TISI - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Team, Inc.

Third Quarter 2020 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kevin Smith, Senior Director of Investor Relations. Please go ahead, sir.

Kevin Smith

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

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

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

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

Amerino Gatti

and COVID We your good again Safety the number guidelines cases service protocols. clients management morning are staying Company's revenue, safe you, Team overall and us reminding significant financial where you the workforce an the improving capital challenging assure this Team been our safety working value the and and grading business, health, and communities, its have safety and employees the but and our healthy. healthy and allegiance structure, a to progress core that during has and world I say high unwavering about keeping one understatement, and the deserve crisis, and made you everyone. of and their even families achieved time and following increasing everyone can clients, I around importance our healthy. our commitment appreciate of neglected best not families hope a joining Thank are is you in Kevin the employees representing value performance during today we has Year-to-date and the of quartile top has safe once has Company's expect. four improvements history. record uncertainty our safety leadership, the efficient pandemic There are delivering economic function. to leaner downturn: cost am an shown what be and times. would XXXX To these more that resilient proud year a Team's accomplished a areas unprecedented Throughout creating and reduced implementing during Company been key I

the critical share the highlighting advantages administrative cross-segment efforts maintain ability provide and the improve been by proposal with process and global year. greater to its revenue Team our crisis. We streamlining with approach pricing First consistency revamped in during to clients sales I've increased been our pleased diversifying competitive capabilities. successful throughout and our has our speed, our generation market to to

more closely with both commercial parties. models flexible develop that We mutually benefit our are collaborating to clients

to structure program allowed OneTEAM our cost Second, market the demands. actions implemented with the to reduce better under align us significantly

flow. cost costs, SG&A and well protect additional attention our balance Our cash tighter to sheet and provide as maintaining indirect on as controls efficiencies

cost During exceeded the target. achieved third previously we $XX million $XX savings our of savings quarter, stated of million realize year-to-date, which and

working was to our we time digital The improve and billing in domestically Third, enhanced DSO. processing job significantly out package rolled capital, accuracy, invoice reducing procedures. order further improve to initiative

Domestically, clients' low function for cost X% We management point in and year. expanded management improvement the clients us the year. last this to technicians since our extremely rates XX% the by a process same our compared flex investments with efficiency in to when to workforce increasing earlier our achieved work also our compared match management year-to-date management. and resources been greater activity better forecasting have last over operating inventory management utilization workforce we and CapEx workforce enable global collaboration and Team's planning in providing market and successful has to Fourth, and when function approximately the reduce future demands. enhanced team put operations our to field allow The year. back XXX our than XX%, market period

to and which recently safety Before daily on operational have our as and to that focus quartile now safety to field technicians. advancements greenhouse Environmental and like is well top moving health published our best exposure inaugural also available achieve allowed recycling through limited record. gas the reduction Social of website. Team's The improve emissions, our our risk performance and how environment us a industry effort would details to highlight safety and we Team's the report on practices programs I financial technological to as Governance Report, our

down were our consolidated project activity was XX% steadily sequentially increased to the current third as turning revenues $XXX for operating and up million in adapted to the Now points quarter for expansion. increase clients $XX our financial year-over-year but of quarter; drove the million, XXX Adjusted savings X.X% the XX.X% year-over-year, performance margin. quarter environment. decline cost margin basis the $XX.X EBITDA realizing our revenues, third Despite or of in million year-over-year

clients' leak revenue million, diversification third the with were We waste were strong tapping hot and second also lines. product quarter our revenues EBITDA and Services OpEx $XXX.X experienced Mechanical in million, was line sequentially and performance, quarter. benefiting spots X.X% segment growth treatment, our in saw from On-stream our to repair services midstream year-over-year up in terminals Turning and $XX.X and bright such works, nuclear and steel Supporting emissions power. water as of efforts, MS tanks spending. areas the control adjusted

and North During XXX the pipeline had inside the offshore Mechanical platform pipes Team feet a base level. of an The thinning platform in platform, Services third project production quarter, Sea. roughly completed corroded repair sea the below for the

Treating and and by gas struck striking other, quarter group days the coupled Texas rope dollars The self-contained our insulation followed increase. diversification to the extended offshore towers working revenue few Coast the XX.X% repair repairs our which and Supporting production. expertise at the XX% quarter. in Sally of Inspection hurricane-related certified plant. saving in IHT late our storms job Mechanical tanks of Gulf up composite the Heat revenue spanned hurricane and We now is The laser of a years. were Our leak and pharmaceuticals. refining lost areas $XX.X approximately rope approximately Coast and breathing negatively and These revenues prevented in crews Marco repair ceiling XX millions Despite million, the in third adjusted increase weeks in levels. operations months lost with estimate of project multi-week a with each of approximately during at impacted of these five to and multiple and million a was paper by U.S. scanning, across year-over-year petrochemical apparatuses. on technicians oil pulp the IHT's work very required Louisiana XX% matter $XX.X lines Hurricanes by Delta, active activity million, Services later. across significantly efforts, Gulf sequentially strong and $X were sequential running completed region and quarter, facility a Laura nested and damaged of winds. client the within utilizing lives EBITDA growth the was by pre-COVID we were specialized access subject disrupted disciplines access a season resulting perform with cooling that shutdown Hurricanes recently production, Team's technicians experienced were chemical steelworks,

discovery project site, on on this due extended to scope other work units. of damaged additional While the was

Coast scaffolding was and XXX% over access high in along been Our million, have access time third demand for increase. sequential Quest Adjusted quarter, subcontractor the XX.X% EBITDA a Gulf to the and rope services. technicians due the other Integrity's up rope of $X.X million were using sequentially. savings $XX.X revenues cost quarter

but industry last reported the and slowdown overall and we continue quarantine July in in in September. activity, experienced travel impacted by quarter a rebound As be requirements to restrictions August Quest

able was well demobilization the within of along project safely logistics hurricanes, In offshore COVID, constraints to travel Quest Gulf the remobilization presented addition working as deferrals by successfully Coast. to and the as and and perform projects coordinate strategically

divisions. in expected comply increases quarter, inspected subsea has results expertise ideal negatively a For pipeline a requirements. -- various better and subsea restrictions Quest offshore Division hurricane levels. specialized closures our geographic and proprietary with in COVID-related perspective, on Mexico. the divisions. the nested pronounced also and example, for inspection inspected technical of the the and globe. pressure clients in headwinds pipeline temporary InVista using project Gulf X,XXX Canadian we all platform and From project diameters length the Team the of faced due high Coast capabilities The Quest this production to plant continued the experienced in over offshore pipeline Year-to-date, pipeline, were their as reduced Quest than of increased impacted North activity team high than the active Quest's the our more due in demand season pipelines during activity PSI. Gulf technology our been where an to West wildfires have businesses in

businesses an in many we to and have Kingdom areas. slow have especially United Europe of in other seen our the activity While international Central recover, been uptick

turn all activity is experiencing which quarter. of Asia-Pacific I financial Middle for to Susan Canada, growth For a example, over more Mechanical detailed the now in East, in review. had and will the increased it Susan? Services

Susan Ball

good Thank you Amerino morning and everyone.

Services million our revenue XX.X% $XXX bulk segments of mentioned, the sequentially from from down but XX% posted percentage decline the XX.X% over second dollar and XX% quarter. Mechanical a As Amerino down Treating decline and while a down revenue consolidated up quarter Services of million the Treating third with just Heat in revenue was On and from Heat Inspection Quest year-over-year third were down $XX quarter the XXXX, basis, the coming XX%. and was All and Inspection of quarter, segments. three the was Mechanical

variable for $XX XX.X% was the prior for and gross slightly down quarter the our cost million despite above period. conscious was or flex our ago over $XX.X continued gross same the year strong the efforts demands. quarter ability our year around to with market consolidated million margin The of to demonstrates a XX.X%, declines cost Our the manage margin, of revenue which and just management

to in The share and $X.XX $X.X quarter for third Significant of was expenses. net million $X.X program, $X.X in net same COVID prior to the XXXX diluted adjusted the quarter Adjusted legal headcount expense million primarily loss of loss net or taken $X.XX a third of net quarter in million compared include reported measure third permanent to in a loss, of $X.X adjusted or professional cost million with per nearly non-GAAP per approximately as $X million compared and restructuring severance a loss under diluted reductions in year result quarter adjustments net the OneTEAM of a million when the adjusted quarter. charges $X.X loss loss for related the share some actions XXXX.

year-over-year actions $XX the EBITDA operating the and a in in revenues, the reimbursed million, only which our was Additionally, was insurance. both be the not that adjusted focused million there realizing Despite our quarter with declined SG&A efforts by cost as result adjusted in the damage was associated third but from XXXX. of sequentially a for global by in EBITDA $X.X quarter the from million Consolidated second in down XXXX, of $XX.X up quarter $XX.X decline costs. million comparable from cost a of $XX.X costs quarter hurricane will $XXX,XXX on the million

total both structural actions the were approximately continued operating $XX savings nearly equally Third temporary both reductions cost cost cost quarter permanent associated discipline and were around cost realized million. SG&A. in with reductions. These our cost our costs and cost reduction include savings The actions

initiatives remain fourth quarter the savings effect cost temporary through XXXX. Our of in

quarter largest our million, for in on to turning costs Now or excellent to the expense. Total to continue of million quarter SG&A seen a we the SG&A progress third for SG&A. dollar quarterly see have is year-over-year This down XXXX improvement of the year-over-year $XX.X XXXX. third basis reduction XX% were SG&A from a reductions $XX.X we

XXXX XX, million high end $XXX These ended as reductions total to reductions reduced the actions cost mentioned when end the to months as program on We XX% expect nine which temporary For XX% total anticipate of XXXX by be range. the or cost OneTEAM our XXXX compared XX%. of and over SG&A be cost full-year initiated declined in $XX to will SG&A include of mid-March, we million this well accelerated both through again continued XXXX. as I September

the the of turning segment slightly to same quarter quarter. million, $XXX.X margin from a XXXX. the Gross XX% period third XX.X% down down specifically million year. quarter $XXX.X XXXX $XX.X segment in XXXX $XX.X to in in the Adjusted our X% Difficulty] Despite dollars Services million, EBITDA business segment Now, XX% decreased revenues million from year. was the XX.X% EBITDA million third revenue million [Technical Mechanical from increased revenues period in $XX.X posted $XXX.X performance; revenues, quarter of in of last third versus XX% the same reported margins decline on the for down earned comparable the of lower last

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

EBITDA XX.X% adjusted was EBITDA to down the decline. $X.X on a declined period. quarter XX% from XX% million compared margin of decreased XX.X% XXXX. third Quest in dollars year $X million, margin revenue the ago to Third in quarter Gross

activity. During began travel in Quest industry were mentioned, though due the restrictions restrictions as Amerino had most lifted. Quest and the line to and to of the more quarantine quarter, requirements to travel September continued as top suffer COVID-related improve And

to $X.X $XX.X ended XXXX. tax net quarter. revenue income. of facility which credit has of for rate tax for million, free XXXX CARRES Capital significant valuation nine under in the approximately to effective a The will for is the our on over for operating million recognized borrower to well federal the impacts compared on our Act, expenditures the losses $XX.X the during differing million $XXX was to Our approximately approximately the was to This compared was are that full months allowance. The flow including associated capital year were as items versus losses to anticipate months discrete impacts effective a $X.X growth as items of statutory nine months with million the to Due income XX%. available offset permit driven our lower third-quarter than taxable benefit. cash and rate needed rate our months future We and foreign Team deductible domestic adjustments by domestic nine working the fund nine net not the Company rate domestic million XXXX. basis year associated basis X.X% be nine-month tax X% federal

September $XX XX. We approximating of $XXX expenditure of third continue had XXXX to of facility quarter under credit with $XX at cash. maintain capital forecast approximately Cash million. $XX We million borrowings liquidity approximately ended were We a our drawn total million million. full-year approximately the

slightly secured senior Our times XX. at leverage X.X September above ratio was

all under and liquidity believe our covenants needs our are enough We cash to are requirements. resources compliant our and capital with working credit facility meet our

of temporary options we as In to evaluate capital all mentioned, previously market end adjustments on provide long-term the future as pay take conditions strengthen have closing, flow and We sheet to through elected to conserve cost and our to financial balance XXXX warrant. priorities we'll extend debt. to future -- focused structure continue cash our free further cash We remain our generate actions down and growth. for capital

completes full XXXX. year cash We to over free the million back the approximately $XX I Amerino. for call review. flow the will financial now That expect to turn be

Amerino Gatti

Thank you, Susan.

our progress outlook recovery market take questions, and program, I readiness current provide your expectations. review we Before planning, OneTEAM of will the our

automation. cost now year, the savings increasing and next planned estimate shared back our million. will and greater previous will permanent OneTEAM We making cost further expanding phase office the We and estimate are variable tune the to deliver optimize accelerated deployment further from initiatives We the that the for up of up $XX million including XXXX billing deliver million other organization. actions between OneTEAM annualized reduction up services additional that $XX were consolidation, use roofline cost reductions $XX million tune $XX of for to key of centers of of and

to our diversification activity been to initiative are revenue two in Now period turning portfolio our very program; the robust years. over a digital strategic rebound for preparing Revenue investments and in we what be our expect readiness key has recovery us. next Company will the diversification a

As for aerospace renewable in our stated continue we and footprint sectors infrastructure. operational opportunities look revenue our LNG, earlier, expand and streams energy, to like to diversify

and energy growing actively made both have we're renewable energy end We progress wind on of which and projects globally. in hydroelectric are markets bidding both

XXX capabilities For The largest access for rope of move its example, and turbines conditions using up remote other miles must general visual in here environmental hour to inspection erosion and be the speeds heavy and can to Texas. technicians. five due the damage routinely wind inspected farms and the turbine wind our an blades are wind world's

infrastructures. Services also solution wind innovative and machining to We recently Mechanical provided bolting prepare an

portfolio. digital partnership in quarter, Field to Service like to that last would to foundation Program Management with enhancements highlight the digital; our the three we of our announced I moving addition to build Now, Microsoft to

improving analysis This rapidly sales quarter, our increasing industry-leading integrated data First, proprietary, Quest during assess assets and comparison platform value software integrity allows management positioning. and streamline to software. Quest across new decision-making midstream the client unveiled data and its

Additionally, datasets. and step asset management software client's platform's to integrity developed ability format, multiple third-party data to information expands a in file integrate was which sets This Quest's the data open-source to support change the accept to represents in programs. analyze ability utility conversion our

information We Second, customer the quarter software saved quarter. providing and and and this our Team we track to man-hours during portal faster review approximately orders has XXX clients digital already service. launched to improved the support allow our employees during estimate ultimately

partner into new than XXX uploaded repair and growing enables our added midstream a management to sector. combined are platform efficiency we This to midstream and real-time quarter. now and updates inspection provides more when receive about inspection more give applications while Approximately we the leading to beneficial and monitoring ability the digital Finally, condition digital the optimization analytics extremely greater to them digital access were performance with database XXX,XXX components of Team in our information assessment data with assets the and combined client during the database order service portfolio These asset rest integrity clients timely our of remains ensuring repair simultaneously choice. and are productivity. will work remotely the

the specifically mixed headwinds, by in and in combined levels. suppressed. U.S. pullback. reduced to COVID our jet global increasing economic refined continues fuel and positive demand gasoline We fuel products concerns the all There collectively potentially three Demand with outlook, remains some recovery activity for economic below give parts trends diesel macro a to some for on potential signals. the is remain are of Asia XXXX due Europe and anticipate Moving driven to while growth being in

the to the markets combined the season. leave of to the undersupplied market oil and fundamentals. volatile a oil plus further production to are quarter due over has when declines with the to rates quarter. will utilization improving Refinery hurricane fourth next relatively the continue U.S. supply were active quarters during willingness and expected several increasing rebalance industry the addition, In during the drawdown withhold indicated OPEC inventories

and will As last year's overall these turnaround of product months. executed which utilizations turnaround large XXXX, XX the below decline, plants and more delayed levels. turnaround refining utilization to more high those but next when is turnaround ultimately are over projects in year's inventories than comprehensive turnaround increase. active the season continue season benefit Many fall and projects Team XXXX margins due will This to XX activity to was complex rates spring

budgets projects. fourth and see of reduced clients' most quarter our capital to OpEx XXXX, the During continue leading inquiries to spending with into related we

for leading As expected, call now out I recovery nested will quarter. our on-stream is fourth the followed activity our operations. the and share expectations by

conversion fourth prior slipped should from projects the quarter. we the backlog of quarters from First, benefit that into

we as Additionally, activity seen have hurricane increased out along the Gulf call continues. Coast work repair

actions cost the year-end. in earlier that extended year we implemented were through Second, the

our in As a gross of the cost XXXX. actions, expect program line other and with to margin XXXX result full-year be we OneTEAM

holiday cash to Meanwhile, for about while risks $XX Finally, several are during half increase the and around the to including now quarter, expect million expect monitor over restrictions the activity second improving continue we flow operations generate client first cautiously X% of we XXXX optimistic fourth the half. we COVID We approximately approximately free to revenue season. year.

have Although I pace there and for will the the of economic and to will long-term technology. profound some of catalyst be a is share now around on continue a the industry outlook. recovery, surrounding impact adoption increased uncertainty preliminary magnitude COVID our thoughts

and Supported consists both will solid few aging overall Our mix and project our integrated our real-time assets, balanced solutions by turnaround and risk. and digitally call desktop of and reduce OpEx address require out exposure that activity. our improvement utilize and a minimizing clients' backlog to efficient while described activity data. Team's earlier business I field-based nested enabled a clients support work, between which spending costs solutions in more strengthening of remains

expect the XXXX show to we to availability widespread effective to a safe and and of Finally, half of instability budgets the vaccine. client continue due first

to in of In as through of Despite to have half company order and a more on half We better in become recessionary a that business to front are revenue well global the we the especially culture do to on economy. expansion our efficient lines pandemic our our and recover. solid to see that XXXX criticality our Even our technicians of testament established as most is true begins as playbooks team, environment, This with a poised is exceptional economy to shock executing maintain and the expect how margin clients to a a who facing head and margins. XXXX. changes resources. it on to been managing closing, environment and for operating we teamwork engage challenges our clients, the turn our the and risks session. leaner, be you the able countless will they've boldly backdrop, second question-and-answer we been our By I than we our Operator, technology related over leverage offerings will back further to costs significantly in have industry the first financial proactively the unity. of XXXX manage strong of reduced now

Operator

Instructions] line from you. Thank of Securities. Please proceed Crist [Operator comes questions. question first with CJS Stefanos your Our of the

Stefanos Crist

How digital do forward? be going those about talked you the think impactful enhancements. you So will

Amerino Gatti

the a when quality XX% see when for percentage look revenue comes at to Well, look we waiting sustainable technician right of state about business, we're not more quality we now in and we're on reduced or really and our efficiency control. drivers we that ready But and digital to three at to subcontractors consistent future. gaining it two rework, already assurance, XX% by main

subcontractor management measure. that of through reflects of clients' again obviously Obviously, onto they more their operations see that's an through our So gains, productivity total etc. internal which efficiency cost

failed to timely actually will, mean mechanism analytics right less, asset at you by based We and get on clients we critical areas more in I what remarks, if inspection, using decline talked data time also that we making more and risk-based help inspection seen. inspecting desktop maintenance is around requirements. need so we're about prepared and more about the talked the our whatever the in is see right analytics, -- the And I what field, recommendations using be to that damage the inspected whatever the and when what to

when that material So repairs visibility And data operation. type quality, the to data be to clients risk-based and their doing at efficiency to more helps our a start and integrity then on manage and able to the you clients track maintenance, electronically ability analytics look to asset move having use when it, program. that help of you our better that or ability

of support a We're some touch efficiency of digital seeing So points. internal to margins. there be is seeing driven others we're be commercial capabilities lot and driven revenue our

to we're excited of and working into and continue going drive both forward our the partners clients, with future So about the margin that working terms in future. going feel other revenue it's to with

Stefanos Crist

Thank you then the detail mentioned on Could us And you're the market on more market call for the a little color. like? you maintaining you competitive share. give looks what

Amerino Gatti

Sure.

So overall clients our got kind what then the and obviously seeing when We're of we've we some look mid-tier and client clients have at again, I of that a would call we say you have large then small. we MSA more regional our clients California. are cost. to like reduce can and they sized pricing talking unit of with their the Coast see of just cost how some some clients our really always the us total and in the about and overall, call Gulf out of But instead work specifically area now right overall divisions, working pressures

or cost. efficiently general, of working in to still key them. and few remarks, type being access are reducing performing pressures, work and inspections my their been closely subcontractor relationships But call we've examples reduce talked would about with costs to more or other on-stream able So we rope I -- scaffolding are those up to picking the some is been able some their good a where prepared additional in maintain total lines. more say out seeing product we've I in cross-selling markets regional either of revenue able

Operator

Thank you.

with comes questions. your question next from Please Our the line Rice. of with Malloy Johnson Martin proceed

Martin Malloy

all to efforts I face the industry you in cost of very And think fundamentals. reduction great some terms increase Good of done being the margins have a morning. in job able difficult and

market at in to had study presentation There emissions gas question be the ESG your about to a majors seems opportunity there the your ask and I little a greenhouse case wellhead. about, First more wellhead. attention is? more talk reduce Could wanted emissions there Permian large model the independents in you in from greenhouse terms maybe at of role that and bit you trying about gas what the to

Amerino Gatti

good Thank and morning Sure. you Marty.

be and on that very highlight program it's example. been and in we're working but good a ESG lot covers we've proud to So, put something for to total obviously, able place a company actually a as that it happy you years, very few and it in a

sustainability. a it as interest what lot and call you others and well of right around program, are are control. using now We that from we clients like specifically emissions obviously our from seeing communities And

methane clients and emissions, monitor to -- we're to is supporting for that able we're through reporting. if we're find it fix our this standardized then case able problem. a then to QA-QC compliance And there in their So we're it furthermore, sure make program able then

multiple we sector and a through programs Services case, with closely, working multiple our but And pulls it's actually we're that to, assets So midstream monitor on have more and we've lot their we're and runs assets repair. environmental got other actually able who technicians is In department emissions the daily basis a Mechanical along components. this of that then monitoring. those

drones seeing automated satellite and manual the other etc. the would we're now, ways to right I it's say it's, use also of monitor and terms emissions in of to terms further of the opportunities use sensors etc, and but imagery, in quite So technicians, reporting,

in we're the become, in So more or monitoring emissions partners to automated with let's say, working actually collection the of future.

Martin Malloy

the in ESG. had same you. next Thank of that was kind question I theme -- terms in of And along

renewable of talk you you go look you used the impacts more market frame of refineries, revenue business? is you see down what and can addressable and sources as about road? your or we think biodiesel and Could total And kind hydro that energy. where of at how as being a more there's wind and could that for us your percentage it to maybe then now As at biodiesel

Amerino Gatti

Sure.

of facility, renewable first new So the those -- that type built well as all either some are on converted. conversions of being few as diesel being a a of

process, In incoming of what is changes the products. really terms the actual

requirements, a of of, you critical output product And requirements the high so piping, from lot at let's inspection plant assets, when incoming still look to it energy mechanical are increasing. regulatory say, there's

our drive work services. say, there capital of So a going to let's is will project be increase, that

in still provide build a conversion and we services changes, critical assets a process that's there The mode. So inspection but obviously is that for. new actual

see let's go down Team. or don't changes age we and And to are they then more then run expansion in down we terms capital and So in for further conversions the if expect assets, going the as of part do say major go maintain clients projects.

that's critical So be And we're the there's and is to then going on and because both that to refining I drive back quite terms a of think But sanctioned. then years similar as maintain because capital projects investment get our conversion There in they plus I also upfront capital is think a for last which the mechanical into over project of run process had the new drives work similar what end, doing will capital general, an put change, units. is still beyond phase. -- further XX hasn't that's just out as that it today, in IHT. lot capital the

diesel. renewable that's So the on

main corrosion and and reliability obviously construction two as the today it's in digits of a see we as phase, and maintenance that are now a Services single Mechanical but so business, will Right energy participating assets it's and today low see lot participating renewable we're lot repair. it as a be we're Inspection the there's upside. doing more the to in the side we're in the we're business on starting requirements participating drivers work, then UK-based age percentage, our work, the those as U.S.-based mechanical phase quite in of small and we on well Europe, lot On more but doing of we're terms our

be with back some oil with diversity we're hold in and in going the right our instability start gas. market future the But our more of numbers to So outside in around to the the diversity future. out to bring that until we percentages now percentages we color But coming will XXXX. will

Operator

you. Thank

of next Sean comes your of from Capital Please Markets. question Our KeyBanc questions. Eastman with proceed the line

Tahira Afzal

this our Hi, for for is Thanks taking Afzal questions. on Sean.

Amerino Gatti

Good morning.

Tahira Afzal

And congrats on quarter. the

Amerino Gatti

you. Thank

Tahira Afzal

especially activity get big in your a year? workforce, question back furloughs, how staffing uptick levels next in second capacity and seen So plan with activity around drawdown first, technician half year, of ready do up you next that to is, in for the guess etc. of have XXXX you the I ramping

Amerino Gatti

the Thank question. you for

last our but globally. training rates, an the highlight on we visibility I'd accredited and also the we a training management focused better utilization lot we requirements have certification Alvin like to that Company all, training but for now really remote years that facility, and well of do So many in technicians. facility we've I function many our as as And two use of think we've able a can across workforce maturing we're first to years, been on get

things at the the seeing XXXX. already starting us about but for Obviously, talk So you in look in ahead. managing hear of lot of We're planning visibility terms we're HX that's still quarters two where least are today, of why times we're business hours. that a in requirements our projects halves. And demand to of move, two generally can

team a visibility. workforce lot brings our of So

on our workforce those back operating hand-in-hand. and linked then so to they in work each function, deployed have a We a they're of managers that central divisions weekly basis

We've We a military. recruit program. relationships colleges, got We tech have from the with strong etc. colleges, recruiting

people people contact mid-career program the have and also once to matured cost to as we invested And etc, X,XXX the that PPE Company as very get call let's people it them thirdly, them very we very industry. training as, our we've recruited pool, what able into And a been had We've type we group. comes them. say variable structured been provide programs safety, provide group quite as safety as we've stay high as to in certified more with. training. We've a low but of obviously a network from up when we and that them We with quickly with we then We XXX has that which training bring and They're then close possible. have time network large from casual We with. very qualified. and got

demand it talked us on I have we years meet the the we those able that to the terms I feel that. with tightest think but us, increases, that help of in building lot recovers, lot that about. the for a are the will of to a be prepare recovery that areas of labor making as as in being the economy pressure So will be a blocks

and other extremely thing are programs and work. that they district The to referral like And got our I to that the that we've managers technicians live our we communities is that linked leverage.

So recover. recovery. of market to on there's that a that thing though -- lot their to of would use the add stabilize starts and we've a planning the already to when difficult is, tried of keep over are terms able of point. got furloughs, maintaining talking year had And technicians the one more pull in we've employees those add low the levers our one one our so our keep that's furloughed even been pieces our I technicians that with of about link I certified work best to we've thing for and started even the from to that we've benefits, back many we've and XXX a technicians. other reasons just for some would put been it's we And

and that So some workforce line we're of maturing those using ways group management. are the our

Tahira Afzal

such or there have Is access most the I What rope are helpful. technicians that's do differentiated rope access. Team's why outlook in is then guess question around these my there? demand? And competitors Thanks, Team high is capabilities? of next

Amerino Gatti

that I our access got and some can us managers, our the makes both workforce Mechanical our Well, people unique of are is people ability what skill access access rope in so actually coordinate obviously, that project to bringing competitors Also, our there is just their out for in product rope ability, project have managers planning, as that would I say also think and certified that using little and we there our certified line. set. in But again, we've rope access. project technicians, rope Services not so a have ability total, to management piece project the inspectors are job small then scale

when I of management. to -- group. size cross-train certification technicians are think the And rope capabilities obviously, do look and other sure access versus make that can that it's our its program, at scale, also what you and competitors, its line So that our training then product it's ability those Team project our

that's base and I package. would So able then and efficiency that like And especially at pull our site. furthermore, in on that clients rope say of subcontractors help allows we what leverage to partner the on services reduce number, a basis looking there are, be on really have large grouping with the nested to clients, standpoint, to COVID, revenue us daily we're because ways their project number the needs access our planning an finding on during with to them a

plays stuff differentiation. that all So our into

Tahira Afzal

back line. in hop I'll again. Thanks. Congrats

Operator

Thank you.

with questions line proceed from Thompson, with the Davis. Thalhimer Please next your come Our of questions. Adam

Adam Thalhimer

morning Hey, Congrats EBITDA versus on still beat guys. environment. good the tough

Amerino Gatti

morning. Thank you. Good

Adam Thalhimer

you you of couple there? And then in a North flesh on Hey, Mexico. and just level mentioned one couple of a The from bit questions then the a you Gulf September, projects. And QX out little for in of Quest. Quest, One your Amerino talk in can expectations? with the the about Sea, opportunities that growth just can talk us how about

Amerino Gatti

little -- side. talk on one have I'll a Susan and I'll market take let financial I'll the bit Sure, then the

goes generating working a hubs and creative segment project of technicians same revenue team XXXX, you had we've a really are inspection world what maintain you because into challenges jobs look two over two is by working and been, But compounded as capital developing hard quarantines. team only tools the effort know doing what but Quest that managers is The in as least two last is versus at year in get when times Quest the their deploy with and then not at to into we've Quest. the this in like on they the is very revenue to ability aggressive regional So to and technology, -- got investing today I hours. the really monthly all some of The their countless quarantines we've travel with projects. all year through to that country

they're finding So they're -- etc, to to manage ways creative on-site finding to maintenance the ways remote ways They're operations. creative programs, support etc. to finding people, use handle

been But it, basis. a they you is strategy. global how our to very delayed. our look canceled. doesn't off the because much are hats projects have business, been on A change when They've it my of impacted lot So managing not Quest at

are to on work clients rescheduling. So with starting we now

very East, doing is an remains want America that then that Asia-Pacific, mentioned more offshore needed earlier. on international There new they range requirements three one it helicopter area clients a season Latin with the and work, what we're with solutions of integrity Our hurricane bunch markets our not focus is integrated our to is a places chopper or or other sizes, met. ability. And vessels, tools market do have a on their we're done asset four and Middle etc, access of some programs inspection like companies and And of have want -- opening platform few intact, mobed mature up with during demobed you and times could the and to that with etc.

excited remain logistics that outlook. a is And flexible ability technical to up markets, future both So a from standpoint. how as the be we we're opening well as continue new standpoint to on

to are open good our markets. around capabilities integrity up asset services providing earlier, Our the to digital for said very feedback new our clients I like us and then on need continue

the I'll in the talk a standpoint, bit about and market that's the So financials little let quarter. from Susan

Susan Ball

in travel a restrictions, significant them I And And increase we flex the obviously, can't the Amerino and pull for to we with Quest QX, I overall. July mentioned, as and still would employees technicians and place keep impacts by the very we quarantine, IHT Quest, the respect did mentioned We with for like robust Yes. can say see as August But MS. into hampered industry was September. Quest. and much

look other seeing margin the Obviously the to lot get additional pulled we into impacts any with get segments. quarantines seeing that looking closed gross year. That's that we if when there at the projects, back out. we're we be kind are two gating to costs be a do be growth able as aren't into travel still as to the to and the Quest as with restrictions item really September the again, that margin, of not getting generally But is this in the one can are the periods. levels Quest. seeing out look the And focus that quarter EBITDA of more we're felt into used that for comes place will ahead, are going and fourth put quarter when to continued different QX, you increase future that strongest improvement in it's So

Adam Thalhimer

of large thanks. would a next seems the work outlook be then just And Okay, It's I wanted turnaround right? overall the the like half large turnarounds. best year. back about of for ask to chance Is for lot that

Amerino Gatti

were second think look Yes, at see 'XX I think HX the shove, to ramp-up to that I the more right little books of earlier, in labor potential turnaround HX, the when into now, from to say the bit growth 'XX half activity, think, that projects the will going demand but that HX recovering we pushed as discussed comes season. gradual some a we're the we are in lot of landing not and you I push as quickly a on

capital will I requirements, be conservation, definitely stronger XXXX half demand I it because out, agree first HX of do obviously, shakes think than than that but So everything second will when a probably etc. cash stronger be

etc. permitting agree But finalize on and that split. clients more with think to Today paper, be I the reassessed budgets as will really that I think our at equally probably you. is their So capital it's start I and look reality requirements,

Adam Thalhimer

was remarks, Amerino tracking. me but like fee? software their I them And there recurring last you that prepared like had many little that Okay. midstream charge customer only tidbits is don't there's of all kind -- Is into -- a revenue your of your struck in know the who you must assets a all loaded a thing thing the so

Amerino Gatti

to Yes, for use digital different we some programs, are yes. but pull revenue are digital of are there our models Others of them yes, yes. but parts digital different, subscription, certain service some subscription program the through

Adam Thalhimer

could Gosh. become become? that revenue what of I percentage -- that could mean

Amerino Gatti

into Right But we're color revenue. offshore, putting together. to it's back and it's mode our too going -- that, you be recovery more as answered prepared diversification, because providing stabilize get to but this infrastructure, Well of more right things to in when aerospace, renewables, color I portfolio Marty, bit percentages with number. we're not we me start Adam, a a putting bring now revenue little our digital, as market early it we we look for give we're to now, at start will

Adam Thalhimer

Okay. it I'll turn over. Thank you.

Amerino Gatti

Thank you.

Susan Ball

you. Thank

Operator

the next Russo [Operator Please of Instructions] with line question. with question Our comes proceed from your Brian Sidoti.

Brian Russo

morning. hi, Yes, good

Amerino Gatti

morning, Brian. Good

Brian Russo

is sequential you're and/or the or fourth that deferred specific quarter Quest primarily the mentioned that it seeing by for end you just outlook it just markets? higher is recurring revenue, trends in your driven that Hey, is and

Amerino Gatti

You fourth little bit, was a question? a up that quarter broke

Brian Russo

sequentially in Yes, year The Quest specific revenue XQ, driven work the it by that or from deferred earlier in end recovery incremental was. for markets? primarily is and/or

Amerino Gatti

question. Good Yes. No.

kind drivers. consistent One, three more quarter growth of main seeing is Quest. for a we're obviously, So and

The and work second the even positive good some turnarounds were we project one is, down though year-over-year, that have been has discovery seen there we're seeing.

that. when seeing we capital we're then of out. And increases more U.S. to have regards as look have of again, by So you been we're in at And been that repair call has seeing side some with projects turnarounds, pushed and driven out. on-stream of the pushed do that's some pockets

We out are areas those increase. of call seeing some

three big main drivers the are at those point. this So

Brian Russo

niche entry of is or fragmented avoid that great, see? inspection you sort you advantages to barriers the in highlighting And Okay, And helpful. are just Could markets maintenance industries that can wind turbine the competitive any some of that of that's on in company as space? other just pressure of Team's and threats subsector a what [indiscernible] that describe service the industrial competitive area. on renewables, renewables every create just about

Amerino Gatti

look in Sure. as there help think Yes, part compliance, assets the that quality it -- manage of terms you is I areas. of their ability, couple them management, critical is assurance. mentioning to data was When inspection earlier of a I on

inspection seeing and corrosion the is deliver repair. repair projects, data projects. strong, to side has technicians there on be that driven more assets quite say -- to we some to importantly, And side, visual are bring of then a remote that with pieces from rope together to those So the that's certified offshore line the you quality a inspection good couple when we're of let's bid work, especially the lot having access as opportunity that have the but able And age piece. to a the bolting product on a all able as

and So we've got manufacturing a strong capabilities. engineering

when repair So it that's execution. finding, there look one And the is and our with at side. is barrier especially the a we're entry another capabilities mechanical you repair thing and around where design other composite to takes blade the engineering then

footprint standpoint. But if you don't when And or each is then inspection, our and support competitors competitor that segments clients size have package. start lot in because and I want say and don't from part? deploy project-base desktop so have an deal three have the there's, the be to footprint advantage going you they're them able markets. our of repair there you to scale the break it the and as would around the management the project a our each to of have do grow, And analytic and on data That's that of different in teams partnerships a to piece world. at as is well a a little separately, the terms to looking Absolutely. Brian, And to either at level

Operator

to further like I are closing comments. no over for any management would back hand this call questions at time. the There to

Amerino Gatti

geographic Team Thank you, in breadth this a position, believe our We services offer market unique footprint and environment. our of and and Daryl. depth particularly products

not manage committed business We make current excellence recovery. costs on will driving decisions our disciplined continue based And and execution the remain do prudently to to ensure and for ends economics next outpace strong to for this continued you And we Team. and joining forward and Daryl, in quarter financial on again to look performance. Thank speaking call with you the that call interest us your we

Operator

today’s This you. does conclude Thank conference.

for participation may a time. great your You at and disconnect this day. lines you your Thank have

Team (TISI) 7 Nov 202020 Q3 Earnings call transcript