Phil Hawk - Chairman and CEO Ted Owen - SVP and CFO

Matt Duncan - Stephens Rich Wesolowski - Sidoti Torin Eastburn - CJS Securities Matt Tucker - Keybanc Capital Markets Max Barrett - Tudor, Pickering, Holt

Welcome to the Team IR Call. (Operator Instructions) I will now turn the call over to Mr. Phil Hawk.

It’s my pleasure to welcome you to the Team Inc. web conference call to discuss recent company performance. As indicated, my name is Phil Hawk; I’m the Chairman and CEO of Team. Joining me again today is Mr. Ted Owen, the company’s Executive Vice President and Chief Financial Officer. The purpose of today’s conference call is to discuss our recently released financial results for the company’s first fiscal quarter ending August 31, 2010. As with past calls, our primary objective is to provide our shareholders and potential shareholders with an enhanced understanding of our company’s performance and prospects. This discussion is intended to supplement our quarterly earnings releases; our 8-K, 10-Q and 10-K filings to the SEC as well as our Annual Report. Ted will begin with a review of the financial results. I will follow Ted with a few brief remarks and observations about our performance and prospects. Following our remarks, we will take questions from our listeners. With that Ted, let me turn it over to you.

First, I want to remind everyone as usual that any forward-looking information we discuss today is being provided in accordance with the provisions of the Private Securities Litigation Reform Act of 1995. We have made reasonable efforts to ensure that the information, assumptions and beliefs upon which this forward-looking information is based are current, reasonable and complete. However, a variety of factors could cause actual results to differ materially from those anticipated in any forward-looking information. A description of those factors is set forth in the last paragraph of our press release and in the company’s SEC filings. There can be no assurance that the forward-looking information discussed today will occur, or that our objectives will be achieved. We assume no obligation to publicly update or revise any forward-looking statements made today, or any other forward-looking statements made by the company whether as a result of new information, future events or otherwise. With that, now for the financial results. Revenues for the first quarter were $104.5 million, which is up 4% compared to last year’s first quarter. Net income was $3.8 million in the current quarter versus $1.8 million adjusted for non-recurring charges in last year’s first quarter. The non-recurring charges in last year’s first quarter as you recall were associated with an SCPA investigation so that all of our discussion related to prior amounts, we’ll adjust for that as we had done last year for comparative purposes. Earnings per diluted share were $0.20 in the current quarter versus an adjusted $0.09 in last year’s first quarter. Other highlights in the quarter were as follows: Gross margin as a percentage of revenue improved to 30.2% compared to 29.2% in last year’s first quarter. SG&A expenses were down $800,000 in the quarter, or 3% from the prior year quarter. Operating income as a percent of revenues was 6.5% versus an adjusted 3.7% in the prior quarter. During the quarter we repurchased approximately 90,000 shares of our stock for a total of $1.3 million. Capital expenditures in the quarter were $2.3 million. Depreciation and amortization expense was $3.1 million, and non-cash compensation expense was $1.1 million. Total adjusted EBITDA was $11 million and $49 million for the trailing 12 months. Please note that adjusted EBITDA reflects the add-back of both non-cash comp expense and the non-routine charges affecting operating income. During the quarter, we repaid $10 million of our outstanding debt, and at the end of the quarter our net debt to EBITDA was considerably less than 1:1. Our net debt at the end of the quarter was approximately $22 million, which is a reduction of $14 million during the quarter and includes the $10 million of debt paid back plus an increase in cash of $4 million. And then finally, at the end of the quarter our unused borrowing capacity under our existing credit facilities was approximately $100 million. So with that Phil, I’ll turn it back to you.

Now I would like to add some additional perspectives on our recent performance. We’re off to a good start our new fiscal year. I am pleased with several aspects of our performance in the recently completed quarter. First of all, we continue to grow our business in a challenging market environment. As Ted indicated, for the quarter, our overall growth was approximately 4% versus the prior year period. This revenue growth was approximately the same rate of growth that we achieved in the most recent fourth quarter. Let me share a few more details and perspectives on this growth. Overall, it is still a challenging market environment. Our customers continue to face business pressures, which are impacting their procurement approaches and operational plans. But there are some bright spots in a number of areas. Our U.S. business revenues grew about 10% for the quarter, faster than even our Canadian or other international markets, reflecting a slightly stronger demand environment in several U.S. regions. We experienced growth in both our onstream and turnaround services. Also, business from our Alliance agreements grew slightly faster than the overall growth rate. In summary, our revenue performance is off to an encouraging start for the year. However, we are also not yet fully satisfied with our performance. Despite our market challenges, we continue to expect that our business should achieve double digit growth rates over the longer term. I’m also pleased with our cost management and business execution in the quarter. The one percentage point improvement in gross margin that Ted mentioned was achieved despite flat project or job margins. This margin improvement was driven by improved indirect cost performance; improved labor utilization and management of other indirect costs were the key drivers of the improvement. We achieved similar positive performance in our SG&A costs. Total SG&A expenses declined by nearly $1 million in the quarter. These reductions are directly related to the initiatives taken last year. The resulting impact of modest growth, combined with good cost management and execution, with solid improvement in our operating profit and operating leverage. For the quarter, operating profit margins increased several points to 6.5%. Incremental operating leverage compared to prior year results was greater than 80%. I’m also pleased with the continued improvement in our balance sheet that Ted discussed. Our financial strength and flexibility has never been better. We also expect to continue generating cash from business operations throughout the remainder of the year. As stated in our earnings release, we are affirming our previously issued earnings guidance for the full fiscal year that ends May 31, 2011. For this period and for the year we expect to earn between $1 and $1.15 for fully diluted shares. As discussed earlier, we’re off to a good start in this first quarter, and our outlook is positive. Let me wrap up my remarks with a couple of final comments before we take your questions. I remain confident in Team’s prospects. We have an attractive business position from which we can be successful in both the near term and longer-term. We have been a high-growth company historically. Following a step back during the recession, Team has started to grow again. I see continued attractive growth opportunities for Team in virtually all of our service lines and in all geographic regions, both within North America and beyond. The key to being successful in our business is our continued focus on the basics; providing great service with every service opportunity, continuing to capitalize on our service network advantages, managing the profitability of our business job-by-job, balancing our resources with current activity levels, continuing aggressive business development initiatives and focus and conducting our business all of the time in all activities in a manner that fosters pride from all Team colleagues and respect from our customers. Companies that focus on and execute these fundamentals in an outstanding manner will be very successful businesses for years and decades to come. We are committed to doing just that. That concludes my remarks. And now I want to open it up for questions.

Matt Duncan - Stephens: The first question I’ve got, and just ask two, the first is on pricing. You mentioned I guess the gross margin was up 100 basis points year-over-year. It sounds like that primarily you’re doing a good job managing the cost side of things. What are you seeing in terms of price? Has it at least stabilized at this point?

I think that would be a good projection, just in that that we expect our job margins to be roughly stable from here forward. There’s continuing pressure and kind of discussions with customers, but I don’t think it’s as broad-based or as intense as it was a year ago. Matt Duncan - Stephens: And then the other thing is, in terms of the outlook for your business, I guess what we’ve been hearing is both the size and number of turnaround projects here in the fall turnaround season appears to be on the rise which I guess would point to improvement, especially in that refiner end market. Are you guys seeing some of the same things, and sort of what’s your outlook for your business in terms of how it’s improved or maybe not I guess over the last few months?

I think we would concur with that general comment that certainly at least in some regions of the country we’re seeing more and larger turnarounds in the fall than we saw a year ago. I think it’s because we’re really just in the heart of the season right now. To have a kind of comprehensive view, I think it’s a little premature, but we’re cautiously optimistic that that some of that pent-up demand is kind of being addressed I think in some of the turnaround activities right now. Matt Duncan - Stephens: So Phil, it would be safe to say then, the outlook for your business is probably better today than it would have been three months ago, with the size of those projects beginning to go up and that pent-up demand starting to shake out a little bit.

I think a little bit better. It’s certainly better than it was a year ago. I think we expected a little improvement from where we were standing three months ago.

Our next question comes from Rich Wesolowski from Sidoti. Rich Wesolowski - Sidoti: Do you guys care to give roughly what your current job margins are, or what they would expect to be on the next job you book?

We really haven’t kind of got into all the detail on that is that with that as an internal measure of just the direct cost that we capture, it doesn’t include all of the benefits of things that actually track with some of that labor. So I don’t think that’s a particularly helpful public number. Rich Wesolowski - Sidoti: Have you lowered wages for tax in any geography to any material degree?

No. Rich Wesolowski - Sidoti: It seems the ongoing theme of vendor consolidation that you were feeding off of for a long time was more prevalent when business was good. And when business was not good you mentioned that the alliance customers grew at a slightly faster rate than the overall company. From your vantage point is there evidence that customers are again engaged in the classic Team sales pitch?

I think it’s always been attractive. I think when there was the most severe pressure on them from a cost management standpoint, I’m going to say their timeframe or perspective was shorter. And I think as you get shorter then you start looking for kind of individual rate on this job rather than may be a broader look at overall efficiency. But I think as the industry recovers a little bit, one of the big advantages of our size and strength is our ability to consistently provide resources and support for any science project anywhere. And that’s not automatic and I think that’s a big distinction between us and certainly some of the smaller regional players. I think the advantage of that will become clearer to bigger customers as the market improves. Rich Wesolowski - Sidoti: You put up a big earnings number at least relative to our mark and sales weren’t too far off. And how long can you grow without having to add some cost back? Or what is the category that you see as unit growing 5% and 10%? What cost category would first have to snap back for you?

I think what we’ve done and I’m pleased with is I think we’re managing our resources and we do look at our variable technician resources, we’re managing them a little better than we have historically. And I think we’re seeing kind of a better utilization levels and better leverage there. It will go up with volume, those resources. But our expectation is to continue to manage them well. I think when we started getting back to volume levels that are beyond where we have been. Recall, we are still growing, but we’re still not back to the levels we were kind of peak levels. Once we start kind of reaching those levels and beyond, we’ll be adding additional equipment and mixed pooling and other aspects to our work that will increase our depreciation, increase some of our operating expenses. So I would expect until we get there, we’re going to have as we talked before a little higher operating leverage. I think we talked about that in previous calls. Our kind of overall target, long term leverage may be in the 20% range. We’re probably in the 30% range in the short run until we kind of get back to operating activity levels near our peaks that we achieved in previous years.

Our next question comes from Arnie Ursaner from CJS Securities. Torin Eastburn - CJS Securities: You had mentioned on your last call you’re undertaking some internal investments and business development initiatives. Could you just detail what you’re doing there and how it’s progressing.

I think we talked about several number of them in both divisions. My recollection from our calls we talked about both the InsertValve and Pipeline Wye projects in our Team Mechanical Services division. These are kind of innovative approaches, both related to how line kind techniques for either inserting valves or accessing pipelines for Pigs that we think are innovative in the market. Both are advancing very nicely. We’ve expanded our capabilities in InsertValve and a couple of sizes during the quarter. We’ve got a couple of our first several orders in the Pipeline Wye and we’re pleased with that. I think we also mentioned that we are kind of entering or expanding or initially entering and kind of expanding some of our heat exchanger services and those continue to progress nicely. We’re kind of focused just in the Gulf coast area on those services at this point. On the Inspection and Heat Treating side, we talked about our commitment to expand our higher end Advanced Inspection Services. And again we saw very nice activity and progress in those areas, particularly in the areas of GULW, Guided Ultra Long Wave, length kind of inspection services, which was a particularly active service area for us in the quarter. Torin Eastburn - CJS Securities: What is your tax account now? And what is your short term outlook report?

The total field headcount is about 2,800 right now. And our expectation would be that we’ll just grow that with volume.

Our next question comes from Matt Tucker from Keybanc Capital Markets. Matt Tucker - Keybanc Capital Markets: Could you talk a little bit why you think the U.S. is stronger versus other regions? And then within the U.S. why certain region might have been stronger than others?

I think when you get to addressing kind of estimated levels in a specific quarter, it not only relates to what happened in this quarter but what happened in the prior year first quarter. And the timing of projects can affect that greatly. So I don’t have a point of view that the U.S. is going to be, Matt, stronger overall than other parts of the world, or our world where we serve markets. But what it reflects is that we had relative to this quarter a weaker kind of project slate in the first quarter a year ago. And this was particularly I think the Gulf Coast area and the west coast were kind of the areas of kind of big difference in the first quarter. Conversely if you look at Europe which was actually down from a year ago; it’s not that Europe is just generally weak in our view, it’s that we had the benefit of a couple of very significant projects in last years first quarter. Matt Tucker - Keybanc Capital Markets: If you look up in Canada in oil sands you had mentioned last quarter it looks like activity could be picking up. And we’ve seen some sponsors up there dusting some projects off. Has the ramp up there been meeting your expectations so far? And could you talk a little bit about what you’re expecting up there?

I think the answer is that we continue to believe that new projects would be restarting, but they haven’t yet. I think the only one I’m aware of that has kind of restarted is the Suncor Firebag project. But there are half a dozen projects out there. Most of them are still in the planning stages. So it’s a spring at the earliest, may be even next fall before that happens. There are turnaround activities relating to existing facilities going on that we’re participating in. but in terms of the big expansion activity I think it’s still coming, not a big change in our viewpoint, but I wouldn’t say it’s accelerating either. Matt Tucker - Keybanc Capital Markets: When you look at the fall turnaround season, are you seeing customers spend in more upgrades or capital project type of work? Or is it really more term deferred maintenance coming back?

I’m not sure I have a really insightful perspective on that, Matt. I don’t think we’re seeing lots of expansions happening right now in the market. But to say that there is no upgrades or fine tuning of plants, I wouldn’t say that either. I think that’s just typical that there’d be a little bit of that here and there.

Our next question comes from Max Barrett from Tudor, Pickering, Holt. Max Barrett - Tudor, Pickering, Holt: Just excluding refining and petrochem, could you update us on sort of the remaining third of your client days, kind of how those areas performed in the quarter? And expectations for the remainder of the year?

I’ll be honest with you, Max, I don’t have and haven’t kind of bothered to look kind of by segment for just the quarter to look at kind of how it’s split out. So I don’t have any data at my finger tips. And just kind of the reports from the field, I wouldn’t say that there was a kind of a major report from our field locations and branches about major differences in the different segments. So I think it kind of all as I said in the beginning I think our customers are still under pressure. But may be there is a slight easing occurring with some of the pent up demand. Max Barrett - Tudor, Pickering, Holt: Do you see the recent incidence with the Enbridge pipeline and California gas utilities potential catalyst for additional business?

I guess generally yes, just in the sense that I think it kind of is just one more heightening of the tension and focus on mechanical integrity of pressurized systems. Max Barrett - Tudor, Pickering, Holt: You talked about the stock repurchases in the quarter. If you could just remind us kind of how you think about using cash, buying stock versus funding acquisitions in the near term.

I guess as we talked at the last conference call, we don’t see it as an either or. I think we’re in a significant cash generating position. And frankly, we think that even with our purchase plans and what has been authorized by our Board, we wouldn’t expect to increase our debt levels as a result of that. Our posture on purchasing stock is that we just are gong to be kind of periodic purchasers of the stock, it’s not an aggressive plan, but just view it as a kind of attractive supplement to our activity. So as you can see we’re not in an aggressive way trying to get in front of investors, but we’re just kind of out there purchasing from time to time.

(Operator Instructions) And our next question comes from Matt Duncan from Stephens. Matt Duncan - Stephens: Just want to ask, on the guidance, you beat the consensus estimate fairly nicely here on earnings this quarter, and I know it’s a seasonal low point in your business and you chose to leave the guidance sort of unchanged. Is that really just a function of this being a seasonally slower quarter? You’ve got to get to at least the fall season before you do update your guidance there?

I think so, and you kind of answered the question. It’s a seasonally weaker quarter. I think it’s kind of not prudent to just rush to extrapolate on the quarter, right? But we’re positive about our business and we’re anxious to go on it again. Matt Duncan - Stephens: Okay. And then if you look at the size of your tech force today, it says about 2,800 people. How utilized is that tech force currently and sort of what annual revenue base do you think you can generate out of the current size of the company?

Well, we’re very proud of our level for the utilization. I don’t have them at my fingertips, but I know that’s the highest level for the utilization that we’ve ever achieved. So we’re very pleased with the work we’re doing and like, we utilize our force. I think the second question was, how much revenue can we achieve from that is misplaced, because our ability to both supplement our full time force with, we call them 253 or kind of our project personnel or project resources is quite extensive, plus, and we’ve proven before, we can ramp our permanent force very quickly as well. So we don’t view kind of our levels of our resources to be a constraint whatsoever in terms of our revenue opportunities. Matt Duncan - Stephens: Okay, but in terms of text to add for growth, you’re seeing available good quality people out there to add as you need them?

Yes. Matt Duncan - Stephens: And the last question I’ve got is sort of focused on the acquisition strategy. The balance sheet’s obviously improved nicely. I know you do have mixing how you want to use cash. But as you look at acquisitions, is there a particular geography that you’re focusing on in particular types of services? What are you thoughts on the types of acquisitions you’re looking at?

We continue to have a consistent view on that. Again, we believe, just as a foundation for our business that we have very attractive organic growth opportunities, and that’s the heart and the core of our company and our strategy. And that’s what we’ve forecast, that’s what our guidance is all based on. So that’s unchanged. Having said that, we are opportunistic to identify approaches that will accelerate that growth, and accelerate it either geographically or in service lines and capabilities that we don’t have internally. And I think we continue to be very receptive to those types of opportunities. If you were to kind of guess geographically where those would be, it would be Europe, again, because we have a foothold there, that would be probably a more likely geographic area than kind of further in the U.S. or North America, just given the current extent of our capability. So I’m saying there’s not a niche here or there, but that’s kind of just as a broad category. I think in terms of service lines though, there are also opportunities to expand. And we continue to look at those, again around the edges. But we’re going to stay in industrial services, and that’s our purpose but there are certainly enhancements and extensions of our capabilities that are possibilities at some point. I would point out that we talked about M&A or growth that it’s not a fixed thing, but it’s just kind of with our continued evolution we opened our first branch in the U.K. during the quarter. Toward the end of the quarter we purchased some small number of assets from a former licensee and now have our own direct service branch in the U.K. and look forward to some exciting growth in that market.

We have no further questions at this time.

Great, John. Well, then let me just wrap up. I want to thank all of you for your participation in this call this morning and your continued interest in Team. We look forward to updating you on our progress again with our second quarter call that will be scheduled in early January. In the meantime, have a good day.

Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.