Net Rental Revenue Rose to $31.9 Million
from $10.2 Million
EBITDA Improved to $8.4 Million and Cash Net
Income Rose to $7.2 Million; Net Loss of $(26.8) Million Included
$28.5 Million of One-time, Non-Cash Financing Costs Associated with
Acquisition / Elimination of Future Revenue Share Payments
Significantly Reduced Debt Profile,
Including Elimination of All Senior Secured Debt
Shareholders’ Equity of $13.5 Million
Represented a $16.7 Million Improvement from December 31,
2022
Collaboration with Wyndham Hotels &
Resorts Expected to Accelerate LuxUrban’s Asset-Light
Acquisition Growth Strategy
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 second quarter ended June 30, 2023 (“Q2 2023”). Reported
results include cash net income and EBITDA, which are non-GAAP
measures and are accompanied by reconciliation tables in this
release.
“By continuing to employ a disciplined, asset-light growth
strategy, strict underwriting criteria, and a commitment to
delivering the highest-level customer experience, in Q2 2023 we
delivered significant quarter-over-quarter increases in net rental
revenue, EBITDA, and cash net income, strengthened our financial
position, and expanded our operations portfolio to 17 properties
under Master Lease Agreements and 1,625 rooms available for rent as
of August 8, 2023,” said Brian Ferdinand, Chairman and Chief
Executive Officer of LuxUrban Hotels. “We have also continued to
explore ways to evolve our business model in pursuit of long-term
and sustainable growth, as reflected in our recently announced
agreement with Wyndham Hotels & Resorts. Our collaboration with
Wyndham is a tremendous leap forward for LuxUrban and a validation
of our operating model, execution abilities, and large opportunity
landscape. When combined with the financial and operational
initiatives we have consummated over the last year, we believe we
are now in the best position in our history to accelerate growth,
enhance cash flow and capture the benefits of scale.”
The table below is provided to illustrate the Company’s
operational progress over the last four quarters.
$ In 000s
Q2 2023
Q1 2023
Q4 2022
Q3 2022
Net Rental Revenue
$
31,861
$
22,814
$
12,900
$
11,575
Net Loss
$
(26,775)
$
(2,781)
$
(8,355)*
$
(3,217)
EBITDA
$
8,435
$
4,040
$
2,739*
$
186
Cash Net Income(Loss)
$
7,245
$
2,191
$
586*
$
(1,220)
Hotel Rooms Available for
Rent
1,625
1,034
680
571
* not previously broken out
Mr. Ferdinand noted that the $26.8 million net loss for Q2 2023
was due primarily to one-time, non-cash financing costs of $28.5
million associated with a previously announced agreement with its
pre-IPO investors that eliminated an estimated $87.5 million in
Revenue Share payments in exchange for a the issuance, from time to
time, in each case, at the pre-IPO investor’s election upon 61 days
prior written notice delivered to the Company on and after
September 1, 2023 and before August 31, 2028, up to an aggregate of
6,740,000 shares of the Company’s common stock, subject to an
extended lock up agreement (the “Revenue Share Agreement”). Absent
these one-time, non-cash charges, cash net income for Q2 2023 was
$7.2 million.
“Less than one year after completing our initial public
offering, we have transformed our financial profile by eliminating
the entirety of the approximately $9.8 million of senior secured
debt held by our pre-IPO lenders and an estimated $87.5 million in
future Revenue Share payments, all while pursuing a focused,
high-conviction commitment to growth and profitability,” said
Shanoop Kothari, President and Chief Financial Officer. “We are
benefiting from rising levels of business and leisure travel across
our property portfolio and expect a strong second half of the year,
which will complement our improved liquidity position, enhanced
cash flow profile, and access to fresh, non-dilutive growth and
working capital via our agreement with Wyndham.”
Q2 2023 Financial Results
Overview
- Q2 2023 net rental revenue rose 212% to $31.9 million from
$10.2 million in the second quarter of 2022 (“Q2 2022”), driven
primarily by an increase in average units available to rent from
565 in Q2 2022 to 1,086 in Q2 2023, as well as improved revenue per
available room, or RevPAR, during this period.
- Q2 2023 rent expense was $4.8 million, or 15.2% of net rental
revenue, compared to $2.1 million, or 20.9% of net rental revenue
in Q2 2022.
- Non-cash rent expense amortization rose to $2.6 million from
$1.1 million in Q2 2022.
- Q2 2023 gross profit rose to $10.2 million, or 31.9% of net
rental revenue, from $2.9 million, or 28% of net rental revenue in
Q2 2022.
- Q2 2023 general & administrative expenses were $4.4
million, or 13.9% of net rental revenue, compared to $0.9 million,
or 8.7% of net rental revenue, in Q2 2022.
- Income from operations improved to $4.8 million from $2.0
million in Q2 2022.
- Q2 2023 net loss of $(26.8) million, or $(0.78) per share,
compared to net income of $0.8 million, or $0.04 per share, in Q2
2022.
- Q2 2023 net loss primarily included:
- $28.5 million in one-time, non-cash financing costs associated
with the Revenue Share Agreement
- $0.8 million one-time, non-cash issuance of stock for operating
expenses
- $0.2 million of non-cash stock option compensation expense
- Adjusted cash net income rose to $7.2 million compared to $1.9
million in Q2 2022.
- EBITDA increased to $8.4 million from $3.2 million in Q2
2022.
Q2 2023 Operational
Highlights
- Year-to-date RevPAR rose to $291 from $138 in the same period
in 2022, and from $247 as of the year ended December 31, 2022.
- Total short-term stay units hosting guests in Q2 2023 rose to
1,086 from 584 in Q2 2022, and from 839 at December 31, 2022.
- As of August 8, 2023, the Company had 17 short-term stay hotels
under Master Lease Agreements consisting of 1,625 rooms.
Financial Condition at June 30, 2023
Compared to December 31, 2022
- Cash and cash equivalents were $3.8 million compared to $1.1
million.
- Restricted cash was unchanged at $1.1 million.
- Total debt declined to $4.6 million from total debt of $14.0
million.
- Net debt declined to $0.8 million from net debt of $12.9
million.
- Shareholders’ Equity improved to $13.5 million from a Deficit
of $(3.3) million.
- Working capital excluding short-term loans payable increased to
$3.7 million from a deficit of $9.6 million.
2023 and 2024 Guidance
For the year ending December 31, 2023, the Company is
reiterating its guidance of net rental revenue of $115 to $120
million and EBITDA of $25 to $30 million, and for the year ending
December 31, 2024 the Company is reiterating net rental revenue and
EBITDA guidance of $220 to $240 Million and $48 to $60 million,
respectively. 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 and 2024 does not reflect, among
other factors, any expected material positive contribution on net
rental revenue and EBITDA generated by: a) the commencement of
operations at scheduled new properties; and b) the collaboration
with Wyndham Hotels & Resorts. The Company expects to update
its annual guidance accordingly to reflect these developments.
This financial and operations guidance is based on, among other
factors, the Company’s beliefs and expectations regarding 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, August 9,
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 1,625 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 certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995 (set forth in Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended). The statements contained in this release that are not
purely historical are forward-looking statements. Forward-looking
statements include, but are not limited to, statements regarding
expectations, hopes, beliefs, intentions or strategies regarding
the future. In addition, any statements that refer to projections,
forecasts or other characterizations of future events or
circumstances, including any underlying assumptions, are
forward-looking statements. Generally, the words “anticipates,”
“believes,” “continues,” “could,” “estimates,” “expects,”
“intends,” “may,” “might,” “plans,” “possible,” “potential,”
“predicts,” “projects,” “should,” “would” and similar expressions
may identify forward-looking statements, but the absence of these
words does not mean that a statement is not forward-looking.
Forward-looking statements in this release may include, for
example, statements with respect to financial and operational
guidance, the success of the Company’s collaboration with Wyndham
Hotels & Resorts, scheduled property openings, expected closing
of noted lease transactions, the Company’s ability to continue
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. The forward-looking statements
contained in this release are based on current expectations and
belief concerning future developments and their potential effect on
the Company. There can be no assurance that future developments
will be those that have been anticipated. These forward-looking
statements are subject to a number of risks, uncertainties (some of
which are beyond our control) or other assumptions that may cause
actual results of performance to be materially different from those
expressed or implied by these forward-looking statements, 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 and in Item 1A of our Form 10-Q for the
three months ended June 30, 2023. 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 defines net debt as current and long-term loans payable and
short-term financing costs (together, total debt) less cash and
cash equivalents. 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, net debt 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
June 30,
For The Six Months
Ended
June 30,
2023
2022
2023
2022
Net Rental Revenue
$
31,861,098
$
10,201,338
$
54,675,273
$
19,300,763
Rent Expense
4,844,114
2,133,569
10,265,981
4,584,547
Non-Cash Rent Expense Amortization
2,583,272
1,115,180
4,234,941
1,202,902
Other Expenses
14,254,698
4,095,971
24,633,463
8,143,433
Total Cost of Revenue
21,682,084
7,344,720
39,134,385
13,930,882
Gross Profit
10,179,014
2,856,618
15,540,888
5,369,881
General and Administrative Expenses
4,417,237
885,621
7,159,823
1,865,227
Non-Cash Issuance of Common Stock for
Operating Expenses
784,314
-
1,669,130
-
Non-Cash Stock Compensation Expense
-
-
429,996
-
Non-Cash Stock Option Expense
204,814
-
372,387
-
Total Operating Expenses
5,406,365
885,621
9,631,336
1,865,227
Income from Operations
4,772,649
1,970,997
5,909,552
3,504,654
Other Income (Expense)
Other Income
58,370
137,154
98,248
587,067
Cash Interest and Financing Costs
(1,189,901
)
(595,742
)
(3,320,506
)
(1,159,879
)
Non-Cash Financing Costs
(28,522,740
)
-
(30,227,289
)
-
Total Other Expense
(29,654,271
)
(458,588
)
(33,449,547
)
(572,812
)
(Loss) Income Before Provision for
Income Taxes
(24,881,622
)
1,512,409
(27,539,995
)
2,931,842
Provision for Income Taxes
1,893,039
750,000
2,015,200
750,000
Net (Loss) Income
$
(26,774,661
)
$
762,409
$
(29,555,195
)
$
2,181,842
Basic and Diluted (Loss) Earnings Per
Common Share
$
(0.78
)
$
0.04
$
(0.94
)
$
0.10
Basic and Diluted Weighted Average Number
of Common Shares Outstanding
34,291,045
21,675,001
31,490,759
21,315,747
Condensed Consolidated Balance Sheets
(unaudited)
June 30,
December 31,
2023
2022
ASSETS
Current Assets
Cash and Cash Equivalents
$
3,777,678
$
1,076,402
Treasury Bills
-
2,661,382
Processor Retained Funds
6,911,532
6,734,220
Channel Retained Funds and Receivables
from On-Line Travel Agencies
5,863,561
-
Prepaid Expenses and Other Current
Assets
1,846,433
963,300
Security Deposits - Current
112,290
112,290
Total Current Assets
18,511,494
11,547,594
Other Assets
Furniture, Equipment and Leasehold
Improvements, Net
564,053
197,129
Restricted Cash
1,100,000
1,100,000
Security Deposits - Noncurrent
19,366,130
11,233,385
Prepaid Expenses and Other Noncurrent
Assets
559,838
559,838
Operating Lease Right-Of-Use Assets,
Net
177,480,671
83,325,075
Total Other Assets
199,070,692
96,415,427
Total Assets
$
217,582,186
$
107,963,021
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses
$
6,581,745
$
6,252,491
Rents Received in Advance
3,092,972
2,566,504
Short Term Business Financing
1,706,836
2,003,015
Loans Payable - Current
1,456,187
10,324,519
Operating Lease Liabilities - Current
6,020,163
4,293,085
Accrued Income Taxes
2,015,200
-
Total Current Liabilities
20,873,103
25,439,614
Long-Term Liabilities
Loans Payable
1,448,829
1,689,193
Security Deposit Letter of Credit
3,500,000
2,500,000
Operating Lease Liabilities -
Noncurrent
178,312,362
81,626,338
Total Long-Term Liabilities
183,261,191
85,815,531
Total Liabilities
204,134,294
111,255,145
Commitments and Contingencies
Stockholders' Equity (Deficit)
Common Stock (shares authorized, issued
and outstanding - 35,136,591 and 27,691,918, respectively)
351
276
Additional Paid In Capital
64,021,728
17,726,592
Accumulated Deficit
(50,574,187
)
(21,018,992
)
Total Stockholders' Equity
(Deficit)
13,447,892
(3,292,124
)
Total Liabilities and Stockholders'
Equity (Deficit)
$
217,582,186
$
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
For The Six Months
Ended
June 30,
June 30,
2023
2022
2023
2022
Net Income (Loss)
$
(26,774,661
)
$
762,409
$
(29,555,195
)
$
2,181,842
Provision for Income Taxes and Other
Taxes
1,893,039
750,000
2,015,200
750,000
Cash Interest and Financing Costs
1,189,901
595,742
3,320,506
1,159,879
Non-Cash Financing Costs
28,522,740
-
30,227,289
-
Non-Cash Issuance of Common Stock for
Operating Expenses
784,314
-
1,669,130
-
Non-Cash Stock Option Expense
204,814
-
372,387
-
Non-Cash Rent Expense Amortization
2,583,272
1,115,180
4,234,941
1,202,902
Depreciation Expense
31,847
2,556
42,878
2,556
SoBe Exit Costs
-
-
602,726
-
EBITDA
$
8,435,266
$
3,225,887
$
12,929,862
$
5,297,179
Net Income (Loss)
$
(26,774,661
)
$
762,409
$
(29,555,195
)
$
2,181,842
Non-Cash Financing Costs
28,522,740
-
30,227,289
-
Non-Cash Issuance of Common Stock for
Operating Expenses
784,314
-
1,669,130
-
Non-Cash Stock Option Expense
204,814
372,387
Non-Cash Rent Expense Amortization
2,583,272
1,115,180
4,234,941
1,202,902
Accrued Taxes
1,893,039
-
2,015,200
-
Depreciation Expense
31,847
2,556
42,878
2,556
Cash Net Income
$
7,245,365
$
1,880,145
$
9,006,630
$
3,387,300
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808237480/en/
LuxUrban Hotels Inc. Shanoop Kothari President & Chief
Financial Officer shanoop@luxurbanhotels.com
The Equity Group Inc. Devin Sullivan, Managing Director
dsullivan@equityny.com
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