TH - Earnings call transcript Q3 2024 | Target Hospitality Corp.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen, and welcome to the Target Hospitality Third Quarter 2024 Earnings Conference Call. [Operator Instructions] This call is being recorded on Tuesday, November 12, 2024. I would now like to turn the conference over to Mark Schuck. Please go ahead.

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 replay a will on time. this In for addition, limited of a be call archived our

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

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

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

Brad by Leading their Officer will and today for be Officer; call we questions. will followed remarks, President prepared the Chief Executive Accounting Jason call Chief Financial Chief After Vlacich, Archer, and Officer. open the

to over Brad Officer, Executive the Archer. Chief turn our now call I'll

James Archer

model us fundamentals today. on cycles. support results network efficient with a performance. Thanks, Mark. and to deliver business elements continues fundamentals, quarterly strong call capabilities. Good these strong underlying flexibility, and operational an ability and support morning, support unmatched These the everyone, proven joining structure strength our for Target's to highly in you durable operating The thank through Target's Together, business operating along

customers. our sheet on our ideal liquidity position and strength financial of position to has focused to hospitality premium solutions our solidified simultaneously balance diversifying our the performance an platform consistent while centered initiatives. providing continue This advancing has world-class commitment Our strong established optimized growth

segments. to segment, In humanitarian our the government's year anticipate and the this contract a Now community continues operation. of critical the in its facility turning cornerstone PCC a community This marking care normal our States, influx mission. in as as Government fifth stands aid to we course renewal continuous United longest-serving in the coming domestic U.S. the serve weeks, of

increase since our capabilities. our our HFS value continue in further Regarding the benefit we capabilities find world-class have offerings located strategically benefits from segment, These quarter premier and network our fourth of network. our the demand and to in customers customer our a XX% XXXX, attributes service supported the unique of highlighting

Additionally, optimization. on and identifying we segment contribution continue opportunities through focus margin our operational strengthen efficiencies to enhanced evaluate incremental network to across

with high with have we consistent an allocating portfolio, a With we This support contract on Our the demand, coupled to value-enhancing contract of existing continues portfolio. focus sheet intentional an balance revenue industry-leading objective to financial optimizing profile, continue established customer our enhanced commitment initiatives degree visibility created and and expanding focus and on our liquidity has as growth our to ideal conversion. cash our diversifying capital and of position. solidifying platform

to adjacent by which align reach attractive broadening growth existing and opportunities to expand and growth naturally customer continue We long-term of evaluate exposure. pipeline our strategic capabilities. establish profile offerings Target's can an market initiatives, These service end with avenues our multiple

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

Southern border.

considering. recent solutions representatives has included potential Our Republican dialogue also regarding conversations are with they

Target's are evaluate support South existing these actively to seeking to we located continues solutions. Target to strategically As Texas utilize these opportunities, assets

growing to pursue continue pipeline of nongovernment initiatives. we growth a Further,

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

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

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

evaluating exposure remaining centered the inorganic can coupled to opportunities, are growth believe core markets initiatives, our These which and while end offer Additionally, trajectory. we diversification growth attractive existing competencies. our accelerate with organic select around we to ability opportunities, offer our customer

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

to our objective and operating cash income portfolio our primary diversifying and on focused continuing customer reach industry-leading contract conversion. remains broadening generate Our while strong

In solidified goals. base, the financial achievement opportunities. of summary, financial world-class capabilities supports sheet These support providing execution elements operational consistently centered solutions pursuing our an customers our existing optimized ability customer strength simultaneously profile. position premium and to the our balance has while growth to our This flexibility our robust of continue network hospitality and on proven attractive liquidity

discuss I'll to third more Jason turn now call to the detail. results our over quarter financial in

Jason Vlacich

Thank you, Brad.

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

approximately $XX with EBITDA approximately $XX revenue total was XXXX million, quarter Third million. adjusted of

Government revenue million. produced $XX of Our approximately segment quarterly

The occurred decrease associated community infrastructure period our primarily with in at revenue noncash driven nonrecurring by PCC the XXXX, which November in prior as revenue fully from significant was amortized XXXX. was enhancement the of expansion that

the minimum of variable X, the contract Center In and lease Texas the decreases partially termination XXXX. Residential to addition, services were and attributable South Family August PCC effective lower revenue

segments illustrating other premium capabilities. our network to quarterly These and solutions hospitality $XX our continue find of value million. revenue the segments in HFS consistent and Our from customers benefit delivered [indiscernible],

the the approximately anticipate remain Recurring year. $XX remainder million were $X $XX corporate around will for the these quarter million to expenses million. quarter of We per for

the Total our quarter across network. capital enhancing base for expansive asset on Target's was and focused maintaining primarily million, approximately $XX spending

enhanced in offering to in and profile. million cash with revolving company's X continues leverage support strong credit under generation the net liquidity $XXX ratio of X.Xx. in core financial strength $XXX ended total and The quarter an cash We million the $XXX our service facility and borrowings with million a

financial of total million $XXX high coupled $XXX revenue $XXX cash support between a results, million. with outlook, financial our strong consists degree and and adjusted $XXX visibility These between EBITDA which of million revenue million and impressive XXXX and conversion,

million $XX $XX between of million. expenditures capital and XXXX anticipate We

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

reminder, occupancy-based fluctuations incremental has As dynamic to shareholders X.X exclude revenue population, and repurchases through any our for focus pursue return from million initiatives shares generation on our of approximately X, financial approximately XXXX, in variable value-enhancing repurchasing utilizing These continued $XX opportunities by PCC our illustrate prudent to to believe given year-to-date financial broad community common million of ability stock. range a This is PCC the to November profile strong shareholders. our we it cash a enhanced supported our XXXX outlook.

our react Regarding position financial evaluate of our focused quickly while pipeline of possible on us growth an expanding enabling a they notes, This liability balancing arise. we outstanding senior maximizing flexibility, XXXX to initiatives growth further opportunities. approach centered as continue opportunities strengthening management to on strategic to is value-enhancing financial range

The portfolio designed strength initiatives, of visibility, of actively expertise are cash degree ability to to Target's evaluating opportunities the operating contract our and select revenue initiatives. leverage core growth continued and provides competencies balance high continue These of existing and inorganic conversion to pursuing and Target's market including reach. sheet, broaden end strong strong pipeline

financial and strong on conversion. remain initiatives, we capital have evaluate cash will enhanced Importantly, as discretionary flow these the maintaining allocation focused we profile achieved we disciplined through

the comments. for turn back With that, Brad call will over closing I to

James Archer

Thanks, Jason.

proven illustrated further performance operational our quarter third consistency and goals. financial Our flexibility achieving our in

pursuing We our growth exposure, as market have diversifying business portfolio, opportunities platform enhanced and position with optimized ideal strong contract an end strategic solidified customer the profile. sheet continue we fundamentals financial established on These balance and focused reach. expanding and liquidity have our

are initiatives on positioned evaluate our focus We attractive accelerating these intentional centered creation as value for shareholders. well with we growth

us thank for you today, Target in and appreciate call I on again your joining the interest Hospitality. everyone

will the back now turn We Q&A. over for call the operator to

Operator

comes Instructions] of Scott first [Operator question Your Schneeberger from Oppenheimer.

Unknown Analyst

] on for Daniel It's Scott. [

how the see the for you Regarding the influence your assets, outcome recent election outlook? government demand do

James Archer

Sure. We've has in believe And policies prepared seen as about. Look, mentioned to engaged past actively it's continue as talk weeks. think in as recently definitely positive. had the continued be This I representatives. remain remarks they is We the very the the the Brad. new dialogue agencies. Republican we well going administration, everybody federal few with We to

we're engaged. look, So

beds ready these immediate within beds for used with departments use majority by of of before the thousands different being have the We federal government.

positioned We well have exceptional we're different to different an many solutions departments record, to many provide and performance past the agencies. within

to We So in side think we helping. positive we look the it. a of forward on definitely business trend see that will

Unknown Analyst

it. Got

you the about facility. talked regarding that previously third Do any have process? ICF You updates

James Archer

selection process government's the pace. have proceeding continue intention Sure. and at ICF, with more slowed. and is a frequency our proceed desire conversations believe pace recent evaluation the indicate to their through and Look, government third of those conversations the the We measured just to

now they was push up look and running. facilities you have done. When -- at get That their that X to

back. of will stepped but it they there. So pace, We to a better at expect get XXXX substantive we anything kind a until don't measured continue think update on

Unknown Analyst

you that? it. that Switching Utilization outcome expanded, and election outlook ADR me. HFS. business, gears was one to bit. see the a you Got final the address And for how down influence Could for do

Jason Vlacich

Yes.

is the that. of I'll the Thanks part This So Jason. first for take question.

would with hold that the optimization So with fluctuated balancing expect fluctuate to We've within balanced ADR out. utilization but steady. business to a has out within has we ADR bit, that that continued and the ranges it

going it In the QX expect forward past. of moderate somewhat terms year it in in experienced seasonality we for balance with the year, would see look I we've last of like how the to as

can And the outcome, it's to then It relatively of quite set anchors well. holds in election Brad a the But chime here terms definitely of nicely. It's mature. in business. steady certainly -- the sort business as stage,

a there business. relatively opportunities, mature so are And while it's

certainly can little chime So bit Brad, a you in more.

James Archer

market business over the years. that's When Permian operators in come. sitting are what that of Great steady. very We matured remains think Basin, of largest It's really for or the the the many there. operators largest has some That business. you talk world to about years the

But those time, benefit remain we're what of we'll approach we is, with be they'll the over into up very things. changes much the right? look, up capital their believe put without And network right? capital they Utilization to it, in in going goes now, we're and that there money more if that. that to if is we're types benefit right of in start way set putting our But disciplined area, seeing

Operator

Our next [Operator Alec Scheibelhoffer from question Instructions] Stifel. of comes

Alec John Scheibelhoffer

to up the want side just on the on business. follow things a government of few I

both bridging relation and Just the to just should basis. maybe on your any how I on year-over-year color pretty if as wondering be gross how we well? they sequential forward and were going that in thinking just we could guidance in about that to should quarter, EBITDA you about give at looking solid margins XXXX a was think

Jason Vlacich

Yes.

future believe of future the hold ex Lilly, kind opportunities, So that there facility gross with while to be looking margin segment respect fixed to points costs there government percentage few the which for we of warm in could drop the are. Government a keep we some

But said, goes obviously, that being occupancy the down, you'll margins see as strengthen. the

could So that you that points few overall, of the much. Like to to expect at fixed going just Dilly said, not will maybe keep I due ongoing some a is be to the costs warm. change margin that the loss facility percentage

James Archer

of Yes. think to big on especially And you're There's to you it. weeks. on past there's these -- warm Jason going changes to don't few some the move says, to put right, can opportunity we right? that lease, walk piece, the to you opportunity, with back a away over sometimes, touch Like from want an the look just and

So matter opportunity who in XXXX. a has no -- been what think, administration our It's lot a in got case, we there. of always that's facility,

little worth more idea So to bit a doing it's that, think well the in spend. there but keep warm. is expense we There's it the

Operator

question-and-answer [Operator session. back Brad Instructions] ahead. Archer. to now concludes the will Please turn That our over go conference I

James Archer

and for conclude of all today. today Operator, We your our speaking support you quarter Thank Have for that a earnings Target call. Hospitality. to call look for call will joining our forward fourth again on the day. great

Operator

attending. for you Thank

You lines. your now may disconnect

Target Hospitality (TH) 12 Nov 242024 Q3 Earnings call transcript