10-Q: Team, Inc. Reports Q3 2026 Results: Revenue Declines, Net Loss Widens

Team, Inc. announced its third-quarter 2026 financial results, showing a decrease in total revenues and an increase in net loss compared to the prior year, with operational challenges impacting segment performance.

Summary

• Total revenues for the three months ended September 30, 2026, decreased by 2.0% to $220.4 million compared to $225.0 million in the prior year.
• For the nine months ended September 30, 2026, total revenues decreased by 1.1% to $664.1 million compared to $671.7 million in the prior year.
• The company reported a net loss of $11.1 million for the three months ended September 30, 2026, compared to a net loss of $11.4 million in the same period of 2025.
• For the nine months ended September 30, 2026, the net loss was $29.2 million, an improvement from $45.4 million in the prior year.
• Operating loss for the three months ended September 30, 2026, was $0.5 million, a decrease from an operating income of $1.3 million in the prior year.
• Operating loss for the nine months ended September 30, 2026, was $1.7 million, a significant decrease from an operating income of $7.4 million in the prior year.
• Adjusted EBITDA for the nine months ended September 30, 2026, was $36.2 million, down from $44.3 million in the prior year.
• Cash and cash equivalents decreased to $11.0 million as of September 30, 2026, from $18.1 million as of December 31, 2025.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative sentiment due to declining revenues, increased net loss, and a significant decrease in operating income, despite some positive adjustments in non-GAAP measures.

Positives

• The Inspection and Heat-Treating (IHT) segment showed revenue growth of 3.9% to $127.1 million for the three months ended September 30, 2026, driven by increased non-turnaround activities in the U.S.
• IHT segment operating income increased by 8.7% to $15.2 million for the three months ended September 30, 2026.
• The net loss for the nine months ended September 30, 2026, improved to $29.2 million from $45.4 million in the prior year.
• Interest expense decreased by $2.0 million for the three months ended September 30, 2026, and by $7.2 million for the nine months ended September 30, 2026, due to refinancing and debt paydowns.
• The company reported compliance with its debt covenants as of September 30, 2026.
• Available borrowing capacity under the 2022 ABL Credit Agreement was approximately $35.4 million as of September 30, 2026.
• The company has access to up to $30.0 million in additional liquidity through September 2027 via a delayed draw mechanism.

Negatives

• Total revenues decreased by 2.0% to $220.4 million for the three months ended September 30, 2026.
• Mechanical Services (MS) segment revenues decreased by 9.1% to $93.3 million for the three months ended September 30, 2026, due to lower oil and gas turnaround activities and project revenue.
• MS segment operating income decreased by 89.1% to $0.4 million for the three months ended September 30, 2026.
• The company reported an overall operating loss of $0.5 million for the three months ended September 30, 2026, compared to an operating income of $1.3 million in the prior year.
• The overall operating loss for the nine months ended September 30, 2026, was $1.7 million, a significant decline from an operating income of $7.4 million in the prior year.
• Net loss attributable to common shareholders was $14.2 million for the three months ended September 30, 2026.
• Cash and cash equivalents decreased to $11.0 million as of September 30, 2026, from $18.1 million as of December 31, 2025.
• Adjusted EBITDA decreased to $36.2 million for the nine months ended September 30, 2026, from $44.3 million in the prior year.

Risks

• The company's ability to generate sufficient cash from operations, access credit facilities, or maintain compliance with debt covenants is a significant risk.
• Inflationary pressures on operating costs and negative market conditions, including global economic uncertainties, pose risks.
• Delays in the commencement of major projects could impact financial results.
• Seasonal variations, severe weather, volatility of oil and gas prices, and contract timing can lead to unpredictable fluctuations in cash flows.
• Significant debt and high leverage could negatively impact access to capital markets and liquidity.
• Risk of non-payment or delays in payment of receivables from customers.
• The company faces risks related to maintaining compliance with NYSE continued listing requirements.
• The outcome of current and future litigation is inherently uncertain.

Future Outlook

The company believes its current working capital, forecasted cash flows, and availability under debt arrangements are sufficient to fund operations, service debt, and maintain compliance with covenants for the next twelve months and long-term, though this assessment is based on assumptions that may prove inaccurate.

Management Comments

• Management believes the company is uniquely qualified to provide integrated solutions involving inspection, engineering assessment, and mechanical services.
• Management believes the company is unique in its ability to provide services across turnaround, call-out, and run-and-maintain demand profiles.
• Management believes that the resolution of current legal matters will not have a material adverse effect on the company's financial statements.

Industry Context

StockSavvy.ai notes that the company operates in the specialty industrial services sector, which is sensitive to economic cycles and capital expenditure trends in heavy industries like energy, manufacturing, and infrastructure. The reported revenue decline and operational challenges reflect broader economic headwinds and industry-specific pressures.

Comparison to Industry Standards

• The company's reported net loss for the nine months ended September 30, 2026, of $29.2 million, while an improvement from the prior year, indicates continued profitability challenges compared to industry peers with more stable revenue streams.
• The decrease in total revenues for both the quarter and year-to-date periods suggests potential market share erosion or a slowdown in demand for its services, which is a concern when compared to companies in the industrial services sector that have maintained or grown revenue.
• The significant decrease in operating income and adjusted EBITDA for the nine-month period indicates margin compression, which is a key performance indicator for profitability in the industrial services sector. Competitors with efficient operations and strong pricing power may be showing more resilience.
• The company's high leverage, with total debt and finance obligations of $319.1 million as of September 30, 2026, is a point of concern when compared to industry benchmarks for companies of similar size and operational scope, potentially limiting financial flexibility.

Legal Proceedings

• The company is involved in the Kelli Most litigation, a wrongful death case that has been refiled in federal court in Kansas. A $10.0 million liability has been accrued, 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

• Stellex Capital Management LLC, through affiliated entities, is the largest common stock shareholder, holds Series B Preferred Stock, and $10.0 million of debt under the 2025 Second Lien Term Loan Agreement.
• JFL Credit Opportunities Fund II, L.P. and affiliates hold $15.0 million of debt under the 2025 Second Lien Term Loan Agreement.
• One independent director is an equity partner of JFL Credit Opportunities Fund II, L.P.

Stakeholder Impact

• Shareholders may be concerned by the declining revenues, increased operating losses, and reduced cash position.
• Creditors may be monitoring the company's ability to maintain compliance with debt covenants given the current financial performance.
• Employees may be impacted by ongoing operational challenges and potential restructuring costs, as indicated by severance charges.
• Suppliers may face potential payment delays if the company's liquidity situation deteriorates further.

Next Steps

• Continue to monitor liquidity and cash flow.
• Manage operating costs and inflationary pressures.
• Focus on improving profitability in the Mechanical Services segment.
• Continue to assess and manage legal proceedings and contingencies.
• Monitor compliance with debt covenants and NYSE listing requirements.

Key Dates

Recommendation

While the company has improved its net loss year-over-year and shows some positive trends in its IHT segment and debt management, the overall decline in revenues, widening operating losses, and reduced cash position present significant concerns. The company's high leverage and ongoing litigation also add to the risk profile. A 'hold' recommendation reflects a cautious stance, awaiting signs of sustained revenue recovery and improved profitability before considering a more positive outlook.

Keywords

specialty industrial services, inspection services, heat treating, mechanical services, asset integrity, non-destructive testing, turnaround services, oil and gas