Target Hospitality Corp. (NASDAQ:TH) Q3 2020 Earnings Conference Call November 9, 2020 9:00 AM ET Company Participants Mark Schuck - Senior Vice President, Investor Relations Brad Archer - President and Chief Executive Officer Eric Kalamaras - Executive Vice President and Chief Financial Officer Conference Call Participants Operator Good day and welcome to the Target Hospitality Third Quarter Earnings Call. All participants are in a listen-only mode. [Operator Instructions] Please note, this event is being ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38343 TARGET HOSPITALITY CORP. (Exact name of registrant as specified in its charter) Delaware 98-1378631 (State or other ...

Target Hospitality Corp. (NASDAQ:TH) Q2 2020 Earnings Conference Call August 10, 2020 9:00 AM ET Company Participants Mark Schuck - SVP, Investor Relations Brad Archer - President and CEO Eric Kalamaras - EVP and CFO Troy Schrenk - Chief Commercial Officer Conference Call Participants Jeff Grampp - Northland Capital Markets Stephen Gengaro - Stifel Kevin McVeigh - Credit Suisse Stephen Gengaro - Stifel Operator Greetings and welcome to the Target Hospitality Second Quarter 2020 Earnings Conference Call. At ...

Target Hospitality Corp. (NASDAQ:TH) Q1 2020 Earnings Conference Call May 28, 2020 9:00 AM ET Company Participants Mark Schuck - Senior Vice President, Investor Relations Brad Archer - President and Chief Executive Officer Eric Kalamaras - Executive Vice President and Chief Financial Officer Troy Schrenk - Chief Commercial Officer Conference Call Participants Stephen Gengaro - Stifel Jeff Grampp - Northland Capital Markets Scott Schneeberger - Oppenheimer Kevin McVeigh - Credit Suisse Ashish Sabadra - Deuts ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38343 TARGET HOSPITALITY CORP. (Exact name of registrant as specified in its charter) Delaware 98-1378631 (State or other ...

Financial Data and Key Metrics Changes - For full year 2019, total revenue was $321 million, an increase of 33% compared to full year 2018. Adjusted EBITDA was $159 million, an increase of 36% with an adjusted EBITDA margin of 50% [28][13][12] - The company generated cash flow from operations of approximately $16 million and $61 million for the fourth quarter and full year respectively, demonstrating exceptional cash flow generation ability [35][36] Business Line Data and Key Metrics Changes - The Permian Basin delivered fourth quarter revenue of $53 million, an increase of 6% versus the prior year quarter, driven by an increase in average utilized beds [29] - In the Bakken, revenue declined by 29% due to a decrease in average utilized beds and lower ADR, reflecting lower activity levels compared to the same period last year [31] - The government segment's revenue for the quarter was up slightly to $17 million, providing stable ADR, utilization, and revenue [32] Market Data and Key Metrics Changes - Average available beds increased by over 2,000 or 29% compared to 2018, while ADR decreased by $2.80 primarily from lower average ADRs at acquired Signor communities [30] - The uncontracted business, representing about 15% of revenue, was impacted by reduced growth rates in activity in the fourth quarter [15] Company Strategy and Development Direction - The company aims to solidify its competitive advantage and position itself as the leading provider of specialty hospitality accommodations and services in the U.S. [10] - A disciplined approach to capital allocation is emphasized, with capital expenditures being highly discretionary to ensure high return certainty [19][18] - The company is focused on long-term contracts with well-capitalized customers, which provide revenue visibility and stability [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged recent volatility in global financial and commodity markets, which have created macro uncertainties affecting the business [9] - Despite challenges, the company remains confident in its core contracted business, which provides a high degree of cash-generating capability [41] - The company expects to continue generating meaningful cash flow, allowing for flexibility in capital allocation and potential growth opportunities [36][42] Other Important Information - The company has repurchased shares for approximately $24 million, representing about 32% of the total share repurchase authorization [39] - The company has a total long-term debt of $420 million, with a consolidated net leverage of 2.6 times, providing significant flexibility within its capital structure [38] Q&A Session Summary Question: Clarification on revenue guidance and contract definitions - Management clarified that 55% of revenue is locked and unwavering, while the remaining 30% is dependent on customer activity levels [53][57] Question: Update on government contracts - Management expressed confidence in the government segment, stating that contract renewal discussions will begin in late 2021 [60] Question: Impact of oil pricing on contracts - Management indicated that while there may be discussions regarding contract modifications, they have long-term contracts with customers that provide stability [66] Question: Capital allocation strategy amid uncertainty - Management emphasized the importance of maintaining balance sheet strength while evaluating share repurchases and potential M&A opportunities [76] Question: Trends in Permian ADR and utilization - Management noted that customer activity levels are currently uncertain, and they will continue to evaluate the situation [81][84] Question: Cost structure and flexibility - Management stated that approximately 70% of operating costs are variable, allowing for quick adjustments in response to changes in utilization [95][96]

Operations and Market Presence - Target Hospitality operates primarily in the Permian Basin and Bakken Basin, which are the highest producing oil and gas regions in the U.S.[14] - The company serves over 13 million meals annually, emphasizing high-quality culinary services and hospitality solutions[29] - Target Hospitality's DDBOOM business model allows for comprehensive turnkey solutions, optimizing project execution and reducing counterparty risks[23][28] - The company has expanded its community network significantly, adding approximately 1,600 rooms across the Permian Basin in 2018 and acquiring 4,500 beds through the acquisition of Signor[33] - Target Hospitality's facilities include amenities such as 24-hour dining, fitness centers, and professional uniformed staff, promoting safety and productivity for workers[31][30] - Target Hospitality operates 25 strategically located communities with approximately 13,800 beds in high-demand regions[51] - Target Hospitality operates 19 communities with approximately 9,821 beds in the Permian Basin, the largest network in the region[71] - The company has four community locations and 1,079 rentable rooms in the Bakken Basin, holding approximately 50% market share[79] Financial Performance and Revenue - Target Hospitality generated $67.0 million, representing 20.9% of total revenue from the Government segment for the year ended December 31, 2019[67] - The Permian Basin segment accounted for $214.5 million, or 66.8% of total revenue for the year ended December 31, 2019[72] - The Bakken Basin segment contributed $20.6 million, which is 6.4% of total revenue for the year ended December 31, 2019[79] - 82% of long-term contracts are committed, with 63% guaranteeing revenue regardless of occupancy levels, and a client renewal rate of at least 90% over the last 5 years[54] - The average life of rental assets exceeds 20 years, with maintenance capital estimated at approximately 1% of annual revenue[55] - Target Hospitality represents 42.7% of the overall rental accommodations market in the U.S., with the total integrated market approximately 70%[41] Customer Relationships and Contracts - The company has long-standing relationships with approximately 300 diversified customers, including major oil and gas companies[54] - Target Hospitality's largest customers for the year ended December 31, 2019, were CoreCivic and Halliburton, accounting for 20.8% and 12.5% of revenue, respectively[85] - Approximately 46% of total committed contracts contain exclusivity provisions, ensuring customers exclusively use Target's communities[54] - The company operates through network lease and services agreements (NLSAs) with an average term of 2 to 3 years, obligating customers to use its facilities across the U.S.[89] Strategic Growth and Acquisitions - The company has a history of strategic expansions and partnerships, including significant contracts with major industry players like Halliburton and Schlumberger[33] - Target Hospitality selectively pursues acquisitions to expand service offerings and enhance its market presence[56] Risks and Challenges - The company faces significant competition in the specialty rental and hospitality services sector, which could lead to pricing pressures and reduced market share[105] - The company is exposed to operational risks, including economic, political, and regulatory factors that could adversely affect its business[104] - The loss of significant customers, particularly in the energy sector, could materially affect the company's financial results[107] - Regulatory changes and increased compliance costs could impact the demand for the company's services and overall operations[94] - Increased public resistance and negative media attention towards the company's management of facilities may adversely affect brand perception and investor confidence[114] - Unique operational risks associated with family residential services could lead to higher costs and increased litigation, impacting financial condition and results of operations[115] - Oil and gas customers face disruptions from pricing volatility, unexpected development issues, and regulatory challenges, which could adversely affect the company's business[116] Financial Obligations and Debt - The company incurred $420 million in total indebtedness as of December 31, 2019, consisting of $80 million under the New ABL Facility and $340 million in Notes[194] - The company’s leverage may limit its ability to satisfy debt obligations and could require a substantial portion of cash flow to be dedicated to debt payments, reducing funds available for growth[195] - The company may need to raise additional funds to refinance existing debt or fund operations, which could impact its ability to achieve strategic objectives[200] Compliance and Regulatory Environment - The company is subject to various laws and regulations, including those related to U.S. government contracts, which may materially harm its business if compliance is not maintained[158] - Noncompliance with applicable regulations could lead to administrative penalties, suspension of government contracts, or debarment, adversely affecting revenue and financial condition[159] - U.S. government contracts typically include additional requirements that may increase operational costs and expose the company to liability for non-compliance, potentially leading to contract termination[160] Market Sensitivity and Economic Factors - Demand for services is sensitive to fluctuations in oil and gas prices, which could lead to decreased customer expenditure levels and negatively impact results[129] - Economic downturns, both locally and globally, could reduce demand for the company's products and services, impacting financial performance[179] Operational and Environmental Risks - The company faces risks related to environmental laws and regulations, which could result in increased compliance costs and liabilities for past contamination[165] - Climate change regulations may impose additional operating restrictions and compliance costs, adversely affecting the company's business and demand for services[170] - The company has no reserves for potential environmental liabilities, which could lead to significant costs in the future[165]

Investor Presentation December 2019 Disclaimer Cautionary Statement Regarding Forward-Looking Statements This presentation contains statements reflecting assumptions, expectations, projections, intentions or beliefs about future events that are intended as "forward-looking statements." You can identify these statements by the fact that they do not relate strictly to historical or current facts. Management cautions that any or all of Target Hospitality's forward-looking statements may turn out to be wrong. P ...

Revenue Growth - Revenue increased by $21.3 million or 35% compared to the same period in 2018, driven by organic growth and acquisitions [188]. - Total revenue for the three months ended September 30, 2019, was $81.6 million, a 35% increase from $60.3 million in the same period of 2018 [217]. - Total revenue for the nine months ended September 30, 2019, was $245 million, a 70% increase from $144.4 million in the same period of 2018 [232]. - Revenue for the Permian Basin segment was $161.3 million for the nine months ended September 30, 2019, a 129% increase from $70.5 million in the same period of 2018 [258]. - Services income increased by 36% to $64.1 million for the three months ended September 30, 2019, compared to $47.2 million in 2018 [218]. - Services income for the nine months ended September 30, 2019, was $185.1 million, an 84% increase from $100.4 million in 2018 [232]. Net Income and Profitability - Net income for the three months ended September 30, 2019, was approximately $9.5 million, up from $0.8 million in the same period in 2018 [188]. - Net income for the three months ended September 30, 2019, was $9.6 million, representing a 1027% increase from $849,000 in the same period of 2018 [217]. - Adjusted gross profit for the total company increased to $146.57 million for the nine months ended September 30, 2019, up 68% from $87.38 million in the same period of 2018 [255]. - For the three months ended September 30, 2019, Target Hospitality reported a gross profit of $38.556 million, up from $26.354 million in the same period of 2018, representing a 46% increase [298]. - Adjusted gross profit for the nine months ended September 30, 2019, was $146.565 million, compared to $87.379 million for the same period in 2018, reflecting a 67% increase [298]. Operational Performance - Adjusted EBITDA reached $40.6 million, representing an increase of $9.3 million or 23% compared to the same period in 2018 [188]. - Adjusted EBITDA for the nine months ended September 30, 2019, reached $123.144 million, compared to $72.928 million in 2018, indicating a 69% increase [299]. - EBITDA for the three months ended September 30, 2019, was $38.274 million, significantly higher than $19.176 million for the same period in 2018, marking a 99% increase [298]. Cash Flow and Liquidity - Cash flows from operations increased by $28.3 million or 178% for the nine months ended September 30, 2019, compared to the same period in 2018 [185]. - Net cash provided by operating activities increased to $44.3 million for the nine months ended September 30, 2019, compared to $15.9 million for the same period in 2018, reflecting a growth of approximately 178% [266]. - Net cash provided by operating activities for the nine months ended September 30, 2019, was $44.229 million, compared to $15.920 million in 2018, representing a 177% increase [299]. - The company expects sufficient liquidity to fund its growth strategy and working capital needs for at least the next 12 months, relying on cash flow from operations and borrowings [262]. Acquisitions and Expansion - The acquisition of Signor added 4,388 available beds in the Permian Basin segment, contributing significantly to revenue growth [188]. - The acquisition of Superior added 575 rooms to the company's portfolio, further expanding its presence in the Texas Permian Basin [212]. - The acquisition of Signor in September 2018 significantly contributed to revenue growth and increased operational activity in the Permian Basin [220]. Expenses and Costs - Selling, general and administrative expenses for the nine months ended September 30, 2019, were $66.8 million, a 90% increase from $35.1 million in 2018 [237]. - Interest expense for the three months ended September 30, 2019, was $10.2 million, an 88% increase from $5.4 million in the same period of 2018 [228]. - The company incurred approximately $38.1 million in incremental costs related to the Business Combination recognized as selling, general, and administrative expenses for the nine months ended September 30, 2019 [214]. - Other depreciation and amortization expense rose to $11.6 million for the nine months ended September 30, 2019, compared to $3.9 million for the same period in 2018, primarily due to $8.0 million from the amortization of customer relationship intangible assets from the Signor acquisition [239]. Market and Economic Factors - The company expects continued demand for its services, influenced by customer capital spending in the oil and gas sector [187]. - Target Hospitality's profitability and cash flows are affected by volatility in crude oil prices, although the company does not currently hedge this exposure [303]. - Inflation has not had a material effect on Target Hospitality's results of operations [304].

Target Hospitality Corp. (NASDAQ:TH) Q3 2019 Earnings Conference Call November 13, 2019 9:00 AM ET Company Participants Narinder Sahai - SVP, Treasurer, and IR Brad Archer - President and CEO Eric Kalamaras - CFO Troy Schrenk - Chief Commercial Officer Conference Call Participants Stephen Gengaro - Stifel Nicolaus Jeff Grampp - Northland Capital Markets Kevin McVeigh - Credit Suisse Ashish Sabadra - Deutsche Bank Operator Greetings, and welcome to Target Hospitality's Third Quarter 2019 Earnings Call. At th ...