Target Hospitality Reports Record 3rd Quarter 2022 Results, Announces Exclusive 11-year Partnership and Authorizes up to $100 million Stock Repurchase Program.

THE WOODLANDS, Texas: Target Hospitality Corp. ("Target Hospitality", "Target" or the "Company") (NASDAQ: TH), one of North America's largest providers of vertically-integrated modular accommodations and value-added hospitality services, today reported results for the three months ended September 30, 2022.

Financial and Operational Highlights for the Third Quarter 2022

Record quarterly revenue of $159.6 million for the three months ended September 30, 2022, an increase of 79% from the same period in 2021

Net income of $19.0 million for the three months ended September 30, 2022, compared to $6.7 million for the same period in 2021

Basic and diluted income per share of $0.20 for the three months ended September 30, 2022

Record quarterly Adjusted EBITDA(1) of $84.4 million for the three months ended September 30, 2022, an increase of 125% from the same period in 2021

Record cash generation with net cash provided by operating activities of $261.2 million and Discretionary Cash Flow ("DCF")(1) of $257.5 million for the three months ended September 30, 2022

Significant financial flexibility with over $300 million in total available liquidity and net leverage ratio of 0.8 times as of September 30, 2022

Exclusive 11-year partnership with nonprofit partner to continue jointly providing services solely for the expanded humanitarian community, previously announced on July 6, 2022, ("Expanded Humanitarian Community")

Strong business momentum supporting three consecutive quarterly increases in customer demand across Target's Hospitality and Facility Services ("HFS") segments, driving a 14% increase from the third quarter of 2021

Extended multiple HFS customer contracts worth over $75 million of cumulative revenue through 2025

Maximizing network optimization with a 19% increase in total average utilized beds from the same period in 2021

Executing on strategic diversification with approximately 77% of third quarter 2022 revenue derived from committed revenue contracts backed by the United States government

Authorized up to $100 million stock repurchase plan, expanding the range of potential value enhancing capital allocation initiatives

Executive Commentary

"Our impressive third quarter results are a direct reflection of our commitment to continue enhancing our operational flexibility, while increasing financial strength and maximizing asset utilization. With record operating cash flow and the execution of multiple long-term contracts, we have materially strengthened our operating platform," stated Brad Archer, President and Chief Executive Officer.

"These accomplishments achieve our strategic objectives to materially strengthen our financial position, resulting in over $220 million of cumulative debt reduction since 2020 with over $300 million of liquidity. Our balance sheet strength has created an ideal scenario to pursue strategic initiatives focused on accelerating value creation for our shareholders," concluded Mr. Archer.

Financial Results

Third 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 per share amounts)

September 30, 2022

September 30, 2021

Revenue

$

159,565

$

89,169

Net income

$

19,022

$

6,675

Income per share - basic and diluted

$

0.20

$

0.07

Adjusted EBITDA

$

84,383

$

37,534

Average utilized beds

13,181

11,087

Utilization

88

%

75

%

Revenue for the three months ended September 30, 2022, was $159.6 million compared to $89.2 million for the same period in 2021. The increase was driven by the Government segment and the Expanded Humanitarian Community.

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