Business Context and Reporting Period
Company: TEAM, INC. (NYSE: TISI)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Team, Inc. is a global provider of specialty industrial services operating in two segments: Inspection and Heat-Treating (IHT) and Mechanical Services (MS). The company serves energy, manufacturing, midstream, infrastructure, and aerospace/defense sectors.
Key Financial Metrics
| Metric (in thousands) | 2025 | 2024 |
|---|---|---|
| Total Revenues | $896,483 | $852,272 |
| Operating Income | $14,071 | $10,136 |
| Net Loss | $(49,210) | $(38,266) |
| Adjusted EBITDA | $60,725 | $54,262 |
| Free Cash Flow | $(20,637) | $13,302 |
| Total Debt & Finance Obligations | $297,201 | $325,111 |
| Cash & Cash Equivalents | $18,145 | $35,545 |
| Available Liquidity (Credit Facilities) | $63,400 | N/A |
Note: Liquidity as of Dec 31, 2025 includes $53.4M ABL availability and $10.0M Second Lien delayed draw. Total liquidity including cash was $66.8M as of March 10, 2026.
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 5.2% ($44.2M) driven by a 7.5% increase in IHT (higher call-out and turnaround activity) and a 2.8% increase in MS (turnaround growth in oil/refining).
- Operating Income: Increased 38.8% to $14.1M. However, this included $11.8M in non-core expenses (professional fees, legal costs, severance). Excluding these, operating income rose 64.7% to $25.8M.
- Net Loss Expansion: Net loss widened to $49.2M from $38.3M, primarily due to a $13.1M loss on debt extinguishment and increased interest expense relative to pre-tax losses.
- Cash Flow Deterioration: Operating cash flow swung from a $22.8M inflow in 2024 to an $11.3M outflow in 2025, driven by a $31.3M use of cash for working capital changes (receivables growth and payable payments).
- Debt Reduction: Total debt decreased by $27.9M following refinancing and partial paydowns using proceeds from a new preferred stock issuance.
Guidance, Outlook, Risks, and Unusual Items
Recent Financing Transactions
- March 2025 Refinancing: Entered a $225M First Lien Term Loan and a $107.4M Second Lien Term Loan. Proceeds repaid prior term loans.
- September 2025 Equity/Debt: Issued 75,000 shares of Series B Preferred Stock and warrants for $75M gross proceeds. Proceeds were used to repay debt and cover transaction costs. This transaction included a $30M delayed draw option available through 2027.
Unusual Items
- Loss on Debt Extinguishment: $13.1M charge recognized in 2025 related to refinancing and prepayment premiums.
- Non-Core Expenses: $11.8M in expenses excluded from core operating metrics, including $8.2M in professional fees (largely debt/equity financing related) and $2.1M in legal costs/litigation reserves.
Risks and Contingencies
- Liquidity & Covenants: The company relies on cash flows and credit facilities to service significant debt. Compliance with financial covenants (e.g., First Lien Net Leverage Ratio) is critical. The company regained NYSE listing compliance in March 2025 but faces ongoing risks regarding market capitalization and equity levels.
- Legal Proceedings: The "Most litigation" (wrongful death claim) resulted in a $222M jury verdict in 2021, which was vacated in 2024. The plaintiff re-filed in Kansas in March 2025. The company has accrued $10.0M for this matter, believing insurance will cover amounts above the deductible.
- Market Sensitivity: Demand is heavily dependent on oil and gas prices and capital spending in refining/petrochemical sectors.
Investor Verification Checklist
- Debt Covenant Compliance: Verify current leverage ratios against the 6.00x to 6.50x thresholds in the First and Second Lien Term Loan agreements.
- Working Capital Trends: Monitor the $31.3M cash outflow for working capital; assess if receivables growth is sustainable or indicative of collection issues.
- Series B Preferred Stock Terms: Review the accretion to redemption value ($132M estimated by 2030) and the impact of PIK dividends on future cash flow requirements.
- Legal Exposure: Track the status of the re-filed "Most litigation" in Kansas and the adequacy of the $10M accrual versus potential insurance recoveries.
- Free Cash Flow: Assess the ability to generate positive free cash flow given the $20.6M negative FCF in 2025 and high interest obligations.