-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GT77ERhprg6ceXzO/FanJIwxKeIb9Q44Lun3AC2mGx9wqj+wZBJjMbxx/VRGOZ+F //FSoH8Ly4m8QeDPhSA0wA== 0001157523-06-000062.txt : 20060105 0001157523-06-000062.hdr.sgml : 20060105 20060105105319 ACCESSION NUMBER: 0001157523-06-000062 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060104 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060105 DATE AS OF CHANGE: 20060105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEAM INC CENTRAL INDEX KEY: 0000318833 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS REPAIR SERVICES [7600] IRS NUMBER: 741765729 STATE OF INCORPORATION: TX FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08604 FILM NUMBER: 06511011 BUSINESS ADDRESS: STREET 1: 200 HERMANN DRIVE CITY: ALVIN STATE: TX ZIP: 77056 BUSINESS PHONE: 2813316154 MAIL ADDRESS: STREET 1: 1019 SOUTH HOOD STREET CITY: ALVIN STATE: TX ZIP: 77551 8-K 1 a5049809.txt TEAM INC., 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): January 4, 2006 ------------------------------- TEAM, Inc. (Exact Name of Registrant as Specified in Charter) Texas 001-08604 74-1765729 - -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification No.) 200 Hermann Drive Alvin, Texas 77511 (Address of Principal Executive Offices and Zip Code) Registrant's telephone number, including area code: (281) 331-6154 ---------------------------- Not Applicable - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) Check the appropriate line below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition --------------------------------------------- On January 4, 2006, TEAM, Inc. disseminated a press release announcing its financial results for the second quarter of fiscal 2006. A copy of such press release is furnished herewith as Exhibit 99.1. The information furnished in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed "filed" with the Securities and Exchange Commission and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated by reference. Item 9.01. Financial Statements and Exhibits --------------------------------- (c) Exhibits. The following exhibit is furnished as part of Item 2.02 of this Current Report on Form 8-K: Exhibit number Description -------------- ----------- 99.1 TEAM, Inc.'s Press Release dated January 4, 2006 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 hereunto duly authorized. TEAM, INC. By: /s/ Ted W. Owen ----------------------------------------------- Ted W. Owen Senior Vice President - Chief Financial Officer Dated: January 4, 2006 EXHIBIT INDEX Exhibit number Description -------------- ----------- 99.1 TEAM, Inc.'s Press Release dated January 4, 2006 EX-99.1 2 a5049809ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Team, Inc. Reports Strong Second Quarter Profit Growth ALVIN, Texas--(BUSINESS WIRE)--Jan. 4, 2006--Team Inc., (AMEX:TMI) today reported income from continuing operations of $3.8 million, or $0.41 per diluted share, for its second quarter ending November 30, 2005. Net income from continuing operations increased 169% from the corresponding prior year period in which Team earned $1.4 million, or $0.16 per diluted share. For the quarter, Team's revenues improved 39% to $67.0 million, operating profits grew 143% to $7.1 million, and operating profit margin was 11% compared to 6% in the prior year quarter. For the year-to-date period, Team's net income was $4.4 million, or $0.47 per diluted share, up 154% from the corresponding prior year period. Year-to-date revenues increased 55% to $121.2 million, operating profits improved 154% to $8.8 million, and operating profit margin was 7% compared to 4% in the prior year-to-date period. Team acquired the assets of Cooperheat-MQS during the first quarter of the last fiscal year, affecting the comparability of some of the year-to-date results. "We are pleased with the strong operating performance in the most recent quarter," said Phil Hawk, Team's Chairman and CEO. "Several factors contributed to this performance including the broader business base as a result of last year's acquisition, significantly improved margins in the acquired business, and strong organic revenue growth in nearly all aspects of our industrial services business," said Hawk. Industrial Services Business Segment For the most recent quarter, Team Industrial Services segment revenues were $67.0 million, up 39% from the prior year quarter. Operating income for the segment was $9.4 million, up $4.7 million or a 98% increase over last year's quarter. Operating profit percentage for the segment was 14% versus 10% for last year's second quarter. Both the TMS and TCM divisions, and nearly all geographic regions and service lines within these divisions, contributed to Team's strong revenue growth during the quarter. TCM Division (Team's NDE inspection and field heat treating service lines) revenues for the quarter were $38.3 million, a 45% improvement over the prior year quarter. TMS Division (Team's mechanical service lines of leak repair, hot tapping, fugitive emissions monitoring, field machining, technical bolting, and field valve repair) revenues for the quarter were $28.7 million, up 31% from the prior year quarter. The revenues for all service lines were well ahead of the prior year quarter. All geographic regions in both divisions, except one, experienced revenue growth in the quarter. The company believes that the growth reflects strong market demand driven in part by very robust customer profit margins in several key segments, combined with Team's continued market share growth. This growth is driven by outstanding service performance and ongoing customer strategies to consolidate service procurement with fewer, larger multi-service, multi-location service companies. For the quarter, Hurricanes Katrina and Rita depressed overall revenues slightly due to the temporary disruptions and the inability to perform any work at several major facilities. However, offsetting increases in work related to storm damage repairs are expected over the next several quarters. The segment's 14% operating profit margin was up significantly from the prior year and almost back to pre-acquisition levels. The biggest improvement for the quarter was in TCM branches, which are benefiting from the completion of integration activities related to the Cooperheat acquisition, growing familiarity with Team systems and management tools, and increasing commercial business momentum. "Our recent performance has affirmed two key premises to our longer-term strategy," said Hawk. "First, we demonstrated our continuing ability to organically grow all aspects of our business at attractive growth rates. Second, while we have not yet fully achieved expected levels of performance, we also confirmed our ability to earn attractive profit margins in our newly acquired branches in the TCM division." Climax Discontinued Operations and Business Sale As previously announced, Team sold Climax Portable Machine Tools, Inc. (the entire Equipment Sales and Rental business segment) on November 30, 2005. The operating results for the quarter and year-to-date have been reclassified as discontinued operations. Team remains responsible for certain post-sale Climax business expenses, including accounts receivable collections, product warranty and liability expenses. The company believes it has set up adequate reserves for these expenses. The pre-tax operating loss for this business was $131,000 and $78,000 for the second quarter and year-to-date periods, respectively, which is net of $150,000 of costs associated with assumed liabilities for both the quarter and year-to-date periods, as well as interest expense allocated of $237,000 for the quarter and $472,000 for the six month year-to-date period. The sale of the Climax operations resulted in a net pre-tax gain of about $1.5 million. However, because of the significant difference in book and tax basis of assets, the effective tax rate on the gain is nearly 100%, resulting in deminimus results from discontinued operations. "In the December 1, 2005 press release announcing the sale of Climax, we indicated that the sale would result in a gain of about $0.05 per share," said Hawk. "However, the tax basis difference was more than originally estimated, which resulted in the elimination of the gain." Outlook for the Remainder of FY2006 The Company remains comfortable with its previously issued full year guidance for FY 2006 ending May 31, 2006 of $1.15 to $1.30 per share. Earnings Conference Call In connection with this earnings release, the Company will hold its quarterly conference call on Thursday, January 5, 2006, at 10:00 a.m. Central Time (11:00 a.m. Eastern). The call will be broadcast over the web and can be accessed on Team's website, www.teamindustrialservices.com. Individuals wishing to participate in the conference call by phone can call 1-888-896-0862 and ask to join the Team IR call. Team, Inc. is a professional, full-service provider of specialty industrial services. Team's current industrial service offering encompasses on-stream leak repair, hot tapping, fugitive emissions monitoring, field machining, technical bolting, field valve repair, NDE inspection and field heat treating. All these services are required in maintaining high temperature, high pressure piping systems and vessels utilized extensively in the refining, petrochemical, power, pipeline, and other heavy industries. Team's inspection services also serve the aerospace and automotive industries. Headquartered in Alvin, Texas, the Company operates in over 50 customer service locations throughout the United States. The Company also serves the international market through both its own international subsidiaries as well as through licensed arrangements in 14 countries. Team, Inc. common stock is traded on the American Stock Exchange under the ticker symbol "TMI". Certain forward-looking information contained herein is being provided in accordance with the provisions of the Private Securities Litigation Reform Act. Such information is subject to certain assumptions and beliefs based on current information known to the Company and is subject to factors that could result in actual results differing materially from those anticipated in the forward-looking statements contained herein. Such factors include domestic and international economic activity, interest rates, and market conditions for the Company's customers, regulatory changes and legal proceedings, and the Company's successful implementation of its internal operating plans. Accordingly, there can be no assurance that the forward-looking statements contained herein will occur or that objectives will be achieved. TEAM, INC. AND SUBSIDIARIES SUMMARY OF OPERATING RESULTS Three Months Ended Six Months Ended November 30, November 30, ------------------------- -------------------------- 2005 2004 2005 2004 ------------ ------------ ------------- ------------ Revenues $67,046,000 $48,385,000 $121,198,000 $78,175,000 Operating expenses 43,642,000 31,969,000 80,511,000 51,768,000 ------------ ------------ ------------- ------------ Gross Margin 23,404,000 16,416,000 40,687,000 26,407,000 Selling, general and administrative expenses 16,312,000 13,492,000 31,906,000 22,728,000 Non-cash G&A compensation cost 5,000 5,000 9,000 228,000 ------------ ------------ ------------- ------------ Operating income-- continuing operations 7,087,000 2,919,000 8,772,000 3,451,000 Interest expense, net 942,000 625,000 1,779,000 816,000 ------------ ------------ ------------- ------------ Earnings from continuing operations before income taxes 6,145,000 2,294,000 6,993,000 2,635,000 Provision for income taxes 2,314,000 872,000 2,645,000 1,000,000 ------------ ------------ ------------- ------------ Income from continuing operations 3,831,000 1,422,000 4,348,000 1,635,000 ------------ ------------ ------------- ------------ Discontinued operations: Income (loss) from operations of discontinued segment (131,000) 40,000 (78,000) 133,000 Gain on sale of segment 1,494,000 - 1,494,000 - ------------ ------------ ------------- ------------ Earnings from discontinued operations before income taxes 1,363,000 40,000 1,416,000 133,000 Provision for income taxes 1,389,000 15,000 1,410,000 52,000 ------------ ------------ ------------- ------------ Income (loss) from discontinued operations (26,000) 25,000 6,000 81,000 ------------ ------------ ------------- ------------ Net income $3,805,000 $1,447,000 $4,354,000 $1,716,000 ============ ============ ============= ============ Earnings per common share: Continuing operations Basic $0.46 $0.18 $0.52 $0.20 ============ ============ ============= ============ Diluted $0.41 $0.16 $0.47 $0.18 ============ ============ ============= ============ Discontinued operations Basic $(0.00) $0.00 $0.00 $0.01 ============ ============ ============= ============ Diluted $(0.00) $0.00 $0.00 $0.01 ============ ============ ============= ============ Net income Basic $0.46 $0.18 $0.52 $0.21 ============ ============ ============= ============ Diluted $0.41 $0.16 $0.47 $0.19 ============ ============ ============= ============ Weighted average number of shares outstanding: Basic 8,361,000 8,142,000 8,312,000 8,104,000 ============ ============ ============= ============ Diluted 9,292,000 9,016,000 9,205,000 8,933,000 ============ ============ ============= ============ Revenues comprised of: TMS $28,738,000 $21,932,000 $53,145,000 $41,302,000 TCM 38,308,000 26,453,000 68,053,000 36,873,000 ------------ ------------ ------------- ------------ $67,046,000 $48,385,000 $121,198,000 $78,175,000 ============ ============ ============= ============ Operating income-- continuing operations comprised of: Industrial Services $9,441,000 $4,770,000 $14,102,000 $6,695,000 Corporate costs (2,354,000) (1,851,000) (5,330,000) (3,244,000) ------------ ------------ ------------- ------------ $7,087,000 $2,919,000 $8,772,000 $3,451,000 ============ ============ ============= ============ TEAM, INC. AND SUBSIDIARIES SUMMARY CONSOLIDATED BALANCE SHEET INFORMATION NOVEMBER 30 AND MAY 31, 2005 Nov. 30 May 31 2005 2005 -------------- ------------- Cash $2,855,000 $3,993,000 Accounts Receivable $68,603,000 $59,364,000 Other current Assets $14,610,000 $12,168,000 Current assets of discontinued operations $- $5,486,000 -------------- ------------- Current assets $86,068,000 $81,011,000 Net property, plant and equipment $24,992,000 $24,378,000 Non current assets of discontinued operations $- $7,883,000 Other non-current assets $29,713,000 $30,054,000 -------------- ------------- Total assets $140,773,000 $143,326,000 ============== ============= Current maturities of long-term debt $4,578,000 $3,835,000 Accounts payable and other current liabilities $30,690,000 $26,807,000 Current liabilities of discontinued operations $- $1,281,000 -------------- ------------- Total current liabilities $35,268,000 $31,923,000 Long term debt $48,425,000 $59,907,000 Other non-current liabilities and taxes $2,252,000 $2,554,000 Stockholders' equity $54,828,000 $48,942,000 -------------- ------------- Total liabilities and stockholders' equity $140,773,000 $143,326,000 ============== ============= CONTACT: Team Inc. Philip J. Hawk or Ted W. Owen, 281-331-6154 -----END PRIVACY-ENHANCED MESSAGE-----