Team Stock Plunges After Q3 Miss, Weak Margins

Team Inc. TISI reported third-quarter revenue of $217.41 million, a decline of 0.8% year-over-year, missing the consensus of $247.12 million.
Sales by segments: Inspection and Heat Treating $101.48 million (+5% Y/Y), Mechanical Services $96.4 million (-5.2% Y/Y), and Quest Integrity $19.53 million (-5.7% Y/Y).
"Our top-line results failed to meet expectations due to a combination of factors that impacted our third-quarter performance, including weather-related disruptions, challenging market dynamics, and an uneven market recovery," commented Chairman and CEO Amerino Gatti.
"During the quarter, we continued to face margin pressure from inflationary costs in several areas, such as raw materials and transportation, as well as increased costs associated with enhanced hiring programs and technician training," Gatti added.
Team reported an operating loss of $(70.53) million, compared to an income of $2.3 million a year ago.
Adjusted EPS was $(1.01) compared to $(0.21) in 3Q20, missing the consensus of $(0.19).
Adjusted EBITDA was ~$1 million compared to $18.2 million for the prior-year quarter.
The gross margin contracted by 460 bps to 24.5%.
Team's cash used in operating activities year-to-date was $35.86 million, compared to cash provided of $20.17 million a year ago. The free cash outflow was $48.24 million.
The company held cash and equivalents of $17 million as of September 30, 2021, and gross debt was $403.0 million.
Price Action: TISI shares are trading lower by 31.2% at $1.85 during the pre-market session on Friday.

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