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Image source: The Motley Fool. Monday, Aug. 10, 2026 at 9:00 a.m. ET Senior Vice President of Finance and Investor Relations - Mark Schuck President and Chief Executive Officer - Brad Archer Chief Financial Officer - Jason Vlacich Operator: Good morning, ladies and gentlemen, and welcome to the Target Hospitality Second Quarter 2026 Earnings Conference Call. [Operator Instructions] This call is being recorded on Monday, August 10, 2026. I would now like to turn the conference over to Mark Schuck, Senior Vice President of Finance and Investor Relations. Please go ahead. Mark Schuck: Thank you. Good morning, everyone, and welcome to Target Hospitality's Second Quarter 2026 Earnings Call. The press release we issued this morning, outlining our second quarter results, is available in the Investors section of our website. In addition, a replay of this call will be archived on our website for a limited time. Please note the cautionary language regarding forward-looking statements contained in the press release. This same language applies to statements made on today's conference call. This call will contain time-sensitive information as well as forward-looking statements, which are only accurate as of today, August 10, 2026. Target Hospitality expressly disclaims any obligation to update or amend the information contained in this conference call to reflect events or circumstances that may arise after today's date, except as required by applicable law. For a complete list of risks and uncertainties that may affect future performance, please refer to Target Hospitality's periodic filings with the SEC. We will discuss non-GAAP financial measures on today's call. Please refer to the tables in our earnings release posted in the Investors section of our website to find a reconciliation of non-GAAP financial measures referenced in today's call and their corresponding GAAP measures. Leading the call today will be Brad Archer, President and Chief Executive Officer; followed by Jason Vlacich, Chief Financial Officer. After their prepared remarks, we will open the call for questions. I'll now turn the call over to our Chief Executive Officer, Brad Archer. James Archer: Thanks, Mark. Good morning, everyone, and thank you for joining us on the call today. We delivered a strong second quarter, defined by disciplined execution on recent WHS contract awards and continued advancement of our growth pipeline. Our focus on converting commercial wins into operating results underscores the momentum driving Target's performance. Since January 2026, we have secured over 9,000 contracted beds, representing more than $1.4 billion of multiyear contracts, supporting unprecedented growth in our WHS segment and reinforcing Target's role as a leading provider of essential mission-critical solutions for AI-driven data center development and critical power generation expansion. That commercial momentum is translating directly into operational execution with average WHS utilized beds surpassing 4,000 during the second quarter. We are delivering on recent contract wins while our Target Hyper/Scale platform improving operating capabilities support accelerating customer demand. We continue to see expanding opportunities across North America with active discussions supporting a pipeline exceeding 20,000 beds. This breadth and durability of demand across our WHS end markets give us confidence in our ability to advance the largest commercial pipeline in our history, supported by a multitrillion-dollar long-term investment cycle. Turning to our individual segments. Our HFS-South segment continues to support world-class customers through an established network of communities across an expansive operating region. Target's reliable service delivery, network scale and long-standing customer relationships consistently support an over 90% renewal rate, highlighting the value of our differentiated offering. Moving to our Workforce Hospitality Solutions, or WHS, segment. The unprecedented growth in our WHS segment reflects building commercial momentum, disciplined operational execution and our intentional pivot toward high-value end markets. We continue to demonstrate the value of our Target Hyper/Scale platform and our scalable speed-to-market solutions, positioning Target to benefit from accelerating customer activity and long-term demand dynamics. Importantly, as we mobilize a growing number of contracted beds across concurrent community development, our focus remains on execution, delivering the essential solutions our customers need to advance complex, time-sensitive projects. Together, accelerating end market demand, growing awareness of our mission-critical solutions and our proven ability to execute continue to drive advanced discussions on additional large-scale community development. Building on this momentum, we are finalizing multiple definitive agreements to establish large-scale workforce hubs supporting new customers' long-term AI data center development. As these customers face increasingly compressed development schedules, the urgency to secure workforce accommodations continues to grow, giving us confidence that we will see incremental contract awards in the coming quarters. This expanding customer base and sustained commercial momentum further validates why customers choose Target, our proven ability to deliver scale, speed, customization and proven execution through our differentiated Target Hyper/Scale offering. These same capabilities are creating opportunities for incremental scope expansion within existing communities. As customers accelerate activity levels, they increasingly seek expanded solutions in fast-paced environments where reliability, flexibility and speed are critical. As large-scale infrastructure developments grow more complex, remote and time-sensitive, Target is uniquely positioned to meet this demand through a vertically integrated turnkey model that gives customers a single partner for their dynamic requirements. These capabilities are supported by Target's multi-decade operational track record and full life cycle model, spanning design and development through full-service operations. This integrated approach enables us to deliver essential solutions for customers, support local communities and remain well positioned as demand continues to build. Looking ahead, we continue to see expanding geographic opportunities across North America with active, ongoing discussions supporting a pipeline exceeding 20,000 beds. As our presence across these end markets grow, we are confident in our ability to capitalize on accelerating demand, advance our strategic growth initiatives and deliver durable long-term value. I'll now turn the call over to Jason to discuss our financial results and 2026 outlook in more detail. Jason Vlacich: Thank you, Brad. Second quarter total revenue was approximately $86 million with adjusted EBITDA of approximately $18 million, driven primarily by significant growth in our WHS segment. This growth also strengthened year-to-date cash flows from operating activities, which exceeded $110 million and included more than $100 million of advance payments from customers tied to recent WHS segment contract awards. These payments underscore the strength of our contract fundamentals and the value customers place on our speed-to-market solutions. More broadly, our results reflect continued execution on recent contract awards, strong unit economics and increasing operating leverage as communities ramp. This supported more than 700 basis points of adjusted EBITDA margin expansion compared to the first quarter. As these awards come online and communities continue to scale, we expect revenue and adjusted EBITDA to build further through 2026 and into 2027. Turning to our individual segment performance. Our WHS segment generated approximately $36 million of quarterly revenue, a 142% increase over the prior year as several communities advanced through their ramp-up phases and activity shifted from construction into full-service operations. Average WHS segment utilized beds surpassed 4,000 during the quarter, further demonstrating the depth of our operational platform, the scalability of our business model and our ability to execute multiple large-scale customer developments concurrently. This operating momentum reflects accelerating demand across our WHS segment end markets and should translate into greater contribution as communities continue to scale, supported by strong unit economics, growing operational efficiencies and increased activity across recently announced large multiyear contract awards. Our WHS segment is positioned to become Target's largest segment for full year 2026, contributing more than 50% of consolidated revenues based on the current contracted portfolio. Moving to our other operating segments. Our HFS-South segment generated approximately $33 million in quarterly revenue. While the segment experienced some moderation, it continues to deliver strategic value through its established presence in high activity regions and its long-standing customer relationships. We continue to evaluate opportunities to optimize this network while preserving flexibility to redeploy capacity towards high-return opportunities across our broader portfolio. Our Government segment generated approximately $13 million in revenue during the quarter, driven by the reactivation of our Dilley, Texas assets. As we optimize certain Government segment assets to support recently announced WHS segment contract awards, we expect to incur approximately $5 million to $7 million of transitional costs over the next 2 quarters. These transitory costs will temporarily pressure Government segment margins, which is reflected in our 2026 outlook. Recurring corporate expenses, excluding stock-based compensation and transaction expenses, were approximately $15 million for the quarter. As we advance Target's strategic initiatives, we remain focused on managing costs prudently while ensuring we have the resources needed to execute effectively. Our 2026 outlook reflects the recalibrated corporate expenses required to support this growth over the coming quarters. Turning to capital management. Total capital spending for the quarter was approximately $132 million as mobilization and construction activity began on multiple large community developments tied to recent WHS segment contract awards. We ended the quarter with approximately $141 million in total available liquidity and a net leverage ratio of 0.6x. As previously announced on July 24, we replaced our $175 million revolving credit facility with a new $660 million credit facility, nearly quadrupling Target's committed borrowing capacity and meaningfully expanding the company's banking relationships. This expanded capacity significantly enhances our financial flexibility and lowers our cost of capital, allowing us to execute on recent contract awards and capitalize on our robust multiyear growth pipeline. Driven by the depth of our Target Hyper/Scale offerings and accelerating customer demand, we continue to identify opportunities to expand our value-added solutions and address specific customer challenges. For example, we recently expanded our service offering for an existing customer by providing a temporary full-service workforce solution. This offering supports their ability to accelerate project development ahead of completing their customized multi-thousand bed community. It further demonstrates how we tailor solutions to customers' unique requirements. Together, our ability to deliver flexible value-added solutions like this one, combined with growing contributions from recently announced WHS segment contracts, reflects the sustained operating momentum behind our increased 2026 outlook. This includes total revenue of $410 million to $420 million and adjusted EBITDA of $85 million to $95 million with capital spending, excluding acquisitions, of $490 million to $510 million to fund our long-term growth. As I mentioned earlier, a meaningful portion of this capital spending is supported by customer advance payments associated with recently awarded WHS segment contracts, supporting efficient capital deployment and maintaining strong financial flexibility. As recent contract awards continue to scale, we expect revenue and adjusted EBITDA to build steadily through 2026 with additional operating leverage and improved unit economics supporting margin expansion into 2027. Together, these factors position us to exit 2027 with annualized revenue exceeding $700 million and adjusted EBITDA above $260 million. Importantly, this projection is supported by our existing contract portfolio and does not assume contribution from our broader commercial pipeline. As we deploy capital to achieve these near-term financial objectives, these investments will temporarily increase our net leverage. However, our committed contract portfolio, customer advance payments and attractive unit economics are expected to support meaningful cash generation, particularly as communities continue to ramp. As a result, we expect leverage to decline as these communities open and anticipate exiting 2027 with net leverage well below 3x based on our current project schedule. Target is well positioned with a flexible operating model and strong financial profile as we continue to evaluate a robust growth pipeline. Our focus remains on expanding the WHS segment, which we believe offers the greatest opportunity to accelerate value creation for our shareholders. Importantly, as we pursue these opportunities, we will remain focused on maintaining the strong financial profile we've built while maximizing margin contribution through our efficient operating structure. With that, I will hand it back to Brad for closing remarks. James Archer: Thanks, Jason. Our second quarter results reflect the strong execution that has defined Target's performance this year as we translate commercial momentum into tangible operating results, finalize incremental contract awards and advance our strategic growth pipeline. Since January, this discipline has delivered more than 9,000 contracted beds and over $1.4 billion in multiyear contract awards, reinforcing Target's position as a trusted mission-critical partner across our WHS end markets. This momentum is underpinned by durable long-term contracts that provide greater revenue and cash flow visibility. Combined with a well-capitalized balance sheet and significant financial flexibility, we are positioned to execute and fund an active pipeline of over 20,000 beds tied to power generation, AI-driven data centers and other critical infrastructure projects across North America. As industry adoption of our mission-critical workforce solutions continues to build, we anticipate incremental contract awards in the coming quarters. Together, our proven Target Hyper/Scale platform, disciplined capital allocation and financial strength position us to capitalize on this multi-decade investment cycle and deliver sustainable long-term value creation for our shareholders. Thank you for joining us on the call today. And once again, we appreciate your interest in Target Hospitality. We will now open the call for questions. Operator: [Operator Instructions] Your first question comes from Faiza Alwy with Deutsche Bank. Faiza Alwy: I wanted to just ask about the revenue and EBITDA guidance increase first. The way I understand it is that you've had good execution and you're benefiting from timing potentially this year, but then you also talked about expansion at some of the existing projects and you've raised the 2027 exit year revenue and EBITDA. So I just wanted to get a little bit more color around what you're seeing, if it's one specific contract? Or just any additional color would be helpful. Jason Vlacich: Faiza, thanks for the question. This is Jason, CFO. I appreciate you calling in. So I would say, overall, what drove the outlook increase, both short term and long term, was essentially community enhancements, scope expansions from multiple customers actually, I would say, also just improved visibility, continued execution on our part. And the contract awards are progressing quite well ahead of our expectations. Customers have, again, expanded scope in certain areas. Some of that is temporary. Some of that is longer term, which fed into the longer-term increase to our outlook. And then just general operating efficiencies that are materializing faster than expected. James Archer: Yes. Maybe let me just touch on incremental scope expansion just for a minute as well, Faiza. As we bid off these massive workforce communities, our customers -- bottom line is they see the value we bring. We're bringing in a lot of staff in those areas. They're looking for us to do more. There's definitely a bigger portion of the wallet, if you will, the bigger portion of the spend, we think we can get more of, right? So there's some incremental things that we already do that we can do more of on the construction side and not just the workforce hub. We think over time, we continue to pick up some of that. And some of that's playing into what we're doing today on some of the guidance as well. Faiza Alwy: Great. That's very helpful. And then I wanted to ask about Dilley, because there's been some speculation in the media and elsewhere around potential divestiture. So just curious kind of what you're hearing about that and sort of if you could comment on that at all. Jason Vlacich: Yes. So we're not going to comment on any kind of monetization of assets or potential monetization of assets. What we can say with respect to the Government segment is it's tied to a contract that is expected to go through 2030. And that facility has been operating since 2014 with the same customer, we're focused on servicing that contract at this point. But we're -- in terms of growth, we're not focused on growing the government segment. Our capital is primarily focused on being deployed to grow the WHS segment because that's where the lion's share of the pipeline opportunities are at this point. Faiza Alwy: I appreciate it. And if I could just sneak one more in. You did raise your CapEx guide for the year. Could you talk to us a little bit about how you see the trend of operating cash flow this year? Jason Vlacich: Yes. So as you can see from our Q2 results and cash flows are flowing in ahead of adjusted EBITDA and full economics on the contract, and that's driven by those advance payments from customers that we talked about at the top of the call and alluded to on our last call as well. So cash flows this year are going to outpace adjusted EBITDA for this year as well. And I would say with respect to the CapEx, the majority of the CapEx spend is anticipated to happen this year as evidenced by the outlook, and we increased that because of the community enhancements that the customers have requested. And so I would anticipate a lot of the CapEx spend to decelerate quite significantly as we move through 2027. And that's, again, based on what we've contracted to date that doesn't anticipate anything in our pipeline at this point in time. Operator: Your next question comes from Scott Schneeberger with Oppenheimer. Scott Schneeberger: I think for the first one, I'd like to ask on the ripeness of the pipeline. Could you please speak to what you're seeing there? And I guess a part B to this question is, what is it in your pipeline kind of speaking historically, who did you see competitively? How many competitors usually are bidding against you? And if you're aware of that in your current pipeline? If you could address it as well. James Archer: Yes, Scott, just high level on this. Pipeline for us continues to outperform our expectations as far as just the sheer numbers that we're seeing of beds being requested, beds that are coming in. Geography is also expanding outside of Texas into the Rockies, the Midwest and further. So number of beds, again, number of requests and then the growth in just the geography, right? I would tell you there's a growing industry adoption as the projects are going more remote. When you look at some of the pushback across the country on the data centers, the companies that maybe thought they didn't need our type of solution are now being -- they're looking at this much differently. They're coming to us earlier to help them on the community engagement piece. They're asking us to get involved early on, just like you've seen in the Uinta County in Wyoming, right? We've been working on that with that customer shoulder to shoulder for a while. So we think some of the things that Governor Abbott put out, right, are a positive for our business and will help strengthen this pipeline. As far as competition, sure, there are several out there that are competing. Some are just competing for the services and then some are saying they're a turnkey operator, right? We'll buy the land, develop the facility as we do. We have always seen competition on that. I would tell you it's not as great as what you might think, but there's definitely some competition out there. Most are regional players, some private equity owned on that side. But I'm not going to call out names, but definitely some competition out there. Scott Schneeberger: And just on the guidance, kind of following up on a prior question. There's $30 million, and that was in there last time you provided guidance of variable revenue. It was termed data center hub contract last time. Now it's just referenced to the whole WHS segment. Could you speak if there's -- is it still just that? And could you speak about what level above committed minimum? Just kind of curious how aggressive or conservative that is looking out if it has -- if that includes others and is taken down within data center hub? Jason Vlacich: Yes. Sure, Scott. I'll take that one. So I appreciate the question. So in terms of the variable revenue that is attached to our longer-range outlook, which is the 2027 outlook, that is still attached to that data center hub contract, and that's the only variable revenue that's considered about $30 million of annual variable revenue is considered there. No other variable revenue is considered. However, as you know, from the other contracts that we talked about, there continues to be variable revenue upside above and beyond that $30 million for sure. We just want to be prudent about our long-range outlook there. Now in terms of the short-term outlook, so 2026 outlook does not include any variable revenue above the contracted minimums for any of the new contracts. So relatively conservative there. It's definitely variable revenue upside. We want to be thoughtful about the contract ramp schedules and things of that nature in terms of how we thought about the variable revenue. But the 2026 outlook is geared towards the fixed minimum revenue commitments with no variable revenue considered. James Archer: I think, Jason, the variable starts to get a little clear as we start to open up more rooms, right, to see the pace that the customer puts heads in beds, right? But we didn't want to get too far ahead of ourselves on that until we start opening up these phases. Jason Vlacich: Yes. And as we talked about last time, the 2 most recent contracts that we announced, the larger ones take about a year to sort of fully ramp up, and that pretty much happens in 2027. Scott Schneeberger: I appreciate that color. I'm going to sneak a follow-up to something Brad said earlier. Brad, the -- your ability to source, if you win a new contract or multiple new contracts, the geographical expansion is getting diverse, as you mentioned. And you've usually had some concentration in certain parts of the country. Just curious if you could comment on your ability to efficiently source assets for development, just your positioning. James Archer: Yes. Look, these communities, they scale quickly, right, after initial mobilization. But we went out early on. We've talked about this before. We secured line time. We're now executing on the projects that we've put out in the press months ago. In fact, we're making very good progress on this. So execution has been our strength since I've been here for 18 years. And I think you'll start to see even more of that flow through as we get through 2026 and 2027. To answer your more pointedly on being able to source, at this point, we've locked up enough line time. We absolutely have the ability and bandwidth to take on more projects, multiple and continue to do what we're doing today. So we don't have an issue at this point with supply construction, getting these lights turned on and the facilities ramped up. And we expect to sign more quickly and execute on it. Operator: Your next question comes from Stephen Gengaro with Stifel. Stephen Gengaro: I think 2 for me. The first is when I think about -- you referenced a little bit earlier. When I think about the legacy oilfield service, HFS-South operations, you mentioned sort of optimizing beds. And I was curious, as it pertains to that, I know I've asked similar questions in the past. But what's the flexibility of moving some of those beds -- but maybe on top of that, like the contractual obligations you have to those customers given sort of your network approach in that region? And how does that kind of all play into the ability to mobilize assets that may be underutilized in the oil patch? James Archer: First, let me address the -- we have a lot of flexibility. But first and foremost, we have a lot of long-term customers there that we aren't going to kick out and not allow them to have a room, right? With that said, we are going to optimize the part of the HFS portion, right? I mean we all know that, that area in the Permian Basin, it's a hot bed for the data centers as well as the oil and gas, but more so the data centers at this point. So we will continue to optimize there while taking care of our long-term customers. But I think that's the growth story. And Steve, I mean, you talked about this a year ago in New York. All Midland to Pecos to, you name it in the Permian Basin, we think the growth story there is the data center play, right, the power play that we're seeing, and we're starting to prove that out by signing contracts. And we think that's just getting started in that area. Stephen Gengaro: Okay. Okay. The other question -- and I know you're not going to speculate too much, but in reference to the question earlier about Dilley -- if hypothetically, you sold an asset that brought in hundreds of millions of dollars, how would you deploy that cash? Jason Vlacich: Well, I would say we're not going to speculate on monetizing assets. However, we are focused on deploying our capital to grow the WHS segment because that's where our pipeline of opportunities is at this point, and that's the most accretive place to deploy our capital for the shareholders. Stephen Gengaro: Okay. And then -- and maybe one more. And Brad has always been very careful about speculating on contracts, et cetera. But you seem very confident in the 20,000 bed pipeline opportunity. Is there any time frame like the contracts that you're in discussions with, are these things that could happen in the next month, the next half year? Like what's -- without sort of kind of committing to a time, what's the kind of cadence of the discussions and the timing on some of these projects? James Archer: Yes. I'll try to be less evasive for you on this one. So I would look on our kind of prepared remarks and what we've talked about here, I would look at 2 separate statements. First, being in advanced discussions. We continue to say we're in advanced discussions for multiple quarters. What we've added here is kind of a separate statement, finalizing multiple definitive agreements. That's separate and apart from advanced discussions. I would tell you, we feel very comfortable near term that we're going to have some new projects come on board, right? I'm not going to get into sizes and terms and customers. I would tell you, 1,000-plus beds, right, each as we move forward, they're sizable projects that we feel comfortable giving you the information I just did. So again, kind of bifurcated advanced discussions and then finalizing multiple definitive agreements. Operator: Your next question comes from Greg Gibas with Northland Securities. Gregory Gibas: One, I wanted to touch on the margins within WHS quite a bit stronger than we expected. And wondering if you could provide some context on whether there were any particular drivers of that strength there? Or if that -- I think it was 53.5% is fair go-forward expectation for that segment? Jason Vlacich: Yes. I think the margin profile on that is pretty much in line with the type of contract structures that we've outlined previously that we see in our pipeline. And what you're seeing there is just a ramp-up ahead of schedule, right? And operational efficiencies materializing quicker and execution, ultimately, right? And so those are long-term impacts that we anticipate going forward. It just happened a bit quicker. James Archer: And look, they continue to increase. Gregory Gibas: Fair. I appreciate that. And I wanted to follow up because I know you mentioned it, Brad, but nice to see the -- you guys secured the permit for the Uinta County, Wyoming data center opportunity. Wondering if you could provide maybe an update on where that opportunity stands and I guess, just where is that in the contracting process? James Archer: Yes. And I would say this one kind of fits in the advanced discussions piece, right? I would say, well, first, we're excited to be a part of this project and the eventual build-out of the workforce hub. What we did there is we worked with a customer for literally months and months the developer of the data center on site selection, community engagement, city planning. And ultimately, what you've seen in the press is we received an approval for the development of a workforce hub in support of the overall project. So final terms, conditions as well as start date for first heads in beds still being worked through contractually. And I would say just as we have more details, we'll come back to you with that. But really excited about the project, large project, gets us in a different geography that we're used to working and we have a facility in Wyoming now. I feel very comfortable with executing on that, and we look forward to it. Gregory Gibas: Got it. Got it. And then I guess last one here. If you could maybe just speak to the pipeline, how that looks for non-data center opportunities, right? I know I would ask maybe the percentage of that 20,000-plus beds or so, but don't necessarily want to exclude oil and gas-related opportunities as well. James Archer: Yes, a lot of critical mineral in there. We're seeing in different parts of the U.S., lots of power, right, tied to data center, lots of that. That's being driven by a lot of the regulations. If you're going to build and they're definitely forcing you to bring your own power, which we've been dealing with that already. We have a couple of power contracts as we've noted earlier in the year. And we think that continues. Look, it's very strong on the power side and then critical minerals piece. I'm not going to break down the 20,000 beds. It's definitely a portion of it, but it's heavily weighted to data center and power when you look at the 20,000 beds. Operator: [Operator Instructions] Your next question comes from Alex Rygiel with Texas Capital. Alexander Rygiel: It's Alex Rygiel. A couple of quick questions and very nice quarter. Regarding the timing of additional workforce housing contracts, how has the pace of negotiations for future contracts changed in the last kind of 2 or 3 months? Have you seen them accelerate? Is it sort of moving at the same kind of pace that it's been at? Has it slowed? James Archer: I would say maybe the overall time from negotiation to signature is about the same. I would just tell you there's more of them, if you will, in discussions, in negotiations. Again, I mentioned earlier, the adoption of what we do is becoming stronger and stronger. So the pipeline is growing and it's getting upgraded as well, if you will. And so we're seeing good things come out of that. Alexander Rygiel: And then your average bed utilization was 4,000 in the quarter. What is implied in your 2026 estimate and 2027 estimate where you'll be kind of exiting on the bed utilization rate in 2026? Jason Vlacich: Well, I would say we have, what, 9,000 beds contracted this year. That includes the last 2 large contracts, one for 3,300 beds, approximately another one for 4,000. Those are going to take about a year to fully ramp up. As we said on our last call, we expect those communities to be fully ramped up by mid-2027. And so obviously, we anticipate the utilization to increase as we move through the year. Even on those 2 large contracts that will take about a year, we anticipate delivering about 1,000 beds a quarter. We're on track for that. And so you'll see a higher number than the 4,000 bed utilization, not the full 9,000 beds because that will basically happen in 2027. Operator: There are no further questions at this time. I will now turn the call over to Brad Archer for closing remarks. James Archer: Thank you. In closing, I just wanted to reiterate a few points. Number one, industry adoption as well as federal, state and local municipality adoption around the services we offer continues to grow as they see our offering lessening any impact caused by the growth they are experiencing in their communities. Community relations is becoming a huge piece of all of this, right? So number two, we are executing. You heard me and Jason talk about that. Revenue and profits are increasing and will continue to accelerate as we move through 2026 and 2027. Number three, sales pipeline continues to strengthen, and we fully expect new wins to flow from this. And my last point, as a company, Target Hospitality has the bandwidth to take on more, and we fully expect to do that in the near future. Last but not least, I want to thank you for all joining the call today, and we look forward for your support in the future. Operator, that ends the call for today. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Before you buy stock in Target Hospitality, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Target Hospitality wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,511!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,381,960!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 17, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Target Hospitality (TH) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Target Hospitality’s second quarter was shaped by substantial growth in its Workforce Hospitality Solutions (WHS) segment and strong conversion of new contract awards into operating results. Management credited disciplined execution and momentum in delivering large-scale workforce communities, especially for AI-driven data centers and critical power projects. CEO James Archer highlighted that “the unprecedented growth in our WHS segment reflects building commercial momentum, disciplined operational execution and our intentional pivot toward high-value end markets.” The company’s ability to secure more than 9,000 contracted beds since January further fueled segment expansion and improved operating leverage. Is now the time to buy TH? Find out in our full research report (it’s free). Revenue: $85.46 million vs analyst estimates of $79.3 million (38.7% year-on-year growth, 7.8% beat) Adjusted EBITDA: $18.22 million vs analyst estimates of $10.99 million (21.3% margin, 65.7% beat) The company lifted its revenue guidance for the full year to $415 million at the midpoint from $375 million, a 10.7% increase EBITDA guidance for the full year is $90 million at the midpoint, above analyst estimates of $79.44 million Operating Margin: -8.8%, up from -27.5% in the same quarter last year Utilized Beds: up 4,278 year on year Market Capitalization: $1.74 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Faiza Alwy (Deutsche Bank) asked if the guidance increase was driven by a specific contract or multiple expansions. CFO Jason Vlacich explained it was a combination of scope expansions, improved visibility, and execution across several contracts. Faiza Alwy (Deutsche Bank) inquired about the potential divestiture of Government assets. Vlacich declined to comment on asset sales but reiterated management’s strategic focus on WHS segment growth. Scott Schneeberger (Oppenheimer) questioned the competitive landscape and pipeline quality. CEO James Archer said industry adoption is broadening, with competition mostly from regional players, and noted increased geographic diversification as a strength. Gregory Gibas (Northland Securities) asked about WHS margin sustainability. Vlacich attributed strength to operational efficiencies and contract ramp-ups, indicating these margin levels are sustainable given current project mix. Alexander Rygiel (Texas Capital) queried about the pace of contract negotiations. Archer indicated the negotiation pace is stable but that the number and quality of opportunities in the pipeline are increasing. In coming quarters, the StockStory team will be closely watching (1) the conversion rate of Target Hospitality’s 20,000-bed pipeline into signed contracts, particularly in new geographies like the Rockies and Midwest; (2) continued progress in ramping up WHS communities, including scope expansions with existing clients; and (3) the ability to sustain operational margin improvements as transitional costs in the Government segment are absorbed. Ongoing customer advance payments and capital deployment effectiveness will be additional areas to monitor. Target Hospitality currently trades at $17.45, up from $16.51 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members). ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.

Interested in Target Hospitality Corp.? Here are five stocks we like better. Workforce Hospitality Solutions drove strong growth: Second-quarter WHS revenue rose 142% year over year to approximately $36 million, with more than 9,000 contracted beds secured since January and over $1.4 billion in multiyear contracts. Target Hospitality raised its 2026 outlook: The company now expects $410 million–$420 million in revenue and $85 million–$95 million in adjusted EBITDA, while planning $490 million–$510 million in capital spending to build new workforce communities. The long-term pipeline is expanding: Active discussions exceed 20,000 beds, primarily tied to AI data centers, power generation and critical-minerals projects; management expects 2027 revenue above $700 million and adjusted EBITDA above $260 million based on existing contracts. Modine’s $4B AI Coup Freezes Out the Competition Target Hospitality (NASDAQ:TH) reported second-quarter results marked by growth in its Workforce Hospitality Solutions, or WHS, segment, higher customer advance payments and an increased full-year outlook as it ramps recently awarded contracts tied to data center, power generation and other infrastructure projects. Total second-quarter revenue was approximately $86 million, while adjusted EBITDA was approximately $18 million, Chief Financial Officer Jason Vlacich said. The company said adjusted EBITDA margin expanded by more than 700 basis points from the first quarter, reflecting growth in WHS operations, operating efficiencies and the ramp-up of new communities. → MarketBeat Week in Review – 08/03 - 08/07 Year-to-date cash flow from operating activities exceeded $110 million, including more than $100 million in customer advance payments associated with recent WHS contract awards. Vlacich said the payments reflect the contract structure and customer demand for Target Hospitality’s speed-to-market workforce accommodation offerings. The WHS segment generated approximately $36 million of quarterly revenue, up 142% from the prior-year period. Average utilized beds in the segment exceeded 4,000 during the quarter as several communities progressed from construction and mobilization into full-service operations. → Quantum Earnings Week: Winners and Losers Are Finally Emerging President and Chief Executive Officer Brad Archer said Target Hospitality has secured more than 9,000 contracted beds since January, representing more than $1.4 billion in multiyear contracts. The company is targeting workforce accommodation demand connected to AI-driven data center construction, power generation expansion, critical minerals and other large infrastructure developments. “Our focus on converting commercial wins into operating results underscores the momentum driving Target’s performance,” Archer said. → Take-Two’s Q1 Results Leave GTA 6 Bulls Stuck in the Fog of War Management said WHS is expected to become the company’s largest segment for full-year 2026, contributing more than 50% of consolidated revenue based on the current contracted portfolio. Vlacich said the company’s two most recently announced large contracts, covering approximately 3,300 and 4,000 beds, are expected to take about a year to fully ramp and should be fully ramped by mid-2027. Asked about segment margins, Vlacich said the WHS margin profile was generally consistent with the types of contract structures Target Hospitality has previously described. He attributed the quarter’s performance to earlier-than-expected ramping, faster realization of operational efficiencies and execution. The HFS South segment generated approximately $33 million in second-quarter revenue. Management said the segment experienced some moderation but continues to provide an established network in active regions and longstanding customer relationships, with renewal rates exceeding 90%. Archer said the company intends to optimize HFS South capacity while continuing to serve long-term customers. He pointed to data center and power-related development in the Permian Basin as a potential growth area, while noting that Target Hospitality would not displace existing customers. The government segment generated approximately $13 million in revenue, aided by the reactivation of assets in Dilley, Texas. The company expects to incur approximately $5 million to $7 million of transitional costs over the next two quarters as it repurposes certain government assets for recently announced WHS awards. Those costs are expected to temporarily pressure government-segment margins. When asked about media speculation regarding a potential Dilley divestiture, Archer declined to discuss possible asset monetization. He said the facility is tied to a contract expected to run through 2030 and that Target Hospitality is focused on servicing that customer. He added that the company is prioritizing capital deployment toward WHS rather than expanding the government segment. Target Hospitality raised its 2026 outlook to total revenue of $410 million to $420 million and adjusted EBITDA of $85 million to $95 million. The company expects capital spending, excluding acquisitions, of $490 million to $510 million for the year. Vlacich said the higher outlook reflects enhancements and scope expansions requested by multiple customers, improved visibility into contract execution and operating efficiencies that have materialized faster than anticipated. Some scope additions are temporary, while others are longer term, he said. The company spent approximately $132 million on capital projects during the second quarter as it began mobilization and construction for multiple large WHS communities. Vlacich said much of the capital spending is expected to occur in 2026, with spending anticipated to decelerate significantly in 2027 based on contracts awarded to date. Management said cash flow in 2026 is expected to outpace adjusted EBITDA because of customer advance payments. Target Hospitality ended the quarter with approximately $141 million of total available liquidity and net leverage of 0.6 times. On July 24, the company replaced its $175 million revolving credit facility with a new $660 million credit facility. Vlacich said the financing expanded committed borrowing capacity, broadened Target Hospitality’s bank relationships and reduced its cost of capital. For 2027, the company expects to exit the year with annualized revenue exceeding $700 million and adjusted EBITDA above $260 million, based on its existing contract portfolio and excluding any contribution from its broader commercial pipeline. Management expects leverage to rise temporarily as capital is deployed but to finish 2027 well below three times net leverage under its current project schedule. Target Hospitality said it has active discussions supporting a pipeline exceeding 20,000 beds across North America. Archer said the pipeline has expanded geographically beyond Texas into the Rockies and Midwest, and is heavily weighted toward data center and power-related activity, with some opportunities tied to critical minerals. The company said it is finalizing multiple definitive agreements for large-scale workforce hubs supporting new customers’ long-term AI data center development. Archer told analysts that Target Hospitality expects near-term new projects of more than 1,000 beds each, while declining to provide customer names, contract sizes or specific signing dates. Archer also discussed a proposed project in Uinta County, Wyoming, where the company has received approval for development of a workforce hub in support of a data center project. Final terms, conditions and the start date for occupancy remain under discussion, he said. Management said the 2026 outlook does not include variable revenue above contracted minimums on new contracts. Its longer-term 2027 outlook includes about $30 million of annual variable revenue associated with one data center hub contract, while excluding other potential variable-revenue opportunities. Target Hospitality is a lodging solutions provider specializing in the ownership and operation of modular workforce housing communities across North America. The company serves large-scale clients in the energy, mining, construction and government sectors that require temporary or long-term accommodations for remote workforces. Its housing portfolio includes suite-style units, single-family cabins and “man-camp” dormitories, designed to match project size, duration and workforce composition. In addition to lodging, Target Hospitality delivers integrated support services such as on-site dining and culinary management, housekeeping, maintenance, facility management and logistics planning. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Target Hospitality Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Total Revenue: Approximately $86 million for the second quarter of 2026. Adjusted EBITDA: Approximately $18 million for the second quarter of 2026. Adjusted EBITDA Margin Expansion: More than 700 basis points of expansion compared to the first quarter of 2026. WHS Segment Revenue: Approximately $36 million, a 142% increase over the prior year. WHS Average Utilized Beds: Surpassed 4,000 during the second quarter. HFS South Segment Revenue: Approximately $33 million for the quarter. Government Segment Revenue: Approximately $13 million for the quarter. Recurring Corporate Expenses: Approximately $15 million for the quarter, excluding stock-based compensation and transaction expenses. Total Capital Spending: Approximately $132 million for the quarter. Total Available Liquidity: Approximately $141 million at the end of the quarter. Net Leverage Ratio: 0.6 times at the end of the quarter. 2026 Full-Year Revenue Outlook: $410 to $420 million. 2026 Full-Year Adjusted EBITDA Outlook: $85 to $95 million. 2026 Capital Spending Outlook (excluding acquisitions): $490 to $510 million. 2027 Annualized Revenue Projection: Exceeding $700 million. 2027 Adjusted EBITDA Projection: Above $260 million. Warning! GuruFocus has detected 2 Warning Signs with TH. Is TH fairly valued? Test your thesis with our free DCF calculator. Release Date: August 10, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Secured over 9,000 contracted beds and $1.4 billion in multi-year contracts since January 2026, driving unprecedented WHS segment growth. WHS segment revenue surged 142% year-over-year to $36 million, with average utilized beds surpassing 4,000 in Q2. Adjusted EBITDA margin expanded by over 700 basis points sequentially, reflecting strong operating leverage and efficient ramp-up. Raised 2026 outlook to $410-$420 million revenue and $85-$95 million adjusted EBITDA, with 2027 exit annualized revenue exceeding $700 million and adjusted EBITDA above $260 million. Expanded credit facility to $660 million, nearly quadrupling committed capacity and enhancing financial flexibility for growth. Government segment revenue moderated to $13 million, with expected $5-$7 million transitional costs pressuring margins over the next two quarters. HFS South segment experienced revenue moderation, requiring network optimization and potential capacity redeployment. Total capital spending surged to $132 million in Q2, with 2026 CapEx guidance raised to $490-$510 million, temporarily increasing net leverage. 2026 outlook excludes variable revenue above contracted minimums, indicating potential conservatism but also uncertainty in ramp-up schedules. Pipeline growth is heavily weighted toward data center and power projects, creating concentration risk in these end markets. Q: Can you provide more color on what drove the increase in the 2026 revenue and EBITDA guidance, as well as the raised 2027 exit-year projections?A: Jason Vlacich (CFO) attributed the outlook increase to community enhancements and scope expansions from multiple customers, improved visibility, and continued execution. Contract awards are progressing ahead of expectations, with customers expanding scope in certain areas, some temporary and some longer-term, which fed into the long-term outlook increase. General operating efficiencies are also materializing faster than expected. Q: Regarding the Dilley, Texas asset, can you comment on the potential for divestiture and the outlook for the government segment?A: Brad Archer (CEO) declined to comment on any potential monetization of assets. Jason Vlacich (CFO) added that the government segment is tied to a contract expected to run through 2030, with the facility operating since 2014 for the same customer. The company is focused on servicing that contract but is not focused on growing the government segment, as capital is primarily being deployed to grow the WHS segment where the majority of pipeline opportunities lie. Q: Can you discuss the strength of the sales pipeline, including competitive dynamics and the pace of negotiations?A: Brad Archer (CEO) stated the pipeline continues to outperform expectations, with a growing number of beds requested, expanding geography beyond Texas into the Rockies and Midwest, and increasing industry adoption as projects become more remote. He noted there is competition from regional players and some private equity-owned firms, but the company's turnkey model and early engagement in community relations provide a competitive edge. The pace of negotiations is similar, but there are more discussions happening, and the company is finalizing multiple definitive agreements for large-scale workforce hubs. Q: What level of variable revenue is included in the 2026 and 2027 guidance, and how should we think about the ramp-up of recently awarded contracts?A: Jason Vlacich (CFO) clarified that the 2027 outlook includes approximately $30 million of annual variable revenue from the data center hub contract, with no other variable revenue considered. The 2026 outlook does not include any variable revenue above contracted minimums for any of the large contracts, making it relatively conservative. The two most recent large contracts, totaling approximately 7,300 beds, are expected to take about a year to fully ramp up, with delivery of about 1,000 beds per quarter, reaching full utilization by mid-2027. Q: How is the company positioned to source assets and efficiently execute on new contract wins given the geographical expansion of the pipeline?A: Brad Archer (CEO) confirmed the company has secured enough line time and has the ability and bandwidth to take on multiple new projects concurrently. Execution has been a core strength, and the company is making good progress on previously announced projects. The company does not currently face issues with supply, construction, or ramping up facilities, and expects to sign new contracts and execute on them quickly. Q: Can you discuss the flexibility of moving beds from the legacy HFS South oilfield operations to higher-return opportunities, and how contractual obligations factor into that?A: Brad Archer (CEO) stated the company has a lot of flexibility but will prioritize taking care of long-term customers in the Permian Basin. The company plans to optimize the HFS South portion, as the region is becoming a hotbed for data centers and power generation. The growth story in the Permian Basin is increasingly tied to data center and power plays, which the company is proving out by signing new contracts. Q: The WHS segment margins were much stronger than expected. Is the 53% margin a fair go-forward expectation for that segment?A: Jason Vlacich (CFO) indicated the margin profile is in line with the type of contract structures previously outlined for the pipeline. The strong performance reflects a ramp-up ahead of schedule, with operational efficiencies materializing quicker than expected. These are long-term impacts anticipated going forward, but they happened faster than initially projected. Q: Can you provide an update on the Uinta County, Wyoming data center opportunity and where it stands in the contracting process?A: Brad Archer (CEO) described this as fitting into the "advanced discussions" category. The company worked with the customer for months on site selection, community engagement, and city planning, and has received approval for the development of a workforce hub. Final terms, conditions, and start dates are still being worked through contractually. The company is excited about the large project, which expands its geographic footprint into Wyoming. Q: How does the 20,000-bed pipeline break down between data center, power, and other opportunities like critical minerals?A: Brad Archer (CEO) noted the pipeline includes a significant portion of critical minerals and power-related opportunities tied to data center development. Regulations are increasingly forcing companies to bring their own power, which is driving demand. While he did not break down the exact percentage, the pipeline is heavily weighted toward data center and power projects. Q: How should we think about the trend of operating cash flow this year relative to the increased CapEx guidance?A: Jason Vlacich (CFO) explained that cash flows are flowing in ahead of adjusted EBITDA due to advanced payments from customers tied to recent WHS contract awards. Cash flows this year will outpace adjusted EBITDA. The majority of the increased CapEx spend is anticipated to occur this year, driven by community enhancements requested by customers, and is expected to decelerate significantly as the company moves through 2027. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Target Hospitality (TH) reported $85.46 million in revenue for the quarter ended June 2026, representing a year-over-year increase of 38.7%. EPS of -$0.09 for the same period compares to -$0.15 a year ago. The reported revenue represents a surprise of +7.81% over the Zacks Consensus Estimate of $79.27 million. With the consensus EPS estimate being -$0.10, the EPS surprise was +10%. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Target Hospitality performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Revenue- Hospitality & Facilities Services - South: $32.64 million versus the two-analyst average estimate of $33.48 million. The reported number represents a year-over-year change of -9.8%. Revenue- Workforce Hospitality Solutions (WHS): $36.33 million compared to the $31.27 million average estimate based on two analysts. Revenue- Government: $13.5 million versus $12.21 million estimated by two analysts on average. Compared to the year-ago quarter, this number represents a +80.3% change. Adjusted Gross Profit- Government: $6.4 million compared to the $5.81 million average estimate based on two analysts. Adjusted Gross Profit- Workforce Hospitality Solutions (WHS): $19.44 million compared to the $7.39 million average estimate based on two analysts. Adjusted Gross Profit- Hospitality & Facilities Services - South: $7.36 million versus the two-analyst average estimate of $8.89 million. View all Key Company Metrics for Target Hospitality here>>> Shares of Target Hospitality have returned -8.1% over the past month versus the Zacks S&P 500 composite's +3.4% change. The stock currently has a Zacks Rank #2 (Buy), indicating that it could outperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Target Hospitality Corp. (TH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Since January 2026, secured over $1.4 billion of multi-year contract awards across diversified, high-growth strategic Workforce Hospitality Solutions end markets, supporting improved profitability and strong cash generation Raises Full-Year 2026 Revenue and Adjusted EBITDA (1) Outlook by 11% and 13%, Respectively THE WOODLANDS, Texas, Aug. 10, 2026 /PRNewswire/ -- Target Hospitality Corp. ("Target Hospitality", "Target" or the "Company") (NASDAQ: TH), one of North America's largest providers of vertically-integrated modular accommodations and value-added hospitality services, today reported results for the three months ended June 30, 2026. Financial and Operational Highlights for the quarter ended June 30, 2026 Revenue increased 39% to $85.5 million compared to the same period in 2025. Net loss of $9.0 million. Basic and diluted loss per share of $0.09. Adjusted EBITDA(1) increased more than 5x year-over-year to $18.2 million, driven by significant growth in the Company's Workforce Hospitality Solutions ("WHS") segment. Generated year-to-date Net Cash Provided by Operating Activities of $111.0 million and Discretionary Cash Flow(1) ("DCF") of $108.2 million led by a significant increase in advance payments from customers associated with recent WHS segment contract awards. Approximately $141 million of total available liquidity, with a total net leverage ratio of 0.6x as of June 30, 2026. On July 24, 2026, closed a new $660 million asset-based revolving credit facility, significantly enhancing the Company's financial flexibility through expanded liquidity and reducing borrowing costs by up to 250 basis points. Since January 2026, secured over 9,000 contracted beds in the expanding WHS segment, supported by sustained demand across AI-driven data center and large-scale power generation infrastructure development. Advanced discussions on commercial opportunities across diverse geographic regions to support the accelerating demand for data center, power generation, and other critical infrastructure development. Target Hyper/Scale, focused on highly customizable solutions across high-value WHS segment markets, continues to resonate with prospective customers and supports an active growth pipeline exceeding 20,000 beds of potential opportunities. Executive Commentary "Our second-quarter results demonstrate our ability to execute at scale while simultaneously responding to accelerating customer demand. Since January, we have announced over $1.4 billion of multi-year contract awards representing over 9,000 beds in our rapidly expanding WHS segment. These accomplishments have strengthened our business fundamentals through durable, long-term contracts, reinforcing confidence in our strategic growth initiatives. Combined with closing a new $660 million credit facility, we have substantial financial flexibility to pursue the deepest commercial growth pipeline in our history," stated Brad Archer, President and Chief Executive Officer. "Our industry-leading capabilities and proven operational execution continue to drive progress across concurrent community developments, while accelerating end-market demand validates the scalability of our Target Hyper/Scale platform and the strength of our vertically integrated model. These fundamentals underpin ongoing and advanced discussion across a robust pipeline of potential commercial opportunities. Supported by enhanced liquidity, strong revenue visibility, and consistent cash flows, we believe Target is uniquely positioned to capitalize on a multi-decade secular demand cycle across AI-driven infrastructure, power generation, and critical infrastructure development — delivering sustainable growth and long-term value creation for our shareholders," concluded Mr. Archer. Financial Results Second Quarter Summary Highlights Revenue was $85.5 million for the three months ended June 30, 2026, compared to $61.6 million for the same period in 2025, a 39% increase. Adjusted EBITDA(1) was $18.2 million for the three months ended June 30, 2026, compared to $3.5 million for the same period in 2025, a 420% increase. These increases were primarily driven by significant growth in the Company's WHS segment and the completion of the ramp-up phases associated with the contract award at the Dilley, Texas community ("Dilley Community") in the Government segment. As previously announced multi-year WHS contracts continue to scale over the coming quarters, the combination of strong unit economics and increasing operational leverage is expected to support continued Adjusted EBITDA(1) growth. Capital Management The Company had approximately $131.9 million of capital expenditures for the three months ended June 30, 2026, primarily related to growth in the Company's WHS segment. As of June 30, 2026, the Company had approximately $6 million of cash and cash equivalents and borrowings of approximately $40 million on the Company's $175 million credit facility, total available liquidity of approximately $141 million, and a total net leverage ratio of 0.6x. On July 24, 2026, the Company replaced its prior $175 million asset-based revolving credit facility (the "Previous Facility") with a new $660 million asset-based revolving credit facility (the "New ABL Facility"). The New ABL Facility, which matures in July 2031, significantly strengthens the Company's liquidity position, extends its debt maturity profile, and enhances financial flexibility. With this expanded financial capacity, the Company remains focused on disciplined capital deployment to support recently announced contract awards and potential incremental contract wins while maintaining strong liquidity and balance sheet flexibility. Business Update Target's vertically integrated, customer-centric solutions continue gaining traction across rapidly expanding AI infrastructure and power generation markets. Since January 2026, the Company has announced over $1.4 billion in multi-year contract awards, accelerating growth in its WHS segment. These awards are backed by meaningful customer commitments, including advanced payments, helping fund growth investments and support efficient capital deployment. Combined with the New ABL Facility, this gives Target meaningful financial flexibility to simultaneously execute on its existing contract portfolio and expanding commercial pipeline opportunities. The expanding WHS segment reflects Target's successful pivot toward high-value end markets with long-term secular momentum and its ability to deliver mission-critical solutions for complex customer requirements. Its scalable operating model, vertically integrated capabilities, and Target Hyper/Scale platform enable the Company to efficiently develop and operate customized communities across diverse geographies—supporting customer project execution while providing essential infrastructure, services, and workforce accommodations for the local communities in which they operate. Target's multi-decade operational track record of responding to evolving customer needs with innovative, scalable, speed-to-market solutions, combined with building end-market demand, has established the most active and dynamic commercial pipeline in the Company's history. With more than 9,000 WHS beds contracted since January 2026 and active discussions representing additional potential growth opportunities exceeding 20,000 beds, Target is well positioned to expand existing relationships and win new developments as a trusted, preferred provider. The financial foundation to pursue this pipeline is equally strong. Target's New ABL Facility expands the Company's capital resources, liquidity, and financial flexibility. Combined with a growing portfolio of high-quality contracts providing strong revenue visibility, predictable cash flows, and attractive unit economics, Target has the financial capacity to fund its growth pipeline while maintaining a disciplined financial profile that supports accelerating demand and value-creating initiatives. The Company's modular asset platform further strengthens this financial profile. Target's ability to redeploy assets across customers and geographies provide a distinct competitive advantage. Its proven ability to maximize asset utilization over a multi-decade lifecycle enhances capital efficiency and, with strong unit economics and cash flow conversion, supports industry-leading returns on invested capital. As large-scale infrastructure developments grow more remote, complex, and time-sensitive, customers increasingly rely on Target's integrated turnkey solutions to accelerate execution and address operational challenges. Supported by strong, geographically diverse demand across North America, the Company believes it is in the early stages of a multi-decade investment cycle spanning data centers, power generation, and other critical infrastructure. As a trusted provider of mission-critical services to world-class companies, Target is uniquely positioned to capitalize on this accelerating end-market demand. Full Year 2026 Financial Outlook Meaningful growth in the WHS segment continues to validate Target's vertically integrated operating model as a distinct competitive advantage, enabling the Company to meet dynamic customer requirements. These scalable operations, supported by strong contract unit economics, are anticipated to drive consistent revenue and Adjusted EBITDA(1) growth through the balance of 2026 and form the basis for the Company's increased outlook, reflecting new community activity and the growing contributions of recently awarded WHS contracts. Total revenue between $410 and $420 million Adjusted EBITDA(1) between $85 and $95 million Total Capital Expenditures between $490 and $510 million, excluding acquisitions As previously announced WHS contract awards continue to ramp through 2026, along with the build-out and completion of more recently announced communities associated with these contract awards into 2027, the Company expects revenue and Adjusted EBITDA(1) growth. Target's expanding operational scale and strong unit economics are also anticipated to support margin improvement over this period. Together, these factors position the Company to achieve annualized revenue exceeding $700 million and annualized Adjusted EBITDA(1) above $260 million exiting 2027. This projection assumes annual variable revenue from WHS contract awards of approximately $30 million, above the committed minimum. This projection is supported entirely by Target's existing contract portfolio and assumes no contribution from the Company's commercial pipeline. Segment Results – Second Quarter 2026 Workforce Hospitality Solutions Refer to exhibits to this earnings release for definitions and reconciliations of Non-GAAP financial measures to GAAP financial measures Revenue for the three months ended June 30, 2026, was $36.3 million, with adjusted gross profit of $19.4 million. The increases were driven by growing contributions across the WHS portfolio, as several communities advanced through their ramp-up phases and more contracted beds transitioned from construction into the services phase. With average WHS utilized beds surpassing 4,000 during the quarter, Target continues to demonstrate the depth of its operational platform, the scalability of its business model, and its ability to support multiple large-scale customer developments concurrently. The Company expects to benefit from increased operational efficiencies as WHS communities continue to scale. Combined with strong unit economics, these efficiencies are expected to support continued Adjusted EBITDA(1) growth. Driven by the continued build-out and increased operational activity across recently announced large WHS contracts, Target expects this segment to be the Company's largest operating segment for full year 2026. Hospitality & Facilities Services - South Refer to exhibits to this earnings release for definitions and reconciliations of Non-GAAP financial measures to GAAP financial measures Revenue and adjusted gross profit for the three months ended June 30, 2026, were $32.6 million and $7.4 million, respectively. The year-over-year declines were driven by lower revenue from reduced utilization, partially offset by a decrease in community operating costs and increased ADR. Target continues to optimize its HFS – South network of communities with a focus on disciplined pricing, cost efficiency and asset utilization, while preserving flexibility to redeploy capacity toward high-return growth opportunities across its broader portfolio. Government Refer to exhibits to this earnings release for definitions and reconciliations of Non-GAAP financial measures to GAAP financial measures Revenue for the three months ended June 30, 2026, was $13.5 million compared to $7.5 million for the same period in 2025. Adjusted gross profit for the period was $6.4 million compared to ($1.1) million for the same period in 2025. The increases were primarily driven by the reactivation of the Dilley Community in March 2025. The Company expects to incur certain transitional costs related to ongoing network optimization initiatives in the Government segment over the balance of 2026, which are expected to temporarily impact segment operating margins and is incorporated into the Company's full year 2026 outlook. All Other Refer to exhibits to this earnings release for definitions and reconciliations of Non-GAAP financial measures to GAAP financial measures This category of operating segments consists of hospitality services revenue not included in other segments. Revenue for the three months ended June 30, 2026, was $3.0 million compared to $2.9 million for the same period in 2025. Conference Call The Company has scheduled a conference call for August 10, 2026, at 8:00 a.m. Central Time (9:00 am Eastern Time) to discuss the second quarter 2026 results. The conference call will be available by live webcast through the Investors section of Target Hospitality's website at www.TargetHospitality.com or by connecting via phone through one of the following options: Please utilize the Direct Phone Dial option to be immediately entered into the conference call once you are ready to connect. Direct Phone Dial(RapidConnect URL): https://emportal.ink/4vmVSws Or the traditional, operator assisted dial-in below. Domestic: 1-800-836-8184 Please register for the webcast or dial into the conference call approximately 15 minutes prior to the scheduled start time. About Target Hospitality Target Hospitality is one of North America's largest providers of vertically integrated specialty rental modular accommodations and full-service value-added hospitality solutions in the United States. Target 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 catering and food services, maintenance, housekeeping, grounds-keeping, concierge, laundry services, logistics, security, recreational facilities services, community management, and community design and construction. Cautionary Statement Regarding Forward Looking Statements Certain statements made in this press release (including the financial outlook contained herein) are "forward looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this press release, the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "intends," "believes," "seeks," "may," "will," "should," "future," "propose" and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside our control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include: operational, economic, including inflation, political and regulatory risks; our ability to effectively compete in the specialty rental accommodations and hospitality services industry, including growing the HFS – South, Workforce Hospitality Solutions and Government segments; our ability to execute, expand, and manage WHS projects supporting critical mineral development, power generation, and data center infrastructure projects, including risks related to construction execution, permitting, labor availability, and timely completion of community buildouts; our ability to achieve margin improvement through the effective servicing of contracts in our WHS segment; natural disasters and other business disruptions including outbreaks of epidemic or pandemic disease; the duration of any future public health crisis, related economic repercussions and the resulting negative impact to global economic demand; the effect of changes in state building codes on marketing our buildings; changes in demand within a number of key industry end-markets and geographic regions, including natural resources, critical minerals, and data center/AI infrastructure; changes in customer capital spending, project schedules, or end-user demand that may result in delays, non-renewals, or cancellations of contracts, including the contract that is terminable for convenience in the Government segment; our reliance on third party manufacturers, suppliers and service providers; our ability to attract and retain key personnel and maintain workforce availability for specialized hospitality and construction operations; increases in raw material, food, labor or other operating costs; the effect of impairment charges on our operating results; our future operating results fluctuating, failing to match performance or to meet expectations; our exposure to various possible claims and the potential inadequacy of our insurance coverage; unanticipated changes in our tax obligations; our obligations under various laws and regulations, including those applicable to government contracts; the effect of litigation, judgments, orders, regulatory or customer bankruptcy proceedings on our business; our ability to successfully acquire and integrate new operations; global, national or local economic and political developments, including any changes in policy under the current or any future U.S. presidential administrations; federal government budgeting and appropriations; our ability to manage credit risk and collect on our accounts receivable; our ability to fulfill Target Hospitality's public company obligations; cybersecurity threats, incidents, or failures of our management information systems; and risks related to our liquidity, access to capital markets, and obligations under existing or future debt agreements, including compliance with financial covenants. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. (1) Non-GAAP Financial Measures This press release contains historical non-GAAP financial measures including Adjusted gross profit, EBITDA, Adjusted EBITDA, and Discretionary cash flows which are measurements not calculated in accordance with US GAAP, in the discussion of our financial results because they are key metrics used by management to assess financial performance. Our business is capital-intensive, and these additional metrics allow management to further evaluate our operating performance. Reconciliations of these measures to the most directly comparable GAAP financial measures are contained herein. To the extent required, statements disclosing the definitions, utility and purposes of these measures are also set forth herein. This press release also contains a forward-looking non-GAAP financial measure Adjusted EBITDA. Reconciliations of this forward-looking measure to its most directly comparable GAAP financial measures are unavailable to Target Hospitality without unreasonable effort. We cannot provide a reconciliation of forward-looking Adjusted EBITDA to GAAP financial measures because certain items required for such reconciliation are outside of our control and/or cannot be reasonably predicted, such as the provision for income taxes. Preparation of such reconciliation would require a forward-looking balance sheet, statement of income and statement of cash flow, prepared in accordance with GAAP, and such forward-looking financial statements are unavailable to us without unreasonable effort. Although we provide a minimum of Adjusted EBITDA that we believe will be achieved, we cannot accurately predict all the components of the Adjusted EBITDA calculation. Target Hospitality provides an Adjusted EBITDA outlook because we believe that this measure, when viewed with our results under GAAP, provides useful information for the reasons noted below. Definitions: Target Hospitality defines Adjusted gross profit, as Gross profit plus depreciation of specialty rental assets, loss on impairment, and certain severance costs. Target Hospitality defines EBITDA as 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. Adjusted EBITDA reflects the following additional adjustments to EBITDA to exclude certain non-cash items and expense or income items that management believes are not indicative of the Company's ongoing operating performance: Other expense (income), net: Other expense (income), net includes miscellaneous cash receipts, gains and losses on disposals of property, plant, and equipment and leased assets, community pre-opening costs incurred during ramp-up periods for new customer contracts, and other immaterial expenses and non-cash items. Community pre-opening costs primarily relate to certain operating costs incurred prior to the community becoming fully operational. Transaction expenses: During 2026, the Company incurred legal, advisory, and audit-related fees associated with the secondary public offerings by Arrow Holdings S.à r.l. and MFA Global S.à r.l., entities controlled by investment funds managed by TDR Capital LLP, as well as legal costs related to certain contemplated transactions. During 2025, transaction costs primarily related to legal, advisory and audit-related fees associated with debt related transaction activity related to the 2025 Senior Secured Notes, which were redeemed and paid off on March 25, 2025, and, to a lesser extent, other business development project related transaction activity and remaining costs associated with the Arrow Proposal. Stock-based compensation: Charges associated with stock-based compensation expense, which has been, and is expected to continue to be for the foreseeable future, a significant recurring expense and an important component of the Company's compensation strategy. Other adjustments: Claim settlement, system implementation costs, and corporate development related costs. We define Discretionary cash flows as cash flows from operations less maintenance capital expenditures for specialty rental assets. Utility and Purposes: EBITDA reflects Net income (loss) excluding the impact of interest expense and loss on extinguishment of debt, provision for income taxes, depreciation, and amortization. We believe that EBITDA is a meaningful indicator of operating performance because we use it to measure our ability to service debt, fund capital expenditures, and expand our business. We also use EBITDA, as do analysts, lenders, investors, and others, to evaluate companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company's capital structure, debt levels, and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. EBITDA also excludes depreciation and amortization expense because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. Target Hospitality also believes that Adjusted EBITDA is a meaningful indicator of operating performance. Our Adjusted EBITDA reflects adjustments to exclude the effects of additional items, including certain items, that are not reflective of the ongoing operating results of Target Hospitality. In addition, to derive Adjusted EBITDA, we exclude gains or losses on the sale and disposal of depreciable assets and impairment losses because including them in EBITDA is inconsistent with reporting the ongoing performance of our remaining assets. Additionally, the gain or loss on sale and disposal of depreciable assets and impairment losses represents either accelerated depreciation or excess depreciation in previous periods, and depreciation is excluded from EBITDA. Target Hospitality also presents Discretionary cash flows because we believe it provides useful information regarding our business as more fully described below. Discretionary cash flows indicate the amount of cash available after maintenance capital expenditures for specialty rental assets for, among other things, investments in our existing business. Adjusted gross profit, EBITDA, Adjusted EBITDA and Discretionary cash flows are not measurements of Target Hospitality's financial performance under GAAP and should not be considered as alternatives to Gross profit, Net income (loss), or other performance measures derived in accordance with GAAP, or as alternatives to Cash flow from operating activities as measures of Target Hospitality's liquidity. Adjusted gross profit, EBITDA, Adjusted EBITDA, and Discretionary cash flows should not be considered as discretionary cash available to Target Hospitality to reinvest in the growth of our business or as measures of cash that is available to it to meet our obligations. In addition, the measurement of Adjusted gross profit, EBITDA, Adjusted EBITDA, and Discretionary cash flows may not be comparable to similarly titled measures of other companies. Target Hospitality's management believes that Adjusted gross profit, EBITDA, Adjusted EBITDA, and Discretionary cash flows provides useful information to investors about Target Hospitality and its financial condition and results of operations for the following reasons: (i) they are among the measures used by Target Hospitality's management team to evaluate its operating performance; (ii) they are among the measures used by Target Hospitality's management team to make day-to-day operating decisions, (iii) they are frequently used by securities analysts, lenders, investors and other interested parties as a common performance measure and to compare results across companies in Target Hospitality's industry. Investor Contact:Mark Schuck(832) 702 – [email protected] View original content:https://www.prnewswire.com/news-releases/target-hospitality-announces-second-quarter-2026-results-highlighting-strong-execution-on-recent-contract-awards-and-sustained-momentum-on-strategic-growth-initiatives-302846372.html

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by disciplined execution on recent Workforce Hospitality Solutions (WHS) contract awards, with utilized beds surpassing 4,000 as activity shifted from construction to full-service operations. The company is experiencing a significant strategic pivot toward high-value end markets, specifically AI-driven data center development and critical power generation expansion, which now represent the largest commercial pipeline in its history. Management attributes its competitive advantage to the Target Hyper/Scale platform, which provides vertically integrated, turnkey solutions that address the compressed development schedules of large-scale infrastructure projects. The HFS-South segment maintains a stable foundation with over 90% renewal rates, though management is actively evaluating opportunities to optimize this network and redeploy capacity toward higher-return WHS opportunities. Operational momentum is supported by a multitrillion-dollar long-term investment cycle in North American infrastructure, leading to expanding geographic opportunities beyond traditional regions into the Rockies and Midwest. The business model is benefiting from increasing operating leverage and strong unit economics as large-scale communities ramp up toward full capacity. Management expects to exit 2027 with annualized revenue exceeding $700 million and adjusted EBITDA above $260 million, based solely on the existing contract portfolio without assuming new pipeline wins. The 2026 outlook assumes total revenue of $410 million to $420 million, supported by fixed minimum revenue commitments and excluding potential variable revenue upside from new contracts. Capital spending is projected at $490 million to $510 million for 2026 to fund long-term growth, with a significant portion offset by customer advance payments that enhance financial flexibility. Net leverage is expected to temporarily increase during the current investment phase but is projected to decline to well below 3x by the end of 2027 as communities reach full operational scale. Transitional costs of $5 million to $7 million are anticipated over the next two quarters as certain Government segment assets are optimized to support WHS contract awards. Target replaced its $175 million revolving credit facility with a new $660 million facility, nearly quadrupling borrowing capacity to support the robust multiyear growth pipeline. The WHS segment is positioned to become the company's largest segment in 2026, contributing more than 50% of consolidated revenues based on the current contracted portfolio. Management flagged $5 million to $7 million in transitory costs that will temporarily pressure Government segment margins during asset optimization for WHS projects. Customer advance payments exceeding $100 million were received in the first half of 2026, highlighting the mission-critical nature of the services and providing upfront funding for mobilization. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. The increase was driven by scope expansions from multiple customers, improved visibility into contract execution, and operating efficiencies materializing faster than expected. Management noted that as customers see the value of the workforce hubs, they are requesting additional services, capturing a larger portion of the total project spend. Management declined to comment on specific asset monetization or divestiture speculation regarding the Dilley, Texas facility. They emphasized that the current government contract runs through 2030 and that all new growth capital is being prioritized for the WHS segment rather than government services. The 20,000-bed pipeline is heavily weighted toward data centers and power, with management distinguishing between 'advanced discussions' and 'finalizing multiple definitive agreements' for 1,000-plus bed projects. Competition exists from regional players and private equity-backed firms, but Target believes its ability to handle community engagement and site selection early in the process is a key differentiator. The 2027 exit target includes approximately $30 million of annual variable revenue tied to a specific data center hub contract, which management considers a prudent estimate. The 2026 guidance is more conservative, relying primarily on fixed minimums and excluding variable upside until the pace of 'heads in beds' becomes clearer during the ramp-up phases.