Target Hospitality (TH) Misses Q2 EPS by 4c, Revenues Beat

Target Hospitality (NASDAQ: TH) reported Q2 EPS of ($0.15), $0.04 worse than the analyst estimate of ($0.11). Revenue for the quarter came in at $53.62 million versus the consensus estimate of $39.74 million.

Financial and Operational Highlights for the Second Quarter 2020

• Revenues of $53.6 million for the three months ended June 30, 2020 as compared to $81.4 million for the same period in 2019
• Net income (loss) of $(14.2) million for the three months ended June 30, 2020, compared to a net income of $10.6 million for the second quarter of 2019
• Basic and diluted (loss) per share of $(0.15) for the three months ended June 30, 2020
• Adjusted EBITDA(1) of $13.4 million, compared to $41.2 million for the second quarter of 2019
• Strong cash generation in a challenging environment, with net cash provided by operating activities of $14.8 million and Discretionary Cash Flow (“DCF”) (1) of $14.7 million for the three months ended June 30, 2020
• Strong balance sheet with liquidity of $59.9 million and net leverage of 3.4 times as of June 30, 2020
• Maintaining financial flexibility with no near-term debt maturities, immediate covenants, liquidity or minimum credit rating on the Company’s Senior Secured Notes or revolving credit facility
• Significant progress on previously announced cost reductions, including substantial reductions in capital spending and cash expense
• Meaningful increase in project activity from TC Energy Corporation Keystone XL pipeline project, contributing approximately $15.4 million in revenue
• Secured and extended additional minimum revenue contracts adding approximately $60 million in committed revenue from 2021 - 2025

“The second quarter was challenging, as the combined impacts of a global pandemic and deteriorating demand for a substantial portion of the global economy created an unprecedented operating environment. The acceleration of the global pandemic significantly reduced economic activity and the corresponding demand for crude oil, resulting in a pronounced reduction in customer activity in the second quarter. We took aggressive actions to quickly align with demand and appropriately positioned Target to successfully navigate this challenging environment. Despite reduced demand in our energy-oriented assets, Target delivered strong financial results with approximately $15 million of discretionary cash flow for the second quarter,” stated Brad Archer, President and Chief Executive Officer.

“The path for global economic demand remains uncertain for the foreseeable future. However, as we exited the second quarter, we began to see positive trends in several of Target’s operating metrics, including occupancy and utilization. Albeit modest, we do anticipate continued marginal improvements in customer activity and demand through the second half of the year and into 2021. As we progress towards a more normal operating environment, Target’s customer base and contract structure, including exclusivity provisions, will allow the Company to take advantage of a more balanced market,” concluded Mr. Archer.

For earnings history and earnings-related data on Target Hospitality (TH) click here.

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