Why Target Hospitality Shares Are Higher Today

Target Hospitality Corp TH shares are trading higher after the company reported better-than-expected fourth-quarter FY23 results and issued FY24 revenue guidance above estimates.

Sales declined to $126.220 million from $152.438 million a year ago, beating the consensus of $118.0 million.

The revenue decline was due to lower non-cash, nonrecurring, infrastructure enhancement revenue associated with its’ PCC community, which was fully amortized as of November 2023. 

Average utilized beds fell to 13,981 (from 14,207), with utilization of 87% (vs. 90% a year ago) for the quarter.

Adjusted gross profit declined to $77.6 million from $100.2 million the prior year ago.

Adjusted EBITDA for the quarter fell to $67.7 million from $90.8 million the prior year quarter. EPS of $0.29 beat the consensus of $0.24.

Target Hospitality held $103.9 million in cash and equivalents as of Dec. 31, 2023. Operating cash flow for the year was $156.8 million.

Repurchase: As of March 8, 2024, the company bought back around 1.9 million shares for about $17.8 million. 

Outlook: Target Hospitality sees FY24 revenue of $410 million-$425 million versus the consensus of $409.67 million and adjusted EBITDA of $195 million-$210 million.

The company continues to evaluate a robust pipeline of strategic organic and inorganic growth opportunities and expects to allocate over $500 million of net growth capital through 2027.

TH Price Action: Target Hospitality shares are trading higher by 4.22% at $8.92 on last check Wednesday.

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