TEAM INC

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business. Unless otherwise indicated, the terms “Team,” “the Company,” “we,” “our” and “us” are used in this report to refer to either Team, Inc., to one or more of our consolidated subsidiaries, or to all of them taken as a whole. Our stock is traded on the New York Stock Exchange (the “NYSE”) under the symbol “TISI”.

We are a global, leading provider of specialty industrial services offering customers access to a full suite of conventional, specialized, and proprietary mechanical, heat-treating, and inspection services. We deploy conventional to highly specialized inspection, condition assessment, maintenance and repair services that result in greater safety, reliability, and operational efficiency for our customers’ most critical assets. We conduct operations intwo segments: Inspection and Heat-Treating (“IHT”) and Mechanical Services (“MS”). Through the capabilities and resources in thesetwo segments, we believe that we are uniquely qualified to provide integrated solutions involving: inspection to assess condition; engineering assessment to determine fitness for purpose in the context of industry standards and regulatory codes; and mechanical services to repair, rerate or replace based upon the customer’s election. In addition, we are capable of escalating with the customer’s needs, as dictated by the severity of the damage found and the related operating conditions, from standard services to some of the most advanced services and integrated asset integrity and reliability management solutions available in the industry. We also believe that we are unique in our ability to provide these services inthree distinct customer demand profiles: (i) turnaround or project services, (ii) call-out services, and (iii) nested or run-and-maintain services.

IHT provides conventional and advanced non-destructive testing services primarily for the process, pipeline and power sectors, pipeline integrity management services, emissions control and compliance and field heat-treating services, as well as associated engineering and condition assessment services. These services can be offered while facilities are running (onstream), during facility turnarounds or during new construction or expansion activities. In addition, IHT provides comprehensive non-destructive testing services and metallurgical and chemical processing services to the aerospace and other industries covering a range of components including finished machined and in-service components. IHT also provides advanced digital imaging including remote digital video imaging.

MS provides solutions designed to serve customers’ unique needs during both the operational (onstream) and off-line states of their assets. Our onstream services include our range of standard to custom-engineered leak repair and composite solutions; hot tapping and line stopping; and online valve insertion solutions, which are delivered while assets are in an operational condition, which maximizes customer production time. Asset shutdowns can be planned, such as a turnaround maintenance event, or unplanned, such as those due to component failure or equipment breakdowns. Our specialty maintenance, turnaround and outage services are designed to minimize customer downtime and are primarily delivered while assets are off-line, often through the use of cross-certified technicians whose multi-craft capabilities deliver the production needed to achieve tight time schedules. These critical services include on-site field machining; bolted-joint integrity; vapor barrier plug testing; and valve management solutions.

We market our services to companies in a diverse array of heavy industries which include:

•Energy (refining, power, renewables, nuclear, offshore oil and gas, and liquefied natural gas);

•Manufacturing and Process (chemical, petrochemical, pulp and paper industries, automotive, and mining);

•Midstream (valves, terminals and storage, and pipeline);

•Infrastructure (construction and building, roads, dams, amusement parks, bridges, ports, and railways); and

•Aerospace and Defense.

Basis of Presentation. These condensed consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results for such periods. The results of operations for any interim period are not necessarily indicative of results for the full year. Certain disclosures have been condensed or omitted from the interim financial statements included in this report. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC (“our Annual Report on Form 10-K”).

Consolidation. The condensed consolidated financial statements include the accounts of our subsidiaries where we have control over operating and financial policies. All material intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications. Certain amounts in prior periods have been reclassified to conform to the current year presentation, including the separate presentation of depreciation and amortization expense on the condensed consolidated statements of operations. Such reclassifications did not have any effect on our financial condition or results of operations as previously reported.

Significant Accounting Policies. Our significant accounting policies are disclosed in Note 1 - Summary of Significant Accounting Policies and Practices in our Annual Report on Form 10-K. On an ongoing basis, we evaluate the estimates and assumptions, including among other things, those related to long-lived assets. Since the date of our Annual Report on Form 10-K, there have been no material changes to our significant accounting policies.

Newly Adopted Accounting Standards. In July 2025, the FASB issued ASU 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). ASU 2025-05 provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue from Contracts with Customers. Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim periods in those years. The Company has elected to apply the practical expedient in its assessment of an allowance for credit losses beginning January 1, 2026. The adoption did not have a material impact on the Company’s condensed consolidated financial statements.

Accounting Standards Not Yet Adopted. In April 2026, the FASB issued ASU 2026-01, Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock (“ASU 2026-01”). The guidance in ASU 2026-01 clarifies how issuers initially measure paid-in-kind (“PIK”) dividends on equity-classified preferred stock by requiring issuers to use the PIK dividend rate stated in the preferred stock agreement. ASU 2026-01 will be effective for the Company’s annual reporting periods beginning after December 15, 2026, and for interim reporting periods within those annual periods, with early adoption permitted. Entities may apply the amendments on either a prospective basis or a modified retrospective basis for equity-classified preferred stock instruments that are outstanding as of the initial application date. The Company is currently evaluating the impact that adoption of ASU 2026-01 may have on its consolidated financial statements.

2. REVENUE

Disaggregation of revenue. Essentially all of our revenues are associated with contracts with customers. A disaggregation of our revenue from customer contracts by geographic region, by reportable operating segment and by service type is presented below:

Revenue by geographic area (in thousands):

1 As of January 1, 2026, Emission Control Services (ECS), previously included in the MS segment, was moved to the IHT segment, refer to Note 15 - Segment Disclosures for more information.

Revenue by operating segment and service type (in thousands):

For additional information on our reportable operating segments, refer to Note 15 - Segment Disclosures.

Remaining performance obligations. As permitted by ASC 606, Revenue from Contracts with Customers, we have elected not to disclose information about remaining performance obligations where (i) the performance obligation is part of a contract that has an original expected duration of one year or less or (ii) when we recognize revenue from the satisfaction of the performance obligation in accordance with the right-to-invoice practical expedient, which permits us to recognize revenue in the amount to which we have a right to invoice the customer if that amount corresponds directly with the value to the customer of our performance completed to date. As most of our contracts with customers are short-term in nature and billed on a time and material basis, there were no material amounts of remaining performance obligations as of June 30, 2026 and December 31, 2025.

3. ACCOUNTS RECEIVABLE

A summary of accounts receivable as of June 30, 2026 and December 31, 2025 is as follows (in thousands):

The following table shows a rollforward of the allowance for credit losses (in thousands):

4. INVENTORY

A summary of inventory as of June 30, 2026 and December 31, 2025 is as follows (in thousands):

5. PREPAID EXPENSES AND OTHER CURRENT ASSETS

A summary of prepaid expenses and other current assets as of June 30, 2026 and December 31, 2025 is as follows (in thousands):

The insurance receivable represents amounts from our third-party insurance providers for a legal claim that is recorded in other accrued liabilities, refer to Note 8 - Other Accrued Liabilities. Insurance receivables will be collected from our third-party insurance providers for litigation matters that have been settled, or are pending settlement, and where the deductibles have been satisfied. The prepaid expenses primarily relate to prepaid insurance and other expenses that have been paid in advance of the coverage period.

6. PROPERTY, PLANT AND EQUIPMENT

A summary of property, plant and equipment as of June 30, 2026 and December 31, 2025 is as follows (in thousands):

Included in the table above are assets under finance leases of $14.1 million and $13.0 million as of June 30, 2026 and December 31, 2025, respectively, and related accumulated amortization of $6.0 million and $4.8 million as of June 30, 2026 and December 31, 2025, respectively. Depreciation expense for the three months ended June 30, 2026 and 2025 was $4.5 million and $4.7 million, respectively. Depreciation expense for the six months ended June 30, 2026 and 2025 was $9.0 million and $9.5 million, respectively.

7. INTANGIBLE ASSETS

A summary of intangible assets as of June 30, 2026 and December 31, 2025 is as follows (in thousands):

Amortization expense of intangible assets was $3.0 million and $3.1 million, respectively, for the three months ended June 30, 2026 and 2025. Amortization expense of intangible assets for the six months ended June 30, 2026 and 2025 was $6.1 million and $6.2 million, respectively. The weighted-average amortization period for intangible assets subject to amortization was 14.0 years as of June 30, 2026 and December 31, 2025.

8. OTHER ACCRUED LIABILITIES

A summary of other accrued liabilities as of June 30, 2026 and December 31, 2025 is as follows (in thousands):

Payroll and other compensation expenses include all payroll related accruals including, among others, accrued vacation, severance, and bonuses. Legal and professional accruals include accruals for legal and professional fees as well as accrued legal claims, refer to Note 14 - Commitments and Contingenciesfor legal claims information. Certain legal claims are covered by our third-party insurance providers and the related insurance receivable for these claims is recorded in prepaid expenses and other current assets, refer to Note 5 - Prepaid Expenses and Other Current Assets. Property, sales and other non-income related taxes include accruals for items such as sales and use tax, property tax and other related tax accruals. Accrued interest relates to the interest accrued on our long-term debt. Insurance accruals primarily relate to workers compensation costs. Other accruals include various business expense accruals.

9. INCOME TAXES

We recorded an income tax benefit of $0.1 million and $0.1 million for the three and six months ended June 30, 2026, compared to a provision of $1.0 million and $1.2 million for the three and six months ended June 30, 2025. The effective tax rate, inclusive of discrete items, was 1.5% for the three months ended June 30, 2026, compared to 29.9% for the three months ended June 30, 2025. For the six months ended June 30, 2026, our effective tax rate, inclusive of discrete items, was 0.5%, compared to 3.7% for the six months ended June 30, 2025. The decrease in effective tax rate for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025 is due to the mix of pretax income in non-valuation allowance jurisdictions and pretax losses in valuation allowance jurisdictions, along with changes in permanent differences.

10. DEBT

As of June 30, 2026 and December 31, 2025, our total long-term debt and finance lease obligations are summarized as follows (in thousands):

1 Comprised of principal amount outstanding, less unamortized debt issuance costs. See below for additional information.

2022 ABL Credit Agreement

On February 11, 2022, we entered into a credit agreement with the lender parties thereto, and Eclipse Business Capital, LLC, a Delaware limited liability company, as agent (“Eclipse”) (such agreement, as amended by Amendment No.1 dated as of May 6, 2022, Amendment No.2 dated as of November 1, 2022, Amendment No.3 dated as of June 16, 2023, Amendment No.4 dated as of March 6, 2024, Amendment No.5 dated as of September 30, 2024, Amendment No.6 dated as of March 12, 2025 and Amendment No.7 dated as of September 11, 2025, the “2022 ABL Credit Agreement”).

Available funding commitments under the 2022 ABL Credit Agreement, subject to certain conditions, include a revolving credit line of up to $150.0 million to be provided by certain affiliates of Eclipse, with a $35.0 million sublimit for swingline borrowings, and a $26.0 million sublimit for issuances of letters of credit (the “Revolving Credit Loans”).

The terms of the Revolving Credit Loans are described in the table below (dollar amounts are presented in thousands):

The 2022 ABL Credit Agreement contains customary conditions to borrowings and covenants, as described in the 2022 ABL Credit Agreement. As of June 30, 2026, we were in compliance with the covenants.

As of June 30, 2026, $9.4 million in letters of credit were issued under the 2022 ABL Credit Agreement. Such amounts remain undrawn and are off-balance sheet.

First Lien Term Loan Agreement

On March 12, 2025, we entered into a First Lien Term Loan Credit Agreement (such agreement, as amended by Amendment No.1 dated as of September 11, 2025, the “First Lien Term Loan Agreement”) with the lenders party thereto and HPS Investment Partners, LLC. Available funding commitments include a $225.0 million senior secured first lien term loan (the “First Lien Term Loan”) consisting of a $175.0 million initial term loan tranche (the “Initial First Lien Term Loans”) and a $50.0 million delayed draw term loan tranche (the “First Lien Delayed Draw Term Loans”), which is available to be drawn from March 12, 2025 to June 30, 2027, subject to satisfying certain conditions.

The terms of the Initial First Lien Term Loans are described in the table below (dollar amounts are presented in thousands):

1 Interest payment dates may be monthly or quarterly based on the Company’s election (subject to availability), adjusted to the nearest business day.

The First Lien Term Loan Agreement contains certain conditions to borrowings, events of default and affirmative and negative covenants as described in the First Lien Term Loan Agreement. As of June 30, 2026, we were in compliance with the covenants.

2025 Second Lien Term Loan Credit Agreement

On March 12, 2025, we entered into a Second Amended and Restated Second Lien Term Loan Credit Agreement with the lenders party thereto and Cantor Fitzgerald Securities, as Agent (as amended by Amendment No.1 dated as of September 11, 2025, the “2025 Second Lien Term Loan Agreement”), which amended and restated the existing Amended and Restated Term Loan Credit Agreement, dated June 16, 2023.

Available funding commitments to the Company under the 2025 Second Lien Term Loan Agreement, subject to certain conditions, included a $107.4 million second lien term loan (the “Second Lien Term Loans”), initially provided by Corre Partners Management, LLC and certain of its affiliates (“Corre and affiliates”), consisting of a $97.4 million term loan tranche (the “2025 Second Lien Term Loans”) and a $10.0 million delayed draw term loan tranche (the “Second Lien Delayed Draw Term Loans”) which was available to be drawn from March 12, 2025 until April 15, 2026, subject to satisfying certain conditions.

The amount currently outstanding under the 2025 Second Lien Term Loan Agreement is a $68.0 million second lien term loan, including certain paid-in-kind interest. As of April 15, 2026, the availability period for the Second Lien Delayed Draw Term Loans expired. No amounts were drawn under the Second Lien Delayed Draw Term Loans prior to the expiration date.

The terms of the 2025 Second Lien Term Loans are described in the table below (dollar amounts are presented in thousands):

1 Principal payments represent a percentage (ranges between 0% and 0.25% based on the First Lien Net Leverage Ratio) of the outstanding principal balance. As of June 30, 2026 we arenot making quarterly principal payments.

2 Interest payments are based on the First Lien Net Leverage Ratio and may be paid in cash or PIK. For the six months ended June 30, 2026, all interest was PIK.

The 2025 Second Lien Term Loan Agreement contains certain conditions to borrowings, events of default and affirmative and negative covenants and a financial covenant as described in the agreement. As of June 30, 2026, we were in compliance with the covenants.

Equipment Financing Loans

Equipment financing loans consist of secured borrowings used to acquire machinery and equipment (including office equipment). Under some of the arrangements, the lender pays the equipment vendor directly on behalf of the Company; as a result, no cash proceeds are received by the Company. The loans are secured by the financed equipment and are repaid over fixed terms through scheduled installments. The related assets are recorded in property, plant, and equipment, net of accumulated depreciation. As of June 30, 2026 and December 31, 2025, the outstanding balances of equipment financing loans were $1.3 million and $1.4 million, respectively.

Fair Value of Debt

The fair value of our debt obligations is representative of the carrying value based upon the respective interest rate terms and management’s opinion that the current rates available to us with the same maturity and security structure are equivalent to that of the debt obligations.

1970 Group Substitute Insurance Reimbursement Facility

As of June 30, 2026, the Company maintains $19.1 million of letters of credit outstanding under its Substitute Insurance Collateral Facility Program Agreement (the “Collateral Facility Agreement”) with 1970 Group Originator, Inc. The collateral facility agreement remains off-balance sheet unless drawn upon. Deferred facility fees are amortized to interest expense; the unamortized balances as of June 30, 2026 and December 31, 2025, were $0.5 million and $1.5 million, respectively. For additional details, refer to Note 11 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

11. EMPLOYEE BENEFIT PLANS

We have a defined benefit pension plan covering certain United Kingdom employees (the “U.K. Plan”). The pension plan was frozen in 1994 and no new participants have been added since that date. Net periodic pension cost (credit) includes the following components (in thousands):

Net pension cost (credit) is included in “Other income (expense), net” on our condensed consolidated statements of operations. The expected long-term rate of return on invested assets is determined based on the weighted average of expected returns on asset investment categories for the U.K. Plan as follows:5.7% overall,8.2% for equities and 5.6% for debt securities.

12. SHAREHOLDERS’ EQUITY (DEFICIT)

Shareholders’ Equity (Deficit)

As of June 30, 2026 there were 4,571,382 shares of our common stock outstanding and 12,000,000 shares authorized at $0.30 par value per share.

As of June 30, 2026 there were 75,000 shares of preferred stock outstanding, designated as Series B Preferred Stock, and we had 500,000 authorized shares at $100.00 par value per share of preferred stock (see Note 13 - Redeemable Preferred Stock for more detail).

Warrants

As of June 30, 2026, the Company had the following warrants issued and outstanding:

Accumulated Other Comprehensive Loss

A summary of changes in accumulated other comprehensive loss included within shareholders’ equity (deficit) is as follows (in thousands):

13. REDEEMABLE PREFERRED STOCK

On September 11, 2025, the Company issued 75,000 shares of Series B Preferred Stock and 1,453,260 warrants to InspectionTech Holdings LP (the “Stellex Holder”) pursuant to a securities purchase agreement (the “Purchase Agreement”). The Series B Preferred Stock is classified as temporary equity in the mezzanine section of the consolidated balance sheets, as it is potentially redeemable for cash at the holder’s option beginning December 31, 2030, and under certain other events outside the Company’s control.

The Company continues to have the option to access (the “Series B Delayed Draw”) up to $30.0 million in additional proceeds through the issuance of up to 30,000 shares of Series B Preferred Stock and 581,304 related warrants prior to September 11, 2027, subject to the terms and conditions of the Purchase Agreement. No Series B Delayed Draws were made during the quarter.

During the six months ended June 30, 2026, the Company accrued a 10.5% paid-in-kind (PIK) dividend on the outstanding Series B Preferred Stock. The dividend was non-cash and was settled by increasing the carrying value of the preferred stock. The accrued PIK dividend totaled $4.2 million for the period, equivalent to $55 per share of redeemable preferred stock.

The following table presents the change in carrying value of the redeemable preferred stock during the period ended June 30, 2026 (in thousands):

For further information regarding the terms, classification, fair value allocation, and accretion accounting for the Series B Preferred Stock and warrants, refer to Note 16 - Redeemable Preferred Stockin the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

14. COMMITMENTS AND CONTINGENCIES

As of June 30, 2026, the Company continues to assess potential loss contingencies, including legal proceedings and government compliance matters, in consultation with legal counsel. Liabilities are accrued when it is probable that a material loss has been incurred and the amount can be reasonably estimated; otherwise, the nature and possible range of loss are disclosed if reasonably possible.

During the quarter ended June 30, 2026, the Company remained involved in the Kelli Most litigation, a wrongful death case that was previously subject to a $222 million judgment, which was subsequently vacated and dismissed in Texas. The plaintiff has since refiled the case in federal court in Kansas. Based on an updated assessment of the case under Kansas jurisdiction, the Company has accrued a $10.0 million liability as of June 30, 2026, which is fully offset by a receivable from the Company’s insurance providers. All insurance retentions and deductibles have been met, and the Company expects that any further claims will be fully funded by its insurance policies.

In total, the Company has accrued approximately $11.0 million for this and other matters as of June 30, 2026. Management, after consultation with legal counsel, believes that the resolution of these matters, as well as other routine legal proceedings, will not have a material adverse effect on the Company’s condensed consolidated financial statements.

15. SEGMENT DISCLOSURES

We conduct operations intwo segments: IHT and MS. Management’s determination of our reporting segments was made on the basis of our strategic priorities within each segment and the differences in the services we offer. The reportable segments results are reviewed regularly by the chief operating decision maker (“CODM”), who is our Chief Executive Officer, in deciding how to allocate resources and assess performance. Our CODM evaluates the segments’ operating performance based on adjusted EBITDA defined as net income (loss) before income taxes, interest expense, depreciation and amortization, and other non-recurring and non-operational items. Our CODM uses adjusted EBITDA as a measure to make resource allocation decisions for each segment for the budgeting process and reviews budget-to-actual variances to assess performance and allocate capital.

As of January 1, 2026, service type Emission Control Services, previously included within the MS segment, was moved to the IHT segment. This change by the Company to the composition of its reportable segments was completed to better align with how the CODM evaluates segment performance. Prior period segment information was recast to conform to the current period presentation. The recasting of the prior period segment information did not have any impact on the Company’s previously reported consolidated revenue or consolidated adjusted EBITDA. The impact of this change for the three months ended June 30, 2025 was to decrease previously reported revenue and adjusted EBITDA for the MS segment with a similar increase to the IHT segment by approximately $7.8 million and $2.2 million, respectively. The impact of the change for the six months ended June 30, 2025 was to decrease previously reported revenue and adjusted EBITDA for the MS segment with a similar increase to the IHT segment by approximately $15.2 million and $4.2 million, respectively.

Segment data for ourtwo operating segments are as follows (in thousands):

1 Represent operating expenses including direct depreciation and amortization but excluding severance cost.

2 Represent segment selling, general and administrative expenses excluding noncash share-based compensation, professional, legal and other non-recurring costs.

Reconciliation of segment adjusted EBITDA to consolidated loss before income taxes:

1 Excludes finance leases. Totals may vary from amounts presented in the consolidated statements of cash flows due to the timing of cash payments.

Separate measures of our assets by operating segment are not produced or utilized by our CODM to evaluate segment performance.

16. RELATED PARTY TRANSACTIONS

In connection with the Company’s debt obligations, the Company engaged in transactions with Corre and affiliates to provide and/or repay funding as described in Note 10 - Debt.

In connection with the issuance of Series B Preferred Stock on September 11, 2025, the Company entered into a Purchase Agreement with the Stellex Holder, see Note 13 - Redeemable Preferred Stock for further details. On the same date, the Stellex Holder acquired $10.0 million of the Company’s outstanding loan under the 2025 Second Lien Term Loan Agreement. The terms of the loan remain unchanged following the acquisition.

In September 2025, $15.0 million of the Company’s outstanding loan under the 2025 Second Lien Term Loan Agreement was acquired by JFL Credit Opportunities Fund II, L.P. and affiliates, in which one of the Company’s independent directors is an equity partner. The terms of the loan remain unchanged.

17. SUBSEQUENT EVENTS

As of August 10, 2026, the filing date of this Quarterly Report on Form 10-Q, management evaluated the existence of events occurring subsequent to the quarter ended June 30, 2026 and determined that there were no events or transactions that would have a material impact on the Company’s results of operations or financial position.