TEAM INCTISI
TEAM INC Income Taxes Disclosure
INCOME TAXES
For the years ended December 31, 2025 and 2024, our income tax provision resulted in an effective tax rate of 5.5% and 9.4%, respectively. Our income tax provision for the years ended December 31, 2025 and 2024 was $2.6 million and $3.3 million, respectively, and includes federal, state and foreign taxes.
The components of our tax provision and benefit were as follows (in thousands):
| Current | Deferred | Total | |||||||||||||||
Twelve months ended December 31, 2025: | |||||||||||||||||
| U.S. Federal | $ | 504 | $ | (407) | $ | 97 | |||||||||||
| State & local | 373 | — | 373 | ||||||||||||||
| Foreign jurisdictions | 1,749 | 361 | 2,110 | ||||||||||||||
| Tax provision | $ | 2,626 | $ | (46) | $ | 2,580 | |||||||||||
Twelve months ended December 31, 2024: | |||||||||||||||||
| U.S. Federal | $ | 305 | $ | (61) | $ | 244 | |||||||||||
| State & local | 481 | — | 481 | ||||||||||||||
| Foreign jurisdictions | 3,514 | (963) | 2,551 | ||||||||||||||
| Tax provision | $ | 4,300 | $ | (1,024) | $ | 3,276 | |||||||||||
The components of loss before income taxes for the years ended December 31, 2025 and 2024 were as follows (in thousands):
| Twelve Months Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Domestic | $ | (53,056) | $ | (42,477) | |||||||
| Foreign | 6,426 | 7,487 | |||||||||
Loss before income taxes | $ | (46,630) | $ | (34,990) | |||||||
The income tax provision in 2025 and 2024, respectively, differed from the amounts computed by applying the U.S. federal income tax rate of 21% in 2025 and 2024, as a result of the following (in thousands):
| Twelve Months Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
Computed income taxes at statutory rate | $ | (9,792) | 21.0 | % | $ | (7,347) | 21.0 | % | |||||||||||||||
Domestic: | |||||||||||||||||||||||
State and local income taxes, net of federal income tax effect | 239 | (0.5) | % | 320 | (0.9) | % | |||||||||||||||||
Effect of cross-border tax laws | |||||||||||||||||||||||
Subpart F | 630 | (1.4) | % | 371 | (1.1) | % | |||||||||||||||||
GILTI | — | — | % | 576 | (1.6) | % | |||||||||||||||||
Other effects of cross-border tax laws | (103) | 0.2 | % | (49) | 0.1 | % | |||||||||||||||||
Changes in valuation allowance | 10,568 | (22.6) | % | 8,830 | (25.3) | % | |||||||||||||||||
Nontaxable or nondeductible items | 483 | (1.0) | % | 185 | (0.5) | % | |||||||||||||||||
Foreign tax effects | 619 | (1.3) | % | 431 | (1.2) | % | |||||||||||||||||
Changes in unrecognized tax benefits | (64) | 0.1 | % | (41) | 0.1 | % | |||||||||||||||||
Total | $ | 2,580 | (5.5) | % | $ | 3,276 | (9.4) | % | |||||||||||||||
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Accrued compensation and benefits | $ | 3,564 | $ | 4,480 | |||||||
| Receivables | 528 | 229 | |||||||||
| Inventory | 327 | 319 | |||||||||
Share-based compensation | 182 | 354 | |||||||||
| Other accrued liabilities | 1,171 | 1,197 | |||||||||
Tax credit carryforward | 2,887 | 2,862 | |||||||||
| Interest expense limitation | 61,433 | 51,414 | |||||||||
| Goodwill and intangible costs | 6,976 | 8,078 | |||||||||
Debt related cost | 2,686 | 2,621 | |||||||||
Net operating loss carryforwards | 48,228 | 46,348 | |||||||||
| Other | 518 | 1,984 | |||||||||
| Deferred tax assets | 128,500 | 119,886 | |||||||||
Less: valuation allowance | (113,516) | (102,201) | |||||||||
| Deferred tax assets, net | $ | 14,984 | $ | 17,685 | |||||||
| Deferred tax liabilities: | |||||||||||
| Property, plant and equipment | (13,019) | (14,075) | |||||||||
| Unremitted earnings of foreign subsidiaries | (2,588) | (2,837) | |||||||||
| Other | (2,827) | (4,156) | |||||||||
| Deferred tax liabilities | (18,434) | (21,068) | |||||||||
Net deferred tax liability | $ | (3,450) | $ | (3,383) | |||||||
As of December 31, 2025, a valuation allowance of $113.5 million was recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized, primarily attributable to the domestic operations. A significant factor of negative evidence evaluated for the domestic jurisdiction was the cumulative pre-tax loss incurred over the three-year period ended December 31, 2025.
As of December 31, 2025, we had the following tax attributes available to offset future taxable income, subject to certain limitations:
•U.S. federal net operating loss carryforward of $137.0 million, all of which have an indefinite carryforward period.
•State net operating loss carryforwards of $265.9 million, of which $187.4 million will expire on various dates through 2043 and $78.5 million have an indefinite carryforward period.
•Interest expense carryforward for U.S. income tax purposes of $275.9 million, all with an indefinite carryforward period.
•Tax credit of $2.7 million, which will expire on various dates through 2037 if not utilized.
•Foreign net operating loss carryforwards totaling $17.8 million, of which $0.8 million will expire on various dates through 2046 and $17.0 million have an unlimited carryforward period.
As of December 31, 2025, none of our undistributed earnings of foreign operations were considered to be permanently reinvested overseas. As of December 31, 2025, the deferred tax liability related to undistributed earnings of foreign subsidiaries was $2.6 million.
We file income tax returns in the U.S. federal and state jurisdictions as well as various foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years prior to 2016. We are currently under audit in one of the states in which we do substantial business. As of December 31, 2025, we recorded a $0.9 million tax liability in our uncertain positions related to this audit due to retroactive changes included in final regulations issued by the state. Certain Dutch entities were also under audit. We do not anticipate any material adjustments related to these examinations.
Periodic examinations of our tax filings occur by the taxing authorities for the jurisdictions in which we conduct business. These examinations review the significant positions taken on our returns, including the timing and amount of income and deductions reported, as well as the allocation of income among multiple taxing jurisdictions. We do not expect any material adjustments to result from positions taken on our income tax returns.
As of December 31, 2025, $2.3 million of unrecognized tax benefits would affect our effective tax rate. We estimate the uncertain tax benefits that may be recognized within the next twelve months will not be material. Our policy is to recognize interest and penalties related to unrecognized tax benefits in income tax expense.
The following table summarizes a reconciliation of gross unrecognized tax benefits, excluding penalties and interest, for the years ended December 31, 2025 and 2024 (in thousands):
| Twelve Months Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Unrecognized tax benefits - January 1 | $ | 1,262 | $ | 1,452 | |||||||
| Additions based on tax positions related to prior years | 42 | — | |||||||||
Reductions based on tax positions related to prior years | — | (74) | |||||||||
| Reductions resulting from a lapse of the applicable statute of limitations | (129) | (116) | |||||||||
| Unrecognized tax benefits - December 31 | $ | 1,175 | $ | 1,262 | |||||||
We have recorded the unrecognized tax benefits in other long-term liabilities in the consolidated balance sheets. As of December 31, 2025 and 2024, the total amount of accrued interest and penalties related to unrecognized tax benefits was $1.1 million and $0.9 million, respectively. There was approximately $0.2 million and $0.1 million of interest or penalties related to unrecognized tax benefits that were recorded in income tax expense for the years ended December 31, 2025, and 2024, respectively.
Cash paid for income taxes, net of refunds, for the years ended December 31, 2025 and 2024 was $2.9 million and $2.4 million, respectively. Cash paid for income taxes, net of refunds, for the year ended December 31, 2025, were as follows (in thousands):
December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
Federal income taxes | $ | 100 | $ | (300) | |||||||
State income taxes: | |||||||||||
Illinois | — | (337) | |||||||||
Texas | 331 | 50 | |||||||||
Other | 61 | (35) | |||||||||
Foreign income taxes: | |||||||||||
Australia | 548 | 201 | |||||||||
Belgium | 688 | 155 | |||||||||
Brazil | 477 | 498 | |||||||||
Canada | (484) | 737 | |||||||||
New Zealand | 29 | 168 | |||||||||
Trinidad | 348 | 957 | |||||||||
United Kingdom | 557 | 161 | |||||||||
All other foreign | 229 | 155 | |||||||||
Total income taxes paid, net of amounts refunded | $ | 2,884 | $ | 2,410 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 12, 2026 | Showing above |
| 2024 | Mar 19, 2025 | |
| 2023 | Mar 7, 2024 | |
| 2022 | Mar 14, 2023 | |
| 2021 | Mar 16, 2022 | |
| 2020 | Mar 12, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Mar 19, 2019 | |
| 2017 | Mar 15, 2018 | |
| 2016 | Mar 16, 2017 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.