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2 days ago
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Target Hospitality Corp (TH) Q2 2025 Earnings Call Highlights: Strategic Contracts and Revenue ...
Release Date: August 07, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points Target Hospitality Corp (NASDAQ:TH) announced two multi-year contracts valued at over $400 million, showcasing their ability to deliver tailored solutions across various markets. The company is finalizing a multi-year lease and services agreement to support the expanding technology infrastructure and data center market, broadening their contract portfolio. Target Hospitality Corp (NASDAQ:TH) secured a multi-year contract extension with a major HFS customer, maintaining a consistent contract renewal rate exceeding 90%. The company has a strong growth pipeline supported by a historic domestic investment cycle and rising demand from the government sector. Target Hospitality Corp (NASDAQ:TH) raised its 2025 revenue outlook to $310 to $320 million, reflecting a 15% increase at the midpoint compared to the previous outlook. Negative Points The termination of the PCC contract and the South Texas Family Residential Center contract led to declines in government segment revenue. The gradual reopening of the Dilly, Texas assets will lead to lower margin contributions through the second and third quarters of 2025. Carrying costs for West Texas assets are expected to be about $2 to $3 million per quarter until a new contract is potentially awarded. The timing of specific contract awards for government initiatives remains uncertain due to the broad scope and resources needed for execution. Inflationary pressures may increase the cost per bed, impacting future capital expenditures and potentially affecting margins. Q & A Highlights Warning! GuruFocus has detected 1 Warning Sign with PSYTF. Q: How should we think about the steps and potential for the West Texas contract to be comparable to prior contracts at that site? A: Mark Shook, CEO, explained that while the reconciliation budget has been passed, the funds have not yet started to flow. However, they are having positive discussions with the government and are on the acquisition list. They feel confident about the facility being leased and reactivated, with continued interest from government officials. Q: Can you provide more details on the data center opportunity and its structure compared to the workforce hub contract? A: Jason Vasic, CFO, mentioned that the data center deal will be different as they will own the assets, leading to higher margins than a services-only contract. Brad Archer, CEO, added that they are waiting on the final contract but have an early works contract in place. The data center opportunity is seen as a potential game-changer for the company, with significant demand due to remote locations and labor challenges. Q: Regarding data center contracts, are these more permanent multi-year facilities or shorter-term network approaches? A: Brad Archer, CEO, clarified that these are long-term projects with a large workforce in one location for many years. These are multi-billion dollar projects where Target Hospitality plays a critical role in helping developers stay on budget and timeline. Q: How are you sourcing beds for the data centers, and is it affecting the oil and gas network? A: Brad Archer, CEO, stated that they first utilize any excess capacity from the oil and gas network, then look to buy in the open market, and finally consider building new. The demand is significant, and they may need to buy new products to meet it. Q: How competitive was the bidding for the data center community contract, and what led them to select Target? A: Brad Archer, CEO, noted that while the bidding was competitive, the decision was not price-driven. The key factors were Target's ability to deliver on time, help retain and attract workforce, and their proven track record in executing large-scale projects. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Yahoo
21-05-2025
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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
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Target Hospitality Corp (TH) Q1 2025 Earnings Call Highlights: Strong Growth Pipeline Amid ...
Total Revenue: Approximately $70 million for Q1 2025. Adjusted EBITDA: Approximately $22 million for Q1 2025. Government Segment Revenue: Approximately $26 million for Q1 2025. HFS and Other Segments Revenue: Approximately $44 million for Q1 2025. Workforce Hub Contract Revenue: Approximately $5 million for Q1 2025. Recurring Corporate Expenses: Approximately $10 million for Q1 2025. Total Capital Spending: Approximately $21 million for Q1 2025. Cash and Total Liquidity: $35 million in cash and $169 million in total liquidity at the end of Q1 2025. Net Leverage Ratio: 0.1 times at the end of Q1 2025. 2025 Financial Outlook: Total revenue between $265 million and $285 million; Adjusted EBITDA between $47 million and $57 million. Warning! GuruFocus has detected 3 Warning Signs with ASX:SKO. Release Date: May 19, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Target Hospitality Corp (NASDAQ:TH) announced two multi-year contracts expected to generate over $380 million in revenue, showcasing their ability to support critical domestic initiatives. The company maintains a consistent 90% renewal rate since 2015, illustrating strong customer relationships and satisfaction. Target Hospitality Corp (NASDAQ:TH) has a robust growth pipeline, particularly in large capital investments focused on modernizing infrastructure and advancing technologies. The reactivation of the Dilley, Texas facility was ahead of schedule, demonstrating operational efficiency and readiness. The company redeemed all outstanding senior notes due in June 2025, resulting in an expected annual interest savings of over $19 million, enhancing financial flexibility. The government segment experienced a revenue decrease due to the termination of the PCC contract and the South Texas Family Residential Center contract. The reactivation of the Dilley, Texas facility will result in lower margin contributions through the second and third quarters of 2025. Maintaining West Texas assets in a ready state incurs carrying costs of approximately $2 million to $3 million per quarter. The timing of potential government contracts for West Texas assets remains uncertain due to administrative steps and funding requirements. The competitive market has led to a decrease in Average Daily Rate (ADR) in the HFS segment, impacting revenue. Q: Can you provide more details about the opportunities for idle government assets and what is driving the demand? A: Brad Archer, President and CEO, explained that there is strong interest in the West Texas assets, with several tours conducted, increasing excitement around the facility. The government intends to increase bed capacity by approximately 100,000 beds, and the West Texas facility is ready for immediate occupancy. The main delay is securing funding, but conversations indicate the facility is part of the government's acquisition plan. Beyond West Texas, there are significant opportunities to support government initiatives, and Target is well-positioned to grow this segment. Q: Regarding the Lithium contract, what is the current contribution and potential upside in the future? A: Jason Vlacich, CFO, stated that the majority of revenue this year will come from construction activities, contributing about $65 million with a 25-30% margin. The service part of the contract will kick in through 2027, with potential for multiple phases extending to 2040. Brad Archer added that the project is attractive due to its longevity and multiple phases, with GM already securing capacity for the first and second phases. Q: Could you discuss potential M&A or new asset considerations, particularly on the government side? A: Brad Archer noted that outside the government pipeline, there is strong bid activity in large domestic infrastructure projects. The data center industry is particularly promising, with significant capital investment and a need for services. Jason Vlacich added that many government opportunities do not require significant capital investment, and any required capital would be structured to protect Target. Inorganic growth remains part of the long-term strategy, but the immediate focus is on organic growth. Q: Could you provide a financial cadence for the remainder of the year, considering the Workforce hub contract and Dilley ramp-up? A: Jason Vlacich explained that the majority of construction activity for the Workforce hub will occur in Q3, with Q2 slightly below and Q4 minimal. The Dilley ramp-up will see margins bottom out in Q2, with full economics expected by September when the facility is fully operational. Q4 will likely be the best quarter from a run-rate standpoint. Q: Are your oil patch lodges locked into that market, or could they be repurposed for other uses? A: Brad Archer stated that while they are committed to serving the Permian Basin, they have repurposed assets in the past and would do so again if needed. They aim to maximize utilization of existing equipment before considering new purchases. Jason Vlacich added that the flexible asset base allows for quick repurposing, as demonstrated in the past with government segment growth. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. 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
20-05-2025
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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
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19-05-2025
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Target Hospitality (TH) Q1 Earnings: Taking a Look at Key Metrics Versus Estimates
For the quarter ended March 2025, Target Hospitality (TH) reported revenue of $69.9 million, down 34.5% over the same period last year. EPS came in at -$0.05, compared to $0.20 in the year-ago quarter. The reported revenue represents a surprise of +6.93% over the Zacks Consensus Estimate of $65.37 million. With the consensus EPS estimate being -$0.02, the EPS surprise was -150.00%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Target Hospitality performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Revenue- Hospitality & Facilities Services - South: $36.07 million versus the two-analyst average estimate of $35.79 million. Revenue- All Other: $8.11 million versus $1.64 million estimated by two analysts on average. Revenue- Government: $25.72 million compared to the $23.71 million average estimate based on two analysts. Adjusted Gross Profit- Hospitality & Facilities Services - South: $11.03 million versus $11.52 million estimated by two analysts on average. Adjusted Gross Profit- Government: $19.18 million versus $16.15 million estimated by two analysts on average. View all Key Company Metrics for Target Hospitality here>>>Shares of Target Hospitality have returned +6.9% over the past month versus the Zacks S&P 500 composite's +13.1% change. The stock currently has a Zacks Rank #2 (Buy), indicating that it could outperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Target Hospitality Corp. (TH) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research 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
