Target Hospitality Corp. (TH) 2021年年度報告「NASDAQ」.pdf

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1、19MAR202017133202|ANNUAL REPORT2021ABOUT TARGET HOSPITALITYTarget Hospitality Corp.(Nasdaq:TH)is one of the largest vertically integrated specialty rentaland hospitality services companies in North America.We have an extensive network ofgeographically relocatable specialty rental accommodation units

2、 with 15,528 beds across 27communities(of which 26 are owned and 1 is leased).We also operate 1 community not ownedor leased by the Company.The majority of our revenues are generated under multi-yearcommitted contracts which provide visibility to future earnings and cash flows.We believe ourcustomer

3、s enter into contracts with us because of our differentiated scale and ability to deliverpremier accommodations and in-house culinary and hospitality services across many keygeographies in which they operate.For the year ended December 31,2021,we generatedrevenues of approximately$291 million.Approx

4、imately 69.7%of our revenue was earned fromspecialty rental with vertically integrated hospitality,specifically lodging and related ancillaryservices,whereas the remaining 30.3%of revenues were earned through leasing of lodgingfacilities(26.4%)and construction fee income(3.9%)for the year ended Dece

5、mber 31,2021.Target Hospitality,though initially founded in 1978,began operating as a specialty rental andhospitality services company in 2006.Our company operates across the U.S.,primarily in theSouthwest and the Midwest.We also own and operate the largest family residential center in theU.S.Target

6、 Hospitality provides comprehensive turnkey solutions to customers unique needs,from the initial planning stages through the full cycle of development and ongoing operations.We provide cost-effective and customized specialty rental accommodations,culinary servicesand hospitality solutions,including

7、site design,construction,operations,security,housekeeping,catering,concierge services and health and recreation facilities.We have established a leadership position in providing a fully integrated service offering to ourlarge customer base,which is comprised of the United States government,governmen

8、t serviceproviders,major companies supporting natural resource developments,and large-scaleinfrastructure projects throughout the United States.Our company is built on the foundation ofthe following core values:safety,care,excellence,integrity and collaboration.You may obtain copies of our annual re

9、port,and the 10-K included therein without chargeby contacting us.Written requests should be directed to our executive office located at9320 Lakeside Blvd.,Suite 300,The Woodlands,Texas 77381.2021 Annual Report UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,D.C.20549 FORM 10-K ANNUAL RE

10、PORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31,2021 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38343 TARGET HOSPITALITY CORP.

11、(Exact name of registrant as specified in its charter)Delaware 98-1378631(State or other jurisdiction of(I.R.S.Employer incorporation or organization)Identification No.)9320 Lakeside Boulevard,Suite 300 The Woodlands,TX 77381(Address,including zip code,of principal executive offices)(800)832-4242(Re

12、gistrants telephone number,including area code)(Former name,former address and former fiscal year,if changed since last report)Securities registered pursuant to Section 12(b)of the Act:Title of each class Trading Symbol(s)Name of each exchange on which is registered Common stock,par value$0.0001 per

13、 share THThe Nasdaq Capital MarketWarrants to purchase common stock THWWWThe Nasdaq Capital Market Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pur

14、suant to Section 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to

15、file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,if any,every Interactive Data File required to be submitted and posted pursuant to Rule 40

16、5 of Regulation S-T during the preceding 12 months(or for such shorter period that the registrant was required to submit and post such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,smaller reporting company,or an

17、 emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If

18、an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed

19、 a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 USC.7262(b)by the registered public accounting firm that prepared or issued its audit report.Indicate by check mark whethe

20、r the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No.The aggregate market value of common shares held by non-affiliates computed by reference to the price at which the common equity was last sold,or the average bid and asked price of such common equity,as of the l

21、ast business day of the registrants most recently completed second fiscal quarter,June 30,2021,was$100,419,824.There were 106,367,450 shares of Common Stock,par value$0.0001 per share,issued and 101,952,683 outstanding as of March 7,2022.Documents Incorporated by Reference The information required b

22、y Part III of this Report,to the extent not set forth herein,is incorporated herein by reference from the registrants definitive proxy statement for the 2022 annual meeting of stockholders,which definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days afte

23、r the end of the fiscal year to which this Report relates.Target Hospitality Corp.TABLE OF CONTENTS Annual Report on FORM 10-K December 31,2021 PART I Item 1.Business 3Item 1A.Risk Factors 22Item 1B.Unresolved Staff Comments 43Item 2.Properties 43Item 3.Legal Proceedings 44Item 4.Mine Safety Disclos

24、ures 44 PART II Item 5.Market for Registrants Common Equity,Related Shareholder Matters and Issuer Purchase of Equity Securities 45Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations 50Item 7A.Quantitative and Qualitative Disclosures About Market Risk67Item 8.

25、Financial Statements and Supplementary Data70Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 113Item 9A.Controls and Procedures 113Item 9B.Other Information 114 PART III Item 10.Directors,Executives,Officers and Corporate Governance115Item 11.Executive Com

26、pensation 115Item 12.Security Ownership of Certain Beneficial Owners and Management Related Shareholder Matters115Item 13.Certain Relationships and Related Transactions,and Director Independence115Item 14.Principal Accounting Fees and Services115 PART IV Item 15.Exhibits and Financial Statement Sche

27、dules116SIGNATURES 121 3 Part I Item 1.Business Unless the context otherwise requires,references to“we”,“us”,“our”,“the Company”,or“Target Hospitality”refer to Target Hospitality Corp.and its consolidated subsidiaries.During 2021,the Company changed the names of select reportable segments to appropr

28、iately align with its diversified hospitality and facilities service offerings.The segments formerly known as Permian Basin and Bakken Basin are now referred to as Hospitality&Facilities Services South(“HFS South”)and Hospitality&Facilities Services Midwest(“HFS Midwest”),respectively.All other repo

29、rtable segment names remain unchanged.Overview Our company,Target Hospitality,is one of the largest vertically integrated specialty rental and hospitality services companies in North America.We have an extensive network of geographically relocatable specialty rental accommodation units with 15,528 b

30、eds across 27 communities(of which 26 are owned and 1 is leased).We also operate 1 community not owned or leased by the Company.The majority of our revenues are generated under multi-year committed contracts which provide visibility to future earnings and cash flows.We believe our customers enter in

31、to contracts with us because of our differentiated scale and ability to deliver premier accommodations and in-house culinary and hospitality services across many key geographies in which they operate.For the year ended December 31,2021,we generated revenues of approximately$291 million.Approximately

32、 69.7%of our revenue was earned from specialty rental with vertically integrated hospitality,specifically lodging and related ancillary services,whereas the remaining 30.3%of revenues were earned through leasing of lodging facilities(26.4%)and construction fee income(3.9%)for the year ended December

33、 31,2021.For additional information on our revenue related to December 31,2020 and 2019,refer to“Managements Discussion and Analysis of Financial Condition and Results of Operations”located in Part II,Item 7 of this Annual Report on Form 10-K.Target Hospitality,though initially founded in 1978,began

34、 operating as a specialty rental and hospitality services company in 2006.Our company operates across the U.S.,primarily in the Southwest and the Midwest.We also own and operate the largest family residential center in the U.S.Target Hospitality provides comprehensive turnkey solutions to customers

35、unique needs,from the initial planning stages through the full cycle of development and ongoing operations.We provide cost-effective and customized specialty rental accommodations,culinary services and hospitality solutions,including site design,construction,operations,security,housekeeping,catering

36、,concierge services and health and recreation facilities.We have established a leadership position in providing a fully integrated service offering to our large customer base,which is comprised of the United States government,government service providers,major companies supporting natural resource d

37、evelopments,and large-scale infrastructure projects throughout the United States.Our company is built on the foundation of the following core values:safety,care,excellence,integrity and collaboration.4 Background For discussion of the background of the Business Combination,please read the“Background

38、”section located in the Item 1.Business section in our Annual Report on Form 10-K/A for the year ended December 31,2020 filed on May 24,2021 and is incorporated herein by reference.Upon completion of the Business Combination,the Nasdaq trading symbols of our Common Stock and our Warrants were change

39、d to“TH”and“THWWW,”respectively.Business Model Our business model allows our customers to focus their efforts and resources on their core businesses.This makes us an integral part of the planning and execution phases for all customers.5 We provide a safe,comfortable,and healthy environment to our gu

40、ests,employees and workers across the U.S.and anywhere our customers need our facilities and services.Under our“Target 12”service model,we provide benefits to our customers,delivering high quality food,rest,connection,wellness,community,and hospitality,which optimizes our customers workforce engagem

41、ent,performance,safety,loyalty,and productivity during work hours.This facility and service model is provided directly by our employees,who deliver the essential services 24 hours per day for 365 days a year.We provide all of the hospitality services at our sites,and as a result,we believe we delive

42、r more consistent and high-quality hospitality services at each community compared to our peers.Our company and employees are driven by our primary objective of helping our customers workforce reach their full potential every day.Our professionally trained hospitality staff has the unique opportunit

43、y to live with our customers as most of our employees live on location at the communities where our customers workforce reside.This allows our employees to develop powerful customer empathy,so we are better able to deliver consistent service quality and care through the Target 12 platform each day.O

44、ur employees are focused on“the other 12 hours”the time our customers and their employees are not workingmaking sure we deliver a well fed,well rested,happier,loyal,safer and more productive employee every day.What we provide our customers workforce“off the clock”optimizes their performance when the

45、y are“on the clock.”The investment our customers make in their employees“the other 12 hours”is an essential part of their strategy and overall business and operations execution plan.Using our expansive community network,unique core competencies and full-service turnkey hospitality solutions,we provi

46、de critical facilities and hospitality support services for fully integrated natural resource development companies and contractors of the United States Government.Customers typically require accommodations and hospitality solutions at the onset of their projects.Our assets are well-suited to suppor

47、t the full lifecycle of development plans and we are able to scale our facility size to meet customers growing needs.We are well-positioned to continue serving our customers throughout the full cycle of their projects,which typically last for several decades.Our integrated model provides value to ou

48、r customers by reducing project timing and counterparty risks associated with projects.More broadly,our accommodations networks,combined with our integrated value-added hospitality and facilities services creates value for our customers by optimizing our customers engagement,performance,safety,loyal

49、ty,productivity,preparedness and profitability.Summary of Value-Added Services We take great pride in the premium customer experience we offer across our range of community and hospitality services offerings.The majority of Targets communities include in-house culinary and hospitality services.Our w

50、orld-class culinary and catering professionals serve approximately 11,000,000 meals each year with fresh ingredients and many of our meals are made from scratch.We self-manage most culinary and hospitality services,which provides us with greater control over service quality as well as incremental re

51、venue and profit potential.Our communities are designed to promote rest and quality of life for our customers workforces and include amenities such as:Summary of Amenities at various Communities:Innovative Modular Design Media Lounges and WIFI Throughout Single Occupancy Design Individual Xbox/PSII

52、Pods Swimming Pool,Volleyball,Basketball Flat-Screen TVs in Each Room Commercial Kitchen 40+Premium TV Channel Line-up Fast Food Lounges Personal Laundry Service Full&Self Service Dining Areas Individually Controlled HVAC System TV Sport/Entertainment Lounges Hotel Access Unity Lock Systems Training

53、/conference Rooms 24 Hour No-Limit Dining Core Passive Recreation Areas Free DVD Rentals Active Fitness Centers Self Dispensing Free Laundry Lodge Recreation Areas Commercial Laundry 6 Locker/Storage/Boot-up Areas Transportation to Project Site Parking Areas 24 Hour Gated Security Waste Water Treatm

54、ent Facility Daily Cleaning&Custodial Service On-site Commissary Professional Uniformed Staff Our hospitality services and programming are designed to promote safety,security and rest,which in turn promote greater on-the-job productivity for our customers workforces.Our communities strictly adhere t

55、o our community code of conduct,which prohibits drugs,firearms,co-habitation and guests.We work closely with our customers to ensure that our communities are an extension of the safe environment and culture they aim to provide to their employees while they are on a project location.Our customer code

56、 of conduct is adopted by each corporate customer and enforced in conjunction with our customers through their documented health,safety and environmental policies,standards and customer management.We recognize that safety and security extends beyond the customers jobsite hours and is a 24-hour respo

57、nsibility which requires 24-hour services by Target Hospitality and close collaboration with our customer partners.7 History and Development Target Hospitalitys legacy businesses of Signor and Target have grown and developed since they were created.The chart below sets out certain key milestones for

58、 each business.1978-2010 2011-Present 1978:Target Logistics was founded 2011:Target expanded capacity in Williston,Stanley and Tioga with long-term customers Halliburton,Hess,ONEOK,Schlumberger,Superior Well Service,Key Energy Services and others 1990:Signor Farm and Ranch Real Estate was founded 20

59、11:Signor Lodge opened in Midland,TX(84 rooms)Target awarded contracts for logistics services for Olympics in 1984(Sarajevo),1992(Barcelona),1996(Atlanta),2000(Sydney),2002(Salt Lake City),2004(Athens),2006(Turin)and 2010(Vancouver)2011:Signor Barnhart Lodge opened in Barnhart,TX(160 beds)The Vancou

60、ver project consisted of a 1,600 bed facility,a portion of which was subsequently transferred to North Dakota and remains in use today 2012:Target developed additional North Dakota facilities in Dunn County(Q1),Judson Lodge(Q3),Williams County(Q3)and Watford City(Q4)2005:Target operated 1,100-bed cr

61、uise ship anchored in the Gulf of Mexico to support relief efforts during aftermath of Hurricane Katrina 2012:Target expanded service into Texas with the opening of Pecos Lodge(90 beds)in Q4 In addition,built and managed 700-person modular camp in New Orleans with running water,electricity and on-si

62、te kitchen services 2013:Target awarded TCPL Keystone KXL pipeline project to house and feed over 6,000 workers(project terminated July 23,2021)2007:Target hired by Freeport-McMoRan to build and operate 425-bed facility in Morenci,AZ in support of copper mining operations(re-opening 10/2012)2014:Tar

63、get awarded lodge contract for new 200-bed community in the HFS South region 2008:Target provided catering/food services for 600 personnel in support of relief operations in aftermath of Hurricane Ike 2014:Target awarded contract and built 2,400-bed community for U.S.federal government 2009:Target p

64、rovided housing and logistics services for 1,500 workers during a refurbishment of a refinery in St.Croix 2015:Opened new community in Mentone,TX in Q4 for Anadarko Petroleum Company 2009:Signor Lodging was formed 2016:Signor expanded Midland Lodge several phased expansions 1,000 beds 2010:Target op

65、ened Williston Lodge,Muddy River,Tioga and Stanley Cabins in western North Dakota 2016:Signor Kermit Lodge opens with 84 rooms 2017:Signor opened Orla Lodge with 208 rooms 2017:Target expanded network with the expansion of both Wolf Lodge and Pecos Lodge in Q2 2017:Target expanded presence in New Me

66、xico and West Texas with the acquisition of 1,000-room Iron Horse Ranch in Q3 2017:Signor opened El Reno Lodge with 345 rooms 2017:Target expanded presence with 280-room Blackgold Lodge in Q3 2018:Target Logistics rebranded as Target Lodging in March 2018 2018:Target opened new 600-room community in

67、 Mentone,Texas 2018:Target added approximately 1,600 rooms across HFS South network 2018:Target expanded community network in the HFS South region through acquisition of Signor,adding 7 locations and approximately 4,500 beds to the network 2019:Target announced new 400-bed community in the HFS South

68、 network 2019:Target expanded its community network in the HFS South region through the acquisitions of Superior and ProPetro,adding 4 locations and approximately 758 beds to the network.2019:El Capitan 200 beds 2019:El Capitan expansion 100 beds 2019:Seven Rivers expansion 200 beds 2021:Government

69、Segment expansion 4,000 beds We are one of the few vertically integrated specialty rental and hospitality services providers that service the entire value chain from site identification to long-term community development and facilities management.Our industry divides specialty rental accommodations

70、into three primary types:communities,temporary worker lodges and mobile assets.We are principally focused on communities across several end markets,including natural resource developments,large-scale infrastructure and U.S.government.8 Communities typically contain a larger number of rooms and requi

71、re more time and capital to develop.These facilities typically have commercial kitchens,dining areas,conference rooms,medical and dental services,recreational facilities,media lounges and landscaped grounds where climate permits.A substantial portion of our communities are built and underpinned by m

72、ulti-year committed contracts which often include exclusivity provisions.These facilities are designed to serve the long-term needs of customers regardless of the end markets they serve.Our communities provide fully-integrated and value-added hospitality services,including but not limited to:caterin

73、g and food services,housekeeping,health and recreation facilities,laundry services and overall workforce community management,as well as water and wastewater treatment,power generation,communications and personnel logistics where required.In contrast,temporary lodges are usually smaller in number of

74、 rooms and generally do not include hospitality,catering,facilities services or other value-added on-site services and typically serve customers on a spot or short-term basis without long-term committed contracts.These temporary facilities are“open”for any customer who needs lodging services.Finally

75、,mobile assets,or rig housing,are designed to follow customers activities and are generally used for drilling rig operators.They are often used to support conventional drilling crews and are contracted on a project-by-project,well-by-well or short-term basis.Our specialty rental modular assets and h

76、ospitality services deliver the essential services and accommodations when and where there is a lack of sufficient accessible or cost-effective housing,infrastructure or local labor.Many of the geographic areas near the southern U.S.border lack sufficient temporary housing and infrastructure for asy

77、lum-seeking immigrants or may require additional infrastructure in the future.In the U.S.natural resource development industry,many of the largest hydrocarbon reservoirs are in remote and expansive geographic locations,like the Southwestern portion of the United States and North Dakota where limited

78、 infrastructure exists.We support the development of these necessary natural resources by providing the fully-integrated and value-added hospitality services described above.Our communities and integrated hospitality services allow our customers to outsource their accommodations needs to a single pr

79、ovider,optimizing employee morale,productivity,safety,and loyalty while focusing their investment on their core businesses and long term planning.With our focus on large-scale community networks,large-scale stand-alone communities and hospitality services,our business model is a balanced combination

80、 of specialty rental assets and facilities services and is most similar to specialty rental companies like Cotton Logistics,Permian Lodging,Aries,and Civeo,and facilities services companies such as Aramark,Sodexo or Compass Group,and developers of lodging properties who are also owners or operators,

81、such as Hyatt Hotels Corporation or Marriott International,Inc.The U.S.specialty rental accommodations industry is segmented into competitors that serve components of the overall value chain,with very few integrated providers.The communities we own,operate,or manage,as well as those facilities we ow

82、n but are managed by other operators,are subject to competition for residents from other private operators.We compete primarily on location,cost,the quality and range of services offered,our experience in the design,construction,and management of facilities,and our reputation.We compete with governm

83、ent agencies that are responsible for residential facilities.Government sector demand for facilities is affected by a number of factors,including the demand for beds,general economic conditions and the size of the populations needing these services.Demand for accommodations and related services with

84、in the natural resource development end market is influenced by four primary factors:(i)available infrastructure,(ii)competition,(iii)workforce requirements,and(iv)capital spending.Anticipated capital spending,and our customers expectations for future capital spending as well as larger infrastructur

85、e requirements,influence customers development on current productive assets,maintenance on current assets,expansion of existing assets and development of greenfield,brownfield or new assets.In addition to capital requirements,different types of customer activity require varying workforce sizes,influ

86、encing the demand for accommodations.Also,competing locations and services influence demand for our assets and services.9 Demand within our government end market is primarily influenced by immigration,including the ongoing need to accommodate asylum seekers as well as federal governmental policy and

87、 budgets.Continued increases in asylum seeking activity may influence government spending on infrastructure in immigration-impacted regions and consequentially demand for accommodations and related services.Another factor that influences demand for our rooms and services is the type of customer we a

88、re supporting.Generally,natural resource development customers require larger workforces during construction and expansionary periods and therefore have a higher demand for accommodations.Due to the contiguous nature of their land positions,a“hub and spoke”model is utilized.Customers that support na

89、tural resource development also require larger and more mobile workforces which,in many cases,consist of employees sourced from outside of the work areas.These employees,described as rotational workers,permanently reside in another region or state and commute to the regions served by our HFS South o

90、r HFS Midwest segments on a rotational basis(often,two weeks on and one week off).In addition,proximity to customer activities influences occupancy and demand.We have built,own and operate the two largest specialty rental and hospitality services networks available to customers operating in the regi

91、ons served by our HFS South and HFS Midwest segments.These networks allow our customers to utilize one provider across a large and expansive geographic area.Our broad network often results in us having communities that are the closest to our customers job sites,which reduces commute times and costs,

92、and improves the overall safety of our customers workforce.Generally,if a community is within a one hour drive of a customers work location,our contractual exclusivity provisions with our customers require the customers to have their workforce lodge at one of our communities.Our communities provide

93、customers with cost efficiencies,as they are able to jointly use our communities and related infrastructure(power,water,sewer and IT)services alongside other customers operating in the same vicinity.Demand for our services is dependent upon activity levels,particularly our customers capital spending

94、 on natural resource development activities and government housing programs.Our customers spending plans generally are based on their view of commodity supply and demand dynamics,as well as the outlook for their near-term and long-term commodity prices and annual government appropriations.Our curren

95、t footprint supporting natural resource development customers is strategically concentrated in the southwestern portion of the United States near the Permian region served by our HFS South segment.The Permian stretches across the southeast corner of New Mexico and through a large portion of land in

96、western Texas,encompassing hundreds of thousands of square miles and dozens of counties and is the lowest cost basin in the U.S.,providing the most economic natural resource development inventory.Business Strengths&Strategies Strengths Market Leader in Strategically Located Geographies.We are one of

97、 North Americas largest providers of turnkey specialty rental units with premium catering and hospitality services including 28 strategically located communities with approximately 15,500 beds primarily in the highest demand regions of the southwestern United States(served by our HFS South segment)a

98、nd North Dakota(served by our HFS Midwest segment).Utilizing our large network of communities with the most bed capacity,particularly within the regions served by our HFS South and HFS Midwest segments,we believe we are the only provider with the scale and regional density to serve all of our custom

99、ers needs in these key areas.Additionally,our network and relocatable facility assets allow us to transfer the rental fleet to locations that meet our customer service needs.We leverage our scale and experience to deliver a comprehensive service offering of vertically integrated accommodations and h

100、ospitality services.Our complete end-to-end accommodations solution,including our premium amenities and experience,provides our customers with a compelling economic value proposition.10 Long-Standing Relationships with Diversified Large Integrated Customers.We have long standing relationships with o

101、ur diversified base of approximately 350 customers,which includes some of the largest blue-chip,investment grade natural resource development and integrated infrastructure companies in North America.We believe we have also established strong relationships in our U.S.government end market with our co

102、ntract partners and the federal agencies we serve.We initially won our large government sub-contract in 2014 based upon our differentiated ability to develop and open a permanent large-scale facility on an accelerated timeline.This contract was renewed and extended in 2016 and 2020,demonstrating our

103、 successful execution and customer satisfaction.The relationships we have established over the past decade have been built on trust and credibility given our track record of performance and delivering value to our customers by providing a broad range of hospitality service offerings within a communi

104、ty atmosphere.Targets customers willingness to enter into multi-year committed contracts,and our historical client retainment rate of approximately 90%,demonstrates the strength of these long-standing relationships.11 Committed Revenue and Exclusivity Produce Highly Visible,Recurring Revenue.The vas

105、t majority of our revenues are generated under multi-year contracts that include committed payment terms or exclusivity provisions,under which our customers agree to use our network for all their accommodation needs within the geographies we serve.In 2021,excluding TCPL Keystone segment revenue gene

106、rated from the terminated TC Energy contract,approximately 70%of our revenues had committed payment provisions and approximately 95%were under long-term contract,including exclusivity.The weighted average length of our contracts is approximately 50 months and Target has maintained a consistent clien

107、t renewal rate of over 90%for the last 5 years.Our customers enter into long-term agreements and consistently renew their contracts to ensure that sufficient accommodations and hospitality services are in place to properly care for their large workforces.Our multi-year contracts and consistent renew

108、al rates provide recurring revenue and high visibility on future financial performance.Proven Performance and Resiliency Through the Cycle.Our business model is generally well insulated from economic and commodity cycles.For example,we secured a major new contract in 2021 as well as a renewal and ex

109、tension in 2020,each under our Government Segment which together represents approximately 54%of Target Hospitalitys 2021 revenue.Additionally,with the onset of COVID-19,the Company executed contract modifications with several customers in the natural resource development industry resulting in extend

110、ed terms and reduced minimum contract commitments in 2020.These modifications utilize multi-year contract extensions to maintain and increase contract value while providing the company with greater visibility into long-term revenue and cash flow.This mutually beneficial approach balances average dai

111、ly rates with contract term and positions the Company to take advantage of a more balanced market.In 2021,with positive trends in occupancy and utilization,the Company entered into new contracts with a higher average daily rate(“ADR”)and certain contracts included rate increases on their ADR.Further

112、,we are able to efficiently optimize our modular assets and redeploy them,as warranted by customer demand.Long-lived Assets Requiring Minimal Maintenance Capital Expenditures.Our long-lived specialty rental assets support robust cash flow generation.Our rental assets have an average life in excess o

113、f 15 years,and we typically recover our initial investment within the first few years of initial capital deployment.Our maintenance capital between 2018 and 2021 has ranged from approximately 0.4%to 4%of annual revenue with an average of 1.6%of annual revenue.We maintain low maintenance capital expe

114、nditures,as cleaning and routine maintenance costs are included in day-to-day operating costs and recovered through the average daily rates that we charge our customers.This continual care of our assets supports extended asset lives and the ongoing ability to operate with only nominal maintenance ca

115、pital expenditures.The investment profile of our rental assets underpins our industry leading unit economics.Our contract discipline underpins our investment decision making and any spending on new growth investments is underwritten by contracts,with no speculative building.Generally,we do not inves

116、t capital unless we expect to meet our internal return thresholds.Due to the high revenue visibility from long-term contracts,we are poised to generate robust and stable cash flows driven by historical strategic growth investments and minimal future maintenance capital expenditure requirements.Strat

117、egies We believe that we can further develop our business by,among other things:Expansion Through Acquisitions and Diversify Our Service Offerings.We selectively pursue acquisitions and business combinations related to specialty rental and hospitality services in the markets we currently serve as we

118、ll as adjacent markets that offer existing complimentary services to ours.Leveraging our core competencies related to facilities management,culinary services,catering and site services,we believe that we can further scale this segment of our business and replicate it in 12 other geographies and end

119、markets.We continue to assess targeted acquisitions and business combinations that would be accretive to us while also expanding our end markets.Maintaining and Expanding Existing Customer Relationships.Growing and maintaining key customer relationships is a strategic priority.We fill existing bed c

120、apacity within our communities,while optimizing our inventory for existing customer expansion or for new customers.Keeping this balance provides us with flexibility and a competitive advantage when pursuing new contract opportunities.We optimize our capacity,inventory and customers usage through dat

121、a analytics,customer collaboration and forecasting demand.With the scale of our accommodations network,a significant number of our key customers are commercially exclusive to Target Hospitality as their primary and preferred provider of accommodations and hospitality services throughout the U.S.or f

122、or a designated geographic area.Enhancing Contract Scope and Services.One of our strategic focus areas is to enhance the scope and terms of our customer contracts.We intend to continue our historical track record of renewing and extending these contracts at favorable commercial and economic terms,wh

123、ile also providing additional value added services to our customers.For example,following the Signor acquisition we added our vertically integrated suite of services,including catering,to the many legacy Signor contracts that included only accommodations.Replacing legacy third party providers allows

124、 us greater control over service quality and delivery and offers substantial incremental revenue potential.Additionally,we believe we have capacity to increase revenue within our existing communities without new growth capital expenditures through increased utilization rates or modest price increase

125、s over time.Disciplined Growth Capital Expenditures to Increase Capacity.We selectively pursue opportunities to expand existing communities and develop new communities to satisfy customer demand.We employ rigorous discipline to our capital expenditures to grow our business.Our investment strategy is

126、 generally to only deploy new capital with visibilitytypically a contractto revenue and returns to meet our internal return hurdles.We target high returns on invested capital and achieve these returns due to our high cash-on-cash margin profile.Due to the lower cost per bed,returns on investment are

127、 higher for the expansion of existing facilities.Growing and Pursuing New Customer/Contract Opportunities.We continually seek additional opportunities to lease our facilities to government,natural resource development,manufacturing,and other third-party owners or operators in need of specialty renta

128、l and hospitality services.We have a proven track record of success in executing our specialty rental and facilities management model across several end markets for ongoing needs as well as major projects that have finite project life cycle durations.While special projects do not constitute a large

129、portion of our business,it is typical for us to secure some special projects that can last anywhere from 1-5 years(or more).We have designated sales-related resources that focus on special finite life cycle projects and maintain a dynamic business pipeline which includes but is not limited to specia

130、l projects across end markets.Business Operations Target Hospitality provides specialty rental and hospitality services,temporary specialty rental and hospitality services solutions and facilities management services across North America.The Companys primary customers are the U.S.Government and rela

131、ted sub-contractors,investment grade natural resource development companies and other workforce accommodation providers operating in the regions served by our HFS South and Midwest segments.The Companys specialty rental and hospitality services and management services are highly customizable and are

132、 tailored to each customers needs and requirements.Target Hospitality is also an approved general services administration(“GSA”)contract holder and offers a comprehensive range of housing,deployment,operations and management services through its GSA professional services schedule agreement.The GSA c

133、ontract allows U.S.federal agencies to acquire our products 13 and services directly from Target Hospitality which expedites the commercial procurement process often required by government agencies.Target Hospitality operates its business in four key end markets:(i)government(“Government”),which inc

134、ludes the facilities,services and operations of its family residential center and the related support communities in Dilley,Texas(the“South Texas Family Residential Center”)provided under its lease and services agreement with a national provider of migrant programming and in West Texas provided unde

135、r its lease and services agreement with a leading national nonprofit organization,backed by a committed United States Government contract,to provide a suite of comprehensive service offerings in support of their humanitarian aid efforts;(ii)HFS-South,which includes the facilities and operations in f

136、ifteen communities located across Texas and New Mexico;(iii)HFS-Midwest,which includes facilities and operations in four communities in North Dakota;and(iv)TCPL Keystone(“TCPL Keystone”),which provided ongoing preparatory work and plans for facilities and services provided in connection with the TC

137、Energy(formerly TransCanada)Keystone pipeline project.The Company terminated the underlying contract and settled with TC Energy in July 2021 related to these ongoing preparatory work and plans,which eliminated all activity from this end market subsequent to July 2021.The map below shows the Companys

138、 primary community locations in the HFS South and the HFS Midwest segments(including the Companys one location in the Anadarko).NORTH AMERICALODGE NETWORKNORTH DAKOTANEW MEXICOOKLAHOMATEXAS1.Barnhart Lodge2.Kermit Lodge3.Kermit Lodge North4.Mentone Wolf Lodge5.Midland Lodge6.Midland Lodge East7.Odes

139、sa Lodge East8.Odessa Lodge FTSI9.Odessa Lodge West10.Orla El Capitan Lodge11.Orla Lodge South12.Pecos Lodge SouthHFS-MIDWESTHFS-SOUTHREGION 13.Carlsbad Lodge14.Jal Lodge15.Seven Rivers Lodge16.El Reno Lodge17.Judson Lodge18.Stanley Hotel19.Watford City Lodge20.Williams County LodgeTEXASNEW MEXICO16

140、315134278114105129611MONTANANORTHDAKOTA2018171914 The table below presents the Companys owned and leased communities in the HFS South,HFS Midwest,Government,and All Other segments as of December 31,2021.Segment Community Name Location Status Number of BedsGovernment Dilley(STFRC)Dilley,TexasOwn 2,55

141、6Government Pecos Childrens CenterPecos,TexasOwn 2,000Government Pecos Blue LodgePecos,TexasOwn/Operate 390Government Railhead Lodge Pecos,TexasLease/Operate 220Government Orla North LodgeOrla,TexasOwn/Operate 169Government Delaware Lodge Orla,TexasOwn/Operate 465Government Skillman Station LodgeMen

142、tone,TexasOwn/Operate 858Government&HFS-South Pecos South LodgePecos,TexasOwn/Operate 776HFS-South Orla South LodgeOrla,TexasOwn/Operate 240HFS-South El Capitan LodgeOrla,TexasOwn/Operate 429HFS-South Odessa West LodgeOdessa,TexasOwn/Operate 805HFS-South Odessa East LodgeOdessa,TexasOwn/Operate 280H

143、FS-South Odessa FTSI LodgeOdessa,TexasOwn/Operate 217HFS-South Mentone Wolf LodgeMentone,TexasOwn/Operate 530HFS-South Midland Lodge Midland,TexasOwn/Operate 1,522HFS-South Midland East LodgeMidland,TexasOwn/Operate 168HFS-South Kermit Lodge Kermit,TexasOwn/Operate 232HFS-South Kermit North LodgeKer

144、mit,TexasOwn/Operate 180HFS-South Barnhart Lodge Barnhart,TexasOwn/Operate 192HFS-South Carlsbad Lodge Carlsbad,New MexicoOwn/Operate 606HFS-South Seven Rivers LodgeCarlsbad,New MexicoOwn/Operate 640HFS-South Jal Lodge Jal,New MexicoOwn/Operate 626HFS-Midwest Williams County LodgeWilliston,North Dak

145、otaOwn/Operate 300HFS-Midwest Judson Executive LodgeWilliston,North DakotaOwn/Operate 105HFS-Midwest Stanley Hotel Stanley,North DakotaOwn/Operate 343HFS-Midwest Watford City LodgeWatford City,North DakotaOwn/Operate 334All Other El Reno Lodge El Reno,OklahomaOwn/Operate 345Total Number of Beds 15,5

146、28 Government The Government segment includes,but is not limited to,two primary end markets which make up approximately 53.6%of our revenue for the year ended December 31,2021:Residential Facilities.Residential facilities,including the South Texas Family Residential Center(discussed below),provide s

147、pace and residential services in an open and safe environment to women with children.Residential facilities offer services including,but not limited to,educational programs,medical care,recreational activities,counseling,and access to religious and legal services.Humanitarian Aid Efforts.Community f

148、acilities providing a suite of comprehensive service offerings supporting humanitarian aid efforts.Target Hospitality built and currently leases and operates the South Texas Family Residential Center through a sub-lease and services agreement with a national provider of migrant programming,which pro

149、vides management services.Target Hospitality owns and operates the facility by providing on-site services including catering,culinary,management,janitorial and light maintenance.The South Texas Family Residential Center includes 524,000 square feet of building space including residential housing uni

150、ts with 2,400 beds,as well as classrooms,a library,chapels,an infirmary with full medical,dental,pharmaceutical and x-ray capabilities,a dining hall,offices and an industrial laundry center.LUBBOCKALBUQUERQUEROSWELL202020285285NEW MEXICOTEXASRailheadPecos BlueSkillmanPecos SouthPECOS285ORLADelawareO

151、rla NorthODESSAMIDLANDDilleyGOVERNMENTPecos Childrens Center15 In March 2021,the Company entered into a lease and services agreement with a leading national nonprofit organization,backed by a committed United States Government contract,to provide a suite of comprehensive service offerings in support

152、 of their humanitarian aid efforts at a residential housing facility with approximately 4,000 beds.This partnership is consistent with our Government segment and strategy of diversifying end-markets through high quality contracts with premier partners that provide strong revenue visibility and cash

153、flows.We look forward to expanding the products and services of our Government segment through our GSA designations,specifically our designation to maintain the professional services schedule(“PSS”)for logistics service solutions,which are designed to assist federal agencies in procuring comprehensi

154、ve logistics solutions,including planning,consulting,management,and operational support when deploying supplies,equipment,materials and associated personnel.GSAs PSS is a multiple award schedule(“MAS”)contract for innovative solutions,offered to federal,state and local governments,for their professi

155、onal services needs.Having a PSS signifies that we have been vetted as a responsible supplier,our pricing has been determined to be fair and reasonable and we are in compliance with all applicable laws and regulations.PSS is one of the GSAs schedule contracts,which are indefinite delivery,indefinite

156、 quantity(“IDIQ”),long-term contracts under the GSA MAS program.GSA schedule contracts were developed to assist federal employees in purchasing products and services and they contain pre-negotiated prices,delivery terms,warranties,and other terms and conditions which streamline the buying process.Th

157、e Government segment generated 53.6%or$156.3 million of the Companys revenue for the year ended December 31,2021.The map below shows the Companys primary community locations in the Government segment.Hospitality&Facilities Services-South The HFS South segment serves an area that stretches across the

158、 southeast corner of New Mexico and a large portion of western Texas,encompassing hundreds of thousands of square miles and dozens of counties.This geographic area,also known as the Permian Basin,is one of the worlds oldest natural resource producing regions.Our customers utilize both 16 unconventio

159、nal and conventional development techniques,encompassing multiple stacked development zones,which increases the potential recoverable resource and lengthens their development lifecycle.While understanding the significant economic potential in this region,Target entered the market in 2012,ahead of ma

160、ny of our competitors.We started in HFS South with an 80-bed community in Pecos,TX.As of December 31,2021,with 15 communities and approximately 7,400 beds across HFS South,we offer the largest network of turnkey specialty rental accommodations and hospitality services,with the next largest provider

161、having 5,000 beds or less and only six locations.The HFS-South segment generated 40.1%or$117.0 million of the Companys revenue for the year ended December 31,2021.The map below shows the Companys primary community locations in the HFS South region.Hospitality&Facilities Services-Midwest The HFS Midw

162、est segment serves an area that spans North Dakota and is home to the largest concentration of natural resource development in the geographic region.In 2009,we entered this regional market and built our first community in Williston,North Dakota for a large natural resources services company.The comm

163、unity was the first of its kind in the region and provided specialty rental and hospitality services for more than 150 remote workers.As of December 31,2021,the Company had four community locations and 1,067 available beds serving customers in the HFS Midwest region.We are the largest specialty rent

164、al and hospitality services provider in the region with approximately 50%of the market share with the next closest direct competitor having less than 15%of the market share.The HFS-Midwest segment generated 1.4%or$4.2 million of the Companys revenue for the year ended December 31,2021.The map below

165、shows the Companys community locations in the region.17 TCPL Keystone Future Pipeline Services Plans We contracted with TC Energy to construct,deliver,cater and manage all accommodations and hospitality services in conjunction with the planned construction of the TCPL Keystone project.Our contract w

166、ith TC Energy was executed in 2013.In October 2018,we received partial release for certain pre-work related to the project and performed a limited scope of work based on work orders issued by TC Energy.During 2020,activity related to this segment increased to a level that resulted in revenue exceedi

167、ng 10%of our consolidated revenues for the first time and as such,this segment became a reportable segment in 2020.In January 2021,the TCPL Keystone project was suspended due to the revocation of the Keystone XL Presidential Permit.Consequently,on July 23,2021,the Company executed a Termination and

168、Settlement Agreement(the“Termination and Settlement Agreement”)terminating the Companys contract with TC Energy that was originated in 2013.As a result of the Termination and Settlement Agreement,no further activity is expected in this segment.All Other In addition to the four reportable segments ab

169、ove,the Company:(i)has facilities and operations for one community in Oklahoma;and(ii)provides catering and other services to communities and other workforce accommodation facilities for the natural resource development industries not owned by Target Hospitality(“Facilities Management”).The Company

170、provides specialty rental and hospitality services including concierge,culinary,catering,maintenance,security,janitorial and related services at facilities owned by other companies.We currently provide Facilities Management,culinary and catering services and site services for one facility located in

171、 Wyoming for which we do not own the specialty rental accommodation assets.MONTANANORTHDAKOTA42131324WillistonWatford CityStanleyNORTH DAKOTA1.Judson Lodge2.Stanley Hotel3.Watford City Lodge4.Williams County LodgeREGION HFS-MIDWESTLODGE NETWORK18 Segment information for December 31,2021 and 2020 For

172、 additional information on our segments,including Government,HFS-South,HFS-Midwest,TCPL Keystone,and Other,related to December 31,2021 and 2020,refer to Note 23 of our audited consolidated financial statements located in Part II,Item 8 within this Annual Report on Form 10-K.Customers and Competitors

173、 The Companys principal customers include the U.S.Government,government contractors,investment grade natural resource development companies and energy infrastructure companies.For the year ended December 31,2021,we had two customers,who accounted for approximately 34.7%and 18.9%of our revenue,respec

174、tively.For the year ended December 31,2021,our top five customers accounted for approximately 68%of our revenue.For the year ended December 31,2020,we had two customers,who accounted for 28.1%and 18.6%of our revenue,respectively.For the year ended December 31,2019,we had two customers,who accounted

175、for 20.8%and 12.5%of our revenue,respectively.Our primary competitors within our HFS segments for vertically integrated modular accommodations are Cotton Logistics,Permian Lodging,Aries,and Civeo.For hospitality solutions and facilities management,our three primary competitors are:Sodexo,Aramark and

176、 Compass.Our primary competitors in the Government segment are PAE Incorporated,Vectrus and ABM Industries.The Companys Community and Services Contracts For the year ended December 31,2021,revenue related to the HFS South and HFS Midwest segments represented 40.1%and 1.4%of our revenue,respectively,

177、revenue related to our Government segment represented 53.6%of our revenue,revenue related to our TCPL Keystone segment represented 4.2%of our revenue,and Other revenue represented less than 1%of our revenue.Lease and Services Agreements The companys operations in the HFS-South and HFS Midwest segmen

178、ts are primarily conducted through committed contractual minimum revenue arrangements with its customers.For certain of the Companys largest customers,it uses network lease and services agreements(“NLSAs”)which cover the customers full enterprise and are exclusive agreements with set terms and rates

179、 for all geographic regions in which the Company operates.The NLSAs obligate the customers to use the Companys facilities and services across the U.S.The companys NLSAs have an average set term of two to three years.Certain other customers are subject to lease and services agreements(“LSAs”)which ar

180、e more limited in geographic scope and cover only specified areas with the same structural commercial terms as the NLSAs.The LSAs have terms that range from six to thirty six months and generally do not have termination provisions in favor of the customer.The company also has master services agreeme

181、nts(“MSAs”)with certain customers which are typically exclusive arrangements without the committed component of the NLSAs and LSAs and no minimum contractual liability for the customer.The Companys operations in the Government segment includes the South Texas Family Residential Center pursuant to a

182、contractual arrangement(the“Family Residential Center Contract”or“FRCC”)with a national provider of migrant 19 programming(the“FRCC Partner”).This FRCC provides for the Companys sublease and ongoing operation of the South Texas Family Residential Center through September 2026.Our FRCC Partner depend

183、s on the U.S.government and its funding.Any impasse or delay in reaching a federal budget agreement,debt ceiling or government shutdowns,and the subsequent lack of funding to the applicable government entity,could result in material payment delays,payment reductions or contract terminations.The gove

184、rnment may terminate the contract with our FRCC Partner for convenience on 90 days notice;in the event this should occur,our FRCC Partner may terminate its agreement with us upon 60 days notice.Other Government Segment LSA The Company also operates several facilities in connection with a lease and s

185、ervices agreement with a leading national nonprofit organization(“NNO Partner”),backed by a committed United States Government contract,to provide a suite of comprehensive service offerings in support of their humanitarian aid efforts.The contract,including subsequent change orders and amendments,ha

186、s a value of approximately$129 million and is fully committed over its initial one-year term,which commenced March 18,2021.The Company continues to have active discussions with our NNO Partner regarding extending the contract.These discussions include a variety of possible outcomes,including options

187、 for multiyear terms and expansion opportunities considerably greater than the current contract.The renewal discussions,and requisite notice and approval procedures,have progressed in normal business course and the Company remains confident of a successful outcome to these discussions and the contin

188、uation of its critical humanitarian support.Our NNO Partner depends on the U.S.government and its funding.Any impasse or delay in reaching a federal budget agreement,debt ceiling or government shutdowns,and the subsequent lack of funding to the applicable government entity,could result in material p

189、ayment delays,payment reductions or contract terminations.The government may terminate this contract with our NNO Partner for convenience;in the event this should occur,our NNO Partner may terminate its agreement with us for convenience.Regulatory and Environmental Compliance Our business and the bu

190、sinesses of the Companys customers can be affected significantly by federal,state,municipal and local laws and regulations relating to the natural resource and mining industries,food safety and environmental protection.The Company incurs significant costs to comply with these laws and regulations in

191、 operating its business.However,changes in these laws,including more stringent regulations and increased levels of enforcement of these laws and regulations,or new interpretations thereof,and the development of new laws and regulations could impact the Companys business and result in increased compl

192、iance or operating costs associated with its or its customers operations.In addition,our customers include U.S.government contractors,which means that we may,indirectly,be subject to various statutes and regulations applicable to doing business with the U.S.government.U.S.government contracts and gr

193、ants normally contain additional requirements that may increase our costs of doing business,reduce our profits,and expose us to liability for failure to comply with these terms and conditions.If we fail to maintain compliance with these requirements,our contracts may be subject to termination,and we

194、 may be subject to financial and/or other liability under its contracts or under the Federal Civil False Claims Act(the“False Claims Act”).To the extent that these laws and regulations impose more stringent requirements or increased costs or delays upon the Companys customers in the performance of t

195、heir operations,the resulting demand for the Companys services by those customers may be adversely affected.Moreover,climate change laws or regulations could increase the cost of consuming,and thereby reduce demand for natural resources,which could reduce the Companys customers demand for its servic

196、es.The Company cannot predict changes in the level of enforcement of existing laws and regulations,how these laws and regulations may be interpreted or the effect changes in these laws and regulations may have on the Company or its 20 customers or on our future operations or earnings.The Company als

197、o cannot predict the extent to which new laws and regulations will be adopted or whether such new laws and regulations may impose more stringent or costly restrictions on its customers or its operations.Human Capital The Companys key human capital management objectives are to attract,retain and deve

198、lop talent to deliver on the Companys strategy.To support these objectives,the Companys human resources programs are designed to:keep employees safe and healthy;enhance the Companys culture through efforts aimed at making the workplace more inclusive;acquire and retain diverse talent;reward and supp

199、ort employees through competitive pay and benefit programs;develop talent to prepare them for critical roles and leadership positions;and facilitate internal talent mobility to create a high-performing workforce.The Company employed approximately 823 people as of December 31,2021.Our workforce is co

200、mprised of all full-time employees.Of the total population as of December 31,2021,approximately 410 of our employees worked in the HFS-South segment,approximately 20 of our employees worked in the HFS-Midwest segment,no employees worked in the TCPL Keystone segment,approximately 320 of our employees

201、 worked in the Government segment,and approximately 19 of our employees worked in the All Other segment.The remaining 54 employees worked in Corporate.None of the Companys employees are unionized or members of collective bargaining arrangements.The Company focuses on the following in managing its hu

202、man capital:Health and safety:We have a safety program that focuses on implementing management systems,policies and training programs and performing assessments to see that workers are trained properly,and that injuries and incidents are prevented.All of our employees are empowered with stop-work au

203、thority which enables them to immediately stop any unsafe or potentially hazardous working condition or behavior they may observe.We utilize a mixture of indicators to assess the safety performance of our operations,including total recordable injury rate,preventable motor vehicle incidents and corre

204、ctive actions.We also recognize outstanding safety behaviors through us at the local community level.Importantly,during the COVID-19 pandemic,our continuing focus on health and safety enabled us to preserve business continuity without sacrificing our commitment to keeping our colleagues safe.Employe

205、e wellness:The Companys Safe&Healthy program is a comprehensive approach to wellness that encourages healthy behaviors and is intended to raise morale,productivity,and overall employee engagement.The program includes a health assessment,no cost preventive care through the medical plan,two personal p

206、aid days off to be used for a physical and mental health,tobacco cessation support through our medical insurance carrier,and an employee assistance program.Approximately 36%of eligible employees participated in the Health&Safety program in 2021.Inclusion and diversity(“I&D”):Inclusion is how we fost

207、er an environment where various backgrounds are celebrated and encouraged to grow and learn by valuing the skills and expertise a diverse workforce provides.We believe that an inclusive and a diverse team is key to the success of our culture and aim to drive I&D initiatives.The Companys I&D initiati

208、ves are operationalized through three core elements:(1)senior managements endorsement of and alignment with the programs;(2)focused efforts in increasing diversity in the talent pipeline and our hiring;(3)creating an inclusive work environment where differences are welcomed.In addition,the Company h

209、as made hiring and supporting veterans and minorities,especially in leadership roles,a priority.The Company analyzes diversity in the workforce on at least an annual basis and develops action plans from the results to spark dialogue among employees and leaders in an effort to build a more inclusive,

210、diverse and empowered culture at the Company.As of December 31,2021,women constituted approximately 38%of our workforce and self-identified racial or ethnic minorities represented 75%of our workforce.Diversity,Equity and Inclusion are core to our culture,and we believe that a diverse workforce is cr

211、itical to our success.21 Compensation programs and employee benefits:Our compensation and benefits programs provide a package designed to attract,retain and motivate employees.In addition to competitive base salaries,the Company provides a variety of short-term,long-term,and commission-based incenti

212、ve compensation programs to reward performance relative to key financial,human capital and customer experience metrics.We offer comprehensive benefit options including retirement savings plans,medical insurance,prescription drug benefits,dental insurance,vision insurance,accident and critical illnes

213、s insurance,life and disability insurance,health savings accounts,flexible spending accounts,legal insurance,auto/home insurance and identity theft insurance.Employee experience and retention:To evaluate our employee experience and retention efforts,we monitor a number of employee measures,such as e

214、mployee retention.To provide an open and frequent line of communication for all employees,we encourage staff meetings at every lodge.Training and development:The Company is committed to the continued development of its people.We aim for all applicable new hires to attend new hire orientation trainin

215、g within 90 days of hire,which training was delivered virtually during most of 2021.Additionally,we offer a wide array of training solutions(classroom,hands-on and e-learning)for our employees.In 2021,our employees enhanced their skills through training,including safety training,leadership training

216、and equipment-related training from our suppliers.Our performance process encourages performance and development check-ins throughout the year to provide for development at all levels across the Company.Intellectual Property Target Hospitality owns a number of trademarks important to the business.It

217、s material trademarks are registered or pending registration in the U.S.Patent and Trademark Office.The business operates primarily under the Target Hospitality brand.Properties Corporate Headquarters Target Hospitalitys headquarters are located in The Woodlands,Texas.Its executive,financial,account

218、ing,legal,administrative,management information systems and human resources functions operate from this single,leased office.For a list of real property owned material to the operations of Target Hospitality,refer to Part I Item 2 within this Annual Report on Form 10-K.Communities/Owned and Leased R

219、eal Estate Target Hospitality operates 28 communities,of which it owns the underlying real property of 43%,leases the underlying real property of 39%,and both owns and leases the underlying real property of 7%.The remaining 11%are customer sites.Available Information Our website address is .We make

220、available,free of charge through our website,our Annual Report on Form 10-K,Quarterly Reports on Form 10-Q,Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a)or 15(d)of the Securities Exchange Act of 1934(the“Exchange Act”)as soon as reasonably pr

221、acticable after such documents are electronically filed with,or furnished to,the United States Securities and Exchange Commission(the“SEC”).The SEC maintains an internet website at www.sec.gov that contains reports,proxy and information statements and other information regarding Target Hospitality C

222、orp.22 Item 1A.Risk Factors Risk Factors Summary Below is a summary of the principal factors that make an investment in our common stock speculative or risky.This summary does not address all of the risks that we face.Additional discussion of the risks summarized in this risk factor summary,and othe

223、r risks that we face,can be found immediately following this summary and should be carefully considered,together with other information in this Annual Report on Form 10-K and our other filings with the SEC before making an investment decision regarding our common stock.Operational Risks Our operatio

224、ns are and will be exposed to operational,economic,political and regulatory risks.The global COVID-19 pandemic and government requirements to mandate COVID-19 vaccination has impacted our business.We face significant competition in the specialty rental sector.We depend on several significant custome

225、rs.The loss of one or more such customers or the inability of one or more such customers to meet their obligations could adversely affect our results of operations.Our business depends on the quality and reputation of the Company and its communities,and any deterioration in such quality or reputatio

226、n could adversely impact its market share,business,financial condition or results of operations.We derive a substantial portion of our revenue from the Government segment.The loss of,or a significant decrease in revenues from,any customer in this concentrated segment could seriously harm our financi

227、al condition and results of operations.Our business may be adversely affected by periods of low commodity prices or unsuccessful exploration results which may decrease customers spending and our results.Demand for our products and services is sensitive to changes in demand within a number of key ind

228、ustry end-markets and geographic regions Increased operating costs and obstacles to cost recovery due to the pricing and cancellation terms of our specialty rental and hospitality services contracts may constrain its ability to make a profit.Our future operating results may fluctuate,fail to match p

229、ast performance,or fail to meet expectations.Financial Accounting Risks If we determine that our goodwill and intangible assets have become impaired,we may incur impairment charges,which would negatively impact our reported operating results.The valuation of our Private Warrants could cause volatili

230、ty in our net income(loss).Social,Political and Regulatory Risks Failure to comply with government regulations related to food and beverages may subject us to liability.Unanticipated changes in our tax obligations,the adoption of a new tax legislation,or exposure to additional income tax liabilities

231、 could affect profitability.We are subject to various laws and regulations including those governing our contractual relationships.Obligations and liabilities under these laws and regulations may materially harm our business.We are subject to evolving public disclosure,financial reporting and corpor

232、ate governance expectations and regulations that impact compliance costs and risks of noncompliance.23 Growth,Development and Financing Risks We may not be able to successfully acquire and integrate new operations,which could cause our business to suffer.Global,national or local economic movements c

233、ould have a material adverse effect on our business.Information Technology and Privacy Risks Any failure of our management information systems could disrupt our business and result in decreased revenue and increased overhead costs.Our business could be negatively impacted by security threats,includi

234、ng cyber-security threats.Risks Related to Our Indebtedness Our leverage may make it difficult for us to service our debt and operate our business.Global capital and credit markets conditions could materially adversely affect our ability to access the capital and credit markets or the ability of key

235、 counterparties to perform their obligations to it.We are,and may in the future become,subject to covenants that limit our operating and financial flexibility and,if we default under our debt covenants,we may not be able to meet our payment obligations.Risks Related to Ownership of Our Common Stock

236、We have incurred and expect to continue to incur significantly increased costs as a result of operating as a public company,and our management is required to devote substantial time to compliance efforts.Our principal stockholder has substantial control over our business,which may be disadvantageous

237、 to other stockholders.We are an“emerging growth company”and as a result of the reduced disclosure and governance requirements applicable to emerging growth companies,our common stock may be less attractive.Risk Factors Operational Risks Our operations are and will be exposed to operational economic

238、,political and regulatory risks.Our operations could be affected by economic,political and regulatory risks.These risks include:multiple regulatory requirements that are subject to change and that could restrict our ability to build and operate our communities and other sites;inflation,recession,flu

239、ctuations in interest rates;compliance with applicable export control laws and economic sanctions laws and regulations;trade protection measures,including increased duties and taxes,and import or export licensing requirements;ownership regulations;compliance with applicable antitrust and other regul

240、atory rules and regulations relating to potential future acquisitions;different local product preferences and product requirements;24 challenges in maintaining,staffing and managing national operations;different labor regulations;potentially adverse consequences from changes in or interpretations of

241、 tax laws;political and economic instability;federal government budgeting and appropriations;enforcement of remedies in various jurisdictions;the risk that the business partners upon whom we depend for technical assistance or management and acquisition expertise will not perform as expected;differen

242、ces in business practices that may result in violation of our policies including but not limited to bribery and collusive practices.These and other risks could have a material adverse effect on our business,results of operations and financial condition.Public health crises such as the COVID-19 pande

243、mic and their impact on business and economic conditions and government requirements could adversely affect our business,financial condition or results of operations.We are subject to risks related to public health crises,such as the COVID-19 pandemic and the various measures that are implemented to

244、 protect public health,which can adversely affect the economy and financial markets.We have implemented business continuity plans to continue to provide specialty rental and hospitality services to our customers and to support our operations,while taking health and safety measures such as incentiviz

245、ing employee vaccination,implementing worker distancing measures and masking measures and using a remote workforce where possible.There can be no assurance that the continued spread of COVID-19,or any future health public crisis,and efforts to contain such public health crisis(including,but not limi

246、ted to,vaccination,social distancing and masking policies,restrictions on travel and reduced operations)will not materially impact our results of operations and financial position.In particular,the continued spread of COVID-19 and its variants and efforts to contain the virus could:impact customer d

247、emand for our specialty rental and hospitality services;reduce the availability and productivity of our employees;cause us to experience an increase in costs as a result of our emergency and business continuity measures;impact our ability to complete any strategic plans on time,or at all;and cause o

248、ther unpredictable events.Additionally,on September 9,2021,President Biden released his COVID-19 Action Plan,Path Out of the Pandemic(the“Plan”),with the stated goal of getting more people vaccinated.As part of the Plan,President Biden signed Executive Order 14042,Ensuring Adequate COVID Safety Prot

249、ocols for Federal Contractors(the“Order”).Pursuant to the Order,on September 24,2021,the Safer Federal Workforce Task Force(the“Task Force”)released guidance for U.S.Government contractors and their subcontractors,which includes us,including mandatory vaccination of all employees working on or for a

250、 government contract,either directly or indirectly,by January 4,2022(subject to medical and religious exemptions).We have been put on notice by our Government Segment partners of the COVID-19 vaccination requirement for their subcontractors.The Order has been challenged in court and its ultimate sta

251、tus is uncertain.25 It is not currently possible to predict with any certainty the outcome of the legal challenges of the Order,or the requirements for U.S.Government contractors and their subcontractors.Any requirement to mandate COVID-19 vaccination of our workforce or require our unvaccinated emp

252、loyees to be tested weekly could result in employee attrition and difficulty securing future labor needs,which could adversely affect our business,financial condition or results of operations.In addition,any requirement to impose obligations on our suppliers under the Order could impact the price an

253、d continuity of supply of materials and our business,financial condition or results of operations could be adversely affected.We face significant competition as a provider of specialty rental and hospitality services in the specialty rental sector.If we are unable to compete successfully,we could lo

254、se customers and our revenue and profitability could decline.Although our competition varies significantly by market,the specialty rental and hospitality services industry,in general,is highly competitive.We compete on the basis of a number of factors,including equipment availability,quality,price,s

255、ervice,reliability,appearance,functionality and delivery terms.We may experience pricing pressures in our operations in the future as some of our competitors seek to obtain market share by reducing prices.We may also face reduced demand for our products and services if our competitors are able to pr

256、ovide new or innovative products or services that better appeal to our potential customers.In each of our current markets,we face competition from national,regional and local companies who have an established market position in the specific service area.We expect to encounter similar competition in

257、any new markets that we may enter.Some of our competitors may have greater market share,less indebtedness,greater pricing flexibility,more attractive product or service offerings,or superior marketing and financial resources.Increased competition could result in lower profit margins,substantial pric

258、ing pressure,and reduced market share.Price competition,together with other forms of competition,may materially adversely affect our business,results of operations,and financial condition.We depend on several significant customers.The loss of one or more such customers or the inability of one or mor

259、e such customers to meet their obligations could adversely affect our results of operations.We depend on several significant customers.For the year ended December 31,2021,our 5 largest customers accounted for 68.2%of our total revenue.For a more detailed explanation of our customers,see the section

260、of this Annual Report on Form 10-K entitled“Business.”The loss of any one of our largest customers in any of our business segments or a sustained decrease in demand by any of such customers could result in a substantial loss of revenues and could have a material adverse effect on our results of oper

261、ations.In addition,the concentration of customers in the industries in which we operate may impact our overall exposure to credit risk,either positively or negatively,in that customers may be similarly affected by changes in economic,political and industry conditions.As a result of our customer conc

262、entration,risks of nonpayment and nonperformance by our counterparties are a concern in our business.We are subject to risks of loss resulting from nonpayment or nonperformance by our customers.Failure to manage our credit risk and receive timely payments on our customer accounts receivable may resu

263、lt in the write-off of customer receivables.If we are not able to manage credit risk,or if a number of significant customers should have financial difficulties at the same time,our credit and equipment losses would increase above historical levels.If this should occur,our business,financial conditio

264、n,and results of operations may be materially and adversely affected.The inability or failure of our significant customers to meet their obligations to us or their insolvency or liquidation may adversely affect our financial results.Our business depends on the quality and reputation of the Company a

265、nd its communities.Any deterioration in the quality and reputation of the Company or public resistance,potential legal challenges to,and increasing scrutiny of our industry,could affect our ability to obtain new contracts or result in the loss of existing contracts and negatively impact our brand or

266、 reputation,each of which could have a material adverse effect on our business,financial condition and results of operations.Many factors can influence our reputation and the value of our communities,including quality of services,food quality and safety,availability and management of scarce natural

267、resources,supply chain management,diversity,human rights and support for local communities.In addition,events that may be beyond our control could affect the reputation of one or more of our communities or more generally impact the reputation of the Company,including protests directed at government

268、immigration policies,violent incidents at one or more communities or other sites or criminal activity.26 Reputational value is also based on perceptions,and broad access to social media makes it easy for anyone to provide public feedback that can influence perceptions of Target Hospitality and its c

269、ommunities,and it may be difficult to control or effectively manage negative publicity,regardless of whether it is accurate.While reputations may take decades to build,negative incidents can quickly erode trust and confidence,particularly if they result in adverse mainstream and social media publici

270、ty,governmental investigations or penalties,or litigation.Negative incidents could lead to tangible adverse effects on our business,including customer boycotts,loss of customers,loss of development opportunities or employee retention and recruiting difficulties.A decline in the reputation or perceiv

271、ed quality of our communities or corporate image could negatively affect its market share,reputation,business,financial condition or results of operations.Increased public resistance,including negative media attention and public opinion,to the use of private companies for the management and operatio

272、n of facilities supporting immigration,may negatively impact our brand and the public perception of the Company.Maintaining and promoting our brand will depend largely on our ability to differentiate ourselves from the direct participants in the ongoing conflict around immigration policy.If we are p

273、ortrayed negatively in the press or associated with the ongoing social and political debates around immigration policy,our public image and reputation could be irreparably tarnished and our brand could be harmed.If we are unable to counter such negative media attention effectively,investors may lose

274、 confidence in our business,which could result in a decline in the trading price of our common stock,and our business could be materially adversely affected.Furthermore,our relationship with the U.S.government subjects us and our government contractor customers to unique risks such as unanticipated

275、increased costs and litigation that could materially adversely affect our or their business,financial condition,or results of operations.These operational risks and others associated with privately managing residential facilities could result in higher costs associated with staffing and lead to incr

276、eased litigation.Lawsuits,to which we are not a party,have challenged the governments policy of detaining migrant families,and government policies with respect to family immigration may impact the demand for our facilities.Any court decision or government action that impacts our customers existing c

277、ontracts with the government could impact our subcontracts for the facilities and result in a reduction in demand for our services or reputational damage to us,and require us to devote a significant amount of time and expense to the defense of our operations and reputation,which could materially aff

278、ect our business,financial condition,and results of operations.We derive a substantial portion of our revenue from the Government segment.The loss of,or a significant decrease in revenues from,any customer in this concentrated segment could seriously harm our financial condition and results of opera

279、tions.We derive a significant portion of our revenues from our subcontracts with government contractors.These revenues depend on the U.S.government and its contractors receiving sufficient funding and providing it with timely payment under the terms of our contracts.If the applicable government enti

280、ty does not receive sufficient appropriations to cover its contractual obligations,it may delay or reduce payment to its contractors and,as a result,our government contractor customers may delay or reduce payments to or terminate their contracts with us.Any future impasse or struggle impacting the f

281、ederal governments ability to reach agreement on the federal budget,debt ceiling or any future federal government shut downs could result in material payment delays,payment reductions or contract terminations.Additionally,our current and potential future government contractor customers may request i

282、n the future that we reduce our contract rates or forego increases to those rates as a way for those contractors to control costs and help their government customers to control their spending and address their budgetary shortfalls.For additional information regarding our operation of the Government

283、segment,see“BusinessBusiness OperationsGovernment”elsewhere in this Form 10-K.The U.S.government and,by extension,our U.S.government contractor customers,may also from time to time adopt,implement or modify certain policies or directives that may adversely affect our business.For example,while the U

284、.S.government is currently using private immigration sites like the South Texas Family Residential Center,federal,state or local governmental partners may in the future choose to undertake a review of their utilization of privately operated facilities,or may cancel or decide not to renew existing co

285、ntracts with their government contractors,who may,in turn,cancel or decide not to renew their contracts with us.Changes in government policy,presidential administration or other changes in the political landscape relating to immigration policies may similarly result in a decline in our revenues in t

286、he Government segment.In addition,lawsuits,to which we are not a party,have challenged the U.S.governments policy of detaining migrant families,and government policies with respect to immigration may impact the demand for our facilities 27 and any facilities that we may operate in the future.Any cou

287、rt decision or government action that impacts our existing contracts or any future contracts for similar facilities could materially affect our cash flows,financial condition and results of operations.Further,we may not be able to renew our agreements with the government contractors or enter new agr

288、eements with these contractors.Any renewals or new agreements we may enter may be on terms that are materially less favorable to us than those in our current agreements.Our natural resource development customers are exposed to a number of unique operating risks and challenges which could also advers

289、ely affect us.Demand for our services is sensitive to the level of exploration,development and production activity of,and the corresponding capital spending by,natural resource development companies.The natural resource development industries willingness to explore,develop,and produce depends largel

290、y upon the availability of attractive resource prospects and the prevailing view of their future cash flows.Prices for energy products can be subject to large fluctuations in response to changes in the supply of and demand for these commodities,market uncertainty,and a variety of other factors that

291、are beyond our control.This volatility causes natural resource development companies to change their strategies and expenditure levels.Accordingly,we could be impacted by disruptions to our customers operations caused by,among other things,any one of or all of the following singularly or in combinat

292、ion:worldwide economic activity including growth in developing countries,U.S.and international tax policies,pricing and demand for the natural resources being produced at a given project(or proposed project);national government political requirements,including the ability of the Organization of Petr

293、oleum Exporting Companies(“OPEC”)to set and maintain production levels and government policies which could nationalize or expropriate natural resource development exploration,production,refining or transportation assets;the level of activity in U.S.shale development;unexpected problems,higher costs

294、and delays during the development,construction,and project start-up which may delay the commencement of production;unforeseen and adverse geological,geotechnical,and seismic conditions;lack of availability of sufficient water or power to maintain their operations;lack of availability or failure of t

295、he required infrastructure necessary to maintain or to expand their operations;the breakdown or shortage of equipment and labor necessary to maintain their operations;risks associated with the natural resource industry being subject to various regulatory approvals.Such risks may include governmental

296、 actions;interruptions to the operations of our customers caused by industrial accidents or disputes or weather conditions and natural disasters;and delays in or failure to commission new infrastructure in timeframes so as not to disrupt customer operations.The carrying value of our communities coul

297、d be reduced by extended periods of limited or no activity by our customers,which would require us to record impairment charges equal to the excess of the carrying value of the communities over 28 fair value.We may incur asset impairment charges in the future,which charges may affect negatively our

298、results of operations and financial condition as well as our borrowing base.Our business is contract intensive.Servicing existing contracts may lead to customer disputes or delays in receipt of payments,and failure to retain our current customers,renew existing customer contracts,and obtain new cust

299、omer contracts,or the termination of existing contracts,could adversely affect our business.Our business is contract intensive and we are party to many contracts with customers.We periodically review our compliance with contract terms and provisions.If customers were to dispute our contract determin

300、ations,the resolution of such disputes in a manner adverse to our interests could negatively affect sales and operating results.In the past,our customers have withheld payment due to contract or other disputes,which has delayed our receipt of payments.While we do not believe any reviews,audits,delay

301、ed payments,or other such matters should result in material adjustments,if a large number of our customer arrangements were modified or payments withheld in response to any such matter,the effect could be materially averse to our business or results of operations.Our success depends on our ability t

302、o retain our current customers,renew or replace our existing customer contracts,and obtain new business.Our ability to do so generally depends on a variety of factors,including overall customer expenditure levels and the quality,price and responsiveness of our services,as well as our ability to mark

303、et these services effectively and differentiate ourselves from our competitors.We cannot assure you that we will be able to obtain new business,renew existing customer contracts at the same or higher levels of pricing,or at all,or that our current customers will not turn to competitors,cease operati

304、ons,elect to self-operate,or terminate contracts with us.In the context of a potential depressed commodity price environment,our customers may not renew contracts on terms favorable to us or,in some cases,at all,and we may have difficulty obtaining new business.As a result,our customers may choose t

305、o terminate their contracts.The likelihood that a customer may seek to terminate a contract is increased during periods of market weakness as we encountered with various customers during the COVID-19 pandemic.Further,if any of our customers fail to reach final investment decisions with respect to pr

306、ojects for which such customers have already awarded us contracts to provide related accommodations,those customers may terminate such contracts.Customer contract cancellations,the failure to renew a significant number of our existing contracts,or the failure to obtain new business would have a mate

307、rial adverse effect on our business,results of operations and financial condition.We may be adversely affected if customers reduce their specialty rental and hospitality services outsourcing.Our business and growth strategies depend in large part on customers outsourcing some or all of the services

308、that we provide.We cannot be certain that these customer preferences for outsourcing will continue or that customers that have outsourced accommodations will not decide to perform these functions themselves or only outsource accommodations during the development or construction phases of their proje

309、cts.In addition,labor unions representing customer employees and contractors may oppose outsourcing accommodations to the extent that the unions believe that third-party accommodations negatively impact union membership and recruiting.The reversal or reduction in customer outsourcing of accommodatio

310、ns could negatively impact our financial results and growth prospects.Our operations could be subject to natural disasters and other business disruptions,which could materially adversely affect our future revenue and financial condition and increase its costs and expenses.Our operations could be sub

311、ject to natural disasters and other business disruptions such as fires,floods,hurricanes,earthquakes,outbreaks of epidemic or pandemic disease and terrorism,which could adversely affect its future revenue and financial condition and increase its costs and expenses.For example,extreme weather,particu

312、larly periods of high rainfall,hail,tornadoes,or extreme cold,in any of the areas in which we operate may cause delays in our community construction activities or result in the cessation of customer operations at one or more communities for an extended period of time.See“Risk FactorsWe are exposed t

313、o various possible claims relating to our business and our insurance may not fully protect us.”See“Managements Discussion and Analysis of Financial Condition and Results of OperationsFactors Affecting Results of OperationsNatural Disasters or Other Significant Disruption.”In addition,the occurrence

314、and threat of terrorist attacks may directly or indirectly affect economic conditions,which could in turn adversely affect demand for our communities and services.In the event of a major natural or man-made disaster,we could experience loss of life of our employees,destruction of our communities or

315、other sites,or business interruptions,any of which may materially adversely 29 affect our business.If any of our communities were to experience a catastrophic loss,it could disrupt our operations,delay services,staffing and revenue recognition,and result in expenses to repair or replace the damaged

316、facility not covered by asset,liability,business continuity or other insurance contracts.Also,we could face significant increases in premiums or losses of coverage due to the loss experienced during and associated with these and potential future natural or man-made disasters that may materially adve

317、rsely affect our business.In addition,attacks or armed conflicts that directly impact one or more of our properties or facilities could significantly affect our ability to operate those properties or communities and thereby impair our results of operations.More generally,any of these events could ca

318、use consumer confidence and spending to decrease or result in increased volatility in the global economy and worldwide financial markets.Any of these occurrences could have a material adverse effect on our business,results of operations and financial condition.Construction risks exist which may adve

319、rsely affect our results of operations.There are a number of general risks that might impinge on companies involved in the development,construction and installation of facilities as a prerequisite to the management of those assets in an operational sense.We are exposed to the following risks in conn

320、ection with our construction activities:the construction activities of our accommodations are partially dependent on the supply of appropriate construction and development opportunities;development approvals,slow decision making by counterparties,complex construction specifications,changes to design

321、 briefs,legal issues,and other documentation changes may give rise to delays in completion,loss of revenue,and cost over-runs which may,in turn,result in termination of accommodation supply contracts;other time delays that may arise in relation to construction and development include supply of labor

322、,scarcity of construction materials,real estate or leasing issues,lower than expected productivity levels,inclement weather conditions,land contamination or environmental claims,cultural heritage claims,difficult site access,or industrial relations issues;objections to our activities or those of our

323、 customers aired by aboriginal or community interests,political,environment and/or neighborhood groups which may cause delays in the granting or approvals and/or the overall progress of a project;where we assume design responsibility,there is a risk that design problems or defects may result in rect

324、ification and/or costs or liabilities which we cannot readily recover;and there is a risk that we may fail to fulfill our statutory and contractual obligations in relation to the quality of our materials and workmanship,including warranties and defect liability obligations.Demand for our products an

325、d services is sensitive to changes in demand within a number of key industry end-markets and geographic regions.Our financial performance is dependent on the level of demand for our facilities and services,which is sensitive to the level of demand within various sectors,in particular,the natural res

326、ource development and government end-markets.Each of these sectors is influenced not only by the state of the general global economy but by a number of more specific factors as well.For example,demand for workforce accommodations within the natural resources sector may be materially adversely affect

327、ed by a decline in global commodity prices.Demand for our facilities and services may also vary among different localities or regions.The levels of activity in these sectors and geographic regions may also be cyclical,and we may not be able to predict the timing,extent or duration of the activity cy

328、cles in the markets in which we or our key customers operate.A decline or slowed growth in any of these sectors or geographic regions could result in reduced 30 demand for our products and services,which may materially adversely affect our business,results of operations,and financial condition.Certa

329、in of our major communities are located on land subject to leases.If we are unable to renew a lease,we could be materially and adversely affected.Certain of our major communities are located on land subject to leases.Accordingly,while we own the accommodations assets,we only own a leasehold interest

330、 in those properties.If we are found to be in breach of a lease,we could lose the right to use the property.In addition,unless we can extend the terms of these leases before their expiration,as to which no assurance can be given,we will lose our right to operate our facilities located on these prope

331、rties upon expiration of the leases.In that event,we would be required to remove our accommodations assets and remediate the site.Generally,our leases have an average term of three years and generally contain unilateral renewal provisions for up to seven additional years.We can provide no assurances

332、 that we will be able to renew our leases upon expiration on similar terms,or at all.If we are unable to renew leases on similar terms,it may have an adverse effect on our business.Third parties may fail to provide necessary services and materials for our communities and other sites.We are often dep

333、endent on third parties to supply services and materials for our communities and other sites.We typically do not enter into long-term contracts with third-party suppliers.We may experience supply problems as a result of logistical,financial or operating difficulties or the failure or consolidation of our suppliers.We may also experience supply problems as a result of shortages and discontinuations