TEAM INC - Quarter Report: 2023 September (Form 10-Q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________________________________

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-08604

TEAM, INC.


(Exact Name of Registrant as Specified in Its Charter)
Delaware						74-1765729
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)
13131 Dairy Ashford, Suite 600, Sugar Land, Texas						77478
(Address of Principal Executive Offices)						(Zip Code)
(281) 331-6154
(Registrant’s Telephone Number, Including Area Code)
None
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.30 par value	TISI	New York Stock Exchange
Preferred Stock Purchase Rights	N/A	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

Smaller reporting company

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The Registrant had 4,368,422 shares of common stock, par value $0.30, outstanding as of November 7, 2023.

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INDEX


		Page No.
PART I—FINANCIAL INFORMATION		1
ITEM 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets as of September 30, 2023 (Unaudited) and December 31, 2022	2
	Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022	3
	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2023 and 2022	4
	Unaudited Condensed Consolidated Statements of Shareholders’ Equity (Deficit) for the Three and Nine Months Ended September 30, 2023 and 2022	5
	Unaudited Condensed Consolidated Statements of Cash Flows for Nine Months Ended September 30, 2023 and 2022	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	34
ITEM 4.	Controls and Procedures	35
PART II—OTHER INFORMATION		36
ITEM 1.	Legal Proceedings	36
ITEM 1A.	Risk Factors	36
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
ITEM 3.	Defaults Upon Senior Securities	36
ITEM 4.	Mine Safety Disclosures	36
ITEM 5.	Other Information	36
ITEM 6.	Exhibits	37
SIGNATURES		38

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PART I—FINANCIAL INFORMATION


ITEM 1.			FINANCIAL STATEMENTS

TEAM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	September 30, 2023		December 31, 2022
ASSETS	(unaudited)

Current assets:
Cash and cash equivalents	$	21,483	$	58,075
Accounts receivable, net of allowance of $5,326 and $5,262 respectively	185,800		186,689
Inventory	38,874		36,331
Income tax receivable	1,226		779

Prepaid expenses and other current assets	65,453		65,679
Total current assets	312,836		347,553
Property, plant and equipment, net	127,714		138,099
Intangible assets, net	65,816		75,407
Operating lease right-of-use assets	43,101		48,462
Defined benefit pension asset	3,618		398
Other assets, net	7,388		6,351
Deferred tax asset	981		375
Total assets	$	561,454	$	616,645
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt and finance lease obligations	$	5,302	$	280,993
Current portion of operating lease obligations	14,517		13,823
Accounts payable	32,039		32,524
Other accrued liabilities	104,750		119,267
Income tax payable	2,464		2,257
Total current liabilities	159,072		448,864
Long-term debt and finance lease obligations	295,778		4,942
Operating lease obligations	32,436		38,819
Deferred tax liabilities	5,325		3,661
Other long-term liabilities	4,228		2,599
Total liabilities	496,839		498,885
Commitments and contingencies
Equity:
Preferred stock, 500,000 shares authorized, none issued	—		—
Common stock, par value $0.30 per share, 12,000,000 shares authorized; 4,368,422 and 4,342,909 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	1,311		1,303
Additional paid-in capital	457,924		457,133
Accumulated deficit	(354,277)		(301,679)
Accumulated other comprehensive loss	(40,343)		(38,997)
Total equity	64,615		117,760
Total liabilities and equity	$	561,454	$	616,645

See accompanying notes to unaudited condensed consolidated financial statements.

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TEAM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

Revenues	$	206,715	$	218,339	$	648,484	$	628,917
Operating expenses	153,928		162,322		487,779		479,656
Gross margin	52,787		56,017		160,705		149,261
Selling, general and administrative expenses	54,045		57,746		165,113		184,174
Restructuring and other related charges, net	—		—		—		16
Operating loss	(1,258)		(1,729)		(4,408)		(34,929)
Interest expense, net	(10,067)		(26,653)		(43,499)		(63,708)
Loss on debt extinguishment	(3)		—		(1,585)		—
Other income, net	266		3,227		914		9,664
Loss from continuing operations before income taxes	(11,062)		(25,155)		(48,578)		(88,973)
Provision for income taxes	(1,072)		(1,465)		(4,020)		(4,182)
Net loss from continuing operations	(12,134)		(26,620)		(52,598)		(93,155)
Discontinued operations:
Net income from discontinued operations, net of income tax	—		3,747		—		16,268
Net loss	$	(12,134)	$	(22,873)	$	(52,598)	$	(76,887)

Basic net loss per common share:
Loss from continuing operations	(2.78)		(6.16)		(12.07)		(22.51)
Income from discontinued operations	—		0.87		—		3.93
Total	$	(2.78)	$	(5.29)	$	(12.07)	$	(18.58)

Weighted-average number of shares outstanding:
Basic	4,368		4,322		4,358		4,139

See accompanying notes to unaudited condensed consolidated financial statements.

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TEAM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE LOSS

(in thousands)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

Net loss	$	(12,134)	$	(22,873)	$	(52,598)	$	(76,887)
Other comprehensive loss before tax:
Foreign currency translation adjustment	(3,366)		(7,035)		(1,311)		(12,152)
Other comprehensive loss, before tax	(3,366)		(7,035)		(1,311)		(12,152)
Tax provision attributable to other comprehensive loss	11		—		(35)		—
Other comprehensive loss, net of tax	(3,355)		(7,035)		(1,346)		(12,152)
Total comprehensive loss	$	(15,489)	$	(29,908)	$	(53,944)	$	(89,039)

See accompanying notes to unaudited condensed consolidated financial statements.

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TEAM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

(in thousands)

(Unaudited)


	Common Stock				Additional Paid-in Capital			Retained Earnings (Deficit)	Accumulated Other Comprehensive Loss		Total Shareholders’ Equity (Deficit)
	Shares			Amount

Balance at December 31, 2022	4,343	$	1,303			$	457,133		$	(301,679)	$	(38,997)	$	117,760


Net loss	—	—				—			(24,711)		—		(24,711)
Net settlement of vested stock awards	14	4				(52)			—		—		(48)
Foreign currency translation adjustment, net of tax	—	—				—			—		755		755

Non-cash compensation	—	—				382			—		—		382

Balance at March 31, 2023	4,357	$	1,307			$	457,463		$	(326,390)	$	(38,242)	$	94,138
Net loss	—	—				—			(15,753)		—		(15,753)
Net settlement of vested stock awards	11	4				(16)			—		—		(12)
Foreign currency translation adjustment, net of tax	—	—				—			—		1,254		1,254
Non-cash compensation	—	—				245			—		—		245
Balance at June 30, 2023	4,368	$	1,311			$	457,692		$	(342,143)	$	(36,988)	$	79,872
Net loss	—	—				—			(12,134)		—		(12,134)
Foreign currency translation adjustment, net of tax	—	—				—			—		(3,355)		(3,355)
Non-cash compensation	—	—				232			—		—		232
Balance at September 30, 2023	4,368	$	1,311			$	457,924		$	(354,277)	$	(40,343)	$	64,615

Balance at December 31, 2021	3,122	$	936			$	453,247		$	(375,584)	$	(26,732)	$	51,867
Accounting pronouncement adjustment	—	—				(5,651)			3,824		—		(1,827)
Net loss	—	—				—			(32,462)		—		(32,462)
Issuance of common stock	1,190	357				9,411			—		—		9,768
Foreign currency translation adjustment, net of tax	—	—				—			—		346		346
Non-cash compensation	—	—				(624)			—		—		(624)
Net settlement of vested stock awards	—	—				2			—		—		2
Balance at March 31, 2022	4,312	$	1,293			$	456,385		$	(404,222)	$	(26,386)	$	27,070
Net loss	—	—				—			(21,552)		—		(21,552)
Issuance of common stock	10	3				(74)			—		—		(71)
Foreign currency translation adjustment, net of tax	—	—				—			—		(5,463)		(5,463)
Non-cash compensation	—	—				565			—		—		565
Balance at June 30, 2022	4,322	$	1,296			$	456,876		$	(425,774)	$	(31,849)	$	549
Net loss	—	—				—			(22,873)		—		(22,873)
Foreign currency translation adjustment, net of tax	—	—				—			—		(7,035)		(7,035)
Non-cash compensation	—	—				629			—		—		629
Balance at September 30, 2022	4,322	$	1,296			$	457,505		$	(448,647)	$	(38,884)	$	(28,730)

See accompanying notes to unaudited condensed consolidated financial statements.

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TEAM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS1

(in thousands)

(Unaudited)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net loss	$	(52,598)	$	(76,887)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization	28,481		28,591
Write-off of deferred loan costs	—		2,748
Write-off of software cost	629		—

Loss on debt extinguishment	1,585		—

Amortization of debt issuance costs, debt discounts, and deferred financing costs	16,926		25,666
Paid-in-kind interest	10,906		15,464
Allowance for credit losses	687		(362)


Foreign currency (gains) losses	(776)		571
Deferred income taxes	986		382

Gain on asset disposal	(268)		(4,296)


Non-cash compensation costs	859		571
Other, net	(3,282)		(3,469)
Changes in operating assets and liabilities:
Accounts receivable	140		(31,313)
Inventory	(2,513)		(3,076)
Prepaid expenses and other assets	(5,207)		(7,048)

Accounts payable	363		(6,038)
Other accrued liabilities	(18,763)		5,911
Income taxes	(224)		6,220
Net cash used in operating activities	(22,069)		(46,365)
Cash flows from investing activities:
Capital expenditures	(7,433)		(21,002)



Proceeds from disposal of assets	414		7,165


Net cash used in investing activities	(7,019)		(13,837)
Cash flows from financing activities:

Borrowings under 2020 ABL Facility	—		10,300
Payments under 2020 ABL Facility	—		(72,300)
Borrowings under 2022 ABL Credit Facility (Revolving Credit Loans)	27,292		106,531
Payments under 2022 ABL Credit Facility (Revolving Credit Loans)	(16,293)		(11,715)
Repayment of APSC Term Loan	(37,092)		—
Repayment of Convertible Debt	(41,161)		—










Borrowings under ME/RE Loans	27,398		—
Payments under ME/RE Loans	(847)		—
Borrowings under Corre Incremental Term Loans	42,500		—
Borrowings under 2022 ABL Credit Facility (Delayed Draw Term Loan)	—		35,000
Payments for debt issuance costs	(8,446)		(13,609)


Issuance of common stock, net of issuance costs	—		9,696



Other	(746)		(615)
Net cash provided by (used in) financing activities	(7,395)		63,288
Effect of exchange rate changes on cash	(109)		(1,373)
Net (decrease) increase in cash and cash equivalents	(36,592)		1,713
Cash and cash equivalents at beginning of period	58,075		65,315
Cash and cash equivalents at end of period	$	21,483	$	67,028

_________________

1 Condensed consolidated statement of cash flows for the nine months ended September 30, 2022 includes discontinued operations.

See accompanying notes to unaudited condensed consolidated financial statements.

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TEAM, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business. Unless otherwise indicated, the terms “we,” “our,” “us,” and “Team” are used in this report to refer to either Team, Inc., to one or more of its consolidated subsidiaries or to all of them taken as a whole.

We are a global leading provider of specialty industrial services offering clients access to a full suite of conventional, specialized, and proprietary mechanical, heat-treating, and inspection services. We deploy conventional to highly specialized inspection, condition assessment, maintenance and repair services that result in greater safety, reliability, and operational efficiency for our clients’ most critical assets. We conduct operations in two segments: Inspection and Heat Treating (“IHT”) and Mechanical Services (“MS”). Through the capabilities and resources in these two segments, we believe that we are uniquely qualified to provide integrated solutions: 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 client’s election. In addition, we are capable of escalating with the client’s needs, as dictated by the severity of the damage found and the related operating conditions, from standard services to some of the most advanced services and integrated asset integrity and reliability management solutions available in the industry. We also believe that we are unique in our ability to provide services in three distinct client demand profiles: (i) turnaround or project services, (ii) call-out services and (iii) nested or run-and-maintain services.

IHT provides conventional and advanced non-destructive testing services primarily for the process, pipeline and power sectors, pipeline integrity management services, and field heat treating services, as well as associated engineering and condition assessment services. These services can be offered while facilities are running (on-stream), during facility turnarounds or during new construction or expansion activities. IHT also provides advanced digital imaging including remote digital video imaging.

MS provides solutions designed to serve clients’ unique needs during both the operational (onstream) and off-line states of their assets. Our onstream services include our range of standard to custom-engineered leak repair and composite solutions; emissions control and compliance; hot tapping and line stopping; and on-line valve insertion solutions, which are delivered while assets are in an operational condition, which maximizes client production time. Asset shutdowns can be planned, such as a turnaround maintenance event, or unplanned, such as those due to component failure or equipment breakdowns. Our specialty maintenance, turnaround and outage services are designed to minimize client downtime and are primarily delivered while assets are off-line and often through the use of cross-certified technicians, whose multi-craft capabilities deliver the production needed to achieve tight time schedules. These critical services include on-site field machining; bolted-joint integrity; vapor barrier plug testing; and valve management solutions.

We market our services to companies in a diverse array of heavy industries which include:

•Energy (refining, power, renewables, nuclear, offshore oil and gas, and liquefied natural gas);

•Manufacturing and Process (chemical, petrochemical, pulp and paper industries, automotive and mining);

•Midstream and Others (valves, terminals and storage, and pipeline);

•Public Infrastructure (amusement parks, bridges, ports, construction and building, roads, dams, and railways); and

•Aerospace and Defense.

Reverse Stock Split. On December 21, 2022, we completed a reverse stock split of our outstanding common stock at a ratio of one-for-ten (the “Reverse Stock Split”). The Reverse Stock Split effected a proportionate reduction in our authorized shares of common stock from 120,000,000 shares to 12,000,000 shares and reduced the number of shares of common stock outstanding from approximately 43,429,089 shares to approximately 4,342,909 shares. We have made proportionate adjustments to the number of common shares issuable upon exercise or conversion of our outstanding warrants, equity awards and convertible securities, as well as the applicable exercise prices and weighted average fair value of the equity awards. No fractional shares were issued in connection with the Reverse Stock Split.

Basis of presentation. These condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and the rules and regulations of the Securities and Exchange Commission. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results for such periods. The results of operations for any interim period are not necessarily indicative of results for the full year. Certain disclosures have been condensed or omitted

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from the interim financial statements included in this report. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission (“our Annual Report on Form 10-K”).

Consolidation. The condensed consolidated financial statements include the accounts of our subsidiaries where we have control over operating and financial policies. All material intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications. Certain amounts in prior periods have been reclassified to conform to the current year presentation, including the separate presentation and reporting of discontinued operations. Such reclassifications did not have any effect on our financial condition or results of operations as previously reported.

Significant Accounting Policies. Our significant accounting policies are disclosed in Note 1 - Summary of Significant Accounting Policies and Practices in our Annual Report on Form 10-K. On an ongoing basis, we evaluate the estimates and assumptions, including among other things, those related to long-lived assets. Since the date of our Annual Report on Form 10-K, there have been no material changes to our significant accounting policies.

Discontinued operations. On November 1, 2022, we completed the sale of Quest Integrity (the “Quest Integrity Transaction”). The criteria for reporting Quest Integrity as a discontinued operation were met during the third quarter of 2022 pursuant to that certain Equity Purchase Agreement by and between us and Baker Hughes Holdings LLC, dated as of August 14, 2022 (the “Sale Agreement”), and, as such, the prior year amounts related to Quest Integrity are presented as a discontinued operation. Unless otherwise specified, the financial information and discussion in this Quarterly Report on Form 10-Q are based on our continuing operations (IHT and MS segments) and exclude any results of our discontinued operations (Quest Integrity). Refer to Note 2 - Discontinued Operations for additional details.

2. DISCONTINUED OPERATIONS

On November 1, 2022, we completed the Quest Integrity Transaction with Baker Hughes for an aggregate purchase price of approximately $279.0 million, in accordance with the Sale Agreement. We used approximately $238.0 million of the net proceeds from the sale of Quest Integrity to pay down $225.0 million of our term loan debt, and to pay certain fees associated with that repayment and related accrued interest, with the remainder reserved for general corporate purposes, thereby reducing our future debt service obligations and leverage, and improving our liquidity. During the fourth quarter of 2022, we recorded total gain of $203.4 million, net of tax and working capital adjustments, on the sale of Quest Integrity. We settled the working capital adjustment in the second quarter of 2023. Quest Integrity previously represented a reportable segment. Following the completion of the Quest Integrity Transaction, we now operate in two segments, IHT and MS. Refer to Note 1 – Description of Business and Basis of Presentation for additional details regarding our IHT and MS operating segments.

Our condensed consolidated statements of operations for the three and nine months ended September 30, 2022 report discontinued operations separate from continuing operations. Our condensed consolidated statements of comprehensive loss and statements of shareholders’ equity (deficit) for the three and nine months ended September 30, 2022, as well as statements of cash flows for the nine months ended September 30, 2022, combine continuing and discontinued operations. A summary of financial information related to our discontinued operations is presented in the tables below.

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The following table represents the reconciliation of the major line items consisting of pretax income from discontinued operations to the after-tax income from discontinued operations (in thousands):


	Three Months Ended September 30, 2022 (unaudited)		Nine Months Ended September 30, 2022 (unaudited)
Major classes of line items constituting income (loss) from discontinued operations
Revenues	$	29,441	$	88,704
Operating expenses	(12,052)		(39,508)
Selling, general and administrative expenses	(8,832)		(26,422)

Interest expense, net	(78)		(108)
Other expense	(2,675)		(4,934)
Income from discontinued operations before income taxes	5,804		17,732
Provision for income taxes	(2,057)		(1,464)
Net income from discontinued operations	$	3,747	$	16,268

The following table presents the depreciation and amortization and capital expenditures of Quest Integrity (in thousands):


	Nine Months Ended September 30, 2022
	(unaudited)
Cash flows provided by operating activities of discontinued operations:
Depreciation and amortization	$	1,143



Cash flows provided by investing activities of discontinued operations:
Capital expenditures	$	3,703

3. REVENUE

Disaggregation of revenue. Essentially all of our revenues are associated with contracts with customers. A disaggregation of our revenue from contracts with customers by geographic region, by reportable operating segment and by service type is presented below (in thousands):

Geographic area:



	Three Months Ended September 30, 2023						Three Months Ended September 30, 2022
	(unaudited)						(unaudited)
	United States and Canada		Other Countries		Total		United States and Canada		Other Countries		Total
Revenue:
IHT	$	100,800	$	3,057	$	103,857	$	108,009	$	2,303	$	110,312
MS	67,286		35,572		102,858		76,135		31,892		108,027
Total	$	168,086	$	38,629	$	206,715	$	184,144	$	34,195	$	218,339


	Nine Months Ended September 30, 2023						Nine Months Ended September 30, 2022
	(unaudited)						(unaudited)
	United States and Canada		Other Countries		Total		United States and Canada		Other Countries		Total
Revenue:
IHT	$	312,344	$	10,082	$	322,426	$	312,928	$	7,105	$	320,033
MS	221,943		104,115		326,058		217,749		91,135		308,884
Total	$	534,287	$	114,197	$	648,484	$	530,677	$	98,240	$	628,917

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Revenue by Operating segment and service type (in thousands):


	Three Months Ended September 30, 2023
	(unaudited)
	Non-Destructive Evaluation and Testing Services		Repair and Maintenance Services		Heat Treating		Other		Total
Revenue:
IHT	$	83,207	$	39	$	12,946	$	7,665	$	103,857
MS	—		101,624		55		1,179		102,858
Total	$	83,207	$	101,663	$	13,001	$	8,844	$	206,715


	Three Months Ended September 30, 2022
	(unaudited)
	Non-Destructive Evaluation and Testing Services		Repair and Maintenance Services		Heat Treating		Other		Total
Revenue:
IHT	$	87,267	$	19	$	16,357	$	6,669	$	110,312
MS	—		106,776		125		1,126		108,027
Total	$	87,267	$	106,795	$	16,482	$	7,795	$	218,339


	Nine Months Ended September 30, 2023
	(unaudited)
	Non-Destructive Evaluation and Testing Services		Repair and Maintenance Services		Heat Treating		Other		Total
Revenue:
IHT	$	259,118	$	261	$	42,391	$	20,656	$	322,426
MS	—		323,484		544		2,030		326,058
Total	$	259,118	$	323,745	$	42,935	$	22,686	$	648,484



	Nine Months Ended September 30, 2022
	(unaudited)
	Non-Destructive Evaluation and Testing Services		Repair and Maintenance Services		Heat Treating		Other		Total
Revenue:
IHT	$	255,419	$	158	$	45,983	$	18,473	$	320,033
MS	—		305,277		238		3,369		308,884
Total	$	255,419	$	305,435	$	46,221	$	21,842	$	628,917

For additional information on our reportable operating segments and geographic information, refer to Note 15 - Segment and Geographic Disclosures.

Contract balances. The timing of revenue recognition, billings, and cash collections results in the recognition of trade accounts receivable, contract assets and contract liabilities on the condensed consolidated balance sheets. Trade accounts receivable include billed and unbilled amounts currently due from customers and represent unconditional rights to receive consideration. The amounts due are stated at their net estimated realizable value. Refer to Note 4 - Receivables for additional information on our trade receivables and the allowance for credit losses.

Contract costs. We recognize the incremental costs of obtaining contracts as selling, general and administrative expenses when incurred if the amortization period of the asset that otherwise would have been recognized is one year or less. Costs to fulfill a contract are recorded as assets if they relate directly to a contract or a specific anticipated contract, the costs to generate or enhance resources that will be used in satisfying performance obligations in the future, and the costs are expected to be recovered. Costs to fulfill a contract recognized as assets primarily consist of labor and material costs and generally relate to engineering and set-up costs incurred prior to when the satisfaction of performance obligations begins. Assets recognized for

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costs to fulfill a contract are included in the “Prepaid expenses and other current assets” line of the condensed consolidated balance sheets and were not material as of September 30, 2023 and December 31, 2022. Such assets are recognized as expenses as we transfer the related goods or services to the customer. All other costs to fulfill a contract are expensed as incurred.

Remaining performance obligations. As permitted by ASC 606, Revenue from Contracts with Customers, we have elected not to disclose information about remaining performance obligations where (i) the performance obligation is part of a contract that has an original expected duration of one year or less or (ii) when we recognize revenue from the satisfaction of the performance obligation in accordance with the right-to-invoice practical expedient, which permits us to recognize revenue in the amount to which we have a right to invoice the customer if that amount corresponds directly with the value to the customer of our performance completed to date. As most of our contracts with customers are short-term in nature and billed on a time and material basis, there were no material amounts of remaining performance obligations as of September 30, 2023 and December 31, 2022.

4. RECEIVABLES

A summary of accounts receivable as of September 30, 2023 and December 31, 2022 is as follows (in thousands):


	September 30, 2023		December 31, 2022
	(unaudited)
Trade accounts receivable	$	141,303	$	160,572
Unbilled receivables	49,823		31,379
Allowance for credit losses	(5,326)		(5,262)
Total	$	185,800	$	186,689

We measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This applies to financial assets measured at amortized cost, including trade and unbilled accounts receivable, and requires immediate recognition of lifetime expected credit losses. Significant factors that affect the expected collectability of our receivables include macroeconomic trends and forecasts in the oil and gas, refining, power, and petrochemical markets, and changes in our results of operations and forecasts. For unbilled receivables, we consider them as short-term in nature as they are normally converted to trade receivables within 90 days, thus future changes in economic conditions will not have a significant effect on the credit loss estimate.

The following table shows a rollforward of the allowance for credit losses (in thousands):


	September 30, 2023		December 31, 2022
	(unaudited)
Balance at beginning of period	$	5,262	$	7,843
Provision for expected credit losses	1,317		1,059
Recoveries collected	(619)		(1,114)
Write-offs	(540)		(2,479)
Foreign exchange effects	(94)		(47)
Balance at end of period	$	5,326	$	5,262

5. INVENTORY

A summary of inventory as of September 30, 2023 and December 31, 2022 is as follows (in thousands):


	September 30, 2023		December 31, 2022
	(unaudited)
Raw materials	$	9,819	$	8,978
Work in progress	2,989		2,945
Finished goods	26,066		24,408
Total	$	38,874	$	36,331

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6. PREPAID AND OTHER CURRENT ASSETS

A summary of prepaid expenses and other current assets as of September 30, 2023 and December 31, 2022 is as follows (in thousands):


	September 30, 2023		December 31, 2022
	(unaudited)
Insurance receivable	$	39,000	$	39,000
Prepaid expenses	16,526		15,238
Other current assets	9,927		11,441
Total	$	65,453	$	65,679

The insurance receivable relates to the receivable from our third-party insurance providers for a legal claim that is recorded in other accrued liabilities, refer to Note 9 - Other Accrued Liabilities. These receivables are covered by our third-party insurance providers for any litigation matter that has been settled, or pending settlements where the deductibles have been satisfied. The prepaid expenses primarily relate to prepaid insurance and other expenses that have been paid in advance of the coverage period. The other current assets primarily include items such as software implementation costs, deferred financing charges and other receivables.

7. PROPERTY, PLANT AND EQUIPMENT

A summary of property, plant and equipment as of September 30, 2023 and December 31, 2022 is as follows (in thousands):


	September 30, 2023		December 31, 2022
	(unaudited)
Land	$	4,006	$	4,006
Buildings and leasehold improvements	61,820		50,833
Machinery and equipment	280,842		277,852
Furniture and fixtures	10,708		10,558
Capitalized ERP system development costs	45,903		45,917
Computers and computer software	19,802		19,457
Automobiles	3,325		3,536
Construction in progress	5,898		19,196
Total	432,304		431,355
Accumulated depreciation	(304,590)		(293,256)
Property, plant and equipment, net	$	127,714	$	138,099

Included in the table above are assets under finance leases of $8.3 million and $7.4 million, and related accumulated amortization of $2.9 million and $2.3 million as of September 30, 2023 and December 31, 2022, respectively. Depreciation expense for the three months ended September 30, 2023 and 2022 was $5.4 million and $5.5 million, respectively. Depreciation expense for the nine months ended September 30, 2023 and 2022 was $16.5 million and $17.3 million, respectively.

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8. INTANGIBLE ASSETS

A summary of intangible assets as of September 30, 2023 and December 31, 2022 is as follows (in thousands):


	September 30, 2023
	(unaudited)
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	$	164,221	$	(99,511)	$	64,710
Trade names	20,248		(19,698)		550
Technology	2,300		(1,744)		556
Licenses	683		(683)		—
Intangible assets	$	187,452	$	(121,636)	$	65,816


	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	$	165,231	$	(91,296)	$	73,935
Trade names	20,563		(19,830)		733
Technology	2,707		(1,978)		729
Licenses	840		(830)		10
Intangible assets	$	189,341	$	(113,934)	$	75,407

Amortization expense of intangible assets for the three months ended September 30, 2023 and 2022 was $3.2 million and $3.4 million, respectively. Amortization expense of intangible assets for the nine months ended September 30, 2023 and 2022 was $9.6 million and $10.2 million, respectively.

The weighted-average amortization period for intangible assets subject to amortization was 13.7 years as of September 30, 2023 and December 31, 2022.

9. OTHER ACCRUED LIABILITIES

A summary of other accrued liabilities as of September 30, 2023 and December 31, 2022 is as follows (in thousands):


	September 30, 2023		December 31, 2022
	(unaudited)
Legal and professional accruals	$	49,223	$	46,665
Payroll and other compensation expenses	35,561		48,507
Insurance accruals	6,124		7,483
Property, sales and other non-income related taxes	5,474		7,348


Accrued interest	3,694		3,963
Volume discount	2,337		2,050
Other accruals	2,337		3,251
Total	$	104,750	$	119,267

Legal and professional accruals include accruals for legal and professional fees as well as accrued legal claims, refer to Note 14 - Commitments and Contingencies for legal claims information. Certain legal claims are covered by our third-party insurance providers and the related insurance receivable for these claims is recorded in prepaid expenses and other current assets, refer to Note 6 - Prepaid and Other Current Assets. Payroll and other compensation expenses include all payroll related accruals including, among others, accrued vacation, severance, and bonuses. Insurance accruals primarily relate to accrued medical and workers compensation costs. Property, sales and other non-income related taxes includes accruals for items such as sales and use tax, property tax and other related tax accruals. Accrued interest relates to the interest accrued on our long-term debt. Other accruals include various business accruals.

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10. INCOME TAXES

We recorded an income tax provision of $1.1 million and $4.0 million for the three and nine months ended September 30, 2023, compared to a provision of $1.5 million and $4.2 million for the three and nine months ended September 30, 2022. The effective tax rate, inclusive of discrete items, was a provision of 9.7% for the three months ended September 30, 2023, compared to a provision of 5.8% for the three months ended September 30, 2022. For the nine months ended September 30, 2023, our effective tax rate, inclusive of discrete items, was a provision of 8.3%, compared to a provision of 4.7% for the nine months ended September 30, 2022. The effective tax rate differed from the statutory tax rate due to changes in the valuation allowance in certain jurisdictions.

11. DEBT

As of September 30, 2023 and December 31, 2022, our total long-term debt and finance lease obligations are summarized as follows (in thousands):


	September 30, 2023		December 31, 2022
	(unaudited)

2022 ABL Credit Facility	$	110,915	$	99,916
ME/RE Loans1	24,739		—
Uptiered Loan / Subordinated Term Loan1	125,588		107,905
Incremental Term Loan1	34,034		—
APSC Term Loan1	—		31,562
Total	295,276		239,383
Convertible Debt1	—		40,650
Finance lease obligations	5,804		5,902
Total long-term debt and finance lease obligations	301,080		285,935
Current portion of long-term debt and finance lease obligations	(5,302)		(280,993)
Total long-term debt and finance lease obligations, less current portion	$	295,778	$	4,942

_________________

1 Comprised of principal amount outstanding, less unamortized discount and issuance costs. See below for additional information.

2022 ABL Credit Facility

On February 11, 2022, we entered into a credit agreement, with the lender parties thereto, and Eclipse Business Capital, LLC, a Delaware limited liability company, as agent, (the “ABL Agent”) (such agreement, as amended by Amendment No. 1 dated as of May 6, 2022, Amendment No. 2 dated as of November 1, 2022 and Amendment No.3 dated June 16, 2023, the “2022 ABL Credit Agreement”). Available funding commitments to us under the 2022 ABL Credit Agreement, subject to certain conditions, include a revolving credit line in an amount of up to $130.0 million to be provided by certain affiliates of the ABL Agent (the “Revolving Credit Loans”), with a $35.0 million sublimit for swingline borrowings, a $26.0 million sublimit for issuances of letters of credit, and an incremental delayed draw term loan of up to $35.0 million (the “Delayed Draw Term Loan”) provided by Corre Partners Management, LLC and certain of its affiliates (“Corre”) (collectively, the “2022 ABL Credit Facility”).

Our obligations under the 2022 ABL Credit Agreement are guaranteed by certain of our direct and indirect subsidiaries referenced below as the “ABL Guarantors” and, together with the Company, the “ABL Loan Parties.” Our obligations under the 2022 ABL Credit Facility are secured on a first priority basis by, among other things, accounts receivable, deposit accounts, securities accounts, and inventory of the ABL Loan Parties and are secured on a second priority basis by substantially all of the other assets of the ABL Loan Parties. Availability under the revolving credit line is based on a percentage of the value of qualifying accounts receivable and inventory, reduced by certain reserves.

The terms of the 2022 ABL Credit Facility are described in the table below (dollar amounts are presented in thousands):

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	Revolving Credit Loans	Delayed Draw Term Loan
Original maturity date	2/11/2025	2/11/2025
Amended maturity date	8/11/2025	8/11/2025
Original stated interest rate	LIBOR + applicable margin (base + applicable margin)	LIBOR+10% (Base+9%)
Amended interest rate	SOFR + applicable margin (base + applicable margin)	SOFR + 10% (Base + 9%)
Actual interest rate:
9/30/2023	10.09%	15.44%
9/30/2022	7.21%	12.56%
Interest payments	monthly	monthly
Cash paid for interest
YTD 9/30/2023	$4,932	$3,951
YTD 9/30/2022	$3,656	$1,683
Unamortized balance of deferred financing cost
9/30/2023	$227	$—
12/31/2022	$2,312	$798
Available amount at 9/30/2023	$4,911	$—

The “applicable margin” in the table above is defined as a rate of 3.15%, 3.40% or 3.65% for base rate loans with a 2.00% base rate floor and a rate of 4.15%, 4.40% or 4.65% for Adjusted Term Secured Overnight Financing Rate (“SOFR”) loans with a 1.00% SOFR floor, in each case depending on the amount of EBITDA (as defined in ABL Amendment No. 3 to the 2022 ABL Credit Facility) as of the most recent measurement period as reported in a monthly compliance certificate. The fee for undrawn revolving amounts is 0.50%.

We incurred additional $0.3 million of financing cost related to the 2022 ABL Credit Facility in connection with Amendment No. 3 thereto (“ABL Amendment No. 3”) dated June 16, 2023. These costs were capitalized and amortized on a straight-line basis over the new term of the 2022 ABL Credit Facility.

The Company may make voluntary prepayments of the loans under the 2022 ABL Credit Facility from time to time, subject, in the case of the Delayed Draw Term Loan, to certain conditions. Mandatory prepayments are also required in certain circumstances, including with respect to the Delayed Draw Term Loan, if the ratio of aggregate value of the collateral under the 2022 ABL Credit Facility to the sum of the Delayed Draw Term Loan plus revolving facility usage outstanding is less than 130%.

Amounts repaid under the Revolving Credit Loans may be re-borrowed, subject to compliance with the borrowing base and the other conditions set forth in the 2022 ABL Credit Agreement. Amounts repaid under the Delayed Draw Term Loan cannot be re-borrowed. Certain permanent repayments of the 2022 ABL Credit Facility loans are subject to the payment of a premium of 1.00% from June 16, 2023 until August 11, 2024, and 0.50% after August 11, 2024 until August 11, 2025. The 2022 ABL Credit Agreement contains customary conditions to borrowings and covenants, as described therein. As of September 30, 2023, we are in compliance with the covenants.

As of September 30, 2023, $10.1 million in letters of credit was issued under the 2022 ABL Credit Agreement. Such amounts remain undrawn and are off-balance sheet.

ME/RE Loans

The ABL Amendment No. 3, in addition to making certain other changes to the 2022 ABL Credit Facility, provided us with $27.4 million of new term loans (the “ME/RE Loans”). Our obligations in respect of the ME/RE Loans are guaranteed by certain direct and indirect material subsidiaries of the Company (the “ABL Guarantors” and, together with the Company, the “ABL Loan Parties”). The ME/RE Loans under the 2022 ABL Credit Agreement are secured on a first priority basis by, among other things, certain real estate and machinery and equipment (the “Specified ME/RE Collateral”), accounts receivable, deposit accounts, securities accounts and inventory of the ABL Loan Parties (collectively, the “ABL Priority Collateral”) and on a second priority basis by substantially all of the other assets of the ABL Loan Parties, subject to the terms of the Intercreditor Agreement (as defined below). The ME/RE Loans were drawn in full on June 16, 2023 and were used to pay off the amounts owed under the existing APSC Term Loan, discussed below.

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The terms of ME/RE Loans are described in the table below (dollar amounts are presented in thousands):


Original maturity date						8/11/2025
Original stated interest rate						SOFR + 5.75% + 0.11% credit spread adjustment
Principal payments						$254 monthly
Effective interest rate
9/30/2023						16.75%
9/30/2022						N/A
Actual interest rate
9/30/2023						11.19%
9/30/2022						N/A
Interest payments						monthly
Cash paid for interest
YTD 9/30/2023						$640
YTD 9/30/2022						N/A
Balances at 9/30/2023
Principal balance						$26,551
Unamortized balance of debt issuance cost						$(1,812)
Net carrying balance						$24,739
Available amount at 9/30/2023						$—

The Company may make voluntary prepayments of the ME/RE Loans from time to time. Mandatory prepayments are required in certain instances when sales of assets are completed that are related to the Specified ME/RE Collateral, and with annual excess cash flow (as defined in the 2022 ABL Credit Agreement), subject to certain prepayment premiums (subject to certain exceptions), plus accrued and unpaid interest. The remaining unpaid principal balance of the ME/RE loans at maturity will be $21.0 million.

Direct and incremental costs associated with the issuance of the ABL Amendment No. 3 were approximately $2.1 million and were deferred and presented as a direct deduction from the carrying amount of the related debt and are amortized on a straight-line basis over the term of the ME/RE Loans.

APSC Term Loan

On June 16, 2023, we used the proceeds from the ME/RE Loans and borrowings under the 2022 ABL Credit Facility to repay the total outstanding APSC Term Loan balance of $35.5 million plus the applicable prepayment premium, resulting in a loss on debt extinguishment of $1.6 million.

On December 18, 2020, we had entered into that certain Term Loan Credit Agreement with Atlantic Park Strategic Capital Fund, L.P., as agent (“APSC”), pursuant to which we borrowed $250.0 million (the “APSC Term Loan”).

The terms of APSC Term Loan are described in the table below (dollar amounts are presented in thousands):

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Original maturity date						12/18/2026
Original stated interest rate						variable
Effective interest rate
9/30/2023						N/A
9/30/2022						25.72%
Actual interest rate:
9/30/2023						N/A
9/30/2022						10.24%
Interest payments						Quarterly
Cash paid for interest
YTD 9/30/2023						$2,849
YTD 9/30/2022						$9,693
PIK interest added to principal
YTD 9/30/2023						$—
YTD 9/30/2022						$6,627
Balances at 12/31/2022
Principal balance						$35,510
Unamortized balance of debt issuance cost						$(3,948)
Net carrying balance						$31,562

Amended and Restated Term Loan Credit Agreement - Uptiered Loan / Subordinated Term Loan and Incremental Term Loan

On November 9, 2021, we entered into a credit agreement (as amended by Amendment No. 1 dated as of November 30, 2021, Amendment No. 2 dated as of December 6, 2021, Amendment No. 3 dated as of December 7, 2021, Amendment No. 4 dated as of December 8, 2021, Amendment No. 5 dated as of February 11, 2022, Amendment No. 6 dated as of May 6, 2022, Amendment No. 7 dated as of June 28, 2022, Amendment No. 8 dated as of October 4, 2022, Amendment No. 9 dated as of November 1, 2022, Amendment No. 10 dated as of November 4, 2022, Amendment No. 11 dated as of November 21, 2022 and Amendment No. 12 dated as of March 29, 2023, the “Subordinated Term Loan Credit Agreement”) with Cantor Fitzgerald Securities, as agent, and the lenders party thereto providing for an unsecured approximately $123.1 million delayed draw subordinated term loan facility. Pursuant to the Subordinated Term Loan Credit Agreement, we borrowed $22.5 million on November 9, 2021, and an additional $27.5 million on December 8, 2021. On October 4, 2022, an additional approximately $57.0 million was added to the outstanding principal amount under the Subordinated Term Loan Credit Agreement in exchange for an equivalent amount of the Company’s senior unsecured 5.00% Convertible Senior Notes (the “Notes”) held by Corre.

On June 16, 2023, the Company, entered into an amendment and restatement of that certain subordinated term loan credit agreement dated as of November 9, 2021 (as amended and restated, the “A&R Term Loan Credit Agreement”) among the Company, as borrower, the guarantors party thereto, the lenders from time to time party thereto and Cantor Fitzgerald Securities, as agent (the “A&R Term Loan Agent”). Additional funding commitments to the Company under the A&R Term Loan Credit Agreement, subject to certain conditions, included a $57.5 million senior secured first lien term loan (the “Incremental Term Loan”) provided by Corre and certain of its affiliates, consisting of a $37.5 million term loan tranche and a $20.0 million delayed draw tranche. Amounts outstanding under the existing subordinated term loan credit agreement (the “Uptiered Loan”) have become senior secured obligations of the Company and the A&R Term Loan Guarantors (as defined below) and are secured on a pari passu basis with the Incremental Term Loan, on the terms described below.

On July 31, 2023, $42.5 million, made up of $37.5 million of the term loan tranche and $5.0 million of the delayed draw tranche, of the $57.5 million Incremental Term Loan under the A&R Term Loan Credit Agreement was drawn down and the proceeds thereof were used to repay the Notes that matured on August 1, 2023. The remaining availability of the delayed draw tranche of $15.0 million will be used, subject to certain maximum liquidity conditions, for working capital purposes.

The Company’s obligations under the A&R Term Loan Credit Agreement are guaranteed by certain direct and indirect material subsidiaries of the Company (the “A&R Term Loan Guarantors” and, together with the Company, the “A&R Term Loan Parties”). The obligations of the A&R Term Loan Parties are secured on a second priority basis by the ABL Priority Collateral and on a first priority basis by substantially all of the other assets of the A&R Term Loan Parties, subject to the terms of an intercreditor agreement (the “Intercreditor Agreement”) between the A&R Term Loan Agent, the ABL Agent and the A&R Term Loan Parties, that sets forth the priorities in respect of the collateral and certain related agreements with respect thereto.

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The Company may make voluntary prepayments of the loans under the A&R Term Loan Credit Agreement from time to time, and the Company is required in certain instances related to change of control, asset sales, equity issuances, non-permitted debt issuances and with annual excess cash flow (as defined in the A&R Term Loan Credit Agreement), to make mandatory prepayments of the loans under the A&R Term Loan Credit Agreement, subject to certain prepayment premiums as specified in the A&R Term Loan Credit Agreement (subject to certain exceptions), plus accrued and unpaid interest.

The A&R Term Loan Credit Agreement contains certain customary conditions to borrowings, events of default and affirmative, negative, and financial covenants (as described in the A&R Term Loan Credit Agreement). As of September 30, 2023, we are in compliance with the covenants.

Further, the A&R Term Loan Credit Agreement includes certain customary events of default, the occurrence of which may require an additional 2.00% interest on the outstanding loans and other obligations under the A&R Term Loan Credit Agreement and the debt may become payable immediately.

The terms of Uptiered Loan / Subordinated Term Loan and Incremental Term Loan are described in the table below (dollar amounts are presented in thousands):


	Uptiered Loan / Subordinated Term Loan	Incremental Term Loan
Maturity date	12/31/2027 (12/31/2026 if outstanding balance is greater than $50 million)	12/31/2026
Stated interest rate	12% PIK through 12/31/2023, then cash and PIK split as described below	12% paid in cash
Principal payments	at maturity	$300 quarterly
Effective interest rate
9/30/2023	12.86%	23.69%
9/30/2022	46.79%	N/A
Interest payments	cash quarterly/PIK monthly	quarterly
PIK interest added to principal
YTD 9/30/2023	$10,829	N/A
YTD 9/30/2022	$4,596	N/A
Balances at 9/30/2023
Principal balance 1	$126,272	$43,371
Unamortized balance of debt issuance cost	$(684)	$(9,337)
Net carrying balance	$125,588	$34,034
Balances at 12/31/2022
Principal balance 1	$115,443	N/A
Unamortized balance of debt issuance cost	$(7,538)	N/A
Net carrying balance	$107,905	N/A
Available amount at 9/30/20232	$—	$15,000

___________

1 The principal balance of the Uptiered Loan / Subordinated Term Loan is made up of $22.5 million drawn on November 9, 2021, $27.5 million drawn on December 8, 2021, and $57.0 million added as part of the exchange agreement on October 4, 2022. In addition, the principal balance also includes PIK interest recorded to date of $18.2 million and $7.4 million as of September 30, 2023 and December 31, 2022, respectively, and, with respect to the Incremental Term Loan, PIK fees of $0.9 million.

2 $5.0 million was drawn from the available balance on October 6, 2023.

The Uptiered Loan under the A&R Term Loan Credit Agreement bears interest at an annual rate of 12.00%, paid-in-kind (noncash) (“PIK”) from June 16, 2023 through December 31, 2023, and thereafter a split between cash and PIK, with the cash portion ranging from 2.50% per annum to 12.00% per annum, and the PIK portion ranging from 9.50% per annum to 0.00% per annum, depending on the Company’s Net Leverage Ratio (as defined in the A&R Term Loan Credit Agreement). In addition, if certain minimum liquidity thresholds set forth in the A&R Term Loan Credit Agreement are not met for an applicable interest payment date, all interest in respect of the Uptiered Loan payable on such interest payment date will be PIK, irrespective of the Net Leverage Ratio at such time.

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In addition, if certain conditions related to repayments in respect of the Incremental Term Loan are not met, certain additional quarterly fees (not to exceed 4 such fees) plus a 150 basis point increase to the applicable interest rate will be payable to the lenders under the A&R Term Loan Credit Agreement in cash or common stock of the Company, at the Company’s option.

Warrants

As of September 30, 2023 and December 31, 2022, APSC Holdco II, L.P. held 500,000 warrants and certain Corre holders collectively held 500,000 warrants in each case providing for the purchase of one share of the Company’s common stock per warrant at an exercise price of $15.00. The warrants will expire on December 8, 2028.

The exercise price and the number of shares of our common stock issuable on exercise of the warrants are subject to certain antidilution adjustments, including for stock dividends, stock splits, reclassifications, noncash distributions, cash dividends, certain equity issuances and business combination transactions.

Convertible Notes

Description of Convertible Notes

On July 31, 2023, $42.5 million of the $57.5 million under the Incremental Term Loan was drawn down and the proceeds thereof were used to repay the principal and accrued interest of the outstanding Notes on their maturity date of August 1, 2023.

On July 31, 2017, we issued $230.0 million principal amount of Notes due 2023 in a private offering to qualified institutional buyers (as defined in the Securities Act of 1933) pursuant to Rule 144A under the Securities Act (the “Offering”). Net proceeds received from the Offering were approximately $222.3 million after deducting discounts, commissions and expenses and were used to repay outstanding borrowings under a previous credit facility.

The Notes bore interest at a rate of 5.0% per year, payable semiannually in arrears on February 1 and August 1 of each year, beginning on February 1, 2018.

Cash interest paid amounted to $2.1 million and $2.1 million for the nine months ended September 30, 2023 and 2022, respectively. PIK interest of $4.2 million was added to principal during the nine months ended September 30, 2022. There was no PIK interest in 2023.

Fair Value of Debt

The fair value of our 2022 ABL Credit Facility, Uptiered Loan, Incremental Term Loan and ME/RE Loans are representative of the carrying value based upon the variable interest rate terms and management’s opinion that the current rates available to us with the same maturity and security structure are equivalent to that of the debt. The fair value of the Notes as of December 31, 2022 was $37.5 million, (inclusive of the fair value of the conversion option) and a “Level 2” measurement, determined based on the observed trading price of these instruments. The Notes were fully paid off on August 1, 2023.

1970 Group Substitute Insurance Reimbursement Facility

On September 29, 2022, the 1970 Group extended us credit in the form of a substitute reimbursement facility (the “Substitute Reimbursement Facility”) to provide up to approximately $21.4 million of letters of credit on our behalf in support of our workers’ compensation, commercial automotive and general liability insurance policies (the “Insurance Policies”).

We are required to reimburse the 1970 Group for any draws made under the letters of credit within five business days of notice of any such draw. The Substitute Insurance Reimbursement Facility Agreement was renewed on August 29, 2023 to update the letters of credit limit up to approximately $24.9 million with the termination date on the earlier of (i) the expiration or termination of our Insurance Policies or (ii) September 29, 2024.

According to the provisions of ASC 470 – Debt, the arrangement is a Substitute Insurance Reimbursement Facility limited to the amounts drawn under the letters of credit. Therefore, until there is a draw on the Substitute Insurance Reimbursement Facility, the letters of credit are treated as an off-balance sheet credit arrangement. The fees paid by us periodically under this arrangement are deferred and amortized to interest expense over the term of the arrangement. As of September 30, 2023, we had approximately $2.8 million of unamortized deferred fees.

Liquidity

As of September 30, 2023, we had $16.5 million of unrestricted cash and cash equivalents and $5.0 million of restricted cash. International cash balances as of September 30, 2023 were $11.2 million, and approximately $0.7 million of such cash is located in countries where currency restrictions exist. As of September 30, 2023, we had approximately $19.9 million of available borrowing capacity under our various credit agreements, consisting of $4.9 million available under the Revolving Credit Loans and $15.0 million available under the Incremental Term Loan under the A&R Term Loan Credit Agreement. We have $37.6 million in letters of credit and $1.7 million in surety bonds outstanding and $2.1 million in miscellaneous cash

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deposits securing leases or other required obligations. Our cash and cash equivalents as of December 31, 2022 totaled $58.1 million including $1.4 million of cash located in countries where currency restrictions existed.

12. EMPLOYEE BENEFIT PLANS

We have a defined benefit pension plan covering certain United Kingdom employees (the “U.K. Plan”). Net periodic pension credit includes the following components (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(unaudited)		(unaudited)		(unaudited)		(unaudited)

Interest cost	$	678	$	358	$	2,054	$	1,171
Expected return on plan assets	(913)		(533)		(2,765)		(1,744)
Amortization of prior service cost	8		7		23		23
Unrecognized Net Actuarial Loss	70		—		212		—
Net periodic pension credit	$	(157)	$	(168)	$	(476)	$	(550)

Net pension credit is included in “Other income, net” on our condensed consolidated statement of operations. The expected long-term rate of return on invested assets is determined based on the weighted average of expected returns on asset investment categories for the U.K. Plan as follows: 6.4% overall, 9.5% for equities and 5.3% for debt securities. We expect to contribute $3.7 million to the U.K. Plan for 2023, of which $2.8 million has been contributed through September 30, 2023.

13. SHAREHOLDERS’ EQUITY

Shareholder’s Equity and Preferred Stock

On December 21, 2022, we completed a reverse stock split of our outstanding common stock at a ratio of one-for-ten. The Reverse Stock Split effected a proportionate reduction in our authorized shares of common stock from 120,000,000 shares to 12,000,000 shares and reduced the number of shares of common stock outstanding as of such date from approximately 43,429,089 shares to approximately 4,342,909 shares. We have made proportionate adjustments to the number of common shares issuable upon exercise or conversion of our outstanding warrants, equity awards and convertible securities, as well as the applicable exercise prices and weighted average fair value of the equity awards. No fractional shares were issued in connection with the Reverse Stock Split.

As of September 30, 2023 there were 4,368,422 shares of our common stock outstanding and 12,000,000 shares authorized at $0.30 par value per share.

As of September 30, 2023 we had 500,000 authorized shares of preferred stock, none of which had been issued.

Accumulated Other Comprehensive Income (loss)

A summary of changes in accumulated other comprehensive loss included within shareholders’ equity is as follows (in thousands):


	Nine Months Ended September 30, 2023								Nine Months Ended September 30, 2022
	(unaudited)								(unaudited)
	Foreign Currency Translation Adjustments		Defined Benefit Pension Plans		Tax Provision		Total		Foreign Currency Translation Adjustments		Defined Benefit Pension Plans		Tax Provision		Total
Balance, beginning of period	$	(28,859)	$	(10,474)	$	336	$	(38,997)	$	(23,286)	$	(3,277)	$	(169)	$	(26,732)
Other comprehensive loss	(1,311)		—		(35)		(1,346)		(12,152)		—		—		(12,152)

Balance, end of period	$	(30,170)	$	(10,474)	$	301	$	(40,343)	$	(35,438)	$	(3,277)	$	(169)	$	(38,884)

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14. COMMITMENTS AND CONTINGENCIES

We accrue for contingencies where the occurrence of a material loss is probable and can be reasonably estimated, based on our best estimate of the expected liability. We may increase or decrease our legal accruals in the future, on a matter-by-matter basis, to account for developments in such matter. Because such matters are inherently unpredictable and unfavorable developments or outcomes can occur, assessing contingencies is highly subjective and requires judgments about future events. Notwithstanding the uncertainty as to the outcome and while our insurance coverage might not be available or adequate to cover these claims, based upon the information currently available, we do not believe that any uninsured losses that might arise from these lawsuits and proceedings will have a materially adverse effect on our condensed consolidated financial statements.

Notice of Potential Environmental Violation - On April 20, 2021, Team Industrial Services, Inc. received Notices of Potential Violation from the U.S. Environmental Protection Agency (“EPA”) alleging noncompliance with various waste determination, reporting, training, and planning obligations under the Resource Conservation and Recovery Act at seven of our facilities located in Texas and Louisiana. The allegations largely related to spent film developing solutions generated through our mobile radiographic inspection services and related to the characterization and quantities of those wastes and related notices, reporting, training, and planning.

On February 9, 2022, Team and the EPA agreed to settle all the claims related to this matter and the formal settlement agreement was finalized in April 2022 with our agreement to pay penalties totaling $0.2 million.

Kelli Most Litigation - On November 13, 2018, Kelli Most filed a lawsuit against Team Industrial Services, Inc., individually and as a personal representative of the estate of Jesse Henson, in the 268th District Court of Fort Bend County, Texas (the “Most litigation”). The complaint asserted claims against Team for negligence resulting in the wrongful death of Jesse Henson. A jury trial commenced on this matter on May 4, 2021. On June 1, 2021, the jury rendered a verdict against Team for $222.0 million in compensatory damages.

On January 25, 2022, the trial court signed a final judgment in favor of the plaintiff and against Team Industrial Services, Inc. Post-judgment motions challenging the judgment were filed on February 24, 2022 and were denied by the court on April 22, 2022. A notice of appeal was filed on April 25, 2022, and this case is currently pending in the Court of Appeals for the First District of Texas, in Houston.

We believe that the likelihood that the amount of the judgment will be affirmed is not probable. We currently estimate a range of possible outcomes between $13.0 million and approximately $51.0 million, and as of September 30, 2023 we have recorded a receivable from our third-party insurance providers in other current assets with a corresponding liability of the same amount in other accrued liabilities at an amount we believe is the most likely estimate for a probable loss on this matter. Such amounts are treated as non-cash operating activities. The Most litigation is covered by our general liability and excess insurance policies which are occurrence based and subject to an aggregate $3.0 million self-insured retention and deductible. All retentions and deductibles have been met, accordingly, we believe pending the final settlement, all further claims will be fully funded by our insurance policies. We will continue to evaluate the possible outcomes of this case in light of future developments and their potential impact on factors relevant to our assessment of any possible loss.

Accordingly, for all matters discussed above, we have accrued in the aggregate approximately $40.7 million as of September 30, 2023, of which approximately $1.7 million is not covered by our various insurance policies.

In addition to legal matters discussed above, we are subject to various lawsuits, claims and proceedings encountered in the normal conduct of business (“Other Proceedings”). Management believes that based on its current knowledge and after consultation with legal counsel that the Other Proceedings, individually or in the aggregate, will not have a material effect on our condensed consolidated financial statements.

15. SEGMENT AND GEOGRAPHIC DISCLOSURES

ASC 280, Segment Reporting, requires us to disclose certain information about our operating segments. Operating segments are defined as “components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.” We conduct operations in two segments: IHT and MS.

Segment data for our two operating segments are as follows (in thousands):

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenues:
IHT	$	103,857	$	110,312	$	322,426	$	320,033
MS	102,858		108,027		326,058		308,884
Total Revenues	$	206,715	$	218,339	$	648,484	$	628,917


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Operating income (loss):
IHT	$	6,412	$	7,390	$	17,683	$	13,038
MS	6,482		7,655		22,395		15,152
Corporate and shared support services	(14,152)		(16,774)		(44,486)		(63,119)
Total Operating loss	$	(1,258)	$	(1,729)	$	(4,408)	$	(34,929)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Capital expenditures1:
IHT	$	835	$	2,557	$	3,857	$	10,654
MS	988		1,427		2,263		3,861
Corporate and shared support services	10		274		10		331
Total Capital expenditures	$	1,833	$	4,258	$	6,130	$	14,846

____________

1 Excludes finance leases. Totals may vary from amounts presented in the condensed consolidated statements of cash flows due to the timing of cash payments.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Depreciation and amortization:
IHT	$	3,148	$	3,022	$	9,390	$	9,372
MS	4,656		4,704		14,113		14,222
Corporate and shared support services	1,592		1,261		4,978		3,856
Total Depreciation and amortization	$	9,396	$	8,987	$	28,481	$	27,450

Separate measures of our assets by operating segment are not produced or utilized by management to evaluate segment performance. A geographic breakdown of our revenues for the three and nine months ended September 30, 2023 and 2022 is as

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follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Total Revenues1
United States	$	148,635	$	158,613	$	466,440	$	453,000
Canada	19,451		25,531		67,847		77,677
Europe	17,739		15,837		55,801		46,296
Other foreign countries	20,890		18,358		58,396		51,944
Total	$	206,715	$	218,339	$	648,484	$	628,917

______________

1 Revenues attributable to individual countries/geographic areas are based on the country of domicile of the legal entity that performs the work.

16. RELATED PARTY TRANSACTIONS

Alvarez & Marsal provided certain consulting services to the Company in connection with our former Interim Chief Financial Officer position and other corporate support costs. Effective June 12, 2022 the Interim Chief Financial Officer position ended as the Company named a permanent Chief Financial Officer. The Company paid $8.1 million in consulting fees to Alvarez & Marsal for the year ended December 31, 2022.

In connection with the Company’s debt transactions, the Company engaged in transactions with Corre and APSC to provide funding as described in Note 11 - Debt.

17. SUBSEQUENT EVENTS

As of November 9, 2023, the filing date of this Quarterly Report on Form 10-Q, management evaluated the existence of events occurring subsequent to the quarter ended September 30, 2023 and determined that there were no events or transactions that would have a material impact on the Company’s results of operations or financial position except as described in Note 11- Debt.

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ITEM 2.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Unless otherwise indicated, the terms “Team, Inc.,” “Team,” “we,” “our” and “us” are used in this report to refer to Team, Inc., to one or more of its consolidated subsidiaries or to all of them taken as a whole.

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in this report, and in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022 (“our Annual Report on Form 10-K”) and other documents previously filed with the Securities and Exchange Commission. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those described in more detail under the heading “Risk Factors” included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K. See also “Cautionary Note Regarding Forward-Looking Statements” below.

Cautionary Note Regarding Forward-Looking Statements.

This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, other written or oral statements that constitute forward-looking statements may be made by us or on our behalf in other materials we release to the public including all statements, other than statements of historical facts included or incorporated by reference in this Quarterly Report on Form 10-Q, that address activities, events, or developments which we expect or anticipate will or may occur in the future. You can generally identify our forward-looking statements by the words “anticipate,” “believe,” “expect,” “plan,” “intend,” “estimate,” “project,” “projection,” “predict,” “budget,” “forecast,” “goal,” “guidance,” “target,” “will,” “could,” “should,” “may” and similar expressions.

We based our forward-looking statements on beliefs and assumptions that we believe to be reasonable, and our current expectations, estimates and projections about ourselves and our industry. However, all forward-looking statements are subject to risks and uncertainties, many of which are out of our control, that may cause actual results to differ materially from those that are expected and, therefore, you should not unduly rely on such statements. The forward-looking statements included herein are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law.

New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Additionally, there are a number of risks and uncertainties that could cause our actual results to differ materially from those expressed or implied by these forward-looking statements. Such risks include those disclosed under the heading “Risk Factors” included in Part I, Item 1A of our Annual Report on Form 10-K and in Part II, Item 1A of this Quarterly Report on Form 10-Q, as such risk factors may be amended, supplemented, or superseded from time to time by other reports we file with the United States Securities and Exchange Commission, as well as risks related to:

•our ability to generate sufficient cash from operations, access our 2022 ABL Credit Facility or amounts available under our Delayed Draw Term Loan, or maintain our compliance with covenants under our debt arrangements including our 2022 ABL Credit Agreement and A&R Term Loan Credit Agreement;

•our ability to manage inflationary pressures in our operating costs;

•negative market conditions, including threats of domestic and global economic recession, future economic uncertainties, and impacts from epidemics and pandemics; particularly in industries in which we are heavily dependent;

•delays in the commencement of major projects;

•seasonal and other variation, such as severe weather conditions (including conditions influenced by climate change) and the nature of our clients’ industry;

•our ability to expand into new markets (including low carbon energy transition) and attract clients in new industries may be limited due to our competition’s breadth of service offerings and intellectual property;

•our significant debt and high leverage which could have a negative impact on our financing options, liquidity position and ability to manage increases in interest rates;

•our ability to access capital and liquidity provided by the financial and capital markets;

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•the timing of new client contracts and termination of existing contracts resulting in unpredictable fluctuations in our cash flows and financial results;

•risk of non-payment and/or delays in payment of receivables from our clients;

•our ability to continue to meet the New York Stock Exchange’s (“NYSE”) continued listing requirements and rules, and the risk that NYSE may delist our common stock, which could negatively affect our company, the price of our common stock and our shareholders’ ability to sell our common stock in the event we are unable to list our common stock on another exchange;

•our financial forecasts being based upon estimates and assumptions that may materially differ from actual results;

•our incurrence of liabilities and suffering of negative financial or reputational impacts relating to occupational health and safety matters;

•our ability to continue as a going concern;

•changes in laws or regulations in the local jurisdictions that we conduct our business;

•the inherently uncertain outcome of current and future litigation;

•our failure to maintain effective internal controls, and the resulting inability to report our financial results accurately or timely or prevent or detect fraud; and

•acts of terrorism, war or political or civil unrest in the U.S. or elsewhere, changes in laws and regulations, or the imposition of economic or trade sanctions affecting international commercial transactions.

General Description of Business

We market our services to companies in a diverse array of heavy industries which include:

•Energy (refining, power, renewables, nuclear, offshore oil and gas, and liquefied natural gas);

•Manufacturing and Process (chemical, petrochemical, pulp and paper industries, automotive and mining);

•Midstream and Others (valves, terminals and storage, and pipeline);

•Public Infrastructure (amusement parks, bridges, ports, construction and building, roads, dams, and railways); and

•Aerospace and Defense.

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Significant Factors Impacting Results and Recent Developments

Our revenues, gross margins and other results of operations can be influenced by a variety of factors in any given period, including those described in Cautionary Note Regarding Forward-Looking Statements above and Part 1, Item 1A of our Annual Report on Form 10-K “Risk Factors” which includes items that have caused fluctuations in our results in the past and are expected to cause fluctuations in our results in the future. Additional information with respect to certain factors are described below.

Market Conditions Update. The global economy, including the financial and credit markets, has recently experienced significant volatility and disruptions, including increases in inflation rates, rising interest rates, disruption to global supply chains, commodity price volatility, uncertainty about economic stability and geopolitical conflicts. The severity and duration of the impact of these conditions on our business cannot be predicted. See Item 1A of our Annual Report on Form 10-K “Risk Factors” for additional information.

Results of Operations

The following is a comparison of our results of operations for the three and nine months ended September 30, 2023 to the three and nine months ended September 30, 2022.

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

The following table sets forth the components of revenue and operating loss from our operations for the three-month period ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended September 30,				Increase (Decrease)
	2023		2022		$		%
	(unaudited)		(unaudited)
Revenues by business segment:
IHT	$	103,857	$	110,312	$	(6,455)	(5.9)	%
MS	102,858		108,027		(5,169)		(4.8)	%
Total revenues	$	206,715	$	218,339	$	(11,624)	(5.3)	%
Operating income (loss):
IHT	$	6,412	$	7,390	$	(978)	(13.2)	%
MS	6,482		7,655		(1,173)		(15.3)	%
Corporate and shared support services	(14,152)		(16,774)		2,622		15.6	%
Total operating loss	$	(1,258)	$	(1,729)	$	471	27.2	%

Interest expense, net	$	(10,067)	$	(26,653)	$	16,586	62.2	%
Loss on debt extinguishment	(3)		—		(3)		NM
Other income, net	266		3,227		(2,961)		(91.8)	%
Loss before income taxes	$	(11,062)	$	(25,155)	$	14,093	56.0	%
Provision for income taxes	(1,072)		(1,465)		393		26.8	%
Net loss from continuing operations	$	(12,134)	$	(26,620)	$	14,486	54.4	%


NM = Not meaningful

Revenues. Total revenues decreased $11.6 million or 5.3% from the prior year quarter and were positively impacted by $1.2 million from foreign exchange movement. IHT revenues decreased by $6.4 million or 5.9% primarily due to a $4.9 million decrease in IHT U.S. operations revenue and a $2.8 million decrease in IHT Canada operations revenue due to lower activity in nested and turnaround services. This was partially offset by a $0.7 million increase in international regions revenue and $0.6 million increase in aerospace related revenue. MS revenue decreased by $5.2 million or 4.8%, which was attributable to a $5.6 million or 8.4% decrease in MS U.S. operations revenue primarily due to lower activity in repairs and maintenance work, and a $3.3 million decrease in MS Canada operations due to less project work. This was partially offset by a $3.7 million increase in international regions revenue.

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Operating income (loss). Overall operating loss was $1.3 million in the current year quarter, a $0.5 million improvement compared to prior year quarter. IHT operating income decreased by $1.0 million or 13.2% due to lower activity in several regions, partially offset by higher direct margins in U.S. and cost reduction actions in Canada operations. MS operating income decreased by $1.1 million or 15.3% as compared to the prior year quarter, driven by our Canada operations and domestic valve business, partially offset by higher operating income from our U.S. and international operations and savings in our overhead costs. Corporate operating loss decreased by $2.6 million due to lower legal cost in the current quarter compared to the prior year quarter and lower overall costs due to the Company’s continuous cost reduction efforts. We continue to experience cost inflation in several areas across all segments, such as raw materials, transportation, and labor costs.

For the three months ended September 30, 2023 and 2022, operating loss includes net expenses totaling $2.8 million and $2.8 million, respectively, that we do not believe are indicative of our core operating activities, as detailed in the table below (in thousands):


	Three Months Ended September 30,
	2023		2022

Operating income (loss)	$	(1,258)	$	(1,729)
Professional fees and other	1,452		539
Legal costs	650		1,543
Severance charges, net	655		670
Total non-core expenses	2,757		2,752
Operating income, excluding non-core expenses	$	1,499	$	1,023

Excluding the impact of these identified non-core items in both periods, operating income increased by $0.5 million from income of $1.0 million in the three months ended September 30, 2022 to $1.5 million in the three months ended September 30, 2023. See our non-GAAP reconciliation for additional details of our non-core expenses.

Interest expense, net. Interest expense decreased by $16.6 million compared to the prior year quarter. The decrease was primarily attributable to lower outstanding debt during the current quarter compared to the prior year quarter due to the paydown of $225 million in November 2022 and full payoff of the remaining balance of our APSC term loan in June 2023. These effects were partially offset by a year over year increase in cash interest on the 2022 ABL Credit Facility and the increase in PIK interest on the Uptiered Loan / Subordinated Term Loan.

Cash interest paid during the quarter ended September 30, 2023 and 2022 was $5.0 million and $7.7 million, respectively.

Other income, net. Other income, net decreased by $3.0 million primarily due to the larger impact of foreign currency fluctuations and asset disposals in the third quarter of 2022 as compared to 2023.

Taxes. The provision for income tax was $1.1 million on the pre-tax loss from continuing operations of $11.1 million in the current year quarter, compared to a $1.5 million income tax provision on a pre-tax loss of $25.2 million in the prior year quarter. The effective tax rate, inclusive of discrete items, was a provision of 9.7% for the three months ended September 30, 2023, compared to a provision of 5.8% for the three months ended September 30, 2022. The effective tax rate differs from the prior year quarter compared to the current year quarter and from the statutory rate due to changes in the valuation allowance.

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Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

The following is a comparison of our results of operations for the nine months ended September 30, 2023 to the nine months ended September 30, 2022.

The components of revenue and operating income (loss) from our continuing operations consisted of the following (in thousands):


	Nine Months Ended September 30,				Increase (Decrease)
	2023		2022		$		%
	(unaudited)		(unaudited)
Revenues by business segment:
IHT	$	322,426	$	320,033	$	2,393	0.7	%
MS	326,058		308,884		17,174		5.6	%
Total revenues	$	648,484	$	628,917	$	19,567	3.1	%
Operating income (loss):
IHT	$	17,683	$	13,038	$	4,645	35.6	%
MS	22,395		15,152		7,243		47.8	%
Corporate and shared support services	(44,486)		(63,119)		18,633		29.5	%
Total operating loss	$	(4,408)	$	(34,929)	$	30,521	87.4	%

Interest expense, net	$	(43,499)	$	(63,708)	$	20,209	31.7	%
Loss on debt extinguishment	(1,585)		—		(1,585)		NM
Other income, net	914		9,664		(8,750)		(90.5)	%
Loss before income taxes	$	(48,578)	$	(88,973)	$	40,395	45.4	%
Provision for income taxes	(4,020)		(4,182)		162		3.9	%
Net loss from continuing operations	$	(52,598)	$	(93,155)	$	40,557	43.5	%
NM = Not meaningful

Revenues. Total revenues increased $19.6 million or 3.1% from the prior year period, with both segments seeing increases compared to prior year period. IHT revenues increased by $2.4 million or 0.7% and MS revenue increased by $17.2 million or 5.6%. Revenues were negatively impacted by $3.8 million from adverse foreign exchange movements during the nine-month period ended September 30, 2023. IHT segment year to date revenue increased 0.7%, compared to the prior year period, which was primarily driven by an increase of $8.3 million in U.S. revenue due to higher callout and turnaround activity, an increase of $3.0 million in other international regions’ revenue and an increase of $1.1 million in aerospace activity, offset by a $10.0 million decrease in Canada revenue due to turnaround/project work in 2022 that did not repeat in 2023. MS segment revenue increased 5.6% compared to the prior year period, due to a $4.0 million increase in U.S. operations, primarily attributable to higher activity in callout, hot tapping and leak repair services, a $0.2 million increase in Canada operations and a $13.0 million increase in other international operations primarily attributable to higher turnaround activity, leak repair services and product sales.

Operating income (loss). Overall operating loss was $4.4 million in the current year, a $30.5 million or 87.4% improvement as compared to an operating loss of $34.9 million in the prior year. IHT operating income increased by $4.6 million or 35.6%, driven by higher activity and improved margins in the U.S. and indirect and SG&A cost reductions in the U.S. and Canada. MS operating income increased by $7.2 million as compared to the prior year period. Operating income from the U.S., Canada, and other international operations increased by $3.7 million, $1.2 million, and $2.3 million, respectively, driven by higher activity and improved margins. Corporate operating loss decreased by $18.6 million due to lower professional fees, lower legal and severance cost in the current year period as compared to the prior year period and lower overall costs due to the Company’s continuous cost reduction efforts. We continue to experience cost inflation in several areas across all segments, such as raw materials, transportation, and labor costs.

For the nine months ended September 30, 2023 and 2022, operating loss includes net expenses totaling $7.8 million and $16.9 million, respectively, that we do not believe are indicative of our core operating activities, as detailed in the table below (in thousands):

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	Nine Months Ended September 30,
	2023		2022

Operating loss	$	(4,408)	$	(34,929)
Professional fees and other	5,820		10,576
Legal costs	850		3,271
Severance charges, net	1,177		3,028
Total non-core expenses	7,847		16,875
Operating income (loss), excluding non-core expenses	$	3,439	$	(18,054)

Excluding the impact of these identified non-core items in both periods, operating loss decreased by $21.5 million from a loss of $18.1 million to income of $3.4 million. See our non-GAAP reconciliation for additional details of our non-core expenses.

Interest expense, net. Interest expense, net decreased $20.2 million from the prior year period. The decrease was primarily attributable to lower outstanding debt during the 2023 period, due to a $225.0 million payment on the APSC term loan in November 2022 and subsequent pay off of the APSC term loan in June 2023. These decreases were partially offset by a year over year increase in cash interest on the 2022 ABL Credit Facility and the increase in PIK interest on the subordinated term loan.

Cash interest paid for nine months ended September 30, 2023 and 2022 was $14.5 million and $17.2 million, respectively.

Loss on Debt Extinguishment. On June 16, 2023, we used the proceeds from the ME/RE Loans and borrowings under the 2022 ABL Credit Facility to repay the total outstanding balance of $35.5 million under the Term Loan Credit Agreement with APSC plus the applicable prepayment premium, resulting in a loss on debt extinguishment of $1.6 million.

Other income, net. Other income decreased by $8.8 million from the prior year period primarily due to larger foreign currency fluctuations, gains on disposal of assets, and insurance proceeds received from a natural disaster claim in the 2022 period.

Taxes. The provision for income tax was $4.0 million on the pre-tax loss from continuing operations of $48.6 million in the current year-to-date period compared to income tax expense of $4.2 million on the pre-tax loss of $89.0 million in the prior year-to-date period. The effective tax rate was a provision of 8.3% for the nine months ended September 30, 2023, compared to a provision of 4.7% for the nine months ended September 30, 2022. The effective tax rate differs from the statutory rate and from the prior year period due to a change in the valuation allowance.

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Non-GAAP Financial Measures and Reconciliations

We use supplemental non-GAAP financial measures which are derived from the consolidated financial information including adjusted net income (loss); adjusted net income (loss) per share; earnings before interest and taxes (“EBIT”); adjusted EBIT; adjusted earnings before interest, taxes, depreciation, and amortization (“adjusted EBITDA”) and free cash flow to supplement financial information presented on a GAAP basis.

We define adjusted net income (loss) and adjusted net income (loss) per share to exclude the following items: non-routine legal costs and settlements, non-routine professional fees, restructuring charges, loss on debt extinguishment, certain severance charges, and certain other items that we believe are not indicative of core operating activities. Consolidated adjusted EBIT, as defined by us, excludes the costs excluded from adjusted net income (loss) as well as income tax expense (benefit), interest charges, foreign currency (gain) loss, and items of other (income) expense. Consolidated adjusted EBITDA further excludes from consolidated adjusted EBIT depreciation, amortization, and non-cash share-based compensation costs. Segment adjusted EBIT is equal to segment operating income (loss) excluding costs associated with non-routine legal costs and settlements, non-routine professional fees, loss on debt extinguishment, certain severance charges, and certain other items as determined by management. Segment adjusted EBITDA further excludes from segment adjusted EBIT depreciation, amortization, and non-cash share-based compensation costs. Free cash flow is defined as net cash provided by (used in) operating activities minus capital expenditures.

Management believes these non-GAAP financial measures are useful to both management and investors in their analysis of our financial position and results of operations. In particular, adjusted net income (loss), adjusted net income (loss) per share, consolidated adjusted EBIT, and consolidated adjusted EBITDA are meaningful measures of performance which are commonly used by industry analysts, investors, lenders, and rating agencies to analyze operating performance in our industry, perform analytical comparisons, benchmark performance between periods, and measure our performance against externally communicated targets. Our segment adjusted EBIT and segment adjusted EBITDA are also used as a basis for the Chief Operating Decision Maker to evaluate the performance of our reportable segments. Free cash flow is used by our management and investors to analyze our ability to service and repay debt and return value directly to stakeholders.

Non-GAAP measures have important limitations as analytical tools because they exclude some, but not all, items that affect net earnings and operating income. These measures should not be considered substitutes for their most directly comparable U.S. GAAP financial measures and should be read only in conjunction with financial information presented on a GAAP basis. Further, our non-GAAP financial measures may not be comparable to similarly titled measures of other companies who may calculate non-GAAP financial measures differently, limiting the usefulness of those measures for comparative purposes. The liquidity measure of free cash flow does not represent a precise calculation of residual cash flow available for discretionary expenditures. Reconciliations of each non-GAAP financial measure to its most directly comparable GAAP financial measure are presented below.

The following tables set forth the reconciliation of Adjusted Net Income (Loss), EBIT and EBITDA to their most comparable GAAP financial measurements:

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TEAM, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Continued)
(unaudited, in thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Adjusted Net Loss:
Net loss	$	(12,134)	$	(26,620)	$	(52,598)	$	(93,155)
Professional fees and other1	1,452		539		5,820		10,576
Write-off of software cost	629		—		629		—
Legal costs2	650		1,543		850		3,271
Severance charges, net3	655		670		1,177		3,028
Natural disaster insurance recovery	—		—		—		(872)
Loss on debt extinguishment	3		—		1,585		—

Tax impact of adjustments and other net tax items4	(37)		(24)		(122)		(31)
Adjusted Net Loss	$	(8,782)	$	(23,892)	$	(42,659)	$	(77,183)

Adjusted Net Loss per common share:
Basic	$	(2.01)	$	(5.53)	$	(9.79)	$	(18.65)

Consolidated Adjusted EBIT and Adjusted EBITDA:
Net loss	$	(12,134)	$	(26,620)	$	(52,598)	$	(93,155)
Provision for income taxes	1,072		1,465		4,020		4,182
Loss (gain) on equipment sale	10		(786)		(286)		(4,269)
Interest expense, net	10,067		26,653		43,499		63,708
Professional fees and other1	1,452		539		5,820		10,576
Write-off of software cost	629		—		629		—
Legal costs2	650		1,543		850		3,271
Severance charges, net3	655		670		1,177		3,028
Foreign currency gain	(742)		(2,264)		(776)		(3,955)
Pension credit5	(163)		(178)		(481)		(571)
Natural disaster insurance recovery	—		—		—		(872)
Loss on debt extinguishment	3		—		1,585		—
Consolidated Adjusted EBIT	1,499		1,022		3,439		(18,057)
Depreciation and amortization
Amount included in operating expenses	3,613		3,771		11,026		11,843
Amount included in SG&A expenses	5,783		5,216		17,455		15,607
Total depreciation and amortization	9,396		8,987		28,481		27,450
Non-cash share-based compensation costs	232		629		859		570
Consolidated Adjusted EBITDA	$	11,127	$	10,638	$	32,779	$	9,963

Free Cash Flow:
Cash provided by (used in) operating activities	$	1,548	$	5,913	$	(22,069)	$	(50,573)
Capital expenditures	(2,360)		(5,883)		(7,433)		(17,299)
Free Cash Flow	$	(812)	$	30	$	(29,502)	$	(67,872)

____________________________________

1 For the three and nine months ended September 30, 2023, includes $1.5 million and $4.7 million, respectively related to debt financing, and $0 and $1.1 million, respectively, related to lease extinguishment charges and other project costs. For the three and nine months ended September 30, 2022, includes $0.5 million and $10.5 million, respectively, related to costs associated with the debt financing and corporate support costs.

2 Primarily relates to accrued legal matters and legal fees.

3 For the three and nine months ended September 30, 2023, primarily related to customary severance costs associated with staff reductions across multiple departments. For the three months ended September 30, 2022, primarily related to customary severance costs associated with staff reductions across multiple corporate departments. For the nine months ended September 30, 2022 includes $1.3 million related to customary severance costs associated with executive departures and $1.7 million associated with severance across multiple corporate departments.

4 Represents the tax effect of the adjustments.

5 Represents pension credits for the U.K. pension plan based on the difference between the expected return on plan assets and the cost of the discounted pension liability. The pension plan was frozen in 1994 and no new participants have been added since that date. Accruals for future benefits ceased in connection with a plan curtailment in 2013.

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TEAM, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Continued)
(unaudited, in thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

Segment Adjusted EBIT and Adjusted EBITDA:

IHT
Operating income	$	6,412	$	7,390	$	17,683	$	13,038
Severance charges, net1	195		150		400		192
Professional fees and other3	—		—		828		—

Adjusted EBIT	6,607		7,540		18,911		13,230
Depreciation and amortization	3,148		3,022		9,390		9,372
Adjusted EBITDA	$	9,755	$	10,562	$	28,301	$	22,602

MS
Operating income	$	6,482	$	7,655	$	22,395	$	15,152
Severance charges, net1	287		35		595		89
Professional fees and other3	—		—		67		—

Adjusted EBIT	6,769		7,690		23,057		15,241
Depreciation and amortization	4,656		4,704		14,113		14,222
Adjusted EBITDA	$	11,425	$	12,394	$	37,170	$	29,463








Corporate and shared support services
Net loss	$	(25,028)	$	(41,665)	$	(92,676)	$	(121,345)
Provision for income taxes	1,072		1,465		4,020		4,182
Loss (gain) on equipment sale	10		(786)		(286)		(4,269)
Interest expense, net	10,067		26,653		43,499		63,708
Foreign currency gain	(742)		(2,264)		(776)		(3,955)
Pension credit2	(163)		(178)		(481)		(571)
Professional fees and other3	1,452		539		4,925		10,576
Write-off of software cost	629		—		629		—
Legal costs4	650		1,543		850		3,271
Severance charges, net1	173		485		182		2,747
Loss on debt extinguishment	3		—		1,585		—
Natural disaster insurance recovery	—		—		—		(872)
Adjusted EBIT	(11,877)		(14,208)		(38,529)		(46,528)
Depreciation and amortization	1,592		1,261		4,978		3,856
Non-cash share-based compensation costs	232		629		859		570
Adjusted EBITDA	$	(10,053)	$	(12,318)	$	(32,692)	$	(42,102)

___________________

1 For the three and nine months ended September 30, 2023, primarily related to customary severance costs associated with staff reductions across multiple departments. For the three months ended September 30, 2022, primarily related to customary severance costs associated with staff reductions across multiple corporate departments. For the nine months ended September 30, 2022 includes $1.3 million related to customary severance costs associated with executive departures and $1.7 million associated with severance across multiple corporate departments.

2 Represents pension credits for the U.K. pension plan based on the difference between the expected return on plan assets and the cost of the discounted pension liability. The pension plan was frozen in 1994 and no new participants have been added since that date. Accruals for future benefits ceased in connection with a plan curtailment in 2013.

3 For the three and nine months ended September 30, 2023, includes $1.5 million and $4.7 million, respectively related to debt financing, and $0 and $1.1 million, respectively, related to lease extinguishment charges and other project costs. For the three and nine months ended September 30, 2022, includes $0.5 million and $10.5 million, respectively, related to costs associated with the debt financing and corporate support costs.

4 Primarily relates to accrued legal matters and legal fees.

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Liquidity and Capital Resources

Financing for operations consists primarily of our 2022 ABL Credit Agreement (which includes the Revolving Credit Loans and, the Delayed Draw Term Loan), ME/RE Loans, the A&R Term Loan Credit Agreement (which includes the Uptiered Loan and the Incremental Term Loan), and cash flows from our operations. As of September 30, 2023, we had approximately $19.9 million of borrowing capacity consisting of $4.9 million available under the 2022 ABL Credit Agreement, and $15.0 million available under the A&R Term Loan Agreement. Our principal uses of cash are for working capital, capital expenditures, and operations.

Our cash and cash equivalents as of September 30, 2023 totaled $21.5 million, consisting of $16.5 million of unrestricted cash on hand, and $5.0 million of restricted cash. As of December 31, 2022, our cash and cash equivalents were $58.1 million, including $51.1 million of unrestricted cash on hand, and $7.0 million of restricted cash. Our total debt and finance obligations were $301.1 million, of which $5.3 million was classified as current at September 30, 2023, compared to total debt of $285.9 million at December 31, 2022.

As of November 7, 2023, we had consolidated cash and cash equivalents of $25.5 million, excluding $5.0 million of restricted cash. In addition, we had $10.0 million available under the A&R Term Loan Agreement and approximately $4.0 million of undrawn availability under our other various credit facilities, resulting in total liquidity of $39.5 million.

As of September 30, 2023, we were in compliance with all debt provisions and covenants under our various debt agreements.

Refer to Note 11 - Debt for information on our debt instruments.

Capital Resources. We establish a capital budget at the beginning of each calendar year and review it during the course of the year. Our capital budgets are based upon our estimate of internally generated sources of cash including from asset sales, as well as cash on hand and the available borrowing capacity under our ABL and other Credit Facilities. We expect to finance our 2023 capital budget with cash flows from operations, cash on hand, proceeds from asset sales, and amounts available under our debt arrangements. Actual capital expenditure levels may vary significantly due to many factors, including industry conditions; the prices and availability of goods and services; the extent to which non-strategic assets are sold and our liquidity outlook.

We continuously monitor our liquidity needs, coordinate our capital expenditure program with our expected cash flows

and projected debt-repayment schedule, and evaluate our available alternative sources of liquidity, including accessing debt and

equity capital markets in light of current and expected economic conditions. Although we cannot provide any assurance, we believe that our liquidity position and our improving ability to generate cash flows from our operations due to the success of our ongoing cost reduction efforts should be adequate to meet our cash requirements inclusive of, but not limited to, our normal operating needs, debt service obligations and commitments of at least the next twelve months.

Cash Flows

The following table summarizes cash flows from Operating, Investing and Financing activities (in thousands):


	Nine Months Ended September 30,
Cash flows provided by (used in):		2023		2022		Increase (Decrease)
Operating activities		$	(22,069)	$	(46,365)	52	%
Investing activities		(7,019)		(13,837)		49	%
Financing activities		(7,395)		63,288		(112)	%
Effect of exchange rate changes on cash		(109)		(1,373)		NM
Net change in cash and cash equivalents		$	(36,592)	$	1,713	NM
NM - Not meaningful

Cash flows attributable to our operating activities. For the nine months ended September 30, 2023, net cash used in operating activities was $22.1 million, an improvement of $24.3 million over the 2022 period. Our net cash used in operating activities was driven by our net loss for the period, which totaled $52.6 million and negative working capital of $26.2 million, partially offset by amortization of debt issuance costs of $16.9 million, depreciation and amortization of $28.5 million, and PIK interest of $10.9 million.

For the nine months ended September 30, 2022, net cash used in operating activities was $46.4 million. Our net cash used in operating activities generally reflects the cash effects of transactions and other events used in the determination of net loss, which totaled $76.9 million. The decline in cash generated from operations was driven by the net loss during the period,

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negative working capital impacts of $35.3 million, a gain on disposal of assets of $4.3 million, and movement in deferred income taxes of $0.4 million. These were partially offset by amortization of debt issuance costs and debt discount, and write off of deferred loan costs of $28.4 million, depreciation and amortization of $28.6 million, and PIK interest of $15.5 million.

Cash flows attributable to our investing activities. For the nine months ended September 30, 2023, net cash used in investing activities was $7.0 million, consisting primarily of capital expenditures of $7.4 million, partially offset by $0.4 million of cash proceeds from asset sales.

For the nine months ended September 30, 2022, net cash used in investing activities was $13.8 million, consisting primarily of $21.0 million of capital expenditures, partially offset by $7.2 million of cash proceeds from asset sales.

Cash flows attributable to our financing activities. For the nine months ended September 30, 2023, net cash used in financing activities was $7.4 million consisting primarily of net borrowings under our 2022 ABL Credit Facility of $11.0 million, borrowings under ME/RE loans of $27.4 million and borrowings under the Incremental Term Loan of $42.5 million, offset by the payoff of APSC Term Loan of $37.1 million, payoff of the Notes of $41.2 million and payment of debt issuance cost of $8.4 million.

For the nine months ended September 30, 2022, net cash provided by financing activities was $63.3 million consisting primarily of net borrowings under our ABL Credit Facility of $67.8 million and $9.7 million cash proceeds from the equity issuances, partially offset by $13.6 million in payments for debt issuance costs.

Effect of exchange rate changes on cash and cash equivalents. For the nine months ended September 30, 2023 and 2022, the effect of foreign exchange rate changes on cash was $0.1 million and $1.4 million, respectively. The impact of exchange rates on cash and cash equivalents is primarily attributable to fluctuations in U.S. Dollar exchange rates against the Canadian Dollar, the Euro, the British Pound, the Australian Dollar and Mexican Peso.

Contractual Obligations. We have various contractual obligations in the normal course of our operations. For further information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Contractual Obligations” in our Annual Report on Form 10-K. See Note 11 - Debt for additional details regarding new financing transactions and amendments to our debt agreements that were executed during the year.

Off-Balance Sheet Arrangements

From time-to-time, we enter into off-balance sheet arrangements and transactions that can give rise to material off-balance sheet obligations. See Note 11 - Debt for additional details on our off-balance sheet arrangements.

Critical Accounting Policies and Estimates

A discussion of our critical accounting policies and estimates is included in our Annual Report on Form 10-K. There were no material changes to our critical accounting policies during the nine months ended September 30, 2023.


ITEM 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this item 3.

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ITEM 4.			CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. Under the supervision and with the participation of our management, including the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of the end of the period covered by this report. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer have concluded as of September 30, 2023, that our disclosure controls and procedures were effective and designed to ensure that the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the requisite time periods.

Changes in Internal Control Over Financial Reporting. There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the quarter ended September 30, 2023.

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PART II—OTHER INFORMATION


ITEM 1.			LEGAL PROCEEDINGS

For information on legal proceedings, see Note 14 - Commitments and Contingencies to the condensed consolidated financial statements included in this report.


ITEM 1A.			RISK FACTORS

Our operations and financial results are subject to various risks and uncertainties. There have been no material changes in our risk factors as previously disclosed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K.


ITEM 2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

NONE


ITEM 3.			DEFAULTS UPON SENIOR SECURITIES

NONE


ITEM 4.			MINE SAFETY DISCLOSURES

NOT APPLICABLE


ITEM 5.			OTHER INFORMATION

NONE

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ITEM 6.			EXHIBITS


Exhibit Number						Description


3.1						Amended and Restated Certificate of Incorporation of Team, Inc. (filed as Exhibit 3.1 to Team, Inc.’s Current Report on Form 8-K (File No. 001-08604) filed on December 2, 2011, incorporated herein by reference ).

3.2						Certificate of Amendment of Amended and Restated Certificate of Incorporation of Team, Inc., dated October 24, 2013 (filed as Exhibit 3.1 to Team, Inc.’s Current Report on Form 8-K (File No. 001-08604) filed on October 25, 2013, incorporated herein by reference).

3.3						Certificate of Amendment to Amended and Restated Certificate of Incorporation of Team, Inc., dated November 28, 2022 (filed as Exhibit 3.3 to Team, Inc.’s Quarterly Report on Form 10-Q (File No. 001-08604) filed on May 11, 2023, incorporated herein by reference ).

3.4						Certificate of Amendment to Amended and Restated Certificate of Incorporation of Team, Inc. (filed as Exhibit 3.1 to Team, Inc.’s Report on Form 8-K (File No. 001-08604) filed on December 22, 2022, incorporated by reference herein).

3.5						Amended and Restated Bylaws of Team, Inc. (filed as Exhibit 3.3 to Team, Inc.’s Annual Report on Form 10-K for year ended December 31, 2017 (File No. 001-08604), incorporated herein by reference).

3.6						Certificate of Designations of Series A Preferred Stock of Team, Inc., as filed with the Secretary of State of the State of Delaware on February 2, 2022 (filed as Exhibit 3.1 to Team, Inc.’s Current Report on Form 8-K (File No. 001-08604) filed on February 2, 2022, incorporated by reference herein).

31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.3						Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2						Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.3						Certification of Chief Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS						Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

101.SCH						Inline XBRL Taxonomy Extension Schema Document.

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104						Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized.


						TEAM, INC. (Registrant)

Date: November 9, 2023						/S/ Keith D. Tucker
						Keith D. Tucker Chief Executive Officer (Principal Executive Officer)

						/S/ Nelson M. Haight
						Nelson M. Haight Chief Financial Officer (Principal Financial Officer)

						/S/ Matthew E. Acosta
						Matthew E. Acosta Vice President, Chief Accounting Officer (Principal Accounting Officer)