TH - Earnings call 3 2023 | Target Hospitality Corp.

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Operator

Good day, and welcome to the Target Hospitality Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mark Schuck, Senior Vice President of Investor Relations. Please go ahead, sir.

Mark Schuck

Thank you. welcome Hospitality's and Earnings Quarter everyone, Call. morning, to Third Target XXXX Good we outlining of this results press issued The release morning, found the can in our Investors website. section our be quarter third

website well time-sensitive forward-looking on replay disclaims language except only a contain applies This or by call applicable as note November will on events conference time. as this as required In the accurate as today's X, XXXX. this statements, in This for which date, reflect language forward-looking the will addition, are limited regarding of a to circumstances amend cautionary same of made that Target conference any or contained in be to today, call. to call Hospitality law. update information may contained expressly archived statements arise our information statements call the today's release. Please press obligation after

of please may list that risks uncertainties Target complete with SEC. filings to a periodic refer For the and performance, future affect Hospitality's

discuss financial Brad questions. for over Brad call Archer. financial Financial GAAP After call Officer, to release to earnings their Leading Officer. turn be today's tables Executive Officer; we Executive Chief and open our followed on Investors the in now non-GAAP and referenced the to will Archer, of measures today Chief Executive the Kalamaras, prepared President call. President corresponding the by our refer in Eric reconciliation non-GAAP of Chief a Vice T I'll will call Please our in find the section and website their measures today's posted call will measures. We remarks,

James Archer

you today. us the Mark. on morning, joining Thanks, for everyone, thank Good and call

quarter of over momentum are results have years. several the third sustained positive continuation strong Our the past we a

strong platform, operating appropriately Our continuing generate changes to demand us efficient to scale creates a results. match financial in highly customer allowing while meaningful

to have focus customers solutions environment. which to to United decade. by government quarters. the year, segment, We full-service to support This the revenue expanded were to opportunities, gains, the cash derived has Coupled XX% revenue a continue on contracts and growth nearly efficiency over with XX% hospitality whom of of purpose-built been solutions third government, positive serve continue industry-leading in customers, network hospitality over humanitarian a revenue quarter quarter the of providing have support strong momentum and anticipate with normalized more to for coming presence while the foundation In created respond pipeline have additional a assets exceeding ability additional third U.S. our government the has for and of materially quickly to In mission U.S. our to they has designed States resulted supported we an our government. supported expectation continuing continue impressive focused partners being critical These growth fully of premium committed of operating while elements critical premium strategic over decade. minimum portfolio having service a remained to past many the we offerings benefit operational aid the Target's demand conversion. in from our value-enhancing world-class more HFS-South expanding our These commitments. income initiatives. optimized continued pricing providing segment, This evaluate from customer

as the supporting quarter, demand validated facility community government's the in proven an Target's missions. seamlessly our trusted responded to row for the to solutions. Children's illustrating is during and capacity designed example, to Pecos concept, influx adequate our This dynamic hospitality critical increase Further an care As provider Center for critical of number the changes need in properly the U.S. respond in unaccompanied arriving the humanity essential children exemplifying

year. forward contract inflex contract for its of of finalize to critical and award a this announce supporting in our a at under the X-year including the to partners PCC week's in this of We the specifications would With at mission upping was total, long seamlessly with continued represent years details, the relationship at the United We providing our look contract ICF services. through care humanitarian in the specific one provides to additional government X the comprehensive This week, our contract available in continuing purpose-built nonprofit the economic delivery are to definite quantity ability partner contract our We is The awarded longest which immunity, of award, they actively indefinite in our United pleased as contract, was coming ensure continuation working nonprofit to States. are humanitarian. our States PCC solidifies as continuity the earlier service continuation XX-year In exclusivity mandatary awarded agreement. partner facilities to its continuous award PCC ICF our partner the running contract this become terms the offerings and Target's weeks. in XXXX. only this we nonprofit forward of look

has ICF to new As to XX,XXX multiple in the new requiring to expand remains creation their the continues engaged individuals and communities. not actively ICF government to build strategic sites, jointly up portfolio. we outlined desire accommodate of currently previously announced, pursue to Target partnerships government's network their the ICF

created past momentum to government humanitary opportunities, over support we focused continuing In remain years. to continually and emissions. children their is these Target stated, look pursue urgently is the positioned forward well and has sustaining the manage summary, we We additional several of we in humanitarian arriving the As needed to believe the housing have to number capacity increasing U.S. U.S. government unaccompanied on the the

opportunities now while to third growth strategic a balance to more simultaneously our and recent we platform in continue have We financial I'll pursuing the operating many years. seen turn discuss detail. supporting call established quarter customers, to pipeline initiatives financial world-class strong most over the Eric growth robust our in and sheet expanding results, have

Eric Kalamaras

efficiency quarter, we the Brad. benefit our align Thanks, to scale, allows which with results. us operational delivering strong seamlessly consistently demand from while In third customer to and continued future

million. was $XX XXXX and quarter was Third EBITDA revenue total adjusted million $XXX

approximately produced $XXX Our this increase by at million. is to segment similar community. revenue was of revenue around quarterly as a occupancy-based in committed sequential variable The segment's revenue PCC the government contracts. reminder, driven minimum revenue And revenue

the Our HFS cash same targets customer delivered segment for driven quarterly revenue in last in increase This the million million period and was momentum $XX assets the human the of ended government's the of to to liquidity anticipate the service demand of million premium company's borrowings $XX credit year. and by sustained approximately facility compared supporting ratio were under quarter We corporate Total enhancing $X spending expenses $XX million these the remain mission, the anticipate $XXX majority $XX capital X for for related quarter million, Recurring of remainder focused the with with around to year. off. for will year. leverage quarter on spending million for we the and quarter remainder was X.Xx. a retained revolving $XX we the with per capital million $X net approximately million, of minimal

Excluding growth. $XX focused per more acquisitions, million should levels organic and $XX between million normal XXXX on year, predominantly approach capital spending

XXXX. $XXX a continue anticipate balance We million year-end achieving and debt-free liquidity make in by net meaningful of over to total available progress sheet

and $XXX million $XXX revenue XXXX between outlook EBITDA million and $XXX includes million $XXX Our between million. adjusted and

expanding maximize offer to a with time expansion of we as line X.X% for flexibility facility, initiatives. notes We of an June now our steps million prudently which the completion in increased additional more liquidity resulted our of managed profile $XX took million. due has $XXX and notes. maturity we million capital total to The offer new for structure XXXX. new quarter, exchange $XXX available a Further, of a create an pre capacity X.XX% efficient in evaluate we continue growth pipeline significantly the of Following

that opportunities select and integrated and of opportunities notice commercial liquidity management the the broaden discretionary a supported full flow initiatives, We remaining more core existing alone, non-asset applications pursuing redemption leverage of government through U.S. are have create encompass value million that sheet participation while solutions solutions new than growth redeemed of number an well across commitment energy as agencies turnkey This to scenario notes emissions. high are transition to initiatives existing are to foundation have designed react our capital. inorganic competencies our and core to hospitality a offerings prudent existing opportunities million of our Target's balance defense, support focused $XX national growth humanitary operating for cumulative pipeline continue cash sheet expanded on offerings duration X Target's the These flexibility. of chain various as of chain projects past for to be creates provides quickly expertise focus service to our These focused subsequently to continuation $XXX return of Target's jointly of invested to extending supporting announced more urgent organic strengthen liability We solutions of strengthened value elements during while opportunities. a optimizing which fully strategic a and and and existing consistent view solutions. these participation and from these cash provider ideal long immediate balance need the to individual payment. as and opportunities total permanent financial This to time. materially seamless strategic unique revenue reducing extension These in competencies. XX% become on and target same a within optimized increase all initiatives, both by position indebtedness XXX% years This including the

As capital over several allocate fiber previously stated, of $XXX Target years. turn net million to growth the prepared next this to over opportunities is

for forward his progress. Brad the updates additional We providing coming I look progress turn are many the closing projects to for will pleased as large-scale that, and to the in over With comments. discussions of back with call and the these opportunities quarters

James Archer

Eric. Thanks,

supporting financial for testament high-grading third XXXX, diversify the business, to established. visibility. impressive efficiencies we match to created, scale these intentional Our contract us demand have appropriately structure operating we platform week's are while results simultaneously Since simultaneously while award have quarter enhanced generating the results. and This revenue PCC enabling further strategic and contract a strong taken a is initiatives, continuation have we operational of customer the steps to

optimize well have opportunities and in financial seen flexibility strongest growth are pipeline positioned many we the We to of years.

Target you to creation I everyone in appreciate on joining are continue shareholders. Hospitality. thank for these for today, your and value value-enhancing accelerating focused us our call the We interest on excited pursuing again initiatives

Operator

first Our Instructions] question from Oppenheimer. with Schneeberger Scott [Operator comes

Scott Schneeberger

you contract, extensions, about address Could please? that, X elaborate duration we're if the Please how on please extensions. the look it of could talking X-year potential

James Archer

a on no the the different South it's This right? you than annual Texas some -- how If option Look, right? X-year is look appropriations, [indiscernible]. are this agreement in Is periods Family it's there on which is base with Residential contract at this, period. structured, is X our top of Center,

contracts. very typical these in we So what see in

look is you taken X if the the when become there you And their is the as here IDIQ. system, It's out out It's to more. came long-term thing positive reason we their bids still right? at government, this the this of part solution, really the design they think going ICF I will, with biggest years to they've for Then program. the know new there ICF is program. are

still building under they're platform. the program this out So IDIQ

Scott Schneeberger

I the it discussing Could here? we similar potential But the thoughts helpful. should you would Any structure what about recognize how economics. component. a be there you're think fixed variable currently on component to be with still and the something structure have the potential

James Archer

structure couple A on of the the contract. of things

existing look has. have will that the it the -- feel and as So contract generally PCC same with

revenue That component. between component. revenue in minimum will we be a be There have variable today. can what shifts the mix be will those there slight So

than some working there contract. even be will existing I that. in the economically opportunity attractive also there slight think it for So in be the ways But some to modifications is

sorry, as tuned that. [indiscernible] materially find speaking, stay contract think, the or of look, it to don't anything I'm this. as it But -- finalizing portion our you PCC still So today know the relates on that. We're I different structure. process I what to of you'll in generally think regarding regarding relates

there same in it's but will some and same elements, look all the slight feel, So the modifications be Index. got

Scott Schneeberger

the at about for this me, final How think point? potential for one incremental do A please. contracts you

James Archer

building Look, first, out I this program. they're as still said

enough look If definitely awarded bidding third you have working of on that first don't report half We're But We're there's that year. their they know of most debts. say should people we out look at at that. there that. a next I sometime ICF kind be weekly now, think continually they

again, for and program look solutions we to as the of their this So children. one for to grow, continue continue on-company long-term on

Operator

[Operator Instructions] comes Our Stephen Stifel. with question next from Gengaro

Stephen Gengaro

on Congrats for guess a of this I couple things me. award.

invest of with think year opportunities, coming. visibility, to think versus growth investment the gives internally the you our seat, we capital a visibility to the of government deal about First, terms when other of free of kind X kind Does this known you the having about free flexibility guys about lot like flow allocating think kind growth you from year and the of flow opportunities? that which capital cash cash way in impact X of business,

Eric Kalamaras

I a that percent Look, such business anytime think cash you large of flow. the a generates have a

to take things into consideration. have sort always You of these X

funding here's I is to think other IDIQ right, is that would up it. this for basically thing the we vehicle is in ask you the X-year about, wrapped think multiyear too, which a

cash look think, that generation So a provides so fortunately, look, in and of very term. in strong. BS But itself is this And much we're a look, degree our confidence. position I we of greater really where at long

the at at at look that's that a we're we're life how going has to not that's needs any And a is way going of not that look, long-term the a about to over whether opportunities the projects, HFS project, cycle. tied operated also it's additional decade. through the has minimum return, deployed, side or only frankly, commitment meet when we And to And been capital to the right? the this for different, revenue company and always look the it on project hurdles look it, from whether so going we're so think to for but

James Archer

right? in The the on how the it's the government can in Deli's And on typical, set that's assess we're we X-year option, up appropriations been short just these not very this get we government we contract specifically annual we this typical period, a base when contract, agreement every has contract. look -- done. X-year one Yes, yearly funding, it Internally, that's is have term. but been [indiscernible]

setting a term. not at government. and solution looking for as long-term we're short the looking So were the We're

Stephen Gengaro

cash you along willing -- about to be similar shareholders lines, a to return it how it you change way on think -- similar much doesn't would And therefore, the well. as may

Eric Kalamaras

question to at business look those so I think I all growth all work go at really you or profile. mutually deploying how in whether goes it's enhance exclusive decision, to to that together. really it's with and those whether don't in the I right, as have for mean has Look, capital that shareholders the look concert at large, Stephen. concert

have -- made active that of in only have most had As as inorganic strategic decisions not I'll pipeline tell up the mentioned, Brad we And be will most years we've there active we well. on that. organic pipeline, the coming lot you are that a

this And the growth go together so in But to stay go tuned. and allows to with of concert look, business. the all has

James Archer

contract. step. Thatâ€™s to was X-year get first that's First a done. And

forward. move can we So

Stephen Gengaro

the contribution point talked a it sort excluding and reimbursement. CapEx as I reasonable we -- XX, starting have that about thought of Is reasonable us like similar others Is XX think economic contained still? have Pecos to a as from

James Archer

a be in mix. and there think, shift, I again, will Yes. mix shift Look, a

little have early talking do specifically. about And be that mind. a to we to we're too bear that So

think the to the about have that to think is concept thing to favorable revenue has well be other to not considered contribution drastically like. looks I be different. going the as what again, But as is we

what to to I mechanisms have to get things I it's too roughly like going to little the because, too it's wouldn't this And change the going the components as looks forward. meaningfully again, so same point, it. early and wouldn't same again, look and that for look, -- construct a specific the is at us to same But

Stephen Gengaro

on on a what's here. patch, lull in and a But HFS seeing in start consensus some cetera. your seasonality, with then of get in see we kind recovery the that color et that there We've to the to about least activity conversations you to the levels mixed the comments what front? had final at XX When side. one in just particularly we've any be And gotten Permian. going seems oil Or one you're see you're of on with that your Do going customers? on activity, level

James Archer

on side, of work. conversations, hope what saying of agree, we been sales I've they had an that. some Stephen, XX, some uptick And I the with is the see should involved get portion a in the that And of they're we

going it's to be minimal. think I

But well as I will good this think as be better. pretty I locations. a our little we're maximized be as at it look, was it may It think year year. a

Operator

The next question comes Securities. from Northland Gregory Gibas with

Gregory Gibas

be variable revenue I mix? that relation to to mentioned we And saying? wanted is it favorable. versus but could the obviously, components that more think have minimum you been going a to just possibly can't specifics, revenue be more It's just he like into you I mix get in of might the answered, but are -- favorable

Eric Kalamaras

to you down comes offers it greater for putting comes piece, great you've potential. I Sure. right? it that's said. change the got So that anything No, place describe revenue which to upside a the way mix, even the third then portion. to Again, And it. in wouldn't down minimum surety

that's I it. how would So describe

Gregory Gibas

finalized specifications, just the as about And those in a is forward because I up kind we about those economics there risk carrying know the think week being existing to of existing is here. contract

that we everything like is forward? of just roll until So kind assume existing would economics finalized,

Eric Kalamaras

Correct.

from to terms, is that's So contract under new go nothing until economically we from right? technical a the perspective, have the through. a So changes process

So right now, X change contracts. relates anything the as it don't to

Gregory Gibas

QX the guidance then lastly, for year. into And just or assumptions

there? notable the in Just assuming rest any assuming changes your occupancy similar the today -- of assumptions quarter? levels Or through seen

Eric Kalamaras

No. Look, I don't think so.

So get a I this I that I offer get little like about do end the aware always be I of. a couple hundred of bit time. to It's the something at a of lot, points does would least right? offer think it's tail think feel not the towards I every period. QX in this year I basis margin, but it's reminder seasonality the HFS -- of

there's we QX don't that QX. see anything I didn't Beyond really in meaningful think expected of out we that

Operator

As would no questions, back the we now for further over conference have remarks. any our Archer Brad to session. I this question-and-answer to like concludes turn closing

James Archer

us call again today. a speaking forward first for on the joining the good Thanks Have of We look the day. year. to after again

Operator

today's you has now Thank presentation. attending conference for concluded. The

Target Hospitality (TH) 8 Nov 232023 Q3 Earnings call transcript