Target Hospitality Corp.

Good day and welcome to the Target Hospitality second 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 the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Mark Schuch, Senior Vice President of Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to Target Hospitality's second quarter 2021 earnings call. The press release we issued this morning outlining our second quarter results can be found in the investor 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, August 11th, 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. Leaving 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. As the economic outlook continues to improve, supported by post-pandemic reopenings and increasing global economic activity, Target has continued to benefit from consistent increases in demand for its customized hospitality solutions and services. This has supported building momentum and strengthened Target's operating metrics through the first half of 2021. Target's strong second quarter results are a direct reflection of the aggressive actions we took in 2020. to appropriately position the business to take advantage of these improving market fundamentals. Our actions created an efficient operating structure, allowing us to expand our customer reach with highly attractive margins that generate significant cash flow, which allows us to execute on our strategic priorities. The sustained momentum Target has experienced over the past year has provided the basis to both materially accelerate the strengthening of Target's financial position and grow the end markets we serve. Target continues to see positive momentum in customer demand, anchored by our premier first class customer base. This has supported meaningful increases in occupancy from our top 10 non-government customers, who have increased their utilized beds by over 20% during the first half of 2021. The positive momentum contributed to Target's second quarter utilization of 72%. which represented the fourth consecutive increase in quarterly utilization. Additionally, we continue to focus on asset optimization across our network. In March, we reallocated approximately 2,400 beds to our government segment. This reallocation allowed us to fully optimize our assets and resulted in several communities being fully utilized during the quarter. This network optimization creates an ideal operating structure and maximizes the margin contribution from each utilized bed with negligible capital requirements. Our customers find added value in the flexibility of Target's network of relocatable assets and hospitality solutions, which provides scale and flexibility to meet their needs while delivering superior service offerings. These attributes have supported the addition of more than 50 new customers in the first half of 2021, and while we continue to have plus 90% customer renewal rates, something we have enjoyed for several years. This positive momentum has also supported the continued execution of our strategic objectives. Target has achieved significant debt reduction with no outstanding borrowings under the company's credit facility, which has materially enhanced Target's financial flexibility. Further, the company has meaningfully enhanced its government segment that now represents approximately 60% of second quarter revenue. This marks an important juncture, as we believe this more balanced revenue profile creates a strategic inflection point for Target. We have illustrated our ability to appropriately position the company to systematically execute on its strategic objectives. By doing so, we have established the trajectory in which to continue pursuing our growth strategies focused on enhancing values through our diversified portfolio of service offerings. Target's unique capabilities translate across a range of end markets and provide the opportunity to pursue a variety of value-enhancing growth initiatives. Target will pursue these opportunities while simultaneously remaining focused on expanding its reach, providing critical support to the United States government. Target has intentionally increased the concentration of services supporting federal agencies and has established itself as a trusted provider of these critical services. This creates the optimal foundation to continue expanding its strategic long-term partnerships with the U.S. government. Our established platform creates the avenues to utilize our core competencies to support critical service needs across a variety of U.S. government agencies, as well as a broader suite of commercial opportunities. These services extend beyond our legacy accommodation offerings and include facilities management, building operations, asset maintenance, and other critical support services. Additionally, our established position as a proven government service provider enables Target to begin engaging these various agencies as a direct prime contractor, which further validates Target as a premier provider of government services and enhances contract and counterparty strengths. Additionally, our increased government scope and the breadth of our services should bode well for additional commercial opportunities across a variety of industries. Target has identified and is currently evaluating a robust pipeline of expansion and diversification initiatives within the government and commercial services markets. This pipeline includes expansion opportunities within our existing service offerings, as well as inorganic growth. focused on broadening our reach across government agencies. Target has intentionally enhanced its operational and leadership capabilities to effectively identify and evaluate these growth opportunities, which it believes provides the greatest opportunity to accelerate value creation. We entered 2021 encouraged by the improving economic outlook, supported by sustained progress in post-pandemic reopenings and increasing global commercial activity. We were confident that the deliberate action taken to appropriately position the company would allow us to take advantage of a balancing market. The pace of these improvements have exceeded our expectations, and the momentum Target has sustained is impressive. We have utilized this momentum to accelerate our progress, strengthening the financial position of Target while growing our end markets. We anticipate this progress to continue as we progress through 2021 and into 2022. while staying focused on our strategic priorities and creating value for our shareholders. I'll now turn the call over to Eric to discuss our second quarter financial results and ongoing growth initiatives in more detail. Thank you, Brad, and good morning, everyone.