10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________________________________ 

FORM 10-Q

(Mark One)

x    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 001-08604

TEAM, INC.

(Exact Name of Registrant as Specified in Its Charter)
Delaware	74-1765729
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
13131 Dairy Ashford, Suite 600, Sugar Land, Texas	77478
(Address of Principal Executive Offices)	(Zip Code)
(281) 331-6154
(Registrant’s Telephone Number, Including Area Code)
None
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.30 par value	TISI	New York Stock Exchange
Preferred Stock Purchase Rights	N/A	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	x
Non-accelerated filer	☐	Smaller reporting company	x
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ¨     No  x

The Registrant had 43,223,879 shares of common stock, par value $0.30, outstanding as of August 10, 2022.

INDEX

		Page No.
PART I—FINANCIAL INFORMATION		1
ITEM 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets as of June 30, 2022 (Unaudited) and December 31, 2021	2
	Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021	3
	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2022 and 2021	4
	Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended June 30, 2022 and 2021	5
	Unaudited Condensed Consolidated Statements of Cash Flows for Six Months Ended June 30, 2022 and 2021	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	48
ITEM 4.	Controls and Procedures	49
PART II—OTHER INFORMATION		50
ITEM 1.	Legal Proceedings	50
ITEM 1A.	Risk Factors	50
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
ITEM 3.	Defaults Upon Senior Securities	51
ITEM 4.	Mine Safety Disclosures	51
ITEM 5.	Other Information	51
ITEM 6.	Exhibits	52
SIGNATURES		53

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PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TEAM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	June 30, 2022		December 31, 2021
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	67,446	$	65,315
Accounts receivable, net of allowance of $6,747 and $8,912, respectively	215,408		188,772
Inventory	36,179		35,754
Income tax receivable	4,351		3,349
Prepaid expenses and other current assets	70,424		59,868
Total current assets	393,808		353,058
Property, plant and equipment, net	157,039		161,359
Operating lease right-of-use assets	52,925		60,700
Intangible assets, net	83,216		89,898
Goodwill	24,547		25,243
Defined benefit pension asset	4,798		2,902
Deferred income taxes	54		792
Other assets, net	7,409		10,533
Total assets	$	723,796	$	704,485
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	38,407	$	46,181
Current portion of long-term debt and finance lease obligations	487,204		669
Current portion of operating lease obligations	14,389		16,176
Other accrued liabilities	128,757		121,099
Total current liabilities	668,757		184,125
Long-term debt and finance lease obligations	4,656		405,191
Operating lease obligations	43,090		49,221
Deferred income taxes	3,265		4,185
Other long-term liabilities	3,479		9,896
Total liabilities	723,247		652,618
Commitments and contingencies
Equity:
Preferred stock, 500,000 shares authorized, none issued	—		—
Common stock, par value $0.30 per share, 60,000,000 shares authorized; 43,223,879 and 31,214,714 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	12,962		9,359
Additional paid-in capital	445,210		444,824
Accumulated deficit	(425,774)		(375,584)
Accumulated other comprehensive loss	(31,849)		(26,732)
Total equity	549		51,867
Total liabilities and equity	$	723,796	$	704,485

See accompanying notes to unaudited condensed consolidated financial statements.

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TEAM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenues	$	251,265	$	238,873	$	469,841	$	433,491
Operating expenses	181,312		176,109		344,790		327,026
Gross margin	69,953		62,764		125,051		106,465
Selling, general and administrative expenses	72,733		68,478		144,018		134,602
Restructuring and other related charges, net	—		280		16		2,157
Operating loss	(2,780)		(5,994)		(18,983)		(30,294)
Interest expense, net	(18,480)		(9,598)		(37,085)		(18,994)
Other income (expense)	1,476		(1,044)		4,178		(1,994)
Loss before income taxes	(19,784)		(16,636)		(51,890)		(51,282)
Provision for income taxes	(1,768)		(857)		(2,124)		(502)
Net loss	$	(21,552)	$	(17,493)	$	(54,014)	$	(51,784)
Loss per common share:
Basic and diluted	$	(0.50)	$	(0.57)	$	(1.34)	$	(1.68)
Weighted-average number of shares outstanding:
Basic and diluted	43,179		30,940		40,454		30,909

See accompanying notes to unaudited condensed consolidated financial statements.

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TEAM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE LOSS

(in thousands)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net loss	$	(21,552)	$	(17,493)	$	(54,014)	$	(51,784)
Other comprehensive income (loss) before tax:
Foreign currency translation adjustment	(5,463)		657		(5,117)		874
Other comprehensive income (loss), before tax	(5,463)		657		(5,117)		874
Tax provision attributable to other comprehensive income (loss)	—		(257)		—		(155)
Other comprehensive income (loss), net of tax	(5,463)		400		(5,117)		719
Total comprehensive loss	$	(27,015)	$	(17,093)	$	(59,131)	$	(51,065)

See accompanying notes to unaudited condensed consolidated financial statements.

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TEAM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

(Unaudited)

	Common Stock			Additional Paid-in Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Shares	Amount
Balance at December 31, 2021	31,215	$	9,359	$	444,824	$	(375,584)	$	(26,732)	$	51,867
Adjustments for prior periods from adopting ASU 2020-06				(5,651)		3,824		—		(1,827)
Issuance of common stock	11,905	3,572		6,196		—		—		9,768
Net loss	—	—		—		(32,462)		—		(32,462)
Foreign currency translation adjustment, net of tax	—	—		—		—		346		346
Non-cash compensation	2	—		(624)		—		—		(624)
Net settlement of vested stock awards	—	—		2		—		—		2
Balance at March 31, 2022	43,122	12,931		444,747		(404,222)		(26,386)		27,070
Net loss	—	—		—		(21,552)		—		(21,552)
Issuance of Common Stock	102	31		(102)						(71)
Foreign currency translation adjustment, net of tax	—	—		—		—		(5,463)		(5,463)
Non-cash compensation	—	—		565		—		—		565
Balance at June 30, 2022	43,224	$	12,962	$	445,210	$	(425,774)	$	(31,849)	$	549
Balance at December 31, 2020	30,874	$	9,257	$	422,589	$	(189,565)	$	(27,678)	$	214,603
Net loss	—	—		—		(34,291)		—		(34,291)
Foreign currency translation adjustment, net of tax	—	—		—		—		319		319
Non-cash compensation	—	—		2,330		—		—		2,330
Net settlement of vested stock awards	19	6		(107)		—		—		(101)
Balance at March 31, 2021	30,893	$	9,263	$	424,812	$	(223,856)	$	(27,359)	$	182,860
Net loss	—	—		—		(17,493)		—		(17,493)
Foreign currency translation adjustment, net of tax	—	—		—		—		400		400
Non-cash compensation	—	—		2,138		—		—		2,138
Net settlement of vested stock awards	86	26		(26)		—		—		—
Balance at June 30, 2021	30,979	$	9,289	$	426,924	$	(241,349)	$	(26,959)	$	167,905

See accompanying notes to unaudited condensed consolidated financial statements.

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TEAM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	Six Months Ended June 30,
	2022		2021
Cash flows (used in) provided by operating activities:
Net loss	$	(54,014)	$	(51,784)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	19,609		21,306
Write-off of deferred financing costs	2,748		—
Amortization of deferred financing costs, debt issuance costs, and debt warrant discounts	12,077		4,154
Paid-in-kind interest	9,962		—
Allowance for credit losses	30		965
Foreign currency losses	569		2,341
Deferred income taxes	(357)		(2,318)
(Gain) loss on asset disposals	(3,532)		309
Non-cash compensation (credits) costs	(59)		4,468
Other, net	(2,382)		(2,451)
Changes in operating assets and liabilities:
Accounts receivable	(29,595)		(24,811)
Inventory	(1,620)		(743)
Prepaid expenses and other current assets	(3,305)		5,612
Accounts payable	(5,889)		3,379
Other accrued liabilities	3,367		4,484
Income taxes	(1,000)		290
Net cash used in operating activities	(53,391)		(34,799)
Cash flows (used in) provided by investing activities:
Capital expenditures	(14,001)		(9,220)
Proceeds from disposal of assets	5,119		49
Net cash used in investing activities	(8,882)		(9,171)
Cash flows (used in) provided by financing activities:
Borrowings under ABL Credit Facility (Eclipse)	104,641		—
Payments under ABL Credit Facility (Eclipse)	(1,588)		—
Borrowings under Corre Delayed Draw Term Loans (ABL Credit Facility (Corre))	25,000		—
Borrowings under ABL Facility (Citibank), net	—		49,300
Borrowings under ABL Facility (Citibank), gross	10,300		95,200
Payments under ABL Facility (Citibank), gross	(72,300)		(104,200)
Payments for debt issuance costs	(10,640)		(2,326)
Issuance of common stock	9,696		—
Taxes paid related to net share settlement of share-based awards	—		(102)
Other	(323)		(206)
Net cash provided by financing activities	64,786		37,666
Effect of exchange rate changes on cash and cash equivalents	(382)		73
Net increase (decrease) in cash and cash equivalents	2,131		(6,231)
Cash and cash equivalents at beginning of period	65,315		24,586
Cash and cash equivalents at end of period	$	67,446	$	18,355

See accompanying notes to unaudited condensed consolidated financial statements.

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TEAM, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

Description of Business. Unless otherwise indicated, the terms “we” “our” and “us” are used in this report to refer to either Team, Inc., to one or more of its consolidated subsidiaries or to all of them taken as a whole.

We are a global leading provider of integrated, digitally-enabled asset performance assurance and optimization solutions. We deploy conventional to highly specialized inspection, condition assessment, maintenance and repair services that result in greater safety, reliability and operational efficiency for our clients’ most critical assets. We conduct operations in three segments: Inspection and Heat Treating (“IHT”), Mechanical Services (“MS”) and Quest Integrity. Through the capabilities and resources in these three segments, we believe that we are uniquely qualified to provide integrated solutions: inspection to assess condition; engineering assessment to determine fitness for purpose in the context of industry standards and regulatory codes; and mechanical services to repair, rerate or replace based upon the client’s election. In addition, we are capable of scaling with the client’s needs, as dictated by the severity of the damage found and the related operating conditions, from standard services to some of the most advanced services and integrated asset integrity and reliability management solutions available in the industry. We also believe that we are unique in our ability to provide services in three distinct client demand profiles: (i) turnaround or project services, (ii) call-out services and (iii) nested or run-and-maintain services.

IHT provides conventional and advanced non-destructive testing (“NDT”) services primarily for the process, pipeline and power sectors, and pipeline integrity management services, and field heat treating and thermal services, tank management solutions, and pipeline integrity solutions, as well as associated engineering and condition assessment services. These services can be offered while facilities are running (on-stream), during facility turnarounds or during new construction or expansion activities. IHT also provides advanced digital imaging including remote digital video imaging, laser scanning and laser profilometry-enabled reformer care services.

MS provides solutions designed to serve clients’ unique needs during both the operational (onstream) and off-line states of their assets. Our onstream services include our range of standard to custom-engineered leak repair and composite solutions; emissions control and compliance; hot tapping and line stopping; and on-line valve insertion solutions, which are delivered while assets are in an operational condition, which maximizes client production time. Asset shutdowns can be planned, such as a turnaround maintenance event, or unplanned, such as those due to component failure or equipment breakdowns. Our specialty maintenance, turnaround and outage services are designed to minimize client downtime and are primarily delivered while assets are off-line and often through the use of cross-certified technicians, whose multi-craft capabilities deliver the production needed to achieve tight time schedules. These critical services include on-site field machining; bolted-joint integrity; vapor barrier plug testing; and valve management solutions.

Quest Integrity provides integrity and reliability management solutions for the process, pipeline and power sectors. These solutions encompass two broadly-defined disciplines: (1) highly specialized in-line inspection services for historically unpiggable process piping and pipelines using proprietary in-line inspection tools and analytical software; and (2) advanced engineering and condition assessment services through a multi-disciplined engineering team and related lab support.

We market our services to companies in a diverse array of heavy industries which include:

•Energy (refining, power, renewables, nuclear and liquefied natural gas);

•Manufacturing and Process (chemical, petrochemical, pulp and paper industries, manufacturing, automotive and mining);

•Midstream and Others (valves, terminals and storage, pipeline and offshore oil and gas);

•Public Infrastructure (amusement parks, bridges, ports, construction and building, roads, dams and railways); and

•Aerospace and Defense.

Ongoing Effects of COVID-19.  The COVID-19 pandemic has impacted our workforce and operations, as well as the operations of our clients, suppliers and contractors. We continue to be affected by the direct and indirect impact of the pandemic and global economic conditions on operating expenses, staffing and supply chain management.

Under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), we qualified to defer the employer portion of social security taxes incurred through the end of calendar 2020. As of December 31, 2021 we had $14.1 million of deferred employer payroll taxes outstanding and we paid $7.0 million of the deferred payroll taxes in January 2022, the

7

remaining balance at June 30, 2022 of $7.1 million is due at the end of 2022. Additionally, other governments in jurisdictions where we operate passed legislation to provide employers with relief programs, which include wage subsidy grants, deferral of certain payroll related expenses and tax payments and other benefits. We elected to treat qualified government subsidies from Canada and other governments as offsets to the related expenses. We recognized no reduction to either our operating expenses or our selling, general and administrative expenses during the three months ended June 30, 2022, compared to $1.8 million and $0.3 million, respectively, during three months ended June 30, 2021. We recognized a reduction of $0.6 million and $0.1 million to our operating expenses and our selling, general and administrative expenses, respectively, during the six months ended June 30, 2022, and $3.8 million and $0.7 million, respectively during the six months ended June 30, 2021.

Inflation. Inflation rates and currency exchange rates continue to have an effect on worldwide economies and, consequently, on the way the Company operates. The Company continues to monitor these situations and take appropriate actions. In the face of increasing costs, the Company strives to maintain its profit margins through cost reduction programs, productivity improvements and periodic price increases. We are carefully monitoring impacts from inflation, supply chain challenges and slowing economic conditions. For further information regarding the risks we face relating to inflation, see "Risk Factors - We may experience inflationary pressures in our operating costs and cost overruns on our projects" in our Annual Report on Form 10-K for the year ended December 31, 2021. For further information regarding the risks we face relating to inflation, see "Risk Factors - We may experience inflationary pressures in our operating costs and cost overruns on our projects" in our Annual Report on Form 10-K for the year ended December 31, 2021.

Ukraine Conflict. The Company does not have employees or operations in Russia or Ukraine. Sanctions and other trade controls imposed by the United States and other governments in response to Russia’s military operations in Ukraine could impact our supply chain in future periods. While it is difficult to estimate the impact of current or future sanctions on the Company’s business and financial position, these sanctions could adversely impact the Company’s sales, cost of procuring raw materials, or distribution costs in future periods.

Basis for presentation. These condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results for such periods. The results of operations for any interim period are not necessarily indicative of results for the full year. Certain disclosures have been condensed or omitted from the interim financial statements included in this report. These financial statements should be read in conjunction with the condensed consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission.

Consolidation. The condensed consolidated financial statements include the accounts of our subsidiaries where we have control over operating and financial policies. All material intercompany accounts and transactions have been eliminated in consolidation.

Related Party Transactions. A related party transaction is any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including the incurrence or issuance of any indebtedness or the guarantee of indebtedness) in which (1) the Company or any of its subsidiaries is a participant, and (2) any Related Party (as defined below) has or will have a direct or indirect material interest.

A Related Party is any person who is, or, at any time since the beginning of the Company’s last fiscal year, was (1) an executive officer, director or nominee for election as a director of the Company or any of its subsidiaries, (2) a person with greater than five percent (5%) beneficial interest in the Company, (3) an immediate family member of any of the individuals or entities identified in (1) or (2) of this paragraph, and (4) any firm, corporation or other entity in which any of the foregoing individuals or entities is employed or is a general partner or principal or in a similar position or in which such person or entity has a five percent (5%) or greater beneficial interest. Immediate family members includes a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law and anyone residing in such person’s home, other than a tenant or employee.

Liquidity and Going Concern. These condensed consolidated financial statements have been prepared in accordance with GAAP and assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the issue date of these unaudited condensed consolidated financial statements. Our ability to continue as a going concern is dependent on many factors, including among other things, our ability to comply with the covenants in our debt agreements, our ability to cure any defaults that occur under our debt agreements, or forbearances with respect to any such defaults, and our ability to pay, retire, amend, replace or refinance our indebtedness as defaults occur or as interest and principal payments come due. Liquidity risk is the risk that we will be unable to meet our financial obligations as they become due. Our liquidity may be affected by improvements and declines in commodity prices, our segments operational performance, and our ability to access capital and credit markets.

8

We evaluated the Company’s liquidity within one year after the date of issuance of these unaudited condensed consolidated financial statements to determine if there is substantial doubt about the Company’s ability to continue as a going concern. In the preparation of this liquidity assessment, we applied judgment to estimate the projected cash flows of the Company, including the following: (i) projected cash outflows, (ii) projected cash inflows, and (iii) excess availability level under the Company’s existing debt arrangements. The cash flow projections were based on known or planned cash requirements for operating and financing costs and include management’s best estimate regarding future customer activity levels, pricing for its services and for its supplies and other factors. Actual results could vary significantly from those projections. We do not believe, based on the Company’s forecast that current working capital, cash flow from operations, and capital expenditure financing is sufficient to fund the operations, maintain compliance with our debt covenants (as amended), and satisfy the Company’s obligations as they come due within one year after the date of issuance of these condensed consolidated financial statements.

Our 5.00% Convertible Senior Notes are due on August 1, 2023 (the "Notes") and have a principal balance of $95.2 million. We are exploring alternatives to reduce or refinance the Notes outstanding balance, including extending the maturity. However, there is no assurance that we will be able to execute a reduction, extension, or refinancing of the Notes or that the terms of any replacement financing would be as favorable as the terms of the Notes prior to the maturity date. Under the terms of our amended financing arrangements that were entered into during 2022, the Maturity Reserve Trigger Date, as defined in the ABL Credit Agreement (as defined herein), and the Maturity Trigger Date as defined in the Term Loan Credit Agreement (as defined herein), collectively referred to as the “Trigger Date” is now May 18, 2023. Therefore, the Notes balance must be paid down to $10.0 million by May 18, 2023, or the Company must have equivalent cash on hand to pay down the Notes to $10.0 million.

The failure to pay down the Notes by the Trigger Date would be an event of default under our Term Loan Credit Agreement (as defined herein), Subordinated Term Loan Credit Agreement, ABL Credit Facility, and Corre Delayed Draw Term Loan (as defined herein) since these instruments contain cross default provisions, resulting in these debt instruments becoming payable on demand. Refer to Note 11 - Debt for more information on the terms and maturity dates of our debt that may affect our future liquidity.

As of June 30, 2022, we are in compliance with our debt covenants. However, without the consummation of a refinancing transaction or agreement to extend the Notes maturity date, there is a risk that the Company could be, among other things, unable to make principal payments on the Notes to satisfy the Trigger Date provision. Failure to pay down the principal on the Notes to $10.0 million by May 18, 2023 will result in an event of default and the associated cross defaults noted above under the Company’s other debt instruments.

As a result of our current financial resources and no guarantee that we will be able to obtain an extension or amend the financial covenants contained therein, we intend to refinance the Notes. Any such refinancing may include the issuance of additional notes, common or preferred stock or a combination thereof. However, there is no assurance that we will be able to execute this refinancing or repayment prior to the Trigger Date, and as such, substantial doubt exists that we have the ability to continue as a going concern. We are evaluating and will continue to explore strategic alternatives to a refinancing transaction or the reduction of the debt, including negotiating amendments to our credit facilities and the financial covenants contained therein, the sale of assets, or other alternative financing transactions. While our lenders agreed on an extension and amended the financial covenants in prior periods, there can be no assurance that our lenders will provide additional extensions, waivers or amendments in the event of future non-compliance with our debt covenants, or other possible events of default. The unaudited condensed consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern.

On August 15, 2022, Team announced it has executed a definitive purchase and sale agreement with Baker Hughes to sell Quest Integrity for $280.0 million, before customary post-closing adjustments. Post-closing of this transaction Team’s expects its liquidity and debt profile to be significantly improved, refer to Note 20 - Subsequent Events for additional details regarding this transaction.

Use of estimates. Our accounting policies conform to GAAP. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect our reported financial position and results of operations. We review significant estimates and judgments affecting our condensed consolidated financial statements on a recurring basis and record the effect of any necessary adjustments prior to their publication. Estimates and judgments are based on information available at the time such estimates and judgments are made. Adjustments made with respect to the use of these estimates and judgments often relate to information not previously available. Uncertainties with respect to such estimates and judgments are inherent in the preparation of financial statements. Estimates and judgments are used in, among other things, (1) aspects of revenue recognition, (2) valuation of acquisition related tangible and intangible assets and assessments of all long-lived assets for possible impairment, (3) estimating various factors used to accrue liabilities for workers’ compensation, auto, medical, and general liability, (4) establishing an allowance for uncollectible accounts receivable, (5) estimating the useful lives of our assets, (6) assessing future tax exposure and the realization of tax assets, (7) selecting assumptions used in the measurement of costs and liabilities associated with defined benefit pension plans, (8)

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assessments of fair value and (9) managing our foreign currency risk in foreign operations. Our most significant accounting policies are described below.

Fair value of financial instruments. As defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 Fair Value Measurements and Disclosure (“ASC 820”), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. We primarily apply the market approach for recurring fair value measurements and endeavor to utilize the best information available. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The use of unobservable inputs is intended to allow for fair value determinations in situations in which there is little, if any, market activity for the asset or liability at the measurement date. We are able to classify fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy such that “Level 1” measurements include unadjusted quoted market prices for identical assets or liabilities in an active market, “Level 2” measurements include quoted market prices for identical assets or liabilities in an active market which have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets, and “Level 3” measurements include inputs that are unobservable and of a highly subjective measure.

Our financial instruments consist primarily of cash, cash equivalents, accounts receivable, accounts payable and debt obligations. The carrying amount of cash, cash equivalents, trade accounts receivable and trade accounts payable are representative of their respective fair values due to the short-term maturity of these instruments. The fair value of our ABL Credit Facility and Term Loans is representative of the carrying value based upon the variable terms and management’s opinion that the current rates available to us with the same maturity and security structure are equivalent to that of the debt. The fair value of our Notes as of June 30, 2022 and December 31, 2021 is $95.2 million and $84.0 million, respectively, (inclusive of the fair value of the conversion option) and are a “Level 2” measurement, determined based on the observed trading price of these instruments. For additional information regarding our ABL Credit Facilities, Atlantic Park Term Loan, Subordinated Term Loan and Notes, see Note 11 - Debt.

Cash and cash equivalents. Cash and cash equivalents consist of all deposits and funds invested in highly liquid short-term investments with original maturities of three months or less.

Inventory. Except for certain inventories that are valued based on weighted-average cost, we use the first-in, first-out method to value our inventory. Inventory includes material, labor, and certain fixed overhead costs. Inventory is stated at the lower of cost and net realizable value. Inventory quantities on hand are reviewed periodically and carrying cost is reduced to net realizable value for inventories for which their cost exceeds their utility. The cost of inventories consumed or products sold are included in operating expenses.

Property, plant and equipment. Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Leasehold improvements are amortized over the shorter of their respective useful life or the lease term. Depreciation and amortization of assets are computed by the straight-line method over the following estimated useful lives of the assets:

Classification	Useful Life
Buildings	20-40 years
Enterprise Resource Planning (“ERP”) System	15 years
Leasehold improvements	2-15 years
Machinery and equipment	2-12 years
Furniture and fixtures	2-10 years
Computers and computer software	2-5 years
Automobiles	2-5 years

Goodwill and intangible assets. We allocate the purchase price of acquired businesses to their identifiable tangible assets and liabilities, such as accounts receivable, inventory, property, plant and equipment, accounts payable and accrued liabilities. We also allocate a portion of the purchase price to identifiable intangible assets, such as client relationships, non-compete agreements, trade names, technology, and licenses. Allocations are based on estimated fair values of assets and liabilities. We use all available information to estimate fair values including quoted market prices, the carrying value of acquired assets, and widely accepted valuation techniques such as discounted cash flows. Certain estimates and judgments are required in the

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application of the fair value techniques, including estimates of future cash flows, selling prices, replacement costs, economic lives, and the selection of a discount rate, as well as the use of “Level 3” measurements as defined in ASC 820. Deferred taxes are recorded for any differences between the assigned values and tax bases of assets and liabilities. Estimated deferred taxes are based on available information concerning the tax bases of assets acquired and liabilities assumed and loss carryforwards at the acquisition date, although such estimates may change in the future as additional information becomes known. Any remaining excess of cost over allocated fair values is recorded as goodwill. We typically engage third-party valuation experts to assist in determining the fair values for both the identifiable tangible and intangible assets. The judgments made in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, could materially impact our results of operations.

Goodwill and intangible assets acquired in a business combination determined to have an indefinite useful life are not amortized, but are instead tested for impairment, and assessed for potential triggering events, at least annually in accordance with the provisions of the ASC 350 Intangibles—Goodwill and Other (“ASC 350”). Intangible assets with finite lives are amortized over their respective estimated useful lives to their estimated residual values and reviewed for impairment in accordance with ASC 360-10 Impairment or Disposal of Long-Lived Assets (“ASC 360”). There was no impairment recorded for long-lived assets as of June 30, 2022.

We assess goodwill for impairment at the reporting unit level, which we have determined to be the same as our operating segments. As of June 30, 2022, the only Company segment with goodwill was Quest Integrity, which goodwill is related to historical acquisitions.

If the carrying value of a reporting unit exceeds its fair value, we measure any goodwill impairment losses as the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. We test our goodwill for impairment annually on December 1 of each year and whenever we become aware of an event or a change in circumstances that would indicate the carrying value may be impaired. There was no goodwill impairment recorded for the six-month period ended June 30, 2022.

Income taxes. We follow the guidance of ASC 740 Income Taxes (“ASC 740”), which requires that we use the asset and liability method of accounting for deferred income taxes and provide deferred income taxes for all significant temporary differences. As part of the process of preparing our condensed consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax payable or receivable and related tax expense or benefit together with assessing temporary differences resulting from differing treatment of certain items, such as depreciation, for tax and accounting purposes. These differences can result in deferred tax assets and liabilities, which are included within our consolidated balance sheets.

In accordance with ASC 740, we are required to assess the likelihood that our deferred tax assets will be realized and, to the extent we believe it is more likely than not (a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized, we must establish a valuation allowance. We consider all available evidence to determine whether, based on the weight of the evidence, a valuation allowance is needed. Evidence used includes the reversal of existing taxable temporary differences, taxable income in prior carryback years if carryback is permitted by tax law, information about our current financial position and our results of operations for the current and preceding years, as well as all currently available information about future years, including our anticipated future performance and tax planning strategies.

We regularly assess whether it is more likely than not that we will realize the deferred tax assets in the jurisdictions in which we operate. Management believes future sources of taxable income, reversing temporary differences and other tax planning strategies will be sufficient to realize the deferred tax assets for which no valuation allowance has been established. Our valuation allowance primarily relates to net operating loss carryforwards. While we have considered these factors in assessing the need for additional valuation allowance, there can be no assurance that additional valuation allowance would not need to be established in the future if information about future years change. Any changes in valuation allowance would impact our income tax provision and net income (loss) in the period in which such a determination is made.

Significant judgment is required in assessing the timing and amounts of deductible and taxable items for tax purposes. In accordance with ASC 740-10, we establish reserves for uncertain tax positions when, despite our belief that our tax return positions are supportable, we believe that it is not more likely than not that the position will be sustained upon challenge. When facts and circumstances change, we adjust these reserves through our provision for income taxes. To the extent interest and penalties may be assessed by taxing authorities on any related underpayment of income tax, such amounts have been accrued and are classified as a component of income tax expense (benefit) in our consolidated statements of operations.

Workers’ compensation, auto, medical and general liability accruals. In accordance with ASC 450 Contingencies (“ASC 450”), we record a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We review our loss contingencies on an ongoing basis to ensure that we have appropriate reserves

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recorded on our balance sheet. These reserves are based on historical experience with claims incurred but not received, estimates and judgments made by management, applicable insurance coverage for litigation matters, and are adjusted as circumstances warrant. For workers’ compensation, our self-insured retention is $1.0 million and our automobile liability self-insured retention is currently $2.0 million per occurrence. For general liability claims, we have an effective self-insured retention of $6.0 million per occurrence. For medical claims, our self-insured retention is $0.4 million per individual claimant determined on an annual basis. For environmental liability claims, our self-insured retention is $1.0 million per occurrence. We maintain insurance for claims that exceed such self-retention limits. The insurance is subject to terms, conditions, limitations, and exclusions that may not fully compensate us for all losses. Our estimates and judgments could change based on new information, changes in laws or regulations, changes in management’s plans or intentions, or the outcome of legal proceedings, settlements, or other factors. If different estimates and judgments were applied with respect to these matters, it is likely that reserves would be recorded for different amounts.

Allowance for credit losses. In the ordinary course of business, a portion of our accounts receivable are not collected due to billing disputes, customer bankruptcies, dissatisfaction with the services we performed and other various reasons. We establish an allowance to account for those accounts receivable that we estimate will eventually be deemed uncollectible. The allowance for credit losses is based on a combination of our historical experience and management’s review of long outstanding accounts receivable.

Concentration of credit risk. No single customer accounts for more than 10% of consolidated revenues.

Earnings (loss) per share. Basic earnings (loss) per share is computed by dividing income (loss) from continuing operations, income (loss) from discontinued operations or net income (loss) by the weighted-average number of shares of common stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing income (loss) from continuing operations, income (loss) from discontinued operations or net income (loss) by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, (2) the dilutive effect of the assumed exercise of share-based compensation using the treasury stock method and (3) the dilutive effect of the assumed conversion of our Notes under the if converted method. Our current intent is to settle the principal amount of our Notes in cash upon maturity. If the conversion value exceeds the principal amount, we may elect to deliver shares of our common stock with respect to the remainder of our conversion obligation in excess of the aggregate principal amount (the “conversion spread”). Accordingly, the conversion spread is included in the denominator for the computation of diluted earnings per common share using the treasury stock method and the numerator is adjusted for any recorded gain or loss, net of tax, on the embedded derivative associated with the conversion feature.

For the three and six months ended June 30, 2022 and 2021, all outstanding share-based compensation awards were excluded from the calculation of diluted loss per share because their inclusion would be antidilutive due to the loss from continuing operations in those periods. Also, for the three and six months ended June 30, 2022 and 2021, potential shares issuable upon the conversion of the Notes were excluded from the calculation of diluted earnings (loss) per share since the conversion price exceeded the average price of our common stock during the applicable periods. For information regarding our Notes and our share-based compensation awards, refer to Note 11 - Debt and Note 14 - Employee Benefit Plans, respectively.

Non-cash investing and financing activities. Non-cash investing and financing activities are excluded from the condensed consolidated statements of cash flows and are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Assets acquired under finance lease	$	77	$	384	$	100	$	406

Also, we had $3.0 million and $1.5 million of accrued capital expenditures as of June 30, 2022 and June 30, 2021, respectively, which are excluded from the condensed consolidated statements of cash flows until paid.

Foreign currency. For subsidiaries whose functional currency is not the U.S. Dollar, assets and liabilities are translated at period ending rates of exchange and revenues and expenses are translated at period average exchange rates. Translation adjustments for the asset and liability accounts are included as a separate component of accumulated other comprehensive loss in stockholders’ equity. Foreign currency transaction gains and losses are included in our statements of operations.

We have historically executed a foreign currency hedging program to mitigate the foreign currency risk in countries where we have significant assets and liabilities denominated in currencies other than the functional currency. There were no foreign currency swap contracts outstanding during the three and six months ended June 30, 2022.

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Defined benefit pension plans. Pension benefit costs and liabilities are dependent on assumptions used in calculating such amounts. The primary assumptions include factors such as discount rates, expected investment return on plan assets, mortality rates and retirement rates. The discount rates, expected investment return on plan assets, mortality rates and retirement rates are determined based on reference to yields, and are reviewed annually and considered for adjustment to reflect current market conditions. The expected return on plan assets is derived from detailed periodic studies, which include a review of asset allocation strategies, anticipated future long-term performance of individual asset classes, risks (standard deviations) and correlations of returns among the asset classes that comprise the plans’ asset mix. While the studies give appropriate consideration to recent plan performance and historical returns, the assumptions are primarily long-term, prospective rates of return. Mortality and retirement rates are based on actual and anticipated plan experience. In accordance with GAAP, actual results that differ from the assumptions are accumulated and are subject to amortization over future periods and, therefore, generally affect recognized expense in future periods. While we believe that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect the pension obligation and future expense.

Reclassifications. Certain amounts in prior periods have been reclassified to conform to the current year presentation. Such reclassifications did not have any effect on our financial condition or results of operations as previously reported.

Newly Adopted Accounting Standards

ASU No. 2020-06. In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments by eliminating certain separation models and will generally be reported as a single liability at its amortized cost. In addition, ASU 2020-06 eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. On January 1, 2022, we adopted the ASU using the modified retrospective method. We recognized a cumulative effect of initially applying the ASU as an adjustment to the January 1, 2022 opening accumulated deficit balance. The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods. Refer to Note 11 - Debt for impact on the adoption of this ASU as of January 1, 2022.

Accounting Standards Not Yet Adopted

ASU No. 2020-04. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance in ASU 2020-04 and ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which was issued in January 2021, provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria that reference LIBOR or another rate that is expected to be discontinued. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. While we are currently determining whether we will elect the optional expedients, we do not expect our adoption of these ASUs to have a significant impact on our consolidated financial position, results of operations, and cash flows. We do not expect our adoption of these ASUs to have a significant impact on our consolidated financial position, results of operations, and cash flows.

2. REVENUE

In accordance with ASC Topic 606, Revenue from Contracts with Customers, (“ASC 606”) we follow a five-step process to recognize revenue: 1) identify the contract with the customer, 2) identify the performance obligations, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations, and 5) recognize revenue when the performance obligations are satisfied.

Most of our contracts with customers are short-term in nature and billed on a time and materials basis, while certain other contracts are at a fixed price. Certain contracts may contain a combination of fixed and variable elements. We act as a principal and have performance obligations to provide the service itself or oversee the services provided by any subcontractors. Revenue is measured based on consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties, such as taxes assessed by governmental authorities. Generally, in contracts where the amount of consideration is variable, the amount is determinable each period based on our right to invoice (as discussed further below) the customer for services performed to date. As most of our contracts contain only one performance obligation, the allocation of a contract transaction price to multiple performance obligations is generally not applicable. Customers are generally billed as we satisfy our performance obligations and payment terms typically range from 30 to 90 days from the invoice date. Billings under certain fixed-price contracts may be based upon the achievement of specified milestones, while some arrangements may require advance customer payment. Our contracts do not include significant financing components since the contracts typically span less than one year. Contracts generally include an assurance type warranty clause to guarantee that the services comply with agreed specifications. The warranty period typically is twelve months or less from the date of service.

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Revenue is recognized as (or when) the performance obligations are satisfied by transferring control over a service or product to the customer. Revenue recognition guidance prescribes two recognition methods (over time or point in time). Most of our performance obligations qualify for recognition over time because we typically perform our services on customer facilities or assets and customers receive the benefits of our services as we perform. Where a performance obligation is satisfied over time, the related revenue is also recognized over time using the method deemed most appropriate to reflect the measure of progress and transfer of control. For our time and materials contracts, we are generally able to elect the right-to-invoice practical expedient, which permits us to recognize revenue in the amount to which we have a right to invoice the customer if that amount corresponds directly with the value to the customer of our performance completed to date. For our fixed price contracts, we typically recognize revenue using the cost-to-cost method, which measures the extent of progress towards completion based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Under this method, revenue is recognized proportionately as costs are incurred. For contracts where control is transferred at a point in time, revenue is recognized at the time control of the asset is transferred to the customer, which is typically upon delivery and acceptance by the customer.

Disaggregation of revenue. A disaggregation of our revenue from contracts with customers by geographic region, by reportable operating segment and by service type is presented below (in thousands):

Geographic area:

	Three Months Ended June 30, 2022						Three Months Ended June 30, 2021
	(unaudited)						(unaudited)
	United States and Canada		Other Countries		Total		United States and Canada		Other Countries		Total
Revenue:
IHT	$	111,541	$	2,583	$	114,124	$	114,834	$	2,628	$	117,462
MS	77,683		29,733		107,416		65,303		31,864		97,167
Quest Integrity	18,634		11,091		29,725		16,480		7,764		24,244
Total	$	207,858	$	43,407	$	251,265	$	196,617	$	42,256	$	238,873

	Six Months Ended June 30, 2022						Six Months Ended June 30, 2021
	(unaudited)						(unaudited)
	United States and Canada		Other Countries		Total		United States and Canada		Other Countries		Total
Revenue:
IHT	$	204,919	$	4,802	$	209,721	$	204,059	$	4,542	$	208,601
MS	141,614		59,243		200,857		125,349		59,214		184,563
Quest Integrity	33,324		25,939		59,263		25,535		14,792		40,327
Total	$	379,857	$	89,984	$	469,841	$	354,943	$	78,548	$	433,491

Operating segment and service type:

	Three Months Ended June 30, 2022
	(unaudited)
	Non-Destructive Evaluation and Testing Services		Repair and Maintenance Services		Heat Treating		Other		Total
Revenue:
IHT	$	91,701	$	115	$	15,787	$	6,521	$	114,124
MS	—		106,731		56		629		107,416
Quest Integrity	29,725		—		—		—		29,725
Total	$	121,426	$	106,846	$	15,843	$	7,150	$	251,265

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	Three Months Ended June 30, 2021
	(unaudited)
	Non-Destructive Evaluation and Testing Services		Repair and Maintenance Services		Heat Treating		Other		Total
Revenue:
IHT	$	92,291	$	207	$	17,267	$	7,697	$	117,462
MS	—		97,149		8		10		97,167
Quest Integrity	24,244		—		—		—		24,244
Total	$	116,535	$	97,356	$	17,275	$	7,707	$	238,873

	Six Months Ended June 30, 2022
	(unaudited)
	Non-Destructive Evaluation and Testing Services		Repair and Maintenance Services		Heat Treating		Other		Total
Revenue:
IHT	$	168,152	$	139	$	29,626	$	11,804	$	209,721
MS	—		198,501		113		2,243		200,857
Quest Integrity	59,263		—		—		—		59,263
Total	$	227,415	$	198,640	$	29,739	$	14,047	$	469,841

	Six Months Ended June 30, 2021
	(unaudited)
	Non-Destructive Evaluation and Testing Services		Repair and Maintenance Services		Heat Treating		Other		Total
Revenue:
IHT	$	163,820	$	288	$	30,722	$	13,771	$	208,601
MS	—		183,125		697		741		184,563
Quest Integrity	40,327		—		—		—		40,327
Total	$	204,147	$	183,413	$	31,419	$	14,512	$	433,491

For additional information on our reportable operating segments and geographic information, refer to Note 17 - Segment and Geographic Disclosures.

Contract balances. The timing of revenue recognition, billings and cash collections results in trade accounts receivable, contract assets and contract liabilities on the consolidated balance sheets. Trade accounts receivable include billed and unbilled amounts currently due from customers and represent unconditional rights to receive consideration. The amounts due are stated at their net estimated realizable value. Refer to Note 1 - Summary of Significant Accounting Policies and Practices and Note 3 – Receivables for additional information on our trade receivables and the allowance for credit losses. Contract assets include unbilled amounts typically resulting from sales under fixed-price contracts when the cost-to-cost method of revenue recognition is utilized, the revenue recognized exceeds the amount billed to the customer and the right to payment is conditional on something other than the passage of time. Amounts may not exceed their net realizable value. If we receive advances or deposits from our customers, a contract liability is recorded. Additionally, a contract liability arises if items of variable consideration result in less revenue being recorded than what is billed. Contract assets and contract liabilities are generally classified as current.

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The following table provides information about trade accounts receivable, contract assets and contract liabilities as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022		December 31, 2021		Change
	(unaudited)
Trade accounts receivable, net1	$	215,408	$	188,772	$	26,636
Contract assets2	$	1,120	$	1,602	$	(482)
Contract liabilities3	$	1,341	$	313	$	1,028

_________________

1    Includes billed and unbilled amounts, net of allowance for credit losses. See Note 3 - Receivables for details.    

2    Included in the “Prepaid expenses and other current assets” line on the condensed consolidated balance sheets.

3    Included in the “Other accrued liabilities” line of the condensed consolidated balance sheets.

The $0.5 million decrease in our contract assets from December 31, 2021 to June 30, 2022 is due to less fixed price contracts in progress at June 30, 2022 as compared to December 31, 2021. Contract liabilities increased by $1.0 million as of June 30, 2022. The increase is associated with contracts under which customers have paid all or a portion of the consideration in advance of the work being performed. Due to the short-term nature of our contracts, contract liability balances as of the end of any period are generally recognized as revenue in the following quarter. Accordingly, essentially all of the contract liability balance at December 31, 2021 was recognized as revenue by the six months ended June 30, 2022.

Contract costs. We recognize the incremental costs of obtaining contracts as selling, general and administrative expenses when incurred if the amortization period of the asset that otherwise would have been recognized is one year or less. Costs to fulfill a contract are recorded as assets if they relate directly to a contract or a specific anticipated contract, the costs are to generate or enhance resources that will be used in satisfying performance obligations in the future and the costs are expected to be recovered. Costs to fulfill a contract recognized as assets primarily consist of labor and materials costs and generally relate to engineering and set-up costs incurred prior to the satisfaction of performance obligations. Assets recognized for costs to fulfill a contract are included in the “Prepaid expenses and other current assets” line of the condensed consolidated balance sheets and were not material as of June 30, 2022 and December 31, 2021. Such assets are recognized as expenses as we transfer the related goods or services to the customer. All other costs to fulfill a contract are expensed as incurred.

Remaining performance obligations. As of June 30, 2022 and 2021, there were no material amounts of remaining performance obligations that are required to be disclosed. As permitted by ASC 606, we have elected not to disclose information about remaining performance obligations where (i) the performance obligation is part of a contract that has an original expected duration of one year or less or (ii) when we recognize revenue from the satisfaction of the performance obligation in accordance with the right-to-invoice practical expedient.

3. RECEIVABLES

A summary of accounts receivable as of June 30, 2022 and December 31, 2021 is as follows (in thousands): 

	June 30, 2022		December 31, 2021
	(unaudited)
Trade accounts receivable	$	178,174	$	161,751
Unbilled receivables	43,981		35,933
Allowance for credit losses	(6,747)		(8,912)
Total	$	215,408	$	188,772

ASC 326, Credit Losses, applies to financial assets measured at amortized cost, including trade and unbilled accounts receivable, and requires immediate recognition of lifetime expected credit losses. Significant factors that affect the expected collectability of our receivables include macroeconomic trends and forecasts in the oil and gas, refining, power, and petrochemical markets and changes in our results of operations and forecasts. For unbilled receivables, we consider them as short-term in nature as they are normally converted to trade receivables within 90 days, thus future changes in economic conditions will not have a significant effect on the credit loss estimate. We have identified the following factors that primarily impact the collectability of our receivables and therefore determine the pools utilized to calculate expected credit losses: (i) the aging of the receivable, (ii) any identification of known collectability concerns with specific receivables, and (iii) variances in economic risk characteristics across geographic regions.

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For trade receivables, customers typically are provided with payment due date terms of 30 days upon issuance of an invoice. We have tracked historical loss information for our trade receivables and compiled historical credit loss percentages for different aging categories. We believe that the historical loss information we have compiled is a reasonable basis on which to determine expected credit losses for trade receivables because the composition of the trade receivables is consistent with that used in developing the historical credit-loss percentages as typically our customers and payment terms do not change significantly. Generally, a longer outstanding receivable equates to a higher percentage of the outstanding balance as current expected credit losses. We update the historical loss information for current conditions and reasonable and supportable forecasts that affect the expected collectability of the trade receivable using a loss-rate approach. We have not seen a negative trend in the current economic environment that significantly impacts our historical credit-loss percentages; however, we will continue to monitor for changes that would indicate the historical loss information is no longer a reasonable basis for the determination of our expected credit losses. Our forecasted loss rates inherently incorporate expected macroeconomic trends. A loss-rate method for estimating expected credit losses on a pooled basis is applied for each aging category for receivables that continue to exhibit similar risk characteristics.

To measure expected credit losses for individual receivables with specific collectability risk, we identify specific factors based on customer-specific facts and circumstances that are unique to each customer. Customer accounts with different risk characteristics are separately identified and a specific reserve is determined for these accounts based on the assessed credit risk.

We have also identified the following geographic regions in which to distinguish our trade receivables: the (i) United States, (ii) Canada, (iii) the European Union, (iv) the United Kingdom, and (v) other countries. These geographic regions are considered appropriate as they each operate in different economic environments with different foreign currencies, and therefore share similar economic risk characteristics. For each geographic region we evaluate the historical loss information and determine credit-loss percentages to apply to each aging category and individual receivable with specific risk characteristics. We estimate future expected credit losses based on forecasted changes in gross domestic product and oil demand for each region.

We consider one year from the financial statement reporting date as representing a reasonable forecast period as this period aligns with the expected collectability of our trade receivables. Financial distress experienced by our customers could have an adverse impact on us in the event our customers are unable to remit payment for the products or services we provide or otherwise fulfill their obligations to us. In determining the current expected credit losses, we review macroeconomic conditions, market specific conditions, and internal forecasts to identify potential changes in our assessment.

The following table shows a rollforward of the allowance for credit losses (in thousands):

	June 30, 2022		December 31, 2021
	(unaudited)
Balance at beginning of period	$	8,912	$	9,918
Provision for expected credit losses	30		2,193
Write-offs	(2,087)		(3,143)
Foreign exchange effects	(108)		(56)
Balance at end of period	$	6,747	$	8,912

4. INVENTORY

A summary of inventory as of June 30, 2022 and December 31, 2021 is as follows (in thousands): 

	June 30, 2022		December 31, 2021
	(unaudited)
Raw materials	$	8,233	$	7,641
Work in progress	2,801		2,725
Finished goods	25,145		25,388
Total	$	36,179	$	35,754

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5. PREPAID AND OTHER CURRENT ASSETS

A summary of prepaid and other current assets as of June 30, 2022 and December 31, 2021 is as follows (in thousands):

	June 30, 2022		December 31, 2021
	(unaudited)
Insurance receivable	$	39,000	$	39,000
Prepaid expenses	16,225		12,645
Other current assets	15,199		8,223
Total	$	70,424	$	59,868

The insurance receivable relates to the receivable from our third-party insurance providers for a legal claim that is recorded in other accrued liabilities, refer to Note 9 - Other Accrued Liabilities. These receivables will be covered by our third-party insurance providers for a litigation matter that has been settled, or are pending settlements where the deductibles have been satisfied. The prepaid expenses primarily relate to prepaid insurance and other expenses that have been paid in advance of the coverage period. The other current assets primarily include items such as contract assets, receivables from third parties, and other accounts receivables.

As of June 30, 2022 the other current assets also includes the deferred financing cost amounting to $6.6 million due to all long term debts now classified as current (see Note 11 - Debt for additional details), and a portion of the MS segment’s land, building and leasehold improvement assets held for sale with a net book value of $0.9 million with anticipated sale closing prior to December 31, 2022. Historically these assets were presented in the other assets, net, and property, plant and equipment section respectively of the balance sheet, and comparative periods were not adjusted.

6. PROPERTY, PLANT AND EQUIPMENT

A summary of property, plant and equipment as of June 30, 2022 and December 31, 2021 is as follows (in thousands):

	June 30, 2022		December 31, 2021
	(unaudited)
Land	$	4,552	$	5,743
Buildings and leasehold improvements	55,085		58,972
Machinery and equipment	300,166		306,366
Furniture and fixtures	11,344		11,642
Capitalized ERP system development costs	45,917		45,917
Computers and computer software	22,454		22,243
Automobiles	4,312		4,356
Construction in progress	25,477		16,565
Total	469,307		471,804
Accumulated depreciation	(312,268)		(310,445)
Property, plant and equipment, net	$	157,039	$	161,359

Included in the table above are assets under finance leases of $6.2 million and $6.7 million, and accumulated amortization of $1.8 million and $1.6 million as of June 30, 2022 and December 31, 2021, respectively. Depreciation expense for the three months ended June 30, 2022 and 2021 was $6.2 million and $6.8 million, respectively. Depreciation expense for the six months ended June 30, 2022 and 2021 was $12.8 million and $14.3 million, respectively.

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7. INTANGIBLE ASSETS

A summary of intangible assets as of June 30, 2022 and December 31, 2021 is as follows (in thousands): 

	June 30, 2022						December 31, 2021
	(unaudited)
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	$	174,774	$	(94,627)	$	80,147	$	175,156	$	(88,783)	$	86,373
Non-compete agreements	5,411		(5,411)		—		5,503		(5,503)		—
Trade names	24,614		(22,432)		2,182		24,743		(22,252)		2,491
Technology	7,809		(6,966)		843		7,843		(6,885)		958
Licenses	837		(793)		44		850		(774)		76
Total	$	213,445	$	(130,229)	$	83,216	$	214,095	$	(124,197)	$	89,898

Amortization expense of intangible assets for the three months ended June 30, 2022 and June 30, 2021 was $3.4 million and $3.6 million, respectively. Amortization expense of intangible assets for the six months ended June 30, 2022 and June 30, 2021 was $6.8 million and $7.0 million, respectively. Amortization expense for intangible assets is forecast to be approximately $13.1 million per year from 2022 through 2025.

The weighted-average amortization period for intangible assets subject to amortization was 13.7 years as of June 30, 2022 and December 31, 2021.

8. GOODWILL

The following table presents a rollforward of goodwill for the six months ended June 30, 2022 as follows (in thousands): 

	IHT						MS						Quest Integrity						Consolidated
	Goodwill, Gross		Accumulated Impairment		Goodwill, Net		Goodwill, Gross		Accumulated Impairment		Goodwill, Net		Goodwill, Gross		Accumulated Impairment		Goodwill, Net		Goodwill, Gross		Accumulated Impairment		Goodwill, Net
Balance at December 31, 2021	$	212,928	$	(212,928)	$	—	$	109,938	$	(109,938)	$	—	$	34,038	$	(8,795)	$	25,243	$	356,904	$	(331,661)	$	25,243
FX Adjustments	—		—		—		—		—		—		(696)		—		(696)		(696)		—		(696)
Balance at June 30, 2022	$	212,928	$	(212,928)	$	—	$	109,938	$	(109,938)	$	—	$	33,342	$	(8,795)	$	24,547	$	356,208	$	(331,661)	$	24,547

See Note 1 - Summary of Significant Accounting Policies and Practices for further information.

9. OTHER ACCRUED LIABILITIES

A summary of other accrued liabilities as of June 30, 2022 and December 31, 2021 is as follows (in thousands): 

	June 30, 2022		December 31, 2021
	(unaudited)
Legal and professional accruals	$	46,334	$	46,762
Payroll and other compensation expenses	50,289		44,284
Insurance accruals	6,121		7,314
Property, sales and other non-income related taxes	6,833		8,018
Accrued commission	2,014		1,111
Accrued interest	8,495		6,469
Other	8,671		7,141
Total	$	128,757	$	121,099

Legal and professional accruals include accruals for legal and professional fees as well as accrued legal claims, refer to Note 16 - Commitments and Contingencies. Certain legal claims are covered by insurance and the related insurance receivable

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for these claims is recorded in prepaid expenses and other current assets, refer to Note 5 - Prepaid and Other Current Assets. Payroll and other compensation expenses include all payroll related accruals including, among others, accrued vacation, severance, and bonuses. Insurance accruals primarily relate to accrued medical and workers compensation costs. Property, sales and other non-income related taxes includes accruals for items such as sales and use tax, property tax and other related tax accruals. Accrued interest relates to the interest accrued on our long-term debt. Other accrued liabilities includes items such as contract liabilities and other accrued expenses.

10. INCOME TAXES

We recorded an income tax provision of $1.8 million and $2.1 million for the three and six months ended June 30, 2022 compared to a provision of $0.9 million and $0.5 million for the three and six months ended June 30, 2021. The effective tax rate, inclusive of discrete items, was a provision of 9.0% for the three months ended June 30, 2022, compared to a provision of 5.1% for the three months ended June 30, 2021. For the six months ended June 30, 2022, our effective tax rate, inclusive of discrete items, was a provision of 4.1%, compared to a provision of 1.0% for the six months ended June 30, 2021. Our effective tax rate differed from the statutory tax rate due to an increase in the valuation allowance in certain foreign jurisdictions. The effective tax rate in the prior year was also impacted by the tax benefits recognized related to the CARES Act.

The lack of going concern basis applicable for our second quarter financial statements generally requires a valuation allowance for all deferred tax assets that are not realizable through the reversal of existing timing differences or taxable income in carryback years. While several subsidiaries have historically been profitable and for which future income was a material factor in assessing the realizability of their deferred tax assets, the substantial doubt about the Company’s ability to continue as a going concern basis casts doubt on our ability to generate future income. As a result, the Company included a charge of $0.8 million in income tax expense for the valuation allowance required to offset the remaining net deferred tax assets. The $0.8 million charge is primarily attributable to our Germany and Canada subsidiaries. Refer to Note 1 - Summary of Significant Accounting Policies and Practices for additional liquidity and going concern discussion.

11. DEBT

For the period ended June 30, 2022 debt with original maturities greater than one year are classified as current due to the Trigger Date provision. This provision did not impact classification of debt for the period ended December 31, 2021. Refer to Note 1 - Summary of Significant Accounting Policies and Practices for additional liquidity and going concern discussion. Team’s current and long-term debt obligations consisted of the following (in thousands):

	June 30, 2022		December 31, 2021
	(unaudited)
ABL Facilities	$	128,053	$	62,000
Atlantic Park Term Loan	224,473		214,191
Subordinated Term Loan	41,845		36,358
Total	$	394,371	$	312,549
Notes1	92,178		87,662
Finance lease obligations	5,311		5,649
Total debt and finance lease obligations	$	491,860	$	405,860
Current portion of long-term debt and finance lease obligations	(487,204)		(669)
Total long-term debt and finance lease obligations, less current portion	4,656		405,191

_________________

1        Comprised of principal amount outstanding, less unamortized discount and issuance costs. See Convertible Debt section below for additional information.

On August 15, 2022, Team announced it has executed a definitive purchase and sale agreement with Baker Hughes to sell Quest Integrity for $280.0 million, before customary post-closing adjustments. Post-closing of this transaction Team’s expects its liquidity and debt profile to be significantly improved, refer to Note 20 - Subsequent Events for additional details regarding this transaction.

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ABL Facilities

On February 11, 2022, we entered into a new credit agreement with the lender parties thereto, and Eclipse Business Capital, LLC, a Delaware limited liability company, as agent, (“Eclipse”) (such agreement, the “ABL Credit Agreement”). Available funding commitments to us under the ABL Credit Agreement, subject to certain conditions, include a revolving credit line in an amount of up to $130.0 million to be provided by certain affiliates of Eclipse (the “Revolving Credit Loans”), with a $35.0 million sublimit for swingline borrowings and a $26.0 million sublimit for issuances of letters of credit, and an incremental delayed draw term loan of up to $35.0 million (the “Corre Delayed Draw Term Loans”) to be provided by Corre Partners Management, LLC and certain of its affiliates (“Corre”) (collectively, the “ABL Credit Facility”). The proceeds of the loans under the ABL Credit Facility were used to, among other things, pay off the amounts owed under that certain asset-based credit agreement (such agreement, as amended, restated, supplemented or otherwise modified from time to time, the “Citi Credit Agreement”) led by Citibank, N.A. (“Citibank”), as agent, which was repaid and terminated in full on February 11, 2022. The ABL Credit Facility matures, and all outstanding amounts become due and payable on February 11, 2025. However, the ABL Credit Facility is subject to the Trigger Date as noted above in Note 1 - Summary of Significant Accounting Policies and Practices.

Borrowings under the ABL Facility bear interest through maturity at a variable rate based upon, at our option, an annual rate of either a base rate (“Base Rate”) or a LIBOR rate, plus an applicable margin, as defined in the ABL Credit Agreement. The interest rate at June 30, 2022 was 5.71% for Eclipse and 11.06% for the Corre Delayed Draw Term Loans.

Direct and incremental costs associated with the issuance of the ABL Credit Facility were approximately $8.3 million and were capitalized as deferred financing costs. These costs are being amortized on a straight-line basis over the term of the ABL Credit Facility. Unamortized deferred financing cost amounted to $6.6 million and $2.9 million at June 30, 2022 and December 31, 2021, respectively. Additionally, the amortization period for deferred financing costs and debt discounts and issuance cost was updated to reflect the revised maturity date associated with the Trigger date provision and the related reclassification of debt as current. Refer to Note 1 - Summary of Significant Accounting Policies and Practices for additional liquidity and going concern discussion.

At June 30, 2022, Team had $103.1 million outstanding under the Revolving Credit Loans and $25.0 million outstanding under the Corre Delayed Draw Term Loans. As of June 30, 2022, subject to the applicable sublimit and other terms and conditions, the remaining $4.5 million of available commitments under the ABL Credit Facility was available for loans or for issuance of new letters of credit.

Amendments in 2022. On May 6, 2022, we entered into the ABL Credit Agreement Amendment No. 1 which, among other things, modified the Maturity Reserve Trigger Date (as defined in the ABL Credit Agreement and Note 1 - Summary of Significant Accounting Policies and Practices) such that the date on which a reserve must, subject to certain conditions, be put into place with respect to the outstanding principal amount of the 5.00% Convertible Senior Notes due 2023 (the “Notes”) is 75 days prior to their maturity date rather than 120 days. Under the terms of our amended financing arrangements the “Trigger Date” is now May 18, 2023, by which date, the Notes balance must be paid down to $10.0 million, or the Company must have equivalent cash on hand to pay down the Notes to $10.0 million.

Atlantic Park Term Loan

On December 18, 2020, we entered into certain Term Loan Credit Agreement (the “Term Loan Credit Agreement”) with Atlantic Park Strategic Capital Fund, L.P., as agent (“APSC”), as lender (the “Term Loan Credit Agreement”), pursuant to which we borrowed a $250.0 million term loan (the “Term Loan”). The Term Loan was issued with a 3% original issuance discount, such that total proceeds received were $242.5 million. As set forth in the Term Loan Credit Agreement, the Term Loan is secured by substantially all assets, other than those secured on a first lien basis by the ABL Credit Facility, and we may under certain conditions, increase the Term Loan by an amount not to exceed $100.0 million. The Term Loan bears an interest through maturity at a variable rate based upon, at our option, an annual rate of either a Base rate or a LIBOR rate, plus an applicable margin. The effective interest rate on the Term Loan at June 30, 2022 and December 31, 2021 was 23.85% and 20.90%, respectively. The increase in the effective interest rate of 2.95% for the six months ended June 30, 2022 is due to the acceleration of the debt issuance costs triggered by the reclassification of the long term debt to current. The unamortized balances of debt discounts, warrant discount and debt issuance cost amounted to $31.7 million and $35.8 million at June 30, 2022 and December 31, 2021, respectively.

The Term Loan matures, and all outstanding amounts become due and payable on December 18, 2026. However, certain conditions could result in an earlier maturity, including if the Notes have an aggregate principal amount outstanding of

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$10.0 million or more on the Trigger Date, in which case the Term Loan will terminate on the Trigger Date. The debt is classified as current due to the Trigger Date noted above.

Amendments in 2022. On February 11, 2022, we entered into Amendment No. 6 (the “Sixth Amendment”) to the Term Loan Credit Agreement. The Sixth Amendment, among other things and subject to the terms thereof, (i) permitted the entry into the ABL Credit Agreement, (ii) permitted certain interest payments due under the Term Loan Credit Agreement to be paid in kind, (iii) permitted certain asset sales and required certain related mandatory prepayments, subject to an applicable prepayment premium, and (iv) amended the financial covenants such that the maximum net leverage ratio of 7.00 to 1.00 would not be tested until the fiscal quarter ending March 31, 2023, and the Company is not permitted to exceed $20.0 million in unfinanced capital expenditures in any calendar year; provided, that such unfinanced capital expenditures limitation will not apply if the Company maintains a net leverage ratio of less than or equal to 4.00 to 1.00 as of the end of the second and fourth fiscal quarter of each calendar year.

On May 6, 2022, we entered into Amendment No. 7 (the “Seventh Amendment”) to the Term Loan Credit Agreement. The Seventh Amendment, among other things and subject to the terms thereof, (i) modified the Maturity Trigger Date (as defined in the Term Loan Credit Agreement) such that the date on which the maturity of the Term Loan Credit Agreement is triggered as a result of there being an aggregate principal amount of more than $10.0 million outstanding under the Notes is 75 days prior to their maturity date instead of 120 days prior to their maturity date, and (ii) amends the financial covenants such that the maximum net leverage ratio to be tested for the fiscal quarter ending March 31, 2023 is increased from 7.00 to 1.00 to 12.00 to 1.00.

Subordinated Term Loan

On November 9, 2021, we entered into a credit agreement the (“Subordinated Term Loan Credit Agreement”) with Corre Credit Fund, LLC (“Corre Fund”), as agent, and the lenders party thereto providing for an unsecured $50.0 million delayed draw subordinated term loan facility (the “Subordinated Term Loan”). The Subordinated Term Loan matures, and all outstanding amounts become due and payable, on the earlier of December 31, 2026 and the date that is two weeks later than the maturity or full repayment of the Term Loan. The stated interest rate on the Subordinated Term Loan is 12%. Effective interest rate at June 30, 2022 and December 31, 2021 was 46.79% and 19.73%, respectively. The increase in the effective interest rate of 27.06% for the six months ended June 30, 2022 is due to the acceleration of the debt issuance costs triggered by the reclassification of the long term debt to current. The unamortized debt issuance cost amounted to $11.6 million and $13.9 million at June 30, 2022 and December 31, 2021, respectively.

Amendments in 2022. On February 11, 2022, we entered into Amendment No. 5 to the Subordinated Term Loan Credit Agreement with the lenders from time to time party thereto (including Corre), and Cantor Fitzgerald Securities, as agent, that, among other things, provided for an additional commitment of $10.0 million in subordinated delayed draw term loans to be available for borrowing by the Company until October 31, 2022 (as amended by Amendment No. 7 as described further below).

On May 6, 2022, we entered into Amendment No. 6 to the Subordinated Term Loan Credit Agreement (the “Corre Amendment 6”) with the lenders from time to time party thereto (including Corre), and Cantor Fitzgerald Securities, as agent. The Corre Amendment 6, among other things, amends the financial covenants, such that the maximum net leverage ratio to be tested for the fiscal quarters ending March 31, 2023 will be increased from 7.00 to 1.00 to 12.00 to 1.00.

On June 27, 2022, we entered into Amendment No. 7 to the Subordinated Term Loan Credit Agreement with the lenders from time to time party thereto (including Corre), and Cantor Fitzgerald Securities, as agent, that, among other things, extended availability date for additional commitment of $10.0 million in subordinated delayed draw term loans from July 1, 2022 to October 31, 2022.

Warrants

On December 18, 2020, in connection with the execution of the Term Loan, we issued to APSC warrants to purchase up to 3,582,949 shares of our common stock, which was initially exercisable at the holder’s option at any time, in whole or in part, until June 14, 2028, at an exercise price of $7.75 per share (the “Existing Warrant”). In connection with execution of the Subordinated Term Loan Credit Agreement and Third Amendment, on November 9, 2021, we entered into an Amended and Restated Common Stock Purchase Warrant (the “A&R Warrant”) with APSC Holdco II, L.P. (“APSC Holdco”) pursuant to which the Existing Warrant was amended and restated to provide for the purchase of up to 4,082,949 shares of our common stock (which includes 500,000 of the shares of common stock issuable pursuant to warrants issued to APSC on November 8,

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2021, providing for the purchase of an aggregate of 1,417,051 shares of our common stock) and to reduce the exercise price to $1.50 per share. As of June 30, 2022 no warrants have been exercised.

Subscription Agreement

In connection with the transactions contemplated by the ABL Credit Agreement, Corre Partners Management, LLC and certain of its affiliates (collectively, “Corre”), agreed to provide the Company with incremental financing (the “Incremental Financing”), totaling approximately $55.0 million, consisting of (i) $35.0 million Delayed Draw Term Loans under the ABL Credit Facility as discussed above; (ii) $10.0 million from Corre in the form of the February 2022 Delayed Draw Term Loan (as defined in the Subordinated Term Loan Credit Agreement) on a pari passu basis with the existing loans issued pursuant to the Subordinated Term Loan Credit Agreement; and (iii) $10.0 million through an issuance of 11,904,762 shares (the “PIPE Shares”) of our common stock to Corre Opportunities Qualified Master Fund, LP, Corre Horizon Fund, LP and Corre Horizon II Fund, LP (collectively, the “Corre Holders”) at a price of $0.84 per share (the “Equity Issuance”). In connection with the Incremental Financing and Equity Issuance, on February 11, 2022, we entered into a common stock subscription agreement (the “Subscription Agreement”) with the Corre Holders, pursuant to which the Company issued and sold the PIPE Shares to the Corre Holders on February 11, 2022.

Pursuant to and subject to the terms and conditions of the Subscription Agreement, our Board of Directors (the “Board”) is required to create a vacancy for one qualified nominee of the Corre Holders to the Board, who shall be designated by the Corre Holders and qualify as an independent director (a “Board Nominee”), and the Board is required to appoint such initial Board Nominee as a Class II director within seven business days of the date of the Subscription Agreement. This nominee has been appointed to the Board and this condition will remain active as long as the Subscription Agreements remains outstanding.

Notes

Amendments in 2022. On January 13, 2022, we entered into a supplemental indenture with Truist Bank, as trustee, (the “Supplemental Indenture”) to the indenture (the “Indenture”) governing the Notes to effect certain amendments (the “Amendments”) to the Indenture and to modify the Notes held by consenting holders (the “Consenting Holders”) of $52.0 million in aggregate principal amount of the Notes (such modified Notes, the “PIK Securities”). The Supplemental Indenture amends the Indenture to, among other things, allow for interest payable on the PIK Securities on February 1, 2022 to be paid in PIK Interest (as defined in the Supplemental Indenture) and on subsequent interest payment dates to be payable, at the Company’s option, at a rate of 5.00% per annum entirely in cash or at a rate of 8.00% per annum in PIK Interest.

In December 2020, we retired $136.9 million par value of our Notes, and as of June 30, 2022, the principal amount outstanding was $95.2 million. As of June 30, 2022 and December 31, 2021, the Notes were recorded in our condensed consolidated balance sheets as follows (in thousands):

	June 30, 2022		December 31, 2021
	(unaudited)
Liability component:
Principal	$	95,208	$	93,130
Unamortized issuance costs	(1,170)		(916)
Unamortized discount	(1,860)		(4,552)
Net carrying amount of the liability component1	$	92,178	$	87,662
Equity component:
Carrying amount of the equity component, net of issuance costs2	$	—	$	7,969
Carrying amount of the equity component, net of issuance costs3	$	37,276	$	37,276

_________________

1        Included in the “Current portion of long-term debt and finance lease obligations” line of the condensed consolidated balance sheets.

2        Relates to the portion of the Notes accounted for under ASC 470-20 (defined below) and is included in the “Additional paid-in capital” line of the condensed consolidated balance sheets.

3        Relates to the portion of the Notes accounted for under ASC 815-15 (defined below) and is included in the “Additional paid-in capital” line of the condensed consolidated balance sheets.

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The following table sets forth interest expense information related to the Notes (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Coupon interest	$	1,595		$	1,164		$	3,177		$	2,328
Amortization of debt discount and issuance costs	693			768			1,320			1,534
Total interest expense	$	2,288		$	1,932		$	4,497		$	3,862
Effective interest rate	10.24		%	9.12		%	10.24		%	9.12		%

ASU 2020-06 Adoption. In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU simplifies the accounting for convertible instruments by removing certain separation models in ASC 470-20, Debt—Debt with Conversion and Other Options, for convertible instruments. The ASU updates the guidance on certain embedded conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, such that those features are no longer required to be separated from the host contract. The convertible debt instruments will be accounted for as a single liability measured at amortized cost. This will also result in the interest expense recognized for convertible debt instruments to be typically closer to the coupon interest rate when applying the guidance in Topic 835, Interest. Further, the ASU made amendments to the EPS guidance in Topic 260 for convertible debt instruments, the most significant impact of which is requiring the use of the if-converted method for diluted EPS calculation, and no longer allowing the net share settlement method. The ASU also made revisions to Topic 815-40, which provides guidance on how an entity must determine whether a contract qualifies for a scope exception from derivative accounting. The amendments to Topic 815-40 change the scope of contracts that are recognized as assets or liabilities. The ASU is effective for interim and annual periods beginning after December 15, 2021, with early adoption permitted for periods beginning after December 15, 2020. Adoption of the ASU can either be on a modified retrospective or full retrospective basis. On January 1, 2022, we adopted the ASU using the modified retrospective method. We recognized a cumulative effect of initially applying the ASU as an adjustment to the January 1, 2022 opening balance of accumulated deficit. The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods.

Accordingly, the cumulative effect of the changes made on our January 1, 2022 condensed consolidated balance sheet for the adoption of the ASU was as follows (in thousands):

	Balances at December 31, 2021		Adjustments from Adoption of ASU 2020-06		Balances at January 1, 2022
Liabilities
Long-term debt and finance lease obligations	$	405,191	$	1,827	$	407,018
Equity
Additional paid-in capital	$	444,824	$	(5,651)	$	439,173
Accumulated deficit	$	(375,584)	$	3,824	$	(371,760)

The impact of adoption on our consolidated statements of operations for the six months ended June 30, 2022 was primarily to decrease net interest expense by $0.6 million. This had the effect of decreasing our basic and diluted net loss per share of common stock attributable to common stockholders for the six months ended June 30, 2022 by $0.01. The change in methodology by requiring the use of the if-converted method to determine the denominator used in the calculation of diluted net income per share of common stock attributable to common stockholders did not have an impact on the diluted EPS as the shares of common stock issuable upon conversion were not included in the denominator because of the antidilutive effect.

Deferred Financing Costs, Debt and Warrant Discounts and Debt Issuance Cost

As referenced above, all debt with original maturities greater than one year are classified as current as of June 30, 2022 due to the Trigger Date provisions.

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As of June 30, 2022 and December 31, 2021, capitalized deferred financing costs, inclusive of debt issuance costs and discounts, net of accumulated amortization, related to Team’s outstanding debt were $53.0 million and $58.0 million. Due to the Trigger Date provisions, the amortization period for deferred financing costs, debt and warrant discounts and debt issuance costs was updated to reflect the accelerated maturity dates. This resulted in additional amortization charges of $4.6 million during the six months ended June 30, 2022. Refer to Note 1 - Summary of Significant Accounting Policies and Practices for additional liquidity and going concern discussion.

Liquidity

At June 30, 2022, we had $41.1 million of unrestricted cash and cash equivalents and $26.3 million of restricted cash held as collateral for letters of credit and commercial card programs. International cash balance at June 30, 2022 was $21.8 million, and approximately $1.5 million of cash is located in countries where currency restrictions exist. We had approximately $24.5 million in additional borrowing capacity, consisting of $4.5 million of available under the ABL Credit Facility, $10.0 million available under the incremental delayed draw term loan (the “Delayed Draw Term Loans”), and $10.0 million available under the Subordinated Term Loan. Internationally we have letters of credit outstanding in the amount of $0.3 million. Additionally, we have $1.5 million in Surety bonds outstanding and an additional $1.2 million in miscellaneous cash deposits securing leases or other required obligations. Refer to Note 1 - Summary of Significant Accounting Policies and Practices for additional liquidity and going concern discussion. Refer to Note 20 - Subsequent Events for draw activity occurring subsequent to the period ended June 30, 2022.

12. LEASES

We adopted ASC 842, Leases, effective January 1, 2019 and elected the modified retrospective transition method. We determine if an arrangement is a lease at inception. Operating leases are included in “Operating lease right-of-use (‘ROU’) assets”, “operating lease liabilities” and “current portion of operating lease obligations” on our consolidated balance sheets. Finance leases are included in “property, plant and equipment, net”, “current portion of long-term debt and finance lease obligations” and “long-term debt and finance lease obligations” on our consolidated balance sheets.  

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments and short-term lease payments (leases with initial terms less than twelve months) are expensed as incurred.

We have lease agreements with lease and non-lease components for certain equipment, office, and vehicle leases. We have elected the practical expedient to not separate lease and non-lease components and account for both as a single lease component. We have operating and finance leases primarily for equipment, real estate, and vehicles. Our leases have remaining lease terms of 1 year to 14 years, some of which may include options to extend the leases for up to 10 years, and some of which may include options to terminate the leases within 1 year.

The components of lease expense are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Operating lease costs	$	6,334	$	7,021	$	13,021	$	14,260
Variable lease costs	1,442		1,326		2,900		2,602
Finance lease costs:
Amortization of right-of-use assets	67		195		261		312
Interest on lease liabilities	38		90		126		168
Total lease cost	$	7,881	$	8,632	$	16,308	$	17,342

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Other information related to leases are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022	2021
Supplemental cash flow information:	(unaudited)		(unaudited)		(unaudited)	(unaudited)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	5,095	$	5,990	10,500	11,346
Operating cash flows from finance leases	25		91		115	171
Financing cash flows from finance leases	158		159		320	237
Right-of-use assets obtained in exchange for lease obligations
Operating leases	514		411		1,354	8,583
Finance leases	77		384		100	406

Amounts recognized in the condensed consolidated balance sheet are as follows (in thousands):

	June 30, 2022			December 31, 2021
Operating Leases:	(unaudited)
Operating lease right-of-use assets	$	52,925		$	60,700
Current portion of operating lease obligations	14,389			16,176
Operating lease obligations (non-current)	43,090			49,221
Finance Leases:
Property, plant and equipment, net	$	4,412		$	5,123
Current portion of long-term finance lease obligations	655			669
Long-term finance lease obligations	4,656			4,980
Weighted average remaining lease term:
Operating leases	5.9 years			6.0 years
Finance leases	9.9 years			10.0 years
Weighted average discount rate:
Operating leases	6.9		%	6.8		%
Finance leases	6.5		%	6.4		%

As of June 30, 2022, we have no material additional operating and finance leases that have not yet commenced. As of June 30, 2022, future minimum lease payments under non-cancellable leases (including short-term leases) are as follows (in thousands):

	Operating Leases		Finance Leases
	(unaudited)		(unaudited)
2022 (Remainder of the year)	$	10,647	$	68
2023	15,317		905
2024	11,918		745
2025	8,609		575
2026	6,729		562
Thereafter	18,161		3,925
Total future minimum lease payments	71,381		6,780
Less: Interest	(13,902)		(1,469)
Present value of lease liabilities	$	57,479	$	5,311

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13. SHARE-BASED COMPENSATION

We have adopted stock incentive plans and other arrangements pursuant to which the Board may grant stock options, restricted stock, stock units, stock appreciation rights, common stock or performance awards to officers, directors and key employees. At June 30, 2022, there were approximately 1.2 million restricted stock units, performance awards and stock options outstanding to officers, directors and key employees. The exercise price, terms and other conditions applicable to each form of share-based compensation under our plans are generally determined by the Compensation Committee of the Board at the time of grant and may vary.

In May 2021, our shareholders approved the amendment and restatement of the 2018 Team, Inc. Equity Incentive Plan (the “2018 Plan”). The 2018 Plan replaced the 2016 Team, Inc. Equity Incentive Plan. The amendment and restatement to the 2018 Plan increased the shares available for issuance by 3.0 million shares of our common stock. Shares issued in connection with our share-based compensation are issued out of authorized but unissued common stock.

Compensation expense related to share-based compensation totaled $0.6 million and $2.1 million for the three months ended June 30, 2022 and 2021, respectively. Compensation expense related to share-based compensation totaled a credit of $0.1 million and an expense of $4.4 million for the six months ended June 30, 2022 and 2021, respectively. The Company incurred a credit in the period related to unvested share-based compensation associated with executive departures which exceeded the total costs expensed for the six month period ended June 30, 2022. Share-based compensation expense reflects an estimate of expected forfeitures. At June 30, 2022, $2.9 million of unrecognized compensation expense related to share-based compensation is expected to be recognized over a remaining weighted-average period of 1.4 years.

Stock units are settled with common stock upon vesting unless it is not legally feasible to issue shares, in which case the value of the award is settled in cash. We determine the fair value of each stock unit based on the market price on the date of grant. Stock units generally vest in annual installments over three or four years and the expense associated with the units is recognized over the same vesting period. We also grant common stock to our directors, which typically vests immediately. There were no stock awards granted to directors during the three and six months ended June 30, 2022. Compensation expense related to stock units and director stock grants totaled $1.2 million and $3.3 million for the six months ended June 30, 2022 and 2021.

Transactions involving our stock units and director stock grants for the six months ended June 30, 2022 are summarized below:

	Six Months Ended June 30, 2022
	(unaudited)
	No. of Stock Units	Weighted Average Fair Value
	(in thousands)
Stock and stock units, beginning of year	804	$	7.27
Changes during the period:
Granted	525	$	1.30
Vested and settled	(135)	$	7.16
Forfeited and cancelled	(89)	$	7.13
Stock and stock units, end of period	1,105	$	4.46

Performance stock units. We have a performance stock unit award program whereby we grant Long-Term Performance Stock Unit (“LTPSU”) awards to our executive officers. Under this program, we communicate “target awards” to the executive officers during the first year of a performance period. LTPSU awards cliff vest with the achievement of the performance goals and completion of the required service period. Settlement occurs with common stock as soon as practicable following the vesting date. LTPSU awards granted in 2019 (the “2019 Awards”), in 2020 (the “2020 Awards”) and in 2021 (the “2021 Awards”) are subject to a two-year performance period and a concurrent two-year service period. There were no LTPSU awards granted during the three and six months ended June 30, 2022. For the LTPSU awards, the performance goal is separated into two independent performance factors based on (i) relative shareholder return (“RTSR”) as measured against a designated peer group and (ii) results of operations over the two-year performance period, with possible payouts ranging from 0% to 200% of the target awards for each of the two performance factors. The 2019 Awards vested as of March 15, 2021 at the RTSR performance target level of 25% and the results of operations performance metric at 0% of the target level.

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The RTSR and the stock price milestone factors are considered to be market conditions under GAAP. For performance units subject to market conditions, we determine the fair value of the performance units based on the results of a Monte Carlo simulation, which uses market-based inputs as of the date of grant to simulate future stock returns. Compensation expense for awards with market conditions is recognized on a straight-line basis over the longer of (i) the minimum required service period and (ii) the service period derived from the Monte Carlo simulation, separately for each vesting tranche. For performance units subject to market conditions, because the expected outcome is incorporated into the grant date fair value through the Monte Carlo simulation, compensation expense is not subsequently adjusted for changes in the expected or actual performance outcome. For performance units not subject to market conditions, we determine the fair value of each performance unit based on the market price of our common stock on the date of grant. For these awards, we recognize compensation expense over the vesting term on a straight-line basis based upon the performance target that is probable of being met, subject to adjustment for changes in the expected or actual performance outcome. Compensation expense related to performance awards totaled a credit of $1.3 million and expense of $1.1 million for the six months ended June 30, 2022 and 2021, respectively.

Transactions involving our performance awards during the six months ended June 30, 2022 are summarized below:

	Six Months Ended June 30, 2022
	(unaudited)
	Performance Units Subject to Market Conditions			Performance Units Not Subject to Market Conditions
	No. of Stock Units1	Weighted Average Fair Value		No. of Stock Units1	Weighted Average Fair Value
	(in thousands)			(in thousands)
Performance stock units, beginning of period	684	$	6.45	219	$	9.91
Changes during the period:
Granted	—	$	—	—	$	—
Vested and settled	—	$	—	—	$	—
Cancelled	(653)	$	6.04	(188)	$	9.61
Performance stock units, end of period	31	$	14.96	31	$	11.69

_________________

1    Performance units with variable payouts are shown at target level of performance.

Stock Options. We determine the fair value of each stock option at the grant date using a Black-Scholes model and recognize the resulting expense of our stock option awards over the period during which an employee is required to provide services in exchange for the awards, usually the vesting period. There was no compensation expense related to stock options for the periods ended June 30, 2022 or December 31, 2021. Our options typically vest in equal annual installments over a four-year service period. Expense related to an option grant is recognized on a straight-line basis over the specified vesting period for those options. Stock options generally have a ten-year term.

No stock options were granted during the six month periods ended June 30, 2022 or June 30, 2021, and no options were exercised, a total of 7,210 options cancelled during the period consisting of 434 forfeited, and 6,776 expired during the six month period ended June 30, 2022. Approximately 10 thousand options were exercisable at June 30, 2022 had a weighted-average remaining contractual life of 1.1 years, and exercise price of $35.59.

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14. EMPLOYEE BENEFIT PLANS

We have a defined benefit pension plan covering certain United Kingdom employees (the “U.K. Plan”). Net periodic pension credit includes the following components (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Interest cost	$	390	$	326	813		$	648
Expected return on plan assets	(582)		(509)		(1,211)		$	(1,012)
Amortization of prior service cost	8		9		16		$	17
Net periodic pension credit	$	(184)	$	(174)	$	(382)	$	(347)

The expected long-term rate of return on invested assets is determined based on the weighted average of expected returns on asset investment categories for the U.K. Plan as follows: 2.1% overall, 4.6% for equities and 1.4% for debt securities. We expect to contribute $3.7 million to the U.K. Plan for 2022, of which $1.9 million has been contributed through June 30, 2022.

15. ACCUMULATED OTHER COMPREHENSIVE LOSS

A summary of changes in accumulated other comprehensive loss included within shareholders’ equity is as follows (in thousands):

	Six Months Ended June 30, 2022										Six Months Ended June 30, 2021
	(unaudited)										(unaudited)
	Foreign Currency Translation Adjustments		Foreign Currency Hedge		Defined Benefit Pension Plans		Tax Provision		Total		Foreign Currency Translation Adjustments		Foreign Currency Hedge		Defined Benefit Pension Plans		Tax Provision		Total
Balance, beginning of period	$	(23,287)	$	—	$	(3,277)	$	(169)	$	(26,732)	$	(23,045)	$	2,988	$	(8,021)	$	400	$	(27,678)
Other comprehensive loss	(5,117)		—		—		—		(5,117)		874		—		—		(155)		719
Balance, end of period	$	(28,404)	$	—	$	(3,277)	$	(169)	$	(31,849)	$	(22,171)	$	2,988	$	(8,021)	$	245	$	(26,959)

The following table represents the related tax effects allocated to each component of other comprehensive income (loss) (in thousands):

	Six Months Ended June 30, 2022						Six Months Ended June 30, 2021
	(unaudited)						(unaudited)
	Gross Amount		Tax Effect		Net Amount		Gross Amount		Tax Effect		Net Amount
Foreign currency translation adjustments	(5,117)		—		(5,117)		874		(155)		719
Total	$	(5,117)	$	—	$	(5,117)	$	874	$	(155)	$	719

16. COMMITMENTS AND CONTINGENCIES

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, which will only be resolved when one or more future events occur or fail to occur. Team’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, Team’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated,

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then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.

We accrue for contingencies where the occurrence of a material loss is probable and can be reasonably estimated, based on our best estimate of the expected liability. We may increase or decrease our legal accruals in the future, on a matter-by-matter basis, to account for developments in such matter. Because such matters are inherently unpredictable and unfavorable developments or outcomes can occur, assessing contingencies is highly subjective and requires judgments about future events. Notwithstanding the uncertainty as to the outcome and while our insurance coverage might not be available or adequate to cover these claims, based upon the information currently available, we do not believe that any uninsured losses that might arise from these lawsuits and proceedings will have a materially adverse effect on our consolidated financial statements.

California Wage and Hour Litigation - On June 24, 2019 and August 26, 2020, two putative class action complaints were filed against Team Industrial Services, Inc. in the Superior Court for the County of Los Angeles, California. The plaintiff in the first filed action is Michael Thai (the “Thai action”). The plaintiff in the second filed action is Alex Esqueda (the “Esqueda action”). All of the claims pleaded in the Esqueda action were also pleaded in the Thai action. Each of the plaintiffs assert claims for alleged wage and hour violations under the California Labor Code (for alleged unpaid wages, failure to provide meal and rest breaks, and derivative related claims). The Thai action also asserts a putative class claim for violation of the Fair Credit Reporting Act. Both cases were stayed shortly after filing to allow the parties to mediate the claims. On February 23, 2021, the Los Angeles Superior Court designated the Thai and Esqueda actions as related cases. While the parties mediated on March 18, 2021, the cases did not settle. On April 16, 2021, Team Industrial Services, Inc. moved both the Thai and Esqueda actions to the United States District Court for the Central District of California. Plaintiff’s motion for remand was denied, and these matters remain in federal court.

In November 2021, the parties agreed in principle to settle all claims in this litigation and all parties entered into a formal settlement agreement in March 2022. As part of the settlement agreement, the parties have agreed to remand the case to the Los Angeles Superior Court for approval of the settlement. All class action settlements of this nature are subject to approval of the court, which can take several months after the final settlement agreement is executed by the parties. The parties anticipate court approval of the settlement agreement in the fourth quarter of 2022 or first quarter of 2023.

Notice of Potential Environmental Violation - On April 20, 2021, Team Industrial Services, Inc. received Notices of Potential Violation from the U.S. Environmental Protection Agency (“EPA”) alleging noncompliance with various waste determination, reporting, training, and planning obligations under the Resource Conservation and Recovery Act at seven of our facilities located in Texas and Louisiana. The allegations largely relate to spent film developing solutions generated through our mobile radiographic inspection services and that the claims relate to the characterization and quantities of those wastes and related notices, reporting, training, and planning.

On February 9, 2022, TEAM and the EPA agreed to settle all the claims related to this matter and the formal settlement agreement was finalized in April 2022 with our agreement to pay penalties totaling $0.2 million.

Kelli Most Litigation - On November 13, 2018, Kelli Most filed a lawsuit against Team Industrial Services, Inc., individually and as a personal representative of the estate of Jesse Henson, in the 268th District Court of Fort Bend County, Texas (the “Most litigation”). The complaint asserted claims against Team for negligence resulting in the wrongful death of Jesse Henson. A jury trial commenced on this matter on May 4, 2021. On June 1, 2021, the jury rendered a verdict against Team for $222.0 million in compensatory damages.

On January 25, 2022, the trial court signed a final judgment in favor of the plaintiff and against Team Industrial Services, Inc. Post-judgment motions challenging the judgment were filed on February 24, 2022 and were denied by the court on April 22, 2022. A notice of appeal was filed on April 25, 2022, and this case is currently pending in the Court of Appeals for the First District of Texas, in Houston.

We believe that the jury verdict is not supported by the facts of the case or applicable law, is the result of significant trial error, and there are strong grounds for appeal. We will seek to overturn the verdict in post-trial motions before the District Court and, if necessary, to appeal to the Court of Appeals for the State of Texas. We intend to vigorously challenge the judgment through all appropriate post-trial motions and appeal processes.

As a result, we believe that the likelihood that the amount of the judgment will be affirmed is not probable. We have taken into consideration the events that have occurred after the reporting period and before the financial statements were issued. We currently estimate a range of possible outcomes between $13.0 million and approximately $51.0 million, and we have

30

accrued a liability as of June 30, 2022. which is the amount we believe is the most likely estimate for a probable loss on this matter. We have also recorded a related receivable from our third-party insurance providers in other current assets with the corresponding liability of the same amount in other accrued liabilities. Such amounts are treated as non-cash operating activities. The Most litigation is covered by our general liability and excess insurance policies which are occurrence based and subject to an aggregate $3.0 million self-insured retention and deductible. All retentions and deductibles have been met, accordingly, we believe pending the final settlement, all further claims will be fully funded by our insurance policies. We will continue to evaluate the possible outcomes of this case in light of future developments and their potential impact on factors relevant to our assessment of any possible loss.

Simon, Vige, and Roberts Matter – On February 19, 2019, a personal injury claim was filed by the plaintiffs against several counterparties including Team Industrial Services Inc., in the 295th District Court of Harris County, Texas. The plaintiffs filed the action seeking monetary damages for personal injury, and emotional and mental distress. This matter was settled in July 2021. This claim is covered by our general liability and excess insurance policies which are occurrence based and subject to an aggregate $3.0 million self-insured retention and deductible.

Accordingly, for all matters discussed above, we have accrued in the aggregate approximately $44.0 million as of June 30, 2022, of which approximately $5.0 million is not covered by our various insurance policies.

In addition to legal matters discussed above, we are subject to various lawsuits, claims and proceedings encountered in the normal conduct of business (“Other Proceedings”). Management believes that based on its current knowledge and after consultation with legal counsel that the Other Proceedings, individually or in the aggregate, will not have a material effect on our consolidated financial statements.

17. SEGMENT AND GEOGRAPHIC DISCLOSURES

ASC 280, Segment Reporting, requires we disclose certain information about our operating segments. Operating segments are defined as “components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.” We conduct operations in three segments: IHT, MS and Quest Integrity.

Segment data for our three operating segments are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenues:
IHT	$	114,124	$	117,462	$	209,721	$	208,601
MS	107,416		97,167		200,857		184,563
Quest Integrity	29,725		24,244		59,263		40,327
Total	$	251,265	$	238,873	$	469,841	$	433,491

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Operating loss:
IHT	$	5,514	$	7,395	$	5,648	$	7,759
MS	6,984		2,328		7,497		2,443
Quest Integrity	8,014		5,702		14,218		5,450
Corporate and shared support services	(23,292)		(21,419)		(46,346)		(45,946)
Total	$	(2,780)	$	(5,994)	$	(18,983)	$	(30,294)

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	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Capital expenditures1:
IHT	$	3,326	$	2,457	$	8,097	$	5,171
MS	1,621		1,367		2,434		2,519
Quest Integrity	1,333		974		2,342		1,380
Corporate and shared support services	19		296		57		421
Total	$	6,299	$	5,094	$	12,930	$	9,491

_____________

1    Excludes finance leases. Totals may vary from amounts presented in the consolidated statements of cash flows due to the timing of cash payments.

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Depreciation and amortization:
IHT	$	3,096	$	3,270	$	6,350	$	6,740
MS	4,634		5,043		9,518		10,482
Quest Integrity	569		710		1,146		1,422
Corporate and shared support services	1,279		1,324		2,595		2,662
Total	$	9,578	$	10,347	$	19,609	$	21,306

Separate measures of our assets by operating segment are not produced or utilized by management to evaluate segment performance.

A geographic breakdown of our revenues and our total long-lived assets for the three and six months ended June 30, 2022 and 2021 is as follows (unaudited, in thousands):

	Three Months Ended June 30, 2022				Three Months Ended June 30, 2021
	Total Revenues1		Total Long-lived Assets2		Total Revenues1		Total Long-lived Assets2
United States	$	171,665	$	258,559	$	162,465	$	282,706
Canada	36,193		9,198		34,152		9,309
Europe	26,554		20,920		29,264		24,755
Other foreign countries	16,853		10,649		12,992		12,440
Total	$	251,265	$	299,326	$	238,873	$	329,210
	Six Months Ended June 30, 2022				Six Months Ended June 30, 2021
	Total Revenues1		Total Long-lived Assets2		Total Revenues1		Total Long-lived Assets2
United States	$	323,346	$	258,559	$	304,296	$	282,706
Canada	56,511		9,198		50,647		9,309
Europe	50,677		20,920		54,975		24,755
Other foreign countries	39,307		10,649		23,573		12,440
Total	$	469,841	$	299,326	$	433,491	$	329,210

 ______________

1    Revenues attributable to individual countries/geographic areas are based on the country of domicile of the legal entity that performs the work.

2    Excludes goodwill, intangible assets not being amortized that are to be held and used, financial instruments and deferred tax assets.

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18. SEVERANCE AND OTHER CHARGES

For the six months ended June 30, 2022, we incurred severance charges of $2.4 million, which represents costs incurred in 2022 as a result of ongoing cost reduction efforts.

In January 2021, we announced a new strategic organizational structure to better position ourselves for recovery post pandemic, continue sector diversification, and enhance client value (the “Operating Group Reorganization”). In connection with the Operating Group Reorganization, we announced certain executive leadership changes and the appointment of experienced new talent to our leadership team. For the twelve months ended December 31, 2021, we incurred severance charges of $2.9 million as a result of the Operating Group Reorganization.

A rollforward of our accrued severance liability associated with our ongoing cost reduction efforts is presented below (in thousands):

	Six Months Ended June 30, 2022
	(unaudited)
Balance, beginning of period	$	712
Charges	2,370
Payments	(866)
Balance, end of period	$	2,216

19. RELATED PARTY TRANSACTIONS

Alvarez & Marsal provided certain consulting services to the Company in connection with our former Interim Chief Financial Officer position and other corporate support costs. Effective June 12, 2022 the Interim Chief Financial Officer position ended as the Company named a permanent Chief Financial Officer prior to end of the period ended June 30, 2022. The Company paid $8.0 million in fees to Alvarez & Marsal for the year ended December 31, 2021, and $6.0 million for the year to date period ended June 30, 2022.

In connection with the Company’s debt transactions, the Company engaged in transactions with Corre and Atlantic Park to provide funding as described in Note 11 - Debt.

20. SUBSEQUENT EVENTS

During July 2022, our Board approved management’s recommendation to place Quest Integrity up for sale. Accordingly Quest Integrity will be treated as held for sale in reporting periods subsequent to June 30, 2022.

On August 15 2022, Team announced it executed a definitive purchase and sale agreement with Baker Hughes to sell Quest Integrity for $280.0 million, before customary post-closing adjustments. The sale is subject to ordinary closing conditions, regulatory approvals, and other adjustments, and is expected to close in the fourth quarter of 2022.

The Company expects the net proceeds from the Quest Integrity Sale to be used to pay down debt and for general corporate purposes, thereby reducing the Company’s future debt service obligations and leverage and improving its liquidity and capital resources. The consummation of the Quest Integrity Sale will allow the Company to focus on improving its core IHT and MS businesses.

Quest Integrity represented approximately 15% of the Company’s consolidated total assets as of June 30, 2022 and approximately 13% of the Company’s consolidated revenue for the six months ended June 30, 2022.

During July 2022, the Company drew down $10.0 million in cash proceeds from the Corre Delayed Draw Term Loan for general corporate purposes.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Unless otherwise indicated, the terms “Team, Inc.,” “Team,” “we,” “our” and “us” are used in this report to refer to Team, Inc., to one or more of its consolidated subsidiaries or to all of them taken as a whole.

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in this report, and in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021 (“our Annual Report on Form 10-K”) and other documents previously filed with the SEC. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those described in more detail under the heading “Risk Factors” included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K. See also “Cautionary Statement Regarding Forward-Looking Statements” below.

Cautionary Note Regarding Forward-Looking Statements.

This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current fact included in this report are forward-looking statements. Forward-looking statements include statements containing words such as “anticipate,” “believe,” “expect,” “plan,” “intend,” “estimate,” “project,” “projection,” “predict,” “budget,” “forecast,” “goal,” “guidance,” “target,” “will,” “could,” “should,” “may” and similar expressions. We base our forward-looking statements on beliefs and assumptions that we believe to be reasonable, and our current expectations, estimates and projections about ourselves and our industry. However, all forward-looking statements are subject to risks and uncertainties, many of which are out of our control, that may cause actual results to differ materially from those that are expected and, therefore, you should not unduly rely on such statements. The forward-looking statements included herein are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law.

There are a number of risks and uncertainties that could cause our actual results to differ materially from those expressed or implied by these forward-looking statements. Such risks include those disclosed under the heading "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the United States Securities and Exchange Commission, as well as, risks related to:

•our ability to continue as a going concern;

•our ability to manage inflationary pressures in our operating costs;

•the impact to our business, financial condition, results of operations and cash flows due to negative market conditions, including from the impact of the COVID-19 pandemic or other public health crises, the ongoing conflict in Ukraine, and future economic uncertainties, particularly in industries in which we are heavily dependent;

•delays in the commencement of major projects, whether due to the COVID-19 pandemic or other factors;

•our business may be affected by seasonal and other variations, including severe weather conditions and the nature of our clients’ industry;

•our ability to expand into new markets (including low carbon energy transition) and attract clients in new industries may be limited due to our competition’s breadth of service offerings and intellectual property;

•we have significant debt and high leverage which could have a negative impact on our financing options, liquidity position and ability to manage increases in interest rates;

•the timing of new client contracts and termination of existing contracts may result in unpredictable fluctuations in our cash flows and financial results;

•risk of non-payment and/or delays in payment of receivables from our clients;

•our ability to generate sufficient cash from operations, access our ABL Credit Facility, or maintain our compliance with our ABL Credit Agreement, Term Loan Credit Agreement, and Subordinated Term Loan Credit Agreement covenants;

•compliance with continued listing standards of the New York Stock Exchange;

•if we cannot regain compliance with the NYSE’s continued listing requirements and rules, the NYSE may delist our

common stock, which could negatively affect our company, the price of our common stock and our shareholders’ ability              to sell our common stock and may lead to potential events of default on existing debt instruments.

•our financial forecasts are based upon estimates and assumptions that may materially differ from actual results;

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•we may incur liabilities and suffer negative financial or reputational impacts relating to occupational health and safety matters, including costs incurred in connection with the implementation of preventative measures required in regard to mitigation of the spread of COVID-19 or other public health crises;

•changes in laws or regulations in the local jurisdictions that we conduct our business;

•the inherently uncertain outcome of current and future litigation;

•if we fail to maintain effective internal controls, we may not be able to report our financial results accurately or timely or prevent or detect fraud, which could have a material adverse effect on our business; and

•acts of terrorism, war or political or civil unrest in the United States or elsewhere, including the current events involving Russia and Ukraine, changes in laws and regulations, or the imposition of economic or trade sanctions affecting international commercial transactions.

General Description of Business

We are a global leading provider of integrated, digitally-enabled asset performance assurance and optimization solutions. We deploy conventional to highly specialized inspection, condition assessment, maintenance and repair services that result in greater safety, reliability and operational efficiency for our clients’ most critical assets. We conduct operations in three segments: Inspection and Heat Treating (“IHT”), Mechanical Services (“MS”) and Quest Integrity. Through the capabilities and resources in these three segments, we believe that we are uniquely qualified to provide integrated solutions involving: inspection to assess condition; engineering assessment to determine fitness for purpose in the context of industry standards and regulatory codes; and mechanical services to repair, rerate or replace based upon the client’s election. In addition, we are capable of scaling with the client’s needs, as dictated by the severity of the damage found and the related operating conditions, from standard services to some of the most advanced services and integrated asset integrity and reliability management solutions available in the industry. We also believe that we are unique in our ability to provide services in three distinct client demand profiles: (i) turnaround or project services, (ii) call-out services and (iii) nested or run-and-maintain services.

IHT provides conventional and advanced non-destructive testing (“NDT”) services primarily for the process, pipeline and power sectors, and pipeline integrity management services, and field heat treating and thermal services, tank management solutions, and pipeline integrity solutions, as well as associated engineering and condition assessment services. These services can be offered while facilities are running (on-stream), during facility turnarounds or during new construction or expansion activities. IHT also provides advanced digital imaging including remote digital video imaging, laser scanning and laser profilometry-enabled reformer care services.

MS provides solutions designed to serve clients’ unique needs during both the operational (onstream) and off-line states of their assets. Our onstream services include our range of standard to custom-engineered leak repair and composite solutions; emissions control and compliance; hot tapping and line stopping; and on-line valve insertion solutions, which are delivered while assets are in an operational condition, which maximizes client production time. Asset shutdowns can be planned, such as a turnaround maintenance event, or unplanned, such as those due to component failure or equipment breakdowns. Our specialty maintenance, turnaround and outage services are designed to minimize client downtime and are primarily delivered while assets are off-line and often through the use of cross-certified technicians, whose multi-craft capabilities deliver the production needed to achieve tight time schedules. These critical services include on-site field machining; bolted-joint integrity; vapor barrier plug testing; and valve management solutions.

Quest Integrity provides integrity and reliability management solutions for the process, pipeline and power sectors. These solutions encompass two broadly-defined disciplines: (1) highly specialized in-line inspection services for historically unpiggable process piping and pipelines using proprietary in-line inspection tools and analytical software; and (2) advanced engineering and condition assessment services through a multi-disciplined engineering team and related lab support.

We market our services to companies in a diverse array of heavy industries which include:

•Energy (refining, power, renewables, nuclear and liquefied natural gas);

•Manufacturing and Process (chemical, petrochemical, pulp and paper industries, manufacturing, automotive and mining);

•Midstream and Others (valves, terminals and storage, pipeline and offshore oil and gas);

•Public Infrastructure (amusement parks, bridges, ports, construction and building, roads, dams and railways); and

•Aerospace and Defense.

In January 2021, we announced a strategic reorganization (the “Operating Group Reorganization”). The new streamlined structure supports our global operations with greater focus on further improving operational and financial performance through

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three new operating groups: Inspection and Heat Treating Group (the “IHT Group”), Mechanical & Onstream Services group (the “MOS Group”) and Asset Integrity & Digital (the “AID Group”). The IHT Group, which included in the IHT segment, is dedicated to growing its stable nested footprint as regulatory compliance requirements increase, expanding turnaround activity, and diversifying its end markets globally, such as through increased investment in the Aerospace business line. The MOS Group, which is included the MS segment, continues to target turnarounds and capital projects, and improve performance, efficiency, and longevity of aging critical assets. The MOS Group is primed to grow with the industry recovery led by the high demand of maintenance and call-out work. The AID Group, which is included in our Quest Integrity segment, will focus on expanding mechanical and pipeline integrity, risk-based inspection, remote visual inspection, and digital platform. The AID Group will also optimize our research and development activities, including product and technology development. These changes had no effect on our reportable segments.

Significant Factors Impacting Results and Recent Developments

Our revenues, gross margins and other results of operations can be influenced by a variety of factors in any given period, including those described in Cautionary Note Regarding Forward-Looking Statements above and Part 1, Item 1A of our Annual Report on Form 10-K. “Risk Factors” included in our Annual Report on Form 10-K include items which have caused fluctuations in our results in the past and are expected to cause fluctuations in our results in the future. Additional information with respect to certain factors are described below.

COVID-19 Pandemic and Market Conditions Update. The impact of COVID-19 had less effect on our workforce and operations during the second quarter of 2022, as well as the operations of our clients, suppliers and contractors. However, the global economy, including the financial and credit markets, has recently experienced significant volatility and disruptions, including increases in inflation rates, rising interest rates, disruption to global supply chains, declines in economic growth, and uncertainty about economic stability. The severity and duration of the impact of these conditions on our business cannot be predicted. See Item 1A, “Risk Factors” for additional information.

Recent Financing Transactions. During 2022 the Company executed a number of amendments to its debt instruments, including amendments to our ABL Credit Facility, Subordinated Term Loan Credit Agreement, and the Term Loan Credit Agreement. Refer to Note 11 - Debt to the unaudited condensed consolidated financial statements for additional details related to these amendments.

Listing Notices from NYSE. The Company’s share price and total market capitalization have fallen below NYSE listing standard thresholds and therefore the Company received the following notices of non-compliance from the NYSE.

•On June 17, 2022, we were notified from the NYSE that the Company was no longer in compliance with the NYSE continued listing standards set forth in Section 802.01B of the NYSE's Listed Company Manual due to the fact that the Company's average global market capitalization over a consecutive 30 trading-day period was less than $50.0 million and, at the same time, its shareholders' equity was less than $50.0 million. The notice has no immediate impact on the listing of the Company’s common stock, which will continue to trade on the NYSE during the applicable cure period, and does not result in a default under the Company's material debt or other agreements.

•On July 13, 2022, the Company was notified by the NYSE that it was not in compliance with the continued listing standards set forth in Rule 802.01C of the NYSE Listed Company Manual requiring listed companies to maintain an average closing share price of at least $1.00 over a consecutive 30 trading-day period. The Company has a period of six months following the receipt of the notice to regain compliance with the minimum share price requirement, with the possibility of extension at the discretion of the NYSE. In order to regain compliance, on the last trading day in any calendar month during the cure period, our common stock must have: (i) a closing price of at least $1.00 per share; and (ii) an average closing price of at least $1.00 per share over the 30 trading day period ending on the last trading day of such month. The notice has no immediate impact on the listing of the Common Stock, which will continue to be listed and traded on the NYSE during this period, subject to the Company’s compliance with the other continued listing requirements of the NYSE. Our common stock will continue to trade on the NYSE under the symbol “TISI” but will have an added designation of “.BC” to indicate the status of our common stock as “below compliance.” If the Company fails to regain compliance with Section 802.01C of the NYSE Listed Company Manual by the end of the cure period, our common stock will be subject to the NYSE’s suspension and delisting procedures.

•As required by the NYSE, the Company notified the NYSE of its intent to cure the deficiency and restore its compliance with the NYSE continued listing standards. In accordance with applicable NYSE procedures on August 1, 2022 the Company submitted a plan advising the NYSE of the definitive actions the Company has taken and is taking, that would bring it into compliance with the minimum global market capitalization and minimum average closing share price listing standards within 18 months of receipt of the written notice. The NYSE will review the plan and, within 45 days of its receipt, determine whether the Company has made a reasonable demonstration of an ability to conform to the relevant standards in the 18-month period. If the NYSE accepts the plan, the Company’s common stock will continue to be listed and traded on the NYSE during the 18-month period, subject to the Company’s compliance with other NYSE continued

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listing standards and continued periodic review by the NYSE of the Company’s progress with respect to its plan. The Company can provide no assurances that the NYSE will accept its plan or that it will be able to satisfy any of the steps outlined in the plan submitted to the NYSE and maintain the listing of its shares on the NYSE.

Current Quarter Financial Results and Significant Operational Trends and Events

Key consolidated financial results for the three and six months ended June 30, 2022 included:

•Revenues for the three months ended June 30, 2022 increased 5.2%, or $12.4 million, to $251.3 million as compared to consolidated revenues of $238.9 million for the three months ended June 30, 2021;

•Revenues for the six months ended June 30, 2022 increased 8.4%, or $36.4 million, to $469.8 million as compared to consolidated revenues of $433.5 million for the six months ended June 30, 2021;

•Operating loss for the three months ended June 30, 2022 improved 53.6%, or $3.2 million, to a loss of $2.8 million as compared to a loss of $6.0 million for the three months ended June 30, 2021;

•Operating loss for the six months ended June 30, 2022 improved 37.3%, or $11.3 million, to a loss of $19.0 million as compared to a loss of $30.3 million for the six months ended June 30, 2021;

•Net loss for the three months ended June 30, 2022 increased by 23.2%, or $4.1 million, to a loss of $21.6 million as compared to a loss of $17.5 million for the three months ended June 30, 2021;

•Net loss for the six months ended June 30, 2022 increased by 4.3%, or $2.2 million, to a loss of $54.0 million as compared to a loss of $51.8 million for the six months ended June 30, 2021;

•Basic earnings per share for the three months ended June 30, 2022 improved 11.7%, or $0.07, to negative $0.50 as compared to negative $0.57 for the three months ended June 30, 2021;

•Consolidated Adjusted EBITDA (a non-GAAP financial measure) for the three months ended June 30, 2022 improved 56.6%, or $5.2 million, to $14.3 million, as compared to $9.1 million for the three months ended June 30, 2021;and

•Net cash used by operating activities for the three months ended June 30, 2022 improved by 80.8%, or $14.2 million to $3.4 million, as compared to net cash used in operating activities of $17.6 million for the three months ended June 30, 2021.

For a reconciliation of EBITDA and adjusted EBITDA to net income attributable to common stock, the most comparable GAAP financial measure, see Non-GAAP Financial Measures below.

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Results of Operations

The following is a comparison of our results of operations for the three months ended June 30, 2022 compared to June 30, 2021.

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

The following table sets forth the components of revenue and operating loss from our operations for the three month period ended June 30, 2022 and 2021 (in thousands):

	Three Months Ended June 30,				Increase (Decrease)
	2022		2021		$		%
	(unaudited)		(unaudited)
Revenues by business segment:
IHT	$	114,124	$	117,462	$	(3,338)	(2.8)	%
MS	107,416		97,167		10,249		10.5	%
Quest Integrity	29,725		24,244		5,481		22.6	%
Total revenues	$	251,265	$	238,873	$	12,392	5.2	%
Operating income (loss):
IHT	$	5,514	$	7,395	$	(1,881)	(25.4)	%
MS	6,984		2,328		4,656		NM
Quest Integrity	8,014		5,702		2,312		40.6	%
Corporate and shared support services	(23,292)		(21,419)		(1,873)		8.7	%
Total operating loss	$	(2,780)	$	(5,994)	$	3,214	53.6	%
Interest expense, net	(18,480)		(9,598)		(8,882)		92.5	%
Other income (expense), net	1,476		(1,044)		2,520		NM
Loss before income taxes	$	(19,784)	$	(16,636)	$	(3,148)	(18.9)	%
Provision for income taxes	(1,768)		(857)		(911)		NM
Net loss	$	(21,552)	$	(17,493)	$	(4,059)	(23.2)	%
NM = Not meaningful

Revenues. Total revenues increased $12.4 million or 5.2% from the prior year quarter primarily driven by increases in MS revenue and Quest Integrity revenue, partially offset by decreases in IHT revenue. Revenues were impacted from foreign exchange negatively by $5.0 million and positively by $8.5 million during the three month period ended June 30, 2022 and 2021. IHT revenues decreased by $3.3 million, MS revenue increased by $10.2 million and Quest Integrity revenue increased by $5.5 million. IHT segment’s second quarter revenue decreased 2.8% compared to the prior year quarter, primarily driven by completion of a significant Canadian customer contract during the second quarter in the prior year. The MS segment delivered second quarter revenue growth of 10.5% over the prior year quarter, primarily from increases in the Canada and US markets, and valve business, partially offset by decreases in international due to non-repeating project work in the UK and continued weakness in Europe offsetting growth in Latin America and the Middle East. The 22.6% increase in revenue for Quest Integrity was due to increased demand in core and growth markets across most geographies and $1.3 million in 2021 deferred projects executed in Q2 2022.

Operating income (loss). Overall operating loss was $2.8 million in the current year quarter compared to operating loss of $6.0 million in the prior year quarter. The overall decrease in operating loss is primarily attributable to MS which experienced an increase in operating income of $4.7 million due to $1.5 million increase in Canada, $2.1 million increase in the valve business, and realized efficiency gains in equipment centers, manufacturing, and engineering, partially offset by lower operating income in the US and international areas. Quest Integrity operating income increased $2.3 million due to increased utilization and a favorable project mix. IHT experienced a decrease of $1.9 million in operating income due to a Canadian customer contract completed in the current period, and the lack of COVID-19 related subsidies in the 2022 period that were received in 2021. Corporate operating loss increased due to higher professional fees related to debt restructuring partially offset by headcount reductions. Additionally, we continue to realize cost inflation in several areas across all segments, such as raw materials, transportation, and labor costs.

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For the three months ended June 30, 2022, operating loss includes net expenses totaling $6.9 million that we do not believe are indicative of our core operating activities, the prior year quarter included $2.6 million of such items, as detailed by segment in the table below (in thousands):

Expenses reflected in operating loss that are not indicative of our core operating activities (unaudited) (in thousands):
	IHT		MS		Quest Integrity		Corporate and shared support services		Total
Three Months Ended June 30, 2022
Professional fees and other1	$	—	$	—	$	—	$	4,693	$	4,693
Legal costs2	—		—		—		1,200		1,200
Severance charges, net3	25		54		12		929		1,020
Total	$	25	$	54	$	12	$	6,822	$	6,913
Three Months Ended June 30, 2021
Professional fees and other1	$	—	$	—	$	—	$	688	$	688
Legal costs2	—		—		—		1,634		1,634
Severance charges, net3	10		216		42		33		301
Total	$	10	$	216	$	42	$	2,355	$	2,623

_________________

1    For the three months ended June 30, 2022, includes $3.2 million related to costs associated with the debt financing and $1.5 million of corporate support costs. For the three months ended June 30, 2021, includes $0.7 million of costs associated with the Operating Group Reorganization (exclusive of restructuring costs).

2    For the three months ended June 30, 2022, primarily relates to legal matters. For June 30, 2021, primarily relates to accrued legal matters and other legal fees.

3    For the three months ended June 30, 2022, $1.0 million primarily related to customary severance costs associated with staff reductions. For the three months ended June 30, 2021, includes $0.3 million related to the Operating Group Reorganization.

The detail of operating income (loss) excluding non-core expenses are as follows (unaudited) (in thousands):
	Three Months Ended June 30,				Increase (Decrease)
	2022		2021		$		%
Operating income (loss), excluding non-core expenses:
IHT	$	5,539	$	7,405	$	(1,866)	(25.2)	%
MS	7,038		2,544		4,494		NM
Quest Integrity	8,026		5,744		2,282		39.7	%
Corporate and shared support services	(16,470)		(19,064)		2,594		13.6	%
Total operating income (loss), excluding non-core expenses	$	4,134	$	(3,371)	$	7,505	NM

Excluding the impact of these identified non-core items in both periods, operating income improved by $7.5 million, consisting of lower operating income at IHT of $1.9 million, higher operating income at MS and Quest Integrity of $4.5 million and $2.3 million, respectively, and a decrease in corporate and shared support services expenses of $2.6 million. The lower operating income in IHT is due to a Canadian customer contract completed in the current period, and inflationary cost pressures associated with the ramp up in activity.

Interest expense, net. Interest expense increased $8.9 million, or 92.5% compared to the prior year quarter, primarily due to the increased outstanding debt amount, attributable to the debt financing executed in the quarter ended March 31, 2022 and increased amortization of deferred financing costs, debt and warrant discounts and debt issuance costs. Due to the various maturity trigger events, the amortization period for deferred financing costs, debt and warrant discounts and debt issuance costs was shortened to reflect the accelerated maturity dates. This resulted in an additional $4.6 million in amortization charges during the three months ended June 30, 2022. Refer to Note 1 - Summary of Significant Accounting Policies and Practices for additional liquidity and going concern discussion.

Other income (expense), net. Other income (expense), net increased $2.5 million from the prior year quarter expense of $1.0 million to a gain of $1.5 million primarily due to insurance proceeds of $0.9 million in cash from natural disaster coverage, received in June 2022, gain on disposal of assets of $1.2 million, and a pension gain of $0.2 million, partially offset by higher foreign currency transaction losses realized in the prior year period.

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Taxes. The provision for income tax was $1.8 million on the pre-tax loss from continuing operations of $19.8 million in the current year quarter, compared to a $0.9 million income tax provision on a pre-tax loss of $16.6 million in the prior year quarter. The effective tax rate, inclusive of discrete items, was a provision of 9.0% for the three months ended June 30, 2022, compared to a provision of 5.1% for the three months ended June 30, 2021. The effective tax rate change from the prior year quarter compared to the current year quarter is due an increase in the valuation allowance.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

The following is a comparison of our results of operations for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

The components of revenue and operating income (loss) from our operations consisted of the following (in thousands):

	Six Months Ended June 30,				Increase (Decrease)
	2022		2021		$		%
	(unaudited)		(unaudited)
Revenues by business segment:
IHT	$	209,721	$	208,601	$	1,120	0.5	%
MS	200,857		184,563		16,294		8.8	%
Quest Integrity	59,263		40,327		18,936		47.0	%
Total revenues	$	469,841	$	433,491	$	36,350	8.4	%
Operating income (loss):
IHT	$	5,648	$	7,759	$	(2,111)	(27.2)	%
MS	7,497		2,443		5,054		NM
Quest Integrity	14,218		5,450		8,768		NM
Corporate and shared support services	(46,346)		(45,946)		(400)		(0.9)	%
Total operating loss	$	(18,983)	$	(30,294)	$	11,311	37.3	%
Interest expense, net	(37,085)		(18,994)		(18,091)		(95.2)	%
Other income (expense), net	4,178		(1,994)		6,172		NM
Loss before income taxes	$	(51,890)	$	(51,282)	$	(608)	(1.2)	%
Provision for income taxes	(2,124)		(502)		(1,622)		NM
Net loss	$	(54,014)	$	(51,784)	$	(2,230)	(4.3)	%

Revenues. Total revenues increased $36.4 million or 8.4% from the prior year period, with all segments seeing increases compared to prior year period. IHT revenues increased by $1.1 million, MS revenue increased by $16.3 million and Quest Integrity revenue increased by $18.9 million. Revenues were impacted from foreign exchange negatively by $6.6 million and positively by $11.9 million during the six month period ended June 30, 2022 and 2021. IHT segment’s year to date 0.5% increase in revenue, compared to the prior year period was primarily driven by increases in US business partially offset by decreases in Canada and international. The MS segment 8.8% increase in revenue compared to the prior year period, primarily from increases of $8.0 million in Canada, $4.2 million in the US, and $3.2 million in the valve business. The 47.0% increase in revenue for Quest Integrity was due to a pronounced recovery of the downstream and pipeline energy markets, continued success in adjacent growth markets and execution of approximately $7.0 million of deferred projects from 2021.

Operating loss. Overall operating loss was $19.0 million in the current year period compared to an operating loss of $30.3 million in the prior year period. The overall decrease in operating loss is attributable to MS experiencing a $5.1 million increase in operating income due to strength in the valve business of $2.0 million, a $1.4 million increase in Canada business and improvements in machinery, engineering and equipment centers. Quest Integrity realized a $8.8 million improvement in operating income due to increased customer sales volume, utilization and a favorable project mix. IHT experienced a decrease in operating income due to declines in aerospace and Canada business, partially offset by a $1.2 million improvement in the US. Corporate operating income was similar to the prior period due to cost reductions, partially offset by higher professional fees in 2022.

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For the six months ended June 30, 2022, operating loss includes net expenses totaling $14.1 million that we do not believe are indicative of our core operating activities as they relate to one time or non-reoccurring items, while the prior year period included $8.3 million of such items, as detailed by segment in the table below (in thousands):

Expenses reflected in operating loss that are not indicative of our core operating activities (unaudited) (in thousands):
	IHT		MS		Quest Integrity		Corporate and shared support services		Total
Six Months Ended June 30, 2022
Professional fees and other1	$	—	$	—	$	—	$	10,036	$	10,036
Legal costs2	—		—		—		1,728		1,728
Severance charges, net3	41		54		12		2,263		2,370
Total	$	41	$	54	$	12	$	14,027	$	14,134
Six Months Ended June 30, 2021
Professional fees and other1	$	—	$	—	$	—	$	1,834	$	1,834
Legal costs2	—		—		—		4,109		4,109
Severance charges, net3	485		355		251		1,257		2,348
Total	$	485	$	355	$	251	$	7,200	$	8,291

_________________

1    For the six months ended June 30, 2022, includes $7.9 million related to costs associated with the debt financing and $2.1 million of corporate support costs. For the six months ended June 30, 2021, includes $1.5 million of costs associated with the Operating Group Reorganization (exclusive of restructuring costs) and $0.3 million of costs associated with the OneTEAM program (exclusive of restructuring costs).

2    For the six months ended June 30, 2022, primarily relates to accrued legal matters. For the six months ended June 30, 2021, primarily relates to accrued legal matters and other legal fees.

3    For the six months ended June 30, 2022, includes $1.3 million related to customary severance costs associated with executive departures and $1.1 million associated with severance across multiple corporate departments. For the six months ended June 30, 2021, includes $2.2 million associated with the Operating Group Reorganization and $0.2 million associated with other severances.

The detail of operating income (loss) excluding non-core expenses are as follows (unaudited) (in thousands):
	Six Months Ended June 30,				Increase (Decrease)
	2022		2021		$		%
Operating income (loss), excluding non-core expenses:
IHT	$	5,689	$	8,244	$	(2,555)	(31.0)	%
MS	7,551		2,798		4,753		NM
Quest Integrity	14,230		5,701		8,529		NM
Corporate and shared support services	(32,319)		(38,746)		6,427		16.6	%
Total operating loss, excluding non-core expenses	$	(4,849)	$	(22,003)	$	17,154	78.0	%
NM = Not meaningful

Excluding the impact of these identified non-core items in both periods, operating loss decreased by $17.2 million, consisting of lower operating income in IHT of $2.6 million, offset by increases in operating income from MS, Quest Integrity, and corporate and shared support services of $4.8 million, $8.5 million, and $6.4 million, respectively. The higher operating income in Quest Integrity reflects recovery of the downstream and pipeline energy markets. The operating income increase in MS was largely attributable to ramp up in activity from customers in valve business and Canada. The operating income increase from corporate and shared support services improved due to staff reductions and other cost efficiency projects.

Interest expense, net. Interest expense, net increased $18.1 million, or 95.2%, from the prior year period primarily due to higher outstanding debt, higher interest rate paid on paid-in-kind interest, and accelerated amortization of deferred financing costs, debt and warrant discounts and debt issuance costs. Due to the various maturity trigger events, the amortization period for deferred financing costs, debt and warrant discounts and debt issuance costs was shortened to reflect the accelerated maturity dates. This resulted in an additional $4.6 million in amortization charges during the six months ended June 30, 2022. Refer to Note 1 - Summary of Significant Accounting Policies and Practices for additional liquidity and going concern discussion. Additionally, due to the debt extinguishment of the Citi Credit Agreement on February 11, 2022, during the three months ended March 31, 2022, the Company recognized interest expense of $2.7 million of related deferred financing costs previously capitalized.

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Other income (expense), net. Other income (expense) improved $6.2 million from the prior year period primarily due to gains on the sale of equipment and inventory of $3.5 million, $0.9 million related to insurance proceeds from a natural disaster claim, and $0.4 million from pension gain, partially offset by higher foreign currency transaction losses realized in the prior year period. Foreign currency transaction losses in the current year period reflect the effects of fluctuations in the U.S. Dollar relative to the currencies to which we have exposure.

Taxes. The provision for income tax was $2.1 million on the pre-tax loss from continuing operations of $51.9 million in the current year-to-date compared to income tax expense of $0.5 million on the pre-tax loss of $51.3 million in the in the prior year-to-date period. The effective tax rate was a provision of 4.1% for the six months ended June 30, 2022, compared to a provision of 1.0% for the six months ended June 30, 2021. The effective tax rate change from the prior year quarter compared to the current year quarter is due to an increase in the valuation allowance.

Non-GAAP Financial Measures and Reconciliations

We use supplemental non-GAAP financial measures which are derived from the condensed consolidated financial information including adjusted net income (loss); adjusted net income (loss) per diluted share, earnings before interest and taxes (“EBIT”); adjusted EBIT (defined below); adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) and free cash flow to supplement financial information presented on a GAAP basis.

We define adjusted net income (loss), adjusted net income (loss) per diluted share and adjusted EBIT to exclude the following items: costs associated with our past integration and transformation program, costs associated with the Operating Group Reorganization, non-routine legal costs and settlements, restructuring charges, certain severance charges, goodwill impairment charges and certain other items that we believe are not indicative of core operating activities. Consolidated adjusted EBIT, as defined by us, excludes the costs excluded from adjusted net income (loss) as well as income tax expense (benefit), interest charges, foreign currency (gain) loss, and items of other (income) expense. Consolidated adjusted EBITDA further excludes from consolidated adjusted EBIT depreciation, amortization and non-cash share-based compensation, and other non cash costs. Segment adjusted EBIT is equal to segment operating income (loss) excluding costs associated with our past integration and transformation program, costs associated with the Operating Group Reorganization, non-routine legal costs and settlements, restructuring charges, certain severance charges, goodwill impairment charges and certain other items as determined by management. Segment adjusted EBITDA further excludes from segment adjusted EBIT depreciation, amortization, and non-cash share-based compensation costs. Free cash flow is defined as net cash provided by (used in) operating activities minus capital expenditures.

Management believes these non-GAAP financial measures are useful to both management and investors in their analysis of our financial position and results of operations. In particular, adjusted net income (loss), adjusted net income (loss) per diluted share, consolidated adjusted EBIT, and consolidated adjusted EBITDA are meaningful measures of performance which are commonly used by industry analysts, investors, lenders and rating agencies to analyze operating performance in our industry, perform analytical comparisons, benchmark performance between periods, and measure our performance against externally communicated targets. Our segment adjusted EBIT and segment adjusted EBITDA is also used as a basis for the Chief Operating Decision Maker to evaluate the performance of our reportable segments. Free cash flow is used by our management and investors to analyze our ability to service and repay debt and return value directly to stakeholders.

Non-GAAP measures have important limitations as analytical tools, because they exclude some, but not all, items that affect net earnings and operating income. These measures should not be considered substitutes for their most directly comparable U.S. GAAP financial measures and should be read only in conjunction with financial information presented on a GAAP basis. Further, our non-GAAP financial measures may not be comparable to similarly titled measures of other companies who may calculate non-GAAP financial measures differently, limiting the usefulness of those measures for comparative purposes. The liquidity measure of free cash flow does not represent a precise calculation of residual cash flow available for discretionary expenditures. Reconciliations of each non-GAAP financial measure to its most directly comparable GAAP financial measure are presented below.

The following tables set forth the reconciliation of Adjusted Net Income (Loss), EBIT and EBITDA to their most comparable GAAP financial measurements:

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TEAM, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands except per share data)
	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Adjusted Net Income (Loss):
Net loss	$	(21,552)	$	(17,493)	$	(54,014)	$	(51,784)
Professional fees and other1	4,693		688		10,036		1,834
Legal costs2	1,200		1,634		1,728		4,109
Severance charges, net3	1,020		301		2,370		2,348
Natural disaster insurance recovery	(872)		—		(872)		—
Tax impact of adjustments and other net tax items4	(2)		(40)		(6)		(63)
Adjusted net loss	$	(15,513)	$	(14,910)	$	(40,758)	$	(43,556)
Adjusted net loss per common share:
Basic and diluted	$	(0.36)	$	(0.48)	$	(1.01)	$	(1.41)
Consolidated Adjusted EBIT and Adjusted EBITDA:
Net loss	$	(21,552)	$	(17,493)	(54,014)		$	(51,784)
Provision (benefit) for income taxes	1,768		857		2,124		502
Gain on equipment sale	(1,170)		—		(3,483)		—
Interest expense, net	18,480		9,598		37,085		18,994
Professional fees and other1	4,693		688		10,036		1,834
Legal costs2	1,200		1,634		1,728		4,109
Severance charges, net3	1,020		301		2,370		2,348
Foreign currency (gain) loss5	754		1,218		569		2,341
Pension credit6	(190)		(174)		(393)		(347)
Natural disaster insurance recovery	(872)		—		(872)		—
Consolidated Adjusted EBIT	4,131		(3,371)		(4,850)		(22,003)
Depreciation and amortization
Amount included in operating expenses	4,333		5,036		8,912		10,550
Amount included in SG&A expenses	5,245		5,311		10,697		10,756
Total depreciation and amortization	9,578		10,347		19,609		21,306
Non-cash share-based compensation costs	565		2,138		(59)		4,468
Consolidated Adjusted EBITDA	$	14,274	$	9,114	$	14,700	$	3,771
Free Cash Flow:
Cash used in operating activities	$	(3,385)	$	(17,616)	$	(53,391)	$	(34,799)
Capital expenditures	(6,933)		(5,807)		(14,001)		(9,220)
Free Cash Flow	$	(10,318)	$	(23,423)	$	(67,392)	$	(44,019)

____________________________________

1    For the three and six months ended June 30, 2022, includes $4.7 million and $10.0 million, respectively, related to costs associated with the debt financing and corporate support costs. For the three and six months ended June 30, 2021, includes $0.7 million and $1.5 million, respectively, of costs associated with the Operating Group Reorganization (exclusive of restructuring costs).

2    For the three and six months ended June 30, 2022, primarily relates to accrued legal matters. For the three and six months ended June 30, 2021, primarily relates to accrued legal matters and other legal fees.

3    For the three months ended June 30, 2022 includes $1.0 million primarily related to customary severance costs associated with staff reductions. For the six months ended June 30, 2022, includes $1.3 million related to customary severance costs associated with executive departures and $1.1 million associated with severance across multiple corporate departments. For the three months and six months ended June 30, 2021, $0.3 million and $2.2 million, respectively, associated with the Operating Group Reorganization.

4    Represents the tax effect of the adjustments. Beginning in Q2 2021, we use the statutory tax rate, net of valuation allowance by legal entity to determine the tax effect of the adjustments. Prior to Q2 2021, we used an assumed marginal tax rate of 21%.

5    Represents foreign currency losses primarily due to strengthening USD against EUR, GBP, CAN and AUD.

6    Represents pension credits for the U.K. pension plan based on the difference between the expected return on plan assets and the cost of the discounted pension liability. The pension plan has had no new participants added since the plan was frozen in 1994 and accruals for future benefits ceased in connection with a plan curtailment in 2013.

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TEAM, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Continued)
(unaudited, in thousands)
	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Segment Adjusted EBIT and Adjusted EBITDA:
IHT
Operating income	$	5,514	$	7,395	$	5,648	$	7,759
Severance charges, net1	25		10		41		485
Adjusted EBIT	5,539		7,405		5,689		8,244
Depreciation and amortization	3,096		3,270		6,350		6,740
Adjusted EBITDA	$	8,635	$	10,675	$	12,039	$	14,984
MS
Operating income	$	6,984	$	2,328	$	7,497	$	2,443
Severance charges, net1	54		216		54		355
Adjusted EBIT	7,038		2,544		7,551		2,798
Depreciation and amortization	4,634		5,043		9,518		10,482
Adjusted EBITDA	$	11,672	$	7,587	$	17,069	$	13,280
Quest Integrity
Operating income (loss)	$	8,014	$	5,702	$	14,218	$	5,450
Severance charges, net1	12		42		12		251
Adjusted EBIT	8,026		5,744		14,230		5,701
Depreciation and amortization	569		710		1,146		1,422
Adjusted EBITDA	$	8,595	$	6,454	$	15,376	$	7,123
Corporate and shared support services
Net loss	$	(42,031)	$	(32,918)	$	(81,398)	$	(67,436)
Provision (benefit) for income taxes	1,768		857		2,124		502
Gain on equipment sale	(1,203)		—		(3,463)		—
Interest expense, net	18,480		9,598		37,085		18,994
Foreign currency (gain) losses2	754		1,218		569		2,341
Pension credit3	(190)		(174)		(393)		(347)
Professional fees and other4	4,693		688		10,036		1,834
Legal costs5	1,200		1,634		1,728		4,109
Severance charges, net1	929		33		2,263		1,257
Natural disaster insurance recovery	(872)		—		(872)		—
Adjusted EBIT	(16,472)		(19,064)		(32,321)		(38,746)
Depreciation and amortization	1,279		1,324		2,595		2,662
Non-cash share-based compensation costs	565		2,138		(59)		4,468
Adjusted EBITDA	$	(14,628)	$	(15,602)	$	(29,785)	$	(31,616)

___________________

1    For the three months ended June 30, 2022 includes $1.0 million primarily related to customary severance costs associated with staff reductions. For the six months ended June 30, 2022, includes $1.3 million related to customary severance costs associated with executive departures and $1.1 million associated with severance across multiple corporate departments. For the three months and six months ended June 30, 2021, $0.3 million and $2.2 million, respectively, associated with the Operating Group Reorganization.

2    Represents foreign currency losses primarily due to strengthening USD against EUR, GBP, CAN and AUD.

3    Represents pension credits for the U.K. pension plan based on the difference between the expected return on plan assets and the cost of the discounted pension liability. The pension plan has had no new participants added since the plan was frozen in 1994 and accruals for future benefits ceased in connection with a plan curtailment in 2013.

4    For the three and six months ended June 30, 2022, includes $4.7 million and $10.0 million, respectively, related to costs associated with the debt financing and corporate support costs. For the three and six months ended June 30, 2021, includes $0.7 million and $1.5 million, respectively, of costs associated with the Operating Group Reorganization (exclusive of restructuring costs).

5    For the three and six months ended June 30, 2022, primarily relates to accrued legal matters. For the three and six months ended June 30, 2021, primarily relates to accrued legal matters and other legal fees.

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Liquidity and Capital Resources

General. Financing for our operations consists primarily of our ABL Credit Facility, Term Loan and our Subordinated Term Loan, and Notes (refer to Note - 11 Debt, for additional details). Our principal uses of cash are for working capital needs, capital expenditures and operations. We have suffered recurring operating losses related to unfavorable market conditions, including the impact of the COVID-19 pandemic and cost inflation related to supply chain disruptions. In response to the above, we evaluated the Company’s current liquidity resources within one year after the date of issuance of these condensed consolidated financial statements and determined there is substantial doubt about the Company’s ability to continue as a going concern (as further described in Note 1 - Summary of Significant Accounting Policies and Practices). Management is evaluating strategic alternatives, including potential asset sales, to address our near-term liquidity needs; and we have taken definitive actions to reduce costs, improve operations, profitability, and liquidity to position the Company for improved cash flow generation from operations.

Our ability to maintain compliance with the financial covenants contained in the ABL Credit Facility, Term Loan Credit Agreement, and Subordinated Term Loan Credit Agreement is dependent upon our future operating performance and future financial condition, both of which are subject to various risks and uncertainties. The effects of the current economic environment, including the COVID-19 pandemic, ongoing conflict in Ukraine and related economic repercussions could have a significant adverse effect on our financial position and business condition, as well as our clients and suppliers. Additionally, these events may, among other factors, impact our ability to generate cash flows from operations, access the capital markets on acceptable terms or at all, and affect our future need or ability to borrow under our ABL Credit Facility. In addition to our current sources of funding our business, the effects of such events may impact our liquidity or our need to revise our allocation or sources of capital, implement further cost reduction measures and/or change our business strategy.

We had approximately $24.5 million in available borrowing capacity, consisting of $4.5 million available under the ABL Credit Facility, $10.0 million available under the incremental delayed draw term loan (the “Delayed Draw Term Loans”), and $10.0 million available under the Subordinated Term Loan.

Recently Announced Asset Sale. On August 15, 2022, Team announced it executed a definitive purchase and sale agreement with Baker Hughes to sell Quest Integrity for $280.0 million, before customary post-closing adjustments. Post-closing, Team expects the net proceeds from the Quest Integrity Sale will be used to pay down debt and for general corporate purposes, thereby reducing the Company’s future debt service obligations and leverage and improving its liquidity and capital resources. Refer to Note 20 – Subsequent Events for additional details regarding this transaction.

Cash and cash equivalents. Our cash and cash equivalents at June 30, 2022 totaled $67.4 million, consisting of $41.1 million of unrestricted cash on hand and $26.3 million of restricted cash, pledged as cash collateral for letters of credit and other obligations. Additionally, $21.8 million of the $67.4 million of cash and cash equivalents was in foreign accounts, primarily in the Europe, Canada and Australia, including $1.5 million of cash located in countries where currency restrictions exist.

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Cash Flows

The following table summarizes cash flows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
Cash flows provided by (used in):	2022		2021		% Change		2022		2021		% Change
Operating activities	$	(3,385)	$	(17,616)	81	%	$	(53,391)	$	(34,799)	(53)	%
Investing activities	(4,840)		(5,787)		16	%	(8,882)		(9,171)		3	%
Financing activities	22,820		20,858		(9)	%	64,786		37,666		(72)	%
Net change in cash and cash equivalents	$	14,595	$	(2,545)	NM		$	2,513	$	(6,304)	NM
NM - Not meaningful

Cash flows attributable to our operating activities. For the six months ended June 30, 2022, net cash used in operating activities was $53.4 million. Our net cash used in operating activities generally reflects the cash effects of transactions and other events used in the determination of net loss, which totaled $54.0 million. The decline in cash generated from operations was driven by the net loss for the period, $38.0 million decline in working capital, a gain on disposal of assets of $3.5 million, deferred income taxes of $0.4 million, partially offset by amortization of debt issuance costs and debt discount and write off of deferred loan costs of $14.8 million, adjustments to depreciation and amortization of $19.6 million, and paid-in-kind interest of $10.0 million, resulted in negative operating cash flow.

For the six months ended June 30, 2021, net cash used by operating activities was $34.8 million. Our net cash used in operating activities generally reflects the cash effects of transactions and other events used in the determination of net loss, which totaled $51.8 million for the period. Overall, the decline in cash generated from operations was driven primarily by the impacts of inclement weather and COVID-19 on our operations which generated reduced revenue and receipts during the period. Partially offsetting the net loss for the period were adjustments of $25.5 million for depreciation and amortization and $4.5 million in non-cash compensation cost.

Cash flows attributable to our investing activities. For the six months ended June 30, 2022, net cash used in investing activities was $8.9 million, consisting primarily of $14.0 million of capital expenditures, partially offset by $5.1 million of cash proceeds from asset sales.

For the six months ended June 30, 2021, net cash used in investing activities was $9.2 million, primarily for capital expenditures.

Cash flows attributable to our financing activities. For the six months ended June 30, 2022, net cash provided by financing activities was $64.8 million consisting primarily of net borrowings under our ABL Credit Facility of $66.1 million and issuance of common stock amounting to $9.7 million cash proceeds from the Equity Issuance partially offset by $10.6 million in payments of debt issuance costs.

On February 11, 2022 we completed a capital structure refinancing, including the ABL Credit Facility which is a new $165.0 million credit facility, consisting of a $130.0 million revolving facility and a $35.0 million delayed draw term loan, plus an incremental $10.0 million of unsecured funding, and an additional $10.0 million equity investment.

For the six months ended June 30, 2021, net cash provided by financing activities was $37.7 million consisting primarily of net borrowings under our Citi Credit Agreement of $40.3 million partially offset by $2.3 million in payments of debt issuance costs.

Effect of exchange rate changes on cash and cash equivalents. For the six months ended June 30, 2022 and 2021, the effect of foreign exchange rate changes on cash was a negative $0.4 million and a positive $0.1 million, respectively. The impact of exchange rates on cash and cash equivalents is primarily attributable to fluctuations in U.S. Dollar exchange rates against the Canadian Dollar, the Euro, the British Pound, the Australian Dollar and Mexican Peso.

Capital Resources. We establish a capital budget at the beginning of each calendar year and review it during the course of the year. Our capital budgets are based upon our estimate of internally generated sources of cash, as well as cash on hand and the available borrowing capacity under our ABL Credit Facilities. We expect to finance our 2022 capital budget with cash flows from operations, cash on hand, proceeds from asset sales, and our credit facility. Actual capital expenditure levels may vary significantly due to many factors, including industry conditions; the prices and availability of goods and services; and the extent to which non-strategic assets are sold.

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We continuously monitor our liquidity needs, coordinate our capital expenditure program with our expected cash flows and projected debt-repayment schedule, and evaluate our available alternative sources of liquidity, including accessing debt and equity capital markets in light of current and expected economic conditions. As discussed above, we will require additional financing to fund our operations for the next 12 months and beyond. However, we believe that our liquidity position and ability to generate cash flows from our operations will be adequate to fund 2022 operations and continue to meet our other obligations. See Note 1 - Summary of Significant Accounting Policies and Practices for further information.

Contractual Obligations. We have various contractual obligations in the normal course of our operations. For further information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Contractual Obligations" in our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes to the contractual obligation disclosure since year-end 2021, see Note 11 - Debt for additional details regarding amendments to our debt agreements that were executed during the first quarter of 2022.

Critical Accounting Policies and Estimates

A discussion of our critical accounting policies and estimates is included in our Annual Report on Form 10-K. Except for the item referenced below, there were no material changes to our critical accounting policies during the six months ended June 30, 2022.

ASU 2020-06 Adoption. In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU simplifies the accounting for convertible instruments by removing certain separation models in ASC 470-20, Debt—Debt with Conversion and Other Options, for convertible instruments. On January 1, 2022, we adopted the ASU using the modified retrospective method. We recognized a cumulative effect of initially applying the ASU as an adjustment to the January 1, 2022 opening balance of accumulated deficit. The prior period condensed consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods. Refer to Note 11 - Debt, for additional details.

New Accounting Principles

For information about newly adopted accounting principles as well as information about new accounting principles pending adoption, see Note 1 - Summary of Significant Accounting Policies and Practices to the condensed consolidated financial statements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our market risk sensitive instruments and positions have been determined to be “other than trading.” We have operations in foreign countries with functional currencies that are not the U.S. Dollar. We are exposed to market risk, primarily related to foreign currency fluctuations related to these operations. Subsidiaries with asset and liability balances denominated in currencies other than their functional currency are remeasured in the preparation of their financial statements using a combination of current and historical exchange rates, with any resulting remeasurement adjustments included in net income (loss) for the period. Net foreign currency transaction losses for the three and six months ended June 30, 2022, were $0.8 million and $0.6 million, respectively.

We have historically executed a foreign currency hedging program to mitigate the foreign currency risk in countries where we have significant assets and liabilities denominated in currencies other than the functional currency. There were no foreign currency swap contracts outstanding during the three and six months ended June 30, 2022.

Translation adjustments for the assets and liability accounts are included as a separate component of accumulated other comprehensive loss in shareholders’ equity. Foreign currency translation gains recognized in other comprehensive loss were $5.5 million and $5.1 million for the three and six month periods ended June 30, 2022, respectively.

We had foreign currency-based revenues and operating income of approximately $144.5 million and $3.9 million, respectively, for the six months ended June 30, 2022. A hypothetical 10% adverse change in all applicable foreign currencies would result in a change in revenues and operating income of $14.4 million and $0.4 million, respectively.

The ABL Credit Facility, Term Loan, and Corre Delayed Draw Term Loan bear interest at variable market rates. If market interest rates increase, our interest expense and cash flows could be adversely impacted. Based on borrowings outstanding at June 30, 2022, an increase in market interest rates of 100 basis points would increase our interest expense and decrease our operating cash flows by approximately $3.9 million on an annual basis.

Our Notes bear interest at a fixed rate, but the fair value of the Notes is subject to fluctuations as market interest rates change. In addition, the fair value of the Notes is affected by changes in our stock price. As of June 30, 2022, the outstanding principal balance of the Notes was $95.2 million. The carrying value of the liability component of the Notes, net of the unamortized discount and issuance costs, was $92.2 million as of June 30, 2022, while the estimated fair value of the Notes was $90.9 million (inclusive of the fair value of the conversion option), which was determined based on the observed trading price of the Notes. See Note 11 - Debt, to the unaudited condensed consolidated financial statements for additional information regarding the Notes.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. Under the supervision and with the participation of our management, including the Interim Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined by Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, the Interim Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer have concluded as of June 30, 2022, that our disclosure controls and procedures were effective and designed to ensure that the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the requisite time periods.

Changes in Internal Control Over Financial Reporting. There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our internal controls performed during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For information on legal proceedings, see Note 16 - Commitments and Contingencies to the condensed consolidated financial statements included in this report.

ITEM 1A. RISK FACTORS

Our operations and financial results are subject to various risks and uncertainties. Other than as noted below, there have been no material changes in our risk factors as previously disclosed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K and in Part II, Item 1A, “Risk Factors” in the Quarterly Report on Form 10-Q for the period ended June 30, 2022.

The pending sale of Quest Integrity is subject to various risks, uncertainties and conditions and may not be completed on the terms or timeline currently contemplated, if at all.

On August 15, 2022, the Company entered into a definitive purchase and sale agreement (the “Purchase Agreement”) to sell Quest Integrity to Baker Hughes (the “Buyer”) for $280.0 million in cash, subject to certain customary adjustments as set forth in the Purchase Agreement (the “Transaction”). The Purchase Agreement provides that completion of the Transaction is subject to the satisfaction of customary closing conditions, including, among other things, obtaining certain required regulatory and third-party approvals. The Transaction is expected to close in fourth quarter of 2022.

There can be no assurance regarding the ultimate timing of the Transaction or that the Transaction will be completed. Unanticipated developments could delay, prevent or otherwise adversely affect the Transaction, including but not limited to potential problems or delays in obtaining various regulatory approvals.

During the period leading to closing the Transaction, whether or not the Transaction is completed, the ongoing businesses may be adversely affected, including as a result of one or more of the following:

•the diversion of management’s attention from operating and growing the business as a result of the time and effort required to execute the Transaction;

•expenses incurred in connection with the Transaction, including the tax effects of the divestiture, in addition to legal, professional advisory and consulting fees to complete the sale and separation of the legal entities and business processes;

•challenges in separating the Quest Integrity business, including separating the assets and liabilities, infrastructure and personnel, potentially resulting in delays and additional costs in achieving the completion of the Transaction;

•disruptions to and potential adverse impacts on relationships with suppliers, customers and others with whom the Company does business; and

•potential negative reactions from the financial markets if the Company fails to complete the Transaction as currently expected.

If we cannot regain compliance with the NYSE’s continued listing requirements and rules, the NYSE may delist our common stock, which could negatively affect our company, the price of our common stock and our shareholders’ ability to sell our common stock and may lead to potential events of default on existing debt instruments.

On June 17, 2022, we were notified by the NYSE that we were no longer in compliance with the NYSE continued listing standards, set forth in Section 802.01B of the NYSE’s Listed Company Manual due to the fact that the Company's average global market capitalization over a consecutive 30 trading-day period was less than $50.0 million and, at the same time, its shareholders' equity was less than $50.0 million. If the Company’s average global market capitalization over a consecutive 30 trading-day period drops below $15.0 million, the NYSE will initiate delisting proceedings. As required by the NYSE, the Company intends to timely notify the NYSE of its intent to cure the deficiency and restore its compliance with the NYSE continued listing standards. In accordance with applicable NYSE procedures, the Company has 45 days from receipt of the notice to submit a plan advising the NYSE of the definitive action(s) the Company has taken, or is taking, that would bring it into compliance with the minimum global market capitalization listing standard within 18 months of receipt of the written notice. The Company notified the NYSE of its intent to cure the deficiency and restore its compliance with the NYSE continued listing standards. In accordance with applicable NYSE procedures on August 1, 2022 the Company submitted a plan advising the NYSE of the definitive actions the Company has taken and is taking, that would bring it into compliance with the minimum global market capitalization and minimum average closing share price listing standards within 18 months of receipt of the written notice. The NYSE will review the plan and, within 45 days of its receipt, determine whether the Company has made a reasonable demonstration of an ability to conform to the relevant standards in the 18-month period. If the NYSE accepts the plan, the Company’s common stock will continue to be listed and traded on the NYSE during the 18-month period, subject to

50

the Company’s compliance with other NYSE continued listing standards and continued periodic review by the NYSE of the Company’s progress with respect to its plan. There can be no assurances that the NYSE will accept the plan or that the Company will maintain compliance with the plan. If the Company fails to comply with the plan or does not meet continued listing standards at the end of the 18-month cure period, it will be subject to the prompt initiation of NYSE suspension and delisting procedures.

In addition, on July 13, 2022, the Company received notice by the NYSE that we were no longer in compliance with the continued listing standard set forth in Section 802.01C of the NYSE’s Listed Company Manual because the average closing price of the Company’s common stock was less than $1.00 per share over a consecutive 30 trading-day period. We have a period of six months following the receipt of the notice to regain compliance with the minimum share price requirement, with the possibility of extension at the discretion of the NYSE. In order to regain compliance, on the last trading day in any calendar month during the cure period, our common stock must have: (i) a closing price of at least $1.00 per share; and (ii) an average closing price of at least $1.00 per share over the 30 trading day period ending on the last trading day of such month. If we fail to regain compliance with Section 802.01C of the NYSE Listed Company Manual by the end of the cure period, our common stock will be subject to the NYSE’s suspension and delisting procedures. We are closely monitoring the closing share price of our common stock and are considering all available options. We intend to regain compliance with the NYSE listing standards by pursuing measures that are in the best interests of the Company and our shareholders, including potentially through the consummation of a reverse stock split, subject to Board of Director and shareholder approval. Although we anticipate that we will regain compliance with Section 802.01C of the NYSE Listed Company Manual within the cure period, the price of our common stock is influenced by many factors, many of which are beyond our control. There is no assurance that our efforts will be successful, nor is there any assurance that we will remain in compliance with Section 802.01C of the NYSE Listed Company Manual or other NYSE continued listing standards in the future.

A delisting of our common stock could negatively impact us by, among other things, reducing the liquidity and market price of our common stock; reducing the number of investors willing to hold or acquire our common stock, which could negatively impact our ability to raise equity financing; limiting our ability to issue additional securities or obtain additional financing in the future; decreasing the amount of news and analyst coverage of us; and causing us reputational harm with investors, our employees, and parties conducting business with us. A delisting of our common stock could constitute a “fundamental change” under the terms of our 5.00% Convertible Notes due 2023 (the “Notes”), requiring us to make an offer to repurchase the Notes at par. There can be no assurance we would have sufficient funds available to us to repurchase the Notes if required to do so. Failure to repurchase the Notes also could cause a cross-default under our ABL Credit Facility and Term Loans, which would permit the holders of the indebtedness to accelerate the maturity thereof and proceed against their collateral and could have a material adverse effect on our business and financial condition.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

NONE

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

NONE

ITEM 4. MINE SAFETY DISCLOSURES

NOT APPLICABLE

ITEM 5. OTHER INFORMATION

NONE

51

ITEM 6. EXHIBITS

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of Team, Inc. (filed as Exhibit 3.1 to Team, Inc.’s Current Report on Form 8-K filed on December 2, 2011, incorporated herein by reference.
3.2	Certificate of Amendment of Amended and Restated Certificate of Incorporation of Team, Inc., dated October 24, 2013 (filed as Exhibit 3.1 to Team, Inc.’s Current Report on Form 8-K filed on October 25, 2013, incorporated herein by reference).
3.3	Amended and Restated Bylaws of Team, Inc. (filed as Exhibit 3.3 to Team, Inc.’s Annual Report on Form 10-K for year ended December 31, 2017, incorporated herein by reference).
3.4	Certificate of Designations of Series A Preferred Stock of Team, Inc., as filed with the Secretary of State of the State of Delaware on February 2, 2022 (filed as Exhibit 3.1 to Team, Inc.’s Current Report on Form 8-K filed on February 2, 2022, incorporated by reference herein).
10.1	Amendment No. 1 to Credit Agreement, dated as of May 6, 2022, among Team, Inc., as Borrower, the lenders from time to time party thereto, the guarantors party thereto and Eclipse Business Capital, LLC, as Agent
10.2	Amendment No. 7 to Term Loan Credit Agreement, dated May 6, 2022, among Team, Inc., as Borrower, the financial institutions party thereto, the guarantors party thereto and Atlantic Park Strategic Capital Fund, L.P., as Agent
10.3	Amendment No. 6 to Subordinated Term Loan Credit Agreement, dated May 6, 2022, by and among Team, Inc., as Borrower, the lenders party thereto and Cantor Fitzgerald Securities, as Agent
10.4	Amendment No. 7 to Subordinated Term Loan Agreement, dated June 28, 2022, by and among the lenders party thereto, and Cantor Fitzgerald Securities, as Agent (filed as Exhibit 10.1 to Team, Inc.’s Current Report on Form 8-K, filed on June 30, 2022, incorporated by reference herein).
10.5(1)†	Project Bonus Letter for Robert Young (June 10 2022)
10.6†	Executive Retention Agreement for Bouchard André (May 20 2022)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.3	Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.3	Certification of Chief Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)
(1)	As permitted by Item 601(b)(10)(iv) Regulation S-K, certain portions of this exhibit have been redacted from the publicly filed document.
†	Management contract or compensation plan or arrangement.

Note: Unless otherwise indicated, documents incorporated by reference are located under Securities and Exchange Commission file number 001-08604.

52

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized.

	TEAM, INC. (Registrant)
Date: August 15, 2022	/S/    Keith D. Tucker
	Keith D. Tucker Interim Chief Executive Officer (Principal Executive Officer)
	/S/     Nelson M. Haight
	Nelson M. Haight Chief Financial Officer (Principal Financial Officer)
	/S/     Matthew E. Acosta
	Matthew E. Acosta Vice President, Chief Accounting Officer (Principal Accounting Officer)

53

EX-10.1

AMENDMENT NO. 1 TO CREDIT AGREEMENT

This AMENDMENT NO. 1 TO CREDIT AGREEMENT (this “Amendment”), dated as of May 6, 2022, is among TEAM, INC., a Delaware corporation (the “Borrower Agent”), the Guarantors party hereto, each of the Lenders party hereto and ECLIPSE BUSINESS CAPITAL LLC, acting not individually but as agent on behalf of, and for the benefit of, the Lenders and all other Secured Parties (in such capacity, together with its successors and assigns, if any, in such capacity, the “Agent”).

W I T N E S S E T H:

WHEREAS, the Borrower Agent, the other Loan Parties party thereto from time to time, the Lenders party thereto from time to time, the Agent, and the other Persons party thereto from time to time, have entered into that certain Credit Agreement, dated as of February 11, 2022 (from time to time further amended, supplemented, restated, amended and restated or otherwise modified, the “Existing Credit Agreement”);

WHEREAS, the Borrower Agent, the Guarantors, the Lenders, and the Agent have agreed to further amend the Existing Credit Agreement and the Lenders have agreed, subject to the terms and conditions set forth herein, to, among other things, modify the Maturity Reserve Trigger Date (the Existing Credit Agreement as amended by this Amendment, the “Credit Agreement”; capitalized terms used in this Amendment not otherwise defined herein shall have the respective meanings given thereto in the Credit Agreement); and

WHEREAS, the Borrower Agent, the Agent and the Lenders party hereto, constituting Required Lenders and Required Supermajority Revolving Credit Lenders, are willing to effect such amendment on the terms and conditions contained in this Amendment.

NOW, THEREFORE, in consideration of the premises and further valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1.Amendments to the Existing Credit Agreement.

Effective as of the Amendment No. 1 Effective Date, Section 1.1 of the Credit Agreement is hereby amended by amending and restating the definition of “Maturity Reserve Trigger Date” in its entirety as follows:

“Maturity Reserve Trigger Date” means the date that is seventy-five (75) days prior to the maturity date of the 2017 Senior Convertible Notes.

2.Effectiveness; Conditions Precedent; Certain Consents.

The amendments contained herein shall only be effective upon the satisfaction or waiver of each of the following conditions precedent (the date of satisfaction or waiver, the “Amendment No. 1 Effective Date”):

(a)the Agent shall have received duly executed copies of the following, each in form and substance satisfactory to the Agent:

(i)that certain Amendment No. 6 to Unsecured Term Loan Credit Agreement, dated as of the date hereof, by and among the Borrower Agent, the lenders party thereto from time to time and Cantor Fitzgerald Securities (successor by assignment to Corre Credit Fund, LLC), as administrative agent under the Corre Credit Agreement, duly executed by each of the parties thereto; and

(ii)that certain Amendment No. 7 to Term Loan Credit Agreement, dated as of the date hereof, by and among the Borrower Agent, the Guarantors (as defined in the Term Loan Agreement) party thereto, the lenders party thereto from time to time and the Term Loan Agent, duly executed by each of the parties thereto;

(b)the Agent shall have received counterparts to this Amendment, duly executed by the Borrower, the Guarantors and each Lender;

(c)each of the representations and warranties made by the Borrower in Section 3 hereof shall be true and correct;

(d)to the extent invoiced prior to the Amendment No. 1 Effective Date, all Lender Group Expenses (including, for the avoidance of doubt, any such costs and expenses incurred in connection with this Amendment) and all other outstanding out-of-pocket expenses of the Agent (including fees, costs, expenses and retainers of Choate, Hall & Stewart LLP, as counsel to the Agent, and all other legal and financial advisors to the Agent) have been fully and indefeasibly paid in cash; and

(e)the Amendment No. 1 Fee shall have been paid pursuant to Section 4 hereof.

Without limiting the generality of the provisions of Section 11.3(b) (No Obligation of Agent) of the Credit Agreement, for purposes of determining compliance with the conditions precedent set forth in this Section 2, each Lender, to the extent such Person has signed this Amendment, shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to such Person, unless the Agent shall have received notice from such Person prior to the date hereof specifying its objection thereto.

In addition, to the extent necessary for any purpose under the Credit Agreement or any other Loan Documents, the Agent and Lenders party to this Amendment hereby consent to each of the amendment fees payable under the Amendment No. 6 to Unsecured Term

Loan Credit Agreement and the Amendment No. 7 to Term Loan Credit Agreement to be paid in kind by (i) adding the amount of such amendment fee to the principal of the outstanding loans of each such lender on the date hereof, (ii) thereafter, be treated as principal for all purposes of such credit agreement and (iii) bear interest in accordance with the terms of such credit agreement.

3.Representations and Warranties.

In order to induce the Lenders to enter into this Amendment, the Borrower Agent represents and warrants to the Lenders, for itself and for each other Loan Party, as follows:

(f)both immediately prior to and immediately after giving effect to this Amendment, no Default or Event of Default exists;

(g)the execution, delivery and performance by the Borrower Agent of this Amendment and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action, do not contravene the Borrower Agent’s Governing Documents and do not and will not contravene any Material Contract;

(h)this Amendment has been duly executed and delivered on behalf of the Borrower Agent;

(i)this Amendment constitutes a legal, valid and binding obligation of the Borrower Agent, enforceable against the Borrower Agent and the other Loan Parties in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, Debtor Relief Laws or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity;

(j)that the representations and warranties listed in the Credit Agreement and the other Loan Documents are true, correct and complete in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that are already qualified or modified by materiality in the text thereof) as of the Amendment No. 1 Effective Date as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that are already qualified or modified by materiality in the text thereof) as of such earlier date); and

(k)all written disclosure provided to the Lenders regarding the Borrower Agent, the other Loan Parties and their Subsidiaries, their businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the Borrower Agent, the other Loan Parties and their Subsidiaries (other than projections, forward looking information or information of a general economic or general industry nature) is true and correct in all material respects (except that such materiality qualifier shall not be applicable to any written disclosure that is already qualified or modified by materiality in the text thereof) and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not materially misleading. Projections and forward looking information (including forecasts and other forward-looking information) were based on good faith estimates and assumptions believed to be reasonable at the time made; it being recognized by the Agent and the Lenders that such projections are as to future events and are not to be viewed as facts, the projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower Agent, the other Loan Parties and the Subsidiaries, that no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material.

4.Amendment Fee.

As consideration for each Revolving Credit Lender’s agreement to enter into this Amendment, the Borrower Agent agrees to pay (or cause to be paid) to the Agent for the ratable benefit of the Revolving Credit Lenders a fee (the “Revolving Lenders Amendment  Fee”) equal to $37,500, which fee shall be net settled on the Amendment No. 1 Effective Date and treated as creating original issue discount on the Revolving Credit Loans under Treasury Reg. section 1.1273-2(g)(2) for US federal income tax purposes.

As consideration for each Delayed Draw Term Lender’s agreement to enter into this Amendment, the Borrower Agent agrees to pay (or cause to be paid) to the Agent for the ratable benefit of the Delayed Draw Term Lenders a fee (the “DDTL Lenders Amendment Fee, and together with the Revolving Lenders Amendment Fee, the “Amendment No. 1 Fee”) equal to 0.125% of the total Delayed Draw Term Loan Commitments, it being understood that the DDTL Lenders Amendment Fee shall be $43,750. The DDTL Lenders Amendment Fee shall (i) be paid in kind by adding the amount of such fee to the principal of the outstanding Delayed Draw Term Loans of each Delayed Draw Term Lender on the Amendment No. 1 Effective Date, (ii) thereafter, be

treated as principal of the Delayed Draw Term Loans for all purposes of the Credit Agreement and (iii) bear interest in accordance with the terms of the Credit Agreement.

5.Entire Agreement; Successors and Assigns; Interpretation.

This Amendment, the Credit Agreement and the other Loan Documents (collectively, the “Relevant Documents”) constitute the entire agreement among the parties, supersede any prior written and verbal agreements among them with respect to the subject matter hereof and thereof, and shall bind and benefit the parties and their respective successors and permitted assigns. This Agreement shall be deemed to have been jointly drafted, and no provision of it shall be interpreted or construed for or against a party because such party purportedly prepared or requested such provision, any other provision or this Amendment as a whole. No promise, condition, representation or warranty, express or implied, not set forth in the Relevant Documents shall bind any party hereto, and no such party has relied on any such promise, condition, representation or warranty. Each of the parties hereto acknowledges that, except as otherwise expressly stated in the Relevant Documents, no representations, warranties or commitments, express or implied, have been made by any party to any other party in relation to the subject matter hereof or thereof. None of the terms or conditions of this Amendment may be changed, modified, waived or cancelled orally or otherwise, except in writing and in accordance with Section 12.5 (Amendments, Waivers and Consents) of the Credit Agreement.

6.Full Force and Effect of Credit Agreement.

This Amendment is a Loan Document (and the Borrower Agent agrees that the “Obligations” secured by the Collateral shall include any and all obligations of the Borrower Agent under this Amendment). Except as expressly modified hereby, all terms and provisions of the Credit Agreement and all other Loan Documents remain in full force and effect and nothing contained in this Amendment shall in any way impair the validity or enforceability of the Credit Agreement or the Loan Documents, or alter, waive, annul, vary, affect, or impair any provisions, conditions, or covenants contained therein or any rights, powers, or remedies granted therein. This Amendment shall not constitute a modification of the Credit Agreement or any of the other Loan Documents or a course of dealing with Agent or the Lenders at variance with the Credit Agreement or the other Loan Documents such as to require further notice by Agent or any Lender to require strict compliance with the terms of the Credit Agreement and the other Loan Documents in the future, except in each case as expressly set forth herein. The Borrower Agent acknowledges and expressly agrees that Agent and the Lenders reserve the right to, and do in fact, require strict compliance with all terms and provisions of the Credit Agreement and the other Loan Documents (subject to any qualifications set forth therein), as amended herein.

7.Counterparts; Effectiveness.

This Amendment may be executed in counterparts and by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. Except as provided in Section 2 above, this Amendment shall become effective when the Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. This Amendment may be executed and delivered by facsimile or other electronic transmission (including by electronic imaging) all with the same force and effect as if the same was a fully executed and delivered original manual counterpart.

The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to this Amendment or any document to be signed in connection with this Amendment and the transactions contemplated hereby (including without limitation assignment and assumptions, amendments or other borrowing requests, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act. Each of the parties represents and warrants to the other parties that it has the corporate capacity and authority to execute this Amendment through electronic means and there are no restrictions for doing so in that party’s constitutive documents.

8.Governing Law; Jurisdiction; Waiver of Jury Trial.

THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AMENDMENT AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS AMENDMENT, WHETHER SOUNDING IN CONTRACT, TORT OR EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND DECISIONS OF THE STATE OF NEW YORK. Sections 12.15 (SUBMISSION TO JURISDICTION) and 12.17 (JURY TRIAL) of the Credit Agreement are hereby incorporated herein by this reference.

9.Severability.

In case any provision in or obligation under this Amendment shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the

remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

10.References.

All references in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement and each reference to the “Credit Agreement”, (or the defined term “Agreement”, “thereunder”, “thereof” of words of like import referring to the Credit Agreement) in the other Loan Documents shall mean and be a reference to the Credit Agreement as amended hereby and giving effect to the amendments contained in this Amendment.

11.Reaffirmation.

Except as expressly amended hereby, all of the terms and provisions of the Credit Agreement and all other Loan Documents are and shall remain in full force and effect and are hereby ratified and confirmed. In furtherance of the foregoing, each of the Loan Parties party hereto hereby irrevocably and unconditionally ratifies its grant of security interest and pledge under the Guaranty and Security Agreement and each Loan Document and confirms that the liens, security interests and pledges granted thereunder continue to secure the Obligations, including, without limitation, any additional Obligations resulting from or incurred pursuant to this Amendment.

Each of the Loan Parties hereto, as debtor, grantor, mortgagor, pledger, guarantor, assignor, or in any other similar capacity in which such Loan Party grants liens or security interests in its property or otherwise acts as accommodation party, guarantor, or indemnitor, as the case may be, hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which it is a party (after giving effect hereto) and (ii) to the extent such Loan Party granted liens on or security interests in any of its property pursuant to any such Loan Document as security for or otherwise guaranteed the Obligations under or with respect to the Loan Documents, ratifies and reaffirms such guarantee and grant of security interest and liens and confirms and agrees that such guarantee includes, and such security interests and liens hereafter secure, all of the Obligations as amended hereby.

For the avoidance of doubt, (i) the ratification and reaffirmation by the Loan Parties in this Section 11 shall not constitute a new grant of security interests and (ii) the consent of the Loan Parties (other than the Borrower Agent) is not required for this Amendment.

12.Release.

By its execution hereof and in consideration of the terms herein and other accommodations granted to the Loan Parties hereunder, each Loan Party, on behalf of itself and each of its Subsidiaries, and its or their successors, assigns and agents, hereby

expressly forever waives, releases and discharges any and all claims (including cross-claims, counterclaims, and rights of setoff and recoupment), causes of action (whether direct or derivative in nature), demands, suits, costs, expenses and damages (collectively, the “Claims”) any of them may, as a result of actions or inactions occurring on or prior to the Amendment No. 1 Effective Date, have or allege to have as of the date of this Amendment or at any time thereafter (and all defenses that may arise out of any of the foregoing) of any nature, description, or kind whatsoever, based in whole or in part on facts, whether actual, contingent or otherwise, now known, unknown, or subsequently discovered, whether arising in law, at equity or otherwise, against the Agent or any Lender, their respective affiliates, agents, principals, managers, managing members, members, stockholders, “controlling persons” (within the meaning of the United States federal securities laws), directors, officers, employees, attorneys, consultants, advisors, agents, trusts, trustors, beneficiaries, heirs, executors and administrators of each of the foregoing (collectively, the “Released Parties”) arising out of, or relating to, this Amendment, the Credit Agreement, the other Loan Documents and any or all of the actions and transactions contemplated hereby or thereby, including any actual or alleged performance or non-performance of any of the Released Parties hereunder or under the Loan Documents (the “Released Matters”). In entering into this Amendment, each Loan Party expressly disclaims any reliance on any representations, acts, or omissions by any of the Released Parties and hereby agrees and acknowledges that the validity and effectiveness of the releases set forth above does not depend in any way on any such representation, acts and/or omissions or the accuracy, completeness, or validity thereof. The provisions of this Section 12 shall survive the termination of this Amendment and the Loan Documents and the payment in full in cash of all Obligations of the Loan Parties under or in respect of the Credit Agreement and other Loan Documents and all other amounts owing thereunder.

[Signature pages follow]

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be made, executed and delivered by their duly authorized officers as of the day and year first above written.

TEAM, INC., as Borrower Agent and a Borrower

By:    /s/ André C. Bouchard                

Name:    André C. Bouchard

Title:     Executive Vice President, Chief Legal Officer and     Secretary

Signed solely with respect to Sections 11 and 12:

AGGRESSIVE EQUIPMENT COMPANY, LLC

DK VALVE & SUPPLY, LLC

FURMANITE, LLC

FURMANITE AMERICA, LLC

FURMANITE WORLDWIDE, LLC

QUALSPEC, LLC

QUEST INTEGRITY GROUP, LLC

QUEST INTEGRITY USA, LLC

ROCKET ACQUISITION, LLC

TANK CONSULTANTS, LLC

TANK CONSULTANTS MECHANICAL SERVICES, LLC

TCI SERVICES, LLC

TCI SERVICES HOLDINGS, LLC

TEAM INDUSTRIAL SERVICES, INC.

TEAM INDUSTRIAL SERVICES INTERNATIONAL, INC.

TEAM QUALSPEC, LLC

TEAM TECHNICAL SCHOOL, LLC

TQ ACQUISITION, INC.

GLOBAL ASCENT, LLC

KANEB FINANCIAL, LLC

FURMANITE LOUISIANA, LLC

as Guarantors

By:    /s/ André C. Bouchard                

Name:    André C. Bouchard

Title:     Executive Vice President, Chief Legal Officer and     Secretary

Signed solely with respect to Sections 11 and 12:

QUEST INTEGRITY CAN LTD.

TISI ACQUISITION INC.

TISI CANADA INC.

as Guarantors

By:    /s/ André C. Bouchard                

Name:    André C. Bouchard

Title:     Executive Vice President, Chief Legal Officer,    Secretary and Managing Director

FURMANITE B.V.

FURMANITE HOLDING B.V.

P3 PULLEN POLYURETHANE PRODUCTS B.V.

QUEST INTEGRITY EU HOLDINGS B.V.

QUEST INTEGRITY NLD B.V.

TEAMINC EUROPE B.V.

TEAM INDUSTRIAL SERVICES EUROPE B.V.

TEAM VALVE REPAIR SERVICES B.V.

THRESHOLD INSPECTION & APPLICATION

TRAINING EUROPE B.V.

TURBINATE INTERNATIONAL B.V.

TEAM INDUSTRIAL SERVICES NETHERLANDS B.V.

QUALITY INSPECTION SERVICES B.V.

A&M BEHEER B.V.

as Guarantors

By:    /s/ André C. Bouchard                

Name:    André C. Bouchard

Title:     Authorised Signatory

EXECUTED by FURMANITE INTERNATIONAL FINANCE LIMITED, a private limited company incorporated under the laws of England and Wales, as a Guarantor by one director	Signed: /s/ André C. Bouchard_________ André C. Bouchard Director
EXECUTED by TEAM INDUSTRIAL SERVICES INSPECTION LIMITED, a private limited company incorporated under the laws of England and Wales, as a Guarantor, by one director	Signed: /s/ André C. Bouchard_________ André C. Bouchard Director
EXECUTED by TEAM INDUSTRIAL SERVICES (UK) HOLDING LIMITED, a private limited company incorporated under the laws of England and Wales, as a Guarantor, by one director	Signed: /s/ André C. Bouchard_________ André C. Bouchard Director

EXECUTED by TEAM VALVE AND ROTATING SERVICES LIMITED, a private limited company incorporated under the laws of England and Wales, as a Guarantor, by one director	Signed: /s/ André C. Bouchard_________ André C. Bouchard Director
EXECUTED by TIS UK LIMITED LIMITED, a private limited company incorporated under the laws of England and Wales, as a Guarantor, by one director	Signed: /s/ André C. Bouchard_________ André C. Bouchard Director

ECLIPSE BUSINESS CAPITAL LLC,

as Agent

By:    /s/ John Whetstone                    

Name:    John Whetstone

Title:     EVP

ECLIPSE BUSINESS CAPITAL SPV, LLC,

as a Revolving Credit Lender

By:    /s/ John Whetstone                    

Name:    John Whetstone

Title:     EVP

CORRE OPPORTUNITIES QUALIFIED MASTER FUND, LP, as a Delayed Draw Term Lender

By:    /s/ John Barrett                    

Name:    John Barrett

Title:     Authorized Signatory

CORRE HORIZON FUND, LP,
as a Delayed Draw Term Lender

By:    /s/ John Barrett                    

Name:    John Barrett

Title:     Authorized Signatory

CORRE HORIZON II FUND, LP,
as a Delayed Draw Term Lender

By:    /s/ John Barrett                    

Name:    John Barrett

Title:     Authorized Signatory

[Team, Inc. Credit Agreement
Amendment No. 1 Signature Page]

EX-10.2

Execution Version

AMENDMENT NO. 7 TO TERM LOAN CREDIT AGREEMENT

This AMENDMENT NO. 7 TO TERM LOAN CREDIT AGREEMENT (this “Amendment”), dated as of May 6, 2022, is among TEAM, INC., a Delaware corporation (the “Borrower”), the Guarantors party hereto, each of the Lenders party hereto and Atlantic Park Strategic Capital Fund, L.P., as agent for the Lenders and the Secured Parties (the “Agent”).

W I T N E S S E T H:

WHEREAS, the Borrower, the Lenders and the Agent have entered into that certain Term Loan Credit Agreement, dated as of December 18, 2020 (from time to time further amended, supplemented, restated, amended and restated or otherwise modified the “Credit Agreement”; capitalized terms used in this Amendment not otherwise defined herein shall have the respective meanings given thereto in the Credit Agreement, as amended by this Amendment);

WHEREAS, the Borrower and the Lenders have entered into Amendment No. 1 to Term Loan Credit Agreement, dated as of October 19, 2021, Amendment No. 2 to Term Loan Credit Agreement, dated as of October 29, 2021, Amendment No. 3 to Term Loan Credit Agreement, dated as of November 9, 2021, Amendment No. 4 to Term Loan Credit Agreement, dated as of December 1, 2021, Amendment No. 5 to Term Loan Credit Agreement, dated as of December 7, 2021 and Amendment No. 6 to Term Loan Credit Agreement, dated as of February 11, 2022;

WHEREAS, the Borrower, Guarantors, the Lenders, and the Agent have agreed, subject to the terms and conditions set forth herein, to further amend the Credit Agreement; and

WHEREAS, the Borrower and the Lenders party hereto, constituting all Lenders, are willing to effect such amendment on the terms and conditions contained in this Amendment.

NOW, THEREFORE, in consideration of the premises and further valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1.Amendments to the Credit Agreement.

(a)Section 1.1 of the Credit Agreement is, effective as of the Amendment No. 7 Effective Date, hereby amended to replace the reference to “120 days” in the definition of “Maturity Trigger Date” with a reference to “75 days”; and

(b)Section 9.1 of the Credit Agreement is, effective as of the Amendment No. 7 Effective Date, hereby amended and restated in its entirety as follows:

“The Borrower hereby covenants and agrees that the Loan Parties and their Subsidiaries will maintain a Net Leverage Ratio (a) for the four (4) fiscal quarter period ending on March 31, 2023, of less than or equal to 12.00 to 1.00, and (b) for each four (4) fiscal quarter period ending on the

last day of each fiscal quarter thereafter, of less than or equal to 7.00 to 1.00.”

2.Effectiveness; Conditions Precedent.

The amendments contained herein shall only be effective upon the satisfaction or waiver of each of the following conditions precedent (the date of satisfaction or waiver, the “Amendment No. 7 Effective Date”):

(c)the Agent shall have received duly executed copies of the following, each in form and substance satisfactory to the Agent:

(i)that certain Amendment No. 6 to Unsecured Term Loan Credit Agreement, dated as of the Amendment No. 7 Effective Date, by and among the Borrower, the lenders party thereto from time to time and Cantor Fitzgerald Securities (“Amendment No. 6 to Unsecured Credit Agreement”), duly executed by each of the parties thereto;

(ii)that certain Amendment No. 1 to Credit Agreement, dated as of the Amendment No. 7 Effective Date, by and among the Borrower, the lenders party thereto from time to time and Eclipse Business Capital LLC (“Amendment No. 1 to ABL Credit Agreement”), duly executed by each of the parties thereto; and

(iii)a certificate of a Responsible Officer of the Borrower certifying that (A) each of the representations and warranties made by the Borrower in Section 3 hereof shall be true and correct, (B) that both immediately prior to and immediately after giving effect to this Amendment, no Default or Event of Default exists and (C) each Loan Party has complied with, or obtained a waiver from the applicable agent with respect to, all conditions to be satisfied by such Loan Party to the effectiveness of Amendment No. 6 to Unsecured Credit Agreement and Amendment No. 1 to ABL Credit Agreement.

(d)the Agent shall have received counterparts to this Amendment, duly executed by the Borrower and each Lender;

(e)each of the representations and warranties made by the Borrower in Section 3 hereof shall be true and correct;

(f)all Lender Group Expenses (including, for the avoidance of doubt, any such costs and expenses incurred in connection with this Amendment) and all other outstanding out-of-pocket expenses of the Agent (including fees, costs, expenses

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and retainers of Davis Polk & Wardwell LLP, as counsel to the Agent, and all other legal and financial advisors to the Agent) have been fully and indefeasibly paid in cash; and

(g)the Amendment No. 7 Fee shall have been paid pursuant to Section 4 hereof.

The Agent shall, upon the satisfaction or waiver of the conditions contained in this Section 2, promptly provide written notice (which may be by email) to the Borrower and the Lenders of the effectiveness of this Amendment.

3.Representations and Warranties.

In order to induce the Lenders to enter into this Amendment, the Borrower represents and warrants to the Lenders, for itself and for each other Loan Party, as follows:

(h)that both immediately prior to and immediately after giving effect to this Amendment, no Default or Event of Default exists;

(i)the execution, delivery and performance by the Borrower of this Amendment and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action, do not contravene the Borrower’s Governing Documents and do not and will not contravene any Material Contract;

(j)this Amendment has been duly executed and delivered on behalf of the Borrower;

(k)this Amendment constitutes a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, Debtor Relief Laws or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity;

(l)that the representations and warranties listed in the Credit Agreement and the other Loan Documents are true, correct and complete in all material respects as of the Amendment No. 7 Effective Date (except that such materiality qualifier shall not apply to any representations and warranties that already are qualified or modified by materiality in the text thereof); and

(m)all written disclosure provided to the Lenders regarding the Borrower, the other Loan Parties and their Subsidiaries, their businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the Borrower, the other Loan Parties and their Subsidiaries (other than projections, forward looking information or information of a general economic or general industry nature) is true and correct in all material respects

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and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not materially misleading. Projections and forward looking information (including forecasts and other forward-looking information) were based on good faith estimates and assumptions believed to be reasonable at the time made; it being recognized by the Agent and the Lenders that such projections are as to future events and are not to be viewed as facts, the projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower, the other Loan Parties and the Subsidiaries, that no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material.

4.Amendment Fee.

As consideration for each Lender’s agreement to enter into this Amendment, the Borrower agrees to pay (or cause to be paid) to such Lender a paid-in-kind fee (the “Amendment No. 7 Fee”) equal to 0.50% of the principal amount of all Loans held by such Lender on the Amendment No. 7 Effective Date, it being understood that the total amount of Amendment No. 7 Fees shall be $1,250,000. The Amendment No. 7 Fee shall (i) be paid in kind by adding the amount of such fee to the principal of the outstanding Loans of each Lender on the Amendment No. 7 Effective Date, (ii) thereafter, be treated as principal for all purposes of the Credit Agreement and (iii) bear interest in accordance with the terms of the Credit Agreement.

5.Entire Agreement.

This Amendment, the Credit Agreement (including giving effect to the amendments set forth in Section 1 above), and the other Loan Documents (collectively, the “Relevant Documents”) constitute the entire agreement among the parties, supersede any prior written and verbal agreements among them with respect to the subject matter hereof and thereof, and shall bind and benefit the parties and their respective successors and permitted assigns. This Agreement shall be deemed to have been jointly drafted, and no provision of it shall be interpreted or construed for or against a party because such party purportedly prepared or requested such provision, any other provision or this Amendment as a whole. No promise, condition, representation or warranty, express or implied, not set forth in the Relevant Documents shall bind any party hereto, and no such party has relied on any such promise, condition, representation or warranty. Each of the parties hereto acknowledges that, except as otherwise expressly stated in the Relevant Documents, no representations, warranties or commitments, express or implied, have been made by any

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party to any other party in relation to the subject matter hereof or thereof. None of the terms or conditions of this Amendment may be changed, modified, waived or cancelled orally or otherwise, except in writing and in accordance with Section 12.5 of the Credit Agreement (Amendments, Waivers and Consents).

6.Full Force and Effect of Credit Agreement.

This Amendment is a Loan Document (and the Borrower agrees that the “Obligations” secured by the Collateral shall include any and all obligations of the Borrower under this Amendment). Except as expressly modified hereby, all terms and provisions of the Credit Agreement and all other Loan Documents remain in full force and effect and nothing contained in this Amendment shall in any way impair the validity or enforceability of the Credit Agreement or the Loan Documents, or alter, waive, annul, vary, affect, or impair any provisions, conditions, or covenants contained therein or any rights, powers, or remedies granted therein. This Amendment shall not constitute a modification of the Credit Agreement or any of the other Loan Documents or a course of dealing with Agent or the Lenders at variance with the Credit Agreement or the other Loan Documents such as to require further notice by Agent or any Lender to require strict compliance with the terms of the Credit Agreement and the other Loan Documents in the future, except in each case as expressly set forth herein. The Borrower acknowledges and expressly agrees that Agent and the Lenders reserve the right to, and do in fact, require strict compliance with all terms and provisions of the Credit Agreement and the other Loan Documents (subject to any qualifications set forth therein), as amended herein.

7.Counterparts; Effectiveness.

This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Except as provided in Section 2 above, this Amendment shall become effective when the Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Amendment by facsimile, electronic email or other electronic imaging means (e.g., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Amendment.

The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to this Amendment or any document to be signed in connection with this Amendment and the transactions contemplated hereby (including without limitation assignment and assumptions, amendments or other borrowing requests, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Agent,

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or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act. Each of the parties represents and warrants to the other parties that it has the corporate capacity and authority to execute this Amendment through electronic means and there are no restrictions for doing so in that party’s constitutive documents.

8.Governing Law; Jurisdiction; Waiver of Jury Trial.

THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AMENDMENT AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS AMENDMENT, WHETHER SOUNDING IN CONTRACT, TORT OR EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND DECISIONS OF THE STATE OF NEW YORK. Sections 12.15 (Submission to Jurisdiction) and 12.17 (Jury Trial) of the Credit Agreement are hereby incorporated herein by this reference.

9.Severability.

In case any provision in or obligation under this Amendment shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provisions or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

10.References.

All references in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement and each reference to the “Credit Agreement”, (or the defined term “Agreement”, “thereunder”, “thereof” of words of like import referring to the Credit Agreement) in the other Loan Documents shall mean and be a reference to the Credit Agreement as amended hereby and giving effect to the amendments contained in this Amendment.

11.Reaffirmation.

Except as expressly amended hereby, all of the terms and provisions of the Credit Agreement and all other Loan Documents are and shall remain in full force and effect and are hereby ratified and confirmed. In furtherance of the foregoing, each of the Loan

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Parties hereto hereby irrevocably and unconditionally ratifies its grant of security interest and pledge under the Guaranty and Security Agreement and each Loan Document and confirms that the liens, security interests and pledges granted thereunder continue to secure the Obligations, including, without limitation, any additional Obligations resulting from or incurred pursuant to this Amendment.

Each of the Loan Parties hereto, as debtor, grantor, mortgagor, pledger, guarantor, assignor, or in any other similar capacity in which such Loan Party grants liens or security interests in its property or otherwise acts as accommodation party, guarantor, or indemnitor, as the case may be, hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which it is a party (after giving effect hereto) and (ii) to the extent such Loan Party granted liens on or security interests in any of its property pursuant to any such Loan Document as security for or otherwise guaranteed the Obligations under or with respect to the Loan Documents, ratifies and reaffirms such guarantee and grant of security interest and liens and confirms and agrees that such guarantee includes, and such security interests and liens hereafter secure, all of the Obligations as amended hereby.

For the avoidance of doubt, the ratification and reaffirmation by the Loan Parties in this Section 11 shall not constitute a new grant of security interests.

12.Release.

By its execution hereof and in consideration of the terms herein and other accommodations granted to the Loan Parties hereunder, each Loan Party, on behalf of itself and each of its Subsidiaries, and its or their successors, assigns and agents, hereby expressly forever waives, releases and discharges any and all claims (including cross-claims, counterclaims, and rights of setoff and recoupment), causes of action (whether direct or derivative in nature), demands, suits, costs, expenses and damages (collectively, the “Claims”) any of them may, as a result of actions or inactions occurring on or prior to the Amendment No. 7 Effective Date, have or allege to have as of the date of this Amendment or at any time thereafter (and all defenses that may arise out of any of the foregoing) of any nature, description, or kind whatsoever, based in whole or in part on facts, whether actual, contingent or otherwise, now known, unknown, or subsequently discovered, whether arising in Law, at equity or otherwise, against the Agent or any Lender, their respective affiliates, agents, principals, managers, managing members, members, stockholders, “controlling persons” (within the meaning of the United States federal securities laws), directors, officers, employees, attorneys, consultants, advisors, agents, trusts, trustors, beneficiaries, heirs, executors and administrators of each of the foregoing (collectively, the “Released Parties”) arising out of, or relating to, this Amendment, the Credit Agreement, the other Loan Documents and any or all of the

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actions and transactions contemplated hereby or thereby, including any actual or alleged performance or non-performance of any of the Released Parties hereunder or under the Loan Documents (the “Released Matters”). In entering into this Amendment, each Loan Party expressly disclaims any reliance on any representations, acts, or omissions by any of the Released Parties and hereby agrees and acknowledges that the validity and effectiveness of the releases set forth above does not depend in any way on any such representation, acts and/or omissions or the accuracy, completeness, or validity thereof. The provisions of this Section 12 shall survive the termination of this Amendment and the Loan Documents and the payment in full in cash of all Obligations of the Loan Parties under or in respect of the Credit Agreement (as amended) and other Loan Documents and all other amounts owing thereunder.

[Signature pages follow]

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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be made, executed and delivered by their duly authorized officers as of the day and year first above written.

TEAM, INC., as Borrower

By: /s/ André C. Bouchard_______________________

Name: André C. Bouchard

Title:    Executive Vice President, Chief Legal Officer and Secretary

[Team, Inc. Term Loan Credit Agreement
Amendment No. 7 Signature Page]

AGGRESSIVE EQUIPMENT COMPANY, LLC

DK VALVE & SUPPLY, LLC

FURMANITE, LLC

FURMANITE AMERICA, LLC

FURMANITE WORLDWIDE, LLC

QUALSPEC, LLC

QUEST INTEGRITY GROUP, LLC

QUEST INTEGRITY USA, LLC

ROCKET ACQUISITION, LLC

TANK CONSULTANTS, LLC

TANK CONSULTANTS MECHANICAL SERVICES, LLC

TCI SERVICES, LLC

TCI SERVICES HOLDINGS, LLC

TEAM INDUSTRIAL SERVICES, INC.

TEAM INDUSTRIAL SERVICES INTERNATIONAL,INC.

TEAM QUALSPEC, LLC

TEAM TECHNICAL SCHOOL, LLC

TQ ACQUISITION, INC.

GLOBAL ASCENT, LLC

KANEB FINANCIAL, LLC

FURMANITE LOUISIANA, LLC

as Guarantors

By: /s/ André C. Bouchard_______________________

Name: André C. Bouchard

Title: Executive Vice President, Chief Legal          Officer and Secretary

[Team, Inc. Term Loan Credit Agreement
Amendment No. 7 Signature Page]

QUEST INTEGRITY CAN LTD.

TISI ACQUISITION INC.

TISI CANADA INC.

as Guarantors

By: /s/ André C. Bouchard_______________________

Name: André C. Bouchard

Title: Executive Vice President, Chief Legal Officer and Secretary, Managing Director

FURMANITE B.V.

FURMANITE HOLDING B.V.

P3 PULLEN POLYURETHANE PRODUCTS B.V.

QUEST INTEGRITY EU HOLDINGS, B.V.

QUEST INTEGRITY NLD B.V.

TEAMINC EUROPE B.V.

TEAM INDUSTRIAL SERVICES EUROPE B.V.

TEAM VALVE REPAIR SERVICES B.V.

THRESHOLD INSPECTION & APPLICATION TRAINING EUROPE B.V.

TURBINATE INTERNATIONAL B.V.

TEAM INDUSTRIAL SERVICES NETHERLANDS B.V.

QUALITY INSPECTION SERVICES B.V.

A&M BEHEER B.V.

as Guarantors

By: /s/ André C. Bouchard______________________

Name: André C. Bouchard

Title: Authorised Signatory

[Team, Inc. Term Loan Credit Agreement
Amendment No. 7 Signature Page]

EXECUTED by FURMANITE INTERNATIONAL FINANCE LIMITED, a private limited company organized under the laws of England and Wales, as a Guarantor, by one director	Signed: /s/André C. Bouchard_____ André C. Bouchard Director
EXECUTED by TEAM INDUSTRIAL SERVICES INSPECTION LIMITED, a private limited company organized under the laws of England and Wales, as a Guarantor, by one director	Signed: /s/André C. Bouchard_____ André C. Bouchard Director
EXECUTED by TEAM INDUSTRIAL SERVICES (UK) HOLDING LIMITED, a private limited company organized under the laws of England and Wales, as a Guarantor, by one director	Signed: /s/André C. Bouchard_____ André C. Bouchard Director
EXECUTED by TEAM VALVE AND ROTATING SERVICES LIMITED, a private limited company organized under the laws of England and Wales, as a Guarantor, by one director	Signed: /s/André C. Bouchard_____ André C. Bouchard Director
EXECUTED by TIS UK LIMITED LIMITED, a private limited company organized under the laws of England and Wales, as a Guarantor, by one director	Signed: /s/André C. Bouchard_____ André C. Bouchard Director

Acknowledged and Agreed:

APSC HOLDCO I, L.P., as Lender

By: /s/George Fan ______________________
Name: George Fan
Title: Authorized Signatory

[Team, Inc. Term Loan Credit Agreement
Amendment No. 7 Signature Page]

#95709642v3    

Acknowledged and Agreed:

ATLANTIC PARK STRATEGIC CAPITAL FUND, L.P., as Agent

By: /s/George Fan ______________________
Name: George Fan
Title: Authorized Signatory

[Team, Inc. Term Loan Credit Agreement
Amendment No. 7 Signature Page]

EX-10.3

Execution Version

AMENDMENT NO. 6 TO UNSECURED TERM LOAN CREDIT AGREEMENT

This AMENDMENT NO. 6 TO UNSECURED TERM LOAN CREDIT AGREEMENT (this “Amendment”), dated as of May 6, 2022, is among Team, Inc., a Delaware corporation (the “Borrower”), each of the Lenders party hereto, and Cantor Fitzgerald Securities, as agent (the “Agent”).

This Amendment and the rights and obligations evidenced hereby are subordinate in the manner and to the extent set forth in that certain Subordination Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “Subordination Agreement”) dated as of February 11, 2022, by and among Cantor Fitzgerald Securities, as administrative agent for all of the Subordinated Lenders under the Unsecured Credit Agreement (as such terms are defined in the Subordination Agreement) (in such capacity, together with its successors and assigns in such capacity, “Subordinated Agent”), Eclipse Business Capital LLC, as agent for all Senior Lenders (as defined in the Subordination Agreement) party to the Senior Credit Agreement (as defined below) (in such capacity, together with its successors and assigns in such capacity, the “Senior Agent”), Team, Inc., a Delaware corporation (“Borrower Agent”), and each other Loan Parties party thereto, to the indebtedness (including interest) owed by Loan Parties and pursuant to that certain Credit Agreement, dated as of February 11, 2022 (the “Senior Credit Agreement”), among Loan Parties, Senior Agent and the lenders from time to time party thereto, and the other Senior Debt Documents (as defined in the Subordination Agreement), as suchSenior Credit Agreement and other Senior Debt Documents have been and hereafter may be amended, supplemented or otherwise modified from time to time and to indebtedness refinancing the indebtedness under those agreements as contemplated by the Subordination Agreement; and each holder of this instrument, by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement.

W I T N E S S E T H:

WHEREAS, the Borrower, the Lenders and Corre Credit Fund, LLC as the predecessor agent (the “Predecessor Agent”) entered into that certain Unsecured Term Loan Credit Agreement, dated as of November 9, 2021 (as amended, supplemented, restated, amended and restated or otherwise modified from time to time, the “Credit Agreement”; capitalized terms used in this Amendment but not otherwise defined herein shall have the respective meanings given thereto in the Credit Agreement);

WHEREAS, the Borrower and the Lenders entered into that certain Amendment No. 1 to Unsecured Term Loan Credit Agreement, dated as of November 30, 2021, under which the Lenders agreed to amend the Credit Agreement and subject to the terms and conditions set forth therein, to (i) extend the payment date for interest in the form of PIK Interest with respect to the Initial Term Loans, (ii) extend the date upon which the Borrower must deliver a fully executed

ABL Consent to, in each case, 11:59 P.M. on December 6, 2021, and (iii) extend the date upon which the Borrower must issue the Underlying Warrants to 11:59 P.M. on December 7, 2021;

WHEREAS, the Borrower and the Lenders entered into that certain Amendment No. 2 to Unsecured Term Loan Credit Agreement, dated as of December 6, 2021, under which the Lenders agreed to amend the Credit Agreement and subject to the terms and conditions set forth therein, to (i) extend the payment date for interest in the form of PIK Interest with respect to the Initial Term Loans and (ii) extend the date upon which the Borrower must deliver a fully executed ABL Consent to, in each case, 11:59 P.M. on December 7, 2021;

WHEREAS, the Borrower and the Lenders entered into that certain Amendment No. 3 to Unsecured Term Loan Credit Agreement, dated as of December 7, 2021, under which the Lenders agreed to amend the Credit Agreement and subject to the terms and conditions set forth therein, to (i) extend the payment date for interest in the form of PIK Interest with respect to the Initial Term Loans, (ii) extend the date upon which the Borrower must deliver a fully executed ABL Consent and (iii) extend the date upon which the Borrower must issue the Underlying Warrants to, in each case, 11:59 P.M. on December 8, 2021;

WHEREAS, the Borrower, the Lenders, the Predecessor Agent and the Agent entered into that certain Resignation, Consent and Appointment Agreement and Amendment No. 4 to Unsecured Term Loan Credit Agreement, dated as of December 8, 2021, under which the parties thereto agreed to appoint the Agent as successor agent to the Predecessor Agent under the Credit Agreement and agreed to amend the Credit Agreement subject to the terms and conditions set forth therein;

WHEREAS, the Borrower, the Lenders and the Agent entered into that certain Amendment No. 5 to Unsecured Term Loan Credit Agreement, dated as of February 11, 2022, under which the parties thereto agreed to amend the Credit Agreement and subject to the terms and conditions set forth therein to make the February 2022 Delayed Draw Term Loans to the Borrower and establish the Uncommitted Delayed Draw Term Loans which may be made at the Lenders’ sole and absolute discretion;

WHEREAS, the Borrower, the Lenders and the Agent have agreed, subject to the terms and conditions set forth herein, to amend the Credit Agreement as set out in Section 1 hereof; and

WHEREAS, the Borrower and the Lenders are willing to effect such amendments on the terms and conditions contained in this Amendment.

NOW, THEREFORE, in consideration of the premises and further valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

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1.Amendments to the Credit Agreement.

Section 9.1 of the Credit Agreement is, effective as of the Sixth Amendment Effective Date, hereby amended and restated in its entirety as follows:

“The Borrower hereby covenants and agrees that the Loan Parties and their Subsidiaries will maintain a Net Leverage Ratio (a) for the four (4) fiscal quarter period ending on March 31, 2023, of less than or equal to 12.00 to 1.00, and (b) for each four (4) fiscal quarter period ending on the last day of each fiscal quarter thereafter, of less than or equal to 7.00 to 1.00.”

2.Effectiveness; Certain Consents.

This Amendment shall become effective on the date the following conditions are satisfied (the “Sixth Amendment Effective Date”):

(a)the Agent and Lenders shall have received duly executed copies of the following, each in form and substance satisfactory to the Required Lenders:

(i)that certain Amendment No. 7 to Term Loan Credit Agreement, dated as of the Sixth Amendment Effective Date, by and among the Borrower, the lenders party thereto from time to time and Atlantic Park Strategic Capital Fund (“Amendment No. 7 to Term Loan Credit Agreement”), duly executed by each of the parties thereto;

(ii)that certain Amendment No. 1 to Credit Agreement, dated as of the Sixth Amendment Effective Date, by and among the Borrower, the lenders party thereto from time to time and Eclipse Business Capital LLC (“Amendment No. 1 to ABL Credit Agreement”), duly executed by each of the parties thereto; and

(iii)a certificate of a Responsible Officer of the Borrower certifying that (A) each of the representations and warranties made by the Borrower in Section 3 hereof shall be true and correct, (B) that both immediately prior to and immediately after giving effect to this Amendment, no Default or Event of Default exists and (C) each Loan Party has complied with, or obtained a waiver from the applicable agent with respect to, all conditions to be satisfied by such Loan Party to the effectiveness of Amendment No. 7 to Term Loan Credit Agreement and Amendment No. 1 to ABL Credit Agreement.

(b)the Agent shall have received counterparts to this Amendment, duly executed by the parties hereto;

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(c)the Borrower shall have paid on or prior to the Sixth Amendment Effective Date:

(iv)all reasonable and documented out-of-pocket fees and Lender Group Expenses required to be paid pursuant to Section 12.4 of the Credit Agreement to the extent invoiced at least three (3) Business Days prior to the Sixth Amendment Effective Date;

(v)the Amendment No. 6 Fee, pursuant to Section 4 hereof;

(vi)any fees and expenses due and payable to the Agent or the Lenders under any Loan Document; and

(vii)for the benefit of Willkie Farr & Gallagher LLP, counsel to the Lenders, and Shipman & Goodwin LLP, counsel to the Agent any of its fees and expenses to the extent required to be reimbursed or paid by the Borrower under any Loan Document.

Each condition in Section 2 that is subject to the satisfaction or discretion of Agent or any Lender shall be deemed satisfied upon Agent’s or Lender’s, as applicable, delivering its signature page to this Amendment.

In addition, to the extent necessary for any purpose under the Credit Agreement or any other Loan Documents, the Agent and Lenders party to this Amendment hereby consent to each of the amendment fees payable under the Amendment No. 1 to ABL Credit Agreement and the Amendment No. 7 to Term Loan Credit Agreement to be paid in kind by (i) adding the amount of such amendment fee to the principal of the outstanding loans of each such lender on the date hereof, (ii) thereafter, be treated as principal for all purposes of such credit agreement and (iii) bear interest in accordance with the terms of such credit agreement.

3.Representations and Warranties.

In order to induce the Lenders and the Agent to enter into this Amendment, the Borrower represents and warrants to the Lenders and the Agent, for itself and for each other Loan Party, as follows:

(a)that both immediately prior to and immediately after giving effect to this Amendment, no Default or Event of Default exists;

(b)the execution, delivery and performance by the Borrower of this Amendment and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action, do not contravene the Borrower’s Governing Documents and do not and will not contravene any Material Contract;

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(c)this Amendment has been duly executed and delivered on behalf of the Borrower;

(d)this Amendment constitutes a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, Debtor Relief Laws or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity;

(e)that the representations and warranties listed in the Credit Agreement and the other Loan Documents are true, correct and complete in all material respects as of the Sixth Amendment Effective Date (except that such materiality qualifier shall not apply to any representations and warranties that already are qualified or modified by materiality in the text thereof); and

(f)all written disclosure provided to the Lenders regarding the Borrower, the other Loan Parties and their Subsidiaries, their businesses and the transactions contemplated hereby, including any schedules thereto, furnished by or on behalf of the Borrower, the other Loan Parties and their Subsidiaries (other than projections, forward looking information or information of a general economic or general industry nature) is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not materially misleading. Projections and forward looking information (including forecasts and other forward-looking information) were based on good faith estimates and assumptions believed to be reasonable at the time made; it being recognized by the Agent and the Lenders that such projections are as to future events and are not to be viewed as facts, the projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower, the other Loan Parties and the Subsidiaries, that no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material.

4.Amendment Fee.

As consideration for each Lender’s agreement to enter into this Amendment, the Borrower agrees to pay (or cause to be paid) to such Lender a paid-in-kind fee (the “Amendment No. 6 Fee”) equal to 0.50% of the sum of (i) all Loans and Commitments held by such Lender on the Sixth Amendment Effective Date (including for the avoidance of doubt any undrawn portion of such Commitments) and (ii) any PIK Interest that has

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been added to the principal amount of the Loans pursuant to the Credit Agreement prior to and as of the Sixth Amendment Effective Date. The Amendment No. 6 Fee shall (i) be paid in kind by adding the amount of such fee to the principal of the outstanding Loans of each Lender on Sixth Amendment Effective Date, (ii) thereafter, be treated as principal for all purposes of the Credit Agreement and (iii) bear interest in accordance with the terms of the Credit Agreement.

5.Entire Agreement.

This Amendment, the Credit Agreement (including giving effect to the amendments set forth in Section 1 above), and the other Loan Documents (collectively, the “Relevant Documents”) constitute the entire agreement among the parties, supersede any prior written and verbal agreements among them with respect to the subject matter hereof and thereof, and shall bind and benefit the parties and their respective successors and permitted assigns. This Amendment shall be deemed to have been jointly drafted, and no provision of it shall be interpreted or construed for or against a party because such party purportedly prepared or requested such provision, any other provision or this Amendment as a whole. No promise, condition, representation or warranty, express or implied, not set forth in the Relevant Documents shall bind any party hereto, and no such party has relied on any such promise, condition, representation or warranty. Each of the parties hereto acknowledges that, except as otherwise expressly stated in the Relevant Documents, no representations, warranties or commitments, express or implied, have been made by any party to any other party in relation to the subject matter hereof or thereof. None of the terms or conditions of this Amendment may be changed, modified, waived or cancelled orally or otherwise, except in writing and in accordance with Section 12.5 of the Credit Agreement (Amendments, Waivers and Consents).

6.Full Force and Effect of Credit Agreement.

This Amendment is a Loan Document. Except as expressly modified hereby, all terms and provisions of the Credit Agreement and all other Loan Documents remain in full force and effect and nothing contained in this Amendment shall in any way impair the validity or enforceability of the Credit Agreement or the Loan Documents, or alter, waive, annul, vary, affect, or impair any provisions, conditions, or covenants contained therein or any rights, powers, or remedies granted therein. This Amendment shall not constitute a modification of the Credit Agreement or any of the other Loan Documents or a course of dealing with Agent or the Lenders at variance with the Credit Agreement or the other Loan Documents such as to require further notice by Agent or any Lender to require strict compliance with the terms of the Credit Agreement and the other Loan Documents in the future, except in each case as expressly set forth herein. The Borrower acknowledges and expressly agrees that Agent and the Lenders reserve the right to, and

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do in fact, require strict compliance with all terms and provisions of the Credit Agreement and the other Loan Documents (subject to any qualifications set forth therein), as amended herein.

7.Counterparts; Effectiveness.

This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Except as provided in Section 2 above, this Amendment shall become effective when the Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the parties hereto. Delivery of an executed counterpart of a signature page of this Amendment by facsimile, electronic email or other electronic imaging means (e.g., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Amendment.

The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to this Amendment or any document to be signed in connection with this Amendment and the transactions contemplated hereby (including without limitation assignment and assumptions, amendments or other borrowing requests, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act. Each of the parties represents and warrants to the other parties that it has the corporate capacity and authority to execute this Amendment through electronic means and there are no restrictions for doing so in that party’s constitutive documents.

8.Governing Law; Jurisdiction; Waiver of Jury Trial.

THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AMENDMENT AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS AMENDMENT, WHETHER SOUNDING IN CONTRACT, TORT OR EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND DECISIONS OF THE STATE OF NEW YORK. Sections 12.15 (Submission to

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Jurisdiction) and 12.17 (Jury Trial) of the Credit Agreement are hereby incorporated herein by this reference.

9.Severability.

In case any provision in or obligation under this Amendment shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provisions or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

10.References.

All references in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement and each reference to the “Credit Agreement”, (or the defined term “Agreement”, “thereunder”, “thereof” of words of like import referring to the Credit Agreement) in the other Loan Documents shall mean and be a reference to the Credit Agreement as amended hereby and giving effect to the amendments contained in this Amendment.

11.Consent of the Lenders.

Each of the undersigned Lenders hereby consents to the amendments of the Loan Documents set forth herein and authorizes and directs the Agent to execute and deliver this Amendment, and perform its obligations hereunder. The Lenders and the Loan Parties acknowledge and agree that the obligations of such Person under Section 11.6 and 12.4 of the Credit Agreement shall apply to this direction and the actions taken by the Agent hereunder.

12.Release.

By its execution hereof and in consideration of the terms herein and other accommodations granted to the Borrower on behalf of itself and each of the Loan Parties, and its or their successors, assigns and agents, the Borrower on behalf of itself and each of the Loan Parties hereby expressly forever waives, releases and discharges any and all claims (including cross-claims, counterclaims, and rights of setoff and recoupment), causes of action (whether direct or derivative in nature), demands, suits, costs, expenses and damages (collectively, the “Claims”) any of them may, as a result of actions or inactions occurring on or prior to the Sixth Amendment Effective Date, have or allege to have as of the date of this Amendment or at any time thereafter (and all defenses that may arise out of any of the foregoing) of any nature, description, or kind whatsoever, based in whole or in part on facts, whether actual, contingent or otherwise, now known, unknown, or subsequently discovered, whether arising in Law, at equity or otherwise, against the

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Agent or any Lender, their respective affiliates, agents, principals, managers, managing members, members, stockholders, “controlling persons” (within the meaning of the United States federal securities laws), directors, officers, employees, attorneys, consultants, advisors, agents, trusts, trustors, beneficiaries, heirs, executors and administrators of each of the foregoing (collectively, the “Released Parties”) arising out of, or relating to, this Amendment, the Credit Agreement, the other Loan Documents and any or all of the actions and transactions contemplated hereby or thereby, including any actual or alleged performance or non-performance of any of the Released Parties hereunder or under the Loan Documents (the “Released Matters”). In entering into this Amendment, the Borrower on behalf of itself and each Loan Party expressly disclaims any reliance on any representations, acts, or omissions by any of the Released Parties and hereby agrees and acknowledges that the validity and effectiveness of the releases set forth above do not depend in any way on any such representation, acts and/or omissions or the accuracy, completeness, or validity thereof. The provisions of this Section 12 shall survive the termination of this Amendment and the Loan Documents and the payment in full in cash of all Obligations of the Loan Parties under or in respect of the Credit Agreement (as amended) and other Loan Documents and all other amounts owing thereunder, or the earlier resignation or removal of the Agent.

[Signature pages follow]

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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be made, executed and delivered by their duly authorized officers as of the day and year first above written.

TEAM, INC., as Borrower

By: /s/ André C. Bouchard________________________

Name: André C. Bouchard

Title:    Executive Vice President, Chief Legal Officer and Secretary

[Team, Inc. - Unsecured Term Loan Credit Agreement - Amendment No. 6 Signature Page]

CORRE OPPORTUNITIES QUALIFIED MASTER FUND, LP,as Lender

By: /s/ John Barrett____________________________
Name: John Barrett
Title: Authorized Signatory

CORRE HORIZON FUND, LP, as Lender

By: /s/ John Barrett____________________________
Name: John Barrett
Title: Authorized Signatory

CORRE HORIZON II FUND, LP, as Lender

By: /s/ John Barrett____________________________
Name: John Barrett
Title: Authorized Signatory

[Team, Inc. - Unsecured Term Loan Credit Agreement - Amendment No. 6 Signature Page]

CANTOR FITZGERALD SECURITIES,as Agent

By: /s/ James Buccola__________________
Name: James Buccola
Title: Head of Fixed Income

[Team, Inc. - Unsecured Term Loan Credit Agreement - Amendment No. 6 Signature Page]

EX-10.4

Exhibit 10.1

Execution Version

AMENDMENT NO. 7 TO UNSECURED TERM LOAN CREDIT AGREEMENT

This AMENDMENT NO. 7 TO UNSECURED TERM LOAN CREDIT AGREEMENT (this “Amendment”), dated as of June 28, 2022, is among Team, Inc., a Delaware corporation (the “Borrower”), each of the Lenders party hereto, and Cantor Fitzgerald Securities, as agent (the “Agent”).

This Amendment and the rights and obligations evidenced hereby are subordinate in the manner and to the extent set forth in that certain Subordination Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “Subordination Agreement”) dated as of February 11, 2022, by and among Cantor Fitzgerald Securities, as administrative agent for all of the Subordinated Lenders under the Unsecured Credit Agreement (as such terms are defined in the Subordination Agreement) (in such capacity, together with its successors and assigns in such capacity, “Subordinated Agent”), Eclipse Business Capital LLC, as agent for all Senior Lenders (as defined in the Subordination Agreement) party to the Senior Credit Agreement (as defined below) (in such capacity, together with its successors and assigns in such capacity, the “Senior Agent”), Team, Inc., a Delaware corporation (“Borrower Agent”), and each other Loan Parties party thereto, to the indebtedness (including interest) owed by Loan Parties and pursuant to that certain Credit Agreement, dated as of February 11, 2022 (the “Senior Credit Agreement”), among Loan Parties, Senior Agent and the lenders from time to time party thereto, and the other Senior Debt Documents (as defined in the Subordination Agreement), as such Senior Credit Agreement and other Senior Debt Documents have been and hereafter may be amended, supplemented or otherwise modified from time to time and to indebtedness refinancing the indebtedness under those agreements as contemplated by the Subordination Agreement; and each holder of this instrument, by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement.

W I T N E S S E T H:

WHEREAS, the Borrower, the Lenders and Corre Credit Fund, LLC as the predecessor agent (the “Predecessor Agent”) entered into that certain Unsecured Term Loan Credit Agreement, dated as of November 9, 2021 (as amended, supplemented, restated, amended and restated or otherwise modified from time to time, the “Credit Agreement”; capitalized terms used in this Amendment but not otherwise defined herein shall have the respective meanings given thereto in the Credit Agreement);

WHEREAS, the Borrower and the Lenders entered into that certain Amendment No. 1 to Unsecured Term Loan Credit Agreement, dated as of November 30, 2021, under which the Lenders agreed to amend the Credit Agreement and subject to the terms and conditions set forth therein, to (i) extend the payment date for interest in the form of PIK Interest with respect to the Initial Term Loans, (ii) extend the date upon which the Borrower must deliver a fully executed ABL Consent to, in each case, 11:59 P.M. on December 6, 2021, and (iii) extend the date upon which the Borrower must issue the Underlying Warrants to 11:59 P.M. on December 7, 2021;

WHEREAS, the Borrower and the Lenders entered into that certain Amendment No. 2 to Unsecured Term Loan Credit Agreement, dated as of December 6, 2021, under which the Lenders agreed to amend the Credit Agreement and subject to the terms and conditions set forth therein, to (i) extend the payment date for interest in the form of PIK Interest with respect to the Initial Term Loans and (ii) extend the date upon which the Borrower must deliver a fully executed ABL Consent to, in each case, 11:59 P.M. on December 7, 2021;

WHEREAS, the Borrower and the Lenders entered into that certain Amendment No. 3 to Unsecured Term Loan Credit Agreement, dated as of December 7, 2021, under which the Lenders agreed to amend the Credit Agreement and subject to the terms and conditions set forth therein, to (i) extend the

payment date for interest in the form of PIK Interest with respect to the Initial Term Loans, (ii) extend the date upon which the Borrower must deliver a fully executed ABL Consent and (iii) extend the date upon which the Borrower must issue the Underlying Warrants to, in each case, 11:59 P.M. on December 8, 2021;

WHEREAS, the Borrower, the Lenders, the Predecessor Agent and the Agent entered into that certain Resignation, Consent and Appointment Agreement and Amendment No. 4 to Unsecured Term Loan Credit Agreement, dated as of December 8, 2021, under which the parties thereto agreed to appoint the Agent as successor agent to the Predecessor Agent under the Credit Agreement and agreed to amend the Credit Agreement subject to the terms and conditions set forth therein;

WHEREAS, the Borrower, the Lenders and the Agent entered into that certain Amendment No. 5 to Unsecured Term Loan Credit Agreement, dated as of February 11, 2022, under which the Lenders agreed to amend the Credit Agreement and subject to the terms and conditions set forth therein, to (i) make the February 2022 Delayed Draw Term Loans and (ii) at the Lenders’ sole and absolute discretion, make the Uncommitted Delayed Draw Terms Loans;

WHEREAS, the Borrower, the Lenders and the Agent entered into that certain Amendment No. 6 to Unsecured Term Loan Credit Agreement, dated as of May 6, 2022, under which the Lenders agreed to amend the Credit Agreement and subject to the terms and conditions set forth therein, to amend the financial covenants; and

WHEREAS, the Borrower, the Lenders and the Agent have agreed, subject to the terms and conditions set forth herein, to amend the Credit Agreement as set out in Section 1 hereof; and

WHEREAS, the Borrower and the Lenders are willing to effect such amendments on the terms and conditions contained in this Amendment.

NOW, THEREFORE, in consideration of the premises and further valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1.    Amendments to the Credit Agreement. Upon the Seventh Amendment Effective Date, the parties hereto agree that the Credit Agreement shall be amended as follows:

    (a) New Definitions. Section 1.1 of the Credit Agreement is amended to add the following new definitions:

“Seventh Amendment” means that certain Amendment No. 7 to Unsecured Term Loan Credit Agreement, dated as of June 28, 2022, among the Borrower, the Lenders and the Agent.    

“Seventh Amendment Effective Date” means June 28, 2022.

    “Sixth Amendment” means that certain Amendment No. 6 to Unsecured Term Loan Credit Agreement, dated as of May 6, 2022, among the Borrower, the Lenders and the Agent.    

“Unused February 2022 DDTL Fee Payment Date” has the meaning specified in Section 4.12.

    (b) Amended Definitions. Section 1.1 of the Credit Agreement is amended to delete the definitions of “February 2022 Delayed Draw Availability Period” and “Loan Documents” therefrom and to insert in place thereof, respectively, the following:

“February 2022 Delayed Draw Availability Period” means the period beginning on the Fifth Amendment Effective Date and ending on October 31, 2022.

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“Loan Documents” means this Agreement, any Intercompany Subordination Agreement, the ABL Subordination Agreement, the 2020 Term Loan Subordination Agreement, the Agent Fee Letter, the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment, the Seventh Amendment and any other documents and instruments entered into, now or in the future, by any Loan Party or any of its Subsidiaries under or in connection with this Agreement, as each of the same may be amended, restated, supplemented or otherwise modified from time to time.

(c) February 2022 Delayed Draw Term Loans. Clause (i) of Section 2.1(a) of the Credit Agreement shall be amended to read in its entirety as follows:

(i) make term loans (the “February 2022 Delayed Draw Term Loans”) to the Borrower, in an aggregate amount of $10,000,000 at any time during the February 2022 Delayed Draw Availability Period, provided such term loans may only be drawn on not more than two occasions, the first being in an amount not less than $5,000,000, plus any integral multiple of $100,000 (not to exceed $10,000,000), and the second (if requested by the Borrower) being in an amount equal to the excess, if any, of $10,000,000 over the amount of the first drawing, and

    (d) UnusedFebruary 2022 Delayed Draw Term Loans Cash Fee. Section 4.5 of the Credit Agreement shall be amended and restated in its entirety to read as follows:

4.5 Unused February 2022 Delayed Draw Term Loans Cash Fee. On the earliest of (i) October 31, 2022, (ii) the Termination Date, and (iii) the date on which all Obligations shall become immediately due and payable (whether by declaration pursuant to Section 10.2(a), operation of law, or otherwise) (the“Unused February 2022 DDTL Fee Payment Date”), the Borrower shall pay to the Agent, for the ratable benefit of the Lenders, a cash fee equal to one percent (1.0%) of the amount, if any, by which $10,000,000 exceeds the principal amount of February 2022 Delayed Draw Term Loansmade by the Lenders to the Borrower on or prior to the Unused February 2022 DDTL Fee Payment Date; provided that, for the avoidance of doubt no fee shall be payable pursuant to this Section 4.5 to the extent that the February 2022 Delayed Draw Term Loan is drawn in full.

2.Effectiveness. This Amendment shall become effective on the date the following conditions are satisfied (the “Seventh Amendment Effective Date”):

(a) the Agent shall have received counterparts to this Amendment, duly executed by the parties hereto;

(b) the Borrower shall have paid on or prior to the Seventh Amendment Effective Date:

(i) all reasonable and documented out-of-pocket fees and Lender Group Expenses required to be paid pursuant to Section 12.4 of the Credit Agreement to the extent invoiced at least three (3) Business Days prior to the Seventh Amendment Effective Date;

(ii) any fees and expenses due and payable to the Agent or the Lenders under any Loan Document (including without limitation the Credit Agreement, the Agent Fee Letter and this Amendment); and

3.     Entire Agreement. This Amendment, the Credit Agreement (including giving effect to the amendments set forth in Section 1 above), and the other Loan Documents (collectively, the “Relevant Documents”) constitute the entire agreement among the parties, supersede any prior written and verbal agreements among them with respect to the subject matter hereof and thereof, and shall bind and benefit

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the parties and their respective successors and permitted assigns. This Amendment shall be deemed to have been jointly drafted, and no provision of it shall be interpreted or construed for or against a party because such party purportedly prepared or requested such provision, any other provision or this Amendment as a whole. No promise, condition, representation or warranty, express or implied, not set forth in the Relevant Documents shall bind any party hereto, and no such party has relied on any such promise, condition, representation or warranty. Each of the parties hereto acknowledges that, except as otherwise expressly stated in the Relevant Documents, no representations, warranties or commitments, express or implied, have been made by any party to any other party in relation to the subject matter hereof or thereof. None of the terms or conditions of this Amendment may be changed, modified, waived or cancelled orally or otherwise, except in writing and in accordance with Section 12.5 of the Credit Agreement (Amendments, Waivers and Consents).

4.    Full Force and Effect of Credit Agreement. This Amendment is a Loan Document. Except as expressly modified hereby, all terms and provisions of the Credit Agreement and all other Loan Documents remain in full force and effect and nothing contained in this Amendment shall in any way impair the validity or enforceability of the Credit Agreement or the Loan Documents, or alter, waive, annul, vary, affect, or impair any provisions, conditions, or covenants contained therein or any rights, powers, or remedies granted therein. This Amendment shall not constitute a modification of the Credit Agreement or any of the other Loan Documents or a course of dealing with Agent or the Lenders at variance with the Credit Agreement or the other Loan Documents such as to require further notice by Agent or any Lender to require strict compliance with the terms of the Credit Agreement and the other Loan Documents in the future, except in each case as expressly set forth herein. The Borrower acknowledges and expressly agrees that Agent and the Lenders reserve the right to, and do in fact, require strict compliance with all terms and provisions of the Credit Agreement and the other Loan Documents (subject to any qualifications set forth therein), as amended herein.

5.     Counterparts; Effectiveness. This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Except as provided in Section 2 above, this Amendment shall become effective when the Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the parties hereto. Delivery of an executed counterpart of a signature page of this Amendment by facsimile, electronic email or other electronic imaging means (e.g., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Amendment. The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to this Amendment or any document to be signed in connection with this Amendment and the transactions contemplated hereby (including without limitation assignment and assumptions, amendments or other borrowing requests, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act. Each of the parties represents and warrants to the other parties that it has the corporate capacity and authority to execute this Amendment through electronic means and there are no restrictions for doing so in that party’s constitutive documents.

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6.     Governing Law; Jurisdiction; Waiver of Jury Trial. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AMENDMENT AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS AMENDMENT, WHETHER SOUNDING IN CONTRACT, TORT OR EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND DECISIONS OF THE STATE OF NEW YORK. Sections 12.15 (Submission to Jurisdiction) and 12.17 (Jury Trial) of the Credit Agreement are hereby incorporated herein by this reference.

7.     References. All references in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement and each reference to the “Credit Agreement”, (or the defined term “Agreement”, “thereunder”, “thereof” of words of like import referring to the Credit Agreement) in the other Loan Documents shall mean and be a reference to the Credit Agreement as amended hereby and giving effect to the amendments contained in this Amendment. 8. Consent of the Required Lenders. Each of the undersigned Lenders hereby consents to the amendments of the Loan Documents set forth in this Amendment and authorizes and directs the Agent to execute and deliver this Amendment and perform its obligations thereunder. The Lenders and the Loan Parties acknowledge and agree that the obligations of such Person under Section 11.6 and 12.4 of the Credit Agreement shall apply to this direction and the actions taken by the Agent hereunder.

[Signature pages follow]

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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be made, executed and delivered by their duly authorized officers as of the day and year first above written.

TEAM, Inc., as Borrower
By:	/s/ André C. Bouchard
Name:	André C. Bouchard
Title:	Executive Vice President, Administration, Chief Legal Officer and Secretary

[Team, Inc. - Unsecured Term Loan Credit Agreement - Amendment No. 7 Signature Page]

CORRE OPPORTUNITIES QUALIFIED MASTER FUND, LP, as Lender
By:	/s/ John Barrett
Name:	John Barrett
Title:	Authorized Signatory
CORRE HORIZON FUND, LP,as Lender
By:	/s/ John Barrett
Name:	John Barrett
Title:	Authorized Signatory
CORRE HORIZON II FUND, LP,as Lender
By:	/s/ John Barrett
Name:	John Barrett
Title:	Authorized Signatory

[Team, Inc. - Unsecured Term Loan Credit Agreement - Amendment No. 7 Signature Page]

CANTOR FITZGERALD SECURITIES,as Agent
By:	/s/ James Buccola
Name:	James Buccola
Title:	Head of Fixed Income

[Team, Inc. - Unsecured Term Loan Credit Agreement - Amendment No. 7 Signature Page]

EX-10.5

Certain identified information has been redacted from this exhibit because it is both (i) not material and (ii) a type that the registrant treats as private or confidential. Information that has been omitted has been identified in this document with a placeholder identified by the mark “[***].”

Certain identified information marked with [***] has been excluded from this exhibit because it is not material and would be competitively harmful if publicly disclosed.

June 10, 2022

PERSONAL AND CONFIDENTIAL

Via hand delivery and email

Robert Young

Dear Robert,

As you know, Team, Inc. (together with its subsidiaries, the “Company”) is currently facing a challenging business environment. In light of this situation, the Company has made certain changes to your compensation as described in this letter agreement (this “Agreement”). We thank you for your hard work and continuous efforts and are pleased that we are able to offer a revised compensation program during these challenging times.

Retention Bonuses

Subject to the terms of this Agreement, the Company has granted you a cash retention bonus opportunity pursuant to the Company’s 2022 Management Incentive Plan (the “Annual Plan”) and the Team, Inc. 2018 Equity Incentive Plan, as amended and restated May 2021 (as the same may be amended, the “Equity Plan”) in the aggregate amount of U.S. $115,500.00 (the “Retention Opportunity”). The Retention Opportunity is earned over the first, second, third, and fourth quarters of calendar year 2022 (each quarter a “Retention Period”). One-fourth of the Retention Opportunity (a “Retention Bonus”) will be payable after the end of each Retention Period, subject to your continued employment with the Company (except as expressly provided below). Your Retention Bonus for each Retention Period will be paid to you by the Company within a reasonable period of time (but generally no later than forty-five (45) days) after the end of the applicable Retention Period (except that the Retention Bonus first quarter Retention Period will be made as soon as practicable after the date of this Agreement), provided, that in the sole discretion of the Company’s Board of Directors, you may receive an advance payment of your Retention Bonus for any Retention Period or for multiple Retention Periods.

You will be required to repay any Retention Bonuses received, net of any taxes you are required to pay in respect thereof and taking into account any tax benefit that may be available in respect of such repayment to the Company, in the event that your employment with the Company ends (or you are under notice of a termination) for reasons other than death, disability, a Voluntary Separation from Service for Good Reason, or an Involuntary Separation from Service Without Cause (as such terms are defined in the Company's 2020 Officer Severance Policy and Guidelines) (as the same may be amended, including as

13131 Dairy Ashford Rd., Ste. 600, Sugar Land, Texas 77478

Certain identified information has been redacted from this exhibit because it is both (i) not material and (ii) a type that the registrant treats as private or confidential. Information that has been omitted has been identified in this document with a placeholder identified by the mark “[***].”

described below, the “Severance Policy”) (such repayment obligations, the “Clawback”). Notwithstanding the forgoing, you agree that Good Reason for purposes of the Severance Policy will not include any change in your position so long as you are reporting to Team’s Chief Executive Officer, Interim Chief Executive Officer or Chief Operating Officer, and the Severance Policy is deemed amended, with your consent, to reflect this change. The Clawback for all Retention Bonuses will expire on the earlier of (i) April 1, 2023, (ii) the consummation of a “Change in Control” of the Company as defined in the Equity Plan or completion of the Strategic Project (as described in Schedule A) if, as part of the transaction, you are employed by the acquirer, or (iii) the completion of any liquidation, windup, reorganization, or restructuring of the Company, whether under the federal law of the United States or any other jurisdiction. Any required repayment under the Clawback must be made promptly, and in all events within twenty (20) calendar days following the date of your termination of employment with the Company.

Strategic Project Bonus

    Subject to the terms of this Agreement, you will also be eligible to receive a Strategic Project Bonus (“Strategic Project Bonus”) based on the completion of a Strategic Project (as described in Schedule A). The final value of the Strategic Project Bonus will be determined according to the value of the defined project as described in Schedule A. The Strategic Project Bonus will be payable within 10 days following the date the Strategic Project is completed (the “Payment Date”), provided, however, that in the event you are no longer continuing as an employee of Team, Inc. following the completion of the Strategic Project, your right to receive the Strategic Project Bonus is contingent on your execution of an irrevocable general release agreement and non-compete agreement for a term of one (1) year in the form prescribed by the Company, subject to the extension for specified competitors as described below. Except as is provided in the case of an Involuntary Separation from Service Without Cause, you must be employed by Company (or its successor) and not under notice of dismissal or resignation on the Payment Date.

Cash Incentive

Subject to the terms of this Agreement, you will also be eligible to receive cash incentive payments (each, a “Cash Incentive”), based on the Company's (i.e. Team, Inc.’s) achievement of designated performance metrics, for the first half of fiscal year 2022 (“H1”), the third quarter of fiscal year 2022 (“Q3”) and the fourth quarter of fiscal year 2022 (“Q4”, and H1, Q3 and Q4 each, a “Performance Period”).

•Your aggregate target Cash Incentives for the Performance Periods will equal $115,500.00 meaning that your target Cash Incentive will equal $57,750.00 for H1 (your “H1 Target”) and will equal $28,875.00 for each of Q3 and Q4 (your “Q3 Target” and “Q4 Target”, respectively). Upon the completion of each Performance Period, the Company will determine its level of achievement against the performance metrics applicable to such Performance Period. You will receive a detailed breakdown of the applicable performance metrics in a separate communication in the coming weeks.

•Based on the level of achievement of the Company's performance metrics, you will be eligible to receive a Cash Incentive for each Performance Period of either 0% (for below threshold performance) or 100% (for at or above target performance) of the applicable of your H1, Q3 or Q4 Target. Your earned Cash

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Certain identified information has been redacted from this exhibit because it is both (i) not material and (ii) a type that the registrant treats as private or confidential. Information that has been omitted has been identified in this document with a placeholder identified by the mark “[***].”

Incentives will be paid, net of applicable taxes and withholdings, as soon as administratively practicable following the Company's determination of the level of achievement for each Performance Period; provided, that such payment is expected to be made on or before the sixtieth (60th) day following the end of the applicable Performance Period. Once properly paid, Cash Incentives are not subject to Clawback (unless paid in advance as described below).

Notwithstanding the foregoing, as determined in the sole discretion of the Company’s Board of Directors, you may receive an advance payment equal to 100% of the applicable of your H1, Q3 or Q4 Target for a Performance Period and shall have no further rights to additional sums with respect to such Performance Period. In the event your advance payment (i.e., 100% of the applicable of your H1, Q3 or Q4 Target) is greater than the Cash Incentive you would otherwise have earned for that Performance Period based on actual performance, your Cash Incentive for the next Performance Period will be reduced by the amount of the overpayment or, if your employment terminates in circumstances in which you are not entitled to receive any Cash Incentive for such subsequent Performance Period, you may, in the discretion of the Company, be required to repay such excess (net of any taxes you are required to pay with respect thereof) within twenty (20) calendar days following the date you receive notice of the actual payment amount. Except as expressly provided below, your eligibility to receive a Cash Incentive for each Performance Period is subject to your continued employment with the Company through (and not being under any notice of termination of employment as of) the applicable payment date.

Effect of Termination of Employment

In the event your employment with the Company ends for reasons other than death, disability, a Voluntary Separation from Service for Good Reason or an Involuntary Separation from Service Without Cause, you will immediately forfeit any unpaid Retention Bonus for any previously completed Retention Period, you will not be eligible to receive a payment with respect to any Retention Period ending on or following your termination date, you will be subject to the Clawback of your Retention Bonuses as described above and you will immediately forfeit any unpaid Strategic Project Bonus payments. For the avoidance of doubt, the Strategic Project Bonus and Cash Incentive payments you receive are not subject to the Clawback.

In the event your employment ends as a result of a Voluntary Separation from Service for Good Reason or an Involuntary Separation from Service Without Cause, you will not be subject to the Clawback and you will (i) receive any earned but unpaid Retention Bonus for any previously completed Retention Period; (ii) receive the Retention Bonus for the Retention Period during which your termination occurs prorated by multiplying the amount of such Retention Bonus that would be payable for the full Retention Period by a fraction, the numerator of which is the number of days you were employed during the Retention Period in which your termination of employment occurs and the denominator of which is equal to the number of days contained in such Retention Period; (iii) forfeit and not be eligible to receive any payment with respect to any Retention Period following the Retention Period during which your employment terminates; and (iv) in the event of an Involuntary Separation from Service Without Cause, receive the

3

Certain identified information has been redacted from this exhibit because it is both (i) not material and (ii) a type that the registrant treats as private or confidential. Information that has been omitted has been identified in this document with a placeholder identified by the mark “[***].”

Strategic Project Bonus, if earned, as described (and subject to the requirements and limitations set forth) in Schedule A. In addition, payment will be conditioned on all other conditions in this Agreement being satisfied. For avoidance of doubt, in the event of a Voluntary Separation from Service for Good Reason prior to the Payment Date, you will not be entitled to any payment for the Strategic Project Bonus under this Agreement.

The payments referred to in section (iv) immediately above will be subject to the terms and conditions set forth in the Severance Policy, including the requirement to execute an irrevocable general release agreement and non-compete agreement for a term of one (1) year, in the form prescribed by the Company, subject to the extension for specified competitors as described below.

In the event that you are paid the Strategic Project Bonus, then you agree that the Protected Information, Inventions, and Non-Solicitation Agreement with Non-Compete (“PIINs Agreement”) between you and the Company shall be automatically amended to provide that the following entities and their affiliates (collectively, the “Competitive Businesses”) shall be deemed to be businesses competitive with the Company Group and businesses with products or services that are competitive with the Company Group, becoming employed by or otherwise providing services to any of the Competitive Businesses will constitute “Prohibited Activity” for purposes of Section 4 of the PIINs Agreement, and soliciting employees or customers on behalf of any Competitive Business will constitute a violation of Section 3 of the PIINs Agreement: Acuren, Clean Harbors, Mistras, IRIS NDT, Universal Plant Services, Colt, Boltech Mannings, Integra Technologies, Industrial Speciality Services (ISS)/Leak Sealers, Weldfit, Stronghold, In-Place Machining Company, PSI Industrial Solutions and Leverage Mechanical Services. The PIINs Agreement shall be further amended to provide that, with respect to the Competitive Businesses, the Restricted Period for purposes of Section 3 and 4 of the PIINs Agreement shall be amended to mean a period of eighteen (18) months after Employee’s employment with the TEAM ends regardless of the reason for or party initiating the separation.

Relationship to Other Payments and Agreement

Your eligibility to receive the payments described above under “Retention Bonuses” and “Cash Incentive” are special awards intended to run concurrently with, and as a component of, the 2022 performance period under the Annual Plan, and will be considered an advance payment of amounts otherwise payable pursuant to the Annual Plan in respect of calendar year 2022; provided, however, that you will not participate in the Annual Plan in respect of 2022 unless: (i) the Strategic Project is completed and you remain employed by the Company, in which case your participation in the Annual Plan will be prorated for the period following the completion of the Strategic Project or (ii) the Strategic Project is abandoned by the Company, in which case your participation in the Annual Plan will be retroactive to January 1, 2022. Except as expressly provided in the previous sentence, the opportunity to participate in the Strategic Project Bonus is in lieu of your participation in the Annual Plan in respect of 2022, and is expected to be paid, if at all, before the normal payout under the Annual Plan in respect of 2022. If you are eligible for the Annual

4

Certain identified information has been redacted from this exhibit because it is both (i) not material and (ii) a type that the registrant treats as private or confidential. Information that has been omitted has been identified in this document with a placeholder identified by the mark “[***].”

Plan and provided you remain employed by Team, Inc. or one of its subsidiaries through the applicable payment date in 2023, in the event your payout under the Annual Plan (adjusted for any proration described above) is greater than the amounts paid pursuant to the terms of this Agreement, other than the Strategic Project Bonus (the “Annual Plan Excess”), you will be eligible to receive the Annual Plan Excess pursuant to the terms of the Annual Plan at the time annual bonuses are normally paid in respect of calendar year 2022. For the avoidance of doubt, in no event will the 2022 performance under the Annual Plan result in a Clawback or other repayment obligation with respect to the Retention Bonuses or Cash Incentives provided under this Agreement. Additional details will be provided at the time the annual incentive opportunity for you is established in connection with the Annual Plan. The payments provided pursuant to this Agreement are in lieu of any other cash retention arrangements, and as a condition of entering into this Agreement, you expressly agree that any prior cash retention arrangements are hereby null and void and of no effect. Unless otherwise required by the terms of the applicable plan documents, all payments under this Agreement are not pensionable and shall not be considered compensation for purposes of any of the Company's severance or retirement programs.

Miscellaneous

This Agreement and the rights and obligations hereunder will be governed by and construed in accordance with the laws of the State of Texas without reference to any jurisdiction's principles of conflicts of law and reflect the parties’ entire understanding and agreement with regard to the foregoing.

The Company reserves the right to amend, modify or terminate this compensation program for any Retention Period or Performance Period that has not commenced (i.e., the Company cannot amend, modify or terminate the program with respect to any Retention Period that has already commenced or with respect to the Strategic Project Bonus, except that the Strategic Project Bonus may be terminated by the Company as further described in Schedule A).

Should you have any questions regarding the foregoing, please contact Butch Bouchard at 281.288.5561 or butch.bouchard@teaminc.com. We look forward to your continued support and efforts during these challenging times for the Company.

Sincerely,

Keith Tucker

Interim Chief Executive Officer

ACKNOWLEDGED AND AGREED:

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Certain identified information has been redacted from this exhibit because it is both (i) not material and (ii) a type that the registrant treats as private or confidential. Information that has been omitted has been identified in this document with a placeholder identified by the mark “[***].”

Signature: ________________________

Printed Name: _____________________

Date: ____________________________

Schedule A

Strategic Project Bonus

The amount of the Strategic Project Bonus, if any, will be determined according to the schedule below. The designated “Strategic Project” is completion of the sale of substantially all the assets or equity of [***], expected to be completed on or before December 31, 2022. If the value realized in connection with the designated Strategic Project (the “Project Value”) is less than the Level 1 Value, between the Level 1 Value and the Level 2 Value, between the Level 2 Value and the Level 3 Value, between the Level 3 Value and the Level 4 Value, between the Level 4 Value and the Level 5 Value or above the Level 5 Value, the payment will be determined according to a straight-line interpolation. The maximum Strategic Project Bonus will be the payout calculation associated with the percentage of the Level 5 Strategic Project Bonus to the Strategic Project Value, as applied to the Project Value in excess of the Level 5 Value. The Project Value shall be the aggregate amount of pre-tax cash proceeds and/or the aggregate fair market value of securities or other property received by the Company in connection with the Strategic Project amount of proceeds received by the Company as determined in good faith by the compensation committee of the board of directors of the Company. For purposes of the foregoing, if any earnouts, escrows, holdbacks or other contingent or deferred payments may be payable to the Company on account of its ownership of equity interests in the Company in connection with the Strategic Project (the foregoing, collectively, “Delayed Payments”), then the Board shall estimate the fair market value of such Delayed Payments as of the date of the consummation of the Strategic Project, and include such estimate in the Project Value, which fair market value determination may take into account the likelihood that such amounts will be paid to the Company, as reasonably determined by the Board in good faith.

This Strategic Project Bonus opportunity shall automatically terminate if the Company elects to abandon the Strategic Project. In order for the Strategic Project Bonus to be paid, the Strategic Project must close no later than December 31, 2022 and the other conditions for payment described in the Agreement must be satisfied. Notwithstanding anything herein to the contrary, the Company may not terminate the Strategic Project Bonus opportunity prior to December 31, 2022 if, at the time of the proposed termination, the Company is contractually committed with a buyer to sell all, or substantially all, of the assets or equity of [***].

Incentive Level	Project Value	Strategic Project Bonus
Level 5 Value	[***]	[***] [***] [***] [***] [***]
Level 4 Value	[***]	[***] [***] [***] [***] [***]
Level 3 Value	[***]	[***] [***] [***] [***] [***]
Level 2 Value	[***]	[***] [***] [***] [***] [***]
Level 1 Value	[***]	[***] [***] [***] [***] [***]

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Certain identified information has been redacted from this exhibit because it is both (i) not material and (ii) a type that the registrant treats as private or confidential. Information that has been omitted has been identified in this document with a placeholder identified by the mark “[***].”

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EX-10.6

May 20, 2022

PERSONAL AND CONFIDENTIAL

André C. Bouchard

Dear André,

As you know, Team, Inc. (together with its subsidiaries, the “Company”) is currently facing a challenging business environment. In light of this situation, the Company has made certain changes to your compensation as described in this letter agreement (this “Agreement”). We thank you for your hard work and continuous efforts and are pleased that we are able to offer a revised compensation program during these challenging times.

Retention Bonuses

Subject to the terms of this Agreement, the Company has granted you a cash retention bonus opportunity pursuant to the Team, Inc. 2018 Equity Incentive Plan, as amended and restated May 2021) (as the same may be amended, the “Equity Plan”) in the aggregate amount of U.S. $123,600 (the “Retention Opportunity”). The Retention Opportunity is earned over the first, second, third, and fourth quarters of calendar year 2022 (each quarter a “Retention Period”). One-fourth of the Retention Opportunity (a “Retention Bonus”) will be payable after the end of each Retention Period, subject to your continued employment with the Company (except as expressly provided below). Your Retention Bonus for each Retention Period will be paid to you by the Company within a reasonable period of time (but generally no later than thirty (30) days) after the end of the applicable Retention Period (except that the Retention Bonus for the first quarter Retention Period will be made as soon as practicable after the date of this Agreement), provided, that in the sole discretion of the Company’s Board of Directors, you may receive an advance payment of your Retention Bonus for any Retention Period or for multiple Retention Periods.

You will be required to repay any Retention Bonuses received, net of any taxes you are required to pay in respect thereof and taking into account any tax benefit that may be available in respect of such repayment to the Company, in the event that your employment with the Company ends (or you are under notice of a termination) for reasons other than death, disability, a Voluntary Separation from Service for Good Reason, or an Involuntary Separation from Service Without Cause (as such terms are defined in the Company's 2020 Officer Severance Policy and Guidelines) (as the same may be amended, the “Severance Policy”) (such repayment obligations, the “Clawback”). The Clawback for all Retention Bonuses will expire on the earlier of (i) February 1, 2023, (ii) the consummation of a “Change in Control” of the Company (as defined in the Equity Plan), or (iii) the completion of any liquidation, windup, reorganization, or

KE 84149921.5

restructuring of the Company, whether under the federal law of the United States or any other jurisdiction. Any required repayment under the Clawback must be made promptly, and in all events within twenty (20) calendar days following the date of your termination of employment with the Company.

Cash Incentive

Subject to the terms of this Agreement, you will also be eligible to receive cash incentive payments (each, a “Cash Incentive”), based on the Company's achievement of designated performance metrics, for the first half of fiscal year 2022 (“H1”), the third quarter of fiscal year 2022 (“Q3”) and the fourth quarter of fiscal year 2022 (“Q4”, and H1, Q3 and Q4 each, a “Performance Period”).

Your aggregate target Cash Incentives for the Performance Periods will equal $123,600.00 meaning that your target Cash Incentive will equal $61,800.00 for H1 (your “H1 Target”) and will equal $30,900.00 for each of Q3 and Q4 (your “Q3 Target” and “Q4 Target”, respectively). Upon the completion of each Performance Period, the Company will determine its level of achievement against the performance metrics applicable to such Performance Period. You will receive a detailed breakdown of the applicable performance metrics in a separate communication in the coming weeks.

Based on the level of achievement of the Company's performance metrics, you will be eligible to receive a Cash Incentive for each Performance Period of either 0% (for below threshold performance) or 100% (for at or above target performance) of the applicable of your H1, Q3 or Q4 Target. Your earned Cash Incentives will be paid, net of applicable taxes and withholdings, as soon as administratively practicable following the Company's determination of the level of achievement for each Performance Period; provided, that in no event will such a payment be made on or after the sixtieth (60th) day following the end of the applicable Performance Period. Once properly paid, Cash Incentives are not subject to Clawback (unless paid in advance as described below).

Notwithstanding the foregoing, as determined in the sole discretion of the Company’s Board of Directors, you may receive an advance payment equal to 100% of the applicable of your H1, Q3 or Q4 Target for a Performance Period and shall have no further rights to additional sums with respect to such Performance Period. In the event your advance payment (i.e., 100% of the applicable of your H1, Q3 or Q4 Target) is greater than the Cash Incentive you would otherwise have earned for that Performance Period based on actual performance, your Cash Incentive for the next Performance Period will be reduced by the amount of the overpayment or, if your employment terminates in circumstances in which you are not entitled to receive any Cash Incentive for such subsequent Performance Period, you may, in the discretion of the Company, be required to repay such excess (net of any taxes you are required to pay with respect thereof) within twenty (20) calendar days following the date you receive notice of the actual payment amount. Except as expressly provided below, your eligibility to receive a Cash Incentive for each Performance Period is subject to your continued employment with the Company through (and not being under any notice of termination of employment as of) the applicable payment date.

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KE 84149921.5

Effect of Termination of Employment

In the event your employment with the Company ends for reasons other than death, disability, a Voluntary Separation from Service for Good Reason or an Involuntary Separation from Service Without Cause, you will immediately forfeit any unpaid Cash Incentive or Retention Bonus for any previously completed Retention Period or Performance Period, as applicable, you will not be eligible to receive a payment with respect to any Retention Period or Performance Period ending on or following your termination date and will be subject to the Clawback of your Retention Bonuses as described above. For the avoidance of doubt, the Cash Incentives you receive are not subject to the Clawback (unless paid in advance as described above).

In the event your employment ends as a result of a Voluntary Separation from Service for Good Reason or an Involuntary Separation from Service Without Cause, you will not be subject to the Clawback and you will (i) receive any earned but unpaid Cash Incentive or Retention Bonus for any previously completed Retention Period or Performance Period; (ii) receive the Retention Bonus for the Retention Period during which your termination occurs; (iii) receive a Cash Incentive for the Performance Period during which your termination of employment occurs based on actual performance for such Performance Period prorated by multiplying the amount of such Cash Incentive that would be payable for the full Performance Period by a fraction, the numerator of which is the number of days you were employed during the Performance Period in which your termination of employment occurs and the denominator of which is equal to the number of days contained in such Performance Period; and (iv) forfeit and not be eligible to receive any payment with respect to any Retention Period or Performance Period following the Retention Period or Performance Period during which your employment terminates. The payments referred to in (i), (ii) and (iii) immediately above will be subject to the terms and conditions set forth in the Severance Policy, including the requirement to execute an irrevocable general release agreement and non-compete agreement.

In the event of a Voluntary Separation from Service for Good Reason or an Involuntary Separation from Service Without Cause following a Change in Control (provided that the term Change in Control for purposes of this Letter Agreement shall be as defined in the Equity Plan), you will (i) receive any earned but unpaid Retention Bonus or Cash Incentive for previously completed Retention Period or Performance Period; (ii) receive a payment equal to 100% of the Retention Bonus and the applicable of your H1, Q3 or Q4 Target for the Retention Period and Performance Period, as applicable, during which the termination occurs; and (iii) 100% of the Retention Bonus and the applicable of your H1, Q3 or Q4 Target for any Retention Periods and Performance Periods in 2022 following the Retention Period and Performance Period during which the Change in Control has occurred. The payments referred to in (i), (ii) and (iii) immediately above will be subject to the terms and conditions set forth in the Severance Policy, including the requirement to execute an irrevocable general release agreement and non-compete agreement.

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KE 84149921.5

Relationship to Other Payments and Agreement

Your eligibility to receive the payments described above under “Retention Bonuses” and “Cash Incentive” are special awards intended to run concurrently with, and as a component of, the 2022 performance period under the Company’s Management Incentive Plan (the “Annual Plan”) and will be considered an advance payment of amounts otherwise payable pursuant to the Annual Plan in respect of calendar year 2022. In the event your payout under the Annual Plan is greater than the amounts paid pursuant to the terms of this Agreement (the “Annual Plan Excess”), you will be eligible to receive the Annual Plan Excess pursuant to the terms of the Annual Plan at the time annual bonuses are normally paid in respect of calendar year 2022. For the avoidance of doubt, in no event will the 2022 performance under the Annual Plan result in a Clawback or other repayment obligation with respect to the Retention Bonuses or Cash Incentives provided under this Agreement. Additional details will be provided at the time the annual incentive opportunity for you is established in connection with the Annual Plan. The payments provided pursuant to this Agreement are in lieu of any other prior cash retention arrangements, and as a condition of entering into this Agreement, you expressly agree that any prior cash retention arrangements are hereby null and void and of no effect. Unless otherwise required by the terms of the applicable plan documents, all payments under this Agreement are not pensionable and shall not be considered compensation for purposes of any of the Company's severance or retirement programs.

Miscellaneous

This Agreement and the rights and obligations hereunder will be governed by and construed in accordance with the laws of the State of Texas without reference to any jurisdiction's principles of conflicts of law and reflect the parties’ entire understanding and agreement with regard to the foregoing.

The Company reserves the right to amend, modify or terminate this compensation program for any Retention Period or Performance Period that has not commenced (i.e., the Company cannot amend, modify or terminate the program with respect to any Retention Period or Performance Period that has already commenced).

Should you have any questions regarding the foregoing, please contact Sherri Sides at 281-388-5611 or katina.cole@teaminc.com. We look forward to your continued support and efforts during these challenging times for the Company.

Sincerely,

Keith Tucker

Chief Executive Officer

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ACKNOWLEDGED AND AGREED:

Signature: ________________________

Printed Name: _____________________

Date: ____________________________

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EX-31.1

Exhibit 31.1

I, Keith D. Tucker, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Team, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 15, 2022

/S/   KEITH D. TUCKER      

Keith D. Tucker
Interim Chief Executive Officer
(Principal Executive Officer)

EX-31.2

Exhibit 31.2

I, Nelson M. Haight, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Team, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 15, 2022

/S/   NELSON M. HAIGHT

Nelson M. Haight
Chief Financial Officer

EX-31.3

Exhibit 31.3

I, Matthew E. Acosta, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Team, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 15, 2022

/S/   MATTHEW E. ACOSTA  

Matthew E. Acosta
Vice President and Chief Accounting Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Team, Inc. (the Company) on Form 10-Q for the period ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Keith Tucker, Interim Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/    KEITH D. TUCKER      

Keith D. Tucker
Interim Chief Executive Officer
(Principal Executive Officer)

August 15, 2022

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Team, Inc. (the Company) on Form 10-Q for the period ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Nelson M. Haight, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/   Nelson M. Haight

Nelson M. Haight
Chief Financial Officer

August 15, 2022

EX-32.3

Exhibit 32.3

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Team, Inc. (the Company) on Form 10-Q for the period ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Matthew E. Acosta, Vice President and Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/    MATTHEW E. ACOSTA    

Matthew E. Acosta
Vice President and Chief Accounting Officer

August 15, 2022

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Cover - shares	6 Months Ended
	Jun. 30, 2022	Aug. 10, 2022
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	001-08604
Entity Registrant Name	TEAM, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	74-1765729
Entity Address, Address Line One	13131 Dairy Ashford
Entity Address, Address Line Two	Suite 600
Entity Address, City or Town	Sugar Land
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77478
City Area Code	281
Local Phone Number	331-6154
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		43,223,879
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Entity Central Index Key	0000318833
Current Fiscal Year End Date	--12-31
Common Stock
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $0.30 par value
Trading Symbol	TISI
Security Exchange Name	NYSE
Preferred Stock
Document Information [Line Items]
Title of 12(b) Security	Preferred Stock Purchase Rights
Security Exchange Name	NYSE
No Trading Symbol Flag	true

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 67,446	$ 65,315
Accounts receivable, net of allowance of $6,747 and $8,912, respectively	215,408	188,772
Inventory	36,179	35,754
Income tax receivable	4,351	3,349
Prepaid expenses and other current assets	70,424	59,868
Total current assets	393,808	353,058
Property, plant and equipment, net	157,039	161,359
Operating lease right-of-use assets	52,925	60,700
Intangible assets, net	83,216	89,898
Goodwill	24,547	25,243
Defined benefit pension asset	4,798	2,902
Deferred income taxes	54	792
Other assets, net	7,409	10,533
Total assets	723,796	704,485
Current liabilities:
Accounts payable	38,407	46,181
Current portion of long-term debt and finance lease obligations	487,204	669
Current portion of operating lease obligations	14,389	16,176
Other accrued liabilities	128,757	121,099
Total current liabilities	668,757	184,125
Total long-term debt and finance lease obligations, less current portion	4,656	405,191
Operating lease obligations	43,090	49,221
Deferred income taxes	3,265	4,185
Other long-term liabilities	3,479	9,896
Total liabilities	723,247	652,618
Commitments and contingencies
Equity:
Preferred stock, 500,000 shares authorized, none issued	0	0
Common stock, par value $0.30 per share, 60,000,000 shares authorized; 43,223,879 and 31,214,714 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	12,962	9,359
Additional paid-in capital	445,210	444,824
Accumulated deficit	(425,774)	(375,584)
Accumulated other comprehensive loss	(31,849)	(26,732)
Total equity	549	51,867
Total liabilities and equity	$ 723,796	$ 704,485

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Allowance for credit loss, current	$ 6,747	$ 8,912
Preferred stock, shares authorized (in shares)	500,000	500,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in usd per share)	$ 0.30	$ 0.30
Common stock, shares authorized (in shares)	60,000,000	60,000,000
Common stock, shares issued (in shares)	43,223,879	31,214,714
Common stock, shares, outstanding (in shares)	43,223,879	31,214,714

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Statement [Abstract]
Revenues	$ 251,265	$ 238,873	$ 469,841	$ 433,491
Operating expenses	181,312	176,109	344,790	327,026
Gross margin	69,953	62,764	125,051	106,465
Selling, general and administrative expenses	72,733	68,478	144,018	134,602
Restructuring and other related charges, net	0	280	16	2,157
Operating loss	(2,780)	(5,994)	(18,983)	(30,294)
Interest expense, net	(18,480)	(9,598)	(37,085)	(18,994)
Other income (expense)	1,476	(1,044)	4,178	(1,994)
Loss before income taxes	(19,784)	(16,636)	(51,890)	(51,282)
Provision for income taxes	(1,768)	(857)	(2,124)	(502)
Net loss	$ (21,552)	$ (17,493)	$ (54,014)	$ (51,784)
Loss per common share:
Basic (in dollars per share)	$ (0.50)	$ (0.57)	$ (1.34)	$ (1.68)
Diluted (in dollars per share)	$ (0.50)	$ (0.57)	$ (1.34)	$ (1.68)
Weighted-average number of shares outstanding:
Weighted-average number of basic shares outstanding (in shares)	43,179	30,940	40,454	30,909
Weighted-average number of diluted shares outstanding (in shares)	43,179	30,940	40,454	30,909

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Statement of Comprehensive Income [Abstract]
Net loss	$ (21,552)	$ (17,493)	$ (54,014)	$ (51,784)
Other comprehensive income (loss) before tax:
Foreign currency translation adjustment		657	(5,117)	874
Other comprehensive income (loss), before tax	(5,463)	657	(5,117)	874
Tax provision attributable to other comprehensive income (loss)	0	(257)	0	(155)
Other comprehensive income (loss), net of tax	(5,463)	400	(5,117)	719
Total comprehensive loss	$ (27,015)	$ (17,093)	$ (59,131)	$ (51,065)

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CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Common Stock	Additional Paid-in Capital	Additional Paid-in Capital Cumulative Effect, Period of Adoption, Adjustment	Retained Earnings (Deficit)	Retained Earnings (Deficit) Cumulative Effect, Period of Adoption, Adjustment	Accumulated Other Comprehensive Loss
Beginning balance (in shares) at Dec. 31, 2020			30,874
Beginning balance at Dec. 31, 2020	$ 214,603		$ 9,257	$ 422,589		$ (189,565)		$ (27,678)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(34,291)					(34,291)
Foreign currency translation adjustment, net of tax	319							319
Non-cash compensation	2,330			2,330
Net settlement of vested stock awards (in shares)			19
Net settlement of vested stock awards	(101)		$ 6	(107)
Ending balance (in shares) at Mar. 31, 2021			30,893
Ending balance at Mar. 31, 2021	182,860		$ 9,263	424,812		(223,856)		(27,359)
Beginning balance (in shares) at Dec. 31, 2020			30,874
Beginning balance at Dec. 31, 2020	214,603		$ 9,257	422,589		(189,565)		(27,678)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(51,784)
Ending balance (in shares) at Jun. 30, 2021			30,979
Ending balance at Jun. 30, 2021	167,905		$ 9,289	426,924		(241,349)		(26,959)
Beginning balance (in shares) at Dec. 31, 2020			30,874
Beginning balance at Dec. 31, 2020	214,603		$ 9,257	422,589		(189,565)		(27,678)
Ending balance (in shares) at Dec. 31, 2021			31,215
Ending balance at Dec. 31, 2021	$ 51,867	$ (1,827)	$ 9,359	444,824	$ (5,651)	(375,584)	$ 3,824	(26,732)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Adjustments for prior periods from adopting ASU 2020-06	ASU 2020-06 (ASC 470-20)
Beginning balance (in shares) at Mar. 31, 2021			30,893
Beginning balance at Mar. 31, 2021	$ 182,860		$ 9,263	424,812		(223,856)		(27,359)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(17,493)					(17,493)
Foreign currency translation adjustment, net of tax	400							400
Non-cash compensation	2,138			2,138
Net settlement of vested stock awards (in shares)			86
Net settlement of vested stock awards	0		$ 26	(26)
Ending balance (in shares) at Jun. 30, 2021			30,979
Ending balance at Jun. 30, 2021	167,905		$ 9,289	426,924		(241,349)		(26,959)
Beginning balance (in shares) at Dec. 31, 2021			31,215
Beginning balance at Dec. 31, 2021	51,867	(1,827)	$ 9,359	444,824	(5,651)	(375,584)	3,824	(26,732)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock (in shares)			11,905
Issuance of common stock	9,768		$ 3,572	6,196
Net loss	(32,462)					(32,462)
Foreign currency translation adjustment, net of tax	346							346
Non-cash compensation (in shares)			2
Non-cash compensation	(624)			(624)
Net settlement of vested stock awards	2			2
Ending balance (in shares) at Mar. 31, 2022			43,122
Ending balance at Mar. 31, 2022	27,070		$ 12,931	444,747		(404,222)		(26,386)
Beginning balance (in shares) at Dec. 31, 2021			31,215
Beginning balance at Dec. 31, 2021	51,867	$ (1,827)	$ 9,359	444,824	$ (5,651)	(375,584)	$ 3,824	(26,732)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(54,014)
Ending balance (in shares) at Jun. 30, 2022			43,224
Ending balance at Jun. 30, 2022	549		$ 12,962	445,210		(425,774)		(31,849)
Beginning balance (in shares) at Mar. 31, 2022			43,122
Beginning balance at Mar. 31, 2022	27,070		$ 12,931	444,747		(404,222)		(26,386)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock (in shares)			102
Issuance of common stock	(71)		$ 31	(102)
Net loss	(21,552)					(21,552)
Foreign currency translation adjustment, net of tax	(5,463)							(5,463)
Non-cash compensation	565			565
Ending balance (in shares) at Jun. 30, 2022			43,224
Ending balance at Jun. 30, 2022	$ 549		$ 12,962	$ 445,210		$ (425,774)		$ (31,849)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows (used in) provided by operating activities:
Net loss	$ (54,014)	$ (51,784)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	19,609	21,306
Write-off of deferred financing costs	2,748	0
Amortization of deferred financing costs, debt issuance costs, and debt warrant discounts	12,077	4,154
Paid-in-kind interest	9,962	0
Allowance for credit losses	30	965
Foreign currency losses	569	2,341
Deferred income taxes	(357)	(2,318)
(Gain) loss on asset disposals	(3,532)	309
Non-cash compensation (credits) costs	(59)	4,468
Other, net	(2,382)	(2,451)
Changes in operating assets and liabilities:
Accounts receivable	(29,595)	(24,811)
Inventory	(1,620)	(743)
Prepaid expenses and other current assets	(3,305)	5,612
Accounts payable	(5,889)	3,379
Other accrued liabilities	3,367	4,484
Income taxes	(1,000)	290
Net cash used in operating activities	(53,391)	(34,799)
Cash flows (used in) provided by investing activities:
Capital expenditures	(14,001)	(9,220)
Proceeds from disposal of assets	5,119	49
Net cash used in investing activities	(8,882)	(9,171)
Cash flows (used in) provided by financing activities:
Borrowings under ABL Credit Facility (Eclipse)	104,641	0
Payments under ABL Credit Facility (Eclipse)	(1,588)	0
Borrowings under Corre Delayed Draw Term Loans (ABL Credit Facility (Corre))	25,000	0
Borrowings under ABL Facility (Citibank), net	0	49,300
Borrowings under ABL Facility (Citibank), gross	10,300	95,200
Payments under ABL Facility (Citibank), gross	(72,300)	(104,200)
Payments for debt issuance costs	(10,640)	(2,326)
Issuance of common stock	9,696	0
Taxes paid related to net share settlement of share-based awards	0	(102)
Other	(323)	(206)
Net cash provided by financing activities	64,786	37,666
Effect of exchange rate changes on cash and cash equivalents	(382)	73
Net increase (decrease) in cash and cash equivalents	2,131	(6,231)
Cash and cash equivalents at beginning of period	65,315	24,586
Cash and cash equivalents at end of period	$ 67,446	$ 18,355

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

Description of Business. Unless otherwise indicated, the terms “we” “our” and “us” are used in this report to refer to either Team, Inc., to one or more of its consolidated subsidiaries or to all of them taken as a whole.

We are a global leading provider of integrated, digitally-enabled asset performance assurance and optimization solutions. We deploy conventional to highly specialized inspection, condition assessment, maintenance and repair services that result in greater safety, reliability and operational efficiency for our clients’ most critical assets. We conduct operations in three segments: Inspection and Heat Treating (“IHT”), Mechanical Services (“MS”) and Quest Integrity. Through the capabilities and resources in these three segments, we believe that we are uniquely qualified to provide integrated solutions: inspection to assess condition; engineering assessment to determine fitness for purpose in the context of industry standards and regulatory codes; and mechanical services to repair, rerate or replace based upon the client’s election. In addition, we are capable of scaling with the client’s needs, as dictated by the severity of the damage found and the related operating conditions, from standard services to some of the most advanced services and integrated asset integrity and reliability management solutions available in the industry. We also believe that we are unique in our ability to provide services in three distinct client demand profiles: (i) turnaround or project services, (ii) call-out services and (iii) nested or run-and-maintain services.

IHT provides conventional and advanced non-destructive testing (“NDT”) services primarily for the process, pipeline and power sectors, and pipeline integrity management services, and field heat treating and thermal services, tank management solutions, and pipeline integrity solutions, as well as associated engineering and condition assessment services. These services can be offered while facilities are running (on-stream), during facility turnarounds or during new construction or expansion activities. IHT also provides advanced digital imaging including remote digital video imaging, laser scanning and laser profilometry-enabled reformer care services.

MS provides solutions designed to serve clients’ unique needs during both the operational (onstream) and off-line states of their assets. Our onstream services include our range of standard to custom-engineered leak repair and composite solutions; emissions control and compliance; hot tapping and line stopping; and on-line valve insertion solutions, which are delivered while assets are in an operational condition, which maximizes client production time. Asset shutdowns can be planned, such as a turnaround maintenance event, or unplanned, such as those due to component failure or equipment breakdowns. Our specialty maintenance, turnaround and outage services are designed to minimize client downtime and are primarily delivered while assets are off-line and often through the use of cross-certified technicians, whose multi-craft capabilities deliver the production needed to achieve tight time schedules. These critical services include on-site field machining; bolted-joint integrity; vapor barrier plug testing; and valve management solutions.

Quest Integrity provides integrity and reliability management solutions for the process, pipeline and power sectors. These solutions encompass two broadly-defined disciplines: (1) highly specialized in-line inspection services for historically unpiggable process piping and pipelines using proprietary in-line inspection tools and analytical software; and (2) advanced engineering and condition assessment services through a multi-disciplined engineering team and related lab support.

We market our services to companies in a diverse array of heavy industries which include:

•Energy (refining, power, renewables, nuclear and liquefied natural gas);

•Manufacturing and Process (chemical, petrochemical, pulp and paper industries, manufacturing, automotive and mining);

•Midstream and Others (valves, terminals and storage, pipeline and offshore oil and gas);

•Public Infrastructure (amusement parks, bridges, ports, construction and building, roads, dams and railways); and

•Aerospace and Defense.

Ongoing Effects of COVID-19.  The COVID-19 pandemic has impacted our workforce and operations, as well as the operations of our clients, suppliers and contractors. We continue to be affected by the direct and indirect impact of the pandemic and global economic conditions on operating expenses, staffing and supply chain management.

Under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), we qualified to defer the employer portion of social security taxes incurred through the end of calendar 2020. As of December 31, 2021 we had $14.1 million of deferred employer payroll taxes outstanding and we paid $7.0 million of the deferred payroll taxes in January 2022, the

remaining balance at June 30, 2022 of $7.1 million is due at the end of 2022. Additionally, other governments in jurisdictions where we operate passed legislation to provide employers with relief programs, which include wage subsidy grants, deferral of certain payroll related expenses and tax payments and other benefits. We elected to treat qualified government subsidies from Canada and other governments as offsets to the related expenses. We recognized no reduction to either our operating expenses or our selling, general and administrative expenses during the three months ended June 30, 2022, compared to $1.8 million and $0.3 million, respectively, during three months ended June 30, 2021. We recognized a reduction of $0.6 million and $0.1 million to our operating expenses and our selling, general and administrative expenses, respectively, during the six months ended June 30, 2022, and $3.8 million and $0.7 million, respectively during the six months ended June 30, 2021.

Inflation. Inflation rates and currency exchange rates continue to have an effect on worldwide economies and, consequently, on the way the Company operates. The Company continues to monitor these situations and take appropriate actions. In the face of increasing costs, the Company strives to maintain its profit margins through cost reduction programs, productivity improvements and periodic price increases. We are carefully monitoring impacts from inflation, supply chain challenges and slowing economic conditions. For further information regarding the risks we face relating to inflation, see "Risk Factors - We may experience inflationary pressures in our operating costs and cost overruns on our projects" in our Annual Report on Form 10-K for the year ended December 31, 2021. For further information regarding the risks we face relating to inflation, see "Risk Factors - We may experience inflationary pressures in our operating costs and cost overruns on our projects" in our Annual Report on Form 10-K for the year ended December 31, 2021.

Ukraine Conflict. The Company does not have employees or operations in Russia or Ukraine. Sanctions and other trade controls imposed by the United States and other governments in response to Russia’s military operations in Ukraine could impact our supply chain in future periods. While it is difficult to estimate the impact of current or future sanctions on the Company’s business and financial position, these sanctions could adversely impact the Company’s sales, cost of procuring raw materials, or distribution costs in future periods.

Basis for presentation. These condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results for such periods. The results of operations for any interim period are not necessarily indicative of results for the full year. Certain disclosures have been condensed or omitted from the interim financial statements included in this report. These financial statements should be read in conjunction with the condensed consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission.

Consolidation. The condensed consolidated financial statements include the accounts of our subsidiaries where we have control over operating and financial policies. All material intercompany accounts and transactions have been eliminated in consolidation.

Related Party Transactions. A related party transaction is any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including the incurrence or issuance of any indebtedness or the guarantee of indebtedness) in which (1) the Company or any of its subsidiaries is a participant, and (2) any Related Party (as defined below) has or will have a direct or indirect material interest.

A Related Party is any person who is, or, at any time since the beginning of the Company’s last fiscal year, was (1) an executive officer, director or nominee for election as a director of the Company or any of its subsidiaries, (2) a person with greater than five percent (5%) beneficial interest in the Company, (3) an immediate family member of any of the individuals or entities identified in (1) or (2) of this paragraph, and (4) any firm, corporation or other entity in which any of the foregoing individuals or entities is employed or is a general partner or principal or in a similar position or in which such person or entity has a five percent (5%) or greater beneficial interest. Immediate family members includes a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law and anyone residing in such person’s home, other than a tenant or employee.

Liquidity and Going Concern. These condensed consolidated financial statements have been prepared in accordance with GAAP and assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the issue date of these unaudited condensed consolidated financial statements. Our ability to continue as a going concern is dependent on many factors, including among other things, our ability to comply with the covenants in our debt agreements, our ability to cure any defaults that occur under our debt agreements, or forbearances with respect to any such defaults, and our ability to pay, retire, amend, replace or refinance our indebtedness as defaults occur or as interest and principal payments come due. Liquidity risk is the risk that we will be unable to meet our financial obligations as they become due. Our liquidity may be affected by improvements and declines in commodity prices, our segments operational performance, and our ability to access capital and credit markets.

We evaluated the Company’s liquidity within one year after the date of issuance of these unaudited condensed consolidated financial statements to determine if there is substantial doubt about the Company’s ability to continue as a going concern. In the preparation of this liquidity assessment, we applied judgment to estimate the projected cash flows of the Company, including the following: (i) projected cash outflows, (ii) projected cash inflows, and (iii) excess availability level under the Company’s existing debt arrangements. The cash flow projections were based on known or planned cash requirements for operating and financing costs and include management’s best estimate regarding future customer activity levels, pricing for its services and for its supplies and other factors. Actual results could vary significantly from those projections. We do not believe, based on the Company’s forecast that current working capital, cash flow from operations, and capital expenditure financing is sufficient to fund the operations, maintain compliance with our debt covenants (as amended), and satisfy the Company’s obligations as they come due within one year after the date of issuance of these condensed consolidated financial statements.

Our 5.00% Convertible Senior Notes are due on August 1, 2023 (the "Notes") and have a principal balance of $95.2 million. We are exploring alternatives to reduce or refinance the Notes outstanding balance, including extending the maturity. However, there is no assurance that we will be able to execute a reduction, extension, or refinancing of the Notes or that the terms of any replacement financing would be as favorable as the terms of the Notes prior to the maturity date. Under the terms of our amended financing arrangements that were entered into during 2022, the Maturity Reserve Trigger Date, as defined in the ABL Credit Agreement (as defined herein), and the Maturity Trigger Date as defined in the Term Loan Credit Agreement (as defined herein), collectively referred to as the “Trigger Date” is now May 18, 2023. Therefore, the Notes balance must be paid down to $10.0 million by May 18, 2023, or the Company must have equivalent cash on hand to pay down the Notes to $10.0 million.

The failure to pay down the Notes by the Trigger Date would be an event of default under our Term Loan Credit Agreement (as defined herein), Subordinated Term Loan Credit Agreement, ABL Credit Facility, and Corre Delayed Draw Term Loan (as defined herein) since these instruments contain cross default provisions, resulting in these debt instruments becoming payable on demand. Refer to Note 11 - Debt for more information on the terms and maturity dates of our debt that may affect our future liquidity.

As of June 30, 2022, we are in compliance with our debt covenants. However, without the consummation of a refinancing transaction or agreement to extend the Notes maturity date, there is a risk that the Company could be, among other things, unable to make principal payments on the Notes to satisfy the Trigger Date provision. Failure to pay down the principal on the Notes to $10.0 million by May 18, 2023 will result in an event of default and the associated cross defaults noted above under the Company’s other debt instruments.

As a result of our current financial resources and no guarantee that we will be able to obtain an extension or amend the financial covenants contained therein, we intend to refinance the Notes. Any such refinancing may include the issuance of additional notes, common or preferred stock or a combination thereof. However, there is no assurance that we will be able to execute this refinancing or repayment prior to the Trigger Date, and as such, substantial doubt exists that we have the ability to continue as a going concern. We are evaluating and will continue to explore strategic alternatives to a refinancing transaction or the reduction of the debt, including negotiating amendments to our credit facilities and the financial covenants contained therein, the sale of assets, or other alternative financing transactions. While our lenders agreed on an extension and amended the financial covenants in prior periods, there can be no assurance that our lenders will provide additional extensions, waivers or amendments in the event of future non-compliance with our debt covenants, or other possible events of default. The unaudited condensed consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern.

On August 15, 2022, Team announced it has executed a definitive purchase and sale agreement with Baker Hughes to sell Quest Integrity for $280.0 million, before customary post-closing adjustments. Post-closing of this transaction Team’s expects its liquidity and debt profile to be significantly improved, refer to Note 20 - Subsequent Events for additional details regarding this transaction.

Use of estimates. Our accounting policies conform to GAAP. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect our reported financial position and results of operations. We review significant estimates and judgments affecting our condensed consolidated financial statements on a recurring basis and record the effect of any necessary adjustments prior to their publication. Estimates and judgments are based on information available at the time such estimates and judgments are made. Adjustments made with respect to the use of these estimates and judgments often relate to information not previously available. Uncertainties with respect to such estimates and judgments are inherent in the preparation of financial statements. Estimates and judgments are used in, among other things, (1) aspects of revenue recognition, (2) valuation of acquisition related tangible and intangible assets and assessments of all long-lived assets for possible impairment, (3) estimating various factors used to accrue liabilities for workers’ compensation, auto, medical, and general liability, (4) establishing an allowance for uncollectible accounts receivable, (5) estimating the useful lives of our assets, (6) assessing future tax exposure and the realization of tax assets, (7) selecting assumptions used in the measurement of costs and liabilities associated with defined benefit pension plans, (8)

assessments of fair value and (9) managing our foreign currency risk in foreign operations. Our most significant accounting policies are described below.

Fair value of financial instruments. As defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 Fair Value Measurements and Disclosure (“ASC 820”), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. We primarily apply the market approach for recurring fair value measurements and endeavor to utilize the best information available. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The use of unobservable inputs is intended to allow for fair value determinations in situations in which there is little, if any, market activity for the asset or liability at the measurement date. We are able to classify fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy such that “Level 1” measurements include unadjusted quoted market prices for identical assets or liabilities in an active market, “Level 2” measurements include quoted market prices for identical assets or liabilities in an active market which have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets, and “Level 3” measurements include inputs that are unobservable and of a highly subjective measure.

Our financial instruments consist primarily of cash, cash equivalents, accounts receivable, accounts payable and debt obligations. The carrying amount of cash, cash equivalents, trade accounts receivable and trade accounts payable are representative of their respective fair values due to the short-term maturity of these instruments. The fair value of our ABL Credit Facility and Term Loans is representative of the carrying value based upon the variable terms and management’s opinion that the current rates available to us with the same maturity and security structure are equivalent to that of the debt. The fair value of our Notes as of June 30, 2022 and December 31, 2021 is $95.2 million and $84.0 million, respectively, (inclusive of the fair value of the conversion option) and are a “Level 2” measurement, determined based on the observed trading price of these instruments. For additional information regarding our ABL Credit Facilities, Atlantic Park Term Loan, Subordinated Term Loan and Notes, see Note 11 - Debt.

Cash and cash equivalents. Cash and cash equivalents consist of all deposits and funds invested in highly liquid short-term investments with original maturities of three months or less.

Inventory. Except for certain inventories that are valued based on weighted-average cost, we use the first-in, first-out method to value our inventory. Inventory includes material, labor, and certain fixed overhead costs. Inventory is stated at the lower of cost and net realizable value. Inventory quantities on hand are reviewed periodically and carrying cost is reduced to net realizable value for inventories for which their cost exceeds their utility. The cost of inventories consumed or products sold are included in operating expenses.

Property, plant and equipment. Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Leasehold improvements are amortized over the shorter of their respective useful life or the lease term. Depreciation and amortization of assets are computed by the straight-line method over the following estimated useful lives of the assets:

Classification	Useful Life
Buildings	20-40 years
Enterprise Resource Planning (“ERP”) System	15 years
Leasehold improvements	2-15 years
Machinery and equipment	2-12 years
Furniture and fixtures	2-10 years
Computers and computer software	2-5 years
Automobiles	2-5 years

Goodwill and intangible assets. We allocate the purchase price of acquired businesses to their identifiable tangible assets and liabilities, such as accounts receivable, inventory, property, plant and equipment, accounts payable and accrued liabilities. We also allocate a portion of the purchase price to identifiable intangible assets, such as client relationships, non-compete agreements, trade names, technology, and licenses. Allocations are based on estimated fair values of assets and liabilities. We use all available information to estimate fair values including quoted market prices, the carrying value of acquired assets, and widely accepted valuation techniques such as discounted cash flows. Certain estimates and judgments are required in the

application of the fair value techniques, including estimates of future cash flows, selling prices, replacement costs, economic lives, and the selection of a discount rate, as well as the use of “Level 3” measurements as defined in ASC 820. Deferred taxes are recorded for any differences between the assigned values and tax bases of assets and liabilities. Estimated deferred taxes are based on available information concerning the tax bases of assets acquired and liabilities assumed and loss carryforwards at the acquisition date, although such estimates may change in the future as additional information becomes known. Any remaining excess of cost over allocated fair values is recorded as goodwill. We typically engage third-party valuation experts to assist in determining the fair values for both the identifiable tangible and intangible assets. The judgments made in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, could materially impact our results of operations.

Goodwill and intangible assets acquired in a business combination determined to have an indefinite useful life are not amortized, but are instead tested for impairment, and assessed for potential triggering events, at least annually in accordance with the provisions of the ASC 350 Intangibles—Goodwill and Other (“ASC 350”). Intangible assets with finite lives are amortized over their respective estimated useful lives to their estimated residual values and reviewed for impairment in accordance with ASC 360-10 Impairment or Disposal of Long-Lived Assets (“ASC 360”). There was no impairment recorded for long-lived assets as of June 30, 2022.

We assess goodwill for impairment at the reporting unit level, which we have determined to be the same as our operating segments. As of June 30, 2022, the only Company segment with goodwill was Quest Integrity, which goodwill is related to historical acquisitions.

If the carrying value of a reporting unit exceeds its fair value, we measure any goodwill impairment losses as the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. We test our goodwill for impairment annually on December 1 of each year and whenever we become aware of an event or a change in circumstances that would indicate the carrying value may be impaired. There was no goodwill impairment recorded for the six-month period ended June 30, 2022.

Income taxes. We follow the guidance of ASC 740 Income Taxes (“ASC 740”), which requires that we use the asset and liability method of accounting for deferred income taxes and provide deferred income taxes for all significant temporary differences. As part of the process of preparing our condensed consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax payable or receivable and related tax expense or benefit together with assessing temporary differences resulting from differing treatment of certain items, such as depreciation, for tax and accounting purposes. These differences can result in deferred tax assets and liabilities, which are included within our consolidated balance sheets.

In accordance with ASC 740, we are required to assess the likelihood that our deferred tax assets will be realized and, to the extent we believe it is more likely than not (a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized, we must establish a valuation allowance. We consider all available evidence to determine whether, based on the weight of the evidence, a valuation allowance is needed. Evidence used includes the reversal of existing taxable temporary differences, taxable income in prior carryback years if carryback is permitted by tax law, information about our current financial position and our results of operations for the current and preceding years, as well as all currently available information about future years, including our anticipated future performance and tax planning strategies.

We regularly assess whether it is more likely than not that we will realize the deferred tax assets in the jurisdictions in which we operate. Management believes future sources of taxable income, reversing temporary differences and other tax planning strategies will be sufficient to realize the deferred tax assets for which no valuation allowance has been established. Our valuation allowance primarily relates to net operating loss carryforwards. While we have considered these factors in assessing the need for additional valuation allowance, there can be no assurance that additional valuation allowance would not need to be established in the future if information about future years change. Any changes in valuation allowance would impact our income tax provision and net income (loss) in the period in which such a determination is made.

Significant judgment is required in assessing the timing and amounts of deductible and taxable items for tax purposes. In accordance with ASC 740-10, we establish reserves for uncertain tax positions when, despite our belief that our tax return positions are supportable, we believe that it is not more likely than not that the position will be sustained upon challenge. When facts and circumstances change, we adjust these reserves through our provision for income taxes. To the extent interest and penalties may be assessed by taxing authorities on any related underpayment of income tax, such amounts have been accrued and are classified as a component of income tax expense (benefit) in our consolidated statements of operations.

Workers’ compensation, auto, medical and general liability accruals. In accordance with ASC 450 Contingencies (“ASC 450”), we record a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We review our loss contingencies on an ongoing basis to ensure that we have appropriate reserves

recorded on our balance sheet. These reserves are based on historical experience with claims incurred but not received, estimates and judgments made by management, applicable insurance coverage for litigation matters, and are adjusted as circumstances warrant. For workers’ compensation, our self-insured retention is $1.0 million and our automobile liability self-insured retention is currently $2.0 million per occurrence. For general liability claims, we have an effective self-insured retention of $6.0 million per occurrence. For medical claims, our self-insured retention is $0.4 million per individual claimant determined on an annual basis. For environmental liability claims, our self-insured retention is $1.0 million per occurrence. We maintain insurance for claims that exceed such self-retention limits. The insurance is subject to terms, conditions, limitations, and exclusions that may not fully compensate us for all losses. Our estimates and judgments could change based on new information, changes in laws or regulations, changes in management’s plans or intentions, or the outcome of legal proceedings, settlements, or other factors. If different estimates and judgments were applied with respect to these matters, it is likely that reserves would be recorded for different amounts.

Allowance for credit losses. In the ordinary course of business, a portion of our accounts receivable are not collected due to billing disputes, customer bankruptcies, dissatisfaction with the services we performed and other various reasons. We establish an allowance to account for those accounts receivable that we estimate will eventually be deemed uncollectible. The allowance for credit losses is based on a combination of our historical experience and management’s review of long outstanding accounts receivable.

Concentration of credit risk. No single customer accounts for more than 10% of consolidated revenues.

Earnings (loss) per share. Basic earnings (loss) per share is computed by dividing income (loss) from continuing operations, income (loss) from discontinued operations or net income (loss) by the weighted-average number of shares of common stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing income (loss) from continuing operations, income (loss) from discontinued operations or net income (loss) by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, (2) the dilutive effect of the assumed exercise of share-based compensation using the treasury stock method and (3) the dilutive effect of the assumed conversion of our Notes under the if converted method. Our current intent is to settle the principal amount of our Notes in cash upon maturity. If the conversion value exceeds the principal amount, we may elect to deliver shares of our common stock with respect to the remainder of our conversion obligation in excess of the aggregate principal amount (the “conversion spread”). Accordingly, the conversion spread is included in the denominator for the computation of diluted earnings per common share using the treasury stock method and the numerator is adjusted for any recorded gain or loss, net of tax, on the embedded derivative associated with the conversion feature.

For the three and six months ended June 30, 2022 and 2021, all outstanding share-based compensation awards were excluded from the calculation of diluted loss per share because their inclusion would be antidilutive due to the loss from continuing operations in those periods. Also, for the three and six months ended June 30, 2022 and 2021, potential shares issuable upon the conversion of the Notes were excluded from the calculation of diluted earnings (loss) per share since the conversion price exceeded the average price of our common stock during the applicable periods. For information regarding our Notes and our share-based compensation awards, refer to Note 11 - Debt and Note 14 - Employee Benefit Plans, respectively.

Non-cash investing and financing activities. Non-cash investing and financing activities are excluded from the condensed consolidated statements of cash flows and are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Assets acquired under finance lease	$	77	$	384	$	100	$	406

Also, we had $3.0 million and $1.5 million of accrued capital expenditures as of June 30, 2022 and June 30, 2021, respectively, which are excluded from the condensed consolidated statements of cash flows until paid.

Foreign currency. For subsidiaries whose functional currency is not the U.S. Dollar, assets and liabilities are translated at period ending rates of exchange and revenues and expenses are translated at period average exchange rates. Translation adjustments for the asset and liability accounts are included as a separate component of accumulated other comprehensive loss in stockholders’ equity. Foreign currency transaction gains and losses are included in our statements of operations.

We have historically executed a foreign currency hedging program to mitigate the foreign currency risk in countries where we have significant assets and liabilities denominated in currencies other than the functional currency. There were no foreign currency swap contracts outstanding during the three and six months ended June 30, 2022.

Defined benefit pension plans. Pension benefit costs and liabilities are dependent on assumptions used in calculating such amounts. The primary assumptions include factors such as discount rates, expected investment return on plan assets, mortality rates and retirement rates. The discount rates, expected investment return on plan assets, mortality rates and retirement rates are determined based on reference to yields, and are reviewed annually and considered for adjustment to reflect current market conditions. The expected return on plan assets is derived from detailed periodic studies, which include a review of asset allocation strategies, anticipated future long-term performance of individual asset classes, risks (standard deviations) and correlations of returns among the asset classes that comprise the plans’ asset mix. While the studies give appropriate consideration to recent plan performance and historical returns, the assumptions are primarily long-term, prospective rates of return. Mortality and retirement rates are based on actual and anticipated plan experience. In accordance with GAAP, actual results that differ from the assumptions are accumulated and are subject to amortization over future periods and, therefore, generally affect recognized expense in future periods. While we believe that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect the pension obligation and future expense.

Reclassifications. Certain amounts in prior periods have been reclassified to conform to the current year presentation. Such reclassifications did not have any effect on our financial condition or results of operations as previously reported.

Newly Adopted Accounting Standards

ASU No. 2020-06. In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments by eliminating certain separation models and will generally be reported as a single liability at its amortized cost. In addition, ASU 2020-06 eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. On January 1, 2022, we adopted the ASU using the modified retrospective method. We recognized a cumulative effect of initially applying the ASU as an adjustment to the January 1, 2022 opening accumulated deficit balance. The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods. Refer to Note 11 - Debt for impact on the adoption of this ASU as of January 1, 2022.

Accounting Standards Not Yet Adopted

ASU No. 2020-04. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance in ASU 2020-04 and ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which was issued in January 2021, provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria that reference LIBOR or another rate that is expected to be discontinued. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. While we are currently determining whether we will elect the optional expedients, we do not expect our adoption of these ASUs to have a significant impact on our consolidated financial position, results of operations, and cash flows. We do not expect our adoption of these ASUs to have a significant impact on our consolidated financial position, results of operations, and cash flows.

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REVENUE

6 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

REVENUE

REVENUE

In accordance with ASC Topic 606, Revenue from Contracts with Customers, (“ASC 606”) we follow a five-step process to recognize revenue: 1) identify the contract with the customer, 2) identify the performance obligations, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations, and 5) recognize revenue when the performance obligations are satisfied.

Most of our contracts with customers are short-term in nature and billed on a time and materials basis, while certain other contracts are at a fixed price. Certain contracts may contain a combination of fixed and variable elements. We act as a principal and have performance obligations to provide the service itself or oversee the services provided by any subcontractors. Revenue is measured based on consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties, such as taxes assessed by governmental authorities. Generally, in contracts where the amount of consideration is variable, the amount is determinable each period based on our right to invoice (as discussed further below) the customer for services performed to date. As most of our contracts contain only one performance obligation, the allocation of a contract transaction price to multiple performance obligations is generally not applicable. Customers are generally billed as we satisfy our performance obligations and payment terms typically range from 30 to 90 days from the invoice date. Billings under certain fixed-price contracts may be based upon the achievement of specified milestones, while some arrangements may require advance customer payment. Our contracts do not include significant financing components since the contracts typically span less than one year. Contracts generally include an assurance type warranty clause to guarantee that the services comply with agreed specifications. The warranty period typically is twelve months or less from the date of service.

Revenue is recognized as (or when) the performance obligations are satisfied by transferring control over a service or product to the customer. Revenue recognition guidance prescribes two recognition methods (over time or point in time). Most of our performance obligations qualify for recognition over time because we typically perform our services on customer facilities or assets and customers receive the benefits of our services as we perform. Where a performance obligation is satisfied over time, the related revenue is also recognized over time using the method deemed most appropriate to reflect the measure of progress and transfer of control. For our time and materials contracts, we are generally able to elect the right-to-invoice practical expedient, which permits us to recognize revenue in the amount to which we have a right to invoice the customer if that amount corresponds directly with the value to the customer of our performance completed to date. For our fixed price contracts, we typically recognize revenue using the cost-to-cost method, which measures the extent of progress towards completion based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Under this method, revenue is recognized proportionately as costs are incurred. For contracts where control is transferred at a point in time, revenue is recognized at the time control of the asset is transferred to the customer, which is typically upon delivery and acceptance by the customer.

Disaggregation of revenue. A disaggregation of our revenue from contracts with customers by geographic region, by reportable operating segment and by service type is presented below (in thousands):

Geographic area:

	Three Months Ended June 30, 2022						Three Months Ended June 30, 2021
	(unaudited)						(unaudited)
	United States and Canada		Other Countries		Total		United States and Canada		Other Countries		Total
Revenue:
IHT	$	111,541	$	2,583	$	114,124	$	114,834	$	2,628	$	117,462
MS	77,683		29,733		107,416		65,303		31,864		97,167
Quest Integrity	18,634		11,091		29,725		16,480		7,764		24,244
Total	$	207,858	$	43,407	$	251,265	$	196,617	$	42,256	$	238,873

	Six Months Ended June 30, 2022						Six Months Ended June 30, 2021
	(unaudited)						(unaudited)
	United States and Canada		Other Countries		Total		United States and Canada		Other Countries		Total
Revenue:
IHT	$	204,919	$	4,802	$	209,721	$	204,059	$	4,542	$	208,601
MS	141,614		59,243		200,857		125,349		59,214		184,563
Quest Integrity	33,324		25,939		59,263		25,535		14,792		40,327
Total	$	379,857	$	89,984	$	469,841	$	354,943	$	78,548	$	433,491

Operating segment and service type:

	Three Months Ended June 30, 2022
	(unaudited)
	Non-Destructive Evaluation and Testing Services		Repair and Maintenance Services		Heat Treating		Other		Total
Revenue:
IHT	$	91,701	$	115	$	15,787	$	6,521	$	114,124
MS	—		106,731		56		629		107,416
Quest Integrity	29,725		—		—		—		29,725
Total	$	121,426	$	106,846	$	15,843	$	7,150	$	251,265

	Three Months Ended June 30, 2021
	(unaudited)
	Non-Destructive Evaluation and Testing Services		Repair and Maintenance Services		Heat Treating		Other		Total
Revenue:
IHT	$	92,291	$	207	$	17,267	$	7,697	$	117,462
MS	—		97,149		8		10		97,167
Quest Integrity	24,244		—		—		—		24,244
Total	$	116,535	$	97,356	$	17,275	$	7,707	$	238,873

	Six Months Ended June 30, 2022
	(unaudited)
	Non-Destructive Evaluation and Testing Services		Repair and Maintenance Services		Heat Treating		Other		Total
Revenue:
IHT	$	168,152	$	139	$	29,626	$	11,804	$	209,721
MS	—		198,501		113		2,243		200,857
Quest Integrity	59,263		—		—		—		59,263
Total	$	227,415	$	198,640	$	29,739	$	14,047	$	469,841

	Six Months Ended June 30, 2021
	(unaudited)
	Non-Destructive Evaluation and Testing Services		Repair and Maintenance Services		Heat Treating		Other		Total
Revenue:
IHT	$	163,820	$	288	$	30,722	$	13,771	$	208,601
MS	—		183,125		697		741		184,563
Quest Integrity	40,327		—		—		—		40,327
Total	$	204,147	$	183,413	$	31,419	$	14,512	$	433,491

For additional information on our reportable operating segments and geographic information, refer to Note 17 - Segment and Geographic Disclosures.

Contract balances. The timing of revenue recognition, billings and cash collections results in trade accounts receivable, contract assets and contract liabilities on the consolidated balance sheets. Trade accounts receivable include billed and unbilled amounts currently due from customers and represent unconditional rights to receive consideration. The amounts due are stated at their net estimated realizable value. Refer to Note 1 - Summary of Significant Accounting Policies and Practices and Note 3 – Receivables for additional information on our trade receivables and the allowance for credit losses. Contract assets include unbilled amounts typically resulting from sales under fixed-price contracts when the cost-to-cost method of revenue recognition is utilized, the revenue recognized exceeds the amount billed to the customer and the right to payment is conditional on something other than the passage of time. Amounts may not exceed their net realizable value. If we receive advances or deposits from our customers, a contract liability is recorded. Additionally, a contract liability arises if items of variable consideration result in less revenue being recorded than what is billed. Contract assets and contract liabilities are generally classified as current.

The following table provides information about trade accounts receivable, contract assets and contract liabilities as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022		December 31, 2021		Change
	(unaudited)
Trade accounts receivable, net1	$	215,408	$	188,772	$	26,636
Contract assets2	$	1,120	$	1,602	$	(482)
Contract liabilities3	$	1,341	$	313	$	1,028

_________________

1    Includes billed and unbilled amounts, net of allowance for credit losses. See Note 3 - Receivables for details.    

2    Included in the “Prepaid expenses and other current assets” line on the condensed consolidated balance sheets.

3    Included in the “Other accrued liabilities” line of the condensed consolidated balance sheets.

The $0.5 million decrease in our contract assets from December 31, 2021 to June 30, 2022 is due to less fixed price contracts in progress at June 30, 2022 as compared to December 31, 2021. Contract liabilities increased by $1.0 million as of June 30, 2022. The increase is associated with contracts under which customers have paid all or a portion of the consideration in advance of the work being performed. Due to the short-term nature of our contracts, contract liability balances as of the end of any period are generally recognized as revenue in the following quarter. Accordingly, essentially all of the contract liability balance at December 31, 2021 was recognized as revenue by the six months ended June 30, 2022.

Contract costs. We recognize the incremental costs of obtaining contracts as selling, general and administrative expenses when incurred if the amortization period of the asset that otherwise would have been recognized is one year or less. Costs to fulfill a contract are recorded as assets if they relate directly to a contract or a specific anticipated contract, the costs are to generate or enhance resources that will be used in satisfying performance obligations in the future and the costs are expected to be recovered. Costs to fulfill a contract recognized as assets primarily consist of labor and materials costs and generally relate to engineering and set-up costs incurred prior to the satisfaction of performance obligations. Assets recognized for costs to fulfill a contract are included in the “Prepaid expenses and other current assets” line of the condensed consolidated balance sheets and were not material as of June 30, 2022 and December 31, 2021. Such assets are recognized as expenses as we transfer the related goods or services to the customer. All other costs to fulfill a contract are expensed as incurred.

Remaining performance obligations. As of June 30, 2022 and 2021, there were no material amounts of remaining performance obligations that are required to be disclosed. As permitted by ASC 606, we have elected not to disclose information about remaining performance obligations where (i) the performance obligation is part of a contract that has an original expected duration of one year or less or (ii) when we recognize revenue from the satisfaction of the performance obligation in accordance with the right-to-invoice practical expedient.

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RECEIVABLES

6 Months Ended

Jun. 30, 2022

Receivables [Abstract]

RECEIVABLES

RECEIVABLES

A summary of accounts receivable as of June 30, 2022 and December 31, 2021 is as follows (in thousands): 

	June 30, 2022		December 31, 2021
	(unaudited)
Trade accounts receivable	$	178,174	$	161,751
Unbilled receivables	43,981		35,933
Allowance for credit losses	(6,747)		(8,912)
Total	$	215,408	$	188,772

ASC 326, Credit Losses, applies to financial assets measured at amortized cost, including trade and unbilled accounts receivable, and requires immediate recognition of lifetime expected credit losses. Significant factors that affect the expected collectability of our receivables include macroeconomic trends and forecasts in the oil and gas, refining, power, and petrochemical markets and changes in our results of operations and forecasts. For unbilled receivables, we consider them as short-term in nature as they are normally converted to trade receivables within 90 days, thus future changes in economic conditions will not have a significant effect on the credit loss estimate. We have identified the following factors that primarily impact the collectability of our receivables and therefore determine the pools utilized to calculate expected credit losses: (i) the aging of the receivable, (ii) any identification of known collectability concerns with specific receivables, and (iii) variances in economic risk characteristics across geographic regions.

For trade receivables, customers typically are provided with payment due date terms of 30 days upon issuance of an invoice. We have tracked historical loss information for our trade receivables and compiled historical credit loss percentages for different aging categories. We believe that the historical loss information we have compiled is a reasonable basis on which to determine expected credit losses for trade receivables because the composition of the trade receivables is consistent with that used in developing the historical credit-loss percentages as typically our customers and payment terms do not change significantly. Generally, a longer outstanding receivable equates to a higher percentage of the outstanding balance as current expected credit losses. We update the historical loss information for current conditions and reasonable and supportable forecasts that affect the expected collectability of the trade receivable using a loss-rate approach. We have not seen a negative trend in the current economic environment that significantly impacts our historical credit-loss percentages; however, we will continue to monitor for changes that would indicate the historical loss information is no longer a reasonable basis for the determination of our expected credit losses. Our forecasted loss rates inherently incorporate expected macroeconomic trends. A loss-rate method for estimating expected credit losses on a pooled basis is applied for each aging category for receivables that continue to exhibit similar risk characteristics.

To measure expected credit losses for individual receivables with specific collectability risk, we identify specific factors based on customer-specific facts and circumstances that are unique to each customer. Customer accounts with different risk characteristics are separately identified and a specific reserve is determined for these accounts based on the assessed credit risk.

We have also identified the following geographic regions in which to distinguish our trade receivables: the (i) United States, (ii) Canada, (iii) the European Union, (iv) the United Kingdom, and (v) other countries. These geographic regions are considered appropriate as they each operate in different economic environments with different foreign currencies, and therefore share similar economic risk characteristics. For each geographic region we evaluate the historical loss information and determine credit-loss percentages to apply to each aging category and individual receivable with specific risk characteristics. We estimate future expected credit losses based on forecasted changes in gross domestic product and oil demand for each region.

We consider one year from the financial statement reporting date as representing a reasonable forecast period as this period aligns with the expected collectability of our trade receivables. Financial distress experienced by our customers could have an adverse impact on us in the event our customers are unable to remit payment for the products or services we provide or otherwise fulfill their obligations to us. In determining the current expected credit losses, we review macroeconomic conditions, market specific conditions, and internal forecasts to identify potential changes in our assessment.

The following table shows a rollforward of the allowance for credit losses (in thousands):

	June 30, 2022		December 31, 2021
	(unaudited)
Balance at beginning of period	$	8,912	$	9,918
Provision for expected credit losses	30		2,193
Write-offs	(2,087)		(3,143)
Foreign exchange effects	(108)		(56)
Balance at end of period	$	6,747	$	8,912

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INVENTORY

6 Months Ended

Jun. 30, 2022

Inventory Disclosure [Abstract]

INVENTORY

INVENTORY

A summary of inventory as of June 30, 2022 and December 31, 2021 is as follows (in thousands): 

	June 30, 2022		December 31, 2021
	(unaudited)
Raw materials	$	8,233	$	7,641
Work in progress	2,801		2,725
Finished goods	25,145		25,388
Total	$	36,179	$	35,754

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PREPAID AND OTHER CURRENT ASSETS

6 Months Ended

Jun. 30, 2022

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

PREPAID AND OTHER CURRENT ASSETS

PREPAID AND OTHER CURRENT ASSETS

A summary of prepaid and other current assets as of June 30, 2022 and December 31, 2021 is as follows (in thousands):

	June 30, 2022		December 31, 2021
	(unaudited)
Insurance receivable	$	39,000	$	39,000
Prepaid expenses	16,225		12,645
Other current assets	15,199		8,223
Total	$	70,424	$	59,868

The insurance receivable relates to the receivable from our third-party insurance providers for a legal claim that is recorded in other accrued liabilities, refer to Note 9 - Other Accrued Liabilities. These receivables will be covered by our third-party insurance providers for a litigation matter that has been settled, or are pending settlements where the deductibles have been satisfied. The prepaid expenses primarily relate to prepaid insurance and other expenses that have been paid in advance of the coverage period. The other current assets primarily include items such as contract assets, receivables from third parties, and other accounts receivables.

As of June 30, 2022 the other current assets also includes the deferred financing cost amounting to $6.6 million due to all long term debts now classified as current (see Note 11 - Debt for additional details), and a portion of the MS segment’s land, building and leasehold improvement assets held for sale with a net book value of $0.9 million with anticipated sale closing prior to December 31, 2022. Historically these assets were presented in the other assets, net, and property, plant and equipment section respectively of the balance sheet, and comparative periods were not adjusted.

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PROPERTY, PLANT AND EQUIPMENT

6 Months Ended

Jun. 30, 2022

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

A summary of property, plant and equipment as of June 30, 2022 and December 31, 2021 is as follows (in thousands):

	June 30, 2022		December 31, 2021
	(unaudited)
Land	$	4,552	$	5,743
Buildings and leasehold improvements	55,085		58,972
Machinery and equipment	300,166		306,366
Furniture and fixtures	11,344		11,642
Capitalized ERP system development costs	45,917		45,917
Computers and computer software	22,454		22,243
Automobiles	4,312		4,356
Construction in progress	25,477		16,565
Total	469,307		471,804
Accumulated depreciation	(312,268)		(310,445)
Property, plant and equipment, net	$	157,039	$	161,359

Included in the table above are assets under finance leases of $6.2 million and $6.7 million, and accumulated amortization of $1.8 million and $1.6 million as of June 30, 2022 and December 31, 2021, respectively. Depreciation expense for the three months ended June 30, 2022 and 2021 was $6.2 million and $6.8 million, respectively. Depreciation expense for the six months ended June 30, 2022 and 2021 was $12.8 million and $14.3 million, respectively.

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INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS

INTANGIBLE ASSETS

A summary of intangible assets as of June 30, 2022 and December 31, 2021 is as follows (in thousands): 

	June 30, 2022						December 31, 2021
	(unaudited)
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	$	174,774	$	(94,627)	$	80,147	$	175,156	$	(88,783)	$	86,373
Non-compete agreements	5,411		(5,411)		—		5,503		(5,503)		—
Trade names	24,614		(22,432)		2,182		24,743		(22,252)		2,491
Technology	7,809		(6,966)		843		7,843		(6,885)		958
Licenses	837		(793)		44		850		(774)		76
Total	$	213,445	$	(130,229)	$	83,216	$	214,095	$	(124,197)	$	89,898

Amortization expense of intangible assets for the three months ended June 30, 2022 and June 30, 2021 was $3.4 million and $3.6 million, respectively. Amortization expense of intangible assets for the six months ended June 30, 2022 and June 30, 2021 was $6.8 million and $7.0 million, respectively. Amortization expense for intangible assets is forecast to be approximately $13.1 million per year from 2022 through 2025.

The weighted-average amortization period for intangible assets subject to amortization was 13.7 years as of June 30, 2022 and December 31, 2021.

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GOODWILL

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOOWILL

GOODWILL

The following table presents a rollforward of goodwill for the six months ended June 30, 2022 as follows (in thousands): 

	IHT						MS						Quest Integrity						Consolidated
	Goodwill, Gross		Accumulated Impairment		Goodwill, Net		Goodwill, Gross		Accumulated Impairment		Goodwill, Net		Goodwill, Gross		Accumulated Impairment		Goodwill, Net		Goodwill, Gross		Accumulated Impairment		Goodwill, Net
Balance at December 31, 2021	$	212,928	$	(212,928)	$	—	$	109,938	$	(109,938)	$	—	$	34,038	$	(8,795)	$	25,243	$	356,904	$	(331,661)	$	25,243
FX Adjustments	—		—		—		—		—		—		(696)		—		(696)		(696)		—		(696)
Balance at June 30, 2022	$	212,928	$	(212,928)	$	—	$	109,938	$	(109,938)	$	—	$	33,342	$	(8,795)	$	24,547	$	356,208	$	(331,661)	$	24,547

See Note 1 - Summary of Significant Accounting Policies and Practices for further information.

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OTHER ACCRUED LIABILITIES

6 Months Ended

Jun. 30, 2022

Payables and Accruals [Abstract]

OTHER ACCRUED LIABILITIES

OTHER ACCRUED LIABILITIES

A summary of other accrued liabilities as of June 30, 2022 and December 31, 2021 is as follows (in thousands): 

	June 30, 2022		December 31, 2021
	(unaudited)
Legal and professional accruals	$	46,334	$	46,762
Payroll and other compensation expenses	50,289		44,284
Insurance accruals	6,121		7,314
Property, sales and other non-income related taxes	6,833		8,018
Accrued commission	2,014		1,111
Accrued interest	8,495		6,469
Other	8,671		7,141
Total	$	128,757	$	121,099

Legal and professional accruals include accruals for legal and professional fees as well as accrued legal claims, refer to Note 16 - Commitments and Contingencies. Certain legal claims are covered by insurance and the related insurance receivable

for these claims is recorded in prepaid expenses and other current assets, refer to Note 5 - Prepaid and Other Current Assets. Payroll and other compensation expenses include all payroll related accruals including, among others, accrued vacation, severance, and bonuses. Insurance accruals primarily relate to accrued medical and workers compensation costs. Property, sales and other non-income related taxes includes accruals for items such as sales and use tax, property tax and other related tax accruals. Accrued interest relates to the interest accrued on our long-term debt. Other accrued liabilities includes items such as contract liabilities and other accrued expenses.

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INCOME TAXES

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

We recorded an income tax provision of $1.8 million and $2.1 million for the three and six months ended June 30, 2022 compared to a provision of $0.9 million and $0.5 million for the three and six months ended June 30, 2021. The effective tax rate, inclusive of discrete items, was a provision of 9.0% for the three months ended June 30, 2022, compared to a provision of 5.1% for the three months ended June 30, 2021. For the six months ended June 30, 2022, our effective tax rate, inclusive of discrete items, was a provision of 4.1%, compared to a provision of 1.0% for the six months ended June 30, 2021. Our effective tax rate differed from the statutory tax rate due to an increase in the valuation allowance in certain foreign jurisdictions. The effective tax rate in the prior year was also impacted by the tax benefits recognized related to the CARES Act.

The lack of going concern basis applicable for our second quarter financial statements generally requires a valuation allowance for all deferred tax assets that are not realizable through the reversal of existing timing differences or taxable income in carryback years. While several subsidiaries have historically been profitable and for which future income was a material factor in assessing the realizability of their deferred tax assets, the substantial doubt about the Company’s ability to continue as a going concern basis casts doubt on our ability to generate future income. As a result, the Company included a charge of $0.8 million in income tax expense for the valuation allowance required to offset the remaining net deferred tax assets. The $0.8 million charge is primarily attributable to our Germany and Canada subsidiaries. Refer to Note 1 - Summary of Significant Accounting Policies and Practices for additional liquidity and going concern discussion.

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DEBT

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

DEBT

DEBT

For the period ended June 30, 2022 debt with original maturities greater than one year are classified as current due to the Trigger Date provision. This provision did not impact classification of debt for the period ended December 31, 2021. Refer to Note 1 - Summary of Significant Accounting Policies and Practices for additional liquidity and going concern discussion. Team’s current and long-term debt obligations consisted of the following (in thousands):

	June 30, 2022		December 31, 2021
	(unaudited)
ABL Facilities	$	128,053	$	62,000
Atlantic Park Term Loan	224,473		214,191
Subordinated Term Loan	41,845		36,358
Total	$	394,371	$	312,549
Notes1	92,178		87,662
Finance lease obligations	5,311		5,649
Total debt and finance lease obligations	$	491,860	$	405,860
Current portion of long-term debt and finance lease obligations	(487,204)		(669)
Total long-term debt and finance lease obligations, less current portion	4,656		405,191

_________________

1        Comprised of principal amount outstanding, less unamortized discount and issuance costs. See Convertible Debt section below for additional information.

On August 15, 2022, Team announced it has executed a definitive purchase and sale agreement with Baker Hughes to sell Quest Integrity for $280.0 million, before customary post-closing adjustments. Post-closing of this transaction Team’s expects its liquidity and debt profile to be significantly improved, refer to Note 20 - Subsequent Events for additional details regarding this transaction.

ABL Facilities

On February 11, 2022, we entered into a new credit agreement with the lender parties thereto, and Eclipse Business Capital, LLC, a Delaware limited liability company, as agent, (“Eclipse”) (such agreement, the “ABL Credit Agreement”). Available funding commitments to us under the ABL Credit Agreement, subject to certain conditions, include a revolving credit line in an amount of up to $130.0 million to be provided by certain affiliates of Eclipse (the “Revolving Credit Loans”), with a $35.0 million sublimit for swingline borrowings and a $26.0 million sublimit for issuances of letters of credit, and an incremental delayed draw term loan of up to $35.0 million (the “Corre Delayed Draw Term Loans”) to be provided by Corre Partners Management, LLC and certain of its affiliates (“Corre”) (collectively, the “ABL Credit Facility”). The proceeds of the loans under the ABL Credit Facility were used to, among other things, pay off the amounts owed under that certain asset-based credit agreement (such agreement, as amended, restated, supplemented or otherwise modified from time to time, the “Citi Credit Agreement”) led by Citibank, N.A. (“Citibank”), as agent, which was repaid and terminated in full on February 11, 2022. The ABL Credit Facility matures, and all outstanding amounts become due and payable on February 11, 2025. However, the ABL Credit Facility is subject to the Trigger Date as noted above in Note 1 - Summary of Significant Accounting Policies and Practices.

Borrowings under the ABL Facility bear interest through maturity at a variable rate based upon, at our option, an annual rate of either a base rate (“Base Rate”) or a LIBOR rate, plus an applicable margin, as defined in the ABL Credit Agreement. The interest rate at June 30, 2022 was 5.71% for Eclipse and 11.06% for the Corre Delayed Draw Term Loans.

Direct and incremental costs associated with the issuance of the ABL Credit Facility were approximately $8.3 million and were capitalized as deferred financing costs. These costs are being amortized on a straight-line basis over the term of the ABL Credit Facility. Unamortized deferred financing cost amounted to $6.6 million and $2.9 million at June 30, 2022 and December 31, 2021, respectively. Additionally, the amortization period for deferred financing costs and debt discounts and issuance cost was updated to reflect the revised maturity date associated with the Trigger date provision and the related reclassification of debt as current. Refer to Note 1 - Summary of Significant Accounting Policies and Practices for additional liquidity and going concern discussion.

At June 30, 2022, Team had $103.1 million outstanding under the Revolving Credit Loans and $25.0 million outstanding under the Corre Delayed Draw Term Loans. As of June 30, 2022, subject to the applicable sublimit and other terms and conditions, the remaining $4.5 million of available commitments under the ABL Credit Facility was available for loans or for issuance of new letters of credit.

Amendments in 2022. On May 6, 2022, we entered into the ABL Credit Agreement Amendment No. 1 which, among other things, modified the Maturity Reserve Trigger Date (as defined in the ABL Credit Agreement and Note 1 - Summary of Significant Accounting Policies and Practices) such that the date on which a reserve must, subject to certain conditions, be put into place with respect to the outstanding principal amount of the 5.00% Convertible Senior Notes due 2023 (the “Notes”) is 75 days prior to their maturity date rather than 120 days. Under the terms of our amended financing arrangements the “Trigger Date” is now May 18, 2023, by which date, the Notes balance must be paid down to $10.0 million, or the Company must have equivalent cash on hand to pay down the Notes to $10.0 million.

Atlantic Park Term Loan

On December 18, 2020, we entered into certain Term Loan Credit Agreement (the “Term Loan Credit Agreement”) with Atlantic Park Strategic Capital Fund, L.P., as agent (“APSC”), as lender (the “Term Loan Credit Agreement”), pursuant to which we borrowed a $250.0 million term loan (the “Term Loan”). The Term Loan was issued with a 3% original issuance discount, such that total proceeds received were $242.5 million. As set forth in the Term Loan Credit Agreement, the Term Loan is secured by substantially all assets, other than those secured on a first lien basis by the ABL Credit Facility, and we may under certain conditions, increase the Term Loan by an amount not to exceed $100.0 million. The Term Loan bears an interest through maturity at a variable rate based upon, at our option, an annual rate of either a Base rate or a LIBOR rate, plus an applicable margin. The effective interest rate on the Term Loan at June 30, 2022 and December 31, 2021 was 23.85% and 20.90%, respectively. The increase in the effective interest rate of 2.95% for the six months ended June 30, 2022 is due to the acceleration of the debt issuance costs triggered by the reclassification of the long term debt to current. The unamortized balances of debt discounts, warrant discount and debt issuance cost amounted to $31.7 million and $35.8 million at June 30, 2022 and December 31, 2021, respectively.

The Term Loan matures, and all outstanding amounts become due and payable on December 18, 2026. However, certain conditions could result in an earlier maturity, including if the Notes have an aggregate principal amount outstanding of

$10.0 million or more on the Trigger Date, in which case the Term Loan will terminate on the Trigger Date. The debt is classified as current due to the Trigger Date noted above.

Amendments in 2022. On February 11, 2022, we entered into Amendment No. 6 (the “Sixth Amendment”) to the Term Loan Credit Agreement. The Sixth Amendment, among other things and subject to the terms thereof, (i) permitted the entry into the ABL Credit Agreement, (ii) permitted certain interest payments due under the Term Loan Credit Agreement to be paid in kind, (iii) permitted certain asset sales and required certain related mandatory prepayments, subject to an applicable prepayment premium, and (iv) amended the financial covenants such that the maximum net leverage ratio of 7.00 to 1.00 would not be tested until the fiscal quarter ending March 31, 2023, and the Company is not permitted to exceed $20.0 million in unfinanced capital expenditures in any calendar year; provided, that such unfinanced capital expenditures limitation will not apply if the Company maintains a net leverage ratio of less than or equal to 4.00 to 1.00 as of the end of the second and fourth fiscal quarter of each calendar year.

On May 6, 2022, we entered into Amendment No. 7 (the “Seventh Amendment”) to the Term Loan Credit Agreement. The Seventh Amendment, among other things and subject to the terms thereof, (i) modified the Maturity Trigger Date (as defined in the Term Loan Credit Agreement) such that the date on which the maturity of the Term Loan Credit Agreement is triggered as a result of there being an aggregate principal amount of more than $10.0 million outstanding under the Notes is 75 days prior to their maturity date instead of 120 days prior to their maturity date, and (ii) amends the financial covenants such that the maximum net leverage ratio to be tested for the fiscal quarter ending March 31, 2023 is increased from 7.00 to 1.00 to 12.00 to 1.00.

Subordinated Term Loan

On November 9, 2021, we entered into a credit agreement the (“Subordinated Term Loan Credit Agreement”) with Corre Credit Fund, LLC (“Corre Fund”), as agent, and the lenders party thereto providing for an unsecured $50.0 million delayed draw subordinated term loan facility (the “Subordinated Term Loan”). The Subordinated Term Loan matures, and all outstanding amounts become due and payable, on the earlier of December 31, 2026 and the date that is two weeks later than the maturity or full repayment of the Term Loan. The stated interest rate on the Subordinated Term Loan is 12%. Effective interest rate at June 30, 2022 and December 31, 2021 was 46.79% and 19.73%, respectively. The increase in the effective interest rate of 27.06% for the six months ended June 30, 2022 is due to the acceleration of the debt issuance costs triggered by the reclassification of the long term debt to current. The unamortized debt issuance cost amounted to $11.6 million and $13.9 million at June 30, 2022 and December 31, 2021, respectively.

Amendments in 2022. On February 11, 2022, we entered into Amendment No. 5 to the Subordinated Term Loan Credit Agreement with the lenders from time to time party thereto (including Corre), and Cantor Fitzgerald Securities, as agent, that, among other things, provided for an additional commitment of $10.0 million in subordinated delayed draw term loans to be available for borrowing by the Company until October 31, 2022 (as amended by Amendment No. 7 as described further below).

On May 6, 2022, we entered into Amendment No. 6 to the Subordinated Term Loan Credit Agreement (the “Corre Amendment 6”) with the lenders from time to time party thereto (including Corre), and Cantor Fitzgerald Securities, as agent. The Corre Amendment 6, among other things, amends the financial covenants, such that the maximum net leverage ratio to be tested for the fiscal quarters ending March 31, 2023 will be increased from 7.00 to 1.00 to 12.00 to 1.00.

On June 27, 2022, we entered into Amendment No. 7 to the Subordinated Term Loan Credit Agreement with the lenders from time to time party thereto (including Corre), and Cantor Fitzgerald Securities, as agent, that, among other things, extended availability date for additional commitment of $10.0 million in subordinated delayed draw term loans from July 1, 2022 to October 31, 2022.

Warrants

On December 18, 2020, in connection with the execution of the Term Loan, we issued to APSC warrants to purchase up to 3,582,949 shares of our common stock, which was initially exercisable at the holder’s option at any time, in whole or in part, until June 14, 2028, at an exercise price of $7.75 per share (the “Existing Warrant”). In connection with execution of the Subordinated Term Loan Credit Agreement and Third Amendment, on November 9, 2021, we entered into an Amended and Restated Common Stock Purchase Warrant (the “A&R Warrant”) with APSC Holdco II, L.P. (“APSC Holdco”) pursuant to which the Existing Warrant was amended and restated to provide for the purchase of up to 4,082,949 shares of our common stock (which includes 500,000 of the shares of common stock issuable pursuant to warrants issued to APSC on November 8,

2021, providing for the purchase of an aggregate of 1,417,051 shares of our common stock) and to reduce the exercise price to $1.50 per share. As of June 30, 2022 no warrants have been exercised.

Subscription Agreement

In connection with the transactions contemplated by the ABL Credit Agreement, Corre Partners Management, LLC and certain of its affiliates (collectively, “Corre”), agreed to provide the Company with incremental financing (the “Incremental Financing”), totaling approximately $55.0 million, consisting of (i) $35.0 million Delayed Draw Term Loans under the ABL Credit Facility as discussed above; (ii) $10.0 million from Corre in the form of the February 2022 Delayed Draw Term Loan (as defined in the Subordinated Term Loan Credit Agreement) on a pari passu basis with the existing loans issued pursuant to the Subordinated Term Loan Credit Agreement; and (iii) $10.0 million through an issuance of 11,904,762 shares (the “PIPE Shares”) of our common stock to Corre Opportunities Qualified Master Fund, LP, Corre Horizon Fund, LP and Corre Horizon II Fund, LP (collectively, the “Corre Holders”) at a price of $0.84 per share (the “Equity Issuance”). In connection with the Incremental Financing and Equity Issuance, on February 11, 2022, we entered into a common stock subscription agreement (the “Subscription Agreement”) with the Corre Holders, pursuant to which the Company issued and sold the PIPE Shares to the Corre Holders on February 11, 2022.

Pursuant to and subject to the terms and conditions of the Subscription Agreement, our Board of Directors (the “Board”) is required to create a vacancy for one qualified nominee of the Corre Holders to the Board, who shall be designated by the Corre Holders and qualify as an independent director (a “Board Nominee”), and the Board is required to appoint such initial Board Nominee as a Class II director within seven business days of the date of the Subscription Agreement. This nominee has been appointed to the Board and this condition will remain active as long as the Subscription Agreements remains outstanding.

Notes

Amendments in 2022. On January 13, 2022, we entered into a supplemental indenture with Truist Bank, as trustee, (the “Supplemental Indenture”) to the indenture (the “Indenture”) governing the Notes to effect certain amendments (the “Amendments”) to the Indenture and to modify the Notes held by consenting holders (the “Consenting Holders”) of $52.0 million in aggregate principal amount of the Notes (such modified Notes, the “PIK Securities”). The Supplemental Indenture amends the Indenture to, among other things, allow for interest payable on the PIK Securities on February 1, 2022 to be paid in PIK Interest (as defined in the Supplemental Indenture) and on subsequent interest payment dates to be payable, at the Company’s option, at a rate of 5.00% per annum entirely in cash or at a rate of 8.00% per annum in PIK Interest.

In December 2020, we retired $136.9 million par value of our Notes, and as of June 30, 2022, the principal amount outstanding was $95.2 million. As of June 30, 2022 and December 31, 2021, the Notes were recorded in our condensed consolidated balance sheets as follows (in thousands):

	June 30, 2022		December 31, 2021
	(unaudited)
Liability component:
Principal	$	95,208	$	93,130
Unamortized issuance costs	(1,170)		(916)
Unamortized discount	(1,860)		(4,552)
Net carrying amount of the liability component1	$	92,178	$	87,662
Equity component:
Carrying amount of the equity component, net of issuance costs2	$	—	$	7,969
Carrying amount of the equity component, net of issuance costs3	$	37,276	$	37,276

_________________

1        Included in the “Current portion of long-term debt and finance lease obligations” line of the condensed consolidated balance sheets.

2        Relates to the portion of the Notes accounted for under ASC 470-20 (defined below) and is included in the “Additional paid-in capital” line of the condensed consolidated balance sheets.

3        Relates to the portion of the Notes accounted for under ASC 815-15 (defined below) and is included in the “Additional paid-in capital” line of the condensed consolidated balance sheets.

The following table sets forth interest expense information related to the Notes (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Coupon interest	$	1,595		$	1,164		$	3,177		$	2,328
Amortization of debt discount and issuance costs	693			768			1,320			1,534
Total interest expense	$	2,288		$	1,932		$	4,497		$	3,862
Effective interest rate	10.24		%	9.12		%	10.24		%	9.12		%

ASU 2020-06 Adoption. In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU simplifies the accounting for convertible instruments by removing certain separation models in ASC 470-20, Debt—Debt with Conversion and Other Options, for convertible instruments. The ASU updates the guidance on certain embedded conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, such that those features are no longer required to be separated from the host contract. The convertible debt instruments will be accounted for as a single liability measured at amortized cost. This will also result in the interest expense recognized for convertible debt instruments to be typically closer to the coupon interest rate when applying the guidance in Topic 835, Interest. Further, the ASU made amendments to the EPS guidance in Topic 260 for convertible debt instruments, the most significant impact of which is requiring the use of the if-converted method for diluted EPS calculation, and no longer allowing the net share settlement method. The ASU also made revisions to Topic 815-40, which provides guidance on how an entity must determine whether a contract qualifies for a scope exception from derivative accounting. The amendments to Topic 815-40 change the scope of contracts that are recognized as assets or liabilities. The ASU is effective for interim and annual periods beginning after December 15, 2021, with early adoption permitted for periods beginning after December 15, 2020. Adoption of the ASU can either be on a modified retrospective or full retrospective basis. On January 1, 2022, we adopted the ASU using the modified retrospective method. We recognized a cumulative effect of initially applying the ASU as an adjustment to the January 1, 2022 opening balance of accumulated deficit. The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods.

Accordingly, the cumulative effect of the changes made on our January 1, 2022 condensed consolidated balance sheet for the adoption of the ASU was as follows (in thousands):

	Balances at December 31, 2021		Adjustments from Adoption of ASU 2020-06		Balances at January 1, 2022
Liabilities
Long-term debt and finance lease obligations	$	405,191	$	1,827	$	407,018
Equity
Additional paid-in capital	$	444,824	$	(5,651)	$	439,173
Accumulated deficit	$	(375,584)	$	3,824	$	(371,760)

The impact of adoption on our consolidated statements of operations for the six months ended June 30, 2022 was primarily to decrease net interest expense by $0.6 million. This had the effect of decreasing our basic and diluted net loss per share of common stock attributable to common stockholders for the six months ended June 30, 2022 by $0.01. The change in methodology by requiring the use of the if-converted method to determine the denominator used in the calculation of diluted net income per share of common stock attributable to common stockholders did not have an impact on the diluted EPS as the shares of common stock issuable upon conversion were not included in the denominator because of the antidilutive effect.

Deferred Financing Costs, Debt and Warrant Discounts and Debt Issuance Cost

As referenced above, all debt with original maturities greater than one year are classified as current as of June 30, 2022 due to the Trigger Date provisions.

As of June 30, 2022 and December 31, 2021, capitalized deferred financing costs, inclusive of debt issuance costs and discounts, net of accumulated amortization, related to Team’s outstanding debt were $53.0 million and $58.0 million. Due to the Trigger Date provisions, the amortization period for deferred financing costs, debt and warrant discounts and debt issuance costs was updated to reflect the accelerated maturity dates. This resulted in additional amortization charges of $4.6 million during the six months ended June 30, 2022. Refer to Note 1 - Summary of Significant Accounting Policies and Practices for additional liquidity and going concern discussion.

Liquidity

At June 30, 2022, we had $41.1 million of unrestricted cash and cash equivalents and $26.3 million of restricted cash held as collateral for letters of credit and commercial card programs. International cash balance at June 30, 2022 was $21.8 million, and approximately $1.5 million of cash is located in countries where currency restrictions exist. We had approximately $24.5 million in additional borrowing capacity, consisting of $4.5 million of available under the ABL Credit Facility, $10.0 million available under the incremental delayed draw term loan (the “Delayed Draw Term Loans”), and $10.0 million available under the Subordinated Term Loan. Internationally we have letters of credit outstanding in the amount of $0.3 million. Additionally, we have $1.5 million in Surety bonds outstanding and an additional $1.2 million in miscellaneous cash deposits securing leases or other required obligations. Refer to Note 1 - Summary of Significant Accounting Policies and Practices for additional liquidity and going concern discussion. Refer to Note 20 - Subsequent Events for draw activity occurring subsequent to the period ended June 30, 2022.

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LEASES

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

LEASES

LEASES

We adopted ASC 842, Leases, effective January 1, 2019 and elected the modified retrospective transition method. We determine if an arrangement is a lease at inception. Operating leases are included in “Operating lease right-of-use (‘ROU’) assets”, “operating lease liabilities” and “current portion of operating lease obligations” on our consolidated balance sheets. Finance leases are included in “property, plant and equipment, net”, “current portion of long-term debt and finance lease obligations” and “long-term debt and finance lease obligations” on our consolidated balance sheets.  

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments and short-term lease payments (leases with initial terms less than twelve months) are expensed as incurred.

We have lease agreements with lease and non-lease components for certain equipment, office, and vehicle leases. We have elected the practical expedient to not separate lease and non-lease components and account for both as a single lease component. We have operating and finance leases primarily for equipment, real estate, and vehicles. Our leases have remaining lease terms of 1 year to 14 years, some of which may include options to extend the leases for up to 10 years, and some of which may include options to terminate the leases within 1 year.

The components of lease expense are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Operating lease costs	$	6,334	$	7,021	$	13,021	$	14,260
Variable lease costs	1,442		1,326		2,900		2,602
Finance lease costs:
Amortization of right-of-use assets	67		195		261		312
Interest on lease liabilities	38		90		126		168
Total lease cost	$	7,881	$	8,632	$	16,308	$	17,342

Other information related to leases are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022	2021
Supplemental cash flow information:	(unaudited)		(unaudited)		(unaudited)	(unaudited)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	5,095	$	5,990	10,500	11,346
Operating cash flows from finance leases	25		91		115	171
Financing cash flows from finance leases	158		159		320	237
Right-of-use assets obtained in exchange for lease obligations
Operating leases	514		411		1,354	8,583
Finance leases	77		384		100	406

Amounts recognized in the condensed consolidated balance sheet are as follows (in thousands):

	June 30, 2022			December 31, 2021
Operating Leases:	(unaudited)
Operating lease right-of-use assets	$	52,925		$	60,700
Current portion of operating lease obligations	14,389			16,176
Operating lease obligations (non-current)	43,090			49,221
Finance Leases:
Property, plant and equipment, net	$	4,412		$	5,123
Current portion of long-term finance lease obligations	655			669
Long-term finance lease obligations	4,656			4,980
Weighted average remaining lease term:
Operating leases	5.9 years			6.0 years
Finance leases	9.9 years			10.0 years
Weighted average discount rate:
Operating leases	6.9		%	6.8		%
Finance leases	6.5		%	6.4		%

As of June 30, 2022, we have no material additional operating and finance leases that have not yet commenced. As of June 30, 2022, future minimum lease payments under non-cancellable leases (including short-term leases) are as follows (in thousands):

	Operating Leases		Finance Leases
	(unaudited)		(unaudited)
2022 (Remainder of the year)	$	10,647	$	68
2023	15,317		905
2024	11,918		745
2025	8,609		575
2026	6,729		562
Thereafter	18,161		3,925
Total future minimum lease payments	71,381		6,780
Less: Interest	(13,902)		(1,469)
Present value of lease liabilities	$	57,479	$	5,311

LEASES

LEASES

We adopted ASC 842, Leases, effective January 1, 2019 and elected the modified retrospective transition method. We determine if an arrangement is a lease at inception. Operating leases are included in “Operating lease right-of-use (‘ROU’) assets”, “operating lease liabilities” and “current portion of operating lease obligations” on our consolidated balance sheets. Finance leases are included in “property, plant and equipment, net”, “current portion of long-term debt and finance lease obligations” and “long-term debt and finance lease obligations” on our consolidated balance sheets.  

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments and short-term lease payments (leases with initial terms less than twelve months) are expensed as incurred.

We have lease agreements with lease and non-lease components for certain equipment, office, and vehicle leases. We have elected the practical expedient to not separate lease and non-lease components and account for both as a single lease component. We have operating and finance leases primarily for equipment, real estate, and vehicles. Our leases have remaining lease terms of 1 year to 14 years, some of which may include options to extend the leases for up to 10 years, and some of which may include options to terminate the leases within 1 year.

The components of lease expense are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Operating lease costs	$	6,334	$	7,021	$	13,021	$	14,260
Variable lease costs	1,442		1,326		2,900		2,602
Finance lease costs:
Amortization of right-of-use assets	67		195		261		312
Interest on lease liabilities	38		90		126		168
Total lease cost	$	7,881	$	8,632	$	16,308	$	17,342

Other information related to leases are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022	2021
Supplemental cash flow information:	(unaudited)		(unaudited)		(unaudited)	(unaudited)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	5,095	$	5,990	10,500	11,346
Operating cash flows from finance leases	25		91		115	171
Financing cash flows from finance leases	158		159		320	237
Right-of-use assets obtained in exchange for lease obligations
Operating leases	514		411		1,354	8,583
Finance leases	77		384		100	406

Amounts recognized in the condensed consolidated balance sheet are as follows (in thousands):

	June 30, 2022			December 31, 2021
Operating Leases:	(unaudited)
Operating lease right-of-use assets	$	52,925		$	60,700
Current portion of operating lease obligations	14,389			16,176
Operating lease obligations (non-current)	43,090			49,221
Finance Leases:
Property, plant and equipment, net	$	4,412		$	5,123
Current portion of long-term finance lease obligations	655			669
Long-term finance lease obligations	4,656			4,980
Weighted average remaining lease term:
Operating leases	5.9 years			6.0 years
Finance leases	9.9 years			10.0 years
Weighted average discount rate:
Operating leases	6.9		%	6.8		%
Finance leases	6.5		%	6.4		%

As of June 30, 2022, we have no material additional operating and finance leases that have not yet commenced. As of June 30, 2022, future minimum lease payments under non-cancellable leases (including short-term leases) are as follows (in thousands):

	Operating Leases		Finance Leases
	(unaudited)		(unaudited)
2022 (Remainder of the year)	$	10,647	$	68
2023	15,317		905
2024	11,918		745
2025	8,609		575
2026	6,729		562
Thereafter	18,161		3,925
Total future minimum lease payments	71,381		6,780
Less: Interest	(13,902)		(1,469)
Present value of lease liabilities	$	57,479	$	5,311

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SHARE-BASED COMPENSATION

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

We have adopted stock incentive plans and other arrangements pursuant to which the Board may grant stock options, restricted stock, stock units, stock appreciation rights, common stock or performance awards to officers, directors and key employees. At June 30, 2022, there were approximately 1.2 million restricted stock units, performance awards and stock options outstanding to officers, directors and key employees. The exercise price, terms and other conditions applicable to each form of share-based compensation under our plans are generally determined by the Compensation Committee of the Board at the time of grant and may vary.

In May 2021, our shareholders approved the amendment and restatement of the 2018 Team, Inc. Equity Incentive Plan (the “2018 Plan”). The 2018 Plan replaced the 2016 Team, Inc. Equity Incentive Plan. The amendment and restatement to the 2018 Plan increased the shares available for issuance by 3.0 million shares of our common stock. Shares issued in connection with our share-based compensation are issued out of authorized but unissued common stock.

Compensation expense related to share-based compensation totaled $0.6 million and $2.1 million for the three months ended June 30, 2022 and 2021, respectively. Compensation expense related to share-based compensation totaled a credit of $0.1 million and an expense of $4.4 million for the six months ended June 30, 2022 and 2021, respectively. The Company incurred a credit in the period related to unvested share-based compensation associated with executive departures which exceeded the total costs expensed for the six month period ended June 30, 2022. Share-based compensation expense reflects an estimate of expected forfeitures. At June 30, 2022, $2.9 million of unrecognized compensation expense related to share-based compensation is expected to be recognized over a remaining weighted-average period of 1.4 years.

Stock units are settled with common stock upon vesting unless it is not legally feasible to issue shares, in which case the value of the award is settled in cash. We determine the fair value of each stock unit based on the market price on the date of grant. Stock units generally vest in annual installments over three or four years and the expense associated with the units is recognized over the same vesting period. We also grant common stock to our directors, which typically vests immediately. There were no stock awards granted to directors during the three and six months ended June 30, 2022. Compensation expense related to stock units and director stock grants totaled $1.2 million and $3.3 million for the six months ended June 30, 2022 and 2021.

Transactions involving our stock units and director stock grants for the six months ended June 30, 2022 are summarized below:

	Six Months Ended June 30, 2022
	(unaudited)
	No. of Stock Units	Weighted Average Fair Value
	(in thousands)
Stock and stock units, beginning of year	804	$	7.27
Changes during the period:
Granted	525	$	1.30
Vested and settled	(135)	$	7.16
Forfeited and cancelled	(89)	$	7.13
Stock and stock units, end of period	1,105	$	4.46

Performance stock units. We have a performance stock unit award program whereby we grant Long-Term Performance Stock Unit (“LTPSU”) awards to our executive officers. Under this program, we communicate “target awards” to the executive officers during the first year of a performance period. LTPSU awards cliff vest with the achievement of the performance goals and completion of the required service period. Settlement occurs with common stock as soon as practicable following the vesting date. LTPSU awards granted in 2019 (the “2019 Awards”), in 2020 (the “2020 Awards”) and in 2021 (the “2021 Awards”) are subject to a two-year performance period and a concurrent two-year service period. There were no LTPSU awards granted during the three and six months ended June 30, 2022. For the LTPSU awards, the performance goal is separated into two independent performance factors based on (i) relative shareholder return (“RTSR”) as measured against a designated peer group and (ii) results of operations over the two-year performance period, with possible payouts ranging from 0% to 200% of the target awards for each of the two performance factors. The 2019 Awards vested as of March 15, 2021 at the RTSR performance target level of 25% and the results of operations performance metric at 0% of the target level.

The RTSR and the stock price milestone factors are considered to be market conditions under GAAP. For performance units subject to market conditions, we determine the fair value of the performance units based on the results of a Monte Carlo simulation, which uses market-based inputs as of the date of grant to simulate future stock returns. Compensation expense for awards with market conditions is recognized on a straight-line basis over the longer of (i) the minimum required service period and (ii) the service period derived from the Monte Carlo simulation, separately for each vesting tranche. For performance units subject to market conditions, because the expected outcome is incorporated into the grant date fair value through the Monte Carlo simulation, compensation expense is not subsequently adjusted for changes in the expected or actual performance outcome. For performance units not subject to market conditions, we determine the fair value of each performance unit based on the market price of our common stock on the date of grant. For these awards, we recognize compensation expense over the vesting term on a straight-line basis based upon the performance target that is probable of being met, subject to adjustment for changes in the expected or actual performance outcome. Compensation expense related to performance awards totaled a credit of $1.3 million and expense of $1.1 million for the six months ended June 30, 2022 and 2021, respectively.

Transactions involving our performance awards during the six months ended June 30, 2022 are summarized below:

	Six Months Ended June 30, 2022
	(unaudited)
	Performance Units Subject to Market Conditions			Performance Units Not Subject to Market Conditions
	No. of Stock Units1	Weighted Average Fair Value		No. of Stock Units1	Weighted Average Fair Value
	(in thousands)			(in thousands)
Performance stock units, beginning of period	684	$	6.45	219	$	9.91
Changes during the period:
Granted	—	$	—	—	$	—
Vested and settled	—	$	—	—	$	—
Cancelled	(653)	$	6.04	(188)	$	9.61
Performance stock units, end of period	31	$	14.96	31	$	11.69

_________________

1    Performance units with variable payouts are shown at target level of performance.

Stock Options. We determine the fair value of each stock option at the grant date using a Black-Scholes model and recognize the resulting expense of our stock option awards over the period during which an employee is required to provide services in exchange for the awards, usually the vesting period. There was no compensation expense related to stock options for the periods ended June 30, 2022 or December 31, 2021. Our options typically vest in equal annual installments over a four-year service period. Expense related to an option grant is recognized on a straight-line basis over the specified vesting period for those options. Stock options generally have a ten-year term.

No stock options were granted during the six month periods ended June 30, 2022 or June 30, 2021, and no options were exercised, a total of 7,210 options cancelled during the period consisting of 434 forfeited, and 6,776 expired during the six month period ended June 30, 2022. Approximately 10 thousand options were exercisable at June 30, 2022 had a weighted-average remaining contractual life of 1.1 years, and exercise price of $35.59.

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EMPLOYEE BENEFIT PLANS

6 Months Ended

Jun. 30, 2022

Retirement Benefits [Abstract]

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

We have a defined benefit pension plan covering certain United Kingdom employees (the “U.K. Plan”). Net periodic pension credit includes the following components (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Interest cost	$	390	$	326	813		$	648
Expected return on plan assets	(582)		(509)		(1,211)		$	(1,012)
Amortization of prior service cost	8		9		16		$	17
Net periodic pension credit	$	(184)	$	(174)	$	(382)	$	(347)

The expected long-term rate of return on invested assets is determined based on the weighted average of expected returns on asset investment categories for the U.K. Plan as follows: 2.1% overall, 4.6% for equities and 1.4% for debt securities. We expect to contribute $3.7 million to the U.K. Plan for 2022, of which $1.9 million has been contributed through June 30, 2022.

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ACCUMULATED OTHER COMPREHENSIVE LOSS

6 Months Ended

Jun. 30, 2022

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE LOSS

ACCUMULATED OTHER COMPREHENSIVE LOSS

A summary of changes in accumulated other comprehensive loss included within shareholders’ equity is as follows (in thousands):

	Six Months Ended June 30, 2022										Six Months Ended June 30, 2021
	(unaudited)										(unaudited)
	Foreign Currency Translation Adjustments		Foreign Currency Hedge		Defined Benefit Pension Plans		Tax Provision		Total		Foreign Currency Translation Adjustments		Foreign Currency Hedge		Defined Benefit Pension Plans		Tax Provision		Total
Balance, beginning of period	$	(23,287)	$	—	$	(3,277)	$	(169)	$	(26,732)	$	(23,045)	$	2,988	$	(8,021)	$	400	$	(27,678)
Other comprehensive loss	(5,117)		—		—		—		(5,117)		874		—		—		(155)		719
Balance, end of period	$	(28,404)	$	—	$	(3,277)	$	(169)	$	(31,849)	$	(22,171)	$	2,988	$	(8,021)	$	245	$	(26,959)

The following table represents the related tax effects allocated to each component of other comprehensive income (loss) (in thousands):

	Six Months Ended June 30, 2022						Six Months Ended June 30, 2021
	(unaudited)						(unaudited)
	Gross Amount		Tax Effect		Net Amount		Gross Amount		Tax Effect		Net Amount
Foreign currency translation adjustments	(5,117)		—		(5,117)		874		(155)		719
Total	$	(5,117)	$	—	$	(5,117)	$	874	$	(155)	$	719

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, which will only be resolved when one or more future events occur or fail to occur. Team’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, Team’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated,

then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.

We accrue for contingencies where the occurrence of a material loss is probable and can be reasonably estimated, based on our best estimate of the expected liability. We may increase or decrease our legal accruals in the future, on a matter-by-matter basis, to account for developments in such matter. Because such matters are inherently unpredictable and unfavorable developments or outcomes can occur, assessing contingencies is highly subjective and requires judgments about future events. Notwithstanding the uncertainty as to the outcome and while our insurance coverage might not be available or adequate to cover these claims, based upon the information currently available, we do not believe that any uninsured losses that might arise from these lawsuits and proceedings will have a materially adverse effect on our consolidated financial statements.

California Wage and Hour Litigation - On June 24, 2019 and August 26, 2020, two putative class action complaints were filed against Team Industrial Services, Inc. in the Superior Court for the County of Los Angeles, California. The plaintiff in the first filed action is Michael Thai (the “Thai action”). The plaintiff in the second filed action is Alex Esqueda (the “Esqueda action”). All of the claims pleaded in the Esqueda action were also pleaded in the Thai action. Each of the plaintiffs assert claims for alleged wage and hour violations under the California Labor Code (for alleged unpaid wages, failure to provide meal and rest breaks, and derivative related claims). The Thai action also asserts a putative class claim for violation of the Fair Credit Reporting Act. Both cases were stayed shortly after filing to allow the parties to mediate the claims. On February 23, 2021, the Los Angeles Superior Court designated the Thai and Esqueda actions as related cases. While the parties mediated on March 18, 2021, the cases did not settle. On April 16, 2021, Team Industrial Services, Inc. moved both the Thai and Esqueda actions to the United States District Court for the Central District of California. Plaintiff’s motion for remand was denied, and these matters remain in federal court.

In November 2021, the parties agreed in principle to settle all claims in this litigation and all parties entered into a formal settlement agreement in March 2022. As part of the settlement agreement, the parties have agreed to remand the case to the Los Angeles Superior Court for approval of the settlement. All class action settlements of this nature are subject to approval of the court, which can take several months after the final settlement agreement is executed by the parties. The parties anticipate court approval of the settlement agreement in the fourth quarter of 2022 or first quarter of 2023.

Notice of Potential Environmental Violation - On April 20, 2021, Team Industrial Services, Inc. received Notices of Potential Violation from the U.S. Environmental Protection Agency (“EPA”) alleging noncompliance with various waste determination, reporting, training, and planning obligations under the Resource Conservation and Recovery Act at seven of our facilities located in Texas and Louisiana. The allegations largely relate to spent film developing solutions generated through our mobile radiographic inspection services and that the claims relate to the characterization and quantities of those wastes and related notices, reporting, training, and planning.

On February 9, 2022, TEAM and the EPA agreed to settle all the claims related to this matter and the formal settlement agreement was finalized in April 2022 with our agreement to pay penalties totaling $0.2 million.

Kelli Most Litigation - On November 13, 2018, Kelli Most filed a lawsuit against Team Industrial Services, Inc., individually and as a personal representative of the estate of Jesse Henson, in the 268th District Court of Fort Bend County, Texas (the “Most litigation”). The complaint asserted claims against Team for negligence resulting in the wrongful death of Jesse Henson. A jury trial commenced on this matter on May 4, 2021. On June 1, 2021, the jury rendered a verdict against Team for $222.0 million in compensatory damages.

On January 25, 2022, the trial court signed a final judgment in favor of the plaintiff and against Team Industrial Services, Inc. Post-judgment motions challenging the judgment were filed on February 24, 2022 and were denied by the court on April 22, 2022. A notice of appeal was filed on April 25, 2022, and this case is currently pending in the Court of Appeals for the First District of Texas, in Houston.

We believe that the jury verdict is not supported by the facts of the case or applicable law, is the result of significant trial error, and there are strong grounds for appeal. We will seek to overturn the verdict in post-trial motions before the District Court and, if necessary, to appeal to the Court of Appeals for the State of Texas. We intend to vigorously challenge the judgment through all appropriate post-trial motions and appeal processes.

As a result, we believe that the likelihood that the amount of the judgment will be affirmed is not probable. We have taken into consideration the events that have occurred after the reporting period and before the financial statements were issued. We currently estimate a range of possible outcomes between $13.0 million and approximately $51.0 million, and we have

accrued a liability as of June 30, 2022. which is the amount we believe is the most likely estimate for a probable loss on this matter. We have also recorded a related receivable from our third-party insurance providers in other current assets with the corresponding liability of the same amount in other accrued liabilities. Such amounts are treated as non-cash operating activities. The Most litigation is covered by our general liability and excess insurance policies which are occurrence based and subject to an aggregate $3.0 million self-insured retention and deductible. All retentions and deductibles have been met, accordingly, we believe pending the final settlement, all further claims will be fully funded by our insurance policies. We will continue to evaluate the possible outcomes of this case in light of future developments and their potential impact on factors relevant to our assessment of any possible loss.

Simon, Vige, and Roberts Matter – On February 19, 2019, a personal injury claim was filed by the plaintiffs against several counterparties including Team Industrial Services Inc., in the 295th District Court of Harris County, Texas. The plaintiffs filed the action seeking monetary damages for personal injury, and emotional and mental distress. This matter was settled in July 2021. This claim is covered by our general liability and excess insurance policies which are occurrence based and subject to an aggregate $3.0 million self-insured retention and deductible.

Accordingly, for all matters discussed above, we have accrued in the aggregate approximately $44.0 million as of June 30, 2022, of which approximately $5.0 million is not covered by our various insurance policies.

In addition to legal matters discussed above, we are subject to various lawsuits, claims and proceedings encountered in the normal conduct of business (“Other Proceedings”). Management believes that based on its current knowledge and after consultation with legal counsel that the Other Proceedings, individually or in the aggregate, will not have a material effect on our consolidated financial statements.

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SEGMENT AND GEOGRAPHIC DISCLOSURES

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

SEGMENT AND GEOGRAPHIC DISCLOSURES

SEGMENT AND GEOGRAPHIC DISCLOSURES

ASC 280, Segment Reporting, requires we disclose certain information about our operating segments. Operating segments are defined as “components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.” We conduct operations in three segments: IHT, MS and Quest Integrity.

Segment data for our three operating segments are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenues:
IHT	$	114,124	$	117,462	$	209,721	$	208,601
MS	107,416		97,167		200,857		184,563
Quest Integrity	29,725		24,244		59,263		40,327
Total	$	251,265	$	238,873	$	469,841	$	433,491

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Operating loss:
IHT	$	5,514	$	7,395	$	5,648	$	7,759
MS	6,984		2,328		7,497		2,443
Quest Integrity	8,014		5,702		14,218		5,450
Corporate and shared support services	(23,292)		(21,419)		(46,346)		(45,946)
Total	$	(2,780)	$	(5,994)	$	(18,983)	$	(30,294)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Capital expenditures1:
IHT	$	3,326	$	2,457	$	8,097	$	5,171
MS	1,621		1,367		2,434		2,519
Quest Integrity	1,333		974		2,342		1,380
Corporate and shared support services	19		296		57		421
Total	$	6,299	$	5,094	$	12,930	$	9,491

_____________

1    Excludes finance leases. Totals may vary from amounts presented in the consolidated statements of cash flows due to the timing of cash payments.

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Depreciation and amortization:
IHT	$	3,096	$	3,270	$	6,350	$	6,740
MS	4,634		5,043		9,518		10,482
Quest Integrity	569		710		1,146		1,422
Corporate and shared support services	1,279		1,324		2,595		2,662
Total	$	9,578	$	10,347	$	19,609	$	21,306

Separate measures of our assets by operating segment are not produced or utilized by management to evaluate segment performance.

A geographic breakdown of our revenues and our total long-lived assets for the three and six months ended June 30, 2022 and 2021 is as follows (unaudited, in thousands):

	Three Months Ended June 30, 2022				Three Months Ended June 30, 2021
	Total Revenues1		Total Long-lived Assets2		Total Revenues1		Total Long-lived Assets2
United States	$	171,665	$	258,559	$	162,465	$	282,706
Canada	36,193		9,198		34,152		9,309
Europe	26,554		20,920		29,264		24,755
Other foreign countries	16,853		10,649		12,992		12,440
Total	$	251,265	$	299,326	$	238,873	$	329,210
	Six Months Ended June 30, 2022				Six Months Ended June 30, 2021
	Total Revenues1		Total Long-lived Assets2		Total Revenues1		Total Long-lived Assets2
United States	$	323,346	$	258,559	$	304,296	$	282,706
Canada	56,511		9,198		50,647		9,309
Europe	50,677		20,920		54,975		24,755
Other foreign countries	39,307		10,649		23,573		12,440
Total	$	469,841	$	299,326	$	433,491	$	329,210

 ______________

1    Revenues attributable to individual countries/geographic areas are based on the country of domicile of the legal entity that performs the work.

2    Excludes goodwill, intangible assets not being amortized that are to be held and used, financial instruments and deferred tax assets.

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RESTRUCTURING AND OTHER RELATED CHARGES

6 Months Ended

Jun. 30, 2022

Restructuring and Related Activities [Abstract]

RESTRUCTURING AND OTHER RELATED CHARGES

OTHER CHARGES

For the six months ended June 30, 2022, we incurred severance charges of $2.4 million, which represents costs incurred in 2022 as a result of ongoing cost reduction efforts.

In January 2021, we announced a new strategic organizational structure to better position ourselves for recovery post pandemic, continue sector diversification, and enhance client value (the “Operating Group Reorganization”). In connection with the Operating Group Reorganization, we announced certain executive leadership changes and the appointment of experienced new talent to our leadership team. For the twelve months ended December 31, 2021, we incurred severance charges of $2.9 million as a result of the Operating Group Reorganization.

A rollforward of our accrued severance liability associated with our ongoing cost reduction efforts is presented below (in thousands):

	Six Months Ended June 30, 2022
	(unaudited)
Balance, beginning of period	$	712
Charges	2,370
Payments	(866)
Balance, end of period	$	2,216

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2022

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

Alvarez & Marsal provided certain consulting services to the Company in connection with our former Interim Chief Financial Officer position and other corporate support costs. Effective June 12, 2022 the Interim Chief Financial Officer position ended as the Company named a permanent Chief Financial Officer prior to end of the period ended June 30, 2022. The Company paid $8.0 million in fees to Alvarez & Marsal for the year ended December 31, 2021, and $6.0 million for the year to date period ended June 30, 2022.

In connection with the Company’s debt transactions, the Company engaged in transactions with Corre and Atlantic Park to provide funding as described in Note 11 - Debt.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2022

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

During July 2022, our Board approved management’s recommendation to place Quest Integrity up for sale. Accordingly Quest Integrity will be treated as held for sale in reporting periods subsequent to June 30, 2022.

On August 15 2022, Team announced it executed a definitive purchase and sale agreement with Baker Hughes to sell Quest Integrity for $280.0 million, before customary post-closing adjustments. The sale is subject to ordinary closing conditions, regulatory approvals, and other adjustments, and is expected to close in the fourth quarter of 2022.

The Company expects the net proceeds from the Quest Integrity Sale to be used to pay down debt and for general corporate purposes, thereby reducing the Company’s future debt service obligations and leverage and improving its liquidity and capital resources. The consummation of the Quest Integrity Sale will allow the Company to focus on improving its core IHT and MS businesses.

Quest Integrity represented approximately 15% of the Company’s consolidated total assets as of June 30, 2022 and approximately 13% of the Company’s consolidated revenue for the six months ended June 30, 2022.

During July 2022, the Company drew down $10.0 million in cash proceeds from the Corre Delayed Draw Term Loan for general corporate purposes.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (Policies)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Basis for presentation

Basis for presentation. These condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results for such periods. The results of operations for any interim period are not necessarily indicative of results for the full year. Certain disclosures have been condensed or omitted from the interim financial statements included in this report. These financial statements should be read in conjunction with the condensed consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission.

Consolidation

Consolidation. The condensed consolidated financial statements include the accounts of our subsidiaries where we have control over operating and financial policies. All material intercompany accounts and transactions have been eliminated in consolidation.

Related Party Transactions

Related Party Transactions. A related party transaction is any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including the incurrence or issuance of any indebtedness or the guarantee of indebtedness) in which (1) the Company or any of its subsidiaries is a participant, and (2) any Related Party (as defined below) has or will have a direct or indirect material interest.

A Related Party is any person who is, or, at any time since the beginning of the Company’s last fiscal year, was (1) an executive officer, director or nominee for election as a director of the Company or any of its subsidiaries, (2) a person with greater than five percent (5%) beneficial interest in the Company, (3) an immediate family member of any of the individuals or entities identified in (1) or (2) of this paragraph, and (4) any firm, corporation or other entity in which any of the foregoing individuals or entities is employed or is a general partner or principal or in a similar position or in which such person or entity has a five percent (5%) or greater beneficial interest. Immediate family members includes a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law and anyone residing in such person’s home, other than a tenant or employee.

Use of estimates

Use of estimates. Our accounting policies conform to GAAP. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect our reported financial position and results of operations. We review significant estimates and judgments affecting our condensed consolidated financial statements on a recurring basis and record the effect of any necessary adjustments prior to their publication. Estimates and judgments are based on information available at the time such estimates and judgments are made. Adjustments made with respect to the use of these estimates and judgments often relate to information not previously available. Uncertainties with respect to such estimates and judgments are inherent in the preparation of financial statements. Estimates and judgments are used in, among other things, (1) aspects of revenue recognition, (2) valuation of acquisition related tangible and intangible assets and assessments of all long-lived assets for possible impairment, (3) estimating various factors used to accrue liabilities for workers’ compensation, auto, medical, and general liability, (4) establishing an allowance for uncollectible accounts receivable, (5) estimating the useful lives of our assets, (6) assessing future tax exposure and the realization of tax assets, (7) selecting assumptions used in the measurement of costs and liabilities associated with defined benefit pension plans, (8) assessments of fair value and (9) managing our foreign currency risk in foreign operations. Our most significant accounting policies are described below.

Fair value of financial instruments

Fair value of financial instruments. As defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 Fair Value Measurements and Disclosure (“ASC 820”), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. We primarily apply the market approach for recurring fair value measurements and endeavor to utilize the best information available. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The use of unobservable inputs is intended to allow for fair value determinations in situations in which there is little, if any, market activity for the asset or liability at the measurement date. We are able to classify fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy such that “Level 1” measurements include unadjusted quoted market prices for identical assets or liabilities in an active market, “Level 2” measurements include quoted market prices for identical assets or liabilities in an active market which have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets, and “Level 3” measurements include inputs that are unobservable and of a highly subjective measure.Our financial instruments consist primarily of cash, cash equivalents, accounts receivable, accounts payable and debt obligations. The carrying amount of cash, cash equivalents, trade accounts receivable and trade accounts payable are representative of their respective fair values due to the short-term maturity of these instruments. The fair value of our ABL Credit Facility and Term Loans is representative of the carrying value based upon the variable terms and management’s opinion that the current rates available to us with the same maturity and security structure are equivalent to that of the debt.

Cash and cash equivalents

Cash and cash equivalents. Cash and cash equivalents consist of all deposits and funds invested in highly liquid short-term investments with original maturities of three months or less.

Inventory

Inventory. Except for certain inventories that are valued based on weighted-average cost, we use the first-in, first-out method to value our inventory. Inventory includes material, labor, and certain fixed overhead costs. Inventory is stated at the lower of cost and net realizable value. Inventory quantities on hand are reviewed periodically and carrying cost is reduced to net realizable value for inventories for which their cost exceeds their utility. The cost of inventories consumed or products sold are included in operating expenses.

Property, plant and equipment

Property, plant and equipment. Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Leasehold improvements are amortized over the shorter of their respective useful life or the lease term. Depreciation and amortization of assets are computed by the straight-line method over the following estimated useful lives of the assets:

Classification	Useful Life
Buildings	20-40 years
Enterprise Resource Planning (“ERP”) System	15 years
Leasehold improvements	2-15 years
Machinery and equipment	2-12 years
Furniture and fixtures	2-10 years
Computers and computer software	2-5 years
Automobiles	2-5 years

Goodwill and intangible assets

Goodwill and intangible assets. We allocate the purchase price of acquired businesses to their identifiable tangible assets and liabilities, such as accounts receivable, inventory, property, plant and equipment, accounts payable and accrued liabilities. We also allocate a portion of the purchase price to identifiable intangible assets, such as client relationships, non-compete agreements, trade names, technology, and licenses. Allocations are based on estimated fair values of assets and liabilities. We use all available information to estimate fair values including quoted market prices, the carrying value of acquired assets, and widely accepted valuation techniques such as discounted cash flows. Certain estimates and judgments are required in the

application of the fair value techniques, including estimates of future cash flows, selling prices, replacement costs, economic lives, and the selection of a discount rate, as well as the use of “Level 3” measurements as defined in ASC 820. Deferred taxes are recorded for any differences between the assigned values and tax bases of assets and liabilities. Estimated deferred taxes are based on available information concerning the tax bases of assets acquired and liabilities assumed and loss carryforwards at the acquisition date, although such estimates may change in the future as additional information becomes known. Any remaining excess of cost over allocated fair values is recorded as goodwill. We typically engage third-party valuation experts to assist in determining the fair values for both the identifiable tangible and intangible assets. The judgments made in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, could materially impact our results of operations.

Goodwill and intangible assets acquired in a business combination determined to have an indefinite useful life are not amortized, but are instead tested for impairment, and assessed for potential triggering events, at least annually in accordance with the provisions of the ASC 350 Intangibles—Goodwill and Other (“ASC 350”). Intangible assets with finite lives are amortized over their respective estimated useful lives to their estimated residual values and reviewed for impairment in accordance with ASC 360-10 Impairment or Disposal of Long-Lived Assets (“ASC 360”). There was no impairment recorded for long-lived assets as of June 30, 2022.

We assess goodwill for impairment at the reporting unit level, which we have determined to be the same as our operating segments. As of June 30, 2022, the only Company segment with goodwill was Quest Integrity, which goodwill is related to historical acquisitions.

If the carrying value of a reporting unit exceeds its fair value, we measure any goodwill impairment losses as the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. We test our goodwill for impairment annually on December 1 of each year and whenever we become aware of an event or a change in circumstances that would indicate the carrying value may be impaired. There was no goodwill impairment recorded for the six-month period ended June 30, 2022.

Income taxes

Income taxes. We follow the guidance of ASC 740 Income Taxes (“ASC 740”), which requires that we use the asset and liability method of accounting for deferred income taxes and provide deferred income taxes for all significant temporary differences. As part of the process of preparing our condensed consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax payable or receivable and related tax expense or benefit together with assessing temporary differences resulting from differing treatment of certain items, such as depreciation, for tax and accounting purposes. These differences can result in deferred tax assets and liabilities, which are included within our consolidated balance sheets.

In accordance with ASC 740, we are required to assess the likelihood that our deferred tax assets will be realized and, to the extent we believe it is more likely than not (a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized, we must establish a valuation allowance. We consider all available evidence to determine whether, based on the weight of the evidence, a valuation allowance is needed. Evidence used includes the reversal of existing taxable temporary differences, taxable income in prior carryback years if carryback is permitted by tax law, information about our current financial position and our results of operations for the current and preceding years, as well as all currently available information about future years, including our anticipated future performance and tax planning strategies.

We regularly assess whether it is more likely than not that we will realize the deferred tax assets in the jurisdictions in which we operate. Management believes future sources of taxable income, reversing temporary differences and other tax planning strategies will be sufficient to realize the deferred tax assets for which no valuation allowance has been established. Our valuation allowance primarily relates to net operating loss carryforwards. While we have considered these factors in assessing the need for additional valuation allowance, there can be no assurance that additional valuation allowance would not need to be established in the future if information about future years change. Any changes in valuation allowance would impact our income tax provision and net income (loss) in the period in which such a determination is made.

Significant judgment is required in assessing the timing and amounts of deductible and taxable items for tax purposes. In accordance with ASC 740-10, we establish reserves for uncertain tax positions when, despite our belief that our tax return positions are supportable, we believe that it is not more likely than not that the position will be sustained upon challenge. When facts and circumstances change, we adjust these reserves through our provision for income taxes. To the extent interest and penalties may be assessed by taxing authorities on any related underpayment of income tax, such amounts have been accrued and are classified as a component of income tax expense (benefit) in our consolidated statements of operations.

Workers’ compensation, auto, medical and general liability accruals

Workers’ compensation, auto, medical and general liability accruals. In accordance with ASC 450 Contingencies (“ASC 450”), we record a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We review our loss contingencies on an ongoing basis to ensure that we have appropriate reserves recorded on our balance sheet. These reserves are based on historical experience with claims incurred but not received, estimates and judgments made by management, applicable insurance coverage for litigation matters, and are adjusted as circumstances warrant. For workers’ compensation, our self-insured retention is $1.0 million and our automobile liability self-insured retention is currently $2.0 million per occurrence. For general liability claims, we have an effective self-insured retention of $6.0 million per occurrence. For medical claims, our self-insured retention is $0.4 million per individual claimant determined on an annual basis. For environmental liability claims, our self-insured retention is $1.0 million per occurrence. We maintain insurance for claims that exceed such self-retention limits. The insurance is subject to terms, conditions, limitations, and exclusions that may not fully compensate us for all losses. Our estimates and judgments could change based on new information, changes in laws or regulations, changes in management’s plans or intentions, or the outcome of legal proceedings, settlements, or other factors. If different estimates and judgments were applied with respect to these matters, it is likely that reserves would be recorded for different amounts.

Allowance for credit losses

Allowance for credit losses. In the ordinary course of business, a portion of our accounts receivable are not collected due to billing disputes, customer bankruptcies, dissatisfaction with the services we performed and other various reasons. We establish an allowance to account for those accounts receivable that we estimate will eventually be deemed uncollectible. The allowance for credit losses is based on a combination of our historical experience and management’s review of long outstanding accounts receivable.

Concentration of credit risk

Concentration of credit risk. No single customer accounts for more than 10% of consolidated revenues.

Earnings (loss) per share

Earnings (loss) per share. Basic earnings (loss) per share is computed by dividing income (loss) from continuing operations, income (loss) from discontinued operations or net income (loss) by the weighted-average number of shares of common stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing income (loss) from continuing operations, income (loss) from discontinued operations or net income (loss) by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, (2) the dilutive effect of the assumed exercise of share-based compensation using the treasury stock method and (3) the dilutive effect of the assumed conversion of our Notes under the if converted method. Our current intent is to settle the principal amount of our Notes in cash upon maturity. If the conversion value exceeds the principal amount, we may elect to deliver shares of our common stock with respect to the remainder of our conversion obligation in excess of the aggregate principal amount (the “conversion spread”). Accordingly, the conversion spread is included in the denominator for the computation of diluted earnings per common share using the treasury stock method and the numerator is adjusted for any recorded gain or loss, net of tax, on the embedded derivative associated with the conversion feature.

For the three and six months ended June 30, 2022 and 2021, all outstanding share-based compensation awards were excluded from the calculation of diluted loss per share because their inclusion would be antidilutive due to the loss from continuing operations in those periods. Also, for the three and six months ended June 30, 2022 and 2021, potential shares issuable upon the conversion of the Notes were excluded from the calculation of diluted earnings (loss) per share since the conversion price exceeded the average price of our common stock during the applicable periods. For information regarding our Notes and our share-based compensation awards, refer to Note 11 - Debt and Note 14 - Employee Benefit Plans, respectively.

Foreign currency

Foreign currency. For subsidiaries whose functional currency is not the U.S. Dollar, assets and liabilities are translated at period ending rates of exchange and revenues and expenses are translated at period average exchange rates. Translation adjustments for the asset and liability accounts are included as a separate component of accumulated other comprehensive loss in stockholders’ equity. Foreign currency transaction gains and losses are included in our statements of operations.

We have historically executed a foreign currency hedging program to mitigate the foreign currency risk in countries where we have significant assets and liabilities denominated in currencies other than the functional currency. There were no foreign currency swap contracts outstanding during the three and six months ended June 30, 2022.

Defined benefit pension plans

Defined benefit pension plans. Pension benefit costs and liabilities are dependent on assumptions used in calculating such amounts. The primary assumptions include factors such as discount rates, expected investment return on plan assets, mortality rates and retirement rates. The discount rates, expected investment return on plan assets, mortality rates and retirement rates are determined based on reference to yields, and are reviewed annually and considered for adjustment to reflect current market conditions. The expected return on plan assets is derived from detailed periodic studies, which include a review of asset allocation strategies, anticipated future long-term performance of individual asset classes, risks (standard deviations) and correlations of returns among the asset classes that comprise the plans’ asset mix. While the studies give appropriate consideration to recent plan performance and historical returns, the assumptions are primarily long-term, prospective rates of return. Mortality and retirement rates are based on actual and anticipated plan experience. In accordance with GAAP, actual results that differ from the assumptions are accumulated and are subject to amortization over future periods and, therefore, generally affect recognized expense in future periods. While we believe that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect the pension obligation and future expense.

Reclassifications

Reclassifications. Certain amounts in prior periods have been reclassified to conform to the current year presentation. Such reclassifications did not have any effect on our financial condition or results of operations as previously reported.

Newly Adopted Accounting Standards and Accounting Standards Not Yet Adopted

Newly Adopted Accounting Standards

ASU No. 2020-06. In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments by eliminating certain separation models and will generally be reported as a single liability at its amortized cost. In addition, ASU 2020-06 eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. On January 1, 2022, we adopted the ASU using the modified retrospective method. We recognized a cumulative effect of initially applying the ASU as an adjustment to the January 1, 2022 opening accumulated deficit balance. The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods. Refer to Note 11 - Debt for impact on the adoption of this ASU as of January 1, 2022.

Accounting Standards Not Yet Adopted

ASU No. 2020-04. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance in ASU 2020-04 and ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which was issued in January 2021, provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria that reference LIBOR or another rate that is expected to be discontinued. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. While we are currently determining whether we will elect the optional expedients, we do not expect our adoption of these ASUs to have a significant impact on our consolidated financial position, results of operations, and cash flows. We do not expect our adoption of these ASUs to have a significant impact on our consolidated financial position, results of operations, and cash flows.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (Tables)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Estimated Useful Lives of Assets

Depreciation and amortization of assets are computed by the straight-line method over the following estimated useful lives of the assets:

Classification	Useful Life
Buildings	20-40 years
Enterprise Resource Planning (“ERP”) System	15 years
Leasehold improvements	2-15 years
Machinery and equipment	2-12 years
Furniture and fixtures	2-10 years
Computers and computer software	2-5 years
Automobiles	2-5 years

Non-Cash Investing and Financing Activities

Non-cash investing and financing activities are excluded from the condensed consolidated statements of cash flows and are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Assets acquired under finance lease	$	77	$	384	$	100	$	406

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REVENUE (Tables)

6 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

A disaggregation of our revenue from contracts with customers by geographic region, by reportable operating segment and by service type is presented below (in thousands):

Geographic area:

	Three Months Ended June 30, 2022						Three Months Ended June 30, 2021
	(unaudited)						(unaudited)
	United States and Canada		Other Countries		Total		United States and Canada		Other Countries		Total
Revenue:
IHT	$	111,541	$	2,583	$	114,124	$	114,834	$	2,628	$	117,462
MS	77,683		29,733		107,416		65,303		31,864		97,167
Quest Integrity	18,634		11,091		29,725		16,480		7,764		24,244
Total	$	207,858	$	43,407	$	251,265	$	196,617	$	42,256	$	238,873

	Six Months Ended June 30, 2022						Six Months Ended June 30, 2021
	(unaudited)						(unaudited)
	United States and Canada		Other Countries		Total		United States and Canada		Other Countries		Total
Revenue:
IHT	$	204,919	$	4,802	$	209,721	$	204,059	$	4,542	$	208,601
MS	141,614		59,243		200,857		125,349		59,214		184,563
Quest Integrity	33,324		25,939		59,263		25,535		14,792		40,327
Total	$	379,857	$	89,984	$	469,841	$	354,943	$	78,548	$	433,491

Operating segment and service type:

	Three Months Ended June 30, 2022
	(unaudited)
	Non-Destructive Evaluation and Testing Services		Repair and Maintenance Services		Heat Treating		Other		Total
Revenue:
IHT	$	91,701	$	115	$	15,787	$	6,521	$	114,124
MS	—		106,731		56		629		107,416
Quest Integrity	29,725		—		—		—		29,725
Total	$	121,426	$	106,846	$	15,843	$	7,150	$	251,265

	Three Months Ended June 30, 2021
	(unaudited)
	Non-Destructive Evaluation and Testing Services		Repair and Maintenance Services		Heat Treating		Other		Total
Revenue:
IHT	$	92,291	$	207	$	17,267	$	7,697	$	117,462
MS	—		97,149		8		10		97,167
Quest Integrity	24,244		—		—		—		24,244
Total	$	116,535	$	97,356	$	17,275	$	7,707	$	238,873

	Six Months Ended June 30, 2022
	(unaudited)
	Non-Destructive Evaluation and Testing Services		Repair and Maintenance Services		Heat Treating		Other		Total
Revenue:
IHT	$	168,152	$	139	$	29,626	$	11,804	$	209,721
MS	—		198,501		113		2,243		200,857
Quest Integrity	59,263		—		—		—		59,263
Total	$	227,415	$	198,640	$	29,739	$	14,047	$	469,841

	Six Months Ended June 30, 2021
	(unaudited)
	Non-Destructive Evaluation and Testing Services		Repair and Maintenance Services		Heat Treating		Other		Total
Revenue:
IHT	$	163,820	$	288	$	30,722	$	13,771	$	208,601
MS	—		183,125		697		741		184,563
Quest Integrity	40,327		—		—		—		40,327
Total	$	204,147	$	183,413	$	31,419	$	14,512	$	433,491

Contract with Customer, Asset and Liability

The following table provides information about trade accounts receivable, contract assets and contract liabilities as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022		December 31, 2021		Change
	(unaudited)
Trade accounts receivable, net1	$	215,408	$	188,772	$	26,636
Contract assets2	$	1,120	$	1,602	$	(482)
Contract liabilities3	$	1,341	$	313	$	1,028

_________________

1    Includes billed and unbilled amounts, net of allowance for credit losses. See Note 3 - Receivables for details.    

2    Included in the “Prepaid expenses and other current assets” line on the condensed consolidated balance sheets.

3    Included in the “Other accrued liabilities” line of the condensed consolidated balance sheets.

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RECEIVABLES (Tables)

6 Months Ended

Jun. 30, 2022

Receivables [Abstract]

Summary of Accounts Receivable

A summary of accounts receivable as of June 30, 2022 and December 31, 2021 is as follows (in thousands): 

	June 30, 2022		December 31, 2021
	(unaudited)
Trade accounts receivable	$	178,174	$	161,751
Unbilled receivables	43,981		35,933
Allowance for credit losses	(6,747)		(8,912)
Total	$	215,408	$	188,772

Allowance for Credit Loss

The following table shows a rollforward of the allowance for credit losses (in thousands):

	June 30, 2022		December 31, 2021
	(unaudited)
Balance at beginning of period	$	8,912	$	9,918
Provision for expected credit losses	30		2,193
Write-offs	(2,087)		(3,143)
Foreign exchange effects	(108)		(56)
Balance at end of period	$	6,747	$	8,912

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INVENTORY (Tables)

6 Months Ended

Jun. 30, 2022

Inventory Disclosure [Abstract]

Summary of Inventory

A summary of inventory as of June 30, 2022 and December 31, 2021 is as follows (in thousands): 

	June 30, 2022		December 31, 2021
	(unaudited)
Raw materials	$	8,233	$	7,641
Work in progress	2,801		2,725
Finished goods	25,145		25,388
Total	$	36,179	$	35,754

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PREPAID AND OTHER CURRENT ASSETS (Tables)

6 Months Ended

Jun. 30, 2022

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Other Current Assets

A summary of prepaid and other current assets as of June 30, 2022 and December 31, 2021 is as follows (in thousands):

	June 30, 2022		December 31, 2021
	(unaudited)
Insurance receivable	$	39,000	$	39,000
Prepaid expenses	16,225		12,645
Other current assets	15,199		8,223
Total	$	70,424	$	59,868

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PROPERTY, PLANT AND EQUIPMENT (Tables)

6 Months Ended

Jun. 30, 2022

Property, Plant and Equipment [Abstract]

Summary of Property, Plant and Equipment

A summary of property, plant and equipment as of June 30, 2022 and December 31, 2021 is as follows (in thousands):

	June 30, 2022		December 31, 2021
	(unaudited)
Land	$	4,552	$	5,743
Buildings and leasehold improvements	55,085		58,972
Machinery and equipment	300,166		306,366
Furniture and fixtures	11,344		11,642
Capitalized ERP system development costs	45,917		45,917
Computers and computer software	22,454		22,243
Automobiles	4,312		4,356
Construction in progress	25,477		16,565
Total	469,307		471,804
Accumulated depreciation	(312,268)		(310,445)
Property, plant and equipment, net	$	157,039	$	161,359

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INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Intangible Assets

A summary of intangible assets as of June 30, 2022 and December 31, 2021 is as follows (in thousands): 

	June 30, 2022						December 31, 2021
	(unaudited)
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	$	174,774	$	(94,627)	$	80,147	$	175,156	$	(88,783)	$	86,373
Non-compete agreements	5,411		(5,411)		—		5,503		(5,503)		—
Trade names	24,614		(22,432)		2,182		24,743		(22,252)		2,491
Technology	7,809		(6,966)		843		7,843		(6,885)		958
Licenses	837		(793)		44		850		(774)		76
Total	$	213,445	$	(130,229)	$	83,216	$	214,095	$	(124,197)	$	89,898

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GOODWILL (Tables)

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Rollforward Goodwill

The following table presents a rollforward of goodwill for the six months ended June 30, 2022 as follows (in thousands): 

	IHT						MS						Quest Integrity						Consolidated
	Goodwill, Gross		Accumulated Impairment		Goodwill, Net		Goodwill, Gross		Accumulated Impairment		Goodwill, Net		Goodwill, Gross		Accumulated Impairment		Goodwill, Net		Goodwill, Gross		Accumulated Impairment		Goodwill, Net
Balance at December 31, 2021	$	212,928	$	(212,928)	$	—	$	109,938	$	(109,938)	$	—	$	34,038	$	(8,795)	$	25,243	$	356,904	$	(331,661)	$	25,243
FX Adjustments	—		—		—		—		—		—		(696)		—		(696)		(696)		—		(696)
Balance at June 30, 2022	$	212,928	$	(212,928)	$	—	$	109,938	$	(109,938)	$	—	$	33,342	$	(8,795)	$	24,547	$	356,208	$	(331,661)	$	24,547

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OTHER ACCRUED LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2022

Payables and Accruals [Abstract]

Summary of Other Accrued Liabilities

A summary of other accrued liabilities as of June 30, 2022 and December 31, 2021 is as follows (in thousands): 

	June 30, 2022		December 31, 2021
	(unaudited)
Legal and professional accruals	$	46,334	$	46,762
Payroll and other compensation expenses	50,289		44,284
Insurance accruals	6,121		7,314
Property, sales and other non-income related taxes	6,833		8,018
Accrued commission	2,014		1,111
Accrued interest	8,495		6,469
Other	8,671		7,141
Total	$	128,757	$	121,099

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DEBT (Tables)

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

Team’s current and long-term debt obligations consisted of the following (in thousands):

	June 30, 2022		December 31, 2021
	(unaudited)
ABL Facilities	$	128,053	$	62,000
Atlantic Park Term Loan	224,473		214,191
Subordinated Term Loan	41,845		36,358
Total	$	394,371	$	312,549
Notes1	92,178		87,662
Finance lease obligations	5,311		5,649
Total debt and finance lease obligations	$	491,860	$	405,860
Current portion of long-term debt and finance lease obligations	(487,204)		(669)
Total long-term debt and finance lease obligations, less current portion	4,656		405,191

_________________

1        Comprised of principal amount outstanding, less unamortized discount and issuance costs. See Convertible Debt section below for additional information.

Schedule of Convertible Debt

As of June 30, 2022 and December 31, 2021, the Notes were recorded in our condensed consolidated balance sheets as follows (in thousands):

	June 30, 2022		December 31, 2021
	(unaudited)
Liability component:
Principal	$	95,208	$	93,130
Unamortized issuance costs	(1,170)		(916)
Unamortized discount	(1,860)		(4,552)
Net carrying amount of the liability component1	$	92,178	$	87,662
Equity component:
Carrying amount of the equity component, net of issuance costs2	$	—	$	7,969
Carrying amount of the equity component, net of issuance costs3	$	37,276	$	37,276

_________________

1        Included in the “Current portion of long-term debt and finance lease obligations” line of the condensed consolidated balance sheets.

2        Relates to the portion of the Notes accounted for under ASC 470-20 (defined below) and is included in the “Additional paid-in capital” line of the condensed consolidated balance sheets.

3        Relates to the portion of the Notes accounted for under ASC 815-15 (defined below) and is included in the “Additional paid-in capital” line of the condensed consolidated balance sheets.

The following table sets forth interest expense information related to the Notes (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Coupon interest	$	1,595		$	1,164		$	3,177		$	2,328
Amortization of debt discount and issuance costs	693			768			1,320			1,534
Total interest expense	$	2,288		$	1,932		$	4,497		$	3,862
Effective interest rate	10.24		%	9.12		%	10.24		%	9.12		%

Schedule of Error Corrections and Prior Period Adjustments

Accordingly, the cumulative effect of the changes made on our January 1, 2022 condensed consolidated balance sheet for the adoption of the ASU was as follows (in thousands):

	Balances at December 31, 2021		Adjustments from Adoption of ASU 2020-06		Balances at January 1, 2022
Liabilities
Long-term debt and finance lease obligations	$	405,191	$	1,827	$	407,018
Equity
Additional paid-in capital	$	444,824	$	(5,651)	$	439,173
Accumulated deficit	$	(375,584)	$	3,824	$	(371,760)

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LEASES (Tables)

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Lease, Cost

The components of lease expense are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Operating lease costs	$	6,334	$	7,021	$	13,021	$	14,260
Variable lease costs	1,442		1,326		2,900		2,602
Finance lease costs:
Amortization of right-of-use assets	67		195		261		312
Interest on lease liabilities	38		90		126		168
Total lease cost	$	7,881	$	8,632	$	16,308	$	17,342

Schedule of Other Information Related to Leases

Other information related to leases are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022	2021
Supplemental cash flow information:	(unaudited)		(unaudited)		(unaudited)	(unaudited)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	5,095	$	5,990	10,500	11,346
Operating cash flows from finance leases	25		91		115	171
Financing cash flows from finance leases	158		159		320	237
Right-of-use assets obtained in exchange for lease obligations
Operating leases	514		411		1,354	8,583
Finance leases	77		384		100	406

Amounts Recognized in Balance Sheet for Leases

Amounts recognized in the condensed consolidated balance sheet are as follows (in thousands):

	June 30, 2022			December 31, 2021
Operating Leases:	(unaudited)
Operating lease right-of-use assets	$	52,925		$	60,700
Current portion of operating lease obligations	14,389			16,176
Operating lease obligations (non-current)	43,090			49,221
Finance Leases:
Property, plant and equipment, net	$	4,412		$	5,123
Current portion of long-term finance lease obligations	655			669
Long-term finance lease obligations	4,656			4,980
Weighted average remaining lease term:
Operating leases	5.9 years			6.0 years
Finance leases	9.9 years			10.0 years
Weighted average discount rate:
Operating leases	6.9		%	6.8		%
Finance leases	6.5		%	6.4		%

Schedule of Finance Lease Liability

As of June 30, 2022, future minimum lease payments under non-cancellable leases (including short-term leases) are as follows (in thousands):

	Operating Leases		Finance Leases
	(unaudited)		(unaudited)
2022 (Remainder of the year)	$	10,647	$	68
2023	15,317		905
2024	11,918		745
2025	8,609		575
2026	6,729		562
Thereafter	18,161		3,925
Total future minimum lease payments	71,381		6,780
Less: Interest	(13,902)		(1,469)
Present value of lease liabilities	$	57,479	$	5,311

Schedule of Operating Lease Liability

As of June 30, 2022, future minimum lease payments under non-cancellable leases (including short-term leases) are as follows (in thousands):

	Operating Leases		Finance Leases
	(unaudited)		(unaudited)
2022 (Remainder of the year)	$	10,647	$	68
2023	15,317		905
2024	11,918		745
2025	8,609		575
2026	6,729		562
Thereafter	18,161		3,925
Total future minimum lease payments	71,381		6,780
Less: Interest	(13,902)		(1,469)
Present value of lease liabilities	$	57,479	$	5,311

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SHARE-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Summary of Transactions Involving Stock Units and Director Stock Grants

Transactions involving our stock units and director stock grants for the six months ended June 30, 2022 are summarized below:

	Six Months Ended June 30, 2022
	(unaudited)
	No. of Stock Units	Weighted Average Fair Value
	(in thousands)
Stock and stock units, beginning of year	804	$	7.27
Changes during the period:
Granted	525	$	1.30
Vested and settled	(135)	$	7.16
Forfeited and cancelled	(89)	$	7.13
Stock and stock units, end of period	1,105	$	4.46

Summary of Transactions Involving Performance Awards

Transactions involving our performance awards during the six months ended June 30, 2022 are summarized below:

	Six Months Ended June 30, 2022
	(unaudited)
	Performance Units Subject to Market Conditions			Performance Units Not Subject to Market Conditions
	No. of Stock Units1	Weighted Average Fair Value		No. of Stock Units1	Weighted Average Fair Value
	(in thousands)			(in thousands)
Performance stock units, beginning of period	684	$	6.45	219	$	9.91
Changes during the period:
Granted	—	$	—	—	$	—
Vested and settled	—	$	—	—	$	—
Cancelled	(653)	$	6.04	(188)	$	9.61
Performance stock units, end of period	31	$	14.96	31	$	11.69

_________________

1    Performance units with variable payouts are shown at target level of performance.

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EMPLOYEE BENEFIT PLANS (Tables)

6 Months Ended

Jun. 30, 2022

Retirement Benefits [Abstract]

Schedule of Net Periodic Pension Cost (Credit)

Net periodic pension credit includes the following components (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Interest cost	$	390	$	326	813		$	648
Expected return on plan assets	(582)		(509)		(1,211)		$	(1,012)
Amortization of prior service cost	8		9		16		$	17
Net periodic pension credit	$	(184)	$	(174)	$	(382)	$	(347)

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

6 Months Ended

Jun. 30, 2022

Equity [Abstract]

Summary of Changes in Accumulated Other Comprehensive Loss Included Within Shareholders' Equity

A summary of changes in accumulated other comprehensive loss included within shareholders’ equity is as follows (in thousands):

	Six Months Ended June 30, 2022										Six Months Ended June 30, 2021
	(unaudited)										(unaudited)
	Foreign Currency Translation Adjustments		Foreign Currency Hedge		Defined Benefit Pension Plans		Tax Provision		Total		Foreign Currency Translation Adjustments		Foreign Currency Hedge		Defined Benefit Pension Plans		Tax Provision		Total
Balance, beginning of period	$	(23,287)	$	—	$	(3,277)	$	(169)	$	(26,732)	$	(23,045)	$	2,988	$	(8,021)	$	400	$	(27,678)
Other comprehensive loss	(5,117)		—		—		—		(5,117)		874		—		—		(155)		719
Balance, end of period	$	(28,404)	$	—	$	(3,277)	$	(169)	$	(31,849)	$	(22,171)	$	2,988	$	(8,021)	$	245	$	(26,959)

Related Tax Effects Allocated to Each Component of Other Comprehensive Income (Loss)

The following table represents the related tax effects allocated to each component of other comprehensive income (loss) (in thousands):

	Six Months Ended June 30, 2022						Six Months Ended June 30, 2021
	(unaudited)						(unaudited)
	Gross Amount		Tax Effect		Net Amount		Gross Amount		Tax Effect		Net Amount
Foreign currency translation adjustments	(5,117)		—		(5,117)		874		(155)		719
Total	$	(5,117)	$	—	$	(5,117)	$	874	$	(155)	$	719

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SEGMENT AND GEOGRAPHIC DISCLOSURES (Tables)

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Segment Data for our Three Operating Segments

Segment data for our three operating segments are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenues:
IHT	$	114,124	$	117,462	$	209,721	$	208,601
MS	107,416		97,167		200,857		184,563
Quest Integrity	29,725		24,244		59,263		40,327
Total	$	251,265	$	238,873	$	469,841	$	433,491

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Operating loss:
IHT	$	5,514	$	7,395	$	5,648	$	7,759
MS	6,984		2,328		7,497		2,443
Quest Integrity	8,014		5,702		14,218		5,450
Corporate and shared support services	(23,292)		(21,419)		(46,346)		(45,946)
Total	$	(2,780)	$	(5,994)	$	(18,983)	$	(30,294)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Capital expenditures1:
IHT	$	3,326	$	2,457	$	8,097	$	5,171
MS	1,621		1,367		2,434		2,519
Quest Integrity	1,333		974		2,342		1,380
Corporate and shared support services	19		296		57		421
Total	$	6,299	$	5,094	$	12,930	$	9,491

_____________

1    Excludes finance leases. Totals may vary from amounts presented in the consolidated statements of cash flows due to the timing of cash payments.

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Depreciation and amortization:
IHT	$	3,096	$	3,270	$	6,350	$	6,740
MS	4,634		5,043		9,518		10,482
Quest Integrity	569		710		1,146		1,422
Corporate and shared support services	1,279		1,324		2,595		2,662
Total	$	9,578	$	10,347	$	19,609	$	21,306

Geographic Breakdown of Revenues

A geographic breakdown of our revenues and our total long-lived assets for the three and six months ended June 30, 2022 and 2021 is as follows (unaudited, in thousands):

	Three Months Ended June 30, 2022				Three Months Ended June 30, 2021
	Total Revenues1		Total Long-lived Assets2		Total Revenues1		Total Long-lived Assets2
United States	$	171,665	$	258,559	$	162,465	$	282,706
Canada	36,193		9,198		34,152		9,309
Europe	26,554		20,920		29,264		24,755
Other foreign countries	16,853		10,649		12,992		12,440
Total	$	251,265	$	299,326	$	238,873	$	329,210
	Six Months Ended June 30, 2022				Six Months Ended June 30, 2021
	Total Revenues1		Total Long-lived Assets2		Total Revenues1		Total Long-lived Assets2
United States	$	323,346	$	258,559	$	304,296	$	282,706
Canada	56,511		9,198		50,647		9,309
Europe	50,677		20,920		54,975		24,755
Other foreign countries	39,307		10,649		23,573		12,440
Total	$	469,841	$	299,326	$	433,491	$	329,210

 ______________

1    Revenues attributable to individual countries/geographic areas are based on the country of domicile of the legal entity that performs the work.

2    Excludes goodwill, intangible assets not being amortized that are to be held and used, financial instruments and deferred tax assets.

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RESTRUCTURING AND OTHER RELATED CHARGES (Tables)

6 Months Ended

Jun. 30, 2022

Restructuring and Related Activities [Abstract]

Schedule of Accrued Severance Liability

A rollforward of our accrued severance liability associated with our ongoing cost reduction efforts is presented below (in thousands):

	Six Months Ended June 30, 2022
	(unaudited)
Balance, beginning of period	$	712
Charges	2,370
Payments	(866)
Balance, end of period	$	2,216

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2022 USD ($) profile	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) profile	Jun. 30, 2022 USD ($) performance_condition profile	Jun. 30, 2022 USD ($) segment profile	Jun. 30, 2021 USD ($)	Aug. 15, 2022 USD ($)	Jan. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Jul. 31, 2017
Significant Accounting Policies [Line Items]
Number of operating segments				3	3
Number of client demand profiles | profile	3		3	3	3
Deferred employer payroll taxes	$ 7,100,000		$ 7,100,000	$ 7,100,000	$ 7,100,000			$ 7,000,000	$ 14,100,000
Selling, general and administrative expenses	72,733,000	$ 68,478,000	144,018,000			$ 134,602,000
Impairment of intangible assets			0
Goodwill impairment			0
Workers compensation our self-insured retention			1,000,000
Automobile liability self-insured retention			2,000,000
General liability claims we have an effective self-insured retention			6,000,000
Medical claims, our self-insured retention			400,000
Environmental liability claims, our self-insured retention			1,000,000
Accrued capital expenditures			3,000,000			1,500,000
Quest Integrity | Subsequent Event
Significant Accounting Policies [Line Items]
Purchase and sale agreement, consideration							$ 280,000,000
COVID-19
Significant Accounting Policies [Line Items]
Operating expenses	0	1,800,000	600,000			3,800,000
Selling, general and administrative expenses	0	$ 300,000	100,000			$ 700,000
Convertible debt
Significant Accounting Policies [Line Items]
Principal amount, long-term debt issued	95,200,000		95,200,000	95,200,000	95,200,000					$ 95,200,000
Debt Instrument, interest rate, stated percentage											5.00%
Periodic payment			10,000,000
Fair value of our convertible senior notes	$ 10,000,000		$ 10,000,000	$ 10,000,000	$ 10,000,000
Convertible debt | Fair Value, Inputs, Level 2
Significant Accounting Policies [Line Items]
Fair value of our convertible senior notes									$ 84,000,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - Estimated Useful Lives of Assets (Detail)	6 Months Ended
	Jun. 30, 2022
Enterprise Resource Planning (“ERP”) System
Property, Plant and Equipment [Line Items]
Useful Life (in years)	15 years
Minimum | Buildings
Property, Plant and Equipment [Line Items]
Useful Life (in years)	20 years
Minimum | Leasehold improvements
Property, Plant and Equipment [Line Items]
Useful Life (in years)	2 years
Minimum | Machinery and equipment
Property, Plant and Equipment [Line Items]
Useful Life (in years)	2 years
Minimum | Furniture and fixtures
Property, Plant and Equipment [Line Items]
Useful Life (in years)	2 years
Minimum | Computers and computer software
Property, Plant and Equipment [Line Items]
Useful Life (in years)	2 years
Minimum | Automobiles
Property, Plant and Equipment [Line Items]
Useful Life (in years)	2 years
Maximum | Buildings
Property, Plant and Equipment [Line Items]
Useful Life (in years)	40 years
Maximum | Leasehold improvements
Property, Plant and Equipment [Line Items]
Useful Life (in years)	15 years
Maximum | Machinery and equipment
Property, Plant and Equipment [Line Items]
Useful Life (in years)	12 years
Maximum | Furniture and fixtures
Property, Plant and Equipment [Line Items]
Useful Life (in years)	10 years
Maximum | Computers and computer software
Property, Plant and Equipment [Line Items]
Useful Life (in years)	5 years
Maximum | Automobiles
Property, Plant and Equipment [Line Items]
Useful Life (in years)	5 years

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - Non-Cash Investing and Financing Activities (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Accounting Policies [Abstract]
Assets acquired under finance lease	$ 77	$ 384	$ 100	$ 406

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REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Disaggregation of Revenue [Line Items]
Revenues	$ 251,265	$ 238,873	$ 469,841	$ 433,491
Non-Destructive Evaluation and Testing Services
Disaggregation of Revenue [Line Items]
Revenues	121,426	116,535	227,415	204,147
Repair and Maintenance Services
Disaggregation of Revenue [Line Items]
Revenues	106,846	97,356	198,640	183,413
Heat Treating
Disaggregation of Revenue [Line Items]
Revenues	15,843	17,275	29,739	31,419
Other
Disaggregation of Revenue [Line Items]
Revenues	7,150	7,707	14,047	14,512
United States and Canada
Disaggregation of Revenue [Line Items]
Revenues	207,858	196,617	379,857	354,943
Other Countries
Disaggregation of Revenue [Line Items]
Revenues	43,407	42,256	89,984	78,548
IHT
Disaggregation of Revenue [Line Items]
Revenues	114,124	117,462	209,721	208,601
IHT | Non-Destructive Evaluation and Testing Services
Disaggregation of Revenue [Line Items]
Revenues	91,701	92,291	168,152	163,820
IHT | Repair and Maintenance Services
Disaggregation of Revenue [Line Items]
Revenues	115	207	139	288
IHT | Heat Treating
Disaggregation of Revenue [Line Items]
Revenues	15,787	17,267	29,626	30,722
IHT | Other
Disaggregation of Revenue [Line Items]
Revenues	6,521	7,697	11,804	13,771
IHT | United States and Canada
Disaggregation of Revenue [Line Items]
Revenues	111,541	114,834	204,919	204,059
IHT | Other Countries
Disaggregation of Revenue [Line Items]
Revenues	2,583	2,628	4,802	4,542
MS
Disaggregation of Revenue [Line Items]
Revenues	107,416	97,167	200,857	184,563
MS | Non-Destructive Evaluation and Testing Services
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
MS | Repair and Maintenance Services
Disaggregation of Revenue [Line Items]
Revenues	106,731	97,149	198,501	183,125
MS | Heat Treating
Disaggregation of Revenue [Line Items]
Revenues	56	8	113	697
MS | Other
Disaggregation of Revenue [Line Items]
Revenues	629	10	2,243	741
MS | United States and Canada
Disaggregation of Revenue [Line Items]
Revenues	77,683	65,303	141,614	125,349
MS | Other Countries
Disaggregation of Revenue [Line Items]
Revenues	29,733	31,864	59,243	59,214
Quest Integrity
Disaggregation of Revenue [Line Items]
Revenues	29,725	24,244	59,263	40,327
Quest Integrity | Non-Destructive Evaluation and Testing Services
Disaggregation of Revenue [Line Items]
Revenues	29,725	24,244	59,263	40,327
Quest Integrity | Repair and Maintenance Services
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Quest Integrity | Heat Treating
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Quest Integrity | Other
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Quest Integrity | United States and Canada
Disaggregation of Revenue [Line Items]
Revenues	18,634	16,480	33,324	25,535
Quest Integrity | Other Countries
Disaggregation of Revenue [Line Items]
Revenues	$ 11,091	$ 7,764	$ 25,939	$ 14,792

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REVENUE - Contract Balances (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Revenue from Contract with Customer [Abstract]
Trade accounts receivable, net	$ 215,408	$ 188,772
Contract assets	1,120	1,602
Contract liabilities	1,341	$ 313
Change in trade accounts receivable, net	26,636
Change in contract assets	(482)
Change in contract liability	1,028
Contract asset, decrease from beginning of period	(500)
Increase in contract liability	$ 1,000

XML

RECEIVABLES - Summary of Accounts Receivable (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021	Dec. 31, 2020
Receivables [Abstract]
Trade accounts receivable	$ 178,174	$ 161,751
Unbilled receivables	43,981	35,933
Allowance for credit losses	(6,747)	(8,912)	$ (9,918)
Total	$ 215,408	$ 188,772
Accounts receivable, payment terms	30 days

XML

RECEIVABLES - Summary of Activity in Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Balance at beginning of period	$ 8,912	$ 9,918
Provision for expected credit losses	30	2,193
Write-offs	(2,087)	(3,143)
Foreign exchange effects	(108)	(56)
Balance at end of period	$ 6,747	$ 8,912

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INVENTORY (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Raw materials	$ 8,233	$ 7,641
Work in progress	2,801	2,725
Finished goods	25,145	25,388
Total	$ 36,179	$ 35,754

XML

PREPAID AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Insurance receivable	$ 39,000	$ 39,000
Prepaid expenses	16,225	12,645
Other current assets	15,199	8,223
Total	70,424	$ 59,868
Assets held-for-sale, current, other	900
Debt issuance costs, current, net	$ 6,600

XML

PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Total	$ 469,307		$ 469,307		$ 471,804
Accumulated depreciation	(312,268)		(312,268)		(310,445)
Property, plant and equipment, net	157,039		157,039		161,359
Assets under finance leases	6,200		6,200		6,700
Accumulated amortization for assets under finance leases	1,800		1,800		1,600
Depreciation expense	6,200	$ 6,800	12,800	$ 14,300
Land
Property, Plant and Equipment [Line Items]
Total	4,552		4,552		5,743
Buildings and leasehold improvements
Property, Plant and Equipment [Line Items]
Total	55,085		55,085		58,972
Machinery and equipment
Property, Plant and Equipment [Line Items]
Total	300,166		300,166		306,366
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Total	11,344		11,344		11,642
Capitalized ERP system development costs
Property, Plant and Equipment [Line Items]
Total	45,917		45,917		45,917
Computers and computer software
Property, Plant and Equipment [Line Items]
Total	22,454		22,454		22,243
Automobiles
Property, Plant and Equipment [Line Items]
Total	4,312		4,312		4,356
Construction in progress
Property, Plant and Equipment [Line Items]
Total	$ 25,477		$ 25,477		$ 16,565

XML

INTANGIBLE ASSETS - Summary of Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 213,445	$ 214,095
Accumulated Amortization	(130,229)	(124,197)
Net Carrying Amount	83,216	89,898
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	174,774	175,156
Accumulated Amortization	(94,627)	(88,783)
Net Carrying Amount	80,147	86,373
Non-compete agreements
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	5,411	5,503
Accumulated Amortization	(5,411)	(5,503)
Net Carrying Amount	0	0
Trade names
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	24,614	24,743
Accumulated Amortization	(22,432)	(22,252)
Net Carrying Amount	2,182	2,491
Technology
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	7,809	7,843
Accumulated Amortization	(6,966)	(6,885)
Net Carrying Amount	843	958
Licenses
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	837	850
Accumulated Amortization	(793)	(774)
Net Carrying Amount	$ 44	$ 76

XML

INTANGIBLE ASSETS - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense of intangible assets	$ 3.4	$ 3.6	$ 6.8	$ 7.0
Finite-lived intangible asset, expected amortization, remainder of 2022	13.1		13.1
Finite-lived intangible asset, expected amortization, 2023	13.1		13.1
Finite-lived intangible asset, expected amortization, 2024	13.1		13.1
Finite-lived intangible asset, expected amortization, 2025	$ 13.1		$ 13.1
Intangible assets, estimated weighted average useful life			13 years 8 months 12 days		13 years 8 months 12 days

XML

GOODWILL (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2022 USD ($)
Goodwill [Roll Forward]
Goodwill, Gross, beginning balance	$ 356,904
Accumulated Impairment, beginning balance	(331,661)
Goodwill, Net, beginning balance	25,243
FX Adjustments	(696)
Goodwill, Gross, ending balance	356,208
Accumulated Impairment, ending balance	(331,661)
Goodwill, Net, ending balance	24,547
IHT
Goodwill [Roll Forward]
Goodwill, Gross, beginning balance	212,928
Accumulated Impairment, beginning balance	(212,928)
Goodwill, Net, beginning balance	0
Goodwill, Gross, ending balance	212,928
Accumulated Impairment, ending balance	(212,928)
Goodwill, Net, ending balance	0
MS
Goodwill [Roll Forward]
Goodwill, Gross, beginning balance	109,938
Accumulated Impairment, beginning balance	(109,938)
Goodwill, Net, beginning balance	0
Goodwill, Gross, ending balance	109,938
Accumulated Impairment, ending balance	(109,938)
Goodwill, Net, ending balance	0
Quest Integrity
Goodwill [Roll Forward]
Goodwill, Gross, beginning balance	34,038
Accumulated Impairment, beginning balance	(8,795)
Goodwill, Net, beginning balance	25,243
FX Adjustments	(696)
Goodwill, Gross, ending balance	33,342
Accumulated Impairment, ending balance	(8,795)
Goodwill, Net, ending balance	$ 24,547

XML

OTHER ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
Legal and professional accruals	$ 46,334	$ 46,762
Payroll and other compensation expenses	50,289	44,284
Insurance accruals	6,121	7,314
Property, sales and other non-income related taxes	6,833	8,018
Accrued commission	2,014	1,111
Accrued interest	8,495	6,469
Other	8,671	7,141
Total	$ 128,757	$ 121,099

XML

INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Tax Contingency [Line Items]
Provision for income taxes	$ 1,768	$ 857	$ 2,124	$ 502
Effective tax rate (benefit) provision	9.00%	5.10%	4.10%	1.00%
Valuation allowance related to net deferred tax assets	$ 800		$ 800
Foreign Tax Authority | Germany and Canada Subsisdaries
Income Tax Contingency [Line Items]
Valuation allowance related to net deferred tax assets	$ 800		$ 800

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DEBT - Long-Term Debt Balances (Details) - USD ($) $ in Thousands	Aug. 15, 2022	Jun. 30, 2022	Jan. 01, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Total debt and finance lease obligations		$ 491,860		$ 405,860
Finance lease obligations		5,311
Current portion of long-term debt and finance lease obligations		(487,204)		(669)
Long-term debt and finance lease obligations		4,656	$ 407,018	405,191
Quest Integrity | Subsequent Event
Debt Instrument [Line Items]
Purchase and sale agreement, consideration	$ 280,000
Secured Debt
Debt Instrument [Line Items]
Total debt and finance lease obligations		394,371		312,549
Secured Debt | Atlantic Park Term Loan
Debt Instrument [Line Items]
Total debt and finance lease obligations		224,473		214,191
Subordinated Debt | Corre Term Loan
Debt Instrument [Line Items]
Total debt and finance lease obligations		41,845		36,358
Convertible debt
Debt Instrument [Line Items]
Total debt and finance lease obligations		92,178		87,662
Finance lease obligations
Debt Instrument [Line Items]
Finance lease obligations		5,311		5,649
Revolving Credit Facility | ABL Facility
Debt Instrument [Line Items]
Total debt and finance lease obligations		$ 128,053		$ 62,000

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DEBT - ABL Facilities, Additional Information (Details) - USD ($)			6 Months Ended
	May 06, 2022	May 05, 2022	Jun. 30, 2022	Jun. 27, 2022	Feb. 11, 2022	Dec. 31, 2021	Nov. 09, 2021	Jun. 30, 2021	Dec. 31, 2020	Dec. 18, 2020	Jul. 31, 2017
Debt Instrument [Line Items]
Borrowing capacity			$ 24,500,000
Debt issuance costs, net			53,000,000			$ 58,000,000
Cash and cash equivalents			67,446,000			$ 65,315,000
Outstanding letter of credit			300,000
Surety Bond
Debt Instrument [Line Items]
Outstanding letter of credit			1,500,000
Miscellaneous Cash Deposit
Debt Instrument [Line Items]
Outstanding letter of credit			1,200,000
Delayed Draw Term Loan
Debt Instrument [Line Items]
Borrowing capacity			$ 10,000,000
ABL Eclipse | Base Rate
Debt Instrument [Line Items]
Effective interest rate			5.71%
ABL Corre DDTL | LIBOR
Debt Instrument [Line Items]
Effective interest rate			11.06%
ABL Facility
Debt Instrument [Line Items]
Debt issuance costs, net			$ 8,300,000
Cash and cash equivalents			41,100,000
Restricted cash			1,500,000
Cash			21,800,000
Available borrowing capacity			$ 4,500,000
Atlantic Park Term Loan
Debt Instrument [Line Items]
Principal amount, long-term debt issued	$ 10,000,000									$ 250,000,000
Effective interest rate			23.85%			20.90%
Outstanding principle, days prior to maturity	120 days	75 days
Restricted cash			$ 26,300,000
Line of Credit | ABL Facility
Debt Instrument [Line Items]
Debt issuance costs, net			6,600,000			$ 2,900,000
Secured Debt
Debt Instrument [Line Items]
Principal amount, long-term debt issued					$ 55,000,000
Secured Debt | Delayed Draw Term Loan
Debt Instrument [Line Items]
Principal amount, long-term debt issued					35,000,000
Secured Debt | ABL Corre DDTL
Debt Instrument [Line Items]
Borrowing under credit facility			25,000,000
Convertible debt
Debt Instrument [Line Items]
Principal amount, long-term debt issued			$ 95,200,000						$ 95,200,000
Effective interest rate			10.24%					9.12%
Debt Instrument, interest rate, stated percentage											5.00%
Periodic payment			$ 10,000,000
Fair value of our convertible senior notes			10,000,000
Subordinated Debt | Delayed Draw Term Loan
Debt Instrument [Line Items]
Principal amount, long-term debt issued				$ 10,000,000	10,000,000
Subordinated Debt | Subordinated Term Loan
Debt Instrument [Line Items]
Borrowing capacity			$ 10,000,000
Principal amount, long-term debt issued							$ 50,000,000
Effective interest rate			46.79%			19.73%
Debt Instrument, interest rate, stated percentage							12.00%
Revolving Credit Facility | Line of Credit
Debt Instrument [Line Items]
Borrowing capacity					130,000,000
Revolving Credit Facility | Line of Credit | ABL Eclipse
Debt Instrument [Line Items]
Borrowing under credit facility			$ 103,100,000
Bridge Loan | Line of Credit
Debt Instrument [Line Items]
Borrowing capacity					35,000,000
Letter of Credit | Line of Credit
Debt Instrument [Line Items]
Borrowing capacity					$ 26,000,000
Letter of Credit | Line of Credit | ABL Facility
Debt Instrument [Line Items]
Outstanding principle, days prior to maturity	120 days	75 days
Available borrowing capacity			$ 4,500,000

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DEBT - Atlantic Park Term Loan, Additional Information (Details) - Atlantic Park Term Loan	May 06, 2022 USD ($)	May 05, 2022	Dec. 18, 2020 USD ($)	Dec. 18, 2026 USD ($)	Jun. 30, 2022 USD ($)	May 10, 2022	Feb. 11, 2022 USD ($)	Dec. 31, 2021 USD ($)
Debt Instrument [Line Items]
Principal amount, long-term debt issued	$ 10,000,000		$ 250,000,000
Debt instrument, interest rate, original issue discount			0.03
Proceeds from issuance of debt			$ 242,500,000
Line of credit facility, increase limit			$ 100,000,000
Increase in effective interest rate					2.95%
Effective interest rate					23.85%			20.90%
Unamortized discount and issuance costs					$ 31,700,000			$ 35,800,000
Covenant, leverage ratio, maximum						12.00	7.00
Maximum unfinanced capital expenditures							$ 20,000,000
Maximum net leverage ratio threshold							4.00
Outstanding principle, days prior to maturity	120 days	75 days
Forecasted
Debt Instrument [Line Items]
Principal amount, long-term debt issued				$ 10,000,000

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DEBT - Subordinated Term Loan (Details) - Subordinated Debt	Jun. 30, 2022 USD ($)	Jun. 27, 2022 USD ($)	May 09, 2022	Feb. 11, 2022 USD ($)	Dec. 31, 2021 USD ($)	Nov. 09, 2021 USD ($)
Subordinated Term Loan
Debt Instrument [Line Items]
Principal amount, long-term debt issued						$ 50,000,000
Debt Instrument, interest rate, stated percentage						12.00%
Effective interest rate	46.79%				19.73%
Increase in effective interest rate	27.06%
Unamortized Debt Issuance Expense	$ 11,600,000				$ 13,900,000
Delayed Draw Term Loan
Debt Instrument [Line Items]
Principal amount, long-term debt issued		$ 10,000,000		$ 10,000,000
Covenant, leverage ratio, maximum			12.00	7.00

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DEBT - Warrants and Subscription Agreement (Details)	Feb. 11, 2022 USD ($) nominee $ / shares shares	Jun. 30, 2022 shares	Jun. 27, 2022 USD ($)	May 06, 2022 USD ($)	Nov. 09, 2021 $ / shares shares	Nov. 08, 2021 shares	Dec. 18, 2020 USD ($) $ / shares shares
Debt Instrument [Line Items]
Class of warrant or right, outstanding (in shares) | shares							3,582,949
Class of warrant or right, exercise price (in dollars per share) | $ / shares							$ 7.75
Class of warrant or right, number of securities called by warrants or rights (in shares) | shares		0
Number of qualified nominees | nominee	1
Secured Debt
Debt Instrument [Line Items]
Principal amount, long-term debt issued | $	$ 55,000,000
PIPE Shares
Debt Instrument [Line Items]
Consideration received from sale of stock | $	$ 10,000,000
Shares issued (in shares) | shares	11,904,762
Price per share (in dollars per share) | $ / shares	$ 0.84
Period to appoint director	7 days
Atlantic Park Term Loan
Debt Instrument [Line Items]
Principal amount, long-term debt issued | $				$ 10,000,000			$ 250,000,000
Delayed Draw Term Loan | Secured Debt
Debt Instrument [Line Items]
Principal amount, long-term debt issued | $	$ 35,000,000
Delayed Draw Term Loan | Subordinated Debt
Debt Instrument [Line Items]
Principal amount, long-term debt issued | $	$ 10,000,000		$ 10,000,000
A&R Warrant | Atlantic Park Term Loan
Debt Instrument [Line Items]
Class of warrant or right, exercise price (in dollars per share) | $ / shares					$ 1.50
Class of warrant or right, number of securities called by warrants or rights (in shares) | shares					4,082,949
APSC Warrant | Atlantic Park Term Loan
Debt Instrument [Line Items]
Class of warrant or right, number of securities called by warrants or rights (in shares) | shares					500,000	1,417,051

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DEBT - 2023 Convertible Notes, Additional Information (Details) - Convertible debt - USD ($)	Jun. 30, 2022	Jan. 13, 2022	Dec. 31, 2020	Jul. 31, 2017
Debt Instrument [Line Items]
Principal amount, long-term debt issued	$ 95,200,000		$ 95,200,000
Debt Instrument, interest rate, stated percentage				5.00%
Repurchased face amount			$ 136,900,000
PIK Securities
Debt Instrument [Line Items]
Principal amount, long-term debt issued		$ 52,000,000
PIK Securities | Minimum
Debt Instrument [Line Items]
Debt Instrument, interest rate, stated percentage		5.00%
PIK Securities | Maximum
Debt Instrument [Line Items]
Debt Instrument, interest rate, stated percentage		8.00%

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DEBT - Detail of Convertible Debt Carrying Amount (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Convertible debt embedded derivative | ASU 2020-06 (ASC 470-20)
Debt Instrument [Line Items]
Carrying amount of the equity component, net of issuance costs	$ 0	$ 7,969
Convertible debt embedded derivative | Accounting Standards Update 2017-12
Debt Instrument [Line Items]
Carrying amount of the equity component, net of issuance costs	37,276	37,276
Convertible debt
Debt Instrument [Line Items]
Principal	95,208	93,130
Unamortized issuance costs	(1,170)	(916)
Unamortized discount	(1,860)	(4,552)
Net carrying amount of the liability component	$ 92,178	$ 87,662

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DEBT - Components of Convertible Debt Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Debt Instrument [Line Items]
Amortization of debt discount and issuance costs			$ 12,077	$ 4,154
Total interest expense	$ 18,480	$ 9,598	37,085	18,994
Convertible debt
Debt Instrument [Line Items]
Coupon interest	1,595	1,164	3,177	2,328
Amortization of debt discount and issuance costs	693	768	1,320	1,534
Total interest expense	$ 2,288	$ 1,932	$ 4,497	$ 3,862
Effective interest rate	10.24%	9.12%	10.24%	9.12%

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DEBT - Cumulative Effect (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Mar. 31, 2022	Jan. 01, 2022	Dec. 31, 2021	Mar. 31, 2021	Dec. 31, 2020
Liabilities
Long-term debt and finance lease obligations	$ 4,656		$ 4,656			$ 407,018	$ 405,191
Equity:
Additional paid-in capital	445,210		445,210			439,173	444,824
Adjustment to stockholders' equity	549	$ 167,905	549	$ 167,905	$ 27,070		51,867	$ 182,860	$ 214,603
Retained Earnings (Accumulated Deficit)	$ (425,774)		$ (425,774)			$ (371,760)	(375,584)
Basic (in dollars per share)	$ (0.50)	$ (0.57)	$ (1.34)	$ (1.68)
Diluted (in dollars per share)	$ (0.50)	$ (0.57)	$ (1.34)	$ (1.68)
Additional Paid-in Capital
Equity:
Adjustment to stockholders' equity	$ 445,210	$ 426,924	$ 445,210	$ 426,924	444,747		444,824	424,812	422,589
Retained Earnings (Deficit)
Equity:
Adjustment to stockholders' equity	$ (425,774)	$ (241,349)	(425,774)	$ (241,349)	$ (404,222)		(375,584)	$ (223,856)	$ (189,565)
Cumulative Effect, Period of Adoption, Adjustment
Liabilities
Long-term debt and finance lease obligations							1,827
Equity:
Adjustment to stockholders' equity							(1,827)
Interest expense			$ 600
Basic (in dollars per share)			$ (0.01)
Diluted (in dollars per share)			$ (0.01)
Cumulative Effect, Period of Adoption, Adjustment | Additional Paid-in Capital
Equity:
Adjustment to stockholders' equity							(5,651)
Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings (Deficit)
Equity:
Adjustment to stockholders' equity							$ 3,824

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DEBT - Deferred Financing Costs, Debt and Warrant Discounts and Debt Issuance Cost (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Debt Disclosure [Abstract]
Increase (decrease) in amortization of debt issue costs	$ 4.6
Debt issuance costs, net	$ 53.0	$ 58.0

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LEASES - Additional Information (Details)	6 Months Ended
	Jun. 30, 2022
Operating Leased Assets [Line Items]
Options to extend leases (up to)	10 years
Options to terminate leases	1 year
Minimum
Operating Leased Assets [Line Items]
Operating and finance leases, remaining lease term	1 year
Maximum
Operating Leased Assets [Line Items]
Operating and finance leases, remaining lease term	14 years

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LEASES - Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Leases [Abstract]
Operating lease costs	$ 6,334	$ 7,021	$ 13,021	$ 14,260
Variable lease costs	1,442	1,326	2,900	2,602
Finance lease costs:
Amortization of right-of-use assets	67	195	261	312
Interest on lease liabilities	38	90	126	168
Total lease cost	$ 7,881	$ 8,632	$ 16,308	$ 17,342

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LEASES - Cash Flow Lease Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$ 5,095	$ 5,990	$ 10,500	$ 11,346
Operating cash flows from finance leases	25	91	115	171
Financing cash flows from finance leases	158	159	320	237
Right-of-use assets obtained in exchange for lease obligations
Operating leases	514	411	1,354	8,583
Finance leases	$ 77	$ 384	$ 100	$ 406

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LEASES Amounts Recognized in the Balance Sheet for Leases (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Operating Leases:
Operating lease right-of-use assets	$ 52,925	$ 60,700
Current portion of operating lease obligations	14,389	16,176
Operating lease obligations (non-current)	43,090	49,221
Finance Leases:
Property, plant and equipment, net	4,412	5,123
Current portion of long-term debt and finance lease obligations	655	669
Long-term finance lease obligations	$ 4,656	$ 4,980
Weighted average remaining lease term:
Operating leases	5 years 10 months 24 days	6 years
Finance leases	9 years 10 months 24 days	10 years
Weighted average discount rate:
Operating leases	6.90%	6.80%
Finance leases	6.50%	6.40%
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List]	Current portion of long-term debt and finance lease obligations	Current portion of long-term debt and finance lease obligations
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Long-term debt and finance lease obligations	Long-term debt and finance lease obligations

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LEASES - Operating and Finance Leases - Future Minimum Lease Payments (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Operating Leases
2022 (Remainder of the year)	$ 10,647
2023	15,317
2024	11,918
2025	8,609
2026	6,729
Thereafter	18,161
Total future minimum lease payments	71,381
Less: Interest	(13,902)
Present value of lease liabilities	57,479
Finance Leases
2022 (Remainder of the year)	68
2023	905
2024	745
2025	575
2026	562
Thereafter	3,925
Total future minimum lease payments	6,780
Less: Interest	(1,469)
Present value of lease liabilities	$ 5,311

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SHARE-BASED COMPENSATION - Additional Information (Details)		1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 15, 2021	May 31, 2021 shares	Jun. 30, 2022 USD ($) shares	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) factor $ / shares shares	Jun. 30, 2021 USD ($) shares	Dec. 31, 2021 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards outstanding to officers, directors and key employees (in shares)			1,200,000		1,200,000
Share-based compensation | $			$ (600,000)	$ 2,100,000	$ 100,000	$ 4,400,000
Unrecognized compensation expense related to share-based compensation | $			$ 2,900,000		$ 2,900,000
Remaining weighted-average period (in years)					1 year 4 months 24 days
Granted stock options (in shares)					0	0
Exercised stock options (in shares)					0
Expired of stock options (in shares)					7,210
Cancelled stock options (in shares)					434
Expired as vested (in shares)					6,776
Exercisable at end of year (in shares)			10,000		10,000
Weighted-average remaining contractual life of options exercisable (in years)					1 year 1 month 6 days
Range of prices, lower limit | $ / shares					$ 35.59
Stock and stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation | $					$ 1,200,000	$ 3,300,000
Stock and stock units | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period (in years)					3 years
Stock and stock units | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period (in years)					4 years
Long-term performance stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation | $					$ 1,300,000	$ 1,100,000
Award vesting period (in years)					2 years
Performance period (in years)					2 years
Share-based compensation award, number of performance conditions | factor					2
Long-term performance stock units | 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested award performance target level, percentage	25.00%
Award vesting rights, performance metric, percentage	0.00%
Long-term performance stock units | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Possible payouts					0.00%
Long-term performance stock units | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Possible payouts					200.00%
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation | $					$ 0		$ 0
Award vesting period (in years)					4 years
Award contractual term (in years)					10 years
2018 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of additional shares authorized (in shares)		3,000,000

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SHARE-BASED COMPENSATION - Stock Units and Director Stock Grants (Details) - Stock and stock units shares in Thousands	6 Months Ended
	Jun. 30, 2022 $ / shares shares
No. of Stock Units
Stock and stock units, beginning of period (in shares) | shares	804
Changes during the period:
Granted (in shares) | shares	525
Vested and settled (in shares) | shares	(135)
Forfeited and cancelled (in shares) | shares	(89)
Stock and stock units, end of period (in shares) | shares	1,105
Weighted Average Fair Value
Stock and stock units, beginning of period (in dollars per share) | $ / shares	$ 7.27
Changes during the period:
Granted (in dollars per share) | $ / shares	1.30
Vested and settled (in dollars per share) | $ / shares	7.16
Forfeited and cancelled (in dollars per share) | $ / shares	7.13
Stock and stock units, end of period (in dollars per share) | $ / shares	$ 4.46

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SHARE-BASED COMPENSATION - Performance Awards (Details) - Long-term performance stock units shares in Thousands	6 Months Ended
	Jun. 30, 2022 $ / shares shares
Performance Units Subject to Market Conditions
No. of Units/Awards
Stock and stock units, beginning of period (in shares) | shares	684
Changes during the period:
Granted (in shares) | shares	0
Vested and settled (in shares) | shares	0
Forfeited and cancelled (in shares) | shares	(653)
Stock and stock units, end of period (in shares) | shares	31
Weighted Average Fair Value
Stock and stock units, beginning of period (in dollars per share) | $ / shares	$ 6.45
Changes during the period:
Granted (in dollars per share) | $ / shares	0
Vested and settled (in dollars per share) | $ / shares	0
Forfeited and cancelled (in dollars per share) | $ / shares	6.04
Stock and stock units, end of period (in dollars per share) | $ / shares	$ 14.96
Performance Units Not Subject to Market Conditions
No. of Units/Awards
Stock and stock units, beginning of period (in shares) | shares	219
Changes during the period:
Granted (in shares) | shares	0
Vested and settled (in shares) | shares	0
Forfeited and cancelled (in shares) | shares	(188)
Stock and stock units, end of period (in shares) | shares	31
Weighted Average Fair Value
Stock and stock units, beginning of period (in dollars per share) | $ / shares	$ 9.91
Changes during the period:
Granted (in dollars per share) | $ / shares	0
Vested and settled (in dollars per share) | $ / shares	0
Forfeited and cancelled (in dollars per share) | $ / shares	9.61
Stock and stock units, end of period (in dollars per share) | $ / shares	$ 11.69

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EMPLOYEE BENEFIT PLANS - Schedule of Net Pension Cost (Credit) (Details) - United Kingdom - Pension Plan - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Defined Benefit Plan Disclosure [Line Items]
Interest cost	$ 390	$ 326	$ 813	$ 648
Expected return on plan assets	(582)	(509)	(1,211)	(1,012)
Amortization of prior service cost	8	9	16	17
Net periodic pension credit	$ (184)	$ (174)	$ (382)	$ (347)

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EMPLOYEE BENEFIT PLANS - Additional Information (Details) - United Kingdom - Pension Plan $ in Millions	6 Months Ended
	Jun. 30, 2022 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Weighted-average of expected returns on asset investment, percentage	2.10%
Expected contributions for current year	$ 3.7
Total contributions to date	$ 1.9
Defined Benefit Plan, Equity Securities
Defined Benefit Plan Disclosure [Line Items]
Weighted-average of expected returns on asset investment, percentage	4.60%
Debt Securities
Defined Benefit Plan Disclosure [Line Items]
Weighted-average of expected returns on asset investment, percentage	1.40%

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ACCUMULATED OTHER COMPREHENSIVE LOSS - Summary of Changes in AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance, beginning of period			$ 51,867
Other comprehensive loss	$ (5,463)	$ 657	(5,117)	$ 874
Tax Provision	0	(257)	0	(155)
Other comprehensive income (loss), net of tax			(5,117)	719
Balance, end of period	549		549
Total
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance, beginning of period			(26,732)	(27,678)
Balance, end of period	(31,849)	(26,959)	(31,849)	(26,959)
Foreign Currency Translation Adjustments
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance, beginning of period			(23,287)	(23,045)
Other comprehensive loss			(5,117)	874
Tax Provision			0	(155)
Balance, end of period	(28,404)	(22,171)	(28,404)	(22,171)
Foreign Currency Hedge
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance, beginning of period			0	2,988
Other comprehensive loss			0	0
Balance, end of period	0	2,988	0	2,988
Defined Benefit Pension Plans
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance, beginning of period			(3,277)	(8,021)
Other comprehensive loss			0	0
Balance, end of period	(3,277)	(8,021)	(3,277)	(8,021)
Tax Provision
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance, beginning of period			(169)	400
Tax Provision			0	(155)
Balance, end of period	$ (169)	$ 245	$ (169)	$ 245

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ACCUMULATED OTHER COMPREHENSIVE LOSS - Related Tax Effects of AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Accumulated Other Comprehensive Loss [Line Items]
Gross Amount	$ (5,463)	$ 657	$ (5,117)	$ 874
Tax provision attributable to other comprehensive income (loss)	0	(257)	0	(155)
Other comprehensive income (loss), net of tax	$ (5,463)	$ 400	(5,117)	719
Foreign currency translation adjustments
Accumulated Other Comprehensive Loss [Line Items]
Gross Amount			(5,117)	874
Tax provision attributable to other comprehensive income (loss)			0	(155)
Other comprehensive income (loss), net of tax			$ (5,117)	$ 719

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COMMITMENTS AND CONTINGENCIES (Details) $ in Millions			14 Months Ended
	Feb. 09, 2022 USD ($)	Jun. 01, 2021 USD ($)	Aug. 26, 2020 claim	Jun. 30, 2022 USD ($)	Apr. 20, 2021 facility
Loss Contingencies [Line Items]
Number of facilities with potential violations | facility					7
Self-insured retention and deductible				$ 3.0
Legal and professional accruals				44.0
Amount not covered by insurance				5.0
EPA
Loss Contingencies [Line Items]
Cost incurred in dispute	$ 0.2
Thai action
Loss Contingencies [Line Items]
New claims filed | claim			2
Kelli Most Litigation
Loss Contingencies [Line Items]
Amount awarded to other party		$ 222.0
Kelli Most Litigation | Minimum
Loss Contingencies [Line Items]
Estimate of possible loss				13.0
Kelli Most Litigation | Maximum
Loss Contingencies [Line Items]
Estimate of possible loss				$ 51.0

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SEGMENT AND GEOGRAPHIC DISCLOSURES - Additional Information (Details) - 6 months ended Jun. 30, 2022	performance_condition	segment
Segment Reporting [Abstract]
Number of operating segments	3	3

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SEGMENT AND GEOGRAPHIC DISCLOSURES - Segment Data for our Three Operating Segments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Segment Reporting Information [Line Items]
Revenues	$ 251,265	$ 238,873	$ 469,841	$ 433,491
Operating income (loss)	(2,780)	(5,994)	(18,983)	(30,294)
Capital expenditures	6,299	5,094	12,930	9,491
Depreciation and amortization	9,578	10,347	19,609	21,306
IHT
Segment Reporting Information [Line Items]
Revenues	114,124	117,462	209,721	208,601
MS
Segment Reporting Information [Line Items]
Revenues	107,416	97,167	200,857	184,563
Quest Integrity
Segment Reporting Information [Line Items]
Revenues	29,725	24,244	59,263	40,327
Operating segments | IHT
Segment Reporting Information [Line Items]
Revenues		117,462		208,601
Operating income (loss)	5,514	7,395	5,648	7,759
Capital expenditures	3,326	2,457	8,097	5,171
Depreciation and amortization	3,096	3,270	6,350	6,740
Operating segments | MS
Segment Reporting Information [Line Items]
Revenues		97,167		184,563
Operating income (loss)	6,984	2,328	7,497	2,443
Capital expenditures	1,621	1,367	2,434	2,519
Depreciation and amortization	4,634	5,043	9,518	10,482
Operating segments | Quest Integrity
Segment Reporting Information [Line Items]
Revenues		24,244		40,327
Operating income (loss)	8,014	5,702	14,218	5,450
Capital expenditures	1,333	974	2,342	1,380
Depreciation and amortization	569	710	1,146	1,422
Corporate and shared support services
Segment Reporting Information [Line Items]
Operating income (loss)	(23,292)	(21,419)	(46,346)	(45,946)
Capital expenditures	19	296	57	421
Depreciation and amortization	$ 1,279	$ 1,324	$ 2,595	$ 2,662

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SEGMENT AND GEOGRAPHIC DISCLOSURES - Geographic Breakdown of Revenues and Total Long-Lived Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenues from External Customers [Line Items]
Total Revenues	$ 251,265	$ 238,873	$ 469,841	$ 433,491
Total Long-lived Assets	299,326	329,210	299,326	329,210
United States
Revenues from External Customers [Line Items]
Total Revenues	171,665	162,465	323,346	304,296
Total Long-lived Assets	258,559	282,706	258,559	282,706
Canada
Revenues from External Customers [Line Items]
Total Revenues	36,193	34,152	56,511	50,647
Total Long-lived Assets	9,198	9,309	9,198	9,309
Europe
Revenues from External Customers [Line Items]
Total Revenues	26,554	29,264	50,677	54,975
Total Long-lived Assets	20,920	24,755	20,920	24,755
Other foreign countries
Revenues from External Customers [Line Items]
Total Revenues	16,853	12,992	39,307	23,573
Total Long-lived Assets	$ 10,649	$ 12,440	$ 10,649	$ 12,440

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RESTRUCTURING AND OTHER RELATED CHARGES - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Restructuring Cost and Reserve [Line Items]
Restructuring and other related charges, net	$ 0	$ 280	$ 16	$ 2,157
Operating Group Reorganization Program
Restructuring Cost and Reserve [Line Items]
Severance charges incurred cumulatively to date					$ 2,900
Operating Group Reorganization Program | Employee Severance
Restructuring Cost and Reserve [Line Items]
Restructuring and other related charges, net			$ 2,370

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RESTRUCTURING AND OTHER RELATED CHARGES - Rollforward of Restructuring Liability - OneTEAM Program (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Restructuring Reserve [Roll Forward]
Charges	$ 0	$ 280	$ 16	$ 2,157
Operating Group Reorganization Program | Employee Severance
Restructuring Reserve [Roll Forward]
Balance, beginning of period			712
Charges			2,370
Payments			(866)
Balance, end of period	$ 2,216		$ 2,216

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RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Alvarez And Marsal
Related Party Transaction [Line Items]
Expenses from transactions with related party	$ 6.0	$ 8.0

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SUBSEQUENT EVENTS (Details) - USD ($) $ in Millions	1 Months Ended	6 Months Ended
	Jul. 31, 2022	Jun. 30, 2022	Aug. 15, 2022
Assets | Product Concentration Risk | Quest Integrity
Subsequent Event [Line Items]
Concentration risk, percentage		15.00%
Revenue | Product Concentration Risk | Quest Integrity
Subsequent Event [Line Items]
Concentration risk, percentage		13.00%
Subsequent Event | Quest Integrity
Subsequent Event [Line Items]
Purchase and sale agreement, consideration			$ 280.0
Subsequent Event | Corre Delayed Draw Term Loan
Subsequent Event [Line Items]
Cash proceeds	$ 10.0