THE
WOODLANDS, Texas, Feb. 18,
2025 /PRNewswire/ -- Target Hospitality Corp.
("Target Hospitality", "Target" or the "Company") (Nasdaq: TH), one
of North America's largest
providers of vertically integrated modular accommodations and
value-added hospitality services, today announced it has entered
into a multi-year construction and services agreement ("Workforce
Housing Contract") to provide comprehensive facility services and
premium hospitality solutions to Lithium Americas Corp. ("Lithium
Americas") in support of Lithium Americas development of Thacker
Pass ("Thacker Pass Project" or the "Project") and a North American
critical minerals supply chain.
The all-inclusive workforce housing community,
located in Winnemucca, Nevada
("Workforce Hub") is near Thacker Pass, the world's largest known
measured lithium resource. Lithium Americas, in partnership with
General Motors ("GM"), jointly own the Thacker Pass Project.
Lithium Americas holds a 62% interest and will manage the
Project. GM has invested a total of $945 million in cash and a line of credit, for a
38% asset-level interest in the Thacker Pass Project. In
addition, the Project has closed a $2.26
billion loan from the U.S. Department of Energy's Loan
Programs Office, under the Advanced Technology Vehicles
Manufacturing loan program, for financing the construction of the
processing facilities for the Project.
The Thacker Pass Project is expected to play a
major role in the domestic production of lithium batteries and is
backed by an offtake agreement with GM for up to 100% of Phase 1
Thacker Pass production, plus a 20-year offtake agreement for up to
38% of Phase 2 offtake, with a right of first offer for the
remaining balance of Phase 2 volumes. The joint commitment to
developing this strategically significant resource illustrates the
importance of creating a robust North American-focused supply chain
for critical raw materials.
Lithium Americas has commenced site preparation and Target is
actively engaged in construction of the Workforce Hub. The
Workforce Hub will be capable of supporting a population of
approximately 2,000 individuals, with an initial term through 2027,
and opportunities to support this critical service offering through
multiple project phases. Target anticipates first occupancy by
mid-2025 and completion of the Workforce Hub by year-end
2025.
Target will construct and provide full turnkey support for the
Workforce Hub, including premium culinary offerings, facilities
management, and comprehensive support services. The Workforce
Housing Contract, which consists of construction and services
revenue, is expected to generate approximately $140 million of revenue over its initial term,
with approximately $76 million of
committed minimum revenue. The Company anticipates
approximately $68 million of
committed minimum revenue will be realized in 2025.
In addition, the Company plans to allocate between $15 and $20 million
of growth capital to establish new regional network capacity.
The additional capacity will be utilized to support the development
of this premium Workforce Hub, while simultaneously creating a
strategic regional footprint focused on potential additional growth
opportunities. Target believes the Workforce Hub, along with
newly established regional network capacity, will serve as a
cornerstone as it pursues other potential growth initiatives within
this expanding region for lithium and related critical mineral
development.
"We are excited to announce this partnership with Lithium
Americas and support the critical development of a domestic lithium
supply chain. This marks a significant milestone in Target's
commitment to strategic diversification, while simultaneously
expanding our geographic presence. We believe the
establishment of this community will provide opportunities to
pursue additional value enhancing growth initiatives supporting an
expanding number of large, critical mineral development projects in
the region," stated Brad Archer,
President and Chief Executive Officer.
The announcement of this strategic diversification and network
expansion further illustrates Target's unique capabilities in
providing customized solutions across diverse end-markets.
This announcement, coupled with Target's existing contract
portfolio, supports a more diversified business mix, while
maintaining a high degree of revenue visibility.
These enhanced business fundamentals support Target's
preliminary 2025 financial outlook, which consists of:
- Total revenue between $385 and
$395 million
- Adjusted EBITDA(1) between $150 and $160
million
About Target Hospitality
Target Hospitality is one of North
America's largest providers of vertically integrated modular
accommodations and value-added hospitality services in the United States. Target builds, owns and
operates a customized and growing network of communities for a
range of end users through a full suite of value-added solutions
including premium food service management, concierge, laundry,
logistics, security and recreational facilities services.
Cautionary Statement Regarding Forward Looking
Statements
Certain statements made in this press release (including the
financial outlook contained herein) 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: operational,
economic, including inflation, political and regulatory risks; our
ability to effectively compete in the specialty rental
accommodations and hospitality services industry, including growing
the HFS – South and Government segments; effective management of
our communities; natural disasters and other business distributions
including outbreaks of epidemic or pandemic disease; the duration
of any future public health crisis, related economic repercussions
and the resulting negative impact to global economic demand; 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; changes in end-market demand
requirements including variable occupancy levels associated with
subcontracts in the Government segment; 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 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 in policy under the
Trump administration or any future administration; federal
government budgeting and appropriations; 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 refinance debt on favorable terms and meet our debt
service requirements and obligations; and risks related to our
outstanding obligations in connection with 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 a forward-looking
non-GAAP financial measure Adjusted EBITDA. Reconciliations of this
forward-looking measure to its most directly comparable GAAP
financial measure are unavailable to Target Hospitality without
unreasonable effort. We cannot provide reconciliations of
forward-looking Adjusted EBITDA to a GAAP financial measure 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 reconciliations
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
calculations. Target Hospitality provides an Adjusted EBITDA
outlook because we believe that these measures, when viewed with
our results under GAAP, provide useful information for the reasons
noted below.
Definitions:
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 (income) expense, net: Other (income) expense, net
includes miscellaneous cash receipts, gains and losses on disposals
of property, plant, and equipment, and other immaterial expenses
and non-cash items.
- Transaction expenses: Includes transaction costs associated
with certain transactions, including the Proposal.
- Stock-based compensation: 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
non-cash amortization of capitalized system implementation costs,
business development, accounting standard implementation costs and
certain severance costs.
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 and disposal 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 and disposal of depreciable assets and impairment
losses represents either accelerated depreciation or excess
depreciation in previous periods, and depreciation is excluded from
EBITDA.
Adjusted EBITDA is not a measurement of Target
Hospitality's financial performance under GAAP and should not be
considered as alternatives to Net income (loss), or other
performance measures derived in accordance with GAAP. In addition,
this non-GAAP measure may not be comparable to similarly titled
measures of other companies. Target Hospitality's management
believe that Adjusted EBITDA provides useful information to
investors about Target Hospitality and its financial condition and
results of operations for the following reasons: (i) it is among
the measures used by Target Hospitality's management team to
evaluate its operating performance; (ii) it is among the measures
used by Target Hospitality's management team to make day-to-day
operating decisions, (iii) it is 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
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SOURCE Target Hospitality
