Good day, ladies and gentlemen, and welcome to the Team Inc. Fiscal Year 2013 Earnings Conference Call. My name is Marie and I'll be your operator today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. And now I'd like to turn the call over to Phil Hawk, Chairman and CEO. Please proceed, sir.

Thank you, Marie, and good morning, and welcome to the conference call. Again, my name is Phil Hawk, Team's Chairman and CEO. Joining me today is Mr. Ted Owen, the company's Chief Financial Officer; and Mr. Pete Wallace, the company's Chief Operating Officer. The purpose of today's call is to discuss yesterday's press release in which we'd lowered our full year earnings guidance for Team's current fiscal year ending May 31, 2013. I will begin with a few brief remarks regarding our revised earnings guidance and current business outlook. Following my comments, we will open it up for questions. Just as a reminder, certain forward-looking information contained in this discussion are provided in accordance with the provisions of the Private Securities Litigation Reform Act. Please refer to our press release and 8-K filed yesterday for the full disclosure. Now let me begin by summarizing yesterday's press release. We are reducing our adjusted earnings guidance for the current fiscal year by $0.20 per share due to 2 factors: weak performance in Team's third quarter due primarily to weak activity levels in our Canadian and European units which, frankly, we did not anticipate; and reduced revenue growth in the fourth quarter due to fewer expected very large turnaround projects, that is those with a value greater than $2 million for Team in this period. We continue to be optimistic and positive about our business growth prospects. We do not view either of these factors just mentioned as having any impact on our continuing business opportunities. Now let me provide additional detail and perspective about each of these points beginning with expected third quarter results. As a reminder, our third quarter results have not yet been finalized. We currently expect to issue our regular third quarter earnings release on Tuesday, April 2, followed…

[Operator Instructions] And our first question comes from the line of Matt Duncan from Stephens, Inc.

The first question I've got really is with regard to the third quarter. Phil, I'm wondering if you can maybe give us a little bit more detail about what changed in Canada? Is it sort of a timing issue up there? What drove the strength that you saw there in the first half of the year? And then what do you think is behind the sudden change in the dynamics there?

Okay. I think the -- with any kind of a regional unit and with a relatively small period of time, you could have lumpiness just to the timing of projects. Here are some of the things that did happen though. Again, our strength in the first half of the year reflected any kind of significant project work particularly in the oil sands activity, what -- and that we frankly expected to continue. What we've seen is it's really a combination of a couple of things. We've seen just pauses in project activity up there. We also had a -- again, a major customer and facility that had a change in ownership that kind of, in the near term, affected their kind of service activity. They're taking a pause and kind of realigning kind of with their new ownership. We don't expect any long-term impacts but affects timing and sequencing of activities. So those are just the examples of that. But again, as we look forward with those groups, again, we continue to see a lot of activity in Canada. There is no question though that the -- again, the very low prices, I guess, the pressure on the energy sector with kind of lower prices from Brent and kind of just the kind of differentials with the Canadian crudes, it's softening the outlook a little bit going forward.

So are you guys going to take some cost corrective actions then to go ahead and improve profitability there? And if so, have you already done that?

In process. By the way, that's not a -- we're focusing on Canada and Europe here because of just the big differential in this particular quarter. But this is an ongoing process across our organization because we are always kind of ebbing and flowing in individual branches and regions and adjusting accordingly. So again, this is not a huge fire drill but really a kind of continuation of ongoing activities. It's the -- it's being so close to with the inherently -- inherent seasonal weakness of the third quarter that puts us right to the line, that's where it makes these variabilities more glaring, let's say, in the fourth -- third quarter than it would be in other times.

Matt, this is Pete here, just to follow up with Phil. We're always fine-tuning our operations and we've been well underway to look at our cost structures in that area but I want to -- we want to be cautious too because the business is not going to go away in Canada. With the separate spreads on the crudes, it's just slowing down in the Canadian markets right now. But in the future, it's going to be there.

And just to kind of reiterate a point I made in that remarks is we expect satisfactory performance from both of these. It's really not 2 units from both of these markets, they're multiple units that work in these markets during this current quarter.

Okay. And then last thing on the spring turnaround season. I guess what it sounds like, you're experiencing a fewer number of the very big projects. I would think at this point, you start to mobilize on a lot of the spring work that you're going to do. Is it too early to know if any of those projects could ultimately wind up being bigger than what you currently think they're going to be? Or sort of help us understand exactly what you're seeing here in the spring.

Well what we have is -- and again, just because of our concerns and kind of trying to get as accurate a view as we can, we did some fairly significant analysis of all of our historical work with the big work that we've done. And just to kind of provide a little more color is if we look at last year's fourth quarter, this is a North American look now, so there's the U.S. and Canada, we had 55 jobs that where customers and kind of that we're over $500,000 in volume for the quarter. Of those 7 were greater than $2 million, 16 were $1 million to $2 million and 32 were $500,000 to $1 million. So that's kind of our base, if you will, last year. Actually, so we asked our field, "Tell us what you see right now for the quarter in terms of projects." The total number of projects identified was actually 65, so it's a increase from the 55. However, rather than 7 greater than $2 million, at this point in time, our groups are kind of forecasting 1, perhaps 2, there in that greater than $2 million range. And roughly the same number of 15, 16 in the $1 million to $2 million and then many more in the $500,000 to $1 million range. Now as I mentioned, we've talked before, what you see on March 15 is not necessarily what will happen because of the -- scopes can expand as these projects go. So where I think there is likely to be more upside than downside, I would generally say that would be the case. But we know what we know right now. And that's what we're forecasting.

Maybe just from past experience, did you look back to the projects sizes that you wound up having last year? At this point of the turnaround season, how many of the bigger projects would have been forecasted to be smaller than they wound up being? Is there any way to look at that?

Candidly, we really weren't as focused in kind of -- on the kind of project by project basis 1 year ago, so I don't really have an opinion on that. I don't know if Pete would have...

Well I -- I don't think you would find the similar kind of numbers, Matt, as that. In the beginning, as we did the same exercise last year with our field, you're going to have lower customers or projects less than $2 million and it's just discoverable work that comes as you’re in the throes of the turnaround.

The interesting kind of contrast here is that the tone of the markets are very good. There's a lot of activity. We are -- our customers are kind of doing well. There are a lot going on, so we're not discouraged. We don't -- we're not kind of scrambling to find something to do. It's just that again, as we roll this up, what we don't see are these -- as many megaprojects as we enjoyed last year at this point in time.

And our next question comes from the line of Rich Wesolowski from Sidoti. Richard Wesolowski - Sidoti & Company, LLC: Had your direct margins changed much from the status quo during the February quarter?

We're still finalizing all of that, but no. Richard Wesolowski - Sidoti & Company, LLC: Okay. So it sound as though you had hired and trained and generally geared up for customer plans that had been pushed out for a few quarters, is that about accurate?

Yes, I don't know about a few quarters but, let's say, that didn't occur in this quarter, and we're always kind of a little bit at kind of as ramping up in high-growth areas, particularly in Canada, where we're kind of always anticipating kind of what's ahead. So that's not a completely unusual thing. What was unusual was the kind of reversal with trend, if you will, on activity level. Richard Wesolowski - Sidoti & Company, LLC: So regarding the large turnarounds, my understanding has always been that the refiners planned these out -- or any customer would plan these out months ahead of time, so I'd ask whether the customers had expressed plans to you for a higher number of larger turns and have since delayed those plans? Or rather, was Team kind of building up crews on spec that the larger number of projects would be there just because activity is so good generally?

I think the -- if we're talking about kind of what guidance we get from customers, we know about projects kind of working with them and the other general contractors involved, we know what projects that we will be working on. We have kind of general guidelines of scope but I wouldn't say that they're kind of purchase contracts of dollar values, but we have kind of estimates of manning, and then that -- and then we start and we adapt. So it's not unusual at all for our scopes to change significantly in our work. So it's not that we are, on spec, have crews standing by, but that we just react kind of either with kind of flexing our crews or kind of supplementing that with contract personnel kind of to meet the requirements as they emerge and evolve. What we saw though last year I think is that we have again -- it wasn't a gigantic number but it was 7 projects that were very, very large. They were more than $2 million. We don't see as of right today, that same number of those very large projects.

But, Rich, just remember -- this is Ted -- just remember again, to reiterate the earlier point that project scopes change so that when we begin a project, we have a view of what the scope is but that doesn't mean that's how it ends up. So it is very likely that some of these projects that we're not seeing as kind of $2 million projects today may become that. The other point I'd make is simply that the -- kind of, again, back to the staffing levels and technicians, the issue for us in the third quarter is really a Canadian, Europe utilization. It's not a U.S. utilization. If you were to strip out Canada and Europe results, activity levels in the U.S. are just fine. Our organic growth is double-digit, utilization is good. The issue becomes -- became utilization in Canada as our revenue -- revenues declined instead of growing. Richard Wesolowski - Sidoti & Company, LLC: Lastly, I'm wondering if the risk of this choppy project timing, which will always be there, ebbs and flows with the availability of labor generally in the industrial service market, i.e. if this change in project timing occurred in era like 2007, 2008 when labor was very tight, would Team have the opportunity just to turn to other projects that were there for them?

I don't think we -- I think the inferences that we can choose or turndown work, and that's really not exactly how we'd view the world. I think when our customers need us, we flex to do it.

Just a follow-up on that point as well. Keep in mind that the fact that we're not seeing really large projects this quarter is not a reflection that we don't think there are going to be large projects going forward or that there's some deferral or change in business environment. It's simply that for our customer base right now, there aren't any kind of big unit turnarounds that we had seen in either the fall or last spring. But as we look forward into next year, we don't see a change in outlook, it's just a timing of when our customer facilities happen to be turned around, not a change in outlook.

And our next question comes from the line of Adam Thalhimer from BB&T Capital Markets. Adam R. Thalhimer - BB&T Capital Markets, Research Division: As it relates to the refinery turnarounds, could there be an issue with -- your customers are so healthy, crack spreads are so good that maybe they're -- they just don't want bring down the refineries to do big projects right now?

That could always be an issue. I don't think we perceive it to be an issue. I think Ted is right because I think there are turnarounds happening and we're -- obviously we have a large number of projects going along. I think the -- we have customers that we're closer with and I think it's just our particular units and customers that we work with had heavier, bigger projects in the prior period than we perceived that are happening this period. But I don't have a perception that the turnaround activity in total is less this quarter than it was 1 year ago to be honest.

And again, we certainly don't -- we're not aware of any deferrals in previously planned turnaround activity. Again, except for the situation in Canada that Phil alluded to, the change in ownership that's caused the pause relative to that facility. Adam R. Thalhimer - BB&T Capital Markets, Research Division: Okay. And then up in Canada, the rig counts were so strong in the first half of the year and then weakened a lot in the second half. And -- I mean, is there some correlation there do you think, rig counts and the facilities that you're servicing?

I think the driver of that is similar to some of the drivers that affect the influence of kind of projects because of just -- high energy costs are favorable for kind of the upgraders. The rigs themselves are producing hydrocarbons that don't have anything to do with the facilities we're serving. But for the most part, I mean, they feed refineries but not the upgrader markets. But those are kind of driven by kind of optimism by -- in energy prices to some extent I guess. Adam R. Thalhimer - BB&T Capital Markets, Research Division: And then what's the long-term solution in Canada? What -- how does the -- how is that spread differential, Alberta crude versus WTI, close?

I think it starts with -- Keystone is a -- facilities to shift the oil like Keystone are completed. That probably matters. But that's -- those are kind of macro issues that we're not particularly experts on. But as you know, there are a variety of those kinds of issues. There's Keystone, there's the U.S. oil production. But I think again in the long-term, there is a bullishness about Canadian oil environment and we're not less confident or optimistic than we have been.

Yes. I think that's the key point. The kind of inference of your question is that, "Boy, things are really bad, how do we get them good back in Canada?" and that's not true. It's -- they're not as good as they were in the first half or quite as hot and robust, but kind of the longer term, overall view is still really good. And there'll be a lot of activity up there, we believe. Adam R. Thalhimer - BB&T Capital Markets, Research Division: Got it, that's very good. And then just a follow up, I think Rich asked the question about labor availability. I mean is that an issue? I mean the U.S. is so strong.

I don't think so.

No, we're not having any issues, Rich, with finding talent out there in the work force.

And our next question comes from the line of Tahira Afzal from KeyBanc Capital Markets.

This is actually Saagar Parikh on for Tahira this morning. First question, your fiscal third quarter revenues, as we know, were impacted by your Canadian and Europe operations but the overall, your $150 million target for the fiscal third quarter, isn't too off from where consensus was. So could you just talk about what other markets -- I know you mentioned U.S. growing double digits, but could you just talk about your other markets have been on the top line or potentially offsetting the slowness in Canada and Europe?

Well, I think you just mentioned it. I think...

Yes, let me take that. Again, we don't -- I don't have details around other -- kind of other world markets. But again, if you -- our Canadian revenues, as a whole, were down about $3 million year-over-year. Our Europe, kind of EuroAsia, revenues were down about $1 million in the -- again, in the quarter. So that U.S. and kind of other like South America, things like that, would have been up about 13%, but for those areas. So our -- just our organic growth -- sorry, it was up totally 18%, 13% organic growth in the quarter outside of Canada and the EuroAsia zone.

That's overwhelmingly U.S.. I mean, Canada and Europe together are roughly 20% and then U.S. is the overwhelming majority of the rest.

Okay. And then a follow-up on just your integrity business, assume no -- I'm assuming no change in momentum there from the first half?

Correct.

So our next question then comes from Tristan Richardson from D.A. Davidson. Tristan Richardson - D.A. Davidson & Co., Research Division: Just on Canada. I know that you have said that it tends to be a little bit more project-driven and can therefore be more subject to timing than the U.S.. As you grow in Canada, does that change over time as you build a bigger base? Does it become less project-driven?

Yes. There are 2 factors. One is as we grow and kind of establish a stronger and more extensive base, we will build our kind of ongoing maintenance business, which will be a bigger portion of the total. The other factor though is that there is just a lot of new project activity in Canada relative to the install base, so that adds to the lumpiness as well. And that will eventually settle down as the expansion settles down. But that's -- that also makes it more project-intensive, the fact that there's just so much activity.

Yes. Some of the other factors there in Canada, on the East side of Canada, it's more want to maintain type of work but that's -- of course, the industry just isn't quite there like it is in Western Canada, especially in Alberta, so that is the big driver is Alberta with the new construction and everything that's taking place there. But as you're saying and as time moves along, we're anticipating having the maintenance contracts to carry on the want-to-maintain business. Tristan Richardson - D.A. Davidson & Co., Research Division: Okay, great. And then just I guess more near-term, as you're taking indications for projects for the fall and given that you said you had a customer change ownership and so that they've sort of reviewing everything and just better very generally you're seeing some slowing, are customers now a little bit more reluctant to give you their plans for the fall or spring of calendar '13 now than they were, say, 1 year ago? Or are those indications unchanged?

I think they're unchanged. Again, the challenge is translating their planning process that they're doing kind of on their macro level for their plans and what exactly that means for us because they -- what they're not saying is, "Well, we need 32 or 132 technicians for this or that." They're just kind of sharing kind of what units they're looking at to bring down and kind of what time frame. Tristan Richardson - D.A. Davidson & Co., Research Division: Okay. So they're not necessarily saying, "Well, we don't really want to talk about that yet," when you're asking them about the fall?

Not at all. I mean, the specific example that we referenced was when there's a change in ownership of facility, there's kind of a regroup and a rethink of are we going to make any changes in our basic kind of practices for this facility? So that's a different issue.

Okay, thank you. So we have no further questions at this time. [Operator Instructions]

Well given that there are no further questions, let me just wrap this up and again, thank all of you for joining us for the call today. Again, our third quarter conference call is scheduled for April 3 and we look forward to visiting with you again at that time. In the meantime, have a good day.

Thank you, ladies and gentlemen, that concludes your conference call for today. Thanks for joining us, and you may now disconnect.