Q3 2024 Target Hospitality Corp Earnings Call

It does.

We definitely believe the new administration everybody thing the policies. They talk about we think it's going to be very positive. We've had continued dialogue.

As recently passed the past few weeks. So look we're engaged we have thousands of beds ready for immediate use with the majority of the debt being used before by different departments within the federal government.

We haven't accessed exceptional past performance record and we're well positioned.

To provide many different solutions to many different departments within the agencies.

And we look forward to helping we think we will definitely see.

Positive trend in the business on that side of it.

Speaker Change: Got it. Thank you you previously talked about.

Third ICF facility.

Speaker Change: Do you have any updates regarding that process.

Speaker Change: Sure.

Speaker Change: While our recent conversations indicate the government's desire and intention to continue to proceed.

Speaker Change: With the third ICF.

Speaker Change: The pace and frequency of those conversations have slowed.

Speaker Change: We believe the governments proceeding through their evaluation and selection process just at a more measured pace when you look at <unk>.

Speaker Change: Have three facilities now up and running that was their push to get that done. So they kind of step back. We think it will continue on at a measured pace, but we don't expect anything substantive till 2025 to get a better update there.

Speaker Change: Thank you.

Speaker Change: One from me switching gears to Hff's utilization expanded ADR was down a bit could you address the outlook for that business.

Speaker Change: And how do you see the election outcome influence that.

Speaker Change: Yes, so ill.

Speaker Change: I'll take the first part of that this is Jason thanks for the question. So.

Speaker Change: That business has continued to hold steady.

Speaker Change: We balanced out the ADR with optimization and utilization a bit but the ADR has fluctuated within.

Speaker Change: Branches that we would expect it to fluctuate within with balancing that out in terms of how we see it going forward for the balance of the year I would expect to look somewhat like last year.

Speaker Change: With moderate seasonality in Q4, as we experienced in the past.

Speaker Change: And then in terms of the election outcome, Brad can certainly chime in here as well.

Speaker Change: Got it.

Speaker Change: Sort of set the stage at the steady business.

Speaker Change: Definitely holds anchors the business quite nicely.

It's relatively mature.

Speaker Change: And so while there are opportunities its a relatively mature business. Brad you can certainly chime in here a little bit more when you talked about the Permian basin. Some of the largest operators are really the largest operators in the world or are setting there that market's matured over the years, it's very steady we think thats what remains.

Brad: That business great business.

For many years to come and the way we're set up there with our network is look if they start to put more capital in that area, we're going to benefit.

Without putting much money into it right utilization goes up and those types of things, but what we're seeing.

Brad: And what we believe is they will remain very disciplined in their capital approach right now right.

Brad: But if that changes over time will be the benefit of that.

Speaker Change: Thank you I appreciate it.

Speaker Change: Once again should you have a question. Please press star followed by one on your Touchtone phone should you wish to decline from the polling process. Please press star followed by number two.

Speaker Change: Our next question comes from Alex <unk> of Stifel. Please go ahead.

Speaker Change: Yes.

Speaker Change: Hi, good morning, everyone and thanks for taking my question.

Speaker Change: I just wanted to follow up on a few things on the government side of the business just looking at gross margins in the quarter. They were pretty solid on both a sequential and year over year basis. I was just wondering if you could maybe give any color on how we should be thinking about that in relation to bridging to your 2020 for EBITDA guidance and just how we should think about that going forward as well.

Speaker Change: Yeah.

Speaker Change: Yes, so with respect to the government segment kind of future looking ex Gilly.

Speaker Change: There could be a few percentage points drop in the gross margin while we.

Speaker Change: So some of the fixed cost to keep that facility warm for future government opportunities, which we believe there are.

Speaker Change: But that being said as obviously the occupancy goes down you'll see the margins strengthen.

Speaker Change: So overall the margin is not going to change that much like I said, you could expect maybe a few percentage points loss just due to some of the fixed costs that will be ongoing at the daily facility and keep that warm, yes, and just to touch on the warrant picture I'd like Jason says.

Speaker Change: We want it quickly.

Speaker Change: Times, you can walk away from these end.

Speaker Change: It is don't think Theres, an opportunity youre going to look to move it there is a big opportunity to put that back on lease rate, especially with some of the changes over the past past few weeks. So that's always been our case no matter, who what administration got in there.

Speaker Change: The facility, we think has a lot of opportunity.

Speaker Change: In 2025, so the idea is to keep it warm theres, a little bit more expense there and.

Speaker Change: In doing that but we think it's well worth the spend.

Speaker Change: Got it understood I appreciate the color on there and that's all for me So I'll turn it back thanks again.

Speaker Change: And once again should you have a question. Please press star followed by one on your Touchtone phone.

Speaker Change: Should you wish to decline from the polling process. Please press star followed by number two.

Speaker Change: Thank you ladies and gentlemen.

Speaker Change: That concludes our question and answer session I will now turn the conference back over to Brad Archer.

Brad Archer: Please go ahead Sir.

Brad Archer: Thank you all for joining the call today and for your support of target hospitality. We look forward to speaking again on our fourth quarter earnings call have a great day.

Speaker Change: Operator that will conclude our call for today.

Speaker Change: Thank you for attending you may now disconnect your lines.

Speaker Change: [noise].