Target Hospitality Corp. · NASDAQ:TH
Target Hospitality — Investor Presentation (September 2023)
35 slides from Target Hospitality's investor presentation, September 2023
Slide 1: Investor Presentation September 2023
Investor Presentation September 2023
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: Target Hospitality (NASDAQ: TH)
Target Hospitality (NASDAQ: TH) North America’s Largest Provider of Key Differentiating Attributes Comprehensive Hospitality Solutions TH leverages a premier network and first-class customer base, which Strategically located network creates scale North America’s Largest provides increased revenue
Slide 4: Differentiated & Compelling Investment Opportunity
Differentiated & Compelling Investment Opportunity Leading provider of full turnkey vertically integrated modular accommodations and value-added hospitality services with powerful unit economics Strong presence in core end markets providing critical service offerings to a diversified customer base t
Slide 5: Holistic Hospitality Solutions and Services
Holistic Hospitality Solutions and Services Customized and Purpose-Built Solutions Premium Hospitality Services and Offerings - Site Selection & Civil Surveying - Holistic Remote Workforce Solutions - Community Configuration & Layout - Gated Access & 24/7 Onsite Security - Engineering & Land Prepara
Slide 6: Diversified Value-Enhancing Business Model
Diversified Value-Enhancing Business Model Strategically Focused on Enhancing Value through a Balanced Portfolio of Service Offerings Premier Network Creating Value with Existing Core Competencies Network size and scale provide efficient operating structure and Utilizing existing capabilities to ide
Slide 7: Proven Track Record of Business Transformation
Proven Track Record of Business Transformation 2014 2019 2022 Provider of turnkey specialty rental One of the largest providers of vertically- One of North America’s largest provider of full Business Profile units to niche customer integrated hospitality services turnkey hospitality solutions and ho
Slide 8: Contract Structure Drives Long-Term Revenue Visibility
Contract Structure Drives Long-Term Revenue Visibility Multiyear Contracts Provide Greater Visibility on Long-Term Revenue and Cash Flow Attractive Exposure to Multiple End Markets Supports Diversified Revenue Weighted Average Contract Length ~4 Years Hospitality and Facilities Services Government S
Slide 9: Creating Positive Social Change
Creating Positive Social Change Caring for Vulnerable Populations Through Critical Humanitarian Solutions Children and family units come to the United States to escape desperate situations, including Caring poverty, violence and exploitation Target’s humanitarian solutions create a nurturing environ
Slide 10: Expanded Humanitarian Community
Expanded Humanitarian Community Thoughtfully Designed and Purpose Built for a Vibrant and Welcoming Environment Investor Presentation | 10
Slide 11: Expanded Humanitarian Community
Expanded Humanitarian Community Dedicated to Promoting Mental and Physical Well-Being Investor Presentation | 11
Slide 12: Trusted Provider of Critical Humanitarian Solutions
Trusted Provider of Critical Humanitarian Solutions Target’s Best-In-Class Communities and Humanitarian Solutions Extend Beyond Party Lines 3,000 Obama Trump Biden March 2023 - Target's non-profit partner awarded 5-year IDIQ contract (additional 5-year option) 2,500 Southwest Border Encounters (000'
Slide 13: Expanded and Enhanced Humanitarian Support
Expanded and Enhanced Humanitarian Support Expanded Operational Scope Creates Comprehensive and Highly Customized Solutions Real Estate 11 geographic 6,400 ~1,600 Over 3 miles of over 280 Acres sites in the Pecos, total beds modular buildings sidewalks Texas area 6 Outdoor Covered 10 Indoor 14 Educa
Slide 14: Customized Community Establishes ICF Blueprint
Customized Community Establishes ICF Blueprint Highly Customized Assets Supports Longevity of Enhanced Holistic Service Offering Established in 2021, the Pecos Children’s Center (“PCC”) has entered its third year of operations PCC is the only purpose-built Influx Care Facility (“ICF”) in the United
Slide 15: Growth Aspirations
Financial Update Growth Aspirations Investor Presentation | 15
Slide 16: Multiple Value Enhancing Growth Levers
Multiple Value Enhancing Growth Levers Strength in Core Offerings Underpins Multiple Avenues to Accelerate Growth Seeking to Allocate +$500 million of Growth Capital Through 2027 1 2 3 Continued Growth of Legacy Expansion of Government Extension in Adjacent HFS Business Service Offerings Commercial
Slide 17: Managing Legacy Portfolio
1 Managing Legacy Portfolio North America’s largest strategically located network supports an efficient Established 29 Premier operating structure and provides the optimal foundation to match growing Platform Communities (1) customer demand with minimal capital requirements Top-tier natural resource
Slide 18: Growing Government Service Offerings
2 Growing Government Service Offerings Established provider of premier comprehensive hospitality solutions to the Premier United States Government, supporting the two largest permanent hospitality 8,800 Beds Provider solutions for the Government’s humanitarian aid efforts Intentionally increased exp
Slide 19: Extending Reach to Adjacent End Markets
3 Extending Reach to Adjacent End Markets Individual elements of Target’s existing core service offering provide unique ~14 Million Superior opportunities to pursue attractive growth opportunities Annual Meals Capabilities Served (1) Strong national presence creates a platform to expand geographical
Slide 20: Financial Strength
Financial Update Financial Strength Investor Presentation | 20
Slide 21: Strong Second Quarter 2023 Financial Performance
Strong Second Quarter 2023 Financial Performance Sustained Business Momentum and Continued Achievement of Strategic Objectives Second Quarter Highlights Consistently Enhancing Financial Strength Revenue increased 31% to ~$144 million compared to the Over $350 million of cumulative debt reduction
Slide 22: Strategic Principles Support Positive Momentum
Strategic Principles Support Positive Momentum Continued Strength in Core Business and Customer Demand Diversification of End-Markets Provides Strong Revenue Visibility Generating Meaningful Discretionary Cash Flow Achieving Strategic Objectives 2023 Financial Outlook(1) Transformative expansion o
Slide 23: Consistent and Predictable Revenue Visibility
Consistent and Predictable Revenue Visibility Contract structure, including exclusivity, provide consistent and predictable quarterly revenue Quarterly committed minimum revenue is routinely over 70% Contracted and exclusive relationships provides highly reliable revenue from premier customers Empha
Slide 24: Flexible Capital Spending Supports Cash Flow Visibility
Flexible Capital Spending Supports Cash Flow Visibility Disciplined Capital Deployment Creates Meaningful Cash Flow Generation Durability of modular asset base requires minimal maintenance capital, typically ~2%-3% of annual revenue Established network and premier customer base creates ideal sce
Slide 25: Current Capitalization Table
Current Capitalization Table ($ in millions) As of Debt Capitalization 6/30/2023 Maturity Pricing Cash & Cash Equivalents $70 $125MM ABL Facility – 2/1/28 S + 275 bps 9.500% Senior Secured Notes Due 2024 207 3/15/24 9.500% Cap Leases and Other Financing Obligations 4 Total Debt $212 Market Capitaliz
Slide 26: Efficient Capital Deployment Drives Returns
Efficient Capital Deployment Drives Returns Target’s efficient operating structure and unique capabilities, create a highly scalable business model, providing the foundation to meet increasing customer demand with little incremental capital High quality contracts support meaningful cash generati
Slide 27: Powerful HFS Unit Economics (Illustrative)
Powerful HFS Unit Economics (Illustrative) Inputs: Estimated Outputs1: Community Size: 500 Beds Annual Revenue: $14 million Investment: $61,000 per bed Adj. EBITDA2: $7 million ADR / COGS: $76 / $51 Cumulative Minimal Recurring Maintenance Capital Adj. EBITDA (20 years)2: $106 million
Slide 28: Diversified and Unique Peer Universe
Diversified and Unique Peer Universe Target’s unique service offering, and diversified customer base supports a broad peer universe Unique business fundamentals align with a range of attractive end markets Target shares increasingly relevant attributes with government service focused peers Large,
Slide 29: Top Tier Financial Metrics Support Premium Valuation
Top Tier Financial Metrics Support Premium Valuation Achieving Best-in-Class Operating Margins Generating Significant Discretionary Cash Flow Margin Profile, Cash Flow and Diversified Customer Base Supports Multiple Expansion LTM Adjusted Gross Profit Margin(1) Current EV to Adjusted EBITDA(2)(3) 70
Slide 30: Appendix
Appendix Appendix Investor Presentation | 30
Slide 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations Target Hospitality Corp. Reconciliation of Net Income to EBITDA, Adjusted EBITDA ($ in thousands) For the Three Months Ended For the Twelve Months Ended For the Fifty-Four Months Ended June 30, June 30, 2023 June 30, 2023 2023 2022 Total Revenue $ 143,630 $ 109,647 $ 603,453
Slide 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations Target Hospitality Corp. Reconciliation of Net cash provided by operating activities to Discretionary cash flow ($ in thousands) For the Years Ended For the Twelve Months Ended December 31, June 30, 2022 2021 2020 2023 Total Revenue $ 501,985 $ 291,337 $ 225,148 $ 603,452 Ne
Slide 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations Target Hospitality Corp. Reconciliation of Gross Profit to Adjusted gross profit and Adjusted gross profit margin ($ in thousands) For the Twelve Months Ended June 30, 2023 Total Revenue $ 603,452 Gross Profit $ 330,998 Adjustments: Depreciation of specialty rental assets 63
Slide 34: Definitions
Definitions Definitions: Target Hospitality defines Adjusted gross profit, as Gross profit plus depreciation of specialty rental assets, loss on impairment, and certain severance costs. Target Hospitality defines EBITDA as net income (loss) before interest expense and loss on extinguishment of debt,
Slide 35: Target Hospitality
5) TARGET’ HOSPITALITY 5-) TARGET HOSPITALITY investor Presentation | 35
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