3Q 2019 Earnings Call Presentation November 13, 2019 Disclaimer - - PowerPoint PPT Presentation

3Q 2019 Earnings Call Presentation

November 13, 2019

Disclaimer

Cautionary Statement Regarding Forward-Looking Statements This presentation contains statements reflecting assumptions, expectations, projections, intentions or beliefs about future events that are intended as “forward-looking statements.” You can identify these statements by the fact that they do not relate strictly to historical or current facts. Management cautions that any or all of Target Hospitality’s forward-looking statements may turn out to be

• wrong. Please read Target Hospitality’s annual, quarterly and current reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, including

Platinum Eagle Acquisition Corp.’s 2018 Form 10-K filed on February 28, 2019, Form 8-K filed on March 21, 2018, first and second quarter 2019 Form 10-Qs, and third quarter 2019 Form 10-Q, when filed, for additional information about the risks, uncertainties and other factors affecting these forward-looking statements and Target Hospitality generally. Target Hospitality’s actual future results may vary materially from those expressed or implied in any forward-looking statements. All of Target Hospitality’s forward-looking statements, whether written or oral, are expressly qualified by these cautionary statements and any other cautionary statements that may accompany such forward-looking statements. In addition, Target Hospitality disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof. Non-GAAP Financial Measures This presentation contains non-GAAP financial measures including EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted free cash flow. Reconciliations of these historical measures to the most directly comparable GAAP financial measures are contained herein. To the extent required, statements disclosing the definitions, utility and purposes of these measures are set forth in

• ur earnings press release for the third quarter 2019, which is available on our website free of charge at www.TargetHospitality.com.

Information reconciling forward-looking Adjusted EBITDA to GAAP financial measures is unavailable to Target Hospitality without unreasonable effort. We cannot provide reconciliations of forward- looking Adjusted EBITDA to GAAP financial measures because certain items required for such reconciliations are outside of our control and/or cannot be reasonably predicted, such as the provision for income taxes. Preparation of such reconciliations would require a forward-looking balance sheet, statement of income and statement of cash flow, prepared in accordance with GAAP, and such forward-looking financial statements are unavailable to us without unreasonable effort. Although we provide a range of Adjusted EBITDA that we believe will be achieved, we cannot accurately predict all the components of the Adjusted EBITDA calculation. Combined Pro Forma Financial Information This presentation contains combined pro forma financial information, including revenues and Adjusted EBITDA calculated as: (i) the results of Algeco Us Holdings LLC (“Target Parent”) and Arrow Parent Corp. (“Signor Parent”) (combined) for the year ended December 31, 2018, plus (ii) the results of Signor for the period from January 1, 2018 through September 6, 2018, in each case, without giving effect to the business combination and related transactions. We identify combined pro forma financial information in this presentation as ‘‘combined pro forma’’ or as prepared on a ‘‘combined pro forma basis.’’ As Signor was acquired on September 7, 2018 and the audited combined financial statements of Target Parent and Signor Parent do not reflect the historical operations

• f Signor for the period January 1, 2018 through September 6, 2018, the summary combined pro forma financial information is presented to reflect combined financial information as if Signor had

been acquired as of January 1, 2018, to present the results of operations of Target Parent, Signor Parent, and Signor on a combined pro forma basis for the full year of 2018, without giving effect to the business combination and related transactions. No additional adjustments have been made to the historical financials of Target Parent, Signor Parent, or Signor for purposes of presenting such combined pro forma financial information. The combined pro forma financial information in this presentation is for informational purposes only and should be read in connection with the historical consolidated financial statements and related notes of Target Parent and Signor Parent (combined) and Signor for the applicable periods. The combined pro forma financial information in this presentation does not purport to project our future financial position or operating results. Combined Pro forma financial information does not include the predecessor period of other companies acquired after September 7, 2018.

3Q 2019 Earnings Call Presentation | 2

3Q 2019 Operational and Financial Results

Brad Archer, President and Chief Executive Officer Eric Kalamaras, EVP and Chief Financial Officer

Revenue ($ in millions) Adjusted EBITDA ($ in millions)

• Avg. available & utilized beds

Average daily rate (ADR)

3Q 2019 Highlights

3Q 2019 Earnings Call Presentation | 4

Solid operational performance Strong financial performance Disciplined growth execution Shareholder returns initiated

 Over 13,000 total beds with greater than 10,000 utilized beds  Adjusted EBITDA margin remained strong at ~50%  2 new communities became

• perational as planned

 $75.0 million stock repurchase authorization  Integration of Superior Lodging and ProPetro communities progressing according to plan  Strong cash generation

$42.6 million cash from operations ex. cash interest paid of $17.1 million

 Expansion activities for an additional 200 beds on track  Repurchased shares for ~$13.1 million as of November 12th

Represents 17.5% of $75.0 million repurchase authorization

3Q 18 3Q 19 3Q 18 3Q 19 $50.7 $56.5 $7.4 $6.0 $16.9 $16.8 3Q 18 3Q 19

$77.3 $81.6

3Q 18 3Q 19

51.6%

• Adj. EBITDA

margin

49.7%

• Adj. EBITDA

margin

10,340

Utilized Beds

9,955

Utilized Beds

11,825 12,485

Total Company, combined pro forma(1) basis

$39.9 $40.6 $78.1 $80.8

Permian Basin Bakken Basin Government All Other

(1) Includes results of Signor for the full quarter 3Q 2018

Permian 8,611 Bakken 1,017 Government 2,400

Other 457

Target Hospitality (NASDAQ: TH)

Nation’s largest vertically-integrated specialty rental and value-added hospitality services provider

Largest provider of turnkey specialty rental units Key differentiating attributes

 Target Hospitality is the largest vertically integrated specialty rental and hospitality services company in the United States  TH owns an extensive network of geographically relocatable specialty rental assets with 12,485 average available beds across 25 locations  TH leverages a large network with increased visibility from locked-in guaranteed payment contracts and exclusivity provisions

North U.S. 4 Sites 1,017 Avg. Available Beds TH served basins

Largest network(1) 1 Premier customers with exclusive long-term relationships Premium in-house catering + value-added hospitality services Strategically located network creates scale and flexibility that continues to drive growth & profitability Long-standing and exclusive customer relationships; >3 years wtd. avg. contract duration drives visibility 2 3 > 90% contract renewal rates; customer pull drives favorable pricing and long-term trusting partnerships

Permian 63% Bakken 7% Government 20% Other(5) 11%

12,485 $341.1M

(1) Management estimate (2) Includes communities located in the Permian and Anadarko basins (3) As calculated on a combined pro forma basis which includes revenue from Signor Parent for preceding four quarters as of September 30, 2019 (4) “Other” segment operations consist primarily of revenue from the construction phase of the contract with TransCanada Pipelines as well as specialty rental and vertically integrated hospitality services revenue from customers in the oil and gas industry located outside of the Permian and Bakken basins

LTM Total Revenue(3) Average Available Beds

South U.S.(2) 20 lodge sites / 9,068 avg. available beds Family residential center / 2,400 avg. available beds

Note: % do not foot due to rounding

3Q 2019 Earnings Call Presentation | 5

Differentiated, value-added business model

Largest(1) network serving … … premier customers through exclusive LT relationships with … … premium in-house catering + value-added hospitality services 2

(1) Management estimate

TARGET 12

WHAT WE PROVIDE YOUR WORKERS OFF THE CLOCK FOOD REST CONNECTION WELLNESS COMMUNITY HOSPITALITY 01 02 03 04 05 06 07 08 09 10 11 12 ENGAGEMENT SAFETY LOYALTY PRODUCTIVITY PREPAREDNESS ENHANCES THEIR PERFORMANCE ON THE CLOCK PERFORMANCE

1 3

3Q 2019 Earnings Call Presentation | 6

3Q 2019 Financial highlights

(1) Includes results of Signor from September 7, 2018 onward in 3Q 2018 for as-reported, and results of Signor for the full quarter 3Q 2018 for combined pro forma figures (2) Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures; see appendix to this presentation for a reconciliation to the most comparable GAAP measures (3) Excludes $30 million for the acquisition of Superior Lodging, but includes $5 million for the acquisition of the Midland, TX community from ProPetro (4) ADR = Average Daily Rate; calculated based on specialty rental income and services income received over the period, excluding construction revenue, divided by utilized bed nights (5) Utilization in a period is calculated as average utilized beds divided by average available beds for the same period

Total Revenue

 $81.6 million

+35.3% year over year as reported(1); +5.6% year over year combined pro forma(1)

Adjusted EBITDA(2)

 $40.6 million | 49.7% Adjusted EBITDA margin(2)

+30.0% year over year as reported; +1.8% year over year combined pro forma

Net Cash Provided by Operating Activities

 $25.5 million in 3Q | $44.2 million YTD

$42.6 million in 3Q ex. cash interest paid of $17.1 million

Net Capital Expenditures

 $27.0 million | $74.2 million YTD(3)

$0.4 million maintenance capital expenditures

Key Operating Metrics

 ADR(4): $80.8

($1.9) year over year as reported; +$2.7 year over year combined proforma

 Available beds: 12,485 | Utilized beds: 10,340 with utilization(5) of ~83% 3Q 2019 Earnings Call Presentation | 7

3Q results reflect strong operational execution

$31.2 $39.9 $40.6 $8.7 $1.3 $1.5 $2.2 $0.1 $4.3 3Q 2018 Adjusted EBITDA "as reported" Signor Contribution 3Q 2018 Adjusted EBITDA "combined pro forma" ADR Utilization COGS SG&A Other 3Q 2019 Adjusted EBITDA "as reported"

(US$, in millions)

A B C D E

Represents contribution from Signor acquisition Reflects impact from increase in price primarily in the Permian Basin due to integration of acquired Signor communities Reflects impact from increase in utilized beds, primarily in the Permian Basin due to expansions of existing communities, acquisition of communities from Superior Lodging and ProPetro, and new community openings in Odessa, TX (for FTSI in 2Q-19), Carlsbad, NM (3Q-19, new 400 beds), and Orla, TX (3Q-19, new 200 beds) Reflects improved cost leverage primarily due to higher utilized beds in the Permian Basin driving occupancy costs lower offset by lower year over year utilization in the Bakken Basin Reflects higher costs primarily for build out of corporate staff and public company costs as well as increase in commissions commensurate with higher revenues Reflects impact from other revenue including construction activities related to TransCanada Pipelines project

A B C D E F F

3Q 2019 Earnings Call Presentation | 8

3Q 2019 Segment results(1)

Permian Basin Bakken Basin Government

Operational highlights:



Revenue up 64.9%: mainly due to an increase in average utilized beds as a result of acquisitions and community expansions in response to stronger demand year-over-year for full turnkey accommodations and hospitality services



Adjusted gross profit margin down 71 bps to 58.9%: mainly due to lower ADR partially offset by improvement in operating costs per person



• Avg. available beds at 8,611; utilized beds up by 2,923

beds to 6,994 beds (81% utilization); ADR at $84.2

Operational highlights:



Revenue decreased 18.7%: primarily due to decrease in average utilized beds (although utilization increased to 76% from 53%) at lower ADR reflecting reduced activity levels compared to the same period last year



Adjusted gross profit margin improved 292 bps to 48.1%: primarily due to reduced occupancy and employee costs (avg. available beds decreased by 580) driven by closure of Dunn county community (4Q-18)



• Avg. available beds at 1,017; utilized beds down by 70

beds to 771 beds (76% utilization); ADR at $77.4

Operational highlights:



Revenue essentially flat: primarily due to unchanged utilized beds and ADR at STFRC



Adjusted gross profit margin increased 514 bps to 76.2%: primarily due to lower occupancy costs partially

• ffset by unfavorable cost absorption as a result of

lower occupied vs. utilized beds at STFRC



• Avg. available and utilized beds at 2,400 (100%

utilization); ADR at $74.5 $34,278 $56,524 Revenue 3Q 18 3Q 19

US$, in ‘000s, except ADR

$20,430 $33,285 Adjusted Gross Profit 3Q 18 3Q 19 59.6% 58.9% $7,400 $6,019 Revenue 3Q 18 3Q 19 $3,343 $2,895 Adjusted Gross Profit 3Q 18 3Q 19 45.2% 48.1% $16,864 $16,830 Revenue 3Q 18 3Q 19 $11,977 $12,817 Adjusted Gross Profit 3Q 18 3Q 19 71.0% 76.2%

• 71 bps

+292 bps +514 bps

+64.9% +62.9%

• 18.7%
• 13.4%

~0% +7.0% y-o-y change:

US$, in ‘000s, except ADR

y-o-y change:

US$, in ‘000s, except ADR

y-o-y change:

(1) As reported; results of All Other segment not discussed here – see accompanying earnings press release and other filings for detailed segment financial results

ADR

$74.7

ADR

$74.5

ADR

$79.1

ADR

$77.4

ADR

$87.9

ADR

$84.2

3Q 2019 Earnings Call Presentation | 9

Robust cash generation backed by nominal maintenance capex needs

3Q-YTD Adjusted EBITDA & Adjusted FCF(1) conversion



Over 90% of Adjusted EBITDA converted to Adjusted free cash flow; cash generated important source of growth capital offsetting external borrowing needs



Specialty rental assets require minimal future capital outlays; deferred revenue adjustment due to customer advances $52.0 $111.6 3Q 2018 YTD Adjusted EBITDA 3Q 2019 YTD Adjusted EBITDA Adjusted FCF Deferred Revenue Maintenance Capex $72.9 $123.1

= 71%

• f Adjusted EBITDA

= 91%

• f Adjusted EBITDA

(1) Adjusted free cash flow (FCF) is a non-GAAP measure; see appendix to this presentation for reconciliation to the most comparable GAAP measure (2) Adjusted FCF Conversion as presented is calculated as Adjusted free cash low divided by Adjusted EBITDA for the same period, and expressed as a percentage (3) Excludes cash paid to acquire Signor on September 7, and Superior Lodging on June 19, 2019, but includes cash paid to acquire the Midland, TX community from ProPetro on July 1, 2019

71%

• Adj. FCF conversion(2):

91%

US$ in millions 3Q 2019 Earnings Call Presentation | 10

3Q-YTD capital expenditures(3)

$2.5 $1.4 $62.0 $74.2 3Q 2018 YTD 3Q 2019 YTD Maintenance Capex Total Capex 8,595

• Avg. available beds:

12,485



Discretionary growth capital invested when customer demand gives high visibility of contracted utilization; IRR and payback hurdles must be met



Basic upkeep of facilities included in routine operating costs resulting in minimal future capital outlay

US$ in millions

3Q 2019 Cash flow drivers

$10.2 $3.5

$25.5 $0.4 $4.2 $22.4 $5.0 $0.1

Cash & eq. at Jun 30, 2019 Cash flow from operations Maintenance capex Signor enhancement Growth capex Stock repurchases All

• ther

Cash & eq. at Sep. 30, 2019 (US$, in millions)

Items of note:

 $25.5 million of net cash flow from operations

–

Includes $17.1 million cash interest paid

–

$42.6 million net cash flow from operations excluding cash interest paid

–

Minimal cash impact from working capital change  $27.0 million of capital expenditures

–

$0.4 million of maintenance capex

–

$4.2 million of Signor enhancement capex

–

Remaining $22.4 million for new communities and expansions; includes $5.0 million for ProPetro  $5.0 million for stock repurchases as of 9/30

–

Approximately $13.1 million as of 11/12, or 17.5%

• f $75.0 million repurchase authorization

3Q 2019 Earnings Call Presentation | 11

3Q 2019 cash flow walk

2019 Financial Outlook

3Q 2019 Earnings Call Presentation | 12

Full Year

Total Revenue $318 to $328 million Adjusted EBITDA $157 to $162 million Assumptions: SG&A, ex. charges and credits $32 to $34 million Net capital expenditures $80 to $90 million

Summary

3Q 2019 Earnings Call Presentation | 13

3Q Highlights

► Solid operational and financial performance ► Significant net cash flow from operations – $25.5 million, includes $17.1 million cash paid for interest ► Commenced stock repurchases under $75.0 million initial repurchase authorization ► Excellent execution – on-time opening of new communities and ongoing successful integration of acquisitions

Key takeaways

► Contracted business remains resilient, taking steps to address impact on uncontracted portion ► Continue to execute on disciplined, returns-focused growth strategy ► Cash generation to accelerate as capital investment programs near completion ► Capital allocation priorities to invest in growth, maintain a flexible balance sheet, and deploy capital into long-run

value enhancing initiatives

Appendix

Share count analysis

(1) Excluded from the US GAAP Basic Outstanding Share Counts are 5,015,898 common shares (the “Escrow Shares”) issued and outstanding that have been deposited into an escrow account that have no voting or economic rights while in escrow. See further information on the earnout agreement and the escrow agreement in Exhibit 10.2 and 10.3, respectively, to our Form 8-K filed March 21, 2019 (the “8-K”). Note that these shares will be excluded from the EPS calculations prospectively (basic & diluted) until those shares are released from Escrow. (2) These Escrow Shares will be released if at any time during the period of three 3 years following the date hereof, the closing price of the shares of the Company’s Common Stock as reported on NASDAQ or any other national securities exchange exceeds $12.50 per share (50% release) and $15.00 per share (remaining 50% release) for 20 of 30 consecutive days. (3) Assumes exercise of all outstanding warrants, including: (i) 10,833,316 Public Warrants and (ii) 5,333,334 Private Placement Warrants (as defined below). Each warrant entitles the holder thereof to purchase one share of TH common stock at a price of $11.50 per share. (4) Total outstanding common shares in the “Other Shares and Equivalents Outstanding” columns represent the cumulative amount of outstanding common shares if each of the potential events in items 1-3 were to occur. (5) Comprised of shares issuable upon exercise of certain warrants issued to the initial investors and former independent directors of Platinum Eagle in a private placement transaction concurrent with the initial public offering of Platinum Eagle (the “Private Placement Warrants”). (6) Reflects shares (the “Founder Shares”) held by the Founder Group, as defined in the earnout agreement, filed as exhibit 10.2 to the 8-K. Excludes any shares purchased by any member of the Founder Group in the open market. (7) Includes certain shares held by the former directors of Platinum Eagle Acquisition Corp. who are not members of the Founder Group as defined in the earnout agreement, filed as exhibit 10.2 to the 8-K. (8) Includes the shares that were issued to the sellers of Target Parent and Signor Parent in connection with the business combination. (9) Includes shares issued to investors for an equity offering for private investment in public equity. 3Q 2019 Earnings Call Presentation | 15

Shares by Type Common Stock Total Potential Outstanding Common Shares (Fully Diluted)

Outstanding as of 9/30/2019 (1) Escrowed Founder Shares (2) All unvested stock options and restricted stock units Exercise of Outstanding Warrants (3) Public Shares 14,321,606 14,321,606 Treasury shares (issued but not outstanding) (828,600) (828,600) Net Public Shares 13,493,006 13,493,006 Shares Underlying Public Warrants

• 10,833,316

10,833,316 Shares Underlying Founder & TH Director (former & current) Warrants (5)

• 5,333,334

5,333,334 Founder Shares (6) 3,034,102 5,015,898 8,050,000 Former Platinum Eagle Director Shares (7) 75,000 75,000 TDR (8) 74,786,327 74,786,327 PIPE Investors (9) 8,000,000 8,000,000 Shares potentially issuable pursuant to compensation plans

• 933,444

933,444 Shares issued pursuant to compensation plans (vested RSUs) 12,897 12,897 US GAAP Basic Outstanding Share Count for EPS (1) 99,401,332 Add: Escrow Shares 5,015,898

Total Outstanding Common Shares (4) 104,417,230 104,417,230 105,350,674 120,583,880 121,517,324 Other Shares and Equivalents Outstanding (4)

Non-GAAP Reconciliations

3Q 2019 Earnings Call Presentation | 16

2019 2018 2019 2018 Net income 9,569 $ 849 $ 6,170 $ 1,079 $ Adjustments: Restructuring costs

• 415

168 7,829 Target Parent selling, general, and administrative costs

• 1,548

246 9,133 Other expense (income), net 646 (416) 1,064 (1,313) Transaction expenses 35 1,283 38,028 2,333 Acquisition-related expenses 67 9,227 370 9,227 Stock-based compensation 433

• 643
• Officer loan expense
• 1,583
• Other adjustments

1,155

• 1,664
• Less: Income tax benefits

(569) (2,984) (10,025) (6,668) Adjusted net income 11,336 $ 9,922 $ 39,911 $ 21,620 $ Weighted average shares outstanding - basic and diluted 100,102,641 38,495,023 93,378,332 30,002,811 Earnings per share, reported - basic and diluted 0.10 $ 0.02 $ 0.07 $ 0.04 $ Adjusted earnings per share - basic and diluted 0.11 $ 0.26 $ 0.43 $ 0.72 $ September 30 September 30

Target Hospitality Corp. Reconciliation of Net income to Adjusted net income and Adjusted diluted earnings per share ($ in thousands, except per share amounts)

Three Months Ended Nine Months Ended 2019 2018 2019 2018 Total revenue 81,643 $ 60,326 $ 244,983 $ 144,448 $ Gross profit 38,556 $ 26,354 $ 115,482 $ 64,199 $ Adjustments: Depreciation of specialty rental assets 11,222 9,785 31,083 23,180 Adjusted gross profit 49,778 $ 36,139 $ 146,565 $ 87,379 $ Adjusted gross profit margin 61.0% 59.9% 59.8% 60.5%

Target Hospitality Corp. Reconciliation of Gross profit to Adjusted gross profit and Adjusted gross profit margin ($ in thousands)

Three Months Ended Nine Months Ended September 30 September 30

Non-GAAP Reconciliations, continued

3Q 2019 Earnings Call Presentation | 17

2019 2018 2019 2018 Total revenue 81,643 $ 60,326 $ 244,983 $ 144,448 $ Net income 9,569 $ 849 $ 6,170 $ 1,079 $ Interest expense, net 10,172 5,408 24,056 15,023 Loss on extinguishment of debt

• 907
• Income tax expense (benefit)

3,290 1,678 5,562 2,579 Other depreciation and amortization 4,021 1,456 11,600 3,858 Depreciation of specialty rental assets 11,222 9,785 31,083 23,180 EBITDA 38,274 $ 19,176 $ 79,378 $ 45,719 $ Adjustments: Currency (gains) losses, net (77) 4 (77) 72 Restructuring costs

• 415

168 7,829 Transaction expenses 35 1,283 38,028 2,333 Stock-based compensation 433

• 643
• Officer loan expense
• 1,583
• Acquisition-related expenses

67 9,227 370 9,227 Other expense (income), net 723 (420) 1,141 (1,385) Other adjustments 1,155

• 1,664
• Target parent selling, general, and administrative costs
• 1,548

246 9,133 Adjusted EBITDA 40,610 $ 31,233 $ 123,144 $ 72,928 $ Adjusted EBITDA margin 49.7% 51.8% 50.3% 50.5% September 30 September 30

Target Hospitality Corp. Reconciliation of Net income (loss) to EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin ($ in thousands)

Three Months Ended Nine Months Ended 2019 2018 2019 2018 Adjusted EBITDA 40,610 $ 31,233 $ 123,144 $ 72,928 $ Transaction expenses (35) (1,283) (38,028) (2,333) Officer loan expense

• (1,583)
• Acquisition-related expenses

(67) (9,227) (370) (9,227) Target parent selling, general, and administrative costs

• (1,548)

(246) (9,133) Interest payments (17,143) (1,207) (23,464) (7,311) Cash paid for income taxes

• (1,237)
• Restructuring costs
• (415)

(168) (7,829) Other (expense) income, net (612) (8) (908) (721) Gain (loss) on involuntary conversion (111) 428 (122) 1,678 Working capital and other 2,812 (9,098) (12,789) (22,132) Net cash provided by operating activities 25,454 $ 8,875 $ 44,229 $ 15,920 $ Adjustments: Transaction expenses 35 1,283 38,028 2,333 Officer loan expense

• 1,583
• Acquisition-related expenses

67 9,227 370 9,227 Target parent selling, general, and administrative costs

• 1,548

246 9,133 Interest payments 17,143 1,207 23,464 7,311 Cash paid for income taxes

• 1,237
• Restructuring costs
• 415

168 7,829 Other expense (income), net 612 8 908 721 (Gain) loss on involuntary conversion 111 (428) 122 (1,678) Working capital and other (2,812) 9,098 12,789 22,132 Deferred revenue and customer deposits (3,945) (11,466) (10,170) (18,365) Maintenance capital expenditures for specialty rental assets (390) (934) (1,408) (2,536) Adjusted free cash flow 36,275 $ 18,833 $ 111,566 $ 52,027 $ September 30 September 30

Target Hospitality Corp. Reconciliation of Adjusted EBITDA to Net cash (used in) provided by operating activities to Adjusted free cash ($ in thousands)

Three Months Ended Nine Months Ended

Non-GAAP Reconciliations, continued

3Q 2019 Earnings Call Presentation | 18

Combined Pro forma

Year Ended Year Ended Nine Months Ended Last Tweleve Months (LTM) December 31, 2017 March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 December 31, 2018 March 31, 2019 June 30, 2019 September 30, 2019 September 30, 2019 September 30, 2019

Total revenue 172,972 $ 59,671 $ 68,735 $ 77,284 $ 96,152 $ 301,842 $ 81,982 $ 81,358 $ 81,643 $ 244,983 $ 341,135 $ Net income (loss) 15,533 $ 4,040 $ 17,359 $ 11,394 $ (920) $ 31,873 $ (13,979) $ 10,580 $ 9,569 $ 6,170 $ 5,250 $ Interest expense, net (4,975) 4,013 5,734 5,543 9,176 24,466 4,031 9,853 10,172 24,056 33,232 Loss on extinguishment of debt

• 907
• 907

907 Income tax expense (benefit) 25,584 230 671 1,678 9,176 11,755 (1,850) 4,121 3,290 5,562 14,738 Other depreciation and amortization 5,681 1,250 1,152 1,456 3,660 7,518 3,763 3,816 4,021 11,600 15,260 Depreciation of specialty rental assets 27,743 7,835 8,336 10,251 9,210 35,632 9,901 9,960 11,222 31,083 40,293 EBITDA 69,566 $ 17,368 $ 33,252 $ 30,322 $ 30,302 $ 111,244 $ 2,773 $ 38,330 $ 38,274 $ 79,378 $ 109,680 $ Adjustments: Loss on impairment

• 15,320

15,320

• 15,320

Currency (gains) losses, net (91)

• 68

4 77 149

• (77)

(77)

• Restructuring costs

2,180 6,256 1,158 415 764 8,593 168

• 168

932 Transaction expenses

• 484

848 1,134 5,934 8,400 36,565 1,428 35 38,028 43,962 Stock-based compensation

• 210

433 643 643 Officer loan expense

• 1,583
• 1,583

1,583 Acquisition-related expenses

• 5,622
• 5,622
• 303

67 370 370 Non-routine bad-debt expense

• 1,192
• 1,192
• Other expense (income), net

(510) 88 (1,053) (422) (6,888) (8,275) (38) 456 723 1,141 (5,747) Other adjustments

• 509

1,155 1,664 1,664 Holdings SG&A costs 8,771 5,549 1,967 1,617 (1,755) 7,378 246

• 246

(1,509) Adjusted EBITDA 79,916 $ 29,745 $ 36,240 $ 39,884 $ 43,754 $ 149,623 $ 41,297 $ 41,236 $ 40,610 $ 123,144 $ 166,898 $ Adjusted EBITDA margin 46.2% 49.8% 52.7% 51.6% 45.5% 49.6% 50.4% 50.7% 49.7% 50.3% 48.9%

Target Hospitality Corp. Reconciliation of Net income (loss) to EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin ($ in thousands)

Combined Pro forma As Reported

Quarter Ended Quarter Ended