10-Q: Team, Inc. Reports Q2 2026 Results: Net Loss Widens

Team, Inc. announced its Q2 2026 financial results, reporting a net loss of $6.812 million on revenues of $228.678 million, a decrease from the prior year.

Summary

• Team, Inc. reported revenues of $228.678 million for the three months ended June 30, 2026, a decrease of 7.8% from $248.026 million in the same period last year.
• The company incurred a net loss of $6.812 million for the three months ended June 30, 2026, compared to a net loss of $4.266 million in the prior year period.
• For the six months ended June 30, 2026, revenues were $443.734 million, a slight decrease of 0.7% from $446.681 million in the prior year period.
• The net loss for the six months ended June 30, 2026, was $18.145 million, an improvement from a net loss of $33.984 million in the prior year period.
• Operating income for the three months ended June 30, 2026, was $2.173 million, a significant decrease from $12.103 million in the prior year period.
• Operating loss for the six months ended June 30, 2026, was $1.198 million, compared to an operating income of $6.100 million in the prior year period.
• The company had $25.984 million in cash and cash equivalents as of June 30, 2026.
• Total liabilities were $490.624 million as of June 30, 2026.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as negative due to the continued net losses, declining revenues in key segments, and increased operating expenses, despite some positive adjustments in debt interest and foreign exchange.

Positives

• Interest expense decreased by $2.6 million for the three months ended June 30, 2026, compared to the prior year period, primarily due to debt refinancing and lower interest rates.
• Other income (expense), net, showed a favorable change of $3.7 million for the three months ended June 30, 2026, mainly due to a foreign currency gain.
• For the six months ended June 30, 2026, the net loss improved to $18.145 million from $33.984 million in the prior year period.
• For the six months ended June 30, 2026, interest expense, net, decreased by $5.2 million compared to the same period in 2025, due to refinancing and lower interest rates.
• The company reported $28.9 million of available borrowing capacity under its 2022 ABL Credit Agreement as of June 30, 2026.
• The company has access to up to $30.0 million in additional liquidity through September 2027 via a delayed draw mechanism.
• Cash used in operating activities improved significantly, from $32.0 million for the six months ended June 30, 2025, to $8.4 million for the same period in 2026.
• The company was in compliance with its debt covenants as of June 30, 2026.

Negatives

• Total revenues decreased by $19.3 million (7.8%) for the three months ended June 30, 2026, compared to the prior year period.
• The IHT segment revenue decreased by $6.9 million (5.0%) and the MS segment revenue decreased by $12.4 million (11.3%) for the three months ended June 30, 2026, compared to the prior year.
• Operating income for the three months ended June 30, 2026, decreased by $9.9 million (82.0%) to $2.2 million.
• IHT segment operating income decreased by $4.6 million (25.8%) and MS segment operating income decreased by $5.6 million (71.0%) for the three months ended June 30, 2026.
• Total revenues for the six months ended June 30, 2026, decreased by $2.9 million (0.7%) compared to the prior year period.
• Operating loss for the six months ended June 30, 2026, was $1.2 million, a decline of $7.3 million from operating income in the prior year period.
• IHT segment operating income decreased by $4.4 million (15.5%) and MS segment operating income decreased by $4.0 million (82.9%) for the six months ended June 30, 2026.
• The company reported a net loss of $6.812 million for the three months ended June 30, 2026, an increase from the $4.266 million net loss in the prior year period.

Risks

• The company faces risks related to inflationary pressures on operating costs and negative market conditions, including global economic uncertainties.
• Delays in the commencement of major projects could impact financial results.
• Seasonal and other variations, such as severe weather, volatility in oil and gas prices, and the nature of customer industries, can cause unpredictable fluctuations in cash flows.
• Significant debt and high leverage could negatively impact the ability to access capital markets, liquidity, and manage interest rate increases.
• There is a risk of non-payment or delays in payment of receivables from customers.
• The company must maintain compliance with NYSE continued listing requirements.
• Financial forecasts are based on estimates and assumptions that may differ materially from actual results.
• Incurrence of liabilities and negative financial or reputational impacts related to occupational health and safety matters are a concern.

Future Outlook

The company believes its current working capital, forecasted cash flows from operations, and availability under existing debt arrangements are sufficient to fund operations, service indebtedness, and maintain compliance with debt covenants for the next twelve months and into the long-term, based on current expectations. However, this assessment relies on assumptions that may prove inaccurate, and actual results could differ materially.

Management Comments

• Management believes that the resolution of current legal matters, including the Kelli Most litigation, will not have a material adverse effect on the Company's condensed consolidated financial statements.
• Management believes that the non-GAAP financial measures used are useful to both management and investors in their analysis of financial position and results of operations.
• Management has evaluated the effectiveness of the Company's disclosure controls and procedures and concluded they are effective.
• Management has evaluated the effectiveness of the Company's internal control over financial reporting and found no material changes that have affected or are likely to affect them.

Industry Context

StockSavvy.ai notes that Team, Inc.'s performance in the specialty industrial services sector, particularly in Inspection and Heat-Treating (IHT) and Mechanical Services (MS), is sensitive to activity levels in heavy industries like Energy, Manufacturing, Midstream, and Infrastructure. The reported revenue decline in both segments suggests a slowdown in project and turnaround activities within these key client industries, which is a common challenge for companies in this cyclical sector.

Comparison to Industry Standards

• The company's net loss of $6.812 million for the quarter and $18.145 million for the six months ended June 30, 2026, indicates a challenging operating environment compared to profitable peers in the industrial services sector.
• The decline in revenues for both IHT and MS segments, particularly the 11.3% drop in MS, suggests potential underperformance relative to industry peers who may be experiencing stronger demand or have more diversified service offerings.
• The company's high debt-to-equity ratio (implied by the significant accumulated deficit and substantial long-term debt) is a concern when compared to industry benchmarks that often favor lower leverage for greater financial flexibility.
• While the company highlights improvements in cash flow from operations for the six-month period, the overall negative free cash flow of $(14.8) million for the year-to-date period is a concern compared to companies that consistently generate positive free cash flow.

Legal Proceedings

• The company is involved in the Kelli Most litigation, a wrongful death case that was previously subject to a $222 million judgment which was vacated and dismissed. The plaintiff has refiled the case in federal court in Kansas, and the company has accrued a $10.0 million liability as of June 30, 2026, fully offset by an insurance receivable.
• Management believes the resolution of this and other routine legal proceedings will not have a material adverse effect on the financial statements.

Related Party Transactions

• Transactions with Corre and affiliates related to debt obligations, including providing and repaying funding.
• In connection with the Series B Preferred Stock issuance, the company entered into a Purchase Agreement with the Stellex Holder.
• The Stellex Holder acquired $10.0 million of the company's outstanding loan under the 2025 Second Lien Term Loan Agreement.
• In September 2025, $15.0 million of the company's outstanding loan under the 2025 Second Lien Term Loan Agreement was acquired by JFL Credit Opportunities Fund II, L.P. and affiliates, in which an independent director is an equity partner.

Stakeholder Impact

• Shareholders may be concerned by the continued net losses and declining revenues, potentially impacting stock value.
• Creditors may be concerned by the company's high leverage and the need to maintain compliance with debt covenants.
• Employees may be impacted by potential restructuring or cost-saving measures due to the challenging financial performance.
• Suppliers may face extended payment terms if the company's liquidity is strained.

Next Steps

• Continue to monitor compliance with debt covenants.
• Manage inflationary pressures and market conditions.
• Focus on improving operating performance and cash flow.
• Evaluate the impact of adopting new accounting standards (ASU 2026-01).

Key Dates

Recommendation

The company continues to report net losses and declining revenues, particularly in its Mechanical Services segment. While there are some positive adjustments in interest expense and foreign exchange, the overall financial performance indicates worsening operational results. The high debt levels and ongoing legal proceedings add further risk. Until a clear path to profitability and sustainable revenue growth is demonstrated, a sell recommendation is warranted.

Keywords

specialty industrial services, inspection services, heat treating, mechanical services, asset integrity, turnaround services, energy sector, manufacturing