Net Rental Revenue Rose to $31.9 Million from $10.2 Million
LuxUrban Hotels Inc. 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.
“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.
| 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 |