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08.05.2024 06:45
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Target Hospitality Reports Strong First Quarter 2024 Results Centered on Strength of Core Service Offering Further Enhancing Financial Position
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PR Newswire
THE WOODLANDS, Texas, May 8, 2024
THE WOODLANDS, Texas, May 8, 2024 /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, 2024.
Financial and Operational Highlights
- Revenue of $106.7 million for the three months ended March 31, 2024.
- Net income of $20.4 million for the three months ended March 31, 2024.
- Basic and diluted income per share of $0.20 for the three months ended March 31, 2024.
- Adjusted EBITDA(1) of $53.7 million for the three months ended March 31, 2024.
- Strong cash generation with approximately $50.6 million of Net Cash Provided by Operating Activities and $47.5 million of Discretionary Cash Flow(1) ("DCF") for the three months ended March 31, 2024.
- Significant financial flexibility with approximately $299 million of total available liquidity and a net leverage ratio of 0.2x as of March 31, 2024.
- Materially enhanced financial position supports growing pipeline of potential growth opportunities, seeking to allocate over $500 million of net growth capital through 2027.
- Returned approximately $21.2 million to shareholders through the repurchase of approximately 2.3 million shares of common stock during the three months ended March 31, 2024.
Executive Commentary
"Our first quarter results reflect the strength of our operating platform and network capabilities, which consistently support strong financial performance. We continue to focus on maximizing operational efficiencies, while simultaneously providing world-class solutions to our customers," stated Brad Archer, President and Chief Executive Officer.
"This commitment has strengthened our balance sheet and materially enhanced our financial position. These attributes create the ideal position to continue providing premier hospitality solutions to our customers, while delivering strong financial results and simultaneously pursuing attractive growth opportunities focused on diversifying our service offerings," concluded Mr. Archer.
Financial Results
First Quarter Summary Highlights
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| For the Three Months Ended ($ in '000s, except per share amounts) - (unaudited) | | March 31, 2024 | | March 31, 2023 | | ||
| Revenue | | $ | 106,672 | | $ | 147,819 | |
| Net income | | $ | 20,383 | | $ | 43,825 | |
| Income per share – basic | | $ | 0.20 | | $ | 0.44 | |
| Income per share – diluted | | $ | 0.20 | | $ | 0.38 | |
| Adjusted EBITDA(1) | | $ | 53,688 | | $ | 90,597 | |
| Average utilized beds | | | 14,049 | | | 14,490 | |
| Utilization | | | 87 | % | | 93 | % |
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Revenue was $106.7 million for the three months ended March 31, 2024, compared to $147.8 million for the same period in 2023.
Net income was $20.4 million for the three months ended March 31, 2024, compared to $43.8 million for the same period in 2023.
Adjusted EBITDA was $53.7 million for the three months ended March 31, 2024, compared to $90.6 million for the same period in 2023.
The year over year decreases were primarily driven by non-cash, nonrecurring, infrastructure enhancement revenue amortization ("Infrastructure Revenue Amortization") associated with the Company's Pecos Children's Center ("PCC") community within the government segment. As previously announced, on July 8, 2022, the Infrastructure Revenue Amortization was associated with material expansion and enhancement of the PCC community and was fully amortized as of November 2023.
Capital Management
The Company had approximately $9.7 million of capital expenditures for the three months ended March 31, 2024. Capital expenditures were predominantly focused on enhancing operational efficiencies through the purchase of previously leased equipment, further optimizing Target's operational footprint across its network of modular accommodations.
As of March 31, 2024, the Company had approximately $124 million of cash and cash equivalents with approximately $299 million of total available liquidity, no outstanding borrowings on the Company's $175 million credit facility, and a net leverage ratio of 0.2 times.
As of March 31, 2024, the Company repurchased approximately 2.3 million shares of its common stock for approximately $21.2 million. The stock repurchases, which commenced in January 2024, were executed pursuant to the $100 million stock repurchase program announced in November 2022 and represent approximately 21.2% of total share repurchase authorization executed to date. This repurchase program may be suspended from time to time, modified, extended or discontinued at certain times. Purchases under the repurchase program may be made from time to time in open market or privately negotiated transactions, and will be subject to market conditions, applicable legal requirements, contractual obligations and other factors. Any shares of common stock repurchased will be held as treasury shares.
Business Update
The strength in Target's core service offering continues to support a high degree of revenue visibility, strong cash generation and a robust liquidity profile. These attributes have established an enhanced financial position, centered on an optimized balance sheet supporting meaningful financial flexibility.
Target's optimized financial profile allows the Company to pursue capital allocation opportunities focused on diversifying and broadening the Company's customer base and contract portfolio. Importantly, as Target evaluates these opportunities there remains a sharp focus on maintaining its strong financial position through disciplined capital deployment.
Target continues to actively evaluate a robust pipeline of strategic growth opportunities and seeks to allocate over $500 million of net growth capital through 2027. These opportunities encompass Target's existing full-turnkey hospitality solutions, as well as broadening Target's value chain participation through individual elements of existing core competencies.
The strength in Target's core service offering and enhanced financial profile supports the company's reiterated preliminary 2024 outlook, excluding acquisitions of:
- Total revenue between $410 and $425 million
- Adjusted EBITDA(1) between $195 and $210 million
- Total capital spending between $25 and $30 million, excluding acquisitions
Recent Developments
On March 25, 2024 Target announced that the Board of Directors of Target Hospitality ("the Board") received an unsolicited non-binding proposal from Arrow Holdings S.à r.l. ("Arrow"), an affiliate of TDR Capital LLP ("TDR"), to acquire all of the outstanding shares of common stock of Target Hospitality that are not owned by any of Arrow, any investment fund managed by TDR or any of their respective affiliates, for cash consideration of $10.80 per share (the "Proposal").
The Board has established a special committee of independent directors (the "Special Committee"), and the Special Committee has retained Centerview Partners LLC and Ardea Partners LP as its financial advisors and Cravath, Swaine & Moore LLP as its legal advisor. The Special Committee has commenced its review and evaluation of the Proposal.
The Special Committee has made no decision at this time with respect to the Proposal, and the Company does not undertake any obligation to provide any updates with respect to the Proposal or any other transaction, except as required by applicable law or other regulatory requirements. There can be no assurance that any transaction will result from the Special Committee's evaluation of the Proposal, or, if so, the timing, terms and conditions of such transaction.
Segment Results – First Quarter 2024
Government
Refer to exhibits to this earnings release for definitions and reconciliations of Non-GAAP financial measures to GAAP financial measures
| | | | | | | | |
| For the Three Months Ended ($ in '000s) - (unaudited) | | March 31, 2024 | | March 31, 2023 | | ||
| Revenue | | $ | 67,607 | | $ | 109,503 | |
| Adjusted gross profit(1) | | $ | 52,433 | | $ | 88,774 | |
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Revenue for the three months ended March 31, 2024, was $67.6 million compared to $109.5 million for the same period in 2023. Adjusted gross profit for the period was $52.4 million compared to $88.8 million in the same period in 2023.
These decreases were primarily driven by non-cash, nonrecurring, Infrastructure Revenue Amortization associated with the Company's PCC community, which was fully amortized as of November 2023.
Hospitality & Facilities Services - South
Refer to exhibits to this earnings release for definitions and reconciliations of Non-GAAP financial measures to GAAP financial measures
| | | | | | | | |
| For the Three Months Ended ($ in '000s, except ADR) - (unaudited) | | March 31, 2024 | | March 31, 2023 | | ||
| Revenue | | $ | 36,934 | | $ | 35,772 | |
| Adjusted gross profit(1) | | $ | 12,842 | | $ | 11,656 | |
| Average daily rate (ADR) | | $ | 74.89 | | $ | 73.42 Werbung Mehr Nachrichten zur Target Hospitality Corp Aktie kostenlos abonnieren
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