UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2024~~2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-38343

TARGET HOSPITALITY CORP.

(Exact name of registrant as specified in its charter)


Delaware			98-1378631
(State or other jurisdiction of			(I.R.S. Employer
incorporation or organization)			Identification No.)

9320 Lakeside Boulevard, Suite 300

The Woodlands, TX 77381

(Address, including zip code, of principal executive offices)

(800) 832-4242

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which is registered
Common stock, par value $0.0001 per share	TH	Nasdaq Capital Market

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ◻ No ⌧

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ◻ No ⌧

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ◻	Accelerated filer ⌧
Non-accelerated filer ◻	Smaller reporting company ◻
	Emerging growth company ◻

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 USC. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive oﬃcers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧.

The aggregate market value of common shares held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter, June 30, ~~2024~~2025, was $~~293~~227,~~345~~771,~~501~~256.

There were ~~112~~113,~~660~~450,~~853~~134 shares of Common Stock, par value $0.0001 per share, issued and 99100,~~363~~153,~~923~~204 outstanding as of March 206, ~~2025~~2026.

Documents Incorporated by Reference

The information required by Part III of this Report, to the extent not set forth herein, is incorporated herein by reference from the registrant's definitive proxy statement for the ~~2025~~2026 annual meeting of stockholders, which definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Report relates.

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Target Hospitality Corp.

TABLE OF CONTENTS

Annual Report on FORM 10-K

December 31, ~~2024~~2025

PART I Item 1. Business 3 Item 1A. Risk Factors 21 Item 1B. Unresolved Staff Comments 41 Item 1C. Cybersecurity 41 Item 2. Properties 44 Item 3. Legal Proceedings 45 Item 4. Mine Safety Disclosures 45 PART II Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchase of Equity Securities 46 Item 6. Reserved 51 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 51 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 6772 Item 8. Financial Statements and Supplementary Data 7176 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ~~119~~121 Item 9A. Controls and Procedures ~~119~~121 Item 9B. Other Information ~~122~~124 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections ~~122~~124 PART III Item 10. Directors, Executives, Officers and Corporate Governance ~~123~~125 Item 11. Executive Compensation ~~123~~125 Item 12. Security Ownership of Certain Beneficial Owners and Management Related Shareholder Matters ~~123~~125 Item 13. Certain Relationships and Related Transactions, and Director Independence ~~123~~125 Item 14. Principal Accounting Fees and Services ~~123~~125 PART IV Item 15. Exhibits and Financial Statement Schedules ~~124~~126 SIGNATURES 130

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Part I

Item 1. Business

Unless the context otherwise requires, references to “we”, “us”, “our”, “the Company”, or “Target Hospitality” refer to Target Hospitality Corp. and its consolidated subsidiaries.

Overview

Our company, Target Hospitality, is one of the largest vertically integrated specialty rental and hospitality services companies in North America. We have an extensive network of geographically relocatable specialty rental accommodation units with 16,~~865~~991 beds across 2629 communities. WeA ~~also~~large ~~operate~~portion 2of ~~communities~~our ~~not~~specialty ~~owned~~rental orasset ~~leased~~base byis ~~the~~comprised ~~Company. The majority~~ of ~~our~~modular ~~revenues~~unit ~~are~~assets ~~generated under contracts~~ that ~~include~~are ~~minimum~~generally ~~revenue~~interchangeable ~~amounts~~across ~~over~~segments ~~the~~and ~~active~~geographies. ~~contract~~We ~~term~~also ~~which~~operate ~~provides~~2 ~~visibility~~communities tonot ~~future~~owned ~~earnings~~or ~~and~~leased ~~cash~~by ~~flows~~the Company. WeA ~~believe~~portion ~~our customers enter into contracts with us because~~ of our ~~differentiated~~revenues ~~scale~~is ~~and~~currently ~~ability~~generated tounder ~~deliver~~contracts ~~premier~~that ~~accommodations~~include ~~and~~minimum ~~in-house~~revenue ~~culinary~~commitments, and ~~hospitality~~nearly ~~services~~all ~~across~~of ~~many~~our ~~key~~revenues ~~geographies~~are inearned ~~which~~through ~~they~~fully ~~operate.~~executed ~~For~~customer ~~the~~contracts. ~~year~~We ~~ended~~expect ~~December 31, 2024,~~to wecontinue ~~generated~~to ~~revenues~~enter ofinto ~~approximately~~additional ~~$386~~contracts ~~million. Approximately~~that ~~68.8%~~include ofminimum ~~our~~ revenue ~~was earned from specialty rental with vertically integrated hospitality~~commitments, ~~specifically lodging~~ and ~~related~~we ~~ancillary~~expect ~~services,~~these ~~whereas~~arrangements ~~the~~to ~~remaining~~comprise ~~31.2%~~a oflarger ~~revenues~~share ~~were earned through leasing~~ of ~~lodging~~our ~~facilities~~revenues ~~for~~going ~~the year ended December 31, 2024~~forward.

~~For~~We ~~additional~~believe ~~information~~our oncustomers enter into contracts with us because of our ~~revenue~~differentiated ~~related~~scale and vertically integrated solutions, including the ability to deliver premier accommodations and in-house culinary and hospitality services across many key geographies in which they operate. For the ~~years~~year ended December 31, ~~2024~~2025, ~~and~~we ~~2023,~~generated ~~refer~~revenues toof ~~“Management’s~~approximately ~~Discussion~~$321 ~~and~~million. Approximately ~~Analysis~~58.5% of ~~Financial~~our ~~Condition~~revenue was earned from specialty rental with vertically integrated hospitality, specifically lodging and ~~Results~~related ancillary services, whereas the remaining 14.3% of ~~Operations”~~revenues ~~located~~were inearned ~~Part~~through ~~II,~~leasing ~~Item~~of 7lodging facilities and 27.2% of ~~this~~revenues ~~Annual~~were ~~Report~~earned onthrough ~~Form~~construction ~~10-K~~fee income for the year ended December 31, 2025.

For additional information on our revenue related to the years ended December 31, 2025 and 2024, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” located in Part II, Item 7 of this Annual Report on Form 10-K.

Target Hospitality, though initially founded in 1978, began operating as a specialty rental and hospitality services company in 2006. Our Company operates across the U.S. and Canada, primarily in the Southwest, Nevada, and the Midwest U.S.. Target Hospitality provides comprehensive turnkey solutions to customers’ unique needs, from the initial planning stages through the full cycle of development and ongoing operations. We provide cost-effective and customized specialty rental accommodations, culinary services and hospitality solutions, including site design, construction, operations, security, housekeeping, catering, concierge services and health and recreation facilities.

We have established a leadership position in providing a fully integrated service offering to our large customer base, which is comprised of ~~U.S.~~major ~~government~~companies ~~service~~supporting ~~providers~~natural resource development, ~~and~~critical ~~major~~mineral ~~companies~~development or data center infrastructure projects, as well as supporting ~~natural~~a ~~resource~~U.S. ~~development~~government service provider. Our Company is built on the foundation of the following core values: serve others with empathy, elevate the experience, pursue excellence, act with integrity and collaboration. We believe that when our team is living these values corporate responsibility comes naturally. The map below shows the Company’s community locations in North America:

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Background

For discussion of the background of the business combination, please read the “Background” section located in the Item 1. Business section in our Annual Report on Form 10-K/A for the year ended December 31, 2020 filed on May 24, 2021 and is incorporated herein by reference.

Business Model

Our business model allows our customers to focus their efforts and resources on their core businesses. This makes us an integral part of the planning and execution phases for all customers.

We provide a safe, comfortable, and healthy environment to our guests, employees and workers across the U.S. and Canada and anywhere our customers need our facilities and services. Under our “Target 12” service model, we provide benefits to our customers, delivering high quality food, rest, connection, wellness, community, and hospitality, which optimizes our customers’ workforce engagement, performance, safety, loyalty, and productivity during work hours.

This facility and service model is provided directly by our employees, who deliver the essential services 24 hours per day for 365 days a year. We provide all of the hospitality services at our sites, and as a result, we believe we deliver more consistent and high-quality hospitality services at each community compared to our peers. Our company and employees are driven by our primary objective of helping our customers’ workforce reach their full potential every day. Our professionally trained hospitality staff has the unique opportunity to live with our customers as most of our employees live on location at the communities where our customers’ workforce reside. This allows our employees to develop powerful customer empathy, so we are better able to deliver consistent service quality and care through the Target 12 platform each day. Our employees are focused on the “other 12 hours”—the time our customers and their employees are not working—making sure we deliver a well -fed, well -rested, happier, loyal, safer and more productive employee every day. What we provide our customers’ workforce “off the clock” optimizes their performance when they are “on the clock.” The investment our customers make in their employees’ ~~the~~ “other 12 hours” is an essential part of their strategy and overall business and operations execution plan.

Using our expansive community network, unique core competencies and full-service turnkey hospitality solutions, we provide critical facilities and hospitality support services for fully integrated natural resource development companies, customers supporting critical mineral development, power generation, or data center infrastructure projects, as well as

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~~Using~~a ~~our~~contractor expansive community network, unique core competencies and full-service turnkey hospitality solutions, we provide critical facilities and hospitality support services for fully integrated natural resource development companies and contractors of the U. S. government. Our assets are well-suited to support the full lifecycle of development plans and we are able to scale our facility size to meet customers’ growing needs. We are well-positioned to continue serving our customers throughout the full cycle of their projects, which typically last for several decades. ~~Our integrated model provides value to our customers by reducing project timing and counterparty risks associated with projects.~~ More broadly, our accommodations networks, combined with our integrated value-added hospitality and facilities services creates value for our customers by optimizing their engagement, performance, safety, loyalty, productivity, preparedness and profitability.

The Company’s vertically integrated asset base and long-lived modular fleet historically generate strong unit-level economics supported by recurring contracted revenue, low maintenance capital requirements, and disciplined capital-deployment practices.

Summary of Value-Added Services

We take great pride in the premium customer experience we offer across our range of community and hospitality services offerings. The majority of Target’s communities include in-house culinary and hospitality services. Our world-class culinary and catering professionals serve approximately 159,000,000 meals on average each year with fresh ingredients and many of our meals are made from scratch. We self-manage most culinary and hospitality services, which provides us with greater control over service quality as well as incremental revenue and profit potential. Our communities are designed to promote rest and quality of life for our customers’ workforces and include amenities such as:

Summary of Amenities at various Communities:


● Innovative Modular Design		● On-site Commissary
● Single Occupancy Design		● Media Lounges and WIFI Throughout
● Swimming Pool, Volleyball, Basketball courts		● Flat-Screen TVs in Each Room
● Commercial Kitchen		● 40+ Premium TV Channel Line-up
● Fast Food Lounges		● Personal Laundry Service
● Full & Self Service Dining Areas		● Individually Controlled HVAC System
● TV Sport/Entertainment Lounges		● Hotel Access Lock Systems
● TV Sport/Entertainment Lounges/Golf Simulator		● Hotel Access Lock Systems
● Training/conference Rooms		● 24 Hour No-Limit Dining
● Core Passive Recreation Areas		● Self Dispensing Laundry
● Active Fitness Centers		● Commercial Laundry
● Lodge Recreation Areas		● Transportation to Project Site
● Locker/Storage/Boot-up Areas		● 24 Hour Gated Security
● Parking Areas		● Daily Cleaning & Custodial Service
● Waste Water Treatment Facility		● Professional Uniformed Staff

Our hospitality services and programming are designed to promote safety, security and rest, which in turn promote greater on-the-job productivity for our customers’ workforces. Our communities strictly adhere to our community code of conduct, which, among other things, prohibits drugs, illegal firearms, co-habitation and guests. We work closely with our customers to ensure that our communities are an extension of the safe environment and culture they aim to provide to their employees while they are on a project location. Our community code of conduct is adopted by each corporate customer and enforced in conjunction with our customers through their documented health, safety and environmental policies, standards and customer management. We recognize that safety and security extends beyond the customers’ jobsite and is a 24-hour responsibility which requires 24-hour services by Target Hospitality in close collaboration with our customers.

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History and Development

Target Hospitality’s legacy businesses have grown and developed since they were created. The chart below sets out certain key milestones for each business.

1978-2010		2011-Present
● 1978: Target Logistics was founded		● 2011: Target expanded capacity in Williston, Stanley and Tioga with long-term customers Halliburton, Hess, ONEOK, Schlumberger, Superior Well Service, Key Energy Services and others
● 1990: Signor Farm and Ranch Real Estate was founded		● 2011: Signor Lodge opened in Midland, TX (84 rooms)
● Target awarded contracts for logistics services for Olympics in 1984 (Sarajevo), 1992 (Barcelona), 1996 (Atlanta), 2000 (Sydney), 2002 (Salt Lake City), 2004 (Athens), 2006 (Turin) and 2010 (Vancouver)		● 2011: Signor Barnhart Lodge opened in Barnhart, TX (160 beds)
● The Vancouver project consisted of a 1,600 bed facility, a portion of which was subsequently transferred to North Dakota and remains in use today		● 2012: Target developed additional North Dakota facilities in Dunn County (Q1), Judson Lodge(Q3), Williams County (Q3) and Watford City (Q4)
● 2005: Target operated 1,100-bed cruise ship anchored in the Gulf of Mexico to support relief efforts during aftermath of Hurricane Katrina		● 2012: Target expanded service into Texas with the opening of Pecos Lodge (90 beds) in Q4
● In addition, built and managed 700-person modular camp in New Orleans with running water, electricity and on-site kitchen services		● 2013: Target awarded TCPL Keystone KXL pipeline project to house and feed over 6,000 workers (project terminated July 23, 2021)
● 2007: Target hired by Freeport-McMoRan to build and operate 425-bed facility in Morenci, AZ in support of copper mining operations (re-opening 10/2012)		● 2014: Target awarded lodge contract for new 200-bed community in the HFS – South region
● 2008: Target provided catering/food services for 600 personnel in support of relief operations in aftermath of Hurricane Ike		● 2014: Target awarded contract and built 2,400-bed community for U.S. federal government (contract briefly terminated August 9, 2024 and was reactivated on March 5, 2025 with an anticipated term of five years)
● 2009: Target provided housing and logistics services for 1,500 workers during a refurbishment of a refinery in St. Croix		● 2015: Opened new community in Mentone, TX in Q4 for Anadarko Petroleum Company
● 2009: Signor Lodging was formed		● 2016: Signor expanded Midland Lodge several phased expansions 1,000 beds
● 2010: Target opened Williston Lodge, Muddy River, Tioga and Stanley Cabins in western North Dakota		● 2016: Signor Kermit Lodge opens with 84 rooms
		● 2017: Signor opened Orla Lodge with 208 rooms
		● 2017: Target expanded network with the expansion of both Wolf Lodge and Pecos Lodge in Q2
		● 2017: Target expanded presence in New Mexico and West Texas with the acquisition of 1,000-room Iron Horse Ranch in Q3
		● 2017: Signor opened El Reno Lodge with 345 rooms
		● 2017: Target expanded presence with 280-room Blackgold Lodge in Q3
		● 2018: Target Logistics rebranded as Target Lodging in March 2018
		● 2018: Target opened new 600-room community in Mentone, Texas
		● 2018: Target added approximately 1,600 rooms across HFS – South network
		● 2018: Target expanded community network in the HFS – South region through acquisition of Signor, adding 7 locations and approximately 4,500 beds to the network
		● 2019: Target announced new 400-bed community in the HFS – South network
		● 2019: Target expanded its community network in the HFS – South region through the acquisitions of Superior and ProPetro, adding 4 locations and approximately 758 beds to the network.
		● 2019: El Capitan addition of 200 beds
		● 2019: El Capitan expansion 100 beds
		● 2019: Seven Rivers expansion 200 beds
		● 2021: Government Segment expansion 4,000 beds (related contract terminated effective February 21, 2025)
		● 2022: Government Segment expansion approximately 2,000 beds (related contract terminated effective February 21, 2025)
		● 2023: HFS – South Segment expansion 665 beds
		● 2024: Entered into partnership with Chard Métis Dene Group to further expand business in Canada
		● 2025: Target expanded services into the newly created Workforce Hospitality Solutions segment as a result of contracts with Lithium Nevada in Q1, the new Data Center Community Contract in Q3 and related expansions, and the Power Community Contract in Q4 adding up to approximately 3,300 beds under management, of which approximately 1,300 beds are owned and managed.

We are one of the few vertically integrated specialty rental and hospitality services providers that service the entire value chain from site identification to long-term community development and facilities management. Our industry divides specialty rental accommodations into three primary types: communities, temporary worker lodges and mobile assets. We are principally focused on communities across several end markets, including natural resource development, and the U.S. government.

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Industry Overview

Our Communities and Services

Communities typically contain a larger number of rooms and require more time and capital to develop. These facilities typically have commercial kitchens, dining areas, conference rooms, medical and dental services, recreational facilities, media lounges and landscaped grounds where climate permits. A portion of our communities are built and underpinned by multi-year committed contracts which often include exclusivity provisions. These facilities are designed to serve the long-term needs of customers regardless of the end markets they serve. Our communities provide fully-integrated and value-added hospitality services, including but not limited to: catering and food services, housekeeping, health and recreation facilities, laundry services and overall workforce community management, as well as water and wastewater treatment, power generation, communications and personnel logistics where required. In contrast, temporary lodges are usually smaller in number of rooms and generally do not include hospitality, catering, facilities services or other value-added on-site services and typically serve customers on a spot or short-term basis without long-term committed contracts. These temporary facilities are “open” for any customer who needs lodging services. Finally, mobile assets, or rig housing, are designed to follow customers’ activities and are generally used for drilling rig operators. They are often used to support conventional drilling crews and are contracted on a project-by-project or short-term basis.

Our specialty rental modular assets and hospitality services deliver the essential services and accommodations when and where there is a lack of sufficient accessible or cost-effective housing, infrastructure or local labor. ~~Many~~For ofexample, ~~the geographic areas near the southern U.S. border lack sufficient temporary housing and infrastructure and may require additional infrastructure~~ in the ~~future. In the~~ U.S. natural resource development industry, many of the largest hydrocarbon reservoirs are in remote and expansive geographic locations, like the Southwestern portion of the U.S. and North Dakota where limited infrastructure exists. We support the development of these necessary natural resources by providing the fully-integrated and value-added hospitality services described above. Our communities and integrated hospitality services allow our customers to outsource their accommodations needs to a single provider, optimizing employee morale, productivity, safety, and loyalty while focusing their investment on their core businesses and long term planning.

~~The~~Market ~~communities~~Dynamics we own, operate, or manage, as well as those facilities we own but are managed by other operators, are subject to competition for residents from other private operators. We compete primarily on location, cost, the quality and ~~range~~Competitive of services offered, our experience in the design, construction, and management of facilities, and our reputation. We compete with government agencies that are responsible for residential facilities. Government sector demand for facilities is affected by a number of factors, including the demand for beds, general economic conditions and the size of the populations needing these services.Environment

Demand for accommodations and related services within the natural resource development end market is influenced by four primary factors: (i) available infrastructure, (ii) competition, (iii) workforce requirements, and (iv) capital spending. Anticipated capital spending, and our customers’ expectations for future capital spending as well as larger infrastructure requirements, influence customers’ development on current productive assets, maintenance on current assets, expansion of existing assets and development of greenfield, brownfield or new assets. In addition to capital requirements, different types of customer activity require varying workforce sizes, influencing the demand for accommodations. Also, competing locations and services influence demand for our assets and services.

~~Demand~~The ~~within~~communities ~~our~~we ~~government~~own, ~~end~~operate, ~~market~~or ismanage, ~~primarily~~are ~~influenced~~subject byto ~~immigration~~competition ~~and~~for ~~deportation~~residents asfrom ~~well~~other asprivate ~~federal~~operators. ~~governmental~~We ~~policy~~compete ~~and~~primarily ~~budgets.~~on ~~Continued~~location, ~~increases~~cost, inthe ~~immigration~~quality orand ~~deportation~~range ~~activity~~of ~~have~~services ~~influenced~~offered, ~~government~~our ~~spending~~experience ~~on infrastructure~~ in ~~impacted~~the ~~regions~~design, ~~and~~construction, ~~consequentially,~~and ~~demand~~management ~~for~~of ~~accommodations~~facilities, and ~~related~~our ~~services~~reputation.

~~Another~~Demand ~~factor~~for ~~that~~accommodations ~~influences~~and ~~demand~~related ~~for~~services ~~our~~within ~~rooms~~the ~~and~~natural ~~services~~resource development end market is ~~the~~influenced ~~type~~by offour ~~customer~~primary wefactors: ~~are~~(i) ~~supporting.~~available ~~Generally~~infrastructure, ~~natural~~(ii) ~~resource~~competition, ~~development~~(iii) ~~customers~~workforce ~~require~~requirements, ~~larger~~and ~~workforces~~(iv) ~~during~~capital ~~construction~~spending. ~~and~~Anticipated ~~expansionary~~capital ~~periods~~spending, and ~~therefore~~our ~~have~~customers’ aexpectations ~~higher~~for ~~demand~~future ~~for~~capital ~~accommodations.~~spending ~~Due~~as towell ~~the~~as ~~contiguous~~larger ~~nature~~infrastructure ofrequirements, ~~their~~influence ~~land~~customers’ ~~positions,~~development aon ~~“hub~~current ~~and~~productive ~~spoke”~~assets, ~~model~~maintenance ison ~~utilized.~~current ~~Customers~~assets, ~~that~~expansion ~~support~~of ~~natural~~existing ~~resource~~assets and development ~~also~~of ~~require~~new ~~larger~~assets. ~~and~~In ~~more~~addition ~~mobile~~to ~~workforces~~capital ~~which~~requirements, indifferent ~~many~~types ~~cases,~~of ~~consist~~customer ofactivity ~~employees~~require ~~sourced~~varying ~~from~~workforce ~~outside~~sizes, ofinfluencing the ~~work~~demand ~~areas~~for accommodations. ~~These employees~~Also, competing locations and services influence demand for our assets and services.

Demand for accommodations and related services supporting data center infrastructure projects is influenced by the rapid expansion of cloud computing capacity, artificial intelligence workloads, and the resulting growth of hyperscalers and colocation facilities in remote or infrastructure-constrained regions. Construction and commissioning of these facilities

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~~described~~often asrequire ~~rotational~~substantial, ~~workers~~highly specialized workforces that must be mobilized quickly and housed safely near project sites where adequate local housing, ~~permanently~~services, ~~reside~~and ininfrastructure ~~another~~are ~~region~~limited or ~~state~~unavailable. ~~and~~These ~~commute~~projects tofrequently ~~the~~involve ~~regions~~multi-phase ~~served~~development bytimelines requiring sustained on-site labor, which drives consistent demand for scalable, turnkey workforce accommodations. Similar to our ~~HFS~~natural –resource ~~South~~development ~~segment~~customers, oncritical aminerals ~~rotational~~development ~~basis~~customers (and data center operators often prefer single-provider solutions that deliver integrated hospitality, ~~two~~catering, ~~weeks~~housekeeping, and community management services, particularly when projects are located far from population centers. As a result, proximity to customer activities, project scale and duration, availability of regional labor, and the timing of customer capital spending on digital infrastructure all influence demand for our communities and ~~one~~integrated ~~week~~hospitality ~~off)~~services.

Demand within our government end market is primarily influenced by immigration and deportation as well as federal governmental policy and budgets. Government sector demand for facilities is affected by a number of factors, including the demand for beds, general economic conditions and the size of the populations needing these services.

Another factor that influences demand for our rooms and services is the type of customer we are supporting. Generally, natural resource development customers require larger workforces during construction and expansionary periods and therefore have a higher demand for accommodations. Due to the contiguous nature of their land positions, a “hub and spoke” model is utilized. Customers that support natural resource development also require larger and more mobile workforces which, in many cases, consist of employees sourced from outside of the work areas. These employees, described as rotational workers, permanently reside in another region or state and commute to the regions served by our HFS – South segment on a rotational basis (often, two weeks on and one week off). Similarly, critical mineral development and large data center infrastructure projects often rely on substantial, specialized construction and commissioning workforces who may also be sourced from outside the immediate region and deployed on multi-week rotations, contributing to demand for our accommodations in areas where adequate local housing and supporting services are limited.

In addition, proximity to customer activities influences occupancy and demand. We have built, own and operate the largest specialty rental and hospitality services networks available to customers operating in the regions served by our HFS – South segment. These networks allow our customers to utilize one provider across a large and expansive geographic area. Our broad network often results in us having communities that are the closest to our customers’ job sites, which reduces commute times and costs, and improves the overall safety of our customers’ workforce.

Generally, if a community is within a one hour drive of a customer’s work location, our contractual exclusivity provisions with our customers require the customers to have their workforce lodge at one of our communities. Our communities provide customers with cost efficiencies, as they are able to jointly use our communities and related infrastructure (power, water, sewer and IT) services alongside other customers operating in the same vicinity.

Demand for our services is dependent upon activity levels, particularly our customers’ capital spending on natural resource development activities, critical mineral development, data center infrastructure projects, and government housing programs. Our customers’ spending plans generally are based on their view of commodity supply and demand dynamics, as well as the outlook for their medium and long-term commodity prices and annual government appropriations. ~~Our~~While ~~current footprint supporting~~ natural resource development ~~customers~~and iscritical ~~strategically~~minerals ~~concentrated~~development inspending ~~the~~is ~~southwestern~~generally ~~portion~~influenced ~~of the United States near the Permian Basin region served~~ by ~~our~~customers’ ~~HFS~~views –of ~~South~~commodity ~~segment.~~supply ~~The~~and ~~Permian~~demand ~~stretches~~dynamics ~~across~~and the ~~southeast~~outlook ~~corner~~for ofmedium- ~~New Mexico~~ and ~~through~~long-term acommodity ~~large portion of land in western Texas~~prices, ~~encompassing~~capital ~~approximately~~spending aon ~~hundred~~data ~~thousand~~center ~~square~~infrastructure ~~miles~~projects ~~and~~is ~~dozens~~primarily ofdriven ~~counties~~by ~~and~~growth isin ~~the~~cloud ~~lowest~~computing ~~cost~~capacity, ~~basin~~artificial inintelligence ~~the U.S.~~workloads, ~~providing~~and the ~~most~~need ~~economic~~for ~~natural~~digital ~~resource~~infrastructure ~~development inventory~~expansion.

Our current footprint supporting natural resource development customers is strategically concentrated in the southwestern portion of the United States near the Permian Basin region served by our HFS – South segment. The Permian stretches across the southeast corner of New Mexico and through a large portion of land in western Texas,

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encompassing approximately a hundred thousand square miles and dozens of counties and is the lowest cost basin in the U.S., providing the most economic natural resource development inventory.

While our current footprint is primarily concentrated in natural resource development regions, demand associated with large data center infrastructure projects and related power generation may create opportunities to expand into additional geographies over time.

Business Strengths & Strategies

Strengths

● Market Leader in Strategically Located Geographies. We are one of North America’s largest providers of turnkey specialty rental units with premium catering and hospitality services including 2629 strategically located communities with 16,~~865~~991 beds primarily in the highest demand regions of the southwestern U. S. as of December 31, ~~2024~~2025. As of December 31, ~~2024~~2025 we also operated 2 communities not owned or leased by the Company. Utilizing our large network of communities with the most bed capacity, particularly within the regions served by our ~~Government~~Workforce ~~and~~Hospitality Solutions (“WHS”), HFS – South, and Government segments, we believe we are the only provider with the scale and regional density to serve all of our customers’ needs in these key areas. Additionally, our network and relocatable facility assets allow us to transfer the rental fleet to locations that meet our customer service needs across our segments allowing us to achieve a higher return on capital. We leverage our scale and experience to deliver a comprehensive service offering of vertically integrated accommodations and hospitality services that provides a compelling economic value proposition to our customers.

● Long-Standing Relationships with Diversified Large Integrated Customers. We have long standing relationships with our diversified base of approximately ~~330~~320 customers, which includes some of the largest blue-chip, investment grade natural resource development and integrated infrastructure companies in North America. In addition to formal contract agreements, our reputation for reliability and value has led to numerous word-of-mouth referrals from satisfied clients, contributing significantly to the growth and diversification of our customer base. Positive experiences shared among industry peers and decision-makers have played a vital role in expanding our business reach, reinforcing trust, and establishing new opportunities. We believe we have also established strong relationships as a subcontractor in our U.S. government end market with our prime contract ~~partners~~partner and the federal ~~agencies~~agency we serve. We initially won one of our largest government sub-contracts in 2014 based upon our differentiated ability to develop and open a permanent large-scale facility in Dilley, Texas on an accelerated timeline, which was renewed and extended in 2016 and 2020 and ultimately led to an expansion of the Government segment, demonstrating our successful execution and customer satisfaction. Although the original contract to this facility was terminated effective August 9, 2024, we renewed our partnership with the prime contracting partner mentioned above on March 5, 2025 to reactivate our existing assets in Dilley, Texas. The relationships we have established over the past decade have been built on trust and credibility given our track record of performance and delivering value to our customers by providing a broad range of hospitality service offerings within a community atmosphere. Target’s customers’ willingness to enter into multi-year committed contracts, and our historical client retainment rate of over 90%, demonstrates the strength of these long-standing relationships.

●

Contracted Revenue and Exclusivity Produce Highly Visible, Recurring Revenue. The vast majority of our revenues are generated under multi-year contracts with exclusivity provisions, under which our customers agree to use our network for all their accommodation needs within the geographies we serve.

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~~contractor~~For onthe ~~March~~year 5ended December 31, 2025, toapproximately ~~reactivate~~16% of our ~~existing~~revenues ~~assets~~were incomprised ~~Dilley~~of minimum revenue amounts and approximately 100% of our revenues were under contract, ~~Texas~~including exclusivity. The ~~relationships~~weighted weaverage ~~have~~length ~~established~~of ~~over~~our ~~the~~contracts ~~past~~is ~~decade~~approximately ~~have~~60 ~~been~~months ~~built~~and onwe ~~trust~~have ~~and~~maintained ~~credibility~~a ~~given~~consistent ~~our~~client ~~track~~renewal ~~record~~rate of ~~performance~~over ~~and~~90% ~~delivering~~for ~~value~~the tolast ~~our~~5 years. Our customers byenter ~~providing~~into along-term ~~broad~~agreements ~~range~~and ofconsistently ~~hospitality~~renew ~~service~~their ~~offerings~~contracts ~~within~~to aensure ~~community~~that ~~atmosphere.~~sufficient ~~Target’s~~accommodations ~~customers’~~and ~~willingness~~hospitality services are in place to ~~enter~~properly ~~into~~care for their large workforces. Our multi-year ~~committed~~ contracts, and ~~our~~consistent ~~historical~~renewal ~~client~~rates ~~retainment~~provide ~~rate~~recurring ofrevenue ~~over~~and ~~85%,~~high ~~demonstrates~~visibility ~~the~~on ~~strength~~future offinancial ~~these long-standing relationships~~performance.

● Committed Revenue and Exclusivity Produce Highly Visible, Recurring Revenue. The vast majority of our revenues are generated under multi-year contracts that include minimum revenue amounts or exclusivity provisions during the active contract term, under which our customers agree to use our network for all their accommodation needs within the geographies we serve. In 2024, approximately 64% of our revenues were comprised of minimum revenue amounts and approximately 99% were under contract, including exclusivity. The weighted average length of our existing customer relationships is approximately 60 months and we have maintained a consistent client renewal rate of over 85% for the last 5 years. Our customers enter into long-term agreements and consistently renew their contracts to ensure that sufficient accommodations and hospitality services are in place to properly care for their large workforces. Our multi-year contracts and consistent renewal rates provide recurring revenue and high visibility on future financial performance.

●

Proven Performance and Resiliency Through the Various Economic Cycles. We believe our business model is generally well insulated from economic cycles because we utilize the same asset base across our operating segments, which allows us to efficiently optimize our modular assets and redeploy them, as warranted by customer demand.

● Long-lived Assets Requiring Minimal Maintenance Capital Expenditures. Our long-lived specialty rental assets support robust cash flow generation. Our rental assets have an average estimated depreciable useful life of approximately 15 years with a residual value, and we typically recover our initial investment within the first few years of initial capital deployment. Our maintenance capital between ~~2020~~2021 and ~~2024~~2025 has ranged from approximately 02.45% to 5.4% of annual revenue with an average of 23.94% of annual revenue. We maintain low maintenance capital expenditures, as cleaning and routine maintenance costs are included in day-to-day operating costs and recovered through the average daily rates that we charge our customers. This continual care of our assets supports extended asset lives and the ongoing ability to operate with only nominal maintenance capital expenditures. The investment profile of our rental assets underpins our industry leading unit economics. Our contract discipline underpins our investment decision making and any spending on new growth investments is generally underwritten by contracts, with generally no speculative building. Generally, we do not invest capital unless we expect to meet our internal return thresholds. Due to the high revenue visibility from long-term contracts, we are poised to generate robust and stable cash flows driven by historical strategic growth investments and minimal future maintenance capital expenditure requirements.

Strategies

We believe that we can further develop our business by, among other things:

● Expansion and Diversification Through Organic Growth, Acquisitions, Diversifying Our Service Offerings as well as our Customer base. We selectively pursue ~~acquisitions~~organic growth, and ~~business~~mergers ~~combinations~~and acquisitions related to specialty rental and hospitality services in the markets we currently serve as well as adjacent markets that offer existing complimentary services to ours. Leveraging our core competencies related to facilities management, culinary services, catering and site services, we believe that we can further scale these elements of our business and replicate it in other geographies and end markets. We continue to focus on strengthening our balance sheet through strong cash flow generation and ~~debt~~prudent ~~reduction~~liability management to provide flexibility to execute upon targeted organic growth opportunities, acquisitions and business combinations that would be accretive to us while also diversifying our customer base, reducing customer concentration, and expanding our end markets.

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us while also diversifying our customer base, reducing customer concentration, and expanding our end markets.

●

Maintaining and Expanding Existing Customer Relationships. Growing and maintaining key customer relationships is a strategic priority. We fill existing bed capacity within our communities, while optimizing our inventory for existing customer expansion or for new customers. Keeping this balance provides us with flexibility and a competitive advantage when pursuing new contract opportunities as top-tier customers find enhanced value in the scale and flexibility of Target’s world class network, which supports their comprehensive and dynamic housing and food management requirements. With the scale of our accommodations network, a significant number of our key customers are commercially exclusive to Target Hospitality as their primary and preferred provider of accommodations and hospitality services throughout the U.S. or for a designated geographic area.

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● Enhancing Contract Scope and Services. One of our strategic focus areas is to enhance the scope and terms of our customer contracts. We intend to continue our historical track record of renewing and extending these contracts at favorable commercial and economic terms, while also providing additional value added services to our customers. For example, we have expanded our presence across multiple ~~government~~end ~~agencies~~markets within our WHS segment creating broad reaching opportunities to extend reach beyond our core accommodations platform. Intentionally growing revenue in an attractive ~~government~~critical ~~services~~mineral development and data center infrastructure end ~~market~~markets, allowed us to high-grade contracts and significantly expand Target’s growth pipeline.

●

Disciplined Growth Capital Expenditures to Increase Capacity. We selectively pursue opportunities to expand existing communities and develop new communities to satisfy customer demand. We employ rigorous discipline to our capital expenditures to grow our business. Our investment strategy is generally to only deploy new capital with visibility—typically a contract—to revenue and returns to meet our internal return hurdles often with capital recovery mechanisms. We target high returns on invested capital and achieve these returns due to our high cash-on-cash margin profile.

● Growing and Pursuing New Customer/Contract Opportunities. We continually seek additional opportunities to lease our facilities to ~~government~~customers in support of data center infrastructure projects and critical mineral development, natural resource development, and other third-party owners or operators in need of specialty rental and hospitality services. We have a proven track record of success in executing our specialty rental and facilities management model across several end markets for ongoing needs as well as major projects that have finite project life cycle durations. A strong national presence creates a platform to expand geographical reach into a wide range of industry applications, while significantly expanding Target’s long-term growth pipeline by utilizing existing core competencies to broaden service offerings across a variety of business and commercial applications. While special projects do not constitute a large portion of our business, it is typical for us to secure some special projects that can last anywhere from 1-5 years (or more). We have designated sales-related resources that focus on special finite life cycle projects and maintain a dynamic business pipeline which includes, but is not limited to, special projects across end markets.

● Enhance Financial Strength and Create Shareholder Value. The Company follows a disciplined approach to maintaining and enhancing financial strength to create stockholder value. This strategy is centered on the Company’s ability to drive profitable growth, and maximize net earnings, cash flows and operating margins; maintain consistent financial policies to ensure a strong balance sheet, liquidity level and access to capital; and retain the financial flexibility needed to strategically allocate and deploy capital as circumstances change. The Company's disciplined financial approach also allows it to maintain sufficient liquidity and to reduce refinancing risk~~, with the nearest significant debt maturity of $181~~.4 ~~million~~The ~~occurring~~Company inhad ~~June~~total ~~2025~~liquidity ~~consisting~~ of ~~our~~ approximately $~~181~~183.43 million inas ~~aggregate principal amount~~ of ~~10.75%~~December ~~senior secured notes due June 15~~31, 2025, ~~(the~~which ~~“2025~~consisted ~~Senior~~of ~~Secured~~up ~~Notes”),~~to ~~which~~$175 ~~were~~million ~~redeemed~~of inunused ~~full~~capacity onunder ~~March~~its 25ABL Facility, ~~2025.~~and ~~The~~cash ~~Company~~and ~~had~~cash ~~total~~equivalents ~~liquidity~~ of ~~approximately~~ $~~365~~8.73 million. asAs of December 31, ~~2024~~2025, ~~which~~the ~~consisted~~Company ofhad ~~up to~~ $~~175~~0 ~~million~~drawn ofon ~~unused capacity under~~ its ABL Facility, and ~~cash~~no ~~and~~Debt ~~cash~~outstanding, ~~equivalents~~other ofthan ~~$190.7~~finance ~~million~~lease obligations.

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Business Operations

Target Hospitality provides specialty rental and hospitality services, temporary specialty rental and hospitality services solutions and facilities management services across North America. The Company’s primary customers are U.S. government related contractors, investment grade natural resource development companies and other workforce accommodation providers operating in the regions served by our HFS – South segment. The Company’s specialty rental and hospitality and management services are highly customizable and are tailored to each customer’s needs and requirements. Target Hospitality is also an approved U.S. General Services Administration (“GSA”) contract holder and offers a comprehensive range of housing, deployment, operations and management services through its GSA professional services schedule agreement. The GSA contract allows U.S. federal agencies to acquire our products and services directly from Target Hospitality which expedites the commercial procurement process often required by government agencies.

Target Hospitality operates its business in two key end markets: (i) government (“Government”), which includes the facilities, services and operations of (a) the residential center and the related support communities in Dilley, Texas (the “South Texas Family Residential Center” or the “Dilley Immigration Processing Center”) previously provided pursuant to a lease and services agreement with a national provider of migrant programming which was terminated effective August 9, 2024 and which was reactivated on March 5, 2025; and (b) several facilities in West, Texas previously provided pursuant to its lease and services agreement with a leading national nonprofit organization (“NP Partner”) in support of their aid efforts, backed by a U. S. government contract, which was terminated effective February 21, 2025 and (ii) HFS – South, which includes the facilities and operations in sixteen communities located across Texas and New Mexico.

The map below shows the Company’s primary community locations in the HFS – South segment (including five locations outside of this segment).

Business Operations and Segments

Target Hospitality provides specialty rental and hospitality services, temporary specialty rental and hospitality services solutions and facilities management services across North America. The Company’s primary customers are customers supporting critical mineral development, power generation, or data center infrastructure projects in remote locations, investment grade natural resource development companies, a U.S. government related contractor, and other workforce accommodation providers operating in the regions served by our HFS – South segment. The Company’s specialty rental and hospitality and management services are highly customizable and are tailored to each customer’s needs and requirements. Target Hospitality is also an approved U.S. General Services Administration (“GSA”) contract holder and offers a comprehensive range of housing, deployment, operations and management services through its GSA professional

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~~The~~services ~~table~~schedule ~~below~~agreement. ~~presents~~The ~~the~~GSA ~~Company’s~~contract ~~communities~~allows inU.S. ~~the~~federal ~~HFS~~agencies –to ~~South,~~acquire ~~Government,~~our products and ~~All~~services ~~Other~~directly ~~segments~~from asTarget ofHospitality ~~December 31, 2024~~which expedites the commercial procurement process often required by government agencies.


Segment	Community Name	Location	Status	Number of Beds
Government	Dilley (Dilley Immigration Processing Center) (1)	Dilley, Texas	Own	2,556
Government	PCC (2)	Pecos, Texas	Own	2,000
Government	Pecos Blue Lodge (2)	Pecos, Texas	Own	1,000
Government	Delaware Lodge (2)	Orla, Texas	Own/Operate	425
Government	Lodge 118 (2)	Pecos, Texas	Own/Operate	1,402
Government	Pecos Trail Lodge (2)	Pecos, Texas	Own/Operate	558
Government & HFS - South	Skillman Station Lodge (2)	Mentone, Texas	Own/Operate	1,048
Government & HFS - South	Pecos South Lodge (2)	Pecos, Texas	Own/Operate	772
HFS - South	Orla North Lodge	Orla, Texas	Own/Operate	169
HFS - South	Orla South Lodge	Orla, Texas	Own/Operate	240
HFS - South	El Capitan Lodge	Orla, Texas	Own/Operate	429
HFS - South	Odessa West Lodge	Odessa, Texas	Own/Operate	805
HFS - South	Odessa East Lodge	Odessa, Texas	Own/Operate	280
HFS - South	Mentone Wolf Lodge	Mentone, Texas	Own/Operate	530
HFS - South	Midland Lodge	Midland, Texas	Own/Operate	870
HFS - South	Midland East Lodge	Midland, Texas	Own/Operate	197
HFS - South	Kermit Lodge	Kermit, Texas	Own/Operate	232
HFS - South	Kermit North Lodge	Kermit, Texas	Own/Operate	180
HFS - South	Carlsbad Lodge	Carlsbad, New Mexico	Own/Operate	496
HFS - South	Seven Rivers Lodge	Carlsbad, New Mexico	Own/Operate	640
HFS - South	Jal Lodge	Jal, New Mexico	Own/Operate	466
HFS - South	Big Spring Lodge	Big Spring, Texas	Own/Operate	621
All Other	Williams County Lodge	Williston, North Dakota	Own/Operate	300
All Other	Judson Executive Lodge	Williston, North Dakota	Own/Operate	100
All Other	Watford City Lodge	Watford City, North Dakota	Own/Operate	334
All Other	Cheecham Lodge	Alberta, Canada	Own/Operate	215
Total Number of Beds				16,865

Target Hospitality currently operates its business in three reportable segments: (i) HFS – South, which includes the facilities and operations in sixteen communities located across Texas and New Mexico; (ii) WHS, which includes construction and hospitality services provided to a community in Winnemucca, Nevada where there is insufficient housing and infrastructure solutions supporting critical mineral development and specialty rental and hospitality services provided to a community in the Southwestern United States where there is also insufficient housing and infrastructure solutions supporting the development of a regional data center campus; and (iii) government (“Government”), which includes the facilities, services and operations of (a) the residential center and the related support communities in Dilley, Texas (the “South Texas Family Residential Center” or the “Dilley Immigration Processing Center”) previously provided pursuant to a lease and services agreement with a national provider of migrant programming which was terminated effective August 9, 2024 and reactivated on March 5, 2025; and (b) several facilities in West Texas previously provided pursuant to its lease and services agreement with a leading national nonprofit organization (“NP Partner”) in support of their aid efforts, backed by a U. S. government contract, which was terminated effective February 21, 2025.

(1) South Texas Family Residential Center Contract (as defined below) terminated on August 9, 2024. These community assets in Dilley, Texas previously leased under the South Texas Family Residential Center Contract were reactivated as of March 5, 2025 under a new contract with the same national provider of migrant programming.

(2) The New PCC Contract (as defined below) associated with these communities terminated on February 21, 2025.

Government

The Government segment includes, but is not limited to, two primary end markets which make up approximately 58% of our revenue for the year ended December 31, 2024:

● Immigration Aid Efforts. Community facilities providing a suite of comprehensive service offerings supporting immigration aid efforts.

● Residential Facilities. Residential facilities, provide space and residential services in an open and safe environment. Residential facilities offer services including, but not limited to, educational programs, medical care, recreational activities, counseling, and access to religious and legal services.

For the year ended December 31, 2024, the Company’s operations in the Government segment consisted primarily of a lease and services agreement with our NP Partner, backed by a committed U.S. government contract, to provide a suite of comprehensive service offerings in support of their aid efforts at a residential housing facility. During the year ended December 31, 2023, the Company executed a new contract with our NP Partner that became effective on May 16, 2022,

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~~which~~The ~~represented~~table abelow ~~significantly~~presents ~~expanded lease and services agreement (“Expanded Contract”) to provide enhanced infrastructure and comprehensive facility services that support~~ the ~~critical hospitality solutions the~~ Company’s ~~provides~~communities ~~to the NP Partner and the U.S. government~~ in ~~their missions. The Expanded Contract provided for a significant scope expansion and term extension for~~ the ~~continuation~~HFS of– ~~services provided under the agreement that originated in March 2021 with approximately 6~~South,~~375~~ ~~beds. On May 15~~WHS, ~~2023~~Government, ~~the Company executed a six-month extension of the Expanded Contract, which extended the period of performance through November 15, 2023~~ and ~~increased~~All ~~the~~Other ~~contract~~category value, with no change to contract structure or any other existing economic terms. During the year ended December 31, 2023, the Company executed a new contract with our NP Partner (“New PCC Contract”), pursuant to an Indefinite Delivery, Indefinite Quantity Task Order between our NP Partner and the U.S. government, that became effective on November 16, 2023, with a one year base period through November 15, 2024, with an option to extend for up to four additional one year periods and an option to extend for up to six months upon the conclusion of the base period or any of the option periods. As previously disclosed, effective February 21, 2025, the New PCC Contract was terminated, but Target retained ownership of these assets, enabling the Company to continue utilizing these modular solutions and real property to support customer demand across its existing operating segments ~~and other potential growth opportunities. Target is actively engaged in re-marketing these assets, along with other existing modular solutions,~~ as ~~it pursues a strong pipeline~~ of ~~growth opportunities. These opportunities include a growing number of potential solutions supporting the U.S. government's current immigration policies~~December 31, ~~including utilizing the Company's previously leased assets located in Pecos, Texas~~ 2025.


Segment	Community Name	Location	Status	Number of Beds
HFS - South	Orla North Lodge	Orla, Texas	Own/Operate	169
HFS - South	Orla South Lodge	Orla, Texas	Own/Operate	240
HFS - South	El Capitan Lodge	Orla, Texas	Own/Operate	429
HFS - South	Odessa West Lodge	Odessa, Texas	Own/Operate	805
HFS - South	Odessa East Lodge	Odessa, Texas	Own/Operate	280
HFS - South	Mentone Wolf Lodge	Mentone, Texas	Own/Operate	530
HFS - South	Midland Lodge	Midland, Texas	Own/Operate	870
HFS - South	Midland East Lodge	Midland, Texas	Own/Operate	197
HFS - South	Kermit Lodge	Kermit, Texas	Own/Operate	232
HFS - South	Kermit North Lodge	Kermit, Texas	Own/Operate	180
HFS - South	Carlsbad Lodge	Carlsbad, New Mexico	Own/Operate	496
HFS - South	Seven Rivers Lodge	Carlsbad, New Mexico	Own/Operate	640
HFS - South	Jal Lodge	Jal, New Mexico	Own/Operate	466
HFS - South	Big Spring Lodge	Big Spring, Texas	Own/Operate	487
WHS	New Frontier RV Lodge	Winnemucca, Nevada	Own/Operate	200
WHS	Thacker Pass Lodge ⁽³⁾	Winnemucca, Nevada	Operate	N/A
WHS	Patton Springs Lodge	Afton, Texas	Own/Operate	310
Government	Dilley (Dilley Immigration Processing Center) ⁽¹⁾	Dilley, Texas	Own	2,556
Government	PCC ⁽²⁾	Pecos, Texas	Own	2,000
Government	Pecos Blue Lodge ⁽²⁾	Pecos, Texas	Own	1,000
Government	Delaware Lodge ⁽²⁾	Orla, Texas	Own/Operate	425
Government	Lodge 118 ⁽²⁾	Pecos, Texas	Own/Operate	1,402
Government	Pecos Trail Lodge ⁽²⁾	Pecos, Texas	Own/Operate	308
Government & HFS - South	Skillman Station Lodge ⁽²⁾	Mentone, Texas	Own/Operate	1,048
Government & HFS - South	Pecos South Lodge ⁽²⁾	Pecos, Texas	Own/Operate	772
All Other	Williams County Lodge	Williston, North Dakota	Own/Operate	300
All Other	Judson Executive Lodge	Williston, North Dakota	Own/Operate	100
All Other	Watford City Lodge	Watford City, North Dakota	Own/Operate	334
All Other	Powder River Lodge ⁽⁴⁾	Powder River, Wyoming	Operate	N/A
All Other	Cheecham Lodge	Alberta, Canada	Own/Operate	215
Total Number of Beds				16,991

~~We look forward to expanding the products and services of our Government segment through our GSA designations, specifically our designation to maintain the professional services schedule~~ (~~“PSS”~~1) ~~for~~South ~~logistics~~Texas ~~service~~Family ~~solutions,~~Residential ~~which~~Center ~~are~~Contract ~~designed~~(as todefined assist federal agencies in procuring comprehensive logistics solutions, including planning, consulting, management, and operational support when deploying supplies, equipment, materials and associated personnel. GSA’s PSS is a multiple award schedule (“MAS”below) ~~contract~~terminated ~~for~~on ~~innovative~~August ~~solutions~~9, ~~offered to federal, state and local governments, for their professional service’s needs~~2024. These ~~Having~~community aassets ~~PSS signifies that we have been vetted as a responsible supplier, our pricing has been determined to be fair and reasonable and we are~~ in ~~compliance with all applicable laws and regulations. PSS is one of the GSA’s schedule contracts~~Dilley, ~~which~~Texas ~~are~~previously ~~indefinite~~leased ~~delivery, indefinite quantity (“IDIQ”), long-term contracts~~ under the ~~GSA~~South ~~MAS~~Texas ~~program.~~Family ~~GSA~~Residential ~~schedule~~Center ~~contracts~~Contract were ~~developed~~reactivated toas ~~assist~~of ~~federal~~March ~~employees in purchasing products and services and they contain pre-negotiated prices~~5, ~~delivery~~2025 ~~terms,~~under ~~warranties,~~a ~~and~~new ~~other~~contract ~~terms~~with ~~and~~the ~~conditions~~same ~~which~~national ~~streamline~~provider ~~the~~of ~~buying~~migrant ~~process~~programming.

(2) The ~~Government~~PCC ~~segment~~Contract ~~generated~~(as ~~approximately~~defined ~~58%~~below) orassociated ~~$224.7~~with ~~million~~these ofcommunities ~~the~~terminated ~~Company’s~~on ~~revenue~~February ~~for the year ended December 31~~21, ~~2024.~~ ~~The map below shows the Company’s primary community locations in the Government segment~~2025.

13(3) Thacker Pass Lodge is operated and managed, but not owned under the Workforce Hub Contract effective February 14, 2025.

~~Table~~(4) The Company provides operational support, inclusive of ~~Contents~~catering and housekeeping services to support the Powder River Lodge.

Hospitality & Facilities Services - South

The HFS – South segment serves an area that stretches across the southeast corner of New Mexico and a large portion of western Texas, encompassing approximately a hundred thousand square miles and dozens of counties. This geographic area, also known as the Permian Basin, is one of the world’s oldest natural resource producing regions. Our customers utilize both unconventional and conventional development techniques, encompassing multiple stacked development zones, which increases the potential recoverable resource and lengthens their development lifecycle.

While understanding the significant economic potential in this region, Target entered the market in 2012, ahead of many of our competitors. We started in HFS – South with an 80-bed community in Pecos, TX.13

AsTable of ~~December 31, 2024, with 16 communities and approximately 7,900 beds across HFS – South, we offer the largest network of turnkey specialty rental accommodations and hospitality services.~~ Contents

~~The~~Understanding ~~HFS~~the –significant ~~South~~economic ~~segment~~potential ~~generated~~in ~~approximately~~this ~~39%~~region, orTarget ~~$149.9~~entered ~~million~~the ofmarket ~~the~~in ~~Company’s~~2012, ~~revenue~~ahead ~~for~~of ~~the~~many ~~year~~of ~~ended~~our ~~December 31, 2024~~competitors. ~~The~~We ~~map~~started ~~below~~in ~~shows~~HFS ~~the~~– ~~Company’s~~South ~~primary~~with ~~community~~an ~~locations~~80-bed community in ~~the~~Pecos, ~~HFS – South region~~TX.

As of December 31, 2025, with 16 communities and approximately 7,800 beds across HFS – South, we offer the largest network of turnkey specialty rental accommodations and hospitality services.

The HFS – South segment generated approximately 44% or $141.7 million of the Company’s revenue for the year ended December 31, 2025.

Workforce Hospitality Solutions

The WHS segment was created in 2025 and includes a diverse customer base with highly customized communities, with capabilities to expand to meet growing customer demand, supporting critical mineral development, power generation, and data center infrastructure projects. Currently, WHS includes one community in Winnemucca, Nevada to establish a new regional workforce hub network capacity for lithium and related critical mineral development as well as the Workforce Housing Contract described below for construction of workforce housing and delivery of comprehensive hospitality and facility services. The WHS segment also includes the Data Center Community Contract described below to construct and provide comprehensive facility services and hospitality solutions supporting the Data Center Community.

For the year ended December 31, 2025, the Company’s operations in the WHS segment included activity under a multi-year construction and services agreement (the “Workforce Housing Contract”) entered into in February 2025 with Lithium Nevada, LLC (“Lithium Nevada”). Under the Workforce Housing Contract, the Company is providing construction of workforce housing, facility services, and hospitality solutions in support of Lithium Nevada’s development of Thacker Pass (the “Thacker Pass Project”) and the broader North American critical minerals supply chain. The workforce housing community (the “Workforce Hub”) is located in Winnemucca, Nevada, near Thacker Pass, which contains one of the world’s largest known measured lithium resources. The Thacker Pass Project is expected to play a significant role in domestic lithium battery production. At the time the Workforce Housing Contract was executed, Lithium Nevada had commenced site preparation, and the Company began construction of the Workforce Hub. As of December 31, 2025, construction of the Workforce Hub was substantially complete. When fully operational, the Workforce Hub will be capable of supporting a population of approximately 2,000 individuals. The assets associated with the Workforce Hub that support this capacity are not owned by the Company. The Workforce Housing Contract has an initial term through 2027, with first occupancy that began in September 2025. In addition to constructing the Workforce Hub, the Company is providing turnkey operational support for the Workforce Hub, including culinary services, facilities management, and other support services. The Workforce Housing Contract is expected to generate approximately $175.2 million of revenue over its initial term, including approximately $111.1 million of minimum committed revenue. Revenue recognized during 2025 primarily consisted of construction-related fee income.

For the year ended December 31, 2025, the Company’s operations in the WHS segment also included a multi-year lease and services agreement (“Data Center Community Contract”) executed during the three months ended September 30, 2025 to construct and provide comprehensive facility services and hospitality solutions supporting the development of a regional data center campus located in the Southwestern United States (“Data Center Community” or the “Community”). The Company is providing full turnkey support for the Data Center Community, including premium culinary offerings, facilities management, and comprehensive support services. The purpose-built and highly customized Community will support an initial population of 250 individuals, with the capability to expand to approximately 1,500 individuals. Construction and mobilization of the Community for the initial 250 beds was completed as of September 30, 2025, and first occupancy of the Community began in September 2025 for the initial 250 beds. During the three months ended December 31, 2025, the scope of the Data Center Community Contract was expanded to add an additional 800 beds to the Data Center Community by June 2026, representing a 320% increase from the initial Community size, resulting in a customized and purpose-built community capable of supporting up to 1,050 individuals (“Expanded Community Contract”). The assets comprising the 1,050 beds supporting the Data Center Community will be owned and managed by the Company. The Company anticipates additional potential Community expansions to meet growing customer demand in future years. The Expanded Community Contract, which has an initial term through September 2027 for the initial 250 beds and an initial term through May 2028 for the additional 800 beds, is expected to generate approximately $134 million of committed minimum revenue over the initial terms, which includes advanced payments to be paid in installments during

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~~All~~the ~~Other~~initial construction and mobilization phase of the Expanded Community Contract to fund the initial construction and mobilization of the Community and related expansions. The Company utilized a portion of its existing asset portfolio to construct the premium Data Center Community and, during the year ended December 31, 2025, began receiving advanced payments from the customer to fund the construction and mobilization of the Community. The majority of the advance payments were received as of December 31, 2025, and are reflected as cash flows from operations during the year ended December 31, 2025. The advanced payments were determined to be related to future services and will be amortized as revenue over the estimated term of the contract. The Data Center Community Contract began to generate revenue during the year ended December 31, 2025.

InThe ~~addition~~Data toCenter ~~the~~Community ~~two~~contract ~~reportable~~described ~~segments~~ above, demonstrates the Company:’s ~~(i)~~rapid-deployment ~~has~~capabilities ~~facilities~~through ~~and~~scalable ~~operations~~community ~~for~~expansions. ~~one~~The initial 250 bed community was completed in ~~Canada;~~less ~~(ii)~~than ~~has~~60 ~~facilities~~days, ~~and~~underscoring ~~operations~~the ~~for~~Company’s ~~three~~ability ~~communities~~to rapidly scale infrastructure in ~~North~~response ~~Dakota;~~to ~~and~~customer ~~(iii)~~workforce ~~provides~~requirements. Based ~~catering~~on ~~and~~this ~~other~~demonstrated ~~services~~execution, tothe ~~communities~~Company ~~and~~expects ~~other~~to ~~workforce~~continue ~~accommodation~~delivering ~~facilities~~subsequent ~~for~~expansions ~~the~~on ~~natural~~timelines ~~resource~~consistent ~~development~~with ~~industries~~the ~~not~~initial ~~owned~~deployment bythroughout ~~Target~~the ~~Hospitality~~life ~~(“Facilities~~of ~~Management”)~~the project.

~~The~~In December 2025, the Company ~~provides~~announced ~~specialty~~a ~~rental~~25-month contract award agreement to build and ~~hospitality~~operate ~~services~~a ~~including~~community ~~concierge,~~in ~~culinary,~~Northern ~~catering~~Nevada, ~~maintenance,~~supporting ~~security,~~power ~~janitorial~~generation ~~and~~expansion ~~related~~for ~~services~~mining atand ~~facilities~~data ~~owned~~center byprojects ~~other~~(the ~~companies~~“Power Community Contract”). WeIt ~~currently~~is ~~provide~~expected ~~Facilities~~to ~~Management~~generate approximately $35 million in revenue over its initial 25-month term starting in June of 2026, ~~culinary~~accommodate ~~and~~up ~~catering~~to 250 individuals, and ~~site~~leverage ~~services~~the Company’s existing regional infrastructure with minimal capital investment of $8 million to $10 million. The operating results for ~~one~~this ~~facility~~contract ~~located~~are expected to be reported within the WHS operating segment beginning in ~~Wyoming~~June ~~for~~of ~~which~~2026 weas dothe ~~not~~contract ~~own~~generated no operating revenues for the ~~specialty~~year ~~rental~~ended ~~accommodation~~December ~~assets.~~31, 2025.

The WHS segment generated approximately 30% or $96.8 million of the Company’s revenue for the year ended December 31, 2025 and generated Adjusted Gross Profit of approximately $20.6 million, resulting in an adjusted gross margin of approximately 21%.

Management estimates the potential total addressable market opportunity for integrated workforce hospitality solutions supporting data center development, AI infrastructure, critical mineral development, and power generation projects to be approximately $18 billion. These estimates are based on historical hospitality-service input percentages applied to announced and expected U.S. infrastructure and advanced technology capital investment cycles. Our estimates for the total addressable market are based on a number of internal and third-party estimates. We have not independently verified the information published by third-party sources, and our internal estimates are subject to uncertainty. Therefore, such estimates are inherently imprecise, and as a result, our estimates of the total addressable market for our services may prove to be incorrect, which may impair our growth and materially and adversely affect our business, financial condition and results of operations.

Government

The Government segment includes, but is not limited to, two primary end markets, immigration aid efforts and residential facilities, which make up approximately 22% of our revenue for the year ended December 31, 2025.

For the year ended December 31, 2025, the Company’s operations in the Government segment included a lease and services agreement with our NP Partner, backed by a committed U.S. government contract, to provide a suite of comprehensive service offerings in support of their aid efforts at a residential housing facility. During the year ended December 31, 2023, the Company executed a new contract with our NP Partner (“PCC Contract”), pursuant to an Indefinite Delivery, Indefinite Quantity Task Order between our NP Partner and the U.S. government, that became effective on November 16, 2023, with a one year base period through November 15, 2024, with an option to extend for up to four additional one year periods and an option to extend for up to six months upon the conclusion of the base period or any of the option periods. In November of 2024, one of the four one year option period extensions was exercised with an annual minimum lease revenue of approximately $168 million supporting a community capable of serving up to 6,000 individuals. Effective February 21, 2025, the PCC Contract was terminated, but Target retained ownership of these assets, enabling the Company to continue utilizing these modular solutions and real property to support customer demand across

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its existing operating segments and other potential growth opportunities. Certain assets were redeployed to the WHS segment to service the requirements of the Data Center Community Contract previously described. The Company is actively engaged in remarketing the remaining assets, as it pursues a strong pipeline of growth opportunities. These opportunities include a growing number of potential solutions supporting data center infrastructure projects within our WHS segment.

Target Hospitality built, leased and operated the South Texas Family Residential Center through a former sub-lease and services agreement with a national provider of migrant programming, which provided management services (“STFRC Contract”). Effective August 9, 2024, the STFRC Contract was terminated, but these assets were reactivated as the Dilley Immigration Processing Center (“DIPC”) pursuant to a new sub-lease and services agreement with the same national provider of migrant programming (the “DIPC Contract”), effective March 5, 2025, which is a lease and services agreement with an anticipated five-year term. The DIPC retains a similar facility size and operational scope as the prior operations under the STFRC Contract. The DIPC is capable of supporting up to 2,400 individuals and provides an open and safe environment to appropriately care for the community population. The consistency of the community layout required no capital investment, allowing for seamless community reactivation. The Company is providing facility and hospitality solutions under the DIPC Contract, which has a similar economic structure to the previous STFRC Contract, including fixed minimum revenue regardless of occupancy that amounts to a cumulative fixed minimum revenue amount of approximately $246 million over the anticipated five-year term. As such, the DIPC Contract is expected to provide over $246 million of revenue over its anticipated five-year term, to March 2030, and was subject to a ramp up period based on utilization during the first six months of the contract term resulting in lower fixed minimum revenue amounts during the ramp up period. The ramp up period was completed as scheduled as of September 30, 2025 with the maximum fixed minimum revenue amount now being recognized. The maximum fixed minimum revenue amount is based on utilization of 2,400 beds. Target Hospitality owns the facility and provides select on-site services including catering, culinary, management, janitorial and light maintenance. The Dilley Facility includes 524,000 square feet of building space including residential housing units with 2,400 beds (excluding employee beds), as well as classrooms, a library, chapels, an infirmary with full medical, dental, pharmaceutical and x-ray capabilities, a dining hall, offices and an industrial laundry center. The DIPC Contract is supported by an amended intergovernmental services agreement (“IGSA”) between the city of Dilley, Texas and U.S. Immigration and Customs Enforcement (“ICE”). As is customary for U.S. government contracts and subcontracts, the IGSA and the DIPC Contract are subject to annual U.S. government appropriations and can be canceled for convenience with a 60-day prior notice.

The Company holds a GSA designation, specifically our designation to maintain the professional services schedule (“PSS”) for logistics service solutions, which are designed to assist federal agencies in procuring comprehensive logistics solutions, including planning, consulting, management, and operational support when deploying supplies, equipment, materials and associated personnel. GSA’s PSS is a multiple award schedule (“MAS”) contract for innovative solutions, offered to federal, state and local governments, for their professional service’s needs. Having a PSS signifies that we have been vetted as a responsible supplier, our pricing has been determined to be fair and reasonable and we are in compliance with all applicable laws and regulations. PSS is one of the GSA’s schedule contracts, which are indefinite delivery, indefinite quantity (“IDIQ”), long-term contracts under the GSA MAS program. GSA schedule contracts were developed to assist federal employees in purchasing products and services and they contain pre-negotiated prices, delivery terms, warranties, and other terms and conditions which streamline the buying process.

The Government segment generated approximately 22% or $70.8 million of the Company’s revenue for the year ended December 31, 2025.

All Other

In addition to the three reportable segments above, the Company: (i) has facilities and operations for one community in Canada; (ii) has facilities and operations for three communities in North Dakota; and (iii) provides catering and other services to communities and other workforce accommodation facilities for the natural resource development industries not owned by Target Hospitality (“Facilities Management”).

The Company provides specialty rental and hospitality services including concierge, culinary, catering, maintenance, security, janitorial and related services at facilities owned by other companies. We currently provide Facilities

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Management, culinary and catering and site services for one facility located in Wyoming for which we do not own the specialty rental accommodation assets.

Segment information for December 31, ~~2024~~2025 and ~~2023~~2024

For additional information on our segments, including ~~Government,~~ HFS - South, WHS, Government, and All Other, related to December 31, ~~2024~~2025 and ~~2023~~2024, refer to Note 1918 of our audited consolidated financial statements located in Part II, Item 8 within this Annual Report on Form 10-K.

Customers and Competitors

For the year ended December 31, ~~2024~~ 2025, the Company’s principal customers ~~include~~included ~~U.S. Government contractors, and~~ investment grade natural resource development companies, customers supporting critical mineral development, power generation, and data center infrastructure projects, and U.S. Government contractors. For the year ended December 31, ~~2024~~2025, wethe Company had ~~one~~three ~~customer,~~customers who accounted for 28%, ~~approximately~~11% 48and 11% of our ~~revenue~~revenues, respectively.

For the year ended December 31, 2024, we had one customer, who accounted for approximately 48% of our revenue.

For the year ended December 31, 2023, we had one customer, who accounted for approximately 62% of our revenue.

For the year ended December 31, 2022, we had two customers, who accounted for approximately 61% and 11% of our revenue, respectively.

Generally, the Company competes based on factors including quality and breadth of available locations and room utilization, modular construction time and development expertise, proactive logistics management, geographic areas serviced, average daily rate, facility quality, and food management.

The accommodation facilities market in our HFS-South ~~segment~~and isWHS segments are divided into competitors that serve components of the overall value chain, but very few offer the entire suite of hospitality services to our customers. Our HFS-South and WHS competitors primarily include small, independent businesses with a few locations, often with little to no contracts and with significantly fewer rooms, or RV parks that offer no turn-key services or modular accommodation solutions.

The accommodations market within our Government segment is generally divided into competitors that primarily serve as temporary facilities with seasonal contracts, and tent providers with limited scale and services. U.S. government sites typically do not own and operate the full suite of hospitality solutions, but contract out to third-parties for more limited offerings and on a shorter-term basis.

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typically do not own and operate the full suite of hospitality solutions, but contract out to third-parties for more limited offerings and on a shorter-term basis.

The Company’s Community and Services Contracts

For the year ended December 31, ~~2024~~2025, revenue related to the HFS – South segment represented approximately 3944% of our revenue, revenue related to our Government segment represented 5822% of our revenue, revenue related to the WHS segment represented 30% of our revenue, and All Other revenue represented 34% of our revenue.

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Customer Agreements

The Company’s operations in the HFS – South segment are conducted through several different types of agreements with customers.

Certain customer agreements include committed contractual revenue arrangements, some of which contain minimum revenue amounts. For certain of the Company’s customers, it uses network lease and services agreements (“NLSAs”) which cover the customer’s full enterprise and are exclusive agreements with set terms and rates for all geographic regions in which the Company operates. The NLSAs obligate the customers to use the Company’s facilities and services across the U.S. The Company’s NLSAs have an average set term of two to three years.

Certain other customers are subject to lease and services agreements (“LSAs”) which are more limited in geographic scope and cover only specified areas with the same structural commercial terms as the NLSAs. The LSAs obligate customers to pay a fixed minimum revenue amount, generally for a fixed amount of rooms over a term regardless of occupancy with terms that can range from one month to multiple years.

The Company also has master services agreements (“MSAs”) with certain customers which are typically exclusive arrangements without the committed component of the NLSAs and LSAs and no minimum contractual liability for the customer. MSAs make up the largest portion of the Company’s operations in the HFS – South segment.

~~For~~The ~~the year ended December 31, 2024, the~~ Company’s operations in the ~~Government~~WHS segment ~~consisted~~consist ~~primarily~~ of ~~several~~the ~~facilities~~multi-year inconstruction ~~connection with a lease~~ and services ~~agreement~~Workforce ~~with~~Housing ~~the~~Contract NPpreviously ~~Partner~~described, ~~backed~~as bywell aas ~~committed~~LSAs, ~~U.S.~~which ~~government~~obligate ~~contract,~~the customer to ~~provide~~pay a ~~suite~~fixed ofminimum ~~comprehensive~~revenue ~~service offerings. The initial contract~~amount, ~~including~~generally ~~subsequent~~for ~~change orders and amendments, had~~ a ~~value~~fixed number of ~~approximately~~rooms ~~$129 million and was fully committed~~ over ~~its~~a ~~initial one~~multi-year term, ~~which~~regardless ~~commenced~~of ~~March 18, 2021~~occupancy. ~~During~~These ~~the~~arrangements ~~year~~also ~~ended~~include December 31, 2022, the Company executed the Expanded Contract with our NP Partner that became effective on May 16, 2022, which represented a significantly expanded lease and services agreement to provide enhanced infrastructure and comprehensive ~~facility~~master services ~~supporting~~contracts the NP Partner and the U.S. government in their missions. The Expanded Contract provided for a significant scope expansion and term extension for the continuation of services provided under the agreement that ~~originated~~provide inturnkey ~~March~~workforce ~~2021.~~housing ~~The~~solutions ~~Expanded Contract operated~~ with ~~similar~~fixed ~~structure~~monthly to the Company’s prior and existing government services subcontracts, which are centered around minimum revenue amounts supported by the U.S. government. Additionally, the Expanded Contract included occupancy-based variable services revenue that aligned with active community population. The minimum revenue amount, which consisted of annual lease ~~revenue~~charges ~~and nonrecurring infrastructure enhancement revenue, provided~~ for a ~~minimum annual revenue contribution of approximately $390 million and was fully~~ committed ~~over~~room ~~its initial contract term. On May 15~~block, ~~2023,~~tiered ~~the Company executed a six~~meal-~~month~~service ~~extension~~pricing ofbased ~~the~~on ~~Expanded Contract~~occupancy, ~~which extended the period of performance through November 15, 2023~~ and ~~increased~~bundled ~~the~~transportation ~~contract~~services ~~value,~~together with nominimum ~~change~~payment tocommitments contract structure or any other existing economic terms. The Expanded Contract terminated as of November 15, 2023. During the year ended December 31, 2023, the Company executed the New PCC Contract, pursuant to an Indefinite Delivery, Indefinite Quantity Task Order between our NP Partner and ~~the~~early-termination ~~U.S.~~fees ~~government,~~ that ~~replaced~~create ~~the~~a ~~Expanded~~stable ~~Contract~~ and ~~became~~recurring ~~effective~~revenue onprofile ~~November~~over ~~16,~~the ~~2023.~~contract ~~The New PCC Contract included a one year base period through November 15, 2024, an option to extend for up to four additional one~~ term.

17For the year ended December 31, 2025, the Company’s operations in the Government segment included several facilities in connection with a lease and services agreement with the NP Partner, backed by a committed U.S. government contract, to provide a suite of comprehensive service offerings. The Company’s relationship with its NP Partner in the Government segment began with an initial contract that commenced on March 18, 2021, with a total value of approximately $129 million. This agreement was significantly expanded in 2022, which provided a minimum annual revenue contribution of approximately $390 million, consisting of annual lease revenue and nonrecurring infrastructure enhancement revenue, along with occupancy-based variable services revenue that aligned with active community population. In 2023, the expanded contract was replaced by the PCC Contract, which maintained similar operational scope and structure, included four one-year extension options, and continued to provide occupancy-based variable services revenue tied to active community population. In 2024, the Company executed the first of these extension options along with an amendment to the PCC Contract, effective November 16, 2024, to support a community capable of serving up to 6,000 individuals, which provided a minimum annual revenue contribution of approximately $168 million. The PCC Contract remained in effect until its termination on February 21, 2025.

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year periods, and an option to extend for up to six months upon the conclusion of the base period or any of the option periods. Under the New PCC Contract, the Company maintained similar facility size and operational scope compared to the Expanded Contract. The New PCC Contract operates with similar structure to the Company’s prior government services subcontracts, which centered around minimum revenue amounts supported by the U.S. government. Additionally, the New PCC Contract includes occupancy-based variable services revenue that align with active community population. During the year ended December 31, 2024, the Company executed the first of four one-year extension options on the New PCC Contract along with an amendment, effective November 16, 2024, which supports a community capable of serving up to 6,000 individuals. As previously disclosed, the New PCC Contract was terminated effective February 21, 2025.

The Company’s operations in the Government segment also includes the DIPC with a national provider of migrant programming (the “Dilley Partner”) currently provided pursuant to the Dilley contract effective March 5, 2025. The DIPC Contract is supported by an amended IGSA between the city of Dilley, Texas and ICE. As is customary for U.S. government contracts and subcontracts, the IGSA and the DIPC Contract are subject to annual U.S. government appropriations and can be canceled for convenience with a 60-day prior notice.

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Regulatory and Environmental Compliance

Our business and the businesses of the Company’s customers can be affected significantly by federal, state, municipal and local laws and regulations relating to the natural resource and mining industries, food safety and environmental protection. The Company incurs significant costs to comply with these laws and regulations in operating its business. However, changes in these laws, including more stringent regulations and increased levels of enforcement of these laws and regulations, or new interpretations thereof, and the development of new laws and regulations could impact the Company’s business and result in increased compliance or operating costs associated with its or its customers’ operations.

In addition, our customers include a U.S. government ~~contractors~~contractor, which means that we may, indirectly, be subject to various statutes and regulations applicable to doing business with the U.S. government. U.S. government contracts and grants normally contain additional requirements that may increase our costs of doing business, reduce our profits, and expose us to liability for failure to comply with these terms and conditions. If we fail to maintain compliance with these requirements, our contracts may be subject to termination, and we may be subject to financial and/or other liability under its contracts or under the Federal Civil False Claims Act (the “False Claims Act”).

To the extent that these laws and regulations impose more stringent requirements or increased costs or delays upon the Company’s customers in the performance of their operations, the resulting demand for the Company’s services by those customers may be adversely affected. Moreover, climate change laws or regulations could increase the cost of consuming, and thereby reduce demand for natural resources, which could reduce the Company’s customers’ demand for its services. The Company cannot predict changes in the level of enforcement of existing laws and regulations, how these laws and regulations may be interpreted or the effect changes in these laws and regulations may have on the Company or its customers or on our future operations or earnings. The Company also cannot predict the extent to which new laws and regulations will be adopted or whether such new laws and regulations may impose more stringent or costly restrictions on its customers or its operations.

Human Capital

The Company’s key human capital management objectives are to attract, retain and develop talent to deliver on the Company’s strategy. To support these objectives, the Company’s human resources programs are designed to: keep employees safe and healthy; reward and support employees through competitive pay and benefit programs; develop talent to prepare them for critical roles and leadership positions; and facilitate internal talent mobility to create a high-performing workforce.

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The Company employed approximately ~~770~~902 people as of December 31, ~~2024~~2025. Our workforce is primarily comprised of full-time employees. Of the total population as of December 31, ~~2024~~2025, approximately ~~600~~562 of our employees worked in the HFS – South segment, approximately 41114 of our employees worked in the WHS segment, approximately 106 of our employees worked in the Government segment, and approximately 6659 of our employees worked in the All Other segment. The remaining 6361 employees worked in Corporate. None of the Company’s employees are unionized or members of collective bargaining arrangements.

The Company focuses on the following in managing its human capital:

•Health and safety: We have a safety program that focuses on implementing management systems, policies and training programs and performing assessments to see that workers are trained properly, and that injuries and incidents are prevented. All of our employees are empowered with stop-work authority which enables them to immediately stop any unsafe or potentially hazardous working condition or behavior they may observe. We utilize a mixture of indicators to assess the safety performance of our operations, including total recordable injury rate, preventable motor vehicle incidents and corrective actions. We also recognize outstanding safety behaviors through us at the local community level. Importantly, during the COVID-19 ~~pandemic, our continuing focus on health and safety enabled us to preserve business continuity without sacrificing our commitment to keeping our colleagues safe.~~

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pandemic, our continuing focus on health and safety enabled us to preserve business continuity without sacrificing our commitment to keeping our colleagues safe.

•Employee wellness: The Company’s Safe & Healthy program is a comprehensive approach to wellness that encourages healthy behaviors and is intended to raise morale, productivity, and overall employee engagement. The program includes a health assessment, no cost preventive care through the medical plan, tobacco cessation support through our medical insurance carrier, and an employee assistance program. Approximately 4540% of eligible employees participated in the Health & Safety program in ~~2024~~2025.

•Compensation programs and employee benefits: Our compensation and benefits programs provide a package designed to attract, retain and motivate employees. In addition to competitive base salaries, the Company provides a variety of short-term, long-term, and commission-based incentive compensation programs to reward performance relative to key metrics. We offer comprehensive benefit options including retirement savings plans, medical insurance, prescription drug benefits, dental insurance, vision insurance, accident and critical illness insurance, life and disability insurance, health savings accounts, and flexible spending accounts.

•Employee experience and retention: To evaluate our employee experience and retention efforts, we monitor a number of employee measures, such as employee retention. To provide an open and frequent line of communication for all employees, we encourage staff meetings at every community.

•Training and development: The Company is committed to the continued development of its people. We aim for all applicable new hires to attend new hire orientation training within 90 days of hire. Additionally, we offer a wide array of training solutions (classroom, hands-on and e-learning) for our employees. In ~~2024~~2025, our employees enhanced their skills through training, including cybersecurity, ethics, and safety training, leadership training and equipment-related training from our suppliers. Our performance process encourages performance and development check-ins throughout the year to provide for development at all levels across the Company.

Intellectual Property

Target Hospitality owns a number of trademarks important to the business. Its material trademarks are registered or pending registration in the U.S. Patent and Trademark Office. The business operates primarily under the Target Hospitality brand.

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Properties

Target Hospitality’s corporate headquarters is located in The Woodlands, Texas. Its executive, financial, accounting, legal, administrative, management information systems and human resources functions operate from this single, leased office.

For a list of real property owned material to the operations of Target Hospitality, refer to Part I Item 2 within this Annual Report on Form 10-K.

Available Information

Our website address is www.targethospitality.com. We make available, free of charge through our website, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) as soon as reasonably practicable after such documents are electronically filed with, or furnished to, the U.S. Securities and Exchange Commission (the “SEC”). The SEC maintains an internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding Target Hospitality Corp.

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Item 1A. Risk Factors

Risk Factors Summary

Below is a summary of the principal factors that make an investment in our common stock, par value $0.0001 per share (the “Common Stock”), speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found immediately following this summary and should be carefully considered, together with other information in this Annual Report on Form 10-K and our other filings with the SEC before making an investment decision regarding our Common Stock.

Operational Risks

●

Our operations are and will be exposed to operational, economic, political and regulatory risks.

●

We face significant competition in the specialty rental sector.

● The loss of ~~our most significant customer or~~ any of our largest customers in any of our business segments could adversely affect our results of operations.

●

Our business depends on the quality and reputation of the Company and its communities, and any deterioration in such quality or reputation could adversely impact its market share, business, financial condition or results of operations.

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

●

We are subject to extensive procurement laws, regulations and procedures, including those that enable the U.S. government to terminate contracts for convenience.

●

Our natural resource development customers are exposed to a number of unique operating risks and challenges which could also adversely affect us.

●

Our business also depends on activity levels in critical mineral development and data center infrastructure industries, and reductions or delays in these projects could adversely affect our results of operations.

●

Our business is contract intensive. Servicing existing contracts may lead to customer disputes or delays in receipt of payments, and failure to retain our current customers, renew existing customer contracts, and obtain new customer contracts, or the termination of existing contracts, could adversely affect our business.

●

We are subject to fluctuations in occupancy levels, and a decrease in occupancy levels could cause a decrease in revenues and profitability.

●

We may be adversely affected if customers reduce their specialty rental and hospitality services outsourcing.

●

Expansion into new markets exposes us to operational, regulatory, and execution risks.

●

Our operations could be subject to natural disasters and other business disruptions, which could materially adversely affect our future revenue and financial condition and increase its costs and expenses.

●

Construction risks exist which may adversely affect our results of operations.

●

Demand for our products and services is sensitive to changes in demand within a number of key industry end-markets and geographic regions.

●

Certain of our major communities are located on land subject to leases. If we are unable to renew a lease, we could be materially and adversely affected.

●

Third parties may fail to provide necessary services and materials for our communities and other sites.

●

It may become difficult for us to find and retain qualified employees, and failure to do so could impede our ability to execute our business plan and growth strategy.

●

Significant increases in operating costs, including raw material and labor costs, could increase our operating costs significantly and harm our profitability.

●

Our future operating results may fluctuate, fail to match past performance, or fail to meet expectations.

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●

We are exposed to various possible claims relating to our business, and our insurance may not fully protect us.

●

Public health crises such as pandemics and their impact on business and economic conditions and government requirements could adversely affect our business, financial condition or results of operations.

Financial Accounting Risks

●

If we determine that our goodwill and intangible assets have become impaired, we may incur impairment charges, which would negatively impact our reported operating results.

Social, Political and Regulatory Risks

● Failure to maintain food safety or comply with government regulations related to food and beverages may subject us to liability.

●

We may be unable to recognize deferred tax assets and, as a result, lose future tax savings, which could have a negative impact on our liquidity and financial position.

●

Unanticipated changes in our tax obligations, the adoption of a new tax legislation, or exposure to additional income tax liabilities could affect profitability.

● We are subject to various laws and regulations, including those governing our contractual relationships with the U.S. government and a U.S. government contractor and the health and safety of our workforce and our customers. Obligations and liabilities under these laws and regulations may materially harm our business.

●

We are subject to various anti-corruption laws and we may be subject to other liabilities which could have a material adverse effect on our business, results of operations and financial condition.

●

We may be exposed to certain regulatory and financial risks related to climate change and other environmental laws and regulations.

●

We may be subject to litigation, judgments, orders or regulatory proceedings that could materially harm our business.

●

We are subject to evolving public disclosure, financial reporting and corporate governance expectations and regulations that impact compliance costs and risks of noncompliance.

Growth, ~~Development~~ and ~~Financing~~Development Risks

●

We may not be able to successfully acquire and integrate new operations, which could cause our business to suffer.

●

Global, national or local economic movements could have a material adverse effect on our business.

Information Technology and Privacy Risks

●

Any failure of our management information systems could disrupt our business and result in decreased revenue and increased overhead costs.

●

Our business could be negatively impacted by security threats, including cybersecurity threats.

Risks Related to Our Indebtedness

● Our leverage may make it difficult for us to service our debt and operate our business.

●

Global capital and credit markets conditions could materially adversely affect our ability to access the capital and credit markets or the ability of key counterparties to perform their obligations to it.

●

We are, and may in the future become, subject to covenants that limit our operating and financial flexibility and, if we default under our debt covenants, we may not be able to meet our payment obligations.

●

Restrictions in Arrow Bidco’s existing and future debt agreements could limit our growth and our ability to respond to changing conditions.

●

Credit rating downgrades could adversely affect our businesses, cash flows, financial condition and operating results.

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Risks Related to Ownership of Our Common Stock

●

Our stock price has been and may continue to be subject to volatility, and this and other factors may affect elements of our capital allocation strategy such as share repurchases, acquisitions and debt reduction.

●

We have incurred and expect to continue to incur significantly increased costs as a result of operating as a public company, and our management is required to devote substantial time to compliance efforts.

●

Our principal stockholder has substantial control over our business, which may be disadvantageous to other stockholders.

Risk Factors

Operational Risks

Our operations are and will be exposed to operational economic, political and regulatory risks.

Our operations could be affected by economic, political and regulatory risks. These risks include:

●multiple regulatory requirements that are subject to change and that could restrict our ability to build and operate our communities and other sites;

●inflation or other increases in costs relating to personnel, utilities, insurance, medical and food, recessions, fluctuations in interest rates;

●compliance with applicable export control laws and economic sanctions laws and regulations;

●trade protection measures, including increased duties and taxes, and import or export licensing requirements;

●ownership regulations;

●compliance with applicable antitrust and other regulatory rules and regulations relating to potential future acquisitions;

●different local product preferences and product requirements;

●challenges in maintaining, staffing and managing national operations;

●bankruptcy or insolvency of our customers, thereby reducing demand for our services;

●different labor regulations;

●potentially adverse consequences from changes in or interpretations of tax laws;

●political and economic instability;

●federal government budgeting and appropriations;

●enforcement of remedies in various jurisdictions;

●the risk that the business partners upon whom we depend for technical assistance or management and acquisition expertise will not perform as expected; and

●differences in business practices that may result in violation of our policies including but not limited to bribery and collusive practices.

These and other risks could have a material adverse effect on our business, results of operations and financial condition.

We face significant competition as a provider of specialty rental and hospitality services in the specialty rental sector. If we are unable to compete successfully, we could lose customers and our revenue and profitability could decline.

Although our competition varies significantly by market, the specialty rental and hospitality services industry, in general, is competitive. We compete on the basis of a number of factors, including equipment availability, quality, price, service,

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reliability, appearance, functionality and delivery terms. We may experience pricing pressures in our operations in the future as some of our competitors seek to obtain market share by reducing prices. We may also face reduced demand for our products and services if our competitors are able to provide new or innovative products or services that better appeal to our potential customers. In each of our current markets, we face competition from national, regional and local companies who have an established market position in the specific service area. We expect to encounter similar competition in any new markets that we may enter. Some of our competitors may have greater market share, greater pricing flexibility, more attractive product or service offerings, or superior marketing and financial resources. In addition, if some of our government customers have capacity at the facilities which they operate, they may choose to use less capacity at our facilities. Increased competition could result in lower profit margins, substantial pricing pressure, and reduced market share. Price competition, together with other forms of competition, may materially adversely affect our business, results of operations, and financial condition.

The loss of ~~our most significant customer or, in the future,~~ any one of our largest customers in any of our business segments could adversely affect our results of operations.

~~For~~The ~~the~~loss ~~year~~of ~~ended~~any ~~December 31, 2024, our largest customer accounted for approximately 48%~~ of our ~~total revenue, and our five~~ largest customers ~~accounted~~in ~~for~~any ~~approximately 74%~~ of our ~~total~~business ~~revenue.~~segments ~~For~~could aadversely ~~more~~affect ~~detailed explanation of~~ our ~~customers,~~results ~~see the section~~ of ~~this Annual Report on Form 10-K entitled “Business~~operations.” ~~Following~~For the ~~termination~~year ofended ~~the~~December ~~New~~31, ~~PCC Contract~~2025, the ~~loss~~Company ofhad ~~any~~three ~~one of our largest remaining~~ customers orwho aaccounted ~~sustained~~for ~~decrease~~28%, in11% ~~demand~~and by11% ~~any~~ of ~~such~~total ~~customers~~revenue, ~~could~~respectively, ~~result in a substantial loss of revenues~~ and ~~could have an adverse effect on~~ our ~~results~~five oflargest ~~operations if the Company is unable to secure new replacement~~ customers oraccounted ~~contracts~~ for anapproximately ~~extended~~63% ~~period~~ of ~~time. We are actively seeking to mitigate the impact of the termination of the New PCC contract by pursuing new business opportunities and diversifying~~ our ~~customer~~total ~~base~~revenue. ~~However,~~Despite ~~there~~recent ~~can~~diversification bediscussed nobelow, ~~assurance~~our ~~that~~business ~~these~~remains ~~efforts~~highly ~~will~~dependent beon ~~successful or that we will be able to replace the lost revenue in~~ a ~~timely~~limited ~~manner.~~number ~~Investors should carefully consider the risks associated with the loss~~ of ~~our~~large ~~largest~~customers, ~~customer~~including ~~and~~several ~~the~~in ~~potential~~new ~~impact~~end-markets onsuch ~~our~~as ~~business,~~critical ~~financial~~minerals ~~condition,~~ and ~~results~~data ofcenter ~~operations~~infrastructure. For Ina ~~addition,~~more ~~the~~detailed ~~concentration~~explanation of ~~customers in the industries in which we operate may impact~~ our ~~overall exposure to credit risk~~customers, ~~either~~see ~~positively~~the orsection ~~negatively,~~of inthis ~~that~~Annual ~~customers~~Report ~~may~~on beForm ~~similarly~~10-K ~~affected~~entitled ~~by changes in economic, political and industry conditions~~“Business”.

Following the termination of the PCC Contract, we pursued new business opportunities and sought to diversify our customer base. During the year ended December 31, 2025, we secured new contracts from multiple customers across two of our business segments that replaced a substantial majority of the estimated remaining contract value associated with the terminated PCC Contract. Although newly awarded contracts have offset a substantial portion of the lost PCC Contract revenue, the loss of any of our largest remaining customers, delays in ramping the newly awarded contracts, or a sustained decrease in demand by any such customers could still result in a material reduction in revenues and could adversely affect our results of operations.

There can be no assurance that the newly awarded contracts will perform as expected, that utilization will materialize at anticipated levels, or that we will not experience future customer losses or reductions. Investors should carefully consider the continuing risks associated with customer concentration, including the potential adverse impact on our business, financial condition, and results of operations if we are unable to maintain or further diversify our customer relationships. In addition, the concentration of customers in the industries in which we operate may impact our overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic, political, and industry conditions. Further, our expansion into data center workforce solutions may increase exposure to a concentrated group of hyperscale technology customers whose project delays or cancellations could significantly reduce occupancy in our facilities and our revenues, thereby adversely impacting our business, results of operations, and financial condition.

As several of these customers are new and operate in emerging or rapidly evolving industries, we may face increased risks related to contract execution, project delays, or changes in customer capital spending.

Our business depends on the quality and reputation of the Company and its communities. Any deterioration in the quality and reputation of the Company or public resistance, potential legal challenges to, and increasing scrutiny of our industry, could affect our ability to obtain new contracts or result in the loss of existing contracts and negatively impact our brand or reputation, each of which could have a material adverse effect on our business, financial condition and results of operations.

Many factors can influence our reputation and the value of our communities, including quality of services, food quality and safety, availability and management of scarce natural resources, supply chain management, diversity, human rights and support for local communities. In addition, events that may be beyond our control could affect the reputation of one or more of our communities or more generally impact the reputation of the Company, including protests directed at government immigration policies, violent incidents at one or more communities or other sites or criminal activity.

Reputational value is also based on perceptions, and broad access to social media makes it easy for anyone to provide public feedback that can influence perceptions of the Company and its communities, and it may be difficult to control or effectively manage negative publicity, regardless of whether it is accurate. While reputations may take decades to build, negative incidents can quickly erode trust and confidence, particularly if they result in adverse mainstream and social media publicity, governmental investigations or penalties, or litigation. Negative incidents could lead to tangible adverse effects on our business, including customer boycotts, loss of customers, loss of development opportunities or employee retention and recruiting difficulties. A decline in the reputation or perceived quality of our communities or corporate image could negatively affect its market share, reputation, business, financial condition or results of operations.

Increased public resistance, including negative media attention and public opinion, to the use of private companies for the management and operation of facilities supporting immigration, may negatively impact our brand and the public perception of the Company. Maintaining and promoting our brand will depend largely on our ability to differentiate ourselves from the direct participants in the ongoing conflict around immigration policy. If we are portrayed negatively in the press or

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~~associated~~Reputational ~~with~~value ~~the~~is ~~ongoing~~also ~~social~~based on perceptions, and ~~political~~broad ~~debates~~access ~~around~~to ~~immigration~~social ~~policy,~~media ~~our~~makes it easy for anyone to provide public ~~image~~feedback that can influence perceptions of the Company and ~~reputation~~its ~~could~~communities, and it may be ~~irreparably~~difficult ~~tarnished~~to control or effectively manage negative publicity, ~~and~~regardless ~~our~~of ~~brand~~whether ~~could~~it beis ~~harmed~~accurate. IfWhile wereputations ~~are~~may ~~unable~~take decades to ~~counter~~build, ~~such~~ negative ~~media~~incidents ~~attention~~can ~~effectively,~~quickly ~~investors~~erode ~~may~~trust ~~lose~~and confidence, particularly if they result in adverse mainstream and social media publicity, governmental investigations or penalties, or litigation. Negative incidents could lead to tangible adverse effects on our business, ~~which~~including ~~could~~customer ~~result~~boycotts, inloss aof customers, loss of development opportunities or employee retention and recruiting difficulties. A decline in the ~~trading~~reputation ~~price~~or perceived quality of our ~~Common~~communities ~~Stock,~~or ~~and~~corporate ~~our~~image could negatively affect its market share, reputation, business, ~~could~~financial becondition ~~materially~~or ~~adversely~~results ~~affected~~of operations.

~~Furthermore,~~Increased ~~our~~public ~~relationship~~resistance, ~~with~~including ~~the~~negative ~~U.S.~~media ~~government~~attention ~~subjects us~~ and ~~our~~public ~~government~~opinion, ~~contractor customers~~ to ~~unique~~the ~~risks~~use ~~such~~of asprivate ~~unanticipated~~companies ~~increased~~for ~~costs~~the management and ~~litigation~~operation ~~that~~of ~~could~~facilities ~~materially~~supporting ~~adversely~~immigration, ~~affect~~may ~~our~~negatively orimpact ~~their~~our ~~business,~~brand ~~financial~~and ~~condition,~~the orpublic ~~results~~perception of ~~operations~~the Company. ~~These~~Maintaining ~~operational risks~~ and ~~others~~promoting ~~associated~~our ~~with~~brand ~~privately~~will ~~managing~~depend ~~residential~~largely ~~facilities~~on ~~could~~our ~~result~~ability into ~~higher~~differentiate ~~costs~~ourselves ~~associated~~from ~~with~~the ~~staffing~~direct ~~and~~participants ~~lead~~in tothe ~~increased~~ongoing ~~litigation.~~conflict ~~Lawsuits,~~around toimmigration ~~which~~policy. If we are ~~not~~portrayed anegatively ~~party,~~in ~~have challenged~~ the ~~government's~~press ~~policy~~or ofassociated ~~detaining~~with ~~migrant~~the ~~families,~~ongoing social and ~~government~~political ~~policies~~debates ~~with~~around ~~respect to family~~ immigration ~~may~~policy, ~~impact the demand for~~ our ~~facilities.~~public ~~Any~~image ~~court~~and ~~decision~~reputation orcould ~~government~~be ~~action~~irreparably ~~that~~tarnished, ~~impacts~~and our ~~customers’~~brand ~~existing~~could ~~contracts~~be ~~with~~harmed. ~~the~~If ~~government~~we ~~could~~are ~~impact~~unable ~~our~~to ~~subcontracts~~counter ~~for~~such ~~the~~negative ~~facilities~~media ~~and~~attention ~~result~~effectively, ininvestors amay ~~reduction~~lose confidence in ~~demand for~~ our ~~services~~business, orwhich ~~reputational~~could ~~damage~~result toin ~~us and require us to devote~~ a ~~significant~~decline ~~amount~~in ~~of time and expense to~~ the ~~defense~~trading price of our ~~operations~~Common ~~and reputation~~Stock, ~~which~~and ~~could materially affect~~ our business, ~~financial~~could ~~condition,~~be ~~and~~materially ~~results~~adversely ~~of operations~~affected.

WeFurthermore, ~~derive~~our arelationship ~~substantial~~with ~~portion~~the ofU.S. government subjects us and our ~~revenue~~government ~~from~~contractor ~~the~~customer ~~Government~~to ~~segment.~~unique ~~The~~risks ~~loss~~such ofas unanticipated increased costs and litigation that could materially adversely affect our or their business, financial condition, or aresults ~~significant~~of ~~decrease~~operations. These operational risks and others associated with privately managing residential facilities could result in ~~revenues~~higher ~~from~~costs associated with staffing and lead to increased litigation. Lawsuits, ~~new~~to which we are not a party, have challenged the government's policy of detaining migrant families, and government policies with respect to family immigration may impact the demand for our facilities. Any court decision or government action that impacts our customers’ existing contract with the government could impact our subcontract for the facilities and result in ~~this~~a ~~concentrated~~reduction ~~segment~~in demand for our services or reputational damage to us and require us to devote a significant amount of time and expense to the defense of our operations and reputation, which could ~~seriously~~materially ~~harm~~affect our business, financial condition, and results of operations.

We historically have derived a significant portion of our revenues from our subcontracts with government contractors. Despite the termination of each of the STFRC Contract and the New PCC Contract, we continue to pursue a pipeline of growth opportunities of subcontracts with government contractors such as the new DIPC Contract. These revenues depend on the U.S. government and its contractors receiving sufficient funding and providing it with timely payment under the terms of our contracts. If the applicable government entity does not receive sufficient appropriations to cover its contractual obligations, it may delay or reduce payment to its contractors and, as a result, our government contractor customers may delay or reduce payments to or terminate their contracts with us. Any future impasse or struggle impacting the federal government’s ability to reach agreement on the federal budget, debt ceiling or any future federal government shutdowns could result in material payment delays, payment reductions or contract terminations. Additionally, our current and potential future government contractor customers have requested and may request in the future that we reduce our contract rates or forego increases to those rates as a way for those contractors to control costs and help their government customers to control their spending and address their budgetary shortfalls. For additional information regarding our operation of the Government segment, see the section entitled “Business—Business Operations—Government”.

The U.S. government and, by extension, our U.S. government contractor customers, may also from time to time adopt, implement or modify certain policies or directives that may adversely affect our business. For example, federal, state or local governmental partners may in the future choose to undertake a review of their utilization of privately operated facilities, or may cancel or decide not to renew existing contracts with their government contractors, who may, in turn, cancel or decide not to renew their contracts with us. Changes in government policy, presidential administration or other changes in the political landscape relating to immigration policies may similarly result in a decline in our revenues in the Government segment. In addition, lawsuits, to which we are not a party, have challenged the U.S. government’s policy of detaining migrant families, and government policies with respect to immigration may impact the demand for our facilities and any facilities that we may operate in the future. Any court decision or government action that impacts our existing contracts or any future contracts for similar facilities could materially affect our cash flows, financial condition and results of operations. Further, we may not be able to renew our agreements with the government contractors or enter new agreements with these contractors. Any renewals or new agreements we may enter may be on terms that are materially less favorable to us than those in our current agreements.

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We are subject to extensive procurement laws, regulations and procedures, including those that enable the U.S. government to terminate contracts for convenience. Our business and reputation could be adversely affected if we or those we do business with fail to comply with or adapt to existing or new procurement laws and regulations, which are regularly evolving.

As a U.S. government subcontractor, we and others with which we do business must comply with laws and regulations relating to the award, administration and performance of U.S. government contracts. Government contract laws and regulations affect how we do business with our customers and impose certain risks and costs on our business. A violation of these laws and regulations by us, our employees, others working on our behalf or a supplier could harm our reputation and result in the imposition of fines and penalties, the termination of our contracts, suspension or debarment from bidding on or being awarded contracts, loss of our ability to export products or perform services and civil or criminal investigations or proceedings. In addition, costs to comply with new government regulations can increase our costs, reduce our margins and adversely affect our competitiveness.

Government contract laws and regulations can impose terms or obligations that are different than those typically found in commercial transactions. One of the significant differences is that the U.S. government generally may terminate its contracts, not only for default based on our performance, but also at its convenience. Generally, prime contractors have a similar right under subcontracts related to government contracts. If a contract is terminated for convenience, we typically would be entitled to receive payments for our allowable costs incurred and the proportionate share of fees or earnings for the work performed. However, to the extent insufficient funds have been appropriated by the U.S. government to the program to cover our costs upon a termination for convenience, the U.S. government may assert that it is not required to appropriate additional funding. If a contract is terminated for default, the U.S. government could make claims to reduce the contract value or recover its procurement costs and could assess other special penalties, exposing us to liability and adversely affecting our ability to compete for future contracts and orders. In addition, the U.S. government could terminate a prime contract under which we are a subcontractor, notwithstanding the fact that our performance and the quality of the services we delivered were consistent with our contractual obligations as a subcontractor. Similarly, the U.S. government could indirectly terminate a program or contract by not appropriating funding. The decision to terminate programs or contracts for convenience or default could adversely affect our business and future financial performance. Additionally, the U.S. government increasingly has relied on competitive contract award types, including indefinite-delivery, indefinite-quantity and other multi-award contracts, which have the potential to create pricing pressure and to increase costs by requiring prime contractors to submit multiple bids and proposals. Multi-award contracts require our prime contractor to make sustained efforts to obtain task orders under the contract. Additionally, procurements that do not evaluate whether the cost assumptions in the bids are realistic can lead to bidders taking aggressive pricing positions, which could result in the winner realizing a loss upon contract award or an increased risk of lower margins or realizing a loss over the term of the contract. For a broader discussion of the indirect exposure to statutes and regulations applicable to U.S. government contractors please see “We are subject to various laws and regulations including those governing our contractual relationships with the U.S. government and U.S. government contractors and the health and safety of our workforce and our customers. Obligations and liabilities under these laws and regulations may materially harm our business.” below.

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services we delivered were consistent with our contractual obligations as a subcontractor. Similarly, the U.S. government could indirectly terminate a program or contract by not appropriating funding. The decision to terminate programs or contracts for convenience or default could adversely affect our business and future financial performance. Additionally, the U.S. government increasingly has relied on competitive contract award types, including indefinite-delivery, indefinite-quantity and other multi-award contracts, which have the potential to create pricing pressure and to increase costs by requiring prime contractors to submit multiple bids and proposals. Multi-award contracts require our prime contractor to make sustained efforts to obtain task orders under the contract. Additionally, procurements that do not evaluate whether the cost assumptions in the bids are realistic can lead to bidders taking aggressive pricing positions, which could result in the winner realizing a loss upon contract award or an increased risk of lower margins or realizing a loss over the term of the contract. For a broader discussion of the indirect exposure to statutes and regulations applicable to U.S. government contractors please see “We are subject to various laws and regulations including those governing our contractual relationships with the U.S. government and U.S. government contractors and the health and safety of our workforce and our customers. Obligations and liabilities under these laws and regulations may materially harm our business.” below.

Our natural resource development customers are exposed to a number of unique operating risks and challenges which could also adversely affect us.

Demand for our services is sensitive to the level of exploration, development and production activity of, and the corresponding capital spending by, natural resource development companies. The natural resource development industries’ willingness to explore, develop, and produce depends largely upon the availability of attractive resource prospects and the prevailing view of their future cash flows. Prices for energy products can be subject to large fluctuations in response to changes in the supply of and demand for these commodities, market uncertainty, and a variety of other factors that are beyond our control. This volatility causes natural resource development companies to change their strategies and expenditure levels. Accordingly, we could be impacted by disruptions to our customers’ operations caused by, among other things, any one of or all of the following singularly or in combination:

●worldwide economic activity including growth in developing countries, U.S. and international tax policies, pricing and demand for the natural resources being produced at a given project (or proposed project);

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●national government political requirements, including the ability of the Organization of Petroleum Exporting Companies (“OPEC”) to set and maintain production levels and government policies which could nationalize or expropriate natural resource development exploration, production, refining or transportation assets;

●the level of activity in U.S. shale development;

●unexpected problems, higher costs and delays during the development, construction, and project start-up which may delay the commencement of production;

●unforeseen and adverse geological, geotechnical, and seismic conditions;

●lack of availability of sufficient water or power to maintain their operations;

●lack of availability or failure of the required infrastructure necessary to maintain or to expand their operations;

●the breakdown or shortage of equipment and labor necessary to maintain their operations;

●risks associated with the natural resource industry being subject to various regulatory approvals. Such risks may include governmental actions;

●interruptions to the operations of our customers caused by industrial accidents or disputes or weather conditions and natural disasters; and

●delays in or failure to commission new infrastructure in timeframes so as not to disrupt customer operations.

The carrying value of our communities could be reduced by extended periods of limited or no activity by our customers, which would require us to record impairment charges equal to the excess of the carrying value of the communities over fair value. We may incur asset impairment charges in the future. Such charges may negatively affect our results of operations and financial condition as well as our borrowing base.

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We provide workforce housing to support large-scale lithium mining and data center development projects located in remote locations. These projects may be subject to unique permitting, environmental, regulatory, technological, and execution risks distinct from our historical lodging and hospitality operations. Demand for our services is therefore closely tied to the timing, funding, permitting, and overall activity of these projects. Any slowdown, delay, or cancellation, whether due to changes in customer capital spending, regulatory or environmental constraints, or project-specific challenges, could reduce occupancy and utilization of our assets.

Demand for our services is also sensitive to the capital spending on data center infrastructure to support artificial intelligence (“AI”) applications, which has seen rapid expansion in recent years. There is no assurance that such expansion will continue. If capital spending on data center infrastructure slows down, including due to adverse developments related to AI or changes in the way AI applications are supported, demand for our services may decline, which could have a material adverse effect on our financial condition or results of operations.

Accordingly, we could be impacted by disruptions to our data center customers’ operations caused by, among other things, any one of or all of the following singularly or in combination:

●a slowdown in worldwide economic activity or a decline in the demand for AI-related products and the data center end market;

●rising energy costs for and lack of energy capacity to support data center development and operations;

●lack of availability or failure of the required infrastructure necessary to maintain or to expand their operations;

●the breakdown or shortage of equipment and labor necessary to maintain their operations;

●risks associated with the AI and data center industry being subject to various regulatory approvals. Such risks may include governmental actions;

●interruptions to the operations of our customers caused by industrial accidents or disputes or weather conditions and natural disasters; and

●delays in or failure to commission new infrastructure in timeframes so as not to disrupt customer operations.

Our business is contract intensive and we are party to many contracts with customers. We periodically review our compliance with contract terms and provisions. If customers were to dispute our contract determinations, the resolution of such disputes in a manner adverse to our interests could negatively affect sales and operating results. In the past, some of our customers have opted to withhold payment due to contract or other disputes, which has delayed our receipt of payments. While we do not believe any reviews, audits, delayed payments, or other such matters should result in material adjustments, if a large number of our customer arrangements were modified or payments withheld in response to any such matter, the effect could be materially adverse to our business or results of operations.

Our success depends on our ability to retain our current customers, renew or replace our existing customer contracts, and obtain new business. Our ability to do so generally depends on a variety of factors, including overall customer expenditure levels and the quality, price and responsiveness of our services, as well as our ability to market these services effectively and differentiate ourselves from our competitors. We cannot assure you that we will be able to obtain new business, renew existing customer contracts at the same or higher levels of pricing, or at all, or that our current customers will not turn to competitors, cease operations, elect to self-operate, or terminate contracts with us. In the context of a potential depressed commodity price environment, our customers may not renew contracts on terms favorable to us or, in some cases, at all, and we may have difficulty obtaining new business. As a result, our customers may choose to terminate their contracts. The likelihood that a customer may seek to terminate a contract is increased during periods of market weakness as we encountered with various customers during the COVID-19 pandemic. Further, if any of our customers fail to reach final investment decisions with respect to projects for which such customers have already awarded us contracts to provide related accommodations, those customers may terminate such contracts. Customer contract cancellations, the failure to renew a significant number of our existing contracts, or the failure to obtain new business would have a material adverse effect on our business, results of operations and financial condition if the Company is unable to secure new contracts for an extended period of time.

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commodity price environment, our customers may not renew contracts on terms favorable to us or, in some cases, at all, and we may have difficulty obtaining new business. As a result, our customers may choose to terminate their contracts. The likelihood that a customer may seek to terminate a contract is increased during periods of market weakness as we encountered with various customers during the COVID-19 pandemic. Further, if any of our customers fail to reach final investment decisions with respect to projects for which such customers have already awarded us contracts to provide related accommodations, those customers may terminate such contracts. Customer contract cancellations, the failure to renew a significant number of our existing contracts, or the failure to obtain new business would have a material adverse effect on our business, results of operations and financial condition if the Company is unable to secure new contracts for an extended period of time.

We are subject to fluctuations in occupancy levels, and a decrease in occupancy levels could cause a decrease in revenues and profitability.

While a substantial portion of our cost structure is fixed, a substantial portion of our revenue is generated under facility management contracts that, to a certain extent, are based on variable occupancy levels. We are dependent upon our customers and, with respect to our ~~subcontracts~~subcontract with the U.S. government, U.S. government ~~agencies~~agency, to provide occupants for facilities we operate. We cannot control occupancy levels at the facilities we operate. Under a variable rate structure, a decrease in our occupancy rates could cause a decrease in revenue and profitability. Occupancy rates have decreased in the past and may decrease in the future, including as a result of changes in public policy or increased public resistance to our industry. When combined with relatively fixed costs for operating each facility, a decrease in occupancy levels could have an adverse impact on our revenues and profitability.

Because of the uncertainty in estimating future occupancy levels, our estimates and Company forecast may prove to be inaccurate. Therefore, any business deterioration, including as a result of contract cancellations or decreased occupancy levels, could cause our actual revenues, earnings and cash flows to decline below our current financial outlook.

We may be adversely affected if customers reduce their specialty rental and hospitality services outsourcing.

Our business and growth strategies depend in large part on customers outsourcing some or all of the services that we provide. We cannot be certain that these customer preferences for outsourcing will continue or that customers that have outsourced accommodations will not decide to perform these functions themselves or only outsource accommodations during the development or construction phases of their projects. For example, the Data Center Community Contract involves the provision of our services during the development phase of a regional data center campus. In addition, labor unions representing customer employees and contractors may oppose outsourcing accommodations to the extent that the unions believe that third-party accommodations negatively impact union membership and recruiting. The reversal or reduction in customer outsourcing of accommodations could negatively impact our financial results and growth prospects.

Expansion into new markets exposes us to operational, regulatory, and execution risks.

Our expansion into new markets such as critical mineral development and data center infrastructure exposes us to operational, regulatory, and execution risks for which we have more limited historical experience. These markets may require new technical capabilities, specialized labor, and compliance with complex permitting regimes. If we are unable to execute successfully in these markets, our financial results could be materially adversely affected.

Our operations could be subject to natural disasters and other business disruptions such as fires, floods, hurricanes, earthquakes, outbreaks of epidemic or pandemic disease and terrorism, which could adversely affect its future revenue and financial condition and increase its costs and expenses. For example, extreme weather, particularly periods of high rainfall, hail, tornadoes, or extreme cold, in any of the areas in which we operate may cause delays in our community construction activities or result in the cessation of customer operations at one or more communities for an extended period of time such as during the COVID-19 pandemic. See “We are exposed to various possible claims relating to our business and our insurance may not fully protect us.” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Results of Operations—Natural Disasters or Other Significant Disruption.” In addition, the occurrence and threat of terrorist attacks may directly or indirectly affect economic conditions, which could in turn adversely affect demand for our communities and services. In the event of a major natural or man-made disaster, we could experience loss of life of our employees, destruction of our communities or other sites, or business interruptions, any of which may materially adversely affect our business. If any of our communities were to experience a catastrophic loss, it could disrupt our operations, delay services, staffing and revenue recognition, and result in expenses to repair or replace the damaged facility not covered by asset, liability, business continuity or other insurance contracts. Also, we could face significant increases in premiums or losses of coverage due to the loss experienced during and associated with these and potential future natural or man-made disasters that may materially adversely affect our business. In addition, attacks or armed conflicts that directly impact one or more of our properties or communities could significantly affect our ability to operate those properties or communities and thereby impair our results of operations.

More generally, any of these events could cause consumer confidence and spending to decrease or result in increased volatility in the global economy and worldwide financial markets. Any of these occurrences could have a material adverse effect on our business, results of operations and financial condition.

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Operations—Factors Affecting Results of Operations—Natural Disasters or Other Significant Disruption.” In addition, the occurrence and threat of terrorist attacks may directly or indirectly affect economic conditions, which could in turn adversely affect demand for our communities and services. In the event of a major natural or man-made disaster, we could experience loss of life of our employees, destruction of our communities or other sites, or business interruptions, any of which may materially adversely affect our business. If any of our communities were to experience a catastrophic loss, it could disrupt our operations, delay services, staffing and revenue recognition, and result in expenses to repair or replace the damaged facility not covered by asset, liability, business continuity or other insurance contracts. Also, we could face significant increases in premiums or losses of coverage due to the loss experienced during and associated with these and potential future natural or man-made disasters that may materially adversely affect our business. In addition, attacks or armed conflicts that directly impact one or more of our properties or communities could significantly affect our ability to operate those properties or communities and thereby impair our results of operations.

Construction risks exist which may adversely affect our results of operations.

There are a number of general risks that might impinge on companies involved in the development, construction and installation of facilities as a prerequisite to the management of those assets in an operational sense. We are exposed to the following risks in connection with our construction activities:

●the construction activities of our accommodations are partially dependent on the supply of appropriate construction and development opportunities;

●development approvals, slow decision making by counterparties, complex construction specifications, changes to design briefs, legal issues, and other documentation changes may give rise to delays in completion, loss of revenue, and cost over-runs which may, in turn, result in termination of accommodation supply contracts;

●other time delays that may arise in relation to construction and development include supply of labor, scarcity of construction materials, real estate or leasing issues, lower than expected productivity levels, inclement weather conditions, land contamination or environmental claims, cultural heritage claims, difficult site access, or industrial relations issues;

●objections to our activities or those of our customers aired by community interests, political, environment and/or neighborhood groups which may cause delays in the granting or approvals and/or the overall progress of a project;

●where we assume design responsibility, there is a risk that design problems or defects may result in rectification and/or costs or liabilities which we cannot readily recover; and

●there is a risk that we may fail to fulfill our statutory and contractual obligations in relation to the quality of our materials and workmanship, including warranties and defect liability obligations.

Demand for our products and services is sensitive to changes in demand within a number of key industry end-markets and geographic regions.

Our financial performance is dependent on the level of demand for our facilities and services, which is sensitive to the level of demand within various sectors, in particular, the natural resource development, AI data center infrastructure projects, and government end-markets. Each of these sectors is influenced not only by the state of the general global economy but by a number of more specific factors as well. For example, demand for workforce accommodations within the natural resources sector may be materially adversely affected by a decline in global commodity prices. Demand for our facilities and services may also vary among different localities or regions. The levels of activity in these sectors and geographic regions may also be cyclical, and we may not be able to predict the timing, extent or duration of the activity cycles in the markets in which we or our key customers operate., Afor ~~decline~~example ordata ~~slowed~~center ~~growth~~development incycles ~~any~~may offluctuate ~~these~~based ~~sectors~~on orcooling-infrastructure ~~geographic~~availability, ~~regions~~supply-chain ~~could~~delays ~~result~~ in ~~reduced~~electrical ~~demand~~components, ~~for our products~~ and ~~services,~~shifts ~~which~~in ~~may~~cloud ~~materially adversely affect our business, results of operations,~~ and ~~financial~~AI ~~condition.~~

Certain of our major communities are located on land subject to leases. If we are unable to renew a lease, we could be materially and adversely affected.

Certain of our major communities are located on land subject to leases. Accordingly, while we own the accommodations assets, we only own a leasehold interest in those properties. If we are found to be in breach of a lease, we could lose the right to use the property. In addition, unless we can extend the terms of these leases before their expiration, as to which no assurance can be given, we will lose our right to operate our facilities located on these properties upon expiration of the leases. In that event, we would be required to remove our accommodations assets and remediate the site. Generally, our leases have an average term of seven years and generally contain unilateral renewal provisions. We can provide no assurances that we will be able to renew our leases upon expiration on similar terms, or at all. If we are unable to renew leases on similar terms, it may have an adverse effect on our business.

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infrastructure investment, resulting in variability in occupancy levels at our communities. A decline or slowed growth in any of these sectors or geographic regions could result in reduced demand for our products and services, which may materially adversely affect our business, results of operations, and financial condition.

Certain of our major communities are located on land subject to leases. If we are unable to renew a lease, we could be materially and adversely affected.

Certain of our major communities are located on land subject to leases. Accordingly, while we own the accommodations assets, we only own a leasehold interest in those properties. If we are found to be in breach of a lease, we could lose the right to use the property. In addition, unless we can extend the terms of these leases before their expiration, as to which no assurance can be given, we will lose our right to operate our facilities located on these properties upon expiration of the leases. In that event, we would be required to remove our accommodations assets and remediate the site. Generally, our leases have an average term of five years and generally contain unilateral renewal provisions. We can provide no assurances that we will be able to renew our leases upon expiration on similar terms, or at all. If we are unable to renew leases on similar terms, it may have an adverse effect on our business.

Third parties may fail to provide necessary services and materials for our communities and other sites.

We are often dependent on third parties to supply services and materials for our communities and other sites. We typically do not enter into long-term contracts with third-party suppliers. We may experience supply problems as a result of logistical, financial or operating difficulties or the failure or consolidation of our suppliers. We may also experience supply problems as a result of shortages and discontinuations resulting from product obsolescence or other shortages or allocations by suppliers. Unfavorable economic conditions may also adversely affect our suppliers or the terms on which we purchase products. In the future, we may not be able to negotiate arrangements with third parties to secure products and services that we require in sufficient quantities or on reasonable terms. If we cannot negotiate arrangements with third parties to produce or supply our products or if the third parties fail to produce our products to our specifications or in a timely manner, our business, results of operations, and financial condition may be materially adversely affected.

It may become difficult for us to find and retain qualified employees, and failure to do so could impede our ability to execute our business plan and growth strategy.

One of the most important factors in our ability to provide reliable and quality services and profitably execute our business plan is our ability to attract, develop and retain qualified personnel. The competition for qualified personnel in the industries in which we operate is intense and there can be no assurance that we will be able to continue to attract and retain all personnel necessary for the development and operation of our business. In periods of higher activity, it may become more difficult to find and retain qualified employees which could limit growth, increase operating costs, or have other material adverse effects on our operations. In addition, labor shortages, the inability to hire or retain qualified employees nationally, regionally or locally or increased labor costs could have a material adverse effect on our ability to control expenses and efficiently conduct operations.

Many of our key executives, managers, and employees have knowledge and an understanding of our business and our industry that cannot be readily duplicated and they are the key individuals that interface with customers. In addition, the ability to attract and retain qualified personnel is dependent on the availability of qualified personnel, the impact on the labor supply due to general economic or political conditions, and the ability to provide a competitive compensation package.

Significant increases in operating costs, including raw material and labor costs, could increase our operating costs significantly and harm our profitability.

We incur labor costs and purchase raw materials, including steel, lumber, siding and roofing, fuel and other products to construct and perform periodic repairs, modifications and refurbishments to maintain physical conditions of our facilities as well as the construction of our communities and other sites. The volume, timing, and mix of such work may vary quarter-to-quarter and year- to-year. Generally, increases in labor and raw material costs will increase the acquisition costs of new facilities and also increase the construction, repair, and maintenance costs of our facilities. ~~During~~We ~~periods~~also of rising prices for labor or raw materials, and in particular, when the prices increase rapidly or to levels significantly higher than normal, we may incur significant increases in our costs for new facilities and incur higher operating costs that we may not be able to recoup from customers through changes in pricing, which could have ~~a material adverse effect on our business, results of operations and financial condition.~~

Our profitability can also be adversely affected to the extent we are faced with cost increases for food, wages and other labor related expenses, insurance, fuel and utilities, especially to the extent we are unable to recover such increased costs through increases in the prices for our services, due to one or more of general economic conditions, competitive conditions or contractual provisions in our customer contracts. Substantial increases in the cost of fuel and utilities have historically resulted in cost increases in our communities. From time to time we have experienced increases in our food costs. In addition, food prices can fluctuate as a result of inflation, foreign exchange rates and temporary changes in supply, including as a result of incidences of severe weather such as droughts, heavy rains, and late freezes. Although we negotiate the pricing and other terms for the majority of our purchases of food and related products directly with national manufacturers, we purchase these products and other items through national distributors and suppliers. If our relationship with, or the business of a primary distributor were to be disrupted, we would have to arrange alternative distributors and

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~~our~~experienced ~~operations~~ and ~~cost~~in ~~structure~~the ~~could~~future bemay ~~adversely~~experience ~~affected~~building material shortages, which have led to and may in the ~~short~~future ~~term~~lead to delays in our construction projects. WeDuring ~~may~~periods beof ~~unable~~rising toprices ~~fully~~for ~~recover~~labor ~~costs~~or raw materials, and ~~such~~in particular, when the prices increase rapidly or to levels significantly higher than normal, we may incur significant increases ~~could~~in ~~negatively~~our ~~impact~~costs ~~profitability~~for onnew ~~contracts~~facilities and incur higher operating costs that dowe may not ~~contain~~be ~~such~~able ~~inflation~~to ~~protections~~recoup from customers through changes in pricing, which could have a material adverse effect on our business, results of operations and financial condition.

Our future operating results may fluctuate, fail to match past performance, or fail to meet expectations.

Our operating results may fluctuate, fail to match past performance, or fail to meet the expectations of analysts and investors. Our financial results may fluctuate as a result of a number of factors, some of which are beyond our control, including but not limited to:

●general economic conditions in the geographies and industries where we own or operate communities;

●natural disasters, including pandemics and endemics, and business interruptions;

●executive and legislative policies where we provide our services;

●the budgetary constraints of the government and/or our customers;

●the success of our strategic growth initiatives;

●the costs associated with the launching or integrating new or acquired businesses;

●the cost, type, and timing of customer orders;

●the nature and duration of the needs of our customers;

●the raw material or labor costs of servicing our facilities;

●the timing of new product or service introductions by us, our suppliers, and our competitors;

●changes in end-user demand requirements, including variable occupancy levels associated with contracts inwith ~~the~~revenue ~~Government~~driven ~~segment~~off of actual occupancy or utilization levels;

●the mix, by state and region, of our revenue, personnel, and assets;

●movements in interest rates, or tax rates;

●changes in, and application of, accounting rules;

●changes in the regulations applicable to us;

●litigation matters;

●the success of large scale capital intensive projects;

●liquidity, including the impact of our debt service costs; ~~and~~

~~●attrition and retention risk.~~31

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●attrition and retention risk; and

●The finite duration and milestone-based nature of certain large construction projects, particularly within the WHS segment. Construction fee income related revenue in particular may not repeat at prior levels.

As a result of these factors, our historical financial results are not necessarily indicative of our future results.

We are exposed to various possible claims relating to our business, and our insurance may not fully protect us.

We are exposed to various possible claims relating to our business, and our operations are subject to many hazards. In the ordinary course of business, we may become the subject of various claims, lawsuits, and administrative proceedings seeking damages or other remedies concerning our commercial operations, products, employees, and other matters, including occasional claims by individuals alleging exposure to hazardous materials as a result of our products or operations. Some of these claims relate to the activities of businesses that we have acquired, even though these activities may have occurred prior to our acquisition of such businesses.

Our insurance policies have deductibles or self-insured retentions which would require us to expend amounts prior to taking advantage of coverage limits. We believe that we have adequate insurance coverage for the protection of our assets and operations. However, our insurance may not fully protect us for certain types of claims such as dishonest, fraudulent, criminal or malicious acts; terrorism, war, hostile or warlike action during a time of peace; automobile physical damage; natural disasters; and certain cyber-crime. A judgment could be rendered against us in cases in which we could be uninsured and beyond the amounts that we currently have reserved or anticipate incurring for such matters. Even a partially uninsured or underinsured claim, if successful and of significant size, could have a material adverse effect on our results of operations or consolidated financial position. The specifications and insured limits under those policies, however, may be insufficient for such claims. We also face the following other risks related to our insurance coverage, including we may not be able to continue to obtain insurance on commercially reasonable terms; the counterparties to our insurance contracts may pose credit risks; and we may incur losses from interruption of our business that exceed our insurance coverage each of which, individually or in the aggregate, could materially and adversely impact our business. Further, due to rising insurance costs and changes in the insurance markets, we cannot provide any assurance that our insurance coverage will continue to be available at all or at rates or on terms similar to those presently available.

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criminal or malicious acts; terrorism, war, hostile or warlike action during a time of peace; automobile physical damage; natural disasters; and certain cyber-crime. A judgment could be rendered against us in cases in which we could be uninsured and beyond the amounts that we currently have reserved or anticipate incurring for such matters. Even a partially uninsured or underinsured claim, if successful and of significant size, could have a material adverse effect on our results of operations or consolidated financial position. The specifications and insured limits under those policies, however, may be insufficient for such claims. We also face the following other risks related to our insurance coverage, including we may not be able to continue to obtain insurance on commercially reasonable terms; the counterparties to our insurance contracts may pose credit risks; and we may incur losses from interruption of our business that exceed our insurance coverage each of which, individually or in the aggregate, could materially and adversely impact our business. Further, due to rising insurance costs and changes in the insurance markets, we cannot provide any assurance that our insurance coverage will continue to be available at all or at rates or on terms similar to those presently available.

We are subject to risks related to public health crises, such as pandemics and the various measures that are implemented to protect public health, which can adversely affect the economy and financial markets. We have implemented business continuity plans to continue to provide specialty rental and hospitality services to our customers and to support our operations, while taking health and safety measures such as incentivizing employee vaccination, implementing worker distancing measures and masking measures and using a remote workforce where possible. There can be no assurance that any future public health crisis, and efforts to contain such public health crisis (including, but not limited to, vaccination, social distancing and masking policies, restrictions on travel and reduced operations) will not materially impact our results of operations and financial position.

Financial Accounting Risks

If we determine that our goodwill and intangible assets have become impaired, we may incur impairment charges, which would negatively impact our reported operating results.

We have goodwill associated with the HFS-South segment, which represents the excess of the total purchase price of our acquisitions over the fair value of the assets acquired, and other intangible assets associated with the HFS-South segment. As of December 31, ~~2024~~2025, we had approximately $41.0 million and $5239.83 million of goodwill and other intangible assets, net, respectively, in our statement of financial position, which represents approximately 57.67% and 7.34% of total assets, respectively. We review goodwill and intangible assets at least annually for impairment. In the event impairment is identified, a charge to earnings would be recorded. Impairment may result from significant changes in the manner of use of the acquired asset, negative industry or economic trends and significant underperformance relative to historic or ~~projected operating results. Any impairment charges could adversely affect our reported results of operations and financial condition.~~

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projected operating results. Any impairment charges could adversely affect our reported results of operations and financial condition.

Social, Political, Regulatory and Litigation Risks

A failure to maintain food safety or comply with government regulations related to food and beverages may subject us to liability.

Claims of illness or injury relating to food quality or food handling are common in the food service industry, and a number of these claims may exist at any given time. Because food safety issues could be experienced at the source or by food suppliers or distributors, food safety could, in part, be out of our control. Regardless of the source or cause, any report of food-borne illness or other food safety issues such as food tampering or contamination at one of our locations could adversely impact our reputation, hindering our ability to renew contracts on favorable terms or to obtain new business, and have a negative impact on our sales. Future food product recalls and health concerns associated with food contamination may also increase our raw materials costs and, from time to time, disrupt business.

A variety of regulations at various governmental levels relating to the handling, preparation, and serving of food (including, in some cases, requirements relating to the temperature of food), and the cleanliness of food production facilities and the hygiene of food-handling personnel are enforced primarily at the local public health department level. We cannot assure you that we are in full compliance with all applicable laws and regulations at all times or that we will be able to comply with any future laws and regulations. Furthermore, legislation and regulatory attention to food safety is very high. Additional or amended regulations in this area may significantly increase the cost of compliance or expose us to liabilities.

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hygiene of food-handling personnel are enforced primarily at the local public health department level. We cannot assure you that we are in full compliance with all applicable laws and regulations at all times or that we will be able to comply with any future laws and regulations. Furthermore, legislation and regulatory attention to food safety is very high. Additional or amended regulations in this area may significantly increase the cost of compliance or expose us to liabilities.

If we are unable to maintain food safety or comply with government regulations related to food and beverages, the effect could be materially adverse to our business or results of operations.

We may be unable to recognize deferred tax assets and, as a result, lose future tax savings, which could have a negative impact on our liquidity and financial position.

We recognize deferred tax assets primarily related to deductible temporary differences based on our assessment that the item will be utilized against future taxable income and the benefit will be sustained upon ultimate settlement with the applicable taxing authority. Such deductible temporary differences primarily relate to tax loss carryforwards and deferred revenue. Tax loss carryforwards arising in a given tax jurisdiction may be carried forward to offset taxable income in future years from such tax jurisdiction and reduce or eliminate income taxes otherwise payable on such taxable income, subject to certain limitations. We may have to write down, via a valuation allowance, the carrying amount of certain of the deferred tax assets to the extent we determine it is not probable such deferred tax assets will continue to be recognized. The taxing authorities could challenge our calculation of the amount of our tax attributes, which could reduce certain of our recognized tax benefits. In addition, tax laws in certain jurisdictions may limit the ability to use carryforwards upon a change in control.

Unanticipated changes in our tax obligations, the adoption of a new tax legislation, or exposure to additional income tax liabilities could affect profitability.

We are subject to income taxes in the United States. Our tax liabilities are affected by the amounts charged for services, funding, and other intercompany transactions. Tax authorities may disagree with our intercompany charges, or other tax positions and assess additional taxes. We regularly assess the likely outcomes of examinations in order to determine the appropriateness of our tax provision. However, there can be no assurance that we will accurately predict the outcomes of potential examinations, and the amounts ultimately paid upon resolution of examinations could be materially different from the amounts previously included in our income tax provision and, therefore, could have a material impact on results of operations and cash flows. In addition, our future effective tax rate could be adversely affected by changes to its operating structure, changes in the mix of earnings in countries and/or states with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws, and the discovery of new information in the course of our tax return preparation process.

We are subject to various laws and regulations including those governing our contractual relationships with the U.S. government and U.S. government contractors and the health and safety of our workforce and our customers. Obligations and liabilities under these laws and regulations may materially harm our business.33

~~Our~~Table ~~customers include U.S. government contractors, which means that we may, indirectly, be subject to various statutes and regulations applicable to doing business with the U.S. government. These types~~ of contracts customarily contain provisions that give the U.S. government substantial rights and remedies, many of which are not typically found in commercial contracts and which are unfavorable to contractors, including provisions that allow the government to unilaterally terminate or modify our customers’ federal government contracts, in whole or in part, at the government’s convenience. Under general principles of U.S. government contracting law, if the government terminates a contract for convenience, the terminated party may generally recover only its incurred or committed costs and settlement expenses and profit on work completed prior to the termination. If the government terminates a contract for default, the defaulting party may be liable for any extra costs incurred by the government in procuring undelivered items from another source. In addition, our or our customers’ failure to comply with these laws and regulations might result in administrative penalties or the suspension of our customers’ government contracts or debarment and, as a result, the loss of the related revenue which would harm our business, results of operations and financial condition. We are not aware of any action contemplated by any regulatory authority related to any possible non-compliance by or in connection with our operations.Contents

We are subject to various laws and regulations, including those governing our contractual relationships with the U.S. government and a U.S. government contractor and the health and safety of our workforce and our customers. Obligations and liabilities under these laws and regulations may materially harm our business.

Our customers include a U.S. government contractor, which means that we may, indirectly, be subject to various statutes and regulations applicable to doing business with the U.S. government. These types of contracts customarily contain provisions that give the U.S. government substantial rights and remedies, many of which are not typically found in commercial contracts and which are unfavorable to contractors, including provisions that allow the government to unilaterally terminate or modify our customers’ federal government contracts, in whole or in part, at the government’s convenience. Under general principles of U.S. government contracting law, if the government terminates a contract for convenience, the terminated party may generally recover only its incurred or committed costs and settlement expenses and profit on work completed prior to the termination. If the government terminates a contract for default, the defaulting party may be liable for any extra costs incurred by the government in procuring undelivered items from another source. In addition, our or our customers’ failure to comply with these laws and regulations might result in administrative penalties or the suspension of our customers’ government contract or debarment and, as a result, the loss of the related revenue which would harm our business, results of operations and financial condition. We are not aware of any action contemplated by any regulatory authority related to any possible non-compliance by or in connection with our operations.

In addition, U.S. government contracts and grants normally contain additional requirements that may increase our costs of doing business, reduce our profits, and expose us to liability for failure to comply with these terms and conditions. These requirements include, for example:

●

specialized disclosure and accounting requirements unique to U.S. government contracts;

●

financial and compliance audits that may result in potential liability for price adjustments, recoupment of government funds after such funds have been spent, civil and criminal penalties, or administrative sanctions such as suspension or debarment from doing business with the U.S. government;

●

public disclosures of certain contract and company information; and

●

mandatory socioeconomic compliance requirements, including labor requirements, non-discrimination and affirmative action programs and environmental compliance requirements.

33If we fail to maintain compliance with these requirements, our contracts may be subject to termination, and we may be subject to financial and/or other liability under its contract or under the False Claims Act. The False Claims Act’s “whistleblower” provisions allow private individuals, including present and former employees, to sue on behalf of the U.S. government. The False Claims Act statute provides for treble damages and other penalties and, if our operations are found to be in violation of the False Claims Act, we could face other adverse action, including suspension or prohibition from doing business with the U.S. government. Any penalties, fines, suspension or damages could adversely affect our financial results as well as our ability to operate our business.

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If we fail to maintain compliance with these requirements, our contracts may be subject to termination, and we may be subject to financial and/or other liability under its contracts or under the False Claims Act. The False Claims Act’s “whistleblower” provisions allow private individuals, including present and former employees, to sue on behalf of the U.S. government. The False Claims Act statute provides for treble damages and other penalties and, if our operations are found to be in violation of the False Claims Act, we could face other adverse action, including suspension or prohibition from doing business with the U.S. government. Any penalties, fines, suspension or damages could adversely affect our financial results as well as our ability to operate our business.

Further, our operations are subject to an array of other governmental regulations in each of the jurisdictions in which we operate. Our activities are subject to regulation by several federal and state government agencies, including OSHA and by federal and state laws. Our operations and activities in other jurisdictions are subject to similar governmental regulations. Similar to conventionally constructed buildings, the workforce housing industry is also subject to regulations by multiple governmental agencies in each jurisdiction relating to, among others, environmental, zoning and building standards, and health, safety and transportation matters. Noncompliance with applicable regulations, implementation of new regulations or modifications to existing regulations may increase costs of compliance, require a termination of certain activities or otherwise have a material adverse effect on our business, results of operations, and financial condition.

We are subject to various anti-corruption laws and we may be subject to other liabilities which could have a material adverse effect on our business, results of operations and financial condition.

We are subject to various anti-corruption laws that prohibit improper payments or offers of payments to foreign governments and their officials by a U.S. person for the purpose of obtaining or retaining business. Our activities create the risk of unauthorized payments or offers of payments by one of our employees or agents that could be in violation of various laws, including the U.S. Foreign Corrupt Practices Act (the “FCPA”). We have implemented safeguards and policies to discourage these practices by our employees and agents. However, existing safeguards and any future improvements may prove to be ineffective and employees or agents may engage in conduct for which we might be held responsible.

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various laws, including the U.S. Foreign Corrupt Practices Act (the “FCPA”). We have implemented safeguards and policies to discourage these practices by our employees and agents. However, existing safeguards and any future improvements may prove to be ineffective and employees or agents may engage in conduct for which we might be held responsible.

If employees violate our policies or we fail to maintain adequate record-keeping and internal accounting practices to accurately record its transactions, we may be subject to regulatory sanctions. Violations of the FCPA or other anti-corruption laws may result in severe criminal or civil sanctions and penalties, including suspension or debarment from U.S. government contracting, and we may be subject to other liabilities which could have a material adverse effect on our business, results of operations and financial condition. We are also subject to similar anti-corruption laws in other jurisdictions.

We may be exposed to certain regulatory and financial risks related to climate change and other environmental laws and regulations.

All of our and our customers’ operations may be affected by federal, state and local laws and regulations governing the discharge of substances into the environment or otherwise relating to environmental protection. Among other things, these laws and regulations impose limitations and prohibitions on the discharge and emission of, and establish standards for the use, disposal and management of, regulated materials and waste, and impose liabilities for the costs of investigating and cleaning up, and damages resulting from, present and past spills, disposals or other releases of hazardous substances or materials. In the ordinary course of business, we use and generate substances that are regulated or may be hazardous under environmental laws. We have an inherent risk of liability under environmental laws and regulations, both with respect to ongoing operations and with respect to contamination that may have occurred in the past on our properties or as a result of our operations. From time to time, our operations or conditions on properties that we have acquired have resulted in liabilities under these environmental laws. We may in the future incur material costs to comply with environmental laws or sustain material liabilities from claims concerning noncompliance or contamination. We have no reserves for any such liabilities. Environmental laws and regulations are likely to change in the future under different administrations, possibly resulting in more stringent requirements. Our or any of our customers’ failure to comply with applicable environment laws and regulations may result in any of the following:

●

issuance of administrative, civil and criminal penalties;

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●

denial or revocation of permits or other authorizations;

●

reduction or cessation of operations; and

●

performance of site investigatory, remedial or other corrective actions.

While it is not possible at this time to predict how environmental legislation may change or how new regulations that may be adopted would impact our business, any such future laws and regulations could result in increased compliance costs or additional operating restrictions for us or our customers and could have a material adverse effect on our business or demand for our services.

There are a number of legislative and regulatory proposals to address greenhouse gas emissions, which are in various phases of discussion or implementation, but it remains unclear what additional actions the current or future administration will take and what support the President will have for any potential legislative changes from Congress. The outcome of U.S. federal, regional, provincial, and state actions to address global climate change could result in a variety of regulatory programs including potential new regulations, additional charges to fund energy efficiency activities, or other regulatory actions. These actions could:

●

result in increased costs associated with our operations and our customers’ operations;

●

increase other costs to our business;

●

reduce the demand for carbon-based fuels; and

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reduce the demand for our services.

Any adoption of these or similar proposals by U.S. federal, regional, provincial, or state governments mandating a substantial reduction in greenhouse gas emissions could have far-reaching and significant impacts on the energy industry. Although it is not possible at this time to predict how legislation or new regulations that may be adopted to address greenhouse gas emissions would impact our business, any such future laws and regulations could result in increased compliance costs or additional operating restrictions, and could have a material adverse effect on our business or demand for our services. See “Business—Regulatory and Environmental Compliance” for a more detailed description of our climate-change related risks.

We may be subject to litigation, judgments, orders or regulatory proceedings that could materially harm our business.

We are subject to claims arising from disputes with customers, employees, vendors and other third parties in the normal course of business. The risks associated with any such disputes may be difficult to assess or quantify and their existence and magnitude may remain unknown for substantial periods of time. If the plaintiffs in any suits against us were to successfully prosecute their claims, or if we were to settle such suits by making significant payments to the plaintiffs, our business, results of operations and financial condition would be harmed. Even if the outcome of a claim proves favorable to us, litigation can be time consuming and costly and may divert management resources. To the extent that our senior executives are named in such lawsuits, our indemnification obligations could magnify the costs.

We are subject to evolving public disclosure, financial reporting and corporate governance expectations and regulations that impact compliance costs and risks of noncompliance.

We are subject to changing rules and regulations promulgated by a number of governmental and self-regulatory organizations, including the SEC and Nasdaq, as well as evolving investor expectations around disclosures, financial reporting, corporate governance and environmental and social practices. These rules and regulations continue to evolve in scope and complexity, and many new requirements have been created in response to laws enacted by the U.S. and foreign governments, making compliance more difficult and uncertain. The increase in costs to comply with such evolving expectations, rules and regulations, as well as any risk of noncompliance, could adversely impact us.

35Growth, and Development Risks

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Growth, Development and Financing Risks

We may not be able to successfully acquire and integrate new operations, which could cause our business to suffer.

We may not be able to successfully complete potential strategic acquisitions for various reasons. We anticipate that we will consider acquisitions in the future that meet our strategic growth plans. We cannot predict whether or when acquisitions will be completed, and we may face significant competition for certain acquisition targets. Acquisitions that are completed involve numerous risks, including the following:

●difficulties in integrating the operations, technologies, products and personnel of the acquired companies;

●diversion of management’s attention from normal daily operations of the business;

●difficulties in entering markets in which we have no or limited direct prior experience and where our competitors in such markets have stronger market positions;

●difficulties in complying with regulations, such as environmental regulations, and managing risks related to an acquired business;

●an inability to timely complete necessary financing and required amendments, if any, to existing agreements;

●an inability to implement uniform standards, controls, procedures and policies;

●undiscovered and unknown problems, defects, liabilities or other issues related to any acquisition that become known to us only after the acquisition, particularly relating to rental equipment on lease that are unavailable for inspection during the diligence process; and

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●potential loss of key customers or employees.

In connection with acquisitions, we may assume liabilities or acquire damaged assets, some of which may be unknown at the time of such acquisitions; record goodwill and non-amortizable intangible assets that will be subject to future impairment testing and potential periodic impairment charges; or incur amortization expenses related to certain intangible assets.

The condition and regulatory certification of any facilities or operations acquired is assessed as part of the acquisition due diligence. In some cases, facility condition or regulatory certification may be difficult to determine due to that facility being on lease at the time of acquisition and/or inadequate certification records. Facility acquisitions may therefore result in a rectification cost which may not have been factored into the acquisition price, impacting ability to deploy and ultimate profitability of the facility acquired.

Acquisitions are inherently risky, and no assurance can be given that our future acquisitions will be successful or will not materially adversely affect our business, results of operations, and financial condition. If we do not manage new markets effectively, some of our new communities and acquisitions may lose money or fail, and we may have to close unprofitable communities. Closing a community in such circumstances would likely result in additional expenses that would cause our operating results to suffer. To successfully manage growth, we will need to continue to identify additional qualified managers and employees to integrate acquisitions within our established operating, financial and other internal procedures and controls. We will also need to effectively motivate, train and manage our employees. Failure to successfully integrate recent and future acquisitions and new communities into existing operations could materially adversely affect our results of operations and financial condition.

Global, national or local economic movements could have a material adverse effect on our business.

We operate in the United States, but our business may be negatively impacted by economic movements or downturns in that market or in global markets generally, including those that could be caused by policy changes by the U.S. administration in areas such as trade and immigration. These adverse economic conditions may reduce commercial activity, cause disruption and volatility in global financial markets, and increase rates of default and bankruptcy. Reduced commercial activity has historically resulted in reduced demand for our products and services. For example, reduced commercial activity in the natural resource development sector in certain markets in which we operate may negatively impact our business. U.S. federal spending cuts or further limitations that may result from presidential or congressional action or inaction may also negatively impact our arrangements with government contractor customers. Disruptions in financial markets could negatively impact the ability of our customers to pay their obligations to us in a timely manner and increase our counterparty risk. If economic conditions worsen, we may face reduced demand and an increase, relative to historical levels, in the time it takes to receive customer payments. If we are not able to adjust our business in a timely and effective manner to changing economic conditions, our business, results of operations and financial condition may be materially adversely affected.

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commercial activity in the natural resource development sector in certain markets in which we operate may negatively impact our business. U.S. federal spending cuts or further limitations that may result from presidential or congressional action or inaction may also negatively impact our arrangements with government contractor customers. Disruptions in financial markets could negatively impact the ability of our customers to pay their obligations to us in a timely manner and increase our counterparty risk. If economic conditions worsen, we may face reduced demand and an increase, relative to historical levels, in the time it takes to receive customer payments. If we are not able to adjust our business in a timely and effective manner to changing economic conditions, our business, results of operations and financial condition may be materially adversely affected.

Information Technology and Privacy Risks

Any failure of our management information systems could disrupt our business and result in decreased revenue and increased overhead costs.

We depend on our management information systems to actively manage our facilities and provide facility information, and availability of our services. These functions enhance our ability to optimize facility utilization, occupancy, costs of goods sold, and average daily rate. The failure of our management information systems to perform as anticipated could damage our reputation with our customers, disrupt our business or result in, among other things, decreased revenue and increased overhead costs. For example, an inaccurate utilization rate could cause us to fail to have sufficient inventory to meet consumer demand, resulting in decreased sales. Any such failure could harm our business, results of operations and financial condition. In addition, the delay or failure to implement information system upgrades and new systems effectively could disrupt our business, distract management’s focus and attention from business operations and growth initiatives, and increase our implementation and operating costs, any of which could materially adversely affect our operations and operating results. Furthermore, these technologies may require refinements and upgrades. The development and maintenance of these technologies may require significant investment by us. As various systems and technologies become outdated or new technology is required, we may not be able to replace or introduce them as quickly as needed or in a cost- effective and timely manner. As a result, we may not achieve the benefits we may have been anticipating from any new technology or system.

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maintenance of these technologies may require significant investment by us. As various systems and technologies become outdated or new technology is required, we may not be able to replace or introduce them as quickly as needed or in a cost- effective and timely manner. As a result, we may not achieve the benefits we may have been anticipating from any new technology or system.

Like other companies, our information systems may be vulnerable to a variety of interruptions due to events beyond our control, including, but not limited to, telecommunications failures, computer viruses, security breaches (including cyber-attacks), and other security issues. In addition, because our systems contain information about individuals and businesses, the failure to maintain the security of the data we hold, whether the result of our own error or the malfeasance or errors of others, could harm our reputation or give rise to legal liabilities leading to lower revenue, increased costs, regulatory sanctions, and other potential material adverse effects on our business, results of operations, and financial condition.

Our business could be negatively impacted by security threats, including cybersecurity threats and other disruptions.

We face various security threats, including cybersecurity threats to gain unauthorized access to sensitive information or to render data or systems unusable; threats to the safety of our employees; threats to the security of our facilities and infrastructure or third- party facilities and infrastructure; and threats from terrorist acts. Although we utilize various procedures and controls to monitor these threats and mitigate our exposure to such threats, there can be no assurance that these procedures and controls will be sufficient in preventing security threats from materializing. If any of these events were to materialize, they could lead to losses of sensitive information, critical infrastructure, personnel or capabilities essential to our operations and could have a material adverse effect on our reputation, financial position, results of operations or cash flows. Cybersecurity attacks in particular are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information, and corruption of data. Even if we are fully compliant with legal standards and contractual or other requirements, we still may not be able to prevent security breaches involving sensitive data. Breaches, thefts, losses or fraudulent uses of customer, employee or company data could cause consumers to lose confidence in the security of our website, point of sale systems and other information technology systems and choose not to stay in our communities or contract with us in the future.

37While we have a cybersecurity program, including an incident response plan, designed to protect and preserve the integrity of our information systems, the Company also maintains cybersecurity insurance in line with industry standards to manage potential liabilities resulting from specific cyber-attacks. However, it is important to note that no system is fully immune from attack and although we maintain cybersecurity insurance, there can be no guarantee that our insurance coverage limits will protect against any future claims or that such insurance proceeds will be paid to us in a timely manner.

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While we have a cybersecurity program designed to protect and preserve the integrity of our information systems, the Company also maintains cybersecurity insurance in line with industry standards to manage potential liabilities resulting from specific cyber-attacks. However, it is important to note that although we maintain cybersecurity insurance, there can be no guarantee that our insurance coverage limits will protect against any future claims or that such insurance proceeds will be paid to us in a timely manner.

Risks Related to Our Indebtedness

~~Our~~Global ~~leverage~~capital ~~may~~and ~~make~~credit itmarkets ~~difficult~~conditions ~~for~~could usmaterially toadversely ~~service~~affect our ~~debt~~ability to access the capital and ~~operate~~credit ~~our~~markets ~~business~~or the ability of key counterparties to perform their obligations to it.

AsAlthough the redemption of ~~December 31, 2024,~~our ~~we,~~$181.4 ~~through~~million ~~our~~in ~~wholly-owned~~aggregate ~~indirect~~principal ~~subsidiary,~~amount ~~Arrow~~of ~~Bidco~~10.75% senior secured notes due June 15, ~~LLC~~2025 (the “~~Arrow~~2025 ~~Bidco~~Senior Secured Notes”) improved our leverage profile, ~~had~~our ~~$181.4~~growth ~~million~~strategy ofcontinues ~~total~~to ~~indebtedness~~depend ~~consisting~~on ofaccess $0to ~~borrowings~~capital markets and the ABL Facility. Any reduction in availability under the ABL Facility ~~and~~due ~~$181.4~~to ~~million~~a ofdecrease ~~our~~in ~~2025~~the ~~Senior~~borrowing ~~Secured~~base ~~Notes~~or for other reasons could impact our liquidity.

In the future, we may need to raise additional funds to, among other things, improve or expand our operations, respond to competitive pressures or make acquisitions. If adequate funds are not available on acceptable terms, we may be unable to achieve our ~~leverage~~business ~~increases~~or strategic objectives or compete effectively. Our ability to pursue certain future opportunities may depend in part on our ongoing access to debt and equity capital markets. We cannot assure you that any such financing will be available on terms satisfactory to us or at all. If we are unable to obtain financing on acceptable terms, itwe ~~could~~may have ~~important~~to ~~consequences,~~curtail ~~including:~~our growth.

~~●making~~Economic itdisruptions ~~more~~affecting ~~difficult~~key tocounterparties ~~satisfy~~could ~~our~~also ~~obligations~~have ~~with~~a ~~respect~~material toadverse effect on our ~~various~~business. ~~debt~~We ~~(including~~monitor the ~~2025~~financial ~~Senior~~strength ~~Secured~~of ~~Notes)~~our larger customers, lenders, and ~~liabilities;~~insurance carriers on a periodic basis using publicly-available

●requiring us to dedicate a substantial portion of our cash flow from operations to debt payments, thus reducing the availability of cash flow to fund internal growth through working capital and capital expenditures on our existing communities or new communities and for other general corporate purposes;

●increasing our vulnerability to a downturn in our business or adverse economic or industry conditions;

●limiting our flexibility in planning for or reacting to changes in our business and industry;

●restricting us from pursuing strategic acquisitions or exploiting certain business opportunities or causing us to make non-strategic divestitures; and

●limiting, among other things, our ability to borrow additional funds or raise equity capital in the future and increasing the costs of such additional financings.

Our ability to meet our debt service obligations, including those under the ABL Facility and the 2025 Senior Secured Notes, or to refinance our debt depends on our future operating and financial performance, which will be affected by our ability to successfully implement our business strategy as well as general economic, financial, competitive, regulatory and other factors beyond our control. If our business does not generate sufficient cash flow from operations, or if future borrowings are not available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs, we may need to refinance all or a portion of our indebtedness on or before the maturity thereof, sell assets, reduce or delay capital investments or seek to raise additional capital, any of which could have a material adverse effect on our operations. In addition, we may not be able to effect any of these actions, if necessary, on commercially reasonable terms or at all. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of our existing or future debt instruments may limit or prevent us from taking any of these actions. If we default on the payments required under the terms of certain of our indebtedness, that indebtedness, together with debt incurred pursuant to other debt agreements or instruments that contain cross-default or cross-acceleration provisions, may become payable on demand, and we may not have sufficient funds to repay all of our debts. As a result, our inability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance or restructure our obligations on commercially reasonable terms or at all, would have an adverse effect, which could be material, on our business, financial condition and results of operations, as well as on our ability to satisfy our debt obligations.

We and our subsidiaries may be able to incur substantial additional indebtedness (including additional secured obligations) in the future. Although the Indenture governing our 2025 Senior Secured Notes and the ABL Facility contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and under certain circumstances, the amount of indebtedness that could be incurred in compliance with these

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~~restrictions~~information ~~could~~in beorder ~~substantial.~~to Ifevaluate ~~new~~its ~~debt,~~exposure ~~including~~to ~~future~~those ~~additional~~who ~~secured~~have or who it believes may likely experience significant threats to their ability to adequately perform their obligations, isto ~~added~~it. The information available will differ from counterparty to ~~our~~counterparty and ~~our~~may ~~subsidiaries’~~be ~~existing~~insufficient ~~debt~~for ~~levels,~~us ~~the~~to ~~related~~adequately ~~risks~~interpret ~~that~~or weevaluate ~~now~~our ~~face~~exposure ~~would~~and/or ~~increase~~determine appropriate or timely responses.

In the future, we may need to raise additional funds to, among other things, refinance existing indebtedness, fund existing operations, improve or expand our operations, respond to competitive pressures or make acquisitions. If adequate funds are not available on acceptable terms, we may be unable to achieve our business or strategic objectives or compete effectively. Our ability to pursue certain future opportunities may depend in part on our ongoing access to debt and equity capital markets. We cannot assure you that any such financing will be available on terms satisfactory to us or at all. If we are unable to obtain financing on acceptable terms, we may have to curtail our growth.

Economic disruptions affecting key counterparties could also have a material adverse effect on our business. We monitor the financial strength of our larger customers, lenders, and insurance carriers on a periodic basis using publicly-available information in order to evaluate its exposure to those who have or who it believes may likely experience significant threats to their ability to adequately perform their obligations to it. The information available will differ from counterparty to counterparty and may be insufficient for us to adequately interpret or evaluate our exposure and/or determine appropriate or timely responses.

~~The~~As ~~ABL~~of ~~Facility~~December ~~and the Indenture~~31, ~~as well as any instruments that will govern any future debt obligations~~2025, ~~contain~~we ~~covenants~~had ~~that~~$0 ~~impose~~of ~~significant~~total ~~restrictions on the way the Arrow Bidco and its subsidiaries can operate~~indebtedness, ~~including~~excluding ~~restrictions~~finance onlease ~~the ability to:~~obligations.

The ABL Facility, as well as any instruments that will govern any future debt obligations, contain covenants that impose significant restrictions on the way Arrow Bidco and its subsidiaries can operate, including restrictions on the ability to:

●incur or guarantee additional debt and issue certain types of stock;

●create or incur certain liens;

●make certain payments, including dividends or other distributions, with respect to our equity securities;

●prepay or redeem junior debt;

●make certain investments or acquisitions, including participating in joint ventures;

●engage in certain transactions with affiliates;

●create unrestricted subsidiaries;

●create encumbrances or restrictions on the payment of dividends or other distributions, loans or advances to, and on the transfer of, assets to the issuer or any restricted subsidiary;

●sell assets, consolidate or merge with or into other companies;

●sell or transfer all or substantially all our assets or those of our subsidiaries on a consolidated basis; and

●issue or sell share capital of certain subsidiaries.

Although these limitations will be subject to significant exceptions and qualifications, these covenants could limit our ability to finance future operations and capital needs and our ability to pursue acquisitions and other business activities that may be in our interest. Arrow Bidco’s ability to comply with these covenants and restrictions may be affected by events beyond our control. These include prevailing economic, financial and industry conditions. If Arrow Bidco defaults on their obligations under the ABL Facility ~~and the 2025 Senior Secured Notes Indenture (as defined below)~~, then the relevant lenders ~~or holders~~ could elect to declare the debt, together with accrued and unpaid interest and other fees, if any, immediately due and payable and proceed against any collateral securing that debt. If the debt under the ABL Facility, or any other material financing arrangement that we enter into were to be accelerated, our assets may be insufficient to repay in full the ABL Facility, or such other debt.

The ABL Facility also requires our subsidiaries to satisfy specified financial maintenance tests. The ability to meet these tests could be affected by deterioration in our operating results, as well as by events beyond our control, including increases in raw materials prices and unfavorable economic conditions, and we cannot assure you that these tests will be met. As previously disclosed by the Company in its Current Report on Form 8-K filed with the SEC on December 29, 2025, the Company amended the ABL Credit Facility on December 23, 2025 to revise the Consolidated Fixed Charge Coverage Ratio (as defined in the ABL Credit Facility) covenant that the Company must comply with during calendar 2026, to provide additional flexibility in connection with the timing of anticipated capital expenditures associated with planned growth projects. If an event of default occurs under the ABL Facility, the lenders thereunder could terminate their commitments and declare all amounts borrowed, together with accrued and unpaid interest and other fees, to be immediately due and payable. Borrowings under other debt instruments that contain cross-acceleration or cross-default provisions also may be accelerated or become payable on demand. In these circumstances, Target Hospitality’s assets may not be sufficient to repay in full that indebtedness and its other indebtedness then outstanding.

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Indenture or any other material financing arrangement that we enter into were to be accelerated, our assets may be insufficient to repay in full the ABL Facility, the 2025 Senior Secured Notes and our other debt.

The amount of borrowings permitted at any time under the ABL Facility will be subject to compliance with limits based on a periodic borrowing base valuation of the borrowing base assets thereunder. As a result, our access to credit under the ABL Facility will potentially be subject to significant fluctuations depending on the value of the borrowing base of eligible assets as of any measurement date, as well as certain discretionary rights of the agent in respect of the calculation of such borrowing base value. As a result of any change in valuation, the availability under the ABL Facility may be reduced, or we may be required to make a repayment of the ABL Facility, which may be significant. The inability to borrow under the ABL Facility or the use of available cash to repay the ABL Facility as a result of a valuation change may adversely affect our liquidity, results of operations and financial position.

Restrictions in Arrow Bidco’s existing and future debt agreements could limit our growth and our ability to respond to changing conditions.

The ABL Facility contains a number of significant covenants including covenants restricting the incurrence of additional debt. The credit agreement governing the ABL Facility requires Arrow Bidco, among other things, to maintain certain financial ratios or reduce our debt. These restrictions also limit our ability to obtain future financings to withstand a future downturn in its business or the economy in general, or to otherwise conduct necessary corporate activities. We may also be prevented from taking advantage of business opportunities that arise because of the limitations that the restrictive covenants under the ABL Facility ~~and the Indenture~~ impose on it. In addition, complying with these covenants may also cause us to take actions that are not favorable to our securityholders and may make it more difficult for us to successfully execute our business strategy and compete against companies that are not subject to such restrictions.

Credit rating downgrades could adversely affect our businesses, cash flows, financial condition and operating results.

Arrow Bidco’s credit ratings will impact the cost and availability of future borrowings, and, as a result, cost of capital. Arrow Bidco’s ratings reflect each rating agency’s opinion of our financial strength, operating performance and ability to meet our debt obligations. Each rating agency will review these ratings periodically and there can be no assurance that such ratings will be maintained in the future. A downgrade in Arrow Bidco’s rating could adversely affect our businesses, cash flows, financial condition and operating results.

Risks Related to Ownership of Our Common Stock

Our stock price has experienced volatility over time and this volatility may continue, in part due to factors such as those mentioned in this Item 1A. Stock volatility in itself may adversely affect stockholder confidence as well as employee morale and retention for those associates who receive equity grants as part of their compensation packages. The impact on employee morale and retention could adversely affect our business performance and financial results. Stock volatility and other factors may also affect elements of our capital allocation strategy, and our ability to use equity to fund acquisitions or raise capital.

As part of our capital allocation strategy, since November 2022, the Company’s Board of Directors has authorized several share repurchase programs. Decisions regarding share repurchases and dividends are within the discretion of the Board of Directors, and will be influenced by a number of factors, including the price of our Common Stock, general business and economic conditions, our financial condition and operating results, the emergence of alternative investment or acquisition opportunities, changes in business strategy and other factors. Changes in, or the elimination of, our share repurchase programs could have a negative effect on the price of our Common Stock. Our share repurchase program could change, and would be influenced by several factors, including business and market conditions. During the year ended December 31, 2025, no share repurchases were made. As of December 31, 2025, the stock repurchase program had a remaining capacity of approximately $66.6 million. For more information on our dividends and share repurchase programs, see “Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchase of Equity Securities”.

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As part of our capital allocation strategy, since November 2022, the Company’s Board of Directors has authorized several share repurchase programs. Decisions regarding share repurchases and dividends are within the discretion of the Board of Directors, and will be influenced by a number of factors, including the price of our Common Stock, general business and economic conditions, our financial condition and operating results, the emergence of alternative investment or acquisition opportunities, changes in business strategy and other factors. Changes in, or the elimination of, our share repurchase programs could have a negative effect on the price of our Common Stock. Our share repurchase program could change, and would be influenced by several factors, including business and market conditions. During the year ended December 31, 2024, the Company repurchased 3,866,265 shares of Common Stock for an aggregated price of approximately $33.4 million (exclusive of estimated excise taxes of approximately $0.2 million). As of December 31, 2024, the stock repurchase program had a remaining capacity of approximately $66.6 million. For more information on our dividends and share repurchase programs, see “Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchase of Equity Securities”.

We have incurred and expect to continue to incur significant legal, accounting, insurance, and other expenses as a result of being a public company. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended (the “Dodd-Frank Act”) and the Sarbanes-Oxley Act of 2002, as amended (“SOX”), as well as related rules implemented by the SEC, have required changes in corporate governance practices of public companies. In addition, rules that the SEC is implementing or is required to implement pursuant to the Dodd-Frank Act may require additional change. Compliance with these and other similar laws, rules and regulations, including compliance with Section 404 of SOX, may substantially increase our expenses, including legal and accounting costs, and may make some activities more time-consuming and costly. These laws, rules, and regulations may also make it more expensive to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage, which may make it more difficult to attract and retain qualified persons to serve on its board of directors or as officers.

Our principal stockholder has substantial control over our business, which may be disadvantageous to other stockholders.

Arrow Holdings and MFA Global S.a r.l., entities controlled by TDR Capital, together beneficially owned approximately 65% of our outstanding shares of Common Stock as of December 31, ~~2024~~2025. As a result of its ability to control a significant percentage of the voting power of our outstanding Common Stock, TDR Capital may have substantial control over matters requiring approval by our stockholders, including the election and removal of directors, amendments to our certificate of incorporation, any proposed merger, consolidation or sale of all or substantially all of our assets and other corporate transactions. TDR Capital may have interests that are different from those of other stockholders.

Item 1B. Unresolved Staff Comments

None.

Item 1C. Cybersecurity

Risk Management and Strategy

Information technology (“IT”), digital information and automation are essential components of the Company’s operations and growth strategy. The Company recognizes the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard information systems and protect the availability, integrity and confidentiality of our data. The Cybersecurity Risk Management & Oversight Committee (consisting of the Senior Vice President of Business Applications & Digital Transformation, Vice President of IT, a member of our IT department, a senior member of our Legal department, and a member of Operations) sets IT risk strategy and makes risk-informed decisions related to our technology, which includes the assessment and response to cybersecurity risk. For purposes of this Item 1C disclosure, we refer to the Cybersecurity Risk Management & Oversight Committee as the “Cybersecurity Committee.”

The Company has integrated cybersecurity into its broader internal controls framework. The Company maintains a cybersecurity program overseen by the Cybersecurity Committee and is informed by key industry frameworks including the National Institute of Standards and Technology (“NIST”). In addition, we have set Company-wide policies and procedures concerning transactional workflow approvals, multifactor authentication, antivirus protection, confidential information and the use of the internet, social media, email, and wireless devices. These policies go through an internal review process and are approved by appropriate members of senior management.

The Company has continued to expand investments in IT security, including end user-training, using layered defenses, identifying and protecting critical assets, strengthening monitoring and alerting, and engaging experts. Further, we conduct periodic external penetration tests, vulnerability assessments and maturity testing. These tests and assessments are useful tools for maintaining a robust cybersecurity program to protect our investors, customers, employees, vendors and

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~~The~~intellectual ~~Company has integrated cybersecurity into its broader internal controls framework~~property. The Company maintains a cybersecurity program overseen by the Cybersecurity Risk Management & Oversight Committee and aligns with key industry frameworks including the National Institute of Standards and Technology (“NIST”). In addition Additionally, we ~~have~~perform ~~set Company-wide policies~~ and ~~procedures~~document ~~concerning~~user ~~transactional workflow approvals, multifactor authentication, antivirus protection, confidential information~~ and ~~the~~administrative ~~use~~access reviews of ~~the~~all ~~internet~~domains, ~~social media~~networks, ~~email~~applications, and ~~wireless~~systems ~~devices.~~at ~~These~~least ~~policies go through an internal review process and are approved by appropriate members of senior management~~quarterly.

~~The~~We ~~Company~~view ~~has~~cybersecurity ~~continued~~as toa ~~expand~~shared ~~investments~~responsibility. inThe ITCompany ~~security,~~maintains ~~including~~a ~~end~~formal ~~user-training,~~information ~~using~~security ~~layered~~training ~~defenses,~~program ~~identifying~~for ~~and~~all ~~protecting~~employees ~~critical~~that ~~assets,~~includes ~~strengthening~~annual ~~monitoring~~training ~~and~~on ~~alerting,~~matters ~~and~~such ~~engaging~~as ~~experts.~~phishing ~~Further,~~and weemail ~~conduct~~security ~~periodic~~best ~~external penetration tests, vulnerability assessments and maturity testing~~practices. ~~These~~Employees ~~tests and assessments~~ are ~~useful~~also ~~tools~~required ~~for maintaining a robust cybersecurity program~~ to ~~protect~~complete ~~our~~annual ~~investors,~~compulsory ~~customers,~~training ~~employees,~~on ~~vendors~~data ~~and intellectual property~~privacy. ~~Additionally,~~ weSecurity ~~perform~~training ~~and~~is ~~document~~specialized ~~user~~based ~~and~~on ~~administrative~~employee ~~access reviews of all domains, networks, applications, and systems at least quarterly~~roles.

We view cybersecurity as a shared responsibility. The Company maintains a formal information security training program for all employees that includes training on matters such as phishing and email security best practices. Employees are also required to complete compulsory training on data privacy. Security training is specialized based on employee roles.

Personnel

The Cybersecurity ~~Risk Management & Oversight~~ Committee is responsible for assessing and managing cybersecurity risk, which includes prevention, mitigation, detection, and remediation of cybersecurity incidents. The Cybersecurity ~~Risk Management & Oversight~~ Committee members collectively have relevant expertise in cybersecurity ~~with~~through ~~the~~ appropriate experience, education, and ~~industry~~in ~~standard~~certain ~~cybersecurity~~cases, industry-recognized certifications.

The Cybersecurity ~~Risk Management & Oversight~~ Committee works closely with other members of executive management to ensure that the Company has effective communication and understanding of its cybersecurity risk management.

The members of the Cybersecurity ~~Risk Management & Oversight~~ Committee work together to inform the Audit Committee of the Company’s Board of Directors (the “Audit Committee”) on cybersecurity risks at least quarterly. These reports include, among other things, current cybersecurity risk posture, status of projects to strengthen the Company’s information security systems, the effectiveness of our cybersecurity policies, procedures, and strategies, and any significant cybersecurity incidents that have occurred.

Third Party Engagement

The Company engages third-party expertise as part of the broader internal controls framework. These experts include independent cybersecurity assessors, consultants, and our internal audit team towho evaluate and stress-test the Company’s networks, policies, cybersecurity technologies and preventative measures. Third-party experts evaluate the effectiveness of our cybersecurity program against industry standards and established frameworks, such as those set by NIST guidelines. The Company also engages an independent managed detection and response provider as an extension of the Company’s cybersecurity team.

Oversight of Third-Party Risk

The Company implements stringent processes to oversee and manage risks associated with third-party service providers. Upon initial engagement with third-party providers, the Company researches the vendor’s cybersecurity and threat reputation. We then require a completed security questionnaire and any relevant documentation including System and Organization Controls (“SOC”) 1 or SOC 2 reports, non-disclosure agreements ~~where~~(as ~~applicable~~appropriate), and ~~proof~~evidence of cybersecurity insurance, if(as ~~necessary~~applicable). This documentation is compiled and assessed by the Cybersecurity ~~Risk Management & Oversight~~ Committee and documented in a workflow approval process. Existing vendors are evaluated bi-annually, and any updates to their cyber posture are documented in the same fashion. The internal business owners of cloud-based applications are required to perform and document user access reviews at least quarterly.

Governance

Our Audit Committee is actively engaged in the oversight of the Company’s information security program. The Audit Committee receives reports on these matters from management at least quarterly, which includes discussion of management’s actions to identify and respond to threats, key performance indicators reflecting cybersecurity posture, and status of recent cybersecurity related initiatives. In addition, the Audit Committee periodically evaluates our cybersecurity strategy to ensure its effectiveness and, if appropriate, includes a review from third-party experts.

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Risks from Cybersecurity Threats

We are exposed to, and may be adversely affected by, interruptions to our computer and IT systems and sophisticated cyber-attacks, including third-party compromise. We have not experienced cybersecurity threats that have materially affected the Company’s results of operations or financial condition. For more information about the cybersecurity risks we face, refer to the section titled “Risk Factors” in Part I Item 1A of this Annual Report on Form 10-K.

Governance

Our Audit Committee is actively engaged in the oversight of the Company’s information security program. The Audit Committee receives reports on these matters from management, which includes discussion of management’s actions to identify and respond to threats, key performance indicators reflecting cybersecurity posture, and status of recent cybersecurity related initiatives. In addition, the Audit Committee periodically evaluates our cybersecurity strategy to ensure its effectiveness and, if appropriate, includes a review from third-party experts.

Cybersecurity Risk Management & Oversight Committee’s Role Managing Risk

The Cybersecurity ~~Risk Management & Oversight~~ Committee continuously updates its approach on cybersecurity to safeguard the Company’s sensitive information and assets based on assessments mentioned above. The program is supported by an organizational structure that reflects support from across the business.

While processes and technologies are in place to ~~minimize~~reduce the ~~chance~~likelihood ofand apotential ~~successful~~impact ~~cyber-attack~~of cybersecurity incidents, the Company has established incident response procedures to address a cybersecurity threat should one occur. The Company’s cybersecurity incident response plan (the “Response Plan”) provides for a timely and consistent response to actual or attempted cybersecurity incidents impacting the Company. The Response Plan includes (1) detection, (2) analysis, which may include timely notice to our Board and public disclosure if deemed material or appropriate, (3) containment, (4) eradication, (5) recovery and (6) post-incident review.

AsRisks previously mentioned, we face a number of cybersecurity risks in connection with our business. Although such risks have not materially affected us, including our business strategy, results of operations or financial condition, to date, we have, from ~~time~~Cybersecurity to time, experienced attempted threats to our data and systems. For more information about the cybersecurity risks we face, refer to the section titled “Risk Factors” in Part I Item 1A of this Annual Report on Form 10-K.Threats

We are exposed to, and may be adversely affected by, interruptions to our computer and IT systems and sophisticated cyber-attacks, including third-party compromise. To date, we have, from time to time, experienced attempted threats to our data and systems. As of the date of this report, no risk from cybersecurity threats, including those resulting from any previous cybersecurity incidents, have materially affected, or are reasonably likely to materially affect, the Company’s results of operations or financial condition. For more information about the cybersecurity risks we face, refer to the section titled “Risk Factors” in Part I Item 1A of this Annual Report on Form 10-K.

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Item 2. Properties

Our corporate headquarters are located in The Woodlands, Texas. Our executive, financial, accounting, legal, administrative, management information systems and human resources functions operate from this single, leased office. Except as indicated, we own all of the real property at the locations listed below. Subject to certain exceptions, substantially all of our owned personal property and material real property in the U.S. are encumbered under our ABL Facility ~~and the 2025 Senior Secured Notes~~. We do not believe that the encumbrances will materially detract from the value of our properties, nor will they materially interfere with their use in the operation of our business. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 and Note 8 – Debt to the notes to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information concerning our ABL Facility (as defined below) ~~and the 2025 Senior Secured Notes~~. For a discussion about how each of our business segments utilizes its respective properties, see Item 1, “Business” of this Annual Report on Form 10-K.


	Location	Description
Government
	Dilley, Texas (leased land)	Dilley (Dilley Immigration Processing Center (2))
	Pecos, Texas (owned and leased land)	PCC (3)
	Pecos, Texas (leased land)	Pecos Blue Lodge (3)
	Orla, Texas	Delaware Lodge (3)
	Mentone, Texas (leased land)	Skillman Station Lodge(1) (3)
	Pecos, Texas	Lodge 118 (3)
	Pecos, Texas	Pecos Trail Lodge (3)
	Pecos, Texas	Pecos South Lodge(1) (3)

HFS – South
	Pecos, Texas	Pecos South Lodge(1)
	Orla, Texas	Orla North Lodge
	Orla, Texas	Orla South Lodge
	Orla, Texas (leased land)	El Capitan Lodge
	Odessa, Texas (owned and leased land)	Odessa West Lodge
	Odessa, Texas	Odessa East Lodge
	Mentone, Texas (leased land)	Mentone Wolf Lodge
	Mentone, Texas (leased land)	Skillman Station Lodge(1)
	Midland, Texas	Midland Lodge
	Midland, Texas	Midland East Lodge
	Kermit, Texas (leased land)	Kermit Lodge
	Kermit, Texas	Kermit North Lodge
	Carlsbad, New Mexico (leased land)	Carlsbad Lodge
	Carlsbad, New Mexico (leased land)	Seven Rivers Lodge
	Jal, New Mexico (owned and leased land)	Jal Lodge
	Big Spring, Texas	Big Spring Lodge

WHS
	Winnemucca, Nevada	New Frontier RV Lodge
	Afton, Texas (leased land)	Patton Springs Lodge

Government
	Dilley, Texas (leased land)	Dilley (Dilley Immigration Processing Center (2))
	Pecos, Texas (owned and leased land)	PCC (3)
	Pecos, Texas (leased land)	Pecos Blue Lodge (3)
	Orla, Texas	Delaware Lodge (3)
	Mentone, Texas (leased land)	Skillman Station Lodge(1) (3)
	Pecos, Texas	Lodge 118 (3)
	Pecos, Texas	Pecos Trail Lodge (3)
	Pecos, Texas	Pecos South Lodge(1) (3)

Other
	Canada (leased land)	Cheecham Lodge
	Williston, North Dakota	Williams County Lodge
	Williston, North Dakota	Judson Executive Lodge
	Watford City, North Dakota (leased land)	Watford City Lodge

(1) Location iswas shared between the HFS – South and Government segments until the PCC Contract terminated.

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(2)	STFRC Contract terminated on August 9, 2024. These community assets in Dilley, Texas previously leased under the STFRC Contract were reactivated as of March 5, 2025 under the DIPC Contract.

(3) The ~~New~~ PCC Contract (as previously defined) associated with these locations terminated on February 21, 2025.

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Item 3. Legal Proceedings

We are involved in various lawsuits, claims and legal proceedings, most of which arise out of the ordinary course of business. The nature of the Company’s business is such that disputes occasionally arise with vendors including suppliers and subcontractors, and customers over contract specifications and contract interpretations among other things. The company assesses these matters on a case-by-case basis as they arise. Reserves are established, as required, based on assessment of exposure. We have insurance policies to cover general liability and workers’ compensation related claims. In the opinion of management, the ultimate amount of liability not covered by insurance, if any, under such pending lawsuits, claims and legal proceedings will not have a material adverse effect on its financial condition results of operations, or liquidity. Because litigation is subject to inherent uncertainties including unfavorable rulings or developments, it is possible that the ultimate resolution of our legal proceedings could involve amounts that are different from our currently recorded accruals, and that such differences could be material.

Item 4. Mine Safety Disclosures

Not applicable.

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Part II

Our Common Stock is listed on the Nasdaq Capital Market under the symbol “TH.”. Our Warrants (as defined below), which expired by their terms on March 15, 2024, traded on Nasdaq under the ticker symbol “THWWW”.

Holders

As of December 31, ~~2024~~2025, there were twelve holders of record of our Common Stock. The number of holders of record does not include a substantially greater number of “street name” holders or beneficial holders whose Common Stock are held ofon record by banks, brokers and other financial institutions.

Dividend Information

We do not currently pay any cash dividends on our Common Stock. The declaration and amount of any dividends in the future will be at the discretion of our board of directors and will depend upon many factors, including our financial condition, results of operations, cash flows, prospects, industry conditions, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors the board of directors deems relevant. We can give no assurances that we will pay a dividend in the future.

Warrants

Platinum Eagle Acquisition Corp., our legal predecessor (“Platinum Eagle”), issued warrants to purchase its common stock as components of units sold in its initial public offering (the “Public Warrants”) and ~~the warrants issued~~ in a private placement concurrently with its initial public offering (the Private Warrants and, together with the Public Warrants, the “Warrants”). The Warrants expired at 5:00 pm New York City time on March 15, 2024.

As of December 31, ~~2024~~2025, there were no Warrants outstanding. The Private Warrants expired unexercised on March 15, 2024 and are no longer outstanding. The Private Warrants were classified as liabilities under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity guidance. The Public Warrants were classified as equity based on the guidance outlined in ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity. Each Warrant entitled its holder to purchase Common Stock in accordance with its terms. During the year ended December 31, 2023, holders of Public Warrants exercised 17,369 Public Warrants for shares of Common Stock resulting in the Company receiving cash proceeds of approximately $0.2 million and issuing 17,369 shares of Common Stock. During the year ended December 31, 2024, holders of Public Warrants exercised 1,079 Public Warrants for shares of Common Stock resulting in the Company receiving cash proceeds of less than $0.1 million and issuing 1,079 shares of Common Stock. See Note 9 and 16 of the audited consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

Warrant Exchange

On December 22, 2022, the Company closed on an offer to exchange the Warrants for shares of its Common Stock in a cashless transaction (the “Warrant Exchange”). Pursuant to the terms of the Warrant Exchange, the Company issued 2,996,201 shares of Common Stock. See Note 9 and 16 of the audited consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

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Performance Graph

The following stock price performance graph should not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10-K into any filing under the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”), except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such acts.

The graph below compares the cumulative total return of our Common Stock from December 31, ~~2019~~2020, through December 31, ~~2024~~2025, with the comparable cumulative return of two indices, the Russell Broadbased Total Returns and the Nasdaq US Benchmark TR Index. The graph plots the change in value of an initial investment in each of our Common Stock, the Russell 2000 Index, and the Nasdaq US Benchmark Index over the indicated time periods. We have not paid any cash dividends and, therefore, the cumulative total return calculation for us is based solely upon the change in share price. The share price performance shown on the graph is not necessarily indicative of future price performance.

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Unregistered Sales of Equity Securities and Use of Proceeds

~~On December 12, 2024, the Company issued an aggregate of 90,000 unregistered, restricted shares of Common Stock to Jeff Sagansky, a former director of the Company, in settlement of Mr~~None. Sagansky’s purported exercise of certain warrants held by him. With respect to such issuance, the Company relied on an exemption from the registration requirements under the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereunder.

Issuer Purchases of Equity Securities

On November 3, 2022, the Company’s Board of Directors approved a stock repurchase program that authorizes the Company to repurchase up to $100 million of its outstanding shares of Common Stock. The stock repurchase program does not obligate the Company to purchase any particular number of shares, and the timing and exact amount of any repurchases will depend on various factors, including market pricing and conditions, applicable legal requirements, contractual obligations, and other factors.

The Company may repurchase its shares in open market transactions from time to time or through privately negotiated transactions in accordance with federal securities laws, at the Company's discretion. The repurchase program, which has no expiration date, may be increased, suspended, or terminated at any time. The program is expected to be implemented over the course of several years and is conducted subject to the covenants in the agreements governing the Company's indebtedness. No share repurchases were made during the year ended December 31, 2025. As of December 31, 2025, 13,296,930 shares of Common Stock for an aggregate price of $57.3 million were held in treasury stock (at cost). As of December 31, 2025, the stock repurchase program had a remaining capacity of approximately $66.6 million.

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no expiration date, may be increased, suspended, or terminated at any time. The program is expected to be implemented over the course of several years and is conducted subject to the covenants in the agreements governing the Company's indebtedness. During the year ended December 31, 2024, the Company repurchased 3,866,265 shares of Common Stock for an aggregated price of approximately $33.4 million (exclusive of estimated excise taxes of approximately $0.2 million). As of December 31, 2024, the stock repurchase program had a remaining capacity of approximately $66.6 million.

The following table summarizes all of the share repurchases during the year ended December 31, 2024:


Period	Total number of shares		Average price paid per share	Total number of shares purchased as part of publicly announced plan or program	Maximum number of shares yet to be purchased under the plans (1)
January 1, 2024 through January 31, 2024	903,444	$	9.37	903,444	9,465,382
February 1, 2024 through February 29, 2024	754,556	$	9.47	754,556	8,717,615
March 1, 2024 through March 31, 2024	616,440	$	8.89	616,440	7,259,287
September 1, 2024 through September 30, 2024	150,000	$	7.61	150,000	9,995,668
October 1, 2024 through October 31, 2024	1,112,719	$	7.63	1,112,719	9,291,496
November 1, 2024 through November 30, 2024	329,106	$	8.19	329,106	8,050,899
Total	3,866,265			3,866,265

Securities Authorized for Issuance under Equity Compensation Plans

On March 6, 2019, our shareholders approved a long-term incentive award plan (the “Plan”) in connection with the business combination. The Plan is administered by the Compensation Committee. Under the Plan, the Compensation Committee may grant an aggregate of 4,000,000 shares of Common Stock in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards, and performance compensation awards.

On May 19, 2022, the Company’s stockholders approved an amendment to the Plan to increase the number of shares authorized under the plan by 4,000,000 shares.

Please refer to Note 17 in the audited consolidated financial statements included in Part II, Item 8 within this Annual Report on Form 10-K for details of the forms of Executive Nonqualified Stock Option Award Agreements, the forms of Executive Restricted Stock Unit Agreements, the form of Executive Stock Appreciation Rights Award Agreement, and the forms of Executive Performance Stock Unit Agreements. 47

As of December 31, 2024, 10,919,715 securities had been granted under the Plan, excluding 116,837 Restricted Stock Units (“RSUs”) paid in cash, and including 1,578,537 of Stock Appreciation Right Awards (“SARs”), which were settled in cash.

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On May 22, 2025, the Company’s stockholders approved an amendment to the Plan to increase the number of shares authorized under the plan by 5,000,000 shares.

Please refer to Note 16 in the audited consolidated financial statements included in Part II, Item 8 within this Annual Report on Form 10-K for details of the forms of Executive Nonqualified Stock Option Award Agreements, the forms of Executive Restricted Stock Unit Agreements, the form of Executive Stock Appreciation Rights Award Agreement, and the forms of Executive Performance Stock Unit Agreements.

As of December 31, 2025, 15,036,871 securities had been granted under the Plan, excluding 116,837 Restricted Stock Units (“RSUs”) paid in cash, and including 1,578,537 of Stock Appreciation Right Awards (“SARs”), which were settled in cash.

Information on our equity compensation plans can be found in the table below.


	Equity Compensation Plan Information
Plan Category	Common shares to be issued upon Exercise of Outstanding Options, Restricted Stock Units, and Performance Stock Units(a)		Weighted Average Exercise Price of Outstanding Options		Common Shares Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Shares Reflected in the first column in this table)
Equity compensation plan approved by Target Hospitality stockholders(1)		24,~~748~~905,~~593~~707	$	7.3852		~~953~~2,~~569~~645,618
Equity compensation plans not approved by security holders		—		—		—
Total		24,~~748~~905,~~593~~707	$	7.3852		~~953~~2,~~569~~645,618

(1) The number of common shares reported in Column (a) excludes shares associated with grants that were withheld for tax liabilities and grants that were forfeited or expired on or before December 31, ~~2024~~2025, as shares associated with grants that were withheld for tax liabilities and forfeited and expired grants are available for reissuance under the Plan. The amounts and values in Column (a) comprise ~~985~~1,~~077~~290,634 equity-based RSUs at a weighted average grant price of $76.6080, 13,~~401~~269,~~407~~846 equity-based PSUs (assumed at a payout of 100% of Target) at a weighted average grant price of $62.0264, and ~~362~~345,~~109~~227 stock options at a weighted average exercise price of $7.3852. For additional information on the awards outstanding under the Plan, see Note 1716 in the audited consolidated financial statements included in Part II, Item 8 within this Annual Report on Form 10-K.

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Cautionary Statement Regarding Forward-Looking Statements

This Annual Report on Form 10-K includes “forward-looking statements” within the meaning of Section 27A of the Securities Act , and Section 21E of the Exchange Act. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for the ~~post-combination~~ business. Specifically, forward-looking statements may include statements relating to:

●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, WHS, and Government segments;

●~~effective~~our ~~management~~ability ofto ~~our~~execute, ~~communities~~expand, and manage WHS projects supporting critical mineral development, power generation, and data center infrastructure projects;

●our ability to achieve margin improvement through the effective servicing of the new contracts we entered into during 2025, including the Expanded Community Contract, the Power Community Contract, the DIPC Contract, and the services portion of the Workforce Housing Contract (each as defined below);

●effective management, utilization, and performance, of our communities (including workforce hubs);

●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 ~~requirements~~ that ~~could~~may ~~lead~~result toin ~~cancellation~~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 ~~suppliers~~service providers;

●~~failure~~our ability to attract and retain key personnel and maintain workforce availability for specialized hospitality and construction operations;

●increases in raw material, ~~and~~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 ~~movements~~developments, including any changes in policy under the ~~Trump~~current ~~administration~~ or any future ~~administration~~U.S. presidential administrations;

●federal government budgeting and appropriations;

●our ability to ~~effectively~~ manage ~~our~~ credit risk and collect on our accounts receivable;

●our ability to fulfill our public company obligations;

●~~any~~cybersecurity ~~failure~~threats, incidents, or failures of our management information systems; and

●~~our~~risks ~~ability~~related to ~~refinance~~our ~~debt~~liquidity, onaccess ~~favorable~~to ~~terms~~capital markets, and ~~meet~~obligations ~~our~~under existing or future debt ~~service~~agreements, ~~requirements~~including ~~and~~compliance ~~obligations;~~with ~~and~~financial covenants.

~~●risks related to Arrow Bidco’s debt obligations;~~49

~~These~~Table ~~forward-looking statements are based on information available as~~ of the date of this Annual Report on Form 10-K and our management’s current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date. We undertake no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.Contents

These forward-looking statements are based on information available as of the date of this Annual Report on Form 10-K and our management’s current expectations, forecasts and assumptions, which involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date. We undertake no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

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Item 6. Reserved

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and capital resources of Target Hospitality Corp. and is intended to help the reader understand Target Hospitality Corp., our operations and our present business environment. This discussion should be read in conjunction with the Company’s audited consolidated financial statements and notes to those statements included in Part II, Item 8 within this Annual Report on Form 10-K. References to “we,” “us,” “our”, “Target Hospitality,” or “the Company” refer to Target Hospitality Corp. and its consolidated subsidiaries.

Executive Summary

Target Hospitality Corp. is one of North America’s largest providers of vertically integrated specialty rental and value-added hospitality services including: catering and food services, maintenance, housekeeping, grounds-keeping, security, health and recreation facilities, community design and construction, overall workforce community management, concierge services and laundry service. As of December 31, ~~2024~~2025, our network included 2629 communities to better serve our customers across the US and Canada. We also operate 2 communities not owned or leased by the Company.

Economic Update

OnIn ~~June~~February 102025, ~~2024,~~ the Company ~~received~~entered ~~notice~~into ~~that~~ the ~~U.S.~~Workforce ~~government~~Housing ~~intended~~Contract to ~~terminate~~provide ~~the~~construction ~~STFRC~~of ~~Contract,~~workforce ~~effective in 60 days~~housing, onfacility ~~August 9~~services, ~~2024.~~and Ashospitality ~~such~~solutions ~~effective~~to onLithium ~~August~~Nevada 9,in ~~2024,~~support ~~the~~of ~~STFRC~~Lithium ~~Contract~~Nevada’s ~~was~~development ~~terminated.~~of ~~The~~Thacker ~~STFRC~~Pass ~~Contract~~(the ~~was~~“Thacker ~~based~~Pass onProject”) and a ~~fixed~~North ~~minimum~~American ~~lease~~critical ~~revenue~~minerals ~~amount~~supply ~~and~~chain. The ~~for~~workforce ~~the~~housing ~~year ended December 31~~community, ~~2023,~~located ~~contributed approximately $55.9 million~~ in ~~total~~Winnemucca, ~~consolidated~~Nevada ~~revenue~~(“Workforce ~~compared~~Hub”) tois ~~approximately~~located ~~$38.3~~near ~~million~~Thacker ~~of revenue for the year ended December 31~~Pass, ~~2024,~~ ~~all of~~ which iscontains ~~related~~one toof the ~~Company’s~~largest ~~Government~~known ~~segment.~~measured ~~These~~lithium ~~assets~~resources. The ~~associated~~Thacker ~~with~~Pass ~~the~~Project ~~STFRC~~is ~~Contract~~expected ~~were reactivated on March 5, 2025 pursuant~~ to ~~the~~play ~~DIPC~~a ~~Contract.~~significant ~~During~~role ~~the~~in ~~year ended December 31, 2024,~~ the ~~Company’s~~domestic ~~Government~~production ~~segment~~of ~~continued~~lithium tobatteries. At ~~benefit from~~ the ~~PCC~~time ~~Community~~of ~~and~~entering ~~the~~into ~~contract (~~the ~~New~~Workforce ~~PCC~~Housing Contract, ~~and~~Lithium ~~the~~Nevada ~~amendment)~~had ~~thereof~~commenced ~~with~~site ~~our NP Partner that became effective November 16~~preparation, ~~2023~~and ~~(with~~ the ~~exercise~~Company ofbegan ~~the~~construction ~~first~~ of ~~four~~the ~~one-year~~Workforce ~~extension~~Hub. As ~~options~~of onDecember ~~November~~31, 162025, ~~2024).~~construction ~~However,~~of the ~~PCC~~Workforce ~~Community~~Hub ~~contributed~~was ~~lower~~substantially ~~revenues as compared to 2023 driven primarily by lower non-cash revenue amortization of $118~~complete.2 When ~~million~~fully ~~related~~operational, ~~to an advanced payment for community expansion associated with~~ the ~~prior~~Workforce ~~contract~~Hub ~~that~~will ~~became~~be ~~fully~~capable ~~amortized as~~ of ~~November~~supporting ~~2023, and to~~ a ~~lesser~~population ~~extent, by a decrease~~ of ~~$22~~approximately ~~million~~2,000 inindividuals. The ~~the~~assets ~~minimum~~associated ~~lease~~with ~~revenue component of~~ the ~~New~~Workforce ~~PCC~~Hub ~~Contract amendment compared to the prior contract~~ that ~~ended~~support inthis ~~November~~capacity ~~2023~~are asnot ~~well~~owned ~~as $21 million of lower variable services revenue generated~~ by the ~~New PCC Contract~~Company. The ~~New~~Workforce ~~PCC~~Housing Contract ~~terminated~~has ~~effective~~an ~~February~~initial ~~21,~~term ~~2025~~through as2027 ~~discussed~~with infirst ~~Note~~occupancy 20that ofbegan ~~our audited consolidated financial statements located~~ in ~~Part~~September ~~II,~~2025. ~~Item~~In 8addition ~~within~~to ~~this~~constructing ~~annual~~the ~~report~~Workforce onHub, ~~Form~~the ~~10-K. The~~ Company ~~generated~~is ~~positive~~providing ~~cash~~turnkey ~~flows~~operational ~~from~~support ~~operations of approximately $151.7 million representing a decrease in cash flows from operations of approximately $5.1 million or 3%~~ for the ~~year~~Workforce ~~ended December 31~~Hub, ~~2024~~ ~~compared~~including toculinary ~~the~~services, ~~year~~facilities ~~ended December 31~~management, ~~2023~~ ~~driven~~and byother asupport ~~$22~~services.8 ~~million~~The ~~increase~~Workforce inHousing ~~cash~~Contract, ~~paid~~which ~~for~~consists ~~income~~of ~~taxes,~~construction and aservices ~~decrease~~revenue, inis ~~cash~~expected ~~collections~~to ofgenerate approximately $21175.2 million, ~~partially~~of ~~offset~~revenue byover aits ~~decrease~~initial ~~in operating expenses of $24.4 million~~term, ~~and~~with anapproximately $11111.31 million ~~decrease~~of incommitted ~~cash~~minimum ~~paid~~revenue. Revenue ~~for~~recognized ~~interest~~during ~~driven~~2025 byon athe ~~significant~~Workforce ~~reduction~~Housing inContract ~~the~~is ~~average~~largely ~~amount~~comprised of ~~debt~~construction ~~outstanding~~fee ~~during~~income ~~the~~recognized ~~current~~using ~~year compared to~~ the ~~prior~~percentage ~~year,~~of ~~and~~completion anmethod ~~increase~~with inprogress ~~interest~~towards ~~income~~completion ofmeasured ~~$3.2~~using ~~million. During~~ the ~~year~~cost-to-cost ~~ended~~method ~~December~~as ~~31, 2024,~~ the ~~Company~~basis ~~also~~to ~~purchased~~recognize ~~3,866,265 shares of Common Stock for an aggregate price of approximately $33~~revenue.4 ~~million~~This ~~(exclusive~~contract ofactivity ~~estimated~~is ~~excise~~reported ~~taxes~~within ofthe ~~approximately~~newly ~~$0.2~~formed ~~million).~~WHS segment.

In February 2025, the Company received notice that the U.S. government terminated the PCC Contract with the Company’s NP Partner, effective immediately on February 21, 2025 (“PCC Termination Effective Date”), and the NP Partner provided notice to the Company of their intention to terminate the PCC Contract as of the PCC Termination Effective Date. The Company provided facility and hospitality solutions to the NP Partner under the PCC Contract utilizing the Company’s owned modular assets and real property, capable of supporting up to 6,000 individuals. The PCC Contract included a minimum annual revenue contribution of approximately $168 million, all of which was attributable to the Government reportable segment. In connection with the PCC Contract termination, on August 1, 2025, the Company entered into an agreement with the NP Partner related to the close-out and settlement of the PCC Contract. The agreement provided the Company with reimbursement for certain costs incurred following the termination of the PCC Contract and resulted in a payment to the Company of approximately $11.8 million (“PCC Contract Close-Out Payment”), which was received in cash and recognized as revenue during the year ended December 31, 2025 and is included as a component of services income for the year ended December 31, 2025 and is included as a component of cash flows from operations for the year ended December 31, 2025. No further payments are expected from the PCC Contract. The PCC Contract generated

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total revenue of approximately $36.3 million (inclusive of the PCC Contract Close-Out Payment) and $186.4 million for the years ended December 31, 2025 and 2024, respectively. The Company retained ownership of the related assets that were associated with the PCC Contract, enabling the Company to continue utilizing these modular solutions and real property to support customer demand across its operating segments and other potential growth opportunities. Certain assets previously associated with servicing the PCC Contract were redeployed to the WHS segment to service the requirements of the Data Center Community Contract described below. The Company is actively engaged in remarketing the remaining assets, which are generally interchangeable across segments, as it evaluates a diverse pipeline of business opportunities that include an increasing number of potential solutions supporting data center infrastructure projects within the WHS segment.

During the year ended December 31, 2024, the STFRC Contract in the Company’s Government segment was terminated effective August 9, 2024. The STFRC Contract was based on a fixed minimum lease revenue amount and for the year ended December 31, 2024, contributed approximately $38.3 million, in total consolidated revenue. The assets associated with the STFRC Contract were reactivated under the DIPC Contract effective March 5, 2025, which is a lease and services agreement with an anticipated five-year term. The DIPC retains a similar facility size and operational scope as the prior operations under the STFRC Contract. The DIPC is capable of supporting up to 2,400 individuals and provides an environment to appropriately care for the community population. The consistency of the community layout required no capital investment, allowing for seamless community reactivation. The Company is providing facility and hospitality solutions under the DIPC Contract, which has a similar economic structure to the previous STFRC Contract, including fixed minimum revenue regardless of occupancy that amounts to a cumulative fixed minimum revenue amount of approximately $246 million over the anticipated five-year term. As such, the DIPC Contract is expected to provide over $246 million of revenue over its anticipated five-year term, to March 2030, and was subject to a ramp up period based on utilization during the first six months of the contract term resulting in lower fixed minimum revenue amounts during the ramp up period. The ramp up period was completed as scheduled as of September 30, 2025 with the maximum fixed minimum revenue amount now being recognized. The maximum fixed minimum revenue amount is based on utilization of 2,400 beds. The DIPC Contract is supported by an amended IGSA between the city of Dilley, Texas and ICE. As is customary for U.S. government contracts and subcontracts, the IGSA and the DIPC Contract are subject to annual U.S. government appropriations and can be canceled for convenience with a 60-day prior notice.

On March 25, 2025, the Company redeemed $181.4 million aggregate principal amount of the 2025 Senior Secured Notes for a redemption price equal to 101.000% of the principal amount of the 2025 Senior Secured Notes plus accrued and unpaid interest. The 2025 Senior Secured Notes are no longer outstanding, and such redemption is expected to generate an annual interest expense savings of approximately $19.5 million.

During the year ended December 31, 2025, the Company entered into the Data Center Community Contract to construct and provide comprehensive facility services and hospitality solutions supporting the Data Center Community. The Company will provide full turnkey support for the Data Center Community, including premium culinary offerings, facilities management, and comprehensive support services. The purpose-built and highly customized Community will support an initial population of 250 individuals, with the capability to expand to approximately 1,500 individuals. Construction and mobilization of the Community for the initial 250 beds was completed as of September 30, 2025, and first occupancy of the Community began in September 2025 for the initial 250 beds. During the three months ended December 31, 2025, the scope of the Data Center Community Contract was amended to add an additional 800 beds to the Data Center Community by June 2026, representing a 320% increase from the initial Community size, resulting in a customized and purpose-built community capable of supporting up to 1,050 individuals (“Expanded Community Contract”). The assets comprising the 1,050 beds supporting the Data Center Community will be owned and managed by the Company. The Company anticipates additional potential Community expansions to meet growing customer demand in future years. The Expanded Community Contract, which has an initial term through September 2027 for the initial 250 beds and, as amended, an initial term through May 2028 for the additional 800 beds, is expected to generate approximately $134 million of committed minimum revenue over the initial terms, which includes advanced payments to be paid in installments during the initial construction and mobilization phase of the Expanded Community Contract to fund the initial construction and mobilization of the Community and related expansions. The Company utilized a portion of its existing asset portfolio to construct the premium Data Center Community and, during the year ended December 31, 2025, began receiving advanced payments from the customer to fund the construction and mobilization of the Community. The majority of the advance payments were received as of December 31, 2025, and are reflected as cash flows from operations during

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the year ended December 31, 2025. The advanced payments were determined to be related to future services and will be amortized as revenue over the estimated term of the contract. The Data Center Community Contract began to generate revenue during the year ended December 31, 2025, and is reported within the Company’s WHS segment.

In December 2025, the Company entered into a 25-month contract to build and operate a community in Northern Nevada, supporting power generation expansion for mining and data center projects (the “Power Community Contract”). It is expected to generate approximately $35 million in revenue over its initial 25-month term starting in June of 2026, accommodate up to 250 individuals, and leverage the Company’s existing regional infrastructure with minimal capital investment of $8 million to $10 million. The operating results for this contract are expected to be reported within the WHS operating segment beginning in June of 2026 as the contract generated no operating revenues for the year ended December 31, 2025.

The Company generated cash flows from operations of approximately $74.1 million representing a decrease in cash flows from operations of approximately $77.6 million or 51% for the year ended December 31, 2025 compared to the year ended December 31, 2024 led by a decrease in cash collections, an increase in cash paid for operating expenses and payroll, and a decrease in interest income, partially offset by a $26 million decrease in cash paid for income taxes, and a $5.0 million decrease in cash paid for interest driven by the redemption of the 2025 Senior Secured Notes on March 25, 2025.

For the year ended December 31, ~~2024~~2025, key drivers of financial performance included:

● Decreased consolidated revenue by ($~~177~~65.36) million or (3117)% compared to the year ended ~~2023~~2024, driven by lower revenue generated from the Government segment ~~primarily~~led ~~from~~by ~~lower~~the ~~non-cash~~termination ~~revenue~~of ~~amortization~~the ofPCC anContract ~~advanced~~(terminated ~~payment~~February ~~for~~21, ~~community~~2025) ~~build-out~~as ~~and~~well ~~mobilization~~as the termination of ~~asset~~the ~~activities~~STFRC Contract on August 9, 2024 (the assets associated with the ~~Company’s~~STFRC ~~PCC~~Contract ~~community,~~were ~~which~~reactivated ~~was~~on ~~fully~~March ~~amortized~~5, as2025 ofunder ~~November~~the ~~2023~~DIPC Contract), ~~partially~~and lower revenue generated by HFS-South led by lower ~~minimum~~ADR. ~~lease~~These decreases were partially offset by higher revenue asgenerated ~~well~~from asthe ~~lower~~WHS ~~variable~~segment ~~services~~led ~~revenue~~by construction fee income generated by construction services provided under the ~~New~~new ~~PCC~~Workforce ~~contract~~Housing Contract originated in February 2025. In addition to the ~~current~~decline ~~period~~in revenue, ~~and~~the termination of the PCC Contract described above removed a significant source of historically high-margin revenue from our results. The incremental revenue generated for the year ended December 31, 2025 from construction services within the WHS segment carries lower margins than the PCC Contract, resulting in a shift in our revenue mix that further pressured our gross profit and consolidated margins.

51● Generated consolidated net loss of approximately ($37.1) million for the year ended December 31, 2025 as compared to a net income of approximately $71.4 million for the year ended December 31, 2024 primarily because the PCC Contract described above historically generated substantially higher margins than our current construction-driven revenue stream, and its termination significantly reduced our profitability. The resulting replacement of high-margin PCC revenue in the Government segment with lower-margin construction services revenue from the WHS segment led this year-over-year decline in net income. As such, this decrease in net income was primarily attributable to an increase in services and construction costs led by the WHS segment from construction services activity under the Workforce Housing Contract, and the decrease in revenue as discussed above. Also contributing to this decrease in net income was an increase in loss on extinguishment of debt driven by the redemption of the 2025 Senior Secured Notes, partially offset by a decrease in interest expense, net led by a decrease in interest expense from the redemption of the 2025 Senior Secured Notes, a decrease in the change in fair value of warrant liabilities driven by expiration of the Warrants in 2024, and a decrease in income tax expense led by a decrease in income before income tax.

●

Generated consolidated Adjusted EBITDA of $53.2 million representing a decrease of ($143.6) million or (73)% as compared to the year ended December 31, 2024, driven primarily by the increase in operating expenses comprised of an increase in services and construction costs led by costs for construction services activity under the Workforce Housing Contract in the WHS segment, and partially driven by the decrease in revenue described above. Adjusted EBITDA was further negatively affected by the shift in our revenue mix following the termination of the high-margin PCC Contract described above. The construction revenue generated for the year ended December 31, 2025 within the WHS segment carries structurally lower margins, which materially compressed our Adjusted EBITDA despite the incremental revenue contribution from these activities.

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~~termination~~2026 ofForward the STFRC Contract, partially offset by an increase in revenue in the HFS – South segment by $1.3 million or 1% as compared to the year ended December 31, 2023 as a result of an increase in customer demand.Look

● Generated consolidated net income of approximately $71.4 million for the year ended December 31, 2024 as compared to a net income of approximately $173.7 million for the year ended December 31, 2023. This decrease in net income is primarily attributable to a decrease in revenue, the change in the estimated fair value of warrant liabilities, partially offset by a decrease in costs of services driven primarily by lower costs in the Government segment as a result of operational efficiencies and reduced leasing costs associated with certain leases that were terminated at the PCC Community, a decrease in specialty rental costs, a decrease in depreciation of specialty rental assets, a decrease in selling, general and administrative expenses led by a decrease in stock compensation expense, a decrease in interest expense, net driven by a decrease in interest expense led by a reduction in the average amount of debt outstanding during the current year and an increase in interest income earned on cash equivalents funded by the increase in available cash as a result of cash flows from operations, a decrease in loss on extinguishment of debt, and a decrease in income tax expense led by a decrease in income before income tax.

● Generated consolidated Adjusted EBITDA of $196.7 million representing a decrease of ($147.5) million or (43)% as compared to the year ended December 31, 2023, driven primarily by the decrease in revenue led by the lower non-cash revenue amortization mentioned above that ended in November 2023 associated with the prior PCC Contract, partially offset by a decrease in operating expenses comprised of a decrease in services costs and specialty rental costs.

Adjusted EBITDA is a non-GAAP measure. The GAAP measure most comparable to Adjusted EBITDA is Net income. Please see “Non-GAAP Financial Measures” for a definition and reconciliation to the most comparable GAAP measure.

~~Our~~We ~~Government~~anticipate ~~segment~~margin improvement as the Company progresses through 2026 led by the new contracts previously described, including ~~several~~the ~~communities~~Expanded inCommunity ~~West~~Contract, ~~Texas~~the ~~supporting~~Power ~~critical~~Community ~~U.S.~~Contract, ~~government~~the ~~efforts~~DIPC Contract, ~~deliver~~and ~~essential~~the services portion of the Workforce Housing Contract. We expect this anticipated improvement to be driven by (i) transition of 2025 construction activity toward higher-margin services operations on the Workforce Housing Contract, (ii) full-run-rate economics on the DIPC Contract following the 2025 ramp completion, and ~~accommodations~~(iii) ~~near~~the mobilization related to the ~~southern~~Power UCommunity Contract and the Expanded Community Contract.S. ~~border~~These ~~where~~dynamics ~~there~~are issupported ~~insufficient~~by ~~housing~~the contract terms and ~~infrastructure~~ramp ~~solutions~~timing summarized above and by the Company’s internal analysis of 2026 mix. We cannot assure you that we will be able to ~~appropriately~~deliver ~~address~~margin ~~immigration~~improvement ~~and~~through ~~deportation~~the effective servicing of the above mentioned contracts.

Adjusted EBITDA is a non-GAAP measure. The GAAP measure most comparable to Adjusted EBITDA is Net income (loss). Please see “Non-GAAP Financial Measures” for a definition and reconciliation to the most comparable GAAP measure.

Our proximity to customer activities influences occupancy and demand. We have built, own and operate the largest specialty rental and hospitality services network available to customers operating in the HFS – South region. Our broad network often results in us having communities that are the closest to our customers’ job sites, which reduces commute times and costs, and improves the overall safety of our customers’ workforce. Our communities provide customers with cost efficiencies, as they are able to jointly use our communities and related infrastructure (i.e., power, water, sewer and IT) services alongside other customers operating in the same vicinity. Demand for our services is dependent upon activity levels, particularly our customers’ capital spending on natural resource development activities.

Our WHS segment includes construction and hospitality services provided to a community in Winnemucca, Nevada where there is insufficient housing and infrastructure solutions supporting the critical mineral supply chain. The WHS segment also includes specialty rental and hospitality services provided to a community in the Southwestern United States where there is also insufficient housing and infrastructure solutions supporting the development of a regional data center campus. Our communities provide our customers with a strategic competitive advantage in attracting and retaining a highly skilled workforce to support their objectives in areas of critical mineral development and the building of data centers in remote locations. Demand for our services in this segment is dependent on capital spending supporting the critical mineral supply chain, such as lithium mining, as well as capital spending on the development of data centers in remote locations.

Our Government segment includes the DIPC community in Dilley, Texas supporting critical U.S. government efforts, delivering essential services and accommodations near the southern U.S. border where there is insufficient housing and infrastructure solutions to appropriately address immigration and deportation.

Factors Affecting Results of Operations

We expect our business to continue to be affected by the key factors discussed below, as well as factors discussed in the section titled “Risk Factors” included elsewhere in this report. Our expectations are based on assumptions made by us and information currently available to us. To the extent our underlying assumptions about, or interpretations of, available information prove to be incorrect, our actual results may vary materially from our expected results.

Supply and Demand for Natural Resources, Mining, Energy Demand, and Infrastructure

AsDemand afor ~~provider~~our ~~of vertically integrated specialty rental and hospitality~~ services, weis ~~are~~influenced ~~not directly impacted~~ by ~~commodity~~broader ~~price~~trends ~~fluctuations.~~in ~~However, these price fluctuations indirectly influence our activities and results of operations because the~~ natural resource development, ~~workforce~~mining isactivity, ~~directly~~energy ~~affected~~demand, ~~by price fluctuations~~ and the ~~industry’s~~availability ~~expansion~~of orsupporting ~~contraction~~infrastructure asin athe ~~result~~regions ofwhere ~~these~~our ~~fluctuations~~customers operate. ~~Our~~Although ~~occupancy~~we ~~volume~~are ~~depends~~not ondirectly ~~the~~exposed ~~size~~to ofcommodity ~~the~~price ~~workforce~~movements, ~~within~~customer ~~the~~capital ~~natural~~spending ~~resources industry~~ and ~~the~~workforce ~~demand~~deployment ~~for labor. Commodity prices~~ are ~~volatile~~closely ~~and~~tied ~~influenced~~to bycommodity ~~numerous~~supply-demand ~~factors~~dynamics ~~beyond~~across ~~our~~natural ~~control~~resources, including ~~the~~lithium, ~~domestic~~ and ~~global~~other ~~supply~~critical ofminerals. ~~and~~As ~~demand~~these ~~for~~industries ~~natural~~expand ~~resources~~or contract, the ~~commodities~~size ~~trading~~and ~~markets,~~duration asof ~~well~~customer asworkforces—particularly ~~other~~in ~~supply~~remote ~~and~~areas—impact ~~demand~~our ~~factors~~occupancy ~~that~~levels ~~may~~and ~~influence~~utilization ~~commodity prices~~rates.

52Mining and critical mineral projects, including large-scale lithium developments, often occur in remote locations with limited existing housing or utilities. Our integrated, scalable communities provide essential infrastructure—such as power,

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water, wastewater treatment, and communications—to support these workforce needs. Similarly, growth in energy-intensive sectors, including data center development and associated power-generation projects, can increase demand for turnkey accommodations when regional infrastructure is insufficient to sustain project activity.

The timing and visibility of future demand may be affected by commodity price volatility, permitting timelines, energy availability, and regional infrastructure constraints, all of which influence the pace of customer investment and workforce mobilization in natural resources, mining, and emerging energy-related projects.

Availability and Cost of Capital

Capital markets conditions could affect our ability to access the debt and equity capital markets to the extent necessary to fund our future growth. Interest rates on future credit facilities and debt offerings could be higher than current levels, causing our financing costs to increase accordingly, and could limit our ability to raise funds, or increase the price of raising funds, in the capital markets and may limit our ability to expand.

Regulatory Compliance

We are subject to extensive federal, state, local, and foreign environmental, health and safety laws and regulations concerning matters such as air emissions, wastewater discharges, solid, and hazardous waste handling and disposal and the investigation and remediation of contamination. In addition, we may be subject, indirectly, to various statutes and regulations applicable to doing business with the U.S. government as a result of our ~~contracts~~contract with a U.S. government contractor ~~clients~~client. The risks of substantial costs, liabilities, and limitations on our operations related to compliance with these laws and regulations are an inherent part of our business, and future conditions may develop, arise, or be discovered that create substantial compliance or environmental remediation liabilities and costs.

Public Policy

We have derived, ~~and in the future may derive,~~ a ~~significant~~ portion of our revenues from our ~~subcontracts~~subcontract with a U.S. government ~~contractors~~contractor. The U.S. government and, by extension, our U.S. government contractor ~~customers~~customer, may from time to time adopt, implement or modify certain policies or directives that may adversely affect our business. Changes in government policy, presidential administration or other changes in the political landscape relating to immigration policies may similarly result in a decline in our revenues in the Government segment.

WeAlthough ~~are~~our ~~continuing~~primary growth strategy continues to ~~pursue~~center anon expanding ~~pipeline~~opportunities ofoutside the government ~~services~~sector ~~growth~~in ~~opportunities~~our WHS segment, ~~and~~where we ~~believe~~are ~~there~~seeing isincreasing ~~significant~~demand ~~opportunity~~for our services, we remain available to support the federal government and continue to evaluate opportunities to assist ~~the~~where ~~federal~~our capabilities align with government needs. However, available government funding and economic incentives are subject to change for a variety of reasons that are beyond our control, including budget and policy initiatives and priorities of current and future administrations at the federal and state level. We cannot predict what actions the ~~new~~current ~~Trump~~U.S. presidential administration may take with respect to ~~government~~the ~~contracts that were~~ previously executed government contract.

Natural Disasters or Other Significant Disruption

An operational disruption in any of our facilities could negatively impact our financial results. The occurrence of a natural disaster, such as earthquake, tornado, severe weather including hail storms, flood, fire, or other unanticipated problems such as public health threats or outbreaks, labor difficulties, equipment failure, capacity expansion difficulties or unscheduled maintenance could cause operational disruptions of varied duration. These types of disruptions could materially adversely affect our financial condition and results of operations to varying degrees dependent upon the facility, the duration of the disruption, our ability to shift business to another facility or find alternative solutions.

~~Overview of Our Revenue and Operations~~55

We derive the majority of our revenue from specialty rental accommodations and vertically integrated hospitality services. Approximately 68.8% of our revenue was earned from specialty rental with vertically integrated hospitality services, specifically lodging and related ancillary services, whereas the remaining 31.2% of revenues were earned through leasing of lodging facilities for the year ended December 31, 2024. Revenue is recognized in the period in which lodging and services are provided pursuant to the terms of contractual relationships with our customers. In certain of our contracts, rates may vary over the contract term, in these cases, revenue is generally recognized on a straight-line basis over the contract term. We enter into arrangements with multiple deliverables for which arrangement consideration is allocated between lodging and services based on the relative estimated standalone selling price of each deliverable. The estimated price of lodging and services deliverables is based on the prices of lodging and services when sold separately or based upon the best estimate of selling price.

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Overview of Our Revenue and Operations

We derive the majority of our revenue from specialty rental accommodations and vertically integrated hospitality services. Approximately 58.5% of our revenue was earned from specialty rental with vertically integrated hospitality services, specifically lodging and related ancillary services, whereas the remaining 14.3% of revenues were earned through leasing of lodging facilities and 27.2% of revenues were earned through construction fee income for the year ended December 31, 2025. Revenue is recognized in the period in which lodging and services are provided pursuant to the terms of contractual relationships with our customers. In certain of our contracts, rates may vary over the contract term, in these cases, revenue is generally recognized on a straight-line basis over the contract term. We enter into arrangements with multiple deliverables for which arrangement consideration is allocated between lodging and services based on the relative estimated standalone selling price of each deliverable. The estimated price of lodging and services deliverables is based on the prices of lodging and services when sold separately or based upon the best estimate of selling price.

In February 2025, the Company entered into the Workforce Housing Contract to construct workforce housing, and provide facility and hospitality services to Lithium Nevada in support of the Thacker Pass Project and the broader North American critical minerals supply chain. As of December 31, 2025, construction of the Workforce Hub was substantially complete and most of the revenue recognized under this contract for the year ended December 31, 2025 reflected construction services performed during this phase. In addition to constructing the Workforce Hub, the Company is also providing turnkey operational support, including culinary services, facilities management, and other support services. During the construction phase, the Company is recognizing revenue under the percentage of completion method as costs are incurred, as further described in Note 1 of the notes to our audited consolidated financial statements, included in Part II, Item 8, of this Annual Report on Form 10-K.

Key Indicators of Financial Performance

Our management uses a variety of financial and operating metrics to analyze our performance. We view these metrics as significant factors in assessing our operating results and profitability and intend to review these measurements frequently for consistency and trend analysis. We primarily review the following profit and loss information when assessing our performance:

Revenue

We analyze our revenues by comparing actual revenues to our internal budgets and projections for a given period and to prior periods to assess our performance. We believe that revenues are a meaningful indicator of the demand and pricing for our services. Key drivers to change in revenues may include average utilization of existing beds, levels of development activity in the HFS – South segment, development activity in remote locations in support of critical mineral supply chains, including lithium supply chains, data center development and infrastructure activity in remote locations, the consumer price index impacting government contracts, and government spending on housing programs.

Adjusted Gross Profit

We analyze our adjusted gross profit, which is a Non-GAAP measure, which we define as revenues less services and construction costs, and specialty rentals costs, excluding impairment, certain severance costs, and depreciation of specialty rental assets to measure our financial performance. Please see “Non-GAAP Financial Measures” for a definition and reconciliation to the most comparable GAAP measure. We believe adjusted gross profit is a meaningful metric because it provides insight on financial performance of our revenue streams without consideration of company overhead, noncash impairment and depreciation expenses, and certain severance costs not reflective of the ongoing results of Target Hospitality. Additionally, using adjusted gross profit gives us insight on factors impacting cost of sales, such as efficiencies of our direct labor and material costs. When analyzing adjusted gross profit, we compare actual adjusted gross profit to our budgets and internal projections and to prior period results for a given period in order to assess our performance.

We also use Non-GAAP measures such as EBITDA, Adjusted EBITDA, and Discretionary cash flows to evaluate the operating performance of our business. For a more in-depth discussion of the Non-GAAP measures, please refer to the "Non-GAAP Financial Measures" section.

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Segments

We have identified ~~two~~three reportable business segments: HFS – South, WHS, and Government:

HFS - South

The HFS – South segment reflects our facilities and operations in the HFS – South region from customers in the natural resources development industry and includes our 16 communities located across Texas and New Mexico.

WHS

The WHS segment includes one community in Winnemucca, Nevada to establish a new regional workforce hub network capacity for lithium and related critical mineral development as well as the Workforce Housing Contract for construction of workforce housing and delivery of comprehensive hospitality and facility services. The WHS segment also includes the Data Center Community Contract to construct and provide comprehensive facility services and hospitality solutions supporting the Data Center Community.

Government

The Government segment includes facilities and operations ~~provided~~of ~~under~~the aDIPC ~~lease~~provided ~~and~~under ~~services~~the ~~agreement~~previous ~~with~~STFRC ~~our NP Partner~~Contract, ~~backed~~which bywas aterminated ~~committed~~effective ~~U.S.~~August ~~government contract~~9, ~~to provide a suite of comprehensive service offerings in support of their aid efforts. As discussed in Note 20 of our audited consolidated financial statements located in Part II~~2024, ~~Item~~but 8was ~~within~~reactivated ~~this~~under ~~annual report on Form 10-K,~~ the ~~lease~~DIPC ~~and~~Contract ~~services agreement with the NP Partner was terminated~~ effective ~~February~~March 215, 2025.

Additionally, this segment includes the facilities and operations ofpreviously ~~the DIPC~~ provided under a lease and services agreement known as the ~~STFRC~~PCC Contract with our NP Partner. This arrangement was supported by a U.S. government contract to provide a suite of comprehensive service offerings in support of their aid efforts. As previously discussed, ~~which~~the PCC Contract was terminated effective ~~August~~February 921, ~~2024~~2025. The majority of the assets associated with the PCC Contract continue to be included in this segment, ~~but~~however, ~~was~~certain ~~reactivated~~assets ~~under~~were redeployed to the ~~DIPC~~WHS segment to service the requirements of the Data Center Community Contract ~~effective~~previously ~~March~~described. 5The Company is actively engaged in remarketing the remaining assets, ~~2025~~which are generally interchangeable across segments, as it evaluates a diverse pipeline of business opportunities. These opportunities include an increasing number of potential solutions supporting data center infrastructure projects within our WHS segment.

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All Other

Our other facilities and operations which do not meet the criteria to be a separate reportable segment are consolidated and reported as “All Other” which represents the facilities and operations of one community in Canada, three communities in North Dakota, and the catering and other services provided to communities and other workforce accommodation facilities for the natural resource development industries not owned by us.

Key Factors Impacting the Comparability of Results

The historical results of operations for the periods presented may not be comparable, either to each other or to our future results of operations, for the reasons described below:

WHS Segment

As discussed in the Economic Update section, the Company originated the Workforce Housing Contract in February 2025. The Workforce Housing Contract, which consists of construction and services revenue, is expected to generate approximately $175.2 million of revenue over its initial term, with approximately $111.1 million of committed minimum revenue. The revenue recognized for the year ended December 31, 2025 on the Workforce Housing Contract is largely comprised of construction fee income recognized using the percentage of completion method with progress towards completion measured using the cost-to-cost method as the basis to recognize revenue. The Workforce Housing Contract generated approximately $89.2 million of revenue for the year ended December 31, 2025, most of all of which is reported as construction fee income associated with construction services provided through December 31, 2025. As noted above,

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the construction fee income generated for the year ended December 31, 2025 carries lower margins when compared to the margins generated under the terminated PCC Contract described below, which contributed to lower gross profit margins overall for the Company for the year ended December 31, 2025 when compared to the prior year.

Government Segment

~~During~~As ~~the~~discussed ~~year~~in ~~ended~~the Economic ~~December 31~~Update section, ~~2022,~~ the ~~Company~~PCC ~~executed the Expanded~~ Contract ~~that~~with ~~went into effect in May 2022 to provide enhanced infrastructure and comprehensive facility services that support~~ the ~~critical hospitality solutions the Company provides to the~~ NP Partner ~~and~~was ~~the~~terminated ~~U.S.~~effective ~~government~~February in21, ~~their missions~~2025. The ~~Expanded~~PCC Contract ~~provided~~generated ~~for~~total arevenue ~~significant scope expansion and term extension for the continuation~~ of ~~services~~approximately ~~provided~~$36.3 ~~under~~million, ~~the~~$186.4 ~~prior~~million, ~~agreement~~and ~~that originated in March 2021~~$347.8 ~~The~~million ~~Expanded~~for ~~Contract operated with similar structure to~~ the ~~Company’s~~years ~~prior~~ended ~~government~~December ~~services subcontracts~~31, ~~which are centered around minimum revenue amounts supported by the U.S. government. Additionally~~ 2025, ~~the Expanded Contract included occupancy-based variable services revenue that aligned with active community population. The minimum revenue amount~~2024, ~~which consisted of annual lease revenue~~ and ~~nonrecurring infrastructure enhancement revenue~~2023, ~~provided for a minimum annual revenue contribution of approximately $390 million and was fully committed over its initial contract term~~respectively. ~~Inclusive~~For ~~of all potential occupancy-based variable services revenue,~~ the ~~Expanded~~year ~~Contract~~ended ~~provided~~December ~~for a maximum initial annual total contract amount of approximately $575 million. On May 15~~31, 2023, the ~~Company~~revenue ~~executed~~generated afrom ~~six-month extension of~~ the ~~Expanded~~PCC Contract, ~~which~~included ~~extended~~approximately ~~the~~$118.2 ~~period~~million of ~~performance~~revenue ~~through~~amortization ~~November~~from ~~15,~~nonrecurring ~~2023 and increased the contract value, with no change to contract structure or any other existing economic terms. The Expanded Contract terminated on November 15, 2023. The non-recurring~~ infrastructure enhancement revenue ~~was~~ generated from an advance payment made during the year ended December 31, 2022 for the community build-out, and mobilization of asset activities related to the community expansion ~~associated with the Expanded Contract~~. The advanced payment was determined to be related to future services toand bewas fully amortized to revenue ~~over~~as ~~the~~of ~~estimated~~December ~~term~~31, of2023. At the ~~Expanded~~time ~~Contract. This~~of ~~advance~~termination, ~~payment~~the ~~revenue~~PCC ~~amortization~~Contract ~~ended~~included ~~when~~a ~~the~~minimum ~~Expanded~~annual ~~Contract~~revenue ~~terminated~~contribution onof ~~November~~approximately 15$168 million, ~~2023. As~~all ~~such,~~of ~~the~~which ~~prior~~was ~~period~~attributable ~~for~~to the ~~year~~Government ~~ended~~reportable ~~December~~segment. ~~31,~~In ~~2023~~addition ~~included~~to ~~this~~the ~~revenue~~decline ~~amortization~~ in revenue, the ~~amount~~termination of ~~approximately~~the ~~$118.2~~PCC ~~million,~~Contract ~~whereas~~removed ~~the~~a ~~current~~significant ~~period~~source ~~does~~of ~~not.~~historically ~~Additionally,~~high-margin ~~the~~revenue ~~Expanded~~from ~~Contract~~our ~~included~~results. anThe ~~annual~~incremental ~~minimum~~revenue ~~lease~~generated ~~revenue~~for ~~amount~~the ofyear ~~approximately~~ended ~~$196~~December ~~million~~31, ~~that~~2025 ~~impacted~~from construction services provided under the ~~prior~~Workforce ~~period~~Housing ~~compared~~Contract towithin the ~~current~~WHS ~~period~~segment ~~being~~described ~~impacted~~below bycarries anlower ~~annual~~margins ~~minimum~~than ~~lease~~the ~~revenue~~PCC ~~amount~~Contract, ofresulting ~~approximately~~in ~~$178~~a ~~million~~shift toin ~~$168~~our ~~million~~revenue ~~under~~mix ~~the~~that ~~New~~further ~~PCC~~pressured ~~Contract~~our ~~explained~~gross ~~below~~profit and consolidated margins.

~~During~~As ~~the~~discussed ~~year~~in ~~ended~~the Economic ~~December 31~~Update section, ~~2023,~~ the ~~Company~~STFRC ~~executed the New PCC~~ Contract, ~~pursuant~~was toterminated aneffective ~~Indefinite~~August ~~Delivery~~9, ~~Indefinite Quantity Task Order between our NP Partner and the U~~2024.S. The ~~government,~~STFRC ~~that replaced the Expanded~~ Contract ~~and~~was ~~became~~based ~~effective~~ on ~~November~~a ~~16,~~fixed ~~2023.~~minimum ~~The~~lease ~~New~~revenue ~~PCC~~amount ~~Contract~~and ~~includes~~for athe ~~one~~ year ~~base~~ended ~~period~~December ~~through November 15~~31, 2024, ancontributed ~~option~~approximately to$38.3 ~~extend~~million ~~for~~in uptotal toconsolidated ~~four~~revenue. ~~additional~~The ~~one~~assets ~~year~~associated ~~periods,~~with ~~and an option to extend for up to six months upon~~ the ~~conclusion~~STFRC ofContract ~~the~~were ~~base~~reactivated ~~period~~under ~~or any of~~ the ~~option~~DIPC ~~periods.~~Contract ~~Under~~effective ~~the~~March ~~New PCC Contract~~5, ~~the Company maintains similar facility size and operational scope compared to the Expanded Contract~~2025. The ~~New~~DIPC ~~PCC~~ Contract ~~operates~~is ~~with~~expected ~~similar structure~~ to ~~the~~provide ~~Company’s~~over ~~prior~~$246 ~~government~~million ~~services~~of ~~subcontracts, which are centered around minimum~~ revenue ~~amounts~~over ~~supported~~its byanticipated ~~the U. S. government. Additionally, the New PCC Contract includes occupancy~~five-~~based variable services revenue that align with active community population. During the~~ year ~~ended December 31~~term, ~~2024,~~to ~~the~~March ~~Company executed the first of four one-year extension options on the New PCC Contract along with an amendment~~2030, ~~effective~~and ~~November~~was ~~16,~~subject ~~2024,~~to ~~which supports~~ a ~~community~~ramp ~~capable of serving~~ up toperiod ~~6,000~~based ~~individuals.~~on ~~The~~utilization ~~minimum~~during ~~revenue~~the ~~amount,~~first ~~which~~six ~~consist~~months of ~~annual~~the ~~lease~~contract ~~revenue,~~term ~~provide~~resulting ~~for~~in alower fixed minimum ~~annual~~ revenue ~~contribution~~amounts ofduring ~~approximately $168 million, which decreased from $178 million pursuant to~~ the ~~amendment~~ramp ofup ~~the~~period. ~~New~~The ~~PCC~~ramp ~~Contract~~up onperiod ~~November~~was ~~16,~~completed ~~2024.~~as ~~Assuming~~scheduled ~~all~~in ~~option~~September ~~periods~~2025 ~~are~~with ~~exercised,~~ the ~~5-year~~maximum ~~cumulative~~fixed minimum revenue amount ofnow ~~the~~being ~~New~~recognized. ~~PCC~~The DIPC Contract isgenerated ~~expected~~total torevenue beof approximately $~~851~~34.5 million ~~through~~for ~~2028.~~the Asyear ~~discussed~~ended inDecember ~~Note 20 of our audited~~ 31, 2025.

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consolidated financial statements located in Part II, Item 8 within this annual report on Form 10-K, the New PCC Contract with the NP Partner was terminated effective February 21, 2025.

Additionally, the termination of the STFRC Contract as well as the change from the prior Expanded Contract to the New PCC Contract impacts comparability between periods.

Results of Operations

The period to period comparisons of our results of operations have been prepared using the historical periods included in our audited consolidated financial statements. The following discussion should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this document.

Consolidated Results of Operations for the years ended December 31, ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023($ in thousands):


	For the Years Ended December 31,							Amount of Increase (Decrease)	Percentage Change Increase (Decrease)		Amount of Increase (Decrease)	Percentage Change Increase (Decrease)
Revenues:	~~2024~~2025		~~2023~~2024		~~2022~~2023		~~2024~~2025 vs. ~~2023~~2024		~~2024~~2025 vs. ~~2023~~2024	~~2023~~2024 vs. ~~2022~~2023		~~2023~~2024 vs. ~~2022~~2023
Services income	$	~~265~~187,~~912~~532	$	~~365~~265,~~627~~912	$	~~333~~365,~~702~~627	$	(9978,~~715~~380)	(2729)%	$	31(99,~~925~~715)	10(27)%
Specialty rental income		~~120~~45,~~360~~807		~~197~~120,~~981~~360		~~168~~197,~~283~~981		(7774,~~621~~553)	(3962)%		29(77,~~698~~621)	18(39)%
Total revenues		386,272		563,608		501,985		(177,336)	(31)%		61,623	12%
Construction fee income		87,296		-		-		87,296	100%		-	0%
Total revenues		320,635		386,272		563,608		(65,637)	(17)%		(177,336)	(31)%
Costs:
Services		132,142		151,574		174,200		(19,432)	(13)%		(22,626)	(13)%
Services and construction costs		209,348		132,142		151,574		77,206	58%		(19,432)	(13)%
Specialty rental		1811,~~787~~446		3018,~~084~~787		2730,~~824~~084		(117,~~297~~341)	(3839)%		2(11,~~260~~297)	8(38)%
Depreciation of specialty rental assets		57,~~164~~182		6857,~~626~~164		5268,~~833~~626		~~(11,462)~~18	~~(17)~~0%		15(11,~~793~~462)	30(17)%
Gross profit		~~178~~42,~~179~~659		~~313~~178,~~324~~179		~~247~~313,~~128~~324		(135,~~145~~520)	(4376)%		66(135,~~196~~145)	27(43)%
Selling, general and administrative		5458,~~258~~508		5654,~~126~~258		5756,~~893~~126		(14,~~868)~~250	~~(3)~~8%		(1,~~767~~868)	(3)%
Other depreciation and amortization		1516,~~642~~204		15,~~351~~642		1415,~~832~~351		~~291~~562	24%		~~519~~291	32%
Other (income) expense, net		~~(502)~~2,694		~~1,241~~(502)		361,241		(13,~~743)~~196	(~~140~~637)%		(1,~~205~~743)	~~3347~~(140)%
Operating income		108,781		240,606		174,367		(131,825)	(55)%		66,239	38%
Operating income (loss)		(34,747)		108,781		240,606		(143,528)	(132)%		(131,825)	(55)%
Loss on extinguishment of debt		-2,370		~~2,279~~-		-2,279		(2,~~279)~~370	(100)%		(2,279)	(100)%
Interest expense, net		166,~~619~~086		2216,~~639~~619		3622,~~323~~639		(610,~~020~~533)	(2763)%		(136,~~684~~020)	(3827)%
Change in fair value of warrant liabilities		~~(675)~~-		(~~9,062~~675)		31(9,~~735~~062)		~~8,387~~675	(93100)%		~~(40~~8,~~797)~~387	(~~129~~93)%
Income before income tax		92,837		224,750		106,309		(131,913)	(59)%		118,441	111%
Income (loss) before income tax		(43,203)		92,837		224,750		(136,040)	(147)%		(131,913)	(59)%
Income tax expense		21,430		51,050		32,370		(29,620)	(58)%		18,680	58%
Income tax expense (benefit)		(6,126)		21,430		51,050		(27,556)	(129)%		(29,620)	(58)%
Net income	$	71,407	$	173,700	$	73,939	$	(102,293)	(59)%	$	99,761	135%
Net income (loss)	$	(37,077)	$	71,407	$	173,700	$	(108,484)	(152)%	$	(102,293)	(59)%
Less: Net income attributable to the noncontrolling interest		~~142~~44		-142		-		~~142~~(98)	~~100~~(69)%		-142	0100%
Net income attributable to Target Hospitality Corp. common stockholders	$	71,265	$	173,700	$	73,939	$	(102,435)	(59)%	$	99,761	135%
Net income (loss) attributable to Target Hospitality Corp. common stockholders	$	(37,121)	$	71,265	$	173,700	$	(108,386)	(152)%	$	(102,435)	(59)%

Comparison of Years Ended December 31, ~~2024~~2025 and ~~2023~~2024

Total Revenue. Total revenue was $~~386~~320.36 million for the year ended December 31, ~~2024~~2025 as compared to $~~563~~386.63 million for the year ended December 31, ~~2023~~2024, and consisted of $~~265~~187.95 million of services income, ~~and~~ $~~120~~45.48 million of specialty rental income and $87.3 million of construction fee income. Total revenue for the year ended December 31, ~~2023~~2024 consisted of $~~365~~265.69 million of services income and $~~198~~120.04 million of specialty rental income.

Services income consists primarily of specialty rental and vertically integrated and comprehensive hospitality services including room revenue, catering and food services, maintenance, housekeeping, grounds-keeping, security, overall workforce community management services, health and recreation facilities, concierge services, and laundry service. The main drivers of the decrease in services income revenue year over year was lower revenue in the Government segment inled by the ~~current~~termination ~~period~~of ~~from~~ the ~~decrease~~PCC inContract and termination of the ~~non-cash~~STFRC ~~revenue~~Contract, ~~amortization~~and ~~that~~partially ~~ended~~by lower revenue in ~~November~~HFS-South ~~2023~~led ~~associated~~by ~~with~~lower ~~the~~ADR. ~~advanced~~This ~~payment~~decrease ~~from~~was partially offset by reactivation of the ~~prior~~assets ~~Expanded~~associated ~~Contract~~with ~~that~~the ~~terminated~~STFRC onContract ~~November~~under ~~15,~~the ~~2023,~~DIPC ~~partially~~Contract bywithin ~~lower~~the ~~minimum~~Government ~~lease~~segment ~~revenue~~in March 2025, as well as ~~lower~~growth ~~variable~~in ~~services~~the ~~revenue~~WHS ~~generated~~segment. byAs ~~the~~discussed ~~New~~above, ~~PCC~~services ~~contract~~income ~~and~~for the ~~New~~period included the PCC Contract ~~amendment~~Close-Out inPayment ~~the~~of ~~current~~$11.8 ~~period~~million, ~~and~~which ~~the~~also ~~termination~~partially ofoffset the ~~STFRC~~net ~~Contract~~decrease in services income.

~~Specialty~~In ~~rental~~addition to the decrease in services income, ~~consists~~the ~~primarily~~termination of ~~revenues~~the ~~from~~PCC ~~leasing~~Contract ~~rooms~~also resulted in the loss of a significant source of historically high-margin revenue. The PCC Contract generated recurring, high-margin services and ~~other~~specialty ~~facilities~~rental atincome ~~certain~~revenue ~~communities~~within ~~that~~the ~~include~~Government ~~contractual~~segment, ~~arrangements~~and ~~with~~its ~~customers~~termination ~~that~~materially ~~are~~reduced ~~considered~~our ~~leases~~consolidated ~~under~~margin profile. Although construction fee income generated by the ~~authoritative~~WHS ~~accounting~~segment ~~guidance~~for the year ended December 31, 2025 partially offset the revenue decline, this construction-driven revenue carries materially lower margins compared to the PCC

5659

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~~for leases~~Contract. ~~Specialty~~As ~~rental income decreased primarily as~~ a result, ~~of lower revenue in~~ the ~~Government~~shift ~~segment from the decrease~~ in ~~the~~our ~~non-cash~~ revenue ~~amortization~~mix ~~that ended in November 2023 associated with the advanced payment~~ from ~~the~~high-margin ~~prior~~PCC ~~Expanded~~ Contract ~~that~~activity ~~terminated~~to ~~on November 15, 2023, partially by~~ lower-margin ~~minimum~~construction ~~lease revenue as well as lower variable~~ services revenue ~~generated~~contributed bymeaningfully to the ~~New~~overall ~~PCC~~reduction ~~contract~~ in ~~the~~gross ~~current~~profit ~~period,~~for ~~and~~ the ~~termination of the STFRC Contract~~period.

~~Cost~~Specialty ofrental ~~services.~~income ~~Cost~~consists primarily of ~~services~~revenues ~~was~~from ~~$132.1~~leasing ~~million~~rooms ~~for~~and ~~the~~other ~~year~~facilities ~~ended~~at ~~December 31, 2024~~certain ascommunities ~~compared~~that toinclude ~~$151.6~~contractual ~~million~~arrangements ~~for~~with ~~the~~customers ~~year~~that ~~ended~~are ~~December 31, 2023.~~considered ~~The~~leases ~~decrease~~under ~~in services costs is primarily due to a decrease in services costs in~~ the ~~Government~~authoritative ~~segment~~accounting ~~driven~~guidance ~~primarily~~for ~~by operational efficiencies and reduced leasing costs associated with certain~~ leases. ~~that~~Specialty ~~were~~rental ~~terminated~~income atdecreased ~~the~~primarily ~~PCC Community, including lease terminations~~ as a result of ~~the purchase of certain previously leased equipment, and partially driven by~~ lower ~~occupancy~~revenue ~~at the PCC Community. Approximately $1 million of this decrease was driven by a community~~ in the ~~All~~Government ~~Other~~segment ~~Category~~led ~~that incurred lodge removal and transportation costs in the prior period that did not recur in the current period, while approximately $3.3 million of this decrease was driven~~ by the termination of the ~~STFRC~~PCC Contract~~. These~~ ~~decreases~~and ~~were~~termination ~~partially offset by an increase~~ of ~~approximately $1.9 million in~~ the ~~HFS-South~~STFRC ~~segment~~Contract ~~related~~as topreviously ~~an increase in operational costs from community expansion to support increased customer demand in the HFS-South segment~~discussed, partially offset by the ~~prior~~reactivation ~~period~~of ~~including~~the ~~asset~~assets ~~mobilization and integration costs~~ associated with athe ~~new~~STFRC ~~community~~Contract ~~acquired~~under inthe ~~January~~DIPC ~~2023~~Contract ~~that~~within ~~did not recur in~~ the ~~current~~Government ~~period~~segment ~~and operational efficiencies achieved~~ in ~~the~~March ~~current period~~2025.

~~Specialty~~Cost ~~rental~~of ~~costs~~services and construction. ~~Specialty~~Cost ~~rental~~of ~~costs~~services ~~were~~and ~~approximately~~construction were $18209.83 million for the year ended December 31, ~~2024~~2025 as compared to $30132.1 million for the year ended December 31, ~~2023~~2024. The ~~decrease~~increase is primarily due to an increase in ~~specialty~~costs ~~rental~~of approximately $75.8 million in the WHS segment led by construction costs isfor ~~primarily~~the ~~due~~construction toservices aactivity ~~decrease~~under inthe Workforce Housing Contract. Additionally, costs ~~from~~associated with the ~~Government~~HFS-South segment ~~driven~~increased by ~~operational~~approximately ~~efficiencies~~$1.9 ~~and~~million ~~reduced~~led ~~leasing~~by an increase in catering food costs. Costs associated with ~~certain~~the ~~leases~~Government ~~terminated~~segment atincreased by approximately $0.9 million led by costs under the ~~PCC~~DIPC ~~Community~~Contract. ~~and~~These ~~termination~~cost increases were partially offset by a decrease in costs of approximately ($1.3) million in the ~~STFRC~~All ~~Contract~~Other category of operating segments driven by a community that incurred lodge removal and transportation costs in the ~~Government~~prior ~~segment~~period that did not recur in the current period, and partially driven by approximately ($0.4) million in lower labor costs.

~~Depreciation~~Specialty ~~of specialty~~ rental ~~assets~~costs. ~~Depreciation~~Specialty ~~of specialty~~ rental ~~assets~~costs ~~was~~were approximately $5711.24 million for the year ended December 31, ~~2024~~2025 as compared to $6818.68 million for the year ended December 31, ~~2023~~2024. The decrease in ~~depreciation~~specialty ~~expense~~rental costs is primarily ~~attributable~~due to a decrease in ~~depreciation~~costs onfrom ~~certain specialty rental assets and related leasehold improvements acquired or built in 2022 to support growth of~~ the Government segment ~~related~~driven toby the ~~Expanded~~PCC Contract, ~~which~~termination ~~became~~previously ~~fully depreciated during the year ended December 31~~discussed, ~~2023,~~partially ~~while~~offset ~~approximately $3 million of this decrease was driven~~ by aan ~~decrease~~increase in ~~depreciation of specialty rental assets in~~ the ~~HFS-South~~Government segment ~~for~~driven ~~certain~~by ~~assets~~the ~~that~~DIPC ~~became fully depreciated during 2024~~Contract.

~~Selling,~~Depreciation ~~general~~of ~~and~~specialty ~~administrative~~rental assets. ~~Selling,~~Depreciation ~~general~~of ~~and~~specialty ~~administrative~~rental assets was $5457.32 million for the year ended December 31, ~~2024~~2025 as compared to $5657.12 million for the year ended December 31, ~~2023~~2024. The ~~decrease~~slight inincrease ~~selling, general and administrative expenses of ($1.9) million was primarily driven by a decrease~~ in ~~stock~~depreciation ~~compensation~~ expense ofis ~~approximately~~primarily ~~$3.9~~attributable ~~million largely from the liability-based stock appreciation right awards (“SARs”) driven by a lower number of SAR awards outstanding during the current period compared~~ to ~~the~~an ~~prior~~increase ~~period as approximately 50% of such awards were outstanding as of December 31, 2023 compared to 0%~~ in ~~the~~depreciation ~~current~~expense ~~period~~for asspecialty ~~there~~rental ~~are~~assets ~~no remaining awards outstanding as~~ of ~~December 31, 2024 as these awards vested and were exercised as of December 31, 2024. Amortization of system implementation costs also decreased by~~ approximately $05.~~7 million from the prior year as such costs became fully amortized in May of 2024 as scheduled. Recruiting expenses also decreased by approximately $~~0.4 million ~~from~~driven ~~the prior year. These decreases were partially offset~~ by angrowth ~~increase~~ in ~~severance of approximately $1.0 million for certain terminated employees during~~ the ~~year~~WHS ~~ended December 31~~segment, ~~2024,~~ ~~other~~largely ~~compensation~~offset ~~and~~by ~~benefits~~a ~~cost~~decrease ~~increases of approximately $0.4 million, audit fee increases of approximately $0.4 million, other professional fee increases of approximately $0.5 million, and an increase~~ in depreciation expense ~~for~~associated ~~a non-cash share settlement on December 12, 2024~~ with ~~a former non~~HFS-~~employee~~South ~~director~~and ofGovernment ~~the~~specialty ~~Company~~rental ofassets ~~approximately~~for ~~$0.8~~certain ~~million~~site ~~based~~work onassets ~~the~~that ~~value~~became offully ~~the~~depreciated ~~settlement~~during ~~shares on the settlement date~~2024.

~~Other~~Selling, ~~depreciation~~general and ~~amortization~~administrative. ~~Other~~Selling, ~~depreciation~~general and ~~amortization~~administrative ~~expense~~ was $1558.65 million for the year ended December 31, ~~2024~~2025 as compared to $1554.43 million for the year ended December 31, ~~2023~~2024. The increase in ~~other~~selling, ~~depreciation~~general and ~~amortization~~administrative isexpenses of $4.3 million was primarily driven by an increase in ~~depreciation~~compensation ~~associated~~and ~~with~~benefits costs of approximately $5.7 million led by an increase in ~~finance~~the ~~leases~~short-term incentive plan bonus expense, reflecting strong new contract wins during 2025, which drove the payout to the maximum level based on the Company’s better than expected execution, an increase in bad debt expense of approximately $0.6 million, an increase in recruiting expenses of approximately $0.5 million, an increase in other corporate expenses of approximately $0.5 million, an increase in professional fees of approximately $0.4 million, and an increase in stock-compensation expense of approximately $0.2 million. These increases were partially offset from the prior period by a decrease in severance costs of approximately $1.0 million for ~~commercial~~certain ~~use~~terminated ~~vehicles~~employees during the year ended December 31, 2024, amortization of system implementation costs also decreased by approximately $0.7 million from the prior year as such costs became fully amortized in 2024 as scheduled, a decrease in transaction fees expense by approximately $1.1 million driven primarily by the prior period including costs associated with the evaluation of the offer from Arrow Holdings S.a.r.l. (“Arrow”), an affiliate of TDR, to acquire all of the outstanding common stock of the Company not owned by Arrow (the “Arrow Proposal”), and a decrease in expense for a non-cash share settlement on December 12, 2024 with a former non-employee director of the Company of approximately $0.8 million based on the value of the settlement shares on the settlement date.

57Other depreciation and amortization. Other depreciation and amortization expense was $16.2 million for the year ended December 31, 2025 as compared to $15.6 million for the year ended December 31, 2024. The increase in other depreciation and amortization is primarily driven by an increase in depreciation associated with an increase in finance leases for commercial use vehicles.

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Other expense (income), net. Other expense (income), net was ($02.5)7 million for the year ended December 31, ~~2024~~2025 as compared to ($10.25) million for the year ended December 31, ~~2023~~2024. This ~~decrease~~increase in other expense is primarily driven by ~~costs~~community ~~incurred~~pre-opening oncosts ~~the disposal of assets~~ in the ~~All~~WHS ~~Other~~ segment ~~category in the prior year, which did not recur in the current year~~.

Loss on extinguishment of debt. Loss on extinguishment of debt was $02.4 million for the year ended December 31, ~~2024~~2025 as compared to $~~2.3~~0 ~~million~~ for the year ended December 31, ~~2023~~2024. The ~~decrease~~increase in loss on extinguishment of debt is due to the ~~partial~~ redemption of ~~Arrow Bidco’s 9.50% Senior Secured Notes due 2024 (~~the ~~“2024~~2025 Senior Secured Notes”) on March 1525, 2023, which was accounted for as a partial extinguishment of debt and resulted in a charge of approximately $1.7 million related to the write-off of unamortized deferred financing costs and unamortized original issue discount. Approximately $0.4 million of the change related to the write-off of unamortized deferred financing costs for non-continuing lenders in connection with the First Amendment to the ABL Facility on February 1, 2023. The remainder of the change relates to the write-off of approximately $0.2 million of the remaining unamortized deferred financing costs and unamortized original issue discount associated with the redemption on November 21, 2023 of the remaining portion of the 2024 Senior Secured Notes that were not exchanged for the new 2025 ~~Senior Secured Notes in Arrow Bidco’s offer to exchange (the “Notes Exchange Offer”) any and all of its outstanding 2024 Senior Secured Notes for cash and for the 2025 Senior Secured Notes~~. ~~No such activity occurred in the current period.~~ Refer to Note 87 of the notes to our audited consolidated financial statements in Part II, Item 8 within this Annual Report on Form 10-K for further discussion regarding extinguishment of debt ~~and the Notes Exchange Offer~~.

Interest expense, net. Interest expense, net was $~~16.~~6.1 million for the year ended December 31, ~~2024~~2025 as compared to interest expense, net of $2216.6 million for the year ended December 31, ~~2023~~2024. The change in interest expense, net was primarily driven by a decrease in interest expense on the ~~Senior~~2025 ~~Secured Notes by approximately $2.9 million driven by a lower outstanding debt balance in current year as approximately $153.1 million of the~~ Senior Secured Notes ~~were~~led ~~paid off during the year ended December 31, 2023. Approximately $1.9 million of this decrease was driven~~ by ~~lower~~their ~~deferred~~early ~~financing~~redemption ~~cost amortization~~ on ~~the~~March ~~Senior~~25, ~~Secured Notes during the current year due to the write-off of unamortized deferred financing costs during the year ended December 31~~2025, ~~2024~~partially ~~driven~~offset by the ~~partial~~increase ~~extinguishment~~in ofinterest ~~debt~~expense ~~associated~~on ~~with~~ the ~~partial~~ABL ~~redemption~~Facility, ofand ~~the~~a ~~2024 Senior Secured Notes discussed above. Approximately $2.6 million of this~~ decrease ~~was driven by an increase~~ in interest income earned on cash equivalents ~~funded by the increase in available cash as a result of cash flows from operations~~. ~~These~~Refer ~~decreases~~to ~~were partially offset by an increase in Senior Secured~~ Note ~~original~~7 ~~issue discount amortization~~ of ~~approximately $1 million driven by fees incurred in connection with~~ the ~~Senior Note Exchange that closed on November 1, 2023 as more fully discussed in Note 8 of the~~ notes to our audited consolidated financial statements in Part II, Item 8 within this Annual Report on Form 10-K. Additionally, these decreases were partially offset by an increase in ABL Facility deferred financing costs amortization and unused line fee expenses combined of approximately $0.3 million driven by the ABL Facility amendments completed in the prior year.

Change in fair value of warrant liabilities. Change in fair value of warrant liabilities represents the fair value adjustments to the outstanding Private Warrant liabilities based on the change in their estimated fair value at each reporting period end. The change in fair value of the warrant liabilities was ($0~~.7)~~ ~~million~~ for the year ended December 31, ~~2024~~2025 as compared to ($90.17) million for the year ended December 31, ~~2023~~2024. The change in the fair value of the warrant liabilities is the result of ~~changes in market prices deriving~~ the ~~value of the financial instruments. The estimated value of the~~ Private Warrants ~~decreased~~expiring inunexercised ~~the~~on current year, generating an increase to income in the current year. There was also a lower number of outstanding Private Warrants in the current year compared to the prior year given the Private Warrants expired March 15, 2024 as discussed in Note 98 of the notes to our audited consolidated financial statements in Part II, Item 8 within this Annual Report on Form 10-K.

Income tax expense (benefit). Income tax expense (benefit) was ($216.41) million for the year ended December 31, ~~2024~~2025 as compared to $5121.14 million for the year ended December 31, ~~2023~~2024. The ~~decrease~~change in income tax expense (benefit) is primarily attributable to a decrease in income before income tax for the year ended December 31, ~~2024~~2025 led by a decrease in revenue, ~~partially~~and ~~offset~~ by cost ~~decreases~~increases previously mentioned.

58Comparison of the Years Ended December 31, 2024 and 2023

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Comparison of the Years Ended December 31, 2023 and 2022

For discussion of the comparison of our operating results for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, please read the “Comparison of Years Ended December 31, ~~2023~~2024 and ~~2022~~2023” section located in the Management Discussion & Analysis section in our Annual Report on From 10-K for the year ended December 31, ~~2023~~2024 filed with the SEC on March 1326, ~~2024~~2025, ~~and~~which is incorporated herein by reference.

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Segment Results

The following table sets forth our selected results of operations for each of our reportable segments and the All Other category of operating segments for the years ended December 31, ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023 ($ in thousands, except for Average Daily Rate amounts).


	For the Years Ended December 31,							Amount of Increase (Decrease)	Percentage Change Increase (Decrease)		Amount of Increase (Decrease)	Percentage Change Increase (Decrease)
Revenue:	~~2024~~2025		~~2023~~2024		~~2022~~2023			~~2024~~2025 vs. ~~2023~~2024	~~2024~~2025 vs. ~~2023~~2024		~~2023~~2024 vs. ~~2022~~2023	~~2023~~2024 vs. ~~2022~~2023
Government	$	224,650	$	403,724	$	360,294	$	(179,074)	(44)%	$	43,430	12%
HFS - South	$	141,694	$	149,931	$	148,677	$	(8,237)	(5)%	$	1,254	1%
HFS - South		149,931		148,677		132,373		1,254	1%		16,304	12%
WHS		96,800		-		-		96,800	100%		-	100%
All Other		11,691		11,207		9,318		484	4%		1,889	20%
Government		70,794		224,650		403,724		(153,856)	(68)%		(179,074)	(44)%
Total revenues	$	386,272	$	563,608	$	501,985	$	(177,336)	(31)%	$	61,623	12%
All Other		11,347		11,691		11,207		(344)	(3)%		484	4%
Total revenues	$	320,635	$	386,272	$	563,608	$	(65,637)	(17)%	$	(177,336)	(31)%

Adjusted Gross Profit
Government	$	185,268	$	332,480	$	246,598	$	(147,212)	(44)%	$	85,882	35%
HFS - South	$	40,428	$	50,822	$	51,444	$	(10,394)	(20)%	$	(622)	(1)%
HFS - South		50,822		51,444		54,558		(622)	(1)%		(3,114)	(6)%
WHS		20,597		-		-		20,597	100%		-	100%
All Other		(747)		(1,974)		(1,195)		1,227	(62)%		(779)	65%
Government		38,560		185,268		332,480		(146,708)	(79)%		(147,212)	(44)%
Total Adjusted Gross Profit	$	235,343	$	381,950	$	299,961	$	(146,607)	(38)%	$	81,989	27%
All Other		256		(747)		(1,974)		1,003	(134)%		1,227	(62)%
Total Adjusted Gross Profit	$	99,841	$	235,343	$	381,950	$	(135,502)	(58)%	$	(146,607)	(38)%

Average Daily Rate
HFS - South	$	7370.5723	$	7573.2257	$	7375.3922	$	(13.6534)		$	(1.8365)

Note: Adjusted gross profit for the chief operating decision maker’s (“CODM”) analysis includes the services and construction costs, and rental costs recognized in the financial statements and excludes depreciation on specialty rental assets, certain severance costs, and loss on impairment. Average daily rate is calculated based on specialty rental income and services income received over the period indicated, divided by utilized bed nights.

Comparison of Years Ended December 31, ~~2024~~2025 and ~~2023~~2024

Government

Revenue for the Government segment was $224.7 million for the year ended December 31, 2024 as compared to $403.8 million for the year ended December 31, 2023.

Adjusted gross profit for the Government segment was $185.3 million for the year ended December 31, 2024 as compared to $332.5 million for the year ended December 31, 2023.

Revenue decreased primarily due to the decrease in the non-cash revenue amortization of approximately $118.2 million that ended in November 2023 associated with the advanced payment from the prior Expanded Contract that terminated on November 15, 2023 and partially by lower minimum lease revenue of approximately $22 million as well as lower variable services revenue of approximately $21 million generated by the New PCC contract in the current year. This was also partially driven by a decrease in revenue of approximately $18 million from the South Texas Family Residential Center led by the STFRC Contract termination as previously discussed.

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Adjusted gross profit decreased as a result of the decrease in revenue mentioned above, partially offset by lower costs due to operational efficiencies and reduced leasing costs associated with certain leases that were terminated at the PCC Community, including lease terminations as a result of the purchase of certain previously leased equipment. This was also partially offset by a decrease in costs of approximately $6.4 million from the South Texas Family Residential Center led by the STFRC Contract termination previously discussed.

Hospitality & Facilities Services - South

Revenue for the HFS – South segment was $~~149~~141.97 million for the year ended December 31, ~~2024~~2025, as compared to $~~148~~149.79 million for the year ended December 31, ~~2023~~2024.

Adjusted gross profit for the HFS – South segment was $5040.84 million for the year ended December 31, ~~2024~~2025, as compared to $5150.48 million for the year ended December 31, ~~2023~~2024.

The ~~increase~~decrease in revenue of approximately ($18.32) million was primarily attributable to ana ~~increase~~decrease in ~~customer demand and more communities in operation during the year ended December 31, 2024~~ADR.

The decrease in adjusted gross profit of approximately ($010.64) million was primarily attributable to anthe ~~increase~~decrease in ~~operational~~revenue ~~costs~~noted ~~from community expansion to support increased customer demand~~above, and partially ~~offset~~ by aan ~~decrease~~increase in ~~service~~operational costs ~~driven~~led by ~~the~~an ~~prior~~increase ~~year~~in ~~including~~catering ~~asset~~food ~~mobilization and integration~~ costs ~~associated~~of ~~with~~approximately ~~the~~$1.7 ~~new~~million ~~community acquired in January 2023 that did not recur in the current year~~ and partially by ~~operational~~an ~~efficiencies achieved in the current year. The~~ increase in ~~revenue noted above also partially offset this decrease~~utilities.

~~Comparison of the Years Ended December 31, 2023 and 2022~~WHS

~~For~~Revenue ~~discussion~~for of the ~~comparison~~WHS ofsegment ~~our~~was ~~operating~~$96.8 ~~results~~million for the ~~years~~year ended December 31, ~~2023 and 2022~~ 2025, ~~please~~as ~~read~~compared ~~the~~to ~~“Comparison~~$0 ~~of Years Ended December 31, 2023 and 2022” section located in the Management Discussion & Analysis section in our Annual Report on Form 10-K~~ for the year ended December 31, ~~2023 filed on March 13,~~ 2024 ~~and is incorporated herein by reference~~.

Adjusted gross profit for the WHS segment was $20.6 million for the year ended December 31, 2025, as compared to $0 for the year ended December 31, 2024.

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The increase in revenue of approximately $96.8 million was primarily attributable to the increase in construction fee income, which was due to construction services provided under the Workforce Housing Contract originated in February 2025.

The increase in adjusted gross profit of approximately $20.6 million was primarily attributable to the increase in revenue noted above, partially offset by higher costs due to construction activity and short-term costs incurred of approximately $1.7 million to mobilize existing assets to service the new Data Center Community Contract.

Government

Revenue for the Government segment was $70.8 million for the year ended December 31, 2025 as compared to $224.7 million for the year ended December 31, 2024.

Adjusted gross profit for the Government segment was $38.6 million for the year ended December 31, 2025 as compared to $185.3 million for the year ended December 31, 2024.

Revenue decreased primarily due to the termination of the PCC Contract as previously discussed, partially offset by reactivation of the assets associated with the STFRC Contract under the DIPC Contract in March 2025. Approximately $150 million of the revenue decrease was attributable to the PCC Contract, of which approximately $9.3 million was related to lower variable services revenue from the PCC Contract. The remaining decrease in revenue of approximately $3.9 million was attributable to the STFRC Contract termination, partially offset by the DIPC Contract mentioned above. Note that revenue for the year ended December 31, 2025 included the PCC Contract Close-Out Payment of $11.8 million previously discussed, which also partially offset the net decrease in revenue.

Adjusted gross profit decreased as a result of the decrease in revenue mentioned above, partially offset by lower costs driven by the previously described PCC Contract termination. Approximately $9.3 million of the cost decrease was associated with community operations related to the PCC Contract, partially offset by an increase in costs of approximately $2 million related to community operations under the DIPC Contract mentioned above.

Comparison of the Years Ended December 31, 2024 and 2023

For discussion of the comparison of our operating results for the years ended December 31, 2024 and 2023, please read the “Comparison of Years Ended December 31, 2024 and 2023” section located in the Management Discussion & Analysis section in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 26, 2025, which is incorporated herein by reference.

Liquidity and Capital Resources

We depend on cash flow from operations, cash on hand and borrowings under our ABL Facility to finance our ~~acquisition~~growth and diversification strategy, working capital needs, ~~principal debt payments, debt service requirements,~~ and capital expenditures. As of December 31, ~~2024~~2025, the ABL Facility had unused available borrowing capacity of $175 million. We currently believe that our cash on hand, ~~along~~together with these sources of funds, will provide sufficient liquidity to ~~fund debt service requirements,~~ support our growth, ~~acquisition,~~ and diversification strategy discussed in Item 1, “Business” of this Annual Report on Form 10-K, as well as our lease obligations, contingent liabilities and working capital investments for at least the next 12 months. However, we cannot assure you that we will be able to obtain future debt or equity financings adequate for our future cash requirements on commercially reasonable terms or at all.

IfOur ~~our~~ABL ~~cash~~Facility ~~flows~~is ~~and~~scheduled ~~capital~~to ~~resources~~terminate ~~are~~on ~~insufficient~~February 1, 2028. Prior to its maturity, we ~~may~~expect to evaluate renewal or replacement alternatives, although there can be ~~forced~~no assurance that we will be able to ~~reduce~~renew or ~~delay~~replace ~~additional~~the ~~acquisitions,~~facility ~~future~~on ~~investments~~commercially ~~and~~reasonable ~~capital~~terms ~~expenditures,~~or ~~and~~at ~~seek~~all. ~~additional~~If ~~capital.~~we ~~Significant~~are ~~delays~~unable into ~~our~~renew ~~ability~~or toreplace ~~finance~~the ~~planned~~ABL ~~acquisitions~~Facility, orour ~~capital~~liquidity ~~expenditures~~could ~~may~~be ~~materially~~adversely ~~and~~affected, which could in turn adversely ~~affect~~impact our ~~future~~financial ~~revenue~~condition ~~prospects~~and results of operations.

WeIf ~~continue~~our tocash ~~review~~flows ~~available acquisition opportunities with the awareness that any such acquisition may require us to incur additional debt to finance the acquisition~~ and~~/or~~ ~~to issue shares of our Common Stock or other equity securities as acquisition consideration or as part of an overall financing plan. We will continue to evaluate alternatives to optimize our~~ capital ~~structure,~~resources ~~which~~are ~~could include the issuance or repurchase of additional unsecured and secured debt~~insufficient, ~~equity~~we ~~securities~~may ~~and/or equity-linked securities. There can~~ be noforced ~~assurance as~~ to ~~the~~reduce ~~timing of any such issuance~~ or ~~repurchase. From~~delay ~~time~~additional togrowth ~~time~~opportunities, wefuture ~~may~~investments ~~also~~and ~~seek to streamline our~~ capital ~~structure~~expenditures, and ~~improve~~seek ~~our~~additional ~~financial position through refinancing or restructuring our existing debt or retiring certain of our securities for cash or other consideration~~capital. ~~For~~Significant ~~additional~~delays ~~discussion~~in ~~of risks related to~~ our ~~liquidity~~ability ~~and capital resources, refer~~ to ~~the section titled “Risk Factors” in Part I Item 1A of this Annual Report on Form 10-K.~~

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~~Capital~~finance ~~Requirements~~planned growth initiatives or capital expenditures may materially and adversely affect our future revenue prospects.

~~During~~We ~~the~~continue ~~year ended December 31, 2024, we incurred approximately $32.5 million in capital expenditures, which decreased by approximately $33.1 million compared~~ to ~~the~~review ~~year~~available ~~ended December 31, 2023 largely driven by lower~~ growth ~~capital~~opportunities ~~expenditures,~~with ~~led by~~ the ~~HFS-South~~awareness ~~segment~~that ~~and~~pursuing ~~partially~~such ~~driven~~opportunities bymay ~~the~~require ~~Government~~us ~~segment,~~to ~~partially~~incur ~~offset~~additional byindebtedness ~~higher~~or ~~maintenance~~issue ~~capital~~shares ~~expenditures~~ of ~~approximately~~our ~~$6.5~~Common ~~million,~~Stock ~~and~~or another ~~increase~~equity insecurities ~~finance~~as ~~lease~~part ~~assets~~ of ~~approximately~~an $1overall ~~million.~~financing ~~Our total annual 2024 capital spending included approximately $15~~plan.8 ~~million~~We ofwill ~~capital~~continue ~~expenditures~~to ~~driven~~evaluate byalternatives the HFS-South segment and approximately $15.5 million driven by the Government segment, most of which was comprised of maintenance capital expenditures. In 2022, capital expenditures incurred increased from 2021, primarily driven by growth projects to ~~increase~~optimize ~~community capacity, mainly in the Government segment. Although growth capital expenditures are largely discretionary,~~ our ~~long-lived specialty rental assets require a certain level of maintenance~~ capital ~~expenditures~~structure, which ~~have~~may ~~ranged~~include ~~from~~the ~~approximately~~issuance ~~0.4% to 5.4%~~ of ~~annual~~additional ~~revenue~~unsecured ~~between~~or ~~2020~~secured ~~and 2024~~debt, ~~with~~equity ansecurities ~~average~~and/or ~~cost~~equity-linked ~~of approximately 2~~securities.9% There ofcan ~~annual~~be ~~revenue.~~no ~~Maintenance~~assurance ~~capital~~as ~~expenditures for specialty rental assets amounted~~ to ~~approximately $20.7 million, $14.2 million, and $12.3 million for~~ the ~~years~~timing ~~ended~~or ~~December 31, 2024,~~availability ~~2023~~of ~~and~~any ~~2022,~~such ~~respectively~~issuance. AsFrom wetime ~~pursue~~to ~~growth~~time, we ~~monitor~~may ~~which~~also ~~capital~~seek ~~resources,~~to ~~including~~modify ~~equity~~or ~~and~~replace ~~debt~~our ~~financings,~~ABL ~~are~~Facility ~~available~~ to ussupport ~~to meet~~ our ~~future~~liquidity ~~financial~~and ~~obligations, planned~~ capital ~~expenditure activities and liquidity requirements~~resources. ~~However,~~For ~~future~~additional ~~cash~~discussion ~~flows are subject to a number~~ of ~~variables,~~risks ~~including~~related ~~the ability~~ to ~~maintain existing contracts, obtain new contracts and manage~~ our ~~operating~~liquidity ~~expenses. The failure to achieve anticipated revenue~~ and ~~cash flows from operations could result in a reduction in future~~ capital spending. We cannot assure you that operations and other needed capital will be available on acceptable terms or at all. In the event we make additional acquisitions and the amount of capital required is greater than the amount we have available for acquisitions at that timeresources, werefer ~~could be required~~ to ~~reduce~~ the ~~expected~~section ~~level~~titled of“Risk ~~capital~~Factors” ~~expenditures~~in orPart ~~seek~~I ~~additional~~Item ~~capital.~~1A Weof ~~cannot~~this ~~assure~~Annual ~~you~~Report ~~that needed capital will be available~~ on ~~acceptable~~Form ~~terms or at all~~10-K.

Capital Expenditure Requirements

During the year ended December 31, 2025, we incurred approximately $72.7 million in capital expenditures, which increased by approximately $40.2 million compared to the year ended December 31, 2024, largely driven by an increase in growth capital expenditures in the new WHS segment, including the $15.5 million acquisition of community assets in January 2025, partially offset by lower growth capital expenditures in the Government segment by approximately $1.8 million, and lower maintenance capital expenditures by approximately $12.6 million. The increase in WHS segment related growth capital expenditures was primarily attributable to development and expansion activities supporting the Data Center Community Contract and other WHS contract wins, consistent with our strategic focus on scaling this segment. In 2024, capital expenditures incurred decreased from 2023, primarily driven by lower growth capital expenditures, led by the HFS-South segment and partially driven by the Government segment, partially offset by higher maintenance capital expenditures of approximately $6.5 million, and an increase in finance lease assets of approximately $1 million.

Although growth capital expenditures are largely discretionary, our long-lived specialty rental assets require a certain level of maintenance capital expenditures, which have ranged from approximately 2.5% to 5.4% of annual revenue between 2021 and 2025, with an average cost of approximately 3.4% of annual revenue. Maintenance capital expenditures for specialty rental assets amounted to approximately $8.1 million, $20.7 million, and $14.2 million for the years ended December 31, 2025, 2024 and 2023, respectively. We expect maintenance capital requirements to remain toward the lower end of the historical range in the near term due to the redeployment of modular assets from the terminated PCC Contract and efficiencies gained from recent portfolio realignments. Future maintenance capital may increase modestly as WHS segment owned assets are placed into service under the Expanded Community Contract.

As we pursue growth, we monitor which capital resources, including operating cash flows and equity and debt financings, are available to us to meet our future financial obligations, planned capital expenditure activities and liquidity requirements. However, future cash flows are subject to a number of variables, including the ability to maintain existing contracts, obtain new contracts and manage our operating expenses. Based on currently contracted projects, including the 800-bed expansion of the Data Center Community expected to be delivered by mid-2026 and the commencement of the Power Community Contract in June 2026, as well as the contracted projects executed in 2026 as described in Note 19, Subsequent Events, in the audited consolidated financial statements included in Part II, Item 8 within this Annual Report on Form 10-K, we expect growth capital expenditures, excluding acquisitions, and net of customer advance payments and asset redeployments, in 2026 to increase compared to 2025. Capital requirements for these projects, which will impact 2026, are expected to range from approximately $38 million to $49 million, net of customer advance payments and asset redeployment. Based on current expectations, we anticipate funding these capital requirements with a combination of operating cash flows, and available liquidity, and do not currently expect to utilize external financing for these projects. Actual capital requirements and funding sources may vary depending on project timing, contract execution, and market conditions.

While we believe our available liquidity, including cash on hand and approximately $175 million of undrawn capacity under our ABL Facility as of December 31, 2025, positions us to fund currently planned capital projects, the timing and size of future WHS opportunities may require additional capital. If the capital required to pursue incremental WHS growth exceeds operating cash flows and available ABL Facility capacity, we may adjust the timing of and/or cancel planned investments or seek additional equity or debt financing. There can be no assurance that such financing will be available to us on acceptable terms or at all. Our disciplined investment framework generally requires visibility to long-term contracted

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minimum revenues before deploying significant growth capital, and we may continue to leverage redeployment of modular units where feasible to minimize upfront capital requirements and enhance returns. The failure to achieve anticipated revenue and cash flows from operations could result in a reduction in future capital spending.

The following table sets forth general information derived from our audited consolidated statements of cash flows:


	For the Years Ended
($ in thousands)	December 31,
	~~2024~~2025		~~2023~~2024		~~2021~~2023

Net cash provided by operating activities	$	~~151~~74,~~675~~092	$	~~156~~151,~~801~~675	$	~~305~~156,~~612~~801
Net cash used in investing activities		(2867,~~842~~790)		(6828,~~180~~842)		(~~140~~68,~~228~~180)
Net cash used in financing activities		(36188,~~064~~641)		(~~166~~36,~~369~~064)		(7166,~~098~~369)
Effect of exchange rate changes on cash and cash equivalents		~~(30)~~19		4(30)		~~(19)~~4
Net increase (decrease) in cash and cash equivalents	$	86(182,~~739~~320)	$	~~(77~~86,~~744)~~739	$	~~158~~(77,~~267~~744)

Comparison of Years Ended December 31, ~~2024~~2025 and ~~2023~~2024

Cash flows provided by operating activities. Net cash provided by operating activities was $~~151~~74.71 million for the year ended December 31, ~~2024~~2025 compared to $~~156~~151.87 million for the year ended December 31, ~~2023~~2024. This decrease in net cash provided by operating activities relates primarily to a ~~$22.8 million increase in cash paid for income taxes, and a~~ decrease in cash collections from customers of approximately $2171.21 million, ~~partially~~(led ~~offset~~ by athe ~~decrease~~PCC Contract termination in ~~operating~~the ~~expenses~~Government ofsegment), ~~$24.4~~a ~~million~~net ~~driven~~increase byin apayments ~~decrease~~for operating expenses of approximately $332.93 million indriven ~~cash~~primarily ~~payments~~by ~~for~~growth of the ~~vested~~WHS ~~SAR awards~~segment, and by a decrease in ~~operating~~interest ~~expenses~~received ~~led~~ by ~~the~~approximately ~~Government~~$4.8 ~~segment~~million (driven by ~~operational~~a ~~efficiencies~~lower ~~and~~average ~~reduced~~outstanding ~~leasing~~cash ~~costs~~balance ~~associated~~in ~~with~~the ~~certain~~current ~~leases~~period that ~~were~~generated ~~terminated~~interest atincome). ~~the~~These ~~PCC~~decreases ~~Community,~~were ~~including lease terminations as a result of the purchase of certain previously leases equipment, and~~ partially ~~driven~~offset by ~~lower~~a ~~occupancy at the PCC Community as well as the termination of the STFRC Contract, and an~~ $115.30 million decrease in cash paid for interest driven by ~~a significant reduction in~~ the ~~average~~redemption ~~amount~~ of ~~debt~~the ~~outstanding~~2025 ~~during~~Senior ~~the~~Secured ~~current~~Notes ~~year~~on ~~compared~~March to25, ~~the~~2025. ~~prior~~There ~~year,~~was ~~and~~also ana ~~increase~~decrease in ~~interest~~cash paid for income taxes of approximately $~~3.2~~26 million.

Cash flows used in investing activities. Net cash used in investing activities was $2867.8 million for the year ended December 31, ~~2024~~2025 compared to $6828.28 million for the year ended December 31, ~~2023~~2024. This ~~decrease~~increase in net cash used in investing activities was primarily related to aan ~~decrease~~increase in growth capital expenditures in the ~~HFS~~WHS ~~– South~~ segment ~~with~~related ~~the~~to ~~largest single driver being~~ the $1815.65 million acquisition of community assets in January 2025 to support growth of the WHS segment and an increase in growth capital expenditures related ~~intangibles~~to the construction of the Data Center Community to service the Data Center Community Contract in ~~January~~the ~~2023~~WHS segment (a portion of which was funded by the advance payments reported within cash flows from operations associated with the Data Center Community Contract previously described), partially offset by lower maintenance capital expenditures in the HFS-South segment, and lower growth capital expenditures in the Government segment.

61Cash flows used in financing activities. Net cash used in financing activities was $188.6 million for the year ended December 31, 2025 compared to $36.1 million for the year ended December 31, 2024. This increase in net cash used in financing activities was primarily driven by the $181.4 million full redemption of the 2025 Senior Secured Notes on March 25, 2025 and the related payment of 2025 Senior Secured Notes debt extinguishment premium costs of $1.8 million, as well as the prior period including approximately $1.9 million of proceeds from the issuance of Common Stock from the exercise of options that did not recur in the current period, partially offset by the prior period including approximately $33.5 million for the repurchase of Common Stock as part of the share repurchase program.

~~Table~~Comparison of ~~Contents~~the Years Ended December 31, 2024 and 2023

supporting continued customer demand. To a lesser extent, the net decrease was related to a $5.0 million acquisition of community assets in April 2023 and $1.3 million worth of land acquisitions during the year ended December 31, 2023, supporting Government segment growth. The remainder of the decrease was driven by a decrease in other growth capital expenditures in the Government segment as the prior period included expansion related activities associated with the Expanded Contract that became effective on May 16, 2022 and drove a significant amount of capital expenditure spend into 2023.

Cash flows used in financing activities. Net cash used in financing activities was $36.1 million for the year ended December 31, 2024 compared to $166.4 million for the year ended December 31, 2023. The decrease in net cash used in financing activities was driven primarily by the prior year including approximately $153.1 million of combined repayments related to the 2024 Senior Secured Notes on March 15, 2023 and November 21, 2023. The prior year also included payments of deferred financing costs of approximately $5.2 million associated with the ABL Facility amendments and the issuance of the 2025 Senior Secured Notes on November 1, 2023 in connection with the Notes Exchange Offer, whereas the current year had no such payments. The decrease in net cash used in financing activities was also driven by the prior year including the payment of accrued issuance costs from the warrant exchange of $1.5 million that closed in December of 2022, and taxes paid related to net share settlement of equity awards of approximately $6.8 million. These decreases in net cash used in financing activities were partially offset by the current year increase in net cash used in financing activities of approximately $33.4 million for the repurchase of Common Stock as part of the share repurchase program, combined with taxes paid related to net share settlement of equity awards of $2.6 million in the current year.

Comparison of the Years Ended December 31, 2023 and 2022

For discussion of the comparison of our operating results for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, please read the “Comparison of Years Ended December 31, ~~2023~~2024 and ~~2022~~2023” section located in the Management Discussion & Analysis section in the our Annual Report on Form 10-K for the year ended December 31, ~~2023~~2024 filed with the SEC on March 1326, ~~2024~~2025, ~~and~~which is incorporated herein by reference.

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Indebtedness

The Company’s finance lease and other financing obligations as of December 31, ~~2024~~2025 consisted of $3.38 million of finance leases. The finance leases pertain to leases entered into during 2022 through December 31, ~~2024~~ 2025, for commercial-use vehicles with ~~48 to~~ 36-month terms (and continue on a month-to-month basis thereafter) expiring through 2028. Refer to Notes 1, 87, and 1312 of the notes to our audited consolidated financial statements included in Part II, Item 8 within this Annual Report on Form 10-K for further discussion regarding finance leases.

The Company’s finance lease and other financing obligations as of December 31, ~~2023~~2024, consisted of approximately $23.43 million of finance leases related to commercial-use vehicles with the same terms as described above.

ABL Facility

On March 15, 2019, as amended on February 1, 2023, August 10, 2023, ~~and~~ October 12, 2023, February 24, 2025, February 27, 2025, and December 23, 2025, Topaz, Arrow Bidco, Target, Signor and each of their domestic subsidiaries entered into an ABL credit agreement that provides for a senior secured asset-based revolving credit facility in the aggregate principal amount of up to $175 million (the “ABL Facility”) with a termination date of February 1, 2028, which termination date is subject to a springing maturity that will accelerate the maturity of the ABL Facility if any of the 2025 Senior Secured Notes remain outstanding on the date that is ninety-one days prior to the stated maturity date thereof. During the ~~year~~years ended December 31, ~~2022,~~2024 ~~$70~~and ~~million~~2023, ~~was~~respectively ~~drawn~~no ~~and~~amounts ~~$70~~were ~~million~~drawn ~~was~~or repaid on the ABL Facility~~. During~~ ~~the~~resulting ~~years~~in ~~ended~~an outstanding balance of $0 as of December 31, 2024 and 2023, respectively. noDuring ~~amounts~~the ~~were~~year ~~drawn~~ended orDecember 31, 2025, ~~repaid~~all amounts drawn on the ABL Facility were fully repaid resulting in an outstanding balance of $0 as of December 31, ~~2024 and 2023, respectively~~2025. Refer to Note 87 of the notes to our audited consolidated financial statements located in Part II, Item 8 within this Annual Report on Form 10-K for additional information on the ABL Facility.

62Sixth Amendment to the ABL Facility Agreement

~~Table~~In December 2025, we entered into the Sixth Amendment to the ABL Facility Agreement, which provides the Company with additional flexibility to support near-term capital investment requirements, particularly related to growth within the WHS segment. The Sixth Amendment temporarily suspends the minimum Consolidated Fixed Charge Coverage Ratio covenant and reduces the maximum Total Leverage Ratio to 1.50:1.00, each of ~~Contents~~which remain in effect until the earlier of January 1, 2027 or the date on which the Company elects to reinstate the prior covenant structure. The amendment also introduces an Excess Availability condition, whereby the modified covenant framework remains operative only so long as Excess Availability is at least the greater of 40% of the Line Cap or $70 million; should Excess Availability fall below this threshold, the prior financial covenants—including the minimum Consolidated Fixed Charge Coverage Ratio of 1.00:1.00 and maximum Total Leverage Ratio of 2.50:1.00—would again apply. The Company was in full compliance with all applicable covenants under the ABL Facility, including the Sixth Amendment as of December 31, 2025. This discussion is qualified in its entirety by reference to the full text of the Sixth Amendment to the ABL Facility Agreement, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 29, 2025.

Senior Secured Notes

OnAs ~~March 15, 2019, Arrow Bidco issued $340 million in aggregate principal amount~~ of 2024 Senior Secured Notes under an indenture dated March 15, 2019 (the “2024 Notes Indenture”). The 2024 Notes Indenture was entered into by and among Arrow Bidco, the guarantors named therein (the “2024 Senior Secured Note Guarantors”), and Deutsche Bank Trust Company Americas, as trustee and as collateral agent. Interest was payable semi-annually on September 15 and March 15 and began September 15, 2019. During the year ended December 31, ~~2022~~ 2025, ~~the~~none ~~Company made an elective repayment~~ of ~~approximately $5.5 million on~~ the ~~2024~~2025 Senior Secured Notes, ~~reducing~~remain ~~the principal balance~~ outstanding toas ~~$334.5~~the ~~million~~remaining ~~from an original principal~~ balance ~~of $340 million. On March 15, 2023, Arrow Bidco redeemed $125 million in aggregate principal amount of the outstanding 2024 Senior Secured Notes. The redemption~~ was ~~accounted~~paid ~~for~~off ~~as a partial extinguishment of debt. In connection with the Notes Exchange Offer,~~ on November 1, 2023 (the “Notes Exchange Offer Settlement Date”), approximately $181.4 million of 2024 Senior Secured Notes were exchanged by Arrow Bidco and Arrow Bidco issued approximately $181.4 million in aggregate principal amount of the 2025 Senior Secured Notes pursuant to an indenture, dated November 1, 2023, by and among Arrow Bidco, the guarantors from time to time party thereto and Deutsche Bank Trust Company Americas, as trustee and collateral agent (the “2025 Senior Secured Notes Indenture”). Interest is payable semi-annually on March ~~15 and September 15 of each year~~25, beginning March 15, 2024. Following this issuance and related transactions, approximately $28.1 million aggregate principal amount of 2024 Senior Secured Notes remained outstanding, which were subsequently redeemed on November 21, 2023 resulting in an outstanding balance of $0. As of December 31, 2024, none of the 2024 Senior Secured Notes remain outstanding and the 2025 ~~Senior Secured Notes had an outstanding principal balance of $181~~.~~4 million.~~ Refer to Note 87 of the notes to our audited consolidated financial statements located in Part II, Item 8, within this Annual Report on Form 10- K for additional discussion of the ~~2024 Senior Secured Notes, the Notes Exchange Offer, and the~~ 2025 Senior Secured Notes.

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Cash requirements

We expect that our principal short-term (over the next 12 months) and long-term needs for cash relating to our operations will be to primarily fund (i) operating activities and working capital, (ii) growth capital expenditures associated primarily with growing the WHS segment as previously described in the Capital Expenditure Requirements section, (iii) maintenance capital expenditures for specialty rental and other property, plant, and equipment assets as previously described in the Capital Expenditure Requirements section, (~~iii~~iv) payments due under finance and operating leases, and (ivv) debt service interest payments associated with any future borrowings under the ABL Facility, if drawn. We plan to fund such cash requirements from our existing sources of liquidity as previously discussed. The table below presents information on payments coming due under the most significant categories of our needs for cash (excluding operating cash flows pertaining to normal business operations, other than operating lease obligations) as of December 31, ~~2024 ($ in thousands)~~2025:


	Total		2025		2026		2027		2028		2029
Interest Payments(1)	$	14,629	$	14,629	$	—	$	—	$	—	$	—
2025 Senior Secured Notes		181,446		181,446		—		—		—		—
Operating lease obligations, including imputed interest(2)		30,948		8,927		9,325		6,181		5,467		1,048
Total	$	227,023	$	205,002	$	9,325	$	6,181	$	5,467	$	1,048

($ in thousands)

(1) We will incur and pay interest expense at 10.75% of the remaining face value of $181.4 million annually in connection with our 2025 Senior Secured Notes due June 15, 2025. Over the remaining term of the 2025 Senior Secured Notes, interest payments total approximately $14.6 million.


	Total			2026		2027		2028
Operating lease obligations, including imputed interest⁽¹⁾	$	7,270		$	6,008	$	1,259	$	3
Purchase commitment⁽²⁾		8,304			8,304
Finance lease obligations⁽³⁾		3,761			2,086		1,381		294
Total	$	19,335		$	16,397	$	2,640	$	297

(21) Represents interest on operating lease obligations calculated using the appropriate discount rate for each lease as noted in Note 1312 of the notes to our audited consolidated financial statements located in Part II, Item 8 within this Annual Report on Form 10-K.

(2)

As of December 31, 2025, the Company has a non-cancelable purchase commitment related to a modular equipment purchase, with payments due in the first quarter of 2026. These commitment is expected to be funded from the existing liquidity resources previously described. See Note 11, Commitments and Contingencies, of the notes to our audited consolidated financial statements included in Part II, Item 8 within this Annual Report on Form 10-K, for additional information.

(3)	Represents future minimum payments under finance leases for commercial vehicles as noted in Note 12 of the notes to our audited consolidated financial statements located in Part II, Item 8 within this Annual Report on Form 10-K.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our audited consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”). A summary of our significant accounting policies is provided in Note 1 of the notes to our audited consolidated financial statements included in Part II, Item 8 within this Annual Report on Form 10-K. The following section is a summary of certain aspects of those accounting policies involving estimates or assumptions that (1) involve a significant level of estimation uncertainty and (2) have had or are reasonably likely to have a material impact on our financial condition or results of operations. It is possible that the use of different reasonable estimates or assumptions could result in materially different amounts being reported in our consolidated final statements. While reviewing this section, refer to Note 1 of the notes to our audited consolidated financial statements included in Part II, Item 8 within this Annual Report on Form 10-K, including terms defined herein.

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involve a significant level of estimation uncertainty and (2) have had or are reasonably likely to have a material impact on our financial condition or results of operations. It is possible that the use of different reasonable estimates or assumptions could result in materially different amounts being reported in our consolidated final statements. While reviewing this section, refer to Note 1 of the notes to our audited consolidated financial statements included in Part II, Item 8 within this Annual Report on Form 10-K, including terms defined herein.

Revenue Recognition

~~For~~The ~~contracts~~Company ~~that~~recognizes ~~contain~~revenue ~~both~~associated awith ~~lease~~community ~~component~~construction ~~and~~using ~~a services or non-lease component,~~ the ~~Company~~percentage ~~adopted~~of ancompletion ~~accounting~~method ~~policy~~with toprogress ~~account~~towards ~~for~~completion ~~and~~measured ~~present~~using the ~~lease component under ASC 842 and the non~~cost-~~lease~~to-cost ~~component~~method ~~under~~as the ~~authoritative~~basis ~~guidance~~to ~~for~~recognize revenue ~~recognition (“ASC 606” or “Topic 606”)~~. ~~When~~Management ~~allocating~~believes ~~the~~this ~~contract consideration~~ cost-to ~~the lease component under ASC 842 and the services or non~~-~~lease~~cost ~~component~~method ~~under~~is ~~ASC 606,~~ the ~~Company~~most ~~uses~~appropriate ~~judgement~~measure inof ~~contemplating~~progress ~~how~~ to ~~initially~~the ~~measure~~satisfaction ~~one or more parts~~ of ~~the~~a ~~contract,~~performance toobligation ~~apply~~on the ~~separation~~community ~~and measurement guidance~~construction. ~~Factors~~Provisions ~~the~~for ~~Company~~estimated ~~considers~~losses inon ~~making~~uncompleted ~~this~~contracts ~~allocation~~are ~~include~~made ~~relative~~in ~~standalone~~the ~~price~~period ofin ~~lease~~which ~~and~~such ~~services~~losses orare ~~non-lease components~~determined. AnChanges ~~over~~in orjob ~~under-estimate~~performance, ofjob ~~the~~conditions, ~~consideration~~estimated ~~allocation~~profitability ~~between the lease components~~ and ~~the~~final ~~services~~contract orsettlements ~~non-lease~~may ~~components could~~ result in ~~revenue~~revisions ~~not~~to ~~being~~projected ~~recognized~~costs and ~~properly~~revenue ~~presented~~and inare ~~accordance~~recognized ~~with~~in the ~~authoritative~~period ~~guidance~~in ~~under~~which ~~ASC 842 and ASC 606. The Company had no significant contracts determined to have been over or under-allocated during~~ the ~~reporting~~revisions ~~periods included herein.~~

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to estimates are identified and the amounts can be reasonably estimated. Factors that may affect future project costs and margins include weather, production efficiencies, availability and costs of labor, materials and subcomponents.

For contracts that contain both a lease component and a services or non-lease component, the Company adopted an accounting policy to account for and present the lease component under ASC 842 and the non-lease component under the authoritative guidance for revenue recognition (“ASC 606” or “Topic 606”). When allocating the contract consideration to the lease component under ASC 842 and the services or non-lease component under ASC 606, the Company uses judgement in contemplating how to initially measure one or more parts of the contract, to apply the separation and measurement guidance. Factors the Company considers in making this allocation include relative standalone price of lease and services or non-lease components. An over or under-estimate of the consideration allocation between the lease components and the services or non-lease components could result in revenue not being recognized and properly presented in accordance with the authoritative guidance under ASC 842 and ASC 606. With respect to ASC 842, when estimating a customer’s lease term, the Company uses judgment in contemplating the significance of: any penalties a customer may incur should it choose not to exercise any existing options to extend the lease or exercise any existing options to terminate the lease; and economic incentives to the customer in the lease. Factors the Company considers in making this assessment include the uniqueness of the purpose or location of the property, the availability of a comparable replacement property, the relative importance or significance of the property to the continuation of the lessee’s line of business and the existence of customer leasehold improvements or other assets whose value would be impaired by the customer vacating or discontinuing use of the leased property. With respect to ASC 606, when estimating the contract term where an extension option is present, the Company uses judgment in determining whether the extension option contains a material right under ASC 606. An over-estimate of the term of the lease by management could result in the write-off of any recorded assets associated with rental revenue and acceleration of depreciation and amortization expense associated with costs we incurred related to the lease. Additionally, an over or under-estimate of the contract term could result in revenue not being recognized in the proper period as well as revenue being under recognized, including for any significant advance payments for future services. The Company had no significant contracts determined to have been over or under-allocated during the reporting periods included herein

Principles of Consolidation

Refer to Note 1 of the notes to our audited consolidated financial statements included in Part II, Item 8 within this Annual Report on Form 10-K for a discussion of principles of consolidation.

Recently Issued and Adopted Accounting Standards

Refer to Note 1 of the notes to our audited consolidated financial statements included in Part II, Item 8 within this Annual Report on Form 10-K for our assessment of recently issued and adopted accounting standards.

Non-GAAP Financial Measures

We have included 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.

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 further adjustments to EBITDA to exclude certain non-cash items and the effect of what management considers transactions or events not related to its core business operations:68

● Other (income) expense, net: Other (income) expense, net includes miscellaneous cash receipts, gains and losses on disposals of property, plant, and equipment, and other immaterial expenses and non-cash items.

● Transaction expenses: Target Hospitality incurred certain transaction costs during 2022, 2023 and 2024, including immaterial items during 2022. During 2023, such transaction costs primarily related to legal, advisory and underwriter fees, associated with debt related transaction activity and, to a lesser extent, other business development project related transaction activity. During 2024, such transaction costs were primarily driven by the Proposal described in “Recent Developments” in Note 1 of the notes to our audited consolidated financial statements in Part II, Item 8 within this Annual Report on Form 10-K.

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●

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, and other immaterial expenses and non-cash items.

●

Transaction expenses: Target Hospitality incurred legal, advisory fees, and other costs associated with certain transactions during 2024, including costs related to the evaluation of the Arrow Proposal. During 2025, such transaction costs primarily related to legal, advisory and audit-related fees associated with debt related transaction activity associated with the 2025 Senior Secured Notes that were redeemed and paid off on March 25, 2025, and, to a lesser extent, other business development project related transaction activity, including transaction bonus amounts related to certain new contract wins, and remaining costs associated with the Arrow Proposal.

●

Stock-based compensation: Charges associated with stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy.

●

Change in fair value of warrant liabilities: Non-cash change in estimated fair value of warrant liabilities.

● Other adjustments: System implementation costs, including ~~primarily~~ non-cash amortization of capitalized system implementation costs, claim ~~settlement~~settlements, business development, accounting standard implementation costs and certain severance costs.

We define Discretionary cash flows as Cash flows from operations less maintenance capital expenditures for specialty rental assets.

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~~or 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~~or 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 believe that Adjusted gross profit, EBITDA, Adjusted EBITDA, and Discretionary cash flows provide 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, investors and other interested parties as a common performance measure to compare results across companies in Target Hospitality’s industry.

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(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.

The following table presents a reconciliation of Target Hospitality’s consolidated gross profit to Adjusted gross profit:


	For the Years Ended
($ in thousands)	December 31,
	~~2024~~2025		~~2023~~2024		~~2022~~2023
Gross Profit	$	~~178~~42,~~179~~659	$	~~313~~178,~~324~~179	$	~~247~~313,~~128~~324
Depreciation of specialty rental assets		57,~~164~~182		6857,~~626~~164		5268,~~833~~626
Adjusted gross profit	$	~~235~~99,~~343~~841	$	~~381~~235,~~950~~343	$	~~299~~381,~~961~~950

The following table presents a reconciliation of Target Hospitality’s consolidated net income (loss) to EBITDA and Adjusted EBITDA:


	For the Years Ended
($ in thousands)	December 31,
	~~2024~~2025		~~2023~~2024		~~2022~~2023
Net income	$	71,407	$	173,700	$	73,939
Net income (loss)	$	(37,077)	$	71,407	$	173,700
Income tax expense		21,430		51,050		32,370
Income tax expense (benefit)		(6,126)		21,430		51,050
Interest expense, net		166,~~619~~086		2216,~~639~~619		3622,~~323~~639
Loss on extinguishment of debt		-2,370		~~2,279~~—		-2,279
Other depreciation and amortization		1516,~~642~~204		15,~~351~~642		1415,~~832~~351
Depreciation of specialty rental assets		57,~~164~~182		6857,~~626~~164		5268,~~833~~626
EBITDA		~~182~~38,~~262~~639		~~333~~182,~~645~~262		~~210~~333,~~297~~645

Adjustments
Other (income) expense, net		(502)		1,241		36
Other expense (income), net		2,694		(502)		1,241
Transaction expenses		43,~~899~~781		4,~~875~~899		~~283~~4,875
Stock-based compensation		7,~~306~~552		117,~~174~~306		1911,~~121~~174
Change in fair value of warrant liabilities		~~(675)~~—		(~~9,062~~675)		31(9,~~735~~062)
Other adjustments		~~3,427~~500		23,~~344~~427		32,~~242~~344
Adjusted EBITDA	$	~~196~~53,~~717~~166	$	~~344~~196,~~217~~717	$	~~264~~344,~~714~~217

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The following table presents a reconciliation of Target Hospitality’s Net cash provided by operating activities to Discretionary cash flows:


	For the Years Ended
($ in thousands)	December 31,
	~~2024~~2025		~~2023~~2024		~~2022~~2023
Net cash provided by operating activities	$	~~151~~74,~~675~~092	$	~~156~~151,~~801~~675	$	~~305~~156,~~612~~801
Less: Maintenance capital expenditures for specialty rental assets		(208,~~747~~115)		(1420,~~218~~747)		(1214,~~314~~218)
Discretionary cash flows	$	~~130~~65,~~928~~977	$	~~142~~130,~~583~~928	$	~~293~~142,~~298~~583

Purchase of specialty rental assets		(2967,~~557~~039)		(6029,~~808~~557)		(~~120~~60,~~287~~808)
Purchase of property, plant and equipment		(~~687~~751)		(~~3,066~~687)		(203,~~556~~066)
Acquired intangible assets		-—		~~(4,547)~~—		-(4,547)
Proceeds from sale of specialty rental assets and other property, plant and equipment		~~1,402~~—		~~241~~1,402		~~615~~241
Net cash used in investing activities	$	(2867,~~842~~790)	$	(6828,~~180~~842)	$	(~~140~~68,~~228~~180)

Principal payments on finance and finance lease obligations		(12,~~695~~344)		(1,~~404~~695)		(1,~~008~~404)
Principal payments on borrowings from ABL		-		-		(70,000)
Principal payments on borrowings from ABL Facility		(75,000)		—		—
Proceeds from borrowings on ABL		-		-		70,000
Proceeds from borrowings on ABL Facility		75,000		—		—
Repayment of Senior Notes		-(181,446)		~~(153,054)~~—		(5153,~~500~~054)
Payment of issuance costs from warrant exchange		-—		~~(1,504)~~—		(~~774~~1,504)
Repurchase of Common Stock		~~(33,496)~~—		-(33,496)		-—
Distributions paid to noncontrolling interest		(65260)		-(65)		-—
Proceeds from issuance of Common Stock from exercise of warrants		3—		~~209~~3		80209
Proceeds from issuance of Common Stock from exercise of stock options		~~1,850~~—		1,~~396~~850		~~225~~1,396
Payment of deferred financing costs		-(535)		~~(5,194)~~—		-(5,194)
Taxes paid related to net share settlement of equity awards		(2,~~661~~242)		(62,~~818~~661)		(~~121~~6,818)
Net cash used in financing activities	$	(36,064)	$	(166,369)	$	(7,098)
Payment of debt extinguishment premium costs		(1,814)		—		—
Net cash used in financing activities	$	(188,641)	$	(36,064)	$	(166,369)

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Our principal market risks are our exposure to interest rates and commodity risks.

Interest Rates

We are exposed to interest rate risk through our ABL Facility, which is subject to the risk of higher interest charges associated with increases in interest rates. As of December 31, ~~2024~~2025, we had $0 of outstanding floating-rate obligations under our ABL credit ~~facilities~~facility. ~~These~~This floating-rate ~~obligations~~obligation ~~expose~~exposes us to the risk of increased interest expense in the event of increases in short-term interest rates. If floating interest rates increased by 100 basis points, our consolidated interest expense would not be impacted, however, based on our floating-rate debt ~~obligations~~obligation, which had no outstanding balances as December 31, ~~2024~~2025.

Commodity Risk

Commodity price fluctuations also indirectly influence our activities and results of operations over the long-term because they may affect production rates and investments by natural resource development companies in the development of commodity reserves.

We have limited direct exposure to risks associated with fluctuating commodity prices. However, both our profitability and our cash flows are affected by volatility in commodity prices. We do not currently hedge our exposure to commodity prices.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

TABLE OF CONTENTS		Page

Report of Independent Registered Public Accounting Firm (PCAOB ID:42)		6974

Consolidated Balance Sheets		7176

Consolidated Statements of Comprehensive Income		72
Consolidated Statements of Comprehensive Income (Loss)		77

Consolidated Statements of Changes in Stockholders’ Equity		7378

Consolidated Statements of Cash Flows		7479

Notes to the Consolidated Financial Statements		7580

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Target Hospitality Corp.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Target Hospitality Corp. (the Company) as of December 31, ~~2024~~2025 and ~~2023~~2024, the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, ~~2024~~2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, ~~2024~~2025 and ~~2023~~2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2024~~2025, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, ~~2024~~2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 2611, ~~2025~~2026 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.


	~~Accounting~~Recognition of Revenue for ~~Operating~~Data ~~Leases~~Center Community Contract
Description of the Matter	As ~~discussed~~described in Note 132 to the consolidated financial statements, during the ~~Company’s~~three ~~operating~~months ~~lease~~ended ~~right~~September of30, ~~use assets~~2025, ~~net~~the ~~and~~Company ~~operating~~entered ~~lease~~into ~~liabilities~~a asmulti-year ofData ~~December~~Center ~~31,~~Community ~~2024~~Contract ~~totaled~~to ~~$24.9~~construct ~~million~~ and ~~$26~~provide ~~million,~~facility ~~respectively.As~~services ~~discussed~~and inhospitality ~~Note~~solutions 1 to the ~~consolidated~~Data ~~financial~~Center ~~statements,~~Community. During the ~~Company~~three ~~used~~months ~~judgment~~ended toDecember ~~determine~~31, ~~whether~~2025, itthe isscope ~~reasonably~~and ~~certain~~term toof ~~exercise~~the ~~extension~~services ~~options~~were ~~when~~expanded. ~~determining~~The ~~the~~Data ~~term~~Center ofCommunity ~~the~~Contract ~~leases.~~included ~~Auditing~~advanced ~~lease~~payments ~~terms~~that ~~required~~were ainitially ~~higher~~recognized ~~degree~~as ofdeferred ~~auditor~~revenue to be amortized as

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~~judgment~~revenue ~~when~~over ~~evaluating~~the ~~evidence~~estimated ~~related~~term of the contract. The Company began to recognize revenue on the ~~determination~~Data Center Community Contract during the year ended December 31, 2025.Auditing revenue recognition for the Data Center Community was complex due to the judgment involved in determining whether the expansions of scope and term represented modifications or separate contracts under ASC 842 and the ~~reasonably~~impact ~~certain~~the ~~lease~~conclusion ~~end~~has ~~date~~on the allocation of consideration to the components of the contract. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s internal controls ~~relating~~over toits ~~management’s~~recognition ~~determination~~ of ~~the~~revenue ~~expected~~for ~~lease~~the ~~term~~Data ~~and~~Center ~~recording~~Community ofContract, ~~the~~including ~~right~~management’s evaluation of ~~use~~the ~~assets~~judgments ~~and lease liabilities~~involved. Our audit procedures included, among others, evaluating the reasonableness of significant judgments utilized by management byin ~~reviewing~~determining ~~contract~~whether ~~terms, understanding~~ the ~~utility~~expansions of ~~the~~scope ~~lease~~and interm ~~the~~represented ~~context~~modifications ofor ~~the~~separate ~~Company’s~~contracts ~~operations,~~under ~~and~~ASC ~~considering historical experience with lease extension options~~842. InFor ~~addition~~example, we ~~compared~~evaluated ~~management’s~~whether ~~judgment~~the ~~utilized~~expanded ~~for~~services ~~the~~contemplated ~~operating~~in ~~lease~~the ~~terms~~amendments to the ~~judgment~~Data ~~utilized~~Center inCommunity ~~determining~~Contract granted the ~~term~~lessee additional rights of ~~related~~use ~~revenue~~and ~~contracts.~~were ~~Further,~~priced commensurate with the standalone price for asuch ~~sample~~additional rights of ~~operating~~use. ~~leases~~Additionally, we ~~compared~~independently ~~terms~~recalculated in the ~~contract~~allocation of consideration to the ~~terms~~components ~~used~~of bythe ~~management~~contract and ~~recalculated~~ the ~~right~~revenue ofrecognized ~~use~~during ~~assets~~the ~~and operating lease liabilities~~year.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2018.

Houston, Texas

March 2611, ~~2025~~2026

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Item 8. Financial Statements and Supplementary Data

Target Hospitality Corp.

Consolidated Balance Sheets

($ in thousands)


	December 31,		December 31,
	~~2024~~2025		~~2023~~2024
Assets
Current assets:
Cash and cash equivalents	$	~~190~~8,~~668~~348	$	~~103~~190,~~929~~668
Accounts receivable, less allowance for credit losses of $534 and $550, respectively		49,342		67,092
Accounts receivable, less allowance for credit losses of $232 and $534, respectively		56,200		49,342
Prepaid expenses and other assets		98,~~326~~790		9,~~479~~326
Total current assets		~~249~~73,~~336~~338		~~180~~249,~~500~~336

Specialty rental assets, net		~~320~~332,~~852~~406		~~349~~320,~~064~~852
Other property, plant and equipment, net		3435,~~935~~754		34,~~631~~935
Operating lease right-of-use assets, net		246,~~935~~544		1924,~~698~~935
Goodwill		41,038		41,038
Other intangible assets, net		5239,~~807~~332		6652,~~282~~807
Deferred financing costs revolver, net		1,~~871~~793		21,~~479~~871
Other non-current assets		—		661
Total assets	$	530,205	$	725,774
Total assets	$	725,774	$	694,353

Liabilities
Current liabilities:
Accounts payable	$	1644,~~187~~393	$	2016,~~926~~187
Accrued liabilities		2522,~~782~~475		3325,~~652~~782
Deferred revenue and customer deposits		~~699~~9,282		~~1,794~~699
Current portion of operating lease obligations		85,~~548~~807		118,~~914~~548
Current portion of finance lease and other financing obligations (Note 8)		1,860		1,369
Current portion of finance lease and other financing obligations (Note 7)		2,086		1,860
Current warrant liabilities		—		675
Current portion of long-term debt, net (Note 7)		—		180,328
Current portion of long-term debt, net (Note 8)		180,328		—
Total current liabilities		84,043		233,404
Total current liabilities		233,404		70,330

Other liabilities:
Long-term debt (Note 8):
Long-term finance lease and other financing obligations		1,675		1,451
Principal amount		—		181,446
Long-term operating lease obligations		1,128		17,459
Less: unamortized original issue discount		—		(2,619)
Deferred revenue and customer deposits		9,292		536
Less: unamortized term loan deferred financing costs		—		(734)
Deferred tax liability		42,312		49,271
Long-term debt, net		—		178,093
Asset retirement obligations		2,695		2,563
Long-term finance lease and other financing obligations		1,451		1,024
Total liabilities		141,145		304,684
Long-term operating lease obligations		17,459		8,426
Deferred revenue and customer deposits		536		3,675
Deferred tax liability		49,271		53,074
Asset retirement obligations		2,563		2,424
Total liabilities		304,684		317,046

Commitments and contingencies (Note 12)
Commitments and contingencies (Note 11)
Stockholders' equity:
Common Stock, $0.0001 par, 400,000,000 authorized, 112,248,984 issued and 98,952,054 outstanding as of December 31, 2024 and 111,091,266 issued and 101,660,601 outstanding as of December 31, 2023.		10		10
Common Stock, $0.0001 par, 400,000,000 authorized, 113,094,172 issued and 99,797,242 outstanding as of December 31, 2025 and 112,248,984 issued and 98,952,054 outstanding as of December 31, 2024.		10		10
Common Stock in treasury at cost, 13,296,930 shares as of December 31, 2024 and 9,430,665 shares as of December 31, 2023.		(57,304)		(23,559)
Common Stock in treasury at cost, 13,296,930 shares as of December 31, 2025 and 13,296,930 shares as of December 31, 2024.		(57,304)		(57,304)
Additional paid-in-capital		~~148~~154,~~780~~090		~~142~~148,~~379~~780
Accumulated other comprehensive loss		(2,~~785~~798)		(2,~~638~~785)
Accumulated earnings		~~332~~295,~~380~~259		~~261~~332,~~115~~380
Total stockholders' equity attributable to Target Hospitality Corp. stockholders		~~421~~389,~~081~~257		~~377~~421,~~307~~081
Noncontrolling interest in consolidated subsidiaries		9(197)		—9
Total stockholders' equity		~~421~~389,~~090~~060		~~377~~421,~~307~~090
Total liabilities and stockholders' equity	$	~~725~~530,~~774~~205	$	~~694~~725,~~353~~774

See accompanying notes which are an integral part of these consolidated financial statements.

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Target Hospitality Corp.

Consolidated Statements of Comprehensive Income (Loss)

($ in thousands, except per share amounts)


	For the Years Ended
	December 31,
	~~2024~~2025		~~2023~~2024		~~2022~~2023
Revenue:
Services income	$	~~265~~187,~~912~~532	$	~~365~~265,~~627~~912	$	~~333~~365,~~702~~627
Specialty rental income		~~120~~45,~~360~~807		~~197~~120,~~981~~360		~~168~~197,~~283~~981
Total revenue		386,272		563,608		501,985
Construction fee income		87,296		—		—
Total revenue		320,635		386,272		563,608
Costs:
Services		132,142		151,574		174,200
Services and construction costs		209,348		132,142		151,574
Specialty rental		1811,~~787~~446		3018,~~084~~787		2730,~~824~~084
Depreciation of specialty rental assets		57,~~164~~182		6857,~~626~~164		5268,~~833~~626
Gross profit		~~178~~42,~~179~~659		~~313~~178,~~324~~179		~~247~~313,~~128~~324
Selling, general and administrative		5458,~~258~~508		5654,~~126~~258		5756,~~893~~126
Other depreciation and amortization		1516,~~642~~204		15,~~351~~642		1415,~~832~~351
Other (income) expense, net		~~(502)~~2,694		~~1,241~~(502)		361,241
Operating income		108,781		240,606		174,367
Operating income (loss)		(34,747)		108,781		240,606
Loss on extinguishment of debt		—2,370		~~2,279~~—		—2,279
Interest expense, net		166,~~619~~086		2216,~~639~~619		3622,~~323~~639
Change in fair value of warrant liabilities		~~(675)~~—		(~~9,062~~675)		31(9,~~735~~062)
Income before income tax		92,837		224,750		106,309
Income (loss) before income tax		(43,203)		92,837		224,750
Income tax expense		21,430		51,050		32,370
Income tax expense (benefit)		(6,126)		21,430		51,050
Net income		71,407		173,700		73,939
Net income (loss)		(37,077)		71,407		173,700
Less: Net income attributable to the noncontrolling interest		~~142~~44		—142		—
Net income attributable to Target Hospitality Corp. common stockholders		71,265		173,700		73,939
Net income (loss) attributable to Target Hospitality Corp. common stockholders		(37,121)		71,265		173,700
Change in fair value of warrant liabilities		—		~~(9,062)~~—		—(9,062)
Net income attributable to Target Hospitality Corp. common stockholders - diluted		71,265		164,638		73,939
Net income (loss) attributable to Target Hospitality Corp. common stockholders - diluted		(37,121)		71,265		164,638

Other comprehensive loss
Foreign currency translation		(~~147~~13)		(64147)		(~~112~~64)
Comprehensive income		71,260		173,636		73,827
Comprehensive income (loss)		(37,090)		71,260		173,636


Weighted average number shares outstanding - basic		~~100~~99,~~135~~520,~~249~~649		~~101~~100,~~350~~135,~~910~~249		97101,~~213~~350,~~166~~910
Weighted average number shares outstanding - diluted		~~101~~99,~~434~~520,~~754~~649		~~105~~101,~~319~~434,~~405~~754		~~100~~105,~~057~~319,~~748~~405

Net income per share attributable to Target Hospitality Corp. common stockholders - basic	$	0.71	$	1.71	$	0.76
Net income (loss) per share attributable to Target Hospitality Corp. common stockholders - basic	$	(0.37)	$	0.71	$	1.71
Net income per share attributable to Target Hospitality Corp. common stockholders - diluted	$	0.70	$	1.56	$	0.74
Net income (loss) per share attributable to Target Hospitality Corp. common stockholders - diluted	$	(0.37)	$	0.70	$	1.56

See accompanying notes which are an integral part of these consolidated financial statements

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Target Hospitality Corp.

Consolidated Statements of Changes in Stockholders’ Equity

For the years ended December 31, ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023

($ in thousands)


							Additional		Accumulated				Total Target Hospitality Corp.
	Common Stock			Common Stock in Treasury			Paid In		Other		Accumulated		Stockholders'		Noncontrolling		Total
	Shares	Amount		Shares	Amount		Capital		Comprehensive Loss		Earnings		Equity		Interest		Equity
Balances at December 31, 2021	101,952,683	$	10	4,414,767	$	(23,559)	$	109,538	$	(2,462)	$	13,744	$	97,271	$	—	$	97,271

Net income	—		—	—		—		—		—		73,939		73,939		—		73,939
Stock-based compensation, net	320,607		—	—		—		8,245		—		—		8,245		—		8,245
Tax withholdings related to net share settlement of equity awards	—		—	—		—		(121)		—		—		(121)		—		(121)
Cancelled common stock	(5,015,898)		—	5,015,898		—		—		—		—		—		—		—
Cumulative translation adjustment	—		—	—		—		—		(112)		—		(112)		—		(112)
Common Stock issued in warrant exchange	2,996,201		—	—		—		21,320		—		—		21,320		—		21,320
Issuance of Common Stock from exercise of warrants	7,101		—	—		—		80		—		—		80		—		80
Issuance of Common Stock from exercise of stock options	56,007		—	—		—		225		—		—		225		—		225
Balances at December 31, 2022	100,316,701	$	10	9,430,665	$	(23,559)	$	139,287	$	(2,574)	$	87,683	$	200,847	$	—	$	200,847

Adoption of ASC 326 (Note 1)	—		—	—		—		—		—		(268)		(268)		—		(268)
Balances at January 1, 2023	100,316,701	$	10	9,430,665	$	(23,559)	$	139,287	$	(2,574)	$	87,415	$	200,579	$	—	$	200,579

Net income	—		—	—		—		—		—		173,700		173,700		—		173,700
Stock-based compensation, net	870,917		—	—		—		8,305		—		—		8,305		—		8,305
Tax withholdings related to net share settlement of equity awards	—		—	—		—		(6,818)		—		—		(6,818)		—		(6,818)
Cumulative translation adjustment	—		—	—		—		—		(64)		—		(64)		—		(64)
Issuance of Common Stock from exercise of warrants	17,369		—	—		—		209		—		—		209		—		209
Issuance of Common Stock from exercise of stock options	455,614		—	—		—		1,396		—		—		1,396		—		1,396
Balances at December 31, 2023	101,660,601	$	10	9,430,665	$	(23,559)	$	142,379	$	(2,638)	$	261,115	$	377,307	$	—	$	377,307

Net income	—		—	—		—		—		—		71,265		71,265		142		71,407
Stock-based compensation, net	718,250		—	—		—		6,431		—		—		6,431		—		6,431
Tax withholdings related to net share settlement of equity awards	—		—	—		—		(2,661)		—		—		(2,661)		—		(2,661)
Cumulative translation adjustment	—		—	—		—		—		(147)		—		(147)		—		(147)
Issuance of Common Stock from exercise of warrants	1,079		—	—		—		3		—		—		3		—		3
Issuance of Common Stock from exercise of stock options	348,389		—	—		—		1,850		—		—		1,850		—		1,850
Distributions	—		—	—		—		—		—		—		—		(133)		(133)
Repurchase of Common Stock as part of share repurchase program	(3,866,265)			3,866,265		(33,745)		—		—		—		(33,745)		—		(33,745)
Other	90,000		—	—		—		778		—		—		778		—		778
Balances at December 31, 2024	98,952,054	$	10	13,296,930	$	(57,304)	$	148,780	$	(2,785)	$	332,380	$	421,081	$	9	$	421,090

Net loss	—		—	—		—		—		—		(37,121)		(37,121)		44		(37,077)
Stock-based compensation, net	845,188		—	—		—		7,552		—		—		7,552		—		7,552
Tax withholdings related to net share settlement of equity awards	—		—	—		—		(2,242)		—		—		(2,242)		—		(2,242)
Cumulative translation adjustment	—		—	—		—		—		(13)		—		(13)		—		(13)
Distributions	—		—	—		—		—		—		—		—		(250)		(250)
Balances at December 31, 2025	99,797,242	$	10	13,296,930	$	(57,304)	$	154,090	$	(2,798)	$	295,259	$	389,257	$	(197)	$	389,060

See accompanying notes which are an integral part of these consolidated financial statements.

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Target Hospitality Corp.

Consolidated Statements of Cash Flows

($ in thousands)


	For the Years Ended
	December 31,
	~~2024~~2025		~~2023~~2024		~~2022~~2023
Cash flows from operating activities:
Net income	$	71,407	$	173,700	$	73,939
Net income (loss)	$	(37,077)	$	71,407	$	173,700
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		59,~~331~~911		7059,~~530~~331		5470,~~363~~530
Amortization of intangible assets		13,475		13,~~447~~475		13,~~302~~447
Noncash operating lease expense		109,~~060~~075		1710,~~797~~060		1017,~~782~~797
Accretion of asset retirement obligation		~~139~~132		~~177~~139		~~168~~177
Amortization of deferred financing costs		~~1,098~~736		21,~~881~~098		42,~~689~~881
Amortization of original issue discount		~~1,745~~440		~~750~~1,745		~~711~~750
Change in fair value of warrant liabilities		~~(675)~~—		(~~9,062~~675)		31(9,~~735~~062)
Stock-based compensation expense		7,~~306~~552		117,~~174~~306		1911,~~242~~174
(Gain) loss on sale of specialty rental assets and other property, plant and equipment		~~(322)~~13		~~137~~(322)		~~(101)~~137
Loss on extinguishment of debt		—2,370		~~2,279~~—		—2,279
Deferred income taxes		(36,~~803~~959)		37(3,~~902~~803)		2937,~~882~~902
Provision for credit losses on receivables, net of recoveries		~~257~~703		~~544~~257		~~407~~544
Other		~~778~~—		—778		—
Changes in operating assets and liabilities
Accounts receivable		17(7,~~599~~512)		~~(25~~17,~~800)~~599		(1325,~~692~~800)
Related party receivable		—		—		—
Prepaid expenses and other assets		545		139		3,083
Prepaid expenses and other assets		139		3,083		(10,120)
Accounts payable and other accrued liabilities		23,147		(13,568)		(10,394)
Accounts payable and other accrued liabilities		(13,568)		(10,394)		6,371
Deferred revenue and customer deposits		17,339		(4,235)		(120,050)
Deferred revenue and customer deposits		(4,235)		(120,050)		91,108
Operating lease obligation		(9,756)		(9,630)		(13,477)
Operating lease obligation		(9,630)		(13,477)		(8,617)
Other non-current assets and liabilities		(42)		574		1,183
Other non-current assets and liabilities		574		1,183		1,443
Net cash provided by operating activities		74,092		151,675		156,801
Net cash provided by operating activities		151,675		156,801		305,612
Cash flows from investing activities:
Cash flows from investing activities:
Purchase of specialty rental assets		(67,039)		(29,557)		(60,808)
Purchase of specialty rental assets		(29,557)		(60,808)		(120,287)
Purchase of property, plant and equipment		(751)		(687)		(3,066)
Purchase of property, plant and equipment		(687)		(3,066)		(20,556)
Acquired intangible assets		—		—		(4,547)
Acquired intangible assets		—		(4,547)		—
Proceeds from the sale of specialty rental assets and other property, plant and equipment		—		1,402		241
Proceeds from the sale of specialty rental assets and other property, plant and equipment		1,402		241		615
Net cash used in investing activities		(67,790)		(28,842)		(68,180)
Net cash used in investing activities		(28,842)		(68,180)		(140,228)
Cash flows from financing activities:
Cash flows from financing activities:
Principal payments on finance and finance lease obligations		(2,344)		(1,695)		(1,404)
Principal payments on finance and finance lease obligations		(1,695)		(1,404)		(1,008)
Principal payments on borrowings from ABL Facility		(75,000)		—		—
Principal payments on borrowings from ABL		—		—		(70,000)
Proceeds from borrowings on ABL Facility		75,000		—		—
Proceeds from borrowings on ABL		—		—		70,000
Repayment of Senior Notes		(181,446)		—		(153,054)
Repayment of Senior Notes		—		(153,054)		(5,500)
Repurchase of Common Stock		—		(33,496)		—
Repurchase of Common Stock		(33,496)		—		—
Payment of issuance costs from warrant exchange		—		—		(1,504)
Payment of issuance costs from warrant exchange		—		(1,504)		(774)
Distributions paid to noncontrolling interest		(260)		(65)		—
Distributions paid to noncontrolling interest		(65)		—		—
Proceeds from issuance of Common Stock from exercise of warrants		—		3		209
Proceeds from issuance of Common Stock from exercise of warrants		3		209		80
Proceeds from issuance of Common Stock from exercise of options		—		1,850		1,396
Proceeds from issuance of Common Stock from exercise of options		1,850		1,396		225
Payment of deferred financing costs		(535)		—		(5,194)
Payment of deferred financing costs		—		(5,194)		—
Taxes paid related to net share settlement of equity awards		(2,242)		(2,661)		(6,818)
Taxes paid related to net share settlement of equity awards		(2,661)		(6,818)		(121)
Payment of debt extinguishment premium costs		(1,814)		—		—
Net cash used in financing activities		(36188,~~064~~641)		(~~166~~36,~~369~~064)		(7166,~~098~~369)

Effect of exchange rate changes on cash and cash equivalents		~~(30)~~19		4(30)		~~(19)~~4

Net increase (decrease) in cash and cash equivalents		86(182,~~739~~320)		~~(77~~86,~~744)~~739		~~158~~(77,~~267~~744)
Cash and cash equivalents - beginning of year		~~103~~190,~~929~~668		~~181~~103,~~673~~929		23181,~~406~~673
Cash and cash equivalents - end of year	$	~~190~~8,~~668~~348	$	~~103~~190,~~929~~668	$	~~181~~103,~~673~~929

Supplemental Cash Flow Information:
Cash paid for interest, net of amounts capitalized	$	1712,~~975~~984	$	2917,~~273~~975	$	3229,~~653~~273
Income taxes paid, net of refunds received	$	282,~~771~~818	$	528,~~973~~771	$	45,~~865~~973
Decrease in accrued capital expenditures	$	~~348~~—	$	—348	$	~~1,864~~—
Decrease in accrual of issuance costs from warrant exchange	$	—	$	~~1,504~~—	$	—1,504
Operating lease liabilities arising from obtaining operating lease assets	$	(226,~~225~~625)	$	(1022,~~197~~225)	$	(3210,~~501~~197)
Reduction in operating lease assets due to lease terminations and modifications	$	715,~~035~~883	$	—7,035	$	—

Non-cash investing and financing activity:
Non-cash repurchase of common stock as part of share repurchase program	$	~~(249)~~—	$	—(249)	$	—
Non-cash change in accrued distributions to noncontrolling interest	$	~~(68)~~10	$	—(68)	$	—
Non-cash issuance of common stock	$	(778)	$	—	$	—
Non-cash accrued proceeds from the sale of specialty rental assets	$	118	$	—	$	—
Non-cash capital contribution - warrant liabilities from warrant exchange	$	—	$	—	$	23,598
Non-cash issuance of common stock	$	—	$	(778)	$	—
Non-cash change in accrued issuance costs from warrant exchange	$	—	$	—	$	(1,504)
Non-cash change in finance lease terminations	$	258	$	—	$	—
Non-cash change in accrued capital expenditures	$	—(1,826)	$	~~(129)~~—	$	—(129)
Non-cash change in finance lease obligations	$	(23,~~613~~051)	$	(12,~~632~~613)	$	(1,~~881~~632)

See accompanying notes which are an integral part of these consolidated financial statements.

Table of Contents

Target Hospitality Corp.

Notes to Consolidated Financial Statements

(Amounts in Thousands, Unless Stated Otherwise)

1. Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies

Organization and Nature of Operations

Target Hospitality Corp. (“Target Hospitality” and, together with its subsidiaries, the “Company”) was formed on March 15, 2019 and is one of North America’s largest providers of vertically integrated specialty rental accommodations and full-service value-added hospitality ~~services~~solutions. The Company ~~provides~~delivers ~~vertically~~comprehensive ~~integrated~~hospitality ~~specialty~~services ~~rental~~ and ~~comprehensive~~workforce ~~hospitality~~community ~~services~~solutions, including: catering and food services, maintenance, housekeeping, grounds-keeping, security, ~~health~~recreational ~~and~~amenities, ~~recreation~~community ~~services,~~design ~~overall~~and ~~workforce~~construction, community management, and laundry ~~service~~services. Target Hospitality’s modular specialty rental accommodation assets are relocatable and interchangeable across its operating segments, enabling the Company to redeploy assets in response to shifts in customer requirements, market conditions, and project locations. The Company serves ~~clients~~customers in the natural resources development sector, customers supporting critical mineral development, power generation, or data center infrastructure projects, and the government ~~sectors~~sector, ~~principally~~with operations primarily located in the West Texas, South Texas, New Mexico, Nevada and Midwest regions.

The Company, whose securities are listed on the Nasdaq Capital Market, together with its wholly owned subsidiaries, Topaz Holdings LLC, a Delaware limited liability company (“Topaz”), and Arrow Bidco, LLC, a Delaware limited liability company (“Arrow Bidco”), serve as the holding companies for the businesses of Target Logistics Management, LLC and its subsidiaries (“Target” or “TLM”) and RL Signor Holdings, LLC (“Signor”). TDR Capital LLP (“TDR Capital” or “TDR”) indirectly owns approximately 65% of Target Hospitality and the remaining ownership is broken out among the founders of the Company’s legal predecessor, Platinum Eagle Acquisition Corp. (“Platinum Eagle” or “PEAC”), investors who purchased the shares of Platinum Eagle in a private placement transaction, and other public shareholders.

Basis of Presentation

The accompanying consolidated financial statements and related notes have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. If the underlying estimates and assumptions upon which the financial statements are based change in future periods, actual amounts may differ from those included in the accompanying consolidated financial statements.

Principles of Consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries that it controls due to ownership of a majority voting interest or if the subsidiary is a variable interest entity (“VIE”) where the Company has been determined to be the primary beneficiary. For controlled subsidiaries that are not wholly-owned, the third-party ownership interest represents a noncontrolling interest, which is presented separately in the consolidated financial statements. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Company. All intercompany balances and transactions are eliminated.

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Summary of Significant Accounting Policies

Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less when purchased to be cash equivalents.

Receivables and Allowances for Credit Losses

Receivables primarily consist of amounts due from customers from the delivery of specialty rental services. The trade accounts receivable is recorded net of an allowance for credit losses. The allowance for credit losses is based upon the amount of losses expected to be incurred in the collection of these accounts pursuant to the guidance outlined in ASU 2016-13, Financial Instruments – Credit Losses (ASU 2016-13, Topic 326, or ASC 326), which the Company adopted effective January 1, 2023. The estimated losses are calculated using the loss rate method based upon a review of outstanding receivables, including specific accounts, related aging, and on historical collection experience. These allowances reflect our estimate of the amount of our receivables that we will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability. Our estimate could require a change based on changing circumstances, including changes in the economy or in the circumstances of individual customers. In addition, specific accounts are written off against the allowance when management determines the account is uncollectible. Activity in the allowance for credit losses was as follows:


		Years Ended December 31,
	~~2024~~2025		~~2023~~2024		~~2022~~2023
Balances at Beginning of Year	$	~~550~~534	$	4550	$	434
Adoption of ASC 326		-		~~268~~-		-268
Provision for credit losses		~~336~~977		~~599~~336		~~1,052~~599
Recoveries		(79274)		(5579)		(~~645~~55)
Write-offs		(~~273~~1,005)		(~~266~~273)		(~~446~~266)
Balances at End of Year	$	~~534~~232	$	~~550~~534	$	4550

Provision for credit losses, net of recoveries for the period are included within selling, general and administrative expenses in the accompanying consolidated statements of comprehensive income (loss).

Prepaid Expenses and Other Assets

Prepaid expenses of approximately $5.4.5 million and $5.54 million at December 31, ~~2024~~2025 and ~~2023~~2024, respectively, primarily consist of insurance, rent, deposits and permits. Prepaid insurance, rent, and permits are amortized over the related term of the respective agreements. Other assets of approximately $4.3 million and $4 million at December 31, ~~2024~~2025 and ~~2023~~2024, respectively, primarily consist of $12.91 million and $1.9 million of deposits as of December 31, ~~2024~~2025 and ~~2023~~2024, respectively, and $12.91 million and $2.1.9 million of hospitality inventory as of December 31, ~~2024~~2025 and ~~2023~~2024, respectively. Inventory, primarily consisting of food and beverages, is accounted for by the first-in, first-out method and is stated at the lower of cost and net realizable value.

Concentrations of Credit Risk

In the normal course of business, the Company grants credit to its customers based on credit evaluations of their financial condition and generally requires no collateral or other security. Major customers are defined as those individually comprising more than 10.0% of the Company’s revenues or accounts receivable. For the year ended December 31, ~~2024~~2025, the Company had ~~one~~three ~~customer~~customers who accounted for 4828%, 11% and 11% of total revenues, respectively. The largest customer accounted for 4348% of accounts receivable, while no other customer accounted for more than 10% of the accounts receivable balance as of December 31, ~~2024~~2025.

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For the year ended December 31, ~~2023~~2024, the Company had one customer who accounted for 6248% of revenues. The largest customer accounted for 4543% of accounts receivable, while no other customer accounted for more than 10% of the accounts receivable balance as of December 31, 2024 ~~2023~~.

For the year ended December 31, ~~2022~~2023, the Company had ~~two~~one ~~customers~~customer representing ~~60.6~~62% ~~and~~ ~~11.1%~~ of ~~total~~ revenues~~, respectively~~.

Major suppliers are defined as those individually comprising more than 10.0% of the annual goods purchased. For the years ended December 31, ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023, the Company had one major supplier representing 1913.45%, 1619.84%, and 1316.48% of goods purchased, respectively.

We provide services almost entirely to customers in the government and natural resource development sectors and as such, are almost entirely dependent upon the continued activity of such customers.

Interest Capitalization

Interest costs for the construction of certain long-term assets are capitalized by applying the weighted average interest rate applicable to the borrowings of the Company to the average amount of accumulated expenditures outstanding during the construction period. Such capitalized interest costs are depreciated over the related assets’ estimated useful lives.

Specialty Rental Assets

Specialty rental assets (modular units, site work and furniture and fixtures comprising ~~lodges~~communities) are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Costs of improvements and betterments ~~to units~~ are capitalized when such costs extend the useful life ~~of the unit~~ or increase the rental value of the ~~unit~~specialty rental asset. Costs incurred for ~~units~~specialty rental assets to meet a particular customer specification are capitalized and depreciated over the lease term. Maintenance and repair costs are expensed as incurred.

Depreciation is computed using the straight-line method over estimated useful lives and considering the residual value of those assets. The estimated useful life of buildings is 5-15 years. The estimated useful life of modular units is 15 years. The estimated useful life of site work (above ground and below ground infrastructure) is 5 years. The estimated useful life of furniture and fixtures is 7 years. Depreciation methods, useful lives and residual values are adjusted prospectively, if a revision is determined to be appropriate.

Other Property, Plant, and Equipment

Other property, plant, and equipment is stated at cost, net of accumulated depreciation and impairment losses. Assets leased under finance leases are depreciated over the shorter of the lease term or their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term. Land is not depreciated. Maintenance and repair costs are expensed as incurred.

Depreciation is computed using the straight-line method over estimated useful lives, as follows:


Machinery and office equipment		3-57 years
Furniture and fixtures		7 years
Software		3 years

Depreciation methods, useful lives and residual values are reviewed and adjusted prospectively, if appropriate.

Business Combinations

Business combinations are accounted for using the acquisition method. Consideration transferred for acquisitions is measured at fair value at the acquisition date and includes assets transferred, liabilities assumed and equity issued. Acquisition costs incurred are expensed and included in selling, general and administrative expenses. When the Company acquires a business, the financial assets and liabilities assumed are assessed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the acquisition date.

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acquires a business, the financial assets and liabilities assumed are assessed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the acquisition date.

Any contingent consideration transferred by the acquirer is recognized at fair value at the acquisition date. Any subsequent changes to the fair value of contingent consideration are recognized in profit or loss. If the contingent consideration is classified as equity, it is not re-measured and subsequent settlement is accounted for within equity.

Goodwill

The Company evaluates goodwill for impairment at least annually at the reporting unit level. A reporting unit is the operating segment, or one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by segment management. However, components are aggregated as a single reporting unit if they have similar economic characteristics. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the Company’s reporting units that are expected to benefit from the combination. The Company evaluates changes in its reporting structure to assess whether that change impacts the composition of one or more of its reporting units. If the composition of the Company’s reporting units’ changes, goodwill is reassigned between reporting units using the relative fair value allocation approach.

The Company performs the annual impairment test of goodwill at October 1. In addition, the Company performs impairment tests during any reporting period in which events or changes in circumstances indicate that impairment may have occurred. To test goodwill for impairment, the Company first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, the Company then performs a quantitative impairment test. Otherwise, the quantitative impairment test is not required. Under the quantitative impairment test, the Company would compare the estimated fair value of each reporting unit to its carrying value.

In assessing the fair value of the reporting units, the Company considers the market approach, the income approach, or a combination of both. Under the market approach, the fair value of the reporting unit is based on quoted market prices of companies comparable to the reporting unit being valued. Under the income approach, the fair value of the reporting unit is based on the present value of estimated cash flows. The income approach is dependent on several significant management assumptions, including estimated future revenue growth rates, gross margin on sales, operating margins, capital expenditures, tax rates and discount rates.

If the carrying amount of the reporting unit exceeds the calculated fair value, a loss on impairment is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Additionally, the Company considers the income tax effect from any tax-deductible goodwill on the carrying amount of the reporting unit, if applicable, when measuring the goodwill impairment charge.

Intangible Assets Other Than Goodwill

Intangible assets that are acquired by the Company and determined to have an indefinite useful life are not amortized, but are tested for impairment at least annually. The Company’s indefinite-lived intangible assets consist of a trade name. The Company calculates fair value by comparing a relief-from-royalty method to the carrying amount of the indefinite-lived intangible asset. This method is used to estimate the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. A loss on impairment would be recorded to the extent the carrying value of the indefinite-lived intangible asset exceeds the fair value.

Other intangible assets that have finite useful lives are measured at cost less accumulated amortization and impairment losses, if any. Subsequent expenditures for intangible assets are capitalized only when they increase the future economic benefits embodied in the specific asset to which they relate. Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets. The Company has customer relationship assets with lives ranging from 5 to 9 years. Amortization of intangible assets is included in other depreciation and amortization on the consolidated statements of comprehensive income (loss).

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Impairment of Long-Lived and Amortizable Intangible Assets

Fixed assets including rental equipment and other property, plant and equipment and amortizable intangible assets are reviewed for impairment as events or changes in circumstances occur indicating that the carrying value of the asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group to future undiscounted cash flows, without interest charges, expected to be generated by the asset group. If future undiscounted cash flows, without interest charges, exceed the carrying amount of an asset, no impairment is recognized. If management determines that the carrying value cannot be recovered based on estimated future undiscounted cash flows, without interest charges, over the shorter of the asset’s estimated useful life or the expected holding period, an impairment loss would be recorded based on the estimated fair value of the asset.

Assets Held for Sale

Management considers an asset to be held for sale when management approves and commits to a formal plan to actively market the asset for sale and it is probable that the sale will be completed within twelve months. A sale may be considered probable when a signed sales contract and significant non-refundable deposit or contract break-up fee exist. Upon designation as held for sale, management records the carrying value of the asset at the lower of its carrying value or its estimated fair value, less estimated costs to sell, and management stops recording depreciation expense. As of December 31, ~~2024~~2025, no assets were considered held for sale.

Other Non-Current Assets

Other non-current assets primarily consist of capitalized software implementation costs for the implementation of cloud computing systems primarily during 2020 and 2019. The Company capitalizes expenditures related to the implementation of cloud computing software as incurred during the application development stage. Such capitalized costs are amortized to selling, general, and administrative expenses over the term of the cloud computing hosting arrangement, including reasonably certain renewals, beginning when the module or component of the hosting arrangement is ready for its intended use.

Deferred Financing Costs Revolver, net

Deferred financing costs revolver are associated with the issuance of the ABL Facility discussed in Note 87. Such costs are amortized over the contractual term of the line-of-credit through initial maturity using the straight-line method. Amortization expense of deferred financing costs revolver is included in interest expense, net in the consolidated statement of comprehensive income (loss).

Term Loan Deferred Financing Costs

Term loan deferred financing costs are associated with the issuance of the 2025 Senior Secured Notes discussed in Note 87. The Company presents unamortized deferred financing costs as a direct deduction from the principal amount of the 2025 Senior Secured Notes on the consolidated balance sheets. Such costs are deferred and amortized over the term of the debt based on the effective interest rate method.

Original Issuance Discounts

Debt original issue discounts are associated with the ~~issuances~~issuance of the 2025 Senior Secured Notes discussed in Note 87 and are recorded as direct deductions to the principal amount of the 2025 Senior Secured Notes on the consolidated balance sheets. Debt discounts are deferred and amortized over the term of the debt based on the effective interest rate method.

Finance and Operating Leases

The Company determines if a contract is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Expense for these short-term leases is recognized on a straight-line basis over the lease term. For leases with an initial term greater than 12 months, the Company records a right-of-use (“ROU”) asset and a corresponding lease obligation. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease obligations represent the Company’s obligation to make fixed lease payments as stipulated by the lease. The Company has elected the lessee practical expedient to make an accounting policy election by class of underlying asset to not separate non-lease components from lease components and instead to account for each separate lease component and non-lease components associated with that lease component as a single lease component. As a lessee in a lease contract, the Company recognizes a ROU asset and a lease liability on the consolidated balance sheet. The Company is a lessee in a variety of lease contracts, such as land, building, modular units, equipment and vehicle leases.

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~~corresponding~~The ~~lease~~Company ~~obligation.~~classifies ~~ROU~~its ~~assets~~leases ~~represent~~as ~~the~~either ~~Company’s~~an ~~right~~operating toor ~~use~~a anfinance ~~underlying~~lease ~~asset~~based ~~for~~on the ~~lease~~principle ~~term,~~of ~~and~~whether ~~lease~~or ~~obligations~~not ~~represent~~ the ~~Company’s~~lease ~~obligation~~is toeffectively ~~make~~a ~~fixed~~financed ~~lease~~purchase ~~payments~~of ~~as stipulated by~~ the ~~lease~~leased asset. ~~The~~For ~~Company~~operating ~~has~~leases, ~~elected~~ the ~~lessee~~Company ~~practical~~recognizes ~~expedient~~lease toexpense ~~make~~on ana ~~accounting~~straight-line ~~policy~~basis ~~election~~over bythe ~~class~~term of ~~underlying~~the ~~asset~~lease. toFor ~~not~~finance ~~separate~~leases, ~~non-lease~~the ~~components~~Company ~~from~~recognizes lease ~~components~~expense ~~and~~using ~~instead~~the toeffective ~~account~~interest ~~for~~method, ~~each~~which ~~separate~~results ~~lease~~in ~~component~~the ~~and~~interest ~~non-lease~~component ~~components~~of ~~associated~~each ~~with~~lease ~~that~~payment ~~lease~~being ~~component~~recognized as ainterest ~~single~~expense and the lease ~~component.~~right-of-use Asasset abeing ~~lessee~~amortized ininto aother ~~lease~~depreciation ~~contract,~~and amortization expense in the ~~Company~~accompanying ~~recognizes~~consolidated astatement ~~ROU~~of ~~asset~~comprehensive ~~and~~income a(loss) ~~lease~~using ~~liability~~the onstraight-line method over the ~~consolidated~~term ~~balance~~of ~~sheet~~the lease. ~~The~~Operating ~~Company~~lease isobligations aare ~~lessee~~recognized inat athe ~~variety~~lease ofcommencement ~~lease~~date ~~contracts,~~based ~~such~~on asthe ~~land,~~present ~~building,~~value ~~modular~~of ~~units,~~lease ~~equipment~~payments ~~and~~over ~~vehicle~~the ~~leases~~lease term.

The Company classifies its leases as either an operating or a finance lease based on the principle of whether or not the lease is effectively a financed purchase of the leased asset. For operating leases, the Company recognizes lease expense on a straight-line basis over the term of the lease. For finance leases, the Company recognizes lease expense using the effective interest method, which results in the interest component of each lease payment being recognized as interest expense and the lease right-of-use asset being amortized into other depreciation and amortization expense in the accompanying consolidated statement of comprehensive income using the straight-line method over the term of the lease. Operating lease obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term.

As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate (“IBR”) based on information available at the commencement date in determining the present value of lease payments over the lease term. The IBR is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The Company determined its IBR for each lease by using the IBR in effect as of the start of the quarter of the lease commencement date. In order to estimate the Company’s IBR, the Company first looks to its own unsecured debt offerings, and adjusts the rate for both length of term and secured borrowing using available market data as well as consultations with leading national financial institutions that are active in the issuance of both secured and unsecured notes.

Operating ROU assets are recognized at the lease commencement date, and include the amount of the initial operating lease obligation, any lease payments made at or before the commencement date, excluding any lease incentives received, and any initial direct costs incurred. For leases that have extension options that the Company can exercise at its discretion, management uses judgment to determine if it is reasonably certain that the Company will in fact exercise such option. If the extension option is reasonably certain to occur, the Company includes the extended term’s lease payments in the calculation of the respective lease liability. Certain lease contracts may include an option to purchase the leased property, which is at the Company's sole discretion. None of the Company’s leases contain any material residual value guarantees or material restrictive covenants. The Company reviews its right-of-use assets for indicators of impairment. If such assets are considered to be impaired, the related assets are adjusted to their estimated fair value and an impairment loss is recognized. The impairment loss recognized is measured at the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Based on the Company’s review, no operating or finance lease ROU assets were impaired during any of the years presented in these accompanying consolidated financial statements.

The Company's leases include a base lease payment, which is recognized as lease expense on a straight-line basis over the lease term. In addition, certain of the Company's leases may include an additional lease payment for items such as common area maintenance, real estate taxes, utilities, operating expenses, insurance, personal property expense, or other related charges all of which are recognized as variable lease expense, when incurred, in the consolidated statement of comprehensive income (loss). The variable lease expense incurred by the Company was not based on an index or rate.

For lease modifications, the Company evaluates whether the lease modifications may be accounted for as either two leases – the original lease and a separate new lease, or, one modified lease. When a lease modification is accounted for as one modified lease, the Company must reconsider the lease classification and may need to remeasure the lease liability and adjust the related ROU asset. Such assessments may require reconsideration of certain assumptions made at the lease commencement date, such as whether the exercise of a renewal option is reasonably certain, which may result in a change to the original expected lease term. Triggering events that may result in a lease modification may include a modification of a related customer contract that depends on leased assets to service the customer contract over the related term.

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Lessor Perspective: For lease agreements in which the Company is the lessor, the Company analyzed the lease and non-lease components of its lease agreements and determined that the timing and pattern of transfer for both components are the same. In addition, the leases will continue to qualify as operating leases and the Company will account for and present the lease component under ASC 842 and the non-lease component under ASC 606. Refer to Note 2 for the breakout of revenue under each standard.

Refer to Notes 1312 and 1413 for additional lease disclosures.

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Asset Retirement Obligations

The Company recognizes asset retirement obligations (“AROs”) related to legal obligations associated with the operation of the Company’s specialty rental assets. The fair values of these AROs are recorded on a discounted basis, at the time the obligation is incurred and accreted over time for the change in present value over the expected timing of settlement. Changes in the expected timing or amount of settlement are recognized in the period of change as an increase or decrease in the carrying amount of the ARO and related asset retirement costs with decreases in excess of the carrying value of the related asset retirement cost being recognized in the consolidated statement of comprehensive income (loss). The Company capitalizes asset retirement costs by increasing the carrying amount of the related long-lived assets and depreciating these costs over the remaining useful life. The carrying amount of AROs included in the consolidated balance sheets were $2.67 million and $2.46 million as of December 31, ~~2024~~2025 and ~~2023~~2024, respectively, which represents the present value of the estimated future cost of these AROs of approximately $2.9 million. Accretion expense of approximately $0.1 million, $0.21 million, and $0.2 million was recognized in specialty rental costs in the accompanying consolidated statements of comprehensive income (loss) for the years ended December 31, ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023, respectively.

Foreign Currency Transactions and Translation

The Company’s reporting currency is the US Dollar (USD). Exchange rate adjustments resulting from foreign currency transactions are recognized in profit or loss, whereas effects resulting from the translation of financial statements are reflected as a component of accumulated other comprehensive loss, a component of equity.

The assets and liabilities of subsidiaries whose functional currency is different from the USD are translated into USD at exchange rates at the reporting date and revenue and expenses are translated using average exchange rates for the respective period.

Foreign exchange gains and losses arising from a receivable or payable to a consolidated Company entity, the settlement of which is neither planned nor anticipated in the foreseeable future, are considered to form part of a net investment in the Company entity and are included within accumulated other comprehensive loss.

Revenue Recognition

The Company derives revenue from specialty rental and hospitality services, specifically lodging and related ancillary services. Revenue is recognized in the period in which lodging and services are provided pursuant to the terms of contractual relationships with the customers. Certain arrangements contain a lease of lodging facilities to customers. The leases are accounted for as operating leases under the authoritative guidance for leases (“ASC 842”) and are recognized as income is earned over the term of the lease agreement and is reflected as specialty rental income in the consolidated statements of comprehensive income (loss).

Upon lease commencement, the Company evaluates leases to determine if they meet criteria set forth in lease accounting guidance for classification as sales-type or direct financing leases; if a lease meets none of these criteria, the Company classifies the lease as an operating lease. As previously mentioned, the arrangements that contain a lease of the Company’s lodging facilities are accounted for as operating leases, whereby the underlying asset remains on our balance sheet and is depreciated consistently with other owned assets, with income recognized as it is earned over the term of the lease agreement. For contracts that contain both a lease component and a services or non-lease component, the Company has adopted an accounting policy to account for and present the lease component under ASC 842 and the non-lease component under the authoritative guidance for revenue recognition (“ASC 606” or “Topic 606”). Refer to Note 2 for the breakout of revenue under each standard. The Company estimates the transaction price, including variable consideration, at contract inception. Then the consideration in the contract is allocated to each separate lease component and non-lease component of the contract. When assessing the recognition of services and specialty rental revenue, judgement is required in contemplating the determination of the transaction price. When allocating the contract consideration to the lease component under ASC 842 and the services or non-lease component under ASC 606, the Company uses judgement in contemplating how to initially measure one or more parts of the contract, to apply the separation and measurement guidance. Factors the Company considers in making this allocation include relative standalone price of lease and services or non-lease components. The Company recognizes minimum rents on operating leases over the term of the customer

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inception. Then the consideration in the contract is allocated to each separate lease component and non-lease component of the contract. When assessing the recognition of services and specialty rental revenue, judgement is required in contemplating the determination of the transaction price. When allocating the contract consideration to the lease component under ASC 842 and the services or non-lease component under ASC 606, the Company uses judgement in contemplating how to initially measure one or more parts of the contract, to apply the separation and measurement guidance. Factors the Company considers in making this allocation include relative standalone price of lease and services or non-lease components. The Company recognizes minimum rents on operating ~~leases over the term of the customer operating~~ lease. A lease term commences when: (1) the customer has control of the leased space (legal right to use the property); and (2) the Company has delivered the premises to the customer as required under the terms of the lease. The term of a lease includes the noncancellable periods of the lease along with periods covered by: (1) a customer option to extend the lease if the customer is reasonably certain to exercise that option; (2) a customer option to terminate the lease if the customer is reasonably certain not to exercise that option; and (3) an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the Company as the lessor. When assessing the expected lease end date, judgment is required in contemplating the significance of: any penalties a customer may incur should it choose not to exercise any existing options to extend the lease or exercise any existing options to terminate the lease; and economic incentives for the customer in the lease. Furthermore, when assessing the expected end date of a contract under ASC 606 with an extension option, judgment is required to determine whether the option contains a material right.

Because performance obligations related to specialty rental and hospitality services are satisfied over time, ~~the~~some ~~majority~~ of our revenue is recognized evenly over the contractual term of the arrangement, based on a contractual fixed minimum amount and defined period of performance. Certain contracts may contain a contractual fixed minimum amount and an initial ramp up period based on bed utilization, which may result in lower revenue recognition during the ramp up period of the contract term. Some of our revenue is recognized on a daily basis, for each night a customer stays, at a contractual day rate. Our customers typically contract for accommodation services under committed contracts with terms that most often range from several months to multiple years. Our payment terms vary by type and location of our customer and the service offered. The time between invoicing and when payment is due is not significant.

When lodging and services are billed and collected in advance, recognition of revenue is deferred until services are rendered.

Cost of services and construction includes labor, food, utilities, supplies, leasing and other direct costs associated with operating the lodging units as well as repair and maintenance expenses, costs associated with relocating community assets, and construction costs associated with community construction services projects. Cost of rental includes leasing costs, utilities, and other direct costs of maintaining the lodging units. Costs associated with contracts include sales commissions which are expensed as incurred and reflected in selling, general and administrative expenses in the consolidated statements of comprehensive income (loss).

Additionally, the Company collects sales, use, occupancy and similar taxes, which the Company presents on a net basis (excluded from revenues) in the consolidated statements of comprehensive income (loss).

The Company recognizes revenue associated with community construction using the percentage of completion method with progress towards completion measured using the cost-to-cost method as the basis to recognize revenue. Management believes this cost-to-cost method is the most appropriate measure of progress to the satisfaction of a performance obligation on the community construction. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, estimated profitability and final contract settlements may result in revisions to projected costs and revenue and are recognized in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated. Factors that may affect future project costs and margins include weather, production efficiencies, availability and costs of labor, materials and subcomponents. As noted above, costs associated with the construction fee income are recognized as incurred and presented within the services and construction costs financial statement line item within the accompanying consolidated statement of comprehensive income (loss).

Revenues associated with community construction using the percentage of completion method are reflected as construction fee income in the consolidated statements of comprehensive income (loss).

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Fair Value Measurements

A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The inputs are prioritized into three levels that may be used to measure fair value:

Level 1: Inputs that reflect quoted prices for identical assets or liabilities in active markets that are observable.

Level 2: Inputs that reflect quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3: Inputs that are unobservable to the extent that observable inputs are not available for the asset or liability at the measurement date.

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Income Taxes

The Company’s operations are subject to U.S. federal, state and local, and foreign income taxes. The Company accounts for income taxes under the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent that it is more likely than not that these assets will be realized. In making such determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent results of operations. Valuation allowances are recorded to reduce the deferred tax assets to an amount that will more likely than not be realized. When a valuation allowance is established or there is an increase in an allowance in a reporting period, tax expense is generally recorded in the Company’s consolidated statements of comprehensive income (loss).

In accordance with applicable authoritative guidance, the Company accounts for uncertain income tax positions using a benefit recognition model with a two-step approach; a more-likely-than-not recognition criterion; and a measurement approach that measures the position as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement. If it is not more-likely-than-not that the benefit of the tax position will be sustained on its technical merits, no benefit is recorded. Uncertain tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. The Company classifies interest and penalties related to uncertain tax positions within income tax expense.

Warrant Liabilities

We evaluated the warrants issued by Platinum Eagle, our legal predecessor, to purchase its common stock in a private placement concurrently with its initial public offering (the “Private Warrants”) under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and concluded that they dodid not meet the criteria to be classified in stockholders’ equity. Specifically, the provisions in the Private Warrant agreement ~~provide~~provided for potential changes to the settlement amounts dependent upon the characteristics of the warrant holder and because the holder of a warrant is not an input into the pricing of a fixed-for-fixed option on equity shares, such a provision would preclude the warrant from being classified in equity. Since the Private Warrants meet the definition of a derivative under ASC 815, we recorded these Private Warrants as liabilities on the balance sheet at fair value, with subsequent changes in their respective fair values recognized in the consolidated statements of comprehensive income (loss) at each reporting date. The fair value adjustments were determined by using a Black-Scholes option-pricing model based on inputs less observable in the marketplace ~~as described in Note 11~~. The Private Warrants ~~are~~were deemed equity instruments for income tax purposes, and accordingly, there iswas ~~no tax accounting related to changes in the fair value of the Private Warrants recognized. The Private Warrants expired unexercised on March 15, 2024 and are no longer outstanding.~~

~~Stock-Based Compensation~~88

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~~provide~~no ~~service~~tax inaccounting ~~exchange~~related ~~for the awards, usually the vesting period. Similarly, for time-based awards subject~~ to ~~graded~~changes ~~vesting, compensation expense is recognized on a straight-line basis over the service period. For Market-Based PSUs, the probability of satisfying a market condition is considered~~ in the ~~estimation of the grant-date~~ fair value ~~for~~of ~~Market-Based PSUs and~~ the ~~compensation~~Private ~~cost~~Warrants ~~is not reversed if the market condition is not achieved, provided the requisite service has been provided~~recognized. ~~Forfeitures~~ ~~are accounted for as they occur.~~ The ~~Plan~~Private ~~also~~Warrants ~~includes~~expired ~~Stock~~unexercised Appreciation Rights awards (“SARs”) issued to certain of the Company’s executive officers and other employees. Each SAR represents a contingent right to receive, upon vesting, payment in cash or the Company’s Common Stock, as determined by the compensation committee, in an amount equal to the difference between (a) the fair market value of a Common Share on ~~the~~March ~~date of exercise~~15, ~~over~~2024 ~~(b) the grant date price. Under the authoritative guidance for stock-based compensation, these SARs are considered liability-based awards that are included in accrued liabilities~~ and ~~other non-current liabilities in the consolidated balance sheets at fair value and~~ are remeasured at fair value each reporting period until the date of settlement using the Black-Scholes option pricing model. Changes in the estimated fair value of the SARs along with the resulting cost is recognized as increases or decreases in stock-based compensation expense in the accompanying consolidated statements of comprehensive income each reporting period over the period during which an employee is required to provide service in exchange for the SARs, usually the vesting period. Forfeitures are accounted for as they occur. As of December 31, 2024, there were no ~~SAR~~longer ~~awards~~ outstanding ~~as all were either exercised and paid in cash or forfeited as of December 31, 2024~~. ~~Refer to Note 17 for further details of activity related to the Plan.~~

Stock-Based Compensation

The Company sponsors an equity incentive plan, the Target Hospitality Corp. 2019 Incentive Award Plan, as amended (the “Plan”), in which certain employees and non-employee directors participate. The Plan is administered by the compensation committee of the board of directors of the Company (the “Compensation Committee”). The Company measures the cost of services received in exchange for an award of equity instruments (typically restricted stock unit awards (“RSUs”), performance stock unit awards (“PSUs”), and stock options) based on the grant-date fair value of the awards issued under the Plan that are equity classified. The fair value of the stock options is calculated using the Black-Scholes option-pricing model and the fair value of the PSUs that are based on market conditions (“Market-Based PSUs”) are calculated using a Monte Carlo simulation while the fair value of the RSUs and performance-based PSUs not based on market conditions (“Performance-Based PSUs”) are calculated based on the Company’s share price on the grant-date, together with the assessment of the probability of achieving defined performance measures for Performance-Based PSUs. Compensation cost for awards with performance conditions (non-market) is recognized if and when achievement becomes probable and is adjusted for changes in probability and actual outcomes through the end of the performance period. The resulting compensation expense is recognized over the period during which an employee or non-employee director is required to provide service in exchange for the awards, usually the vesting period. Similarly, for time-based awards subject to graded vesting, compensation expense is recognized on a straight-line basis over the service period, subject to the requirement that cumulative expense recognized at any date will at least equal the grant-date fair value of the vested portion of the award. For Market-Based PSUs, the probability of satisfying a market condition is considered in the estimation of the grant-date fair value and the compensation cost is not reversed if the market condition is not achieved, provided the requisite service has been provided. Forfeitures are accounted for as they occur. For valuation of awards, the Company uses key assumptions appropriate to the valuation technique (e.g., expected term, expected volatility, dividend yield, and risk-free interest rate for Black-Scholes; and relevant volatility/correlation and risk-free inputs for Monte Carlo). See Note 16 for the period’s specific assumptions and ranges. The Plan also includes Stock Appreciation Rights awards (“SARs”). Each SAR represents a contingent right to receive, upon vesting, payment in cash or the Company’s Common Stock, as determined by the Compensation Committee, in an amount equal to the difference between (a) the fair market value of a Common Share on the date of exercise, over (b) the grant date price. Under the authoritative guidance for stock-based compensation, SARs that are expected to be settled in cash are considered liability-based awards that are included in accrued liabilities and other non-current liabilities in the consolidated balance sheets at fair value and are remeasured at fair value each reporting period until the date of settlement using the Black-Scholes option pricing model. Changes in the estimated fair value of the SARs along with the resulting cost is recognized as increases or decreases in stock-based compensation expense in the accompanying consolidated statements of comprehensive income (loss) each reporting period over the period during which an employee is required to provide service in exchange for the SARs, usually the vesting period. Forfeitures are accounted for as they occur. As of December 31, 2025 and 2024, respectively, there were no SAR awards outstanding as all were either exercised and paid in cash or forfeited as of December 31, 2024. Additional information related to the Plan, including award activity rollforwards (by award type), total unrecognized compensation cost and weighted-average remaining recognition period, valuation assumptions, related income tax effects, and cash flow impacts, is presented in Note 16.

Treasury Stock

Treasury stock is reflected as a reduction of stockholders’ equity at cost. In August 2022, the Inflation Reduction Act of 2022 was enacted into law and imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. The Company reflects the applicable excise tax in equity as part of the cost basis of the stock repurchased classified as treasury stock and a corresponding liability for the excise taxes payable in accrued expenses in the accompanying consolidated balance sheets until paid. We use the weighted average purchase price to determine the cost of treasury stock that is reissued, if any.

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Recently Adopted Accounting Standards

In ~~November~~December 2023, the FASB issued ASU 2023-0709, ~~Segment Reporting (Topic 280):~~ Improvements to ~~Reportable~~Income ~~Segment~~Tax Disclosures, which ~~expands~~requires ~~reportable segment~~ disclosure ~~requirements,~~of ~~primarily~~disaggregated ~~through~~income ~~enhanced~~taxes ~~disclosures~~paid, ~~about~~prescribes ~~significant~~standard ~~segment~~categories ~~expenses.~~for ~~The~~the ~~amendments~~components inof the ~~ASU~~effective ~~require,~~tax ~~among~~rate ~~other things~~reconciliation, ~~disclosure~~and ofmodifies ~~significant~~other ~~segment~~income ~~expenses~~tax-related ~~that~~disclosures. ~~are~~ASU ~~regularly~~2023-09 ~~provided~~requires topublic ancompanies ~~entity's~~to ~~chief~~annually ~~operating decision maker~~ (~~“CODM”~~1) ~~and~~disclose aspecific ~~description~~categories ofin ~~other segment items (~~the ~~difference~~rate ~~between~~reconciliation ~~segment~~and ~~revenue~~(2) ~~less~~provide ~~the~~additional ~~segment~~information ~~expenses~~for ~~disclosed~~reconciling ~~under~~items ~~the~~that ~~significant~~meet ~~expense~~a ~~principle~~quantitative ~~and~~threshold ~~each~~(if ~~reported~~the ~~measure~~effect of ~~segment~~those ~~profit~~reconciling oritems ~~loss)~~is byequal ~~reportable~~to ~~segment,~~or asgreater ~~well~~than asfive ~~disclosure~~percent of the ~~title~~amount ~~and~~computed ~~position~~by ofmultiplying ~~the~~pretax ~~CODM,~~income ~~and an explanation of how the CODM uses the reported measure(s) of segment profit~~ or loss inby ~~assessing~~the ~~segment~~applicable ~~performance~~statutory ~~and~~income ~~deciding~~tax ~~how to allocate resources~~rate). Annual disclosures are required for fiscal years beginning after December 15, ~~2023~~2024 and ~~interim~~may ~~disclosures~~be ~~are~~applied ~~required~~prospectively ~~for~~or ~~periods within fiscal years beginning after December 15, 2024~~retrospectively. ~~Retrospective application is required, and early adoption is permitted.~~ These requirements did not have an impact on amounts recognized in our financial statements, but resulted in expanded ~~reportable~~Income ~~segment~~Tax disclosures as shown in Note 199 of ~~these~~the financial statements. The Company adopted ASU 2023-0709, on the effective date of ~~January1~~January 1, ~~2024.~~2025, ~~Results~~which ~~for~~will ~~reporting~~be ~~periods~~applied ~~prior to 2024 are presented in accordance with ASU 2023-07~~prospectively. Refer to Note 199 for these expanded disclosures.

Recently Issued Accounting Standards

Improvements to ~~Income~~Expense ~~Tax~~Disaggregation Disclosures. In ~~December~~November ~~2023~~2024, the FASB issued ASU ~~2023~~2024-0903, which requires ~~disclosure~~additional ofinformation ~~disaggregated~~about ~~income~~specific ~~taxes~~expense ~~paid,~~categories ~~prescribes~~in ~~standard~~the ~~categories~~notes to financial statements for ~~the~~both ~~components~~interim ofand ~~the~~annual ~~effective~~reporting ~~tax~~periods. ~~rate~~The ~~reconciliation,~~update ~~and~~requires ~~modifies~~disaggregated ~~other~~information about certain prescribed expense categories underlying any relevant income ~~tax-related~~statement ~~disclosures~~expense caption. ASU ~~2023~~2024-0903 is effective for fiscal years beginning after December 15, ~~2024~~2026, and interim reporting periods beginning after December 15, 2027. The ASU 2024-03 may be applied prospectively or retrospectively, and allows for early adoption. ~~These~~The ~~requirements~~Company ~~are~~is currently evaluating the impact of this update and does not ~~expected~~intend to ~~have~~early anadopt ~~impact~~ASU on2024-03. ~~the~~The ~~recorded~~Company ~~amounts~~expects inthis ~~our~~update ~~financial~~to ~~statements~~result in expanded disclosures, but ~~will~~does ~~impact~~not ~~our~~expect ~~income~~the ~~tax~~update ~~disclosures.~~to ~~The~~affect the Company’s ~~does~~consolidated ~~not~~results ~~intend~~of tooperations, ~~early~~cash ~~adopt~~flows, ~~ASU~~or ~~2023-09~~financial position.

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Improvements to Expense Disaggregation Disclosures. In November 2024, the FASB issued ASU 2024-03, which requires additional information about specific expense categories in the notes to financial statements for both interim and annual reporting periods. The update requires disaggregated information about certain prescribed expense categories underlying any relevant income statement expense caption. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The ASU 2024-03 may be applied prospectively or retrospectively, and allows for early adoption. The Company is currently evaluating the impacts of this update and does not intend to early adopt ASU 2024-03.

Recent Developments

On March 25, 2024, the Company announced that the Board of Directors of the Company (“the Board”) received an unsolicited non-binding proposal from Arrow Holdings S.à r.l. (“Arrow”), an affiliate of TDR, to acquire all of the outstanding shares of Common Stock of the Company that are not owned by any of Arrow, any investment fund managed by TDR or any of their respective affiliates (the “Unaffiliated Shares”), for cash consideration of $10.80 per share (the “Proposal”).

The Board established a special committee of independent directors (the “Special Committee”), and the Special Committee retained Centerview Partners LLC and Ardea Partners LP as its financial advisors and Cravath, Swaine & Moore LLP as its legal advisor. The Special Committee was established to consider and evaluate the Proposal, and explore and consider strategic alternatives thereto.

In connection with its review of the Proposal, the Special Committee launched a formal process to solicit offers for the Company and invited Arrow to participate in such a process. Following the previously announced loss of a contract, no formal offers were received, and Arrow did not reaffirm the Proposal or advance any alternative proposal that the Special Committee could conclude, in consultation with its independent financial and legal advisors, would be more attractive to the holders of the Unaffiliated Shares than the Company’s standalone prospects. Accordingly, the Board determined to disband the Special Committee, as previously announced on September 25, 2024.

As discussed in Note 20, the New PCC Contract discussed in Note 2, which related to the Company’s Government segment (See Note 19), was terminated effective February 21, 2025.

2. Revenue

Total revenue under contracts recognized under ASC 606 was approximately $~~265~~274.98 million for the year ended December 31, ~~2024~~2025, while $~~120~~45.48 million was specialty rental income subject to the guidance of ASC 842 for the year ended December 31, ~~2024~~2025. Total revenue under contracts recognized under ASC 606 was $~~365~~265.69 million for the year ended December 31, ~~2023~~2024, while $~~198~~120.4 million was specialty rental income subject to the guidance of ASC 842 for the year ended December 31, ~~2023~~2024. Total revenue under contracts recognized under ASC 606 was $~~333~~365.76 million for the year ended December 31, ~~2022~~2023, while $~~168.3~~198 million was specialty rental income subject to the guidance of ASC 842 for the year ended December 31, ~~2022~~2023.

The following table disaggregates our services income by our two reportable segments as well as the All Other category: Hospitality and Facility Services-South (“HFS – South”), Government, and All Other for the years indicated below: 90

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The following table disaggregates our services and construction fee income by our three reportable segments as well as the All Other category: Hospitality and Facility Services-South (“HFS – South”), Workforce Hospitality Solutions (“WHS”), Government, and All Other for the years indicated below:


	For the Years Ended December 31,
	~~2024~~2025		~~2023~~2024		~~2022~~2023
HFS - South	$	~~143,846~~	$	~~142,666~~	$	~~126,135~~
Services income	$	135,357	$	143,846	$	142,666
Total HFS - South revenues		135,357		143,846		142,666

Government	$	110,375	$	211,753	$	198,249
WHS
Services income	$	5,157	$	—	$	—
Construction fee income		87,296		—		—
Total WHS revenues		92,453		—		—

All Other	$	11,691	$	11,208	$	9,318
Government
Services income	$	35,671	$	110,375	$	211,753
Total Government revenues		35,671		110,375		211,753

Total services revenues	$	265,912	$	365,627	$	333,702
All Other
Services income	$	11,347	$	11,691	$	11,208
Total All Other revenues		11,347		11,691		11,208

Total services and construction fee income revenues	$	274,828	$	265,912	$	365,627

85For the year ended December 31, 2025, the Company incurred and expensed approximately $69.6 million of construction costs associated with construction fee income, which are included within the services and construction costs financial statement line item within the accompanying consolidated statement of comprehensive income (loss).

During the year ended December 31, 2024, the STFRC Contract in the Company’s Government segment was terminated effective August 9, 2024. The STFRC Contract was based on a fixed minimum lease revenue amount and for the years ended December 31, 2024 and 2023, contributed approximately $38.3 million and $55.9 million, respectively, in total consolidated revenue. The assets associated with the STFRC Contract were reactivated under the DIPC Contract relating to the DIPC effective March 5, 2025, which is a lease and services agreement with an anticipated five-year term. The DIPC retains a similar facility size and operational scope as the prior operations under the STFRC Contract. The DIPC is capable of supporting up to 2,400 individuals and provides an open and safe environment to appropriately care for the community population. The consistency of the community layout required no capital investment, allowing for seamless community reactivation. The Company is providing facility and hospitality solutions under the DIPC Contract, which has a similar economic structure to the previous STFRC Contract, including fixed minimum revenue regardless of occupancy that amounts to a cumulative fixed minimum revenue amount of approximately $246 million over the anticipated five-year term. As such, the DIPC Contract is expected to provide over $246 million of revenue over its anticipated five-year term, to March 2030, and was subject to a ramp up period based on utilization during the first six months of the contract term resulting in lower fixed minimum revenue amounts during the ramp up period. The ramp up period was completed as scheduled as of September 30, 2025 with the maximum fixed minimum revenue amount now being recognized. The maximum fixed minimum revenue amount is based on utilization of 2,400 beds. The DIPC Contract is supported by an amended intergovernmental services agreement between the city of Dilley, Texas and U.S. Immigration and Customs Enforcement. As is customary for U.S. government contracts and subcontracts, the IGSA and the DIPC Contract are subject to annual U.S. government appropriations and can be canceled for convenience with a 60-day prior notice.

During the year ended December 31, 2023, the NP Partner executed the PCC Contract that became effective on November 16, 2023, and included a term with a one-year base period through November 15, 2024, with an option to extend for up to four additional one-year periods and an option to extend for up to six months upon the conclusion of the base period or any of the option periods. The PCC Contract did not result in any advanced payments that required an assessment of the

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amortization period. The PCC Contract operated with similar structure to the Company’s prior government services contracts, which centered around minimum revenue amounts supported by the U.S. government. Additionally, this PCC Contract included occupancy-based variable services revenue that fluctuated with active community population fluctuations. During the year ended December 31, 2024, the ~~STFRC~~Company executed the first of four one-year extension options on the PCC Contract along with an amendment, effective November 16, 2024, which supported a community capable of serving up to 6,000 individuals. The minimum revenue amount provided for a minimum annual revenue contribution of approximately $168 million, which decreased from $178 million pursuant to the amendment on November 16, 2024. The PCC contract contained both a lease component under ASC 842 and a service or non-lease component under ASC 606. The November 16, 2024 amendment of the PCC Contract resulted in a re-assessment of the ~~Company’s~~allocation of the contract consideration to the lease component under ASC 842 and the services or non-lease component under ASC 606, which did not result in a material change from the previous allocation of contract consideration done at the origination date of the PCC Contract on November 15, 2023, other than allocating a lower minimum annual revenue contribution of $168 million compared to the prior $178 million amount. All revenue associated with the PCC contract and the related amendment, is attributable to the Government reportable segment. ~~was~~In February 2025, the Company received notice that the U.S. government terminated ~~effective~~the PCC Contract with the NP Partner and the NP Partner terminated the PCC Contract, effectively immediately on February 21, 2025 and the NP Partner provided notice to the Company of their intention to terminate the PCC Contract as of the PCC Termination Effective Date. In connection with the PCC Contract termination, on August 91, ~~2024~~2025, the Company entered into an agreement with the NP Partner related to the close-out and settlement of the PCC Contract. The ~~STFRC~~agreement provided the Company with consideration for certain costs related to the termination of the PCC Contract ~~was~~and ~~based~~resulted onin a ~~fixed~~payment ~~minimum~~to ~~lease~~the Company of approximately $11.8 million (“PCC Contract Close-Out Payment”), which was received in cash and recognized as revenue ~~amount~~during the year ended December 31, 2025 and is included as a component of services income in the accompanying consolidated statement of comprehensive income (loss) for the ~~years~~year ended December 31, ~~2022~~2025 within the Government segment and ~~2023~~is included as a component of cash flows from operations within the accompanying consolidated statement of cash flows for the year ended December 31, ~~contributed~~2025. The PCC Contract generated total revenue of approximately $5536.93 million (inclusive of the PCC Contract Close-Out Payment) and $55186.94 million for the years ended December 31, ~~respectively~~2025 and 2024, inrespectively. ~~total~~The ~~consolidated~~combined ~~revenue~~PCC ~~compared~~Contract toand prior contract with the NP Partner generated total revenue of approximately $38347.38 million ~~of revenue~~ for the year ended December 31, ~~2024~~ 2023. No Asfurther ~~discussed~~payments inare ~~Note~~expected 20from the PCC Contract. The Company retained ownership of the related assets that were associated with the PCC Contract, enabling the Company to continue utilizing these modular solutions and real property to support customer demand across its operating segments and other potential growth opportunities. Certain assets previously associated with servicing the ~~STFRC~~PCC Contract were ~~reactivated~~redeployed ~~under~~to the ~~DIPC~~WHS segment to service the requirements of the Data Center Community Contract ~~effective~~described ~~March~~below. The 5,Company ~~2025~~is actively engaged in remarketing the remaining assets that were associated with servicing the PCC Contract.

During the year ended December 31, ~~2023~~2025, the NPCompany ~~Partner~~entered ~~executed~~into the ~~New~~Data ~~PCC~~Center Community Contract ~~that~~to ~~became~~construct ~~effective~~and onprovide ~~November~~comprehensive ~~16,~~facility ~~2023,~~services and ~~included~~hospitality asolutions ~~term~~supporting ~~with~~the aData ~~one-year~~Center ~~base~~Community. ~~period~~The ~~through~~Company ~~November~~will ~~15,~~provide ~~2024,~~full ~~with~~turnkey ansupport ~~option to extend~~ for upthe toData ~~four~~Center ~~additional~~Community, ~~one-year~~including ~~periods~~premium ~~and~~culinary anofferings, ~~option~~facilities tomanagement, ~~extend~~and ~~for~~comprehensive upsupport toservices. ~~six~~The ~~months~~purpose-built ~~upon~~and ~~the~~highly ~~conclusion~~customized ofCommunity ~~the~~will ~~base~~support ~~period~~an orinitial ~~any~~population of ~~the~~250 ~~option~~individuals, ~~periods.~~with ~~The~~the ~~New~~capability ~~PCC~~to ~~Contract~~expand ~~did~~to ~~not~~approximately ~~result~~1,500 inindividuals. Construction ~~any~~and ~~advanced~~mobilization ~~payments that required an assessment~~ of the ~~amortization~~Community ~~period.~~for ~~The~~the ~~New~~initial ~~PCC~~250 ~~Contract~~beds ~~operates~~was ~~with~~completed ~~similar~~as ~~structure~~of toSeptember ~~the~~30, ~~Company’s~~2025, ~~prior~~and ~~government~~first ~~services~~occupancy ~~contracts,~~of ~~which~~the ~~centered~~Community ~~around~~began ~~minimum~~in ~~revenue~~September ~~amounts~~2025 ~~supported~~for by the ~~U.S.~~initial ~~government~~250 beds. ~~Additionally,~~During ~~this~~the ~~New~~three ~~PCC~~months ~~Contract~~ended ~~includes~~December ~~occupancy-based~~31, ~~variable~~2025, ~~services~~the ~~revenue~~scope ~~that~~of ~~may~~the ~~fluctuate~~Data ~~with~~Center ~~active~~Community ~~community~~Contract ~~population~~was ~~fluctuations.~~amended ~~During~~to ~~the~~add ~~year~~an ~~ended~~additional ~~December~~800 ~~31,~~beds ~~2024,~~to the ~~Company~~Data ~~executed~~Center ~~the~~Community ~~first~~by ofJune ~~four~~2026, ~~one-year~~representing ~~extension~~a ~~options~~320% onincrease from the ~~New~~initial ~~PCC~~Community ~~Contract along with an amendment~~size, ~~effective~~resulting ~~November~~in ~~16,~~a ~~2024,~~customized ~~which~~and ~~supports~~purpose-built a community capable of ~~serving~~supporting up to 61,~~000~~050 individuals. ~~The~~(“Expanded ~~minimum~~Community ~~revenue~~Contract”). The ~~amount~~assets ~~provides~~comprising ~~for~~the a1,050 ~~minimum~~beds ~~annual~~supporting ~~revenue~~the ~~contribution~~Data ofCenter ~~approximately~~Community ~~$168~~will ~~million,~~be ~~which~~owned ~~decreased~~and ~~from~~managed ~~$178~~by ~~million pursuant to~~ the ~~amendment~~Company. The onCompany ~~November~~anticipates ~~16,~~additional ~~2024.~~potential ~~The~~Community ~~New~~expansions ~~PCC~~to ~~contract~~meet ~~contains~~growing ~~both~~customer ademand ~~lease~~in ~~component~~future ~~under~~years. The ~~ASC~~Expanded ~~842~~Community ~~and~~Contract, awhich ~~service~~has oran ~~non-lease~~initial ~~component~~term ~~under~~through ~~ASC~~September ~~606. The~~2027 ~~November~~for ~~16,~~the ~~2024~~initial ~~amendment~~250 ofbeds ~~the~~and, ~~New~~as ~~PCC~~amended, ~~Contract~~an ~~resulted~~initial interm athrough ~~re-assessment~~May of2028 for the ~~allocation~~additional of800 ~~the~~beds, ~~contract~~is ~~consideration~~expected to ~~the~~generate ~~lease~~approximately ~~component~~$134 ~~under~~million ~~ASC~~of ~~842~~committed ~~and~~minimum ~~the~~revenue ~~services~~over orthe ~~non-lease~~initial ~~component under ASC 606~~terms, which ~~did~~includes ~~not~~advanced ~~result~~payments into abe ~~material~~paid ~~change~~in ~~from~~installments during the ~~previous~~initial ~~allocation~~construction ofand ~~contract~~mobilization ~~consideration~~phase ~~done~~of at the ~~origination~~Expanded ~~date~~Community ofContract ~~the~~to ~~New~~fund ~~PCC~~the ~~Contract~~initial onconstruction ~~November~~and ~~15,~~mobilization ~~2023,~~of ~~other~~the ~~than~~Community ~~allocating~~and arelated ~~lower~~expansions. The ~~minimum~~Company ~~annual~~utilized ~~revenue~~a ~~contribution~~portion of ~~$168~~its ~~million~~existing ~~compared~~asset portfolio to construct the ~~prior~~premium ~~$178~~Data ~~million~~Center ~~amount. All~~Community ~~revenue~~and, ~~associated~~during ~~with~~ the ~~New~~year ~~PCC~~ended ~~contract~~December ~~and~~31, ~~the~~2025, ~~related~~began ~~amendment,~~receiving isadvanced ~~attributable~~payments tofrom the ~~Government~~customer ~~reportable~~to ~~segment.~~fund ~~In February 2025,~~ the ~~Company~~construction ~~received~~and ~~notice~~mobilization ~~that~~of the UCommunity.S. ~~government~~As ~~terminated~~services ~~the~~began ~~New~~in ~~PCC~~September ~~Contract~~2025, ~~with~~most of the NPadvance ~~Partner~~payments ~~and~~were ~~the~~received NPas ~~Partner~~of ~~terminated~~December ~~the~~31, ~~New~~2025, ~~PCC~~and ~~Contract~~are reflected as ~~discussed~~cash ~~in Note 20.~~

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flows from operations during the year ended December 31, 2025. The advanced payments were determined to be related to future services and will be initially recognized as deferred revenue upon receipt and included as a component of deferred revenue and customer deposits within the accompanying consolidated balance sheet and amortized as revenue over the estimated term of the contract. The Data Center Community Contract began to generate revenue during the year ended December 31, 2025, and is reported within the Company’s WHS segment.

In December 2025, the Company announced a 25-month contract award agreement to build and operate a community in Northern Nevada, supporting power generation expansion for mining and data center projects (the “Power Community Contract”). It is expected to generate approximately $35 million in revenue over its initial 25-month term starting in June of 2026, accommodate up to 250 individuals, and leverage the Company’s existing regional infrastructure with minimal capital investment of $8 million to $10 million. The operating results for this contract are expected to be reported within the WHS operating segment beginning in June of 2026 as the contract generated no operating revenues for the year ended December 31, 2025.

Allowance for Credit Losses

The Company maintains allowances for credit losses. These allowances reflect our estimate of the amount of our receivables that we will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability. Our estimate could require a change based on changing circumstances, including changes in the economy or in the circumstances of individual customers.

Contract Assets and Liabilities

We do not have any contract assets.

Contract liabilities primarily consist of deferred revenue that represent advanced payments for ~~room~~rental ~~nights~~of assets that ~~the~~is ~~customer~~being ~~may~~recognized ~~use~~over in the ~~future~~related ascontract ~~well~~period, asa ansecurity deposit, advanced payments for community builds, and mobilization of asset activities related to community expansions that are being recognized over the related contract period, and billings in excess of costs. Activity in the deferred revenue accounts as of the dates indicated below was as follows:


	For the Years Ended December 31,
	~~2024~~2025		~~2023~~2024		~~2022~~2023
Balances at Beginning of Year	$	51,~~469~~235	$	~~125~~5,~~519~~469	$	34125,~~411~~519
Additions to deferred revenue		~~699~~19,522		-699		~~172,760~~-
Revenue recognized		(42,~~933~~183)		(~~120~~4,~~050~~933)		(81120,~~652~~050)
Balances at End of Year	$	118,~~235~~574	$	51,~~469~~235	$	~~125~~5,~~519~~469

86As a result of the termination of the STFRC Contract effective August 9, 2024 in the Company’s Government Segment, the Company recognized the $4.9 million of deferred revenue remaining at December 31, 2023 associated with this contract during the year ended December 31, 2024 as is reflected in the above table, as no further service obligations existed.

~~Table~~As of ~~Contents~~December 31, 2025, the following table discloses the estimated revenues under ASC 606 related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue, and only represents revenue expected to be recognized from contracts where the price and quantity of the product or service are fixed (in thousands):

As a result of the termination of the STFRC Contract effective August 9, 2024 in the Company’s Government Segment, the Company recognized the $4.9 million of deferred revenue remaining at December 31, 2023 associated with this contract during the year ended December 31, 2024 as is reflected in the above table, as no further service obligations exist.


		For the Years Ended December 31,
	2026		2027		2028		2029		Total
Revenue expected to be recognized as of December 31, 2025	$	52,912	$	34,509	$	20,140	$	15,426	$	122,987

As of December 31, 2024, the following table discloses the estimated revenues under ASC 606 related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue, and only represents revenue expected to be recognized from contracts where the price and quantity of the product or service are fixed (in thousands):


		For the Years Ended December 31,
	2025		2026		2027		Total
Revenue expected to be recognized as of December 31, 2024	$	83,956	$	3,625	$	1,192	$	88,773

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The Company applied some of the practical expedients in ASC 606, including the “right to invoice” practical expedient, and does not disclose consideration for remaining performance obligations for contracts without minimum revenue amounts or for variable consideration related to unsatisfied (or partially unsatisfied) performance obligations. Due to the application of these practical expedients as well as excluding rental income revenue subject to the guidance included in ASC 842, the table above represents only a portion of the Company’s expected future consolidated revenues and it is not necessarily indicative of the expected trend in total revenues.

3. Specialty Rental Assets, Net

Specialty rental assets, net at the dates indicated below consisted of the following:


	December 31,		December 31,
	~~2024~~2025		~~2023~~2024
Specialty rental assets	$	~~773~~830,~~858~~592	$	~~751~~773,~~181~~858
Construction-in-process		821,~~476~~057		38,~~665~~476
Less: accumulated depreciation		(~~461~~519,~~482~~243)		(~~405~~461,~~782~~482)
Specialty rental assets, net	$	~~320~~332,~~852~~406	$	~~349~~320,~~064~~852

There were no specialty rental assets under finance lease as of December 31, ~~2024~~2025 and ~~2023~~2024, respectively. Depreciation expense of these assets is presented in depreciation of specialty rental assets in the accompanying consolidated statements of comprehensive income. During the year ended December 31, 2024, the Company disposed of assets with accumulated depreciation of approximately $0.5 million along with the related gross cost of approximately $0.7 million. These asset disposals resulted in a net gain on sale of specialty rental assets of approximately $0.1 million (~~net of sale proceeds of approximately $0~~loss).3 ~~million)~~During ~~and is reported within other expense (income), net in~~ the ~~accompanying consolidated statement of comprehensive income for the~~ year ended December 31, ~~2024. During the year ended December 31~~2025, ~~2024,~~ there was also a non-cash change in specialty rental assets and related accumulated depreciation due to the effect of exchange rate changes in the amount of approximately $10.6 million with no net impact to specialty rental assets, net.

~~During~~In ~~the~~January ~~year ended December 31~~2025, ~~2023,~~ the Company ~~disposed~~purchased a group of assets ~~with~~consisting ~~accumulated~~of ~~depreciation~~land, ofand ~~approximately~~specialty ~~$8.7~~rental ~~million~~assets ~~along~~(building, ~~with~~modular ~~the~~units, ~~related~~site ~~gross~~work, ~~cost~~and offurniture & fixtures) for approximately $915.15 million~~. These~~, ~~disposals~~of ~~were~~which, ~~primarily~~approximately ~~associated~~$14.9 ~~with~~million ~~fully~~is ~~depreciated~~included ~~asset~~within ~~retirement~~this ~~costs~~asset asgroup, ~~well~~to assupport agrowth ~~sale~~ of ~~assets. These~~the ~~asset~~WHS ~~disposals~~segment ~~resulted~~discussed in ~~disposal~~Note ~~costs~~18, ofwhich ~~approximately~~was ~~$1.2~~funded ~~million~~by ~~and~~cash ~~a net loss~~ on ~~the~~hand. ~~sales~~The ~~and~~acquisition ~~disposal~~was ofaccounted ~~assets~~for ofas ~~approximately~~an $0asset acquisition.2 ~~million~~The ~~(net~~Company ofallocated ~~sale~~the ~~proceeds~~total ofpurchase ~~approximately~~price ~~$0.2~~to ~~million)~~identifiable ~~and~~tangible isassets ~~reported~~based ~~within~~on ~~other~~their ~~expense~~relative ~~(income)~~fair values, ~~net~~which resulted in the ~~accompanying~~entire ~~consolidated~~purchase ~~statement~~price ofbeing ~~comprehensive~~allocated ~~income~~to ~~for~~land, ~~the~~and ~~year~~specialty ~~ended~~rental ~~December 31, 2023~~assets.

InDuring ~~January~~the ofyear ~~2023~~ended December 31, 2024, the Company ~~purchased~~disposed aof ~~group~~assets with accumulated depreciation of ~~assets~~approximately ~~consisting~~$0.5 million along with the related gross cost of ~~land,~~approximately ~~specialty~~$0.7 ~~rental~~million. ~~assets~~These ~~(modular~~asset ~~units,~~disposals ~~site~~resulted ~~work,~~in ~~and~~a ~~furniture~~net &gain ~~fixtures)~~on ~~and~~sale ~~intangibles~~of ~~for~~specialty rental assets of approximately $180.61 million, (net of ~~which~~sale proceeds of approximately $130.23 million) and is ~~included~~reported within ~~this~~other ~~asset~~expense ~~group~~(income), tonet ~~support~~in ~~growth~~the accompanying consolidated statement of ~~the~~comprehensive ~~HFS~~income –(loss) ~~South~~for ~~segment~~the ~~discussed~~year inended ~~Note~~December 1931, ~~which~~2024. ~~was~~During ~~funded~~the byyear ~~cash~~ended onDecember ~~hand.~~31, ~~The~~2024, ~~acquisition~~there was ~~accounted~~also ~~for~~a asnon-cash anchange ~~asset~~in ~~acquisition.~~specialty ~~The~~rental ~~Company~~assets ~~allocated~~and ~~the~~related ~~total~~accumulated ~~purchase~~depreciation ~~price~~due to ~~identifiable~~the ~~tangible~~effect ~~and~~of ~~intangible~~exchange ~~assets~~rate ~~based~~changes onin ~~their~~the ~~relative~~amount ~~fair~~of ~~values,~~approximately ~~which~~$1 ~~resulted~~million inwith ~~the~~no ~~entire~~net ~~purchase~~impact ~~price being allocated~~ to ~~land,~~ specialty rental assets, ~~and intangible assets~~net.

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In April of 2023, the Company purchased a group of assets consisting of land and specialty rental assets (modular units, site work, and furniture & fixtures) for approximately $5.0 million, of which, approximately $4.6 million is included within this asset group, to support growth of the Government segment discussed in Note 19, which was funded by cash on hand. The acquisition was accounted for as an asset acquisition. The Company allocated the total purchase price to identifiable tangible assets based on their relative fair values, which resulted in the entire purchase price being allocated to land and specialty rental assets.

4. Other Property, Plant and Equipment, Net

Other property, plant, and equipment, net at the dates indicated below, consisted of the following:


	December 31,		December 31,
	~~2024~~2025		~~2023~~2024
Land	$	3031,~~606~~184	$	3130,~~111~~606
Leasehold improvements		908		~~901~~908
Machinery and office equipment		2,~~206~~398		12,~~820~~206
Other		1012,~~862~~605		810,~~589~~862
		4447,~~582~~095		4244,~~421~~582
Less: accumulated depreciation		(911,~~647~~341)		(79,~~790~~647)
Total other property, plant and equipment, net	$	3435,~~935~~754	$	34,~~631~~935

Depreciation expense related to other property, plant and equipment was approximately $2.2 million, $1.9 million and $1.5 million for the years ended December 31, 2024, 2023 and 2022, respectively, and is included in other depreciation and amortization in the consolidated statements of comprehensive income. During the year ended December 31, 2024 the Company disposed of land with a gross cost of approximately $0.8 million as well as fully depreciated finance lease assets with gross cost and related accumulated depreciation of approximately $0.3 million. These asset disposals resulted in a net gain on sale of other property, plant and equipment of approximately $0.3 million (net of sale proceeds of approximately $1.1 million) and is reported within other expense (income), net in the accompanying consolidated statement of comprehensive income for the year ended December 31, 2024. 94

Included in other property, plant and equipment, net are certain assets under finance lease. The gross cost of the assets under finance lease was approximately $8.5 million and $6.3 million as of December 31, 2024 and 2023, respectively. The accumulated depreciation related to finance lease assets totaled approximately $5.2 million and $3.8 million as of December 31, 2024 and 2023, respectively. Such amounts under finance lease are included in the other category in the above table as of December 31, 2024 and 2023, respectively.

In January of 2023, the Company purchased a group of assets consisting of land, specialty rental assets (modular units, site work, and furniture & fixtures) and intangibles for approximately $18.6 million, of which approximately $0.9 million is included within this asset group related to the land portion of the acquisition, to support growth of the HFS – South segment discussed in Note 19, which was funded by cash on hand. The acquisition was accounted for as an asset acquisition. The Company allocated the total purchase price to identifiable tangible and intangible assets based on their relative fair values, which resulted in the entire purchase price being allocated to land, specialty rental assets and intangible assets.

In April of 2023, the Company purchased a group of assets consisting of land and specialty rental assets (modular units, site work, and furniture & fixtures) for approximately $5.0 million, of which approximately $0.4 million is included within this asset group, to support growth of the Government segment discussed in Note 19, which was funded by cash on hand. The acquisition was accounted for as an asset acquisition. The Company allocated the total purchase price to identifiable tangible assets based on their relative fair values, which resulted in the entire purchase price being allocated to land and specialty rental assets.

In July of 2023, the Company purchased land for approximately $1.3 million, all of which is included within this asset group, to support growth in the Government segment discussed in Note 19, which was funded by cash on hand. During

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Depreciation expense related to other property, plant and equipment was approximately $2.7 million, $2.2 million and $1.9 million for the ~~year~~years ended December 31, 2025, 2024 and 2023, respectively, and is included in other depreciation and amortization in the consolidated statements of comprehensive income (loss). During the year ended December 31, 2025, the Company ~~purchased~~retired ~~land~~finance ~~previously~~lease ~~leased~~right-of-use assets pertaining to ~~support~~commercial-use ~~customer~~vehicles ~~activity~~included in the ~~HFS-South~~Other ~~segment~~category ~~discussed~~above, with accumulated depreciation of $1.0 million and a gross cost of $1.3 million, which resulted in ~~Note~~a 19net loss on the disposal of leased assets of approximately $0.3 million and is reported within other expense (income), net in the accompanying consolidated statement of comprehensive income (loss) for the year ended December 31, 2025.

Included in other property, plant and equipment, net are certain assets under finance lease. The gross cost of the assets under finance lease was approximately $10.3 million and $8.5 million as of December 31, 2025 and 2024, respectively. The accumulated depreciation related to finance lease assets totaled approximately $6.5 million and $5.2 million as of December 31, 2025 and 2024, respectively. Such amounts under finance lease are included in the other category in the above table as of December 31, 2025 and 2024, respectively.

In January 2025, the Company purchased a group of assets consisting of land, and specialty rental assets (building, modular units, site work, and furniture & fixtures) for approximately $15.5 million, of which, approximately $0.6 million is included within this asset group related to the land portion of the acquisition, to support growth of the WHS segment discussed in Note 18, which was funded by cash on hand. The acquisition was accounted for as an asset acquisition. The Company allocated the total purchase price to identifiable tangible assets based on their relative fair values, which resulted in the entire purchase price being allocated to land, and specialty rental assets.

5. Goodwill and Other Intangible Assets, net

The financial statements reflect goodwill from previous acquisitions that is all attributable to the HFS – South business segment and reporting unit.

Changes in the carrying amount of goodwill were as follows:


	HFS – South
Balance at December 31, 2022	$	41,038
Balance at December 31, 2023	$	41,038
Changes in Goodwill		-
Balance at December 31, 2023		41,038
Balance at December 31, 2024		41,038
Changes in Goodwill		-
Balance at December 31, 2024	$	41,038
Balance at December 31, 2025	$	41,038

In connection with our annual assessment on October 1, we performed a qualitative assessment based on information currently available in determining if it was more likely than not that the fair value of the Company’s HFS – South reporting unit was less than the carrying amount. This assessment considered various factors, including changes in the carrying value of the reporting unit, forecasted operating results, other qualitative key events and circumstances, including the macroeconomic environment, the industry, market conditions, cost factors, and events specific to the reporting unit. Based on the results of this qualitative assessment, management concluded that it is not more likely than not that the fair value of the Company's HFS – South reporting unit was less than its carrying amount.

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Intangible assets other than goodwill at the dates indicated below consisted of the following:


	December 31, ~~2024~~2025
	Weighted	Gross
	average	Carrying		Accumulated		Net Book
	remaining lives	Amount		Amortization		Value
Intangible assets subject to amortization
Customer relationships	2.90	$	133,105	$	(96110,~~911~~316)	$	3622,~~194~~789
Non-compete agreement	32.1		349		(~~136~~206)		~~213~~143

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