Ahead of the Bell: Team falls on lowered forecast

Team Inc.'s weak third-quarter and lowered full-year forecast shows that customers of the pipeline repair company are not spending as much on maintenance, an analyst said Wednesday.

The Alvin, Texas, company cut its revenue outlook for the 12 months ending in May by $20 million to about $500 million, implying fourth-quarter sales of $120 million, down about 17 percent from the previous year.

Team said it now expects full-year earnings of $1.05 to $1.20 per share.

"The decrease in customer capital projects, the deferral or reduction in scope of turnaround projects this spring, and pricing pressures from customers are the primary drivers of Team's reduced revenue expectations," the company said in a news release.

The company's net income and sales missed Wall Street expectations in the the third quarter.

KeyBanc analyst Tahira Afzal said Team's customers could resume maintenance spending this fall.

"Given the extent to which it appears TISI's customers are cutting their maintenance spending in the near term, and that we believe maintenance spending is typically the last area to get cut and the first to come back when conditions improve, we assess that TISI's core maintenance work could begin to rebound (near the end of calendar-year 2009).

Team shares fell $1.82, or 15.5 percent, at $9.90 in premarket trading after closing Tuesday at $11.72.