0001558370-25-010732
SEC filingRevenue fell 39% YoY to $61.6M, driven by government contract losses, partially offset by new Workforce Housing and DIPC contracts; net loss of $14.9M vs income of $18.4M.
For the three months ended June 30, 2025, total revenue decreased 39% to $61.6 million from $100.7 million in the same period last year. The decline was primarily driven by the termination of the PCC Contract (effective February 21, 2025) and the STFRC Contract (terminated August 2024, partially reactivated as DIPC in March 2025). Services income fell 40% to $40.5 million, and specialty rental income dropped 80% to $6.7 million. These were partially offset by $14.4 million in construction fee income from the new Workforce Housing Contract with Lithium Nevada. Gross profit swung to a loss of $(0.3) million from a $46.9 million profit, as service costs increased 36% due to construction activities, while specialty rental costs declined 49%. Operating loss was $(16.9) million versus income of $29.6 million. Net loss attributable to common stockholders was $(14.9) million compared to net income of $18.4 million. Adjusted EBITDA decreased 93% to $3.5 million, reflecting revenue declines and higher costs.
The Government segment revenue plunged 87% to $7.5 million, with adjusted gross profit of $(1.1) million, as the PCC and STFRC contracts were terminated. The DIPC Contract began in March 2025, generating $9.1 million in revenue for the six months, but ramp-up period fixed minimums are lower. The HFS-South segment revenue declined 5% to $36.2 million, driven by a 6% drop in average daily rate to $69.62, partially offset by increased customer activity. Its adjusted gross profit fell 19% to $10.5 million. The new WHS segment contributed $15.0 million in revenue and $3.7 million in adjusted gross profit, all from construction fee income under the Workforce Housing Contract. All Other grew 11% to $2.9 million.
Management expects the Workforce Housing Contract to generate approximately $153.5 million over its term through 2027, with first occupancy by late 2025 and completion of the workforce hub by year-end. The DIPC Contract is anticipated to provide over $246 million over five years to March 2030, with a ramp-up period affecting near-term minimums. The redemption of the 2025 Senior Secured Notes on March 25, 2025, is expected to save approximately $19.5 million in annual interest expense. The company is actively re-marketing assets from the terminated PCC Contract. Liquidity remains adequate with $151 million available under the ABL Facility as of June 30, 2025. No full-year guidance was provided, but management highlights the impact of contract transitions and the potential for growth in government and lithium-related services.
Cash and cash equivalents plummeted to $19.2 million as of June 30, 2025, from $190.7 million at December 31, 2024. The primary driver was the redemption of $181.4 million in 10.75% Senior Secured Notes due 2025 on March 25, 2025, which was funded by cash on hand and $75.0 million in borrowings from the ABL Facility. Total debt, net, stood at $28.8 million, comprising $24.0 million drawn on the ABL Facility and $4.8 million in finance lease obligations. The ABL Facility has a total capacity of $175 million, with a borrowing base formula. Stockholders' equity decreased to $401.2 million from $421.1 million, driven by a net loss of $21.4 million for the six-month period.
The Notes disclose a significant contractual commitment: the DIPC Contract (Dilley Immigration Processing Center) provides a cumulative fixed minimum revenue of approximately $246 million over its anticipated five-year term, ending March 2030. This contract is subject to annual U.S. government appropriations and can be canceled for convenience with 60 days' notice. Additionally, the Company has $9.0 million in deferred revenue and customer deposits as of June 30, 2025, up from $1.2 million at year-end 2024, primarily due to billings in excess of cost on the WHS segment construction project.
The Company's stock repurchase program, authorized in November 2022, has a remaining capacity of $66.6 million as of June 30, 2025. No share repurchases were made during the six months ended June 30, 2025. No dividends were declared or paid. Capital expenditures totaled $24.9 million for the six months, including $24.3 million for specialty rental assets and $0.7 million for other property, plant and equipment. The Company redeemed all $181.4 million of its 2025 Senior Secured Notes, incurring a $2.4 million loss on extinguishment of debt (including a $1.8 million premium and write-off of unamortized deferred financing costs and original issue discount).
The Company reports three operating segments: HFS – South, Government, and WHS, plus an All Other category. For the six months ended June 30, 2025, HFS – South generated $72.2 million in revenue (down 3.9% YoY), Government $33.2 million (down 74.0% YoY due to the termination of the PCC Contract), and WHS $20.2 million (new segment, primarily construction fee income). Adjusted gross profit for the segments was $21.6 million (HFS – South), $18.1 million (Government), and $5.0 million (WHS). The Government segment's revenue decline was partially offset by the commencement of the DIPC Contract in March 2025.