Target Hospitality — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue for the quarter ended September 30, 2026, was $129.1 million, a 30% increase year-over-year (YoY) and 51% increase sequentially compared to $99.4 million in Q3 2025.
• Net loss was $9.2 million, or $0.09 per share (basic and diluted), compared to a net loss of $0.8 million, or $0.01 per share, in Q3 2025.
• Adjusted EBITDA was $34.2 million, up 59% YoY from $21.5 million, with margin expanding approximately 480 basis points to 27%.
• Year-to-date Net Cash Provided by Operating Activities was $154.2 million, and Discretionary Cash Flow (DCF) was $150.0 million.
• Total liquidity ended the quarter at approximately $440 million, consisting of $3 million in cash and cash equivalents and $437 million in undrawn ABL commitments.
• Total net leverage ratio was 1.4x as of September 30, 2026.
• Capital expenditures for the quarter were approximately $246 million, primarily to support long-term customer contracts in the Workforce Hospitality Solutions (WHS) segment.
• Deferred revenue and customer deposits increased to $60.3 million at September 30, 2026, from $9.3 million at December 31, 2025.

Guidance and Future Outlook:

• Reaffirmed full-year 2026 financial outlook:
  • Total revenue between $435 million and $445 million.
  • Adjusted EBITDA between $105 million and $115 million.
  • Total Capital Expenditures between $490 million and $510 million (excluding acquisitions).
• Projected annualized revenue exceeding $750 million and annualized Adjusted EBITDA above $300 million exiting 2027, based entirely on the existing contract portfolio with no contribution from the commercial pipeline.
• Anticipates continued revenue and Adjusted EBITDA growth as the WHS contract portfolio scales through 2026 and into 2027.

Business Segments and Product Lines:

• Workforce Hospitality Solutions (WHS):
  • Revenue was $79.5 million, up 116% YoY from $36.8 million.
  • Adjusted gross profit was $39.8 million, up 509% YoY from $6.5 million.
  • Average utilized beds reached 6,222 (up from 127 YoY), with utilization at 97% (up from 36%).
  • Average Daily Rate (ADR) was $132.04, up from $108.15 YoY.
  • Secured over $1.7 billion in multi-year contract awards since January 2026 representing more than 10,000 beds.
  • Multiple scope expansions on existing contracts increased total contract value by more than 10% over initial terms.
• Hospitality & Facilities Services - South:
  • Revenue was $32.6 million, down from $35.6 million YoY.
  • Adjusted gross profit was $7.7 million, down from $10.4 million YoY.
  • Average utilized beds were 4,844 (down from 5,429 YoY), while utilization remained flat at 73%.
  • ADR increased to $72.19 from $70.24 YoY.
  • Decreases driven by reallocation of assets to support high-return WHS contracts.
• Government:
  • Revenue was $13.7 million, down from $23.9 million YoY.
  • Adjusted gross profit was $3.4 million, down from $15.1 million YoY.
  • Decreases driven by a non-recurring $11.8 million PCC contract close-out payment in Q3 2025 and increased transitional costs in the current period.
  • Additional transitional costs expected for the remainder of 2026.
• All Other:
  • Revenue was $3.2 million, up slightly from $3.0 million YoY.
  • Adjusted gross profit was $(0.02) million, compared to $0.3 million YoY.

Market and Competitive Landscape:

• Target Hyper/Scale platform gaining traction in data center, power generation, and critical infrastructure development sectors.
• Geographically diverse growth pipeline exceeds 25,000 beds of potential opportunities, with some in advanced contract discussions.
• Company positioned as a preferred sole-source partner for large-scale industrial projects, including AI data centers.
• Focus on expanding into value-added adjacencies to capture a greater share of customers' total development spend.

Risks and Challenges:

• Government segment expected to incur additional transitional costs related to network optimization in 2026, temporarily impacting operating margins.
• Forward-looking statements involve risks including operational, economic, political, and regulatory uncertainties; construction execution and permitting risks; labor availability; and potential delays, non-renewals, or cancellations of contracts.
• Specific risks include reliance on third-party manufacturers, changes in customer capital spending, and exposure to claims or litigation.

Management Commentary and Tone:

• CEO Brad Archer stated results reflect a strategic transformation delivering meaningful revenue growth and margin expansion.
• Management highlighted "execution at scale" with WHS utilized beds exceeding 6,200 and building momentum for growth into 2027 and beyond.
• Confidence expressed in converting the deepest commercial pipeline in company history into compounding growth and long-term shareholder value.
• Emphasis on the vertically integrated model and speed-to-market capabilities differentiating the company in attracting and retaining skilled workers for critical infrastructure projects.

Other Key Points:

• On July 24, 2026, closed a new $660 million asset-based revolving credit facility (ABL), reducing borrowing costs by up to 250 basis points.
• As of September 30, 2026, had $223 million of borrowings under the $660 million ABL.
• Total contract value for WHS awards increased by more than 10% over initial terms due to scope expansions.
• Conference call scheduled for November 9, 2026, at 8:00 a.m. Central Time.
• Repurchased $30 million of common stock during the nine months ended September 30, 2026.