[Management View]
Key metrics, strategic priorities: Management highlighted slow government segment activity but emphasized a developing pipeline of contract bid opportunities. They are actively repurposing non-government assets to meet emerging demand, particularly in regions driven by data center and AI-related expansion.

[Outlook]
Performance guidance, future plans: Management expects long-term revenue growth from government contracts and increased demand for hospitality services in remote areas supporting large data centers. They aim to enhance margins through operational efficiencies and cost management.

[Financial Performance]
YoY/QoQ trends compared to expectations/estimates: The earnings call revealed slow government segment activity but highlighted a developing pipeline of contract bid opportunities that could enhance long-term revenue streams. Management emphasized ongoing strategic asset repurposing and its ability to meet specialty hospitality demand, particularly in regions driven by data center and AI-related expansion. Margin enhancement remains a focus, with leadership addressing inflationary pressures through vendor contract management and cost structure optimization.

[Q&A Highlights]
Question 1: And so, we are hearing that they are going out for bids on some of this business. So, we expect that would help us long-term with both our Pecos project and potentially our Cotulla project. Sorry about that.
Answer: No, that is okay. And then, on the non-government side, we continue to actively market that asset and feel very confident in our ability to repurpose it. It is a top-tier asset with a lot of amenities, and it is got proximity to both Eagle Ford and high-density areas within Texas that create the demand for additional host facilities.

Question 2: Got it. That is really helpful. Thank you for that. And just one quick follow-up on I've heard AI. I've heard it mentioned multiple times on the call. Can you give us some sense of how Target's services mingle with AI? And what potential hydro opportunities do you see arising given your growing focus on that area?
Answer: Sure, Scott. As we touched on in the prepared remarks, it is about understanding the needs of these communities. They like to congregate in the larger hospitality communities, meal service, and all of those dynamics. And we are noticing these big centers getting built in these remote areas. Our centers then obviously become a place where they can visit, live, and use amenities. And we are really excited about going deeper into AI with these centers and access managing logistical support that is needed in those areas.

Question 3: My question is about the WHS segment mentioned earlier. Could you provide a bit more detail on your expectations for continued growth and what is likely to drive the segment significantly forward going into 2026?
Answer: Absolutely, James. We view the WHS segment as one of our key growth areas. As we mentioned, we have successfully expanded contracts resulting in increased contract values, and we expect this momentum to continue. Our strategy includes enhancing our existing contracts with further modifications and leveraging our operational efficiencies to drive growth. With demand in hospitality regularly growing into sectors like AI integration and broader data center expansions, we are confident that we can sustain and build upon the success we have achieved thus far.

Question 4: My question concerns recent cost trends that may have impacted your operating model. How have you been addressing potential cost pressure, and is the outlook positive looking forward, especially into fiscal year 2026?
Answer: Thanks for the question, Stephen. Our focus has always been on maintaining a robust cost structure, and as mentioned earlier, we continuously optimize our cost mechanisms to enhance margins. We've noticed inflationary pressures, especially in materials and equipment, but through strategic vendor contracts, we keep cost variances minimal. Our outlook indicates opportunities to improve margins by increasing operational efficiencies and managing fixed costs diligently, which is crucial as we scale and expand our operations.

[Sentiment Analysis]
Tone of analysts/management: The tone of the analysts was inquisitive and focused on understanding the company's strategic direction and growth prospects. Management's tone was confident and optimistic, emphasizing their strategic initiatives and ability to manage costs effectively.

[Quarterly Comparison]
Key metrics comparison table:
| Metric | Q3 2025 | Q2 2025 | YoY Change |
|----------------------------|---------|---------|------------|
| Government Segment Revenue | $X | $Y | -Z% |
| WHS Segment Revenue | $A | $B | +C% |
| Total Revenue | $D | $E | +F% |
| Operating Margin | G% | H% | +I% |

[Risks and Concerns]
Risks and concerns content: Management noted inflationary pressures in materials and equipment as a concern but emphasized their ability to manage these through strategic vendor contracts. The slow activity in the government segment was also highlighted as a risk, though mitigated by the developing pipeline of contract bid opportunities.

[Final Takeaway]
The earnings call highlighted Target Hospitality's strategic focus on repurposing non-government assets and meeting the growing demand for hospitality services driven by AI and data center expansions. While the government segment showed slower activity, the company is optimistic about long-term revenue growth from new contract bids. Management's disciplined approach to cost management and operational efficiencies is expected to enhance margins and support future growth.