Attached files
| file | filename |
|---|---|
| EX-10.1 - EXHIBIT 10.1 - TEAM INC | ex10-1teamthirdamendmentfi.htm |
| 8-K - FORM 8-K - TEAM INC | form8-kcreditfacilityamend.htm |
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Business Review
August 2016
Exhibit 99.1
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1
Safe Harbor Statement
Certain forward-looking information contained herein is being provided in accordance with the provisions of the
Private Securities Litigation Reform Act of 1995. We have made reasonable efforts to ensure that the
information, assumptions and beliefs upon which this forward-looking information is based are current,
reasonable and complete. Such forward-looking statements involve estimates, assumptions, judgments and
uncertainties. There are known and unknown factors that could cause actual results or outcomes to differ
materially from those addressed in the forward-looking information. Such known factors are detailed in the
Company's Annual Report on Form 10-K and in the Company's Quarterly Reports on Form 10-Q as filed with the
Securities and Exchange Commission, and in other reports filed by the Company with the Securities and
Exchange Commission from time to time. Accordingly, there can be no assurance that the forward-
looking information contained herein will occur or that objectives will be achieved. We assume no obligation to
publicly update or revise any forward-looking statements made today or any other forward-looking statements
made by the Company, whether as a result of new information, future events or otherwise.
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2
Non-GAAP Financial Measures (Unaudited)
The Company uses supplemental non-GAAP financial measures which are derived from the consolidated financial information including
adjusted net income; adjusted net income per share, earnings before interest and taxes (“EBIT”); adjusted EBIT; and adjusted earnings before
interest, taxes, depreciation and amortization (“adjusted EBITDA”) to supplement financial information presented on a GAAP basis. Adjusted
net income and adjusted earnings per share, each as defined by the Company, exclude the following items from net income: acquisition costs
associated with business combinations, non-routine legal costs and professional fees for acquired business integration and changing our
fiscal year end, losses on the revaluation of contingent consideration, non-capitalized ERP implementation costs, losses on our investment in
Venezuela, certain other non-routine items and the related income tax impacts. EBIT, as defined by the Company, excludes discontinued
operations, income tax expense, interest charges and items of other (income) expense and therefore is equal to operating income reported in
accordance with GAAP. Adjusted EBIT further excludes the following items: acquisition costs associated with business combinations, non-
routine legal costs and professional fees for acquired business integration and changing our fiscal year end, losses on the revaluation of
contingent consideration, non-capitalized ERP implementation costs and certain other non-routine items. Adjusted EBITDA further excludes
from adjusted EBIT depreciation, amortization and non-cash share based compensation costs.
Management believes that excluding certain items from GAAP results allows management to better understand the consolidated financial
performance from period to period and to better identify operating trends that may not otherwise be apparent. Moreover, the Company
believes these non-GAAP financial measures will provide its stakeholders with useful information to help them evaluate operating
performance. However, there are limitations to the use of the non-GAAP financial measures represented in this presentation. The Company’s
non-GAAP financial measures may not be comparable to similarly titled measures of other companies who may calculate non-GAAP financial
measures differently than TEAM does, limiting the usefulness of those measures for comparative purposes.
The non-GAAP financial measures are not meant to be considered as indicators of performance in isolation from or as a substitute for net
income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity, prepared in accordance
with GAAP, and should be read only in conjunction with financial information presented on a GAAP basis. Refer to previously filed Quarterly
Earnings Release filings on Form 8-K for additional information on the Non-GAAP financial measures.
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• Leading provider of specialty industrial services
related to maintenance and installation of
pressurized piping systems and processes and
inspection – focused primarily on the energy
industry
• Recurring revenue business model – services are
primarily oriented towards the maintenance and
monitoring of existing facilities, but also support
new facilities and facility expansions
• Services are critical and essential to clients and are
driven by ongoing operational and safety
requirements
• Organized in three complementary and synergistic
business units:
— TeamQualspec, delivering NDT Inspection and
Heat Treating
— TeamFurmanite, delivering Mechanical Services
— Quest Integrity Group (QIG)
• Principal services are North American centric;
significant upside exists in foreign markets—
especially with the recent acquisition of Furmanite
3
TEAM’s Business and Service Offering Overview
Overview of TEAM
• Premier NDT Inspection and
assessment services
• Full range of traditional and
advanced NDE methods
• Pipeline integrity management
• Leading Field Heat Treating
Company in NAM
• Proprietary In-line inspection
tools
• Advanced engineering and
assessment
• Pipeline Integrity Management
(PIM)
• Premier Mechanical Service
Company
• On stream Services
• Turnaround/project services
Team
Qualspec
Team
Furmanite
Quest
Integrity
Group (QIG)
Business Units
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4
Our Primary Competitive Attributes---Building the Premier
Global Industrial Services Company
Industrial Services Market Leadership – This means Extending our market leadership in the
fragmented mechanical services and inspection industries, and meeting client demands for more
single source accountability, capability, capacity and priority resource allocations.
Standard Services to Customized, Fully Integrated Solutions – This means Providing a natural
escalation path, from standard and specialty individual services to advanced, fully integrated solutions
as/when client circumstances demand.
Highly Trained and Experienced Workforce – This means Deploying 8,000+ highly trained and
qualified employees, often with local plant or asset-specific knowledge, to help clients index and
support best practices.
Practical Technology-Enablement – This means Applying mechanical and inspection/NDT
technology to improve and predict condition assessment, and to enable safe, compliant and cost
effective maintenance and repairs.
Regional Resources and Responsiveness – This means Leveraging the availability of regional
resources and equipment at over 220 locations in 22 countries, maximizing service responsiveness
and reliability.
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5
Furmanite Acquisition Summary
• Team, Inc. acquired Furmanite in an all equity transaction.
• Acquisition purchase price was $282MM (including debt), representing a 9x multiple of Furmanite
2015 EBITDA of $30MM. (includes $3 million from business to be sold).
• Merger was stock-for-stock.
o Furmanite shareholders received 0.215 shares of TEAM common stock for each share of
Furmanite common stock.
o Furmanite shareholders own approximately 27% of combined company.
• Merger closed on February 29, 2016.
4
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1999 2004 2004 2007 2008 2010 2011 2012 2013 2015 2016 2016 2016
Company
EA
Revenues $9 $15 $90 $58 $22 $22 $12 $22 $6 $170 $345 $9 $8
Rationale Add NDT
inspection
capability
into core
industrial
service
offering
Expand
field heat
treating
services
portfolio
Bolster under-
performing
non-
destructive
testing and
field heat
treating
branches
Increase
Canadian
penetration,
becoming #2
Canadian
inspection
service
provider
Extend
mechanical
service
presence to
Europe
Broaden
service and
product
offering;
deepen
skilled labor
pool;
geographic
expansion
Extend
mechanical
service
presence
to Pacific
Northwest
Broaden
domestic
inspection
and repair
platform to
storage
tanks
Access
to
industrial
rope
access
services
package
Established
TEAM as the
premier US
NDT
inspection
company
Established
TEAM as
premier NA
Mechanical
Services
company and
expands our
penetration in
Europe and
Asia Pacific
Team’s first
inspection
operation outside
of North America
(Europe).
Turbinate is a
mechanical
furnace and
pipe cleaning
business
recognized as
a service
leader in the
European
market.
6
Significant Acquisitions Overview
GA
TCI
Cooperheat
MQSXRI Aitec
($ in millions)
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7
TEAM Proforma Business Structure
TEAM ($1,365)
Mechanical Services ($605)
Furmanite ($300)
(acquired March 2016)
Inspection & Heat Treating
($685)
NDT=$562, HT=$123
QualSpec ($170)
(acquired July 2015)
Furmanite ($45) NDT & HT
Quest ($75)
(FYE 2015 Pro Forma Revenue in millions)
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8
TEAM Historical and Pro Forma Revenue and EBITDA
Highlights
($ in millions)
260
318
479 498 454
508
624
714
813
926
1365
$29
$41
$62 $60
$46
$63
$79 $79
$90
$96
$136
$0
$50
$100
$150
$200
$250
$300
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
Revenue Adj. EBITDA
% Margin 11% 13% 13% 12% 10% 12% 13% 11% 11% 10% 10%
2006-2013 – Reporting year June 1st to May 31st
2014-2015 – Reporting year January 1st to December 31st
• 20% Revenue CAGR since 2006
• 12% average annual Adj.
EBITDA margin since 2006
• Major acquisitions of QualSpec
(2015) and Furmanite (2016)
add $500MM+ of Revenue
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9
A Balanced Portfolio of Standard to Specialty Services
60%
30%
10%
TEAM Furmanite Combined
47%
44%
9%
Total 2015 (PF) Revenue: $1,020
$ in millions
Total 2015 (PF) Revenue: $345 Total 2015 (PF) Revenue: $1,365
_____________________
Note: TEAM and Furmanite pro forma for acquisition of Qualspec and divestiture of discontinued operations, respectively.
(1) Inspection & Assessment revenue consists of Inspection and QIG revenue.
Inspection &
Assessment (1)
$615
MS
$305
Inspection &
Assessment
$637 MS
$605
6%
87%
7%
Inspection &
Assessment
$22
MS
$300
Revenue by Service Offering
7
Heat Treating
(“HT”)
$100
HT
$23
HT
$123
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Team Furmanite Combined
Employees 6,000 2,300 8,300
Locations 140 80 220
Countries 15 16 22
10
Geographic Scale, Scope and Customer Access
North America (85%) – US (76%)/CA (9%) Europe (10%) Rest of World (5%)
Combined Entity Snapshot Key Benefits
• Better attract and retain skilled employees
• Cross-sell services to existing customers
• Creates more “large project” capabilities
• Better access and service new customers
• Enhances purchasing power among supplier base
TEAM
$931
Furmanite
$224 TEAM
$48
Furmanite
$87
TEAM
$41 Furmanite
$34
$ in millions
_____________________
Note: Represents 2015 Pro-Forma revenue
Total 2015 (PF) Revenue: $1,155 Total 2015 (PF) Revenue: $135 Total 2015 (PF) Revenue: $75
8
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11
U.S. Locations (Team, Furmanite & QualSpec)
TEAM Branch Office
TEAM Branch Office and Equipment Center
TEAM Corporate Office
QualSpec Resident Locations
QualSpec Offices
Quest Distribution Location
Furmanite Location
Furmanite Manufacturing Location
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12
Blue-Chip Customer Base
Refineries
45%
Other
17%
Pipeline
8%
Power
8%
Petro-
Chemical
22%
• Diverse customer base across several large industrial markets
• Industry-leading, blue-chip customers
• 7,000 active customers and minimal concentrations
• Multi-year service agreements with major customers
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13
An Attractive Growth Platform
Breadth of
Services
New Capital
Construction
Pipeline
Integrity
Management
LNG Boom and
Cheap Feed
Stocks
Leading North
America Market
Position
Areas of Growth
• Opportunity to capitalize on
procurement consolidation trends by
customers who prefer larger, specialized
service providers
• Leading NAM market position; breadth
of service lines and geographic reach
provide opportunity to gain share in
highly fragmented market
• New construction starts, specifically in
the Gulf coast, provide long-term
opportunities
• Existing and new pipeline construction
create demand for our specialized
integrity management programs
• Cheap feed stock is driving max
production capacities, which stresses
equipment usage leading to more
service opportunities
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August 28, 2015
Questions
14
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Investor Information
15
Stock Ticker
NYSE: TISI
Website: www.teaminc.com
Headquarters
Team Industrial Services
13131 Dairy Ashford #600
Sugar Land, Texas 77478
Team Contacts
Ted Owen: President and CEO
+1 281.388.5525 |ted.owen@teaminc.com
Greg Boane: Executive Vice President and CFO
+1 281.388.5541 |greg.boane@teaminc.com
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Appendix
16
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17
TEAM’s Business Integration Bet
8
Note: Based on unaudited pro forma consolidated results of operations as if the acquisition of Furmanite and Qualspec had occurred at the beginning of fiscal
year 2015. These results are not necessarily indicative of the results which would actually have occurred if the acquisitions had taken place at the beginning of
fiscal year 2015, nor are they necessarily indicative of future results.
$ in millions
Current
FY 2015 Market Market 2018
Pro Forma Adjustment Growth Target
Total Revenues 1,365 1,250 250 1,500
Adjusted EBITDA 136 105 50 155
10% 8% 20% 10%
Merger Related Synergies 25
Performance Improvement 20
Targeted EBITDA 200
13%
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18
Pro Forma Revenue 2015
Note: Based on unaudited pro forma consolidated results of operations as if the acquisition of Furmanite and Qualspec had occurred at the beginning of fiscal year 2015. These results are not necessarily indicative of
the results which would actually have occurred if the acquisitions had taken place at the beginning of fiscal year 2015, nor are they necessarily indicative of future results.
REVENUE SUMMARY
Three Months Ending Mar. 31, Jun. 30, Sep. 30 and Dec. 31, 2015
(Unaudited)
($ in millions)
PFORMA Revenues (Incl. QSpec and FRM) Q1 '15 Q2 '15 Q3 '15 Q4 '15 TOTAL FY '15
Team QualSpec 152 174 157 155 638
Team Furmanite 154 173 155 171 653
Quest Integrity 16 24 16 18 74
Total TEAM Consolidated 322 371 328 344 1,365
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Pro Forma Revenue Summary Q216 vs. Q215
Note: Based on unaudited pro forma consolidated results of operations as if the acquisition of Furmanite and Qualspec had occurred at the beginning of fiscal year 2015. These results are not necessarily indicative of
the results which would actually have occurred if the acquisitions had taken place at the beginning of fiscal year 2015, nor are they necessarily indicative of future results.
REVENUE SUMMARY
Three Months Ending June 30, 2016 and 2015
(Unaudited)
($ in millions)
Q2 '16 Q2 '15 $ Change % Change
TEAM Consolidated
Team Consolidated Pro Forma 336 371 (34) (9%)
Less: Heat Treating Services 17 28 (11) (39%)
Less: Quest Integrity 20 24 (4) (17%)
Plus: Fort McMurray Fire Impact 5 - 5
Adjusted Pro Forma Revenues 304 319 (14) (4%)
TEAM QualSpec
Team QualSpec Pro Forma 156 174 (18) (10%)
Less: Heat Treating Services 17 28 (11) (39%)
Plus: Fort McMurray Fire Impact 2 - 2
Adjusted Pro Forma Revenues 141 146 (5) (3%)
TEAM Furmanite
Team Furmanite Pro Forma 160 173 (13) (8%)
Plus: Fort McMurray Fire Impact 3 - 3
Adjusted Pro Forma Revenues 163 173 (10) (6%)
Quest Integrity 20 24 (4) (17%)
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20
Merger Cost Synergies Achievement to Date (June 30, 2016)
Annualized Savings (Millions)
Operations 8.43$
Executive Level 2.83$
Corporate Functions 1.35$
Headcount Savings Total 12.61$
Public Company Costs 2.01$
Business Insurance Renewal 4.00$
Total 18.63$
Note: This schedule represents the merger cost synergies achieved to date on an annual run-rate basis.