Team Inc. (TISI) filed Quarterly Report for the period ended 2009-08-31.
TEAM INC. is a professional full service provider of environmental engineering consulting monitoring and repair services. Environmental engineering consulting and monitoring services primarily in air quality together with on-stream leak repair and related industrial services for piping systems and process equipment are provided by subsidiaries of the Company through its Environmental Services business segment. Team Inc. has a market cap of $295.7 million; its shares were traded at around $15.68 with a P/E ratio of 13.5 and P/S ratio of 0.6. Team Inc. had an annual average earning growth of 27.5% over the past 10 years. GuruFocus rated Team Inc. the business predictability rank of 2.5-star.
Highlight of Business Operations:
Gross Margin. Our gross margin for the three months ended August 31, 2009 was $29.4 million compared to $39.1 million for the three months ended August 31, 2008, a decrease of $9.7 million or 25%. Gross margin as a percentage of revenue was 29% for the three months ended August 31, 2009 and 32% for the three months ended August 31, 2008. Gross margin for our TCM division for the three months ended August 31, 2009 was $16.5 million compared to $20.1 million for the three months ended August 31, 2008, a decrease of approximately $3.6 million or 18%. Gross margin as a percentage of revenue for the TCM division was 29% for the current period compared to 31% in the prior period. Gross margin for our TMS division was $13.0 million for the three months ended August 31, 2009 compared to $19.0 million for the three months ended August 31, 2008, a decrease of $6.1 million or 32%. Gross margin as a percentage of revenue for the TMS division was 30% for the current period compared to 33% in the prior period.
Selling, General, and Administrative Expenses. Our SG&A for the three months ended August 31, 2009 was $27.0 million compared to $29.7 million for the three months ended August 31, 2008, a decrease of $2.6 million or 9%. The decrease in SG&A was primarily due to reduced expenditures in our field operations offset by $0.8 million increase in corporate support cost. The increase in corporate costs are primarily due to a $1.1 million non-routine pre-tax charge associated with the internal investigation disclosed in Note 11 of this Form 10-Q. SG&A as a percentage of revenue was 27% for the three months ended August 31, 2009 and 24% for the three months ended August 31, 2008. Excluding the $1.1 million pre-tax charge for the investigation, total SG&A decreased $3.7 million, or 12%.
Taxes. The provision for income taxes was $0.7 million on pretax income of $1.9 million for the three months ended August 31, 2009 and $3.3 million on pretax income of $8.3 million for the three months ended August 31, 2008. The effective tax rate for the three months ended August 31, 2009 was 39%, the same as for the prior year period.
Cashflows Attributable to Our Operating Activities. For the three months ended August 31, 2009, cash provided by operating activities was $18.3 million. Positive operating cash flow was primarily attributable to working capital changes, net income of $1.1 million, depreciation and amortization of $3.0 million and non-cash compensation cost of $1.2 million.
Cashflows Attributable to Our Investing Activities. For the three months ended August 31, 2009, cash used in investing activities was $2.0 million, consisting primarily of $1.9 million of capital expenditures. Capital expenditures can vary depending upon specific customer needs that may arise unexpectedly. We anticipate capital expenditures for the fiscal year 2010 to be approximately $10-15 million.
At May 31, 2007, we entered into an interest rate swap agreement with a fixed pay rate of 4.97% that has a notional value of $30.0 million beginning on June 1, 2007 and decreasing to $16.3 million by March 1, 2010. The interest rate swap agreement is designated as a cash flow hedge, with the changes in fair value, to the extent the swap agreement is effective, recognized in other comprehensive income until the hedged interest expense is recognized in earnings. At August 31, 2009, the notional amount of our swap was $20.0 million.
TISI is in the portfolios of Ron Baron of Baron Funds.
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