Earnings call transcript: Target Hospitality Q2 2025 beats revenue expectations

Target Hospitality Corp reported its second-quarter earnings for 2025, revealing a better-than-expected performance in revenue, although earnings per share (EPS) fell short of forecasts. The company reported a revenue of $62 million, surpassing the forecast of $59.43 million. However, its EPS was -$0.1223, slightly missing the expected -$0.11. Following the release, Target Hospitality’s stock price surged by 10.96% in pre-market trading, reflecting positive investor sentiment. According to InvestingPro data, the company maintains a healthy financial position with a "GOOD" overall health score, despite recent market volatility. InvestingPro analysis indicates the stock is currently trading near its Fair Value.

Key Takeaways

• Target Hospitality’s Q2 2025 revenue exceeded expectations by 3.67%.
• EPS was below forecast, with an 11.18% negative surprise.
• The company’s stock rose by 10.96% in pre-market trading.
• Raised full-year revenue outlook to $310-$320 million.
• Secured over $400 million in new contracts.

Company Performance

Target Hospitality demonstrated robust performance in Q2 2025, with total revenue climbing to $62 million. This represents a significant achievement given the competitive landscape and economic pressures. The company continues to capitalize on its strong position in the remote hospitality sector, driven by its government and commercial market engagements. With an EBITDA of $153.82 million over the last twelve months and a market capitalization of approximately $805 million, the company shows significant operational scale. Access comprehensive analysis and detailed metrics with InvestingPro’s exclusive research report, part of our coverage of over 1,400 US stocks.

Financial Highlights

• Revenue: $62 million, up from the forecasted $59.43 million.
• Adjusted EBITDA: $4 million.
• Cash flow from operations: Over $15 million.
• Cash position: $19 million.
• Net leverage ratio: 0.1x.

Earnings vs. Forecast

Target Hospitality’s revenue for Q2 2025 came in at $62 million, surpassing the forecast of $59.43 million, marking a 3.67% revenue surprise. However, the EPS was -$0.1223, slightly below the forecast of -$0.11, resulting in an 11.18% negative surprise. This mixed performance highlights the company’s ability to drive revenue growth despite challenges in achieving expected EPS.

Market Reaction

Following the earnings announcement, Target Hospitality’s stock price saw a notable increase of 10.96%, reaching $7.64 in pre-market trading. This surge indicates strong investor confidence, likely driven by the company’s revenue beat and optimistic future outlook. The stock remains below its 52-week high of $11.1 but has shown resilience compared to its 52-week low of $4. InvestingPro data reveals the company maintains a strong current ratio of 1.97x and operates with moderate debt levels, with a debt-to-equity ratio of just 0.13. Want deeper insights? InvestingPro offers 8 additional key tips about Target Hospitality’s financial health and market position.

Outlook & Guidance

Target Hospitality has raised its full-year revenue outlook to $310-$320 million, a midpoint increase of 15%. The company also projects adjusted EBITDA between $50-$60 million, reflecting a 6% midpoint increase. These revisions underscore the company’s confidence in its growth trajectory, supported by new contracts and expanding market opportunities.

Executive Commentary

CEO Brad Archer highlighted the strategic importance of recent contracts, stating, "This is really starting to ramp up. It has the ability to be what we would say is a game changer for our company." Archer also emphasized the company’s robust market fundamentals, noting, "We are excited about these opportunities underpinned by robust market fundamentals and secular momentum."

Risks and Challenges

• Potential delays in contract execution could impact revenue.
• Economic uncertainties may affect government and commercial spending.
• Competitive pressures in the remote hospitality sector.
• Fluctuations in demand for workforce housing solutions.
• Dependence on government contracts for a significant portion of revenue.

Q&A

During the earnings call, analysts inquired about the potential impact of new data center projects. CEO Archer described these as "long-term, multi-year facilities" that could significantly enhance the company’s growth prospects. Additionally, questions about the utilization of West Texas assets revealed ongoing government interest, with potential contracts expected in the latter half of 2025.

Full transcript - Target Hospitality Corp (TH) Q2 2025:

Conference Operator: Good morning, ladies and gentlemen, and welcome to the Target Hospitality Second Quarter twenty twenty five Earnings Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press 0 for the operator. This call is being recorded on Thursday, 08/07/2025.

I would now like to turn the conference call over to mister Mark Stuck. Please go ahead.

Mark Stuck, Unspecified Executive, Target Hospitality: Thank you. Good morning, everyone, and welcome to Target Hospitality’s Second Quarter twenty twenty five Earnings Call. The press release we issued this morning outlining our second quarter results can be found in the Investors section of our website. In addition, a replay of this call will be archived on our website for a limited time. Please note the cautionary language regarding forward looking statements contained in the press release.

This same language applies to statements made on today’s conference call. This call will contain time sensitive information as well as forward looking statements, which are only accurate as of today, 08/07/2025. Target Hospitality expressly disclaims any obligation to update or amend the information contained in this conference call to reflect events or circumstances that may arise after today’s date, except as required by applicable law. For a complete list of risks and uncertainties that may affect future performance, please refer to Target Hospitality’s periodic filings with the SEC. We will discuss non GAAP financial measures on today’s call.

Please refer to the tables in our earnings release posted in the Investors section of our website to find a reconciliation of non GAAP financial measures referenced in today’s call and their corresponding GAAP measures. Leading the call today will be Brad Archer, President and Chief Executive Officer followed by Jason Vlasic, Chief Financial Officer and Chief Accounting Officer. After their prepared remarks, we will open the call for questions. I’ll now turn the call over to our Chief Executive Officer, Brad Archer. Thanks, Mark.

Good morning, everyone, and thank you for joining us on the call today. We entered 2025 focused on accelerating our strategic growth initiatives and diversifying our contract portfolio. In the first half of this year, we announced two multiyear contracts valued at over $400,000,000 supporting a diverse range of customers. These contracts exemplify Target’s unique value proposition and our ability to deliver tailored solutions and exceptional services across various end markets. Additionally, we are finalizing contract discussions regarding a multiyear lease and services agreement that supports the rapidly expanding technology infrastructure and data center end market.

This agreement will further broaden our diverse end market reach and contract portfolio. These achievements have driven significant progress in advancing our growth initiatives, both within Target’s existing market and in developing new growth sectors. Moreover, these diverse markets all benefit from strong long term growth trends, providing solid platforms to accelerate our strategic objectives. Our growth pipeline remains strong, supported by a historic domestic investment cycle and rising demand from the government sector. With these strong tailwinds, we continue to focus on maintaining this momentum and advancing our strategic initiatives.

Turning to our segments and specific growth opportunities. Our HFS segment continues to benefit from consistent customer demand as clients value our premium service offerings and network capability. Target’s ability to deliver these unmatched solutions is essential for maintaining long relationships and achieving consistent contract renewal rates exceeding 90%. These factors help secure a recent multiyear contract extension with one of our largest HFF customers, highlighting a relationship that has lasted over fifteen years. This proven operating model is central to Target’s success and has served as the blueprint for potential new customers, demonstrating the benefit and unique value propositions of our vertically integrate graded accommodations platform.

These distinctive capabilities supported the workforce subcontract announced in February along with recent contract modifications supporting community enhancements. The increased scope of the contract, which raises the total contract value to approximately $154,000,000, exemplifies Target’s capacity to develop highly tailored solutions to meet specific customer needs. These enhancements underscore the importance of this community, and we see further opportunities for expanded contract scope and term extension to support the development of this critical mineral supply chain. Target’s bespoke solutions and unmatched capabilities in developing comprehensive remote workforce community have supported the advanced contract discussions for our anticipated data center community. This contract further expands Target’s end market reach and creates a new growth sector supporting the unprecedented growth in AI and data center construction.

As we conclude contract discussions, we have started preliminary construction for this highly customized community and expect to share more details soon. This rapidly growing market is driven by historic domestic investment and long term growth trend. Since January 2025, more than $1,200,000,000,000 has been committed to developing and enhancing technology infrastructure to support artificial intelligence and data centers. The scale and remote locations of these projects generate significant demand for con comprehensive workforce hospitality solution. As demonstrated by these recent contracts and advanced discussions, Target’s distinctive ability to deliver integrated solutions aligns perfectly with the needs of remote workforce communities.

These factors have created one of the most significant commercial growth pipelines we’ve seen in years. Our reputation as the leading provider of remote hospitality solutions uniquely positions Target to support this rapidly expanding end market demand. We are excited about these growth opportunities, which we believe establish a vital long long term commercial vertical aligned with Target’s strategic growth objectives. Now moving to the government segment. The reactivation of our Dillard, Texas assets remain on schedule with community ramp up expected to be completed in September.

The successful reopening of this facility highlights the importance of our decision to keep this community prepared to reopen alongside our partner. Target’s ability to quickly mobilize and respond to government demand has established a strong reputation for delivering unmatched solutions across various critical US government immigration initiatives. These qualities form a solid foundation as Target continues to evaluate and pursue additional growth opportunities within the government sector. With the passage of the 2025 reconciliation bill in July, the US government has allocated $45,000,000,000 towards specific border security initiatives, including expanding assets and debt capacity. These initiatives will require coordination among multiple federal agencies to identify the most effective ways to implement comprehensive operational solutions.

Because of the broad scope of these efforts and the resources needed for proper execution, predicting the timing of a specific contract award is difficult. However, we are taking deliberate steps to demonstrate target capabilities and believe there are multiple avenues to support these key policy initiatives. Regarding our West Texas asset, we remain encouraged by ongoing interest from the US government in utilizing this readily accessible community. We have continued to host site visits with government officials and potential partners, receiving positive feedback. We remain confident in this community’s ability to deliver a vital solution aligned with the government’s policy objectives.

While actively remarketing our West Texas assets, we are also exploring various strategies to develop innovative solutions that support immigration initiatives beyond Target’s current asset portfolio and available beds. Recently, we developed and proposed proprietary solutions to help the government urgently expand critical immigration housing infrastructure. These tailored and highly customized solutions have generated strong interest from government agencies and potential partners. We are optimistic about leveraging these innovative solutions to support their policy objectives. In summary, the strength of our core accommodations platform and our distinctive capabilities have driven considerable progress towards key strategic goals.

We are encouraged by the strongest growth pipeline we’ve seen in years, supported by an unprecedented domestic investment cycle and increasing demand within the government sector. We believe these opportunities offer multiple pathways to expand our business portfolio and continue advancing our strategic objectives. I’ll now turn the call over to Jason to discuss our financial results in more detail. Thank you, Brad. Second quarter total revenue was approximately $62,000,000 with adjusted EBITDA of approximately $4,000,000 Our government segment generated quarterly revenue of approximately $7,000,000 The declines from the previous year were primarily driven by the termination of the PCC contract effective 02/21/2025, and partially by the termination of the South Texas Family Residential Center contract on 08/09/2024.

These declines were modestly offset by the reactivation of our Gilly, Texas assets effective 03/05/2025. As a reminder, this contract is based on fixed monthly revenue regardless of occupancy. It is expected to produce approximately $30,000,000 in revenue in 2025 with over 246,000,000 over its expected five year term. However, as the community progressively reopens, 2025 monthly revenue will align with the reactivation of each neighborhood within the facility. Additionally, this gradual reopening will lead to lower margin contribution through the 2025 before a full reactivation occurs.

We expect the community to be fully operational by September 2025, at which point we will see revenue and margin contributions consistent with the entire 2,400 bed community. Regarding our West Texas assets, as a reminder, we have decided to keep these assets in a ready state while actively remarketing. This decision, is similar to our approach with the Dilly assets, will entail carrying costs of about 2,000,000 to $3,000,000 per quarter until a new contract is potentially awarded. Turning to our HFS and all other segments. These segments delivered quarterly revenue of approximately $39,000,000 The scale of our HFS segment enables us to offer premium solutions across our network while maintaining substantial asset utilization in a competitive market.

We will continue to balance network optimization with demand while identifying opportunities to enhance efficiencies and margin contribution. Moving on to the expanding Workforce Hospitality Solutions segment or WHF. This segment, which includes our Workforce Hub contract, generated approximately $15,000,000 in revenue in the second quarter, primarily related to construction activity. As announced today, the critical nature of this contract led to recent modifications and scope expansion, increasing its total contract value from $140,000,000 to approximately $154,000,000 These community enhancements will lead to additional construction activity in 2025 and shift some previously expected services revenue into 2026. With the scope expansion, we now expect most construction revenue to be recognized in the third and fourth quarters of this year, with construction materially complete by the 2025.

As we finish construction, we anticipate increased services revenue starting in 2026 and continuing through 2027. The scope expansion and contract modifications highlight the vital role of the workforce hub in the project success, and we see potential for further scope expansions and contract extensions. This demonstrates the advantages of our vertically integrated hospitality solutions and our ability to create long term revenue streams supporting large scale remote operations. Recurring corporate expenses for the quarter were approximately $10,000,000 As we progress through the year, we will continue exploring ways to optimize our cost structure and enhance margin contributions. Total capital spending for the quarter was approximately $6,000,000 primarily focused on enhancing asset capabilities within the government segment aligned with our strategic growth initiatives.

During the 2025, Target’s business fundamentals and durable operating model supported strong cash conversion, resulting in over $15,000,000 of cash flows from operations. These fundamentals are reflected in the strength of our balance sheet and our ability to maintain substantial financial flexibility through prudent capital management. We ended the quarter with $19,000,000 in cash and a net leverage ratio of 0.1 times. As of August 1, we have no outstanding borrowings under the company’s $175,000,000 revolving credit facility, providing total available liquidity of over $190,000,000 including approximately $23,000,000 in cash. This robust liquidity position further enhances our financial flexibility as we evaluate a strong pipeline of growth opportunities.

This momentum and positive operating environment along with the expanded scope of the workforce health contract support our raised outlook for 2025, which now includes total revenue of $310,000,000 to $320,000,000 and adjusted EBITDA of $50,000,000 to $60,000,000 This raised outlook reflects a 15% increase in the midpoint revenue and a 6% increase in the midpoint adjusted EBITDA compared to our previous outlook. Target is well positioned with a flexible operating model and an optimized balance sheet as we continue to evaluate a robust pipeline, which we believe offers the greatest opportunity to accelerate value creation for our shareholders. Importantly, as we pursue these opportunities, we will stay focused on maintaining the strong financial profile we’ve built while optimizing margin contribution through our efficient operating structure. With that, I will hand it back to Brad for closing remarks. Thanks, Jason.

In the 2025, we have made significant progress towards achieving key elements of our strategic priorities focused on expanding and diversifying our business portfolio. We announced two multiyear contracts serving diverse end markets and are finalizing contract discussions supporting the rapidly growing AI and data center end markets. Additionally, we see clear opportunities to enhance our growing contract portfolio with expanded service offerings and term extensions. We remain focused on maintaining this momentum as we evaluate our strongest growth pipeline in many years, comprising both commercial and government end markets. Importantly, this pipeline is supported by an unprecedented domestic investment cycle and continued strong demand in the government sector.

We are excited about these opportunities underpinned by robust market fundamentals and secular momentum. We believe that our distinctive capabilities and unparalleled solutions position us well as we actively pursue these strategic growth initiatives designed to provide exceptional value to our shareholders. Thank you for joining us on the call today. And again, we appreciate your interest in Target Hospitality. We will now open the call for questions.

Conference Operator: Thank you. Ladies and gentlemen, you will now begin the question and answer Should you have a question, please press the star followed by the one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the following process, please press the star followed by the two. If you are using a speakerphone, please listen your answer before pressing any key.

One moment, please, for your first question. Your first question comes from Scott Schenberger from Oppenheimer. Please go ahead.

Mark Stuck, Unspecified Executive, Target Hospitality: Good morning, guys. It’s Daniel on for Scott. Thank you for taking taking our questions. I just wanna start on West Texas first. I mean, you mentioned site visits.

How how should we think about the steps from here? How how those discussions could progress and the potential for this contract to be comparable to prior contracts at that site? Okay. Hold on. What’s the question?

Yeah. Hey, Daniel. This is Mark. So the question is just on on West Texas timeline and the opportunities there? Yes.

Correct. Concerning the government. Right. Yeah. Right.

Yeah. Yeah. Sorry, Daniel. We couldn’t we couldn’t quite hear you, Daniel. Yeah.

So so look. Timeline’s still consistent what we said. Right? We know that the that the reconciliation budget has been passed. But right now, we’re not seeing that money flow.

Right? What we do know is we’re having some very good discussions continually with with with the government. We also have been told we’re on their acquisition list. Right? So as that starts those funds start to flow, we don’t know exactly where in line we’re at, but we still feel very good on that facility as far as being leased and reactivated.

Right? There’s nothing has changed in that. We continue to have different parts of the government out to view the property, take a look, and continue, you know, positive statements around that. So we still feel really good about that as we get in the back half of the year. Got it.

Thank you. Yeah. And then and then on the data center opportunity, how should we think about the I mean, we will get economic details eventually, but how should we think about the the structure there? Could could that be comparable to the to the workforce hub contract? And and it sounds like the timing is is imminent to that, but any any more color you can provide there?

Yeah. Sure. This is Jason. So won’t get into too much details. We hope to release more details for you in in the in the near term.

But I will say on this deal, it’ll be a bit different than the workforce subcontracts because we’re going to own the assets. And I would say the margin on that typically is a bit higher than a services only contract. So this is a leasing services agreement, not dissimilar to the Dilly structure. Yep. And look.

Let me just hey, Daniel. Let me just add a little bit more to that and give you a little bit more color on this. But we are you know, we’re waiting on the on the final contract. What we do have is an early works contract where we’re doing some work on the site. So I will tell you this is imminent far as this happening fairly quickly and starting to fully mobilize on that site.

But I think at a higher level, I think it’s probably a good time. We’ve talked about the data centers the past couple of quarters. And and this is really starting to ramp up. It has the ability to be what we would say is a game changer for our company. You know, it’s kind of a perfect storm when you look at what’s in that business.

Aside from all the capital spend that’s already committed and weekly more continues to be committed. Right? But if you look across The US, these are going in everywhere. Not everyone kind of or not every project fits the target hospitality mold, but more and more continue to fit that. What’s happening is in a lot of these local communities, they’re being voted down.

Right? They’re bringing they’re they’re taking on so much power, so much water. It’s massive amounts of people coming into the town over a three, four, five, six, seven year period on the construction cycle. Right? So these developers are being forced out into more and more remote locations.

These developers are fighting each other over over labor. Labor’s very hard to get. So when I talk about a perfect storm, it’s exactly what we went through in my history in this business where these these huge booms. Right? And lots of money being being being committed.

And it’s in these remote areas where we come in and and help in that. We deliver the housing. We deliver the services. We help them retain and attract the the workforce because it’s very competitive. So we’ve got our first one under contract, which we’ll finalize very soon and many more in the pipeline.

But I’m not sure we’ve talked about the scale of this like I’m telling you today. It’s massive. Our pipeline continues to fill up. Yes. We need to close some of them, but we have some near term and some longer term that that we’re working on.

And again, very excited internally because of things they could they can do for it. And it’s it’s exactly what we’ve done over the years in in in the oil and gas, in the mining, but on a much larger scale. Got it. Excellent color. Thank you so much.

Conference Operator: Thank you. As a reminder, if you wish to ask a question, please press star one. And your next question comes from Steven Gennaro from Stifel. Please go ahead.

Mark Stuck, Unspecified Executive, Target Hospitality: Thanks. Good morning, everybody. Good morning. Well, I guess, when you think about these data center contracts, as far as the duration because when I think about a lot of gap, it’s kind of this great network approach, right, where you have people moving around, but you have them for someone like a Halliburton over time. Is this more of, like, a permanent multiyear facility where workers will be in the same spot for years?

Or is this kind of more of a shorter term network approach, which probably just a lot of demand out there that will continue to fill that? No. It’s it’s it’s your first statement. Right? A large amount of workforce in one location for many years.

Right? If you see some of these that that they’re doing, that they’re putting out in the press, you know, first, they need the power and they need the water. Right? And then what they say is we’ve got a build out of of seven years. We’re gonna start with two.

They get those leased and they continually build another two, another four as they get the commitment. Very similar to the gas when they build a pipeline. Right? They get the commitments. They they they and they continue to fill it.

But these are longer term. Right? And huge multibillion dollar project in that one location where we’re where we’re a very small part of the spin, but a huge critical piece of making success for them. Right? And staying on budget and staying on on on timeline.

Without us in some of these locations, especially with this first one, they just couldn’t get the job done. And we’re just seeing more and more of these going remote, getting closer to the power source, closer to the water source, being forced out of the bigger cities. And it sits right in our wheelhouse on on these. Thank you. And if if I could tie that into the oil and gas business for a second.

When we think about so clearly, doing a completion activity this week, it looks like there’s some level of maybe a bit lower norm for a while as, you know, that works through excess capacity. The risk regular completion activity is much more efficient. There’s lots of people out there. Are you like, what’s the source of beds for the data center? Is it is it taking some more oil and gas network?

Is it incremental CapEx? Is it a combination of both? Is it Pico’s contract? Something Yeah. How do think about the best?

Yeah. It’s the same way we’ve always thought about it in our business. Right? We we look at any excess capacity and and try to utilize that first. Right?

We wouldn’t be, if you will, mothballing the oil and gas side of the business. It’s a great business. We have to have a certain number of rooms out there. But we do have some excess capacity out there that’s not being used that we would we would first utilize on on the data center. Secondly, we would look in the open market to buy.

Right? And then we would look to build new. What I would tell you, the amount of work that’s out there that’s on our radar would absolutely in the future have us buying new product. The in short, the amount of work in our pipeline that is very real and actionable. And if we get a few of these, we would absolutely have to go and buy because they’re mass and it’s all over The US.

Right? So we would run out of equipment. That’s that’s a high class problem, a good one. We’re okay with that. Right?

We have the capital structure to make that happen. Not always built into the economics of that opportunity as appropriate. And great counterparties on these huge companies. Right? So Okay.

Thank you. And just one quick follow-up. Back in, I don’t know, 02/2019, I think the numbers that we were using was about $50,000 per bed. Is that still a reasonable number given the inflation environment, etcetera, if you do need to ultimately add your coffee or just throw it over your stuff? Like, I haven’t seen anything say the same price since 2019 after COVID and everything, so I would tell you that probably goes up.

I mean but where that’s at, we’re not gonna divulge kind of where we’re at on a on a cost right now per per bed. But what I would lean back into is what Jason said. What it will be is rolled into our economics. Whether that’s $50.60, $70,000 rent, we’re gonna make sure that the economics work and and more so kinda how our HFF and that that stuff looks. Higher economics than what you’re seeing on a LAC project for sure.

Right? Great. Great. I appreciate the color, Brad. Thank you.

Thank you.

Conference Operator: Thank you. And the next question comes from Greg Gibas from North Securities. Please go ahead.

Mark Stuck, Unspecified Executive, Target Hospitality: Great. Good morning, Brad and Jason. Nice to hear that near finalization of the data center community contract. You know, wanted to follow-up there in terms of, like, how competitive the bidding was for that contract and and maybe there’s a key factor that led them to select Target. Yeah.

Look. I would tell you it was they checked our numbers. Right? But when you when you look at the scale of some of these the ability to move fast, when you’re talking billion dollar projects that they’re building, we become a small, again, a small piece of the spend. So it doesn’t come down to saving a few bucks on a room.

They look at, can you get the job done? Can you help us retain and attract the the workforce that we need? So it’s it’s not so much a price point, right, which is exactly what what we like. It’s can you get it done? Can you deliver what you say you’re gonna deliver on time?

And and that’s really where this went. Was it competitive? Sure. They’re always competitive. But this wasn’t a price driven exercise, and we’re not seeing a lot of price driven exercises on the because we have many more of this that we’re or many more of these that we’re looking at.

Great. That’s very helpful and good to hear. Wondering if I could get a little bit more color on kind of the puts and takes relative to the updated guidance. I know not a big change, but there you mentioned the positive momentum, positive environment and then some changes to the workforce hub contract. Just wondering what’s changed regarding what’s implied in the updated guidance changes?

Yes. So the two main drivers of the guidance update, the lead driver on the revenue side for sure is the workforce hub contract expansion. So now the total contract value has increased from 140,000,000 to 154,000,000 driven by construction activity. So that construction activity has expanded. We still anticipate the construction activity to be completed this year.

Timing has shifted a little bit, but that’s sort of the main driver behind the guidance, particularly on the revenue side. Then we also had that PCC contract wrap up settlement as well that played into the guidance. And those are the two primary drivers behind the outlook increase. Yep. Hey, Greg.

And yeah. Just I don’t jump in on Jason here, but, you know, again, this quarter, a little bit of noise, right? That I’ll say this. It kind of cleans itself up as we move through the year and get into 2026 as well. So not really much to pay attention to as far as the noise here.

It’s kind of a tale of two stories. We’ve seen where this was going. We kind of predicted this other than the timing, but the project got a lot larger. Right? We’re happy to move that to the right for the customer and help them, but the project continues to grow.

And then our numbers get better as we roll through the year, especially as we add new projects. Very helpful. Appreciate it, guys. And then if I could just follow-up on West Texas assets, not sure if there’s that much more you can share there. But how would you maybe characterize the interest from the government agencies relative to last quarter, if that’s changed at all?

It has waned it up. It has not waned at all, right? Still very high. And to be honest, it it it it it it’s gotten a little higher because they they got their budget approved. Right?

So so, you know, there’s more more more firm discussions about what they’re trying to do. But I will tell you, the the government and this is not a knock. They just have so much that they’re trying to to do. Right? And we know they’ve got the money.

And I think some folks thought, well, got the money. They’ll start writing checks the next day. That’s just not how it works. It it takes time for it to to get appropriated, for it to flow out the doors. So we, you know, we think we start to see that in the back half of the year.

What hasn’t changed is their need for at least a 100,000 beds. Right? So they have to add a lot of beds in that. And we are still squarely in the mix there, not only on our West Texas assets. And I’m gonna take this time, you know, we mentioned the the proprietary facility that we’ve built.

The government came and inspected it. The name of that is SecureFlex. That’s the trademark name of this. It’s a great product. The government’s excited about it.

It gives us another optionality with them that they’ve looked at and we’ve quoted on some new builds for them for part of this 100,000 room expansion, you know, that they’re that they’re trying to do or to get to a 100,000 rooms. So we think this new product really helps us as we continue to move forward, not only with the federal, but if the state needs it as well. So some good stuff going on in the government aside from just the West Texas asset. Lots of opportunity out there. Yeah.

That’s great to hear. Thanks very much, guys. Welcome.

Conference Operator: Thank you. There are no further questions at this time. Mister Brad Archer, you may proceed your conference.

Mark Stuck, Unspecified Executive, Target Hospitality: Yep. Thanks for joining us on the call today, we look forward to talking to you next quarter. I’ll turn the call back over.

Conference Operator: Thank you. Ladies and gentlemen, this does conclude your conference call for today. We thank you very much for your participation. You may now disconnect your lines. Have a great day.

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