Target Hospitality Corp.

Second-quarter total revenue was approximately $86 million and adjusted EBITDA was approximately $18 million. WHS revenue was approximately $36 million, up 142% from the prior year; HFS-South revenue was approximately $33 million; and Government revenue was approximately $13 million. Average WHS utilized beds surpassed 4,000 during the quarter. Year-to-date cash flow from operating activities exceeded $110 million, including more than $100 million of advance payments from customers. Management said adjusted EBITDA margin expanded by more than 700 basis points versus Q1. For 2026, Target raised guidance to $410 million-$420 million of revenue and $85 million-$95 million of adjusted EBITDA, with capital spending excluding acquisitions of $490 million-$510 million. It also said WHS should become the largest segment in 2026, contributing more than 50% of consolidated revenue based on the current contracted portfolio. Management said the 2027 exit-year view implies annualized revenue above $700 million and adjusted EBITDA above $260 million, with net leverage expected to end 2027 well below 3x.

Brad Archer said the quarter reflected disciplined execution, commercial momentum and conversion of recent contract awards into operating results. He highlighted more than 9,000 contracted beds since January, over $1.4 billion of multiyear contract awards, and a pipeline exceeding 20,000 beds tied mainly to AI data centers, power generation and other critical infrastructure. His tone was confident and upbeat, emphasizing that customers are asking Target to do more, including scope expansion within existing communities, and that the company has the bandwidth to take on more projects.

Jason Vlacich focused on the financial ramp, saying Q2 revenue of about $86 million and adjusted EBITDA of about $18 million were driven by WHS growth and operating leverage. He noted year-to-date operating cash flow above $110 million, with more than $100 million coming from customer advance payments, and said this cash generation should continue to outpace adjusted EBITDA in 2026. He also said Q2 capital spending was about $132 million, total available liquidity was about $141 million, net leverage was 0.6x, and the new $660 million credit facility nearly quadruples prior committed borrowing capacity and lowers cost of capital. He added that $5 million-$7 million of transitional Government-segment costs are expected over the next two quarters, and that most 2026 capex should decelerate significantly as the company moves through 2027.

Analysts pressed on what was driving the higher guidance, and management said it came from multiple customer scope expansions, better visibility, and operating efficiencies arriving faster than expected. They also asked about the Dilley asset, and management declined to comment on any monetization, saying the Government segment contract runs to 2030 and that capital is focused on WHS where the best growth opportunity lies. On the 20,000-bed pipeline, management said discussions remain active across Texas, the Rockies and the Midwest, competition exists but is not overwhelming, and several near-term projects are in advanced discussions or being finalized into definitive agreements.