Target Hospitality Corp.

Good morning and welcome to Target Hospitality's fourth quarter and full year 2021 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded. I will 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 fourth quarter and full year 2021 earnings call. The press release we issued this morning outlining our fourth quarter and full year 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 this press release. The 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, March 10th, 2022. 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. Before we get into our 2021 results, I want to briefly touch on the leadership transition announcement we made last week. It was important for us to ensure there was ample time to have a smooth and orderly transition. And as we said, I will continue to lead the company through the balance of 2022 and then transition into a strategic advisory role. I'm excited about Target's opportunity set and look forward to progressing its strategic initiatives in 2022 and ensuring business continuity through this transition. Now, I would like to look back at Target's significant 2021 accomplishments. Target's impressive 2021 results illustrate the strength of the company's operating position and commitment to our defined strategic initiatives. We entered 2021 with a goal to diversify our end markets. while significantly strengthening Target's balance sheet and operational flexibility. We accomplished these objectives with the deliberate actions we took to create an efficient operating structure, while simultaneously positioning the company to take advantage of improving demand fundamentals. Since year-end 2020, Target has experienced an over 47% increase in customer demand across its HFS segments. This illustrates the value our best-in-class customers find in allocating labor to Target's world-class network and premier service offerings. These attributes continue to support an over 90% customer renewal rate, which we have enjoyed for many years. As Target's utilization and customer activity increases, we have matched this demand with minimal incremental capital and continue to benefit from the scale and efficiencies we have created within our operating structure. This network optimization creates an ideal scenario and maximizes the margin contribution from each additional utilized bed, supporting robust margins and significant cash generation. Additionally, our superior operational capabilities and unmatched hospitality solutions were the catalyst in securing a new government service contract award, one of the largest in the company's history. Target's government segment represented 54% of 2021 revenue, supported by fully committed minimum revenue contracts backed by the U.S. government. This is a clear illustration of our commitment to diversify and expand targets in markets, while simultaneously high-grading counterparty exposure and contract structure. These positive business fundamentals accelerated progress on our strategic objectives. Target generated operating cash flow of $105 million, a 124 percent increase from 2020, and discretionary cash flow of $93 million. This significant cash generation materially strengthened Target's balance sheet and resulted in a 58 percent reduction to Target's net leverage ratio in 2021. These accomplishments have allowed Target to materially enhance its operational flexibility. while simultaneously diversifying its business mix and establishing a foundation to continue pursuing strategic growth initiatives. These growth initiatives will be focused on broadening targets in markets, while significantly expanding our long-term growth opportunities. Target will pursue these initiatives while simultaneously remaining focused on expanding its reach, providing critical support to the United States governments, Target has intentionally established itself as the premier provider of permanent hospitality solutions for the U.S. government's long-term domestic humanitarian aid missions. Target's premier and comprehensive service offering is viewed favorably by the U.S. government, and our scale and operational capabilities are unmatched in North America. As it relates to our government service contract, which began in March of last year, Discussions have meaningfully progressed regarding the extension and expansion of this contract. These discussions have recently evolved to include options for multi-year terms and expansion opportunities considerably greater than the current contract. The government has recently posted its public notice of intent to award a sole source contract for the continuation of the current service offerings. This marks a critical and one of the final steps in the government's notice and ultimate contract award procedures. We are highly confident in the successful outcome to these contract discussions and the continuation of our critical humanitarian support to the United States government. We were encouraged by the sustained momentum experienced throughout 2021, and our results illustrated the benefits of our strategic positioning as North America's premier provider of vertically integrated hospitality solutions. We have strategically positioned Target and diversified our business mix to intentionally focus on expanding our long-term growth opportunities, which we believe creates the greatest value for our shareholders. The progress we have made executing on our strategic initiatives is impressive, and we are focused on sustaining this momentum in 2022. I'll now turn the call over to Eric to discuss our fourth quarter financial results and ongoing growth initiatives in more detail.