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Operator
Operator
Good day, and welcome to the Target Hospitality Third Quarter 2023 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.
美好的一天,歡迎參加 Target Hospitality 2023 年第三季財報電話會議。 (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, sir.
我現在想將會議交給投資者關係高級副總裁馬克舒克 (Mark Schuck)。請繼續,先生。
Mark Schuck - SVP of IR & Financial Planning
Mark Schuck - SVP of IR & Financial Planning
Thank you. Good morning, everyone, and welcome to Target Hospitality's Third Quarter 2023 Earnings Call. The press release we issued this morning, outlining our third 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, November 8, 2023.
謝謝。大家早安,歡迎參加 Target Hospitality 2023 年第三季財報電話會議。我們今天早上發布的概述第三季度業績的新聞稿可以在我們網站的投資者部分找到。此外,本次通話的重播將在我們的網站上限時存檔。請注意新聞稿中有關前瞻性陳述的警告性語言。同樣的語言也適用於今天的電話會議上的發言。本次電話會議將包含時間敏感資訊以及前瞻性陳述,這些資訊僅截至今天(2023 年 11 月 8 日)準確。
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 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.
Target Hospitality 明確表示不承擔更新或修改本次電話會議中包含的資訊以反映今天之後可能發生的事件或情況的義務,除非適用法律要求。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 向 SEC 定期提交的文件。我們將在今天的電話會議上討論非公認會計準則財務指標。請參閱我們網站投資者部分發布的收益報告中的表格,查找今天電話會議中引用的非公認會計原則財務指標及其相應的公認會計原則指標的調節表。
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, we will open the call for questions.
今天的電話會議將由總裁兼執行長 Brad Archer 主持。其次是執行副總裁兼財務長 Eric T Kalamaras。在他們準備好發言後,我們將開始提問。
I'll now turn the call over to our Chief Executive Officer, Brad Archer.
我現在將把電話轉給我們的執行長布拉德·阿徹 (Brad Archer)。
James Bradley Archer - CEO, President & Non-Independent Director
James Bradley Archer - CEO, President & Non-Independent Director
Thanks, Mark. Good morning, everyone, and thank you for joining us on the call today. Our strong third quarter results are a continuation of the positive momentum we have sustained over the past several years. Our meaningful scale creates a highly efficient operating platform, allowing us to appropriately match changes in customer demand while continuing to generate strong financial results. We continue to benefit from our materially expanded presence providing critical hospitality solutions to the U.S. government. This additional focus has resulted in over 72% of third quarter revenue being derived from committed contracts by the United States government, with 73% of third quarter revenue having minimum revenue commitments.
謝謝,馬克。大家早安,感謝您今天加入我們的電話會議。我們強勁的第三季業績是我們過去幾年保持的積極勢頭的延續。我們有意義的規模創造了一個高效的營運平台,使我們能夠適當地匹配客戶需求的變化,同時繼續產生強勁的財務表現。我們繼續受益於我們為美國政府提供關鍵酒店解決方案的實質擴張。這種額外的關注導致第三季超過 72% 的收入來自美國政府承諾的合同,其中 73% 的第三季收入有最低收入承諾。
These elements continue to support impressive operating income and industry-leading cash conversion. This foundation has supported Target's ability to quickly respond to strategic growth opportunities, while continuing to evaluate an expanding pipeline of value-enhancing growth initiatives. In our HFS-South segment, we have remained focused on providing premium full-service hospitality solutions to our world-class customers, many of whom have been customers for over a decade. These premium service offerings have supported strong customer demand and a more fully optimized network over the past year, which has created a more normalized pricing environment.
這些要素繼續支持可觀的營業收入和領先業界的現金轉換。這項基礎支持了塔吉特快速回應策略性成長機會的能力,同時持續評估不斷擴大的增值成長計畫管道。在我們的 HFS-South 部門,我們仍然專注於為我們的世界級客戶提供優質的全方位服務酒店解決方案,其中許多客戶已經是十多年來的客戶。這些優質服務在過去一年支持了強勁的客戶需求和更全面優化的網絡,從而創造了更規範的定價環境。
Coupled with continued operational efficiency gains, we anticipate additional positive momentum in the coming quarters. In the government segment, our purpose-built portfolio of assets continue to serve the critical humanitarian aid mission they were designed to support while exceeding the expectation of our partners and the U.S. government for nearly a decade. As an example, during the quarter, our Pecos Children's Center community seamlessly responded as designed to an increase in demand for our critical hospitality solutions. This validated the influx care facility concept, illustrating the government's essential need for adequate capacity to properly respond to dynamic changes in the number of unaccompanied children arriving in the U.S.
再加上營運效率的持續提高,我們預計未來幾季將出現更多積極勢頭。在政府部門,我們專門建構的資產組合繼續服務於其旨在支持的關鍵人道主義援助任務,同時超越了我們的合作夥伴和美國政府近十年來的期望。例如,在本季度,我們的佩科斯兒童中心社區按照設計無縫響應了對我們關鍵酒店解決方案的需求增長。這驗證了湧入護理設施的概念,說明政府迫切需要足夠的能力來正確應對抵達美國的無人陪伴兒童數量的動態變化。
Further exemplifying Target's row is the proven and trusted provider supporting critical humanity missions. We are pleased to announce this week, our nonprofit partner was awarded a contract for the continuation of the ICF at our PCC immunity, upping its continued in its critical humanitarian. The contract award is a continuation of the 5-year indefinite delivery and definite quantity contract, which was awarded to our nonprofit partner earlier this year.
進一步證明塔吉特的成功的是,它是支持關鍵人類使命的經過驗證且值得信賴的供應商。我們很高興地宣布,本週,我們的非營利合作夥伴獲得了一份在我們的 PCC 豁免權下繼續開展 ICF 的合同,從而加強了其關鍵人道主義方面的持續性。該合約是今年稍早授予我們的非營利合作夥伴的 5 年期無限期交付和確定數量合約的延續。
In total, this contract provides the government the ability to seamlessly ensure continuity of the service offerings at PCC through 2028. This award solidifies PCC as one of the only inflex care facilities in the United States and would represent 8 years of continuous comprehensive humanitarian services. We look forward to continuing our long relationship supporting our partners in mandatary in mission at the longest running purpose-built ICF in the United States.
總的來說,這份合約使政府能夠無縫地確保PCC 提供的服務連續性到2028 年。該合約鞏固了PCC 作為美國唯一的靈活護理機構之一的地位,並將代表PCC 連續8 年提供全面的人道主義服務。我們期待繼續維持我們的長期合作關係,為我們的合作夥伴在美國運行時間最長的專門 ICF 中執行任務提供支援。
With this week's contract award, we are actively working to finalize Target's contract specifications with our nonprofit partner under our 11-year exclusivity agreement. We look forward to providing additional contract details, including specific economic terms as they become available in the coming weeks. As we previously announced, the government has outlined their desire to expand their ICF network to accommodate up to 10,000 individuals requiring multiple new ICF communities. Target remains actively engaged and continues to build strategic partnerships to jointly pursue the creation of new ICF sites, not currently in the government's portfolio.
透過本週的合約授予,我們正在積極努力根據 11 年獨家協議與我們的非營利合作夥伴最終確定塔吉特的合約規格。我們期待提供更多合約細節,包括未來幾週內公佈的具體經濟條款。正如我們之前宣布的,政府已概述了擴大 ICF 網路的願望,以容納多達 10,000 名需要多個新 ICF 社區的個人。 Target 仍積極參與並持續建立策略夥伴關係,共同尋求創建新的 ICF 站點(目前不在政府的投資範圍內)。
As the government has continually stated, additional humanitarian housing capacity is urgently needed to manage the increasing number of unaccompanied children arriving in the U.S. We believe Target is well positioned to pursue these opportunities, and we look forward to continuing to support the U.S. government and their humanitary emissions.
正如政府不斷表示的那樣,迫切需要額外的人道主義住房容量來管理越來越多抵達美國的無人陪伴兒童。我們相信Target 已做好充分準備來抓住這些機會,我們期待繼續支持美國政府及其政府人道排放。
In summary, we remain focused on sustaining the momentum we have created over the past several years. We have established a strong financial and operating platform to continue supporting our world-class customers, while simultaneously pursuing the most robust growth pipeline we have seen in many years.
總之,我們仍然致力於維持過去幾年創造的勢頭。我們建立了強大的財務和營運平台,以繼續支援我們的世界級客戶,同時追求多年來最強勁的成長管道。
I'll now turn the call over to Eric to discuss our third quarter financial results, recent balance sheet initiatives and expanding strategic growth opportunities in more detail.
現在,我將把電話轉給艾瑞克,詳細討論我們第三季的財務表現、最近的資產負債表計畫以及擴大策略成長機會。
Eric T. Kalamaras - Executive VP & CFO
Eric T. Kalamaras - Executive VP & CFO
Thanks, Brad. In the third quarter, we continued to benefit from our operational efficiency and scale, which allows us to seamlessly align with customer demand while consistently delivering strong future results. Third quarter 2023 total revenue was $146 million and adjusted EBITDA was $95 million. Our government segment produced quarterly revenue of approximately $106 million. And as a reminder, this segment's revenue is similar around committed to minimum revenue contracts. The sequential increase in revenue was driven by occupancy-based variable revenue at the PCC community. Our HFS segment delivered quarterly revenue of $40 million compared to $36 million in the same period last year.
謝謝,布拉德。第三季度,我們繼續受益於我們的營運效率和規模,這使我們能夠無縫地滿足客戶需求,同時持續交付強勁的未來業績。 2023 年第三季總營收為 1.46 億美元,調整後 EBITDA 為 9,500 萬美元。我們的政府部門季度收入約為 1.06 億美元。提醒一下,該細分市場的收入與承諾的最低收入合約類似。收入的環比增長是由 PCC 社區基於入住率的可變收入推動的。我們的 HFS 部門季度營收為 4,000 萬美元,而去年同期為 3,600 萬美元。
This increase was driven by sustained momentum in customer demand for targets premium service off. Recurring corporate expenses for the quarter were approximately $9 million, and we anticipate these will remain around $9 million to $10 million per quarter for the remainder of the year. Total capital spending for the quarter was approximately $13 million, with the majority related to enhancing assets focused on supporting the government's human retained mission, we anticipate minimal capital spending for the remainder of the year.
這一成長是由客戶對優質服務目標的持續需求所推動的。本季的經常性公司開支約為 900 萬美元,我們預計今年剩餘時間內每季的經常性開支將保持在 900 萬至 1,000 萬美元左右。本季的總資本支出約為 1,300 萬美元,其中大部分與增強資產有關,重點是支持政府的人力保留使命,我們預計今年剩餘時間的資本支出將降至最低。
We ended the quarter with $105 million cash and $23 million of liquidity with 0 borrowings under the company's revolving credit facility and a net leverage ratio of 0.3x. Excluding acquisitions, 2023 capital spending should approach more normal levels between $30 million and $35 million per year, predominantly focused on organic growth. We continue to make meaningful progress in achieving a net debt-free balance sheet and anticipate over $315 million of total available liquidity by year-end 2023. Our 2023 outlook includes revenue between $550 million and $580 million and adjusted EBITDA between $346 million and $365 million.
截至本季末,我們擁有 1.05 億美元現金和 2,300 萬美元流動資金,公司循環信貸額度下的借款為零,淨槓桿率為 0.3 倍。不包括收購在內,2023 年資本支出應接近每年 3,000 萬至 3,500 萬美元之間的更正常水平,主要集中於有機成長。我們繼續在實現淨無負債資產負債表方面取得有意義的進展,預計到2023 年底,可用流動資金總額將超過3.15 億美元。我們2023 年的展望包括收入在5.5 億至5.8 億美元之間,調整後EBITDA 在3.46 億至3.65 億美元之間。
Following the quarter, we took additional steps to create a more efficient capital structure and maximize flexibility as we continue to evaluate an expanding pipeline of growth initiatives. We significantly increased our liquidity profile for a $50 million expansion of a pre facility, which now has total available capacity of $175 million. Further, we prudently managed our maturity time line with the completion of an exchange offer for 9.5% in new notes. The offer resulted in $181 million of new 1.75% notes due June 2025.
本季結束後,我們繼續評估不斷擴大的成長計畫管道,並採取了額外措施來創建更有效率的資本結構並最大限度地提高靈活性。我們顯著提高了我們的流動性狀況,以 5000 萬美元擴大預設施,目前該設施的總可用容量為 1.75 億美元。此外,我們審慎管理到期時間,完成了 9.5% 新票據的交換要約。此次要約發行了 1.81 億美元、利率為 1.75%、將於 2025 年 6 月到期的新票據。
We have subsequently announced a redemption notice for the remaining $29 million of non-asset new notes to be redeemed the cash payment. This prudent liability management initiatives are continuation of our focused commitment to strengthen our balance sheet while optimizing financial flexibility. This focus provides the foundation to quickly react to strategic growth initiatives, which have supported a more than 150% increase in revenue and $550 million of cumulative discretionary cash flow within the past 3 years alone, all while reducing total indebtedness by 90% during that same time.
我們隨後宣布了贖回通知,剩餘的2900萬美元非資產新票據將被贖回現金支付。這種審慎的負債管理措施是我們強化資產負債表、同時優化財務彈性的重點承諾的延續。這項重點為快速應對策略成長措施奠定了基礎,光是在過去 3 年裡,這些措施就支持了營收成長 150% 以上,累積可自由支配現金流達到 5.5 億美元,同時將總負債減少了 90%時間。
This materially strengthened balance sheet and optimized liquidity position creates the ideal scenario of target to continue pursuing an expanded pipeline of strategic growth initiatives, including both organic and inorganic opportunities. These opportunities are designed to jointly leverage Target's operating expertise and existing core competencies to create a number of solutions across various U.S. government agencies and commercial applications for projects that support national defense, energy transition and humanitary emissions.
這種實質強化的資產負債表和優化的流動性狀況為繼續追求擴大的策略成長舉措(包括有機和無機機會)創造了理想的目標情境。這些機會旨在共同利用塔吉特的營運專業知識和現有核心能力,為美國各政府機構和支持國防、能源轉型和人道主義排放計畫的商業應用創建多種解決方案。
These opportunities encompass Target's existing full turnkey hospitality solutions as well as select opportunities to broaden Target's value chain participation through individual elements of our existing core competencies. These solutions are focused on extending value chain participation to become more fully integrated provider of these unique offerings from immediate and urgent need to long duration and permanent solutions. We view these opportunities as a seamless extension of our existing service offerings and supporting a high consistent return on invested capital.
這些機會包括塔吉特現有的全套交鑰匙酒店解決方案,以及透過我們現有核心能力的各個要素擴大塔吉特價值鏈參與的精選機會。這些解決方案的重點是擴大價值鏈參與,成為這些獨特產品的更全面整合的供應商,從即時和緊急的需求到長期和永久的解決方案。我們將這些機會視為我們現有服務產品的無縫擴展,並支持投資資本的高持續回報。
As previously stated, Target is prepared to allocate over $500 million of net growth capital to this fiber turn opportunities over the next several years. We are pleased with the progress and discussions for many of these large-scale projects and look forward to providing additional updates in the coming quarters as the opportunities progress.
如前所述,塔吉特準備在未來幾年內為此光纖轉型機會分配超過 5 億美元的淨成長資本。我們對許多大型專案的進展和討論感到高興,並期待在未來幾季隨著機會的進展提供更多更新。
With that, I will turn the call back over to Brad for his closing comments.
至此,我將把電話轉回給布拉德,聽取他的結束語。
James Bradley Archer - CEO, President & Non-Independent Director
James Bradley Archer - CEO, President & Non-Independent Director
Thanks, Eric. Our impressive third quarter results are a testament to the operational efficiencies and scale we have created, enabling us to appropriately match customer demand while simultaneously generating strong financial results. Since 2021, we have taken intentional steps to diversify the business, while simultaneously high-grading contract structure and revenue visibility. This week's contract award for PCC is a continuation of these strategic initiatives, further supporting the enhanced operating platform we have established.
謝謝,埃里克。我們令人印象深刻的第三季業績證明了我們所創造的營運效率和規模,使我們能夠適當地滿足客戶需求,同時產生強勁的財務表現。自 2021 年以來,我們有意採取措施實現業務多元化,同時提高合約結構和收入可見度。本週授予 PCC 的合約是這些策略舉措的延續,進一步支持我們已建立的增強營運平台。
We are well positioned to optimize financial flexibility and the strongest pipeline of growth opportunities we have seen in many years. We are excited to continue pursuing these value-enhancing 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.
我們處於有利地位,可以優化財務靈活性和我們多年來看到的最強大的成長機會管道。我們很高興能夠持續推行這些旨在加速為股東創造價值的增值措施。我感謝大家今天加入我們的電話會議,並再次感謝您對 Target Hospitality 的興趣。
Operator
Operator
(Operator Instructions) Our first question comes from Scott Schneeberger with Oppenheimer.
(操作員說明)我們的第一個問題來自 Scott Schneeberger 和 Oppenheimer。
Scott Andrew Schneeberger - MD & Senior Analyst
Scott Andrew Schneeberger - MD & Senior Analyst
Could you please address the potential duration of the contract, how it could look if we're talking about 1-year extensions, 5 extensions. Please elaborate on that, please?
您能談談合約的潛在期限嗎?如果我們談論的是 1 年延期、5 次延期,合約會是什麼樣子?請詳細說明一下好嗎?
James Bradley Archer - CEO, President & Non-Independent Director
James Bradley Archer - CEO, President & Non-Independent Director
Look, this is -- it's a 5-year agreement with 4 option periods on top of the base period. Is how it's structured, right? If you look at this, there are some annual appropriations, right? This is no different than our contract on the South Texas Family Residential Center, which is in (inaudible). So very typical in what we see in these contracts. I think the positive thing here is when you look at the government, they've taken 3 years to really design the system, if you will, this ICF program. Then they came out with the IDIQ. And the biggest reason is this is going to become part of their long-term solution, right? It's their new program. It's the ICF as we know there are still bids out there for more. So they're still building out this program under the IDIQ platform.
看,這是一份為期 5 年的協議,在基本期限之上還有 4 個選擇期。它的結構是這樣的,對嗎?如果你看一下,每年都會有一些撥款,對吧?這與我們在(聽不清楚)南德州家庭住宅中心的合約沒有什麼不同。我們在這些合約中看到的情況非常典型。我認為積極的一面是,當你觀察政府時,他們花了 3 年時間來真正設計這個系統,如果你願意的話,這個 ICF 計劃。然後他們推出了 IDIQ。最大的原因是這將成為他們長期解決方案的一部分,對嗎?這是他們的新節目。這是 ICF,我們知道仍有更多投標。所以他們仍在 IDIQ 平台下建立這個程式。
Scott Andrew Schneeberger - MD & Senior Analyst
Scott Andrew Schneeberger - MD & Senior Analyst
I recognize you're still discussing the economics. But how should we think about the potential structure here? Could it be something similar to what you have currently with the fixed component and a variable component. Any thoughts there on the potential structure would be helpful.
我知道你還在討論經濟問題。但我們該如何思考這裡的潛在結構呢?它是否類似於您目前使用的固定組件和可變組件。關於潛在結構的任何想法都會有所幫助。
James Bradley Archer - CEO, President & Non-Independent Director
James Bradley Archer - CEO, President & Non-Independent Director
A couple of things on the structure of the contract. So it will have generally the same look and feel as the existing contract with -- that PCC has. So there will be a minimum revenue component. That will be the variable revenue component. There can be slight shifts in mix between those what we have today. So there will be some slight modifications in that. But I think there is also the opportunity for it to be even working economically attractive in some ways than the existing contract. So look, stay tuned on that. We're still in the process of finalizing our portion of this. But I think, generally speaking, what you know regarding (inaudible) today -- or I'm sorry, regarding PCC as it relates to the contract structure. I don't think you'll find anything materially different as it relates to that. So it's got all the same elements, the same look and feel, but there will be some slight modifications in Index.
關於合約結構的一些事情。因此,它的外觀和感覺與 PCC 現有的合約大致相同。所以會有一個最低收入部分。這將是可變收入部分。我們今天所擁有的這些之間的組合可能會發生輕微的變化。因此,其中會有一些細微的修改。但我認為,它甚至有可能在某些方面比現有合約更具經濟吸引力。所以看,請繼續關注。我們仍在最後確定我們的部分。但我認為,一般來說,您今天所了解的(聽不清楚)——或者很抱歉,關於 PCC,因為它與合約結構有關。我認為您不會發現與此相關的任何實質不同。因此它具有所有相同的元素、相同的外觀和感覺,但 Index 會有一些細微的修改。
Scott Andrew Schneeberger - MD & Senior Analyst
Scott Andrew Schneeberger - MD & Senior Analyst
A final one for me, please. How do you think about the potential for incremental contracts at this point?
請給我最後一張。您目前如何看待增量合約的潛力?
James Bradley Archer - CEO, President & Non-Independent Director
James Bradley Archer - CEO, President & Non-Independent Director
Look, as I said first, they're still building out this program. If you look at kind of their weekly report that I think most people look at now, they continually say they don't have enough debts. But we know there's a third ICF out there that should be awarded sometime first half of next year. We're definitely bidding that. We're working on that. So we look for this program to continue to grow, and again, continue on as one of their long-term solutions for the on-company children.
瞧,正如我首先所說的,他們仍在製定這個計劃。如果你看他們的每週報告,我想大多數人現在都會看,他們不斷地說他們沒有足夠的債務。但我們知道還有第三個 ICF 應該會在明年上半年的某個時候頒發。我們一定會出價。我們正在努力解決這個問題。因此,我們希望該計劃繼續發展,並再次繼續作為他們為公司兒童提供的長期解決方案之一。
Operator
Operator
(Operator Instructions) Our next question comes from Stephen Gengaro with Stifel.
(操作員說明)我們的下一個問題來自 Stifel 的 Stephen Gengaro。
Stephen David Gengaro - MD & Senior Analyst
Stephen David Gengaro - MD & Senior Analyst
Congrats on this award. I guess a couple of things for me. First, when you guys internally think about allocating capital to growth opportunities, like from our seat, we kind of think about the government business, having a lot of visibility, which kind of gives you the flexibility to invest growth capital with known free cash flow coming. Does the terms of this deal 1 year versus 5 year kind of impact the way you think about the visibility of that free cash flow and investment in other opportunities?
恭喜獲得此獎項。我想對我來說有幾件事。首先,當你們在內部考慮將資本分配給成長機會時,就像從我們的座位上一樣,我們會考慮政府業務,具有很大的可見性,這使您可以靈活地利用已知的自由現金流來投資成長資本未來。這筆交易的 1 年期與 5 年期條款是否會影響您對自由現金流和其他機會投資可見度的看法?
Eric T. Kalamaras - Executive VP & CFO
Eric T. Kalamaras - Executive VP & CFO
Look, I think anytime you have a business that generates a such a large percent of the cash flow. You always have to take these 2 sort of things into consideration. I think here's the other thing that we would ask you to think about, too, is this is wrapped up in a 5-year IDIQ right, which is basically the multiyear funding vehicle for it. So look, so that in and of itself provides a much greater degree of confidence. But look, we look at this long term. And I think, fortunately, we're in a BS position where our cash generation is really very strong. And so when we look at opportunities for projects, we're always going to look at this through the life cycle. And we're going to look at whether that is a project on the HFS side or whether it's a long-term project, look, it needs to meet the hurdles of not only the return, but also the minimum revenue commitment that's tied to it, right? And so that's how we're going to think about any additional capital deployed, and that has not been different, frankly, from the way the company has operated for over a decade.
聽著,我認為任何時候你的企業都會產生如此大比例的現金流。您始終必須考慮這兩件事。我認為我們還要求您考慮的另一件事是,這是包含在 5 年期 IDIQ 權利中的,這基本上是其多年期融資工具。所以看,這樣本身就提供了更大程度的信心。但是看,我們著眼於長遠。我認為,幸運的是,我們處於一個廢話位置,我們的現金產生能力確實非常強大。因此,當我們尋找專案機會時,我們總是會在整個生命週期中審視這一點。我們將看看這是否是 HFS 方面的一個項目,還是一個長期項目,看,它不僅需要滿足回報的障礙,還需要滿足與之相關的最低收入承諾, 正確的?因此,這就是我們如何考慮部署任何額外資本的方式,坦白說,這與該公司十多年來的運作方式沒有什麼不同。
James Bradley Archer - CEO, President & Non-Independent Director
James Bradley Archer - CEO, President & Non-Independent Director
And just specifically on this government contract, we can get (inaudible) the 5-year agreement in the base period, the option, that's very typical, right? The annual appropriations it's how we're set up in Deli's been a 9-year contract. Internally, when we assess these -- this is not one we look short term. Yes, it has yearly funding, but that's been typical on every government contract we have done. So we're not setting and were looking at the short term. We're looking as a long-term solution for the government.
特別是在這份政府合約上,我們可以獲得(聽不清楚)基期的 5 年協議,選擇權,這是非常典型的,對吧?我們在熟食店的年度撥款是一份為期 9 年的合約。在內部,當我們評估這些時,我們不會著眼於短期。是的,它每年都有資金,但這在我們簽訂的每一份政府合約中都是典型的。所以我們沒有設定目標,而是著眼於短期。我們正在為政府尋找長期解決方案。
Stephen David Gengaro - MD & Senior Analyst
Stephen David Gengaro - MD & Senior Analyst
And on a similar -- along similar lines, it would -- therefore, it doesn't change the way you think about how much cash you may be willing to return to shareholders as well.
因此,按照類似的思路,它不會改變你對願意向股東返還多少現金的看法。
Eric T. Kalamaras - Executive VP & CFO
Eric T. Kalamaras - Executive VP & CFO
I think that question really goes in concert with how you look at deploying capital at large, right, whether it's shareholders or whether it's to enhance the business for the growth profile. Look, all that has to work in concert and so I don't look at those as really mutually exclusive decision, Stephen. I mean those all have to go together. As Brad mentioned, we have the most active -- not only organic pipeline, we have the most active inorganic pipeline we've had in years as well. And I'll tell you that there are a lot of strategic decisions that will be made coming up on that. And so stay tuned. But look, this all has to go together and allows to go in concert with the growth of the business.
我認為這個問題確實與您如何看待整體資本的部署一致,無論是股東還是為了增強業務的成長狀況。看,所有這些都必須協調一致,所以我不認為這些是真正相互排斥的決定,史蒂芬。我的意思是這些都必須一起進行。正如布拉德所提到的,我們擁有最活躍的——不僅是有機管道,我們還擁有多年來最活躍的無機管道。我會告訴你,接下來將做出很多戰略決策。請繼續關注。但看,這一切都必須齊頭並進,並與業務的成長保持一致。
James Bradley Archer - CEO, President & Non-Independent Director
James Bradley Archer - CEO, President & Non-Independent Director
First was to get a 5-year contract. Thatââ¬â¢s first step. And that's done. So we can move forward.
首先是獲得一份為期5年的合約。這是第一步。這樣就完成了。這樣我們就可以繼續前進。
Stephen David Gengaro - MD & Senior Analyst
Stephen David Gengaro - MD & Senior Analyst
Is it a reasonable -- like I think us and others have we talked to have sort of thought about 24 as contained similar economic contribution from Pecos as 23, excluding the CapEx reimbursement. Is that a reasonable starting point still?
這是合理的嗎?就像我認為我們和其他人與我們交談過的那樣,24 包含了與 23 類似的 Pecos 經濟貢獻,不包括資本支出報銷。這仍然是一個合理的起點嗎?
James Bradley Archer - CEO, President & Non-Independent Director
James Bradley Archer - CEO, President & Non-Independent Director
Yes. Look, I think, again, there will be a mix and shift, a shift in mix. So we do have to bear that mind. And we're a little too early to be talking about that specifically. I think the other thing we have to think about is the favorable revenue contribution has to be considered as well as to what that looks like. But again, the concept is not going to be drastically different. And so look, I wouldn't -- at this point, I wouldn't look to change things meaningfully because, again, the construct is roughly the same and it's going to have the same mechanisms and the same components to it. But again, it's a little too early for us to get too specific as to what that looks like going forward.
是的。看,我想,再次,將會出現混合和轉變,混合中的轉變。所以我們必須牢記這一點。我們現在具體討論這個還為時過早。我認為我們必須考慮的另一件事是必須考慮有利的收入貢獻以及它的樣子。但同樣,這個概念不會有太大不同。所以看,我不會——在這一點上,我不會尋求有意義的改變,因為同樣,結構大致相同,並且將具有相同的機制和相同的組件。但同樣,對我們來說,現在就具體了解未來的情況還為時過早。
Stephen David Gengaro - MD & Senior Analyst
Stephen David Gengaro - MD & Senior Analyst
And then just one final one on the HFS side. When we see what's going on with activity levels in the oil patch, and we've had a lull here. We've gotten kind of mixed comments about seasonality, et cetera. But there seems to be a consensus that the 24 you're going to start to get at least some level of recovery in activity, particularly in the Permian. Do you see that in your conversations with your customers? Or any color on what you're seeing on that front?
然後是 HFS 方面的最後一個。當我們看到油田的活動水平發生了什麼時,我們這裡已經平靜了。我們收到了關於季節性等的褒貶不一的評論。但人們似乎一致認為,從 24 日開始,活動至少會得到一定程度的恢復,特別是在二疊紀。您在與客戶的對話中看到這一點了嗎?或您在正面看到的任何顏色?
James Bradley Archer - CEO, President & Non-Independent Director
James Bradley Archer - CEO, President & Non-Independent Director
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.
史蒂芬,我在銷售方面參與過一些對話,我同意,24,他們說他們應該看到一些工作增加。我們所希望的是我們能得到其中的一部分。我認為這將是最小的。我認為我們在我們的位置上已經充分發揮了作用。但是看,我認為今年會和今年一樣好。可能會好一點。
Operator
Operator
The next question comes from Gregory Gibas with Northland Securities.
下一個問題來自北國證券公司的葛瑞格里‧吉巴斯(Gregory Gibas)。
Gregory Thomas Gibas - VP & Senior Research Analyst
Gregory Thomas Gibas - VP & Senior Research Analyst
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?
我想他可能已經得到了答复,但我只是想——你提到這可能會更有利。顯然,我們無法詳細說明,但這是否與最低收入組成部分與可變收入的組合有關?這會是一個更有利的組合嗎?
Eric T. Kalamaras - Executive VP & CFO
Eric T. Kalamaras - Executive VP & CFO
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.
當然。不,這是描述它的好方法。我不會改變你所說的任何話。再說一次,這取決於混合,對吧?因此,歸根究底就是為最低收入部分提供保證。然後你就得到了第三塊,它提供了更大的上升潛力。這就是我的描述方式。
Gregory Thomas Gibas - VP & Senior Research Analyst
Gregory Thomas Gibas - VP & Senior Research Analyst
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?
當我們考慮那些最終確定的規範時,是否存在推動現有經濟的風險,因為我知道現有合約將在大約一周內到期。因此,在一切最終確定之前,我們是否會假設現有的經濟學會向前發展?
Eric T. Kalamaras - Executive VP & CFO
Eric T. Kalamaras - Executive VP & CFO
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.
正確的。因此,從技術角度來看,在合約採用新條款之前,經濟上沒有任何變化,對嗎?所以這是我們必須經歷的過程。因此,現在不要更改與 6 份合約相關的任何內容。
Gregory Thomas Gibas - VP & Senior Research Analyst
Gregory Thomas Gibas - VP & Senior Research Analyst
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?
最後是對第四季指引或全年的假設。只是假設-假設今天到本季剩餘時間的入住率水準相似?或者你的假設有什麼顯著的改變嗎?
Eric T. Kalamaras - Executive VP & CFO
Eric T. Kalamaras - Executive VP & CFO
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.
不,聽著,我不這麼認為。我想我會提供——我想我覺得我每年都會在這個時候這樣做。我總是提醒大家,HFS 在第四季末確實有一點季節性。雖然不是很多,但保證金有幾百個基點,對吧?所以至少要注意這一點。除此之外,我認為我們在第四季中沒有看到任何我們在第三季中真正沒有看到的有意義的東西。
Operator
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.
由於我們沒有其他問題,我們的問答環節到此結束。現在,我想將會議轉回布拉德·阿徹 (Brad Archer) 發表閉幕詞。
James Bradley Archer - CEO, President & Non-Independent Director
James Bradley Archer - CEO, President & Non-Independent Director
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.
再次感謝您今天加入我們的電話會議。我們期待在新年後再次發言。祝你有美好的一天。
Operator
Operator
The conference has now concluded. Thank you for attending today's presentation.
會議現已結束。感謝您參加今天的演講。