Luca Paciolo – circa 1500 – “The Father of Accounting”

Susan Ball has resigned as CFO of Sugar Land-based Team Inc, effective November 12, 2021. The company has retained an executive search firm to find a replacement. It is expected that Ms. Ball will enter into a consulting agreement to assist in the transition.

Team provides testing, inspection and repair services to industries such as refining and power. It has a market capitalization of $100 million.

A poisoned chalice

Ms. Ball was appointed CFO in December 2018. Prior to that, she was CFO at CVR Energy, another company based in Sugar Land, though Ms. Ball got a relocation package when she joined Team (presumably from Kansas City where CVR used to be based). When she was appointed, the market capitalization of Team was $500 million. I noted in my blog post at the time that she had her hands full, namely;

• The company had made two big acquisitions in 2015-2016 for $538 million that turned out to be a disaster (especially Houston-based Furmanite). $325 million of this was paid in cash.
• The company botched an ERP implementation. Spent $47 million on Microsoft Dynamics AX before going live in March 2017!
• Hired Alvarez & Marsal in late 2017 to assist in identifying cost saving opportunities.

Some of these issues still plague the company. In 2020, the company wrote off another $192 million in goodwill impairment from those big acquisitions. That’s on top of the $75 million taken in 2017.

Alvarez & Marsal are still engaged by the company, though their role is winding down. To date, the company has spent about $30 million in professional fees associated with their ‘ONETEAM’ program. I presume most of this went to A&M.

The company has had internal control issues as well. In 2019, it disclosed that an employee in the Netherlands (a Furmanite subsidiary) had overridden controls that resulted in misappropriation of assets over a number of years.

Debt refinanced

Team currently has shareholders’ equity of $167 million, though its balance sheet still has goodwill and intangible assets valued at $187 million.

Long-term debt amounts to $351 million. Under Ms. Ball’s watch, the business was refinanced in late 2020. The first tranche ($93 million) is not due to be repaid until 2023. $250 million is due in 2026. That’s given the company some breathing room as it tries to sort out its business.

SEC filing – Team CFO resignation