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Mar 31, 2020
Target Hospitality Q1 2020 Earnings Report
Target Hospitality's first quarter results were announced, revealing a mix of financial outcomes amidst a challenging macro environment.
Key Takeaways
Target Hospitality reported revenues of $71.7 million and a net income of $3.8 million for the first quarter of 2020. The company faced challenges due to the COVID-19 pandemic and commodity market deterioration but implemented cost reduction measures and contract modifications to maintain financial flexibility.
Revenues reached $71.7 million, compared to $82.0 million in the same period of 2019.
Net income was $3.8 million, a significant improvement from a net loss of $14.0 million in Q1 2019.
Adjusted EBITDA stood at $32.4 million, down from $41.3 million in the first quarter of 2019.
The company maintained a strong balance sheet with liquidity of $47.5 million and net leverage of 2.8 times.
Target Hospitality
Target Hospitality
Target Hospitality Revenue by Segment
Revenue by Segment
Government Revenue
CapyFin.comAll Other Revenue
CapyFin.com Forward Guidance
Target Hospitality has withdrawn its 2020 financial outlook due to market conditions. The Company has lowered is anticipated full year 2020 growth capital expenditure to a range of $5 - $10 million but is otherwise not providing an updated 2020 financial outlook at this time.
Positive Outlook
- TC Energy Corporation will proceed with the construction of the TCPL Project.
- Target will provide hospitality and catering services for the duration of this project, which is anticipated to last into 2023.
- The Company is in the process of finalizing the full project scope and anticipate increased activity and revenue associated with this project over the remainder of 2020.
- The company has taken proactive steps to modify select commercial contracts to ensure long-term success in the face of a challenging near-term market.
- These modifications utilize multi-year contract extensions to maintain contract value and provide Target with greater visibility on long-term revenue and cash flow.
Challenges Ahead
- The COVID-19 pandemic and related economic repercussions have created significant volatility and uncertainty across global financial and commodity markets.
- These events, coupled with a substantial decline in crude oil prices, have consequently negatively affected Target’s energy end-market customers.
- The Company does anticipate a meaningful reduction in utilization levels in the second and third quarter of 2020.
- The financial results for the first quarter of 2020 reflect a small portion of what is anticipated to be a pronounced reduction in customer activity and utilization levels.
- The company has withdrawn its 2020 financial outlook.