Don Bleasdell - Team Industrial Services Amerino Gatti - Team, Inc. Greg L. Boane - Team, Inc.

Tahira Afzal - KeyBanc Capital Markets, Inc. Craig Bibb - CJS Securities, Inc. Martin W. Malloy - Johnson Rice & Co. LLC Willam Kerr Steinwart - Stephens, Inc.

Good day, ladies and gentlemen, and welcome to the First Quarter 2018 Team, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Don Bleasdell, Vice President of Finance. You may begin, sir. Don Bleasdell - Team Industrial Services: Thank you, Nicole. Welcome, everyone, to Team, Inc.'s first quarter fiscal year 2018 conference call. With me on today's call are Team's Chief Executive Officer, Amerino Gatti; and Greg Boane, EVP and Chief Financial Officer. This call is also being webcast and can be accessed through the audio link under the Investor Relations section of our website at teaminc.com. Information recorded on this call speaks only as of today, May 9, 2018. Therefore, please be advised that any time-sensitive information may no longer be accurate as of the date of any replay. Before we continue, I'd like to remind you that this call contains forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements of expectations, future events or future financial performance. Forward-looking statements involve inherent risks and uncertainties and we caution investors that a number of factors could cause actual results to differ materially from those contained in any such forward-looking statements. These factors and other risks and uncertainties are described in detail on the company's Annual Report on Form 10-K and in the company's other filings with the Securities and Exchange Commission. The company assumes no obligation to publically update or revise any forward-looking statements. I would now like to turn the call over to Mr. Amerino Gatti. Amerino? Amerino Gatti - Team, Inc.: Thank you, Don, and good morning, everyone. I appreciate you joining us today. I'll begin by providing a brief update on our business. Greg will then share a detailed financial commentary before handing the call back to me, and then we will take your questions. We will be discussing our financial results within the context of our recently renamed business segments. As of the first quarter 2018, we have renamed two of our reportable segments. TeamQualspec will now be referred to as Inspection and Heat Treating and TeamFurmanite will be called Mechanical Services. The Quest Integrity group will retain its name. Team delivered consolidated first quarter revenues of $302 million, an increase of 6% from $287 million in the prior year period. This marked the highest Q1 revenue since the Qualspec and Furmanite acquisitions. We also experienced the highest single month revenues in March since October of 2016. Mechanical [Technical Difficulties] (3:13) revenue growth of 9%, followed by Inspection and Heat Treating growth of 6%. Quest Integrity revenues declined 17% as several projects shifted later this year. Excluding Quest, our consolidated revenue was up 7% year-over-year. Adjusted EBITDA increased 58% to $10 million from $6 million in the prior year quarter and adjusted EBITDA margin improved 110 basis points. In addition to higher revenues and higher adjusted EBITDA, free cash flow improved by $10 million over the prior year first quarter. At the beginning of the quarter, we anticipated borrowing $10 million. And in fact, we paid down $3 million of debt, while also funding $3.4 million of the OneTEAM program. I will now move to an overview of our segment performance. The Mechanical Services segment delivered first quarter revenues of $133 million, a 9% increase when compared to $122 million in the same period last year. Adjusted EBITDA was $12.3 million in the first quarter or 138% higher than prior year quarter. This segment experienced higher activity levels and solid gross margin improvement from progressive changes implemented by the team to improve pricing and project execution. These changes led to a 230-basis point gross margin expansion over the same period last year. The Inspection and Heat Treating segment delivered first quarter revenues of $151 million, a 6% increase when compared to $143 million last year. Adjusted EBITDA was $12 million in the first quarter or 2% lower than the first quarter of 2017. This segment was stretched during the quarter due to growth in large project activity levels and expanded scopes. This resulted in technician workforce constraints that drove increased overtime and flexible labor costs to meet customer demand. The Quest Integrity segment delivered first quarter revenues of $18 million and adjusted EBITDA of $2.1 million. This compares to revenues of $22 million and adjusted EBITDA of $5.6 million in the prior year quarter. As we mentioned last quarter, we expected lumpiness due to specific project deferrals into the remainder of 2018. I will now provide highlights on safety, manufacturing and technology. We continue to focus on our safety performance and culture. I am proud of our team in the Midwest region for achieving a significant milestone, more than 1.6 million man hours worked with zero recordable injuries over a nine and a half year period at a customer facility. We are beginning to realize the benefits of our investments in manufacturing and lean processes within our Mechanical Services segment. We achieved a 40% improvement in on-time delivery since November 2017. In this quarter alone, the volume of our work order completions have increased by 32% and lead times have decreased in some cases by more than 50%. These investments will allow us to better control costs and meet our customer needs. Team Digital continues to make inroads through its proprietary technology platform. Our software integrated into six additional projects in the first quarter of 2018, and we successfully completed our first pilot project in Canada. We continued to be very excited about this differentiating technology. We are achieving 20% to 30% productivity gains from increased time on tools, reduced standby time and automated reporting. I will now turn it over to Greg for the first quarter financial review. Greg L. Boane - Team, Inc.: Thanks, Amerino. As Amerino stated earlier, markets are improving and activity levels have picked up as Q1 2018 consolidated revenues increased $16 million or 6% over Q1 2017. Q1 2018 consolidated gross margin decreased to 25% from 26% in Q1 2017. Mechanical Services had strong gross margin improvement in Q1 2018, increasing to 28% from 26% in Q1 2017. Mechanical Services had very good profitability fall-through with Q1 2018 gross margin increase of $6 million on an $11 million revenue improvement. The Mechanical Services team has effectively managed their workforce assignments and utilization and implemented targeted pricing improvements while reducing costs and functions like manufacturing and engineering. Quest which has higher semi-fixed cost structure related to their engineering and assessment resources, experienced Q1 2018 gross margin decrease of $2.8 million related to lower revenues from project shifting to later quarters in 2018. The Inspection and Heat Treating segment had some operating challenges during Q1 2018 with higher project execution costs and a declining gross margin to 19% from 22% in Q1 2017. Higher than planned overtime hours and flexible labor costs, coupled with certain unfavorable contract pricing terms which carry lower profit margin markups on overtime hours led to the gross margin decline. Overtime cost in Inspection and Heat Treating increased by approximately 30% and flexible labor hours increased by 60% compared to the prior year quarter. Amerino will address these items later in the call. Moving on to SG&A, I'll discuss spending trends on a sequential basis because I believe that comparison is the most relevant. Consolidated SG&A expense for the first quarter was $90 million and includes roughly $5 million of excluded items that I'll review in a moment. Adjusted SG&A expense for Q1 2018 was $84.5 million compared to $74 million in Q4 2017. As discussed on the Q4 2017 earnings call, we expected increases in Q1 2018 related to $3.1 million of accelerated amortization on the Furmanite brand name, approximately a $1 million of R&D expense which was reclassified as SG&A in 2018 and we have higher incentive and stock-based compensation of $2.1 million. When we factor in these items to Q4 2017, Q1 2018 pro forma SG&A would have been around $80 million to $81 million. The sequential increase in Q1 2018 SG&A to $84.5 million is primarily made up of the following items. The first item is Q1 2018 payroll taxes increased by $1.4 million sequentially as part of the normal annual January payroll tax resets. We expect payroll taxes to decline in Q2 2018 with further declines later in the year. Second item is our normalized allowance for bad debt expense runs around $2 million per quarter. Q1 2018 allowance for bad debt was $2.7 million, and increased $1.5 million sequentially due mainly to a low expense amount in Q4 2017 of $1.2 million combined with a few isolated additional reserves recorded in Q1 2018. Q1 2018 corporate SG&A of $20 million was flat sequentially inclusive of the payroll tax reset. Shifting now to annual D&A and stock-based compensation. For full year 2018, we expect depreciation and amortization to be around $64 million, an increase of $12 million over 2017 due primarily to the accelerated amortization related to shifting away from using the Furmanite trade name. Non-cash stock-based compensation is expected to be around $10 million in 2018, no change from the last update. I'll spend a few minutes discussing the excluded items in the current quarter that we do not consider to be indicative of our core operating activities. In the current quarter, there was a total of $5 million of excluded items before tax comprised of the following. There was $3.4 million of organizational restructuring work during the quarter related to the OneTEAM program and $1.6 million of legal and professional fees outside of the program, including $600,000 of severance related expenses. Moving down the income statement below operating income, interest expense net for the quarter was $7.6 million and includes $1.6 million related to non-cash amortization of debt issue cost and debt discount on the convertible debt. Cash interest expense for Q1 2018 was $6 million. Finally, there was a non-cash gain of $5 million associated with the accounting of the conversion feature of the convertible debt which is treated as a derivative. Taxes related to Q1 2018 are impacted by the amount of actual pre-tax losses, the impacts of NOLs and valuation allowances, the new tax on foreign earnings and the interest deduction limitation. A combination of all these factors resulted in effective rate in Q1 of less than 4%, a normalized rate for Team should be between 28% to 30%. I'll now cover the balance sheet and cash flows. At March 31, our cash balance was $18 million and we had approximately $60 million of available borrowing capacity under the revolver, total liquidity of $78 million improved by $10 million sequentially. We are seeing the impacts of our focus on improved cash generation in 2018. It is one of our key performance objectives in our 2018 incentive program. Q1 2018 cash flow from operations was a net generation of $2 million, an improvement of around $5 million from Q1 2017. Our focus on managing working capital primarily AR and inventory was having a positive impact as evidenced by the $6 million improvement in cash flow generated from working capital as compared to last year. CapEx was $5.5 million or around $5 million lower than Q1 2017. Free cash flow improved by around $10 million in Q1 2018 versus Q1 2017. We paid down approximately $3 million in bank debt in Q1 2018. As of March 31, we're in compliance with our existing debt covenants. The senior secured leverage ratio improved to 3.3 times EBITDA compared to a maximum covenant of 4.25 times. That completes the financial review. I'll now turn it back over to Amerino. Amerino Gatti - Team, Inc.: Thank you, Greg. We are taking immediate actions to accelerate the following initiatives under the OneTEAM program to increase our margins. First, we are focused on contract management. We reviewed our top 25 contracts, identified dilutive contract terms and conditions such as unfavorable project overtime markups. We're taking actions to address these issues in order to improve margins in the second half of this year. Second, we are deploying our successful Mechanical Services workforce management capabilities to the IHT business segment to improve project visibility, resource demand planning and maximize labor utilization including reducing non-billable time and over time. Mechanical Services experienced a 3% to 5% improvement in labor utilization through the use of this function. Third, we are accelerating our cost reduction plans focused on streamlining SG&A and indirect costs and restructuring low performing locations. We have identified approximately 10% to 15% of locations that are in the process of being restructured. Medium term, we look to our OneTEAM integration and transformation program to provide the foundation for the company. We have completed the design phase that was announced on the last call and have now entered the deployment phase of the program. As a reminder, the OneTEAM program focuses on three pillars: revenue enhancements, operations improvement, and center-led functional support cost improvement. I will now cover some of the OneTEAM achievements since our last earnings call. As part of the revenue enhancement pillar, we have targeted incremental revenue growth from cross-selling initiatives and we've already achieved early success of $5 million to $8 million of future project wins. Within the operations improvement pillar, we recently rolled out our new geographic division model. Each division will be led by one business leader with a manageable customer and geographic footprint and large addressable market poised for growth. The cross segment division structure will allow us to consistently present our full enterprise strength and capability to our clients. As part of the center-led functional support cost improvement pillar, we are continuing to centralize our procurement function to gain cost savings leveraging our size and scale. We have already experienced early benefits from more favorable contracts, savings and enhancing commercial terms for the company. As we disclosed in our last call, OneTEAM is expected to require an investment of between $25 million and $30 million to complete, with 90% of the spending expected to occur in 2018. The cost split is into thirds; one-third for external consulting, one-third for restructuring costs, and one-third for internal costs to deploy and train employees. We recently negotiated a revised monthly fixed price contract with Alvarez & Marsal, our external consulting partner, in order to manage program costs. It is important to note that we plan to fund the OneTEAM program with free cash flow. We are expecting cost efficiencies of approximately $35 million to $45 million from the operations and center-led functional support cost improvement pillars. The planned program payback is estimated to be one to two years. Once the OneTEAM program is fully implemented, we expect our organic growth to be greater than the overall market growth rate and achieve a target of 10% to 12% EBITDA margins. From a macroeconomic perspective, our strengthening end markets showed signs of improvement towards the end of the quarter. External data shows that refining capacity and utilization in the U.S. has been increasing every year for the past five years, which are positive indicators for our inspection and maintenance businesses. While we recognize that the recovery is still underway and that our customers will continue to strictly manage their CapEx budgets, we are watchful of the ongoing maintenance CapEx announcements for 2018 and beyond. This is the space where Team specializes and can best collaborate with our customers. In closing, we remain committed to safety and returning Team to profitability, and we are focused on improving contract management, workforce planning and delivering accelerated cost reductions. Finally, I would like to personally thank all of our employees for their loyalty, hard work and willingness to embrace change and drive execution excellence. At this point, I'll turn it to the operator for our first question.

Thank you. And our first question comes from Tahira Afzal from KeyBanc. Your line is now open. Tahira Afzal - KeyBanc Capital Markets, Inc.: Thank you very much and congratulations, Amerino, in squeezing some free cash flow out this quarter. Amerino Gatti - Team, Inc.: Thank you, Tahira. Tahira Afzal - KeyBanc Capital Markets, Inc.: I guess my first question is, we've always thought maybe perhaps the market trend maybe being a little higher than what we expected would be a positive benefit. Given that you are facing some headwinds in terms of the overtime cost pricing, et cetera, perhaps you can lay out how we should be thinking about the EBITDA build-up progressively through the year? Is the $10 million to maybe $15 million a good sort of range on a quarterly basis or does it progressively build up because of Quest? Amerino Gatti - Team, Inc.: So I'd like to just address the first part which is handling of the growth of the market, Tahira, and then we'll address the EBITDA. So on the market side, I don't want the inspection situation to be considered a negative. Actually, the tailwind of the activity increases project scope expansion, a lot of discovery work that was identified by our customers is a positive market move. We have and do have plans in place using our workforce planning capabilities to recruit and train and obviously work with our customers to get the overtime and the flexible workforce back aligned with that activity, so it's a positive thing. As we move forward, we will address it and I'll let Greg comment on the buildup as we see it going forward through 2018 on the EBITDA. Greg L. Boane - Team, Inc.: Just... Tahira Afzal - KeyBanc Capital Markets, Inc.: Thanks so much. Greg L. Boane - Team, Inc.: Tahira, as a clarification, your reference to $10 million to $15 million of EBITDA, what were you referring to there? Tahira Afzal - KeyBanc Capital Markets, Inc.: I was being sneaky and saying well, we've got $10 million in the quarter. So I'm assuming it will hopefully head up progressively through the year. Greg L. Boane - Team, Inc.: Yeah. Our progression through the year will follow the seasonality of the business. Obviously, we're expecting Q2 to be stronger than Q1. We're pleased with the progression, the margin expansion that we experienced at Mechanical Services. As Amerino said, we're focused on improving the gross margins and EBITDA margins in Inspection and we're also expecting Quest to be up sequentially over Q1 and a much better profit generation from Quest looking into Q2. Tahira Afzal - KeyBanc Capital Markets, Inc.: Got it. And I've got a couple of follow-ups. I'll hop back in the queue for those. Amerino Gatti - Team, Inc.: Thank you, Tahira.

Thank you. And our next question comes from Craig Bibb from CJS Securities. Your line is now open. Craig Bibb - CJS Securities, Inc.: Hi, thanks for letting me ask a question. Amerino, you have kind of a broader perspective that you brought the team, oils closing above $71. Could you talk about how the puts and takes on how that might impact refinery spending, the profitability of some of your customers? Amerino Gatti - Team, Inc.: Okay. Thank you and good morning. So first of all, the tailwinds we're starting to see with increased oil prices and crack spreads have been positive. I've spent the last couple months traveling throughout North America including Canada. The thing we're seeing specifically on refining, however, is that the capital spend on new projects and refining is down year-on-year. However, our space which is the maintenance capital projects where both Mechanical, Inspection services play is up significantly into the ranges of 40% to 50% year-on-year. And we're using obviously some of our key customers' public announcements. So from that perspective, what it's driving is additional turnaround project work. It's driving additional discovery work and that's why we saw quite a few expansions of project scopes within the Inspection business. So refining capital projects, I think we still see that down year-over-year but when you get drilled down one level into maintenance, that's up 40% to 50%. Craig Bibb - CJS Securities, Inc.: Okay. So would you guys are going to see anything like that 40% or 50% increase in demand? Amerino Gatti - Team, Inc.: Well, that's their spend and then we're obviously a percentage of that. And then we have a market share associated with that increase. So you'd have to do the math obviously to go from that increase from a customer spend, our portion of that spend and then our market share within those service lines. Craig Bibb - CJS Securities, Inc.: Okay. And could you maybe talk a little bit in more detail about the outlook for turnarounds both in the spring and later in the year? Amerino Gatti - Team, Inc.: So for this spring continued turnaround season over the next two months, we see and expect a strong season to continue as we've started in March. We actually saw 65% to 70% ramp-up between January and March of activity and we don't -- obviously, it's not going to continue at that pace. But the next couple months of turnaround activity look strong. And again, I expect that the discovery phase will continue as we've seen it in March. So from that perspective, it's good. We have put together our fourth quarter look ahead on project planning. And at this point, we expect to see the second half of the season projects to be in line on the turnaround side with the first. Craig Bibb - CJS Securities, Inc.: In line with the first. So I mean are we looking at like double-digit type growth in demand in the start of Q2? Amerino Gatti - Team, Inc.: So, we're coming off a 6% revenue increase this quarter and we do see high single digit to low double digit in Q2 growth. Craig Bibb - CJS Securities, Inc.: Great. All right. Thanks a lot. I'll let someone else take a shot. Amerino Gatti - Team, Inc.: Thank you. Thank you.

Thank you. And our next question comes from Marty Malloy from Johnson Rice. Your line is now open. Martin W. Malloy - Johnson Rice & Co. LLC: Good morning. Amerino Gatti - Team, Inc.: Good morning. Martin W. Malloy - Johnson Rice & Co. LLC: I just want to make sure I understand the OneTEAM program here and you talked about $25 million to $30 million of cost with 95% of that occurring in 2018 and the benefits that you have – that you expect of $35 million to $45 million and I guess that's a combination of revenue increase and margin expansion. Should that be occurring in 2019 then? Amerino Gatti - Team, Inc.: So let me just – if you don't mind, let me clarify two points. So it's $25 million to $30 million spend with 90% spend in 2018 and the remainder carrying over in Q1 of 2019 to close out the project. So that's the $25 million to $30 million. The $35 million to $45 million, which we've now -- last quarter, we gave an estimate. We've now bracketed it to that. That is only from the cost pillars, which is the operations pillar, the division branch and SG&A restructuring and from the center-led pillar procurement and other activities. It does not include anything for the revenue enhancement pillar. And that's going to be done as we go through. We'll continue to provide updates on that phase of the program. Martin W. Malloy - Johnson Rice & Co. LLC: And should we expect that $35 million to $45 million annual improvement to show up in 2019? Amerino Gatti - Team, Inc.: So, we expect $8 million to $10 million of that to show up in the second half of this year. And then we expect the 2020 to be a full year of implementation of the program and then 2019 will be in the middle of both. But we expect to see an $8 million to $10 million this year and 2020 will be the next full year implementation. And in between that, we'll be in that $20 million to $25 million range. Martin W. Malloy - Johnson Rice & Co. LLC: Great. Thank you. That's helpful. And then last question. Could you maybe talk about the petrochemical market and with the build-out on the Gulf Coast kind of what you're seeing there as it relates to your services? Amerino Gatti - Team, Inc.: So, the petrochemical market is when we do services in petrochemical versus refining, it's a very similar types of services that we perform in both facilities. We are seeing increase in capital projects on petrochemical that we're not seeing in capital projects on refining and the rest of it, when it comes to maintenance capital, it's similar to the refining market. So the real difference is that we're seeing more capital growth in that market versus refining. And just to narrow it down a little bit for you, it's about a 20% improvement year-on-year in the refining market on the capital side. Petrochemical, I'm sorry – on the petrochemical side, 20% increase. Martin W. Malloy - Johnson Rice & Co. LLC: Understood. Amerino Gatti - Team, Inc.: Versus the refining -- sorry, versus the refining, which is actually down year-on-year. Martin W. Malloy - Johnson Rice & Co. LLC: Okay. Great. Thank you. Amerino Gatti - Team, Inc.: Thank you.

Thank you. And our next question comes from Matt Duncan from Stephens, Inc. Your line is now open. Willam Kerr Steinwart - Stephens, Inc.: Hey. Good morning, guys. This is actually Will on the call for Matt. Amerino Gatti - Team, Inc.: Good morning, Will. Greg L. Boane - Team, Inc.: Hi, Will. Willam Kerr Steinwart - Stephens, Inc.: Good morning. I just wanted to tie a bow around the overall market expectations and the commentary that we've been hitting on here the last call you noted indicators for 4% to 5% growth. So is it fair to assume that that has gone up now, and if you can update us on what you think that 4% to 5% range now is? Amerino Gatti - Team, Inc.: So, the market projected growth of 4% to 5%, I haven't changed, Will, overall general market growth, if you look at all the service lines, combining refining, petrochemical, pulp paper, et cetera, et cetera. The pace we're seeing though is that the second quarter will reach a high-single digit, low-double digit growth versus the first quarter and overall I do think we're going to be reaching the higher single-digit levels for the year-over-year growth rate. Willam Kerr Steinwart - Stephens, Inc.: Okay. Okay. That's helpful. Amerino Gatti - Team, Inc.: Yeah. And remember, just as a clarification, without Quest, we saw about 7% year-over-year growth and we know that Quest was a tailwind in the first quarter and those specific projects have been pushed out into other quarters in the year and it's not market share loss in Quest, it is just deferred projects. Willam Kerr Steinwart - Stephens, Inc.: Okay. So, just to clarify, high single-digit year-over-year growth in the 2Q is what you're currently expecting? Amerino Gatti - Team, Inc.: Yes. Willam Kerr Steinwart - Stephens, Inc.: Okay. And then going over to the OneTEAM initiative, can you give – you hit on this a little bit, you called out some early benefits you're seeing around the revenue enhancement targets and the size. Can you provide some more detail on the potential opportunity there as you look, I know, it's early into 2019 and/or possibly a couple years out, and what you think the revenue enhancement piece of this business can do... Amerino Gatti - Team, Inc.: Sure. (32:39) Amerino Gatti - Team, Inc.: Sure. Sure, I'm not going to – yeah, no problem, Will. I'm going to give you a number here that's more focused on the near term because I don't want to start giving away information for the long term on revenue. Willam Kerr Steinwart - Stephens, Inc.: Sure. Amerino Gatti - Team, Inc.: We have a target of $25 million to $30 million in our cross-selling initiative for 2018. We've seen already $5 million to $8 million of project wins that will be awarded – that have been awarded to be executed later in the year. And then, obviously, you can do the math on fall-throughs, et cetera. Willam Kerr Steinwart - Stephens, Inc.: Okay. Then, on the unfavorable contract pricing, the headwind on the quarter, is there any way that you can quantify that and call out what that headwind was to gross margins? And have you seen any other contracts with similar terms that could cause headwinds given this tight market into the fall? Amerino Gatti - Team, Inc.: Sure. So I'm going to address the contract piece and then I'm going to let Greg talk about specifically two lines that we were obviously breaking down, which is the overtime and the flexible contract. First of all, I want to reiterate that the growth is a good positive thing for us. It's a tailwind. This is not negative. We knew it was coming, but because of some of the project scope expansions, we did get into overtime and flexible contract workforce. So that's number one. Number two is, when we go through our contracts and we are starting now to work with our customers of how to manage that. So, obviously, the overtime rate markup is an easy thing. There is other items that are more discretionary costs that are built into these contracts like per diems and travel, et cetera. As you move people around the U.S., there is a cost impact with that to try and service the customer needs and handle the ramp-ups. So when you look at the Ts and Cs that are somewhat dilutive, it's overtime markup and it's all that logistical stuff that comes with it. We are working on better planning through the workforce management tool. We are meeting with our customers to get a longer-term view of their planning and project cycle. And then having obviously more local content versus moving people around and it's always a balance between how much head count you add for turnaround season versus handling the troughs in the quarters that there is no turnaround. So we have to always balance that, but those are the types of things that we're working on with our customers. It's not an immediate fix, because you have to recruit, you have to train and you have to, obviously, negotiate the Ts and Cs with your customers. So I don't expect that to just flip over on a switch immediately. And I'll let Greg comment on the actual impact we saw through the quarter from those type of things. Greg? Greg L. Boane - Team, Inc.: So, Will, as you know, we're the compilation of hundreds of thousands of jobs in a quarter and we didn't – going through and getting real specific on contracts and what the impact was, there's a lot of data. What I can tell you is when we look at the overtime costs and the flexible labor costs quarter-to-quarter, they were up $10 million this quarter. And obviously, there is some profit markup on that, but not at the same rates as standard hours. And so, when you mash all that together, there was a significant component of our revenue stream that was at a much lower margin than our standard hours because of that uplift in customer activity and meeting customer demand through the incremental overtime and flexible labor. Amerino Gatti - Team, Inc.: And that will never be zero because we have to always balance the turnaround season with the trough season. So, we don't expect overtime and flexible hours to ever be zero. But it was definitely higher than the previous quarter plans. Willam Kerr Steinwart - Stephens, Inc.: Sure. Very helpful. Amerino Gatti - Team, Inc.: Okay. Thank you. Willam Kerr Steinwart - Stephens, Inc.: Last thing from me, if I can sneak this in. Just updated thoughts on free cash flow generation this year; improved a lot in the first quarter, can you give some thoughts there? Amerino Gatti - Team, Inc.: So I will say that as we've stated in the past, we are planning to finish the year at positive cash flow -- free cash flow that's after the funding of the OneTEAM program. So we will be positive and any free cash flow will go towards paying down senior debt. We've made some good progress on our receivables and our CapEx reductions to move us in that direction. So, positive -- neutral to positive free cash flow after the program funding is still a good estimate for the year. Willam Kerr Steinwart - Stephens, Inc.: Thanks a lot, guys. Congrats on the growth. Amerino Gatti - Team, Inc.: Thank you. Greg L. Boane - Team, Inc.: Thank you.

Thank you. And we have a follow-up question from Tahira Afzal from KeyBanc. Your line is now open. Tahira Afzal - KeyBanc Capital Markets, Inc.: Hi, guys. Just -- I guess it's still too early, Amerino, but if you're looking at the pathway towards that 10% to 12%, it seems like 10% to 12% is we're looking at 2020 perhaps. Is it sort of a fairly notable step-up into the first year or should we assume a more gradual or back-ended approach? Amerino Gatti - Team, Inc.: Gradual, Tahira, because our deployment is on schedule. Tahira Afzal - KeyBanc Capital Markets, Inc.: Right. Amerino Gatti - Team, Inc.: We expect the deployment to be 12 months. The revenue enhancement we're already seeing some early wins and those will continue to grow, as I mentioned earlier. So a gradual increase to the 10% to 12% near the back half of 2020. So that's the approach we're taking. Obviously, the market conditions, Tahira, there are some assumptions in that based on top line growth but it is a gradual approach. And as I stated last call, this program is a foundation or long-term change in the structure of the company. It's not a light switch, it's not just head count reductions, it's a significant program that we're putting in place and it will take us about 12 months to deploy. Tahira Afzal - KeyBanc Capital Markets, Inc.: Got it, okay. And then, Amerino, just in terms of, if you look at Quest, we've seen that the pipeline market in particular, it moves from region-to-region, we had Marcellus being big, now there's more talk on the Permian side, how nimble is Quest in really moving with the market activities? Amerino Gatti - Team, Inc.: You mean Quest Integrity specifically, that product line? Tahira Afzal - KeyBanc Capital Markets, Inc.: Yeah. Amerino Gatti - Team, Inc.: Yeah. So the nice thing about Quest is, number one, they are very mobile because we continue to run them. We perform or handle the sales and commercial part near our customer, but we run it as a special services organization. They can travel with one to two technicians, with one to two Pelican cases due to the size of our tools and be on location within days. So they're very mobile. They don't have a lot of infrastructure like facilities, et cetera, that bog them down. So they can move with where the markets are moving both in North America as well as international and their tool base and their platform allows them to have backup people or backup tools in a very quick timeframe. So they're probably one of our most mobile product lines because there's not a lot of manufacturing support required, et cetera, et cetera, like Mechanical as an example. Tahira Afzal - KeyBanc Capital Markets, Inc.: Got it. Okay. Thank you very much. Amerino Gatti - Team, Inc.: Thank you.

Thank you. And we have another follow-up from Craig Bibb from CJS Securities. Your line is now open. Craig Bibb - CJS Securities, Inc.: Yeah. You mentioned the revenue enhancements cross-selling a few times. Could you give us like an anecdote of like how cross-selling works kind of you were at X revenues and then you brought in more just maybe just explain that with a little more specifics? Amerino Gatti - Team, Inc.: Sure. So first of all on the cross-selling, the nice thing is that we have a lot of running room because this business in most of our service lines is so fragmented even with our market share across all the three business units, it's still very fragmented. So when you look at cross-selling, we're able to go into customers that we already have a footprint or already have a contract or already have a relationship and I'm going to use an example like Inspection and then as we're doing Inspection services, discoveries on projects, we're then able to pull in our Mechanical Services. So if you look at the lifecycle, first thing that our customers do is they want to collect data and that's done through our Inspection services, Quest Integrity services, leak detection services. The next thing they do is they analyze that data, we work with them hand-in-hand and collaboratively. And then the third thing is they have to move to repair. So an Inspection type customer, which we have a footprint into expanding and pulling in Mechanical Services, is a very common type of cross-selling and it can go vice-versa both ways. But that's the CAR workflow that we use, that's the approach we take with our customers and obviously, we then work a lot closely with those ones that buy more of the integrated offering with our engineering support and our final reports on the work that we've done. So that gives you an example of how it's happening today. Craig Bibb - CJS Securities, Inc.: Okay. So... Amerino Gatti - Team, Inc.: Furthermore -- sorry – I was going to say furthermore, Mechanical Services and Inspection have deployed regional sales managers, which now allows us to start -- that's the beginning of our commercial function and that allows us to start meeting with our customers looking for opportunity pipelines and actually starting to collaborate earlier in the planning and project phase. Craig Bibb - CJS Securities, Inc.: Okay. So in the past, Inspection was not bringing in Mechanical Services? Amerino Gatti - Team, Inc.: Well, in the past, depending how far back you go, with the pre-Furmanite acquisition, we had a smaller Mechanical business. So with the Qualspec and Furmanite acquisitions, we have a much broader portfolio of offerings and a much broader portfolio of our customer base. So it's not that they weren't bringing it in, but we're now much stronger in all three legs of the organization and Inspection and Heat Treating, Mechanical Services and obviously Quest Integrity. And part of the integration and transformation program is to leverage those acquisitions to grow our top line and improve our EBITDA. So we made these acquisitions over the last couple of years, but now, we want to leverage and gain that EBITDA improvement from those acquisitions. So it's not that they weren't doing it, but there's significant amount of upside that we want to capture. Craig Bibb - CJS Securities, Inc.: And then when you're doing that like higher level in the organization marketing, are you offering kind of package deals or how has that changed? Amerino Gatti - Team, Inc.: So it's both. I think, we don't expect that the whole market is going to shift to package deals. I would explain it into three categories. The first one is discrete services. The majority of the market will always or not always, but we'll want to buy discrete services and that will continue to be a large base to our business. We then move into what we consider more bundled services where we can have Inspection and Mechanical working together. And then the top of the pyramid is integrated offerings where it's not just pulling in another business unit, but it's advanced engineering, it's bringing in metallurgy support working with our service lines providing a fully integrated asset planning modules. So it's really in three distinct buckets. And a lot of our customers today are driving to reduce the number of suppliers. They want to select suppliers that have a broad breadth of services, strong safety programs, et cetera. So we're working very closely with both the operations and the asset group as well as procurement of our customers to move in that direction. But it's not something that will happen overnight, it's going to take time for us to build that relationship, provide that technical competency and use our strong service lines to grow those integrated offerings with our customer. Craig Bibb - CJS Securities, Inc.: Okay. And then just one quick easy one. So as you shifted to fixed price with Alvarez & Marsal, is there a savings associated with that or just managing your top line, your cost risk? Amerino Gatti - Team, Inc.: There was a savings, but more importantly, we wanted to ensure we protected the scope creep of the project. So it was a very good discussion with Alvarez. It's now a very tight partnership with them. They did a lot of the analysis early on and now we're both committed to delivering the program and hitting the KPIs. Craig Bibb - CJS Securities, Inc.: Great. Okay. Thanks a lot. Amerino Gatti - Team, Inc.: Thank you.

Thank you. And we have one more follow-up from Marty Malloy from Johnson Rice. Your line is now open. Martin W. Malloy - Johnson Rice & Co. LLC: Thank you. Just a quick question. The IMO 2020 regulations have been in the news a lot more recently and I was just kind of curious, do you expect to see any impact to you all from increased work associated with enhancements to the refineries to comply with that or provide that the type of fuel being needed? Amerino Gatti - Team, Inc.: So, I think it's a little bit too early to tell. We are meeting with customers to start looking beyond 2018. I think what I will say is as regulations and programs become more strict, again, it does play into the specialized services that we offer. But more importantly, things like Team Digital and our advanced engineering groups, those are the ones that are very valuable because we want to be planning, we want to be working a lot closer with our customer on future projects, improving turnaround times, reducing unplanned events. So I think IMO might be one example but I think as the regulations improve or not improve, I guess, strengthen or change, that's where we do see our breadth and scope playing a large role with our customers. Martin W. Malloy - Johnson Rice & Co. LLC: Great. Thank you. Amerino Gatti - Team, Inc.: Thank you very much.

Thank you. And I'm showing no further questions at this time. I will now like to turn the call back to management for any further remarks. Amerino Gatti - Team, Inc.: Thank you, operator. We appreciate all of you joining us on the call today, and I want to thank you for your continued interest in Team. We look forward to speaking with you again next quarter.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day.