Target Hospitality Corp. Q3 FY2025 earnings call

Strategic Growth Initiatives

• Over $455 million in new multiyear contract awards in 2025.
• HFS segment has >90% customer renewal rates with average existing relationship >5 years.
• WHS segment has multiple contract awards, including Workforce Hub Contract expanded to $166 million and data center community with initial 250-bed facility.
• Dilley, Texas community fully operational, West Texas assets in ready state for remarketing.
• Launched Target Hyper/Scale brand for data center focus.

Financials

• Total revenue $99M, adjusted EBITDA $22M; 9 months ended Sept 30, 2025: cash flows from operations >$68M, discretionary cash flow $61M; ended quarter with $30M cash and 0 net debt, total available liquidity ~$205M.

Third quarter total revenue was approximately $99 million. Government segment generated approximately $24 million in revenue, with Dilley, Texas assets fully operational and expected to generate ~$30 million in 2025 with over $246 million over 5 years. HFS and other segments generated ~$39 million in quarterly revenue. WHS segment generated ~$37 million in Q3, with Workforce Hub Contract increased to ~$166 million and data center contract expected to generate ~$43 million in committed minimum revenue over initial term through September 2027, with ~$5 million in 2025.

2025 Outlook

• Total revenue $310M-$320M, adjusted EBITDA $50M-$60M.
• Dilley contract annualized $50M revenue, Q4 to see full ramp-up.
• PCC closeout payment of $11.8M not recurring in Q4.

• Uncertainty around government contract timings for West Texas assets.
• Inflationary impacts on costs and timing of new contract awards.

Q: Repurposing of Pecos, West Texas assets and Target Hyper/Scale brand A: Brad Archer discusses West Texas opportunities with multiple data center and power projects, and Target Hyper/Scale brand as focused approach for data center customers Q: Data center contract revenue and EBITDA run rate A: Jason Vlacich says $5M expected in 2025 from data center contract, balance split between 2026 and 2027, Dilley contract annualized $50M revenue Q: WEXMAC DOD award A: Jason Vlacich states they're on the contract vehicle and will look at bids if they fit Q: Workforce EBITDA shift and community enhancements A: Jason Vlacich talks about services kicking in next year, community enhancements not increasing beds but impacting construction revenue Q: Timing of contracts and bed capacity A: Jason Vlacich and Brad Archer discuss advanced discussions on data center expansions, government contract timing uncertainty Q: Data center economics and inflation protection A: Jason Vlacich says data center economics similar to Dilley, inflation varies by contract