Key Points
Third quarter turnaround revenue declined 49% year over year.
Team raised its 2026 structural cost savings target to $18 million.
Full year revenue guidance was revised to $870 million to $890 million.
On its third quarter of 2026 earnings call, held on Nov. 12, 2026, Team (NYSE:TISI) revised its full-year 2026 revenue guidance to a range of $870 million to $890 million. Deferred facility maintenance in core refining markets delayed high-margin turnaround projects into next year. Three things management said stand out.
1. Customer Maintenance Deferrals Squeezed Mechanical Services Revenue
Refinery operators extended production runs to capture operating margins, delaying planned plant maintenance. This shift hit the mechanical services segment, which provides specialized on-site repair and turnaround services.
During the third quarter, turnaround revenue declined approximately 49% compared to the prior year period, following a decline of more than 50% observed through the first half of the year.
-- Gary Hill, Chief Executive Officer
2. Structural Cost Savings Targets Increased for Full Year 2026
Streamlining European and Canadian operations allowed management to cut overhead while facility activity remained soft. Realizing these structural reductions early protects profit margins before turnaround demand rebounds.
Through the third quarter, we have realized approximately $9 million of savings, and we are raising our near-term expectations for our structural cost improvements, now expecting to capture between $15 million and $18 million of benefit in 2026.
-- Clinton Roeder, Chief Financial Officer
3. Aerospace Contract Negotiations Broaden Commercial Pipeline
Expanding customer relationships past traditional refining facilities creates a more balanced revenue mix. Negotiating multiyear agreements in commercial nuclear power and aerospace strengthens long-term commercial pipeline visibility.
In aerospace, we are in advanced discussions with a leading global aerospace manufacturer on a potential long-term agreement that would expand the specialized services we provide from our aerospace facilities.
-- Gary Hill, Chief Executive Officer
Looking Ahead
Essential facility maintenance can't be delayed indefinitely without risking reliability. Differentiated inspection capabilities provide operational stability as management tracks international facility access and turnaround schedules.
Based on our experiences in these markets, this maintenance work can only be deferred for a finite period of time, and we currently expect much of it to begin returning in early 2027.
-- Gary Hill, Chief Executive Officer
Commercial expansion into aerospace complements ongoing cost reductions. A lower overhead structure positions the business for margin expansion when deferred projects return.
As deferred activity returns on to a more efficient cost structure, we believe Team will benefit from greater operating leverage.
-- Clinton Roeder, Chief Financial Officer
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