Target Hospitality Corp.

Good day and welcome to the Target Hospitality first quarter 2021 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, press star then one on a touch-tone phone. To withdraw your question, press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Mark Shook. Please go ahead.

Thank you. Good morning, everyone, and welcome to Target Hospitality's first quarter 2021 earnings call. The press release we issued this morning outlining our first quarter results can be found in the investors section of our website. In addition, a replay of this call will be archived on our website for a limited time. Please note the cautionary language regarding forward-looking statements contained in the press release. This same language applies to statements made on today's conference call. This call will contain time-sensitive information as well as forward-looking statements which are only accurate as of today, May 24th, 2021. Target Hospitality expressly disclaims any obligation to update or amend the information contained in this conference call to reflect events or circumstances that may arise after today's date, except as required by applicable law. For a complete list of risks and uncertainties that may affect future performance, please refer to Target Hospitality's periodic filings with the SEC. We will discuss non-GAAP financial measures on today's call. Please refer to the table in our earnings release posted in the investor section of our website to find a reconciliation of non-GAAP financial measures referenced in today's call and their corresponding GAAP measures. Leading the call today will be Brad Archer, President and Chief Executive Officer, followed by Eric T. Calamares, Executive Vice President and Chief Financial Officer. After their prepared remarks, we will be joined by Troy Schrenk, Chief Commercial Officer, and open the call for questions. I'll now turn the call over to our Chief Executive Officer, Brad Archer.

Thanks, Mark. Good morning, everyone, and thank you for joining us on the call today. In addition to discussing our first quarter performance, I will touch on the continued momentum we are experiencing across the business and indications of further strengthening through the balance of 2021. We continue to see signs of an improving global economic recovery. Increasing global vaccine distribution is fostering renewed commercial activities and global demand. These factors have supported meaningful improvements and targets operating metrics through the first quarter of 2021. This is even more impressive considering the severe winter weather experienced in February, which had an unprecedented impact on regional commerce within our Permian Basin segment. As a result of the storm, we experienced limited financial impact of less than $1 million and no lasting network disruptions. This is notable and illustrates our operational continuity and network integrity, which enabled us to meet customer demands with few service interruptions. The new partnership within our government services segment is off to a strong start and illustrates Target's superior operational flexibility and scale. These attributes allowed us to rapidly mobilize and begin servicing our customers' needs. Now turning to the first quarter operational trends. We continue to see positive momentum in customer demand, which contributed to increases in occupancy and utilization during the quarter. Utilization increased 800 basis points from the fourth quarter of 2020, as customer activity and labor allocation for our premium service offerings continue to build. The efficient operating structure we have created allowed us to meet increasing customer demand with little incremental cost. This supported sequential margin expansion of 900 base points from the fourth quarter of 2020. Our network scale, combined with our premium service offerings, is unmatched. These attributes enabled us to effectively increase our market share, our service offerings, and capabilities to continue to drive customer pull. In the first quarter alone, we added over 20 new customers and continue to realize an over 90% customer renewal rate. As we think about the second half of 2021 and into 2022, we are encouraged by the improving economic outlook. The pace and momentum of post-pandemic reopenings continues to improve, providing greater confidence in the cadence of demand recovery. We continue to benefit from our expansive network and premier service offerings, where our first-class customers find added value in allocating labor to our premium network. we have seen meaningful increases in labor allocation from our top 10 customers who continue to see headcount demand increase as commercial activity strengthens. This promoted enhanced network optimization with several lodges being fully utilized during the quarter. Additionally, the expansion of our government services segment illustrates Target's ability to expand customer reach while securing high-quality contracts that provide significant revenue visibility. This positions Target as a trusted provider of critical hospitality service offerings and solutions, establishing a platform to continue developing strategic, long-term partnerships with government and nonprofit organizations. Target has a unique set of capabilities and core competencies that translate across a variety of end markets. These attributes position Target to evaluate a range of organic and strategic growth opportunities, both within our core business segments and adjacent end markets. As we continue to evaluate a pipeline of diversification and expansion opportunities, we will remain vigilant on the principles of identifying scalable opportunities that increase revenue visibility while enhancing our financial strength. We entered 2021 encouraged by signs of improving customer demand, supported by global stimulus, and sustained progress in post-pandemic reopenings. The pace of these improvements have exceeded our expectations. We anticipate these elements will continue to support positive momentum in customer activity and provide the backdrop to further enhance our financial strength through the balance of 2021. I'll now turn the call over to Eric to discuss our first quarter financial results in more detail.