Target Hospitality Corp.

Previous wording

Target Hospitality Corp. is one of North America’s largest providers of vertically integrated specialty rental and value-added hospitality services including: catering and food services, maintenance, housekeeping, grounds-keeping, security, health and recreation facilities, community design and construction, overall workforce community management, concierge services and laundry service. As of June 30, 2025, our network included 27 communities, to better serve our customers across the US and Canada. We also operate 2 communities not owned or leased by the Company.

Current wording

Target Hospitality Corp. is one of North America’s largest providers of vertically integrated specialty rental and value-added hospitality services including: catering and food services, maintenance, housekeeping, grounds-keeping, security, health and recreation facilities, community design and construction, overall workforce community management, concierge services and laundry service. As of September 30, 2025, our network included 29 communities, to better serve our customers across the US and Canada. We also operate 2 communities not owned or leased by the Company.

Previous wording

In February 2025, the Company entered into a multi-year construction and services agreement (“Workforce Housing Contract”) to provide construction of workforce housing, comprehensive facility services, and premium hospitality solutions to Lithium Nevada in support of Lithium Nevada’s development of Thacker Pass (“Thacker Pass Project” or the “Project”) and a North American critical minerals supply chain. The all-inclusive workforce housing community, located in Winnemucca, Nevada (“Workforce Hub”) is near Thacker Pass, the world’s largest known measured lithium resource. The Thacker Pass Project is expected to play a major role in the domestic production of lithium batteries. Lithium Nevada has commenced site preparation, and the Company is actively engaged in the construction of the Workforce Hub, which will be capable of supporting a population of approximately 2,000 individuals. The Workforce Housing Contract has an initial term through 2027 with first occupancy anticipated by late-2025 and completion of the Workforce Hub by the end of 2025. The Company will construct and provide full turnkey support for the Workforce Hub, including premium culinary offerings, facilities management, and comprehensive support services. The Workforce Housing Contract, which consists of construction and services revenue, is expected to generate approximately $153.5 million of revenue over its initial term, with approximately $89.5 million of committed minimum revenue. The Company anticipates that revenue realized in 2025 on the Workforce Housing Contract will be largely comprised of construction fee income recognized using the percentage of completion method with progress towards completion measured using the cost-to-cost method as the basis to recognize revenue. This contract activity is reported within the newly formed WHS segment.

Current wording

In February 2025, the Company entered into a multi-year construction and services agreement (“Workforce Housing Contract”) to provide construction of workforce housing, comprehensive facility services, and premium hospitality solutions to Lithium Nevada in support of Lithium Nevada’s development of Thacker Pass (“Thacker Pass Project” or the “Project”) and a North American critical minerals supply chain. The all-inclusive workforce housing community, located in Winnemucca, Nevada (“Workforce Hub”) is near Thacker Pass, the world’s largest known measured lithium resource. The Thacker Pass Project is expected to play a major role in the domestic production of lithium batteries. Lithium Nevada has commenced site preparation, and the Company is actively engaged in the construction of the Workforce Hub, which will be capable of supporting a population of approximately 2,000 individuals. The Workforce Housing Contract has an initial term through 2027 with first occupancy beginning in September 2025 and substantial completion of the Workforce Hub anticipated by the end of 2025. The Company will construct and provide full turnkey support for the Workforce Hub, including premium culinary offerings, facilities management, and comprehensive support services. The Workforce Housing Contract, which consists of construction and services revenue, is expected to generate approximately $166.5 million of revenue over its initial term, with approximately $102.4 million of committed minimum revenue. The Company anticipates that revenue realized in 2025 on the Workforce Housing Contract will be largely comprised of construction fee income recognized using the percentage of completion method with progress towards completion measured using the cost-to-cost method as the basis to recognize revenue. This contract activity is reported within the newly formed WHS segment.

Previous wording

In February 2025, the Company received notice that the U.S. government terminated the PCC Contract with the Company’s NP Partner, effective immediately on February 21, 2025, and the NP Partner provided notice to the Company of their intention to terminate the PCC Contract as of the PCC Termination Effective Date. The Company provided facility and hospitality solutions to the NP Partner under the PCC Contract utilizing the Company’s owned modular assets and real property, capable of supporting up to 6,000 individuals. The PCC Contract included a minimum annual revenue contribution of approximately $168 million, all of which was attributable to the Government reportable segment. The PCC Contract generated total revenue of approximately $24.1 million and $98.0 million for the six months ended June 30, 2025 and 2024, respectively. The Company retains ownership of the related assets that were associated with the PCC Contract, enabling the Company to continue utilizing these modular solutions and real property to support customer demand across its operating segments and other potential growth opportunities. The Company is actively engaged in re-marketing these assets.

Current wording

In February 2025, the Company received notice that the U.S. government terminated the PCC Contract with the Company’s NP Partner, effective immediately on February 21, 2025, and the NP Partner provided notice to the Company of their intention to terminate the PCC Contract as of the PCC Termination Effective Date. The Company provided facility and hospitality solutions to the NP Partner under the PCC Contract utilizing the Company’s owned modular assets and real property, capable of supporting up to 6,000 individuals. The PCC Contract included a minimum annual revenue contribution of approximately $168 million, all of which was attributable to the Government reportable segment. In connection with the PCC Contract termination, on August 1, 2025, the Company entered into an agreement with the NP Partner related to the close-out and settlement of the PCC Contract. The agreement provided the Company with reimbursement for certain costs incurred following the termination of the PCC Contract and resulted in a payment to the Company of approximately $11.8 million (“PCC Contract Close-Out Payment”), which was received in cash and recognized as revenue during the three months ended September 30, 2025 and is included as a component of services income for the three and nine months ended September 30, 2025 and is included as a component of cash flows from operations for the nine months ended September 30, 2025. No further payments are expected from the PCC Contract. The PCC Contract generated total revenue of approximately $36.3 million (inclusive of the PCC Contract Close-Out Payment) and $142.8 million for the nine months ended September 30, 2025 and 2024, respectively. The Company retains ownership of the related assets that were associated with the PCC Contract, enabling the Company to continue utilizing these modular

Previous wording

March 5, 2025, which is a lease and services agreement with an anticipated five-year term. The DIPC retains a similar facility size and operational scope as the prior operations under the STFRC Contract. The DIPC will be capable of supporting up to 2,400 individuals and provide an open and safe environment to appropriately care for the community population. The consistency of the community layout will require no capital investment, allowing for seamless community reactivation. The Company will provide facility and hospitality solutions under the DIPC Contract, which has a similar economic structure to the previous STFRC Contract, including fixed minimum revenue regardless of occupancy that amounts to a cumulative fixed minimum revenue amount of approximately $246 million over the anticipated five-year term. As such, the DIPC Contract is expected to provide over $246 million of revenue over its anticipated five-year term, to March 2030, and is subject to a ramp up period based on utilization during the first six months of the contract term resulting in lower fixed minimum revenue amounts during the ramp up period. The ramp up period may be accelerated at the request of the government, and if accelerated, would result in higher fixed minimum revenue amounts during the ramp up period up to the maximum fixed minimum revenue amount. The maximum fixed minimum revenue amount is based on utilization of 2,400 beds. The DIPC Contract is supported by an amended IGSA between the city of Dilley, Texas and ICE. As is customary for U.S. government contracts and subcontracts, the IGSA and the DIPC Contract are subject to annual U.S. government appropriations and can be canceled for convenience with a 60-day prior notice.

Current wording

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 three and nine months ended September 30, 2024, contributed approximately $8.7 million and $38.2 million, respectively, in total consolidated revenue. The assets associated with the STFRC Contract were reactivated under the DIPC Contract effective March 5, 2025, which is a lease and services agreement with an anticipated five-year term. The DIPC retains a similar facility size and operational scope as the prior operations under the STFRC Contract. The DIPC is capable of supporting up to 2,400 individuals and provides an open and safe environment to appropriately care for the community population. The consistency of the community layout required no capital investment, allowing for seamless community reactivation. The Company is providing facility and hospitality solutions under the DIPC Contract, which has a similar economic structure to the previous STFRC Contract, including fixed minimum revenue regardless of occupancy that amounts to a cumulative fixed minimum revenue amount of approximately $246 million over the anticipated five-year term. As such, the DIPC Contract is expected to provide over $246 million of revenue over its anticipated five-year term, to March 2030, and was subject to a ramp up period based on utilization during the first six months of the contract term resulting in lower fixed minimum revenue amounts during the ramp up period. The ramp up period was completed as scheduled during the three months ended September 30, 2025 with the maximum fixed minimum revenue amount now being recognized as of September 30, 2025. The maximum fixed minimum revenue amount is based on utilization of 2,400 beds. The DIPC Contract is supported by an amended IGSA between the city of Dilley, Texas and ICE. As is customary for U.S. government contracts and subcontracts, the IGSA and the DIPC Contract are subject to annual U.S. government appropriations and can be canceled for convenience with a 60-day prior notice.

Previous wording

The Company generated cash flows from operations for the six months ended June 30, 2025 of approximately $15.0 million compared to approximately $89.7 million for the six months ended June 30, 2024, representing a decrease in cash flows from operations of approximately $(74.7) million or (83)% led by a decrease in cash collections, and partially by a $4.5 million increase in cash paid for interest driven by early payoff of the 2025 Senior Secured Notes on March 25, 2025, and decrease in interest income, partially offset by a $14.4 million decrease in cash paid for income taxes, and a decrease in operating expenses and payroll.

Current wording

The Company generated cash flows from operations for the nine months ended September 30, 2025 of approximately $68.4 million compared to approximately $121.1 million for the nine months ended September 30, 2024, representing a decrease in cash flows from operations of approximately $(52.8) million or (44)% led by a decrease in cash collections, an increase in cash paid for operating expenses and payroll, and a decrease in interest income, partially offset by a $20.0

Previous wording

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. 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.

Current wording

We are continuing to pursue government services growth opportunities, and we believe there is opportunity to continue to assist the federal government. 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.

Previous wording

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

Current wording

An operational disruption in any of our facilities could negatively impact our financial results. The occurrence of a natural disaster, such as earthquake, tornado, severe weather including hail storms, flood, fire, or other unanticipated problems such as public health threats or outbreaks, labor difficulties, equipment failure, capacity expansion difficulties or unscheduled maintenance could cause operational disruptions of varied duration. These types of disruptions could

Previous wording

We derive the majority of our revenue from specialty rental accommodations and vertically integrated hospitality services. Approximately 69% of our revenue was earned from specialty rental with vertically integrated hospitality services, specifically lodging and related ancillary services, whereas the remaining 31% of revenues were earned through leasing of lodging facilities (16)% and construction fee income (15)% for the six months ended June 30, 2025. Revenue is recognized in the period in which lodging and services are provided pursuant to the terms of contractual relationships with our customers. 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.

Current wording

We derive the majority of our revenue from specialty rental accommodations and vertically integrated hospitality services. Approximately 64% of our revenue was earned from specialty rental with vertically integrated hospitality services, specifically lodging and related ancillary services, whereas the remaining 36% of revenues were earned through leasing of lodging facilities (12)% and construction fee income (24)% for the nine months ended September 30, 2025. Revenue is recognized in the period in which lodging and services are provided pursuant to the terms of contractual relationships with our customers. 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.

Previous wording

In February 2025, the Company entered into a multi-year construction and services agreement to provide construction of workforce housing, comprehensive facility services, and premium hospitality solutions to Lithium Nevada in support of Lithium Nevada’s development of Thacker Pass (“Thacker Pass Project”) and a North American critical minerals supply chain. The all-inclusive Workforce Hub is near Thacker Pass, the world’s largest known measured lithium resource. The Thacker Pass Project is expected to play a major role in the domestic production of lithium batteries. Lithium Nevada has commenced site preparation and the Company is actively engaged in the construction of the Workforce Hub, which will be capable of supporting a population of approximately 2,000 individuals. The Workforce Housing Contract has an initial term through 2027 with first occupancy anticipated by late-2025 and completion of the Workforce Hub by the end of 2025. The Company will construct and provide full turnkey support for the Workforce Hub, including premium culinary

Current wording

In February 2025, the Company entered into a multi-year construction and services agreement to provide construction of workforce housing, comprehensive facility services, and premium hospitality solutions to Lithium Nevada in support of Lithium Nevada’s development of Thacker Pass (“Thacker Pass Project”) and a North American critical minerals supply chain. The all-inclusive Workforce Hub is near Thacker Pass, the world’s largest known measured lithium resource. The Thacker Pass Project is expected to play a major role in the domestic production of lithium batteries. Lithium Nevada has commenced site preparation and the Company is actively engaged in the construction of the Workforce Hub, which will be capable of supporting a population of approximately 2,000 individuals. The Workforce Housing Contract has an initial term through 2027 with first occupancy beginning in September 2025 and substantial completion of the Workforce Hub anticipated by the end of 2025. The Company will construct and provide full turnkey support for the Workforce Hub, including premium culinary offerings, facilities management, and comprehensive support services. During the construction phase of the contract, the Company will recognize revenue as costs are incurred in connection with the Thacker Pass Project under the percentage of completion method of accounting as more fully discussed in Note 1 of the notes to our unaudited consolidated financial statements included elsewhere within this Form 10-Q.

Previous wording

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

Current wording

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

Previous wording

We analyze our adjusted gross profit, which is a Non-GAAP measure, which we define as revenues less cost of sales, excluding impairment and depreciation of specialty rental assets to measure our financial performance. Please see “Non-GAAP Financial Measures” for a definition and reconciliation to the most comparable GAAP measure. We believe adjusted gross profit is a meaningful metric because it provides insight into the financial performance of our revenue streams without consideration of company overhead. Additionally, using adjusted gross profit gives us insight on factors impacting cost of sales, such as efficiencies of our direct labor and material costs. When analyzing adjusted gross profit, we compare actual adjusted gross profit to our budgets and internal projections and to prior period results for a given period in order to assess our performance.

Current wording

We analyze our adjusted gross profit, which is a Non-GAAP measure, which we define as revenues less cost of sales, excluding community pre-opening costs, impairment, and depreciation of specialty rental assets to measure our financial performance. Please see “Non-GAAP Financial Measures” for a definition and reconciliation to the most comparable GAAP measure. We believe adjusted gross profit is a meaningful metric because it provides insight into the financial performance of our revenue streams without consideration of company overhead. Additionally, using adjusted gross profit gives us insight on factors impacting cost of sales, such as efficiencies of our direct labor and material costs. When

Previous wording

Additionally, this segment included the facilities and operations provided under a lease and services agreement known as the PCC Contract with our NP Partner, backed 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. The related assets associated with the PCC Contract continue to be included in this segment.

Current wording

Additionally, this segment included the facilities and operations provided under a lease and services agreement known as the PCC Contract with our NP Partner, backed 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. The related assets associated with the PCC Contract continue to be included in this segment. The Company is actively engaged in re-marketing these assets.

Previous wording

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

Current wording

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

Previous wording

As discussed in theEconomic Update section, the PCC Contract with the NP Partner was terminated effective February 21, 2025. The PCC Contract generated total revenue of approximately $24.1 million and $98.0 million for the six months ended June 30, 2025 and 2024, respectively. The PCC Contract included a minimum annual revenue contribution of approximately $168 million, all of which was attributable to the Government reportable segment.

Current wording

As discussed in theEconomic Update section, the PCC Contract with the NP Partner was terminated effective February 21, 2025. The PCC Contract generated total revenue of approximately $36.3 million and $142.8 million for the nine months ended September 30, 2025 and 2024, respectively. The PCC Contract included a minimum annual revenue contribution of approximately $168 million, all of which was attributable to the Government reportable segment.

Previous wording

As discussed in theEconomic Update section, the STFRC Contract was terminated effective August 9, 2024. The STFRC Contract was based on a fixed minimum lease revenue amount and for the three and six months ended June 30, 2024, contributed approximately $15.5 million and $29.5 million, respectively, in total consolidated revenue. The assets associated with the STFRC Contract were reactivated under the DIPC Contract effective March 5, 2025. The DIPC Contract is expected to provide over $246 million of revenue over its anticipated five-year term, to March 2030, and is subject to a ramp up period based on utilization during the first six months of the contract term resulting in lower fixed minimum revenue amounts during the ramp up period. The DIPC Contract generated total revenue of approximately $9.1 million for the six months ended June 30, 2025 .

Current wording

As discussed in theEconomic Update section, the STFRC Contract was terminated effective August 9, 2024. The STFRC Contract was based on a fixed minimum lease revenue amount and for the three and nine months ended September 30, 2024, contributed approximately $8.7 million and $38.2 million, respectively, in total consolidated revenue. The assets associated with the STFRC Contract were reactivated under the DIPC Contract effective March 5, 2025. The DIPC Contract is expected to provide over $246 million of revenue over its anticipated five-year term, to March 2030, and is subject to a ramp up period based on utilization during the first six months of the contract term resulting in lower fixed minimum revenue amounts during the ramp up period. The ramp up period was completed as scheduled in September 2025 with the maximum fixed minimum revenue amount now being recognized as of September 30, 2025. The DIPC Contract generated total revenue of approximately $11.7 million and $20.8 million, respectively, for the three and nine months ended September 30, 2025.

Previous wording

As discussed in the Economic Update section, the Company originated the Workforce Housing Contract in February 2025. The Workforce Housing Contract, which consists of construction and services revenue, is expected to generate approximately $153.5 million of revenue over its initial term, with approximately $89.5 million of committed minimum revenue. The Company anticipates that revenue realized in 2025 on the Workforce Housing Contract will be largely comprised of construction fee income recognized using the percentage of completion method with progress towards completion measured using the cost-to-cost method as the basis to recognize revenue. The Workforce Housing Contract generated approximately $19.2 million of revenue for the six months ended June 30, 2025, all of which is reported as construction fee income associated with construction services provided through June 30, 2025.

Current wording

As discussed in the Economic Update section, the Company originated the Workforce Housing Contract in February 2025. The Workforce Housing Contract, which consists of construction and services revenue, is expected to generate approximately $166.5 million of revenue over its initial term, with approximately $102.4 million of committed minimum revenue. The Company anticipates that revenue realized in 2025 on the Workforce Housing Contract will be largely comprised of construction fee income recognized using the percentage of completion method with progress towards completion measured using the cost-to-cost method as the basis to recognize revenue. The Workforce Housing Contract generated approximately $35.6 million and $54.8 million of revenue, respectively, for the three and nine months ended September 30, 2025, most of all of which is reported as construction fee income associated with construction services provided through September 30, 2025.

Previous wording

Total Revenue. Total revenue was $61.6 million for the three months ended June 30, 2025 and consisted of $40.5 million of services income, $6.7 million of specialty rental income and $14.4 million of construction fee income. Total revenue for the three months ended June 30, 2024 was $100.7 million, which consisted of $67.5 million of services income, and $33.2 million of specialty rental income.

Current wording

Total Revenue. Total revenue was $99.4 million for the three months ended September 30, 2025 and consisted of $56.0 million of services income, $7.8 million of specialty rental income and $35.6 million of construction fee income. Total revenue for the three months ended September 30, 2024 was $95.2 million, which consisted of $65.8 million of services income, and $29.4 million of specialty rental income.

Previous wording

Services income consists primarily of specialty rental and vertically integrated and comprehensive hospitality services, including room revenue, catering and food services, maintenance, housekeeping, grounds-keeping, security, overall workforce community management, health and recreation facilities, concierge services, and laundry service. The main driver of the decrease in services income revenue was lower revenue in the Government segment led by the termination of the PCC Contract and termination of the STFRC Contract as previously discussed, and partially by lower revenue in HFS-South led by lower ADR. This decrease was partially offset by reactivation of the assets associated with the STFRC Contract under the DIPC Contract within the Government segment in March 2025 as previously discussed.

Current wording

Services income consists primarily of specialty rental and vertically integrated and comprehensive hospitality services, including room revenue, catering and food services, maintenance, housekeeping, grounds-keeping, security, overall workforce community management, health and recreation facilities, concierge services, and laundry service. The main driver of the decrease in services income revenue was lower revenue in the Government segment led by the termination of the PCC Contract as previously discussed, and partially by lower revenue in HFS-South from lower ADR and lower utilization. This decrease was partially offset by reactivation of the assets associated with the STFRC Contract under the DIPC Contract within the Government segment in March 2025 as previously discussed, as well as growth in the WHS segment. As discussed above, services income for the period included the PCC Contract Close-Out Payment of $11.8 million, which also partially offset the net decrease in services income.

Previous wording

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. Specialty rental income decreased primarily as a result of lower revenue in the Government segment led by the termination of the PCC Contract and termination of the STFRC Contract as previously discussed, partially offset by reactivation of the assets associated with the STFRC Contract under the DIPC Contract within the Government segment in March 2025.

Current wording

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. Specialty rental income decreased primarily as a result of lower revenue in the Government segment led by the

Previous wording

The decrease in services income and specialty rental income was partially offset by an increase in construction fee income, which was due to construction services provided under the Workforce Housing Contract originated in February 2025 in the WHS segment.

Current wording

The decrease in services income and specialty rental income was offset by an increase in construction fee income, which was due to construction services provided under the Workforce Housing Contract originated in February 2025 in the WHS segment.

Previous wording

Cost of services. Cost of services was $45.6 million for the three months ended June 30, 2025 as compared to $33.6 million for the three months ended June 30, 2024. The increase in services costs is primarily due to an increase in costs of approximately $11.4 million in the WHS segment led by construction costs for the construction services activity under the Workforce Housing Contract. Additionally, costs associated with the HFS-South segment increased by approximately $0.3 million driven by an increase in catering food purchases.

Current wording

Cost of services. Cost of services was $64.1 million for the three months ended September 30, 2025 as compared to $31.3 million for the three months ended September 30, 2024. The increase in services costs is primarily due to an increase in costs of approximately $30.3 million in the WHS segment led by construction costs for the construction services activity under the Workforce Housing Contract. Additionally, costs associated with the Government segment driven by the reactivation of assets associated with the DIPC Contract increased by approximately $3.5 million. These cost increases were partially offset by the HFS-South segment costs, which decreased by approximately $0.6 million led by lower labor costs, and a decrease in services costs of approximately $0.3 million in the All Other category of operating segments driven by lower labor costs and catering food purchases as a result of lower customer activity.

Previous wording

Specialty rental costs. Specialty rental costs were $2.8 million for the three months ended June 30, 2025 as compared to $5.5 million for the three months ended June 30, 2024. The decrease in specialty rental costs is primarily due to a decrease in costs from the Government segment driven by the contract terminations previously discussed.

Current wording

Specialty rental costs. Specialty rental costs were $3.0 million for the three months ended September 30, 2025 as compared to $4.7 million for the three months ended September 30, 2024. 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.

Previous wording

Depreciation of specialty rental assets. Depreciation of specialty rental assets was $13.6 million for the three months ended June 30, 2025 as compared to $14.8 million for the three months ended June 30, 2024. The decrease in depreciation expense is primarily attributable to a decrease in depreciation expense associated with HFS-South specialty rental assets for certain site work assets that became fully depreciated during 2024.

Current wording

Depreciation of specialty rental assets. Depreciation of specialty rental assets was $14.4 million for the three months ended September 30, 2025 as compared to $14.1 million for the three months ended September 30, 2024. The increase in depreciation expense is primarily attributable to an increase in depreciation expense for specialty rental assets driven by growth in the WHS segment, partially offset by a decrease in depreciation expense of approximately $0.8 million associated with HFS-South specialty rental assets for certain site work assets that became fully depreciated during 2024.

Previous wording

Selling, general and administrative. Selling, general and administrative was $12.7 million for the three months ended June 30, 2025 as compared to $13.5 million for the three months ended June 30, 2024. The decrease in selling, general and administrative expense from the prior period was primarily driven by a decrease in transaction fees expense by approximately $1.2 million driven primarily by the prior period including costs associated with the evaluation of the offer from Arrow Holdings S.a.r.l. (“Arrow”), an affiliate of TDR, to acquire all of the outstanding common stock of the Company not owned by Arrow (the “Arrow Proposal”), amortization of system implementation costs also decreased by approximately $0.2 million from the prior year as such costs became fully amortized in 2024 as scheduled, compensation and benefits decreased by approximately $0.2 million, and legal and professional fees decreased by approximately $0.2 million. This was partially offset by an increase of approximately $0.8 million related to stock-compensation expense, an increase of approximately $0.2 million related to audit fees, and an increase of approximately $0.2 million in other corporate expenses.

Current wording

Selling, general and administrative. Selling, general and administrative was $12.9 million for the three months ended September 30, 2025 as compared to $13.3 million for the three months ended September 30, 2024. The decrease in selling, general and administrative expense from the prior period was primarily driven by a decrease in transaction fees expense by approximately $1.9 million driven primarily by the prior period including costs associated with the evaluation of the offer from Arrow Holdings S.a.r.l. (“Arrow”), an affiliate of TDR, to acquire all of the outstanding common stock of the Company not owned by Arrow (the “Arrow Proposal”), and legal and professional fees decreased by approximately $0.2 million. This was partially offset by an increase in compensation and benefits of approximately $0.5 million, an increase in bad debt expense of approximately $0.4 million, an increase of approximately $0.3 million related to stock-compensation expense, an increase of approximately $0.1 million related to audit fees, an increase of approximately $0.2 million in other corporate expenses, and an increase in recruiting expenses of approximately $0.1 million.

Previous wording

Other expense (income), net. Other expense (income), net was $(0.2) million for the three months ended June 30, 2025 as compared to $(0.1) million for the three months ended June 30, 2024. The change in other expense (income), net was primarily driven by non-cash gains on leased assets.

Current wording

Other expense (income), net. Other expense (income), net was $0.9 million for the three months ended September 30, 2025 as compared to less than $(0.1) million for the three months ended September 30, 2024. The change in other expense (income), net was primarily driven by community pre-opening costs in the WHS segment.

Previous wording

Interest expense, net. Interest expense, net was $0.9 million for the three months ended June 30, 2025 as compared to $4.3 million for the three months ended June 30, 2024. The change in interest expense, net was primarily driven by a decrease in interest expense on the 2025 Senior Secured Notes led by their early redemption on March 25, 2025, partially offset by a decrease in interest income earned on cash equivalents.

Current wording

Interest expense, net. Interest expense, net was $0.5 million for the three months ended September 30, 2025 as compared to $3.8 million for the three months ended September 30, 2024. The change in interest expense, net was primarily driven by a decrease in interest expense on the 2025 Senior Secured Notes led by their early redemption on March 25, 2025, partially offset by a decrease in interest income earned on cash equivalents.

Previous wording

Total Revenue. Total revenue was $131.5 million for the six months ended June 30, 2025 and consisted of $90.6 million of services income, $21.7 million of specialty rental income and $19 million of construction fee income. Total revenue for the six months ended June 30, 2024 was $207.4 million, which consisted of $139.9 million of services income, and $67.5 million of specialty rental income.

Current wording

Total Revenue. Total revenue was $230.9 million for the nine months ended September 30, 2025 and consisted of $146.6 million of services income, $29.5 million of specialty rental income and $54.8 million of construction fee income. Total revenue for the nine months ended September 30, 2024 was $302.6 million, which consisted of $205.7 million of services income, and $96.9 million of specialty rental income.

Previous wording

Services income consists primarily of specialty rental and vertically integrated and comprehensive hospitality services, including room revenue, catering and food services, maintenance, housekeeping, grounds-keeping, security, overall workforce community management, health and recreation facilities, concierge services, and laundry service. The main driver of the decrease in services income revenue was lower revenue in the Government segment led by the termination of the PCC Contract and termination of the STFRC Contract as previously discussed, and partially by lower revenue in HFS-South led by lower ADR. This decrease was partially offset by reactivation of the assets associated with the STFRC Contract under the DIPC Contract within the Government segment in March 2025 as previously discussed.

Current wording

Services income consists primarily of specialty rental and vertically integrated and comprehensive hospitality services, including room revenue, catering and food services, maintenance, housekeeping, grounds-keeping, security, overall workforce community management, health and recreation facilities, concierge services, and laundry service. The main driver of the decrease in services income revenue was lower revenue in the Government segment led by the termination of the PCC Contract and termination of the STFRC Contract as previously discussed, and partially by lower revenue in HFS-South led by lower ADR. This decrease was partially offset by reactivation of the assets associated with the STFRC Contract under the DIPC Contract within the Government segment in March 2025 as previously discussed, as well as growth in the WHS segment. As discussed above, services income for the period included the PCC Contract Close-Out Payment of $11.8 million, which also partially offset the net decrease in services income.

Previous wording

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. Specialty rental income decreased primarily as a result of lower revenue in the Government segment led by the termination of the PCC Contract and termination of the STFRC Contract, partially offset by reactivation of the assets

Current wording

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. Specialty rental income decreased primarily as a result of lower revenue in the Government segment led by the termination of the PCC Contract and termination of the STFRC Contract as previously discussed, partially offset by

Previous wording

Cost of services. Cost of services was $81.3 million for the six months ended June 30, 2025 as compared to $70.5 million for the six months ended June 30, 2024. The increase in services costs is primarily due to an increase in costs of approximately $15.3 million in the WHS segment led by construction costs for the construction services activity under the Workforce Housing Contract. Additionally, costs associated with the HFS-South segment increased by approximately $1.2 million driven by an increase in customer activity. These cost increases were partially offset by a decrease in services costs of approximately $4.8 million in the Government segment led by a decrease in occupancy from the contract terminations previously discussed, and a decrease in services costs of approximately $0.9 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 didn’t recur in the current period.

Current wording

Cost of services. Cost of services was $145.4 million for the nine months ended September 30, 2025 as compared to $101.7 million for the nine months ended September 30, 2024. The increase in services costs is primarily due to an increase in costs of approximately $45.6 million in the WHS segment led by construction costs for the construction services activity under the Workforce Housing Contract. Additionally, costs associated with the HFS-South segment increased by approximately $0.6 million led by an increase in catering food costs, which was driven by an increase in customer activity. These cost increases were partially offset by a decrease in services costs of approximately $1.3 million in the Government segment led by a decrease in occupancy from the contract terminations previously discussed, and a decrease in services costs of approximately $1.2 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 didn’t recur in the current period, and partially driven by approximately $0.2 million in lower labor costs.

Previous wording

Specialty rental costs. Specialty rental costs were $5.3 million for the six months ended June 30, 2025 as compared to $11.4 million for the six months ended June 30, 2024. The decrease in specialty rental costs is primarily due to a decrease in costs from the Government segment driven by the contract terminations previously discussed.

Current wording

Specialty rental costs. Specialty rental costs were $8.3 million for the nine months ended September 30, 2025 as compared to $16.1 million for the nine months ended September 30, 2024. The decrease in specialty rental costs is primarily due to a decrease in costs from the Government segment driven by the contract terminations previously discussed.

Previous wording

Depreciation of specialty rental assets. Depreciation of specialty rental assets was $27.3 million for the six months ended June 30, 2025 as compared to $29.6 million for the six months ended June 30, 2024. The decrease in depreciation expense is primarily attributable to a decrease in depreciation expense associated with HFS-South specialty rental assets for certain site work assets that became fully depreciated during 2024.

Current wording

Depreciation of specialty rental assets. Depreciation of specialty rental assets was $41.6 million for the nine months ended September 30, 2025 as compared to $43.6 million for the nine months ended September 30, 2024. The decrease in depreciation expense is primarily attributable to a decrease in depreciation expense associated with HFS-South specialty rental assets for certain site work assets that became fully depreciated during 2024, partially offset by an increase in depreciation expense for specialty rental assets of approximately $1.9 million driven by growth in the WHS segment.

Previous wording

Selling, general and administrative. Selling, general and administrative was $27.5 million for the six months ended June 30, 2025 as compared to $28.4 million for the six months ended June 30, 2024. The decrease in selling, general and administrative expense from the prior period was led by decreases in severance costs of approximately $1 million for certain terminated employees during the six months ended June 30, 2024, amortization of system implementation costs also decreased by approximately $0.7 million from the prior year as such costs became fully amortized in 2024 as scheduled, compensation and benefits costs decreased by approximately $0.6 million, stock compensation expenses decreased by approximately $0.3 million led primarily by the liability-based SARs driven by no SAR awards outstanding during the current period compared to the prior period as these awards vested and were exercised as of December 31, 2024, and marketing and advertising costs as well as insurance costs decreased collectively by approximately $0.3 million. This was partially offset by an increase in transaction fees of approximately $1.4 million driven primarily by legal, advisory, and audit fees associated with debt related transaction activity related to the 2025 Senior Secured Notes that were paid off on March 25, 2025, and, to a lesser extent, other business development project related transaction activity and remaining costs associated with the Arrow Proposal. The remaining change was primarily driven by an increase in recruiting, other corporate expenses, and professional fees.

Current wording

Selling, general and administrative. Selling, general and administrative was $40.4 million for the nine months ended September 30, 2025 as compared to $41.6 million for the nine months ended September 30, 2024. The decrease in selling, general and administrative expense from the prior period was led by decreases in severance costs of approximately $1 million for certain terminated employees during the nine months ended September 30, 2024, amortization of system implementation costs also decreased by approximately $0.7 million from the prior year as such costs became fully amortized in 2024 as scheduled, a decrease in transaction fees expense by approximately $0.5 million driven primarily by the prior period including costs associated with the evaluation of the Arrow Proposal, a decrease in marketing and advertising costs as well as insurance costs collectively by approximately $0.2 million, and a decrease in compensation and benefits costs by approximately $0.1 million. . This was partially offset by an increase in bad debt expense of approximately $0.6 million, an increase in recruiting expenses of approximately $0.3 million, and an increase in other corporate expenses of approximately $0.4 million.

Previous wording

Other depreciation and amortization. Other depreciation and amortization expense was $8.1 million for the six months ended June 30, 2025 as compared to $7.8 million for the six months ended June 30, 2024. The increase in other depreciation and amortization is primarily driven by an increase in depreciation associated with an increase in finance leases for commercial use vehicles.

Current wording

Other depreciation and amortization. Other depreciation and amortization expense was $12.1 million for the nine months ended September 30, 2025 as compared to $11.7 million for the nine months ended September 30, 2024. The increase in other depreciation and amortization is primarily driven by an increase in depreciation associated with an increase in finance leases for commercial use vehicles.

Previous wording

Other expense (income), net. Other expense (income), net was $0.1 million for the six months ended June 30, 2025 as compared to $(0.2) million for the six months ended June 30, 2024. The increase in other expense was primarily driven by losses on leased assets and other asset disposals.

Current wording

Other expense (income), net. Other expense (income), net was $1.0 million for the nine months ended September 30, 2025 as compared to $(0.2) million for the nine months ended September 30, 2024. The increase in other expense was primarily driven by community pre-opening costs in the WHS segment.

Previous wording

Loss on extinguishment of debt. Loss on extinguishment of debt was $2.4 million for the six months ended June 30, 2025 as compared to $0 for the six months ended June 30, 2024. The increase in loss on extinguishment of debt is due to the redemption of the 2025 Senior Secured Notes on March 25, 2025.

Current wording

Loss on extinguishment of debt. Loss on extinguishment of debt was $2.4 million for the nine months ended September 30, 2025 as compared to $0 for the nine months ended September 30, 2024. The increase in loss on extinguishment of debt is due to the redemption of the 2025 Senior Secured Notes on March 25, 2025.

Previous wording

interest expense on the 2025 Senior Secured Notes led by their early redemption on March 25, 2025, partially offset by an increase in interest expense on the ABL Facility, and a decrease in interest income earned on cash equivalents.

Current wording

Interest expense, net. Interest expense, net was $5.7 million for the nine months ended September 30, 2025 as compared to $12.7 million for the nine months ended September 30, 2024. The change in interest expense, net was primarily driven by a decrease in interest expense on the 2025 Senior Secured Notes led by their early redemption on March 25, 2025, partially offset by an increase in interest expense on the ABL Facility, and a decrease in interest income earned on cash equivalents.

Previous wording

Change in fair value of warrant liabilities. Change in fair value of warrant liabilities represents the fair value adjustments to the outstanding Private Warrant liabilities based on the change in their estimated fair value at each reporting period end. The change in fair value of the warrant liabilities was $0 for the six months ended June 30, 2025 as compared to $(0.7) million for the six months ended June 30, 2024 as a result of the Private Warrants expiring unexercised on March 15, 2024 as discussed in Note 8 of the notes to our unaudited consolidated financial statements included elsewhere within this Form 10-Q.

Current wording

Change in fair value of warrant liabilities. Change in fair value of warrant liabilities represented the fair value adjustments to the previously outstanding Private Warrant liabilities based on the change in their estimated fair value at each reporting period end. The change in fair value of the warrant liabilities was $0 for the nine months ended September 30, 2025 as compared to $(0.7) million for the nine months ended September 30, 2024 as a result of the Private Warrants expiring unexercised on March 15, 2024 as discussed in Note 8 of the notes to our unaudited consolidated financial statements included elsewhere within this Form 10-Q.

Previous wording

Income tax expense (benefit). Income tax expense (benefit) was $(2.9) million for the three months ended June 30, 2025 as compared to $6.9 million for the three months ended June 30, 2024. The change in income tax expense (benefit) is primarily attributable to the decrease in income before taxes for the three months ended June 30, 2025 led by a decrease in revenue and by cost increases previously mentioned.

Current wording

Income tax expense (benefit). Income tax expense (benefit) was $(3.9) million for the nine months ended September 30, 2025 as compared to $17.1 million for the nine months ended September 30, 2024. The change in income tax expense (benefit) is primarily attributable to the decrease in income before taxes for the nine months ended September 30, 2025 led by a decrease in revenue and by cost increases previously mentioned.

Previous wording

*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.*Average daily rate is calculated based on specialty rental income and services income received over the period indicated, divided by utilized bed nights.

Current wording

*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, community pre-opening costs, and loss on impairment.*Average daily rate is calculated based on specialty rental income and services income received over the period indicated, divided by utilized bed nights.