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Yahoo
21-05-2025
- Business
- Yahoo
Target Hospitality Announces Seat on $4 Billion Multi-Year U.S. Government Strategic Sourcing Vehicle
THE WOODLANDS, Texas, May 21, 2025 /PRNewswire/ -- 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 announced it has been awarded a seat on a multi-year, $4.0 Billion, Emergency Detention and Related Services Strategic Sourcing Vehicle ("SSV"). The SSV establishes the contracting vehicle necessary to support the Department of Homeland Security ("DHS") and U.S. Immigration and Customs Enforcement ("ICE") response to certain Executive Orders issued on January 20, 2025. The SSV is intended to support DHS and ICE's initiatives focused on expanding emergency detention capabilities and related facility services. The SSV has a total contract value up to $4.0 billion with a period of performance through May 16, 2027. The SSV award is an important step and provides Target the opportunity to directly participate in potential future contract awards supporting critical U.S. government immigration initiatives. Target believes its existing capabilities uniquely align with certain DHS and ICE initiatives supported by the SSV, positioning the Company to actively pursue a portion of these opportunities. Importantly, these opportunities extend beyond Target's existing asset portfolio and establish multiple avenues to expand its government end-market service offering while enhancing and broadening its contract portfolio. "This award is instrumental in our continued pursuit of strategic growth initiatives and significantly expands Target's opportunity set. The U.S. government is evaluating a variety of solutions to meet its immigration policy objectives, and we believe Target is uniquely positioned to support a range of these mission critical services. While we are actively re-marketing our existing assets, the SSV award provides the ability to simultaneously directly pursue additional growth opportunities supporting U.S. government immigration initiatives," stated Brad Archer, President and Chief Executive Officer. About Target Hospitality Target Hospitality is one of North America's largest providers 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 (including the financial outlook contained herein) 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: operational, economic, including inflation, political and regulatory risks; our ability to effectively compete in the specialty rental accommodations and hospitality services industry, including growing the HFS – South, Government and Workforce Hospitality Solutions segments; effective management of our communities; natural disasters and other business disruptions, including outbreaks of epidemic or pandemic disease; the duration of any future public health crisis, related economic repercussions and the resulting negative impact to global economic demand; 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; changes in end-market demand requirements that could lead to cancelation of contracts for convenience in the Government segment; 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 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 Trump administration or any future administration; federal government budgeting and appropriations; our ability to effectively manage our credit risk, liquidity and collect on our accounts receivable; our ability to fulfill Target Hospitality's public company obligations; any failure of our management information systems; our ability to refinance debt on favorable terms and meet our debt service requirements and obligations; and risks related to our outstanding debt obligations. 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. Investor ContactMark Schuck(832) 702 – 8009ir@ View original content: SOURCE Target Hospitality
Yahoo
20-05-2025
- Business
- Yahoo
Q1 2025 Target Hospitality Corp Earnings Call
Mark Schuck; Senior Vice President - Investor Relations; Target Hospitality Corp Brad Archer; President, Chief Executive Officer; Target Hospitality Corp Jason Vlacich; Chief Financial Officer, Chief Accounting Officer; Target Hospitality Corp Stephen Gengaro; Analyst; Stifel Scott Schneeberger; Analyst; Oppenheimer Greg Gibas; Analyst; Northland Securities Operator Good morning, ladies and gentlemen and welcome to the Target Hospitality first-quarter 2025 earnings call conference call. (Operator Instructions) This call is being recorded on Monday, May 19, 2025.I would now like to turn the conference over to Mark Schuck. Please go ahead, sir. Mark Schuck Thank you. Good morning, everyone, and welcome to Target Hospitality's first-quarter 2025 earnings call. The press release we issued this morning outlining our first quarter results can be found in the investor section of our website. In addition, a replay of this call will be archived on our website for a limited note the cautionary language regarding forward-looking statements contained in the press release. The same language applies to statements made on today's conference call will contain time sensitive information as well as forward-looking statements, which are only accurate as of today, May 19, 2025. Target Hospitality expressly disclaims any obligation to update or amend the information contained in this conference call to reflect events or circumstances that may arise after today's date, except as required by applicable law. For a complete list of risks and uncertainties that may affect future performance, please refer to Target Hospitality's periodic filings with the will discuss non-GAAP financial measures on today's call. Please refer to the tables in our earnings release, post in the investor section of the website to find a reconciliation of non-GAAP financial measures referenced in today's call and their corresponding GAAP the call of the day will be Brad Archer, President and Chief Executive Officer; followed by Jason Vlacich, Chief Financial Officer and Chief Accounting Officer. After their prepared remarks, we will open the call for questions.I would now like to turn the call over to our Chief Executive Officer, Brad Archer. Brad Archer Thanks, Mark. Good morning, everyone, and thank you for joining us on the call delivered strong first quarter results centered on the strength of our business fundamentals and proven capabilities. These elements illustrate the benefits of Target's efficient and durable operating model, supporting our ability to successfully navigate a variety of economic the first quarter, we announced two multi-year contracts which are expected to generate over $380 million in revenue over the coming years. These contracts illustrate our unique ability to support a range of critical domestic initiatives spanning both commercial and government and markets. We are well positioned with strong momentum as we continue evaluating and pursuing the most active and robust growth pipeline we have had in many years. We're excited about this opportunity set and focused on accelerating our strategic growth turning to our segments and growth pipeline. Our HFS segment continues to benefit from consistent demand where our world-class customers find added value in the unmatched solutions our network provides. These capabilities support targets of long-standing customer relationships, some for over a decade, and a consistent 90% renewal rate since consistency illustrates the value proposition of our network and ability to appropriately match customer demand through a variety of economic cycles. These characteristics support a well optimized network and enhanced revenue cash flow of visibility. The workforce subcontract, which we announced in February, continues to progress in line with expansion and diversification further illustrate our ability to utilize our distinct core competencies to advance our strategic growth initiatives. Our ability to provide customized solutions across industries highlights the reach of our capabilities as we continue evaluating a strong commercial growth pipeline is predominantly centered around large capital investments focused on modernizing critical domestic infrastructure and advancing 21st century technologies. As this potential historic capital investment cycle takes shape, we have seen growing demand for hospitality solutions to support the significant workforce requirements associated with these initiatives. These opportunities include large industrial projects throughout the US including technology infrastructure, increased domestic critical mineral development, and other related large capital investment a reminder, the size and scale of these growth opportunities inherently leads to longer sales cycles. However, we're encouraged by the pace of active conversations and progress on certain initiatives. We believe these commercial growth opportunities provide meaningful long-term growth potential and are on and are an important element of target strategic growth and diversification to the government segment. Our government segment experienced a transition as we moved into 2025. However, amidst evolving policy initiatives, Target has illustrated its ability to provide unmatched solutions, supporting a range of critical US government. This execution underpins our ability to actively pursue a significant growth opportunity set, supporting the current administration's immigration reactivation of our Dilley, Texas facility is progressing, and the community was able to receive an active population ahead of schedule. Our decision to maintain this community in a ready state was critical to the contract award and our ability, along with our partner to quickly facilitate the community our West Texas assets, we are encouraged by the continued interest from the US government in utilizing this readily accessible community. We have conducted numerous site visits and tours of the facility with positive feedback indicating this community's ability to serve the current administration's policy objectives. Further, the substance of our conversations has indicated the US government's desire to utilize this facility consistent with its current layout, minimizing the need for additional capital timing remains uncertain, as there are likely administrative steps required, including securing necessary funding prior to potential contract award. While we are actively remarketing our West Texas assets, we are simultaneously evaluating multiple opportunities to support immigration initiatives beyond targets existing asset portfolio and available the scope of executive orders and resources required to adequate adequately implement the government's current immigration policies, there is a significant demand for solutions aligned with target's core competence. We are taking intentional steps to demonstrate target's capabilities and believe there are multiple avenues to support these critical policy our strong operational reputation and partnerships with industry leading companies uniquely positions Target to participate in many of these mission-critical summary, the strength of our existing customer base, network capabilities, and proven operational flexibility support a resilient business model. This foundation supports our continued focus on pursuing strategic growth initiatives aimed at expanding and diversifying targets, contract portfolio across in markets.I'll now turn the call over to Jason to discuss our financial results in more detail. Jason Vlacich Thank you, Brad. First quarter total revenue was approximately $70 million with adjusted EBITDA of approximately $22 million. Our government segment produced quarterly revenue of approximately $26 million. The decrease from prior year was primarily driven by the termination of the PCC contract, effective February 21, 2025, and partially by the termination of the South Texas Family Residential Center contract on August 9, 2024. These declines were modestly offset by the reactivation of our Dilley, Texas assets and the Dilly contract award effective March 5, a reminder, this contract is based on fixed monthly revenue regardless of occupancy, and it's expected to generate approximately $30 million of revenue in 2025, with over $246 million of revenue over its anticipated five-year as the community progressively reopens, 2025 monthly revenue contributions will correlate with the reactivation of each neighborhood within the facility. Further, this paced reopening will result in lower margin contribution through the 2nd and 3rd quarter of 2025 prior to full reactivation. We anticipate the community will be fully activated by September of 2025, at which point we will realize revenue and margin contribution commensurate with the entire 2,400 bed our West Texas assets, as a reminder, we have decided to maintain these assets in a ready state as we actively remarket them. This decision, which is similar to the approach we took regarding our daily assets, will result in carrying costs prior to a potential new contract award of approximately $2 million to $3 million per to our HFS in all other segments. Our HFS and all other segments delivered quarterly revenue of approximately $44 million. These segments continue to experience consistent customer demand, illustrating the value our customers find in our premium premium service offering and network capabilities. We have benefited from a more fully optimized HFS South segment which continues to perform in line with our expectations in a competitive pleased with the workforce hospitality solution segment which includes our recently announced Workforce hub contract. Instruction activity associated with the Workforce hub contract is pacing on schedule and generated approximately $5 million of revenue in the first quarter. We anticipate that the majority of the construction revenue will be realized in the 2nd and third quarter of 2025 with completion in the fourth quarter of a reminder, this contract also provides for service revenue, which will support the premium Workforce hub with comprehensive hospitality solutions through 2027. The contract exemplifies the benefits of our full-service capabilities and establishes a long term revenue corporate expenses for the quarter were approximately $10 million. As we move through the year, we will continue to look for opportunities to optimize our cost structure and strengthen margin contribution. Total capital spending for the quarter was approximately $21 million including approximately $16 million of growth capital to expand strategic network capacity and support the Workforce hub we previously announced on March 25, 2025, we redeemed all outstanding senior notes due in June of 2025, at a redemption price of 101% of par, resulting in an expected annual interest savings of over $19 decision to redeem the senior notes was focused on maintaining a balanced capital structure and financial flexibility as we continue pursuing a pipeline of strategic growth initiatives. We believe the current structure supports our ability to react to value enhancing growth opportunities as they arise while appropriately balancing our ended the quarter with $35 million in cash and $169 million in total liquidity, with $41 million of borrowings under the company's $175 million revolving credit facility and a net leverage ratio of 0.1 times. We will continue to prudently manage the capital structure and look for opportunities to further reduce outstanding borrowings as we progress through strong business fundamentals have established a flexible and durable operating model. These elements support the company's reiterated 2025 financial outlook, which consists of total revenue of between $265 million and $285 million and adjusted EBITDA of between $47 million to $57 million. Target is well positioned with a flexible operating model and optimized balance sheet as we continue evaluating a robust growth pipeline, which we believe provides the greatest opportunity to accelerate value creation for our we continue to thoughtfully evaluate a holistic set of capital allocation initiatives, our primary focus is growing and diversifying Target's contract portfolio. As we focus on strategic growth initiatives, we believe it is prudent to maintain the financial flexibility we have established to quickly react to value enhancing opportunities as they arise. Importantly, as we evaluate these opportunities, we will remain focused on maintaining the strong financial profile we have established while optimizing margin contribution through our efficient operating that, I will turn the call back over to Brad for closing comments. Brad Archer Thanks, first-quarter results were supported by strong business fundamentals and continued momentum across our operating segments. We are focused on sustaining this momentum as we evaluate one of the strongest growth pipelines we have had in many years. The breadth of these opportunities spans both commercial and government and by strong secular tailwinds promoting significant domestic capital investments and national security initiatives. The growth opportunities are robust, extended beyond our existing asset portfolio and across multiple and markets. We are excited about these opportunities and believe Target's capabilities and proven reputation uniquely position the company as we actively pursue the strategic growth remain focused on enhancing Target's business mix and contract portfolio, which we believe will accelerate value creation for our shareholders. I appreciate everyone joining us on the call today and thank you again for your interest in Target now, I'd like to open the call questions. Operator (Operator Instructions) Stephen Gengaro, Stifel. Stephen Gengaro There's two for me. The first is just around sort of opportunities on the idle assets on the government side and is there like, can you give us any kind of incremental detail about the conversation you're having the opportunity to put those to work and kind of what we should be thinking about as far as data points around it or what's driving the demand? I'm just trying to kind of get a sense from I know you can't tell us timing or economics, but any more color around that would be helpful. Brad Archer Yes, Stephen, this is Brad. Good morning. Let me just kind of give you a high level on some of the things that happened, since our last call, and I would just kind of the government segment as a whole, but specifically starting on the West Texas continue to have strong interests, as we said before, high level, conversations with the government and our partners, since our last quarterly call, we've led several tours of the facility, which has really increased the excitement around this asset, as we said before, and this hasn't changed, the government fully intends to increase their bed capacity by approximately 100,000 the West Texas facility, it's ready for immediate occupancy, giving them kind of what I've said before is an easy button, right? For once funding is in place. And at this point that is kind of the waiting game, right? Once funding gets in place, the budget's approved. But from all conversations we've had, we believe this facility is part of the government's acquisition plan and we've been told that, through the conversation. So we feel good about this facility and what happens to it in the I would say, and as a reminder, I know there's a lot of focus always on the West Texas assets and rightfully so. But what really gets us excited is all the other potential, for more beds, more opportunities to service the government, from the DOD side to the I side to other, folks within the DHS community. We're seeing more and more, every week, that is hitting our pipeline. So, in summary, I would just say, look, the opportunity set is strong operational, reputation, it positions just well, to get some of this business in the future. We put ourselves in a really good position to grow this segment. Now we need to execute and I believe we will. Stephen Gengaro Got you. Okay, great. No, that's helpful. And then the other question I just had was the contract you have on the Lithium front and just how do we think about how that -- so what's contracted right now and kind of what that means for contribution this year and next and then kind of how do we think about the upside to that in '26-plus? Jason Vlacich Yeah, this is Jason. So in terms of the workforce subcontract, this year the majority of the revenue generated is going to be from the construction activities which we expect to wrap up this year in Q4, we think the majority of that activity is going to, occur in in Q2 and with the majority in Q3 and a wrap up in Q4. That's going to contribute about $65 million of revenue for the year on the construction piece with an estimated margin of between 25 and 30%.After that, that's when the services part kind of more fully kicks in through 2027. So that's the balance of that $140 million revenue contract will be attributable to service. And then on the Lithium project as a whole, there's a potential for multiple phases which we're well positioned to participate in beyond 2027. These phases can go all the way through 2040. Brad Archer Yeah, that's why we really like this project, right? We like it for the first phase, but we really like it for multiple phases that they've publicly been out there and talked about. Look, as we know, GM has taken all the capacity on the first phase, a big portion already on the second phase, so they're set up pretty well to continue to extend it again. We need to continue to perform where there's a service provider in the second and the third phase on this, and we believe we will. So, I looked at that as the upside of this, just the longevity of the project itself. Operator Scott Schneeberger, Oppenheimer. Scott Schneeberger Thanks very much. Good morning. Just kind of following up on the theme of new opportunities. Brad, you did a nice job of outlining kind of what's occurred since the last call with regard to West Texas. Could you -- and you touched on the government opportunity as a whole. Could you -- I thought I heard in there the unprepared remarks somewhere, maybe looking at things that you may not already owns so in the answer to this question, could you address maybe M&A or new asset consideration that you might pursue?And then maybe that's more on the government side, and then on the non-government side, just a discussion of ripeness of what's occurring out there? Thanks. Brad Archer Yeah, let me take the first on the non-government kind of all things other than government, right? For you and I'll touch base on it then I'll let Jason touch on some of the other as well. But outside of the government pipeline, we continue to see very strong bid activity in large domestic infrastructure projects such as mining, power, and data centers to name a that said, I want to spend a little time on the data center industry, more specifically, as we're seeing the need for services across the US increased dramatically. And very encouraged with the progress our business development team is making here. We've talked about it a little before in the other calls, but we definitely moved the ball down the field on several of these projects tend to have a three-year, to six-plus years kind of a build cycle. And look, I think everybody's aware of the massive amount of capital being pumped into this industry. And there's no doubt our services are needed on many of these that we're working on. So internally, there's a lot of excitement on this data center movement, especially since our last call, we continue again kind of move the ball down the field, feeling pretty good about some of these in summary, aside from data centers, our pipelines the strongest it's been. What we really like about it is some of these, especially in the data centers, they're approved, they're shovel ready. There's, they have the capital and they're spending it now. So we put ourselves again, like I said in the government in a really good spot to execute here and we just -- we have to go and do that. That's bottom line, but I think we're close on some of these. Jason Vlacich And on the government side, I would just say with respect to assets, a lot of the opportunities we're looking at that are right in front of us don't necessarily require a lot of capital investment, specifically in the West Texas assets, those the layout there based on all of our conversations and facility site tours that Brad had mentioned in conversations with the government, the layout seems to fit the government's need as is, so we don't anticipate a lot of capital investment for those immediate government if there are requirements around capital deployments, we'll certainly consider those, to the extent that they're creative, and many times those will be built into the economics in terms of reimbursement and such. On the inorganic front, that's definitely still part of our diversification strategy. I would look at that as more of the medium and long term. In the immediate term, we're focused on our organic growth. Brad Archer Yeah, just one comment on the government side there, Scott, is there is no doubt, the amount of rooms we have available compared to what the government needs, if we're lucky enough to win that much would require us to spend some capital, right?To Jason's point, it would be structured in a way where we're not stuck for, with that capital. We're going to bid it into the job, we're going to get that capital back. There'll be guarantees if there's early termination, those types of things. So we will structure that where targets protected on that, as we always have, in the past, right? Scott Schneeberger Very good. Got it. Thanks, guys. Nice color. For my follow-up, I guess, Jason probably more for you, in HFS just curious, if you could address trends in ADR, what you anticipate over the balance of the year and going forward? It's kind of a higher level of just what you anticipate from demand and obviously how that's being priced. Thanks. Jason Vlacich Yeah, so we always balance network optimization with ADR and utilization. The utilization you can see is slightly up from prior year. ADR is down. It's a competitive market, but nothing structurally has changed with respect to the segment. I would anticipate the remaining quarters to look somewhat similar to Q1. Operator Greg Gibas, Northland Securities. Greg Gibas Great, hey, good morning, Brad, Jason. Thanks for taking the questions. Congrats on the results. To follow up on kind of the Workforce hub contract, construction ramping in Q2 and Q3, completion in Q4, wondering if you could just give us a sense of kind of the financial cadence for the remainder of the year, as kind of daily ramps is another factor as well? Jason Vlacich Yeah, so I guess, the best way to put it is, the majority of that activity is going to be in Q3. Q2 will be slightly below Q3. We had a minimal contribution of $5 million of revenue in Q1, it's probably less than 10% complete at that point and then Q4 will be sort of more minimal wrap up activity. On the Dilley ramp up, the margins are going to be bottomed out in Q2 as we ramp has an accelerated revenue rent schedule as we move through the 1st 6 months of the contract as neighborhoods open in phases, and so there's a natural sort of front loading of expenses as we have to meet certain ha milestone milestones for the reopening. But we expect the full economics on that to begin in full economics associated with the full 2,400 beds. That's how the contract's structured, and Q4 will likely be the best quarter from a run rate standpoint on that contract going forward. Greg Gibas Perfect. That's really helpful. Great, and if I could follow up to just some of your previous commentary on this call, could you give us an example or maybe an idea of those opportunities to assist the government on the immigration policy beyond like existing assets like oral facilities? Are you saying that you would -- these would likely involve like an asset purchase or are you saying like there are other opportunities as well? I just wanted to get a sense of what those are. Brad Archer Yeah, look, we're first going to try and put out our existing anything that we have existing that we can, right? And then so if we exceed the beds that we have in our own as far as our own resources, we would look to the open market to purchase some of that, right? Or build in new on similar to how we run our business for years, right? Try again, try to put out what we own today and what's not being used, and then go to the open market or build new. Greg Gibas Makes sense. Thank you. Operator Stephen Gengaro, Stifel. Stephen Gengaro Thanks for taking the follow-up. Just as a kind of a curiosity, but trying to think about your network, your lodges that serve the oil patch right now. I know you're kind of haven't maybe as cleanly differentiated as you used to, but are those assets like as part of the network that you have built to service the customers? Are they basically locked into that market at this point or could there be a scenario where you like you need that level of capacity and distribution across the basins or could those assets be repurposed? Brad Archer They look we have repurposed in the past and we would definitely do that in the future, right? We're going to look to see what's available, what rates are, so we have, not a lot of excess capacity but where we do to optimize that we would definitely look at taking some of that and just throwing this out there using it on a data center or using it on a mine somewhere that is always how we look at that want to be 100% maximized with our own equipment if we can and then look outside if we need to buy or some something else, but all of our facilities can be used somewhere else, right? Whether that's in the government data center mining, other, power projects, whatever. Jason Vlacich Yeah, we've done that historically, right? I mean we built out the government segment with HFS assets basically that we're underutilized so we can quickly repurpose those assets. That's the benefit of having a flexible asset base. Brad Archer And look, to be clear, some of the bids in our pipeline, that's exactly how they're bid with taking some of our own equipment that's set up and using it somewhere else. Stephen Gengaro Okay, and then as a follow-up, I'm trying to think how to ask, but is there like a level of contractual commitment you have to your energy customers that you will have a certain amount of assets and certain basins over a certain period of time? Like I'm just trying to understand the flexibility of doing that or like are you locked in?Because of sort of contractual commitments to having this many rooms available across this large of a swath of land over time? I'm just trying to get a better sense for that. Brad Archer Yeah, let me be clear, and that's a very good question. We are absolutely committed to the Permian Basin for our oil and gas customers, right? We have a big network there, so we would not mothball, the network. We have definitely large contracts that we need to continue to serve service and it's great business, right? Doesn't take a lot of pretty consistent as far as occupancy where we've been, but there's opportunity to maximize the efficiencies there as far as, putting, taking those rooms out if we needed them and putting them somewhere else without hurting our customer base. Stephen Gengaro Great, that was what I was looking for and I didn't ask the question as smoothly as I could have. Thank you. Jason Vlacich Yeah, no problem. Operator Thank you. There are no further questions at this time. I would now like to turn the call over to Brad Archer for closing remarks. Please go ahead. Brad Archer Thank you. Thanks to all of you who have joined the call today, and we look forward to speaking again on our second-quarter call, and we appreciate your support of Target that will conclude our call for today. Thank you. Operator Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
19-05-2025
- Business
- Yahoo
Target Hospitality Reports First Quarter 2025 Results with Continued Focus on Pursuing Strong Strategic Growth Pipeline
THE WOODLANDS, Texas, May 19, 2025 /PRNewswire/ -- 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 March 31, 2025. Financial and Operational Highlights Revenue of $69.9 million for the three months ended March 31, 2025. Net loss of $6.5 million for the three months ended March 31, 2025. Basic and diluted loss per share of $0.07, respectively, for the three months ended March 31, 2025. Adjusted EBITDA(1) of $21.6 million for the three months ended March 31, 2025. On March 25, 2025, redeemed all outstanding 10.75% Senior Secured Notes due 2025 ("Senior Notes"), maintaining financial flexibility as the Company continues pursuing strategic growth initiatives. Approximately $169 million of total available liquidity, with a net leverage ratio of 0.1x as of March 31, 2025. Advanced strategic diversification with multi-year workforce hub contract, expected to generate approximately $140 million of revenue through 2027 supporting a North American critical mineral supply chain ("Workforce Hub Contract"). Announced 5-year $246 million contract award, reactivating strategically located South Texas assets in Dilley, Texas, supporting critical U.S. government initiatives ("Dilley Contract"), effective March 5, 2025. Executive Commentary "We delivered a strong first quarter marked by sound business fundamentals and continued momentum executing on recent contract wins. We are pleased with the pace of activity on our Workforce Hub Contract and reactivation of our Dilley, Texas assets, reinforcing our confidence and ability to appropriately respond to customer demand," stated Brad Archer, President and Chief Executive Officer. "Quarter to quarter we are committed to building and sustaining positive momentum both servicing our existing customers and pursuing growth initiatives. We remain focused on executing our strategy, which is centered on further diversifying our contract portfolio and business mix to deliver consistent results through a variety of business cycles. We remain intentionally focused on achieving these strategic objectives and maximizing value for our shareholders," concluded Mr. Archer. Financial Results First Quarter Summary Highlights For the Three Months Ended ($ in '000s, except per share amounts) - (unaudited)March 31, 2025March 31, 2024Revenue$ 69,897$ 106,672Net income (loss)$ (6,459)$ 20,363Income (loss) per share – basic$ (0.07)$ 0.20Income (loss) per share – diluted$ (0.07)$ 0.20Adjusted EBITDA(1)$ 21,571$ 53,688Average utilized beds 9,898 14,049Utilization 60 %87 % Revenue was $69.9 million for the three months ended March 31, 2025, compared to $106.7 million for the same period in 2024. Net income (loss) was ($6.5) million for the three months ended March 31, 2025, compared to $20.4 million for the same period in 2024. Adjusted EBITDA(1) was $21.6 million for the three months ended March 31, 2025, compared to $53.7 million for the same period in 2024. The decreases were primarily attributable to the government segment, driven by the termination of the Pecos Children's Center Contract ("PCC Contract") effective February 21, 2025, and partially by the termination of the South Texas Family Residential Center Contract ("STFRC Contract") effective August 9, 2024. These decreases were partially offset by the Dilley Contract award effective March 5, 2025 and growth in the All Other category of operating segments attributable to the Workforce Hub Contract. Capital Management The Company had approximately $21.2 million of capital expenditures for the three months ended March 31, 2025, including approximately $15.5 million in growth capital to establish new strategic regional network capacity. The capacity will be utilized to support the Workforce Hub Contract, while simultaneously establishing a regional footprint to evaluate other potential growth opportunities. On March 25, 2025, the Company redeemed all $181.4 million in aggregate principal amount outstanding of the Senior Notes for a redemption price equal to 101.00% of the principal amount of the Senior Notes plus accrued and unpaid interest up to March 25, 2025, for total cash consideration of approximately $183.8 million using cash on hand and a portion of the borrowing capacity under the Company's credit facility. The Company expects to realize annual interest expense savings of approximately $19.5 million following the redemption of the Senior Notes. As of March 31, 2025, the Company had approximately $35 million of cash and cash equivalents and borrowings of approximately $41 million on the Company's $175 million credit facility, total available liquidity of approximately $169 million and a net leverage ratio of 0.1 times. Business Update and Full Year 2025 Outlook Target's premium service offering and unique value proposition, provide unmatched solutions to customers across its expansive network. Coupled with an efficient and durable operating model, these characteristics support Target's ability to navigate a variety of economic environments. The Company's proven workforce accommodation model supports a premier customer base across multiple industries. Target's HFS – South segment continues to benefit from consistent customer demand, where its turn-key hospitality services and expansive network provide valuable solutions supporting customers labor allocation requirements. These proven capabilities supported the multi-year $140 million Workforce Hub Contract. This contract illustrates Target's ability to utilize its existing core competencies to accomplish strategic objectives, specifically diversifying its end-market exposure and geographic reach. In addition, these capabilities support a strong commercial growth pipeline, as Target is actively pursuing a range of growth initiatives across a variety of commercial end-markets. Regarding the Government segment, the 5-year $246 million Dilley Contract and reactivation of these assets illustrates the Company's dynamic capabilities in supporting a range of U.S. government initiatives. The Company believes these proven capabilities, coupled with the U.S. government's stated immigration policy objectives, will support strong demand for Target's services and hospitality solutions. The Company believes it is well positioned, with a strong reputation and partnerships with industry leading companies, as it pursues other potential opportunities supporting critical U.S. government policy initiatives. Target's strong business fundamentals and durable operating model support the Company's reiterated 2025 outlook, of: Total revenue between $265 and $285 million Adjusted EBITDA(1) between $47 and $57 million Segment Results – First Quarter 2025 Government Refer to exhibits to this earnings release for definitions and reconciliations of Non-GAAP financial measures to GAAP financial measures For the Three Months Ended ($ in '000s) - (unaudited)March 31, 2025March 31, 2024Revenue$ 25,717$ 67,607Adjusted gross profit(1)$ 19,178$ 52,433Revenue for the three months ended March 31, 2025, was $25.7 million compared to $67.6 million for the same period in 2024. Adjusted gross profit for the period was $19.2 million compared to $52.4 million for the same period in 2024. The decreases were primarily driven by the termination of the PCC Contract effective February 21, 2025, and partially by the termination of the STFRC Contract effective August 9, 2024. These decreases were moderately offset by the Dilley Contract award effective March 5, 2025. Hospitality & Facilities Services - South Refer to exhibits to this earnings release for definitions and reconciliations of Non-GAAP financial measures to GAAP financial measures For the Three Months Ended ($ in '000s, except ADR) - (unaudited)March 31, 2025March 31, 2024Revenue$ 36,068$ 36,934Adjusted gross profit(1)$ 11,033$ 12,842Average daily rate (ADR)$ 70.07$ 74.89Average utilized beds 5,653 5,363Utilization 76 %72 % Revenue for the three months ended March 31, 2025, was $36.1 million compared to $36.9 million for the same period in 2024. Average utilized beds increased 290 to 5,653 for the three months ended March 31, 2025, compared to 5,363 for the same period in 2024. Target continues to benefit from consistent customer demand, as its customers find added value in its premier service offering and expansive network capabilities. All Other Refer to exhibits to this earnings release for definitions and reconciliations of Non-GAAP financial measures to GAAP financial measures For the Three Months Ended ($ in '000s) - (unaudited)March 31, 2025March 31, 2024Revenue$ 8,112$ 2,131Adjusted gross profit(1)$ 1,425$ (1,426)This category of operating segments consists of hospitality services revenue not included in other segments, including Target's Workforce Hospitality Solutions ("WHS") operating segment which includes the Workforce Hub Contract. Revenue for the three months ended March 31, 2025, was $8.1 million compared to $2.1 million for the same period in 2024. The increase was primarily driven by activity associated with the Workforce Hub Contract and the Company's construction of a premier community capable of supporting up to 2,000 individuals. Conference Call The Company has scheduled a conference call for May 19, 2025, at 8:00 a.m. Central Time (9:00 am Eastern Time) to discuss the first quarter 2025 results. The conference call will be available by live webcast through the Investors section of Target Hospitality's website at or by connecting via phone through one of the following options: Please utilize the Direct Phone Dial option to be immediately entered into the conference call once you are ready to connect. Direct Phone Dial(RapidConnect URL): Or the traditional, operator assisted dial-in below. Domestic: 1-800-836-8184 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 one of North America's largest providers 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 (including the financial outlook contained herein) 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: operational, economic, including inflation, political and regulatory risks; our ability to effectively compete in the specialty rental accommodations and hospitality services industry, including growing the HFS – South, Government and Workforce Hospitality Solutions segments; effective management of our communities; natural disasters and other business distributions including outbreaks of epidemic or pandemic disease; the duration of any future public health crisis, related economic repercussions and the resulting negative impact to global economic demand; 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; changes in end-market demand requirements that could lead to cancelation of contracts for convenience in the Government segment; 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 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 Trump administration or any future administration; federal government budgeting and appropriations; 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 meet our debt service requirements and obligations. 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, EBITDA, 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 a forward-looking non-GAAP financial measure Adjusted EBITDA. Reconciliations of this forward-looking measure to its most directly comparable GAAP financial measures is unavailable to Target Hospitality without unreasonable effort. We cannot provide a reconciliation of forward-looking Adjusted EBITDA to GAAP financial measures because certain items required for such reconciliation are outside of our control and/or cannot be reasonably predicted, such as the provision for income taxes. Preparation of such reconciliation 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 minimum of Adjusted EBITDA that we believe will be achieved, we cannot accurately predict all the components of the Adjusted EBITDA calculation. Target Hospitality provides an Adjusted EBITDA outlook because we believe that this measure, 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, loss on impairment, and certain severance costs. 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 (income) expense, net: Other (income) expense, net includes miscellaneous cash receipts, gains and losses on disposals of property, plant, and equipment, and other immaterial expenses and non-cash items. Transaction expenses: Target Hospitality incurred legal, advisory fees, and other costs associated with certain transactions during 2024, including costs related to the evaluation of the offer from Arrow Holdings S.a.r.l. ("Arrow"), an affiliate of TDR Capital LLP ("TDR"), to acquire all of the outstanding common stock of the Company not owned by any of Arrow, any investment fund managed by TDR or any of their respective affiliates (the "Unaffiliated Shares"), for cash consideration of $10.80 per share (the "Proposal"). During 2025, such transaction costs primarily related to legal, advisory and audit fees associated with debt related transaction activity associated with the Senior Notes that were paid off on March 25, 2025, and, to a lesser extent, other business development project related transaction activity and remaining costs associated with the Proposal. Stock-based compensation: 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 non-cash amortization of capitalized system implementation costs, business development related costs, accounting standard implementation costs and certain severance costs. 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 and disposal 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 and disposal 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, EBITDA and Adjusted EBITDA are not measurements of Target Hospitality's financial performance under GAAP and should not be considered as alternatives to Gross profit, Net income, or other performance measures derived in accordance with GAAP, or as alternatives to Cash flow from operating activities as measures of Target Hospitality's liquidity. Adjusted gross profit, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to Target Hospitality to reinvest in the growth of our business or as measures of cash that is available to it to meet our obligations. In addition, these non-GAAP measures may not be comparable to similarly titled measures of other companies. Target Hospitality's management believes that Adjusted gross profit, EBITDA and Adjusted EBITDA provides 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 – 8009ir@ Exhibit 1Target Hospitality Corp. Consolidated Statements of Comprehensive Income (loss) ($ in thousands, except per share amounts)Three Months Ended March 31, 20252024 (unaudited)(unaudited) Revenue: Services income$ 50,107$ 72,398 Specialty rental income 14,995 34,274 Construction fee income 4,795 — Total revenue 69,897 106,672 Costs: Services 35,768 36,915 Specialty rental 2,493 5,908 Depreciation of specialty rental assets 13,672 14,781 Gross profit 17,964 49,068 Selling, general and administrative 14,805 14,855 Other depreciation and amortization 3,973 3,885 Other expense (income), net 262 (110) Operating income (loss) (1,076) 30,438 Loss on extinguishment of debt 2,370 — Interest expense, net 4,329 4,587 Change in fair value of warrant liabilities — (675) Income (loss) before income tax (7,775) 26,526 Income tax expense (benefit) (1,316) 6,143 Net income (loss) (6,459) 20,383 Less: Net income attributable to the noncontrolling interest 2 — Net income (loss) attributable to Target Hospitality Corp. common stockholders (6,461) 20,383Other comprehensive loss Foreign currency translation (4) (20) Comprehensive income (loss)$ (6,463)$ 20,363Weighted average number shares outstanding - basic 99,111,940 100,657,706 Weighted average number shares outstanding - diluted 99,111,940 102,362,542Net income (loss) per share attributable to Target Hospitality Corp. common stockholders - basic$ (0.07)$ 0.20 Net income (loss) per share attributable to Target Hospitality Corp. common stockholders - diluted$ (0.07)$ 0.20 Exhibit 2Target Hospitality Corp. Condensed Consolidated Balance Sheet Data ($ in thousands) (unaudited)March 31, December 31, 20252024 Assets Cash and cash equivalents$ 34,468$ 190,668 Accounts receivable, less allowance for credit losses 56,949 49,342 Other current assets 8,172 9,326 Total current assets 99,589 249,336Specialty rental assets, net 326,129 320,852 Goodwill and other intangibles, net 90,482 93,845 Other non-current assets 46,320 61,741 Total assets$ 562,520$ 725,774Liabilities Accounts payable$ 23,126$ 16,187 Deferred revenue and customer deposits 1,010 699 Current portion of long-term debt, net — 180,328 Other current liabilities 26,376 36,190 Total current liabilities 50,512 233,404Long-term debt, net 40,900 — Other non-current liabilities 55,840 71,280 Total liabilities 147,252 304,684Stockholders' equity Common stock and other stockholders' equity 89,396 88,701 Accumulated earnings 325,919 332,380 Total stockholders' equity attributable to Target Hospitality Corp. stockholders 415,315 421,081 Noncontrolling interest in consolidated subsidiaries (47) 9 Total stockholders' equity 415,268 421,090 Total liabilities and stockholders' equity$ 562,520$ 725,774 Exhibit 3Target Hospitality Corp. Condensed Consolidated Cash Flow Data ($ in thousands) (unaudited)Three Months Ended March 31, 20252024Cash and cash equivalents - beginning of period$ 190,668$ 103,929Cash flows from operating activities Net income (loss) (6,459) 20,383 Adjustments: Depreciation 14,282 15,303 Amortization of intangible assets 3,363 3,363 Other non-cash items 5,388 4,773 Changes in operating assets and liabilities (12,635) 6,769 Net cash provided by operating activities$ 3,939$ 50,591Cash flows from investing activities Purchases of specialty rental assets (16,590) (8,825) Other investing activities (615) (93) Net cash used in investing activities$ (17,205)$ (8,918)Cash flows from financing activities Other financing activities (142,937) (21,296) Net cash used in financing activities$ (142,937)$ (21,296)Effect of exchange rate changes on cash and cash equivalents 3 (4)Change in cash and cash equivalents (156,200) 20,373Cash and cash equivalents - end of period$ 34,468$ 124,302 Exhibit 4Target Hospitality Corp. Reconciliation of Gross profit to Adjusted gross profit ($ in thousands) (unaudited) For the Three Months EndedMarch 31, 20252024 Gross Profit $ 17,964$ 49,068 Adjustments:Depreciation of specialty rental assets13,672 14,781 Adjusted gross profit $ 31,636$ 63,849 Exhibit 5Target Hospitality Corp. Reconciliation of Net income (loss) to EBITDA and Adjusted EBITDA ($ in thousands) (unaudited) For the Three Months EndedMarch 31, 20252024 Net income (loss) $ (6,459)$ 20,383 Income tax expense (benefit)(1,316) 6,143 Interest expense, net4,329 4,587 Loss on extinguishment of debt2,370 — Other depreciation and amortization3,973 3,885 Depreciation of specialty rental assets13,672 14,781 EBITDA $ 16,569$ 49,779 AdjustmentsOther expense (income), net262 (110) Transaction expenses2,830 240 Stock-based compensation1,716 2,748 Change in fair value of warrant liabilities— (675) Other adjustments194 1,706 Adjusted EBITDA $ 21,571$ 53,688 View original content: SOURCE Target Hospitality
Yahoo
01-04-2025
- Business
- Yahoo
Reflecting On Travel and Vacation Providers Stocks' Q4 Earnings: Target Hospitality (NASDAQ:TH)
Let's dig into the relative performance of Target Hospitality (NASDAQ:TH) and its peers as we unravel the now-completed Q4 travel and vacation providers earnings season. Airlines, hotels, resorts, and cruise line companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted from buying "things" (wasteful) to buying "experiences" (memorable). In addition, the internet has introduced new ways of approaching leisure and lodging such as booking homes and longer-term accommodations. Traditional airlines, hotel, resorts, and cruise line companies must innovate to stay relevant in a market rife with innovation. The 19 travel and vacation providers stocks we track reported a satisfactory Q4. As a group, revenues beat analysts' consensus estimates by 2.2% while next quarter's revenue guidance was 6.9% above. Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 17.1% since the latest earnings results. Building mini-communities at places such as oil drilling sites, Target Hospitality (NASDAQ:TH) is a provider of specialty workforce lodging accommodations and services. Target Hospitality reported revenues of $83.69 million, down 33.7% year on year. This print exceeded analysts' expectations by 4.5%. Overall, it was a very strong quarter for the company with a solid beat of analysts' EPS estimates and an impressive beat of analysts' adjusted operating income estimates. "Our 2024 performance further illustrates our ability to deliver strong results through a variety of business cycles and dynamic changes in customer demand. This operational flexibility has consistently supported the achievement of our financial goals, while allowing us to simultaneously remain focused on pursuing strategic growth initiatives," stated Brad Archer, President and Chief Executive Officer. Target Hospitality delivered the weakest full-year guidance update of the whole group. The stock is up 6.7% since reporting and currently trades at $6.54. Is now the time to buy Target Hospitality? Access our full analysis of the earnings results here, it's free. With attractions ranging from glacier tours in the Canadian Rockies to an oceanfront geothermal lagoon in Iceland, Pursuit Attractions and Hospitality (NYSE:PRSU) operates iconic travel experiences, experiential marketing services, and exhibition management across North America and Europe. Pursuit reported revenues of $45.8 million, down 84.3% year on year, outperforming analysts' expectations by 8.8%. The business had a stunning quarter with an impressive beat of analysts' EPS estimates. Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 4.7% since reporting. It currently trades at $35.39. Is now the time to buy Pursuit? Access our full analysis of the earnings results here, it's free. Founded in 1957, Hyatt Hotels (NYSE:H) is a global hospitality company with a portfolio of 20 premier brands and over 950 properties across 65 countries. Hyatt Hotels reported revenues of $1.60 billion, down 3.5% year on year, falling short of analysts' expectations by 3.1%. It was a softer quarter as it posted a significant miss of analysts' adjusted operating income and EPS estimates. Hyatt Hotels delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 24.8% since the results and currently trades at $122.05. Read our full analysis of Hyatt Hotels's results here. Spun off from Marriott International in 1984, Marriott Vacations (NYSE:VAC) is a vacation company providing leisure experiences for travelers around the world. Marriott Vacations reported revenues of $1.33 billion, up 11.1% year on year. This result surpassed analysts' expectations by 6.7%. Zooming out, it was a mixed quarter as it also produced a decent beat of analysts' EPS estimates but a miss of analysts' adjusted operating income estimates. The stock is down 24.6% since reporting and currently trades at $64.49. Read our full, actionable report on Marriott Vacations here, it's free. With almost 100% of its properties under franchise agreements, Choice Hotels (NYSE:CHH) is a hotel franchisor known for its diverse brand portfolio including Comfort Inn, Quality Inn, and Clarion. Choice Hotels reported revenues of $389.8 million, up 8.8% year on year. This print topped analysts' expectations by 2.8%. It was a strong quarter as it also put up a solid beat of analysts' adjusted operating income estimates. The stock is down 10% since reporting and currently trades at $132.91. Read our full, actionable report on Choice Hotels here, it's free. Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. 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Yahoo
26-03-2025
- Business
- Yahoo
Target Hospitality's (NASDAQ:TH) Q4: Strong Sales, Stock Soars
Workforce housing company Target Hospitality (NASDAQ:TH) beat Wall Street's revenue expectations in Q4 CY2024, but sales fell by 33.7% year on year to $83.69 million. The company's full-year revenue guidance of $275 million at the midpoint came in 3.5% above analysts' estimates. Its GAAP profit of $0.12 per share was 80% above analysts' consensus estimates. Is now the time to buy Target Hospitality? Find out in our full research report. Revenue: $83.69 million vs analyst estimates of $80.1 million (33.7% year-on-year decline, 4.5% beat) EPS (GAAP): $0.12 vs analyst estimates of $0.07 (80% beat) Adjusted EBITDA: $41.15 million vs analyst estimates of $33.07 million (49.2% margin, 24.4% beat) Management's revenue guidance for the upcoming financial year 2025 is $275 million at the midpoint, beating analyst estimates by 3.5% and implying -28.8% growth (vs -31.5% in FY2024) EBITDA guidance for the upcoming financial year 2025 is $52 million at the midpoint, below analyst estimates of $78.27 million Operating Margin: 24.9%, down from 36.6% in the same quarter last year Free Cash Flow Margin: 29.4%, up from 24.7% in the same quarter last year Utilized Beds: 11,911, down 2,070 year on year Market Capitalization: $606.5 million "Our 2024 performance further illustrates our ability to deliver strong results through a variety of business cycles and dynamic changes in customer demand. This operational flexibility has consistently supported the achievement of our financial goals, while allowing us to simultaneously remain focused on pursuing strategic growth initiatives," stated Brad Archer, President and Chief Executive Officer. Building mini-communities at places such as oil drilling sites, Target Hospitality (NASDAQ:TH) is a provider of specialty workforce lodging accommodations and services. Airlines, hotels, resorts, and cruise line companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted from buying "things" (wasteful) to buying "experiences" (memorable). In addition, the internet has introduced new ways of approaching leisure and lodging such as booking homes and longer-term accommodations. Traditional airlines, hotel, resorts, and cruise line companies must innovate to stay relevant in a market rife with innovation. A company's long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Target Hospitality grew its sales at a sluggish 3.8% compounded annual growth rate. This fell short of our benchmark for the consumer discretionary sector and is a rough starting point for our analysis. We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new property or trend. Target Hospitality's performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 12.3% annually. Target Hospitality also discloses its number of utilized beds, which reached 11,911 in the latest quarter. Over the last two years, Target Hospitality's utilized beds averaged 4.4% year-on-year growth. Because this number is higher than its revenue growth during the same period, we can see the company's monetization has fallen. This quarter, Target Hospitality's revenue fell by 33.7% year on year to $83.69 million but beat Wall Street's estimates by 4.5%. Looking ahead, sell-side analysts expect revenue to decline by 31.2% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and suggests its products and services will face some demand challenges. Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next. Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It's also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes. Target Hospitality's operating margin has shrunk over the last 12 months, but it still averaged 36.8% over the last two years, elite for a consumer discretionary business. This shows it's an well-run company with an efficient cost structure, and we wouldn't weigh the short-term trend too heavily. This quarter, Target Hospitality generated an operating profit margin of 24.9%, down 11.7 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue. We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company's growth is profitable. Target Hospitality's EPS grew at an astounding 93% compounded annual growth rate over the last five years, higher than its 3.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded. In Q4, Target Hospitality reported EPS at $0.12, down from $0.36 in the same quarter last year. Despite falling year on year, this print easily cleared analysts' estimates. Over the next 12 months, Wall Street expects Target Hospitality to perform poorly. Analysts forecast its full-year EPS of $0.70 will hit negative $0.12. We were impressed by how significantly Target Hospitality blew past analysts' EPS expectations this quarter. We were also glad its full-year revenue guidance trumped Wall Street's estimates. On the other hand, its full-year EBITDA guidance missed significantly. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 5.2% to $6.45 immediately following the results. Sure, Target Hospitality had a solid quarter, but if we look at the bigger picture, is this stock a buy? We think that the latest quarter is just one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free. Sign in to access your portfolio
