Target Hospitality Corp.

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 mid-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 $140 million of revenue over its initial term, with approximately $76 million of committed minimum revenue. The Company anticipates approximately $68 million of committed minimum revenue will be realized in 2025 expected to 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 will be reported within the newly formed WHS operating segment in the All Other category of operating segments.

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 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.

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 $53.6 million for the three months ended March 31, 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. 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.

Previous 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 months ended March 31, 2024, contributed approximately $14 million in total consolidated revenue. The assets associated

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 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

Previous wording

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 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

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.

Previous wording

On March 10, 2025, the Company issued a notice of redemption to redeem all $181.4 million in aggregate principal amount of its 2025 Senior Secured Notes discussed in Note 7 on March 25, 2025. The 2025 Senior Secured Notes redeemed pursuant to the Redemption were redeemed for a redemption price equal to 101.000% of the principal amount of the 2025 Senior Secured Notes redeemed plus accrued and unpaid interest to but not including the Redemption Date. As of March 25, 2025, the 2025 Senior Secured Notes were paid in full and are no longer outstanding, which is expected to generate an annual interest expense savings of approximately $19.5 million.

Current wording

On March 10, 2025, the Company issued a notice of redemption to redeem all $181.4 million in aggregate principal amount of its 2025 Senior Secured Notes discussed in Note 7 of the notes to our unaudited consolidated financial statements included elsewhere within this Form 10-Q on March 25, 2025. The 2025 Senior Secured Notes redeemed pursuant to the Redemption were redeemed for a redemption price equal to 101.000% of the principal amount of the 2025 Senior Secured Notes redeemed plus accrued and unpaid interest to but not including the Redemption Date. As of March 25, 2025, the 2025 Senior Secured Notes were paid in full and are no longer outstanding, which is expected to generate an annual interest expense savings of approximately $19.5 million.

Previous wording

The Company generated cash flows from operations for the three months ended March 31, 2025 of approximately $3.9 million compared to approximately $50.6 million for the three months ended March 31, 2024, representing a decrease in cash flows from operations of approximately $(46.7) million or (92)% led by a decrease in cash collections, and partially by a $3.1 million increase in cash paid for interest driven by early payoff of the 2025 Senior Secured Notes on March 25, 2025, partially offset by a $0.1 million decrease in cash paid for income taxes, a decrease in operating expenses and payroll, and an increase in interest income.

Current 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.

Previous wording

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

Current wording

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

Previous wording

We derive the majority of our revenue from specialty rental accommodations and vertically integrated hospitality services. Approximately 72% of our revenue was earned from specialty rental with vertically integrated hospitality services, specifically lodging and related ancillary services, whereas the remaining 28% of revenues were earned through leasing of lodging facilities (21)% and construction fee income (7)% for the three months ended March 31, 2025. Revenue is recognized in the period in which lodging and services are provided pursuant to the terms of contractual relationships with our customers. 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 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.

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 Americas 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 mid-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 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

Previous wording

offerings, facilities management, and comprehensive support services. During the construction phase of the contract, the Company recognized revenue as costs were 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

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 have identified two reportable business segments: HFS – South and Government:

Current wording

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

Previous wording

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

Current wording

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

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 $53.6 million for the three months ended March 31, 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 $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.

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 months ended March 31, 2024, contributed approximately $14 million 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 $1.6 million for the three months ended March 31, 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 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 .

Previous wording

As discussed in the Economic Update section, the Company originated the Workforce Housing Contract in February 2025, which will be reported within the WHS operating segment in the All Other category of operating segments. The Workforce Housing Contract, which consists of construction and services revenue, is expected to generate approximately $140 million of revenue over its initial term, with approximately $76 million of committed minimum revenue. The Company anticipates approximately $68 million of committed minimum revenue will be realized in 2025 expected to 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 $4.8 million of revenue for the three months ended March 31, 2025, all of which is reported as construction fee income associated with construction services provided through March 31, 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 $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.

Previous wording

Total Revenue. Total revenue was $69.9 million for the three months ended March 31, 2025 and consisted of $50.1 million of services income, $15.0 million of specialty rental income and $4.8 million of construction fee income. Total revenue for the three months ended March 31, 2024 was $106.7 million, which consisted of $72.4 million of services income, and $34.3 million of specialty rental income.

Current 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.

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.

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.

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.

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, partially offset by reactivation of the assets

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 operating segment within the All Other category of operating segments.

Current 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.

Previous wording

Specialty rental costs. Specialty rental costs were $2.5 million for the three months ended March 31, 2025 as compared to $5.9 million for the three months ended March 31, 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 $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.

Previous wording

Depreciation of specialty rental assets. Depreciation of specialty rental assets was $13.7 million for the three months ended March 31, 2025 as compared to $14.8 million for the three months ended March 31, 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 $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.

Previous wording

Other depreciation and amortization. Other depreciation and amortization expense was $4.0 million for the three months ended March 31, 2025 as compared to $3.9 million for the three months ended March 31, 2024. The increase in other depreciation and amortization is primarily driven by an increase in depreciation associated with an increase in finance leases for commercial use vehicles.

Current wording

Other depreciation and amortization. Other depreciation and amortization expense was $4.1 million for the three months ended June 30, 2025 as compared to $3.9 million for the three 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.

Previous wording

Other expense (income), net. Other expense (income), net was $0.3 million for the three months ended March 31, 2025 as compared to $(0.1) million for the three months ended March 31, 2024. The increase in other expense was primarily driven by losses on leased assets.

Current 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.

Previous wording

Income tax expense (benefit). Income tax expense (benefit) was $(1.3) million for the three months ended March 31, 2025 as compared to $6.1 million for the three months ended March 31, 2024. The change in income tax expense (benefit) is primarily attributable to the decrease in income before taxes for the three months ended March 31, 2025 led by a decrease in revenue, partially offset by cost decreases previously mentioned.

Current 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.

Previous wording

Cost of services. Cost of services was $35.8 million for the three months ended March 31, 2025 as compared to $36.9 million for the three months ended March 31, 2024. The decrease in services costs is primarily due to a decrease in services costs from the Government segment driven by lower occupancy led by the contract terminations previously discussed. These decreases were partially offset by an increase in costs of approximately $3.1 million in the All Other category of operating segments driven by the construction services activity under the Workforce Housing Contract in the WHS operating segment. Additionally, costs associated with the HFS-South segment increased by approximately $0.9 million driven by an increase in customer activity.

Current 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.

Previous wording

Selling, general and administrative. Selling, general and administrative was $14.8 million for the three months ended March 31, 2025 as compared to $14.9 million for the three months ended March 31, 2024. The decrease in selling, general and administrative expense from the prior period as a result of a decrease in stock compensation expense of approximately $1 million led primarily by the liability-based SARs driven by a lower number of SAR awards outstanding during the current period compared to the prior period as approximately 50% of such awards were outstanding during the three months ended March 31, 2024 compared to 0% in the current period as there are no remaining awards outstanding as of March 31, 2025 as these awards vested and were exercised as of December 31, 2024. Additionally, there were also decreases in severance costs of approximately $1 million for certain terminated employees during the three months ended March 31, 2024, amortization of system implementation costs also decreased by approximately $0.4 million from the prior year as such costs became fully amortized in May of 2024 as scheduled, compensation and benefits costs decreased by approximately $0.4 million, marketing and advertising costs as well as insurance costs decreased collectively by approximately $0.3 million. This was offset by an increase in transaction fees of approximately $2.6 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 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”). The remaining change was primarily driven by an increase in professional fees and recruiting.

Current 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.

Previous wording

Loss on extinguishment of debt. Loss on extinguishment of debt was $2.4 million for the three months ended March 31, 2025 as compared to $0 for the three months ended March 31, 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 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.

Previous wording

Interest expense, net. Interest expense, net was $4.3 million for the three months ended March 31, 2025 as compared to $4.6 million for the three months ended March 31, 2024. The change in interest expense, net was primarily driven by an

Current wording

Interest expense, net. Interest expense, net was $5.3 million for the six months ended June 30, 2025 as compared to $8.9 million for the six months ended June 30, 2024. The change in interest expense, net was primarily driven by a decrease in

Previous wording

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

Current 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.

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 three months ended March 31, 2025 as compared to $(0.7) million for the three months ended March 31, 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 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.

Previous wording

Adjusted gross profit decreased as a result of the decrease in revenue mentioned above, partially offset by lower costs due to lower occupancy driven by the contract terminations previously discussed. Approximately $4.8 million of the decrease in costs were associated with community operations related to the PCC Contract, while approximately $3.9 million of the decrease in costs were associated with community operations related to the STFRC Contract.

Current wording

Adjusted gross profit decreased as a result of the decrease in revenue mentioned above, partially offset by lower costs due to lower occupancy driven by the contract terminations previously discussed. Approximately $1.2 million of the decrease in costs were associated with community operations related to the PCC Contract, while approximately $1.3 million of the decrease in costs were associated with community operations related to the STFRC Contract, partially offset by the DIPC Contract mentioned above.

Previous wording

Revenue decreased primarily due to the termination of the PCC Contract and the termination of the STFRC Contract as previously discussed. Approximately $30 million of the revenue decrease was attributable to the PCC Contract, of which approximately $9.3 million was related to lower variable services revenue from the PCC Contract. The remaining decrease in revenue of approximately $12 million was attributable to the STFRC Contract termination.

Current wording

Revenue decreased primarily due to the termination of the PCC Contract and the termination of the STFRC Contract as previously discussed, partially offset by reactivation of the assets associated with the STFRC Contract under the DIPC Contract in March 2025. Approximately $73.9 million of the revenue decrease was attributable to the PCC Contract, of which approximately $9.3 million was related to lower variable services revenue from the PCC Contract. The remaining decrease in revenue of approximately $20.4 million was attributable to the STFRC Contract termination, partially offset by the DIPC Contract mentioned above.

Previous wording

The decrease in revenue of approximately $(0.9) million was primarily attributable to a decrease in ADR, partially offset with an increase in customer activity.

Current wording

The decrease in revenue of approximately $(2.9) million was primarily attributable to a decrease in ADR, partially offset with an increase in customer activity.

Previous wording

The decrease in adjusted gross profit of approximately $(1.8) million was primarily attributable to an increase in operational costs driven by an increase in customer activity, and partially driven by the decrease in revenue noted above.

Current wording

The decrease in adjusted gross profit of approximately $(4.3) million was primarily attributable to the decrease in revenue noted above, and partially by an increase in operational costs driven by an increase in customer activity.

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 March 31, 2025, the ABL Facility had unused available borrowing capacity of $134.1 million. We currently believe that our cash on hand, along with these sources of funds will provide sufficient liquidity to fund debt service requirements, support our growth 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 June 30, 2025, the ABL Facility had unused available borrowing capacity of $151 million. We currently believe that our cash on hand, along with these sources of funds will provide sufficient liquidity to fund debt service requirements, support our growth 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.

Previous wording

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 six months ended June 30, 2025, we incurred approximately $27.2 million in capital expenditures, with approximately $15.7 million driven by capital expenditures in the new WHS segment, and approximately $2.9 million driven by growth capital expenditures in the Government segment. Maintenance capital expenditures for specialty rental assets amounted to approximately $5.7 million for the six months ended June 30, 2025, while approximately $2.7 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.

Previous wording

Cash flows provided by operating activities. Net cash provided by operating activities was $3.9 million for the three months ended March 31, 2025 compared to $50.6 million for the three months ended March 31, 2024.

Current wording

Cash flows provided by operating activities. Net cash provided by operating activities was $15.0 million for the six months ended June 30, 2025 compared to $89.7 million for the six months ended June 30, 2024.

Previous wording

The current period is down by approximately $(46.7) million when compared to 2024 driven by a decrease in cash collections from customers of approximately $56.2 million and a $3.1 million increase in cash paid for interest driven by the early payoff of the 2025 Senior Secured Notes on March 25, 2025. These decreases were partially offset by a net decrease in payments for operating expenses and payroll of approximately $11.8 million driven by a decrease of approximately $1.3 million in cash payments for the vested SAR awards, and by a decrease in operating expenses led by the Government segment. There was also an increase in interest received by approximately $0.7 million (driven by a higher average outstanding cash balance in the current period that generated interest income), and a decrease in cash paid for income taxes of approximately $0.1 million.

Current wording

The current period is down by approximately $(74.7) million when compared to 2024 driven by a decrease in cash collections from customers of approximately $93.1 million, a $4.5 million increase in cash paid for interest driven by the early payoff of the 2025 Senior Secured Notes on March 25, 2025, and a decrease in interest received by approximately $0.5 million (driven by a lower average outstanding cash balance in the current period that generated interest income). These decreases were partially offset by a net decrease in payments for operating expenses and payroll of approximately $9.6 million led by a decrease of approximately $6.2 million in cash payments for the vested SAR awards. There was also a decrease in cash paid for income taxes of approximately $14.4 million.

Previous wording

Cash flows used in investing activities. Net cash used in investing activities was $17.2 million for the three months ended March 31, 2025 compared to $8.9 million for the three months ended March 31, 2024. This increase in net cash used in investing activities was primarily related to an increase in growth capital expenditures in the WHS operating segment within the All Other category related to the $15.5 million acquisition of community assets in January 2025 to support growth of the WHS operating segment.

Current wording

Cash flows used in investing activities. Net cash used in investing activities was $24.9 million for the six months ended June 30, 2025 compared to $16.1 million for the six months ended June 30, 2024. This increase in net cash used in investing activities was primarily related to an increase in growth capital expenditures in the WHS segment related to the $15.5 million acquisition of community assets in January 2025 to support growth of the WHS segment, partially offset by

Previous wording

Cash flows used in financing activities. Net cash used in financing activities was $142.9 million for the three months ended March 31, 2025 compared to $21.3 million for the three months ended March 31, 2024. This increase in net cash used in financing activities was primarily driven by the $181.4 million full redemption of the 2025 Senior Secured Notes on March 25, 2025 and the related payment of 2025 Senior Secured Notes debt extinguishment premium costs of $1.8 million, partially offset by a net draw on the ABL Facility of approximately $40.9 million in the current period and the prior period including approximately $21.2 million for the repurchase of Common Stock as part of the share repurchase program.

Current wording

Cash flows used in financing activities. Net cash used in financing activities was $161.5 million for the six months ended June 30, 2025 compared to $23.2 million for the six months ended June 30, 2024. This increase in net cash used in financing activities was primarily driven by the $181.4 million full redemption of the 2025 Senior Secured Notes on March 25, 2025 and the related payment of 2025 Senior Secured Notes debt extinguishment premium costs of $1.8 million, partially offset by a net draw on the ABL Facility of $24 million in the current period and the prior period including approximately $21.1 million for the repurchase of Common Stock as part of the share repurchase program.