X and million, quarter Inspection of second on XXXX diversifying million, EBITDA down our sectors, and lower the power, municipal and MS activity second year. was nuclear core experienced levels of XX% focus Treating industries. from in realized Despite pharmaceuticals into decrease in last Heat the XX% the across

limited Integrity and second pressure Additionally, long-term received Integrity our well impact quarter, the In Pipeline the Pipeline commitments pandemic. pipeline from market Solutions large business from with operators. performed Solutions three

gas We to this mega further that expect into will effect by later the rule supported be trend this PHMSA will year. go continue and

Our specialized and remains on and our to margin, revenue IHT segment fully focused delivering integrated solutions value-added clients. well informed maintaining growing more cross-selling through

For was and required line the saving different and Adjusted to of the consolidate example, been to personnel, have refinery cranes. significantly by delivered lines. quarter chemical welding both IHT our ultimately rope $XX operation ago year repaired service reducing $X.X We quarter and would complete allowed located the a multiple technology above were EBITDA Team’s Integrity’s capabilities access feet million XXX time across second decline on-site quarter, Quest offering XX% same scaffolding quarter. of expense. steam to number client providers that last ground the million, eliminating revenues integrated a reduce time when XX% year. that the product required service level for weeks from of the and services, down compared

additional half requirements. As the of conventional both in optimization international the Latin restrictions a of opportunities planned second mechanical and quarter weaker year, America, for quarantine the the resulting and in expected, make we performance. Quest orders, was several by heater Quest overall where did pushed slowdown domestic a led Quest’s in to Quest’s successful in travel impacted specialty activity and and has services. and performance track projects however industry inspection stay-at-home have record. inroads to were

Quest is large performing Mexico. As currently integrity a in management reliability both an asset client programs example, for and

geographic projects, of our the performance Quest’s return. were of to businesses expect improve global and of in we of levels recovery. a financial half international and there varying the Given solid From to slow perspective, Canada our year into many XXXX. backlog second were

segments and Brazil. Peru Quest’s north to divisions, Pads along America, seeing in addition success Mexico, X. onstream increases our and and X we activity Latin other also increased are experienced activity our In Domestically, in with which cover projects X, Coast Gulf collectively large

Susan? review. to to now the we to geographic see have improve rest Coast the turn same successful a West detailed country, share more Given Susan I in over but of the this degree for market the in region. gaining the have as yet financial been impact, will it pandemic’s we

Susan Ball

Thank everyone. you, Amerino, and good morning,

given difficult and hard locality business the These caused Heat Services critical our the reduction of Treating and was Stay-at-home offering. second our while all subsequent Mechanical Integrity caused and Heat As productivity. Inspection and segments in XX% XX% macroeconomic percentage segments. the of reduce basis, client capital its limited XX% dollar and The quarantine consolidated in many were industry personnel restrictions extensive decline the from $XXX quarter was decline especially geographies movement All Inspection nature The down key of amount Mechanical Amerino did quarter. spending during Treating largest sectors were Services revenue and the revenue posted engagement projects. three of XXXX. travel conditions The million of pandemic energy quarter Quest the and to restrictions our Quest a come our made quarter, demand mentioned, to across and sector down down On a segment of second disruption the and product XX%. in delay and clients due hit down revenues year-over-year. an from and restrictions severely to

economic rebound part as did industry quarter the realize nice activity we of However, and a in the latter increased.

gross quarter was was above our marks the a million $XX.X Our XXXX. gross achieved since for and which percentage quarter same ago highest margin consolidated XX.X%, or year margin this

$XX.X $XXX.X for quarter million XXXX as actions. the million. in result the Despite our revenues, only million EBITDA in decline our realizing comparable global of year-over-year Our was adjusted a by adjusted declined cost $XX from EBITDA quarter

a of gross the and recent history adjusted a second XXXX our of quarter reference, margin As point revenue was quarters strongest from standpoint, one EBITDA. in

reduced XXX(k) almost both as savings quarter operating non-billable and and overhead salaries, second SG&A suspension approximately The of actions total technicians, The reductions corporate our for fees, and cost were included other costs. minimized elimination actions expenses positions, furloughs These savings of professional with cost reduced as equally. headcount $XX associated and match, non-essential reduction our million. cost well immediate contractor

the for see the including the expansion cost actions, quarter moving SG&A XXXX and SG&A, due million, expense program. lowest year-over-year management Total of SG&A SG&A OneTEAM Now progress costs our the expense initiatives reductions continue quarterly to our acceleration pre-acquisitions. we since second under in to excellent to certain of $XX.X were to XXXX

when improvement basis, second expense the approximately XXXX. these XX% compared $XX.X of other to both net quarter in second XXXX actions quarter’s a be total was been down This anticipate specific as was SG&A The as undertaken well the will SG&A had $XX.X by place. a XX% specific of to down in that million. from as undertake SG&A year or to XX.X% period-over-period We XXXX reduction cost full million. On cost the reduced $XXX sequential actions million discussed, previously includes XXXX, not impacts

negative XXXX. the quarter, quarter net million income EBITDA first for per Significant was of in severance income adjusted measure the and the in which quarter down the quarter loss approximately Consolidated was million $X.X quarter $XX.X non-GAAP from reported $X XXXX. up charges of adjustments was prior compared fees. adjusted $X.XX of sequentially second share adjusted in loss, million in a the million $XX.X compared second quarter quarter. from was to or restructuring of million net Adjusted million included $X professional net in XXXX, when loss adjusted same or diluted the net related but $XX.X per $X.X share second $X.XX in profit primarily million the net quarter to $XX.X second year XXXX, of million diluted in a the to the second $X.X and The expense million, legal in for

XXXX quarter and but year. quarter segment The last business $XXX.X Now when $XXX.X slightly reported million, EBITDA turning Adjusted million, the XXXX Inspection quarter. $XX.X the in was of on $XX.X reported earned of the XX% up for in down revenues million segment the Heat same lower from to down the Gross EBITDA period performance, sequentially, XX.X% second Mechanical XX.X% $XX.X the decline. revenue to to million from posted Despite increased margins same $XX.X dollars period XXXX. margin a of quarter million, second our the in down million last XX% decreased XX%, segment comparable versus Services segment million the second year. Treating revenues XX% compared the in $XX.X revenues,

the adjusted margins increased up sequentially, XX% million million, quarter as $X.X from EBITDA this year quarter. million down to revenue margin prior revenues to was Quest but $XX.X in Gross Second XX% $XX were prior to XX.X%, quarter. million. decline. in compared period year the on decreased of $XX.X XX% million of $X.X revenues EBITDA XX% a down year prior dollars Integrity quarter from

was down period. the in million million, Second $XX.X $X.X quarter year from EBITDA ago adjusted

revenue to to Gross the decline of margin declined Given large XX% XX% decreased a decline. the Quest XX% margin XXXX. XX.X%, dollars EBITDA for compared in quarter Quest’s second in revenue, on

related extended more performance Quest’s travel restrictions discussed, previously severely and the impacted periods. by quarantine As was

were a the rate associated that month impacts permanent our XXXX We has a federal to full company and operating net certain with to as discrete back basis permanent tax six items approximately which million, type will the on CARES losses as is federal differing the The the available offset taxable Under was statutory X% rate including and be domestic operating pretax for to Act, year, domestic approximately effective tax This rate not net items loss. an income. losses $XXX driven in year basis impacts lower tax recognized effective significant than on are by deductible, federal six-month carry previous and domestic to income X% on CARES domestic foreign the anticipate Our rate versus benefit years. Act well future the approximately of losses. able we of XX%.

quarter, second the we million an the $XX.X of million, of $XX.X representing improvement same with of quarter free quarter of quarter, were for over second flow CARES refunds million $XX.X million the in operating XXXX the flow, Team In During the million. Act. allowable generated Capital filings XXXX. income $XX.X $X.X period tax associated of in cash the received over cash of expenditures in resulting percent

million ended capital paid borrowing to forecast year with maintain available lowest the during continue million, approximately nearly $X debt We million. facility full and credit $XX $XX.X of of under second XXXX of capacity of the quarter expenditure a cash approximately We $XX with XXXX. quarter down total approximating the million liquidity of XXXX. the debt debt achieving $XX and $XX XX, million level XXXX, reduced June We of by the since from end at million had

facility needs the our recovery As credit our June discussed capital last liquidity requirements. in amendment XX, extension enough XXXX. the flexibility on facility completed believe earnings are to us amended that through and meet period. covenant provides and additional working we The operate this XXXX January and to call, cash the resources matures We

achieved and we our needed pleased results actions manage down, conserve and we adjustments. continue cost our with down further Our actions we we will financial the sheet. debt to cash, pay our market cost cash will continue structure priorities are to to balance warrant closing, and In take flow, further as if be conditions with free protect generate disciplined

can as actions needed throughout Amerino. With That will the cost call financial expanded XXXX. back I completes Our the review. over turn that, to be

Amerino Gatti

Thank you, Susan.

are Global perspective, while and From signs the steadily parts and by oil remain second resuming increased jet of activity COVID-XX year. half driven we Before will the of I recovering, market country for and your of demand our are take of seeing internationally. outlook, hotspots a remains volatile positive fuel markets provide throughout review progress diesel, current expectations suppressed. highly end questions, tune-up Team’s OneTEAM the the operations. gasoline economic our as is with macro core we world a the

refined demand However, products below XXXX collectively all of levels. remained three

oil approximately combination Plus now in refineries undersupplied should the Given utilization half Refinery XXXX, lead to healthy U.S. in industry of and both CapEx and and have improvements rates drawdown to in levels OPEC for these inventories margins fundamentals. second of and Historically, production OpEx eventually cuts a oil are spending. provided increases resulting the declines, from XX%. supply expect in be of we the market in

addition, of the rates and XXXX, high large environment. XX XX In as additional months these and corrosive plants undertake and the to due more of need turnaround Team wear to next work many in utilization XXXX the utilization long-term turnaround projects months. higher comprehensive benefits to operating delayed now to over will to levels lead due in nature tear asset the

known footprint, and clients Our to that smaller our shorter projects collaborating with pit downstream have nested projects durations, extensive stops, clients perform leveraging stable continue margins. gross able to off-cycle these we our to limited schedule maintenance. our on optimize and scope as are By

During spending instead budgets half of second maintain expect on and clients focus OpEx XXXX, our will the we tight projects. capital

OneTEAM recovery, the and As the the a by through concentrated revenue, model, supported to development digital targeted in these call-out and innovations. to and onstream and in our sales technology and and turnarounds. to by committed the later we across are commitments. and a and nested I for leaner now proactively on operations order recovery diversification structure lead result, focus on following, markets the activity business should cost our projects few and sectors, Team future, program, of prepare sustained followed key expand year, In quality clients will our enhancements investments

the $XX permanent deliver the tune-up OneTEAM, we announced reduction annualized the optimize will of expansion for with reductions cost and structural cost cost variable other First, program the organization. acceleration and million to variable and next the that will of starting estimate between the $XX We million OneTEAM and deliver additional phase and of year. further actions savings

and technology even long a when and our technology has leveraging XXX over digital XX successfully over development history are we structure, years. cost to comes longer of operations, application leaner applications. and it history our to a years addition Team In

be such technology, Our well engineered solutions current is lifting supports number to Team important people of This been as applying quality, line the an without investments are assessed of our cranes. of more provides needed inspectors that system enabled pipeline to corrosion. increase identify costs. becoming the unique corrosion proven technology this Touch remotely work limit to and Point to to directly environment, lifting within has methods solution our Solution. One digitally operations, in Corrosion integrated the conventional even and use support example site. especially reduce pipe for allows safety and as is ability our as on This

extremely quality comprehensive solutions applications over Team for and more Team are and clients management been inspections capture for to assurance XX,XXX as successful in support have knowledge Our since Digital driving now beginning analytics, we our XXXX. turnaround efficiency Team practices continues completing Leveraging and to best seek to through cost-effective a projects digital asset complex technology differentiated Digital, challenges. transition and platform. their and our they

build to workflow During quarter, foundation quality safety, digitized partnered Microsoft the further field our we Team enables relationships. for service second the management client service with to This system. our new and enhance

begin and end-user technology services efficiently and Team’s measure will digital relationships. our more to well starting foster mechanical further onstream soon advanced services. that deeper enhance and pilot nested adoption, applications with technicians opportunities help as our We our inspection as effectively, integrated perform solutions

streamline operations. solutions to and asset well-positioned are provide segments three management Our client applications digital integrated to

processes monitoring, clients for limit our example, and was asset now become margins. trying client rate and automation data corrosion to extremely have the a and important, of client management. workflow digital management to Team’s asset code compliance our digital used data exposure data how they import For establishes reassessing second specialized current further performance manage for are asset as existing half especially collaboration as program -- purpose around subject engineering, a their world. comes the for it year. This advisor to expectations I matter and the assets trusted when labs leveraging now our manage their expertise our assets. our critical and share will role of Clients are establish midstream the

between we for lead the and turnarounds XXXX. At the to company second anticipate optimistic clients XX% which projects XXXX behind level, cautiously leading are improved be will is their and planned macroeconomic a We and revenues into XX% half in our first above conditions that us, the of of should restart late half worst XXXX.

of As with OneTEAM cash a more should Strict gross management, allow us result in of working actions, line XXXX. and margin cost other spending we be the than our free cost flow XXXX. to capital and controls generate to year in XXXX discipline $XX expect full capital million

impact, enter to the to outpace to the and of continue look is in proactively managing election. we manage costs In Certain As trends control, imbalance, oil gas half our upcoming XXXX, we not economics and to on remain COVID-XX the focus outside macro do make prudently will response, control. based and business as disciplined our our the current and recovery. we our what second such are decisions business on ensure

operating with model, us coupled depth demands. agile, First, business our team’s even of to more services asset-light and and made products flex the and scalable allowing us has breadth with

workforce function environment. technicians our our employee ongoing forecast effectively dynamic this management with field allows coordinate more Second, support communicate on-site and global to in utilization, mobilize and logistical us to centrally provide

and shifting Third, will comfortable closing, remain to offer stem have and for time, Fourth, assets our mindset. our oil and and onstream product crude rebound more growth will other reduce downtime technology. particularly We with committed as comply become a environmental finally, profitable financial Team to critical clients believe demand in we with past excellence with footprint over age, and clients proven, position, cash from mix a revenue CapEx to this significant flow. back environment. client-centric become In driving performance investments our products regulations. refined geographic while execution services and from more business OpEx market for strong generating unique stability being responsible and our as And cycles unplanned reliability in our

back how serve for will question-and-answer our worked our and and the resources. to technicians would especially over manage it frontlines. I session. and risk I tirelessly Team technology, the am say this I to of to Operator, you at during have now like They turn on people engage proud financial clients, Finally, our and time leverage

Operator

question from Davis. comes Instructions] from of Adam your the Thalhimer first Thompson line [Operator And

Adam Thalhimer

guys. morning, Good Hey.

Amerino Gatti

Adam. morning, Good

Adam Thalhimer

half Amerino, for everything full with maybe when year, come thinking? a pretty $XX bit that in around, back that’s I line right good you what year better plug I are than million, EBITDA in, little the the of outlook a with is up

Susan Ball

would Adam, going a I that based numbers of plugging gross points commentary would general reductions through be that the and upon and in, range the say, with it margin. SG&A discussion and

Amerino Gatti

one And I the think, will Adam, occurs, how recovery the and cost between be the the permanent reductions. variable topline variable and balance on

SG&A needing XX% the more compared on I from line with sorry. variable, topline training, spend, XX% So of the plans to think an standpoint, obviously, recovers, depend is of to indirect overtime, The growth. as and XX% costs. type drop our the permanent into -- like, XX% some things, the to is will the XXXX costs, travel that be revenue be the nondiscretionary but XXXX, right the system, some those will of back balance in to put of range And now,

Adam Thalhimer

Amerino? in did Okay. you July, What see

Amerino Gatti

In terms of activity?

Adam Thalhimer

Yes.

Amerino Gatti

Yeah.

we troughed, we we a see seen, the been nice that what right would that has July, June, I improvement to So have a May August, say, Adam, more did be and bit now. is forecast moderated April, in

we improvement. a on of pace So good were

taking second Coast the of mentioned, growth some like, improvement. additional example as think precautions, an I wave moderated has the states the I West

it moderated has improved in But June. activity but of terms move still seeing slightly are obviously, an in so as improvement not big a utilization in as hours. to May So of over June, we

Adam Thalhimer

QX QX it obviously, from like in up EBITDA, a QX back half, Okay. and step-up seasonality from the another standpoint sounds And from QX. then then

Amerino Gatti

Yeah.

than prepared and said in to a remarks. second the and I top I obviously, freeing The we the think, revenue we some some again, as half of half at the as a to quarantine stronger place. improvement growth restrictions, year of expect we market, start the Quest good see controls inventories goes cost start up to level, the as travel in going have year, the do on second first, into of demand, the maintaining the down draw expect

will QX be say a EBITDA. would QX in and QX improved That’s fair that, QX. terms So I over of assessment over

Adam Thalhimer

job Thanks. Okay. in Great. good environment. Well, tough a

Amerino Gatti

Adam. you, Thank

Susan Ball

Thank you.

Operator

Your next question from of CJS Stefanos the Crist Securities. from comes line

Stefanos Crist

congrats Good quarter. the on morning and

Amerino Gatti

Stefanos. morning, you. Thank Good

Stefanos Crist

the First, million on cost are the for and those $XX the temporary? million $XX million $XX be percentage of what savings million year, million of to permanent inclusive versus to $XX also of will that $XX

Susan Ball

$XX inclusive million to $XX recognized. million been that’s $XX million The is the of

the obviously XX% as still reductions in continue cost That cost vary but change now nature. and can be would structure, Additionally, permanent we be we of right it and are to about progress, we XX% estimating will permanent. currently our approximately recalibrate would

Stefanos Crist

it. in exposed mentioned, XXXX to you what the close release, activity maybe also what remind midstream midstream you is you. of segments Got Can is maybe Thank And and business press us most levels. percentage your to? that’s

Amerino Gatti

Sure.

are category. at our to revenue your we terminals, et in second don’t specifically, range you and see you That’s bit pipeline that the look of will type of some list so would our other of part pipeline and of midstream other from if of we consider it we XX% What work. X% percentages the type So was coming our what of but cetera, little a into where actually moving question?

Stefanos Crist

to? exposed that’s segments What

Amerino Gatti

Yeah.

pipeline and us or once and impact large allows like is as that midstream lot well do pull then the role of Services right midstream they sector. other comes they and and hot tapping, a plays segments that the biggest obviously, in support clients some for the inspection, the our of Quest what require project in pipeline now management to you from intervention. provide a segments that project line integrity, addresses work, So part get of And Mechanical that then

clients that are overall now. but generally it very starts our finding the is So side, well with on what that what integrated either the midstream package we demanding or right inspection fits are

Stefanos Crist

Thank jump queue. in back it. will you I Got very much.

Amerino Gatti

Thanks.

Operator

of Your next comes from KeyBanc Markets. Eastman Capital from question Sean the line

Sean Eastman

question. Thanks my taking guys. Hi, for

there. the compliments I to commendable think team effort so quarter it was this a

Amerino Gatti

Thank you, Sean. Good morning.

Sean Eastman

morning. Good

sense planning from start, sort is level, you the pressure in curious high for makes year just level and around let’s in be a high sort $X.X this that wanted single-digit I a revenue that would maybe at topline to sense, of much back? million dynamic? $XXX at helpful I if were never of am just go back outlook? a I growth you a So say, to to just hope pre-COVID-XX, on from topline. of what on relative XXXX, we get you looking thoughts comes to to How sort is we are that pre-COVID your question how of low billion were topline now it and looking get much just from guys deferral

Amerino Gatti

Yeah. Yeah.

monitoring, Sean, I constantly We are sense. it think, lot of makes a

monitoring oil what constantly that, if exactly That hard Because and up, it business. constant think is run look COVID and right? gas one it’s And at segment is we imbalance way to you look is each cancellations. one delays for make nested at maintain. are the versus We to or

biggest the revenue. let’s or would that’s going be say, canceled, to nested what non-repeat come our is from of impact and about of So one-third

not On will A publicly occurring think, now not are we continue of quantifying what project/turnaround larger delayed impact. occur. perspective, and the are are impact a the the to believe stops being right pit that’s biggest is We but lot the I turnarounds smaller that canceled.

XXXX. into half into being some second pushed year So they of and are this the

have when turnarounds that those I that the get and increased projects time. we have the and high activity us delayed, with the news Now for is experienced, during rates -- type guess utilization generally of good been generally discovery

the because environments, XX-XX I delayed discovery that is would projects of it’s and call-out, that scope and that So most was increase, which and our bit delayed. would in canceled. delayed find of stuff delayed call-out then be I being bag, the would some is probably we of a say, not But a on is Then can But delayed, with is canceled. between of business third say good. we be that mixed a certain go corrosive considered plan

So it best by that’s I to at type. probably think way look the business is almost

Sean Eastman

really helpful. an on environment. That’s update Yeah. the next just competitive the one And is

of the are margin gross positioning pressure becomes some But Amerino? about competitors there incrementally there So or you and you be did distressed guys macro mention better, you Does the point to that dynamic, which thoughts the softer market as environment smaller share any a stick guys think sort pricing on here continue become we West to. a on discipline at Coast. gaining Team’s point is alongside

Amerino Gatti

quarter are pressure. would we to I we under that last say, have Sean, discussions well with and our are that Sure. did starting as margin obviously clients

reductions or able been price maintain our have to contain We XXXX. to

feel terms have and competitors doing I of we been From in But doing with point of open, get drop are this our to perspective, and leaking into pull through our to a are able XXXX, other services. more work. in cetera, cases, together it’s some none we major think, are them client through gained a are especially segments to clients work competitor by trying we constructive as to price, this I for segment have a in lot revenue been cost, on collaborative, of think, team what focus standpoint, a dynamic environment. similar I the additional collaborative, So et and over at some cases, have a been we from in very standard

some markets our We in cash clients competition if where, generation as you certain are you said, is seeing regional will. pressures focused on smaller of

especially looking been step just just on or and are integrated to with advanced our services, of a cost -- flange a we standard of when total are when cost comes of when When not cost, our some that’s at not I it to that’s to clients customized and more the and solutions, for getting of price. in the the cost the total there, I looking advanced successful So And clients, Team start aggressive, think, we very at hardware. us shifting piece revenue more our have front. customized, we we up engineered, willing that’s and work feel they are closely integrated

managed how have we that’s it. So

our We development and business continue organization. refine sales to

at a diversification think offerings, this a has catalyst I I some strong looking we and have stated, revenue our with of into toolbox going sectors year, market and us got we confident think quarter, earlier. still almost in do last that portfolio and and felt portfolio of very mentioned the we I I to as start this of given

are. where like I So we

really become has clients just ourselves very are how beyond on very RFPs we agile. close and differentiate more a a our are operations, with and price team leadership to our lot They can focused getting Our visibility on discussion. we field

Sean Eastman

level into just XXXX. that’s How we some system, maybe should XX% All healthy right. dynamic I thoughts we entertainment that me, the travel last in see on revenue in of high recovery Very the great, Helpful. a scope as plus margin be the thinking think extent like would savings of and so cost about the one saves, that incremental any we do still sort reduction permanent for on Amerino? the of be coming increased light in of one-time To back think here, helpful. cost One about nature. of sort

Amerino Gatti

Yeah. let Susan comment. I will

the probably we the the additions. we of would obviously, in year I outpace revenue market first half a will see think what cost will expect larger fall-through recovers, because, as

Sean Eastman

Yeah.

Amerino Gatti

savings, XX% and that We high to a and disciplined are over a about tracking monitoring a then would Susan? cost remained we numbers very be would in My that it terms obviously, range front-end, how to XX% full we in are. deliver our year, of expectations the off fall-through. be fall-through have to of level

Susan Ball

going would I No. you see going the that I the on as categories classification the the you of cost revenue. definitely are dependent move and to outpace year. of period I agree the you it the or to time through No. up it’s cost as mean agree. move the revenue our very

Sean Eastman

Excellent. Thanks for the time. Very helpful.

Amerino Gatti

Thank Sean. you,

Susan Ball

Thank you.

Operator

Your from next the from of question Malloy line Johnson [Operator Instructions] Martin Rice. comes

Martin Malloy

are margin do you able on the what to Congratulations morning. side. Good on

Amerino Gatti

Thank you. morning, Marty. Good

Martin Malloy

and involved under am could expound be or I taking whether in comments the pipes about You hydrogen need what prepared you you the on infrastructure, it thinking doing in to sectors, renewables you in mentioned inspection just talking and be new refueling about care of hydrogen inspected. production your facilities, of are pressure are all and also maybe there,

Amerino Gatti

question. Yes. Good

me let maybe So start with renewables.

For well access on or are we inspection us it’s doing that work, front, actual on is inspection are a visual drone offshore solar, that type some And rope of of the a activity either visual a but on where are land. environments inspection we lot not as some wind. lot and as other we hydro and in work on of corrosive environments on some and on and

we or look On machining, services, you well both and their what own repair. on maintenance, work our sites. in be high well repair doing at as life technology, site, some our including side, We terms of bolting the we construction are work going do if extension. helping very it then work high from differentiated, and different and everything have of energy depending client manage the some Mechanical our and services the as but some critical Quest fit-for-service we piping, And clients do when as the assets labs, of would consider on then mechanical it’s type hydrogen resolution new processing some more in into majority on-site, more

it’s and those that type of activity type of So markets.

Martin Malloy

realize anecdotes conversations to digitization, more maybe as Great. your technology customers these implementing you that you involved to that these more but And about some probably of are programs, looking my from and next question headwinds this? near-term programs some comments asset seriously management, relates any in getting programs. with about seeing a there have at these customers And I result are are COVID-XX of or

Amerino Gatti

say have speaking when a becoming inspect, to estimate more management the and as enough viewing right repair, the their is time, et to we switch the assets on are not and What lot to transition. of inspection a make of I critical to better asset goes that’s clients And R&D a on additional move use virtually discussed on. asset Yeah. to inspection We be more side, with dollars we well. obviously, a it’s doing you is for so going years analytics which spent insightful are three handle a where very programs, our require how been get they or how that the, start would we risk-based that repair, their Sure. It not years light will cetera. two more between be analytics getting decisions spend of

well attention is data making pivot more one of getting that’s to more a reasons the as analytics. in we our right critical So digital now are lot as and asset-based, a more lot which systems,

a the lot a more lot We that’s for and seeing rework now. driven but real lot a of right permitting clients are are activities, and here management also subcontractor now less results finding and so and our efficiency technicians, better

other are items. safety tools. On high the the of the one where have risk side, finding for we Touch the use people we and referenced we and Mechanical of technology systems instead and digital I of using are Corrosion, technology Point cranes,

for to then other hands-on move which engineering using when We I an build one digital manage that assets them allows a from to the asset starting help so laser their are that’s -- get our And comes to what techniques, approach asset more real. it almost is accuracy, Xcreate is to think better clients also lot big critical they able their to file being assets. to around an fit-for-service are scanning

and across exposure some to agnostic clients that what to communicate then analytics say platforms. the so using our So different evolution. highest it’s the are going extent, is I driven, reducing now safety right we of getting and I attention be systems think anything can use is But is an making would sure that different

Martin Malloy

turn I Great. back. it will Thank you.

Amerino Gatti

Thank you.

Operator

turn now comments. additional will the call for management to I back over

Amerino Gatti

you. Thank

long-term. navigate economy expanding a forward cash priorities, and quarter. you on call margins next growth to environment the future, dynamic look we and again for and your joining successfully on While foreseeable interest uncertain focusing we profitable down, our flow you quality with We and excellence client Team this business build to topline and us sustainable the the for free continued for speaking Thank pay for generation, execution this in remain remains outlook deepening engagement. for our will the steadfast debt by on

Operator

conference. today’s This concludes

now may You disconnect.

Team (TISI) 8 Aug 202020 Q2 Earnings call transcript