Good morning, ladies and gentlemen, and welcome to the Target Hospitality Corp. Fourth Quarter and Full Year 2025 Earnings Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press 0 for the operator. This call is being recorded on Wednesday, 03/11/2026. I would now like to turn the conference over to Mark Schuck. Please go ahead. Thank you.

Morning, everyone, and welcome to Target Hospitality Corp.'s Fourth Quarter and Full Year 2025 Earnings Call. The press release we issued this morning, outlining our fourth quarter and full year 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 this 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, March 11, 2026. Target Hospitality Corp. 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 Corp.'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 Paul Vlacich, Chief Financial Officer. After their prepared remarks, we will open the call for questions. I will now turn the call over to our Chief Executive Officer, Brad Archer.

Thanks, Mark. Good morning, everyone, and thank you for joining us on the call today. We entered 2025 with a clear mandate to advance our strategic growth priorities, diversifying our contract portfolio, and accelerating our transition into high-growth end markets. We made significant progress on these priorities, and our disciplined execution resulted in the most successful period of contract awards in Target Hospitality Corp.'s history. Since February 2025, we have secured more than $740 million in long-term contract awards across a broad range of end markets, including over $495 million supported by our expanding WHS segment. This strong momentum is driven by an unprecedented capital investment cycle across AI infrastructure, critical minerals, and power generation development. To capture this opportunity, we launched Target Hyperscale, demonstrating our ability to deliver highly customized solutions through a vertically integrated accommodations platform that scales with customer requirements. Our vertically integrated capabilities, unmatched across the U.S., combined with accelerating end market demand, have established a core strategic growth vertical for the company. We believe Target Hospitality Corp. is at an inflection point, supported by strong execution and an unprecedented pipeline of opportunities. Strengthening market fundamentals have laid the foundation for a robust and expanding pipeline of more than 20,000 beds, creating meaningful opportunities to continue advancing our strategic growth priorities. Turning to our segments and accelerating momentum on key strategic growth opportunities, our HFS segment continues to support our world-class customers by meeting their evolving labor allocation needs through premium service delivered across our extensive network. Target Hospitality Corp.'s vertically integrated operating model and network scale enable us to serve customers through all phases of the business cycle, reflected in customer renewal rates consistently above 90% and average customer relationships of more than five years. Moving to the rapidly expanding WHS segment, our WHS segment…

Thank you, Brad. Fourth quarter total revenue was approximately $90 million, with adjusted EBITDA of approximately $7 million. A meaningful portion of quarterly revenue is generated by construction services tied to the workforce hub contract in our Workforce Hospitality Solutions, or WHS, segment. This lower-margin revenue stream, combined with elevated initial operating and mobilization costs associated with recent WHS segment contract wins, temporarily compressed margins. As the workforce hub contract transitions to higher-margin services-based revenue and our new WHS awards continue to scale through 2026, we expect consistent and sustained margin expansion. Our HFS South and All Other segments generated approximately $36 million in quarterly revenue. Target Hospitality Corp.'s customers in these segments continue to value our premium service offerings and extensive network scale, which provides consistent hospitality solutions aligned with their labor allocation demand. While we experienced some moderation in our HFS South segment, this network continues to provide strategic value and reliable cash flow. Its stability supports our long-standing customer base and provides consistent cash generation to advance our growth initiatives and further strengthen our balance sheet. Moving to the expanding WHS segment, this segment's fourth quarter results, which include our workforce hub contract and the data center community contract, generated approximately $40 million in revenue, primarily related to construction services activity associated with the workforce hub contract. As we announced today, the importance of the workforce hub contract led to additional modifications and scope expansion during the fourth quarter. The increased scope of the contract raises the total contract value to approximately $170 million, reflecting a 25% increase from the original contract value. With construction activity substantially complete, we anticipate the workforce hub contract will support margin expansion through 2026 as the contract shifts to higher-margin, services-focused revenue. Regarding the data center community contract, as we previously…

Thanks, Jason. We made significant progress executing on our strategy in 2025, positioning Target Hospitality Corp. to capitalize on powerful long-duration demand trends across AI infrastructure, power generation, and critical minerals. This strong execution drove more than $740 million in new multiyear contracts, including over $495 million within our rapidly expanding WHS segment. We are also engaged in advanced discussions on additional opportunities that reflect the accelerating development activity across AI and related power generation projects. These secular tailwinds are supported by a multi-trillion-dollar investment cycle to expand AI and data center infrastructure. Additionally, supporting this infrastructure development will require substantial growth in U.S. power generation capacity, with national energy consumption expected to double by 2030. Against this backdrop, we continue to evaluate the most active and robust growth pipeline in Target Hospitality Corp.'s history. With strengthening market fundamentals, we are actively pursuing opportunities representing more than 20,000 beds, highlighting the depth and durability of demand in this end market. Target Hospitality Corp.'s unique capabilities, combined with strong execution, position us as a trusted provider in this rapidly expanding marketplace. With a deep pipeline, strong balance sheet, and a scalable vertically integrated platform, we are well positioned to drive sustained growth and long-term value. We are excited about the opportunities ahead and believe they will play a central role in advancing our strategic initiatives and delivering continued value for our shareholders. Thank you for joining us on the call today. We will now open the call for questions. Thank you.

Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any of the keys. One moment please for your first question. Your first question comes from Scott Schneeberger with Oppenheimer. Scott, please go ahead.

Good morning. It is Daniel on for Scott. Thank you for taking our questions, and congratulations on the new contract wins. Starting off with the new contracts, could you please elaborate a little bit on the pipeline? I mean, you still have some assets in West Texas. Good to see some of it, but could you please discuss the pipeline, the potential to reactivate the remaining West Texas assets, and how we should think about the ripeness of that? Thank you.

Yeah, Daniel, this is Brad. Let me just give a high level on the pipeline. We have said this many times over the past few quarters, but it continues to grow, right? It is the strongest, most actionable pipeline we have ever seen. As we mentioned, a 20,000-plus bed opportunity. That is after we removed, you know, several thousand beds, and we have added back to that, right? And it continues to grow. We have been alluding to this fact for several quarters that our pipeline is getting stronger and more mature, right? This started over a year ago. We started planting seeds with the customers in these projects, having negotiations, and now we are beginning to harvest, right? It is in the way of executing contracts, which is what you have seen in our release. And it is just funny. Those happened both in one week. I do not expect that always to happen in the future like that. But what I would tell you is we do expect to keep stacking wins throughout 2026. We have mentioned we are in advanced late-stage negotiations with multiple customers. I am not going to get into details there, but it is a very healthy pipeline. If you look at available fleet, that is absolutely being quoted within those 20,000 beds, right? We expect that to be taken at some point. And then we would look to, you know, in the market, if there is available fleet to purchase, and we have secured line times at multiple factories as well, have a great relationship with the manufacturing base out there. So at some point, we would expect to have to reach into that as well, just by the supply and demand that is out there at this point.

Got it. Thank you. I think Jason mentioned earlier there is potential for variable revenue contribution. Could you please elaborate on that?

Yeah, absolutely. So that is related to the two new contracts that we announced today. The over $150 million contract value is literally just the fixed minimum amount. Within that, there is a lease component, which is relatively straight line, and then there is a built-in fixed minimum bed committed amount that is attached to a manning curve, so it is not exactly straight line. And then on top of that, there is a variable component attached to those contracts. The all-in rate on those, the head-and-bed for those two new contracts, is right around $100 a night. So there is definitely potential for variable upside. None of that is built into our outlook. So our outlook is materially based on fixed minimum amounts.

Got it. Thank you. A final one for me. Any more color you can provide on how to think about the cadence as we move through this year and any unique modeling dynamics we should think about as it comes in the early?

So with respect to our outlook and how that is going to trend, Q1 is going to be the low point as these contracts start to ramp up. Obviously, the two new ones that we announced are immediately accretive. One of those has already started. Another one is going to start in April. But, for example, the expanded data center community will ramp up kind of full force in Q3. Q2, in the power community contract in Nevada, will ramp up June, so you will see the full effects of that in Q3. I would say that is how you would pace it. Q1 is the low point, and then it will continue to ramp up in Q2, much further in Q3 and Q4, until you get to that run rate that we announced on the call for everything that has been contracted, right? None of that includes the variable upside related to the two new contracts. So that over $160 million of annual run rate revenue, over $90 million of adjusted EBITDA on an annual basis, is all based on fixed minimum revenue commitments for everything that has been contracted, and none of that obviously includes the upside related to the pipeline. Basically, you will see that come to fruition in Q4.

So, in short, the low point is Q1, and it builds from there.

Yeah, totally different by the end of the year, right? And not taking into account, like I said, any new projects or the upside on anything that we have signed.

Got it. Okay. Thank you, guys, and congratulations. I will turn it over.

Thank you. Your next question comes from Stephen David Gengaro with Stifel. Please go ahead.

Thank you. Good morning, everybody.

Good morning.

So a couple of things. The first, just to follow up on the point, when you talk about the run rate exiting 2026, is that just based on announced contracts to date?

Absolutely. Yes.

And when you say run rate, do you mean December or fourth quarter? I mean, I do not want to get too granular, but is $22 million sort of the EBITDA guide for 4Q? Or is that—

Yes. It is Q4.

Okay. Q4. Great. Thanks. The two other kind of higher-level questions: when you mentioned the capacity you have in inventory of 3,000 to 4,000 beds, and you have been talking to a lot of customers about opportunities, are you seeing urgency from the customers yet? Is there any feedback you get or implications from customers that they are getting concerned about available capacity, or is that still not a thing from their perspective yet?

Look, that is the fear, right? Not having the capacity, not having the amount of rooms. If you even just look at the contracts we just signed and you look at the 1,400 and the 400, those are existing beds, right? And they are paying to hold every one of those beds. Different when you are building it new. You have time to put in 250, then another 250, then another 250, very similar to our other project on the data center side. But the fear is there, and it is real, right? This pipeline we are talking about, this is not pie in the sky. It is an executable pipeline. Did we win it all? No. But they are real. They are funded. That is what is on this pipeline. So folks, especially when you look in these clusters where multiple data centers and multiple power plants—if you look at the Permian Basin area—there is already a lack of rooms, if you will. On top of that, you are starting to add new power plants and new data centers. It is fear, but it is warranted, right? The supply and demand, I would just say, in a lot of those areas are very much in our favor.

Okay. That is helpful. And then the other quick question, the HFS South business, the oilfield had a better-than-expected fourth quarter from kind of a completions perspective, but your numbers were down a little bit. Is that just seasonality and noise? I am sort of expecting that business to be kind of flattish 2026 versus 2025. Is that a reasonable starting point versus your guide?

Yeah, that is absolutely right. Built into our guidance is HFS basically steady state year over year from 2025 to 2026, and the fluctuations you see there are just moderate seasonality, normal course, not fluctuating outside of our expected ranges.

Okay. Great. Thanks. I will get back in the queue. Thank you for the color.

Thank you.

Your next question comes from Gregory Thomas Gibas with Northern Securities. Please go ahead.

Great. Hey. Good morning. Brad, Jason, thanks for taking the questions. Congrats on the new contract wins.

Thank you.

I guess, a follow-up on what was just discussed in terms of capacity in your remaining inventory. You mentioned 3,000 to 4,000 beds of remaining inventory. Wondering if you could maybe speak to rough plans on what you intend to acquire just given the 20,000 or so active pipeline? And I guess the pricing you are seeing around it. Once you put those 3,000 to 4,000 beds to use, how you would think about how you would work into future contracts the acquisition of new capacity. How would that be reflected in those contracts?

Yeah. I will start off, and Brad can certainly chime in on this. In terms of incremental beds above and beyond our inventory, first of all, all of that is going to be built into the economics of the contract. Many of these contracts come with upfront capital requirements from the customer as well, and a lot of their projects do phase over time, so that allows us to be measured in our approach towards capital allocation to these growth projects. We also have multiple tools available. We have secondary market purchases that we have done in the past to secure more beds. Project-level structures, and contract terms that bake in a lot of that upfront capital to meet our minimum return thresholds. That is how we would approach it, and that is how we have approached it in the past. We have already had advanced discussions with those suppliers, as Brad mentioned earlier.

Yeah. We have a very good relationship with suppliers across the U.S., right? So capacity wise for us, I do not believe will be an issue. I would take you back to the data center project that we started last year, the way it built up over time that Jason was talking about. We also got money down from the customer. So on financing, that helps a lot. All those beds are not put in at one time, even though that was quicker than what was anticipated. It still worked out. For the phases, we got some money down, and then we were able to bring in the buildings and set those up and get them performing for the customer, right? We are still in that mode of constructing that site and increasing the capacity. On true capacity from manufacturing or buying within the market, we feel pretty good about where we sit at this point.

That is great. Appreciate the color. And, if I could just maybe more strategically, as I am following developments on Camp East Montana at Fort Bliss and nearby government facility, just given the strong demand you are seeing within the private sector, I wanted to get a sense of whether you are even interested in pursuing those government-related opportunities at this point and how you are thinking about that.

Yeah. To be blunt, we are focused on growing the WHS segment, which we believe offers the greatest value creation opportunities. Much more commercial when we are dealing with that. It is projects that are ready. It is much more predictable at this point, and that is where our focus is.

And I would just add to that, really still on contract structures and committed counterparty risk breakdown.

Yep. Makes complete sense. I appreciate that. Lastly, as it relates to the pipeline, I appreciate the color you provided there. If you could characterize it further, I wanted to get a sense—because I know that the previous data center contract, nice to see the expansion there where it started at 250 beds and is now over 1,000 and the ability to get up to 1,500. As it relates to that 20,000 pipeline or so, would you say that is maybe how things would be structured going forward with additional contracts, in that it starts small with continued expansion? Or would it perhaps be more like we just saw, the 1,400 with the power community? Could you speak to the relative size of those opportunities in that pipeline?

Yeah. I think size-wise, they range from smaller than 1,000 to much greater than 1,000. We are seeing some really large projects for long duration. The range is big. As far as how they build up, when they get bigger, it just takes longer to put them in. They want this first initial wave, and then it builds up over time, very similar to what we have already shown the market. I think it would probably be a little bit longer than that on the buildup. You have time to get them done. You just cannot build everything that they are wanting all at once, nor can they hire 3,000, 4,000, 5,000 people all at once. But remember, they are not the only company doing the hiring. They are in these clusters. We are looking at five and six of these data centers around a two-hour radius, if you will, on a drive. They could be literally in the same twelve-month to eighteen-month period hiring 30,000 to 35,000 craftsmen in that area. If there is one doing a workforce hub, the others are doing a workforce hub. It takes time to get their own folks hired, and it takes time for us to build out the project. So it starts, if you will, very similar to what we have shown, and then it continues to build up. However, the start could be bigger, and the buildup could be longer as well, because, again, we are seeing much bigger projects than 1,000 beds. On the 1,400, that was a reactivation, so obviously we were able to move really quickly on that because we did not have to move any beds. It was strategically located for the customer, etc. It was literally signed and started billing a few days later. That is what was great about reactivations—they are always going to be faster.

Yep. Makes sense. That is helpful. Thanks very much, guys.

We now have a question from Raj Sharma with Texas Capital Bank. Please go ahead.

Yeah. Thank you for taking my questions. Congratulations on the solid new wins. I wanted to understand the 20,000 beds, the pipeline exceeding. Could you give how much of this pipeline is, in the next couple of years you think achievable versus the next five years? Can you give some color on the cadence? And then I have some follow-on questions.

Yeah. So the cadence here would be within the next twelve to twenty-four months, all of that 20,000. Are we talking to some that is longer out? Yes. But it does not make the pipeline at this point. They have not been FID. They might not have the land. They might not have the power. What we are talking about here is actionable within the next twelve to twenty-four months, some much sooner than that. I would say one to twenty-four months is how I would look at it.

Yeah. These are advanced-stage projects.

Got it. And then as the hyperscale, the data center, and the power generation sort of accelerates, are you seeing situations—I know there was an earlier question on this—where workforce housing is becoming a bottleneck? If so, is that giving you pricing power or longer durations when you negotiate these contracts?

Yeah. We are definitely seeing workforce housing becoming a critical component to getting their project done. They are using it as a competitive tool to attract the workforce, keep the workforce, retain the workforce, and get more productive. So that is definitely working in our favor. When I talk supply and demand, it absolutely helps on maximizing your price.

Got it. And then on the CapEx requirements, you have given a guide for this year. Is that to be assumed—is that $65 million to $75 million, if I sound correct?

Yeah. That is right. It is $65 million to $75 million, and much of that is growth CapEx tied to contracts that we have already executed. Incidentally, that range is materially aligned with what we spent last year.

Got it. And do you expect that to continue for the next year as well, given your pipeline? Also, could you talk about the cadence through the year and the financing of this CapEx?

Yeah. So the CapEx range that we gave does not require any real incremental financing above and beyond our current liquidity. We are well positioned on that. Obviously, any incremental capital that would go above and beyond that would be related to pipeline wins, and those would be built into the economics of those contracts. We have multiple avenues to fund, including growing cash flows from operations. We have the strongest balance sheet that we have ever had as a public company—the first year as a public company that we have exited the year with no debt—and lots of capacity. That being said, the contract structures will be built such that the economics will help fund our minimum return thresholds for sure in the CapEx requirement. There could be incremental CapEx for incremental wins, but certainly nothing we anticipate for the stuff that we have already executed on.

Thank you. Then, just lastly, on the Pecos facility, I wanted to clarify the 8,000 idle beds. Any news on reactivating or contracting to the government on those?

Yeah. I would say a lot of those West Texas assets are very fungible, and we could use them for multiple customers, and a lot of them have been leased out on the new contract wins. At this point, we are really focused on growth in the WHS segment and the pipeline around that, and that is where we see the most value added and the most accretive opportunities for our shareholder base.

Yeah. Let me just put something in there as well. We have already talked about almost 3,000 beds out of that 8,000, right? So there are 3,000 to 4,000 left, just to get a map, right? To your question, I would tell you, just to be more direct, as we look throughout 2026, I would expect those beds to be put in use under WHS. That is where the growth is at. That is where we are focused. That is where the capital is going to go. I am pretty confident that is where they go.

Oh, fantastic. Thank you for the color and the clarification. I will take it offline. Again, congratulations on the wins. Appreciate it. Thank you, guys.

Thank you.

As a reminder, if you wish to ask a question, please press 1. You have another question from Stephen David Gengaro with Stifel. Please go ahead.

Thanks, and thanks for taking the follow-up. You have the 3,000 to 4,000 idle beds. When you think—when you listen to the contracts you are involved with right now—when you exit 2026, would you be disappointed if the bulk of those beds were not under contract?

1,100%. Let me give you a little thought on how we look at these beds. Again, when you look at supply and demand—and it is in our industry’s favor at this point—we are sitting with what we believe are some valuable assets. We strategically want to place not all of them on one prime, but we think we have the ability and the pipeline to be strategic here. As we said, these projects build up over time. The thought is, can you use 500 to help win a project? Can you use 750 to help win a project? Can you use 1,000, where you do not drop them all in one, and get multiple contracts out of it versus one? Strategically, that is how we are looking at it. But we would absolutely be upset if we did not have these out in 2026, based on our pipeline. We have been in this market now going over a year, planting the seeds, as I said. Things are starting to grow, and we are starting to harvest. We like where we sit in the market.

Based on the network approach you take in that business, is there any idle capacity in HFS South that could be mobilized?

Yeah. There is a little bit. I would tell you we think we are pretty optimized in that area, especially West Texas. I would also tell you we have a great customer base there with some really long-term, twenty-plus-year customers we are going to make sure we take care of. There is a lot of work in the Permian. We think we can take that business in other ways besides continuing to deplete the HFS side of it. But we will take every opportunity to high-grade those rates and high-grade those beds as needed while we still take care of the right customers that we have had for many, many years. It is a great question.

Cool. Thank you for all the details.

There are no further questions at this time. I will now turn the call over to Brad Archer for closing remarks. Please continue.

Thank you. In closing, I want to reiterate again that Target Hospitality Corp. is at an inflection point. The hyperscalers are making trillion-dollar investments in remote America. They need us to make those investments work. There is no one else who does what we do at this scale in these locations. We are not an amenity. We are not a nice-to-have. These projects are remote, and timelines are nonnegotiable. Workforce housing is as critical as the fiber in the ground. We also did not stumble into $740 million in contracts. We built the platform, proved the model, and the market needs us. The build-out on AI infrastructure, data centers, and power generation across this country is one of the most consequential investment cycles in American history that I have ever seen, that most have ever seen. The problems we have solved and are solving now are helping transform that infrastructure, and in doing so, it is fundamentally transforming Target Hospitality Corp. With that, I want to thank all of you who have joined us on our call today and for your continued support of Target Hospitality Corp. Operator, that concludes our call for today.

Ladies and gentlemen, this concludes the conference call. Thank you for your participation. You may now disconnect.