Team, Inc. Reports Earnings Growth as Shares Rise 20%
Shares of Team, Inc. (TISI) experienced a 20.1% increase following the release of their fourth-quarter and 2024 financial results, notably outpacing the S&P 500 index, which dipped by 0.1%. Over the past month, Team’s shares have climbed 4%, defying the broader market trend and contrasting with the S&P 500’s 4.8% decline.
Revenue and Earnings Show Positive Trends
In the fourth quarter of 2024, Team reported revenues of $213.3 million, down slightly from $214.1 million in the same period last year. Despite this minor decrease, the company saw notable improvements in profitability. The gross margin rose to $57.3 million, or 26.9% of revenues, reflecting a 330-basis-point increase and a $6.9-million improvement year over year. Operating income was reported at $2.2 million, a significant turnaround from an $8.9-million loss in the fourth quarter of 2023.
The net loss also showed considerable improvement, narrowing to $7.2 million, or $1.61 per share, compared to a loss of $23.1 million, or $5.25 per share, in the year-ago quarter. Consolidated adjusted EBITDA rose by 50.5% year over year to $14.6 million, which amounts to 6.9% of the company’s revenues, compared to $9.7 million, or 4.5%, from the previous year.
For the full year, TISI generated revenues totaling $852.3 million, a decline from $862.6 million in 2023. However, the gross margin improved to $223.2 million (26.2% of revenues) from $211.2 million (24.5% of revenues). Operating income for 2024 reached $10.1 million in contrast to a $13.3 million operating loss from the prior year. The company’s net loss narrowed to $38.3 million from $75.7 million in 2023. Adjusted EBITDA increased by 27.7% to $54.3 million, or 6.4% of revenues.
Price, Consensus, and Earnings Surprise Charts
Team, Inc. price-consensus-eps-surprise-chart | Team, Inc. Quote
Operational Efficiency Boosts Margins
The improvements in Team’s earnings were significantly influenced by a focus on operational efficiency. Selling, general and administrative (SG&A) expenses were reduced by $4.2 million year over year in the fourth quarter, resulting in expenditures of $55.1 million. For the full year, SG&A expenses fell by $11.4 million, or 5.1%. Adjusted SG&A expenses for 2024 totaled $182.7 million, down slightly from $183.6 million in 2023.
Both core segments of the company—Inspection and Heat Treating (IHT) and Mechanical Services (MS)—contributed to higher operating income in the fourth quarter. IHT reported a 45.4% year-over-year gain, reaching an operating income of $9.5 million, while MS grew by 51% to an income of $8.1 million. For the entire year, IHT’s operating income rose to $37 million, a 52.8% increase, while MS maintained steady at $27.3 million. Additionally, corporate and shared service costs decreased by 25.8% in the quarter and 17% for the year, attributed to reduced legal and professional fees.
Management Insights and Future Strategy
CEO Keith Tucker remarked that the results affirm Team’s operational and commercial strategies. He stated, “We expanded our Adjusted EBITDA margin by 150 basis points to 6.4% in 2024, generating a 27.7% year-over-year improvement in Adjusted EBITDA.” CFO Nelson Haight highlighted that the company has achieved year-over-year improvement in quarterly adjusted EBITDA for eight consecutive quarters, reflecting a consistent execution track record.
Drivers Behind Performance Improvements
TISI credited its margin expansion to enhanced pricing, a favorable mix of projects, and reduced operating costs. Notably, higher-margin call-out work and turnaround activities bolstered performance in the United States, offsetting revenue declines in Canada and other international markets. The company’s operating income benefitted from the completion of cost optimization initiatives throughout 2024.
Free cash flow for the fourth quarter increased to $19.6 million, rising from $8.1 million a year earlier. For the full year, free cash flow reached $13.3 million, a recovery from a negative $21.4 million in 2023.
2025 Outlook and Growth Projections
Looking ahead, management anticipates mid-single-digit top-line growth for 2025, backed by the expansion of higher-margin service offerings and increased market penetration in sectors such as midstream, aerospace, and industrial lab testing. The company aims for at least 15% year-over-year growth in adjusted EBITDA and is targeting a long-term adjusted EBITDA margin of 10% or more.
TISI also expects to realize $10 million in annualized cost savings from initiatives initiated late in 2024, aimed at improving workforce utilization and operational efficiencies.
Recent Refinancing Enhances Financial Structure
In March 2025, Team completed a refinancing deal that significantly strengthened its capital structure. The company issued a $175-million First Lien Term Loan along with a $50-million delayed draw term-loan facility maturing in 2030. Proceeds from this refinancing were used to repay $157.7 million in existing debt, including equipment and real estate loans, as well as some incremental term loans. The remaining senior secured term loan has been rolled into a $97.4-million Second Lien Term Loan, also maturing in 2030.
Management has stressed that this refinancing extended loan maturities, lowered the blended interest rate by more than 100 basis points, and enhanced liquidity, which stood at $77.4 million at the end of 2024.
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This article originally published on Zacks Investment Research (zacks.com).
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