10-K: Team Inc. Navigates Debt Refinancing, Reports Mixed 2025 Results

Team Inc. reported a 5.2% revenue increase to $896.5 million in 2025, alongside a higher net loss of $49.2 million, while successfully executing significant debt and equity refinancing transactions.

Summary

• Total revenues increased by $44.2 million or 5.2% to $896.5 million in 2025 compared to $852.3 million in 2024.
• The Inspection and Heat-Treating (IHT) segment's revenue increased by $32.2 million or 7.5% to $458.9 million, driven by higher call-out and turnaround activity in U.S. operations and growth in Canada.
• The Mechanical Services (MS) segment's revenue increased by $12.1 million or 2.8% to $437.6 million, primarily due to growth from turnaround activities in U.S. oil and refining sectors and Canadian project work, partially offset by declines in international operations.
• Overall operating income increased by $3.9 million or 38.8% to $14.1 million in 2025.
• IHT operating income improved by $6.8 million or 18.5%, mainly due to stronger gross margins and cost containment in the U.S.
• MS operating income decreased by $0.9 million or 3.2%, primarily due to lower project activity levels in international regions.
• Net loss increased to $49.2 million in 2025 from $38.3 million in 2024.
• Interest expense, net, decreased by $3.1 million to $44.7 million, attributed to lower interest rates from refinancing and reduced outstanding debt.
• A loss on debt extinguishment of $13.1 million was recognized in 2025 due to debt refinancing activities.
• Cash used in operating activities was $11.3 million in 2025, a significant decrease from $22.8 million provided in 2024, primarily driven by changes in working capital.
• Total debt and finance obligations decreased by $27.9 million to $297.2 million as of December 31, 2025.
• The company successfully completed debt refinancing transactions in March 2025 and a preferred stock financing transaction in September 2025, raising $75.0 million.
• As of March 10, 2026, the company had 4,571,382 shares of common stock outstanding, with an aggregate market value of voting stock held by non-affiliates of approximately $41.1 million on June 30, 2025.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a challenging period marked by increased net losses and negative operating cash flow, despite revenue growth and successful debt restructuring. The high leverage and dependence on specific industries remain concerns, though strategic financing provides some stability.

Positives

• Total revenues increased by 5.2% year-over-year, indicating growth in demand for services.
• The Inspection and Heat-Treating (IHT) segment demonstrated strong performance with a 7.5% revenue increase and an 18.5% increase in operating income, driven by U.S. operations and aerospace-related growth.
• Successful completion of significant debt refinancing transactions in March 2025, which lowered overall interest rates and reduced outstanding debt.
• Secured $75.0 million in preferred stock financing in September 2025, enhancing financial flexibility and liquidity.
• Regained compliance with NYSE listing standards as of March 14, 2025, removing the immediate threat of delisting.
• Maintained compliance with all debt covenants as of December 31, 2025.
• Reduced total debt and finance obligations by $27.9 million from the prior year.
• Access to an additional $30.0 million in liquidity through a delayed draw mechanism for Series B Preferred Stock until September 2027, earmarked for strategic growth and debt repayment.

Negatives

• Net loss increased by $10.9 million (28.6%) to $49.2 million in 2025, indicating a deterioration in bottom-line profitability.
• Cash flow from operating activities shifted from a positive $22.8 million in 2024 to a negative $11.3 million in 2025, primarily due to working capital changes, signaling reduced operational cash generation.
• Free Cash Flow was negative $20.6 million in 2025, a significant decline from positive $13.3 million in 2024.
• A substantial non-cash loss on debt extinguishment of $13.1 million was incurred in 2025.
• The Mechanical Services (MS) segment experienced a 3.2% decrease in operating income, mainly due to lower international project activity.
• Corporate operating loss increased by $2.0 million, primarily due to higher professional costs related to debt and equity refinancing activities.
• Other income (expense), net, shifted from a $2.7 million net income in 2024 to a $2.9 million net expense in 2025, driven by unfavorable foreign currency transaction losses.
• The company has no present intention of paying cash dividends in the foreseeable future due to limitations from lenders and preferred shareholders.

Risks

• Ability to generate sufficient cash from operations, access credit facilities, or amounts available under term loans to support operations, or maintain compliance with covenants under debt arrangements and Series B Preferred Stock Certificate of Designation.
• Ability to manage inflationary pressures in operating costs.
• Negative market conditions, including domestic and global inflationary pressures, impact of changes in global trade policies and tariffs, and future economic uncertainties, particularly in industries of heavy dependence.
• Delays in the commencement of major projects.
• Seasonal and other variations, such as severe weather conditions (including conditions influenced by climate change) and the nature of customer's industry affecting the timing of new contracts and terminations of existing contracts, which may result in unpredictable fluctuations in cash flows and financial results.
• Significant debt and high leverage could have a negative impact on ability to access capital markets, liquidity position, and ability to manage increases in interest rates.
• Risk of non-payment and/or delays in payment of receivables from customers.
• Ability to maintain compliance with the New York Stock Exchange's (NYSE) continued listing requirements and rules.
• Financial forecasts being based upon estimates and assumptions that may materially differ from actual results.
• Incurrence of liabilities and suffering of negative financial or reputational impacts relating to occupational health and safety matters.
• Changes in laws or regulations in the local jurisdictions that business is conducted.
• Inherently uncertain outcome of current and future litigation.
• Acts of terrorism, war or political or civil unrest in the United States or elsewhere, changes in laws and regulations, or the imposition of economic or trade sanctions affecting domestic and international commercial transactions.
• Inability to implement commercially competitive services in a timely manner in response to changes in the market, customer requirements, competitive pressures and technology trends.
• Failure to hire or retain members of a skilled technical workforce.
• Unsatisfactory quality of service execution, including safety performance, can affect customer relationships, eliminate or reduce revenue streams, result in higher operating costs, and negatively impact ability to hire and retain a skilled technical workforce.
• Dependence upon the maintenance of proprietary technologies and information, many of which are no longer subject to patent protection.
• Inability to maintain or renew contracts with customers, as a significant portion may be terminated on short notice.
• Loss or unavailability of executive officers or other key personnel.
• Additional impairments of intangible and other long-lived assets, and changes in the estimated useful lives of intangible assets.
• Improvements in operating results from expected savings in operating costs from workforce reductions and other cost saving and business improvement initiatives may not be realized, may take longer to be realized, or could be realized only for a limited period.
• Economic, political and other risks associated with international operations, including changes in foreign currency exchange rates, instability, difficulty in repatriating cash proceeds, differing employee relations, differing regulatory environments, trade protection measures, and corruption.
• Business acquisitions and divestitures entail risk for investors, including unforeseen integration difficulties or costs, and failure to realize anticipated benefits.
• Business may be adversely impacted by work stoppages, staffing shortages and other labor matters.
• Extension of credit to customers for purchases of services subjects the company to potential credit risk.
• Experience of inflationary pressures in operating costs and cost overruns on projects, particularly fixed-price contracts.
• Increased scrutiny and changing expectations from investors, customers and other market participants with respect to sustainability or environmental, social and governance (ESG) matters may impose additional costs or expose to reputational or other risks.
• Demand for services is sensitive to oil and gas prices, global oil supply and other factors which impact customer spending levels.
• Volatility in the price of outstanding securities due to fluctuating sales and operating results.
• Revenues are heavily dependent on certain industries, particularly the refining and petrochemical industries.
• Sales of services in highly competitive markets, which can limit ability to increase prices and maintain or increase market share.
• Ongoing investments in new customer markets involve significant risks, could disrupt current operations and may not produce expected long-term benefits.
• Business and operations could suffer in the event of computer system failures, cyber-attacks or deficiencies in cybersecurity or those of third-party providers.
• Unanticipated fluctuations in effective tax rate and tax obligations, changes in legislation or adverse outcomes resulting from examination of income or other tax returns.
• Ability to use net operating loss carryforwards and certain other tax attributes may be limited.
• Operations and properties are subject to extensive environmental, health and safety regulations.
• Business is subject to risks arising from climate change, including climate change legislation or regulations restricting emissions of greenhouse gases, changes in consumer preferences and technology and physical impacts of climate change.
• Subject to privacy and data security/protection laws in the jurisdictions in which operations are conducted, potentially exposing to substantial costs and liabilities.
• Insurance coverage will not fully indemnify against certain claims or losses, and not all losses or claims are insured.
• Involvement and likely continued involvement in legal proceedings or governmental or regulatory inquiries, which will increase costs and, if adversely determined, could have a material effect on results of operations, financial position or cash flows.

Future Outlook

The company believes its current working capital, forecasted cash flows from operations, and existing debt arrangements are sufficient to fund operations, service indebtedness, and maintain compliance with debt covenants for the next twelve months and long-term. The company also has an option to draw up to $30.0 million in additional Series B Preferred Stock until September 2027, which can be used to finance permitted acquisitions, growth initiatives, repay First Lien Term Loan obligations, and fund up to 20% of its transformation plan.

Management Comments

• 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 customers election.
• We also believe that we are unique in our ability to provide these services in three distinct customer demand profiles: (i) turnaround or project services, (ii) call-out services, and (iii) nested or run-and-maintain services.
• Our management is responsible for establishing and maintaining adequate internal control over financial reporting... Management has concluded that our internal control over financial reporting was effective as of December 31, 2025.

Industry Context

StockSavvy.ai notes that Team Inc.'s revenue growth, particularly in its Inspection and Heat-Treating segment and U.S. Mechanical Services operations, indicates resilience in core industrial services despite a challenging global economic environment. The company's diversification efforts into aerospace and defense, renewable energy, and infrastructure are strategic moves to reduce reliance on the volatile oil and gas sector, aligning with broader industry trends towards energy transition and asset integrity management. The successful refinancing and capital raise demonstrate continued investor confidence, albeit with significant leverage.

Management Changes

Corporate Governance

Legal Proceedings

• Kelli Most Litigation: A lawsuit for wrongful death, initially resulting in a $222.0 million verdict against Team in 2021. The Texas First Court of Appeals vacated the judgment and dismissed the case in May 2024. The plaintiff re-filed the lawsuit in the U.S. District Court, Kansas District, on March 5, 2025. The company has accrued a $10.0 million liability, which is covered by general liability and excess insurance policies (deductibles met).
• Pandemic-related government subsidies: Received notices of noncompliance for foreign entities regarding governmental funding assistance. After successful contests, a net amount of $0.6 million was accrued as of December 31, 2025, to be repaid, which is not covered by insurance.

Related Party Transactions

• Engaged in debt funding and repayment transactions with Corre and affiliates and APSC, as detailed in Note 11 Debt.
• Issued Series B Preferred Stock and warrants to Stellex Holder on September 11, 2025, as detailed in Note 16 Redeemable Preferred Stock.
• Stellex Holder acquired $10.0 million of the company's outstanding loan under the Second A&R Second Lien Term Loan Agreement in September 2025.
• JFL Credit Opportunities Fund II, L.P. and affiliates, in which one of the company's independent directors is an equity partner, acquired $15.0 million of the company's outstanding loan under the Second A&R Second Lien Term Loan Agreement in September 2025.

Stakeholder Impact

• Shareholders face dilution risk from warrant exercises and potential future equity raises. The increased net loss negatively impacts shareholder value. Concentrated ownership by Corre and Stellex could limit the influence of other shareholders.
• Creditors and lenders benefit from improved financial flexibility and reduced interest rates due to debt refinancing and Series B Preferred Stock issuance, but significant debt and leverage remain, making compliance with covenants critical.
• Employees may be impacted by workforce reductions and cost-saving initiatives, potentially affecting morale and retention, though the company invests in training and competitive compensation.
• Customers are impacted by the company's quality of service and safety performance, which are crucial for maintaining relationships and securing new contracts. Economic downturns in key industries or project delays could reduce demand for services.
• Suppliers may be affected by inflationary pressures and changes in trade policies, which could impact the cost and availability of materials and services.

Next Steps

• Continue to monitor the implementation of OECD BEPS 2.0 Pillar Two rules by countries of operation.
• Evaluate the impact of ASU 2024-03 (Disaggregation of Income Statement Expenses) on related disclosures.
• Evaluate the impact of ASU 2025-12 (Codification Improvements) on consolidated financial statements and disclosures.
• Evaluate the impact of ASU 2025-11 (Interim Reporting: Narrow-Scope Improvements) on consolidated financial statements and disclosures.
• Evaluate the impact of ASU 2025-10 (Government Grants) on consolidated financial statements and disclosures.
• Continue legal defense in the Kelli Most litigation, which was re-filed in the U.S. District Court, Kansas District.
• Potentially exercise the option to draw up to $30.0 million in additional Series B Preferred Stock until September 2027 for strategic purposes.
• Utilize the $10.0 million Second Lien Delayed Draw Term Loans available until April 15, 2026, for general working capital and liquidity purposes.

Key Dates

Recommendation

The company shows mixed results with revenue growth but increased net losses and negative operating cash flow. While successful debt refinancing and a capital raise provide some financial stability and flexibility, significant leverage and ongoing legal challenges present considerable risks. The regaining of NYSE compliance is positive, but the overall financial performance suggests a 'hold' position until there is clear evidence of sustained profitability and improved cash generation from core operations.

Keywords

Industrial Services, Inspection, Heat-Treating, Mechanical Services, Non-Destructive Testing, Asset Integrity, Oil and Gas, Refining, Petrochemical, Aerospace, Debt Refinancing, Preferred Stock, SEC Filing, 10-K, Financial Performance, Corporate Governance, Risk Management, NYSE Listing, Cybersecurity, ESG