Investor Presentation
November 2023
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 that they do not relate strictly to historical or current facts. Management cautions that any or all of Target Hospitality's forward-looking statements may turn out to be wrong. Please read Target Hospitality's annual, quarterly and current reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, including its 2022 Form 10-K filed on March 10, 2023, first quarter 2023 Form 10-Q filed on May 9, 2023, second quarter 2023 Form 10-Q filed on August 9, 2023, and third quarter 2023 Form 10-Q filed on November 8, 2023 for additional information about the risks, uncertainties and other factors affecting these forward-looking statements and Target Hospitality generally. Target Hospitality's actual future results may vary materially from those expressed or implied in any forward-looking statements. All of Target Hospitality's forward-looking statements, whether written or oral, are expressly qualified by these cautionary statements and any other cautionary statements that may accompany such forward-looking statements. In addition, Target Hospitality disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
Non-GAAP Financial Measures
This presentation contains historical non-GAAP financial measures including EBITDA, Adjusted EBITDA, Adjusted Gross Profit, Adjusted Gross Profit margin, and Discretionary Cash Flow. Reconciliations of these historical measures to the most directly comparable GAAP financial measures are contained herein. This presentation also contains forward-lookingnon-GAAP financial measure Adjusted EBITDA. Reconciliations of this forward-looking measure to its most directly comparable GAAP financial measure is unavailable to Target Hospitality without unreasonable effort. We cannot provide reconciliations of forward-looking Adjusted EBITDA 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 that we believe will be achieved, we cannot accurately predict all the components of the Adjusted EBITDA calculation. To the extent required, statements disclosing the definitions, utility and purposes of these measures are set forth in our earnings press release for the year ended 2022 and third quarter 2023, which is available on our website free of charge at www.TargetHospitality.com.
Investor Presentation | 2
Target Hospitality (NASDAQ: TH)
North America's Largest Provider of Comprehensive Hospitality Solutions
Key Differentiating Attributes
- TH leverages a premier network and first-class customer base, which provides increased revenue visibility through minimum revenue commitment contracts and customer exclusivity provisions
- Servicing a diversified customer base including Government and non- profits in support of humanitarian aid efforts
- Utilizing distinct core competencies to provide a comprehensive suite of hospitality solutions
- Consistently enhancing value through a balanced portfolio of service offerings
North America's Largest Network
Premier Customers
Diversified Service
Offerings
Unrivaled Market
Leadership
LTM Total Revenue(1)
Government | HFS and |
Other(3) 27% | |
73% | |
$590
Strategically located network creates scale and flexibility that continues to drive profitability
Long-standing customer relationships; ~4 yrs. wtd. avg. contract duration and +90% contract renewal rate drives visibility
Distinct core competencies provide unique opportunities to drive value enhancing diversification
Trusted partner and gold standard provider of critical hospitality solutions for U.S. Government's humanitarian missions
Total Pro-Forma Available
Liquidity (2)
$280
Investor Presentation | 3
- $ in millions, represents total consolidated revenue for the twelve months ended September 30, 2023
-
Total pro-forma available liquidity as of September 30, 2023, inclusive of the $50 million increase to the Company's credit facility announced on October 12, 2023, comprised of cash and cash equivalents as of 9.30.23 of $105 million and $175 million of available borrowings on the Company's credit facility.
3) Includes HFS - South, HFS - Midwest and All Other segments
Differentiated & Compelling Investment Opportunity
Leading provider of vertically integrated modular accommodations
Unique value enhancing growth opportunities across a large addressable market
Proven track record of powerful returns
Substantial revenue visibility with high contract renewal rates
Robust balance sheet provides optionality in pursuing attractive growth opportunities
29 Communities with
16,320 Beds Available(1)
~$20bn
Market Opportunity(2)
~$540 million of
Cumulative DCF(3) since 2020
+90% Renewal Rate
since 2015
0.3x Net Leverage(1)
- As of September 30, 2023
- Estimated government services end-market annual contract award value based on management's estimates and third-party market research and analysis
- Discretionary Cash Flow ("DCF") defined as Operating Cash Flow less maintenance capital expenditures. Cumulative DCF from 2020 - September 30, 2023. DCF is a non-GAAP financial measure; please see appendix for reconciliation to GAAP measures
Investor Presentation | 4
Holistic Hospitality Solutions and Services
Customized and Purpose-Built Solutions
Premium Hospitality Services and Offerings
- Site Selection & Civil Surveying
- Community Configuration & Layout
- Engineering & Land Preparation
- Real Estate Acquisition
- Commercial Construction & Fabrication
- Modular Asset Integration
- Full Utility Capabilities & Integrations
- Cellular Connectivity & Installation
- Integrated Community Amenities
Design
Build
Develop
Operate
Service
Manage
- Holistic Remote Workforce Solutions
- Gated Access & 24/7 Onsite Security
- Comprehensive Maintenance Services
- Multiple 24/7 Culinary Solutions
- Premier Health & Recreational Facilities
- Transportation & Logistic Services
- Complete Facilities Management
- Technology Infrastructure & Services
- Waste & Janitorial Solutions
Investor Presentation | 5
Diversified Value-Enhancing Business Model
Strategically Focused on Enhancing Value through a Balanced Portfolio of Service Offerings
Premier Network
Network size and scale provide efficient operating structure and promote meaningful strategic advantages in servicing a diversified customer base
Distinct Core Competencies
Best in class customers find increasing value in Target's distinctive set of core competencies which provide the basis for comprehensive hospitality solutions including:
- Food Management - Workforce Accommodations - Logistics
- Lodging Infrastructure - Facilities Maintenance - Premium Catering
Unique Capabilities
Target's premium service offerings provide the basis for expanding its commercial reach beyond its core accommodations platform while unlocking value within its existing core competencies. Target's suite of comprehensive hospitality service offerings and unique capabilities translate across a variety of end markets, creating multiple growth vectors to further enhance value.
- Total reported consolidated revenue for the years ended December 31, 2020, 2021 and 2022
- Represents total reported consolidated revenue for the twelve months ended September 30, 2023
- Includes HFS - South, and All Other segments
Creating Value with Existing Core Competencies
Utilizing existing capabilities to identify and pursue high growth opportunities, with limited infrastructure capital, generating industry leading returns on invested capital
Diversified customer base creates unique opportunities to accelerate value creation across multiple growth platforms
Diversification Supports Meaningful Revenue
Growth
$590 | |
$600 | |
$500 | |
millions | $400 |
$300 | |
$ in | |
$225 | |
$200 | |
$100 | |
$- |
2020 (1) | 2021 (1) | 2022 (1) | Q3 2023 LTM (2) |
HFS & Other (3) | Government | Investor Presentation | 6 | |
Proven Track Record of Business Transformation
2014 | 2019 | 2022 | |
Revenue | $139 million | $321 million | $502 million |
Adjusted EBITDA(1)
$55 million | $159 million | $265 million |
Network Scale | 10 Communities | 20 Communities | 27 Communities |
Available Beds | 5,185 | 12,004 | 16,830 | |||
6% 6% | 72% | |||||
56% | 44% | 67% | Government | 28% | ||
Business Mix | HFS | HFS | 21% | HFS | HFS and | |
Midwest | South | Government | South | Other |
100% Energy End Market Focused | 80% Energy End Market Focused |
~70% Government Services End Market
(1) Adjusted EBITDA is a non-GAAP financial measure; please see appendix for reconciliation to GAAP measures
Analyst Day Presentation | 7
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
Government Services | Hospitality and Facilities Services |
- Government services contracts support two purpose built and highly customized communities in Texas
- Originating in 2014, the South Texas Family Residential Center supports a 2,400 bed community
- Beginning in 2021, the Pecos Childrens Center supports a 6,400 bed community
- Providing critical hospitality solutions for displaced persons supporting the U.S. government's essential humanitarian aid efforts
- Contract structure centers on minimum annual revenue commitments, supporting consistent economic returns
- 19 all-inclusivefull-turnkey communities supports blue chip customers dynamic labor allocation requirements
- Long-standingrelationships with some of the world's largest companies, providing enhanced revenue visibility via minimum revenue commitments
- Over 90% customer renewal rate since 2015
- Contract structure, including exclusivity, provides foundation for increasing effective market share as commercial activity and demand increase
Complementary Business Mix Underpinned by Strong Core Offerings Creates Multiple Avenues to
Accelerate Growth in Well Established Markets
Investor Presentation | 8
Creating Positive Social Change
Caring for Vulnerable Populations Through Critical Humanitarian Solutions
Caring
Holistic
Humanitarian Solutions
Children and family units come to the United States to escape desperate situations, including poverty, violence and exploitation
Target's humanitarian solutions create a nurturing environment to support this critical emotional and social transition
Target is committed to providing safe, clean and compassionate hospitality solutions for these desperate situations
Creating holistic full-service communities with a tailored focus on supporting these vulnerable populations
As the largest provider of permanent hospitality solutions supporting the United States government and their humanitarian aid efforts
Target's best-in-class communities include interactive educational services, premier recreational facilities and comprehensive medical treatment capabilities
Investor Presentation | 9
Expanded Humanitarian Community
Thoughtfully Designed and Purpose Built for a Vibrant and Welcoming Environment
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Target Hospitality Corp. published this content on 24 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 November 2023 15:08:12 UTC.