Team, Inc. (TISI): PESTLE Analysis [Nov-2025 Updated]

You need a clear-eyed view of the forces shaping Team, Inc. (TISI) right now, so let's break down the operating environment with a PESTLE analysis. This isn't just theory; it maps near-term risks and opportunities to clear actions you can take. Honestly, the biggest factor for TISI is the capital expenditure (CapEx) cycle of their core clients-petrochemical, refining, and power generation-and how policy shifts are defintely moving that money.

Team, Inc. (TISI) - PESTLE Analysis: Political factors

Shifting US energy policy impacts CapEx for oil and gas clients.

You need to watch the political pendulum swing in Washington, because it directly affects the capital expenditure (CapEx) of Team, Inc.'s core oil and gas clients. The current administration's push for energy independence and deregulation, like the proposals in Project 2025, favors fossil fuel production by streamlining permits and opening federal lands for drilling. This should encourage more CapEx, but the reality is more nuanced.

Honestly, E&P (Exploration and Production) companies are still prioritizing shareholder returns over aggressive growth. Here's the quick math: despite the pro-oil rhetoric, U.S. E&P capital expenditures are actually projected to decline by approximately 5% in the 2025 fiscal year, according to some forecasts. Globally, oil CapEx is expected to fall by 6%-the first drop since 2020. This means TISI's clients are spending less on new drilling and major construction, shifting their focus to maintenance, which is a sweet spot for TISI's Inspection and Heat Treating (IHT) services.

Government infrastructure spending boosts demand for inspection services.

The good news is that federal spending is creating a significant counter-cyclical tailwind for TISI's inspection business. The Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA) have allocated massive funds to upgrade and maintain aging U.S. infrastructure and build out new energy capacity.

The total allocation is staggering: the IIJA set aside $1.2 trillion, and the IRA added another $783 billion for clean energy and climate mitigation. TISI's Inspection and Heat Treating segment benefits directly from the resulting surge in structural health monitoring and regulatory compliance work. The overall U.S. infrastructure inspection market is projected to grow from $2.14 billion in 2024 to $2.27 billion in 2025, a compound annual growth rate (CAGR) of 5.9%. That's a clear opportunity for TISI to increase its market share, especially in power, aerospace, and LNG, which management has targeted for growth.

Trade tariffs on steel and materials affect supply chain costs.

Trade policy is a near-term risk that can hit the Mechanical Services (MS) segment's margins hard. In June 2025, the Section 232 tariffs on imported steel and aluminum were suddenly doubled to 50% for most countries. This is estimated to add $50 billion in tariff costs across the U.S. economy, and the price difference for steel between the U.S. and the EU jumped by 77% earlier this year. This is defintely a problem.

For TISI, this means the raw materials and components used in mechanical repairs, such as piping and structural supports, now cost significantly more. While TISI passes some of this cost to clients, it also creates pressure on bid prices and project profitability. The increased tariffs also affect imported industrial machinery, with about 40% of U.S. machinery imports from the EU now subject to a 50% tariff on the metal content.

Global geopolitical instability influences energy commodity prices.

Geopolitics drives energy commodity prices, and those prices dictate TISI's clients' willingness to spend. The ongoing conflicts in the Middle East and the Russia-Ukraine war have kept the energy market volatile throughout 2025. This uncertainty adds a significant risk premium to oil.

For example, Brent crude oil prices spiked to $88 per barrel in late 2024 due to Middle East tensions, and European gas prices surged by 12% in January 2025 following the cessation of some Russian gas exports via Ukraine. This volatility creates a stop-start environment for major CapEx projects. When prices are high, clients plan new projects; when they drop, those projects get deferred, which creates a lumpy revenue stream for TISI's project-based services.

The geopolitical risk premium currently priced into oil is estimated to be around $3-5 per barrel. This premium is what keeps prices elevated enough to support some maintenance spending, but the underlying volatility still makes long-term planning difficult for TISI and its customers.

• Monitor: $3-5 per barrel geopolitical risk premium in oil.
• Action: Focus commercial efforts on non-discretionary maintenance over new construction.

Team, Inc. (TISI) - PESTLE Analysis: Economic factors

You're looking at Team, Inc.'s financial health, and the big economic picture is a mixed bag: high costs are squeezing margins, but your clients are still spending on critical maintenance. The core takeaway is that while the high interest rate environment is a headwind for new construction, the essential nature of TISI's services-inspection and repair-is proving resilient, especially in the energy sector.

Inflationary pressures increase labor and material costs for service contracts.

Inflation continues to be a real drag on your cost of services, even as the overall US Producer Price Index (PPI) cools slightly. For the 12 months ended in September 2025, the final demand PPI was up 2.7% year-over-year, and the core rate (excluding food, energy, and trade services) rose 2.9%. For TISI, this translates directly into higher operational expenses, particularly for labor and specialized materials.

The construction sector, a key indicator for TISI's clients, is seeing even higher cost pressure. Preliminary forecasts for Nonresidential Buildings inflation in 2025 are around +4.2%. This cost environment is why TISI's ability to manage its selling, general, and administrative (SG&A) expenses is so important. Honestly, seeing Adjusted SG&A improve to 20.8% of revenue in Q3 2025, down from 21.7% a year earlier, shows solid internal cost discipline, but the gross margin pressure remains a constant fight.

Interest rate hikes make client CapEx financing more expensive.

The Federal Reserve's policy has kept borrowing costs elevated, directly impacting the capital expenditure (CapEx) decisions of TISI's industrial clients. As of October 2025, the federal funds rate target range is 3.75%-4.00%. This elevated rate environment makes large, discretionary CapEx projects-like building a brand-new plant-more expensive to finance. For example, the starting yield for senior loans, a common financing tool for large corporate debt, stood at approximately 7.79% in late October 2025. This is a high hurdle for new, non-essential projects.

Still, the data shows a resilient demand for equipment financing, which often precedes service work. The total new business volumes (NBV) for equipment finance are expected to exceed $117 billion in 2025, positioning it as the second-best year on record. This is the nuance: while new construction slows, clients still need to buy, maintain, and upgrade existing critical assets, which is TISI's sweet spot. They are prioritizing maintenance (OpEx) over new builds (CapEx).

Volatility in crude oil and natural gas prices affects client maintenance budgets.

TISI's Inspection & Heat-Treating (IHT) and Mechanical Services (MS) segments are deeply tied to the energy and petrochemical sectors. Volatility in commodity prices directly influences the maintenance and turnaround budgets of major clients.

Here's the quick math on energy prices for 2025:

The forecast for US natural gas is rising, with the Henry Hub spot price expected to average almost $3.90 per million British thermal units (MMBtu) this winter. This is a positive for TISI, as it encourages higher utilization and maintenance spending by natural gas processing and power generation clients. It's a classic hedging effect: lower oil prices are offset by stronger gas prices, stabilizing the overall maintenance market.

Weakening industrial manufacturing output slows new construction projects.

The slowdown in industrial manufacturing output is a clear headwind for TISI's new construction project revenue. Industrial and manufacturing construction spending is projected to decline by 2.7% in 2025, a significant downshift after being a growth engine in prior years. Total construction spending declined almost 3% year-over-year by July 2025, with manufacturing construction down 7%.

What this estimate hides is the segment-specific performance. While new plant construction is slowing, TISI's Inspection & Heat-Treating (IHT) segment still grew revenue by 5.7% in Q3 2025, driven by strong nested and call-out activity. This suggests that while clients aren't commissioning new facilities, they are defintely relying more on TISI's core services to keep their aging, existing infrastructure running safely and efficiently. This focus on maintenance, repair, and operations (MRO) is a defensive strength in a weakening new-build environment.

The key areas of demand holding up are:

• Strong U.S. turnaround demand in Mechanical Services.
• Increased call-out activity in Inspection & Heat-Treating.
• Growth in international operations, including 8.9% growth in IHT international revenue.

Finance: draft a quarterly report mapping TISI's gross margin fluctuation against the US PPI for processed goods for intermediate demand by Friday.

Team, Inc. (TISI) - PESTLE Analysis: Social factors

When assessing Team, Inc.'s operational landscape in 2025, the 'Social' factors are not just about employee morale; they are powerful market drivers that directly translate into demand for the company's core asset integrity services. The confluence of a tightening labor market and heightened societal expectations for corporate responsibility creates both a significant cost risk and a major revenue opportunity.

The company's position as a provider of specialized, high-consequence services means its social performance-specifically its safety record and ability to staff projects-is a key competitive differentiator, directly impacting its ability to capture the projected 5% full-year revenue growth for 2025.

Growing client demand for Environmental, Social, and Governance (ESG) compliance reporting.

Client demand for verifiable ESG performance is no longer a niche trend; it is a core business requirement, particularly for Team, Inc.'s large clients in the energy and utilities sectors. This pressure is driving a surge in the market for inspection and assurance services that can quantify and document compliance.

The global ESG Service market is projected to reach approximately $75,000 million by 2025, with an anticipated Compound Annual Growth Rate (CAGR) of around 18% through 2033. This macro trend directly benefits Team, Inc.'s Inspection and Heat Treating (IHT) segment, which saw Q1 2025 revenue grow by 6.8%, with U.S. core operations up 8.8% year-over-year.

Here's the quick math: clients need to prove they are reducing emissions and maintaining asset integrity, and that work falls squarely into the Inspection and Testing category. The U.S. energy audit services market alone is calculated at $1.61 billion in 2025, accelerating at a strong CAGR of 8.74%, which is a clear opportunity for TISI's advanced inspection offerings.

Skilled labor shortages in specialized non-destructive testing (NDT) fields.

The scarcity of qualified technicians is the single biggest operational risk for industrial service companies like Team, Inc. in 2025. Across the skilled trades, 50% of professionals identified a shortage of qualified candidates as their top challenge. This shortage is structural, driven by retirements and retention issues, with 31% of workers citing these as major staffing concerns.

For Team, Inc., which employs 5,400 people globally, this means higher recruitment costs and wage pressure, potentially compressing the already tight margins. The company's proactive investment in its 'TEAM Technical School' is a necessary counter-measure, providing in-house training and certification programs for NDT and Mechanical Services, helping to secure a pipeline of talent where the overall US labor shortage rate is sitting at 70%.

Public pressure on industrial safety drives demand for integrity services.

High-profile industrial accidents and stricter regulatory enforcement-like the ongoing focus from OSHA-mean that industrial safety is a non-negotiable social expectation. This public and regulatory pressure is a powerful, inelastic driver for Team, Inc.'s core asset integrity services.

The Environment Testing, Inspection and Certification (ETIC) market, which encompasses much of Team, Inc.'s work, is estimated at $21.6 billion by 2025, fueled by 'intensifying regulatory necessities.' For a company with a history of top-quartile safety performance, this societal demand is a competitive tailwind.

Increased focus on worker training and safety protocols reduces downtime risk.

A superior safety record directly translates to lower operational risk and higher client value. Team, Inc.'s focus on safety, encapsulated by its 12 Life Saving Rules and comprehensive training programs, is a key selling point for clients whose own operations are highly sensitive to downtime.

The company reported a top-quartile safety record in 2024, with a Total Recordable Incident Rate (TRIR) performance that was 50% better than the U.S. Bureau of Labor Statistics (BLS) average for the industry. This safety performance is a tangible competitive advantage that reduces client risk and helps justify the premium on specialized services.

What this estimate hides is the true cost of not investing in safety; a single major incident could negate the entire projected 13% Adjusted EBITDA growth for 2025.

Team, Inc. (TISI) - PESTLE Analysis: Technological factors

Adoption of drone-based inspection and remote monitoring reduces labor needs.

You need to see the real impact of technology on labor costs, and for Team, Inc., the shift to Uncrewed Aerial Systems (UAS), or drones, is a clear driver of efficiency. This isn't just about cool gadgets; it's about eliminating high-risk, high-cost access methods like scaffolding and rope work. The core benefit is a massive reduction in critical work hours and personnel exposure, which directly lowers labor needs and insurance risk.

The company specifically uses advanced drones, such as the Voliro-T for ultrasonic thickness testing at heights and Flyability's Elios 3 for internal confined space inspections (CSE). This technology is a significant factor in the Inspection and Heat Treating (IHT) segment's performance, which saw a revenue growth of 15.2% year-over-year in the second quarter of 2025.

Here's the quick math on why clients pay a premium for this speed and safety:

The elimination of scaffolding and CSE procedures is a huge win for safety and time.

Digital twin technology streamlines asset integrity management for clients.

The future of asset integrity management (AIM) is the digital twin-a virtual replica of a physical asset that integrates real-time sensor data, and Team, Inc. is positioning itself to be the data collector and analyst for this transition. This capability moves the business model from reactive repair to predictive maintenance. By leveraging platforms like TEAM360 and Inspect360, the company provides clients with a fully-digitized process for asset performance assurance.

This digital integration is what allows clients to consolidate their service purchases, which is a key strategic goal for Team, Inc. The goal is to use this real-time data to help clients avoid catastrophic downtime, where every hour an asset sits idle can cost thousands of dollars.

The benefits of this digital shift are clear:

• Predictive Maintenance: Use real-time data to forecast equipment failure.
• Reduced Downtime: Enable better inspection planning and turnaround optimization.
• Enhanced Safety: Remote analysis reduces personnel exposure to hazardous environments.
• Data-Driven Decisions: Convert raw inspection data into actionable insights for fitness-for-service calculations.

Advanced robotic non-destructive examination (NDE) improves data accuracy.

The precision of inspection data is defintely the new competitive frontier, and Team, Inc. is investing heavily in advanced non-destructive examination (NDE) techniques. This includes methods like Phased Array Ultrasonic Testing (PAUT), Guided Wave Testing (GWT), and Automated Ultrasonic Testing (AUT).

These robotic and automated systems deliver high-resolution, real-time insights without interrupting client operations-no shutdown required. This shift to digital data capture, rather than manual reporting, is a crucial step toward Industry 4.0 standards. The technology allows for:

• Imaging flaws from multiple perspectives to capture deeper detail.
• Automated corrosion mapping for a complete picture of material health.
• Real-time data for immediate fitness-for-service assessments.

This advanced NDE capability is a high-margin service that is contributing to the overall financial improvement, with the company projecting at least 15% year-over-year growth in Adjusted EBITDA for the full year 2025.

Investment in proprietary digital platforms enhances service delivery efficiency.

The company's proprietary digital platforms, TEAM360 and Inspect360, are the connective tissue for all these advanced technologies. They serve as the central hub for data collection, analysis, and reporting, which is critical for scaling a global service business.

While the exact capital expenditure on these platforms isn't itemized, the efficiency gains are baked into the overall cost structure improvements. The company launched an optimization program in 2025 that is expected to generate $10 million in annual cost savings, and a significant portion of that comes from streamlining and digitizing critical processes across the organization. This is how you translate technology investment into shareholder value.

The focus on digital delivery has helped lower the Adjusted Selling, General and Administrative (SG&A) expense to 22.7% of consolidated revenue in Q1 2025, down from the prior year, showing that the technology is helping manage overhead even as the business grows.

Team, Inc. (TISI) - PESTLE Analysis: Legal factors

Stricter Occupational Safety and Health Administration (OSHA) regulations increase compliance costs.

The regulatory environment for industrial services is defintely tightening, meaning your compliance costs are rising in 2025. The Occupational Safety and Health Administration (OSHA) increased its maximum penalties effective January 15, 2025, making any safety lapse significantly more expensive. This is not just a theoretical risk; it's a measurable increase in financial exposure.

For a company like Team, Inc., operating in high-risk environments, the cost of non-compliance has seen a sharp jump. For instance, the maximum fine for a Serious or Other-Than-Serious violation rose to $16,550 per violation, up from $16,131. More critically, a Willful or Repeated violation now carries a maximum penalty of $165,514 per violation, an increase from $161,323. This forces a greater investment in proactive safety training and equipment.

Also, new rules are emerging. OSHA is focusing on specific hazards, such as tightening the standard for lead exposure, lowering the Permissible Exposure Limit (PEL) from 50 micrograms per cubic meter to 10 micrograms per cubic meter. This demands more sophisticated monitoring and control measures on job sites, which directly impacts the cost of service delivery.

• Proactive investment in safety is now cheaper than the penalty.

Here is the quick math on the increased punitive risk:

Environmental Protection Agency (EPA) mandates drive demand for leak detection and repair (LDAR).

The Environmental Protection Agency (EPA) continues to issue stringent mandates aimed at reducing fugitive emissions, particularly Volatile Organic Compounds (VOCs) and Hazardous Air Pollutants (HAPs), which is a clear tailwind for Team, Inc.'s Inspection and Heat Treating (IHT) segment. These regulations, especially for the oil, gas, and chemical sectors, create non-discretionary demand for Leak Detection and Repair (LDAR) services.

This regulatory push translates directly into a growing market opportunity. The global LDAR market size is projected to reach a valuation between $22.05 billion and $22.35 billion in 2025, demonstrating a Compound Annual Growth Rate (CAGR) of around 4.2% to 4.51% over the forecast period. North America remains a high-spend region due to the scale of its industrial infrastructure and the enforcement of methane rules.

For TISI, this is a positive legal factor; regulatory compliance for their clients becomes a revenue stream for them. The demand for advanced technologies, like Optical Gas Imaging (OGI), is strong, forcing service providers to invest in high-margin, specialized equipment and training to capture this growth.

Contractual liability and indemnity clauses are becoming more stringent in master service agreements.

The negotiation of Master Service Agreements (MSAs) in the energy and industrial sector is getting tougher, particularly around risk allocation. Clients-the asset owners-are pushing for much more stringent contractual liability and indemnity clauses (LoL), aiming to transfer maximum risk to service providers like Team, Inc.

Indemnity and Limitation of Liability (LoL) provisions are consistently cited as the most negotiated clauses in these contracts. Operators are increasingly insisting on clear, low caps on a service provider's liability, often trying to limit it to the value of the specific work order or a low percentage of the annual contract value. They are also aggressively excluding consequential damages (like lost profits or business interruption) from their own liability, while ensuring the service provider indemnifies them for a broader range of events, including third-party personal injury and environmental damage.

This trend increases TISI's legal risk and necessitates higher insurance premiums and more internal legal review, which is a hidden cost of doing business. You must ensure your insurance coverage aligns with the increasingly aggressive indemnity requirements being written into MSAs.

• Liability caps are shrinking relative to potential project loss.

International project compliance with local labor and permitting laws is complex.

Operating internationally introduces a layer of legal complexity and cost that significantly impacts profitability, a risk Team, Inc. is actively managing in 2025. Navigating diverse local labor laws, permitting requirements, and tax regulations across multiple jurisdictions requires substantial legal and professional overhead.

The financial impact of this complexity is visible in the company's 2025 results. In the third quarter of 2025, the company's Corporate and shared support services costs increased by $4.9 million, or 43.6%, year-over-year. This jump was primarily due to non-recurring professional services fees and an increase in legal reserves, indicating a direct cost from managing complex legal and financial issues, likely tied to international restructuring and compliance.

Furthermore, the Mechanical Services (MS) segment saw a $3.3 million decline in revenue in other international locations in Q3 2025, partially due to reduced activity in leak repair and valve product services. This shows that legal and regulatory hurdles, combined with market conditions, can quickly erode the profitability of international projects. Management is addressing this, targeting $\ge$$10 million in annualized SG&A cost savings with measurable improvements expected in Canada and other international operations.

Team, Inc. (TISI) - PESTLE Analysis: Environmental factors

Increased regulatory focus on methane emissions detection and repair.

You need to understand that the regulatory pressure on methane emissions is a clear, long-term driver for Team, Inc.'s Inspection and Heat Treating (IHT) segment, specifically its Leak Detection and Repair (LDAR) services. The US Environmental Protection Agency (EPA) finalized its 2024 rule (NSPS OOOOb/EG OOOOc) requiring extensive LDAR and zero-emission pneumatic devices for oil and gas facilities, a mandate that is defintely pushing clients toward proactive maintenance.

However, the near-term financial incentive is complicated. While the rule is in effect, the Inflation Reduction Act's Waste Emissions Charge (WEC), which was set to increase to $1,200 per metric ton of wasteful emissions for Calendar Year 2025, was repealed by the Congressional Review Act, with Congress prohibiting its collection until 2034. This removes a massive, immediate financial penalty for clients, potentially slowing down some non-mandated, voluntary LDAR spending. Still, compliance deadlines for certain provisions of the 2024 rule were only extended in July 2025, pushing the full compliance burden out by 18 months in some cases, but the core regulatory requirement for leak detection remains.

Here's the quick math on the opportunity: TISI's IHT segment revenue grew 15.2% in Q2 2025, partly fueled by higher activity in callout services, which includes leak repair. This growth shows the underlying demand is strong, even with regulatory uncertainty. The core business is sound.

Client push toward carbon capture and storage (CCS) creates new service opportunities.

The push toward decarbonization is creating a new class of industrial assets that require the exact specialty services Team, Inc. provides. Carbon Capture and Storage (CCS) projects-which capture CO2 from industrial sources for transport and underground storage-rely on high-pressure, high-temperature piping systems and vessels. These systems demand rigorous non-destructive testing (NDT), inspection, and mechanical integrity services to prevent catastrophic failure.

This is a clear opportunity to diversify beyond traditional oil and gas. The CCS project pipeline has been growing significantly, with 194 commercial CCS facilities in the pipeline as of late 2022. Your clients in the Power Generation, Chemicals, and Refinery sectors (all key TISI markets) are driving this trend. TISI's expertise in inspecting and maintaining these complex, high-integrity assets is a natural fit for this multi-billion-dollar infrastructure build-out. We need to be ready to bid on these new construction and long-term maintenance contracts.

Extreme weather events disrupt client operations, requiring emergency repair services.

Extreme weather is no longer a fringe risk; it's a structural operational reality. For 2025, climate change has climbed to the #5 global risk for companies, primarily due to the physical damage and business interruption it causes. This translates directly into demand for Team, Inc.'s emergency Mechanical Services (MS) and callout work.

Consider the financial impact: Global economic losses from natural disasters were estimated at at least $368 billion in 2024. Severe convective storms alone caused $50 billion of insured damage in the US in 2024. When a refinery or pipeline is hit, they need immediate, specialized repair to get back online, which is TISI's bread and butter. The US Natural Disaster & Emergency Relief Services industry is projected to reach $16 billion in 2025. This market is growing at a 3.0% Compound Annual Growth Rate (CAGR). While TISI's Q1 2025 MS segment revenue was negatively impacted by weather-related delays on projects, the subsequent emergency callout work is a high-margin opportunity that offsets this risk.

The operational reality is simple: more extreme weather means more emergency repairs.

Waste disposal regulations for industrial cleaning and repair materials are tightening.

The regulatory environment for industrial waste is getting tighter, which increases operating complexity and cost for TISI's Mechanical Services segment. This segment uses materials for industrial cleaning and repair that generate hazardous waste streams.

The most immediate change is the new reporting requirement for Per- and Polyfluoroalkyl Substances (PFAS), or 'forever chemicals,' under the Toxic Substances Control Act (TSCA), with a compliance date of July 11, 2025. This requires detailed reporting on the use, disposal, and volume of PFAS, which are common in many industrial applications. Also, the Resource Conservation and Recovery Act (RCRA) compliance changes to fully mandate electronic hazardous waste manifests take effect on December 1, 2025.

The impact is twofold:

• Increased compliance costs for tracking and reporting waste streams.
• Higher disposal costs as specialized waste handling is required for new regulated substances like PFAS.

This means TISI must invest in training and digital systems to handle the new e-Manifest requirements and accurately track PFAS-containing materials, or risk significant EPA fines. What this estimate hides is the potential for clients to shift this complex compliance burden onto their service providers, which could be a competitive advantage if TISI is prepared, but also a cost risk.