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What changed in Target Hospitality Corp.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Target Hospitality Corp.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+503 added−427 removedSource: 10-K (2026-03-11) vs 10-K (2025-03-26)

Top changes in Target Hospitality Corp.'s 2025 10-K

503 paragraphs added · 427 removed · 304 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

84 edited+56 added−21 removed58 unchanged
Biggest changeThe map below shows the Company’s primary community locations in the HFS – South segment (including five locations outside of this segment). ​ 11 Table of Contents The table below presents the Company’s communities in the HFS – South, Government, and All Other segments as of December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 (1) South Texas Family Residential Center Contract (as defined below) terminated on August 9, 2024.
Biggest changeS. government contract, which was terminated effective February 21, 2025. 12 Table of Contents The table below presents the Company’s communities in the HFS – South, WHS, Government, and All Other category of operating segments as of December 31, 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 (1) South Texas Family Residential Center Contract (as defined below) terminated on August 9, 2024.
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 no speculative building. Generally, we do not invest capital unless we expect to meet our internal return thresholds.
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.
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 ​ ​ ● 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 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/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.
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 Acquisitions, Diversifying Our Service Offerings as well as our Customer base .
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 .
Our HFS-South 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.
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.
Our Company operates across the U.S. and Canada, primarily in the Southwest 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.
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.
For additional information on our revenue related to the years ended December 31, 2024 and 2023, 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.
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 world-class culinary and catering professionals serve approximately 15,000,000 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 world-class culinary and catering professionals serve approximately 9,000,000 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.
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 terminated August 9, 2024) ● 2009: Target provided housing and logistics services for 1,500 workers during a refurbishment of a refinery in St.
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.
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.
For example, 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.
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.
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.
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 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.
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. ​ • 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.
Importantly, during the COVID-19 19 Table of Contents 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.
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.
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 new assets. In addition to capital requirements, different types of customer activity require varying workforce sizes, influencing the demand for accommodations.
The Permian stretches across the southeast corner of New Mexico and through a large portion of land in western Texas, 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.
The Permian stretches across the southeast corner of New Mexico and through a large portion of land in western Texas, 8 Table of Contents 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.
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. ​ ● Enhancing Contract Scope and Services .
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. 10 Table of Contents ​ ● Enhancing Contract Scope and Services .
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.
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.
Target’s customers’ willingness to enter into multi-year committed contracts, and our historical client retainment rate of over 85%, demonstrates the strength of these long-standing relationships. ​ ● Committed Revenue and Exclusivity Produce Highly Visible, Recurring Revenue.
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.
Utilizing our large network of communities with the most bed capacity, particularly within the regions served by our Government and HFS – South 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.
Utilizing our large network of communities with the most bed capacity, particularly within the regions served by our Workforce 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.
In addition, our 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.
In addition, 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.
Additionally, we offer a wide array of training solutions (classroom, hands-on and e-learning) for our employees. In 2024, our employees enhanced their skills through training, including safety training, leadership training and equipment-related training from our suppliers.
Additionally, we offer a wide array of training solutions (classroom, hands-on and e-learning) for our employees. In 2025, our employees enhanced their skills through training, including cybersecurity, ethics, and safety training, leadership training and equipment-related training from our suppliers.
For the year ended December 31, 2024, the Company’s operations in the Government segment consisted primarily of 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.
For 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.
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. 18 Table of Contents ​ The Company employed approximately 770 people as of December 31, 2024.
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. ​ The Company employed approximately 902 people as of December 31, 2025.
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 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.
Approximately 45% of eligible employees participated in the Health & Safety program in 2024. ​ • Compensation programs and employee benefits: Our compensation and benefits programs provide a package designed to attract, retain and motivate employees.
Approximately 40% of eligible employees participated in the Health & Safety program in 2025. ​ • Compensation programs and employee benefits: Our compensation and benefits programs provide a package designed to attract, retain and motivate employees.
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.
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 15 Table of Contents its existing operating segments and other potential growth opportunities.
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.
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.
We believe our customers enter into contracts with us because of our differentiated scale and ability to deliver premier accommodations and in-house culinary and hospitality services across many key geographies in which they operate. For the year ended December 31, 2024, we generated revenues of approximately $386 million.
We believe our customers enter into contracts with us because of our differentiated 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 year ended December 31, 2025, we generated revenues of approximately $321 million.
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 lease and services agreement with the same national provider of migrant programming (the “DIPC Contract”), effective March 5, 2025.
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.
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 is divided into competitors that serve components of the overall value chain, but very few offer the entire suite of hospitality services to our customers.
For the year ended December 31, 2023, we had one customer, who accounted for approximately 62% of our revenue. ​ 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 and WHS 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.
We selectively pursue acquisitions and business combinations 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.
We selectively pursue organic growth, and mergers 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.
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 ​ ​ ● 2022: Government Segment expansion approximately 2,000 beds ​ ​ ● 2023: HFS – South Segment expansion 665 beds ​ ​ ● 2024: Entered into partnership with Chard Métis Dene Group to further expand business in Canada ​ 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.
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. 6 Table of Contents Industry Overview ​ 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.
We continue to focus on strengthening our balance sheet through strong cash flow generation and debt reduction to provide flexibility to execute upon targeted acquisitions and business combinations that would be accretive to 9 Table of Contents us while also diversifying our customer base, reducing customer concentration, and expanding our end markets. ​ ● Maintaining and Expanding Existing Customer Relationships .
We continue to focus on strengthening our balance sheet through strong cash flow generation and prudent 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. ​ ● Maintaining and Expanding Existing Customer Relationships .
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 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.
These employees, 7 Table of Contents 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). In addition, proximity to customer activities influences occupancy and demand.
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).
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.
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 PCC Contract (as defined below) associated with these communities terminated on February 21, 2025.
The map below shows the Company’s primary community locations in the HFS – South region. 14 Table of Contents All Other In addition to the two 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”).
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”).
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”) 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.
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.
We currently provide Facilities Management, culinary and catering and site services for one facility located in Wyoming for which we do not own the specialty rental accommodation assets. 15 Table of Contents ​ Segment information for December 31, 2024 and 2023 ​ For additional information on our segments, including Government, HFS - South, and All Other, related to December 31, 2024 and 2023, refer to Note 19 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, the Company’s principal customers include U.S.
We currently provide Facilities 16 Table of Contents 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, 2025 and 2024 ​ For additional information on our segments, including HFS - South, WHS, Government, and All Other, related to December 31, 2025 and 2024, refer to Note 18 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, 2025, the Company’s principal customers included investment grade natural resource development companies, customers supporting critical mineral development, power generation, and data center infrastructure projects, and U.S.
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.
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.
Although the original contract to this facility was terminated effective August 9, 2024, we renewed our partnership with the 8 Table of Contents contractor on March 5, 2025 to reactivate our existing assets in Dilley, Texas.
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.
Approximately 68.8% of our revenue was earned from specialty rental with vertically integrated hospitality, 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.
Approximately 58.5% of our revenue was earned from specialty rental with vertically integrated hospitality, 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.
Our rental assets have an average life of approximately 15 years, and we typically recover our initial investment within the first few years of initial capital deployment. Our maintenance capital between 2020 and 2024 has ranged from approximately 0.4% to 5.4% of annual revenue with an average of 2.9% of annual revenue.
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 2021 and 2025 has ranged from approximately 2.5% to 5.4% of annual revenue with an average of 3.4% of annual revenue.
U.S. government sites 16 Table of Contents 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, revenue related to the HFS – South segment represented approximately 39% of our revenue, revenue related to our Government segment represented 58% of our revenue, and All Other revenue represented 3% of our revenue.
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. ​ The Company’s Community and Services Contracts For the year ended December 31, 2025, revenue related to the HFS – South segment represented approximately 44% of our revenue, revenue related to our Government segment represented 22% of our revenue, revenue related to the WHS segment represented 30% of our revenue, and All Other revenue represented 4% of our revenue. 17 Table of Contents Customer Agreements The Company’s operations in the HFS – South segment are conducted through several different types of agreements with customers.
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.
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.
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 of the geographic areas near the southern U.S. border lack sufficient temporary housing and infrastructure and may require additional infrastructure in the future.
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.
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.
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.
We have long standing relationships with our diversified base of approximately 330 customers, which includes some of the largest blue-chip, investment grade natural resource development and integrated infrastructure companies in North America. We believe we have also established strong relationships in our U.S. government end market with our contract partners and the federal agencies we serve.
We have long standing relationships with our diversified base of approximately 320 customers, which includes some of the largest blue-chip, investment grade natural resource development and integrated infrastructure companies in North America.
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.
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.
The Government segment generated approximately 58% or $224.7 million of the Company’s revenue for the year ended December 31, 2024.
The Government segment generated approximately 22% or $70.8 million of the Company’s revenue for the year ended December 31, 2025.
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.
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.
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.
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.
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 26 strategically located communities with 16,865 beds primarily in the highest demand regions of the southwestern U. S. as of December 31, 2024.
We are one of North America’s largest providers of turnkey specialty rental units with premium catering and hospitality services including 29 strategically located communities with 16,991 beds primarily in the highest demand regions of the southwestern U. S. as of December 31, 2025. As of December 31, 2025 we also operated 2 communities not owned or leased by the Company.
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.
We compete primarily on location, cost, the quality and range of services offered, our experience in the design, construction, and management of facilities, and our reputation. 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.
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.
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. Market Dynamics and Competitive Environment ​ The communities we own, operate, or manage, are subject to competition for residents from other private operators.
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.
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.
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.
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. 9 Table of Contents For the year ended December 31, 2025, approximately 16% of our revenues were comprised of minimum revenue amounts and approximately 100% of our revenues were under contract, including exclusivity.
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. 6 Table of Contents Communities typically contain a larger number of rooms and require more time and capital to develop.
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, critical mineral development, data center infrastructure projects, and the U.S. government.
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 and government housing programs.
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.
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.
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.
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 and nonrecurring infrastructure enhancement revenue, provided for a minimum annual revenue contribution of approximately $390 million and was fully committed over its initial contract term.
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.
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 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.
(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.
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.
Government contractors, and investment grade natural resource development companies. 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.
Government contractors. For the year ended December 31, 2025, the Company had three customers who accounted for 28%, 11% and 11% of our revenues, respectively. ​ For the year ended December 31, 2024, we had one customer, who accounted for approximately 48% of our revenue.
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. 4 Table of Contents 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 and contractors of the U.
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’ “other 12 hours” is an essential part of their strategy and overall business and operations execution plan.
The map below shows the Company’s primary community locations in the Government segment. 13 Table of Contents 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.
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 workforce is primarily comprised of full-time employees. Of the total population as of December 31, 2024, approximately 600 of our employees worked in the HFS – South segment, approximately 41 of our employees worked in the Government segment, and approximately 66 of our employees worked in the All Other segment. The remaining 63 employees worked in Corporate.
Of the total population as of December 31, 2025, approximately 562 of our employees worked in the HFS – South segment, approximately 114 of our employees worked in the WHS segment, approximately 106 of our employees worked in the Government segment, and approximately 59 of our employees worked in the All Other segment. The remaining 61 employees worked in Corporate.
The business operates primarily under the Target Hospitality brand. 19 Table of Contents 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.
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.
As 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. The HFS – South segment generated approximately 39% or $149.9 million of the Company’s revenue for the year ended December 31, 2024.
We started in HFS – South with an 80-bed community in Pecos, 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.
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.
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 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, natural resource development, and other third-party owners or operators in need of specialty rental and hospitality services.
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 have established a leadership position in providing a fully integrated service offering to our large customer base, which is comprised of U.S. government service providers, and major companies supporting natural resource development. 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 have established a leadership position in providing a fully integrated service offering to our large customer base, which is comprised of major companies supporting natural resource development, critical mineral development or data center infrastructure projects, as well as supporting a U.S. government service provider.
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.
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. 18 Table of Contents 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’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.
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.
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.
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. 13 Table of Contents Understanding the significant economic potential in this region, Target entered the market in 2012, ahead of many of our competitors.
We have an extensive network of geographically relocatable specialty rental accommodation units with 16,865 beds across 26 communities. We also operate 2 communities not owned or leased by the Company. The majority of our revenues are generated under contracts that include minimum revenue amounts over the active contract term which provides visibility to future earnings and cash flows.
We have an extensive network of geographically relocatable specialty rental accommodation units with 16,991 beds across 29 communities. A large portion of our specialty rental asset base is comprised of modular unit assets that are generally interchangeable across segments and geographies. We also operate 2 communities not owned or leased by the Company.
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.
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.
The Company had total liquidity of approximately $365.7 million as of December 31, 2024, which consisted of up to $175 million of unused capacity under its ABL Facility, and cash and cash equivalents of $190.7 million. 10 Table of Contents Business Operations Target Hospitality provides specialty rental and hospitality services, temporary specialty rental and hospitality services solutions and facilities management services across North America.
As of December 31, 2025, the Company had $0 drawn on its ABL Facility and no Debt outstanding, other than finance lease obligations. ​ 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.
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.
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.
For example, we have expanded our presence across multiple government agencies creating broad reaching opportunities to extend reach beyond our core accommodations platform. Intentionally growing revenue in an attractive government services end market, allowed us to high-grade contracts and significantly expand Target’s growth pipeline. ​ ● Disciplined Growth Capital Expenditures to Increase Capacity .
For example, we have expanded our presence across multiple end markets within our WHS segment creating broad reaching opportunities to extend reach beyond our core accommodations platform.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe 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 is contract intensive.
Biggest changeOperational 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 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 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.
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.
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.
The ABL Facility and the Indenture, as well as any instruments that will govern any future debt obligations, contain covenants that impose significant restrictions on the way the 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.
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.
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); 26 Table of Contents ● 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.
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); ● 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.
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 ● potential loss of key customers or employees.
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 36 Table of Contents ● potential loss of key customers or employees.
Growth, Development and Financing 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.
Growth, and 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.
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.
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.
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.
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, 2025.
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.
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 28 Table of Contents 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 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.
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.
Furthermore, our relationship with the U.S. government subjects us and our government contractor customers to unique risks such as unanticipated increased costs and litigation that could materially adversely affect our or their business, financial condition, or results of operations.
Furthermore, our relationship with the U.S. government subjects us and our government contractor customer to unique risks such as unanticipated increased costs and litigation that could materially adversely affect our or their business, financial condition, or results of operations.
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. 22 Table of Contents 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.
Risks Related to Our Indebtedness ● 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. 22 Table of Contents 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.
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, 31 Table of Contents criminal or malicious acts; terrorism, war, hostile or warlike action during a time of peace; automobile physical damage; natural disasters; and certain cyber-crime.
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.
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 significantly increased costs as a result of operating as a public company, and our management is required to devote substantial time to compliance efforts.
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”. 40 Table of Contents 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.
In these circumstances, Target Hospitality’s assets may not be sufficient to repay in full that indebtedness and its other indebtedness then outstanding. 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.
In these circumstances, Target Hospitality’s assets may not be sufficient to repay in full that indebtedness and its other indebtedness then outstanding. 39 Table of Contents 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.
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.
We monitor the financial strength of our larger customers, lenders, and insurance carriers on a periodic basis using publicly-available 38 Table of Contents 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.
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.
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 25 Table of Contents 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 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.
The development and 37 Table of Contents 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.
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. ● 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.
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.
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.
In the context of a potential depressed 27 Table of Contents 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.
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.
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 34 Table of Contents 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.
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; 34 Table of Contents ● denial or revocation of permits or other authorizations; ● reduction or cessation of operations; and ● performance of site investigatory, remedial or other corrective actions.
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; ● denial or revocation of permits or other authorizations; ● reduction or cessation of operations; and ● performance of site investigatory, remedial or other corrective actions.
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 32 Table of Contents hygiene of food-handling personnel are enforced primarily at the local public health department level.
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.
Any court decision or government action that impacts our customers’ existing contracts with the government could impact our subcontracts for the facilities and result in a reduction 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 materially affect our business, financial condition, and results of operations.
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 a reduction 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 materially affect our business, financial condition, and results of operations.
If we are unable to renew leases on similar terms, it may have an adverse effect on our business. 29 Table of Contents 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.
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.
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 in the Government segment; ● 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.
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 with revenue driven 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; 31 Table of Contents ● attrition and retention risk; and ● The finite duration and milestone-based nature of certain large construction projects, particularly within the WHS segment.
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 ● reduce the demand for our services.
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 35 Table of Contents ● reduce the demand for our services.
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.
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.
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.
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 any one of our largest customers in any of our business segments could adversely affect our results of operations.
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. Our business depends on the quality and reputation of the Company and its communities.
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.
As of December 31, 2024, we had approximately $41.0 million and $52.8 million of goodwill and other intangible assets, net, respectively, in our statement of financial position, which represents approximately 5.6% and 7.3% of total assets, respectively. We review goodwill and intangible assets at least annually for impairment.
As of December 31, 2025, we had approximately $41.0 million and $39.3 million of goodwill and other intangible assets, net, respectively, in our statement of financial position, which represents approximately 7.7% and 7.4% of total assets, respectively. We review goodwill and intangible assets at least annually for impairment.
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.
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.
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. 33 Table of Contents 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.
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.
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.
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.
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.
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 32 Table of Contents projected operating results.
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. 27 Table of Contents We are subject to fluctuations in occupancy levels, and a decrease in occupancy levels could cause a decrease in revenues and profitability.
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.
Our 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.
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 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.
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.
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.
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. As of December 31, 2025, we had $0 of total indebtedness, excluding finance lease 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 and government end-markets.
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.
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.
These include prevailing economic, financial and industry conditions. If Arrow Bidco defaults on their obligations under the ABL Facility, then the relevant lenders 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.
Our business and growth strategies depend in large part on customers outsourcing some or all of the services that we provide.
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.
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.
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.
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.
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.
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.
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. 33 Table of 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.
Social, Political and Regulatory Risks ● Failure to comply with government regulations related to food and beverages may subject us to liability. ● 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.
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.
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.
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.
If we are portrayed negatively in the press or 24 Table of Contents associated with the ongoing social and political debates around immigration policy, our public image and reputation could be irreparably tarnished, and our brand could be harmed.
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 associated with the ongoing social and political debates around immigration policy, our public image and reputation could be irreparably tarnished, and our brand could be harmed.
If our relationship with, or the business of a primary distributor were to be disrupted, we would have to arrange alternative distributors and 30 Table of Contents our operations and cost structure could be adversely affected in the short term.
If our relationship with, or the business of a primary distributor were to be disrupted, we would have to arrange alternative distributors and our operations and cost structure could be adversely affected in the short term. We may be unable to fully recover costs, and such increases could negatively impact profitability on contracts that do not contain such inflation protections.
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.
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. 24 Table of Contents 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.
If the debt under the ABL Facility, the 39 Table of Contents 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.
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.
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.
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.
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. 37 Table of Contents 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.
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.
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.
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.
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.
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. Construction risks exist which may adversely affect our results of operations.
If new debt, including future additional secured obligations, is added to our and our subsidiaries’ existing debt levels, the related risks that we now face would increase. 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.
Risks Related to Our Indebtedness 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.
Investors should carefully consider the risks associated with the loss of our largest customer and the potential impact on our business, financial condition, and results of operations.
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.
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.
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.
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.
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 impose on it.
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.
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.
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 with the U.S. government, U.S. government agencies, to provide occupants for facilities we operate.
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 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.
Growth, and Development 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.
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.
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.
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 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.
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.
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.
The False Claims Act’s “whistleblower” provisions allow private individuals, including present and former employees, to sue on behalf of the U.S. government.
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 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.
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. 40 Table of Contents As part of our capital allocation strategy, since November 2022, the Company’s Board of Directors has authorized several share repurchase programs.
As part of our capital allocation strategy, since November 2022, the Company’s Board of Directors has authorized several share repurchase programs.
We may be unable to fully recover costs, and such increases could negatively impact profitability on contracts that do not contain such inflation protections. 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 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.
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.
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, for example data center development cycles may fluctuate based on cooling-infrastructure availability, supply-chain delays in electrical components, and shifts in cloud and AI 29 Table of Contents infrastructure investment, resulting in variability in occupancy levels at our communities.
For example, reduced 36 Table of Contents 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.
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.
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.
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.
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.
We are dependent upon our customers and, with respect to our subcontract with the U.S. government, U.S. government 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.
The impact on employee morale and retention could adversely affect our business performance and financial results.
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.
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.
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.
For the year ended December 31, 2024, our largest customer accounted for approximately 48% of our total revenue, and our five largest customers accounted for approximately 74% of our total revenue.
The loss of any of our largest customers in any of our business segments could adversely affect our results of operations. For the year ended December 31, 2025, the Company had three customers who accounted for 28%, 11% and 11% of total revenue, respectively, and our five largest customers accounted for approximately 63% of our total revenue.
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.
As of December 31, 2025, the stock repurchase program had a remaining capacity of approximately $66.6 million.
Such charges may negatively affect our results of operations and financial condition as well as our borrowing base. Our business is contract intensive.
Such charges may negatively affect our results of operations and financial condition as well as our borrowing base. 26 Table of Contents 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.
Any such failure could harm our business, results of operations and financial condition.
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 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.
Any reduction in availability under the ABL Facility due to a decrease in the borrowing base 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.
Economic disruptions affecting key counterparties could also have a material adverse effect on our business.
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.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe internal business owners of cloud-based applications are required to perform and document user access reviews at least quarterly. 42 Table of Contents 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.
Biggest changeRisks 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. To date, we have, from time to time, experienced attempted threats to our data and systems.
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.
The Company maintains a formal information security training program for all employees that includes annual training on matters such as phishing and email security best practices. Employees are also required to complete annual compulsory training on data privacy. Security training is specialized based on employee roles.
These tests and assessments are useful tools for maintaining a robust cybersecurity program to protect our investors, customers, employees, vendors and intellectual property. Additionally, we perform and document user and administrative access reviews of all domains, networks, applications, and systems at least quarterly. We view cybersecurity as a shared responsibility.
These tests and assessments are useful tools for maintaining a robust cybersecurity program to protect our investors, customers, employees, vendors and 41 Table of Contents intellectual property. Additionally, we perform and document user and administrative access reviews of all domains, networks, applications, and systems at least quarterly. We view cybersecurity as a shared responsibility.
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.
In addition, the Audit Committee periodically evaluates our cybersecurity strategy to ensure its effectiveness and, if appropriate, includes a review from third-party experts. 42 Table of Contents Cybersecurity Risk Management & Oversight Committee’s Role Managing Risk The Cybersecurity Committee continuously updates its approach on cybersecurity to safeguard the Company’s sensitive information and assets based on assessments mentioned above.
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.
The Cybersecurity 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 Committee work together to inform the Audit Committee of the Company’s Board of Directors (the “Audit Committee”) on cybersecurity risks at least quarterly.
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. ​ 43 Table of Contents
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. ​ ​ 43 Table of Contents
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 applicable, and proof of cybersecurity insurance, if necessary. This documentation is compiled and assessed by the Cybersecurity Risk Management & Oversight Committee and documented in a workflow approval process.
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 (as appropriate), and evidence of cybersecurity insurance (as applicable). This documentation is compiled and assessed by the Cybersecurity Committee and documented in a workflow approval process.
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 the appropriate experience, education, and industry standard cybersecurity certifications.
Personnel The Cybersecurity Committee is responsible for assessing and managing cybersecurity risk, which includes prevention, mitigation, detection, and remediation of cybersecurity incidents. The Cybersecurity Committee members collectively have relevant expertise in cybersecurity through appropriate experience, education, and in certain cases, industry-recognized certifications.
The program is supported by an organizational structure that reflects support from across the business. While processes and technologies are in place to minimize the chance of a successful cyber-attack, the Company has established incident response procedures to address a cybersecurity threat should one occur.
The program is supported by an organizational structure that reflects support from across the business. While processes and technologies are in place to reduce the likelihood and potential impact of cybersecurity incidents, the Company has established incident response procedures to address a cybersecurity threat should one occur.
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. 41 Table of Contents The Company has integrated cybersecurity into its broader internal controls framework.
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.
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.
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.
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.
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.
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”).
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”).
These experts include independent cybersecurity assessors, consultants, and our internal audit team to evaluate and stress-test the Company’s networks, policies, cybersecurity technologies and preventative measures. The Company also engages an independent managed detection and response provider as an extension of the Company’s cybersecurity team .
These experts include independent cybersecurity assessors, consultants, and our internal audit team who 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.
Existing vendors are evaluated bi-annually, and any updates to their cyber posture are documented in the same fashion.
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.
Removed
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.
Added
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.
Removed
As 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 to time, experienced attempted threats to our data and systems.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeFor 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 ​ ​ ​ ​ ​ 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 is shared between the HFS – South and Government segments.
Biggest changeFor 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 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 was shared between the HFS – South and Government segments until the PCC Contract terminated. 44 Table of Contents (2) STFRC Contract terminated on August 9, 2024.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 and Note 8 – Debt to the notes to 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.
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).
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.
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. 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.
(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. ​ ​ ​ 44 Table of Contents
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 PCC Contract (as previously defined) associated with these locations terminated on February 21, 2025. ​ ​ ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSpecifically, 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 and Government segments; ● effective management of our communities; ● 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; ● changes in end-user demand requirements that could lead to cancellation of contracts for convenience in the Government segment; ● our reliance on third party manufacturers and suppliers; ● failure to retain key personnel; ● increases in raw material and labor 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; ● unanticipated changes in our tax obligations; ● our obligations under various laws and regulations; ● the effect of litigation, judgments, orders, regulatory or customer bankruptcy proceedings on our business; ● our ability to successfully acquire and integrate new operations; ● global or local economic and political movements, including any changes in policy under the Trump administration or any future administration; ● 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 failure of our management information systems; ● our ability to refinance debt on favorable terms and meet our debt service requirements and obligations; and ● risks related to Arrow Bidco’s debt obligations; 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, and involve a number of judgments, risks and uncertainties.
Biggest changeSpecifically, 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; ● our ability to execute, 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 that may result in delays, non-renewals, or cancellations of contracts, including the contract that is terminable for convenience in the Government segment; ● our reliance on third party manufacturers, suppliers, and service providers; ● our ability to attract and retain key personnel and maintain workforce availability for specialized hospitality and construction operations; ● increases in raw material, food, labor, or other operating costs; ● the effect of impairment charges on our operating results; ● our future operating results fluctuating, failing to match performance or to meet expectations; ● our exposure to various possible claims and the potential inadequacy of our insurance coverage; ● unanticipated changes in our tax obligations; ● our obligations under various laws and regulations, including those applicable to government contracts; ● the effect of litigation, judgments, orders, regulatory or customer bankruptcy proceedings on our business; ● our ability to successfully acquire and integrate new operations; ● global, national, or local economic and political developments, including any changes in policy under the current or any future U.S. presidential administrations; ● federal government budgeting and appropriations; ● our ability to manage credit risk and collect on our accounts receivable; ● our ability to fulfill our public company obligations; ● cybersecurity threats, incidents, or failures of our management information systems; and ● risks related to our liquidity, access to capital markets, and obligations under existing or future debt agreements, including compliance with financial covenants . 49 Table of 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.
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”).
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 in a private placement concurrently with its initial public offering (the Private Warrants and, together with the Public Warrants, the “Warrants”).
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.
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.
For additional information on the awards outstanding under the Plan, see Note 17 in the audited consolidated financial statements included in Part II, Item 8 within this Annual Report on Form 10-K. ​ ​ 49 Table of Contents 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.
For additional information on the awards outstanding under the Plan, see Note 16 in the audited consolidated financial statements included in Part II, Item 8 within this Annual Report on Form 10-K. ​ ​ 48 Table of Contents 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.
Holders As of December 31, 2024, 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 of record by banks, brokers and other financial institutions.
Holders As of December 31, 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 on record by banks, brokers and other financial institutions.
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 47 Table of Contents no expiration date, may be increased, suspended, or terminated at any time.
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 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.
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.
These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for the post-combination business.
These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for the business.
The graph below compares the cumulative total return of our Common Stock from December 31, 2019, through December 31, 2024, with the comparable cumulative return of two indices, the Russell Broadbased Total Returns and the Nasdaq US Benchmark TR Index.
The graph below compares the cumulative total return of our Common Stock from December 31, 2020, through December 31, 2025, with the comparable cumulative return of two indices, the Russell Broadbased Total Returns and the Nasdaq US Benchmark TR Index.
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.
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. 47 Table of Contents 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.
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. 46 Table of Contents 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.
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.
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. 48 Table of Contents 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) ​ 2,748,593 ​ $ 7.38 ​ ​ 953,569 Equity compensation plans not approved by security holders ​ — ​ ​ — ​ ​ — Total ​ 2,748,593 ​ $ 7.38 ​ ​ 953,569 (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, as shares associated with grants that were withheld for tax liabilities and forfeited and expired grants are available for reissuance under the Plan.
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) ​ 4,905,707 ​ $ 7.52 ​ ​ 2,645,618 Equity compensation plans not approved by security holders ​ — ​ ​ — ​ ​ — Total ​ 4,905,707 ​ $ 7.52 ​ ​ 2,645,618 (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, 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 Warrants expired at 5:00 pm New York City time on March 15, 2024. As of December 31, 2024, 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 Warrants expired at 5:00 pm New York City time on March 15, 2024. As of December 31, 2025, there were no Warrants outstanding. The Private Warrants expired unexercised on March 15, 2024 and are no longer outstanding.
The amounts and values in Column (a) comprise 985,077 equity-based RSUs at a weighted average grant price of $7.60, 1,401,407 equity-based PSUs (assumed at a payout of 100% of Target) at a weighted average grant price of $6.02, and 362,109 stock options at a weighted average exercise price of $7.38.
The amounts and values in Column (a) comprise 1,290,634 equity-based RSUs at a weighted average grant price of $6.80, 3,269,846 equity-based PSUs (assumed at a payout of 100% of Target) at a weighted average grant price of $2.64, and 345,227 stock options at a weighted average exercise price of $7.52.
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).
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.
The share price performance shown on the graph is not necessarily indicative of future price performance. 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.
The share price performance shown on the graph is not necessarily indicative of future price performance. 46 Table of Contents Unregistered Sales of Equity Securities and Use of Proceeds None.
Removed
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.
Added
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).
Removed
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.
Added
As of December 31, 2025, the stock repurchase program had a remaining capacity of approximately $66.6 million. ​ 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.
Removed
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.
Added
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.
Removed
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”).
Removed
Pursuant to the terms of the Warrant Exchange, the Company issued 2,996,201 shares of Common Stock.
Removed
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.
Removed
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.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeOther Information 122 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 122 ​ ​ PART III ​ Item 10. Directors, Executives, Officers and Corporate Governance 123 Item 11. Executive Compensation 123 Item 12. Security Ownership of Certain Beneficial Owners and Management Related Shareholder Matters 123 Item 13. Certain Relationships and Related Transactions, and Director Independence 123 Item 14.
Biggest changeOther Information 124 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 124 ​ ​ PART III ​ Item 10. Directors, Executives, Officers and Corporate Governance 125 Item 11. Executive Compensation 125 Item 12. Security Ownership of Certain Beneficial Owners and Management Related Shareholder Matters 125 Item 13. Certain Relationships and Related Transactions, and Director Independence 125 Item 14.
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 67 Item 8. Financial Statements and Supplementary Data 71 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 119 Item 9A. Controls and Procedures 119 Item 9B.
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 72 Item 8. Financial Statements and Supplementary Data 76 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 121 Item 9A. Controls and Procedures 121 Item 9B.
Principal Accounting Fees and Services 123 ​ ​ PART IV ​ Item 15. Exhibits and Financial Statement Schedules 124 SIGNATURES 130 ​ ​ ​ Table of Contents Part I
Principal Accounting Fees and Services 125 ​ ​ PART IV ​ Item 15. Exhibits and Financial Statement Schedules 126 SIGNATURES 130 ​ ​ ​ Table of Contents Part I

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSegment Results The following table sets forth our selected results of operations for each of our reportable segments for the years ended December 31, 2024, 2023 and 2022 ($ 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 ​ 2023 ​ 2022 ​ ​ 2024 vs. 2023 ​ 2024 vs. 2023 ​ ​ 2023 vs. 2022 ​ 2023 vs. 2022 Government $ 224,650 ​ $ 403,724 ​ $ 360,294 ​ $ (179,074) ​ (44)% ​ $ 43,430 ​ 12% HFS - South ​ 149,931 ​ ​ 148,677 ​ ​ 132,373 ​ ​ 1,254 ​ 1% ​ ​ 16,304 ​ 12% All Other ​ 11,691 ​ ​ 11,207 ​ ​ 9,318 ​ ​ 484 ​ 4% ​ ​ 1,889 ​ 20% Total revenues $ 386,272 ​ $ 563,608 ​ $ 501,985 ​ $ (177,336) ​ (31)% ​ $ 61,623 ​ 12% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Gross Profit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government $ 185,268 ​ $ 332,480 ​ $ 246,598 ​ $ (147,212) ​ (44)% ​ $ 85,882 ​ 35% HFS - South ​ 50,822 ​ ​ 51,444 ​ ​ 54,558 ​ ​ (622) ​ (1)% ​ ​ (3,114) ​ (6)% All Other ​ (747) ​ ​ (1,974) ​ ​ (1,195) ​ ​ 1,227 ​ (62)% ​ ​ (779) ​ 65% Total Adjusted Gross Profit $ 235,343 ​ $ 381,950 ​ $ 299,961 ​ $ (146,607) ​ (38)% ​ $ 81,989 ​ 27% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Daily Rate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ HFS - South $ 73.57 ​ $ 75.22 ​ $ 73.39 ​ $ (1.65) ​ ​ ​ $ 1.83 ​ ​ ​ Note: Adjusted gross profit for the chief operating decision maker’s (“CODM”) analysis includes the services and rental costs recognized in the financial statements and excludes depreciation on specialty rental assets, certain severance costs, and loss on impairment.
Biggest changeThe change in income tax expense (benefit) is primarily attributable to a decrease in income before income tax for the year ended December 31, 2025 led by a decrease in revenue and by cost increases previously mentioned. ​ 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 From 10-K for the year ended December 31, 2024 filed with the SEC on March 26, 2025, which is incorporated herein by reference. ​ 61 Table of Contents 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, 2025, 2024 and 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: 2025 ​ 2024 ​ 2023 ​ ​ 2025 vs. 2024 ​ 2025 vs. 2024 ​ ​ 2024 vs. 2023 ​ 2024 vs. 2023 HFS - South $ 141,694 ​ $ 149,931 ​ $ 148,677 ​ $ (8,237) ​ (5)% ​ $ 1,254 ​ 1% WHS ​ 96,800 ​ ​ - ​ ​ - ​ ​ 96,800 ​ 100% ​ ​ - ​ 100% Government ​ 70,794 ​ ​ 224,650 ​ ​ 403,724 ​ ​ (153,856) ​ (68)% ​ ​ (179,074) ​ (44)% 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ HFS - South $ 40,428 ​ $ 50,822 ​ $ 51,444 ​ $ (10,394) ​ (20)% ​ $ (622) ​ (1)% WHS ​ 20,597 ​ ​ - ​ ​ - ​ ​ 20,597 ​ 100% ​ ​ - ​ 100% Government ​ 38,560 ​ ​ 185,268 ​ ​ 332,480 ​ ​ (146,708) ​ (79)% ​ ​ (147,212) ​ (44)% 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 $ 70.23 ​ $ 73.57 ​ $ 75.22 ​ $ (3.34) ​ ​ ​ $ (1.65) ​ ​ ​ 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.
In addition, to derive Adjusted EBITDA, we exclude gains or losses on the sale and disposal of depreciable assets and impairment losses because including them in EBITDA is inconsistent with reporting the ongoing performance of our remaining assets.
In addition, to derive Adjusted EBITDA, we exclude gains or losses on the sale 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 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.
Additionally, the gain or loss on sale 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.
Adjusted Gross Profit We analyze our adjusted gross profit, which is a Non-GAAP measure, which we define as revenues less services 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.
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.
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, overall workforce community management, concierge services and laundry service.
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.
ABL Facility On March 15, 2019, as amended on February 1, 2023, August 10, 2023, and October 12, 2023, 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.
ABL Facility On March 15, 2019, as amended on February 1, 2023, August 10, 2023, 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.
The following section is a summary of certain aspects of those accounting policies involving estimates or assumptions that (1) 63 Table of Contents 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.
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.
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 are not measurements of Target Hospitality’s financial performance under GAAP and should not be considered as alternatives to Gross profit, Net income 69 Table of Contents (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.
Refer to Notes 1, 8, and 13 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.
Refer to Notes 1, 7, and 12 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.
Specialty rental income consists primarily of revenues from leasing rooms and other facilities at certain communities that include contractual arrangements with customers that are considered leases under the authoritative accounting guidance 56 Table of Contents for leases.
Specialty rental income consists primarily of revenues from leasing rooms and other facilities at certain communities that include contractual arrangements with customers that are considered leases under the authoritative accounting guidance for leases.
We will continue to evaluate alternatives to optimize our capital structure, which could include the issuance or repurchase of additional unsecured and secured debt, equity securities and/or equity-linked securities. There can be no assurance as to the timing of any such issuance or repurchase.
We will continue to evaluate alternatives to optimize our capital structure, which may include the issuance of additional unsecured or secured debt, equity securities and/or equity-linked securities. There can be no assurance as to the timing or availability of any such issuance.
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 with U.S. government contractor clients.
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 contract with a U.S. government contractor client.
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. 57 Table of Contents Other expense, net. Other expense (income), net was ($0.5) million for the year ended December 31, 2024 as compared to $1.2 million for the year ended December 31, 2023.
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. 60 Table of Contents Other expense (income), net. Other expense (income), net was $2.7 million for the year ended December 31, 2025 as compared to ($0.5) million for the year ended December 31, 2024.
During the year ended December 31, 2022, $70 million was drawn and $70 million was repaid on the ABL Facility. During the years ended December 31, 2024 and 2023, respectively no amounts were drawn or repaid on the ABL Facility resulting in an outstanding balance of $0 as of December 31, 2024 and 2023, respectively.
During the years ended December 31, 2024 and 2023, respectively no amounts were drawn or repaid on the ABL Facility resulting in an outstanding balance of $0 as of December 31, 2024 and 2023, respectively.
We currently believe that our cash on hand, along 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, lease obligations, contingent liabilities and working capital investments for at least the next 12 months.
We currently believe that our cash on hand, together with these sources of funds, will provide sufficient liquidity to support our growth 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.
The Company’s finance lease and other financing obligations as of December 31, 2023, consisted of approximately $2.4 million of finance leases related to commercial-use vehicles with the same terms as described above.
The Company’s finance lease and other financing obligations as of December 31, 2024, consisted of approximately $3.3 million of finance leases related to commercial-use vehicles with the same terms as described above.
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 0.4% to 5.4% of annual revenue between 2020 and 2024, with an average cost of approximately 2.9% of annual revenue.
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.
Depreciation of specialty rental assets was $57.2 million for the year ended December 31, 2024 as compared to $68.6 million for the year ended December 31, 2023.
Depreciation of specialty rental assets was $57.2 million for the year ended December 31, 2025 as compared to $57.2 million for the year ended December 31, 2024.
Interest expense, net was $16.6 million for the year ended December 31, 2024 as compared to interest expense, net of $22.6 million for the year ended December 31, 2023.
Interest expense, net was $6.1 million for the year ended December 31, 2025 as compared to interest expense, net of $16.6 million for the year ended December 31, 2024.
As of December 31, 2024, our network included 26 communities to better serve our customers across the US and Canada.
As of December 31, 2025, our network included 29 communities to better serve our customers across the US and Canada.
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 and 2022, please read the “Comparison of Years Ended December 31, 2023 and 2022” section located in the Management Discussion & Analysis section in the 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.
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.
Other depreciation and amortization. Other depreciation and amortization expense was $15.6 million for the year ended December 31, 2024 as compared to $15.4 million for the year ended December 31, 2023.
Other 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.
Net cash used in investing activities was $28.8 million for the year ended December 31, 2024 compared to $68.2 million for the year ended December 31, 2023.
Net cash used in investing activities was $67.8 million for the year ended December 31, 2025 compared to $28.8 million for the year ended December 31, 2024.
Public Policy We have derived, and in the future may derive, a significant portion of our revenues from our subcontracts with U.S. government contractors. The U.S. government and, by extension, our U.S. government contractor customers, may from time to time adopt, implement or modify certain policies or directives that may adversely affect our business.
Public Policy We have derived a portion of our revenues from our subcontract with a U.S. government contractor. The U.S. government and, by extension, our U.S. government contractor customer, may from time to time adopt, implement or modify certain policies or directives that may adversely affect our business.
Income tax expense was $21.4 million for the year ended December 31, 2024 as compared to $51.1 million for the year ended December 31, 2023.
Income tax expense (benefit) was ($6.1) million for the year ended December 31, 2025 as compared to $21.4 million for the year ended December 31, 2024.
We continue to review 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 continue to review available growth opportunities with the awareness that pursuing such opportunities may require us to incur additional indebtedness or issue shares of our Common Stock or other equity securities as part of an overall financing plan.
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.
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.
Liquidity and Capital Resources We depend on cash flow from operations, cash on hand and borrowings under our ABL Facility to finance our acquisition strategy, working capital needs, principal debt payments, debt service requirements, and capital expenditures. As of December 31, 2024, the ABL Facility had unused available borrowing capacity of $175 million.
Liquidity and Capital Resources We depend on cash flow from operations, cash on hand and borrowings under our ABL Facility to finance our growth and diversification strategy, working capital needs, and capital expenditures. As of December 31, 2025, the ABL Facility had unused available borrowing capacity of $175 million.
The following table sets forth general information derived from our audited consolidated statements of cash flows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ($ in thousands) ​ December 31, ​ 2024 2023 ​ 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash provided by operating activities ​ $ 151,675 ​ $ 156,801 ​ $ 305,612 Net cash used in investing activities ​ (28,842) ​ (68,180) ​ ​ (140,228) Net cash used in financing activities ​ (36,064) ​ (166,369) ​ ​ (7,098) Effect of exchange rate changes on cash and cash equivalents ​ ​ (30) ​ ​ 4 ​ ​ (19) Net increase (decrease) in cash and cash equivalents ​ $ 86,739 ​ $ (77,744) ​ $ 158,267 ​ Comparison of Years Ended December 31, 2024 and 2023 ​ Cash flows provided by operating activities .
The following table sets forth general information derived from our audited consolidated statements of cash flows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ($ in thousands) ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash provided by operating activities ​ $ 74,092 ​ $ 151,675 ​ $ 156,801 Net cash used in investing activities ​ (67,790) ​ (28,842) ​ ​ (68,180) Net cash used in financing activities ​ (188,641) ​ (36,064) ​ ​ (166,369) Effect of exchange rate changes on cash and cash equivalents ​ ​ 19 ​ ​ (30) ​ ​ 4 Net increase (decrease) in cash and cash equivalents ​ $ (182,320) ​ $ 86,739 ​ $ (77,744) ​ Comparison of Years Ended December 31, 2025 and 2024 ​ Cash flows provided by operating activities .
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.
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.
Net cash provided by operating activities was $151.7 million for the year ended December 31, 2024 compared to $156.8 million for the year ended December 31, 2023.
Net cash provided by operating activities was $74.1 million for the year ended December 31, 2025 compared to $151.7 million for the year ended December 31, 2024.
Specialty rental costs. Specialty rental costs were approximately $18.8 million for the year ended December 31, 2024 as compared to $30.1 million for the year ended December 31, 2023.
Specialty rental costs were approximately $11.4 million for the year ended December 31, 2025 as compared to $18.8 million for the year ended December 31, 2024.
Selling, general and administrative. Selling, general and administrative was $54.3 million for the year ended December 31, 2024 as compared to $56.1 million for the year ended December 31, 2023.
Selling, general and administrative. Selling, general and administrative was $58.5 million for the year ended December 31, 2025 as compared to $54.3 million for the year ended December 31, 2024.
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.
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.
Significant delays in our ability to finance planned acquisitions or capital expenditures may materially and adversely affect our future revenue prospects.
Significant delays in our ability to 63 Table of Contents finance planned growth initiatives or capital expenditures may materially and adversely affect our future revenue prospects.
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.
Cash 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.
Key drivers to change in revenues may include average utilization of existing beds, levels of development activity in the HFS – South segment, the consumer price index impacting government contracts, and government spending on housing programs.
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.
(2) Represents interest on operating lease obligations calculated using the appropriate discount rate for each lease as noted in Note 13 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”).
(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”).
The STFRC Contract was based on a fixed minimum lease revenue amount and for the year ended December 31, 2023, contributed approximately $55.9 million in total consolidated revenue compared to approximately $38.3 million of revenue for the year ended December 31, 2024, all of which is related to the Company’s Government 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.
Total revenue was $386.3 million for the year ended December 31, 2024 as compared to $563.6 million for the year ended December 31, 2023, and consisted of $265.9 million of services income and $120.4 million of specialty rental income.
Total revenue for the year ended December 31, 2024 consisted of $265.9 million of services income and $120.4 million of specialty rental income.
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.
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.
Refer to Note 8 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.
Refer to Note 7 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.
Additionally, this segment includes the facilities and operations of the DIPC provided under the STFRC Contract, which was terminated effective August 9, 2024, but was reactivated under the DIPC Contract effective March 5, 2025. 54 Table of Contents 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.
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.
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 and 2023 ​ 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.
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, 2025 and 2024 ​ Hospitality & Facilities Services - South Revenue for the HFS – South segment was $141.7 million for the year ended December 31, 2025, as compared to $149.9 million for the year ended December 31, 2024. ​ Adjusted gross profit for the HFS – South segment was $40.4 million for the year ended December 31, 2025, as compared to $50.8 million for the year ended December 31, 2024.
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.
We also use Non-GAAP measures such as EBITDA, Adjusted EBITDA, and Discretionary cash flows to evaluate the operating performance of our business.
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 Trump administration may take with respect to government contracts that were previously executed.
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.
These assets associated with the STFRC Contract were reactivated on March 5, 2025 pursuant to the DIPC Contract.
The assets associated with the STFRC Contract were reactivated under the DIPC Contract effective March 5, 2025.
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. The failure to achieve anticipated revenue and cash flows from operations could result in a reduction in future capital spending.
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.
Indebtedness The Company’s finance lease and other financing obligations as of December 31, 2024 consisted of $3.3 million of finance leases. The finance leases pertain to leases entered into during 2022 through December 31, 2024, for commercial-use vehicles with 48 to 36-month terms (and continue on a month-to-month basis thereafter) expiring through 2028.
The finance leases pertain to leases entered into during 2022 through December 31, 2025, for commercial-use vehicles with 36-month terms (and continue on a month-to-month basis thereafter) expiring through 2028.
Government The Government segment includes facilities and operations provided under 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.
Additionally, this segment includes the facilities and operations previously provided under a lease and services agreement known as the 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, the PCC Contract was terminated effective February 21, 2025.
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.
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. 55 Table of Contents Overview of Our Revenue and Operations We derive the majority of our revenue from specialty rental accommodations and vertically integrated hospitality services.
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.
For the year ended December 31, 2023, the revenue generated from the PCC Contract included approximately $118.2 million of revenue amortization from nonrecurring infrastructure enhancement revenue generated from an advance payment made during the year ended December 31, 2022 for the community build-out, and mobilization of asset activities related to the community expansion.
Target Hospitality’s management believe that Adjusted gross profit, EBITDA, Adjusted EBITDA, and Discretionary cash flows provide useful information to investors about Target Hospitality and its financial condition and results of operations for the following reasons: (i) they are among the measures used by Target Hospitality’s management team to evaluate its operating performance; (ii) they are among the measures used by Target Hospitality’s management team to make day-to-day operating decisions, (iii) they are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results across companies in Target Hospitality’s industry. 65 Table of Contents The following table presents a reconciliation of Target Hospitality’s consolidated gross profit to Adjusted gross profit: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ($ in thousands) ​ December 31, ​ ​ 2024 ​ 2023 2022 Gross Profit ​ $ 178,179 ​ $ 313,324 ​ $ 247,128 Depreciation of specialty rental assets ​ ​ 57,164 ​ ​ 68,626 ​ ​ 52,833 Adjusted gross profit ​ $ 235,343 ​ $ 381,950 ​ $ 299,961 ​ The following table presents a reconciliation of Target Hospitality’s consolidated net income to EBITDA and Adjusted EBITDA: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ($ in thousands) ​ December 31, ​ ​ 2024 ​ 2023 2022 Net income ​ $ 71,407 ​ $ 173,700 ​ $ 73,939 Income tax expense ​ ​ 21,430 ​ ​ 51,050 ​ ​ 32,370 Interest expense, net ​ ​ 16,619 ​ ​ 22,639 ​ ​ 36,323 Loss on extinguishment of debt ​ ​ - ​ ​ 2,279 ​ ​ - Other depreciation and amortization ​ ​ 15,642 ​ ​ 15,351 ​ ​ 14,832 Depreciation of specialty rental assets ​ ​ 57,164 ​ ​ 68,626 ​ ​ 52,833 EBITDA ​ ​ 182,262 ​ ​ 333,645 ​ ​ 210,297 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjustments ​ ​ ​ ​ ​ ​ ​ ​ ​ Other (income) expense, net ​ ​ (502) ​ ​ 1,241 ​ ​ 36 Transaction expenses ​ ​ 4,899 ​ ​ 4,875 ​ ​ 283 Stock-based compensation ​ ​ 7,306 ​ ​ 11,174 ​ ​ 19,121 Change in fair value of warrant liabilities ​ ​ (675) ​ ​ (9,062) ​ ​ 31,735 Other adjustments ​ ​ 3,427 ​ ​ 2,344 ​ ​ 3,242 Adjusted EBITDA ​ $ 196,717 ​ $ 344,217 ​ $ 264,714 ​ 66 Table of Contents 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 ​ 2023 2022 Net cash provided by operating activities ​ $ 151,675 ​ $ 156,801 ​ $ 305,612 Less: Maintenance capital expenditures for specialty rental assets ​ ​ (20,747) ​ ​ (14,218) ​ ​ (12,314) Discretionary cash flows ​ $ 130,928 ​ $ 142,583 ​ $ 293,298 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Purchase of specialty rental assets ​ ​ (29,557) ​ ​ (60,808) ​ ​ (120,287) Purchase of property, plant and equipment ​ ​ (687) ​ ​ (3,066) ​ ​ (20,556) Acquired intangible assets ​ ​ - ​ ​ (4,547) ​ ​ - Proceeds from sale of specialty rental assets and other property, plant and equipment ​ ​ 1,402 ​ ​ 241 ​ ​ 615 Net cash used in investing activities ​ $ (28,842) ​ $ (68,180) ​ $ (140,228) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Principal payments on finance and finance lease obligations ​ ​ (1,695) ​ ​ (1,404) ​ ​ (1,008) Principal payments on borrowings from ABL ​ ​ - ​ ​ - ​ ​ (70,000) Proceeds from borrowings on ABL ​ ​ - ​ ​ - ​ ​ 70,000 Repayment of Senior Notes ​ ​ - ​ ​ (153,054) ​ ​ (5,500) Payment of issuance costs from warrant exchange ​ ​ - ​ ​ (1,504) ​ ​ (774) Repurchase of Common Stock ​ ​ (33,496) ​ ​ - ​ ​ - Distributions paid to noncontrolling interest ​ ​ (65) ​ ​ - ​ ​ - Proceeds from issuance of Common Stock from exercise of warrants ​ ​ 3 ​ ​ 209 ​ ​ 80 Proceeds from issuance of Common Stock from exercise of stock options ​ ​ 1,850 ​ ​ 1,396 ​ ​ 225 Payment of deferred financing costs ​ ​ - ​ ​ (5,194) ​ ​ - Taxes paid related to net share settlement of equity awards ​ ​ (2,661) ​ ​ (6,818) ​ ​ (121) Net cash used in financing activities ​ $ (36,064) ​ $ (166,369) ​ $ (7,098) ​ ​
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, ​ ​ 2025 ​ 2024 ​ ​ ​ 2023 Gross Profit ​ $ 42,659 ​ $ 178,179 ​ $ 313,324 Depreciation of specialty rental assets ​ ​ 57,182 ​ ​ 57,164 ​ ​ 68,626 Adjusted gross profit ​ $ 99,841 ​ $ 235,343 ​ $ 381,950 ​ 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, ​ ​ 2025 ​ 2024 ​ ​ ​ 2023 Net income (loss) ​ $ (37,077) ​ $ 71,407 ​ $ 173,700 Income tax expense (benefit) ​ ​ (6,126) ​ ​ 21,430 ​ ​ 51,050 Interest expense, net ​ ​ 6,086 ​ ​ 16,619 ​ ​ 22,639 Loss on extinguishment of debt ​ ​ 2,370 ​ ​ — ​ ​ 2,279 Other depreciation and amortization ​ ​ 16,204 ​ ​ 15,642 ​ ​ 15,351 Depreciation of specialty rental assets ​ ​ 57,182 ​ ​ 57,164 ​ ​ 68,626 EBITDA ​ ​ 38,639 ​ ​ 182,262 ​ ​ 333,645 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjustments ​ ​ ​ ​ ​ ​ ​ ​ ​ Other expense (income), net ​ ​ 2,694 ​ ​ (502) ​ ​ 1,241 Transaction expenses ​ ​ 3,781 ​ ​ 4,899 ​ ​ 4,875 Stock-based compensation ​ ​ 7,552 ​ ​ 7,306 ​ ​ 11,174 Change in fair value of warrant liabilities ​ ​ — ​ ​ (675) ​ ​ (9,062) Other adjustments ​ ​ 500 ​ ​ 3,427 ​ ​ 2,344 Adjusted EBITDA ​ $ 53,166 ​ $ 196,717 ​ $ 344,217 ​ 70 Table of Contents 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, ​ ​ 2025 ​ 2024 ​ ​ ​ 2023 Net cash provided by operating activities ​ $ 74,092 ​ $ 151,675 ​ $ 156,801 Less: Maintenance capital expenditures for specialty rental assets ​ ​ (8,115) ​ ​ (20,747) ​ ​ (14,218) Discretionary cash flows ​ $ 65,977 ​ $ 130,928 ​ $ 142,583 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Purchase of specialty rental assets ​ ​ (67,039) ​ ​ (29,557) ​ ​ (60,808) Purchase of property, plant and equipment ​ ​ (751) ​ ​ (687) ​ ​ (3,066) Acquired intangible assets ​ ​ — ​ ​ — ​ ​ (4,547) Proceeds from sale of specialty rental assets and other property, plant and equipment ​ ​ — ​ ​ 1,402 ​ ​ 241 Net cash used in investing activities ​ $ (67,790) ​ $ (28,842) ​ $ (68,180) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Principal payments on finance and finance lease obligations ​ ​ (2,344) ​ ​ (1,695) ​ ​ (1,404) Principal payments on borrowings from ABL Facility ​ ​ (75,000) ​ ​ — ​ ​ — Proceeds from borrowings on ABL Facility ​ ​ 75,000 ​ ​ — ​ ​ — Repayment of Senior Notes ​ ​ (181,446) ​ ​ — ​ ​ (153,054) Payment of issuance costs from warrant exchange ​ ​ — ​ ​ — ​ ​ (1,504) Repurchase of Common Stock ​ ​ — ​ ​ (33,496) ​ ​ — Distributions paid to noncontrolling interest ​ ​ (260) ​ ​ (65) ​ ​ — Proceeds from issuance of Common Stock from exercise of warrants ​ ​ — ​ ​ 3 ​ ​ 209 Proceeds from issuance of Common Stock from exercise of stock options ​ ​ — ​ ​ 1,850 ​ ​ 1,396 Payment of deferred financing costs ​ ​ (535) ​ ​ — ​ ​ (5,194) Taxes paid related to net share settlement of equity awards ​ ​ (2,242) ​ ​ (2,661) ​ ​ (6,818) Payment of debt extinguishment premium costs ​ ​ (1,814) ​ ​ — ​ ​ — Net cash used in financing activities ​ $ (188,641) ​ $ (36,064) ​ $ (166,369) ​ ​ 71 Table of Contents
The change in fair value of the warrant liabilities was ($0.7) million for the year ended December 31, 2024 as compared to ($9.1) million for the year ended December 31, 2023. 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 change in fair value of the warrant liabilities was $0 for the year ended December 31, 2025 as compared to ($0.7) million for the year ended December 31, 2024.
Adjusted EBITDA reflects the following further adjustments to EBITDA to exclude certain non-cash items and the effect of what management considers transactions or events not related to its core business operations: ● Other (income) expense, net: Other (income) expense, net includes miscellaneous cash receipts, gains and losses on disposals of property, plant, and equipment, and other immaterial expenses and non-cash items. ● Transaction expenses: Target Hospitality incurred certain transaction costs during 2022, 2023 and 2024, including immaterial items during 2022.
Target Hospitality defines EBITDA as net income (loss) before interest expense and loss on extinguishment of debt, income tax expense (benefit), depreciation of specialty rental assets, and other depreciation and amortization. 68 Table of Contents Adjusted EBITDA reflects the following further adjustments to EBITDA to exclude certain non-cash items and the effect of what management considers transactions or events not related to its core business operations: ● Other expense (income), net: Other expense (income), net includes miscellaneous cash receipts, gains and losses on disposals of property, plant, and equipment and leased assets, community pre-opening costs, and other immaterial expenses and non-cash items. ● Transaction expenses: Target Hospitality incurred legal, advisory fees, and other costs associated with certain transactions during 2024, including costs related to the evaluation of the Arrow Proposal.
Consolidated Results of Operations for the years ended December 31, 2024, 2023 and 2022($ 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 ​ 2023 ​ 2022 ​ 2024 vs. 2023 ​ 2024 vs. 2023 2023 vs. 2022 ​ 2023 vs. 2022 Services income $ 265,912 ​ $ 365,627 ​ $ 333,702 ​ $ (99,715) ​ (27)% ​ $ 31,925 ​ 10% Specialty rental income ​ 120,360 ​ ​ 197,981 ​ ​ 168,283 ​ ​ (77,621) ​ (39)% ​ ​ 29,698 ​ 18% Total revenues ​ 386,272 ​ ​ 563,608 ​ ​ 501,985 ​ ​ (177,336) ​ (31)% ​ ​ 61,623 ​ 12% Costs: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Services ​ 132,142 ​ ​ 151,574 ​ ​ 174,200 ​ ​ (19,432) ​ (13)% ​ ​ (22,626) ​ (13)% Specialty rental ​ 18,787 ​ ​ 30,084 ​ ​ 27,824 ​ ​ (11,297) ​ (38)% ​ ​ 2,260 ​ 8% Depreciation of specialty rental assets ​ 57,164 ​ ​ 68,626 ​ ​ 52,833 ​ ​ (11,462) ​ (17)% ​ ​ 15,793 ​ 30% Gross profit ​ 178,179 ​ ​ 313,324 ​ ​ 247,128 ​ ​ (135,145) ​ (43)% ​ ​ 66,196 ​ 27% Selling, general and administrative ​ 54,258 ​ ​ 56,126 ​ ​ 57,893 ​ ​ (1,868) ​ (3)% ​ ​ (1,767) ​ (3)% Other depreciation and amortization ​ 15,642 ​ ​ 15,351 ​ ​ 14,832 ​ ​ 291 ​ 2% ​ ​ 519 ​ 3% Other (income) expense, net ​ (502) ​ ​ 1,241 ​ ​ 36 ​ ​ (1,743) ​ (140)% ​ ​ 1,205 ​ 3347% Operating income ​ 108,781 ​ ​ 240,606 ​ ​ 174,367 ​ ​ (131,825) ​ (55)% ​ ​ 66,239 ​ 38% Loss on extinguishment of debt ​ - ​ ​ 2,279 ​ ​ - ​ ​ (2,279) ​ (100)% ​ ​ 2,279 ​ (100)% Interest expense, net ​ 16,619 ​ ​ 22,639 ​ ​ 36,323 ​ ​ (6,020) ​ (27)% ​ ​ (13,684) ​ (38)% Change in fair value of warrant liabilities ​ (675) ​ ​ (9,062) ​ ​ 31,735 ​ ​ 8,387 ​ (93)% ​ ​ (40,797) ​ (129)% Income before income tax ​ 92,837 ​ ​ 224,750 ​ ​ 106,309 ​ ​ (131,913) ​ (59)% ​ ​ 118,441 ​ 111% Income tax expense ​ 21,430 ​ ​ 51,050 ​ ​ 32,370 ​ ​ (29,620) ​ (58)% ​ ​ 18,680 ​ 58% Net income $ 71,407 ​ $ 173,700 ​ $ 73,939 ​ $ (102,293) ​ (59)% ​ $ 99,761 ​ 135% Less: Net income attributable to the noncontrolling interest ​ 142 ​ ​ - ​ ​ - ​ ​ 142 ​ 100% ​ ​ - ​ 0% Net income attributable to Target Hospitality Corp. common stockholders $ 71,265 ​ $ 173,700 ​ $ 73,939 ​ $ (102,435) ​ (59)% ​ $ 99,761 ​ 135% ​ Comparison of Years Ended December 31, 2024 and 2023 ​ Total Revenue.
Consolidated Results of Operations for the years ended December 31, 2025, 2024 and 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: 2025 ​ 2024 ​ 2023 ​ 2025 vs. 2024 ​ 2025 vs. 2024 2024 vs. 2023 ​ 2024 vs. 2023 Services income $ 187,532 ​ $ 265,912 ​ $ 365,627 ​ $ (78,380) ​ (29)% ​ $ (99,715) ​ (27)% Specialty rental income ​ 45,807 ​ ​ 120,360 ​ ​ 197,981 ​ ​ (74,553) ​ (62)% ​ ​ (77,621) ​ (39)% 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 and construction costs ​ 209,348 ​ ​ 132,142 ​ ​ 151,574 ​ ​ 77,206 ​ 58% ​ ​ (19,432) ​ (13)% Specialty rental ​ 11,446 ​ ​ 18,787 ​ ​ 30,084 ​ ​ (7,341) ​ (39)% ​ ​ (11,297) ​ (38)% Depreciation of specialty rental assets ​ 57,182 ​ ​ 57,164 ​ ​ 68,626 ​ ​ 18 ​ 0% ​ ​ (11,462) ​ (17)% Gross profit ​ 42,659 ​ ​ 178,179 ​ ​ 313,324 ​ ​ (135,520) ​ (76)% ​ ​ (135,145) ​ (43)% Selling, general and administrative ​ 58,508 ​ ​ 54,258 ​ ​ 56,126 ​ ​ 4,250 ​ 8% ​ ​ (1,868) ​ (3)% Other depreciation and amortization ​ 16,204 ​ ​ 15,642 ​ ​ 15,351 ​ ​ 562 ​ 4% ​ ​ 291 ​ 2% Other (income) expense, net ​ 2,694 ​ ​ (502) ​ ​ 1,241 ​ ​ 3,196 ​ (637)% ​ ​ (1,743) ​ (140)% Operating income (loss) ​ (34,747) ​ ​ 108,781 ​ ​ 240,606 ​ ​ (143,528) ​ (132)% ​ ​ (131,825) ​ (55)% Loss on extinguishment of debt ​ 2,370 ​ ​ - ​ ​ 2,279 ​ ​ 2,370 ​ 100% ​ ​ (2,279) ​ (100)% Interest expense, net ​ 6,086 ​ ​ 16,619 ​ ​ 22,639 ​ ​ (10,533) ​ (63)% ​ ​ (6,020) ​ (27)% Change in fair value of warrant liabilities ​ - ​ ​ (675) ​ ​ (9,062) ​ ​ 675 ​ (100)% ​ ​ 8,387 ​ (93)% Income (loss) before income tax ​ (43,203) ​ ​ 92,837 ​ ​ 224,750 ​ ​ (136,040) ​ (147)% ​ ​ (131,913) ​ (59)% Income tax expense (benefit) ​ (6,126) ​ ​ 21,430 ​ ​ 51,050 ​ ​ (27,556) ​ (129)% ​ ​ (29,620) ​ (58)% Net income (loss) $ (37,077) ​ $ 71,407 ​ $ 173,700 ​ $ (108,484) ​ (152)% ​ $ (102,293) ​ (59)% Less: Net income attributable to the noncontrolling interest ​ 44 ​ ​ 142 ​ ​ - ​ ​ (98) ​ (69)% ​ ​ 142 ​ 100% 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, 2025 and 2024 ​ Total Revenue.
No such activity occurred in the current period. Refer to Note 8 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.
The increase in loss on extinguishment of debt is due to the redemption of the 2025 Senior Secured Notes on March 25, 2025. Refer to Note 7 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. Interest expense, net.
Segments We have identified two reportable business segments: HFS – South 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.
For a more in-depth discussion of the Non-GAAP measures, please refer to the "Non-GAAP Financial Measures" section. 56 Table of Contents Segments We have identified 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.
Cost of services. Cost of services was $132.1 million for the year ended December 31, 2024 as compared to $151.6 million for the year ended December 31, 2023.
Cost of services and construction. Cost of services and construction were $209.3 million for the year ended December 31, 2025 as compared to $132.1 million for the year ended December 31, 2024.
Approximately $1 million of this decrease was driven by a community in the All Other Category 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 Contract.
These cost increases were partially offset by a decrease in costs of approximately ($1.3) million in the All Other category of operating segments driven by a community that incurred lodge removal and transportation costs in the prior period that did not recur in the current period, and partially driven by approximately ($0.4) million in lower labor costs. Specialty rental costs.
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 9 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.
The change in the fair value of the warrant liabilities is the result of the Private Warrants expiring unexercised on March 15, 2024 as 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. Income tax expense (benefit).
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. We are continuing to pursue an expanding pipeline of government services growth opportunities, and we believe there is significant opportunity to continue to assist the federal government.
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.
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. 64 Table of Contents ● 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, business development, accounting standard implementation costs and certain severance costs.
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 non-cash amortization of capitalized system implementation costs, claim settlements, business development, accounting standard implementation costs and certain severance costs.
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. If our cash flows and capital resources are insufficient, we may be forced to reduce or delay additional acquisitions, future investments and capital expenditures, and seek additional capital.
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. Our ABL Facility is scheduled to terminate on February 1, 2028.
The decrease in specialty rental costs is primarily due to a decrease in costs from the Government segment driven by operational efficiencies and reduced leasing costs associated with certain leases terminated at the PCC Community and termination of the STFRC Contract in the Government segment. Depreciation of specialty rental assets.
The decrease in specialty rental costs is primarily due to a decrease in costs from the Government segment driven by the PCC Contract termination previously discussed, partially offset by an increase in the Government segment driven by the DIPC Contract. Depreciation of specialty rental assets.
The increase in revenue noted above also partially offset this decrease. ​ 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 and 2022, please read the “Comparison 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.
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 the 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. 65 Table of Contents Indebtedness The Company’s finance lease and other financing obligations as of December 31, 2025 consisted of $3.8 million of finance leases.
The New PCC Contract terminated effective February 21, 2025 as discussed in Note 20 of our audited consolidated financial statements located in Part II, Item 8 within this annual report on Form 10-K.
Refer to Note 7 of the notes to our audited consolidated financial statements in Part II, Item 8 within this Annual Report on Form 10-K. Change in fair value of warrant liabilities.
Loss on extinguishment of debt was $0 for the year ended December 31, 2024 as compared to $2.3 million for the year ended December 31, 2023.
This increase in other expense is primarily driven by community pre-opening costs in the WHS segment. Loss on extinguishment of debt. Loss on extinguishment of debt was $2.4 million for the year ended December 31, 2025 as compared to $0 for the year ended December 31, 2024.
Maintenance capital expenditures for specialty rental assets amounted to approximately $20.7 million, $14.2 million, and $12.3 million for the years ended December 31, 2024, 2023 and 2022, respectively. As we pursue growth, we monitor which capital resources, including equity and debt financings, are available to us to meet our future financial obligations, planned capital expenditure activities and liquidity requirements.
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.
The decrease in depreciation expense is primarily attributable to a decrease in depreciation on certain specialty rental assets and related leasehold improvements acquired or built in 2022 to support growth of the Government segment related to the Expanded Contract, which became fully depreciated during the year ended December 31, 2023, while approximately $3 million of this decrease was driven by a decrease in depreciation of specialty rental assets in the HFS-South segment for certain assets that became fully depreciated during 2024.
The slight increase in depreciation expense is primarily attributable to an increase in depreciation expense for specialty rental assets of approximately $5.0 million driven by growth in the WHS segment, largely offset by a decrease in depreciation expense associated with HFS-South and Government specialty rental assets for certain site work assets that became fully depreciated during 2024 .
Natural Disasters or Other Significant Disruption An operational disruption in any of our facilities could negatively impact our financial results.
We cannot predict what actions the current U.S. presidential administration may take with respect to the previously executed government contract. ​ Natural Disasters or Other Significant Disruption An operational disruption in any of our facilities could negatively impact our financial results.
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) maintenance capital expenditures for specialty rental assets, (iii) payments due under finance and operating leases, and (iv) debt service interest payments.
Refer to Note 7 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 2025 Senior Secured Notes. 66 Table of Contents 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, (iv) payments due under finance and operating leases, and (v) debt service interest payments associated with any future borrowings under the ABL Facility, if drawn.
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.
Senior Secured Notes As of December 31, 2025, none of the 2025 Senior Secured Notes remain outstanding as the remaining balance was paid off on March 25, 2025.
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 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”).
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 ​ 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.
Total revenue for the year ended December 31, 2023 consisted of $365.6 million of services income and $198.0 million of specialty rental income.
Total revenue was $320.6 million for the year ended December 31, 2025 as compared to $386.3 million for the year ended December 31, 2024, and consisted of $187.5 million of services income, $45.8 million of specialty rental income and $87.3 million of construction fee income.
As discussed in Note 20 of our audited consolidated financial statements located in Part II, Item 8 within this annual report on Form 10-K, the lease and services agreement with the NP Partner was terminated effective February 21, 2025.
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.
Demand for our services is dependent upon activity levels, particularly our customers’ capital spending on natural resource development activities. ​ 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.
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.
For additional discussion of risks related to our liquidity and capital resources, refer to the section titled “ Risk Factors ” in Part I Item 1A of this Annual Report on Form 10-K . 60 Table of Contents Capital Requirements During the year ended December 31, 2024, we incurred approximately $32.5 million in capital expenditures, which decreased by approximately $33.1 million compared to the year ended December 31, 2023 largely 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.
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.
These decreases were partially offset by an increase in severance of approximately $1.0 million for certain terminated employees during the year ended December 31, 2024, other compensation and benefits cost 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 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.
(“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.
Commodity prices are volatile and influenced by numerous factors beyond our control, including the domestic and global supply of and demand for natural resources, the commodities trading markets, as well as other supply and demand factors that may influence commodity prices. 52 Table of Contents 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.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+3 added−2 removed9 unchanged
Biggest changeThe 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 for Operating Leases ​ Description of the Matter As discussed in Note 13 to the consolidated financial statements, the Company’s operating lease right of use assets, net and operating lease liabilities as of December 31, 2024 totaled $24.9 million and $26 million, respectively. ​ As discussed in Note 1 to the consolidated financial statements, the Company used judgment to determine whether it is reasonably certain to exercise extension options when determining the term of the leases.
Biggest changeThe 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. ​ ​ ​ ​ ​ ​ ​ ​ Recognition of Revenue for Data Center Community Contract ​ Description of the Matter As described in Note 2 to the consolidated financial statements, during the three months ended September 30, 2025, the Company entered into a multi-year Data Center Community Contract to construct and provide facility services and hospitality solutions to the Data Center Community.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 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, 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 26, 2025 expressed an unqualified opinion thereon.
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, 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 11, 2026 expressed an unqualified opinion thereon.
(the Company) as of December 31, 2024 and 2023, the related consolidated statements of comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).
(the Company) as of December 31, 2025 and 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, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).
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, which had no outstanding balances as December 31, 2024.
If floating interest rates increased by 100 basis points, our consolidated interest expense would not be impacted, however, based on our floating-rate debt obligation, which had no outstanding balances as December 31, 2025.
We do not currently hedge our exposure to commodity prices. ​ ​ 67 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ​ TABLE OF CONTENTS Page ​ ​ ​ Report of Independent Registered Public Accounting Firm (PCAOB ID:42) ​ 69 ​ ​ ​ Consolidated Balance Sheets ​ 71 ​ ​ ​ Consolidated Statements of Comprehensive Income ​ 72 ​ ​ ​ Consolidated Statements of Changes in Stockholders’ Equity ​ 73 ​ ​ ​ Consolidated Statements of Cash Flows ​ 74 ​ ​ ​ Notes to the Consolidated Financial Statements ​ 75 ​ ​ ​ 68 Table of Contents Report of Independent Registered Public Accounting Firm ​ To the Stockholders and the Board of Directors of Target Hospitality Corp.
We do not currently hedge our exposure to commodity prices. ​ ​ ​ 72 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ​ TABLE OF CONTENTS ​ ​ ​ Page ​ ​ ​ Report of Independent Registered Public Accounting Firm (PCAOB ID:42) ​ 74 ​ ​ ​ Consolidated Balance Sheets ​ 76 ​ ​ ​ Consolidated Statements of Comprehensive Income (Loss) ​ 77 ​ ​ ​ Consolidated Statements of Changes in Stockholders’ Equity ​ 78 ​ ​ ​ Consolidated Statements of Cash Flows ​ 79 ​ ​ ​ Notes to the Consolidated Financial Statements ​ 80 ​ ​ ​ 73 Table of Contents Report of Independent Registered Public Accounting Firm ​ To the Stockholders and the Board of Directors of Target Hospitality Corp.
As of December 31, 2024, we had $0 of outstanding floating-rate obligations under our credit facilities. These floating-rate obligations expose us to the risk of increased interest expense in the event of increases in short-term interest rates.
As of December 31, 2025, we had $0 of outstanding floating-rate obligations under our ABL credit facility. This floating-rate obligation exposes us to the risk of increased interest expense in the event of increases in short-term interest rates.
Further, for a sample of operating leases, we compared terms in the contract to the terms used by management and recalculated the right of use assets and operating lease liabilities. ​ ​ /s/ Ernst & Young LLP We have served as the Company’s auditor since 2018. Houston, Texas March 26, 2025 70 Table of Contents
Additionally, we independently recalculated the allocation of consideration to the components of the contract and the revenue recognized during the year. ​ ​ /s/ Ernst & Young LLP We have served as the Company’s auditor since 2018. Houston, Texas March 11, 2026 75 Table of Contents
Removed
Auditing lease terms required a higher degree of auditor 69 Table of Contents judgment when evaluating evidence related to the determination of the reasonably certain lease end date. ​ How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls relating to management’s determination of the expected lease term and recording of the right of use assets and lease liabilities. ​ Our audit procedures included, among others, evaluating the reasonableness of significant judgments utilized by management by reviewing contract terms, understanding the utility of the lease in the context of the Company’s operations, and considering historical experience with lease extension options.
Added
During the three months ended December 31, 2025, the scope and term of the services were expanded. The Data Center Community Contract included advanced payments that were initially recognized as deferred revenue to be amortized as 74 Table of Contents revenue over the estimated term of the contract.
Removed
In addition, we compared management’s judgment utilized for the operating lease terms to the judgment utilized in determining the term of related revenue contracts.
Added
The Company began to recognize revenue on the 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 impact the conclusion has 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 over its recognition of revenue for the Data Center Community Contract, including management’s evaluation of the judgments involved. ​ Our audit procedures included, among others, evaluating the reasonableness of significant judgments utilized by management in determining whether the expansions of scope and term represented modifications or separate contracts under ASC 842.
Added
For example, we evaluated whether the expanded services contemplated in the amendments to the Data Center Community Contract granted the lessee additional rights of use and were priced commensurate with the standalone price for such additional rights of use.

Other TH 10-K year-over-year comparisons