Target Hospitality(US:TH)2019-11-14 18:38Revenue 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].