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Target Hospitality Announces Fourth Quarter and Full Year 2020 Results and Provides Full Year 2021 Financial Outlook

March, 30, 2021

THE WOODLANDS, Texas, March 30, 2021 /PRNewswire/ -- Target Hospitality Corp. ("Target Hospitality", "Target" or the "Company") (NASDAQ: TH), the largest provider of vertically-integrated specialty hospitality accommodations with premium food management and value-added hospitality services in the U.S., today reported results for the fourth quarter and year ended December 31, 2020.

Financial and Operational Highlights for the Year Ended 2020

  • Revenue of $225.1 million for the year ended December 31, 2020 as compared to $321.1 million for the same period in 2019
  • Net loss of $27.5 million for the year ended December 31, 2020, compared to net income of $6.2 million for full year 2019
  • Basic and diluted loss per share of $0.29 for the year ended December 31, 2020
  • Adjusted EBITDA(1) of $78.5 million for the year ended December 31, 2020, compared to $159.2 million for the same period in 2019
  • Strong cash generation with net cash provided by operating activities of $46.8 million and Discretionary Cash Flow ("DCF") (1) of $45.9 million for the year ended December 31, 2020
  • Strong balance sheet with liquidity of $84.0 million as of December 31, 2020
  • Utilized $32 million of 2020 discretionary cash flow to reduce borrowings under the Company's revolving credit facility
  • TC Energy Corporation's Keystone XL pipeline project contributed approximately $41.9 million in revenue for the year ended December 31, 2020
  • Secured approximately $383 million in minimum revenue contracts, backed by the United States Government, including a new $118 million contract providing a suite of comprehensive service offerings supporting humanitarian aid efforts

Executive Commentary

"As the 2020 macroeconomic outlook became increasingly uncertain, Target took aggressive actions to align the business with customer demand, while maintaining focus on preserving our financial strength.  These actions resulted in a leaner and more efficient operating structure, which appropriately positioned Target to take advantage of a more balanced market.  As the economic outlook began improving, Target was able to meet a recovery in customer demand for its premium service offerings with little incremental cost, providing the backdrop for margin expansion in the second half of 2020," stated Brad Archer, President and Chief executive Officer.   

"We have continued to see improvement in customer demand and anticipate gradual increases in end-market customer activity throughout 2021, as the market continues to normalize. Additionally, we are excited about the new partnership with a leading nonprofit and providing support to the U.S. Government in their humanitarian aid efforts.  This strategic partnership illustrates our consistent strategy of utilizing our existing core competencies to further diversify our end-markets, while securing high quality contracts that provide significant revenue visibility.  Our suite of core competencies and premier service offerings strategically position Target to evaluate other potential value enhancing opportunities that will further diversify Target's end-markets and strengthen its financial posture.  As we indicated in our 2021 outlook, we will continue to generate meaningful discretionary cash flow and remain focused on capital discipline, continued debt reduction and improving operating efficiency through the balance of 2021," concluded Mr. Archer.

Financial Results

Full Year Summary Highlights

Refer to exhibits to this earnings release for definitions and reconciliations of Non-GAAP financial measures to GAAP financial measures









For the Years Ended

($ in '000s, except ADR and per share amounts)


December 31, 2020


December 31, 2019


Revenue


$

225,148


$

321,096


Net income (loss)


$

(27,478)


$

6,236


Earnings (loss) per share – basic and diluted


$

(0.29)


$

0.07


Adjusted EBITDA


$

78,488


$

159,188


Average daily rate (ADR)


$

77.40


$

81.26


Average utilized beds



6,352



9,923


Utilization



48

%


83

%

Revenue for the year ended December 31, 2020 was $225.1 million compared to $321.1 million for the same period in 2019. The decrease in revenue was primarily driven by a reduction in energy end-market customer activity as a result of the COVID-19 pandemic, which created a meaningful reduction in customer headcount within our operating areas.  These decreases were offset by increased activity associated with TC Energy Corporation's ("TCPL") project, which contributed approximately $41.9 million in revenue in 2020. Net loss for the year ended December 31, 2020 was $27.5 million, compared to net income of $6.2 million for the same period in 2019.

Adjusted EBITDA was $78.5 million for the year ended December 31, 2020 compared to $159.2 million for the same period in 2019.

ADR decreased by $3.86 to $77.40 for the year ended December 31, 2020 compared to the same period in 2019.  Average utilized beds and utilization were 6,352 and 48%, respectively, for the year ended December 31, 2020. 

Fourth Quarter Summary Highlights

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 and per share
amounts)



December 31, 2020



December 31, 2019


Revenue


$

51,610


$

76,113


Net income (loss)


$

(9,210)


$

66


Earnings (loss) per share – basic and diluted


$

(0.10)


$

0.00


Adjusted EBITDA


$

15,762


$

36,044


Average daily rate (ADR)


$

69.92


$

80.90


Average utilized beds



5,773



9,789


Utilization



43

%


76

%

Revenue for the three months ended December 31, 2020 was $51.6 million compared to $76.1 million for the same period in 2019. The decrease in revenue was primarily driven by a reduction in energy end-market customer activity as a result of the COVID-19 pandemic and subsequent meaningful reduction in customer headcount within our operating areas.  These decreases were offset by increased activity associated with the TCPL project, which contributed approximately $13.8 million in revenue in the fourth quarter of 2020. Net loss for the three months ended December 31, 2020 was $9.2 million compared to net income of $0.1 million for the same period in 2019.

Adjusted EBITDA was $15.8 million for the three months ended December 31, 2020 compared to $36.0 million for the same period in 2019.

ADR decreased by $10.98 to $69.92 for the three months ended December 31, 2020 compared to the same period in 2019.  The decrease in ADR was primarily driven by lower average ADR in the Permian and Government segments.  Average utilized beds and utilization were 5,773 and 43%, respectively, for the three months ended December 31, 2020. 

Capital Management

The Company had approximately $9.1 million of capital expenditures, including $0.9 million of maintenance capital expenditures, for the year ended December 31, 2020.  Target has established a premium network with substantial scale within its core operating regions.  This scale allows Target to service increasing demand for its hospitality and accommodation services with minimal capital spending, supporting strong margins and cash flow generation. 

As of December 31, 2020, the Company had $7.0 million of cash and cash equivalents, and $388 million in gross amount of total long-term debt, which included $340 million in aggregate principal amount of senior secured notes due March 2024 and borrowings of $48 million under the Company's $125 million revolving credit facility. The Company had consolidated net leverage of 5.0 times, as defined under its credit facility.

Business Update

Signs of the economic recovery are beginning to emerge, anchored by global fiscal and monetary stimulus and continued rollout of COVID-19 vaccines.  Target has continued to see modest improvement in energy end-market customer demand and operating metrics in 2021 and anticipates gradual increases in customer activity throughout the year, with a more normalized market in 2022. 

As the Company announced, on March 29, 2021, it has entered into a lease and services agreement with a leading national nonprofit organization, backed by a committed United States Government contract, to provide a suite of comprehensive service offerings in support of their humanitarian aid efforts.  The contract has a value of approximately $118.0 million and is fully committed over its initial one-year term, which commenced March 18, 2021.  This partnership is consistent with Target's Government segment and strategy of diversifying its end-markets through high quality contracts with premier partners, that provide strong revenue visibility and cash flows. 

Target's core business remains strong, and its customer base and contract structure, including exclusivity, have allowed the Company to take advantage of stabilizing market trends.  In addition, the recent government services contract provides meaningful committed revenue through 2021.  These elements have contributed to approximately 96% of the Company's anticipated 2021 revenue being under contract with approximately 69% of contracted revenue having committed payment provisions.  As a result, the Company is announcing its 2021 financial outlook of:

  • Total revenue between $235 and $245 million
  • Adjusted EBITDA(1) between $88 and $95 million
  • Interest expense(2) between $34 and $36 million
  • Discretionary Cash Flow(1) between $55 and $60 million
  • Total capital spending between $12 and $17 million, excluding acquisitions
  • Targeting a total net leverage(3) ratio of below 4.0x by year end 2021

(2)  Interest expense excludes amortization of deferred financing cost and original issue discount
(3)  Total net leverage ratio is defined in the credit facility as consolidated total debt to consolidated EBITDA for the preceding four fiscal quarters

Recent Developments

On March 29, 2021, the Board of Directors of Target Hospitality (the "Board") and its special committee comprised of independent directors (the "Special Committee") were notified that Arrow Holdings S.à r.l. ("Arrow"), an affiliate of TDR Capital LLP ("TDR"), withdrew its previously announced non-binding proposal to acquire all of the outstanding shares of common stock of Target Hospitality not owned by Arrow or its affiliates for cash consideration of $1.50 per share (the "Proposal").

Consequently, the Special Committee and its own outside legal counsel and its own outside financial advisor have ceased their evaluation of the Proposal.

Segment Results – Fourth Quarter 2020

Permian Basin

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)


December 31, 2020


December 31, 2019



Revenue


$

22,963


$

53,191



Adjusted gross profit


$

9,260


$

29,957



Adjusted gross profit margin



40

%


56

%


Average daily rate (ADR)


$

75.68


$

83.90



Average utilized beds



3,227



6,706



Utilization



34

%


73

%


Revenue for the three months ended December 31, 2020 was $23.0 million compared to $53.2 million for the same period in 2019. Revenue decreased primarily due to lower utilization as a result of the COVID-19 pandemic, which created a meaningful reduction in customer headcount demand.  ADR decreased by $8.22, to $75.68 compared to the same period in 2019.  The reduction is ADR was primarily driven by a reduction in the uncontracted portion of the business and moderate pricing pressure.

Adjusted gross profit margin was 40% for the three months ended December 31, 2020, compared to 56% for the same period in 2019.

Bakken Basin

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)


December 31, 2020


December 31, 2019


Revenue


$

900


$

4,091


Adjusted gross profit


$

(162)


$

1,283


Adjusted gross profit margin



(18)

%


31

%

Average daily rate (ADR)


$

74.44


$

78.60


Average utilized beds



129



554


Utilization



12

%


54

%

Revenue for the three months ended December 31, 2020 was $0.9 million compared to $4.1 million for the same period in 2019. The decrease was attributable to select communities remaining closed in the Bakken since May 2020, as a result of the COVID-19 pandemic, which created a meaningful reduction in global demand resulting in a sharp decline in customer activity.

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, except ADR)


December 31, 2020


December 31, 2019


Revenue


$

13,732


$

16,858


Adjusted gross profit


$

9,821


$

12,218


Adjusted gross profit margin



72

%


73

%

Average daily rate (ADR)


$

60.85


$

74.50


Average utilized beds



2,400



2,400


Utilization



100

%


100

%

Revenue for the three months ended December 31, 2020 was $13.7 million compared to $16.9 million for the same period in 2019.  Average available beds of 2,400 were fully utilized for the three months ended December 31, 2020, with an ADR of $60.85.  On September 15, 2020, Target executed a five-year renewal and extension of its government services contract through September 30, 2026, which adds approximately $265 million in committed revenue over the contract term.  As a result of the contract extension, there was a decrease in non-cash deferred revenue amortization for the construction cost reimbursement associated with this contract.  The non-cash deferred revenue component was embedded in the ADR, which will result in a lower ADR in subsequent periods.  The facilities and services ADR remained unchanged.

TCPL Keystone

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)


December 31, 2020


December 31, 2019


Revenue


$

13,786


$

1,229


Adjusted gross profit


$

4,200


$

193


Adjusted gross profit margin



30

%


16

%

This segment's operations consist primarily of revenue from the construction phase of the TCPL project. Revenue for the three months ended December 31, 2020 was $13.8 million compared to $1.2 million for the same period in 2019. Revenue increased as a result of the significant increase in activity associated with the TCPL project. 

As a result of the January 20, 2021 Executive Order, revoking the Keystone XL Presidential Permit, the Company anticipates substantially lower 2021 revenue associated with the TCPL project.

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)


December 31, 2020


December 31, 2019


Revenue


$

229


$

744


Adjusted gross profit


$

(212)


$

218


Adjusted gross profit margin



(93)

%


29

%

This segment's operations consist of hospitality services revenue not included in other segments. Revenue for the three months ended December 31, 2020 was $0.2 million compared to $0.7 million for the same period in 2019.

Conference Call

The Company has scheduled a conference call for March 30, 2021 at 8:00 a.m. Central Time (9:00 am Eastern Time) to discuss the fourth quarter and full year 2020 results.

The conference call will be available by live webcast through the Investors section of Target Hospitality's website at www.TargetHospitality.com or by dialing in as follows:



Domestic:

1-888-317-6003

International:

1-412-317-6061

Passcode:

0364477

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 the largest provider of vertically integrated specialty rental accommodations and value-added hospitality services in the United States. Target Hospitality builds, owns and operates customized housing communities for a range of end users, and offers a full suite of cost-effective hospitality solutions including culinary, catering, concierge, laundry and security services as well as recreational facilities. Target Hospitality primarily serves the energy and government sectors and its growing network of communities is designed to maximize workforce productivity and satisfaction.

Cautionary Statement Regarding Forward Looking Statements

Certain statements made in this press release 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: the severity and duration of the COVID-19 pandemic, related economic repercussions and the resulting negative impact on demand for oil and natural gas; operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees and customers, remote work arrangements and return to work arrangements, contract and supply chain disruptions; operational, economic, political and regulatory risks; federal government budgeting and appropriations; our ability to effectively compete in the specialty rental accommodations and hospitality services industry; effective management of our communities; natural disasters, including pandemics and other business disruptions; 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; 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 inability to recognize deferred tax assets and tax loss carry forwards; 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 from the Biden administration; 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; our ability to meet our debt service requirements and obligations; and risks related to Bidco's obligations under the senior notes.  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, Adjusted gross profit margin, DCF 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 forward-looking non-GAAP financial measure Adjusted EBITDA. Reconciliations of this forward-looking measure to its most directly comparable GAAP financial measure 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 reconciliations 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 range 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, provides useful information for the reasons noted below.

Definitions:

Target Hospitality defines Adjusted gross profit, as Gross profit plus depreciation of specialty rental assets and loss on impairment. Target Hospitality defines Adjusted gross profit margin as Adjusted gross profit divided by total revenue for the same period.

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 expense (income), net: Other expense (income), net includes consulting expenses related to certain projects, financing costs not classified as interest expense, gains and losses on disposals of property, plant, and equipment, involuntary asset conversions, COVID-19 related expenses, and other immaterial non-cash charges.
  • Currency (gains) losses, net: Foreign currency transaction gains and losses.
  • Restructuring costs: Algeco US Holdings LLC ("Target Parent") incurred certain costs associated with restructuring plans designed to streamline operations and reduce costs.
  • Transaction expenses: Target Hospitality incurred certain transaction costs, including legal and professional fees, associated with the business combination (the "Business Combination") of Platinum Eagle Acquisition Corp., Target Logistics Management, LLC and RL Signor Holdings, LLC ("Signor") as well as other transactions unrelated to the Company's core business operations. Such amounts related to the Business Combination were funded by proceeds from the Business Combination.
  • Acquisition-related expenses: Target Hospitality incurred certain transaction costs associated with the acquisition of Superior and Signor.
  • Officer loan expense: Non-cash charge associated with loans to certain executive officers of the Company that were forgiven and recognized as selling, general, and administrative expense upon consummation of the Business Combination. Such amounts are not expected to recur in the future.
  • Target Parent selling, general and administrative costs: Target Parent incurred certain costs in the form of legal and professional fees as well as transaction bonus amounts, primarily associated with a restructuring transaction that originated in 2017.
  • Stock-based compensation: Non-cash 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.
  • Other adjustments: System implementation costs, including primarily non-cash amortization of capitalized system implementation costs, claim settlement, business development, accounting standard implementation costs and certain severance costs.

Target Hospitality defines Discretionary cash flow as cash flow from operations less maintenance capital spending for specialty rental assets.

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 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 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, Adjusted gross profit margin, DCF and Adjusted EBITDA are not measurements of Target Hospitality's financial performance under GAAP and should not be considered as alternatives to Net income (loss), Gross profit, Earnings per share, Net cash provided by operating activities, or other performance measures derived in accordance with GAAP. In addition, these non-GAAP measures may not be comparable to similarly titled measures of other companies. Target Hospitality's management believe that Adjusted gross profit, Adjusted gross profit margin, DCF and Adjusted EBITDA provide 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 – 8009
ir@targethospitality.com

 

Exhibit 1

Target Hospitality Corp.
Consolidated Statements of Comprehensive Income (Loss)
($ in thousands, except per share amounts)
(unaudited)




Three Months Ended


For the Years Ended



December 31, 


December 31, 



2020


2019


2020


2019

Revenue:













Services income


$

28,905


$

57,723


$

132,430


$

242,817

Specialty rental income



10,581



16,723



52,960



59,826

Construction fee income



12,125



1,667



39,758



18,453

Total revenue



51,610



76,113



225,148



321,096

Costs:













Services



26,730



29,497



109,185



120,712

Specialty rental



1,979



2,747



8,843



9,950

Depreciation of specialty rental assets



12,808



12,338



49,965



43,421

Gross profit



10,095



31,531



57,155



147,013

Selling, general and administrative



9,529



9,647



38,128



76,464

Other depreciation and amortization



3,094



3,881



15,649



15,481

Restructuring costs









168

Currency gains, net





(46)





(123)

Other expense (income), net



29



6,592



(723)



6,872

Operating income (loss)



(2,557)



11,457



4,101



48,151

Loss on extinguishment of debt









907

Interest expense, net



9,921



9,345



40,034



33,401

Income (loss) before income tax



(12,478)



2,112



(35,933)



13,843

Income tax expense (benefit)



(3,269)



2,046



(8,455)



7,607

Net income (loss)



(9,210)



66



(27,478)



6,236

Other comprehensive income (loss)













Foreign currency translation



(17)



(31)



124



(95)

Comprehensive income (loss)


$

(9,227)


$

35


$

(27,354)


$

6,141














Weighted average number shares outstanding - basic and diluted



96,155,017



97,835,525



96,018,338



94,501,789














Net income (loss) per share - basic and diluted


$

(0.10)


$

0.00


$

(0.29)


$

0.07

 

Exhibit 2

Target Hospitality Corp.
Condensed Consolidated Balance Sheet Data
($ in thousands)
(unaudited)





December 31, 


December 31, 




2020


2019

Assets








Cash and cash equivalents


$

6,979


$

6,787

Accounts receivable, less allowance for doubtful accounts



28,183



48,483

Other current assets



8,400



5,525

Total current assets



$

43,562



60,795








Specialty rental assets, net




311,487



353,695

Goodwill and Other intangibles, net




144,159



158,904

Other non-current assets




35,029



27,398

Total assets



$

534,237


$

600,792








Liabilities








Accounts payable


$

10,644


$

7,793

Deferred revenue and customer deposits



6,619



16,809

Other current liabilities



28,270



36,319

Total current liabilities




45,533



60,921








Long-term debt, net




326,499



323,258

Revolving credit facility




48,000



80,000

Other non-current liabilities




14,784



13,211

Total liabilities




434,816



477,390








Stockholders' equity








Common stock and other stockholders' equity



89,184



85,687

Accumulated earnings



10,237



37,715

Total stockholders' equity




99,421



123,402

Total liabilities and stockholders' equity



$

534,237


$

600,792

 

Exhibit 3

Target Hospitality Corp.
Condensed Consolidated Cash Flow Data
($ in thousands)
(unaudited)




For the Years Ended



December 31, 



2020


2019








Cash, cash equivalents and restricted cash - beginning of year


$

6,839


$

12,451








Cash flows from operating activities







Net (loss) income



(27,478)



6,236

Adjustments:







Depreciation



50,870



44,585

Amortization of intangible assets



14,744



14,317

Other non-cash items



2,149



22,252

Changes in operating assets and liabilities



6,496



(26,895)

Net cash provided by operating activities


$

46,781


$

60,495








Cash flows from investing activities







Purchases of specialty rental assets



(12,177)



(84,732)

Purchase of business



-



(30,000)

Other investing activities



1,228



2,027

Net cash used in investing activities


$

(10,949)


$

(112,705)








Cash flows from financing activities







Repurchase of common stock



(5,318)



(18,241)

Other financing activities



(30,365)



64,893

Net cash (used in) provided by financing activities


$

(35,683)


$

46,652








Effect of exchange rate changes on cash, cash equivalents and restricted cash



(9)



(54)








Change in cash, cash equivalents and restricted cash



140



(5,612)








Cash, cash equivalents and restricted cash - end of year


$

6,979


$

6,839

 

Exhibit 4

Target Hospitality Corp.
Reconciliation of Gross profit to Adjusted gross profit and Adjusted gross profit margin
($ in thousands)
(unaudited)



For the Three Months Ended

For the Years Ended


December 31, 

December 31, 


2020


2019


2020


2019













Total Revenue

$

51,610


$

76,113


$

225,148


$

321,096













Gross Profit

$

10,094


$

31,531


$

57,155


$

147,013













Adjustments:












Depreciation of specialty rental assets


12,808



12,338



49,965



43,421

Adjusted gross profit

$

22,902


$

43,869


$

107,120


$

190,434













Adjusted gross profit margin


44%



58%



48%



59%

 

Exhibit 5

Target Hospitality Corp.
Reconciliation of Net income (loss) to EBITDA and Adjusted EBITDA
($ in thousands)
(unaudited)



For the Three Months Ended


For the Years Ended


December 31, 


December 31, 


2020


2019



2020


2019














Total Revenue

$

51,610


$

76,113



$

225,148


$

321,096














Net income (loss)

$

(9,210)


$

66



$

(27,478)


$

6,236

Income tax expense (benefit)


(3,269)



2,046




(8,455)



7,607

Interest expense, net


9,921



9,345




40,034



33,401

Loss on extinguishment of debt


-



-




-



907

Other depreciation and amortization


3,094



3,881




15,649



15,481

Depreciation of specialty rental assets


12,808



12,338




49,965



43,421

EBITDA

$

13,344


$

27,676



$

69,715


$

107,053














Adjustments













Other expense, net


322



6,890




416



8,031

Restructuring costs


-



-




-



168

Currency gains, net


-



(46)




-



(123)

Transaction expenses


597



329




979



38,357

Acquisition-related expenses


-



-




-



370

Target Parent selling, general, and administrative costs


-



-




-



246

Stock-based compensation


784



884




3,592



1,527

Other adjustments


716



311




3,786



3,559

Adjusted EBITDA

$

15,762


$

36,044



$

78,488


$

159,188

 

Exhibit 6

Target Hospitality Corp.
Reconciliation of Net cash provided by operating activities to Discretionary cash flows
($ in thousands)
(unaudited)




For the Year Ended



December 31,



2020


2019

Net cash provided by operating activities


$

46,781


$

60,495

Less: Maintenance capital expenditures for specialty rental assets



(888)



(2,029)

Discretionary cash flows


$

45,893


$

58,466








Purchase of specialty rental assets



(12,177)



(84,732)

Purchase of property, plant and equipment



(381)



(441)

Purchase of business, net of cash acquired





(30,000)

Repayments from affiliates





638

Receipt of insurance proceeds



619



386

Proceeds from sale of specialty rental assets and other property, plant and equipment



990



1,444

Net cash used in investing activities


$

(10,949)


$

(112,705)








Proceeds from borrowings on Senior Secured Notes, net of discount





336,699

Principal payments on finance and capital lease obligations



(11,581)



(2,331)

Proceeds from borrowings on finance and capital lease obligations



13,437



Principal payments on borrowings from ABL



(74,500)



(48,790)

Proceeds from borrowings on ABL



42,500



108,240

Repayment of affiliate note





(3,762)

Contributions from affiliate





39,107

Recapitalization





218,752

Recapitalization - cash paid to Algeco Seller





(563,134)

Payment of deferred financing costs





(19,798)

Restricted shares surrendered to pay tax liabilities



(221)



(90)

Purchase of treasury stock



(5,318)



(18,241)

Net cash provided by (used in) financing activities


$

(35,683)


$

46,652

 

Cision View original content:http://www.prnewswire.com/news-releases/target-hospitality-announces-fourth-quarter-and-full-year-2020-results-and-provides-full-year-2021-financial-outlook-301257944.html

SOURCE Target Hospitality

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