THE WOODLANDS, Texas,
Aug. 11, 2021 /PRNewswire/
-- Target Hospitality Corp. ("Target Hospitality", "Target" or
the "Company") (NASDAQ: TH), North
America's largest provider of vertically-integrated modular
accommodations and value-added hospitality services, today reported
results for the three months ended June 30,
2021.
Financial and Operational Highlights for the Second Quarter
2021
- Revenue of $75.0 million for the
three months ended June 30, 2021, as
compared to $53.6 million for the
same period in 2020
- Net loss of $0.9 million for the
three months ended June 30, 2021,
compared to a net loss of $13.7
million for second quarter 2020
- Basic and diluted loss per share of $0.01 for the three months ended June 30, 2021
- Adjusted EBITDA(1) of $31.9
million for the three months ended June 30, 2021, compared to $13.4 million for the same period in 2020
- Executing on premier customer diversification with
approximately 60% of second quarter 2021 revenue related to
committed revenue contracts backed by the United States
Government
- Strong cash generation with net cash provided by operating
activities of $67.4 million and
Discretionary Cash Flow ("DCF") (1) of $65.8 million for the three months ended
June 30, 2021
- Continued strengthening customer demand with second quarter
utilization of 72%, representing the fourth consecutive increase in
quarterly utilization
- Approximately 73% of 2021 revenue under committed revenue
contracts, with approximately 54% of 2021 revenue related to
government services
- As of August 11, 2021, zero
outstanding borrowings under the Company's $125 million credit facility, representing a
reduction of year-to-date 2021 outstanding borrowings of
$70 million and more than
$175 million of total available
liquidity
Executive Commentary
"Target's strong second quarter results are a direct reflection
of the deliberate actions taken in 2020 to appropriately position
the Company, amidst an uncertain operating environment, to take
advantage of a more balanced market. As we continue to
experience a consistent increase in customer demand for our premium
service offerings, we have matched this demand with little
incremental capital. This high return on capital growth has
provided continued margin expansion and significant cash
generation, which has been utilized to meaningfully accelerate the
strengthening of Target's financial position," stated Brad Archer, President and Chief Executive
Officer.
"The momentum Target has sustained over the past year is
impressive and is a clear indication of our ability to align the
business to match customer demand, while staying focused on our
strategic priorities of strengthening Target's balance sheet and
creating value by growing our end markets. Target is well
positioned to continue executing on its strategic focus of
expanding its balanced service offerings, which we believe will
continue to drive value creation for our shareholders," concluded
Mr. Archer.
Segment Name Changes
Target continues to focus its growth strategy on broadening its
reach into adjacent end markets that are consistent with the
Company's core competencies. As of June 30, 2021, the Company changed the name of
select reportable segments to appropriately align with its ongoing
growth strategy and highlight its diversified hospitality and
facilities services offering. The segments formerly known as
"Permian Basin" and "Bakken Basin" will now be referred to as
"Hospitality & Facilities Services – South" ("HFS – South") and
"Hospitality & Facilities Services – Midwest" ("HFS –
Midwest"), respectively. All reporting with former segment
names should be relied upon in its entirety. All other
reportable segment names remain unchanged.
Financial Results
Second Quarter Summary Highlights
Refer to exhibits to this earnings release for definitions and
reconciliations of Non-GAAP financial measures to GAAP financial
measures
|
|
|
|
|
|
|
|
For the Three
Months Ended ($ in '000s, except ADR and per share
amounts)
|
|
June 30, 2021
|
|
June 30, 2020
|
|
|
|
|
|
|
|
(Restated)
|
|
Revenue
|
|
$
|
74,986
|
|
$
|
53,620
|
|
Net
loss
|
|
$
|
(912)
|
|
$
|
(13,667)
|
|
Loss per share –
basic and diluted
|
|
$
|
(0.01)
|
|
$
|
(0.14)
|
|
Adjusted
EBITDA
|
|
$
|
31,940
|
|
$
|
13,363
|
|
Average daily rate
(ADR)
|
|
$
|
75.15
|
|
$
|
81.72
|
|
Average utilized
beds
|
|
|
10,682
|
|
|
5,036
|
|
Utilization
|
|
|
72
|
%
|
|
38
|
%
|
Revenue for the three months ended June
30, 2021, was $75.0 million
compared to $53.6 million for the
same period in 2020. The increase in revenue was primarily driven
by the execution of the government services contract, which began
March 2021, and continued increasing
customer demand in the Company's HFS – South segment. Net loss for
the three months ended June 30, 2021,
was $0.9 million compared to a net
loss of $13.7 million for the same
period in 2020.
Adjusted EBITDA was $31.9 million
for the three months ended June 30,
2021, compared to $13.4
million for the same period in 2020.
ADR decreased by $6.57 to
$75.15 for the three months ended
June 30, 2021, compared to the same
period in 2020. The decrease in ADR was primarily driven by
lower average ADR in the HFS - South segment.
Average utilized beds increased by 5,646 to 10,682 for the three
months ended June 30, 2021. The
increase was driven by the government services contract, which
began March of 2021, contributing 4,000 fully utilized beds to the
Government segment and continued increasing customer demand in the
HFS – South segment. Utilization increased to 72% for the
three months ended June 30, 2021,
compared to 38% for the same period in 2020.
Capital Management
The Company had approximately $12.1
million of capital expenditures for the three months ended
June 30, 2021. Capital
expenditures included approximately $10.6
million in growth capital associated with the recently
executed government services contract and approximately
$1.5 million of maintenance
capital.
As of June 30, 2021, the Company
had $6.5 million of cash and cash
equivalents and $345 million in gross
amount of total debt. As of August 11,
2021, the Company has reduced 2021 year-to-date borrowings
by $70 million and currently has no
outstanding borrowings under the Company's $125 million revolving credit facility, with more
than $175 million of total available
liquidity, including cash and cash equivalents of approximately
$53 million. As a result, the
Company has made significant progress towards its year end 2021
total net leverage ratio target of below 3.5 times.
Business Update
The global economic outlook continues to be supported by
post-pandemic re-openings and a resurgence in global commercial
activity, which has continued to support Target's improving
operational and financial results. Target continues to
benefit from its efficient operating structure, which allows the
Company to take advantage of improving customer demand for its
premium hospitality solutions, with little incremental cost.
Target's legacy business has experienced sequential quarterly
improvement in operating margins and utilization throughout
2021.
The continued improvement in demand for Target's premium service
offering and strategic relationships with its first-class customer
base, continues to support the Company's view of additional
increases in customer demand as activity builds through the
remainder of 2021 and into 2022. As a result, the Company is
reiterating its 2021 financial outlook of:
- Total revenue between $260 and
$270 million
- Adjusted EBITDA(1) between $97 and $107
million
- Interest expense(2) between $33 and $35
million
- Discretionary Cash Flow(1) between $65 and $70
million
- Total capital spending between $15 and $20
million, excluding acquisitions
- Targeting a total net leverage(3) ratio below 3.5x
by year end 2021
(2) Interest expense excludes amortization of
deferred financing cost and original issue discount
(3) Total net leverage ratio is defined in the
credit facility as consolidated total debt to consolidated EBITDA
for the preceding four fiscal quarters
Strategic Focus
The positive momentum Target has experienced through 2021 has
supported systematic execution of its strategic objectives.
Target has achieved significant near-term debt reduction, with no
outstanding borrowings under the Company's credit facility, which
has meaningfully strengthened the financial position of the
Company. Additionally, Target has progressed its
diversification strategy, with approximately 60% of second quarter
2021 revenue related to its Government segment.
Target is well positioned to continue pursuing its growth
strategy, focused on enhancing value through a balanced portfolio
of service offerings. Target's unique core competencies
translate across a range of adjacent end-markets and provide the
opportunity to pursue a variety of value-added growth initiatives,
while simultaneously remaining focused on expanding its reach
providing critical support to the United States
Government.
The increased concentration of services aiding the United States
Government creates an optimal foundation to pursue additional
growth opportunities within the government services market.
Target has intentionally enhanced its capabilities to effectively
identify and evaluate these opportunities, which it believes
provides the greatest opportunity to accelerate value creation.
Segment Results – Second Quarter 2021
Government
Refer to exhibits to this earnings release for definitions and
reconciliations of Non-GAAP financial measures to GAAP financial
measures
|
|
|
|
|
|
|
|
For the Three
Months Ended ($ in '000s, except ADR)
|
|
June 30, 2021
|
|
June 30, 2020
|
|
Revenue
|
|
$
|
44,788
|
|
$
|
16,671
|
|
Adjusted gross
profit
|
|
$
|
27,023
|
|
$
|
12,909
|
|
Adjusted gross
profit margin
|
|
|
60
|
%
|
|
77
|
%
|
Average daily rate
(ADR)
|
|
$
|
76.12
|
|
$
|
74.58
|
|
Average utilized
beds
|
|
|
6,400
|
|
|
2,400
|
|
Utilization
|
|
|
100
|
%
|
|
100
|
%
|
Revenue for the three months ended June
30, 2021, was $44.8 million
compared to $16.7 million for the
same period in 2020. Average available beds of 6,400 were
fully utilized for the three months ended June 30, 2021, with an ADR of $76.12.
On March 18, 2021, Target executed
a $118 million minimum revenue
contract, which is fully committed over its initial one-year
term. The contract adds 4,000 available beds, which will be
fully utilized over the contract term.
Hospitality & Facilities Services - South
Refer to exhibits to this earnings release for definitions and
reconciliations of Non-GAAP financial measures to GAAP financial
measures
|
|
|
|
|
|
|
|
For the Three
Months Ended ($ in '000s, except ADR)
|
|
June 30, 2021
|
|
June 30, 2020
|
|
Revenue
|
|
$
|
28,190
|
|
$
|
21,064
|
|
Adjusted gross
profit
|
|
$
|
13,615
|
|
$
|
6,860
|
|
Adjusted gross
profit margin
|
|
|
48
|
%
|
|
33
|
%
|
Average daily rate
(ADR)
|
|
$
|
73.87
|
|
$
|
88.65
|
|
Average utilized
beds
|
|
|
4,132
|
|
|
2,575
|
|
Utilization
|
|
|
60
|
%
|
|
27
|
%
|
Revenue for the three months ended June
30, 2021, was $28.2 million
compared to $21.1 million for the
same period in 2020. Revenue increased as a result of continued
improving customer headcount demand supported by post-pandemic
re-openings and strengthening commercial activity.
ADR decreased by $14.78, to
$73.87 compared to the same period in
2020. The reduction in ADR was primarily driven by lower prior year
utilization on committed minimum revenue contracts, which inflates
ADR despite a decline in activity.
Adjusted gross profit margin was 48% for the three months ended
June 30, 2021, compared to 33% for
the same period in 2020.
Utilization was 60% for the three months ended June 30, 2021, compared to 27% for the same
period in 2020. As a result of the new government services
contract, executed March 2021, the
Company reallocated approximately 2,400 beds from the HFS - South
segment to the Government segment.
Hospitality & Facilities Services – Midwest
Refer to exhibits to this earnings release for definitions and
reconciliations of Non-GAAP financial measures to GAAP financial
measures
|
|
|
|
|
|
|
|
For the Three
Months Ended ($ in '000s, except ADR)
|
|
June 30, 2021
|
|
June 30, 2020
|
|
Revenue
|
|
$
|
730
|
|
$
|
366
|
|
Adjusted gross
profit
|
|
$
|
(249)
|
|
$
|
(1,169)
|
|
Adjusted gross
profit margin
|
|
|
(34)
|
%
|
|
(319)
|
%
|
Average daily rate
(ADR)
|
|
$
|
67.55
|
|
$
|
70.26
|
|
Average utilized
beds
|
|
|
116
|
|
|
53
|
|
Utilization
|
|
|
11
|
%
|
|
5
|
%
|
Revenue for the three months ended June
30, 2021, was $0.7 million
compared to $0.4 million for the same
period in 2020. The increase was attributable to select communities
re-opening in the segment, which had been closed in the prior
period, as a result of modest improvement in customer demand.
TCPL Keystone
Refer to exhibits to this earnings release for definitions and
reconciliations of Non-GAAP financial measures to GAAP financial
measures
|
|
|
|
|
|
|
|
For the Three
Months Ended ($ in '000s)
|
|
June 30, 2021
|
|
June 30, 2020
|
|
Revenue
|
|
$
|
933
|
|
$
|
15,394
|
|
Adjusted gross
profit
|
|
$
|
604
|
|
$
|
2,054
|
|
Adjusted gross
profit margin
|
|
|
65
|
%
|
|
13
|
%
|
This segment's operations consist primarily of revenue from the
construction phase of the TC Energy Keystone XL Pipeline ("TCPL")
project. Revenue for the three months ended June 30, 2021, was $0.9
million compared to $15.4
million for the same period in 2020. As a result of the
January 20, 2021, Executive Order,
revoking the Keystone XL Presidential Permit, the Company will
recognize substantially lower 2021 revenue associated with the TCPL
project.
On July 23, 2021, the Company
entered into a termination and settlement agreement with TC Energy,
which terminated, the Company's contract with TC Energy that was
originated in 2013. The agreement released the Company from any
outstanding work performance obligations under the 2013 contract
(including all change orders, limited notices to proceed, and
amendments) and provided for payment of a termination fee of
approximately $5 million, which the
Company collected in cash on July 27,
2021.
All Other
Refer to exhibits to this earnings release for definitions and
reconciliations of Non-GAAP financial measures to GAAP financial
measures
|
|
|
|
|
|
|
|
For the Three
Months Ended ($ in '000s)
|
|
June 30, 2021
|
|
June 30, 2020
|
|
Revenue
|
|
$
|
345
|
|
$
|
125
|
|
Adjusted gross
profit
|
|
$
|
(16)
|
|
$
|
(194)
|
|
Adjusted gross
profit margin
|
|
|
(5)
|
%
|
|
(155)
|
%
|
This segment's operations consist of hospitality services
revenue not included in other segments. Revenue for the three
months ended June 30, 2021, was
$0.3 million compared to $0.1 million for the same period in 2020.
Conference Call
The Company has scheduled a conference call for August 11, 2021, at 8:00
a.m. Central Time (9:00 am Eastern
Time) to discuss the second quarter 2021 results.
The conference call will be available by live webcast through
the Investors section of Target Hospitality's website at
www.TargetHospitality.com or by dialing in as follows:
Domestic:
|
1-888-317-6003
|
International:
|
1-412-317-6061
|
Passcode:
|
8699659
|
Please register for the webcast or dial into the conference call
approximately 15 minutes prior to the scheduled start time.
About Target Hospitality
Target Hospitality is North
America's largest provider of vertically integrated modular
accommodations and value-added hospitality services in the United States. Target builds, owns and
operates a customized and growing network of communities for a
range of end users through a full suite of value-added solutions
including premium food service management, concierge, laundry,
logistics, security and recreational facilities services.
Cautionary Statement Regarding Forward Looking
Statements
Certain statements made in this press release are "forward
looking statements" within the meaning of the "safe harbor"
provisions of the United States Private Securities Litigation
Reform Act of 1995. When used in this press release, the words
"estimates," "projected," "expects," "anticipates," "forecasts,"
"plans," "intends," "believes," "seeks," "may," "will," "should,"
"future," "propose" and variations of these words or similar
expressions (or the negative versions of such words or expressions)
are intended to identify forward-looking statements. These
forward-looking statements are not guarantees of future
performance, conditions or results, and involve a number of known
and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside our control, that could cause
actual results or outcomes to differ materially from those
discussed in the forward-looking statements. Important factors,
among others, that may affect actual results or outcomes include:
the severity and duration of the COVID-19 pandemic, related
economic repercussions and the resulting negative impact to global
economic demand; operational challenges relating to the COVID-19
pandemic and efforts to mitigate the spread of the virus, including
logistical challenges, protecting the health and well-being of our
employees and customers, remote work arrangements and return to
work arrangements, contract and supply chain disruptions;
operational, economic, political and regulatory risks; federal
government budgeting and appropriations; our ability to effectively
compete in the specialty rental accommodations and hospitality
services industry; effective management of our communities; natural
disasters, including pandemics and other business disruptions; the
effect of changes in state building codes on marketing our
buildings; changes in demand within a number of key industry
end-markets and geographic regions; our reliance on third party
manufacturers and suppliers; failure to retain key personnel;
increases in raw material and labor costs; the effect of impairment
charges on our operating results; our inability to recognize
deferred tax assets and tax loss carry forwards; our future
operating results fluctuating, failing to match performance or to
meet expectations; our exposure to various possible claims and the
potential inadequacy of our insurance; unanticipated changes in our
tax obligations; our obligations under various laws and
regulations; the effect of litigation, judgments, orders,
regulatory or customer bankruptcy proceedings on our business; our
ability to successfully acquire and integrate new operations;
global or local economic and political movements, including any
changes in policy under the Biden administration; our ability to
effectively manage our credit risk and collect on our accounts
receivable; our ability to fulfill Target Hospitality's public
company obligations; any failure of our management information
systems and our ability to remediate any material weakness;
fluctuations in the fair value of warrant liabilities; our
ability to meet our debt service requirements and obligations; and
risks related to Arrow Bidco's obligations under the senior
notes. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
(1) Non-GAAP Financial Measures
This press release contains historical non-GAAP financial
measures including Adjusted gross profit, Adjusted gross profit
margin, DCF and Adjusted EBITDA, which are measurements not
calculated in accordance with US GAAP, in the discussion of our
financial results because they are key metrics used by management
to assess financial performance. Our business is capital-intensive,
and these additional metrics allow management to further evaluate
our operating performance. Reconciliations of these measures
to the most directly comparable GAAP financial measures are
contained herein. To the extent required, statements disclosing the
definitions, utility and purposes of these measures are also set
forth herein.
This press release also contains forward-looking non-GAAP
financial measures Adjusted EBITDA and Discretionary Cash Flow.
Reconciliations of these forward-looking measures to their most
directly comparable GAAP financial measures are unavailable to
Target Hospitality without unreasonable effort. We cannot provide
reconciliations of forward-looking Adjusted EBITDA and
Discretionary Cash Flow to GAAP financial measures because certain
items required for such reconciliations are outside of our control
and/or cannot be reasonably predicted, such as the provision for
income taxes. Preparation of such reconciliations would require a
forward-looking balance sheet, statement of income and statement of
cash flow, prepared in accordance with GAAP, and such
forward-looking financial statements are unavailable to us without
unreasonable effort. Although we provide a range of Adjusted EBITDA
and Discretionary Cash Flow that we believe will be achieved, we
cannot accurately predict all the components of the Adjusted EBITDA
and Discretionary Cash Flow calculations. Target Hospitality
provides an Adjusted EBITDA and Discretionary Cash Flow outlook
because we believe that these measures, when viewed with our
results under GAAP, provide useful information for the reasons
noted below.
Definitions:
Target Hospitality defines Adjusted gross profit, as Gross
profit plus depreciation of specialty rental assets and loss on
impairment. Target Hospitality defines Adjusted gross profit margin
as Adjusted gross profit divided by total revenue for the same
period.
Target Hospitality defines EBITDA as net income (loss) before
interest expense and loss on extinguishment of debt, income tax
expense (benefit), depreciation of specialty rental assets, and
other depreciation and amortization. Adjusted EBITDA reflects the
following further adjustments to EBITDA to exclude certain non-cash
items and the effect of what management considers transactions or
events not related to its core business operations:
- Other expense (income), net: Other expense (income), net
includes consulting expenses related to certain projects, financing
costs not classified as interest expense, gains and losses on
disposals of property, plant, and equipment, involuntary asset
conversions, COVID-19 related expenses, and other immaterial
non-cash charges.
- Transaction expenses: Target Hospitality incurred certain
transaction costs, including legal and professional fees,
associated with the previously announced non-binding proposal made
by Arrow Holdings S.à r.l. ("Arrow"), an affiliate of TDR Capital
LLP ("TDR"), to acquire all of the outstanding shares of common
stock of Target Hospitality not owned by Arrow or its affiliates
for cash consideration of $1.50 per
share in the current period. The prior period primarily included
residual tax advisory filing related expenses associated with the
Business Combination.
- Stock-based compensation: Non-cash charges associated with
stock-based compensation expense, which has been, and will continue
to be for the foreseeable future, a significant recurring expense
in our business and an important part of our compensation
strategy.
- Change in fair value of warrant liabilities: Non-cash change in
estimated fair value of warrant liabilities.
- Other adjustments: System implementation costs, including
primarily non-cash amortization of capitalized system
implementation costs, claim settlement, business development,
accounting standard implementation costs and certain severance
costs.
Target Hospitality defines Discretionary cash flow as cash flow
from operations less maintenance capital spending for specialty
rental assets.
Utility and Purposes:
EBITDA reflects net income (loss) excluding the impact of
interest expense and loss on extinguishment of debt, provision for
income taxes, depreciation, and amortization. We believe that
EBITDA is a meaningful indicator of operating performance because
we use it to measure our ability to service debt, fund capital
expenditures, and expand our business. We also use EBITDA, as do
analysts, lenders, investors, and others, to evaluate companies
because it excludes certain items that can vary widely across
different industries or among companies within the same industry.
For example, interest expense can be dependent on a company's
capital structure, debt levels, and credit ratings. Accordingly,
the impact of interest expense on earnings can vary significantly
among companies. The tax positions of companies can also vary
because of their differing abilities to take advantage of tax
benefits and because of the tax policies of the jurisdictions in
which they operate. As a result, effective tax rates and provision
for income taxes can vary considerably among companies. EBITDA also
excludes depreciation and amortization expense, because companies
utilize productive assets of different ages and use different
methods of both acquiring and depreciating productive assets. These
differences can result in considerable variability in the relative
costs of productive assets and the depreciation and amortization
expense among companies.
Target Hospitality also believes that Adjusted EBITDA is a
meaningful indicator of operating performance. Our Adjusted EBITDA
reflects adjustments to exclude the effects of additional items,
including certain items, that are not reflective of the ongoing
operating results of Target Hospitality. In addition, to
derive Adjusted EBITDA, we exclude gains or losses on the sale of
depreciable assets and impairment losses because including them in
EBITDA is inconsistent with reporting the ongoing performance of
our remaining assets. Additionally, the gain or loss on sale of
depreciable assets and impairment losses represents either
accelerated depreciation or excess depreciation in previous
periods, and depreciation is excluded from EBITDA.
Adjusted gross profit, Adjusted gross profit margin, DCF and
Adjusted EBITDA are not measurements of Target Hospitality's
financial performance under GAAP and should not be considered as
alternatives to Net income (loss), Gross profit, Earnings per
share, Net cash provided by operating activities, or other
performance measures derived in accordance with GAAP. In addition,
these non-GAAP measures may not be comparable to similarly titled
measures of other companies. Target Hospitality's management
believe that Adjusted gross profit, Adjusted gross profit margin,
DCF and Adjusted EBITDA provide useful information to investors
about Target Hospitality and its financial condition and results of
operations for the following reasons: (i) they are among the
measures used by Target Hospitality's management team to evaluate
its operating performance; (ii) they are among the measures used by
Target Hospitality's management team to make day-to-day operating
decisions, (iii) they are frequently used by securities analysts,
investors and other interested parties as a common performance
measure to compare results across companies in Target Hospitality's
industry.
Investor Contact:
Mark Schuck
(832) 702 – 8009
ir@targethospitality.com
Exhibit 1
|
|
Target Hospitality
Corp.
|
Consolidated
Statements of Comprehensive Loss
|
($ in thousands,
except per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenue:
|
|
|
|
|
|
(Restated)
|
|
|
|
|
|
(Restated)
|
Services
income
|
|
$
|
53,648
|
|
$
|
25,257
|
|
$
|
86,585
|
|
$
|
79,195
|
Specialty rental
income
|
|
|
20,827
|
|
|
12,968
|
|
|
32,448
|
|
|
29,551
|
Construction fee
income
|
|
|
511
|
|
|
15,395
|
|
|
1,445
|
|
|
16,528
|
Total
revenue
|
|
|
74,986
|
|
|
53,620
|
|
|
120,478
|
|
|
125,274
|
Costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
|
29,422
|
|
|
31,459
|
|
|
48,771
|
|
|
60,466
|
Specialty
rental
|
|
|
4,587
|
|
|
1,701
|
|
|
6,829
|
|
|
4,304
|
Depreciation of
specialty rental assets
|
|
|
13,908
|
|
|
12,266
|
|
|
26,348
|
|
|
25,162
|
Gross
profit
|
|
|
27,069
|
|
|
8,194
|
|
|
38,530
|
|
|
35,342
|
Selling, general and
administrative
|
|
|
11,677
|
|
|
10,101
|
|
|
23,009
|
|
|
20,092
|
Other depreciation
and amortization
|
|
|
4,096
|
|
|
4,098
|
|
|
8,092
|
|
|
8,214
|
Other expense
(income), net
|
|
|
444
|
|
|
446
|
|
|
690
|
|
|
(569)
|
Operating income
(loss)
|
|
|
10,852
|
|
|
(6,451)
|
|
|
6,739
|
|
|
7,605
|
Interest expense,
net
|
|
|
9,744
|
|
|
10,178
|
|
|
19,594
|
|
|
20,200
|
Change in fair value
of warrant liabilities
|
|
|
2,080
|
|
|
(533)
|
|
|
2,720
|
|
|
(2,187)
|
Loss before income
tax
|
|
|
(972)
|
|
|
(16,096)
|
|
|
(15,575)
|
|
|
(10,408)
|
Income tax
benefit
|
|
|
(60)
|
|
|
(2,429)
|
|
|
(1,523)
|
|
|
(2,196)
|
Net loss
|
|
|
(912)
|
|
|
(13,667)
|
|
|
(14,052)
|
|
|
(8,212)
|
Other comprehensive
income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation
|
|
|
7
|
|
|
45
|
|
|
(12)
|
|
|
(66)
|
Comprehensive
loss
|
|
$
|
(905)
|
|
$
|
(13,622)
|
|
$
|
(14,064)
|
|
$
|
(8,278)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number shares outstanding - basic and diluted
|
|
|
96,545,441
|
|
|
96,003,079
|
|
|
96,398,732
|
|
|
95,926,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share
- basic and diluted
|
|
$
|
(0.01)
|
|
$
|
(0.14)
|
|
$
|
(0.15)
|
|
$
|
(0.09)
|
Exhibit 2
|
|
Target Hospitality
Corp.
|
Condensed
Consolidated Balance Sheet Data
|
($ in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
2021
|
|
2020
|
Assets
|
|
|
|
|
|
(Restated)
|
Cash and cash
equivalents
|
|
$
|
6,467
|
|
$
|
6,979
|
Accounts receivable,
less allowance for doubtful accounts
|
|
|
29,862
|
|
|
28,183
|
Other current
assets
|
|
|
5,505
|
|
|
8,400
|
Total current
assets
|
|
$
|
41,834
|
|
$
|
43,562
|
|
|
|
|
|
|
|
Specialty rental
assets, net
|
|
|
300,329
|
|
|
311,487
|
Goodwill and Other
intangibles, net
|
|
|
136,838
|
|
|
144,159
|
Other non-current
assets
|
|
|
34,975
|
|
|
35,029
|
Total
assets
|
|
$
|
513,976
|
|
$
|
534,237
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
14,772
|
|
$
|
10,644
|
Deferred revenue and
customer deposits
|
|
|
35,650
|
|
|
6,619
|
Other current
liabilities
|
|
|
26,623
|
|
|
28,270
|
Total current
liabilities
|
|
|
77,045
|
|
|
45,533
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
|
328,304
|
|
|
326,499
|
Revolving credit
facility
|
|
|
5,000
|
|
|
48,000
|
Warrant
liabilities
|
|
|
3,253
|
|
|
533
|
Other non-current
liabilities
|
|
|
14,175
|
|
|
14,784
|
Total
liabilities
|
|
|
427,777
|
|
|
435,349
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
Common stock and
other stockholders' equity
|
|
|
81,929
|
|
|
80,568
|
Accumulated
earnings
|
|
|
4,270
|
|
|
18,320
|
Total
stockholders' equity
|
|
|
86,199
|
|
|
98,888
|
Total liabilities
and stockholders' equity
|
|
$
|
513,976
|
|
$
|
534,237
|
Exhibit 3
|
|
Target Hospitality
Corp.
|
Condensed
Consolidated Cash Flow Data
|
($ in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended
|
|
|
June 30,
|
|
|
2021
|
|
2020
|
|
|
|
|
|
|
(Restated)
|
Cash, cash
equivalents and restricted cash - beginning of
period
|
|
$
|
6,979
|
|
$
|
6,839
|
|
|
|
|
|
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
Net loss
|
|
|
(14,052)
|
|
|
(8,212)
|
Adjustments:
|
|
|
|
|
|
|
Depreciation
|
|
|
27,119
|
|
|
25,957
|
Amortization of
intangible assets
|
|
|
7,321
|
|
|
7,410
|
Other non-cash
items
|
|
|
6,024
|
|
|
764
|
Changes in operating
assets and liabilities
|
|
|
33,029
|
|
|
(560)
|
Net cash provided
by operating activities
|
|
$
|
59,441
|
|
$
|
25,359
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
Purchases of specialty
rental assets
|
|
|
(14,107)
|
|
|
(12,310)
|
Other investing
activities
|
|
|
(104)
|
|
|
549
|
Net cash used in
investing activities
|
|
$
|
(14,211)
|
|
$
|
(11,761)
|
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
Purchase of treasury
stock
|
|
|
-
|
|
|
(5,318)
|
Other financing
activities
|
|
|
(45,775)
|
|
|
4,877
|
Net cash used in
financing activities
|
|
$
|
(45,775)
|
|
$
|
(441)
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
|
|
33
|
|
|
(15)
|
|
|
|
|
|
|
|
Change in cash, cash
equivalents and restricted cash
|
|
|
(512)
|
|
|
13,142
|
|
|
|
|
|
|
|
Cash, cash
equivalents and restricted cash - end of period
|
|
$
|
6,467
|
|
$
|
19,981
|
Exhibit 4
|
|
Target Hospitality
Corp.
|
Reconciliation of
Gross profit to Adjusted gross profit and Adjusted gross profit
margin
|
($ in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
For the Six Months
Ended
|
|
June 30,
|
|
June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Revenue
|
$
|
74,986
|
|
$
|
53,620
|
|
$
|
120,478
|
|
$
|
125,274
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
$
|
27,069
|
|
$
|
8,194
|
|
$
|
38,530
|
|
$
|
35,342
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of
specialty rental assets
|
|
13,908
|
|
|
12,266
|
|
|
26,348
|
|
|
25,162
|
Adjusted gross
profit
|
$
|
40,977
|
|
$
|
20,460
|
|
$
|
64,878
|
|
$
|
60,504
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross profit
margin
|
|
55%
|
|
|
38%
|
|
|
54%
|
|
|
48%
|
Exhibit 5
|
|
Target Hospitality
Corp.
|
Reconciliation of
Net loss to EBITDA and Adjusted EBITDA
|
($ in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
For the Six Months
Ended
|
|
June
30,
|
|
June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
(Restated)
|
|
|
|
|
|
(Restated)
|
Total
Revenue
|
$
|
74,986
|
|
$
|
53,620
|
|
$
|
120,478
|
|
$
|
125,274
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$
|
(912)
|
|
$
|
(13,667)
|
|
$
|
(14,052)
|
|
$
|
(8,212)
|
Income tax
benefit
|
|
(60)
|
|
|
(2,429)
|
|
|
(1,523)
|
|
|
(2,196)
|
Interest expense,
net
|
|
9,744
|
|
|
10,178
|
|
|
19,594
|
|
|
20,200
|
Other depreciation
and amortization
|
|
4,096
|
|
|
4,098
|
|
|
8,092
|
|
|
8,214
|
Depreciation of
specialty rental assets
|
|
13,908
|
|
|
12,266
|
|
|
26,348
|
|
|
25,162
|
EBITDA
|
$
|
26,776
|
|
$
|
10,446
|
|
$
|
38,459
|
|
$
|
43,168
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Other expense
(income), net
|
|
444
|
|
|
729
|
|
|
689
|
|
|
(5)
|
Transaction
expenses
|
|
332
|
|
|
332
|
|
|
1,149
|
|
|
356
|
Stock-based
compensation
|
|
1,436
|
|
|
1,038
|
|
|
2,235
|
|
|
1,922
|
Change in fair value
of warrant liabilities
|
|
2,080
|
|
|
(533)
|
|
|
2,720
|
|
|
(2,187)
|
Other
adjustments
|
|
872
|
|
|
1,351
|
|
|
2,649
|
|
|
2,460
|
Adjusted
EBITDA
|
$
|
31,940
|
|
$
|
13,363
|
|
$
|
47,901
|
|
$
|
45,714
|
Exhibit 6
|
|
Target Hospitality
Corp.
|
Reconciliation of
Net cash provided by operating activities to Discretionary cash
flows
|
($ in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
For the Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net cash provided
by operating activities
|
|
$
|
67,440
|
|
$
|
14,808
|
|
$
|
59,441
|
|
$
|
25,359
|
Less: Maintenance
capital expenditures for specialty rental assets
|
|
|
(1,606)
|
|
|
(66)
|
|
|
(3,066)
|
|
|
(695)
|
Discretionary cash
flows
|
|
$
|
65,834
|
|
$
|
14,742
|
|
$
|
56,375
|
|
$
|
24,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of specialty
rental assets
|
|
|
(10,934)
|
|
|
(1,559)
|
|
|
(14,107)
|
|
|
(12,310)
|
Purchase of property,
plant and equipment
|
|
|
(75)
|
|
|
(57)
|
|
|
(104)
|
|
|
(70)
|
Receipt of insurance
proceeds
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
619
|
Net cash used in
investing activities
|
|
$
|
(11,009)
|
|
$
|
(1,616)
|
|
$
|
(14,211)
|
|
$
|
(11,761)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal payments on
finance and capital lease obligations
|
|
|
(1,329)
|
|
|
(10,112)
|
|
|
(2,690)
|
|
|
(10,115)
|
Proceeds from
borrowings on finance and capital lease obligations
|
|
|
—
|
|
|
9,418
|
|
|
—
|
|
|
10,151
|
Principal payments on
borrowings from ABL
|
|
|
(59,000)
|
|
|
(15,000)
|
|
|
(65,000)
|
|
|
(37,500)
|
Proceeds from
borrowings on ABL
|
|
|
4,000
|
|
|
15,000
|
|
|
22,000
|
|
|
42,500
|
Restricted shares
surrendered to pay tax liabilities
|
|
|
(34)
|
|
|
(76)
|
|
|
(85)
|
|
|
(159)
|
Purchase of treasury
stock
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,318)
|
Net cash used in
financing activities
|
|
$
|
(56,363)
|
|
$
|
(770)
|
|
$
|
(45,775)
|
|
$
|
(441)
|
View original
content:https://www.prnewswire.com/news-releases/target-hospitality-delivers-outstanding-second-quarter-2021-results-driving-robust-cash-flows-as-diversification-strategy-strengthens-301352375.html
SOURCE Target Hospitality