Target Hospitality Corp. · NASDAQ:TH
Target Hospitality — Q2 2019 Earnings Presentation
28 slides from Target Hospitality's earnings presentation, Aug 14, 2019
Slide 1: 2Q 2019 Earnings Call Presentation
2Q 2019 Earnings Call Presentation August 14, 2019
Slide 2: Disclaimer
Disclaimer Cautionary Statement Regarding Forward-Looking Statements This presentation contains statements reflecting assumptions, expectations, projections, intentions or beliefs about future events that are intended as “forward-looking statements.” You can identify these statements by the fact tha
Slide 3: 2Q 2019 Financial Results and Operational Highlights
2Q 2019 Financial Results and Operational Highlights Brad Archer, President & Chief Executive Officer Andrew Aberdale, Chief Financial Officer Troy Schrenk, Chief Commercial Officer
Slide 4: Target Hospitality (NASDAQ: TH)
Target Hospitality (NASDAQ: TH) Nation’s largest vertically-integrated specialty rental and value-added hospitality services provider Largest provider of turnkey specialty rental units Key differentiating attributes 1 Target Hospitality is the largest vertically integrated specialty rental and Cus
Slide 5: Long-standing relationships with diversified, blue-chip customers
Long-standing relationships with diversified, blue-chip customers Oil and Gas 80% Oil and Gas 80% $336.8M LTM Total Revenue(1) (as of June 30, 2019) Government Government 20% 20% Diversified customer base includes largest, blue-chip, investment grade oil & gas and integrated energy companies – Enc
Slide 6: Stable exposure to the government end market
Stable exposure to the government end market South Texas Family Residential Center (STFRC) STFRC established in 2014 in Dilley, Texas Unique, hard to replicate asset Ideal solution meeting government need to house asylum-seeking Best-in-class facility women and children family units – 2,400 av
Slide 7: Recent growth initiatives and milestones
Recent growth initiatives and milestones January 31, 2019 March 18, 2019 June 19, 2019 July 1, 2019 Renews and expands Target Hospitality Acquires 3 communities from Acquires Midland community several multi-year contracts goes public Superior Lodging (575 beds) from ProPetro (168 beds) September 7,
Slide 8: 2Q 2019 Financial Highlights
2Q 2019 Financial Highlights Revenue Items of note: $81.4 million Pre-tax charges and (credits) of $2.9 million Adjusted EBITDA(1) – Transaction expenses: $1.4 million $41.2 million | 50.7% – After-tax charges and (credits) of $2.2 million SG&A expense of $7.9 million, ex. pre-tax charges and (c
Slide 9: Adjusted EBITDA driven by broad-based operational execution
Adjusted EBITDA driven by broad-based operational execution Bridge 2Q 2018 to 2Q 2019 (US$, in millions) $1.6 $2.8 $0.8 $41.2 $1.8 $2.1 $13.3 $36.2 $22.9 A B C D E F 2Q 2018 Signor 2Q 2018 ADR Utilization COGS SG&A Other 2Q 2019 As-reported Contribution Combined Pro forma As-reported Adjusted EBITDA
Slide 10: Performance evident in key operating metrics
Performance evident in key operating metrics Total Company, As Reported Total Company, Combined Pro forma(1) Utilization: 84% 86% Utilization: 83% 86% $83.7 11,401 11,401 $80.9 10,886 $80.9 $79.0 6,770 Average Daily Rate Average Available Beds Average Daily Rate Average Available Beds 2Q 18 2Q 19 2Q
Slide 11: 2Q 2019 Segment results
2Q 2019 Segment results(1) Permian Basin Bakken Basin Government US$, in ‘000s US$, in ‘000s US$, in ‘000s y-o-y change: +153% +139% y-o-y change: -19% -6% y-o-y change: ~0% +4% $7,061 $16,634 $16,729 $11,783 $12,317 $52,037 $32,588 $2,872 $2,698 $5,738 $20,569 $13,634 -366 bps +635 bps +279 bps ADR
Slide 12: Robust cash generation backed by minimal maintenance capex needs
Robust cash generation backed by minimal maintenance capex needs 2Q-YTD Capital Expenditures 2Q-YTD Adjusted EBITDA & Adjusted FCF(1) conversion Avg. available beds: 6,770 11,401 Adj. FCF conversion(2): 79% 91% $ in millions $ in millions $82.5 $79.0 $46.2 $40.6 $75.3 $32.1 79% 91% $1.6 $1.0 of Adju
Slide 13: Exceptional cash flow generation
Exceptional cash flow generation 2Q-2019 cash flow walk (US$, in millions) 2Q-2019 cash flow walk Short-term borrowing for Superior Lodging acquisition $25.5 $30.0 $0.5 Items of note: $4.6 Cash flow from operations of $25.5 million – Cash paid for income taxes of $1.2 million – Cash interest expen
Slide 14: 2019 Outlook
2019 Outlook ADR Improvement Continue to enhance network value proposition Strong Utilization Monitoring and Win with the right customers executing incremental High-potential Opportunities Continue to expand/rotate footprint opportunities(2) 2019E Opportunity Set New Contract Wins Carlsbad & Delawar
Slide 15: Summary
Summary 1 Market Leader in Strategically Located Geographies 2 Long-Standing Relationships with Diversified Blue-Chip Customers 3 Multi-Year Contracts and Exclusivity Produce Highly Visible, Recurring Revenue 4 Proven Performance and Resiliency Through the Cycle 5 Long-Lived Assets with Best-in-Clas
Slide 16: Appendix
Appendix 5-) TARGET HOSPITALITY
Slide 17: Full turnkey specialty rental and hospitality services
Full turnkey specialty rental and hospitality services Extensive network of geographically relocatable accommodation assets serves customers in highest demand regions Serving business and governmental needs where availability of space and flexibility are essential Turnkey solutions with integr
Slide 18: Best-in class specialty rental assets with compelling unit economics
Best-in class specialty rental assets with compelling unit economics Illustrative Inputs(1): Illustrative Outputs(1): Community: 500 beds $9.0mm Adj. EBITDA / year Capex: $50K / room ($25mm total) $180mm Adj. EBITDA over 20 years ADR / COGS: $95pppn / $35pppn IRR: 36% (20 year) Low maintenance capex
Slide 19: Disciplined capital allocation priorities
Disciplined capital allocation priorities 1 2 3 Invest in Growth Optimize Debt Cost Return Capital Organic & Inorganic $410.0 million(2) Maximize ROIC(3) Minimal maintenance capex(1) Net leverage goal of ~2.0x Prioritized actions Maintain capital discipline Opportunistic debt repayment Retain option
Slide 20: Well capitalized balance sheet provides flexibility
Well capitalized balance sheet provides flexibility Carrying Value ($ in millions) Interest Rate Maturity (as of June 30, 2019) Senior secured notes, aggregate principal amount(1) 9.5% March 2024 $ 340.0 ABL revolving credit facility(2) Varies September 2023 $ 70.0 Total long-term debt, gross amount
Slide 21: Share count analysis
Share count analysis Total Potential Outstanding Shares by Type Common Stock Other Shares and Equivalents Outstanding (4) Common Shares (Fully Diluted) Outstanding as of Escrow ed Exercise of 3/21/2019 (1) Founder Shares (2) Outstanding Warrants (3) Public Shares 14,321,606 14,321,606 Shares Underly
Slide 22: Unaudited Consolidated Statements of Comprehensive Income (Loss)
Unaudited Consolidated Statements of Comprehensive Income (Loss) Exhibit 1 Target Hospitality Corp. Unaudited Consolidated Statements of Comprehensive Income (Loss) ($ in thousands, except per share amounts) For the Three Months Ended For the Six Months Ended June 30, June 30, 2019 2018 2019 2018 Re
Slide 23: Consolidated Balance Sheets
Consolidated Balance Sheets Exhibit 2 Target Hospitality Corp. Consolidated Balance Sheets ($ in thousands) March 31, December 31, June 30, December 31, 2019 2018 2019 2018 (Unaudited) Assets (Unaudited) Liabilities Current assets: Current liabilities: Cash and cash equivalents $ 10,393 $ 12,194 Acc
Slide 24: Unaudited Consolidated Statements of Cash Flows
Unaudited Consolidated Statements of Cash Flows Exhibit 3 Target Hospitality Corp. Unaudited Consolidated Statements of Cash Flows ($ in thousands) For the Six Months Ended For the Six Months Ended June 30, June 30, 2019 2018 2019 2018 Cash flows from operating activities: Cash flows from investing
Slide 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations Exhibit 4 Exhibit 5 Target Hospitality Corp. Target Hospitality Corp. Reconciliation of Net income to EBITDA, Adjusted EBITDA and Adjusted EBITDA margin Reconciliation of Gross profit to Adjusted gross profit and Adjusted gross profit margin ($ in thousands) ($ in thousands)
Slide 26: Non-GAAP Reconciliations, continued
Non-GAAP Reconciliations, continued Exhibit 6 Exhibit 7 Target Hospitality Corp. Target Hospitality Corp. Reconciliation of Net income to Adjusted net income and Adjusted diluted earnings per share Reconciliation of Adjusted EBITDA to Net cash provided by operating activities to Adjusted free cash f
Slide 27: Non-GAAP Reconciliations, continued
Non-GAAP Reconciliations, continued Exhibit 8 Target Hospitality Corp. Reconciliation of Net income (loss) to EBITDA and Adjusted EBITDA As Reported or Pro forma For Selected Periods ($ in thousands) Combined Pro Forma As Reported Combined Pro Forma Quarter Ended Quarter Ended Quarter Ended Year End
Slide 28: Target Hospitality
5;) TARGET HOSPITALITY