Core Viewpoint - Target Hospitality Corp has announced a multi-year lease and services agreement to construct and provide comprehensive facility services for a regional data center campus in the Southwestern United States, indicating a strategic expansion into the technology infrastructure sector [1][5]. Group 1: Contract Details - The Data Center Community Contract has an initial term through September 2027 and is expected to generate approximately $43 million in committed minimum revenue over this period [3]. - The company anticipates realizing about $5 million in revenue from this contract in 2025 [3]. Group 2: Community Construction and Capacity - Target will construct a purpose-built Data Center Community that will initially support 250 individuals, with the potential to expand to approximately 1,500 individuals as demand grows [2]. - The construction will utilize a portion of the existing asset portfolio, resulting in a minimal net capital investment of approximately $6 to $9 million in 2025 [4]. Group 3: Strategic Implications - This agreement highlights Target's capability to deliver comprehensive turnkey solutions across diverse commercial end-markets, capitalizing on over $1 trillion in committed technology infrastructure investments announced since January 2025 [5]. - The contract broadens the company's customer reach and demonstrates its ability to support the growing demand in the technology infrastructure sector [6].

[PART I — FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including balance sheets, statements of comprehensive income (loss), statements of changes in stockholders' equity, and statements of cash flows, along with detailed notes explaining the company's accounting policies, revenue recognition, asset composition, debt structure, equity changes, and other financial details for the periods ended June 30, 2025, and December 31, 2024 [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets show a significant decrease in total assets and liabilities from December 31, 2024, to June 30, 2025, primarily driven by a substantial reduction in cash and the current portion of long-term debt | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Cash and cash equivalents | $19,237 | $190,668 | $(171,431) | | Total current assets | $83,047 | $249,336 | $(166,289) | | Total assets | $533,714 | $725,774 | $(192,060) | | Current portion of long-term debt, net | $— | $180,328 | $(180,328) | | Total current liabilities | $56,619 | $233,404 | $(176,785) | | Total liabilities | $132,529 | $304,684 | $(172,155) | | Total stockholders' equity | $401,185 | $421,090 | $(19,905) | [Unaudited Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) For the three and six months ended June 30, 2025, the company reported a net loss, a significant decline from net income in the prior year periods, primarily due to decreased revenue and increased service costs | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | | :-------------------- | :----------------------------- | :----------------------------- | :----------- | | Total Revenue | $61,606 | $100,721 | $(39,115) | | Net Income (Loss) | $(14,918) | $18,386 | $(33,304) | | Basic EPS | $(0.15) | $0.18 | $(0.33) | | Diluted EPS | $(0.15) | $0.18 | $(0.33) | | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------- | :----------------------------- | :----------------------------- | :----------- | | Total Revenue | $131,503 | $207,393 | $(75,890) | | Net Income (Loss) | $(21,377) | $38,769 | $(60,146) | | Basic EPS | $(0.22) | $0.39 | $(0.61) | | Diluted EPS | $(0.22) | $0.38 | $(0.60) | [Unaudited Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity decreased from $421,090 thousand at December 31, 2024, to $401,185 thousand at June 30, 2025, primarily due to net losses, partially offset by stock-based compensation - Total stockholders' equity decreased by **$19,905 thousand** from December 31, 2024 (**$421,090**) to June 30, 2025 (**$401,185**)[16](index=16&type=chunk) - Net loss for the six months ended June 30, 2025, was **$(21,392) thousand** attributable to common stockholders[13](index=13&type=chunk)[16](index=16&type=chunk) - Stock-based compensation, net, contributed **$3,806 thousand** to additional paid-in capital for the six months ended June 30, 2025[16](index=16&type=chunk)[113](index=113&type=chunk) [Unaudited Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly decreased, while net cash used in investing and financing activities increased for the six months ended June 30, 2025, compared to the prior year, leading to a substantial net decrease in cash and cash equivalents | Cash Flow Activity (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------------------- | :----------------------------- | :----------------------------- | :----------- | | Net cash provided by operating | $15,001 | $89,696 | $(74,695) | | Net cash used in investing | $(24,911) | $(16,137) | $(8,774) | | Net cash used in financing | $(161,543) | $(23,187) | $(138,356) | | Net increase (decrease) in cash | $(171,431) | $50,367 | $(221,798) | - The decrease in operating cash flow was driven by **lower cash collections** and **increased interest payments**, partially offset by lower income taxes and operating expenses[144](index=144&type=chunk)[230](index=230&type=chunk) - Financing activities included the full redemption of **$181.4 million of 2025 Senior Secured Notes** and a net draw of **$24 million on the ABL Facility** in 2025[19](index=19&type=chunk)[234](index=234&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of the company's accounting policies, revenue recognition, asset composition, debt structure, equity changes, and other financial details, offering context to the consolidated financial statements [1. Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies](index=9&type=section&id=1.%20Organization%20and%20Nature%20of%20Operations,%20Basis%20of%20Presentation,%20and%20Summary%20of%20Significant%20Accounting%20Policies) Target Hospitality Corp. is a major North American provider of vertically integrated specialty rental and hospitality services, serving natural resources and government sectors. The financial statements are prepared under US GAAP, with revenue recognized over time for services and as earned for operating leases, and construction fees using the percentage of completion method - Company provides vertically integrated specialty rental and comprehensive hospitality services to natural resources and government sectors[21](index=21&type=chunk) - Revenue is recognized from specialty rental and hospitality services (ASC 606) and operating leases (ASC 842). Construction fee income is recognized using the percentage of completion method[28](index=28&type=chunk)[29](index=29&type=chunk)[33](index=33&type=chunk) - Recently issued accounting standards (ASU 2023-09 and ASU 2024-03) are being evaluated for disclosure impact, with no early adoption planned for ASU 2024-03[35](index=35&type=chunk)[36](index=36&type=chunk) [2. Revenue](index=13&type=section&id=2.%20Revenue) Total revenue decreased significantly for both the three and six months ended June 30, 2025, compared to 2024, primarily due to the termination of the PCC Contract and STFRC Contract in the Government segment, partially offset by new construction fee income from the WHS segment and the DIPC Contract reactivation - Total revenue for the six months ended June 30, 2025, was **$131.5 million**, down from **$207.4 million** in 2024[13](index=13&type=chunk)[37](index=37&type=chunk) - The PCC Contract (Government segment) was terminated effective February 21, 2025, contributing **$24.1 million** in revenue for the six months ended June 30, 2025, compared to **$98.0 million** in 2024[39](index=39&type=chunk)[41](index=41&type=chunk) - The STFRC Contract was terminated in August 2024; assets were reactivated under the DIPC Contract effective March 5, 2025, expected to generate **over $246 million in revenue** over five years[38](index=38&type=chunk)[142](index=142&type=chunk) - The new WHS segment generated **$19.2 million in construction fee income** for the six months ended June 30, 2025, from the Workforce Housing Contract[13](index=13&type=chunk)[172](index=172&type=chunk) [3. Specialty Rental Assets, Net](index=17&type=section&id=3.%20Specialty%20Rental%20Assets,%20Net) Net specialty rental assets slightly decreased to $317.4 million as of June 30, 2025, from $320.9 million at December 31, 2024, despite a $15.5 million asset acquisition in January 2025 to support the WHS segment | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Specialty rental assets, net | $317,375 | $320,852 | - Depreciation expense of specialty rental assets was **$27.3 million** for the six months ended June 30, 2025[13](index=13&type=chunk)[44](index=44&type=chunk) - In January 2025, the Company purchased **$15.5 million in assets** (land and specialty rental assets) to support the WHS segment[45](index=45&type=chunk) [4. Other Property, Plant and Equipment, Net](index=17&type=section&id=4.%20Other%20Property,%20Plant%20and%20Equipment,%20Net) Other property, plant and equipment, net, increased to $36.9 million as of June 30, 2025, from $34.9 million at December 31, 2024, primarily due to land acquisition for the WHS segment | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total other property, plant and equipment, net | $36,889 | $34,935 | - Depreciation expense for these assets was **$1.3 million** for the six months ended June 30, 2025[47](index=47&type=chunk) - Approximately **$0.6 million** of the **$15.5 million asset acquisition** in January 2025 was allocated to land within this asset group for the WHS segment[48](index=48&type=chunk) [5. Goodwill and Other Intangible Assets, net](index=19&type=section&id=5.%20Goodwill%20and%20Other%20Intangible%20Assets,%20net) Goodwill remained stable at $41.0 million, attributable to the HFS-South segment. Other intangible assets, primarily customer relationships and tradenames, decreased to $46.1 million net, due to amortization - Goodwill balance: **$41,038 thousand** (June 30, 2025 and Dec 31, 2024), all attributable to HFS-South[50](index=50&type=chunk)[51](index=51&type=chunk) | Intangible Assets (in thousands) | June 30, 2025 Net Book Value | December 31, 2024 Net Book Value | | :------------------------------- | :--------------------------- | :------------------------------- | | Customer relationships | $29,498 | $36,194 | | Non-compete agreement | $178 | $213 | | Tradenames | $16,400 | $16,400 | | Total intangible assets other than goodwill | $46,076 | $52,807 | - Amortization expense for intangible assets was **$6.7 million** for the six months ended June 30, 2025[51](index=51&type=chunk) [6. Accrued Liabilities](index=20&type=section&id=6.%20Accrued%20Liabilities) Total accrued liabilities decreased to $17.2 million as of June 30, 2025, from $25.8 million at December 31, 2024, primarily due to a significant reduction in accrued interest on debt | Accrued Liabilities (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Employee accrued compensation expense | $7,358 | $7,732 | | Other accrued liabilities | $9,591 | $12,139 | | Accrued interest on debt | $219 | $5,911 | | Total accrued liabilities | $17,168 | $25,782 | [7. Debt](index=20&type=section&id=7.%20Debt) The Company fully redeemed its $181.4 million 2025 Senior Secured Notes in March 2025, incurring a $2.4 million loss on extinguishment. The ABL Facility had a $24 million outstanding balance as of June 30, 2025, with $151 million unused capacity. Total debt, net, significantly decreased to $28.8 million - The **$181.4 million 2025 Senior Secured Notes** were fully redeemed on March 25, 2025, resulting in a **$2.4 million loss on extinguishment of debt**[54](index=54&type=chunk)[73](index=73&type=chunk) - ABL Facility outstanding balance: **$24,000 thousand** (June 30, 2025) with **$151 million unused capacity**[12](index=12&type=chunk)[60](index=60&type=chunk)[237](index=237&type=chunk) | Debt (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------ | :------------ | :---------------- | | Finance lease and other financing obligations | $4,754 | $3,311 | | ABL Facility | $24,000 | $— | | 10.75% Senior Secured Notes due 2025, face amount | $— | $181,446 | | Total debt, net | $28,754 | $183,639 | - Interest expense, net, decreased to **$5.3 million** for the six months ended June 30, 2025, from **$8.9 million** in 2024, primarily due to the redemption of the Senior Secured Notes[72](index=72&type=chunk)[200](index=200&type=chunk) [8. Warrant Liabilities](index=26&type=section&id=8.%20Warrant%20Liabilities) The Private Warrants, previously classified as liabilities, expired unexercised on March 15, 2024, resulting in no outstanding warrant liabilities as of June 30, 2025 - Private Warrants expired unexercised on **March 15, 2024**[81](index=81&type=chunk)[203](index=203&type=chunk) - Change in fair value of warrant liabilities was **$0** for the six months ended June 30, 2025, compared to a gain of **$(0.7) million** in 2024[13](index=13&type=chunk)[81](index=81&type=chunk)[203](index=203&type=chunk) [9. Income Taxes](index=26&type=section&id=9.%20Income%20Taxes) The Company reported an income tax benefit of $(4.3) million for the six months ended June 30, 2025, a significant change from an expense of $13.0 million in 2024, primarily due to the net loss before income tax. The effective tax rate for the six months ended June 30, 2025, was 16.6% | Income Tax (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------ | :----------------------------- | :----------------------------- | | Income tax expense (benefit) | $(4,253) | $13,035 | - Effective tax rate for the six months ended June 30, 2025, was **16.6%**, compared to **25.2%** in 2024[82](index=82&type=chunk) - The fluctuation in the tax rate is primarily due to the relationship of income (loss) before income tax[82](index=82&type=chunk) [10. Fair Value of Financial Instruments](index=28&type=section&id=10.%20Fair%20Value%20of%20Financial%20Instruments) The fair values of cash, receivables, payables, and other current liabilities approximate their carrying amounts due to short-term maturities. The fair value of the ABL Facility is based on observable market data, while the Senior Secured Notes were redeemed - Fair value of ABL Facility (**$24,000 thousand**) approximates its carrying amount as of June 30, 2025[89](index=89&type=chunk) - Senior Secured Notes had a carrying amount of **$(180,328) thousand** and fair value of **$(185,075) thousand** as of December 31, 2024, but are no longer outstanding[89](index=89&type=chunk) [11. Commitments and Contingencies](index=28&type=section&id=11.%20Commitments%20and%20Contingencies) The Company is involved in various lawsuits and claims in the ordinary course of business, but management believes the ultimate liability not covered by insurance will not materially impact financial condition or results of operations - Company involved in ordinary course lawsuits and claims[90](index=90&type=chunk) - Management's opinion: no material adverse effect on financial condition or results of operations from these proceedings[90](index=90&type=chunk) [12. Earnings (Loss) per Share](index=28&type=section&id=12.%20Earnings%20%28Loss%29%20per%20Share) The Company reported a basic and diluted loss per share of $(0.15) for the three months and $(0.22) for the six months ended June 30, 2025, compared to positive EPS in the prior year, with potential dilutive securities excluded due to the net loss - Basic and diluted LPS for three months ended June 30, 2025: **$(0.15)**[13](index=13&type=chunk)[92](index=92&type=chunk) - Basic and diluted LPS for six months ended June 30, 2025: **$(0.22)**[13](index=13&type=chunk)[92](index=92&type=chunk) - Potential dilutive securities were anti-dilutive and excluded from LPS calculation for 2025 periods due to net loss[91](index=91&type=chunk)[92](index=92&type=chunk) [13. Stockholders' Equity](index=29&type=section&id=13.%20Stockholders%27%20Equity) As of June 30, 2025, the Company had 99.8 million shares of Common Stock outstanding. Public Warrants expired in March 2024. The stock repurchase program had a remaining capacity of $66.6 million, with no repurchases made in the current period - Common Stock outstanding: **99,778,072 shares** as of June 30, 2025[12](index=12&type=chunk)[94](index=94&type=chunk) - Public Warrants expired on **March 15, 2024**, with no outstanding warrants as of June 30, 2025[99](index=99&type=chunk) - Stock repurchase program had a remaining capacity of approximately **$66.6 million** as of June 30, 2025, with no repurchases made during the three and six months ended June 30, 2025[102](index=102&type=chunk) [14. Stock-Based Compensation](index=31&type=section&id=14.%20Stock-Based%20Compensation) The Company granted new RSUs and PSUs in February and May 2025. The Plan Amendment, approved by stockholders in May 2025, increased authorized shares, leading to the reclassification of liability-based PSUs to equity. Stock option and SAR awards had no unrecognized compensation expense as of June 30, 2025 - Stockholders approved a Plan Amendment on **May 22, 2025**, increasing authorized shares by **5,000,000**, leading to reclassification of liability-based PSUs to additional paid-in capital[106](index=106&type=chunk)[111](index=111&type=chunk) - RSU compensation expense: **$2.1 million** for six months ended June 30, 2025. Unrecognized RSU expense: **$8.2 million** over **2.59 years**[109](index=109&type=chunk) - PSU compensation expense: **$1.7 million** for six months ended June 30, 2025. Unrecognized PSU expense: **$6.0 million** over **2.45 years**[113](index=113&type=chunk) - No unrecognized compensation expense related to stock options or SARs as of June 30, 2025[116](index=116&type=chunk)[120](index=120&type=chunk) [15. Retirement plans](index=38&type=section&id=15.%20Retirement%20plans) The Company offers a 401(k) retirement plan with matching contributions, recognizing $0.6 million in expense for the six months ended June 30, 2025 - 401(k) plan with matching contributions (**100% match on first 3% employee contribution** and **50% match on the next 2% contribution**)[121](index=121&type=chunk) - Matching contributions expense: **$0.6 million** for the six months ended June 30, 2025[121](index=121&type=chunk) [16. Business Segments](index=38&type=section&id=16.%20Business%20Segments) The Company operates in three reportable segments: HFS – South (natural resources), Government (government contracts), and WHS (critical mineral development), plus an "All Other" category. Segment performance is evaluated based on revenue and adjusted gross profit - Reportable segments: HFS – South, Government, WHS, and All Other[122](index=122&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk) | Segment (6 Months Ended June 30, in thousands) | 2025 Revenue | 2024 Revenue | Change (YoY) | 2025 Adj. Gross Profit | 2024 Adj. Gross Profit | Change (YoY) | | :--------------------------------------------- | :----------- | :----------- | :----------- | :--------------------- | :--------------------- | :----------- | | Government | $33,204 | $127,466 | $(94,262) | $18,098 | $101,277 | $(83,179) | | HFS - South | $72,234 | $75,165 | $(2,931) | $21,580 | $25,906 | $(4,326) | | WHS | $20,245 | $— | $20,245 | $4,956 | $— | $4,956 | | All Other | $5,820 | $4,762 | $1,058 | $258 | $(1,659) | $1,917 | [17. Subsequent Events](index=41&type=section&id=17.%20Subsequent%20Events) On August 1, 2025, the Company entered into an agreement for the close-out and settlement of the PCC Contract, which will result in an $11.8 million reimbursement payment to the Company - PCC Contract close-out and settlement agreement on **August 1, 2025**[131](index=131&type=chunk) - Company to receive approximately **$11.8 million reimbursement** for costs incurred post-termination[131](index=131&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, operating results, liquidity, and capital resources. It highlights key business developments, economic factors, and detailed analysis of revenue and expense changes across consolidated and segment-specific operations, along with discussions on critical accounting policies and non-GAAP financial measures [Executive Summary](index=45&type=section&id=Executive%20Summary) Target Hospitality, a leading provider of specialty rental and hospitality services, initiated a new Workforce Housing Contract for the Thacker Pass Project in February 2025, while terminating the PCC Contract and reactivating STFRC assets under the DIPC Contract. Financial performance for Q2 2025 saw decreased revenue and a net loss, with Adjusted EBITDA significantly down - New Workforce Housing Contract with Lithium Nevada for Thacker Pass Project, expected to generate **$153.5 million in revenue** over its initial term, with first occupancy anticipated by **late-2025**[138](index=138&type=chunk)[159](index=159&type=chunk) - PCC Contract terminated **February 21, 2025**, previously contributing **$168 million minimum annual revenue**[139](index=139&type=chunk)[170](index=170&type=chunk) - STFRC Contract assets reactivated under DIPC Contract effective **March 5, 2025**, with an anticipated **$246 million in revenue** over five years[140](index=140&type=chunk)[142](index=142&type=chunk)[171](index=171&type=chunk) - For the three months ended June 30, 2025: Total revenue decreased by **39% to $61.6 million**, net loss was **$(14.9) million** (vs. $18.4 million net income in 2024), and Adjusted EBITDA decreased by **93% to $3.5 million**[145](index=145&type=chunk) [Factors Affecting Results of Operations](index=49&type=section&id=Factors%20Affecting%20Results%20of%20Operations) The Company's operations are indirectly influenced by natural resource commodity price fluctuations, capital market conditions affecting funding, and regulatory compliance. Government policy changes, particularly regarding immigration, and potential impacts from natural disasters or operational disruptions also pose significant risks - Indirect impact from natural resource commodity price fluctuations on workforce demand[151](index=151&type=chunk) - Capital market conditions affect ability to fund growth, with potential for higher interest rates[152](index=152&type=chunk) - Significant portion of revenue from U.S. government contracts, subject to changes in government policy and appropriations[155](index=155&type=chunk)[156](index=156&type=chunk) - Exposure to federal, state, local, and foreign environmental, health, and safety laws and regulations, and risks from natural disasters or other significant disruptions[154](index=154&type=chunk)[157](index=157&type=chunk) [Overview of Our Revenue and Operations](index=50&type=section&id=Overview%20of%20Our%20Revenue%20and%20Operations) The majority of revenue is derived from specialty rental accommodations and vertically integrated hospitality services (69%), with the remainder from leasing lodging facilities (16%) and construction fee income (15%) for the six months ended June 30, 2025. Revenue recognition varies by service type, with construction fees recognized using the percentage of completion method - Revenue composition (6 months ended June 30, 2025): **69% from specialty rental/hospitality services**, **16% from lodging facility leases**, **15% from construction fee income**[158](index=158&type=chunk) - Construction fee income from the Workforce Housing Contract is recognized using the percentage of completion method[161](index=161&type=chunk) [Key Indicators of Financial Performance](index=52&type=section&id=Key%20Indicators%20of%20Financial%20Performance) Management assesses performance using revenue, Adjusted Gross Profit, EBITDA, Adjusted EBITDA, and Discretionary Cash Flows. The Company operates in three reportable segments: HFS – South, Government, and WHS, along with an "All Other" category - Key performance metrics include Revenue, Adjusted Gross Profit, EBITDA, Adjusted EBITDA, and Discretionary Cash Flows[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) - Reportable segments: HFS – South (natural resources in Texas/New Mexico), Government (U.S. government contracts in Texas), WHS (critical mineral development in Nevada)[165](index=165&type=chunk)[166](index=166&type=chunk)[168](index=168&type=chunk) [Key Factors Impacting the Comparability of Results](index=54&type=section&id=Key%20Factors%20Impactin%20the%20Comparability%20of%20Results) Comparability of results is significantly impacted by the termination of the PCC Contract (effective Feb 2025, $73.9 million revenue decrease for 6 months ended June 30, 2025 vs 2024) and the STFRC Contract (terminated Aug 2024), partially offset by the reactivation under the DIPC Contract and new revenue from the WHS segment's Workforce Housing Contract ($19.2 million for 6 months ended June 30, 2025) - PCC Contract termination (**Feb 21, 2025**) led to a **$73.9 million revenue decrease** for the Government segment for the six months ended June 30, 2025, compared to 2024[170](index=170&type=chunk)[218](index=218&type=chunk) - STFRC Contract termination (**Aug 9, 2024**) and subsequent DIPC Contract reactivation (**March 5, 2025**) impacted Government segment revenue, with DIPC generating **$9.1 million** for the six months ended June 30, 2025[171](index=171&type=chunk) - WHS segment generated **$19.2 million in construction fee income** for the six months ended June 30, 2025, from the new Workforce Housing Contract[172](index=172&type=chunk) [Results of Operations](index=55&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's consolidated and segment-specific financial performance for the three and six months ended June 30, 2025, compared to the prior year, highlighting significant changes in revenue, costs, and net income/loss drivers [Consolidated Results of Operations for the three months ended June 30, 2025 and 2024](index=55&type=section&id=Consolidated%20Results%20of%20Operations%20for%20the%20three%20months%20ended%20June%2030,%202025%20and%202024) For the three months ended June 30, 2025, total revenue decreased by 39% to $61.6 million, leading to a net loss of $(14.9) million, primarily due to lower Government segment revenue from contract terminations, partially offset by new WHS construction fee income. Service costs increased due to WHS construction, while specialty rental costs and interest expense decreased - Total revenue decreased by **$39.1 million (39%) to $61.6 million**[174](index=174&type=chunk) - Net income (loss) shifted from **$18.4 million income in 2024 to $(14.9) million loss in 2025**[174](index=174&type=chunk) | Revenue Type (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | | :-------------------------- | :----------------------------- | :----------------------------- | :----------- | | Services income | $40,467 | $67,491 | $(27,024) | | Specialty rental income | $6,716 | $33,230 | $(26,514) | | Construction fee income | $14,423 | $— | $14,423 | - Cost of services increased by **$12.0 million (36%)** due to WHS construction. Specialty rental costs decreased by **$2.7 million (49%)**[174](index=174&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - Interest expense, net, decreased by **$3.3 million (78%)** due to 2025 Senior Secured Notes redemption[174](index=174&type=chunk)[184](index=184&type=chunk) [Consolidated Results of Operations for the six months ended June 30, 2025 and 2024](index=59&type=section&id=Consolidated%20Results%20of%20Operations%20for%20the%20six%20months%20ended%20June%2030,%202025%20and%202024) For the six months ended June 30, 2025, total revenue decreased by 37% to $131.5 million, resulting in a net loss of $(21.4) million. This was driven by significant revenue declines in the Government segment due to contract terminations, partially offset by new WHS construction revenue. Service costs increased due to WHS activity, and a $2.4 million loss on debt extinguishment was recorded - Total revenue decreased by **$75.9 million (37%) to $131.5 million**[186](index=186&type=chunk)[188](index=188&type=chunk) - Net income (loss) shifted from **$38.8 million income in 2024 to $(21.4) million loss in 2025**[186](index=186&type=chunk) | Revenue Type (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------------- | :----------------------------- | :----------------------------- | :----------- | | Services income | $90,574 | $139,889 | $(49,315) | | Specialty rental income | $21,711 | $67,504 | $(45,793) | | Construction fee income | $19,218 | $— | $19,218 | - Cost of services increased by **$10.9 million (15%)** due to WHS construction. Specialty rental costs decreased by **$6.1 million (54%)**[186](index=186&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) - Loss on extinguishment of debt was **$2.4 million** due to 2025 Senior Secured Notes redemption[186](index=186&type=chunk)[199](index=199&type=chunk) - Interest expense, net, decreased by **$3.6 million (41%)** due to 2025 Senior Secured Notes redemption[186](index=186&type=chunk)[200](index=200&type=chunk) [Segment Results](index=63&type=section&id=Segment%20Results) This section details the financial performance of the Company's reportable segments, Government, HFS-South, and WHS, for the three and six months ended June 30, 2025 and 2024, highlighting the impact of contract changes and new business on revenue and adjusted gross profit [Segment Results for the three months ended June 30, 2025 and 2024](index=63&type=section&id=Segment%20Results%20for%20the%20three%20months%20ended%20June%2030,%202025%20and%202024) Government segment revenue decreased by 87% to $7.5 million, and adjusted gross profit decreased by 102% to $(1.1) million, primarily due to contract terminations. HFS-South revenue decreased by 5% to $36.2 million due to lower ADR. WHS segment generated $15.0 million in revenue and $3.7 million in adjusted gross profit from new construction activity | Segment (3 Months Ended June 30, in thousands) | 2025 Revenue | 2024 Revenue | Change (YoY) | 2025 Adj. Gross Profit | 2024 Adj. Gross Profit | Change (YoY) | | :--------------------------------------------- | :----------- | :----------- | :----------- | :--------------------- | :--------------------- | :----------- | | Government | $7,487 | $59,860 | $(52,373) | $(1,080) | $48,844 | $(49,924) | | HFS - South | $36,166 | $38,232 | $(2,066) | $10,547 | $13,065 | $(2,518) | | WHS | $15,042 | $— | $15,042 | $3,687 | $— | $3,687 | | All Other | $2,911 | $2,629 | $282 | $102 | $(234) | $336 | - HFS-South Average Daily Rate (ADR) decreased from **$74.33 in 2024 to $69.62 in 2025**[206](index=206&type=chunk) [Segment Results for the six months ended June 30, 2025 and 2024](index=66&type=section&id=Segment%20Results%20for%20the%20six%20months%20ended%20June%2030,%202025%20and%202024) For the six months ended June 30, 2025, Government segment revenue decreased by 74% to $33.2 million, and adjusted gross profit decreased by 82% to $18.1 million, mainly due to PCC and STFRC contract terminations. HFS-South revenue decreased by 4% to $72.2 million due to lower ADR. WHS segment generated $20.2 million in revenue and $5.0 million in adjusted gross profit from new construction | Segment (6 Months Ended June 30, in thousands) | 2025 Revenue | 2024 Revenue | Change (YoY) | 2025 Adj. Gross Profit | 2024 Adj. Gross Profit | Change (YoY) | | :--------------------------------------------- | :----------- | :----------- | :----------- | :--------------------- | :--------------------- | :----------- | | Government | $33,204 | $127,466 | $(94,262) | $18,098 | $101,277 | $(83,179) | | HFS - South | $72,234 | $75,165 | $(2,931) | $21,580 | $25,906 | $(4,326) | | WHS | $20,245 | $— | $20,245 | $4,956 | $— | $4,956 | | All Other | $5,820 | $4,762 | $1,058 | $258 | $(1,659) | $1,917 | - HFS-South Average Daily Rate (ADR) decreased from **$74.60 in 2024 to $69.85 in 2025**[216](index=216&type=chunk) [Liquidity and Capital Resources](index=67&type=section&id=Liquidity%20and%20Capital%20Resources) The Company relies on cash flow from operations, cash on hand, and its ABL Facility for liquidity. Net cash provided by operating activities decreased significantly to $15.0 million for the six months ended June 30, 2025, while investing activities used $24.9 million (driven by WHS asset acquisition) and financing activities used $161.5 million (due to debt redemption) - Unused available borrowing capacity on ABL Facility: **$151 million** as of June 30, 2025[224](index=224&type=chunk)[237](index=237&type=chunk) - Capital expenditures for six months ended June 30, 2025: **$27.2 million**, including **$15.7 million** for the new WHS segment[228](index=228&type=chunk) | Cash Flow Activity (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $15,001 | $89,696 | | Net cash used in investing activities | $(24,911) | $(16,137) | | Net cash used in financing activities | $(161,543) | $(23,187) | - Net cash used in investing activities for the six months ended June 30, 2025, was driven by a **$15.5 million acquisition of community assets** for the WHS segment[231](index=231&type=chunk) - Net cash used in financing activities for the six months ended June 30, 2025, was primarily due to the **$181.4 million full redemption of the 2025 Senior Secured Notes**[234](index=234&type=chunk) | Cash Requirements (in thousands) | Total | Rest of 2025 | 2026 | 2027 | 2028 | | :------------------------------- | :---- | :----------- | :--- | :--- | :--- | | ABL Facility | $24,000 | — | — | — | $24,000 | | Operating lease obligations | $9,623 | $5,095 | $3,266 | $1,259 | $3 | | Total | $33,623 | $5,095 | $3,266 | $1,259 | $24,003 | [Concentration of Risks](index=72&type=section&id=Concentration%20of%20Risks) The Company has significant customer concentration, with three customers accounting for 18%, 15%, and 12% of revenues for the six months ended June 30, 2025. It also has one major supplier (18% of goods purchased) and is highly dependent on the government and natural resource industries - Three major customers accounted for **18%**, **15%**, and **12% of revenues** for the six months ended June 30, 2025[243](index=243&type=chunk) - Largest customer accounted for **43% of accounts receivable** as of June 30, 2025[243](index=243&type=chunk) - One major supplier represented **18% of goods purchased** for the six months ended June 30, 2025[245](index=245&type=chunk) - Services are almost entirely provided to customers in the government and natural resource industries[246](index=246&type=chunk) [Commitments and Contingencies](index=72&type=section&id=Commitments%20and%20Contingencies) The Company has non-cancellable operating lease obligations for land, buildings, and equipment, recognized on the balance sheet. Rent expense for these leases was $5.8 million for the six months ended June 30, 2025 - Operating lease obligations are recognized on the consolidated balance sheet[247](index=247&type=chunk) - Rent expense for cancelable and non-cancelable leases was **$5.8 million** for the six months ended June 30, 2025[248](index=248&type=chunk) [Critical Accounting Policies and Estimates](index=72&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Key accounting policies involve significant estimates, particularly revenue recognition for community construction using the percentage of completion method and the allocation of contract consideration between lease (ASC 842) and non-lease (ASC 606) components - Revenue from community construction is recognized using the percentage of completion method (cost-to-cost)[252](index=252&type=chunk) - Judgment is required to allocate contract consideration between lease (ASC 842) and non-lease (ASC 606) components based on relative standalone selling price[253](index=253&type=chunk) [Non-GAAP Financial Measures](index=74&type=section&id=Non-GAAP%20Financial%20Measures) The Company uses non-GAAP measures like Adjusted Gross Profit, EBITDA, Adjusted EBITDA, and Discretionary Cash Flows to assess financial performance, service debt, fund capital expenditures, and evaluate operating performance, providing reconciliations to comparable GAAP measures - Adjusted Gross Profit: Gross profit + depreciation of specialty rental assets + loss on impairment + certain severance costs[257](index=257&type=chunk) - EBITDA: Net income (loss) before interest expense and loss on extinguishment of debt, income tax expense (benefit), depreciation of specialty rental assets, and other depreciation and amortization[257](index=257&type=chunk) - Adjusted EBITDA: EBITDA adjusted for other expense (income) net, transaction expenses, stock-based compensation, change in fair value of warrant liabilities, and other adjustments[258](index=258&type=chunk)[262](index=262&type=chunk) - Discretionary Cash Flows: Cash flows from operations less maintenance capital expenditures for specialty rental assets[258](index=258&type=chunk) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Adjusted Gross Profit | $13,256 | $61,675 | $44,892 | $125,524 | | EBITDA | $748 | $48,264 | $17,317 | $98,043 | | Adjusted EBITDA | $3,503 | $52,179 | $25,072 | $105,866 | - Discretionary Cash Flows: **$9,270 thousand** (6 months ended June 30, 2025) vs. **$80,309 thousand** (2024)[266](index=266&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=79&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company is exposed to interest rate risk from its floating-rate ABL Facility, where a 100 basis point increase would raise annual interest expense by approximately $0.2 million. It also faces indirect commodity risk through its natural resource development customers - Interest rate risk: **$24 million outstanding floating-rate obligations** under ABL Facility as of June 30, 2025[268](index=268&type=chunk) - A **100 basis point increase** in floating interest rates would increase annual interest expense by approximately **$0.2 million**[268](index=268&type=chunk) - Indirect commodity risk: Profitability and cash flows are affected by volatility in commodity prices, influencing natural resource development activity[269](index=269&type=chunk)[270](index=270&type=chunk) [Item 4. Controls and Procedures](index=79&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025 - Disclosure controls and procedures were effective as of **June 30, 2025**[271](index=271&type=chunk) [PART II — OTHER INFORMATION](index=79&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=79&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in routine legal proceedings, but management believes these will not have a material adverse effect on its financial condition or results of operations, with reserves established as needed - Company involved in various lawsuits, claims, and legal proceedings in the ordinary course of business[272](index=272&type=chunk) - Management's opinion: no material adverse effect on financial condition or results of operations from these proceedings[272](index=272&type=chunk) [Item 1A. Risk Factors](index=80&type=section&id=Item%201A.%20Risk%20Factors) The Company's financial position and results are subject to various risks, which are detailed in the 2024 Form 10-K and have not materially changed - Reference to risk factors in the **2024 Form 10-K**[273](index=273&type=chunk) - No material changes to risk factors since the **2024 Form 10-K**[273](index=273&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=80&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company did not engage in any unregistered sales of equity securities during the quarter ended June 30, 2025 - No unregistered sales of equity securities during the quarter ended **June 30, 2025**[274](index=274&type=chunk) [Item 3. Defaults upon Senior Securities](index=80&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) There were no defaults upon senior securities during the reported period - No defaults upon senior securities[275](index=275&type=chunk) [Item 4. Mine Safety Disclosures](index=80&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Item 4, Mine Safety Disclosures, is not applicable[276](index=276&type=chunk) [Item 5. Other Information](index=80&type=section&id=Item%205.%20Other%20Information) Two executive officers, Heidi D. Lewis and Troy C. Schrenk, adopted Rule 10b5-1 trading plans in June 2025 for the sale of Common Stock - Heidi D. Lewis adopted a Rule 10b5-1 plan on **June 12, 2025**, to sell **89,972 shares** by **May 31, 2026**[277](index=277&type=chunk) - Troy C. Schrenk adopted a Rule 10b5-1 plan on **June 20, 2025**, to sell **258,548 shares** by **April 30, 2026**[278](index=278&type=chunk) [Item 6. Exhibits](index=81&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications, XBRL documents, and amendments to the incentive award plan - Includes certifications (31.1, 31.2, 32.1, 32.2) and XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[283](index=283&type=chunk) - Lists Second Amendment to the Target Hospitality Corp. 2019 Incentive Award Plan (10.1)[283](index=283&type=chunk) [SIGNATURES](index=82&type=section&id=SIGNATURES) [SIGNATURES](index=82&type=section&id=SIGNATURES) The report is signed on behalf of Target Hospitality Corp. by Jason P. Vlacich, Chief Financial Officer and Chief Accounting Officer, dated August 7, 2025 - Signed by Jason P. Vlacich, Chief Financial Officer and Chief Accounting Officer[287](index=287&type=chunk) - Report dated **August 7, 2025**[287](index=287&type=chunk)

Financial Data and Key Metrics Changes - In the second quarter of 2025, total revenue was approximately $62 million with adjusted EBITDA of approximately $4 million [15] - The company raised its outlook for 2025, now expecting total revenue of $310 million to $320 million and adjusted EBITDA of $50 million to $60 million, reflecting a 15% increase in the midpoint revenue and a 6% increase in the midpoint adjusted EBITDA compared to the previous outlook [22] Business Line Data and Key Metrics Changes - The government segment generated quarterly revenue of approximately $7 million, with declines primarily due to the termination of the PCC contract and the South Texas Family Residential Center contract [15][16] - The HFS segment delivered quarterly revenue of approximately $39 million, benefiting from consistent customer demand and high contract renewal rates exceeding 90% [7][19] - The Workforce Hospitality Solutions segment generated approximately $15 million in revenue, with a contract value increase from $140 million to approximately $154 million due to construction activity [19][55] Market Data and Key Metrics Changes - The company is finalizing contract discussions for a multiyear lease and services agreement in the rapidly expanding technology infrastructure and data center market, which is expected to drive significant demand for workforce hospitality solutions [5][10] - Over $1.2 trillion has been committed to developing technology infrastructure to support AI and data centers since January 2025, creating a strong demand for comprehensive workforce hospitality solutions [10] Company Strategy and Development Direction - The company is focused on accelerating strategic growth initiatives and diversifying its contract portfolio, with a strong emphasis on government and technology infrastructure markets [5][6] - The company aims to maintain momentum and advance strategic initiatives supported by a historic domestic investment cycle and rising government sector demand [6][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth pipeline, highlighting strong demand in both commercial and government end markets, supported by robust market fundamentals [23][24] - The company is encouraged by the strongest growth pipeline seen in years, with multiple pathways to expand its business portfolio [15][24] Other Important Information - The company ended the quarter with $19 million in cash and a net leverage ratio of 0.1 times, with no outstanding borrowings under its $175 million revolving credit facility [21] - The company is exploring innovative solutions to support immigration initiatives beyond its current asset portfolio [14][62] Q&A Session Summary Question: What is the timeline for West Texas assets and potential contracts? - Management indicated that discussions are ongoing, and they feel positive about the facility being leased and reactivated as government funds start to flow [29][30] Question: How should the data center opportunity be structured? - The data center contract will be a leasing services agreement, expected to have higher margins than service-only contracts, and is imminent [32][34] Question: What is the duration of the data center contracts? - The contracts are expected to be long-term, with a large workforce in one location for many years [41][42] Question: How will the company source beds for the data center? - The company will utilize excess capacity first, then look to the open market, and potentially build new facilities as needed [46] Question: What factors led to the selection of Target for the data center contract? - The selection was based on the company's ability to deliver on time and retain workforce, rather than just price [52][53] Question: What are the drivers behind the updated guidance? - The main driver for the revenue increase is the expansion of the workforce hub contract, along with the wrap-up of the PCC contract [55][58] Question: How has interest from government agencies changed for West Texas assets? - Interest has increased due to the approval of the budget, and discussions are ongoing regarding the need for additional beds [60][62]

[Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) [Financial Highlights](index=1&type=section&id=Financial%20Highlights%20for%20the%20Second%20Quarter%202025) Target Hospitality reported a significant decrease in Q2 2025 revenue and a net loss, primarily due to government contract terminations, while maintaining strong liquidity and announcing substantial new multi-year contracts, reflecting progress in strategic diversification Financial Highlights | Metric | Q2 2025 ($'000s) | Q2 2024 ($'000s) | | :-------------------------- | :---------------- | :---------------- | | Revenue | 61,606 | 100,721 | | Net income (loss) | (14,918) | 18,366 | | Income (loss) per share – basic | (0.15) | 0.18 | | Income (loss) per share – diluted | (0.15) | 0.18 | | Adjusted EBITDA(1) | 3,503 | 52,179 | - Net Cash Provided by Operating Activities for the six months ended June 30, 2025, was **$15.0 million**[7](index=7&type=chunk) - Approximately **$170 million** of total available liquidity, with a net leverage ratio of **0.1x** as of June 30, 2025[7](index=7&type=chunk) [Operational Achievements](index=1&type=section&id=2025%20Operational%20Achievements) Target Hospitality secured over $400 million in new multi-year contracts in 2025, including a strengthened Workforce Hub Contract ($154M through 2027) and a 5-year $246 million Dilley Contract, demonstrating successful strategic diversification - Target announced over **$400 million** in multi-year contracts in 2025, supporting diverse end-markets and making substantial progress toward achieving key strategic initiatives[7](index=7&type=chunk) - Strengthened multi-year workforce hub contract now expected to generate approximately **$154 million** of revenue through 2027, supporting a North American critical mineral supply chain[7](index=7&type=chunk) - Announced **5-year $246 million** contract award, reactivating strategically located South Texas assets in Dilley, Texas, supporting critical U.S. government initiatives[7](index=7&type=chunk) [Executive Commentary](index=1&type=section&id=Executive%20Commentary) President and CEO Brad Archer highlighted remarkable progress in expanding and diversifying Target's business portfolio, securing over $400 million in new contracts, emphasizing strong momentum, an unprecedented domestic investment cycle, and increased government demand as drivers for robust growth, focusing on strategic goals and shareholder value - Target has made remarkable progress in strategic initiatives to expand and diversify its business portfolio, announcing two new contracts valued at over **$400 million** in the first half of 2025[4](index=4&type=chunk) - Strong momentum, combined with an unprecedented domestic investment cycle and increased demand in the government sector, supports the most robust growth pipeline seen in years[5](index=5&type=chunk) [Detailed Financial Results](index=1&type=section&id=Detailed%20Financial%20Results) [Second Quarter Summary Financials](index=1&type=section&id=Second%20Quarter%20Summary%20Highlights) Target Hospitality's second quarter 2025 financial performance saw a significant decline in revenue, net income, and Adjusted EBITDA compared to the prior year, primarily due to contract changes Second Quarter Summary Financials | Metric | June 30, 2025 ($'000s) | June 30, 2024 ($'000s) | | :-------------------------- | :--------------------- | :--------------------- | | Revenue | 61,606 | 100,721 | | Net income (loss) | (14,918) | 18,366 | | Income (loss) per share – basic | (0.15) | 0.18 | | Income (loss) per share – diluted | (0.15) | 0.18 | | Adjusted EBITDA(1) | 3,503 | 52,179 | | Average utilized beds | 7,482 | 14,370 | | Utilization | 45 % | 89 % | [Revenue Analysis](index=2&type=section&id=Revenue%20Analysis) Revenue for Q2 2025 decreased to $61.6 million from $100.7 million in Q2 2024, mainly due to the termination of the Pecos Children's Center (PCC) and South Texas Family Residential Center (STFRC) contracts, partially offset by the new Dilley Contract and growth in the Workforce Hub Contract - Revenue for the three months ended June 30, 2025, was **$61.6 million**, a decrease from **$100.7 million** for the same period in 2024[8](index=8&type=chunk) - The decrease was primarily attributable to the government segment, driven by the termination of the Pecos Children's Center Contract (PCC Contract) effective February 21, 2025, and partially by the termination of the South Texas Family Residential Center Contract (STFRC Contract) effective August 9, 2024[9](index=9&type=chunk) - These decreases were partially offset by the Dilley Contract award effective March 5, 2025, and growth in the WHS operating segment attributable to the Workforce Hub Contract[9](index=9&type=chunk) [Net Income and Adjusted EBITDA Analysis](index=2&type=section&id=Net%20Income%20and%20Adjusted%20EBITDA%20Analysis) Target Hospitality reported a net loss of $(14.9) million and Adjusted EBITDA of $3.5 million for Q2 2025, down from a net income of $18.4 million and Adjusted EBITDA of $52.2 million in Q2 2024, primarily due to decreased revenue and higher operating expenses related to construction services for the Workforce Hub Contract - Net income (loss) was **$(14.9) million** for the three months ended June 30, 2025, compared to **$18.4 million** for the same period in 2024[10](index=10&type=chunk) - Adjusted EBITDA was **$3.5 million** for the three months ended June 30, 2025, compared to **$52.2 million** for the same period in 2024[10](index=10&type=chunk) - The decreases in net income (loss) and Adjusted EBITDA were primarily attributable to the decrease in Revenue and higher operating expenses primarily related to construction services activity associated with the Workforce Hub Contract[11](index=11&type=chunk) [Capital Management](index=2&type=section&id=Capital%20Management) Target Hospitality invested approximately $6.0 million in capital expenditures during Q2 2025, focused on strategic diversification, maintaining strong liquidity with $19 million in cash and equivalents, $24 million in borrowings on its credit facility, and approximately $170 million in total available liquidity, resulting in a net leverage ratio of 0.1 times as of June 30, 2025 - Approximately **$6.0 million** of capital expenditures for the three months ended June 30, 2025, primarily focused on enhancing asset capabilities aligned with strategic diversification initiatives[12](index=12&type=chunk) - As of June 30, 2025, the Company had approximately **$19 million** of cash and cash equivalents and borrowings of approximately **$24 million** on the Company's **$175 million** credit facility[12](index=12&type=chunk) - Total available liquidity of approximately **$170 million** and a net leverage ratio of **0.1 times** as of June 30, 2025[12](index=12&type=chunk) [Business Update and Full Year 2025 Outlook](index=2&type=section&id=Business%20Update%20and%20Full%20Year%202025%20Outlook) [Strategic Diversification Progress](index=2&type=section&id=Strategic%20Diversification%20Progress) Target Hospitality is making significant progress in expanding and diversifying its business, securing over $400 million in multi-year contracts in 2025 across various industries, leveraging its vertically integrated solutions for remote workforce communities - Target continues to make significant progress towards its primary strategic objectives of expanding and diversifying the Company's business portfolio, while simultaneously establishing attractive growth platforms underpinned by robust long-term growth trends[13](index=13&type=chunk) - This progress has facilitated numerous multi-year contract awards in 2025, totaling over **$400 million**[13](index=13&type=chunk) - Target's distinctive capacity to deliver vertically integrated solutions, ranging from community construction to comprehensive turnkey hospitality services, aligns seamlessly with the holistic hospitality platform required by these remote workforce communities[17](index=17&type=chunk) [Workforce Hub Contract Update](index=2&type=section&id=Workforce%20Hub%20Contract%20Update) The Workforce Hub Contract, supporting a North American critical mineral supply chain, has seen scope expansion and community enhancements, which will shift some expected services revenue to 2026 due to additional construction in 2025, but increases the total contract value to approximately $154 million, with potential for further expansion - The Workforce Hub Contract includes both construction and services revenue, with community enhancements requiring additional construction activity in 2025[15](index=15&type=chunk) - Additional construction activity will shift a portion of the expected services revenue into 2026 but will increase the total contract value to approximately **$154 million**[15](index=15&type=chunk) - Target believes there are further opportunities for expanded contract scope and term extension for the Workforce Hub Contract[15](index=15&type=chunk) [Data Center Community Development](index=2&type=section&id=Data%20Center%20Community%20Development) Target is in advanced contract discussions for a multi-year lease and services agreement for a Data Center Community, supporting the rapidly expanding AI and data center market, with preliminary construction having begun and further economic details to be provided upon contract finalization - Target's capabilities have supported advanced contract discussions for the anticipated Data Center Community, which will support the rapidly expanding AI and data center end-market[16](index=16&type=chunk) - Preliminary construction activity has begun for this highly customized community as contract discussions conclude[16](index=16&type=chunk) [Government Sector Initiatives](index=2&type=section&id=Government%20Sector) Target's established presence in the government sector led to the five-year, $246 million Dilley Contract, highlighting its ability to provide essential infrastructure and hospitality solutions for critical U.S. government initiatives, with the company anticipating continued strong demand from this sector - Target's established presence in supporting critical infrastructure solutions for the U.S. government provided the foundation of its **five-year, $246 million** Dilley Contract[18](index=18&type=chunk) - This contract highlights Target's dynamic capabilities in responding to critical U.S. government policy initiatives and delivering a range of essential infrastructure and hospitality solutions[19](index=19&type=chunk) - Target believes it is uniquely positioned to support these mission-critical services and the continued strong demand from the government sector[19](index=19&type=chunk) [Full Year 2025 Outlook](index=4&type=section&id=Full%20Year%202025%20Outlook) Driven by robust momentum and the expansion of the Workforce Hub Contract, Target Hospitality has increased its full-year 2025 outlook for total revenue and Adjusted EBITDA - The robust momentum and positive environment, combined with the expansion of the Workforce Hub Contract scope, support the Company's increased 2025 outlook[19](index=19&type=chunk) Full Year 2025 Outlook | Metric | Full Year 2025 Outlook | | :---------------- | :--------------------- | | Total revenue | $310 - $320 million | | Adjusted EBITDA(1) | $50 - $60 million | [Segment Performance](index=4&type=section&id=Segment%20Performance) [Government Segment](index=4&type=section&id=Government%20Segment) The Government segment's revenue significantly decreased in Q2 2025 due to the termination of the PCC and STFRC contracts, partially offset by the new Dilley Contract, with increased contributions expected from this segment as the Dilley community becomes fully operational in H2 2025, and an $11.8 million reimbursement secured for PCC Contract close-out costs Government Segment Performance | Metric | June 30, 2025 ($'000s) | June 30, 2024 ($'000s) | | :------------------ | :--------------------- | :--------------------- | | Revenue | 7,487 | 59,860 | | Adjusted gross profit | (1,080) | 48,844 | - Decreases were primarily driven by the termination of the PCC Contract effective February 21, 2025, and partially by the termination of the STFRC Contract effective August 9, 2024, partially offset by the Dilley Contract award effective March 5, 2025[21](index=21&type=chunk) - The Company anticipates increased contributions from this segment as the Dilley community becomes fully operational following the Dilley Contract ramp-up period in the second half of 2025[21](index=21&type=chunk) - An agreement for the close-out and settlement of the PCC Contract will result in a payment to the Company of approximately **$11.8 million**[22](index=22&type=chunk) [Hospitality & Facilities Services - South Segment](index=4&type=section&id=Hospitality%20%26%20Facilities%20Services%20-%20South%20Segment) The Hospitality & Facilities Services - South segment experienced a slight revenue decrease in Q2 2025, but maintained consistent customer demand and utilization rates, with average utilized beds increasing slightly, reflecting the company's ability to optimize assets in a competitive market Hospitality & Facilities Services - South Segment Performance | Metric | June 30, 2025 ($'000s) | June 30, 2024 ($'000s) | | :------------------ | :--------------------- | :--------------------- | | Revenue | 36,166 | 38,232 | | Adjusted gross profit | 10,547 | 13,065 | | Average daily rate (ADR) | 69.62 | 74.33 | | Average utilized beds | 5,632 | 5,595 | | Utilization | 76 % | 76 % | - Target's premium service offering and network scale continue to support consistent customer demand, enabling unparalleled solutions and robust asset optimization[24](index=24&type=chunk) [Workforce Hospitality Solutions Segment](index=5&type=section&id=Workforce%20Hospitality%20Solutions%20Segment) The Workforce Hospitality Solutions segment generated $15.0 million in revenue and $3.7 million in adjusted gross profit in Q2 2025, a new contribution attributable to construction services activity associated with the multi-year Workforce Hub Contract, highlighting successful strategic growth initiatives Workforce Hospitality Solutions Segment Performance | Metric | June 30, 2025 ($'000s) | June 30, 2024 ($'000s) | | :------------------ | :--------------------- | :--------------------- | | Revenue | 15,042 | — | | Adjusted gross profit | 3,687 | — | - The increases were attributable to construction services activity associated with the multi-year Workforce Hub Contract, further illustrating the Company's successful progress on key strategic growth initiatives[27](index=27&type=chunk) [All Other Segment](index=5&type=section&id=All%20Other%20Segment) The 'All Other' operating segment, comprising hospitality services not included elsewhere, saw a slight increase in revenue to $2.9 million in Q2 2025 from $2.6 million in Q2 2024, and turned a positive adjusted gross profit All Other Segment Performance | Metric | June 30, 2025 ($'000s) | June 30, 2024 ($'000s) | | :------------------ | :--------------------- | :--------------------- | | Revenue | 2,911 | 2,629 | | Adjusted gross profit | 102 | (234) | - This category of operating segments consists of hospitality services revenue not included in other segments[28](index=28&type=chunk) [Corporate Information & Disclosures](index=6&type=section&id=Corporate%20Information%20%26%20Disclosures) [Conference Call](index=6&type=section&id=Conference%20Call) Target Hospitality scheduled a conference call for August 7, 2025, at 8:00 a.m. Central Time to discuss Q2 2025 results, accessible via live webcast or phone - A conference call is scheduled for **August 7, 2025, at 8:00 a.m. Central Time** (9:00 am Eastern Time) to discuss the second quarter 2025 results[30](index=30&type=chunk) - The call will be available by live webcast through the Investors section of Target Hospitality's website or by phone[30](index=30&type=chunk) [About Target Hospitality](index=6&type=section&id=About%20Target%20Hospitality) Target Hospitality is a leading North American provider of vertically integrated modular accommodations and value-added hospitality services, building, owning, and operating customized communities with a full suite of services for diverse end-users - Target Hospitality is one of North America's largest providers of vertically integrated modular accommodations and value-added hospitality services in the United States[33](index=33&type=chunk) - The company builds, owns and operates a customized and growing network of communities for a range of end users through a full suite of value-added solutions including premium food service management, concierge, laundry, logistics, security and recreational facilities services[33](index=33&type=chunk) [Cautionary Statement Regarding Forward Looking Statements](index=6&type=section&id=Cautionary%20Statement%20Regarding%20Forward%20Looking%20Statements) This section outlines the inherent risks and uncertainties associated with forward-looking statements, emphasizing that actual results may differ materially due to various factors including operational, economic, political, and regulatory risks, market competition, and reliance on third parties, with the company disclaiming any obligation to update these statements - Statements in the press release are 'forward looking statements' subject to risks, uncertainties, assumptions, and other important factors that could cause actual results to differ materially[34](index=34&type=chunk) - Important factors include operational, economic (including inflation), political and regulatory risks; competition; effective management of communities; natural disasters; changes in demand; reliance on third-party manufacturers; and ability to retain key personnel[34](index=34&type=chunk) - The company undertakes no obligation to update or revise any forward-looking statements, except as required by law[34](index=34&type=chunk) [Non-GAAP Financial Measures (Definitions and Utility)](index=7&type=section&id=Non-GAAP%20Financial%20Measures) Target Hospitality uses non-GAAP financial measures like Adjusted gross profit, EBITDA, and Adjusted EBITDA to assess financial performance, service debt, fund capital expenditures, and expand business, with these metrics excluding certain non-cash items and non-core business transactions to provide a clearer view of operating performance, though they are not GAAP alternatives - Non-GAAP financial measures (Adjusted gross profit, EBITDA, Adjusted EBITDA) are used by management to assess financial performance and are key metrics for evaluating operating performance[36](index=36&type=chunk) - EBITDA is defined as net income (loss) before interest expense, income tax expense, depreciation of specialty rental assets, and other depreciation and amortization, used to measure ability to service debt, fund capital expenditures, and expand business[39](index=39&type=chunk) - Adjusted EBITDA further adjusts EBITDA to exclude certain non-cash items and transactions not related to core business operations, such as transaction expenses, stock-based compensation, and changes in fair value of warrant liabilities[39](index=39&type=chunk)[40](index=40&type=chunk) - These non-GAAP measures are not GAAP financial performance measures and should not be considered alternatives to GAAP measures or cash flow from operating activities[44](index=44&type=chunk) [Investor Contact](index=9&type=section&id=Investor%20Contact) For investor inquiries, contact Mark Schuck at (832) 702 – 8009 or ir@targethospitality.com - Investor Contact: **Mark Schuck**, **(832) 702 – 8009**, ir@targethospitality.com[45](index=45&type=chunk) [Consolidated Financial Statements](index=10&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Statements of Comprehensive Income (loss)](index=10&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(loss)) The consolidated statements of comprehensive income (loss) show a shift from net income in Q2 2024 to a net loss in Q2 2025, driven by decreased revenue and increased service costs, impacting earnings per share significantly Consolidated Statements of Comprehensive Income (loss) | Metric | Three Months Ended June 30, 2025 ($'000s) | Three Months Ended June 30, 2024 ($'000s) | | :------------------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Total revenue | 61,606 | 100,721 | | Gross profit | (328) | 46,870 | | Operating income (loss) | (16,918) | 29,551 | | Income (loss) before income tax | (17,855) | 25,278 | | Net income (loss) | (14,918) | 18,386 | | Net income (loss) attributable to Target Hospitality Corp. common stockholders - basic | (0.15) | 0.18 | | Net income (loss) attributable to Target Hospitality Corp. common stockholders - diluted | (0.15) | 0.18 | [Condensed Consolidated Balance Sheet Data](index=11&type=section&id=Condensed%20Consolidated%20Balance%20Sheet%20Data) Target Hospitality's balance sheet as of June 30, 2025, shows a decrease in total assets and total liabilities compared to December 31, 2024, primarily due to a significant reduction in cash and cash equivalents and the current portion of long-term debt Condensed Consolidated Balance Sheet Data | Metric | June 30, 2025 ($'000s) | December 31, 2024 ($'000s) | | :----------------------------------- | :--------------------- | :------------------------- | | Cash and cash equivalents | 19,237 | 190,668 | | Total current assets | 83,047 | 249,336 | | Total assets | 533,714 | 725,774 | | Total current liabilities | 56,619 | 233,404 | | Long-term debt, net | 24,000 | — | | Total liabilities | 132,529 | 304,684 | | Total stockholders' equity | 401,185 | 421,090 | [Condensed Consolidated Cash Flow Data](index=12&type=section&id=Condensed%20Consolidated%20Cash%20Flow%20Data) For the six months ended June 30, 2025, Target Hospitality experienced a significant decrease in cash and cash equivalents, primarily due to substantial net cash used in financing activities, despite positive net cash provided by operating activities Condensed Consolidated Cash Flow Data | Metric | Six Months Ended June 30, 2025 ($'000s) | Six Months Ended June 30, 2024 ($'000s) | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | | Cash and cash equivalents - beginning of period | 190,668 | 103,929 | | Net cash provided by operating activities | 15,001 | 89,696 | | Net cash used in investing activities | (24,911) | (16,137) | | Net cash used in financing activities | (161,543) | (23,187) | | Change in cash and cash equivalents | (171,431) | 50,367 | | Cash and cash equivalents - end of period | 19,237 | 154,296 | [Non-GAAP Reconciliations](index=13&type=section&id=Non-GAAP%20Reconciliations) [Reconciliation of Gross Profit to Adjusted Gross Profit](index=13&type=section&id=Reconciliation%20of%20Gross%20profit%20to%20Adjusted%20gross%20profit) The reconciliation shows that Adjusted gross profit for Q2 2025 was $13.3 million, a significant decrease from $61.7 million in Q2 2024, primarily due to the negative GAAP gross profit before depreciation adjustments Reconciliation of Gross Profit to Adjusted Gross Profit | Metric | Three Months Ended June 30, 2025 ($'000s) | Three Months Ended June 30, 2024 ($'000s) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | | Gross Profit | (328) | 46,870 | | Depreciation of specialty rental assets | 13,584 | 14,805 | | Adjusted gross profit | 13,256 | 61,675 | [Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA](index=14&type=section&id=Reconciliation%20of%20Net%20income%20(loss)%20to%20EBITDA%20and%20Adjusted%20EBITDA) Target Hospitality's EBITDA and Adjusted EBITDA saw substantial declines in Q2 2025 compared to Q2 2024, reflecting the shift from net income to net loss and reduced operational profitability, even after accounting for non-cash and non-core adjustments Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA | Metric | Three Months Ended June 30, 2025 ($'000s) | Three Months Ended June 30, 2024 ($'000s) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | | Net income (loss) | (14,918) | 18,386 | | EBITDA | 748 | 48,264 | | Adjusted EBITDA | 3,503 | 52,179 |

Core Insights - Target Hospitality Corp reported a significant decline in revenue and net income for the second quarter of 2025, primarily due to contract terminations in the government segment [5][6][7] - The company announced over $400 million in multi-year contracts in 2025, indicating a strong growth pipeline supported by robust long-term trends [2][3][11] - Target's strategic initiatives focus on expanding and diversifying its business portfolio, particularly in the government and critical mineral supply chain sectors [4][15][16] Financial Performance - Revenue for the three months ended June 30, 2025, was $61.6 million, down from $100.7 million in the same period in 2024, representing a decrease of approximately 39% [5][6] - Net loss for the same period was $14.9 million, compared to a net income of $18.4 million in 2024 [7][39] - Adjusted EBITDA was $3.5 million, a significant drop from $52.2 million in the prior year [9][43] Operational Highlights - Average utilized beds decreased to 7,482 in Q2 2025 from 14,370 in Q2 2024, resulting in a utilization rate of 45%, down from 89% [5][6] - The company secured a five-year, $246 million Dilley Contract, which is expected to enhance contributions from the government segment [8][16] - Target's Workforce Hub Contract is projected to generate approximately $154 million in revenue through 2027, supporting the North American critical mineral supply chain [8][13] Strategic Initiatives - The company is actively pursuing growth initiatives in response to an unprecedented domestic investment cycle and increased government demand [4][11] - Target's capabilities in developing remote workforce communities are being leveraged for advanced contract discussions in the AI and data center sectors [14][15] - The company aims to enhance its service offerings in rapidly growing end-markets, supported by over $1.2 trillion in committed investments since January 2025 [15][16] Capital Management - As of June 30, 2025, Target had approximately $170 million in total available liquidity and a net leverage ratio of 0.1x [10][39] - Capital expenditures for the quarter were approximately $6.0 million, focused on enhancing asset capabilities [10][39] - The company anticipates increased cash flow from operating activities, with $15.0 million generated in the first half of 2025 [8][41]

Core Viewpoint - Target Hospitality Corp. will release its second quarter 2025 financial results on August 7, 2025, before market opens, and will hold a conference call to discuss these results [1]. Group 1: Financial Results Announcement - The company is set to announce its second quarter 2025 financial results on August 7, 2025 [1]. - A conference call is scheduled for the same day at 9:00 AM Eastern Time to discuss the financial results [1][3]. Group 2: Conference Call Details - The conference call will be accessible via live webcast on the company's website [2]. - Participants are encouraged to register for the webcast or dial in approximately 15 minutes before the call starts [3]. - A replay of the conference call will be available on the company's website after the event [4]. Group 3: Company Overview - Target Hospitality is one of North America's largest providers of vertically integrated modular accommodations and hospitality services [5]. - The company offers a range of value-added solutions, including food service management, concierge, laundry, logistics, security, and recreational facilities services [5].

Core Insights - Theratechnologies Inc. reported strong demand for EGRIFTA SV with record high patient enrollments, achieving nearly $37 million in revenue for the first half of fiscal 2025 despite a supply shortage impact of $10-$12 million in Q1 [2][6][28] - The company is set to launch EGRIFTA WR, an improved version of EGRIFTA SV, in Q3 2025, leveraging the momentum from the past year [2][29] - The company has withdrawn its Fiscal 2025 revenue and Adjusted EBITDA guidance due to an announced acquisition by an affiliate of Future Pak [3] Financial Performance - For Q2 2025, consolidated revenue was $17.7 million, a decrease of 19.5% year-over-year, while the first half revenue was $36.8 million, down 3.9% from the previous year [6][24] - EGRIFTA SV net sales in Q2 2025 were $11.1 million, down 31.3% from $16.2 million in Q2 2024, while Trogarzo net sales increased by 13.4% to $6.6 million [5][10] - Adjusted EBITDA for Q2 2025 was $906,000, down from $5.5 million in Q2 2024, primarily due to increased spending and lower revenues from EGRIFTA SV [20][34] Cost Structure - Cost of goods sold for Q2 2025 was $4.7 million, representing 26.5% of revenue, compared to 20.7% in Q2 2024 [12][13] - R&D expenses decreased significantly to $2.6 million in Q2 2025 from $4.7 million in Q2 2024, attributed to reduced spending in oncology and F8 formulation programs [14][15] - Selling expenses increased to $6.8 million in Q2 2025, driven by higher compensation expenses related to market preparations [17][18] Net Loss and Financial Position - The company reported a net loss of $4.5 million for Q2 2025, compared to a net profit of $987,000 in Q2 2024, with a total net loss of $4.3 million for the first half of 2025 [24][27] - As of May 31, 2025, cash amounted to $9.5 million, with positive cash flows from operating activities of $2.7 million, indicating improved liquidity [26][27] Future Outlook - The company anticipates that existing cash and cash equivalents will be sufficient to fund operations for at least the next 12 months [26][30] - The successful transition from EGRIFTA SV to EGRIFTA WR is critical for meeting future revenue and EBITDA targets [29][30]

Core Viewpoint - Theratechnologies Inc. will report its financial results for the second quarter of 2025 on July 9, 2025, following the announcement of its acquisition on July 2, 2025, and no conference call will be held [1]. Company Overview - Theratechnologies is a specialty biopharmaceutical company focused on the commercialization of innovative therapies that aim to redefine standards of care [2].

Core Viewpoint - Theratechnologies Inc. has entered into a binding arrangement agreement with CB Biotechnology, LLC for the acquisition of all its common shares at a price of US$3.01 per share in cash, plus contingent value rights (CVRs) that could yield additional payments of up to US$1.19 per CVR, totaling a potential transaction value of US$254 million assuming full CVR payments [1][5][10]. Transaction Details - The cash and CVR consideration represents significant premiums of 126% and 216% respectively compared to the closing price on April 10, 2025, prior to the announcement of the initial proposal [2][5]. - The transaction is the result of a sale process led by a special committee of independent directors, aimed at maximizing shareholder value [3][18]. - The transaction will be funded by Future Pak through a combination of debt financing and cash on hand, with a commitment for a US$220 million credit facility [11]. Milestones and CVR Payments - CVR holders may receive additional payments based on the achievement of specific milestones related to the EGRIFTA franchise gross profit, with potential distributions of up to US$65 million [6][7]. - If the EGRIFTA franchise gross profit exceeds US$40 million in any 12-month period, 50% of the excess will be distributed to CVR holders [6]. - Additional one-time payments of US$10 million and US$15 million may be made if cumulative gross profits exceed US$150 million and US$250 million respectively over a 36-month period [6]. Shareholder Approval and Governance - The transaction requires approval from at least 66⅔% of the votes cast by common shareholders at a special meeting [12]. - The Board of Directors has unanimously recommended that shareholders approve the transaction, deeming it fair and in the best interests of the company [18][19]. - Voting support agreements have been secured from senior management and directors holding approximately 1.14% of the common shares [13]. Post-Transaction Structure - Upon completion, Theratechnologies will become a privately held company and will cease to be a reporting issuer under Canadian securities laws [15]. - The common shares will no longer be publicly traded on the Toronto Stock Exchange and Nasdaq [15].

Company Overview - Target Hospitality is North America's largest provider of comprehensive hospitality solutions[4,6] - The company has over 16,000 network beds across 28 communities[6,9] and +8,000 available beds to expand with limited investment[9,33] - Target Hospitality has an average customer relationship length of +6.5 years[9] Financial Performance and Outlook - The company anticipates total revenue between $265 million and $285 million in 2025[6] - Adjusted EBITDA is projected to be between $47 million and $57 million in 2025[6] - Since 2021, the company has generated +$160 million of average annual Discretionary Cash Flow (DCF)[9] - As of December 31, 2024, Target Hospitality reported $191 million in cash and cash equivalents[42] Growth and Strategy - The company is pursuing a multi-year workforce hub contract supporting critical mineral development, expected to generate approximately $140 million in revenue through 2027[23,25] - Target Hospitality is strategically diversifying and regionally expanding its reach[22] - The company redeemed all outstanding 10.75% Senior Secured Notes on March 25, 2025, resulting in over $19 million of annual interest expense savings[46]