Team, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported third-quarter revenue of $220.4 million, a 2.0% decrease from $225.0 million in the prior-year period.
• Consolidated gross margin was $55.8 million (25.3% of revenue), down from $58.0 million in the prior-year quarter.
• Reported a net loss of $11.1 million, an improvement of $0.3 million (3.3%) compared to a net loss of $11.4 million in the prior-year period.
• Net loss attributable to common shareholders was $14.2 million ($3.10 per share), compared to $12.1 million ($2.68 per share) in the prior-year period.
• Adjusted EBITDA was $15.7 million (7.1% of revenue), an increase of $1.2 million (8.2%) from $14.5 million (6.5% of revenue) in the prior-year quarter.
• Adjusted Selling, General and Administrative Expense decreased $3.5 million (7.4%) to $43.3 million from the prior-year period.
• Total debt was $319.1 million as of September 30, 2026, up from $297.2 million as of December 31, 2025.
• Net Debt was $308.1 million as of September 30, 2026.
• Total liquidity was $43.5 million, including $8.1 million in cash and cash equivalents and $35.4 million of available capacity under the ABL Credit Facility.
• Free Cash Flow for the quarter was negative $5.8 million.

Guidance and Future Outlook:

• Updated full-year 2026 revenue guidance to $870 million to $890 million, approximately 2% lower at the midpoint compared to 2025.
• Updated full-year 2026 gross margin guidance to $226 million to $249 million, approximately 3% higher at the midpoint compared to 2025.
• Updated full-year 2026 Adjusted EBITDA guidance to $56 million to $59 million, approximately 5% lower at the midpoint compared to 2025.
• Full-year 2026 capital expenditures guidance is $13 million to $14 million.
• Structural cost improvements for 2026 are expected to be $15 million to $18 million.
• Full program goals for structural cost improvements are $30 million to $38 million at full annual run rate.
• Management expects deferred turnaround and maintenance activity to largely shift into early 2027 due to disruptions in the Middle East.

Business Segments and Product Lines:

• Inspection, Heat-Treating (IHT): Revenue increased 3.9% to $127.1 million in Q3 2026, driven by growth in the U.S. and Canada. Operating income was $15.2 million, up 8.7% from the prior year.
• Mechanical Services (MS): Revenue decreased 9.1% to $93.3 million in Q3 2026, primarily due to lower oil and gas turnaround and project activities in the U.S. and Canada. Operating income was $0.4 million, down 89.1% from the prior year.
• Corporate and Shared Support Services: Costs were relatively consistent with the prior year, excluding a one-time $2.0 million legal settlement charge.
• Emission Control Services were reclassified from the MS segment to the IHT segment effective January 1, 2026.
• Q3 2026 international revenue grew 8.3%, while U.S. revenue declined 4.4% and Canada remained flat.

Market and Competitive Landscape:

• Demand for inspection services remained resilient broadly.
• Commercial diversification efforts helped partially offset transient headwinds in core refining and petrochemical markets.
• The escalation of conflict in the Middle East disrupted customer activity and delayed the completion of work anticipated before year-end.
• Management believes much of the deferred work has not been lost and expects it to return in early 2027, dependent on customer operating decisions.

Risks and Challenges:

• Prolonged slowdown in turnaround activity continues to impact performance and reported results.
• Timing of deferred maintenance activity remains difficult to predict.
• Potential impacts from negative market conditions, domestic and global inflationary pressures, and changes in global trade policies and tariffs.
• Risks related to liquidity, access to credit facilities, and compliance with covenants under credit agreements.
• Foreign currency exchange rate and interest rate fluctuations.
• Outcome of tax examinations and changes in tax laws.

Management Commentary and Tone:

• CEO Gary L. Hill stated the company is advancing operational and commercial transformation to build a stronger, more efficient, and diversified business.
• Management expressed confidence that the benefits of ongoing transformation will become increasingly evident in results moving into 2027.
• CFO Clinton Roeder noted that the updated guidance reflects the expectation that recovery in deferred activity will shift to early 2027.
• Management emphasized a disciplined focus on working capital and cash conversion while making progress on structural cost improvement initiatives.

Other Key Points:

• A one-time charge of $2.0 million related to a legal settlement was recorded in corporate and shared support services costs for the quarter.
• The company reported a net loss attributable to common shareholders including dividends and accretion related to preferred shares.
• The company held a conference call on November 12, 2026, to discuss results.
• Non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Loss, and Free Cash Flow, were provided with reconciliations to GAAP measures.