Good morning, ladies and gentlemen, and welcome to the Target Hospitality Q2 2025 earnings call 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 star zero for the operator. This call is being recorded on Monday, May 19, 2025. I would now like to turn the conference over to Mark Schuck. Please go ahead, sir. Thank you. Good morning, everyone, and welcome to Target Hospitality's Q2 2025 earnings call. The press release we issued this morning outlining our Q1 results can be found in the investor 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, May 19, 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 investor section of the 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 Vlacich, Chief Financial Officer and Chief Accounting Officer. After their prepared remarks, we will open the call for questions. I would now like to 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 deliver strong Q1 results centered on the strength of our business fundamentals and proven capabilities. These elements illustrate the benefits of Target Hospitality's efficient and durable operating model, supporting our ability to successfully navigate a variety of economic environments. During the first quarter, we announced two multi-year contracts which are expected to generate over $380 million in revenue over the coming years. These contracts illustrate our unique ability to support a range of critical domestic initiatives spanning both commercial and government markets. We are well-positioned with strong momentum as we continue evaluating and pursuing the most active and robust growth pipeline we have had in many years. We are excited about this opportunity set and focused on accelerating our strategic growth initiatives. Now turning to our segments and growth pipeline. Our HFS segment continues to benefit from consistent demand where our world-class customers find added value in the unmatched solutions our network provides. These capabilities support Target's long-standing customer relationship, some for over a decade, and a consistent 90% renewal rate since 2015. This consistency illustrates the value proposition of our network and ability to appropriately match customer demand through a variety of economic cycles. These characteristics support a well-optimized network and enhance revenue cash flow visibility. The workforce subcontract, which we announced in February, continues to progress in line with expectations. This expansion and diversification further illustrate our ability to utilize our distinct core competencies to advance our strategic growth initiatives. Our ability to provide customized solutions across industries highlights the reach of our capabilities as we continue evaluating a strong commercial growth pipeline. This pipeline is predominantly centered around large capital investments focused on modernizing critical domestic infrastructure and advancing 21st-century technologies. As this potential historic capital investment cycle takes shape, we have seen growing demand for hospitality solutions to support the significant workforce requirements associated with these initiatives. These opportunities include large industrial projects throughout the U.S., including technology infrastructure, increased domestic critical mineral development, and other related large capital investment programs. As a reminder, the size and scale of these growth opportunities inherently leads to longer sales cycles. However, we are encouraged by the pace of active conversations and progress on certain initiatives. We believe these commercial growth opportunities provide meaningful long-term growth potential and are an important element of Target Hospitality's strategic growth and diversification strategy. Moving to the government segment, our government segment experienced a transition as we moved into 2025. However, amidst evolving policy initiatives, Target Hospitality has illustrated its ability to provide unmatched solutions supporting a range of critical U.S. government missions. This execution underpins our ability to actively pursue a significant growth opportunity set supporting the current administration's immigration initiatives. The reactivation of our Dilley, Texas facility is progressing, and the community was able to receive an active population ahead of schedule. Our decision to maintain this community in a ready state was critical to the contract award and our ability, along with our partner, to quickly facilitate the community reopening. Regarding our West Texas assets, we are encouraged by the continued interest from the U.S. government in utilizing this readily accessible community. We have conducted numerous site visits and tours of the facility, with positive feedback indicating this community's ability to serve the current administration's policy objectives. Further, the substance of our conversations has indicated the U.S. government's desire to utilize this facility is consistent with its current layout, minimizing the need for additional capital investment. However, timing remains uncertain as there are likely administrative steps required, including securing necessary funding prior to potential contract award. While we are actively remarketing our West Texas assets, we are simultaneously evaluating multiple opportunities to support immigration initiatives beyond Target's existing asset portfolio and available beds. Given the scope of executive orders and resources required to adequately implement the government's current immigration policies, there is a significant demand for solutions aligned with Target's core competencies. We are taking intentional steps to demonstrate Target's capabilities and believe there are multiple avenues to support these critical policy initiatives. Further, our strong operational reputation and partnerships with industry-leading companies uniquely position Target to participate in many of these mission-critical solutions. In summary, the strength of our existing customer base, network capabilities, and proven operational flexibility support a resilient business model. This foundation supports our continued focus on pursuing strategic growth initiatives aimed at expanding and diversifying Target Hospitality's contract portfolio across end markets. I'll now turn the call over to Jason to discuss our financial results in more detail. Thank you, Brad. First quarter total revenue was approximately $70 million, with adjusted EBITDA of approximately $22 million. Our government segment produced quarterly revenue of approximately $26 million. The decrease from prior year was primarily driven by the termination of the PCC contract effective February 21, 2025, and partially by the termination of the South Texas Family Residential Center contract on August 9, 2024. These declines were modestly offset by the reactivation of our Dilley, Texas assets and the Dilley contract award effective March 5, 2025. As a reminder, this contract is based on fixed monthly revenue regardless of occupancy and is expected to generate approximately $30 million of revenue in 2025, with over $246 million of revenue over its anticipated five-year term. However, as the community progressively reopens, 2025 monthly revenue contributions will correlate with the reactivation of each neighborhood within the facility. Further, this paced reopening will result in lower margin contribution through the second and third quarter of 2025 prior to full reactivation. We anticipate the community will be fully activated by September of 2025, at which point we will realize revenue and margin contribution commensurate with the entire 2,400-bed community. Regarding our West Texas assets, as a reminder, we have decided to maintain these assets in a ready state as we actively remarket them. This decision, which is similar to the approach we took regarding our Dilley assets, will result in carrying costs prior to potential new contract award of approximately $2-$3 million per quarter. Turning to our HFS and all other segments, our HFS and all other segments delivered quarterly revenue of approximately $44 million. These segments continue to experience consistent customer demand, illustrating the value our customers find in our premium service offering and network capabilities. We have benefited from a more fully optimized HFS South segment, which continues to perform in line with our expectations in a competitive market. We're pleased with the workforce hospitality solution segment, which includes our recently announced Workforce Hub contract. Construction activity associated with the Workforce Hub contract is pacing on schedule and generated approximately $5 million of revenue in the first quarter. We anticipate that the majority of the construction revenue will be realized in the second and third quarter of 2025, with completion in the fourth quarter of 2025. As a reminder, this contract also provides for service revenue, which will support the premium Workforce Hub with comprehensive hospitality solutions through 2027. The contract exemplifies the benefits of our full-service capabilities and establishes a long-term revenue stream. Recurring corporate expenses for the quarter were approximately $10 million. As we move through the year, we will continue to look for opportunities to optimize our cost structure and strengthen margin contribution. Total capital spending for the quarter was approximately $21 million, including approximately $16 million of growth capital to expand strategic network capacity and support the Workforce Hub contract. As we previously announced on March 25, 2024, we redeemed all outstanding senior notes due in June of 2025 at a redemption price of 101% of par, resulting in an expected annual interest savings of over $19 million. Our decision to redeem the senior notes was focused on maintaining a balanced capital structure and financial flexibility as we continue pursuing a pipeline of strategic growth initiatives. We believe the current structure supports our ability to react to value-enhancing growth opportunities as they arise while appropriately balancing our obligations. We ended the quarter with $35 million in cash and $169 million in total liquidity, with $41 million of borrowings under the company's $175 million revolving credit facility and a net leverage ratio of 0.1 times. We will continue to prudently manage the capital structure and look for opportunities to further reduce outstanding borrowings as we progress through 2025. Target's strong business fundamentals have established a flexible and durable operating model. These elements support the company's reiterated 2025 financial outlook, which consists of total revenue of between $265-$285 million and adjusted EBITDA of between $47-$57 million. Target is well-positioned with a flexible operating model and optimized balance sheet as we continue evaluating a robust growth pipeline, which we believe provides the greatest opportunity to accelerate value creation for our shareholders. While we continue to thoughtfully evaluate a holistic set of capital allocation initiatives, our primary focus is growing and diversifying Target's contract portfolio. As we focus on strategic growth initiatives, we believe it is prudent to maintain the financial flexibility we have established to quickly react to value-enhancing opportunities as they arise. Importantly, as we evaluate these opportunities, we will remain focused on maintaining the strong financial profile we have established while optimizing margin contribution through our efficient operating structure. With that, I will turn the call back over to Brad for closing comments. Thanks, Jason. Our first quarter results were supported by strong business fundamentals and continued momentum across our operating segments. We are focused on sustaining this momentum as we evaluate one of the strongest growth pipelines we have had in many years. The breadth of these opportunities spans both commercial and government end markets, underpinned by strong secular tailwinds promoting significant domestic capital investments and national security initiatives. The growth opportunities are robust, extended beyond our existing asset portfolio and across multiple end markets. We are excited about these opportunities and believe Target's capabilities and proven reputation uniquely position the company as we actively pursue these strategic growth initiatives. We remain focused on enhancing Target's business mix and contract portfolio, which we believe will accelerate value creation for our shareholders. I appreciate everyone joining us on the call today, and thank you again for your interest in Target Hospitality. We'd now like to open the call for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touch-tone phone, and you will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you use a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Steven Ganaru with Stifel. Please go ahead. Thanks. Good morning, everybody. Good morning. Morning. There are two for me. The first is just around sort of opportunities on the idle assets and the government side. Can you give us any kind of incremental detail about the conversation you're having, the opportunity to put those to work, and kind of what we should be thinking about as far as data points around it or what's driving the demand? I'm just trying to kind of get a sense from—I know you can't tell us timing or economics, but any more color around that would be helpful. Yes, Steven, this is Brad. Good morning. Let me just kind of give you a high level on some of the things that have happened since our last call. I'll address kind of the government segment as a whole, but specifically starting on the West Texas assets. We continue to have strong interest, as we said before, high-level conversations with the government and our partners. Since our last quarterly call, we've led several tours of the facility, which has really increased the excitement around this asset. As we said before, and this hasn't changed, the government fully intends to increase their bed capacity by approximately 100,000 beds. The West Texas facility, it's ready for immediate occupancy, giving them kind of what I've said before is an easy button, right, for once funding is in place. At this point, that is kind of the waiting game, right? Once funding gets in place, the budget's approved. From all conversations we've had, we believe this facility is part of the government's acquisition plan. We've been told that through the conversation. We feel good about this facility and what happens to it in the future. What I would say, and as a reminder, I know there's a lot of focus always on the West Texas assets, and rightfully so. What really gets us excited is all the other potential for more beds, more opportunities to service the government from the DOD side to the ICE side to other folks within the DHS community. We're seeing more and more every week that is hitting our pipeline. In summary, I would just say, look, the opportunity set is strong. Target's strong operational reputation positions us well to get some of this business in the future. We've put ourselves in a really good position to grow this segment. Now we need to execute. I believe we will. Gotcha. Okay. Great. No, that's helpful. The other question I just had was the contract you have on the lithium front, and just how do we think about how that—so what's contracted right now and kind of what that means for contribution this year and next? Then kind of how do we think about the upside to that in 2026 plus? Yeah. This is Jason. So in terms of the Workforce Hub contract, this year, the majority of the revenue generated is going to be from the construction activities, which we expect to wrap up this year in Q4. We think the majority of that activity is going to occur in Q2, with the majority in Q3 and a wrap-up in Q4. That's going to contribute about $65 million of revenue for the year on the construction piece with an estimated margin of between 25-30%. After that, that's when the services part kind of more fully kicks in through 2027. So that's the balance of that $140 million revenue contract will be attributable to services. And then on the lithium project as a whole, there's a potential for multiple phases, which we're well-positioned to participate in beyond 2027. These phases can go all the way through 2040. Yeah, that's why we really like this project, right? We liked it for the first phase, but we really like it for multiple phases that they've publicly been out there and talked about. Look, as we know, GM has taken all the capacity on the first phase, a big portion already on the second phase. They are set up pretty well to continue to extend it. Again, we need to continue to perform so we are the service provider in the second and the third phase on this, and we believe we will. I look at that as the upside of this, just the longevity of the project itself. Great. No, thanks for the details, gentlemen. That's great. Thank you. Next question comes from Scott Schrenburger with Oppenheimer. Please go ahead. Thanks very much. Good morning. Morning. Kind of following up on the theme of new opportunities. Brad, you did a nice job outlining kind of what's occurred since last call with regard to West Texas. You touched on the government opportunity as a whole. I thought I heard in there, there were unprepared remarks somewhere, maybe looking at things that you may not already own. In the answer to this question, could you address maybe M&A or new asset consideration that you might pursue? Maybe that's more on the government side. On the non-government side, just a discussion of the ripeness of what's occurring out there. Thanks. Yeah. Let me take the first on the non-government, kind of all things other than government, right, for you. I'll touch base on that. I'll let Jason touch on some of the other as well. Outside of the government pipeline, we continue to see very strong bid activity in large domestic infrastructure projects such as mining, power, and data centers, to name a few. With that said, I want to spend a little time on the data center industry, more specifically, as we're seeing the need for services across the U.S. increase dramatically. I'm very encouraged with the progress our business development team is making here. We've talked about it a little before in the other calls, but we've definitely moved the ball down the field on several of these projects. These projects tend to have a three-year to six-plus years kind of a build cycle. Look, I think everybody's aware of the massive amount of capital being pumped into this industry. There's no doubt our services are needed on many of these that we're working on. Internally, there's a lot of excitement on this data center movement, especially since our last call. We continue, again, kind of moved the ball down the field, feeling pretty good about some of these projects. In summary, aside from data centers, our pipeline's the strongest it's been. What we really like about it is some of these, especially in the data centers, they're approved. They're shovel-ready. They have the capital, and they're spending it now. We put ourselves, again, like I said, in the government, in a really good spot to execute here. We have to go and do that. That's bottom line. I think we're close on some of these. On the government side, I would just say, with respect to assets, a lot of the opportunities we're looking at that are right in front of us don't necessarily require a lot of capital investment. Specifically on the West Texas assets, the layout there, based on all of our conversations and facility site tours that Brad had mentioned and conversations with the government, the layout seems to fit the government's need as is. We don't anticipate a lot of capital investment for those immediate government opportunities. However, if there are requirements around capital deployment, we'll certainly consider those to the extent that they're accretive. Many times, those will be built into the economics in terms of reimbursement and such. On the inorganic front, that's definitely still part of our diversification strategy. I would look at that as more the medium and long term. In the immediate term, we're focused on our organic growth. Yeah. Just one comment on the government side there, Scott, is there is no doubt the amount of rooms we have available compared to what the government needs, if we're lucky enough to win that much, would require us to spend some capital, right? To Jason's point, it would be structured in a way where we're not stuck with that capital. We're going to bid it into the job. We're going to get that capital back. There will be guarantees if there's early termination, those types of things. We will structure that where Target's protected on that, as we always have in the past, right? Very good. Got it. Thanks, guys. Nice color. For my follow-up, I guess, Jason, probably more for you. In HFS, just curious if you could address trends in ADR, what you anticipate over the balance of the year and going forward. It's kind of a higher level of just what you anticipate from demand and then obviously how that's being priced. Thanks. Yeah. So we always balance network optimization with ADR and utilization. The utilization, you can see, is slightly up from prior year. ADR is down. It's a competitive market, but nothing structurally has changed with respect to the segment. I would anticipate the remaining quarters to look somewhat similar to Q1. Great. Thanks, guys. I'll turn it over. Thank you. The next question comes from Greg Guibas with Northland Securities. Please go ahead. Great. Hey, good morning, Brad, Jason. Thanks for taking the questions. Congrats on the results. Thanks. To follow up on kind of the Workforce Hub contract, excuse me, construction ramping in Q2 and Q3, completion in Q4. Wondering if you could just give us a sense of kind of the financial cadence for the remainder of the year as kind of daily ramps is another factor as well. Yeah. I guess the best way to put it is the majority of that activity is going to be in Q3. Q2 will be slightly below Q3. We had a minimal contribution of $5 million of revenue in Q1. It's probably less than 10% complete at that point. Q4 will be sort of more minimal wrap-up activity. On the daily ramp-up, the margins are going to be bottomed out in Q2 as we ramp up. It has an accelerated revenue rent schedule as we move through the first six months of the contract as neighborhoods open in phases. There is a natural sort of front-loading of expenses as we have to meet certain phased milestones for the reopening. We expect the full economics on that to begin in September, the full economics associated with the full 2,400 beds. That's how the contract's structured. Q4 will likely be the best quarter from a run rate standpoint on that contract going forward. Perfect. That's really helpful. Great. If I could follow up to just some of your previous commentary on this call, could you give us an example or maybe an idea of those opportunities to assist the government on the immigration policy beyond existing assets like Oriole facilities? Are you saying that these would likely involve an asset purchase, or are you saying there are other opportunities as well? I just wanted to get a sense of what those are. Yeah. Look, we're first going to try and put out anything that we have existing that we can, right? If we exceed the beds that we have as far as our own resources, we would look to the open market to purchase some of that, right, or build new on facilities. Very similar to how we ran our business for years, right? Again, try to put out what we own today and what's not being used, and then go to the open market or build new. Makes sense. Thank you. Thank you. The next question. We have a follow-up question from Stephen Gengaro with Stifel. Please go ahead. Thanks. Thanks for taking the follow-up. Just as a kind of a curiosity, but trying to think about your network, your lodges that serve the oil patch right now, I know you kind of haven't maybe as cleanly differentiated as you used to, but are those assets as part of the network that you have built to service the customers, are they basically locked into that market at this point, or could there be a scenario where you need that level of capacity and distribution across the basins, or could those assets be repurposed? Look, we have repurposed in the past, and we would definitely do that in the future, right? We're going to look to see what's available, what rates are. We have not a lot of excess capacity, but where we do to optimize that, we would definitely look at taking some of that and just throwing this out there, using it on a data center or using it on a mine somewhere. That is always how we look at that first. We want to be 100% maximized with our own equipment if we can, and then look outside if we need to buy something else. All of our facilities can be used somewhere else, right? Whether that's in the government data center, mining, other power projects, whatever. Yeah. We've done that historically, right? I mean, we built out the government segment with HFS assets, basically, that were underutilized. We can quickly repurpose those assets. That's the benefit of having a flexible asset base. To be clear, some of the bids in our pipeline, that's exactly how they're bid with taking some of our owned equipment that's set up and using it somewhere else. Okay. As a follow-up, I'm trying to figure out how to ask you, but is there a level of contractual commitment you have to your energy customers that you will have a certain amount of assets in certain basins over a certain period of time? I'm just trying to understand the flexibility of doing that, or are you locked in because of sort of contractual commitments to having this many rooms available across this large of a swath of land over time? I'm just trying to get a better sense for that. Yeah. Let me be clear. That's a very good question. We are absolutely committed to the Permian Basin for our oil and gas customers, right? We have a big network there. We would not mothball the network. We have definitely large contracts that we need to continue to service. It's great business, right? Doesn't take a lot of capital. We're pretty consistent as far as occupancy where we've been. There's opportunity to maximize the efficiencies there as far as taking those rooms out if we needed them and putting them somewhere else without hurting our customer base. Great. That was what I was looking for, and I didn't ask the question as smoothly as I could have. Thank you. No problem. Thank you. There are no further questions at this time. I would now like to turn the call over to Brad Archer for closing remarks. Please go ahead. Thank you. Yeah. Thanks to all of you who have joined the call today. We look forward to speaking again on our second quarter call. We appreciate your support of Target Hospitality. Operator, that will conclude our call for today. Thank you. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.