TH - Earnings call transcript Q2 2024 | Target Hospitality Corp.

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Operator

Good morning, ladies and gentlemen, and welcome to the Target Hospitality Second Quarter 2024 Earnings Call. [Operator Instructions]. This call is being recorded on August 7, 2024. I would now like to turn the conference over to Mr. Mark Schuck, Senior Vice President of Investor Relations. Please go ahead.

Mark Schuck

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

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

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

will on their referenced tables financial non-GAAP section a measures Please of our posted call release today's website call. measures measures. the of in reconciliation today's non-GAAP our earnings the to in financial to corresponding find refer GAAP in and We discuss Investors

Hospitality independent Directors decision Board and alternatives. XXXX, special a time, proposals respect directors or they announced, as and to proposal. their previously The are outside and proposal as acquire alternative Target Hospitality on no common collectively, well affiliates legal of Holdings, as own. to Finally, the with the of has and committee Target other do evaluation special already this of the March has Arrow financial retained independent made it to Committee this strategic of proposal. The continuing Capital, Special of At their has affiliate of review evaluating advisers own committee stock proposed XX, not TDR an all of shares evaluate established outstanding

be President Chief to be Jason Officer; we process by will proposal Chief prepared Archer. and the Archer, Brad Executive the over call or unable will to turn call comment will management the a our Accounting evaluation Executive After call. Leading their Vlacich, and today's today Officer. during Brad As result, on followed for Chief Financial questions. I'll open the Officer, remarks, Officer now the call Chief

James Archer

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

quarter highly established scale network of that materially established the and benefits the goals focused centered position second of efficient to of sheet. Our to our These our capabilities. has on balance support our achievement solutions hospitality the strength a a financial delivering strong remaining customer's premium results flexibility deliver continues illustrate and demand. The and financial structure the operating elements our our has supports while our financial durable consistent performance enhanced operating network of ability on model

We margin cycles, these us to world-class growth will enabling opportunities. diversifying are to continuing confident fundamentals to through continue support pursue customers strong our operating while support

the Turning year the segment, United influx care has States. service segments. of the to our in community In and is PCC fourth facility entered our longest-serving government its

the domestic, third Target's November the portfolio. supports pursue in jointly Our this PCC this operational consistent and established a mission in creation currently critical, in government's site, to continued this humanitarian of solidified the cornerstone commitment the presence and year. Further, has operational other of ICS contract course government normal partners supporting a as renewal performance a strategic with aid U.S. not we engagement anticipate of and government's

XXXX. opportunity. dialogue third continued with And site as stated, anticipate we We regarding have we are previously ICF the additional in details this pleased regarding later

provide. as benefit and to we our find the range premium HFS network from segment, our consistent customers demand of our flexibility and solutions customer world-class added Regarding continue we value

relationships customer example, an broad capabilities variety As our needs. expansion of quarter, customer service existing unmatched further a to the reach of offerings illustrating the meet during of our the support

incremental this take across to through continue to steps we contribution realize network segment operational to and Additionally, enhanced optimization. efficiencies strengthen evaluate margin opportunities

portfolio support our contract conversion. attractive network impressive position to to commitment and a growth and profile Target's pipeline industry-leading opportunity continue multiple offerings the cash adjacent continues income set. to optimization expand service while will naturally opportunities operating financial avenues establishes believe We to evaluating existing Target's Our initiatives. growth establishing ideal of enhanced complement these long-term existing

multiple market, they seeking on agencies end variety with government remain Within to a are of the U.S. along federal solutions we implement engaged the

Southern border.

Target's we opportunities, continue utilize of existing we seeking strategically a to are Target support actively Texas to these these nongovernment South to initiatives. growing pursue growth As located to assets evaluate continues Further, solutions. pipeline

previously the these technology have domestic projects include As increase rare and infrastructure, discussed, large throughout transition, energy industrial including U.S., opportunities the in we development.

as Importantly, these remain our Target's core turnkey expanding on as well opportunities full hospitality existing participation centered through competencies. individual solutions elements of chain value

these size the leads cycles. of to reminder, sales longer opportunities inherently a growth As

pleased are and we are difficult of these the the timing with on to While outcomes be dialogue can predict. continued opportunities, final and uncertain many

we achieving initiatives, our defined these remain of committed evaluate to we objectives As growth strategy.

have focused remains to position our financial the customer on strength sheet balance diversifying turn broadening Jason now an our on portfolio support to service premier in our customers contract reach, and while call of the elements more pursuing financial results detail. income enhanced our strong industry-leading second continuing growth ability delivering and to cash financial results conversion. In strong summary, These generate our offering cash opportunities. I'll discuss our objective to provide over primary simultaneously a while attractive and quarter established generation. operating strong flow centered and we to Our

Jason Vlacich

Brad. Thank you,

of results benefits flexibility. and to reflect Our efficient network the second our operating quarter continue model

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

was XXXX. of The fully which prior XXXX period with Our of Government significant at noncash approximately the PCC occurred community expansion as enhancement infrastructure quarterly was amortized in November revenue nonrecurring segment revenue produced from revenue the driven decrease million. our that in by $XX associated

million. which $XX Our $X million $X enhancing of corporate illustrating and These in ratio the a high the an maintaining with company's coupled quarter liquidity our in these hospitality capital a with service These of continues million impressive to were HFS of demand, $XXX network for from credit financial and million, the on quarter and profile. We We the our per quarterly financial $X cash continue will benefit strong enhanced X generation anticipate revolving X.Xx. the quarter facility offering and leverage around $XXX support primarily year. Total to under of million. the million $XXX with premier cash ended degree the customer focused results, for The borrowings $XXX financial anticipated XXXX $XXX capital of was for revenue cash expenditures strong revenue in million asset find million of customers million value million base quarter and XXXX spending million. of consistent million, approximately and strength expenses $XXX million $XXX our and Other segments Target's million between consists and support revenue segments remain total network. conversion between $XX the remainder approximately with between solutions. of $XX $XX delivered visibility our expansive across core and Recurring adjusted and our outlook to EBITDA

liquidity. ending the in to achieving progress total and year with debt towards continue $XXX over net We anticipate X million

financial incremental population, fluctuations in from is the PCC our a variable XXXX it reminder, believe outlook. revenue community the exclude given occupancy-based prudent PCC As dynamic any we to

arise. us our high evaluate pipeline enabling on maximizing various range management opportunities while financial continued conversion The on offering expanding initiatives robust Target's possible is XXXX designed opportunities. sheet, further strength to existing notes, centered of and react competencies commercial they value-enhancing as applications. strategic growth to growth our pipeline continue to pursue Regarding initiatives. These growth service agencies of strong a are balancing flexibility, establish balance to to our ability financial visibility strengthening we leverage to strong revenue continue degree of position, expertise a and of government outstanding to and liability senior provides approach a and evaluate of focused This quickly U.S. operating across actively and cash opportunities core the

we these capital enhanced back closing evaluate we to flow that, have as allocation we maintaining the I cash strong the disciplined Brad through for and on achieved conversion. With turn comments. focused call Importantly, remain will discretionary financial will profile over initiatives,

James Archer

Jason. Thanks,

performance reflected model customer impressive joining reach. again and results our financial I strength today, liquidity our our continue and profile results. and quarter the is and financial Hospitality. everyone while ability operating our tremendous and financial sheet, fundamentals second ability in deliver enhanced Target focused expanding on simultaneously you diversifying pipeline consistently in appreciate strong This of the These to execution your portfolio thank contract position. for Our interest to call the provide growth flexibility on strong in us delivering a of reflects pursuing our balance confidence

Operator

[Operator Instructions].

Stephen Stifel. from is Gengaro question Our first from

Stephen Gengaro

So X for things me.

think of going you general have oil where exactly was about in that something trying but dedicated first, to are and and ask out at I capacity and it, know pop versus we the the The business capacity HFS-South think you how to kind figure of Or about you and when sort the to can't to core I activity mass a of the to do how just in -- capacity if demand there's of kind the think how business trying b, commitments. is gauge been term; trying what kind a oilfield traditional versus And sort is, assets those reallocate utilization think a, any businesses, of contract get up? of to demand patch. we in forward, that and to about that I'm you near here that drop-off that's critical

James Archer

optimized throughout from spend. customer shifts our recently, to Yes. we're there's Look, some network. in another. tell relocated pretty location think I And one you would I appropriately just the assets we

business have there. at that, continue. steady. has We good we'll for that to the ability do that. The and continue look to we still Steve, look been been to It's So

probably business long best As the a I some year. to there. Optimization, see for about and optimizing good has that we're we a for us we're efficiencies. seen more. starting few overall, it think, time. a been been It's And in way for ask is the said, just we've the But of customers strong kind of

doing to So that's us some nice. to kind doing that of over guarantee entered Permian about it's few but years folks some on to more comes, the nice and of things. now that own. into the their I'm areas more these not some They're larger getting have remote looking see talking going at past

we So to business continue. that look

Jason Vlacich

did in some also add And as well. assets We government purchased then and year. the QX segment capacity from we year, assets of some last we redeployed last

the but have things if need feel move we spot, capacity in to. we good to like a the So ability around pretty is we still

Stephen Gengaro

mentioned the there and activity larger being And to kind the you follow-up kind then fewer just -- the customer that, is M&A and of Does a larger as of Brad, base. on price contract not bigger, on visible the bigger getting from kind customers. of demand does sort sort and in and of of but your maybe players help players that negotiations, duration

James Archer

a as the know, on a been me of Chevrons, well when this get look company mature the that time you've energy they are in term. side, the in long there, Occis spending, the you Look, more Exxons, you as longer as some

to as smaller is side on that ability like So that workforce of that. care put that's has of. don't. their the our priority also at do to -- the it's a of a your care a little sure want think others positive. They they differently not helped making But HR So right? firms. taken We They look take well, we some than

that ramp So we they that. us helps in as up, think

Stephen Gengaro

contractual and given one the does and lithium just doing expectations companies then oil final what side, And one alternative And up when kind leg of place? your to comes you that with patch, give Exxon's sort on is talking around to DLE you Great. the that. just potential in the agreements relationship Exxon start about their follow-up a the historically is of like, mind,

James Archer

open. Yes. the general, say, one you're companies, of I with doing the is if right, would business larger just in door

might and that's You to to get some much gas. on not lot in beat so it and looking different a Arkansas them oil or to don't wherever work about an be talk have they doing at

definitely it yes, helps. So

Operator

Our coming Oppenheimer. next from will Scott be Schneeberger question from

Scott Schneeberger

I'm the That's on the time around extension closer are know Pecos. time, can't of renewed what around time? won't I or will I too X-year be that that and start call, if quarter just review Or be of out that's the Do much, time. it -- third conversations that right but renewal curious, will want where a to election sense government? discussing having of in that's we Brad, of say have you you with much now, does start not? a type you probably to around

James Archer

election We an my has anticipate discussions look, knew And But been the Scott, about won't that's statement to the ask detail. I it's you, but and into going question, get November, renewal. kind not good offering been Yes. there's early, what There the November PCC much would through we somebody a right quite of IDIQs work. discussed feel renewal. kind too just in course normal going right? frames on do uninterrupted to They're would And time. PCC that. do at yes, already the nothing I any So that these expect some we that fact, normal of tell service has so us course about right? that in that up it opposite, November. that. Look, differently. into how

Scott Schneeberger

Appreciate of heard to anticipating potential you the say I that. before I third think And contract year. this then ICF, end the for something happen

there And what's change Obviously, is level this a So what Delhi. certainty similar feeling? of type a on? question, that at you're the of is is timeline

considering these is a in the ways different lot So government of things days.

your Just there. curious feel

James Archer

everybody, the the think it's about laws what the the a is, for was and I on minors, you this when unaccompanied we've look children, in talked that difference Delhi. Yes, different going at lot protect than

had they of still week, capacity. Look, of this is ICF, they we need But told influx some recent forward. reasons on this and they were last flexibility some moving did the So that. as emergency

have did We actually requested. some our competitors other they submitted design as that

the in that. we this to and of to fully will, But fourth them forward of formalized, you that in move and this today, become to towards end award expect middle the We expect the we're if project, the more quarter year.

Scott Schneeberger

And an the of kind entering of election Brad, going happen particularly the and for It there, like government Delhi. the how the feels on topic in what's option be repurposed. coming to months other a context could asset repurposed with interesting could more of just And that an certainly things that's for there's in X HFS probably still me and -- prior lot just questions. be you're But few considerations. one that's over

Delhi of Just think? what's the future hold you do

James Archer

shape. And Yes assets like just let for Look our but the up been of -- all level, question. been facilities. for kept one, used They've absolutely. great just in the good high years. me XX they've are

for government as But well the contractors business formal not already well prime So the to as as it it I'll of go HFS. really where agencies to we're lot feel to to multiple right? facility this you government about through this that being use in well. case designed, to already major location do The is immediately, set, of early and how a us the border request shape sits, as come moved. I positive it's again facility We southern great a close capabilities just out facility We've is for to started this we it's this. We've think use has in with very strongly the high put this, as where back right, be found this be soon tell leave sits, you, a And we had innings. as with a would right? as as proposal. facility, remarketing

to get over weeks. peaking the government aisle and government I care side and an contractors that services on prime of as there. And which look, provide in see the and is few here interest We'll that within already just goes. in the marketing it election lease where But And the the so that. year. folks' the well gets of it's availability next we'll this don't

good at assets. remarketing we don't, this lot very has think about I Dakota in shown a over the sits. are of North If and through reutilizing And legs. feel it we've our we past good I where Texas,

going in I'm early what's the but happening back to I the lease. in innings this give I you, ballgame. of doubt on out no have kind So today not like we'll Timing, get

Operator

Last [Operator coming Securities. Gibas question line from Greg the be will Instructions]. Northland from on

Gregory Gibas

what or Nice to increased needs up? kind facility. course going think And maybe that usage for And if hear pick to forward? Curious expect anything anticipating that trends the you normal of would renewal when visibility just you Pecos with any of facility? on maybe to have utilization happen hearing you

Jason Vlacich

with right? PCC's mean Correct? respect You to facility, the Utilization?

Gregory Gibas

Yes.

Jason Vlacich

Yes.

variable generated did year, reminder, in that. it did possible QX in revenue a that utilization up it trends as It the where some last by So September, utilization some the QX, frame. time way services have we is picked

And year. in no little trending obviously, there's a last so But now, it to exactly utilization that's it's Right possibility. trended it. as

certainly our last So that's we within on trends. expectations experienced utilization of based terms what year in

James Archer

Not possibility. there's If in just but note. the There's trend definitely actually none saying itself, towards you'd that's repeated the year, it end right? the our... prudent was of some We thought happening, see the to

Jason Vlacich

nature and year, in to our the given mean, is was rest last revised I line dynamic trending of That again, trend in did Yes, just for year-over-year, it trends said, trends. guidance occupancy year, the QX that the exactly the as the of same. is QX occupancy the utilization it exactly

being did up that early in we September through rest of experience so And the said, year. last the year, utilization picked

Gregory Gibas

Great. it appreciate sense the color makes perspective, I from but there. forecasting a And

-- of, sorry, kind perspective? your assume what outlook occupancy how I guidance terms In maybe like on HFS-South, guess, from either an of there is

Jason Vlacich

Yes.

to QX We year somewhat to year half moderate expect way this trends trends. the be with prior comparable they've of utilization first in with the the consistent in seasonality some trended

pretty of rest HFS-South the for So trending of the utilization in year. terms the in stable

Gregory Gibas

pipeline of I guess more Great. opportunities. broad about kind last And Okay. just one, your of

those Just we're would evaluation your change, as any the of in last you you opportunities? potential position those that in And similar as or quarter organic opportunities? kind evaluate or regarding guess, your those growth of I say just or outlook the pipeline -- discussed, a opportunities of you've timing

James Archer

to you, tell Greg, our you would tell the position. of I would pipeline same in continues project I Yes, build. still we're

added prospects there. some we've quality So

projects. of is not in the reality described large are all really most, the if these we've As past,

really the long. cycle is So sales

to have of continues over timing -- difficult us, is track projects. we of will these for the expanding record going and some going years right? reach. And of good diversification do customer all But We're to the of that, our So closed. to predict. we get to the our contract be our We're a focus look, large closing portfolio

We have over creation a lot of and paths some value execute we'll of to these us, time. of on ahead

Operator

today. conference that you and gentlemen, disconnect for please this your lines. you your We for and call ask participating concludes Ladies thank

all one. You good a have

Target Hospitality (TH) 7 Aug 242024 Q2 Earnings call transcript