Team, Inc. CEO: Demand, trends organic growth reasons for raised guidance
Team, Inc. (Nasdaq: TISI) CEO Phil Hawk said the provider of specialty maintenance and construction services benefited customer trends, strong demand and organic growth in its Canadian operations. Hawk made the comments during a midday conference call.
“We believe that our growth continues to be positively impacted by the pervasive customer procurement consolidation trends, where our customers are continuing to shift toward fewer, larger, more professional service providers for their industrial service needs,” Hawk said. “Team benefited from much stronger demand. This may reflect some flattening of demand seasonality in our industry, as customers become more cognizant of skilled labor limitations in all of the industry, construction and maintenance trades.”
He said Team’s ability to attract, train and retain field technicians was also a factor in the Alvin, Tex.-based company’s success. The company also expects at least a 10% operating profit margin this year, he said.
Team raised its fiscal 2008 guidance after Wednesday’s close to revenue of $425 million and earnings in the range of $1.05 to $1.15 per share. The company previously forecast revenue of $400 million.
“While both the revenue and earnings estimate represent significant increases versus prior year’s results, I also appreciate that the implied revenue and earnings gross rates in this revised guidance for the remainder of the year are lower than what we have experienced in this first quarter,” Hawk said. “While we are very positive about our prospects for the rest of the year, extrapolation of a single quarter’s results, particularly one that benefited from some special circumstances, would be inappropriate.”
Team’s total revenue in fiscal 2007 was $318.4 million.
After Wednesday’s closing, Team announced first-quarter net income of $3.5 million, or $0.18 per share, above analyst estimates of $0.13 per share and compared with $1.5 million, or $0.08 per share, a year earlier. For the quarter ended Aug. 31, Team’s revenue was $103.5 million, above views of $87 million and compared with $65.8 million during the same period of 2006.
The firm’s first-quarter selling, general and administrative expenses increased to $24.5 million, from $18 million in the year-ago period.
In midday trading, TISI shares are up 10.78%, or $2.99, at $30.73. Over the last 52 weeks, shares have ranged from $12.30 to $30.87.
