Phil Hawk – Chief Executive Officer Ted Owen – President & Chief Financial Officer

Matt Duncan – Stephens, Inc. Arnie Ursaner – CJS Securities Edward Marshall – Sidoti & Company Tristan Richardson – D.A. Davidson Tahira Afzal – KeyBanc Capital Markets Adam Thalhimer – BB&T Capital Markets

Good day, ladies and gentlemen, and welcome to the F1Q 2015 Team Earnings Conference Call. My name is Derek and I’ll be your Operator for today. (Operator instructions.) As a reminder this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. Phil Hawk, Team’s Chairman. Please proceed.

Thank you and good morning, everyone. It’s my pleasure to welcome you to the Team web conference call. Again, my name is Phil Hawk. I’m the Chairman and CEO of Team. Joining me again this morning is Mr. Ted Owen, Team’s President and Chief Financial Officer. The purpose of today’s conference call is to discuss our recently released financial results for the company’s Q1 that ended August 31, 2014. As with past calls our primary objective is to provide you with an enhanced understanding of our company’s performance and prospects. Ted will review the financial and operational results for Team overall as well as for each of our business groups. I will follow Ted with a few additional perspectives on our performance and outlook, and then following these remarks we’ll take questions from our listeners. With that introduction, Ted, let me turn it over to you.

Thank you, Phil. First as always I want to remind everyone that any forward-looking information that we discuss today is being provided in accordance with the provisions of the Private Securities Litigation Reform Act of 1995. We’ve 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 company’s SEC filings. Accordingly, there can be no assurance that the forward-looking information discussed today will occur or that our objectives will be achieved. And 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. First I’ll summarize the financial results for the quarter and then I’ll provide a little more color about our operating results before turning it back to Phil for his comments on our outlook. Adjusted net income available to shareholders was $0.34 per share in the current year quarter versus $0.23 in last year’s quarter, an improvement of 48% or $0.11 per share. The adjusted net income for the quarter excludes $200,000 in transaction costs related to an acquisition in the UK that we completed on the last day of the quarter. We are delighted with our start to the fiscal year. Our adjusted EBIT margin improved 1.3 percentage points in this seasonally weaker quarter to 6.4% of revenues compared to 5.1% in last year’s quarter. That reflects operating leverage of 23% on overall revenue growth in the quarter. As a reminder, operating leverage is measured by the change in EBIT divided by the change in revenues. Twenty-three percent is excellent operating leverage in the quarter. Why did that happen? Because of our focus on cost control, pricing and quality initiatives across all our business units, which Phil will discuss further in his remarks. Overall, revenues were $188 million in the quarter, up 8% over last year’s quarter and we’re particularly encouraged by the fact that our overall US growth rate was 12% in the quarter. Now let’s discuss our business unit performance in more detail. As you all know, we’re organized into three business units – Inspection and Heat Treating, which accounts for a little more than half our revenues; Mechanical Services which is about 35% of our revenues; and Quest Integrity Group which is about 10% of our revenues. First let’s discuss IHT, or Inspection and Heat Treating. Total IHT revenues were $106 million in the quarter, up 10% compared to Q1 last year. $87 million of those revenues are from inspection services, both traditional NDE and advanced services. Total Inspection services grew 13% over last year’s quarter, so we are continuing to see nice double-digit growth rates in our Inspection business. IHT’s Heat Treat services were relatively flat year-over-year. These services are generally associated with project or turnaround activities and represented about $19 million of IHT revenues in the quarter, about the same as last year’s quarter – again, recognizing that Q1 is a slow period for project activity. Now let’s shift the discussion to Mechanical Services. In total, Mechanical Service revenues of $68 million for the quarter were up 3% over last year’s quarter. On-stream or under pressure services comprised about 60% of total revenues for Mechanical Services, and turnaround or project services are about 40% of Mechanical Services’ total revenues. As we discussed previously last year was a transitional year in Mechanical Services, with new leadership in several locations and enhanced focus on quality and job execution. We’ve also adjusted to an environment with fewer large projects, especially in Canada where we had been over-weighted toward new, upgraded project opportunities. However, Canada is a particularly good story in the quarter for Mechanical Services. On relatively flat revenues we improved operating income by 300%. But that is just one story. We are also pleased with our performance and progress across many of our Mechanical Service regions. We’re also pleased to announce a recent addition to our Mechanical Services family. On the last business day of the quarter we completed the acquisition of a specialty mechanical services business in the UK. This acquisition will add about $10 million in revenues and will significantly enhance our footprint in the UK as well as being an important addition to our European network. We welcome our new colleagues to Team. And now let’s talk about Quest. For the quarter, Quest revenues were $15 million, up 16% over last year’s Q1. Like the rest of Team, Quest’s Q1 is traditionally a seasonally weaker period with fewer process industry opportunities in the way of heater inspection projects. You will recall that last year Quest got off to an extremely slow start to the year, actually losing $700,000 in FQ1 2014. So the good news for us this year is that we avoided that slow start. On a quarter-over-quarter comparison our operating profit improved by $1.5 million on revenue growth of $2.0 million. And in our last call we talked extensively about capacity expansion at Quest. Personnel, equipment and infrastructure as well as capability expansions – the continued development of next-generation ILI tools. Our next generation of smart Pigs will address higher resolution and higher speed, pressure and temperature tolerances all while maintaining the navigational capabilities that have made us the leader in difficult-to-inspect piping infrastructure in both pipeline and process industries. We will begin commercial introduction this quarter of these high-resolution tools. I liken the higher-resolution capability of these tools to viewing ultra HD TV versus standard definition TV, enabling better-informed condition assessment as well as providing operators with enhanced confidence in their integrity management programs. So Quest is also very well positioned as we move into the busy part of our year. So wrapping up the commentary on the quarter, we’re off to a really good start for F2015. Now, with respect to cash flow related items, capital expenditures were $5.5 million in the quarter and depreciation and amortization plus non-cash compensation charges were $6.5 million in the quarter. Adjusted EBITDA for the quarter was $18.5 million and for the trailing twelve months was $81.0 million. At the end of Q1 our total debt was $71 million, down about $3 million from the end of F4Q 2014. At quarter end total cash was $31 million thus our quarter-end net debt was $40 million and net debt to trailing twelve month EBITDA was 0.5 to 1.0. Now let me ask Phil to discuss our outlook a little further, share with you a few comments about the status of our leadership transition plan as well as a brief update on some of our key performance initiatives. Phil?

Thanks, Ted. To begin let me say that I’m encouraged by the improving momentum in our business. As was mentioned in our earnings release this was the third consecutive quarter of earnings performance improvement by Team. Our profit improvement reflects both our business growth as well as margin improvement. While we still have more progress to make we are beginning to see positive results from our improvement initiatives. With regard to the latter we are focused on several key performance drivers. They are providing outstanding customer service with every service opportunity. While this is certainly not a new area of focus for TEAM over the past year we have strengthened several aspects of our business processes in this regard. As examples, we enhanced and expanded our technician training capabilities with the completion of our new world-class technology and training center in Alvin, Texas. We introduced improved at-the-job service checklists for greater support and consistency and we placed one of our region Vice Presidents in a newly created position of Vice President of Quality to lead our expanded quality program. The second key performance driver is maintaining and/or improving our job margins. Our focus in this regard is on keeping prices and customer rates in line with increases in our technician labor rates and on improving the mix of more advanced services. We are pleased with our progress in both of these areas. And the final driver is balancing team resources and costs with overall demand and revenue opportunities. We now have addressed many of the significant issues related to both fewer new upgraded projects in the Canadian oil sands as well as to the timing of large turnaround projects in some US regions. But we remain focused on continuing to fine tune our operations and capture additional opportunities in this area. Overall revenue growth in this quarter was a little below our target but there are encouraging indications here as well. Inspection Services, our largest service line continues to grow well above the 10% rate. The same is true for Team’s overall US business, reflecting favorable conditions for most of our service offerings. Looking to the remainder of the year we remain comfortable with our $2 per share budget for the current fiscal year. There are a number of reasons why we continue to believe that this is a reasonable expectation. We expect active turnaround and project activities in both the fall and spring turnaround periods this year. We have a number of significant new or expanded customer relationships which we expect will further expand our business activities. We expect to be growing again in Canada and we expect our focus on key performance drivers, service excellence and outstanding execution to continue to drive improved margins. It is now up to us to capitalize on these opportunities and earn it, and we’re committed to doing just that. Let me end with a brief update on our leadership transition process. As most of you are aware we announced a leadership transition plan in July in which Ted will become Team’s President and CEO and I will shift into the role of Executive Chairman. The specific timing of these moves is tied to putting Ted’s CFO successor in place. We have an active search underway and are making good progress in that regard. Of course, until we have the new CFO identified and in place we cannot know with precision exactly what the timing will be. That concludes are remarks; let’s now open it up for questions. Derek, can I turn it back to you?

Certainly. (Operator instructions.) Our first question will be from the line of Matt Duncan, Stephens, Inc. Matt Duncan – Stephens, Inc.: Hey, good morning guys. Just real quick on the internal budget, the $2 earnings number – I think you had given us an $842 million revenue budget target. Is that still a good number?

Yes. Matt Duncan – Stephens, Inc.: Okay. And then the questions I’ve got on Quest, you guys had seen some project deferrals there back in Q4. I think there’s some question from the analyst community on when those might flow back through. I get that that’s a seasonal business like the rest of your business so should we expect to see a pretty good uptick at Quest here in the November quarter and is that when you’re going to see some of those project deferrals start to come through?

Yeah, I think we should. Some of them we’ve already started to see in Q1 – again, these are pipeline projects predominantly. We do have a good backlog of activity that’s falling into Q2 as well so yeah, as we had said in our last call we expect the deferrals from ’14 to fall into F2015 but specifically what quarter is not clear. I don’t have that data on exactly when but we do expect those projects to appear in 2015.

Just as a little more color on that, Matt, as Ted mentioned I think in his remarks, the process part of the business is roughly half and half. The process ILI business is highly seasonal because of the turnarounds; pipeline less so. So you’ll see kind of a smoother flow of pipeline revenue. So we had, because of the seasonally weaker process industry business in Q1, you’d see kind of a richer mix of pipeline business in that quarter. Matt Duncan – Stephens, Inc.: Got it. That helps, Phil, thanks. And then the last thing you guys made mention of your expectation that you’ll have a pretty good fall and spring turnaround season. We’re about a month into that fall season now so what are you guys seeing out there? Are project deferrals still happening and if so are we seeing fewer of those than we did back in the spring? Just update us on sort of what you’re seeing in the end market there.

Yeah, Matt, we’re not seeing at least for our customer base any significant project deferral. We’ve got about a month of activity into the fall turnaround season. Our activity levels are quite good so we expect a very strong fall season based on the activities that we’ve seen so far. Matt Duncan – Stephens, Inc.: Okay, very helpful. Thanks guys.

Your next question is from the line of Arnie Ursaner, CJS Securities. Arnie Ursaner – CJS Securities: Hi, good morning. Phil, in your prepared remarks in terms of growth opportunities you mentioned two things that caught my ear. One is additional customer relationships and the other is an expectation that you’re going to see a renewal of growth again in Canada. Can you expand on both of those? On the customer relationship side who do you think you’re gaining share from and why? And then in Canada given we still don’t have a pipeline and are actually seeing some weakness in the price of crude, why you’re positive that we’ll see a pickup in Canada.

Sure. Really they’re both for the same related reasons. Remember, we are a long-term, high-growth, high organic growth story. And the reason is, is that customers continue to consolidate with fewer larger more professional service providers. So if we’re an outstanding service company and provide excellent service kinds of trends then kind of customer preferences favor us and kind of drive growth. And we’re seeing that in expanded customer relationships. We don’t as a habit go name individual customers but we have several significant customers where we have expanded roles that we look forward to more revenues this year. In the case of Canada it’s just kind of getting the adjustments behind us. It wasn’t that our core business was kind of creeping up but we had to adjust for the massive kind of downturn in the big upgrader project base. That’s really behind us; it’s no longer kind of in our comps so we’re going to see - again, it all depends on execution but we’re confident in that respect. But we just see it’s always been a great market. We were just out of balance and now we expect to grow. Arnie Ursaner – CJS Securities: So again, if I can follow up on both of those again, when you are gaining share if you will, without mentioning the name of customers I’m more intrigued by are you gaining it from the mom & pops or are you gaining it from other national providers that maybe weren’t able to do the quality of work that you’re doing?

I think the systematic advantage we have is against the mom & pops. There’s always kind of ups and downs versus individual other companies but I wouldn’t proclaim those to be any trends at least that we see. Arnie Ursaner – CJS Securities: And going back to Canada just to clarify is this project work or is this still the normal, everyday work that you do where projects are still being deferred?

While there are some turnaround projects that are part of it, it’s a mix of business that looks more like the lower, the US business. So it’s a mix of kind of ongoing maintenance activity as along with project activity, or turnaround. Arnie Ursaner – CJS Securities: Thanks very much.

Your next question is from the line of Edward Marshall, Sidoti & Company Edward Marshall – Sidoti & Company: Good morning, guys.

Good morning, Edward, how you doing? Edward Marshall – Sidoti & Company: Doing pretty well. I thought you had a pretty decent quarter in Quest and I wanted to kind of circle back to some comments that were previously made I guess in Q4 talking about some of the revenue growth expectations there. And the way I understood it is it’s a 20% top line grower this year and you’re just shy of that in Q1. Maybe I’m being a little bit nitpicky but I’m just curious if you could update us. Is it something to do with maybe just the timing of the weakness in the quarter? I mean the comparisons are pretty easy comparisons Q1 to Q1; I’m just wondering if you had an update particularly in that segment.

Yeah, again I think we are, as we’ve indicated previously, Quest is a 20% growth business on balance over the course of the year. There is some lumpiness to that. In Q1 we had great strength in our pipeline business; we had a little weaker performance from a growth perspective in the process part of that business but again, we’re off to a good start for the year. We’re on target with respect to where we thought we would be with Quest from a growth trajectory. So it’s not a 20% per quarter. There’s the same degree of lumpiness in that business as Phil indicated a couple moments ago. So we’re on track and we’re pleased with our start for the year. Edward Marshall – Sidoti & Company: And when you talk about the introduction of higher-resolution, higher-speed capabilities within that segment is that kind of factored into that forecast? Is that going to be a noticeable difference in that growth rate for the business as we move forward?

It’s baked into the growth rate. It’s part of that 20% continued growth rate. Edward Marshall – Sidoti & Company: Thank you guys.

Your next question is from the line of Tristan Richardson, D.A. Davidson. Tristan Richardson – D.A. Davidson: Good morning, guys. Not to pick on Quest but I’m just curious – you talked about being comfortable with the margins in this quarter. And obviously it’s a seasonally lower period, but are single-digit margins, is that a reasonable expectation for Quest in the off season quarters?

I think we always aspire to more but again, we’re not unhappy with the performance by Quest in Q1 in the least. Remember again that we have a continuing investment in next-generation tools that frankly we don’t slow down or modify depending upon what kind of the quarter-over-quarter growth rates might be. And the reason that we don’t is because we’re looking beyond the quarter. And so Quest operating margins for the quarter were about 5%. Remember again there’s high incremental margins on kind of the next project, so as revenue ramps up for Quest so will operating profits. So again, we look at Quest on a year-over-year basis and not on a quarter-to-quarter basis. Tristan Richardson – D.A. Davidson: Sure.

I think just kind of elaborating on that, to cut to the chase our job margins remain very good and very stable in Quest and they actually were a little bit improved in our other two groups where frankly we’ve had a little bit of slippage historically in the back. So back to kind of our basic economic drivers, we feel pretty good about it. And then the volumes will take care of themselves we expect but it just reflects the seasonality. Tristan Richardson – D.A. Davidson: Sure.

I’ll just point out again too that if you think back to a year ago when we got off to a really slow start with Quest, even an operating loss in Q1, we said then that we weren’t worried about Quest even with that slow of a start. The same is doubly true right now. We are not in the least worried about where we’ll be at the end of the year. Tristan Richardson – D.A. Davidson: That’s helpful, thank you guys. And then I guess just the follow-up, in terms of your expectations for the fall, your commentary was you’re excited, you’re seeing more come in in the first month of the season. And I guess I’m just recalling from a year ago, I mean it should make for somewhat easier comps given that you saw the big decline from large projects, and I know that’s where the leverage pays off. But I’m curious sort of what the large project profile is looking like for the fall season.

It’s actually quite good for us. We have a few significant projects again in our customer base and the timing of turnarounds. So again, just based on the projects that are falling for us and the activity levels through the first month we think we’re going to have a very strong fall turnaround season. But as we have said before, saying it and doing it are two different things so let’s just do it and we’ll see. Tristan Richardson – D.A. Davidson: Absolutely.

You are correct though, Tristan, and we’ll acknowledge your point that compared to say last year where we were comping against a very strong prior year that our comps are a little more favorable this year than they were last year. So that will help our percentages if you will. I think just an absolute sense as Ted said, we have strong expectations and we’re off to a good start. Tristan Richardson – D.A. Davidson: Great, appreciate it.

Your next question will be from the line of Tahira Afzal, KeyBanc. Tahira Afzal – KeyBanc Capital Markets: Hi folks, congrats on the quarter. I guess a lot of my questions have been answered, I just had a couple more and sorry to belabor already the progression of Quest during the year. But if you look at last year you know, obviously F2Q was the high point in Quest revenues. If you look at the sequential ramp last year from Q1 to Q2 versus how we should build out this year, could you give us a bit more guidance so that we’re not overbuilding Quest if that be the case into Q2? And then I guess the second question was just in terms of labor costs, etc. We’ve seen maybe some of the markets on the construction side in terms of labor sort of slow down a bit, projects are rolling out a little more slowly in Texas. I would like to get your thoughts if that’s providing you some leeway or if it’s making it more difficult for you to pass costs on to your customers?

Let me talk to the Quest revenue progression. Again, like the rest of Team Quest will have a stronger revenue profile in its Q2 and Q4, and that’s kind of the heart of the year for Quest because again, very high incremental operating margins on a project-to-project basis. About half of its business is associated with process industry so inline inspection of heaters in the process industry, and again that’s associated with turnarounds and those happen in Q2 and Q4. So pipeline is steadier but I think we’ve indicated that for the year we expect Quest to have revenues in the order of magnitude of about $80 million and operating profits of [15% to 20%] [ph] of that. And you should weight that towards Q2 and Q4.

Tahira, just on that, the challenge, it’s a challenge for modeling – it’s not a challenge for the business per se – is that because projects relative to size of business tend to be larger, it’s lumpier. And because the incremental margins are high that makes it more significant in terms of just the swings. So that’s just the common nature of the business a little bit, is that it’s just inherently a little more lumpy and I appreciate the challenge it has for modeling. But it’s not something that we’re particularly concerned about operationally. Your last point was labor?

Yeah, labor costs, again I think you are correct that projects are coming in a little slower than expected although we are starting to see new construction activity that is starting to benefit our business; although as we’ve said and others we think the peak of that is probably another year away. We have seen labor cost increases in particularly some of certainly our higher-end specialty services – higher-end inspection and other more advanced services. We are starting to be able to get relief on that so we’re getting some wins under our belt in terms of being able to pass the cost increases to our customers. I don’t think that we’re on balance all the way there yet but it has not been the issue for us that it might have been, and I think we’ve managed through that so far relatively well. But again, as I indicated I think we’re still on the front end of it and not at the peak of tight labor markets yet. Tahira Afzal – KeyBanc Capital Markets: Got it, thank you folks.

(Operator instructions.) Your next question is from the line of Adam Thalhimer, BB&T Capital Markets. Adam Thalhimer – BB&T Capital Markets: Hey, good morning guys. I was hoping to ask a question first off just on the mindset of your refinery customers, because it feels like it’s been a year or two since we’ve had one or two robust turnaround seasons in a row. Do you feel like there’s any pent-up maintenance demand out there?

No, I don’t sense a pent-up demand. I sense strong demand and kind of Mother Nature as we’ve talked before is pretty persistent and so the need for kind of the basic maintenance activities is always there; if the plants are running, they are running and I think if there’s a little bit of a good favor to us it’s because again, the reason our comps are a little better this year than last year was kind of just the circumstance of the timing of customers where we had the strongest relationships. So to the extent that we’re kind of back in the cycle a little bit on that that’s probably a little bit of a help to us, but I really don’t think the industry is. I think we’re maintaining plants and our level of turnaround activity is kind of consistent with what we would expect. I don’t have really much, I don’t see much in the way of any industry trends to kind of change that pattern. Adam Thalhimer – BB&T Capital Markets: Well, I hear a lot of rumors of the refiners are doing smaller, more frequent turnarounds and maybe they’re underinvesting in their plants. But that’s not the way you see it.

Not from where we sit, Adam. And again, we’re a little myopic in our vision because our point of reference is our customer base, right? And so our experience doesn’t necessarily reflect an industry trend one way or the other. It’s just kind of how our customers are behaving if you will. And from where we sit we don’t see any particular change in behaviors. We don’t see projects that were 2x three years ago being a 1x project this year. So we don’t observe that if that’s so.

There are some very, very large turnarounds we’re involved with this year. There are also some smaller ones where those smaller ones used to be one big one – there’s now three smaller ones. You know, honestly we don’t track every plant like that so I don’t know that we would have a point of view one way or the other. But we certainly don’t have kind of a premise that it’s changing in a big way. Adam Thalhimer – BB&T Capital Markets: So then for your customer base, you said there’s the potential for some very large turnarounds – is there any way to, I’m not sure how we would think about it. But a very large turnaround, I think you’ve previously said over $1 million in revenue? I can’t remember.

We track them all now given our kind of flat-footedness a few years ago. But I think the larger groups that we’ve had is greater than $2 million and there’ll be several of those this year. Adam Thalhimer – BB&T Capital Markets: Okay, thanks guys.

At this time I’m showing no further questions in queue. I would like to turn the call back over to Mr. Phil Hawk for any closing remarks.

Alright, thank you, Derek, and on behalf of both Ted and me we want to thank all of you for your participation in this call and your continuing interest in Team. We look forward to updating you on our progress during our Q2 conference call in early January. In the meantime everyone have a good day.

Ladies and gentlemen that concludes today’s conference. We thank you for your participation. You may now disconnect. Have a great day.