Team (TISI) Q3 2012 Earnings Call April 04, 2012 9:00 am ET Executives Philip J. Hawk - Executive Chairman, Chief Executive Officer and Chairman of Executive Committee Ted W. Owen - Chief Financial officer, Principal Accounting officer, Executive Vice President and Treasurer Analysts Arnold Ursaner - CJS Securities, Inc. Matt Duncan - Stephens Inc., Research Division Matthew P. Tucker - KeyBanc Capital Markets Inc., Research Division Adam R. Thalhimer - BB&T Capital Markets, Research Division Presentation Operator
Previous Statements by TISI
» Team's CEO Discusses Q2 2012 Results - Earnings Call Transcript
» Team's CEO Discusses Q1 2012 Results - Earnings Call Transcript
» Team's CEO Discusses Q4 2011 Results - Earnings Call Transcript
Ted will begin with a review of the financial results. I will then follow Ted with a few remarks and observations about our performance and prospects. Following these remarks, we'll take questions from our listeners.With that, Ted, let me turn it over to you. Ted W. Owen Thank you, Phil. First, as usual, I want to remind everyone that any forward-looking information that we discuss today is being provided in accordance with the provisions of the Private Securities and Litigation Reform Act of 1995. We have made reasonable efforts to ensure that the information, assumptions and beliefs upon which this forward-looking information is based are current, reasonable and complete. However, a variety of factors could cause actual results to differ materially from those anticipated in any forward-looking information. A description of those factors is set forth in the company's SEC filings. Accordingly, there can be no assurance that the forward-looking information discussed today will occur or that our objectives will be achieved. We assume no obligation to publicly update or revise any forward-looking statements made today or any other forward-looking statements made by the company, whether as a result of new information, future events or otherwise. Now for the financial results. We are very pleased to report revenues for the quarter of $136.5 million, which were up 25% from the third quarter of 2011. We're disappointed, however, with what we did with that revenue growth. Net income available to shareholders was $2 million, and earnings were $0.10 per diluted share versus adjusted net income in last year's quarter of $1.7 million or $0.08 per share. Note that in last year's quarter, there was a nonrecurring tax credit which is excluded from the aforementioned comparison. Our overall gross margin declined by 1.4 percentage points in the quarter because of increased indirect cost. And while SG&A declined as a percentage of revenues, we experienced some unusually high costs in this category that impacted our earnings by $0.07 per share. Phil will elaborate more fully on those items in his remarks.
Shifting now to year-to-date results. Total revenues for the 9 months of the fiscal year were nearly $435.9 million, up nearly $90 million or 26% from the prior year. Adjusted EBIT or operating income for the year was $33.1 million, an increase of 35%. Adjusted year-to-date earnings per share was $0.95 versus $0.72 last year. We remain on track to have another record year of both revenues and earnings.Now with respect to some cash flow-related items. Capital expenditures for the quarter were $5 million. Depreciation and amortization was $4.6 million, and noncash compensation expense was $900,000. Additionally, as I reported in the last call, we spent $17 million in late December to acquire a mechanical service business on the West Coast. Adjusted EBITDA was $8.9 million for the quarter and was $73 million on a trailing 12-month basis. At February 29, our total debt was $88 million, cash was $27 million, and therefore, net debt was $61 million. Our net debt to trailing 12-month EBITDA was less than 1:1 even after consideration of the additional debt added for the West Coast acquisition. And with that, Phil, I will turn it back to you. Philip J. Hawk Thanks, Ted. Now I'd like to provide some additional perspectives on our business, recent performance and our outlook. We continue to be pleased with the broad-based growth of our business, both in the third quarter and year-to-date. As Ted indicated, total revenue growth in the quarter was nearly $28 million, a 25% increase. For the year-to-date, Team's total revenue growth is $89 million, a 26% growth rate. We continue to grow on virtually every segment of our business. In each of our major geographic markets, the U.S., Canada and Europe, Team revenues grew by more than 25% in the quarter. For the year-to-date, Team revenue growth -- Team's revenue growth in each of these markets exceeded 20%. Read the rest of this transcript for free on seekingalpha.com