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Team Stock Jumps Despite Q2 Loss as Turnaround Work Is Deferred
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Shares of Team, Inc. (TISI - Free Report) have gained 30.20% since reporting results for the second quarter of 2026 compared with the S&P 500 index’s 0.30% return. Over the past month, the stock has risen 39.20% compared with the S&P 500’s 4.10% advance.
Earnings & Revenue Performance
Second-quarter revenues declined 7.80% year over year to $228.68 million from $248.03 million. Net loss widened 59.7% to $6.81 million from $4.27 million. After $3.01 million in preferred-stock dividends and accretion, net loss attributable to common shareholders was $9.82 million, or $2.15 per share, versus $4.27 million, or 95 cents per share, in the prior-year quarter.
The adjusted loss per share widened to $1.73 from 20 cents in the prior-year quarter. The gross margin fell to $54.40 million from $68.09 million in the prior-year quarter, while adjusted EBITDA decreased to $12.77 million from $24.47 million in the prior-year quarter.
Inspection and Heat-Treating (IHT) revenues decreased 5% to $131.28 million, while segment operating income fell 25.80% to $13.33 million. Mechanical Services (MS) revenues declined 11.30% to $97.40 million, and operating income dropped 71% to $2.31 million. IHT adjusted EBITDA fell to $17.12 million from $21.68 million, and MS adjusted EBITDA decreased to $6.12 million from $12.80 million. Consolidated operating income consequently decreased 82% to $2.17 million. Selling, general and administrative expenses fell 7.60% to $46.75 million.
The operating cash flow turned positive at $0.68 million from a $3.34 million outflow, and the free cash flow outflow narrowed to $3.30 million from $6.25 million. As of June 30, liquidity was $51.20 million, comprising $22.30 million in unrestricted cash and $28.90 million in ABL capacity. Total debt rose to $326.30 million from $297.20 million at the end of 2025, leaving net debt of $300.30 million.
Management Commentary
CEO Gary Hill said that Team’s transformation centers on leadership and accountability, commercial execution and operational efficiency. Priorities include tighter pipeline management, pricing and project selection, improved labor utilization, and reviews of facilities, fleet, procurement and overhead.
Management is also broadening its commercial focus beyond core refining and petrochemicals. It cited year-over-year growth exceeding 10% in LNG, aerospace, commercial nuclear power, and pulp and paper, and expects higher growth in those markets during the second half. Hill said that required maintenance cannot be deferred indefinitely, but cautioned against assuming all postponed work will return in one quarter.
Factors Behind the Results
Management attributed the weakness mainly to deferred turnaround and maintenance work as refining customers extended operating runs to benefit from favorable crack spreads. Turnaround revenues fell slightly more than 50% year to date, and the Middle East conflict reduced first-half revenues by more than $20 million through deferred work and regional disruption.
Lower turnaround activity produced an unfavorable sales mix, weaker labor utilization and fixed-cost deleveraging. IHT was also affected by higher benefit costs, while MS faced reduced activity across regions. Lower interest expenses and a foreign-currency gain partly cushioned the earnings decline.
2026 Guidance
Team reaffirmed 2026 revenue guidance of $920-$945 million, gross profit of $240-$260 million and adjusted EBITDA of $68-$73 million. Management expects results toward the lower half of those ranges until visibility improves around deferred activity. The outlook assumes some MS work returns during the second half, alongside stable IHT demand and better labor utilization.
Team also expects $8-$15 million of structural cost benefits in the second half, advancing toward a $20-$35-million annualized run rate by 2027. Implementation costs are estimated at $5-$10 million. Separately, an order-to-cash initiative targets $5-$10 million in cash-flow improvement by year-end.
Other Developments
Team is restructuring its operating model through leadership additions and reviews of its facility footprint, fleet, supply chain and organization. Second-quarter severance charges were $1.13 million, including $0.60 million related to executive departures. It also moved Emission Control Services from MS to IHT, effective Jan. 1, and recast prior-period segment figures without affecting consolidated revenues or adjusted EBITDA.
Around the earnings release, Stellex Capital Management became Team’s largest common shareholder through a negotiated transaction with CORE Partners. Management said that future cash generation will be directed partly toward debt reduction.
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Team Stock Jumps Despite Q2 Loss as Turnaround Work Is Deferred
Shares of Team, Inc. (TISI - Free Report) have gained 30.20% since reporting results for the second quarter of 2026 compared with the S&P 500 index’s 0.30% return. Over the past month, the stock has risen 39.20% compared with the S&P 500’s 4.10% advance.
Earnings & Revenue Performance
Second-quarter revenues declined 7.80% year over year to $228.68 million from $248.03 million. Net loss widened 59.7% to $6.81 million from $4.27 million. After $3.01 million in preferred-stock dividends and accretion, net loss attributable to common shareholders was $9.82 million, or $2.15 per share, versus $4.27 million, or 95 cents per share, in the prior-year quarter.
The adjusted loss per share widened to $1.73 from 20 cents in the prior-year quarter. The gross margin fell to $54.40 million from $68.09 million in the prior-year quarter, while adjusted EBITDA decreased to $12.77 million from $24.47 million in the prior-year quarter.
Team, Inc. Price, Consensus and EPS Surprise
Team, Inc. price-consensus-eps-surprise-chart | Team, Inc. Quote
Segment & Cash-Flow Performance
Inspection and Heat-Treating (IHT) revenues decreased 5% to $131.28 million, while segment operating income fell 25.80% to $13.33 million. Mechanical Services (MS) revenues declined 11.30% to $97.40 million, and operating income dropped 71% to $2.31 million. IHT adjusted EBITDA fell to $17.12 million from $21.68 million, and MS adjusted EBITDA decreased to $6.12 million from $12.80 million. Consolidated operating income consequently decreased 82% to $2.17 million. Selling, general and administrative expenses fell 7.60% to $46.75 million.
The operating cash flow turned positive at $0.68 million from a $3.34 million outflow, and the free cash flow outflow narrowed to $3.30 million from $6.25 million. As of June 30, liquidity was $51.20 million, comprising $22.30 million in unrestricted cash and $28.90 million in ABL capacity. Total debt rose to $326.30 million from $297.20 million at the end of 2025, leaving net debt of $300.30 million.
Management Commentary
CEO Gary Hill said that Team’s transformation centers on leadership and accountability, commercial execution and operational efficiency. Priorities include tighter pipeline management, pricing and project selection, improved labor utilization, and reviews of facilities, fleet, procurement and overhead.
Management is also broadening its commercial focus beyond core refining and petrochemicals. It cited year-over-year growth exceeding 10% in LNG, aerospace, commercial nuclear power, and pulp and paper, and expects higher growth in those markets during the second half. Hill said that required maintenance cannot be deferred indefinitely, but cautioned against assuming all postponed work will return in one quarter.
Factors Behind the Results
Management attributed the weakness mainly to deferred turnaround and maintenance work as refining customers extended operating runs to benefit from favorable crack spreads. Turnaround revenues fell slightly more than 50% year to date, and the Middle East conflict reduced first-half revenues by more than $20 million through deferred work and regional disruption.
Lower turnaround activity produced an unfavorable sales mix, weaker labor utilization and fixed-cost deleveraging. IHT was also affected by higher benefit costs, while MS faced reduced activity across regions. Lower interest expenses and a foreign-currency gain partly cushioned the earnings decline.
2026 Guidance
Team reaffirmed 2026 revenue guidance of $920-$945 million, gross profit of $240-$260 million and adjusted EBITDA of $68-$73 million. Management expects results toward the lower half of those ranges until visibility improves around deferred activity. The outlook assumes some MS work returns during the second half, alongside stable IHT demand and better labor utilization.
Team also expects $8-$15 million of structural cost benefits in the second half, advancing toward a $20-$35-million annualized run rate by 2027. Implementation costs are estimated at $5-$10 million. Separately, an order-to-cash initiative targets $5-$10 million in cash-flow improvement by year-end.
Other Developments
Team is restructuring its operating model through leadership additions and reviews of its facility footprint, fleet, supply chain and organization. Second-quarter severance charges were $1.13 million, including $0.60 million related to executive departures. It also moved Emission Control Services from MS to IHT, effective Jan. 1, and recast prior-period segment figures without affecting consolidated revenues or adjusted EBITDA.
Around the earnings release, Stellex Capital Management became Team’s largest common shareholder through a negotiated transaction with CORE Partners. Management said that future cash generation will be directed partly toward debt reduction.