TEAM INC

The following is a comparison of our results of operations for the three and nine months ended September 30, 2026 to the three and nine months ended September 30, 2025.

Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

The following is a comparison of our results of operations for the three months ended September 30, 2026 to the three months ended September 30, 2025 (in thousands):

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Revenues. Total revenues decreased by $4.6 million, or 2.0%, compared with the prior-year period. IHT segment revenues increased by $4.8 million, or 3.9%, compared with the prior-year period. This increase was driven by revenue growth of $3.6 million, or 3.3%, in the U.S., primarily from increased non-turnaround activities, partially offset by lower oil and gas turnaround activity levels. In addition, revenues in Canada and other international regions increased by $1.2 million compared with the prior-year period. MS segment revenues decreased by $9.4 million, or 9.1%, compared with the prior-year period, driven primarily by lower oil and gas turnaround activities and project revenue in the U.S. and Canada of $11.1 million and $1.2 million, respectively. These decreases were partially offset by revenue growth of $2.9 million in other international regions.

Operating income (loss). Overall operating loss totaled $0.5 million in the 2026 period, representing an unfavorable change of $1.8 million compared with operating income of $1.3 million in the prior-year period. IHT reported an increase in operating income of $1.2 million, or 8.7%, compared with the prior-year period, driven by a more favorable project mix, and revenue growth from non-turnaround activities. MS reported a decrease in operating income of $3.0 million, or 89.1%, compared with the prior-year period, driven primarily by lower activity levels and profitability in the U.S., particularly within the hot tapping service line, and lower project profitability in Canada. Corporate and shared support services cost was relatively consistent with the prior-year period, despite a one-time charge of $2.0 million related to a legal settlement. Excluding this settlement, cost would have declined by 12.6%, as lower professional services fees and non-cash compensation cost reversals were partially offset by higher personnel costs, including severance charges incurred during the current period.

For the three months ended September 30, 2026 and 2025, operating (loss) income includes net expenses totaling $8.0 million and $4.1 million, respectively, that we do not believe are indicative of our core operating activities, as detailed in the table below (in thousands):

Excluding the impact of these identified non-core expenses in both periods, operating income increased by $2.1 million from $5.4 million in the three months ended September 30, 2025 to $7.5 million in the three months ended September 30, 2026. See our non-GAAP reconciliation for additional details of our non-core expenses.

Interest expense, net. Interest expense decreased by $2.0 million compared to the prior-year period. The decrease was primarily attributable to lower interest expense on the Second Lien Term Loan following a partial paydown in September 2025 using a portion of the proceeds from the issuance of preferred stock, as well as reduced interest rates on the ABL Credit Facility and First Lien Term Loan, also effective September 2025.

Cash interest paid during the quarter ended September 30, 2026 and 2025 was $5.6 million and $9.8 million, respectively.

Other income (expense), net. The year-over-year change in other income (expense) was primarily attributable to a $1.6 million unfavorable change in foreign currency transactions.

Taxes. The income tax provision was $0.6 million on the pre-tax loss of $10.5 million in the current year quarter, compared to a $0.9 million income tax provision on a pre-tax loss of $10.5 million in the prior year quarter. The effective tax rate, inclusive of discrete items, was 5.7% for the three months ended September 30, 2026, compared to 9.1% for the three months ended September 30, 2025. The effective tax rate differs from the prior-year period due to changes in the valuation allowance, along with changes in permanent differences.

Results of Operations

Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

The following is a comparison of our results of operations for the nine months ended September 30, 2026 to the nine months ended September 30, 2025 (in thousands).

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Revenues. Total revenues decreased by $7.6 million, or 1.1%, compared with the prior-year period, and were favorably impacted by $4.2 million from foreign exchange rate movements. IHT segment revenues increased by $7.6 million, or 2.0%, compared with the prior-year period. This increase was driven primarily by a $5.1 million increase in U.S. revenues attributable to increased non-turnaround activities, partially offset by lower oil and gas turnaround activity. Revenues in Canada and other international regions increased by $0.7 million and $1.8 million, respectively. MS segment revenues decreased by $15.1 million, or 5.1%, compared with the prior-year period, attributable primarily to lower turnaround and project activities across the segment’s U.S. and Canada operating regions.

Operating income (loss). Overall operating loss totaled $1.7 million in the 2026 period, compared with operating income of $7.4 million in the prior-year period, representing an unfavorable change of $9.1 million. This decrease was primarily driven by lower operating income in both the IHT and MS segments. IHT segment reported a decrease in operating income of $3.2 million, or 7.6%, compared with the prior-year period, driven by an unfavorable project mix that impacted margins, and higher benefit costs. MS segment reported a decrease in operating income of $7.0 million, or 85.5%, compared with the prior-year period, driven primarily by lower revenues and an unfavorable project mix in the U.S. and Canada, including lower hot tapping and leak repair service line activity, as well as higher benefit costs. Corporate operating loss improved by $1.1 million compared with the prior-year period, despite a one-time charge of $2.0 million related to a legal settlement. The improvement was primarily attributable to lower professional services fees and legal costs, partially offset by higher personnel costs, including severance charges incurred in the current period. A non-cash compensation cost reversal partially offset these higher costs.

For the nine months ended September 30, 2026 and 2025, operating (loss) income includes net expenses totaling $11.5 million and $10.5 million, respectively, that we do not believe are indicative of our core operating activities, as detailed in the table below (in thousands):

Excluding the impact of these identified non-core expenses in both periods, operating income decreased year over year by $8.2 million, from $18.0 million to $9.8 million. See our non-GAAP reconciliation for additional details of our non-core expenses.

Interest expense, net. Interest expense, net decreased by $7.2 million for the nine months ended September 30, 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, as well as lower interest expense on the Second Lien Term Loan following a partial paydown in September 2025 using a portion of the proceeds from the issuance of preferred stock and the related reduction in interest rates on the ABL Credit Facility and First Lien Term Loan, also effective September 2025.

Cash interest paid for the nine months ended September 30, 2026 and 2025 was $13.5 million and $22.6 million, respectively.

Loss on debt extinguishment. Loss on debt extinguishment was $13.1 million for the nine months ended September 30, 2025, primarily related to refinancing transactions completed in March 2025 and the September 2025 partial prepayment of the 2025 Second Lien Term Loan. No comparable loss on debt extinguishment was recognized during the nine months ended September 30, 2026.

Other income (expense), net. The overall change of $3.3 million in other income (expense), net, was primarily attributable to foreign currency transaction gains, reflecting the favorable impact of U.S. dollar strengthening against the currencies of our international operations.

Taxes. The income tax provision was $0.5 million on the pre-tax loss of $28.7 million in the current year period compared to an income tax provision of$2.2 million on the pre-tax loss of $43.3 million in the prior-year period. The effective tax rate was 1.7% for the nine months ended September 30, 2026, compared to 5.0% for the nine months ended September 30, 2025. The effective tax rate differs from the prior-year period due to changes in the valuation allowance, along with changes in permanent differences.

Non-GAAP Financial Measures and Reconciliations

We use supplemental non-GAAP financial measures, 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, incremental non-recurring transformation costs associated with workforce reductions, facility consolidations, lease termination activities and other business transformation initiatives, non-routine write-off of assets and certain other items that we believe are not indicative of core operating activities. Consolidated adjusted EBIT 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. 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 transformation cost, 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 management and investors to evaluate our ability to service and repay debt and return value to stakeholders.

Non-GAAP measures have 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 considered only in conjunction with financial information presented in accordance with U.S. GAAP. Further, our non-GAAP financial measures may not be comparable to similarly titled measures of other companies that 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 present reconciliations of adjusted net income (loss), adjusted EBIT and adjusted EBITDA to their most comparable U.S. GAAP financial measures for both consolidated and segment results:

1 For the three and nine months ended September 30, 2026, includes $1.8 million of transformation costs associated with workforce reductions, facility consolidations, lease termination activities and other business transformation initiatives, as well as executive search and third-party support costs. For the three and nine months ended September 30, 2025, includes $1.6 million and $4.6 million, respectively, of executive search and third-party support costs and $0.4 million and $1.7 million, respectively, of debt financing costs.

2 For the three and nine months ended September 30, 2026, includes non-routine litigation reserves of $2.4 million and $0.9 million (net of refunds), respectively. For the three and nine months ended September 30, 2025, includes non-recurring litigation reserves of $2.0 million and $3.3 million, respectively. These costs are included in selling, general and administrative expenses on the condensed consolidated statements of operations.

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.

1 For the three and nine months ended September 30, 2026, includes $1.8 million of transformation costs associated with workforce reductions, facility consolidations, lease termination activities and other business transformation initiatives, as well as executive search and third-party support costs. For the three and nine months ended September 30, 2025, includes $1.6 million and $4.6 million, respectively, of executive search and third-party support costs and $0.4 million and $1.7 million, respectively, of debt financing costs.

2 For the three and nine months ended September 30, 2026, includes non-routine litigation reserves of $2.4 million and $0.9 million (net of refunds), respectively. For the three and nine months ended September 30, 2025, includes non-recurring litigation reserves of $2.0 million and $3.3 million, respectively. These costs are included in selling, general and administrative expenses on the condensed consolidated statements of operations.

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 Disclosures for more information.

Liquidity and Capital Resources

Financing for operations consists primarily of our 2022 ABL Credit Agreementand 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, over 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 - Debtin 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 September 30, 2026, we had approximately $35.4 million of available borrowing capacity under the 2022 ABL Credit Agreement. 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 September 30, 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 November 10, 2026, we had consolidated cash and cash equivalents of $9.6 million, excluding $3.0 million of restricted cash used mainly as collateral for letters of credit and commercial card programs, and approximately $28.6 million of undrawn availability under our various credit facilities, resulting in total liquidity of $38.2 million. We also have $30.0 million of Series B Delayed Draw availability as described above.

Refer to Note 10 - Debtfor additional information about our debt instruments.

Cash Flows

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

Cash and cash equivalents. Our cash and cash equivalents as of September 30, 2026 totaled $11.0 million, consisting of $8.1 million of unrestricted cash, and $2.9 million of restricted cash. International cash balances as of September 30, 2026 were $5.7 million, and approximately $0.1 million of such cash is restricted.

As of December 31, 2025, our cash and cash equivalents were $18.1 million, consisting of $14.1 million of unrestricted cash 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 was restricted.

Our total debt and finance obligations were $319.1 million, of which $4.1 million was classified as current at September 30, 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 derived 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 nine months ended September 30, 2026, net cash used in operating activities totaled $11.6 million, reflecting an improvement of $16.5 million relative to $28.1 million in the 2025 period. During the nine months ended September 30, 2026, changes in working capital items utilized $16.5 million, representing a favorable variance of $21.9 million in comparison to the $38.4 million utilized by working capital in the corresponding 2025 period. This favorable variance was primarily attributable to a $17.5 million favorable change in other accrued liabilities, driven primarily by the timing of payroll payments, partially offset by higher cash used for prepaid expenses and other assets.

Cash flows attributable to our investing activities. For the nine months ended September 30, 2026, net cash used in investing activities consisted primarily of capital expenditures of $9.0 million as compared to $7.2 million for the nine months ended September 30, 2025.

Cash flows attributable to our financing activities. For the nine months ended September 30, 2026, net cash provided by financing activities was $11.9 million, consisting primarily of the net borrowings under the Revolving Credit Loans of $15.2 million, partially offset by the principal payments under the First Lien Term Loan and equipment financing loans.

For the nine months ended September 30, 2025, net cash provided by financing activities was $14.2 million. Financing cash inflows primarily consisted of $175 million borrowed under the First Lien Term Loan and $75 million of proceeds from the issuance of Series B Preferred Stock. These inflows were partially offset by repayments of the 2025 Second Lien Term Loan, net, repayments of $10.0 million under the Revolving Credit Loans, full repayment of the Corre Delayed Draw Term Loan, Corre Incremental Term Loan, ME/RE Loans, and the Corre Uptiered Loan, $11.4 million of debt issuance costs related to refinancing transactions completed on March 12, 2025, and $7.0 million of issuance costs associated with the Series B Preferred Stock and warrants.

Effect of exchange rate changes on cash and cash equivalents. For the nine months ended September 30, 2026 and 2025, the effect of foreign exchange rate changes on cash was a loss of $0.1 million and a gain of $0.3 million, respectively. The impact of exchange rates on cash and cash equivalents is primarily attributable to fluctuations in the U.S. dollar relative to the euro, the British pound, the Canadian dollar and the Brazilian real.

Off-Balance Sheet Arrangements

From time to time, we enter into off-balance sheet arrangements and transactions that can give rise to off-balance sheet obligations. See Note 10 - Debtin 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.

Critical Accounting Policies and Estimates

A discussion of our critical accounting policies and estimates is included in our Annual Report on Form 10-K. There were no material changes to our critical accounting policies during the nine months ended September 30, 2026.