Team Inc. (NYSE: TISI) grows Q1 2026 revenue, trims loss but carries heavy debt load
Filing Impact
Filing Sentiment
Form Type
10-Q
Rhea-AI Filing Summary
Team, Inc. reported first-quarter 2026 revenue of $215.1 million, up 8.3% from $198.7 million a year earlier, driven by higher turnaround and project work in both Inspection and Heat-Treating (IHT) and Mechanical Services (MS).
Net loss narrowed to $11.3 million from $29.7 million, as operating loss improved to $3.4 million and interest expense declined after a 2025 refinancing. Adjusted EBITDA rose to $7.7 million from $5.3 million, though free cash flow remained negative at -$11.5 million.
Cash and cash equivalents were $12.8 million at March 31, 2026, against total debt and finance obligations of $306.5 million and a shareholders’ deficit of $39.4 million. The company had about $40.5 million of borrowing availability and additional potential liquidity from Series B preferred stock delayed draws.
Positive
- None.
Negative
- None.
Key Figures
Revenue: $215.1 million
Net loss: $11.3 million
Adjusted EBITDA: $7.7 million
+5 more
8 metrics
Revenue
$215.1 million
Three months ended March 31, 2026
Net loss
$11.3 million
Three months ended March 31, 2026
Adjusted EBITDA
$7.7 million
Three months ended March 31, 2026
Free cash flow
-$11.5 million
Three months ended March 31, 2026
Total debt and finance obligations
$306.5 million
As of March 31, 2026
Cash and cash equivalents
$12.8 million
As of March 31, 2026
Shareholders’ equity (deficit)
-$39.4 million
As of March 31, 2026
Revenue growth
$16.4 million increase
Q1 2026 vs Q1 2025 total revenue
Key Terms
adjusted EBITDA, paid-in-kind (PIK) dividend, Second Lien Term Loan, Series B Preferred Stock, +2 more
6 terms
adjusted EBITDA financial
"Consolidated Adjusted EBITDA | $ | 7,711 | $ | 5,310"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
paid-in-kind (PIK) dividend financial
"the Company accrued a 10.5% paid-in-kind (PIK) dividend on the outstanding Series B Preferred Stock"
Second Lien Term Loan financial
"included a $107.4 million second lien term loan (the “Second Lien Term Loans”)"
Series B Preferred Stock financial
"the Company issued 75,000 shares of Series B Preferred Stock and 1,453,260 warrants"
Series B preferred stock is a type of ownership share issued by a company that offers certain advantages over common stock, such as priority in receiving dividends or assets if the company is sold or liquidated. It is typically issued after an initial round of funding, making it a way for investors to support a company's growth while gaining some protections and benefits. This stock matters to investors because it often provides a more secure investment position with potential for future growth.
adjusted net loss financial
"Adjusted Net Loss | $ | (9,704) | $ | (14,869)"
Adjusted net loss is the company’s reported net loss after removing one-time, non-cash, or unusual items that management says obscure underlying results, such as restructuring charges, asset write-downs, or stock-based pay. Investors use it to focus on the business’s core profitability — like smoothing out potholes to judge road quality — but should be cautious because choices about what to exclude can make performance look better than it really is.
Emission Control Services (ECS) other
"As of January 1, 2026, Emission Control Services (ECS), previously included in the MS segment, was moved to the IHT segment"
Earnings Snapshot
Revenue: $215.1 million
Q1 2026
Revenue
$215.1 million
+8.3% YoY
Net loss
$11.3 million
improved from $29.7 million YoY
Adjusted EBITDA
$7.7 million
up from $5.3 million YoY
Cash from operations
-$9.1 million
better than -$28.7 million YoY
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________________________
FORM 10-Q
(Mark One)
For the quarterly period ended March 31, 2026
OR
For the transition period from to
Commission file number 001-08604
| (Exact Name of Registrant as Specified in Its Charter) | ||||||||
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||
( | ||||||||
| (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 | ||||||
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 | ☐ | |||||||||||||||||
x | 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 4,571,382 shares of common stock, par value $0.30, outstanding as of May 11, 2026.
INDEX
| Page No. | ||||||||
PART I—FINANCIAL INFORMATION | 1 | |||||||
ITEM 1. | Financial Statements | 2 | ||||||
Condensed Consolidated Balance Sheets as of March 31, 2026 (Unaudited) and December 31, 2025 | 2 | |||||||
Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025 | 3 | |||||||
Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2026 and 2025 | 4 | |||||||
Unaudited Condensed Consolidated Statements of Shareholders’ Equity (Deficit) for the Three Months Ended March 31, 2026 and 2025 | 5 | |||||||
Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 | 6 | |||||||
Notes to Unaudited Condensed Consolidated Financial Statements | 7 | |||||||
ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 | ||||||
ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk | 30 | ||||||
ITEM 4. | Controls and Procedures | 30 | ||||||
PART II—OTHER INFORMATION | 31 | |||||||
ITEM 1. | Legal Proceedings | 31 | ||||||
ITEM 1A. | Risk Factors | 31 | ||||||
ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 31 | ||||||
ITEM 3. | Defaults Upon Senior Securities | 31 | ||||||
ITEM 4. | Mine Safety Disclosures | 31 | ||||||
ITEM 5. | Other Information | 31 | ||||||
ITEM 6. | Exhibits | 32 | ||||||
SIGNATURES | 33 | |||||||
1
PART I—FINANCIAL INFORMATION
TEAM, INC. AND SUBSIDIARIES
| ITEM 1. | FINANCIAL STATEMENTS | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
| March 31, 2026 | December 31, 2025 | ||||||||||
| ASSETS | (unaudited) | ||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowance of $ | |||||||||||
| Inventory | |||||||||||
| Income tax receivable | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Intangible assets, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Defined benefit pension asset | |||||||||||
| Other assets, net | |||||||||||
| Deferred tax asset | |||||||||||
| Total assets | $ | $ | |||||||||
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY (DEFICIT) | |||||||||||
| Current liabilities: | |||||||||||
| Current portion of long-term debt and finance lease obligations | $ | $ | |||||||||
| Current portion of operating lease obligations | |||||||||||
| Accounts payable | |||||||||||
| Other accrued liabilities | |||||||||||
| Income tax payable | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt and finance lease obligations | |||||||||||
| Operating lease obligations | |||||||||||
| Deferred tax liabilities | |||||||||||
| Other long-term liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
Redeemable preferred stock, par value $ | |||||||||||
| Shareholders’ equity (deficit): | |||||||||||
Preferred stock, | |||||||||||
Common stock, par value $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total shareholders’ equity (deficit) | ( | ( | |||||||||
| Total liabilities, redeemable preferred stock and shareholders’ equity (deficit) | $ | $ | |||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
2
TEAM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Revenues | $ | $ | ||||||||||||
| Operating expenses | ||||||||||||||
Depreciation and amortization | ||||||||||||||
| Gross margin | ||||||||||||||
Selling, general and administrative expenses | ||||||||||||||
Depreciation and amortization | ||||||||||||||
| Operating loss | ( | ( | ||||||||||||
| Interest expense, net | ( | ( | ||||||||||||
| Loss on debt extinguishment | ( | |||||||||||||
| Other income (expense), net | ( | |||||||||||||
| Loss before income taxes | ( | ( | ||||||||||||
| Provision for income taxes | ( | ( | ||||||||||||
| Net loss | ( | ( | ||||||||||||
| Dividend and accretion to redemption value on redeemable preferred stock | ( | |||||||||||||
| Net loss attributable to common shareholders | $ | ( | $ | ( | ||||||||||
| Loss per common share: | ||||||||||||||
| Basic and diluted | $ | ( | $ | ( | ||||||||||
| Weighted-average number of shares outstanding: | ||||||||||||||
| Basic and diluted | ||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
3
TEAM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS
(in thousands)
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||
| Other comprehensive income (loss) before tax: | ||||||||||||||
| Foreign currency translation adjustment | ( | |||||||||||||
| Defined benefit pension plans: | ||||||||||||||
Amortization of prior service cost | ||||||||||||||
Amortization of net actuarial loss | ||||||||||||||
| Other comprehensive income (loss) before tax | ( | |||||||||||||
Tax provision attributable to other comprehensive income (loss) | ( | ( | ||||||||||||
| Other comprehensive income (loss), net of tax | ( | |||||||||||||
| Total comprehensive loss | $ | ( | $ | ( | ||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
4
TEAM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
(in thousands)
(Unaudited)
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Shareholders’Equity (Deficit) | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
| Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Dividend and accretion to redemption value on redeemable preferred stock | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Net settlement of vested stock awards | ( | — | — | ( | |||||||||||||||||||||||||||||||
| Foreign currency translation adjustment, net of tax | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Defined benefit pension plans, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
| Non-cash compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Foreign currency translation adjustment, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
| Defined benefit pension plans, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
| Non-cash compensation | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
5
TEAM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
Loss on debt extinguishment | |||||||||||
| Amortization of debt issuance costs, debt discounts, and deferred financing costs | |||||||||||
Paid-in-kind (“PIK”) interest | |||||||||||
Allowance for credit losses | ( | ||||||||||
Foreign currency loss (gain) | ( | ||||||||||
| Deferred income taxes | ( | ( | |||||||||
| Non-cash compensation cost (credit) | ( | ||||||||||
| Other, net | ( | ||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Inventory | ( | ( | |||||||||
Prepaid expenses and other assets | ( | ||||||||||
| Accounts payable | ( | ( | |||||||||
| Other accrued liabilities | ( | ||||||||||
| Income taxes | |||||||||||
| Net cash used in operating activities | ( | ( | |||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Proceeds from disposal of assets | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Borrowings under Revolving Credit Loans | |||||||||||
| Payments under Revolving Credit Loans | ( | ( | |||||||||
Payments under Corre Delayed Draw Term Loan | ( | ||||||||||
| Payments under Corre Uptiered Loan | ( | ||||||||||
Borrowings under First Lien Term Loan | |||||||||||
| Payments under First Lien Term Loan | ( | ||||||||||
| Payments under ME/RE Loans | ( | ||||||||||
| Payments under Corre Incremental Term Loan | ( | ||||||||||
| Payments for debt issuance costs | ( | ||||||||||
| Other | ( | ( | |||||||||
| Net cash provided by financing activities | |||||||||||
| Effect of exchange rate changes on cash | ( | ||||||||||
| Net decrease in cash and cash equivalents | ( | ( | |||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
6
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 “Team,” “the Company,” “we,” “our” and “us” are used in this report to refer to either Team, Inc., to one or more of our consolidated subsidiaries, or to all of them taken as a whole. Our stock is traded on the New York Stock Exchange (the “NYSE”) under the symbol “TISI”.
We are a global, leading provider of specialty industrial services offering customers 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 customers’ 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 involving: inspection to assess condition; engineering assessment to determine fitness for purpose in the context of industry standards and regulatory codes; and mechanical services to repair, rerate or replace based upon the customer’s election. In addition, we are capable of escalating with the customer’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 these services in three distinct customer demand profiles: (i) turnaround or project services, (ii) call-out services, and (iii) nested or run-and-maintain services.
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 (onstream), during facility turnarounds or during new construction or expansion activities. In addition, IHT provides comprehensive non-destructive testing services and metallurgical and chemical processing services to the aerospace and other industries covering a range of components including finished machined and in-service components. IHT also provides advanced digital imaging including remote digital video imaging.
MS provides solutions designed to serve customers’ 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 online valve insertion solutions, which are delivered while assets are in an operational condition, which maximizes customer 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 customer downtime and are primarily delivered while assets are off-line, 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 (valves, terminals and storage, and pipeline);
•Infrastructure (construction and building, roads, dams, amusement parks, bridges, ports, and railways); and
•Aerospace and Defense.
Basis of presentation. These condensed consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). 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 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, 2025, as filed with the SEC (“our Annual Report on Form 10-K”).
7
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 of depreciation and amortization expense on the condensed consolidated statements of 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.
2. REVENUE
Disaggregation of revenue. Essentially all of our revenues are associated with contracts with customers. A disaggregation of our revenue from customer contracts by geographic region, by reportable operating segment and by service type is presented below:
Revenue by geographic area (in thousands):
| Three Months Ended March 31, 2026 | ||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||
| United States | Canada | Other Countries | Total | |||||||||||||||||||||||
Revenue1: | ||||||||||||||||||||||||||
| IHT | $ | $ | $ | $ | ||||||||||||||||||||||
| MS | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||
| United States | Canada | Other Countries | Total | |||||||||||||||||||||||
Revenue1: | ||||||||||||||||||||||||||
| IHT | $ | $ | $ | $ | ||||||||||||||||||||||
| MS | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
1 As of January 1, 2026, Emission Control Services (ECS), previously included in the MS segment, was moved to the IHT segment, refer to Note 15 - Segment Disclosures for more information.
Revenue by operating segment and service type (in thousands):
8
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||||||||
| Non-Destructive Evaluation and Testing Services | Repair and Maintenance Services | Heat-Treating | Other | Total | |||||||||||||||||||||||||
Revenue1: | |||||||||||||||||||||||||||||
| IHT | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| MS | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||||||||
| Non-Destructive Evaluation and Testing Services | Repair and Maintenance Services | Heat-Treating | Other | Total | |||||||||||||||||||||||||
Revenue1: | |||||||||||||||||||||||||||||
| IHT | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| MS | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
1 As of January 1, 2026, ECS, previously included in the MS segment, was moved to the IHT segment, refer to Note 15 - Segment Disclosures for more information.
For additional information on our reportable operating segments, refer to Note 15 - Segment Disclosures.
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 March 31, 2026 and December 31, 2025.
3. ACCOUNTS RECEIVABLE
A summary of accounts receivable as of March 31, 2026 and December 31, 2025 is as follows (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| (unaudited) | |||||||||||
| Trade accounts receivable | $ | $ | |||||||||
| Unbilled revenues | |||||||||||
| Allowance for credit losses | ( | ( | |||||||||
| Total | $ | $ | |||||||||
The following table shows a rollforward of the allowance for credit losses (in thousands):
| March 31, 2026 | |||||
| (unaudited) | |||||
| Balance at beginning of period | $ | ||||
| Provision for expected credit losses | ( | ||||
| Recoveries collected | ( | ||||
| Write-offs | ( | ||||
| Foreign exchange effects | |||||
| Balance at end of period | $ | ||||
9
4. INVENTORY
A summary of inventory as of March 31, 2026 and December 31, 2025 is as follows (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| (unaudited) | |||||||||||
| Raw materials | $ | $ | |||||||||
| Work in progress | |||||||||||
| Finished goods | |||||||||||
| Total | $ | $ | |||||||||
5. PREPAID EXPENSES AND OTHER CURRENT ASSETS
A summary of prepaid expenses and other current assets as of March 31, 2026 and December 31, 2025 is as follows (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| (unaudited) | |||||||||||
| Insurance receivables | $ | $ | |||||||||
| Prepaid expenses | |||||||||||
| Other current assets | |||||||||||
| Prepaid expenses and other current assets | $ | $ | |||||||||
6. PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment as of March 31, 2026 and December 31, 2025 is as follows (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| (unaudited) | |||||||||||
| Land | $ | $ | |||||||||
| Buildings and leasehold improvements | |||||||||||
| Machinery and equipment | |||||||||||
| Furniture and fixtures | |||||||||||
| Capitalized ERP system development costs | |||||||||||
| Computers and computer software | |||||||||||
| Automobiles | |||||||||||
| Construction in progress | |||||||||||
| Total | |||||||||||
| Accumulated depreciation and amortization | ( | ( | |||||||||
| Property, plant and equipment, net | $ | $ | |||||||||
Included in the table above are assets under finance leases of $13.3 million and $13.0 million as of March 31, 2026 and December 31, 2025, respectively, and related accumulated amortization of $5.3 million and $4.8 million as of March 31, 2026 and December 31, 2025, respectively. Depreciation expense for the three months ended March 31, 2026 and 2025 was $4.5 million and $4.7 million, respectively.
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7. INTANGIBLE ASSETS
A summary of intangible assets as of March 31, 2026 and December 31, 2025 is as follows (in thousands):
| March 31, 2026 | |||||||||||||||||
| (unaudited) | |||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||
| Customer relationships | $ | $ | ( | $ | |||||||||||||
| Trade names | ( | ||||||||||||||||
| Technology | ( | ||||||||||||||||
| Licenses | ( | ||||||||||||||||
| Intangible assets | $ | $ | ( | $ | |||||||||||||
| December 31, 2025 | |||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||
| Customer relationships | $ | $ | ( | $ | |||||||||||||
| Trade names | ( | ||||||||||||||||
| Technology | ( | ||||||||||||||||
| Licenses | ( | ||||||||||||||||
| Intangible assets | $ | $ | ( | $ | |||||||||||||
8. OTHER ACCRUED LIABILITIES
A summary of other accrued liabilities as of March 31, 2026 and December 31, 2025 is as follows (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| (unaudited) | |||||||||||
| Payroll and other compensation expenses | $ | $ | |||||||||
| Legal and professional accruals | |||||||||||
| Insurance accruals | |||||||||||
| Property, sales and other non-income related taxes | |||||||||||
| Accrued interest | |||||||||||
Volume discounts | |||||||||||
| Other accruals | |||||||||||
| Total | $ | $ | |||||||||
Payroll and other compensation expenses include all payroll related accruals including, among others, accrued vacation, severance, and bonuses. 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 5 - Prepaid and Other Current Assets. Insurance accruals primarily relate to workers compensation costs. Property, sales and other non-income related taxes include 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 expense accruals.
9. INCOME TAXES
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10. DEBT
As of March 31, 2026 and December 31, 2025, our total long-term debt and finance lease obligations are summarized as follows (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| (unaudited) | |||||||||||
| 2022 ABL Credit Facility | $ | $ | |||||||||
First Lien Term Loan1 | |||||||||||
2025 Second Lien Term Loan1 | |||||||||||
| Equipment Financing Loans | |||||||||||
| Total | |||||||||||
| Finance lease obligations | |||||||||||
| Total long-term debt and finance lease obligations | |||||||||||
| Current portion of long-term debt and finance lease obligations | ( | ( | |||||||||
| Total long-term debt and finance lease obligations, less current portion | $ | $ | |||||||||
1 Comprised of principal amount outstanding, less unamortized debt issuance costs. See below for additional information.
2022 ABL Credit Agreement
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 (“Eclipse”) (such agreement, as amended by Amendment No.1 dated as of May 6, 2022, Amendment No.2 dated as of November 1, 2022, Amendment No.3 dated as of June 16, 2023, Amendment No.4 dated as of March 6, 2024, Amendment No.5 dated as of September 30, 2024, Amendment No.6 dated as of March 12, 2025 and Amendment No.7 dated as of September 11, 2025, 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 $150.0 million to be provided by certain affiliates of Eclipse, with a $35.0 million sublimit for swingline borrowings, and a $26.0 million sublimit for issuances of letters of credit (the “Revolving Credit Loans”).
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| Maturity date | 10/2/2028 | |||||||
| Interest rate | SOFR + applicable margin (or base rate + applicable margin) | |||||||
| Actual interest rate: | ||||||||
| 3/31/2026 | ||||||||
| 3/31/2025 | ||||||||
| Interest payments | monthly | |||||||
| Cash paid for interest | ||||||||
| YTD 3/31/2026 | $ | |||||||
| YTD 3/31/2025 | $ | |||||||
| Principal balance | ||||||||
| 3/31/2026 | $ | |||||||
| 12/31/2025 | $ | |||||||
| Unamortized balance of deferred financing cost | ||||||||
| 3/31/2026 | $ | |||||||
| 12/31/2025 | $ | |||||||
| Available amount at 3/31/2026 | $ | |||||||
The 2022 ABL Credit Agreement contains customary conditions to borrowings and covenants, as described in the 2022 ABL Credit Agreement. As of March 31, 2026, we were in compliance with the covenants.
As of March 31, 2026, $9.5 million in letters of credit were issued under the 2022 ABL Credit Agreement. Such amounts remain undrawn and are off-balance sheet.
First Lien Term Loan Agreement
On March 12, 2025, we entered into a First Lien Term Loan Credit Agreement (such agreement, as amended by Amendment No.1 dated as of September 11, 2025, the “First Lien Term Loan Agreement”) with the lenders party thereto and HPS Investment Partners, LLC. Available funding commitments include a $225.0 million senior secured first lien term loan (the “First Lien Term Loan”) consisting of a $175.0 million initial term loan tranche (the “Initial First Lien Term Loans”) and a $50.0 million delayed draw term loan tranche (the “First Lien Delayed Draw Term Loans”), which is available to be drawn from March 12, 2025 to June 30, 2027, subject to satisfying certain conditions.
The terms of the Initial First Lien Term Loans are described in the table below (dollar amounts are presented in thousands):
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| Maturity date | 3/12/2030 | |||||||
| Stated interest rate | SOFR+applicable margin (or base rate+applicable margin) | |||||||
| Principal payments | $ | |||||||
Effective interest rate | ||||||||
| 3/31/2026 | ||||||||
| 3/31/2025 | ||||||||
| Actual interest rate | ||||||||
| 3/31/2026 | ||||||||
| 3/31/2025 | ||||||||
| Interest payments | variable1 | |||||||
| Cash paid for interest | ||||||||
| YTD 3/31/2026 | $ | |||||||
| YTD 3/31/2025 | $ | |||||||
| Balances at 3/31/2026 | ||||||||
| Principal balance | $ | |||||||
Unamortized balance of debt discount and issuance cost1 | $( | |||||||
| Net carrying balance | $ | |||||||
| Balances at 12/31/2025 | ||||||||
| Principal balance | $ | |||||||
Unamortized balance of debt discount and issuance cost2 | $( | |||||||
| Net carrying balance | $ | |||||||
1 Interest payment dates may be monthly or quarterly based on the Company’s election (subject to availability), adjusted to the nearest business day.
The First Lien Term Loan Agreement contains certain conditions to borrowings, events of default and affirmative and negative covenants as described in the First Lien Term Loan Agreement. As of March 31, 2026, we were in compliance with the covenants.
A&R Term Loan Credit Agreement / Second A&R Second Lien Term Loan Credit Agreement
On March 12, 2025, we entered into a Second Amended and Restated Second Lien Term Loan Credit Agreement with the lenders party thereto and Cantor Fitzgerald Securities, as Agent (as amended by Amendment No.1 dated as of September 11, 2025, the “Second A&R Second Lien Term Loan Agreement”), which amended and restated the existing Amended and Restated Term Loan Credit Agreement, dated June 16, 2023.
Available funding commitments to the Company under the Second A&R Second Lien Term Loan Agreement, subject to certain conditions, included a $107.4 million second lien term loan (the “Second Lien Term Loans”), initially provided by Corre Partners Management, LLC and certain of its affiliates (“Corre and affiliates”), consisting of a $97.4 million term loan tranche (the “2025 Second Lien Term Loans”) and a $10.0 million delayed draw term loan tranche (the “Second Lien Delayed Draw Term Loans”) which was available to be drawn from March 12, 2025, until April 15, 2026, subject to satisfying certain conditions.
The amount currently outstanding under the Second A&R Second Lien Term Loan Agreement is a $65.8 million second lien term loan, including certain interest payments paid in kind. As of April 15, 2026, the availability period for the Second Lien Delayed Draw Term Loans expired. No amounts were drawn under the Second Lien Delayed Draw Term Loans prior to the expiration date.
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| Maturity date | 6/10/2030 | |||||||
| Principal payments | quarterly1 | |||||||
| Effective interest rate | ||||||||
| 3/31/2026 | ||||||||
| 3/31/2025 | ||||||||
| Actual interest rate | ||||||||
| 3/31/2026 | ||||||||
| 3/31/2025 | ||||||||
| Interest payments | quarterly 2 | |||||||
| Cash paid for interest | ||||||||
| YTD 3/31/2026 | $ | |||||||
| YTD 3/31/2025 | $ | |||||||
PIK interest added to principal balance | ||||||||
| YTD 3/31/2026 | $ | |||||||
| YTD 3/31/2025 | $ | |||||||
| Balances at 3/31/2026 | ||||||||
| Principal balance | $ | |||||||
| Unamortized balance of debt issuance cost | $( | |||||||
| Net carrying balance | $ | |||||||
| Balances at 12/31/2025 | ||||||||
| Principal balance | $ | |||||||
| Unamortized balance of debt issuance cost | $( | |||||||
| Net carrying balance | $ | |||||||
1 Principal payments represent a percentage (ranges between 0 % and 0.25 % based on the First Lien Net Leverage Ratio) of the outstanding principal balance. As of March 31, 2026 we are not making quarterly principal payments.
2 Interest payments are based on the First Lien Net Leverage Ratio and may be paid in cash or PIK. As of March 31, 2026, all interest is PIK.
The Second A&R Second Lien Term Loan Agreement contains certain conditions to borrowings, events of default and affirmative and negative covenants and a financial covenant as described in the agreement. As of March 31, 2026, we were in compliance with the covenants.
Equipment Financing Loans
Equipment financing loans consist of secured borrowings used to acquire machinery and equipment (including office equipment). Under some of the arrangements, the lender pays the equipment vendor directly on behalf of the Company; as a result, no cash proceeds are received by the Company. The loans are secured by the financed equipment and are repaid over fixed terms through scheduled installments. The related assets are recorded in property, plant, and equipment, net of accumulated depreciation. As of March 31, 2026 and December 31, 2025, the outstanding balance of equipment financing loans was $1.4
Fair Value of Debt
The fair value of our debt obligations is representative of the carrying value based upon the respective 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 obligations.
1970 Group Substitute Insurance Reimbursement Facility
As of March 31, 2026, the Company maintains $19.1 million of letters of credit outstanding under its Substitute Insurance Collateral Facility Program Agreement (the “Collateral Facility Agreement”) with 1970 Group Originator, Inc. The collateral facility agreement remains off-balance sheet unless drawn upon. Deferred facility fees are amortized to interest expense; the unamortized balances as of March 31, 2026 and December 31, 2025, were $1.0 million and $1.5 million, respectively. For additional details, refer to Note 11 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
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11. EMPLOYEE BENEFIT PLANS
We have a defined benefit pension plan covering certain United Kingdom employees (the “U.K. Plan”). The pension plan was frozen in 1994 and no new participants have been added since that date. Net periodic pension cost (credit) includes the following components (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (unaudited) | (unaudited) | ||||||||||
| Interest cost | $ | $ | |||||||||
| Expected return on plan assets | ( | ( | |||||||||
| Amortization of prior service cost | |||||||||||
Unrecognized net actuarial loss | |||||||||||
| Net periodic pension cost (credit) | $ | $ | ( | ||||||||
Net pension cost (credit) is included in “Other income (expense), net” on our condensed consolidated statements 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: 5.7 % overall, 8.2 % for equities and 5.6 % for debt securities.
12. SHAREHOLDERS’ EQUITY (DEFICIT)
Shareholders’ Equity (Deficit)
As of March 31, 2026 there were 4,571,382 12,000,000 0.30
As of March 31, 2026 there were 75,000 shares of preferred stock outstanding, designated as Series B Preferred Stock, and we had 500,000 authorized shares at $100.00 par value per share of preferred stock (see Note 13 - Redeemable Preferred Stock for more detail).
Warrants
As of March 31, 2026, the Company had the following warrants issued and outstanding:
| Holder | Issuance date | Number of warrants/ shares issuable | Exercise price | Expiration date | ||||||||||
| APSC Holdco II, LP | 12/18/2020, 11/9/2021, 12/8/2021 | $ | 12/8/2028 | |||||||||||
Corre and affiliates | 12/8/2021 | $ | 12/8/2028 | |||||||||||
| Stellex Holder: | ||||||||||||||
| Tranche A | 9/11/2025 | $ | 9/11/2035 | |||||||||||
| Tranche B | 9/11/2025 | $ | 9/11/2035 | |||||||||||
| Total warrants | ||||||||||||||
16
Accumulated Other Comprehensive Income (loss)
A summary of changes in accumulated other comprehensive loss included within shareholders’ equity (deficit) is as follows (in thousands):
| Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| (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 | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Balance, end of period | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||
13. REDEEMABLE PREFERRED STOCK
On September 11, 2025, the Company issued 75,000 shares of Series B Preferred Stock and 1,453,260 warrants to InspectionTech Holdings LP (the “Stellex Holder”) pursuant to a securities purchase agreement (the “Purchase Agreement”). The Series B Preferred Stock is classified as temporary equity in the mezzanine section of the consolidated balance sheets, as it is potentially redeemable for cash at the holder’s option beginning December 31, 2030, and under certain other events outside the Company’s control.
The Company continues to have the option to access (the “Series B Delayed Draw”) up to $30.0 million in additional proceeds through the issuance of up to 30,000 shares of Series B Preferred Stock and 581,304 related warrants prior to September 11, 2027, subject to the terms and conditions of the Purchase Agreement. No Series B Delayed Draws were made during the quarter.
During the three-months ended March 31, 2026, the Company accrued a 10.5 % paid-in-kind (PIK) dividend on the outstanding Series B Preferred Stock. The dividend was non-cash and was settled by increasing the carrying value of the preferred stock. The accrued PIK dividend totaled $2.0 million for the period, equivalent to $27 per share of redeemable preferred stock.
The following table presents the change in carrying value of the redeemable preferred stock during the period ended March 31, 2026 (in thousands):
| Balance at December 31, 2025 | $ | |||||||
| Additions | ||||||||
| Accrued paid-in-kind dividend | ||||||||
| Accrued paid-in-kind commitment fees | ||||||||
| Accretion to redemption value | ||||||||
| Balance at March 31, 2026 | $ | |||||||
For further information regarding the terms, classification, fair value allocation, and accretion accounting for the Series B Preferred Stock and warrants, refer to Note 16 - Redeemable Preferred Stock in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
14. COMMITMENTS AND CONTINGENCIES
As of March 31, 2026, the Company continues to assess potential loss contingencies, including legal proceedings and government compliance matters, in consultation with legal counsel. Liabilities are accrued when it is probable that a material loss has been incurred and the amount can be reasonably estimated; otherwise, the nature and possible range of loss are disclosed if reasonably possible.
During the quarter ended March 31, 2026, the Company remained involved in the Kelli Most litigation, a wrongful death case that was previously subject to a $222 million judgment, which was subsequently vacated and dismissed in Texas. The plaintiff has since refiled the case in federal court in Kansas. Based on an updated assessment of the case under Kansas jurisdiction, the Company has accrued a $10.0 million liability as of March 31, 2026, which is fully offset by a receivable from
17
the Company’s insurance providers. All insurance retentions and deductibles have been met, and the Company expects that any further claims will be fully funded by its insurance policies.
In total, the Company has accrued approximately $11.0 million for this and other matters as of March 31, 2026. Management, after consultation with legal counsel, believes that the resolution of these matters, as well as other routine legal proceedings, will not have a material adverse effect on the Company’s condensed consolidated financial statements.
15. SEGMENT DISCLOSURES
We conduct operations in two
During the current period, service type Emission Control Services, previously included within the MS segment, was moved to the IHT segment. This change by the Company to the composition of its reportable segments was completed to better align with how the CODM evaluates segment performance. Prior period segment information was recast to conform to the current period presentation. The recasting of the prior period segment information did not have any impact on the Company’s previously reported consolidated revenue or consolidated adjusted EBITDA. The impact of this change was to decrease previously reported revenue and adjusted EBITDA for the MS segment with a similar increase to the IHT segment by approximately $7.4 2.0
Segment data for our two operating segments are as follows (in thousands):
| Three Months Ended March 31, 2026 | ||||||||||||||||||||
| IHT | MS | Total | ||||||||||||||||||
| (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||
| Revenues | $ | $ | $ | |||||||||||||||||
Adjusted operating expenses1 | ||||||||||||||||||||
Adjusted selling, general and administrative expenses2 | ||||||||||||||||||||
Adjusted EBITDA | $ | $ | $ | |||||||||||||||||
| Three Months Ended March 31, 2025 | ||||||||||||||||||||
| IHT | MS | Total | ||||||||||||||||||
| (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||
| Revenues | $ | $ | $ | |||||||||||||||||
Adjusted operating expenses1 | ||||||||||||||||||||
Adjusted selling, general and administrative expenses2 | ||||||||||||||||||||
Adjusted EBITDA | $ | $ | $ | |||||||||||||||||
_____________
1 Represent operating expenses including direct depreciation and amortization but excluding severance cost.
2 Represent segment selling, general and administrative expenses excluding noncash share-based compensation, professional, legal and other non-recurring costs.
18
Reconciliation of segment adjusted EBITDA to consolidated loss before income taxes:
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||
| IHT | $ | $ | ||||||||||||
| MS | ||||||||||||||
Segment adjusted EBITDA | ||||||||||||||
Segment depreciation and amortization | ( | ( | ||||||||||||
Segment professional fees, severance and other | ( | ( | ||||||||||||
| Corporate and shared support cost | ( | ( | ||||||||||||
| Consolidated operating loss | ( | ( | ||||||||||||
| Interest expense | ( | ( | ||||||||||||
| Loss on debt extinguishment | ( | |||||||||||||
| Other income/(expense) | ( | |||||||||||||
| Loss before income taxes | $ | ( | $ | ( | ||||||||||
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||
Capital expenditures1: | ||||||||||||||
| IHT | $ | $ | ||||||||||||
| MS | ||||||||||||||
| Corporate and shared support services | ||||||||||||||
Total capital expenditures | $ | $ | ||||||||||||
____________
1 Excludes finance leases. Totals may vary from amounts presented in the consolidated statements of cash flows due to the timing of cash payments.
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||
| Depreciation and amortization: | ||||||||||||||
| IHT | $ | $ | ||||||||||||
| MS | ||||||||||||||
| Corporate and shared support services | ||||||||||||||
Total depreciation and amortization | $ | $ | ||||||||||||
Separate measures of our assets by operating segment are not produced or utilized by our CODM to evaluate segment performance.
16. RELATED PARTY TRANSACTIONS
In connection with the Company’s debt transactions, the Company engaged in transactions with Corre and affiliates to provide and/or repay funding as described in Note 10 - Debt.
In connection with the issuance of Series B Preferred Stock on September 11, 2025, the Company entered into a Purchase Agreement with the Stellex Holder, see Note 13 - Redeemable Preferred Stock for further details. On the same date, the Stellex
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Holder acquired $10.0 million of the Company’s outstanding loan under the Second A&R Second Lien Term Loan Agreement. The terms of the loan remain unchanged following the acquisition.
In September 2025, $15.0 million of the Company’s outstanding loan under the Second A&R Second Lien Term Loan Agreement was acquired by JFL Credit Opportunities Fund II, L.P. and affiliates, in which one of the Company’s independent directors is an equity partner. The terms of the loan remain unchanged.
17. SUBSEQUENT EVENTS
As of May 13, 2026, the filing date of this Quarterly Report on Form 10-Q, management evaluated the existence of events occurring subsequent to the quarter ended March 31, 2026 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.
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Table of Contents
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | ||||
Overview
Unless otherwise indicated, the terms “Team,” “the Company,” “we,” “our” and “us” are used in this report to refer to Team, Inc., to one or more of our 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 and other documents previously filed with the SEC. 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 our reasonable beliefs and assumptions, and our current expectations, estimates and projections about ourselves and our industry. We caution that these statements are not guarantees of future performance and involve risks, uncertainties and assumptions about events and circumstances that we cannot predict. In addition, we based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. 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. Accordingly, forward-looking statements cannot be relied upon as a guarantee of future results and involve a number of risks and uncertainties that could cause actual results to differ materially from those projected in the statements, including, but not limited to the statements under “Risk Factors” included in Part I, Item 1A of our Annual Report on Form 10-K. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.
There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this report. Such risks, uncertainties and other important factors include, among others, risks related to:
•our ability to generate sufficient cash from operations, access our credit facilities or amounts available under our term loans to support our operations, or maintain our compliance with covenants under our debt arrangements and our Certificate of Designation of Series B Preferred Stock, as filed with the Delaware Secretary of State on September 11, 2025 (the “Series B Certificate of Designation”);
•our ability to manage inflationary pressures in our operating costs;
•negative market conditions, including domestic and global inflationary pressures, impact of changes in global trade policies and tariffs, and future economic uncertainties, particularly in industries in which we are heavily dependent;
•delays in the commencement of major projects;
•seasonal and other variations, such as severe weather conditions (including conditions influenced by climate change), volatility of oil and gas prices, and the nature of our customers’ industry affecting the timing of new contracts and terminations of existing contracts which may result in unpredictable fluctuations in our cash flows and financial results;
•our significant debt and high leverage which could have a negative impact on our ability to access capital markets, our liquidity position and our ability to manage increases in interest rates;
•risk of non-payment and/or delays in payment of receivables from our customers;
•our ability to maintain compliance with the NYSE continued listing requirements and rules;
•our financial forecasts being based upon estimates and assumptions that may materially differ from actual results;
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Table of Contents
•our incurrence of liabilities and suffering of negative financial or reputational impacts relating to occupational health and safety matters;
•changes in laws or regulations in the local jurisdictions that we conduct our business;
•the inherently uncertain outcome of current and future litigation; and
•acts of terrorism, war or political or civil unrest in the United States or elsewhere, including the conflict in the Middle East and the threatened and actual closing of oil shipping routes, including the Strait of Hormuz, by Iran and affiliated groups in connection therewith, changes in laws and regulations, or the imposition of economic or trade sanctions affecting domestic and international commercial transactions.
GENERAL OVERVIEW
Business. We are a global, leading provider of specialty industrial services offering customers 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 customers’ 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 involving: inspection to assess condition; engineering assessment to determine fitness for purpose in the context of industry standards and regulatory codes; and mechanical services to repair, rerate or replace based upon the customer’s election. In addition, we are capable of escalating with the customer’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 these services in three distinct customer demand profiles: (i) turnaround or project services, (ii) call-out services, and (iii) nested or run-and-maintain services.
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 (onstream), during facility turnarounds or during new construction or expansion activities. In addition, IHT provides comprehensive non-destructive testing services and metallurgical and chemical processing services to the aerospace and other industries covering a range of components including finished machined and in-service components. IHT also provides advanced digital imaging including remote digital video imaging.
MS provides solutions designed to serve customers’ 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 online valve insertion solutions, which are delivered while assets are in an operational condition, which maximizes customer 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 customer downtime and are primarily delivered while assets are off-line, 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 (valves, terminals and storage, and pipeline);
•Infrastructure (construction and building, roads, dams, amusement parks, bridges, ports, and railways); and
•Aerospace and Defense.
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Results of Operations
Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025
The following is a comparison of our results of operations for the three months ended March 31, 2026 to the three months ended March 31, 2025 (in thousands).
| Three Months Ended March 31, | Favorable (Unfavorable) | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| (unaudited) | (unaudited) | ||||||||||||||||||||||
Revenues by business segment1: | |||||||||||||||||||||||
| IHT | $ | 123,391 | $ | 113,621 | $ | 9,770 | 8.6 | % | |||||||||||||||
| MS | 91,665 | 85,034 | 6,631 | 7.8 | % | ||||||||||||||||||
| Total revenues | $ | 215,056 | $ | 198,655 | $ | 16,401 | 8.3 | % | |||||||||||||||
Operating income (loss)1: | |||||||||||||||||||||||
| IHT | $ | 10,917 | $ | 10,731 | $ | 186 | 1.7 | % | |||||||||||||||
| MS | (1,488) | (3,149) | 1,661 | 52.7 | % | ||||||||||||||||||
| Corporate and shared support services | (12,800) | (13,585) | 785 | 5.8 | % | ||||||||||||||||||
| Total operating loss | $ | (3,371) | $ | (6,003) | $ | 2,632 | 43.8 | % | |||||||||||||||
| Interest expense, net | $ | (8,882) | $ | (11,436) | $ | 2,554 | 22.3 | % | |||||||||||||||
| Loss on debt extinguishment | — | (11,853) | $ | 11,853 | NM | ||||||||||||||||||
Other income (expense), net | 925 | (204) | 1,129 | 553.4 | % | ||||||||||||||||||
| Loss before income taxes | $ | (11,328) | $ | (29,496) | $ | 18,168 | 61.6 | % | |||||||||||||||
| Provision for income taxes | (5) | (222) | 217 | 97.7 | % | ||||||||||||||||||
| Net loss | $ | (11,333) | $ | (29,718) | $ | 18,385 | 61.9 | % | |||||||||||||||
1 As of January 1, 2026, ECS, previously included in the MS segment, was moved to the IHT segment, refer to Note 15 - Segment Disclosure for more information.
NM - not meaningful
Revenues. Total revenues increased by $16.4 million, or 8.3%, from the prior year period and were favorably impacted by $3.2 million attributable to foreign exchange rates movements. Revenue for the IHT segment increased by $9.8 million, or 8.6%, compared to the prior year period, primarily driven by an increase in U.S. revenue of $6.5 million attributable to higher turnaround and capital projects activity, as well as increase in year-over-year callout and turnaround activities in Canada and other international regions of $3.3 million. MS segment revenue increased by $6.6 million, or 7.8%, compared to the prior year period, mainly due to higher turnaround activities and callout projects in the U.S., and higher revenue from projects in Canada and international areas.
Operating income (loss). Overall operating loss was $3.4 million in the 2026 period, a $2.6 million, or 43.8%, improvement compared to an operating loss of $6.0 million in the prior year period. This improvement was primarily driven by the increased revenue and cost management. IHT reported an increase in operating income of $0.2 million, or 1.7%, as compared to prior year due to job mix. MS operating loss decreased by $1.7 million, or 52.7%, as compared to the prior year period, primarily driven by the increased revenue in the U.S. and a reduction in operating losses in the U.S. and Canada. Corporate operating loss decreased by $0.8 million compared to the prior year period, primarily due to lower legal and professional services costs, partially offset by higher personnel costs in the current period.
For the three months ended March 31, 2026 and 2025, operating loss includes net expenses totaling $1.7 million and $3.0 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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| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Operating loss | $ | (3,371) | $ | (6,003) | |||||||
| Professional fees and other | 1,606 | 2,007 | |||||||||
| Legal costs (refunds) and litigation reserves | (1,560) | 490 | |||||||||
| Severance charges, net | 1,629 | 467 | |||||||||
| Total non-core expenses | 1,675 | 2,964 | |||||||||
| Operating loss, excluding non-core expenses | $ | (1,696) | $ | (3,039) | |||||||
Excluding the impact of these identified non-core items in both periods, operating loss decreased year over year by $1.3 million, from $3.0 million to $1.7 million. See our non-GAAP reconciliation for additional details of our non-core expenses.
Interest expense, net. Interest expense, net decreased by $2.6 million for the three months ended March 31, 2026, compared to the same period in 2025. The decrease was primarily attributable to the refinancing completed in March 2025, in which we replaced our existing credit facilities with new facilities at lower interest rates. In addition, we renegotiated the terms of our ABL Revolving Credit Loans, resulting in further reductions in applicable interest rates. The decrease was also due to lower overall debt balances compared to the prior period.
Cash interest paid for the three months ended March 31, 2026 and 2025 was $2.5 million and $8.9 million, respectively.
Loss on debt extinguishment. During the three months ended March 31, 2025, we completed refinancing transactions that resulted in the repayment of our existing loans. As a result, we recognized a loss on debt extinguishment of $11.9 million which included the write-off of unamortized debt issuance costs.
Other income (expense), net. The overall change of $1.1 million in other income (expense), net, was primarily driven by foreign currency transaction losses in the current year period reflecting the effects of positive fluctuations in the value of the U.S. dollar relative to the foreign currencies to which we have exposure.
Taxes. The provision for income tax was $0.0 million on the pre-tax loss of $11.3 million in the current year period compared to income tax expense of $0.2 million on the pre-tax loss of $29.5 million in the prior year period. The effective tax rate was a provision of 0.0% for the three months ended March 31, 2026, compared to a provision of 0.8% for the three months ended March 31, 2025. The effective tax rate differs from the prior year period due to changes 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 U.S. 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, loss on debt extinguishment, certain severance charges, non-routine write-off of assets 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, pension credit, and items of other (income) expense. Consolidated adjusted EBITDA further excludes depreciation, amortization, and non-cash share-based compensation costs from consolidated adjusted EBIT. Segment adjusted EBIT is equal to segment operating income (loss) excluding costs associated with non-routine legal costs and settlements, non-routine professional fees, certain severance charges, and certain other items as determined by management. Segment adjusted EBITDA further excludes depreciation, amortization, and non-cash share-based compensation costs from segment adjusted EBIT. Free cash flow is defined as net cash provided by (used in) operating activities minus capital expenditures paid in cash.
We believe 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 EBITDA is also used as a basis for the Chief Operating Decision Maker (Chief Executive Officer) 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 U.S. 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 U.S. GAAP financial measurements on a consolidated and segmented basis:
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| TEAM, INC. AND SUBSIDIARIES | ||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||
(unaudited, in thousands except per share data) | ||||||||||||||
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Adjusted Net Loss: | ||||||||||||||
| Net loss | $ | (11,333) | $ | (29,718) | ||||||||||
Professional fees and other1 | 1,606 | 2,007 | ||||||||||||
Write-off of software cost | — | 45 | ||||||||||||
Legal costs and litigation reserves (refunds) | (1,560) | 490 | ||||||||||||
Severance charges, net2 | 1,629 | 467 | ||||||||||||
| Loss on debt extinguishment | — | 11,853 | ||||||||||||
| Tax impact of adjustments and other net tax items | (46) | (13) | ||||||||||||
| Adjusted Net Loss | $ | (9,704) | $ | (14,869) | ||||||||||
| Dividend and accretion to redemption value on redeemable preferred stock | (2,874) | $ | — | |||||||||||
Adjusted Net Loss attributable to common shareholders | $ | (12,578) | $ | (14,869) | ||||||||||
| Adjusted Net Loss per common share: | ||||||||||||||
Basic and Diluted | $ | (2.76) | $ | (3.31) | ||||||||||
| Consolidated Adjusted EBIT and Adjusted EBITDA: | ||||||||||||||
| Net loss | $ | (11,333) | $ | (29,718) | ||||||||||
| Provision for income taxes | 5 | 222 | ||||||||||||
Loss (gain) on equipment sale | (13) | 5 | ||||||||||||
| Interest expense, net | 8,882 | 11,436 | ||||||||||||
Professional fees and other1 | 1,606 | 2,007 | ||||||||||||
Write-off of software cost | — | 45 | ||||||||||||
Legal costs and litigation reserves (refunds) | (1,560) | 490 | ||||||||||||
Severance charges, net2 | 1,629 | 467 | ||||||||||||
Foreign currency loss (gain) | (917) | 205 | ||||||||||||
Pension cost (credit)3 | 5 | (51) | ||||||||||||
| Loss on debt extinguishment | — | 11,853 | ||||||||||||
| Consolidated Adjusted EBIT | (1,696) | (3,039) | ||||||||||||
| Depreciation and amortization | 8,453 | 8,402 | ||||||||||||
| Non-cash share-based compensation cost (credit) | 954 | (53) | ||||||||||||
| Consolidated Adjusted EBITDA | $ | 7,711 | $ | 5,310 | ||||||||||
| Free Cash Flow: | ||||||||||||||
Cash used in operating activities | $ | (9,095) | $ | (28,661) | ||||||||||
| Capital expenditures | (2,424) | (1,406) | ||||||||||||
| Free Cash Flow | $ | (11,519) | $ | (30,067) | ||||||||||
____________________________________
1 For the three months ended March 31, 2026, consists of $1.6 million related to support costs. For the three months ended March 31, 2025, consists of $2.0 million related to refinancing transactions.
2 For the three months ended March 31, 2026, includes $1.4 million related to customary severance costs associated with executive departures.
3 Represents pension cost (credit) for the U.K. pension plan based on the difference between the expected return on plan assets and the amount of the discounted pension liability. The pension plan was frozen in 1994 and no new participants have been added since that date.
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| TEAM, INC. AND SUBSIDIARIES | ||||||||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Continued) | ||||||||||||||
| (unaudited, in thousands) | ||||||||||||||
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Segment Adjusted EBIT and Adjusted EBITDA: | ||||||||||||||
IHT4 | ||||||||||||||
| Operating income | $ | 10,917 | $ | 10,731 | ||||||||||
Professional fees and other1 | 1,054 | — | ||||||||||||
| Severance charges, net | — | 115 | ||||||||||||
| Adjusted EBIT | 11,971 | 10,846 | ||||||||||||
| Depreciation and amortization | 3,316 | 2,816 | ||||||||||||
| Adjusted EBITDA | $ | 15,287 | $ | 13,662 | ||||||||||
MS4 | ||||||||||||||
| Operating loss | $ | (1,488) | $ | (3,149) | ||||||||||
Professional fees and other1 | 69 | — | ||||||||||||
| Severance charges, net | 177 | 334 | ||||||||||||
| Adjusted EBIT | (1,242) | (2,815) | ||||||||||||
| Depreciation and amortization | 3,797 | 4,271 | ||||||||||||
| Adjusted EBITDA | $ | 2,555 | $ | 1,456 | ||||||||||
| Corporate and shared support services | ||||||||||||||
| Net loss | $ | (20,762) | $ | (37,300) | ||||||||||
| Provision for income taxes | 5 | 222 | ||||||||||||
| Loss (gain) on equipment sale | (13) | 5 | ||||||||||||
| Interest expense, net | 8,882 | 11,436 | ||||||||||||
| Foreign currency loss (gain) | (917) | 205 | ||||||||||||
Professional fees and other1 | 483 | 2,007 | ||||||||||||
| Write-off of software cost | — | 45 | ||||||||||||
Legal costs and litigation reserves (refunds) | (1,560) | 490 | ||||||||||||
Severance charges, net2 | 1,452 | 18 | ||||||||||||
Pension cost (credit)3 | 5 | (51) | ||||||||||||
| Loss on debt extinguishment | — | 11,853 | ||||||||||||
| Adjusted EBIT | (12,425) | (11,070) | ||||||||||||
| Depreciation and amortization | 1,340 | 1,315 | ||||||||||||
| Non-cash share-based compensation cost (credit) | 954 | (53) | ||||||||||||
| Adjusted EBITDA | $ | (10,131) | $ | (9,808) | ||||||||||
| Consolidated Adjusted EBITDA | $ | 7,711 | $ | 5,310 | ||||||||||
___________________
1 For the three months ended March 31, 2026, consists of $1.6 million related to support costs. For the three months ended March 31, 2025, consists of $2.0 million related to refinancing transactions.
2 For the three months ended March 31, 2026, includes $1.4 million related to customary severance costs associated with executive departures.
3 Represents pension cost (credit) for the U.K. pension plan based on the difference between the expected return on plan assets and the amount of the discounted pension liability. The pension plan was frozen in 1994 and no new participants have been added since that date.
4 As of January 1, 2026, ECS, previously included in the MS segment, was moved to the IHT segment, refer to Note 15 - Segment Disclosure for more information.
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Liquidity and Capital Resources
Financing for operations consists primarily of our 2022 ABL Credit Agreement and cash flows from our operations.
We have evaluated our liquidity within one year after the date of issuance of the accompanying condensed consolidated financial statements to assess the Company’s ability to fund its operations. Based upon such liquidity assessment, we believe that the Company’s current working capital, forecasted cash flows from operations, current and expected availability under our existing debt arrangements and capital expenditure financing is sufficient to fund our operations, service our indebtedness, and maintain compliance with our debt covenants for the next twelve months, and based on current expectations, the long-term. We based this assessment on assumptions that may prove to be inaccurate, and we could exhaust our available capital resources sooner than we expect in the event that we fail to meet our current financial performance expectations. See Note 10 - Debt in this Quarterly Report on Form 10-Q and Note 11 - Debt in our Annual Report on Form 10-K for additional details concerning our debt obligations.
We closely monitor the amounts and timing of our sources and uses of funds. Our ability to maintain a sufficient level of liquidity to fund our operations and meet our financial obligations will be dependent upon our future performance, which is subject to general economic conditions, industry cycles and financial, business and other factors affecting our operations, many of which are beyond our control.
Our ability to generate operating cash flow, sell assets, access capital markets or take any other action to improve our liquidity and manage our debt is subject to the risks described or referenced herein and other risks and uncertainties that exist in our industry, some of which we may not be able to anticipate at this time or control.
See Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K and risk factors included within Cautionary Note Regarding Forward-Looking Statements above, for additional information.
As of March 31, 2026, we had approximately $40.5 million of available borrowing capacity under our various credit facilities, consisting of $30.5 million available under the 2022 ABL Credit Agreement and $10.0 million available under the Second A&R Second Lien term Loan Agreement (the availability period for the Second Lien Delayed Draw Term Loan expired on April 15, 2026 with no amounts drawn prior to the expiration date). In connection with the issuance of the Series B Preferred Stock and related warrants, we have access to up to $30.0 million in additional liquidity through September 2027 through a delayed draw mechanism, subject to certain conditions under the Purchase Agreement. Our principal uses of cash and liquidity are for working capital needs, capital expenditures and operations.
As of March 31, 2026, we were in compliance with our debt covenants. Our ability to maintain compliance with the financial covenants contained in our Credit Agreements is dependent upon our future operating performance and future financial condition, both of which are subject to various risks and uncertainties, as described elsewhere herein.
As of May 11, 2026, we had consolidated cash and cash equivalents of $11.2 million, excluding $4.2 million of restricted cash used mainly as collateral for letters of credit and commercial card programs, and approximately $24.8 million of undrawn availability under our various credit facilities, resulting in total liquidity of $36.0 million. We also have $30.0 million of Series B Delayed Draw availability as described above.
Refer to Note 10 - Debt for additional information about our debt instruments.
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Cash Flows
The following table summarizes cash flows from Operating, Investing and Financing activities (in thousands):
| Three Months Ended March 31, | ||||||||||||||||||||
| Cash flows provided by (used in): | 2026 | 2025 | Favorable (Unfavorable) | |||||||||||||||||
| Operating activities | $ | (9,095) | $ | (28,661) | $ | 19,566 | ||||||||||||||
| Investing activities | (2,410) | (1,406) | (1,004) | |||||||||||||||||
| Financing activities | 6,237 | 11,188 | (4,951) | |||||||||||||||||
| Effect of exchange rate changes on cash | (38) | 137 | (175) | |||||||||||||||||
| Net change in cash and cash equivalents | $ | (5,306) | $ | (18,742) | $ | 13,436 | ||||||||||||||
Cash and cash equivalents. Our cash and cash equivalents as of March 31, 2026 totaled $12.8 million, consisting of $8.7 million of unrestricted cash on hand, and $4.1 million of restricted cash. International cash balances as of March 31, 2026 were $6.5 million, and approximately $1.2 million of such cash is located in countries where currency or regulatory restrictions exist.
As of December 31, 2025, our cash and cash equivalents were $18.1 million, consisting of $14.1 million of unrestricted cash on hand and $4.0 million of restricted cash. International cash balances as of December 31, 2025 were $4.4 million, and approximately $1.2 million of such cash is restricted.
Our total debt and finance obligations were $306.5 million, of which $3.9 million was classified as current at March 31, 2026, compared to total debt of $297.2 million at December 31, 2025.
Cash flows attributable to our operating activities. Our largest source of operating cash inflow is cash collection from customers for work performed. The primary use of operating cash is to pay our suppliers, employees, tax authorities, and others.
Cash flows from operating activities are primarily generated from net income or loss adjusted for certain non-cash items which include depreciation and amortization, PIK interest, and amortization of debt issuance costs.
For the three months ended March 31, 2026, net cash used in operating activities was $9.1 million, an improvement of $19.6 million as compared to net cash used in operating activities of $28.7 million in the 2025 period. Changes in working capital items - such as the growth of receivables and payment of operating payables - are significant factors affecting operating cash flows and can represent significant uses of cash, particularly during periods of increasing revenue and activity levels. During the three months ended March 31, 2026, changes in working capital items used $8.6 million in cash flows, a $15.1 million decrease compared to the $23.7 million in cash flows used by working capital in the corresponding 2025 period.
Cash flows attributable to our investing activities. For the three months ended March 31, 2026, net cash used in investing activities consisted primarily of capital expenditures of $2.4 million as compared to $1.4 million for the three months ended March 31, 2025.
Cash flows attributable to our financing activities. For the three months ended March 31, 2026, net cash provided by financing activities was $6.2 million, consisting primarily of the net borrowings under the Revolving Credit Loans of $7.2 million, partially offset by the principal payments under the First Lien Term Loan and equipment financing loans.
For the three months ended March 31, 2025, net cash used in financing activities was $11.2 million, consisting primarily of borrowings under the First Lien Term Loan of $175.0 million, net borrowings under the Revolving Credit Loans of $8.0 million, and borrowings under the 2025 Second Lien Term Loan. These inflows were partially offset by the payments of the total outstanding balances under the Corre Delayed Draw Term Loan, Corre Incremental Term Loan and ME/RE Loans, and a partial pay down of the Corre Uptiered Loan. In addition, we paid $8.1 million of debt issuance costs for the refinancing transactions at March 12, 2025.
Effect of exchange rate changes on cash and cash equivalents. For the three months ended March 31, 2026 and 2025, the effect of foreign exchange rate changes on cash was $0.0 million and $0.1 million, respectively. The impact of exchange rates on cash and cash equivalents is primarily attributable to fluctuations in U.S. Dollar exchange rate against the Euro, the British Pound, the Canadian Dollar and the Brazil Real.
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 10 - Debt in this Quarterly Report on Form 10-Q and Note 11 - Debt in our Annual Report on Form 10-K for additional details of our off-balance sheet arrangements.
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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 three months ended March 31, 2026.
| 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.
| 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 (“CEO”) and Chief Financial Officer (“CFO”), 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 CEO and CFO have concluded as of March 31, 2026, 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 March 31, 2026.
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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 | ||||
Insider Trading Arrangements. During the quarter ended March 31, 2026, none of the Company’s directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted terminated
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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 3.2 to Team, Inc.’s Annual Report on Form 10-K (File No. 001-08604) filed on March 7, 2024, 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/A (File No. 001-08604) filed on November 8, 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 Current 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). | |||||||
| 3.7 | Certificate of Designation of Series B Preferred Stock of Team, Inc., as filed with the Secretary of State of the State of Delaware on September 11, 2025 (filed as Exhibit 3.1 to Team, Inc.’s Current Report on Form 8-K (File No. 001-08604) filed on September 15, 2025, incorporated by reference herein). | |||||||
| 10.1 | Letter Agreement re Offer of Employment, dated January 22, 2026, between Gary Hill and Team, Inc. (filed as Exhibit 10.1 to Team, Inc.’s Current Report on Form 8-K (File No. 001-08604) filed on January 26, 2026, incorporated by reference herein). | |||||||
| 10.2 | Severance and Consulting Agreement and Release, dated as of February 6, 2026, by and between Keith Tucker and Team, Inc. (filed as Exhibit 10.1 to Team, Inc.’s Current Report on Form 8-K (File No. 001-08604) filed on February 9, 2026, 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) | |||||||
32
Table of Contents
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: May 13, 2026 | /S/ Gary L. Hill | |||||||
| Gary L. Hill 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) | ||||||||
33
FAQ
How did Team, Inc. (TISI) perform financially in Q1 2026?
Team, Inc. grew revenue to $215.1 million in Q1 2026, up 8.3% year over year. Net loss improved to $11.3 million from $29.7 million, reflecting higher volumes, better cost control, and lower interest expense after prior-year debt refinancing.
What were Team, Inc. (TISI)’s segment results for IHT and MS in Q1 2026?
In Q1 2026, IHT revenue reached $123.4 million and MS revenue was $91.7 million. IHT delivered operating income of $10.9 million, while MS posted a smaller operating loss of $1.5 million, reflecting stronger turnaround and call-out activity across regions.
What was Team, Inc. (TISI)’s profit and loss trend versus Q1 2025?
Team, Inc.’s net loss narrowed to $11.3 million in Q1 2026 from $29.7 million in Q1 2025. Operating loss improved to $3.4 million from $6.0 million, and interest expense decreased by $2.6 million, helped by refinancing into lower-rate credit facilities.
How leveraged is Team, Inc. (TISI) and what is its liquidity position?
At March 31, 2026, Team, Inc. had $306.5 million of total debt and finance lease obligations and a shareholders’ deficit of $39.4 million. Cash was $12.8 million, with about $40.5 million of additional borrowing capacity under credit facilities, plus potential Series B preferred draws.
What non-GAAP metrics did Team, Inc. (TISI) highlight for Q1 2026?
Team, Inc. reported adjusted EBITDA of $7.7 million in Q1 2026, up from $5.3 million a year earlier. Adjusted net loss was $9.7 million, versus $14.9 million, and free cash flow was negative $11.5 million, reflecting ongoing investment and working capital needs.
How did cash flow from operations change for Team, Inc. (TISI) in Q1 2026?
Net cash used in operating activities improved to -$9.1 million in Q1 2026 from -$28.7 million in Q1 2025. The improvement mainly came from reduced net loss and a smaller cash drain from working capital changes, despite higher revenue levels.
What is notable about Team, Inc. (TISI)’s preferred stock and warrants?
Team, Inc. had 75,000 Series B preferred shares outstanding, with a 10.5% paid-in-kind dividend adding $2.0 million to carrying value in Q1 2026. The company also has 2,453,260 warrants outstanding and up to $30 million of additional Series B preferred available via delayed draw.