Target Hospitality Corp.

Previous 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

Current wording

The Company generated cash flows from operations for the three months ended March 31, 2026 of approximately $7.0 million compared to approximately $3.9 million for the three months ended March 31, 2025, representing an increase in cash flows from operations of approximately $3.1 million or 79% led by an increase in cash collections, a $10.3 million

Previous wording

million decrease in cash paid for income taxes, and a $5.0 million decrease in cash paid for interest driven by early payoff of the 2025 Senior Secured Notes on March 25, 2025.

Current wording

decrease in cash paid for interest driven by early payoff of the 2025 Senior Secured Notes on March 25, 2025, partially offset by an increase in cash paid for operating expenses (led by increased construction costs) and payroll, and a decrease in interest income.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Our Government segment, including several communities in West, Texas supporting critical U.S. government efforts, deliver essential services and accommodations near the southern U.S. border where there is insufficient housing and infrastructure solutions to appropriately address immigration and deportation.

Current wording

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.

Previous wording

Supply and Demand for Natural Resources

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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. 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.

Current wording

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. 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.

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

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 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.

Previous 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.

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 (23)% and construction fee income (13)% for the three months ended March 31, 2026. 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 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.

Current wording

In February 2025, the Company entered into a multi-year construction and services agreement (the “Workforce Housing Contract”) to provide construction of workforce housing (the “Workforce Hub”), 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. As of March 31, 2026, construction of the Workforce Hub was substantially complete and most of the revenue recognized under this contract during the three months ended March 31, 2026 reflected construction services performed during this phase.

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, 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.

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, 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 in the WHS segment, and the consumer price index impacting government contracts, and government spending on housing programs in the Government segment.

Previous 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

Current wording

We analyze our adjusted gross profit, which is a Non-GAAP measure, which we define as revenues less services and construction costs, and specialty rental costs, excluding impairment, certain severance costs, and depreciation of specialty rental assets to measure our financial performance. Please see “Non-GAAP Financial Measures” for a definition and reconciliation to the most comparable GAAP measure. We believe adjusted gross profit is a meaningful metric because it provides insight on financial performance of our revenue streams without consideration of company overhead, noncash impairment and depreciation expenses, and certain severance costs not reflective of the ongoing results of the Company. 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.

Previous wording

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

Current wording

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

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. 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.

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. The WHS segment also includes the West Texas Power Community, the Pecos Power Community, and will include the communities associated with the Data Center Hub Contract previously described and the Power Community Contract that is currently under development.

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. The Company is actively engaged in re-marketing these assets.

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. This arrangement was supported by a U.S. government contract to provide a suite of comprehensive service offerings in support of their aid efforts. The PCC Contract was terminated effective February 21, 2025. The related assets associated with the PCC Contract were largely re-deployed to support growth in the WHS segment.

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 $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.

Current wording

As discussed in the 2025 Form 10-K, the PCC Contract with the NP Partner was terminated effective February 21, 2025. The PCC Contract generated total revenue of $0 and $24.1 million for the three months ended March 31, 2026 and 2025, respectively. The PCC Contract included a minimum annual revenue contribution of approximately $168 million, all of which was attributable to the Government reportable segment. No further revenue is expected from the PCC Contract. In addition to the decline in revenue, the termination of the PCC Contract removed a significant source of historically high-margin revenue from our results. The incremental revenue generated for the three months ended March 31, 2026 from

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 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.

Current wording

As discussed in the 2025 Form 10-K, the assets associated with the STFRC Contract, which terminated on August 9, 2024, 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 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 in September 2025 with the maximum fixed minimum revenue amount now being recognized as of March 31, 2026. The DIPC Contract generated total revenue of approximately $13.4 million and $1.6 million for the three months ended March 31, 2026 and 2025, respectively.

Previous 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.

Current wording

Total Revenue. Total revenue was $72.8 million for the three months ended March 31, 2026 and consisted of $46.5 million of services income, $16.6 million of specialty rental income and $9.7 million of construction fee income. Total revenue for the three months ended March 31, 2025 was $69.9 million, which consisted of $50.1 million of services income, $15.0 million of specialty rental income, and $4.8 million of construction fee 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 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.

Current wording

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. This decrease was largely offset by growth in the WHS segment, and 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.

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

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.

Previous 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.

Current wording

The decrease in services income was also 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 $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.

Current wording

Cost of services and construction. Cost of services and construction were $46.7 million for the three months ended March 31, 2026 as compared to $35.8 million for the three months ended March 31, 2025. The increase in services costs is primarily due to an increase in costs of approximately $9.8 million in the WHS segment led by construction costs for the construction services activity under the Workforce Housing Contract as well as ramp-up of communities associated with new WHS contracts. Additionally, costs associated with the Government segment driven by the reactivation of assets associated with the DIPC Contract increased by approximately $1.6 million. These cost increases were partially offset by the HFS-South segment costs, which decreased by approximately $(0.4) million led by lower community operating costs.

Previous 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.

Current wording

Specialty rental costs. Specialty rental costs were $3.6 million for the three months ended March 31, 2026 as compared to $2.5 million for the three months ended March 31, 2025. The increase in specialty rental costs was primarily due to higher costs in the Government segment associated with increased activity under the DIPC Contract, as well as growth in the WHS segment, led by the Data Center Community Contract entered into in September 2025 and the activation of the West Texas Power Community contract in March 2026.

Previous 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.

Current wording

Depreciation of specialty rental assets. Depreciation of specialty rental assets was $15.6 million for the three months ended March 31, 2026 as compared to $13.7 million for the three months ended March 31, 2025. 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 leading to an increase in $3.6 million between periods, partially offset by a decrease in depreciation expense of approximately $(1.5) million associated with Government segment specialty rental assets driven by the termination of the PCC contract on February 21, 2025.

Previous 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.

Current wording

Selling, general and administrative. Selling, general and administrative was $14.6 million for the three months ended March 31, 2026 as compared to $14.8 million for the three months ended March 31, 2025. The decrease in selling, general and administrative expense from the prior period was primarily driven by a decrease in transaction fees expense by approximately $2.5 million driven primarily by the prior period including 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 evaluation of the Arrow Proposal in 2024 (as defined in the 2025 Form 10-K). This decrease was partially offset by an increase of approximately $2.1 million in compensation and benefits costs led by an increase in the short-term incentive plan bonus expense, reflecting new contract wins during 2026, which drove up the estimated payout based on the Company’s continued strong execution on strategic growth initiatives.

Previous 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.

Current wording

Loss on extinguishment of debt. Loss on extinguishment of debt was $0 for the three months ended March 31, 2026 as compared to $2.4 million for the three months ended March 31, 2025. The decrease in loss on extinguishment of debt is due to the redemption of the 2025 Senior Secured Notes on March 25, 2025 with no such transaction activity during the three months ended March 31, 2026.

Previous 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.

Current wording

Interest expense, net. Interest expense, net was $0.9 million for the three months ended March 31, 2026 as compared to $4.3 million for the three months ended March 31, 2025. 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

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.

Current wording

Income tax benefit. Income tax benefit was $(2.3) million for the three months ended March 31, 2026 as compared to $(1.3) million for the three months ended March 31, 2025. The change in income tax benefit is primarily attributable to the decrease in income before taxes for the three months ended March 31, 2026 led by cost increases and loss of the higher margin PCC Contract previously mentioned.

Previous wording

The following table sets forth our selected results of operations for each of our reportable segments and All Other for the three months ended September 30, 2025 and 2024 ($ in thousands, except for Average Daily Rate).

Current wording

The following table sets forth our selected results of operations for each of our reportable segments and All Other for the three months ended March 31, 2026 and 2025 ($ in thousands, except for Average Daily Rate amounts).

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, 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.

Current wording

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

Previous wording

The decrease in adjusted gross profit of approximately $(1.9) million was primarily attributable to the decrease in revenue noted above, partially offset by a decrease in operational costs led by a decrease in labor costs.

Current wording

The decrease in adjusted gross profit of approximately ($2.6) million was primarily attributable to the decrease in revenue noted above, partially offset by a decrease in operational costs led by a decrease in community operating costs.

Previous wording

The increase in adjusted gross profit of approximately $6.5 million was primarily attributable to the increase in revenue noted above, partially offset by higher costs due to construction activity and short-term costs incurred of approximately $1.3 million to mobilize existing assets to service the new Data Center Community Contract.

Current wording

The increase in adjusted gross profit of approximately $8.0 million was primarily attributable to the increase in revenue noted above, partially offset by increased construction and operating costs related to the Workforce Housing Contract and operating costs associated with communities under new contract awards that were not active during the prior period, as well as short-term costs incurred of approximately $1.4 million to mobilize existing assets to service the new contract awards.

Previous wording

Revenue decreased primarily due to the termination of the PCC Contract as previously discussed, partially offset by reactivation of the assets associated with the STFRC Contract under the DIPC Contract in March 2025. Approximately $33 million of the revenue decrease was attributable to the PCC Contract termination, partially offset by an increase in revenue of approximately $3.1 million attributable to the DIPC Contract mentioned above. Revenue for the three months ended September 30, 2025 also included the PCC Contract Close-Out Payment of $11.8 million previously discussed, which also partially offset the net decrease in revenue.

Current wording

Revenue decreased primarily due to the termination of the PCC Contract as previously discussed, partially offset by the reactivation of the assets associated with the STFRC Contract under the DIPC Contract in March 2025. Approximately $24.1 million of the revenue decrease was attributable to the PCC Contract termination, partially offset by an increase in revenue of approximately $11.8 million attributable to the DIPC Contract mentioned above.

Previous wording

Adjusted gross profit decreased as a result of the decrease in revenue mentioned above, and partially driven by higher costs due to higher occupancy driven by the DIPC Contract mentioned above. The DIPC Contract drove an increase in costs of approximately $2.5 million, which was partially offset by a decrease in costs of approximately $0.9 million associated with community operations related to the PCC Contract, which was terminated as previously discussed.

Current wording

Adjusted gross profit decreased as a result of the decrease in revenue mentioned above, and partially driven by higher costs driven by the DIPC Contract reactivation, mentioned above, leading to an increase in costs of $1.9 million between periods.

Previous wording

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 September 30, 2025, the ABL Facility had unused available borrowing capacity of $175 million. We currently believe that our cash on hand, along with these sources of funds will provide sufficient liquidity to fund any future debt service obligations, support our growth and diversification strategy discussed in Item 1, “Business” of the Company’s 2024 Form 10-K, lease obligations, contingent liabilities and working capital investments for at least the next 12 months. However, we cannot assure you that we will be able to obtain future debt or equity financings adequate for our future cash requirements on commercially reasonable terms or at all.

Current wording

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 March 31, 2026, the ABL Facility had available borrowing capacity of $145 million. We currently believe that our cash on hand, along with these sources of funds will provide sufficient liquidity to fund our anticipated debt service obligations, lease obligations, contingent liabilities and working capital investments for at least the next 12 months. However, the pursuit of certain growth and diversification initiatives as discussed in Item 1, “Business” of the Company’s 2025 Form 10-K, may require capital resources in excess of these sources, which could necessitate additional debt or equity financing. We cannot assure you that such financing will be available on commercially reasonable terms or at all.

Previous wording

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 will continue to evaluate alternatives to optimize our capital structure, which could include the issuance or repurchase of 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. From time to time, we may also seek to streamline our capital structure and improve our financial position through refinancing or restructuring our existing debt or retiring certain of our securities for cash or other consideration.

Current wording

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 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. From time to time, we may also seek to modify or replace our ABL Facility to support our liquidity and capital resources.

Previous wording

During the nine months ended September 30, 2025, we incurred approximately $56.2 million in capital expenditures, with approximately $41.1 million driven by growth capital expenditures in the new WHS segment, and approximately $4.9 million driven by growth capital expenditures in the Government segment. Maintenance capital expenditures for specialty rental assets amounted to approximately $7.0 million for the nine months ended September 30, 2025, while approximately $3 million was attributable to an increase in finance leases for commercial-use vehicles. As we pursue growth initiatives, 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. 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. We cannot assure you that operations and other needed capital will be available on acceptable terms or at all. In the event we make additional acquisitions and the amount of capital required is greater than the amount we have available for acquisitions at that time, we could be required to reduce the expected level of capital expenditures or seek additional capital. We cannot assure you that needed capital will be available on acceptable terms or at all.

Current wording

During the three months ended March 31, 2026, we incurred approximately $45.5 million in capital expenditures, with approximately $43.7 million driven by growth capital expenditures in the new WHS segment, and approximately $0.1 million driven by growth capital expenditures in the Government segment. Maintenance capital expenditures for specialty rental assets amounted to approximately $1.2 million for the three months ended March 31, 2026, while approximately $0.3 million was attributable to an increase in finance leases for commercial-use vehicles.

Previous wording

Cash flows provided by operating activities. Net cash provided by operating activities was $68.4 million for the nine months ended September 30, 2025 compared to $121.1 million for the nine months ended September 30, 2024.

Current wording

Cash flows provided by operating activities. Net cash provided by operating activities was $7.0 million for the three months ended March 31, 2026 compared to $3.9 million for the three months ended March 31, 2025.

Previous wording

The current period is down by approximately $(52.8) million when compared to 2024 driven by a decrease in cash collections from customers of approximately$68.1 million (led by the PCC Contract termination in the Government segment), a net increase in payments for operating expenses and payroll of approximately $6.1 million driven primarily by growth of the WHS segment, and a decrease in interest received by approximately $3 million (driven by a lower average outstanding cash balance in the current period that generated interest income). These decreases were partially offset by a $5.0 million decrease in cash paid for interest driven by the early payoff of the 2025 Senior Secured Notes on March 25, 2025. There was also a decrease in cash paid for income taxes of approximately $20 million.

Current wording

The current period is up by approximately $3.1 million when compared to 2025 driven by an increase in cash collections from customers of approximately $31.7 million (led by growth in the WHS segment), a $10.3 million decrease in cash paid for interest driven by the early payoff of the 2025 Senior Secured Notes on March 25, 2025, partially offset by a net increase in payments for operating expenses and payroll of approximately $36.7 million driven primarily by growth of the WHS segment, and a decrease in interest received by approximately $2 million (driven by a lower average outstanding cash balance in the current period that generated interest income).