Net Rental Revenue Rose to $22.8 Million
from $9.1 Million
Net Loss of $(2.8) Million Included $6.8
Million of Non-Cash Expenses and Other Items
Cash Net Income Improved to $2.2 Million;
EBITDA Rose to $4.0 Million
LuxUrban Hotels Inc. (or the “Company”) (Nasdaq: LUXH),
which utilizes an asset-light business model to lease entire hotels
on a long-term basis and rent out hotel rooms in these properties
in key major metropolitan cities, today announced financial results
for the first quarter ended March 31, 2023 (“Q1 2023”). Reported
results include cash net income and EBITDA, which are non-GAAP
measures and are accompanied by reconciliation tables in this
release.
Financial Results
Overview
- Q1 2023 net rental revenue rose 151% to $22.8 million from $9.1
million in the first quarter of 2022 (“Q1 2022”), driven primarily
by an increase in average units available to rent from 479 in Q1
2022 to 988 in Q1 2023, as well as improved revenue per available
room, or RevPAR, during this period.
- Q1 2023 rent expense was $5.4 million, or 23.8% of net rental
revenue, compared to rent expense of $2.3 million, or 25.1%, in Q1
2022, driven by increased number of units available for rent and
the associated expenses
- Q1 2023 gross profit rose to $5.4 million, or 23.5% of net
rental revenue, from $2.5 million, or 27.6% of net rental revenue
in Q1 2022.
- Q1 2023 net loss of $(2.8) million, or $(0.10) per share,
compared to net income of $1.4 million, or $0.07 per share, in Q1
2022.
- Q1 2023 net loss primarily included:
- $1.7 million of non-cash rent expense amortization as compared
to $0.3 million in Q1 2022;
- $0.9 million of non-cash expenses related to the issuance of
shares for operating expenses as compared to no such expenses in Q1
2022;
- $0.4 million of non-cash stock compensation expense as compared
to no such expense in Q1 2022
- $0.2 million of non-cash option compensation expense as
compared to no such expense in Q1 2022
- $1.7 million of non-cash financing costs associated with shares
issued for revenue share agreements; there was no such expenses
incurred in Q1 2022
- Adjusted cash net income rose to $2.2 million compared to $1.4
million in Q1 2022
- EBITDA increased to $4.0 million from $2.2 million in Q1
2022.
2023 First Quarter Operational
Highlights
- RevPAR rose to $257 from $211 in Q1 2022, and from $247 at
December 31, 2022
- Commenced hosting guests at two short-term stay hotels in New
York and Miami and ended Q1 2023 with 12 hotels hosting guests, up
from 1 in Q1 2022 and from 10 at December 31, 2022
- Total short terms stay units hosting guests in Q1 2023 rose to
1,034 from 479 in Q1 2022, and from 844 at December 31, 2022
- As of May 9, 2023, the Company had 20 short-term stay hotels
under MLA consisting of 1,673 rooms that will be hosting guests
from early Q2 to early Q3
Select Recent 2023
Developments
- In April, the Company entered into an agreement with the holder
of its’ senior secured convertible notes (“Convertible Notes”)
totaling approximately $5.0 million. The terms of this agreement
are designed to allow the Company, subject to the satisfaction of
certain conditions, to eliminate all debt associated with the
Convertible Notes and gain access to new equity capital through a
mandatory conversion feature.
Financial Condition
At March 31, 2023, cash and cash equivalents were $2.9 million
compared to $1.1 million at December 31, 2022, and restricted cash
was unchanged at $1.1 million when compared to December 31, 2022.
Total debt at March 31, 2023 declined to $9.0 million from total
debt of $14.0 million at December 31, 2022. Net debt at March 31,
2023 declined to $6.1 million from net debt of $10.3 million at
December 31, 2022. In addition, our cash based days payables
outstanding declined to 35 days at March 31, 2023 from 40 days at
December 31 2022.
Commentary
“We have continued to adhere to a disciplined, asset-light
growth strategy by focusing on select, high-quality properties in
destination locations, strict underwriting criteria, and optimizing
operational efficiencies across our organization,” said Brian
Ferdinand, Chairman and Chief Executive Officer. “Our success in
this regard is evidenced by significant quarter-over-quarter
increases in net rental revenue and EBITDA, an expanded property
operations portfolio, and an improved debt profile. We continue to
see significant, long-term growth opportunities as hotel owners and
operators confront the challenging financial realities created by
the lingering effects of pandemic-induced property closures and
rapidly rising interest rates. The long-term triple net lease
alternatives that we offer allow these owners to improve property
cash flows without losing ownership. We are committed to expanding
our property portfolio in existing and new markets, enhancing our
margins, and elevating our brand, while providing the highest-level
guest experience to business and vacation travelers from around the
world.”
“Our previously announced initiatives to significantly reduce or
eliminate debt, enhance cash flow, and support our growth
objectives began to manifest in Q1 2023,” said Shanoop Kothari,
President and Chief Financial Officer. “Our total debt declined by
$5.0 million from December 31, 2022 to March 31, 2023 as a result
of our previously announced debt to equity conversion initiatives
and debt paydown via cash generated from operations. We continue to
improve our liquidity position and made significant strides over
the quarter. For the balance of 2023, we expect to continue to
reduce our legacy pre-IPO debt, reduce our overall cost of capital
and continue to improve our liquidity position.”
Litigation Update
Also on May 9, 2023, the Company announced that the plaintiffs
in seven lawsuits filed against CorpHousing LLC and Mr. Ferdinand
in December 2022 each had voluntarily withdrawn their complaints on
January 17th , 2023. While the Company and Mr. Ferdinand believe
that each of these complaints was meritless and the allegations
contained therein were baseless, the Company is glad these matters
have been resolved with no payment due from the Company.
2023 Guidance
For the year ending December 31, 2023, the Company is
reiterating its previous guidance of net rental revenue of $115 to
$120 million and EBIDTA of $21 to $25 million.
The Company also continues to expect that 2,500-3,000 total
short term stay hotel units will be operational by December 31,
2023. The financial guidance for 2023 does not reflect any expected
material positive contribution that the commencement of operations
at these properties will produce on net rental revenue and EBITDA
and the Company will update its annual guidance accordingly to
reflet these developments.
This financial and operations guidance is based on, among other
factors, current business, economic, and public health conditions;
the status of the Company’s acquisition pipeline and its ability to
enter into these potential leases; and its current view of
forward-looking unit operating metrics.
Conference Call
The Company will host a conference call on Wednesday, May 10,
2023 at 10:00 am Eastern Time to discuss the results. Investors
interested in participating in the live call can dial:
- (877) 407-9753 - U.S.
- (201) 493-6739 - International
A simultaneous webcast of the call may be accessed online from
the Events & Presentations section of the Investor Relations
page of the Company’s website at www.luxurbanhotels.com.
LuxUrban Hotels Inc.
LuxUrban Hotels Inc. utilizes an asset light business model to
lease entire hotels on a long-term basis and rent out hotel rooms
in the properties it leases to business and vacation travelers
through the company’s online portal and third-party sales and
distribution channels. The company currently manages a portfolio of
hotel rooms in New York, Washington D.C., Miami Beach, New Orleans
and Los Angeles. As of the date of this release, the company has
approximately 1,673 hotel rooms available for rent, and seeks to
rapidly build its portfolio on favorable economics through the
acquisition of additional accommodations that were dislocated or
are underutilized as a result of the pandemic and current economic
conditions. In late 2021, the company commenced the process of
winding down its legacy business of leasing and re-leasing
multifamily residential units, as it pivoted toward its new
strategy of leasing hotels. This transition has been substantially
completed.
Forward Looking
Statements
This press release contains forward-looking statements,
including with respect to financial and operational guidance,
scheduled property openings, expected closing of noted lease
transactions, continued closing on additional leases for properties
in the Company’s pipeline, as well the Company’s anticipated
ability to commercialize efficiently and profitably the properties
it leases and will lease in the future. These forward-looking
statements are subject to a number of risks, uncertainties and
assumptions, including those set forth under the caption “Risk
Factors” in our public filings with the SEC, including in Item 1A
of our 10-K for the year ended December 31, 2022. Generally, such
forward-looking information or forward-looking statements can be
identified by the use of forward-looking terminology such as
"plans", "expects" or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or
"does not anticipate", or "believes", or variations of such words
and phrases or may contain statements that certain actions, events
or results "may", "could", "would", "might" or "will be taken",
"will continue", "will occur" or "will be achieved".
Forward-looking information may relate to anticipated events or
results including, but not limited to business strategy, leasing
terms, high-level occupancy rates, and sales and growth plans. The
financial projections provided herein are based on certain
assumptions and existing and anticipated market, travel and public
health conditions, all of which may change. The forward-looking
information and forward-looking statements contained in this press
release are made as of the date of this press release, and the
Company does not undertake to update any forward-looking
information and/or forward-looking statements that are contained or
referenced herein, except in accordance with applicable securities
laws.
Non-GAAP Information
The Company defines cash net income as net income (loss) before
non-cash financing costs, non-cash stock compensation expense,
non-cash stock option expense, non-cash rent amortization expense,
accrued taxes, non-cash issuance of common stock for operating
expenses, and depreciation. The Company believes that cash net
income is useful to investors as a measure of a company's operating
performance, without regard to generally non-recurring items and
non-cash activity. The Company seeks to achieve profitable,
long-term growth by monitoring and analyzing key operating metrics,
including EBITDA. The Company defines EBITDA as net income (loss)
before interest, taxes, financing costs, depreciation and
amortization, stock compensation expense and stock option expense,
and incremental costs associated with its exit from SoBeNY. The
Company’s management uses these non-GAAP financial metrics and
related computations to evaluate and manage the business and to
plan and make near and long-term operating and strategic decisions.
The management team believes these non-GAAP financial metrics are
useful to investors to provide supplemental information in addition
to the GAAP financial results. Management reviews the use of its
primary key operating metrics from time-to-time. EBITDA and cash
net income are not intended to be a substitute for any GAAP
financial measure and as calculated, may not be comparable to
similarly titled measures of performance of other companies in
other industries or within the same industry. The Company’s
management team believes it is useful to provide investors with the
same financial information that it uses internally to make
comparisons of historical operating results, identify trends in
underlying operating results, and evaluate its business. For
purposes of the guidance provided herein for the year ended
December 31, 2023, however, estimating such GAAP measures with the
required precision necessary to provide a meaningful reconciliation
could not be accomplished without unreasonable effort. Non-GAAP
measures for future periods which cannot be reconciled to the most
comparable GAAP financial measures are calculated in a manner which
is consistent with the accounting policies applied in the Company’s
consolidated financial statements.
A reconciliation of net income (loss) to EBITDA and net income
(loss) to CASH net income is included in the financial tables
included with this press release.
Condensed Consolidated Statements of
Operations (unaudited)
For The Three Months Ended
March 31,
2023
2022
Net Rental Revenue
$
22,814,175
$
9,099,425
Rent Expense
5,421,867
2,282,783
Non-Cash Rent Expense Amortization
1,651,669
255,967
Other Expenses
10,378,765
4,047,412
Total Cost of Revenue
17,452,301
6,586,162
Gross Profit
5,361,874
2,513,263
General and Administrative Expenses
3,627,402
979,606
Non-Cash Issuance of Shares for Operating
Expenses
884,816
-
Non-Cash Stock Compensation Expense
429,996
-
Non-Cash Option Compensation Expense
167,573
-
Total Operating Expenses
4,224,971
979,606
Income from Operations
1,136,903
1,533,657
Other Income (Expense)
Other Income
39,878
449,913
Cash Interest and Financing Costs
(2,130,605
)
(564,137
)
Non-Cash Financing Costs
(1,704,549
)
-
Total Other Expense
(3,795,276
)
(114,224
)
(Loss) Income Before Provision for
Income Taxes
(2,658,373
)
1,419,433
Provision for Income Taxes
122,161
-
Net (Loss) Income
$
(2,780,534
)
$
1,419,433
Basic and Diluted (Loss) Income Per Common
Share
$
(0.10
)
$
0.07
Basic and Diluted Weighted Average Number
of Common Shares Outstanding
28,659,358
21,675,001
Condensed Consolidated Balance Sheets
(unaudited)
March 31,
December 31,
2023
2022
ASSETS
Current Assets
Cash and Cash Equivalents
$
2,880,909
$
1,076,402
Treasury Bills
-
2,661,382
Processor Retained Funds
6,952,243
6,734,220
Prepaid Expenses and Other Current
Assets
702,143
963,300
Security Deposits - Current
112,290
112,290
Total Current Assets
10,647,585
11,547,594
Other Assets
Furniture and Equipment, Net
435,860
197,129
Restricted Cash
1,100,000
1,100,000
Security Deposits - Noncurrent
15,141,105
11,233,385
Prepaid Expenses and Other Noncurrent
Assets
559,838
559,838
Operating Lease Right-of-Use Assets,
Net
169,282,279
83,325,075
Total Other Assets
186,519,082
96,415,427
Total Assets
$
197,166,667
$
107,963,021
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses
$
7,277,439
$
6,252,491
Rents Received in Advance
5,198,743
2,566,504
Short Term Business Financing
825,905
2,003,015
Loans Payable - Current
6,480,294
10,324,519
Operating Lease Liabilities - Current
4,682,746
4,293,085
Accrued Income Taxes
122,161
-
Total Current Liabilities
24,585,288
25,439,614
Long-Term Liabilities
Loans Payable
1,667,522
1,689,193
Security Deposit Letter of Credit
3,500,000
2,500,000
Operating Lease Liabilities –
Noncurrent
168,845,549
81,626,338
Total Long-Term Liabilities
174,013,071
85,815,531
Total Liabilities
198,598,359
111,255,145
Commitments and Contingencies
Stockholders’ Deficit
Common Stock ($0.00001 par value,
90,000,000 shares authorized; 29,392,464 and 27,691,918 shares
issued and outstanding on March 31, 2023 and December 31, 2022;
respectively)
293
276
Additional Paid-In Capital
22,367,541
17,726,592
Accumulated Deficit
(23,799,526
)
(21,018,992
)
Total Stockholders’ Deficit
(1,431,692
)
(3,292,124
)
Total Liabilities and Stockholders’
Deficit
$
197,166,667
$
107,963,021
Non-GAAP Financial Measures
To supplement the condensed consolidated financial statements,
which are prepared in accordance with GAAP, we use EBITDA and Cash
Net Income as a non-GAAP financial measures. We define EBITDA and
Cash Net Income above in the paragraph entitled “Non-GAAP
Information.”
The following table provides reconciliation of net loss to
EBITDA and Cash Net Income:
For The Three Months
Ended
March 31,
2023
2022
Net (Loss) Income
$
(2,780,534
)
$
1,419,433
Provision for Income Taxes and Other
Taxes
122,161
--
Cash Interest and Financing Costs
2,130,605
564,137
Non-Cash Financing Costs
1,704,549
--
Non-Cash Stock Compensation Expense
429,996
--
Non-Cash Stock Option Expense
167,573
--
Non-Cash Rent Expense Amortization
1,651,669
255,967
Depreciation Expense
11,031
--
SoBe Exit Costs
602,726
--
EBITDA
$
4,039,776
$
2,239,537
Net (Loss) Income
$
(2,780,534
)
$
1,419,433
Non-Cash Financing Costs
1,704,549
--
Non-Cash Stock Compensation Expense
429,996
--
Non-Cash Stock Option Expense
167,673
--
Non-Cash Rent Amortization Expense
1,651,669
--
Accrued Taxes
122,161
--
Non-Cash Issuance of Common Stock for
Operating Expenses
884,816
--
Depreciation Expense
11,031
--
Cash Net Income
$
2,191,261
$
1,419,433
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230509006261/en/
LuxUrban Hotels Inc. Shanoop Kothari President & Chief
Financial Officer shanoop@luxurbanhotels.com
The Equity Group Inc. Devin Sullivan, Managing Director
dsullivan@equityny.com
LuxUrban Hotels (NASDAQ:LUXH)
Historical Stock Chart
From Jun 2024 to Jul 2024
LuxUrban Hotels (NASDAQ:LUXH)
Historical Stock Chart
From Jul 2023 to Jul 2024