Target Hospitality Corp. (NASDAQ:TH) Q3 2023 Earnings Call Transcript

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Brad Archer: And some of the conversations, Stephen, that I’ve been involved with on the sales side, I agree, 24, they’re saying they should see an uptick in some of the work. And what we had hope is we get a portion of that. I think it’s going to be minimal. I think we’re pretty well maximized at our locations. But look, I think it will be as good as a year as it was this year; it may be a little better.

Operator: The next question comes from Gregory Gibas with Northland Securities.

Gregory Gibas: I think he might have been answered but I just wanted to — you mentioned that it could be more favorable. And obviously, we can’t get into the specifics but is that in relation to the mix of minimum revenue components versus variable revenue are you saying? It’s just going to be like possibly a more favorable mix?

Eric Kalamaras: Sure. No, that’s a great way to describe it. I wouldn’t change anything that you said. Again, it comes down to the mix, right? So it comes down to putting surety in place for the minimum revenue portion. And then you’ve got the third piece which offers even greater upside potential. So that’s how I would describe it.

Gregory Gibas: And as we think about those being finalized those specifications, is there risk to just kind of carrying forward the existing economics because I know the existing contract is up in about a week here. So until everything is finalized, like would we just kind of assume that existing economics roll forward?

Eric Kalamaras: Correct. So from a technical perspective, nothing changes from economically until the contract is under the new terms, right? So that’s a process we have to go through. So right now, don’t change anything as it relates to the 6 contracts.

Gregory Gibas: And then just lastly, assumptions into Q4 guidance or for the year. Just assuming — assuming similar occupancy levels seen today through the rest of the quarter? Or any notable changes in your assumptions there?

Eric Kalamaras: No. Look, I don’t think so. I think I would offer — I think I feel like I do this every year about this time. I always offer the get reminder that the HFS does get a little bit of seasonality towards the tail end of the Q4 period. It’s not a lot but it’s a couple of hundred basis points in margin, right? So it’s something at least to be aware of. Beyond I don’t think there’s anything meaningful that we expected out of Q4 that we really didn’t see in Q3.

Operator: As we have no further questions, this concludes our question-and-answer session. I would now like to turn the conference back over to Brad Archer for any closing remarks.

Brad Archer: Thanks again for joining us on the call today. We look forward to speaking again after the first of the year. Have a good day.

Operator: The conference has now concluded. Thank you for attending today’s presentation.

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