Target Hospitality Corp. · NASDAQ:TH
Target Hospitality — Q1 2019 Earnings Presentation
28 slides from Target Hospitality's earnings presentation, May 8, 2019
Slide 1: 1Q 2019 Earnings Call Presentation
1Q 2019 Earnings Call Presentation May 8, 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: 1Q 2019 Financial Results and Operational Highlights
1Q 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: Differentiated, value-added business model
Differentiated, value-added business model 1 2 3 … premier customers through … premium in-house catering + Largest(1) network serving … exclusive LT relationships with … value-added hospitality services TARGET 12 WHAT WE PROVIDE ENHANCES THEIR YOUR WORKERS PERFORMANCE OFF THE CLOCK ON THE CLOCK 01 F
Slide 6: Strong customer partnerships drive highly visible, recurring revenue
Strong customer partnerships drive highly visible, recurring revenue Total Revenue 1 (at mid-point of 2019E Outlook) Contracted Contract renewal rates > 90% ~86% Provides revenue visibility Weighted average contract duration of > 3 years Contracted(1) 2 Guaranteed Stable performance through co
Slide 7: TH: Executing, Delivering, Winning
TH: Executing, Delivering, Winning Executing Delivering Winning 11,160 50.4% 600 Average Available Beds (as of March 31, 2019) Adjusted EBITDA(3) Margin (in 1Q 2019) New Beds(8) Unparalleled & largest(1) network Adjusted EBITDA % up ~3.3% y-o-y Announcing a new 200-bed community in the Delaware basi
Slide 8: Outlook supportive for our key end markets
Outlook supportive for our key end markets 10-quarter average of 67% 4,000 (4Q 2016 to 1Q 2019) 90% Permian basin accounted for over two-thirds of total US crude 80% oil production growth (since 4Q-2013) in last 10 quarters(1) 3,500 Energy / Oil & Gas 70% ~$42/bbl WTI price delivers 10% return o
Slide 9: Signor integration on track while growth pipeline provides upside
Signor integration on track while growth pipeline provides upside Signor acquisition integration … with mature pipeline of … and accretive M&A progressing well … organic growth … opportunities Full control of lodge management Most compelling growth Continue to evaluate (since September 2018) o
Slide 10: 1Q 2019 Financial Highlights
1Q 2019 Financial Highlights Revenue Items of note: $82.0 million Pre-tax charges and (credits) of $38.5 million – Transaction bonus: $28.5 million (cash-neutral for TH) Adjusted EBITDA(1) – Transaction expenses: $8.0 million $41.3 million | 50.4% SG&A expense of $6.4 million, ex. pre-tax charge
Slide 11: Adjusted EBITDA driven by broad-based operational execution
Adjusted EBITDA driven by broad-based operational execution Bridge 1Q 2018 to 1Q 2019 (US$, in millions) $1.8 $0.6 $41.3 $5.0 $1.2 $5.4 $11.5 $29.7 $18.2 A B C D E F 1Q 2018 Signor 1Q 2018 ADR Utilization COGS SG&A Other 1Q 2019 As-reported Contribution Combined Pro forma As-reported Adjusted EBITDA
Slide 12: Performance evident in key operating metrics
Performance evident in key operating metrics Total Company, As Reported Total Company, Combined Pro forma(1) Utilization: 77% 87% Utilization: 78% 87% $82.4 11,160 $82.4 11,160 2% 10,417 $80.8 8% $76.3 6,552 Average Daily Rate Average Available Beds Average Daily Rate Average Available Beds 1Q 18 1Q
Slide 13: 1Q 2019 Segment Results
1Q 2019 Segment Results(1) Permian Basin Bakken Basin Government US$, in ‘000s US$, in ‘000s US$, in ‘000s y-o-y change: + 237% + 245% y-o-y change: (14%) (11%) y-o-y change: ~0% +3% $5,570 $1,831 $1,635 $11,851 $52,712 $32,594 $16,521 $16,555 $11,514 $4,772 $15,663 $9,458 +145 bps +139 bps +189 bps
Slide 14: Robust cash generation backed by minimal maintenance capex needs
Robust cash generation backed by minimal maintenance capex needs Capital expenditures ($ in millions) Adjusted EBITDA & Adjusted FCF(1) conversion ($ in millions) Avg. available beds: 6,552 11,160 Adj. FCF conversion(2): 86% 89% $25.0 $41.3 $21.3 $18.2 $36.9 $15.7 $0.8 $0.5 86% 89% of Adjusted EBITD
Slide 15: Well capitalized balance sheet provides flexibility
Well capitalized balance sheet provides flexibility Carrying Value ($ in millions) Interest Rate Maturity (as of March 31, 2019) Senior secured notes, aggregate principal amount(1) 9.5% March 2024 $ 340.0 ABL revolving credit facility(2) Varies September 2023 $ 40.0 Total long-term debt, gross amoun
Slide 16: Disciplined capital allocation priorities
Disciplined capital allocation priorities 1 2 3 Invest in Growth Optimize Debt Cost Return Capital Organic & Inorganic $380.0 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 17: Reaffirming 2019 Outlook
Reaffirming 2019 Outlook ADR Improvement Continue to enhance Signor value proposition Incremental Utilization Monitoring and Achieve more out of existing network executing incremental High-potential Opportunities Continue to expand/rotate footprint opportunities(2) 2019E Opportunity Set New Contract
Slide 18: Summary
Summary Public Company Team TH Proud Moment Differentiated Execution Focus Growth Minded Market leadership built on 90 | 50 | 30+ Organic and M&A opportunities full-turnkey, integrated offering Operational excellence backed by solid balance sheet Expansive network Highly visible, recurring Mat
Slide 19: Appendix
Appendix 5-) TARGET HOSPITALITY
Slide 20: 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 / $35pppn IRR: 36% (20 year) Low maintenance capex
Slide 21: Share count analysis
Share count analysis Total Potential Outstanding Shares by Type Common Stock Other Shares and Equivalents Outstanding (4) Common Shares (Fully Diluted) Outstanding as of Escrow ed Exercise of 3/21/2019 (1) Founder Shares (2) Outstanding Warrants (3) Public Shares 14,321,606 14,321,606 Shares Underly
Slide 22: Unaudited Consolidated Statements of Comprehensive Loss
Unaudited Consolidated Statements of Comprehensive Loss Exhibit 1 Target Hospitality Corp. Unaudited Consolidated Statements of Comprehensive Loss ($ in thousands, except per share amounts) For the Three Months Ended March 31, 2019 2018 Revenue: Services income $ 61,073 $ 24,916 Specialty rental inc
Slide 23: Consolidated Balance Sheets
Consolidated Balance Sheets Exhibit 2 Target Hospitality Corp. Consolidated Balance Sheets ($ in thousands) March 31, December 31, March 31, December 31, 2019 2018 2019 2018 (Unaudited) (Unaudited) Assets Liabilities Current assets: Current liabilities: Cash and cash equivalents $ 23,120 $ 12,194 Ac
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 Three Months Ended For the Three Months Ended March 31, March 31, 2019 2018 2019 2018 Cash flows from operating activities: Cash flows from inve
Slide 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations Exhibit 4 Exhibit 5 Target Hospitality Corp. Target Hospitality Corp. Reconciliation of Net loss to Adjusted net income and Adjusted diluted earnings per share Reconciliation of Gross profit to Adjusted gross profit and Adjusted gross profit margin ($ in thousands, except pe
Slide 26: Non-GAAP Reconciliations, continued
Non-GAAP Reconciliations, continued Exhibit 6 Exhibit 7 Target Hospitality Corp. Target Hospitality Corp. Reconciliation of Net Loss to EBITDA, Adjusted EBITDA and Adjusted EBITDA margin Reconciliation of Net cash (used in) provided by operating activities to Adjusted free cash flows ($ in thousands
Slide 27: Non-GAAP Reconciliations, continued
Non-GAAP Reconciliations, continued Exhibit 8 Target Hospitality Corp. Reconciliation of Net Loss to EBITDA and Adjusted EBITDA As Reported or Combined Pro forma For Selected Periods ($ in thousands) Combined Pro Forma As Reported Combined Pro Forma Quarter Ended Quarter Ended Quarter Ended Quarter
Slide 28: Target Hospitality
5;) TARGET HOSPITALITY