Target Hospitality Corp (TH) 2022 Q4 法說會逐字稿

Good morning, and welcome to the Target Hospitality Fourth Quarter and Full Year 2022 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

早上好，歡迎來到 Target Hospitality 第四季度和 2022 年全年收益電話會議。 （操作員說明）請注意，正在記錄此事件。

I would now like to turn the conference over to Mark Schuck, Senior Vice President of Investor Relations. Please go ahead.

我現在想將會議轉交給投資者關係高級副總裁 Mark Schuck。請繼續。

Thank you. Good morning, everyone, and welcome to Target Hospitality's Fourth Quarter and Full Year 2022 Earnings Call. The press release we issued this morning, outlining our fourth quarter and full year 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.

謝謝。大家早上好，歡迎來到 Target Hospitality 的第四季度和 2022 年全年收益電話會議。我們今天上午發布的新聞稿概述了我們的第四季度和全年業績，可以在我們網站的投資者部分找到。此外，此次通話的重播將在我們的網站上限時存檔。

Please note the cautionary language regarding forward-looking statements contained in this 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, March 10, 2023. 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.

請注意本新聞稿中有關前瞻性陳述的警示性語言。同樣的語言也適用於今天電話會議上的發言。本次電話會議將包含時效性信息和前瞻性陳述，這些信息僅在 2023 年 3 月 10 日今天才准確。Target Hospitality 明確表示不承擔任何更新或修改本次電話會議中包含的信息以反映事件或今天日期之後可能出現的情況，適用法律要求的情況除外。有關可能影響未來業績的風險和不確定性的完整列表，請參閱 Target Hospitality 定期向美國證券交易委員會提交的文件。

We will discuss non-GAAP financial measures on today's call. Please refer to the tables in our earnings release posted in the Investors 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. Kalamaras, Executive Vice President and Chief Financial Officer. After their prepared remarks, they will be joined by Troy Schrenk, Chief Commercial Officer and open the call for questions.

我們將在今天的電話會議上討論非 GAAP 財務措施。請參閱我們網站“投資者”部分發布的收益發布中的表格，以查找今天電話會議中引用的非 GAAP 財務指標及其相應的 GAAP 指標的對賬。總裁兼首席執行官 Brad Archer 將主持今天的電話會議；隨後是執行副總裁兼首席財務官 Eric T. Kalamaras。在準備好的發言後，首席商務官 Troy Schrenk 將加入他們的行列，並開始提問。

I'll now turn the call over to our Chief Executive Officer, Brad Archer.

我現在將電話轉給我們的首席執行官 Brad Archer。

Thanks, Mark. Good morning, everyone, and thank you for joining us on the call today. Target's record-setting 2022 results are a direct reflection of our commitment to further solidify our strong financial standing while positioning the business to quickly respond to strategic growth opportunities.

謝謝，馬克。大家早上好，感謝您今天加入我們的電話會議。 Target 創紀錄的 2022 年業績直接反映了我們致力於進一步鞏固我們強大的財務狀況，同時將業務定位為快速響應戰略增長機會。

Throughout 2022, Target meaningfully increased its minimum revenue commitments, diversified its end market customers and increased discretionary cash flow by 215%. We achieved these accomplishments while serving a diverse customer base across 29 communities. We have remained focused on providing premium full-service hospitality solutions to our world-class HFS clients, many of whom have been customers for over a decade. As a result, Target had consecutive quarterly HFS demand increases, resulting in a 17% year-over-year increase in utilization with consistent customer renewal rates of over 90%, which we have enjoyed for over 7 years.

在整個 2022 年，Target 顯著增加了最低收入承諾，實現了終端市場客戶的多元化，並將可自由支配的現金流量增加了 215%。我們在為 29 個社區的多元化客戶群提供服務的同時取得了這些成就。我們一直專注於為我們世界級的 HFS 客戶提供優質的全方位服務酒店解決方案，其中許多客戶已成為我們十多年的客戶。因此，Target 的 HFS 需求連續季度增長，利用率同比增長 17%，客戶續訂率持續超過 90%，我們已經享受了 7 年多。

Target's reputation and our commitment to these customers supported numerous HFS contract renewals and extensions over the past year. We anticipate these contracts will add over $200 million of cumulative revenue through 2028. We are pleased with our current HFS utilization and its ability to meet our strong customer demand. However, we will thoughtfully evaluate select opportunities to add capacity in response to customer demand where appropriate, while also adequately expanding our significant market share.

Target 的聲譽和我們對這些客戶的承諾在過去一年中支持了許多 HFS 合同的續籤和延期。我們預計到 2028 年，這些合同將增加超過 2 億美元的累計收入。我們對目前的 HFS 利用率及其滿足我們強大的客戶需求的能力感到滿意。然而，我們將仔細評估選擇的機會，以在適當的時候響應客戶需求增加產能，同時充分擴大我們重要的市場份額。

During 2022, we demonstrated Target's superior operational flexibility that allowed us to match increasing HFS demand while simultaneously utilizing its existing assets to expand our government segment by 60%. The end result was a more fully optimized network and more valuable contracts.

在 2022 年期間，我們展示了 Target 卓越的運營靈活性，使我們能夠滿足不斷增長的 HFS 需求，同時利用其現有資產將我們的政府部門擴大 60%。最終結果是更全面優化的網絡和更有價值的合同。

Regarding the government segment, we have completed the enhancements to our expanded humanitarian community announced in July of 2022. With its completion, we have solidified this community as the only purpose-built campus with the sole mission of providing critical hospitality solutions in support of the government's humanitarian aid efforts. We can say this one-of-a-kind, all-inclusive community has exceeded the expectations of our partner and the U.S. government. Since its inception in 2021, it has been our belief this world-class facility would be the premier community providing critical hospitality solutions to the government's humanitarian aid missions. This belief has recently been affirmed with the U.S. government publicly announcing their intention to consolidate the remaining active influx care facilities.

關於政府部門，我們已經完成了 2022 年 7 月宣布的對我們擴大的人道主義社區的改進。隨著它的完成，我們鞏固了這個社區作為唯一一個專門建造的校園的唯一使命，即提供關鍵的接待解決方案以支持政府的人道主義援助工作。可以說，這個獨一無二、包羅萬象的社區已經超出了我們的合作夥伴和美國政府的預期。自 2021 年成立以來，我們一直相信這個世界級的設施將成為為政府的人道主義援助任務提供關鍵接待解決方案的首要社區。這種信念最近得到了美國政府的肯定，該政府公開宣布他們打算整合剩餘的活躍湧入護理設施。

Additionally, we are pleased to announce that our nonprofit partner has recently been awarded an indefinite delivery and definite quantity contract related to the extension of our humanitarian community in Pecos. This award consisting of a base 5-year term with an additional 5-year option, establishes the contracting vehicles required by the U.S. government to appropriately fund multiyear contract awards. The IDIQ award to our non-profit partner is one of the final steps in the government's contract award process prior to working through definitive agreements.

此外，我們很高興地宣布，我們的非營利合作夥伴最近獲得了一份無限期交付和確定數量的合同，該合同涉及我們在佩科斯的人道主義社區的擴展。該合同由 5 年基本期限和額外 5 年選擇權組成，確定了美國政府為多年期合同合同提供適當資金所需的合同工具。 IDIQ 授予我們的非營利合作夥伴是在通過最終協議之前政府合同授予過程的最後步驟之一。

We are highly pleased with the progress as the contracting vehicles come sooner than expected, and we anticipate working through additional contract specifications over the coming months. We look forward to solidifying the longevity of this community and the critical humanitarian mission it was purpose-built to provide.

我們對進展感到非常高興，因為簽約車輛比預期來得更快，我們預計在未來幾個月內通過額外的合同規范進行工作。我們期待著鞏固這個社區的長壽以及它專門為提供的重要人道主義使命。

As a reminder, last year, we entered into an exclusive 11-year partnership with our national nonprofit partner. The long-term agreement solidified our joint commitment to continue providing critical humanitarian services to the United States Government at this highly customized campus.

提醒一下，去年，我們與我們的國家非營利合作夥伴建立了為期 11 年的獨家合作夥伴關係。長期協議鞏固了我們的共同承諾，即繼續在這個高度定制的園區為美國政府提供重要的人道主義服務。

In summary, we have achieved our strategic objectives to materially strengthen Target's financial position while simultaneously diversifying our customer base and continuing to accelerate value creation for our shareholders.

總之，我們已經實現了我們的戰略目標，即實質性地加強 Target 的財務狀況，同時使我們的客戶群多樣化，並繼續加速為我們的股東創造價值。

I'll now turn the call over to Eric to discuss our fourth quarter financial results 2023 financial outlook and capital allocation initiatives in more detail.

我現在將電話轉給埃里克，更詳細地討論我們第四季度的財務業績、2023 年的財務前景和資本配置計劃。

Thank you, Brad. In the fourth quarter, we experienced continued strong demand fundamentals and positive momentum in customer activity, predominantly driven by growth in our Government segment and the materially expanded humanitarian community. Fourth quarter 2022 total revenue was $152 million, and adjusted EBITDA was approximately $91 million.

謝謝你，布拉德。在第四季度，我們經歷了持續強勁的需求基本面和客戶活動的積極勢頭，這主要是由我們的政府部門的增長和實質性擴展的人道主義社區推動的。 2022 年第四季度總收入為 1.52 億美元，調整後的 EBITDA 約為 9100 萬美元。

Our Government segment produced quarterly revenue of approximately $115 million compared to $47 million in the same period last year. This significant increase was attributed to the expanded humanitarian community we announced in July. As a reminder, Target's Government segment, including the expanded humanitarian community, centered around annual minimum revenue commitments. Additionally, the expanded humanitarian community includes variable service revenue that aligns with monthly changes to community population.

我們的政府部門季度收入約為 1.15 億美元，而去年同期為 4700 萬美元。這一顯著增長歸因於我們在 7 月宣布擴大的人道主義社區。提醒一下，Target 的政府部門，包括擴大的人道主義社區，都以年度最低收入承諾為中心。此外，擴大的人道主義社區包括與社區人口每月變化相一致的可變服務收入。

This contract structure provides ideal flexibility for our customers. as their occupancy requirements fluctuate over time, while also providing meaningful minimum revenue commitments that create significant revenue and cash flow visibility for Target. We have found this structure as the optimal outcome for all parties and it creates a sustainable structure, which we believe is the basis for contract longevity for years to come.

這種合同結構為我們的客戶提供了理想的靈活性。因為他們的入住要求會隨著時間的推移而波動，同時還提供有意義的最低收入承諾，從而為 Target 創造可觀的收入和現金流可見性。我們發現這種結構是各方的最佳結果，它創造了一個可持續的結構，我們認為這是未來幾年合同長壽的基礎。

Our HFS segments delivered fourth quarter revenue of $36 million compared to $34 million in the same period last year. This increase was driven by sustained momentum in customer demand for Target's premium service offerings.

我們的 HFS 部門在第四季度實現了 3600 萬美元的收入，而去年同期為 3400 萬美元。這一增長是由客戶對 Target 優質服務產品需求的持續增長推動的。

Recurring corporate expenses for the quarter were approximately $9 million, and we anticipate recurring corporate expenses will remain around $9 million to $10 million per quarter for the remainder of the year.

本季度的經常性公司開支約為 900 萬美元，我們預計今年剩餘時間的經常性公司開支將保持在每季度 900 萬至 1000 萬美元左右。

Total capital expenditures for the quarter were approximately $27 million with $23 million related to the substantial infrastructure enhancements required at the expanded humanitarian community. With the completion of community enhancements in 2022, we expect a more moderate pace of capital expenditures. We ended the quarter with $182 million of cash and over $305 million of liquidity. With 0 borrowings under the company's $125 million revolving credit facility and a net leverage ratio of 0.6x.

本季度的資本支出總額約為 2700 萬美元，其中 2300 萬美元用於擴大人道主義社區所需的大量基礎設施改進。隨著 2022 年社區改善的完成，我們預計資本支出的步伐將更加溫和。我們在本季度結束時擁有 1.82 億美元的現金和超過 3.05 億美元的流動資金。在公司 1.25 億美元的循環信貸額度下借款為零，淨槓桿率為 0.6 倍。

From 2020 through 2022, Target has remained focused on reducing total indebtedness and maximize financial flexibility. Over this time, we have reduced total cumulative debt of more than $225 million. Additionally, we recently announced a $125 million partial redemption of the 9.5% senior secured notes, further illustrating our commitment to a disciplined capital allocation strategy, focused on high-return initiatives. Inclusive of the $125 million note redemption, we will have reduced total indebtedness by over $350 million since 2020 and over $200 million in the last 12 months alone.

從 2020 年到 2022 年，Target 一直專注於減少總債務並最大限度地提高財務靈活性。在這段時間裡，我們減少了超過 2.25 億美元的累計債務總額。此外，我們最近宣布以 1.25 億美元部分贖回 9.5% 的優先擔保票據，進一步表明我們致力於嚴格的資本配置戰略，專注於高回報計劃。包括 1.25 億美元的票據贖回在內，自 2020 年以來，我們的總債務將減少超過 3.5 億美元，僅在過去 12 個月內就減少了超過 2 億美元。

Over the past 12 months, we have increased the intrinsic value of the equity by over $2 per share just from these balance sheet initiatives. This highlights our commitment to allocating capital to the highest return initiatives while continuing to maximize value creation for our shareholders.

在過去 12 個月中，僅通過這些資產負債表舉措，我們就將股票的內在價值提高了每股 2 美元以上。這凸顯了我們致力於將資本分配給回報最高的計劃，同時繼續為我們的股東創造最大價值。

Turning to our financial outlook and capital allocation objectives. Target's enhanced end market portfolio and contract structure has supported increased minimum revenue commitments and provided greater visibility on long-term revenue and cash flow. Additionally, we are pleased with the progress of discussions relating to the multiyear term extensions for the expanded humanitarian community. We believe the government's decision this week to issue an IDIQ contract award to a non-profit partner solidifies the sustainability of this purpose-built community by establishing the necessary mechanism to fund specific multiyear contract awards.

轉向我們的財務前景和資本配置目標。 Target 增強的終端市場產品組合和合同結構支持增加最低收入承諾，並提高了長期收入和現金流的可見性。此外，我們對擴大人道主義社區的多年任期延長相關討論的進展感到高興。我們認為，政府本週決定將 IDIQ 合同授予非營利合作夥伴，通過建立必要的機制為特定的多年期合同授予提供資金，從而鞏固了這個專門建造的社區的可持續性。

We continue to work closely with our non-profit partner and anticipate additional contract specifics related to Target's critical hospitality solutions to be finalized in the coming months. Coupled with our ongoing business development efforts, that have created the strongest project pipeline the company has seen in several years, the company is reiterating its preliminary 2023 financial outlook, which includes revenue of $525 million, maximum revenue of $710 million with adjusted EBITDA of $365 million.

我們將繼續與我們的非營利合作夥伴密切合作，並預計與 Target 關鍵酒店解決方案相關的更多合同細節將在未來幾個月內敲定。加上我們正在進行的業務發展努力，創造了公司幾年來最強大的項目管道，公司重申其 2023 年初步財務展望，其中包括收入 5.25 億美元，最大收入 7.1 億美元，調整後的 EBITDA 為 365 美元百萬。

Excluding acquisitions, 2023 capital spending should approach more normal levels between $20 million and $30 million per year, predominantly focused on organic growth capital. The range of preliminary 2023 revenue reflects the possible contribution of variable service revenue associated with expanding humanitarian community, along with other potential second half weighted revenue catalysts.

不包括收購，2023 年的資本支出應接近每年 2000 萬至 3000 萬美元的更正常水平，主要集中在有機增長資本上。 2023 年初步收入的範圍反映了與不斷擴大的人道主義社區相關的可變服務收入的可能貢獻，以及其他潛在的下半年加權收入催化劑。

As it relates to the expanded humanitarian community, Target expects the government to continue managing its community allotments based on a variety of factors, including seasonality, the regular use of smaller dispersed shelter capacity across the United States and other variable demand dynamics. For the quarter, the government's nomination to our community have remained in line with expectations which contemplate the range of variable demand dynamics, including a typically lower seasonal census during the winter months.

由於涉及擴大的人道主義社區，塔吉特希望政府繼續根據各種因素管理其社區撥款，包括季節性、美國各地較小的分散避難所容量的定期使用以及其他可變的需求動態。對於本季度，政府對我們社區的提名與預期保持一致，這些預期考慮了可變需求動態的範圍，包括冬季月份通常較低的季節性人口普查。

However, there are a variety of other potential catalysts that have shifted from our original expectations. For instance, the government delayed its previously anticipated lifting of Title 42 from December 2022 to May of 2023. As a result, the consolidation of remaining influx care facilities has taken longer than expected resulting in delayed timing of additional variable service revenue. We expect an increase in variable service revenue weighted more towards the second half of 2023 as a result of this shift.

然而，還有許多其他潛在的催化劑已經偏離了我們最初的預期。例如，政府將其先前預期的 Title 42 取消時間從 2022 年 12 月推遲到 2023 年 5 月。因此，整合剩餘的湧入護理設施的時間比預期的要長，導致額外可變服務收入的時間延遲。由於這種轉變，我們預計可變服務收入的增加將更多地集中在 2023 年下半年。

Target's enhanced balance sheet will allow the company to continue evaluating a range of high return capital allocation initiatives focused on maximizing long-term shareholder value while simultaneously expanding long-term growth opportunities.

Target 增強的資產負債表將使公司能夠繼續評估一系列高回報資本配置計劃，重點是最大化長期股東價值，同時擴大長期增長機會。

Target has identified and continues to pursue an active and expanding pipeline of strategic growth opportunities. These opportunities include expanding reach across government agencies in support of select national defense projects as well as unique commercial diversification opportunities, spanning a variety of domestic energy transition initiatives.

Target 已經確定並繼續尋求積極和不斷擴大的戰略增長機會渠道。這些機會包括擴大跨政府機構的影響力以支持選定的國防項目，以及獨特的商業多元化機會，涵蓋各種國內能源轉型計劃。

Target is prepared to allocate over $500 million of net growth capital to these high-return opportunities through 2027. As a result of the size and scale of these strategic projects, there's inherently a longer program cycle prior to award announcement. And while final outcomes are not 100% certain, we can say we are quite pleased with the progress of discussions and believe there are tangible milestones being achieved on these important large-scale projects.

Target 準備在 2027 年之前為這些高回報機會分配超過 5 億美元的淨增長資本。由於這些戰略項目的規模和規模，在宣布授標之前自然會有更長的計劃週期。雖然最終結果並非 100% 確定，但我們可以說我們對討論的進展感到非常滿意，並相信這些重要的大型項目正在取得切實的里程碑。

We look forward to providing additional updates in the coming quarters as the opportunities progress.

隨著機會的進展，我們期待在未來幾個季度提供更多更新。

With that, I will turn the call back over to Brad for his closing comments.

有了這個，我將把電話轉回給布拉德，聽取他的結束評論。

Thanks, Eric. Our record-setting 2022 results illustrate our commitment to enhance operational flexibility, maximize asset utilization and provide unmatched value to our customers, which have supported the achievement of our strategic objectives. We are well positioned entering 2023 with an optimal balance sheet and over $300 million of liquidity.

謝謝，埃里克。我們創紀錄的 2022 年業績表明我們致力於提高運營靈活性、最大限度地提高資產利用率並為我們的客戶提供無與倫比的價值，這支持了我們戰略目標的實現。我們以最佳的資產負債表和超過 3 億美元的流動資金進入 2023 年。

We will utilize this foundation and the tremendous momentum we have created to continue pursuing initiatives focused on accelerating value creation for our shareholders. I appreciate everyone joining us on the call today, and thank you again for your interest in Target Hospitality.

我們將利用這一基礎和我們創造的巨大動力，繼續推行旨在加速為股東創造價值的舉措。我感謝今天加入我們的每個人，並再次感謝您對 Target Hospitality 的關注。

(Operator Instructions) The first question comes from Scott Schneeberger with Oppenheimer.

（操作員說明）第一個問題來自 Scott Schneeberger 和 Oppenheimer。

For my first question, I would like to kind of hone in on the development with your partner with regard to the IDIQ award. Could you just talk a little bit more another level of detail about what has occurred there? And if helpful, maybe compare and contrast this year's negotiation period and process as opposed to last year?

對於我的第一個問題，我想談談與您的合作夥伴在 IDIQ 獎方面的進展。你能再多談談那裡發生的事情的另一個層次的細節嗎？如果有幫助，是否可以將今年的談判期和過程與去年進行比較和對比？

Scott, it's Eric. So great question. So let's discuss last year first. And I think it's a good segue to this current discussion. So recall last year, when the awards were done, the redundant emergency basis, right? And so they were done that way specifically in 2021. We redid that in 2022. And those emergency mechanisms, by nature are 1-year funding structure, which determines the contract term.

斯科特，是埃里克。這麼好的問題。因此，讓我們先討論去年。我認為這是當前討論的一個很好的轉折點。回想一下去年頒獎的時候，多餘的應急基礎，對吧？因此，他們專門在 2021 年以這種方式完成。我們在 2022 年重新做了。那些應急機製本質上是 1 年的資金結構，它決定了合同期限。

So with this IDIQ, I think the big change on this is the permanent shift into how the government is thinking through the infrastructure around their UC capacity. And this allows for the mechanism to be much longer, right, multiyear process. Now there are effectively 2 step functions here. The first step function, which is this, which is to create the IDIQ funding mechanism, which in this case is a really super important point because it establishes the 5-year initial term and then the one 5-year option, which is what we've been talking about for many months.

因此，有了這個 IDIQ，我認為這方面的重大變化是政府正在圍繞其 UC 容量考慮基礎設施的方式發生了永久性轉變。這允許該機制更長，對，多年的過程。現在這裡實際上有 2 個步驟函數。第一步功能，就是創建 IDIQ 資金機制，在這種情況下，這是非常重要的一點，因為它建立了 5 年的初始期限，然後是一個 5 年的選擇權，這就是我們已經談了好幾個月了。

From that point forward, then there's a discussion around what exactly the scope of services look like and any sort of economics out of that. Now last year, if you recall, we don't expect any changes. We have not made any changes in terms of the economics. So I think that's important. We've had that experience for 9 years with Delhi. We had that experience last year as well. Now last year also the scope increased, right? So the only modifications we made were structurally to increase the scope, but no other economic terms effectively changed.

從那時起，就會圍繞服務範圍究竟是什麼樣子以及由此產生的任何經濟問題展開討論。去年，如果你還記得的話，我們預計不會有任何變化。我們沒有在經濟方面做出任何改變。所以我認為這很重要。我們在德里已有 9 年的經驗。我們去年也有過這樣的經歷。現在去年範圍也增加了，對吧？所以我們所做的唯一修改是在結構上增加範圍，但沒有有效改變其他經濟術語。

Now we would expect the same here going forward as it stands today, which is why we have not made any changes to our outlook. And we'll continue the discussion around with our government partner with the government as well as our nonprofit partner around that scope as the government releases that information over the next few months.

現在我們期望這裡的情況會像今天一樣向前發展，這就是為什麼我們沒有對我們的前景做出任何改變。隨著政府在未來幾個月發布該信息，我們將繼續與我們的政府合作夥伴以及我們的非營利合作夥伴圍繞該範圍進行討論。

And Scott, maybe if I'll just add. This is Brad, but add a few things there because I think it's very important. Eric mentioned going from emergency to the ICF. And when you look at that, today, there's only 2 active ICF. And one of them we know is at Fort Bliss, but out publicly, that at some point here in mid -- midyear of 2023 that they're going to mothball that and not use it anymore. That's there. They've put that out publicly. So this has always been out there. And the government moving into the more permanent type facilities longer term. I think that bodes well for where we're at. But that was a big distinction in this contract. Moving to the more permanent facility, the government rebalancing their portfolio as well. And this is allowing them to do that.

斯科特，也許我會補充一下。我是 Brad，但請添加一些內容，因為我認為這非常重要。埃里克提到從緊急情況到 ICF。當你看到它時，今天只有 2 個活躍的 ICF。我們知道其中一個在布利斯堡，但公開表示，在 2023 年年中的某個時候，他們將把它封存起來，不再使用它。就在那裡。他們已經公開了。所以這一直存在。政府將長期遷移到更永久性的設施中。我認為這預示著我們所處的位置。但這在這份合同中是一個很大的區別。轉向更永久的設施，政府也重新平衡了他們的投資組合。這允許他們這樣做。

Okay. Very informative. Some good points there. The -- I guess, let's transition it to kind of more near term. That sounds like an excellent long-term development. But more near term, Eric, you highlighted kind of like second half stronger than first half on seasonal utilization in West Texas. Could you just speak to -- and as Brad just mentioned, kind of the Fort Bliss wind-down dynamic, how should we be thinking about your inflows at West Texas based on seasonality one and wind down of Fort Bliss?

好的。非常翔實。那裡有一些優點。 - 我想，讓我們將其過渡到更近期的期限。這聽起來像是一個極好的長期發展。但更近期，埃里克，你強調了西德克薩斯州季節性利用率的下半年強於上半年。你能不能談談 - 正如布拉德剛才提到的那樣，布利斯堡的風勢下降，我們應該如何根據季節性一和布利斯堡的風勢來考慮你在西德克薩斯州的流入？

Sure. Another great question. The -- I'll say holistically that the capacity that we're seeing is exactly what we would expect to see. In fact, it's very similar to what we saw last year as well. And so the contractual mechanism we have in place and the occupancy levels we have are doing what we would expect them to do. The one shift that we had that I mentioned was the expectation of Title 42 being lifted by the administration on December 21, 2022, which ultimately delayed things. Now that's relevant because we also in and around that time, we're just completing PCC expansion. So because of the timing of this and Title 42, the government delayed the -- how it was thinking about Fort Bliss, that was relevant because that allowed Fort Bliss contract to stay a little bit longer than we would have otherwise anticipated. So effectively, what's happened is that capacity has been shared, if you will, between PCC and Fort Bliss.

當然。另一個很好的問題。 - 我會從整體上說，我們看到的容量正是我們期望看到的。事實上，這也與我們去年看到的非常相似。因此，我們現有的合同機制和我們的入住率正在做我們期望他們做的事情。我提到的一個轉變是期望政府在 2022 年 12 月 21 日取消 Title 42，這最終推遲了事情。現在這很重要，因為我們也在那個時候左右，我們剛剛完成 PCC 擴展。因此，由於這個和 Title 42 的時間安排，政府推遲了——它對布利斯堡的看法，這是相關的，因為這使得布利斯堡合同的停留時間比我們原本預期的要長一點。如此有效，發生的事情是 PCC 和布利斯堡之間共享了容量，如果你願意的話。

So as we move forward with Title 42 being lifted, with the typical seasonality we would expect from children's specifically, right, because that's the census population that we -- that really impacts us. And then the movement of Fort Bliss this summer and the termination of that, that shifts a lot of things related to the second half. So I would love to give you a quantum of number, which is probably what you would prefer I do. But unfortunately, I cannot do that. Suffice to say that -- look, I would just say that it's -- I think a lot of things are being positioned towards the second half.

因此，隨著我們推進 Title 42 的取消，我們會特別期待兒童的典型季節性，因為那是我們的人口普查人口 - 這確實影響了我們。然後是今年夏天布利斯堡的運動和它的終止，這改變了很多與下半場相關的事情。所以我很樂意給你一個數量，這可能是你希望我做的。但不幸的是，我不能那樣做。我只想說 - 看，我只想說 - 我認為很多事情都在下半場進行。

It's hard to say what that quantum is because, as you know, migration flows are not clear. Albeit we can say, and I think we may have touched on this at some point in the past is that over half of the entire touch points on the immigration flows in 2022 alone were rejected specifically due to Title 42 and the rest came in through Title 8, which is the typical asylum claim.

很難說這個數量是多少，因為正如你所知，移民流動並不明確。儘管我們可以說，而且我認為我們在過去的某個時候可能已經觸及到這一點，但僅在 2022 年的移民流動的全部接觸點中，就有超過一半因 Title 42 而被拒絕，其餘的則通過 Title 進入8，這是典型的庇護申請。

The reason why that's relevant is because once that's lifted, you would effectively see as it relates to 2022 at least, just using that as a precursor, you would have expected to see the immigration flows double from where they would have been actually. And so I think that's relevant as opposed to where we are now. We will see what happens near the balance of the year. But my expectation would be that the inflows would be pretty significant.

這之所以重要，是因為一旦它被取消，你會有效地看到它至少與 2022 年有關，只是將其用作前兆，你會期望看到移民流量比實際情況翻一番。因此，我認為這與我們現在所處的位置相關。我們將看到接近年底時會發生什麼。但我的預期是資金流入會非常可觀。

And just one more for me, and I'll turn it over. And it goes back to the first topic I raised. And one of your comments during prepared remarks or in response to that first question was with your partner and the IDIQ award -- is -- should we anticipate now that it looks like it would be a 5-year base and 5-year extension. It sounds like that is being established in this new development. What -- I have heard from something that one of you mentioned that it would probably be the same structure as a base lease payment and then a variable utilization component. Is that how we should think about the future contracts? Or may it be structured in another fashion?

再給我一個，我會把它翻過來。這又回到了我提出的第一個話題。在準備好的評論中或在回答第一個問題時，您的評論之一是與您的合作夥伴和 IDIQ 獎——我們現在是否應該預期它看起來像是一個 5 年的基礎和 5 年的延期。這聽起來像是在這個新的發展中建立起來的。什麼 - 我從你們中的一個人提到的內容中聽到，它可能與基本租賃付款的結構相同，然後是可變利用率部分。我們應該如何看待未來的合同？或者它可能以另一種方式構建？

Scott, when we submitted with our partner on the IDIQ, that's exactly how we submit it. The way it's set up today. We haven't heard any change just the way the IDIQ at this point was given to them. So we had to put in a base concept pricing and all of that to be awarded this.

Scott，當我們在 IDIQ 上與我們的合作夥伴一起提交時，我們就是這樣提交的。今天的設置方式。目前，我們還沒有聽到任何改變 IDIQ 的方式。所以我們必須輸入一個基本概念定價，所有這些都被授予這個。

The next question comes from Greg Gibas with Northland.

下一個問題來自 Northland 的 Greg Gibas。

Congrats on the quarter as well. If I really could just follow up on that IDIQ from the nonprofit partner. What are the next steps there? And when would we expect to see an update on that contract?

也祝賀本季度。如果我真的可以跟進非營利合作夥伴的 IDIQ。下一步是什麼？我們什麼時候會看到該合同的更新？

Yes. Great question. So like we've said, it will be -- these things do take a little bit of time. This is a little bit of a process. I think what we need to get surety of is any scope modification that could be a result of the changes, right? So the first step is to create the funding mechanism in the appropriated dollars, which is effectively what this means, right? The next step then is for the government to finalize its scope.

是的。很好的問題。所以就像我們說過的那樣——這些事情確實需要一點時間。這是一個小過程。我認為我們需要確定的是更改可能導致的任何範圍修改，對嗎？所以第一步是以撥款美元建立融資機制，這實際上意味著什麼，對吧？下一步是政府最終確定其範圍。

Now as you recall last year, we increased the scope from 4,000 beds up to additional 2,400, right? So it increased dramatically. Now again, that's a reflection of I think, one, the built-for-purpose nature of the facility, which is truly -- I would love to say it's best in class that would be unfair. It's actually absolute world class and by far the absolute best facility out there. The other thing that needs to come into play here is, you have to bear in mind, the government is reimagining how they think about its capacity. They have 22 shelter locations across the United States. Those tend to be very small. They are logistically challenging. And our understanding is that they're seeking additional alternatives.

現在您還記得去年，我們將床位從 4,000 張增加到 2,400 張，對嗎？所以它急劇增加。再一次，這反映了我認為，一，該設施的專用性質，這是真的 - 我想說這是同類中最好的，這是不公平的。它實際上是絕對世界一流的，也是迄今為止絕對最好的設施。在這裡需要發揮作用的另一件事是，你必須記住，政府正在重新構想他們對其容量的看法。他們在美國有 22 個避難所。那些往往很小。他們在後勤方面具有挑戰性。我們的理解是他們正在尋找其他選擇。

And so the point being is that there could very well be other locations that come into play here. And so we'll just have to see what the scope changes look like, if there are any -- any locations increase if there are any, and then just go from there. So -- but I think that process is going to take, as we mentioned, it's going to take a few months.

所以關鍵是很可能還有其他地方在這裡發揮作用。所以我們只需要看看範圍變化是什麼樣的，如果有的話——任何位置都會增加，如果有的話，然後就從那裡開始。所以 - 但我認為這個過程將需要幾個月的時間，正如我們提到的那樣。

Yes, which is much shorter than what we've been doing. And we started this process in, what, September with the IDIQ when we submitted even before that, we've been talking about it. So we have -- we think this is a huge hurdle for us to get over. We did that. And I just reiterate, I think it's probably a couple of months, as Eric said, there will be discussions immediately but we'll -- that are already happening, and then we should conclude this, I would say, in the next few months. And my point there is just not a long -- you're not talking 6, 8, 9, 10 months here.

是的，這比我們一直在做的要短得多。我們在 9 月與 IDIQ 一起開始了這個過程，甚至在那之前我們就一直在談論它。所以我們 - 我們認為這是我們克服的巨大障礙。我們做到了。我只是重申，我認為這可能需要幾個月的時間，正如埃里克所說，我們會立即進行討論，但我們會——這已經在發生了，然後我們應該在接下來的幾個月內得出結論.我的意思是時間不長——你在這裡說的不是 6、8、9、10 個月。

Yes. Great point, and that's very helpful, guys. And just a follow-up there again. As we think about them thinking about perhaps changing the scope on that contract. If we think about Fort Bliss being mothballed, like you said, is it a safe assumption to assume that they would require more scope?

是的。很好，這很有幫助，伙計們。再次跟進。當我們考慮他們時，他們可能會考慮更改該合同的範圍。如果我們考慮像您所說的那樣將布利斯堡封存，假設他們需要更大的範圍是否是一個安全的假設？

Look, I think when you look at Title 42 supposedly coming off in May, I would just tell you, high level, I think, the need for our types of services are going to be greater. We think there will be more deals out there. We would have to win those. I'm not sure there will be more scope, if you will, at our West Texas facility. But I think overall, on the border, across the U.S., some of the things that we're dealing on now, I think, there will be a greater need. It doesn't mean we're going to end up with them, but I think our pipeline, and we touched on this, is more active and more real than it's been ever in our company.

聽著，我想當你看到 Title 42 應該在 5 月份生效時，我想告訴你，高水平，我認為對我們服務類型的需求將會更大。我們認為會有更多的交易。我們必須贏得那些。如果您願意，我不確定我們西德克薩斯工廠是否會有更大的範圍。但我認為，總的來說，在美國邊境，我們現在正在處理的一些事情，我認為會有更大的需求。這並不意味著我們將與他們一起結束，但我認為我們的管道，我們談到了這一點，比我們公司以往任何時候都更加活躍和真實。

I think that's a great point. I think to add on to that, as Brad mentioned, a great point, which is our pipeline is exceptionally active in and around these types of things. But in addition to that, Greg, just for clarification, the government as part of this process has clearly indicated that they are net short capacity, right, and they know it. And so to Brad's point, what the ultimate outcome of that is still yet to be determined. But I would submit to say it's not a far stretch. It looks much better for Target. So we'll just leave it at that, but it's certainly not -- certainly very positive.

我認為這是一個很好的觀點。正如 Brad 提到的那樣，我想補充一點，那就是我們的管道在這些類型的事情中和周圍都非常活躍。但除此之外，格雷格，只是為了澄清，政府作為這個過程的一部分已經明確表示他們是淨空頭產能，對，他們知道這一點。因此，對於 Brad 而言，最終結果仍未確定。但我願意說這不是遙不可及的。 Target 看起來好多了。所以我們就此打住，但這肯定不是 - 當然非常積極。

Got it. Very helpful. And then I guess, lastly, just what is maybe reasonable to assume regarding variable revenue this year? I know you provided the range, but what would maybe be kind of a rough baseline that would be a fair assumption.

知道了。很有幫助。然後我想，最後，關於今年可變收入的合理假設是什麼？我知道你提供了範圍，但什麼樣的粗略基線才是合理的假設。

We had initially indicated that we were going to look at close to $50 million in variable revenue for 2023. And as I've said, that is -- that will be pushed more towards the second half, specifically partially due to the Title 42, but really, it's really a function of the typical seasonal census that we're seeing right now, which is not out of the ordinary. So that's actually coming in fine.

我們最初表示，我們將在 2023 年考慮將近 5000 萬美元的可變收入。正如我所說，這將更多地推向下半年，特別是部分原因是第 42 條，但實際上，這確實是我們現在看到的典型季節性人口普查的函數，這並非不尋常。所以這實際上很好。

Look, I mean, I'd like to say there's a chance that it's better than all that. But look, we'll just have to wait and see. I think it's a little too early just to say if it is better, how much. So look, I think, it's hard to make a determination, Greg, when you're in this shoulder period when you're coming out when you're coming off of the period where fewer net children have been coming over the past few months, right? And so that kind of winds down the influx capacity a little bit or need a little bit, and then we'll see what that looks like, particularly coming to spring, which is seasonally very, very strong, exceptionally -- could be exceptionally strong with the changes in the administration policy.

看，我的意思是，我想說它有可能比這一切都好。但是，看，我們只需要拭目以待。我認為現在說它是否更好，多少還為時過早。所以，我認為，很難下定決心，格雷格，當你處於這個肩膀期時，當你從過去幾個月來的淨兒童減少的時期出來時， 正確的？因此，這種流入能力會稍微降低一點或需要一點，然後我們會看到它的樣子，特別是到了春季，季節性非常非常強，特別 - 可能特別強隨著管理政策的變化。

(Operator Instructions) the next question comes from Stephen Gengaro with Stifel.

（操作員說明）下一個問題來自 Stifel 的 Stephen Gengaro。

A couple of things for me. The first was -- just on the variable piece, and I don't want to read into this too much, but when we think about the $50 million expectation for the year, at least, I guess, as sort of the baseline, how much those utilization of the asset this year impact the negotiation. Like is it pretty clear -- I mean this long-term need is sufficient where like if your utilization was low this year that the government could we think the capacity needs longer term? Or is that reading into too short term of a data point?

對我來說有幾件事。第一個是 - 只是關於可變部分，我不想過多地解讀這一點，但是當我們考慮今年 5000 萬美元的預期時，至少，我想，作為一種基線，如何今年資產的使用情況在很大程度上影響了談判。就像很清楚 - 我的意思是這種長期需求就足夠了，如果你今年的利用率很低，我們可以認為政府認為產能需要更長期嗎？還是讀入數據點的時間太短？

Yes. So I understand why you would ask that question. I think it's very much a too short term from a data point, partially because what we're seeing is no different than what we saw last year at the same time. So that's kind of point number one.

是的。所以我明白你為什麼會問這個問題。我認為從數據點來看，這太短了，部分原因是我們看到的與去年同期看到的沒有什麼不同。所以這是第一點。

Point number two, I think the case of our -- the Delhi location is a great case study for this. That was renewed for 5 additional years right in the middle of COVID, right, with very few occupants for -- obviously, for health reasons. And so I don't think there's really a correlation to that one bit. As we mentioned, the government is net short on the influx capacity. And so I don't think they -- I don't think that really has any bearing as to how they're thinking about this.

第二點，我認為我們在德里的案例是一個很好的案例研究。就在 COVID 期間，它又被續訂了 5 年，對，因為 - 顯然是出於健康原因，很少有人居住。所以我不認為那一點真的有關聯。正如我們所提到的，政府在流入能力方面是淨短缺的。所以我不認為他們 - 我不認為這對他們如何思考這件事真的有任何影響。

Okay. That was what I thought, but I've gotten the question, so I figured I'd ask you. So the other sort of bigger picture question. If we work under the assumption and our model is kind of built this way that you guys do secure this long-term contract, and then we look out -- and I mean, you don't have to bless the number, but then you're looking at, I don't know, $175 million to $200 million of annual free cash flow and visibility on that free cash flow what does (inaudible) over a multiyear period as far as utilizing that cash? And maybe I know we've touched on this a little bit, but what -- what are the other sort of end markets you might access? Or could this just be a massive return of capital store to investors?

好的。我也是這麼想的，但我已經知道這個問題了，所以我想我會問你。所以另一個更大的問題。如果我們在假設下工作並且我們的模型是以這種方式構建的，你們確實獲得了這份長期合同，然後我們會注意——我的意思是，你不必祝福這個數字，但是你我不知道，每年有 1.75 億至 2 億美元的自由現金流和自由現金流的可見性，在多年期間（聽不清）使用這些現金有什麼作用？也許我知道我們已經稍微談到了這一點，但是您可能會進入哪些其他類型的終端市場？或者這可能只是對投資者的大量資本儲備回報？

Look, it's a great question. The answer is -- look, I've been a broken record probably the past year on this. But the answers are different when you're dealing with an emergency funding mechanism versus a long-term IDIQ structure, okay? So my point is my answer is going to change slightly a little bit. So look, I think there is a time where you start -- you do start looking at other capital return initiatives, okay? And I think we could be approaching that time.

看，這是一個很好的問題。答案是——看，我可能在過去的一年裡打破了這方面的記錄。但是當你處理緊急資金機制和長期 IDIQ 結構時，答案是不同的，好嗎？所以我的意思是我的答案會稍微改變一點。所以看，我認為有一段時間你可以開始——你確實開始考慮其他資本回報計劃，好嗎？我認為我們可能會接近那個時間。

Now that said, we are -- and we've said this many times, we are absolutely in growth mode, too, right? And so there's a lot of things we can do around that. We can certainly look at some cash transactions, which we have, but we have been very deliberate and very patient in that regard. And we have not found the right thing at the right value just yet, but there are some opportunities out there.

現在說，我們是 - 我們已經說過很多次了，我們也絕對處於增長模式，對嗎？因此，我們可以做很多事情。我們當然可以看看我們已經進行的一些現金交易，但我們在這方面非常謹慎和耐心。我們還沒有找到合適的價值的合適的東西，但那裡有一些機會。

There are other opportunities to materially grow the business to do equity exchange type transactions, right? And so that's not really a use of cash necessarily. But there are opportunities to materially grow the business and diversify the business that way. And then look, we put the balance sheet in a spot where we said we would. And now we're at a spot where to the point when you start looking at over the next 3 or 4 or 5 years, and you're talking $600 million, $700 million, $800 million of free cash flow that can accumulate, you do start looking at the shareholder return activities.

還有其他機會可以實質性地發展業務以進行股權交易類型的交易，對嗎？因此，這不一定是真正使用現金。但是有機會以這種方式實質性地發展業務並使業務多樣化。然後看，我們把資產負債表放在我們說過的地方。現在我們正處在一個點，當你開始關注未來 3 年、4 年或 5 年時，你說的是可以積累的 6 億美元、7 億美元、8 億美元的自由現金流，你做的開始關注股東回報活動。

None of these are mutually exclusive.

這些都不是相互排斥的。

To Brad's point, none of these are mutually exclusive. And we have a tremendous amount of flexibility. And so what we can do with this is we can do cash transactions, looking to equity exchange deals, we can do dividends, et cetera, we can do these things all contemporaneously at this point. And -- and so look, I think we'll enter a mode where we'll start looking at that in a more deliberate and more deliberate fashion because I think that's probably close to that time coming.

在 Brad 看來，這些都不是相互排斥的。我們擁有極大的靈活性。因此，我們可以做的是我們可以進行現金交易，尋找股權交易，我們可以進行股息等等，我們可以在這一點上同時進行所有這些事情。而且 - 所以看，我認為我們將進入一種模式，我們將開始以更加深思熟慮和更加深思熟慮的方式來看待它，因為我認為那可能接近那個時候了。

Great. And then just one final or me. When you -- when you think about the oil patch and what's going on in HFS South, it feels like there's a succinct level of activity there. probably not a lot of growth given the way the E&Ps have remained pretty disciplined. Is it reasonable to think about that business as being kind of pretty steady state at current levels? I know you had the contract extensions, which gives visibility. But is that a reasonable way to be thinking about that piece of the business in 2023?

偉大的。然後只有一場決賽或我。當你 - 當你想到石油補丁以及 HFS South 發生的事情時，感覺那裡的活動水平很簡潔。考慮到 E&P 一直非常自律，可能不會有太大的增長。認為該業務在當前水平上處於相當穩定的狀態是否合理？我知道你有合同延期，這提供了可見性。但這是考慮 2023 年這塊業務的合理方式嗎？

Sure. Look, I think you're right. And the way we think about that business is a fantastic business. We just had $200 million of contract renewals there. We are -- as we've communicated before, we do tend to see a lag. So we do expect margin growth there over the next couple of quarters and perhaps meaningful margin expansion there, which is great. But look, that business generates so much cash. And it is so helpful in diversifying our balance sheet and what we can do that despite it being, call it, a GDP type business at this point, absent any other sort of strategic moves we may make in terms of smaller kind of tuck-in sort of acquisitions. Look, that's a fantastic business for us. And we will continue to operate that and capture as much market share and margin as possible while supporting our customers and their needs. But look, the growth notwithstanding, it's a fantastic business.

當然。看，我認為你是對的。我們對這項業務的看法是一項了不起的業務。我們剛剛在那裡續簽了 2 億美元的合同。我們 - 正如我們之前交流過的那樣，我們確實傾向於看到滯後。因此，我們確實預計未來幾個季度那裡的利潤率會增長，並且可能會有有意義的利潤率擴張，這很好。但是你看，那項業務產生瞭如此多的現金。它對我們的資產負債表多樣化以及我們可以做的事情非常有幫助，儘管它現在可以稱之為 GDP 類型的業務，但我們可能會採取任何其他類型的戰略舉措來進行更小規模的投資某種收購。看，這對我們來說是一項了不起的業務。我們將繼續運營並儘可能多地獲取市場份額和利潤，同時支持我們的客戶和他們的需求。但是，儘管有增長，但這是一項了不起的業務。

I mean utilization is increasing, right? I think...

我的意思是利用率在增加，對吧？我認為...

Absolutely, it is. And I think -- look, we have put that business in a in a fantastic optimizational spot. And we're really, really pleased with where that's positioned at this point.

絕對是。我認為 - 看，我們已經將該業務置於一個極好的優化點。我們對目前的定位非常非常滿意。

We're starting to see some movement on price, not huge, but as Eric said, there's always that lag it's not going to be a huge mover for us because we have a lot of long-term contracts that are already baked in. As we come up on renewals and new high-grading customers, we're having a much better outcome on those negotiations. So not sure you'll see a huge move, but it's nice to see that we are getting some of those now and higher utilization.

我們開始看到價格出現一些變動，幅度不大，但正如埃里克所說，總是存在滯後，這對我們來說不會是一個巨大的推動力，因為我們有很多已經簽訂的長期合同。我們提出了續約和新的高級客戶，我們在這些談判中取得了更好的結果。所以不確定你會看到一個巨大的變化，但很高興看到我們現在得到了其中的一些和更高的利用率。

I think overall, we've really, over the past couple of years looking at the consolidated portfolio, right? When we look at margins, when we look at growth, what can we do to maximize every room in our portfolio? So when we look at that, we look at it holistically, whether that's with government, whether that's with rare earth type companies or if that's the oil and gas side. And I think we -- the team has done a tremendous job and really capturing that for us.

我認為總的來說，在過去的幾年裡，我們真的在研究合併後的投資組合，對吧？當我們審視利潤率時，當我們審視增長時，我們可以做些什麼來最大化我們投資組合中的每個房間？因此，當我們審視這一點時，我們會從整體上審視它，無論是與政府有關，還是與稀土類公司有關，還是與石油和天然氣有關。而且我認為我們 - 團隊已經完成了巨大的工作並真正為我們抓住了這一點。

Yes. That's helpful color. And I mean, the feedback we get is very positive. So it dovetails on what you just said.

是的。這是有用的顏色。我的意思是，我們得到的反饋非常積極。所以它與你剛才所說的相吻合。

This concludes our question-and-answer session. I would like to turn the conference back over to Brad Archer for any closing remarks.

我們的問答環節到此結束。我想將會議轉回 Brad Archer 的閉幕詞。

Just thanks again for joining us on the call today, and we look forward to speaking to you again in May when we deliver our first quarter numbers. Thanks.

再次感謝您今天加入我們的電話會議，我們期待在 5 月份提供第一季度數據時再次與您交談。謝謝。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。