LUXH - Earnings call 2 2023 | LuxUrban Hotels Inc.

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Operator

Greetings, and welcome to the LuxUrban Hotels Inc.

Second Quarter 2023 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. And it is now my pleasure to introduce your host, Devin Sullivan, Managing Director of The Equity Group. Thank you, Devin.

begin. may You

Devin Sullivan

Good today John. Results Thank for you Call. Thank LuxUrban morning, Hotel's us for Financial XXXX joining you, everyone. Second Conference Quarter

Our and Chief Chairman Officer. Brian and will Kothari, Financial speakers Executive Shanoop President Chief Officer; Ferdinand, company's the for today and be

Resorts, the of we respect noted of to closing well begin, we properties company's & lease profitably will to closing transactions, ability future. Wyndham operational ability the success to in it as call, efficiently financial commercialize company's the expected in on to discussing collaboration continue forward-looking Hotels that company's properties as during remind pipeline and anticipated property Before and be everyone the statements, for additional the with like company's and the leases this leases the lease I'd openings, will scheduled including with guidance,

the Factors and to for based These June developments cause Risk to been developments December Form in ended XA statements, effect forward-looking in subject implied from months for their Item a our including the XXXX, potential performance future other forward-looking for be filings which including the expectations XXXX. those XX-K of no forward-looking in statements some are risks, of different public Item or or by anticipated. statements number our the those under XX, results may that XX, of these concerning ended or company. materially expressed in XX-Q caption assumptions set be are SEC, our and actual our that forth beyond XA uncertainties, year beliefs X are have with and be can those control assurance the that on on These current of There will future

the applicable except information securities as are with herein, made and or contained forward-looking also will be update forward-looking referenced company laws. financial any undertake today's discussing are date, and statements most LuxUrban reconciliation forward-looking in please press metrics. A ahead. now forward-looking of the of be can and/or statements measures does Chairman release. non-GAAP The these Officer in Brian, Brian not of turn accordance company's said, to information the Management to that GAAP found comparable Executive Chief that Hotels. and I'll With go measures to financial call over Ferdinand, non-GAAP the

Brian Ferdinand

future quarter and long-term second EBITDA. generated and Almost we Good basis, Devin. net eighth for culturally. and to our and you, of position the thank the Thank operationally, drive to initial of On and quarter last EBITDA say our the enhance positive after LuxUrban, what of accomplish record cash in consecutive to able income been that several offering, for to net net X value strongest of quarters a growth, These we benefits completing day happy seventh financially deliver revenue, I today. have consecutive the am you XXXX, adjusted I am us an we of transformative scale our capture joining of the rental morning, public XXXX In shareholders. to flow, history cash-based and and quarter income. cash reported proud have our entered we've period been half year second

debt debt and and December than When net tripled. year-end, commitment compared each position Total million to and XX, quarter revenue an estimated of We share and million profitability. $XX approximately our growth by a entirety shareholders' financial equity focused, lenders held pre-IPO future pursuing the XXXX, the million. significantly by declined by while cash profile payments, transformed of secured all eliminating $X.X our senior end improved high-conviction our nearly more $XX.X debt in to

only the strong, pursue a significant incredibly to which maturities. hotel properties to Deal deal favorable owners as accelerating facing We upcoming most flow debt pursue and remains growth. pipeline continue to advance that's allows structures opportunity our us

the per level strict have continue we that to markets currently we to operating property adhere and breakeven night controls, we costs serve. believe lowest We in the

and integrated to transformed be By announcing fees to franchise hotel company. Hotels added initially we are world's and partnership to compared by online Wyndham by of into anticipated our a We prior the Hotels also Resorts, include see the arc booking in growth likely Wyndham's with operations. brand our a the platform, end year, sooner. and significant the to expect being Wyndham's Trademark channels intern Wonder Highlights the using deal the LuxUrban of reduction largest of the commissions expected the portfolio booking

program As the million than serves members. XXX more Rewards Wyndham a reminder,

capital We Wyndham property have Wyndham underway. working acquisition existing with nondilutive provide capital LuxUrban upfront already to begun based it's portfolio growth working primarily MLAs. be and non-dilutive LuxUrban's ongoing and by the will future with to integration, on capital significant provided fund initial and

to this to and enhance employ under that a attractive review and alternatives while covered systems, of operating Kothari, in President and customer our ownership even enterprise-wide their that, hotels asset-light branded I'll believe financial with optimizing LuxUrban Wyndham. flow the Financial agreement operating will its and With world-class marketed LuxUrban brand advantages over jointly more solution financials. remain alignment being are which it expected with our for will Wyndham properties Officer, owners efficiencies Shanoop looking maintaining incredibly cash LuxUrban Chief We're triple-net our LuxUrban's operating Wyndham's of turn of our about operational property support make partnership service will and assets. to while operate control lease for by on and enthusiastic

Shanoop Kothari

increase or growth rent rental rent revenue our up continued December at Net XXXX Noncash $XX.X million XXXX. XX.X% in was tripled revenue and in quarter, cash as same to improved as the QX RevPAR per to strong inherent rent an well XXX RevPAR. rental $X.X another model. expense XXX amortization to second in from million million XQ available million room Year-to-date net rose Brian. year. XXX to or to net rental of last XX, year's driven revenue from in QX 'XX total $X,XXX primarily XXX in from by you, 'XX Thank reported validate the in of and from units available QX in We power million, earnings average $X.X quarter period compared in or last $X.X $X.X 'XX. was XX.X% to 'XX revenue QX expense from

or 'XX. or to XX.X% Gross $X.X from X.X% net of million of million profit rose expenses to $XX.X rental $X.X rental revenue or of or revenue to increased in G&A 'XX. rental compared million net net revenue $XXX,XXX XX.X% XX% QX in QX

share $XXX,XXX net million the of the a contracted to of pay. agreement million the loss $XX.X associated net Our $XX.X million $X.XX share was that was noncash eliminated $XX.X second $X.XX as future income with per share in quarter or estimated an year. payments per that The net of have revenue the for primary financing or share last revenue second quarter in charge compared we loss to been onetime would driver

We and also incurred premiums a associated and this. related associated $X.X costs the million of interest onetime debt financing with with retirement cash

up the on of did mask revenue results, drag obligations While payment charges and improved long adjusted term, year's flexibility. these second in results, by these removing elimination of have from impact to under providing and impact primarily capital growth would EBITDA the not Exclusive we share million. to increasing last our business income million items, on our net the financial over just access our quarter, had they the cash $X.X improved financial $X.X our these of $X.X million, should positive to

associated compensation continue ASC forward, expense have but XXX. financing, not with equity expense have rent with noncash we'll charges we regular to amortization Going will stock related grants and to associated

XX, June to our ended quarter XXXX, margin increased XX.X%. the For EBITDA

our long XX-plus EBITDA term. As we discussed the We achieve over the are have EBITDA goals in XX-plus reiterate last this to margins term margins short quarter, and percent guidance. percent

June and XXX the unit to quarter, hosting guests XXXX the X,XXX 'XX. rose XXX During quarter in our prior in from XQ

cash balance million and million, the debt year-end sheet. totaled at $X.X cash from about December cash declined XX, $XXX,XXX, Restricted June $XX.X million. $X.X to quarter million At debt end million net $X.X was to quarter and $XX million at the at Total was from at December XXXX, improvement XX, unchanged $X.X XX, in a XXXX. from XXXX. down and Moving equivalents

and on payables We working the continue strides quarter. made and work during capital to our

position to XXXX, negative XX, from a negative million December $X.X June million narrowed XX, $XX.X at Our at a working XXXX. capital

However, versus a of million removing positive short-term $X.X continue lease negative to liabilities, our our year. the was working the capital XX, at balance $X.X for XX, XXXX. work improving June capital liquidity December we throughout million XXXX, will and working towards said, That

over we quarter, for X the the million months, $X million. deposits and deployed During security in $X

continuing flow As free previously, and coming we our have improving debt to while to in we improve liquidity make these efforts over the continue quarters. cash and look reduce to stated metrics

today. and XXXX, XX, June at portfolio our at Looking

As XX in of cities. June XX, we X,XXX units properties, operated X

hosting properties Los Miami, guests with of New in operate we Orleans. today, units As and XX York, Angeles, New X,XXX Washington

currently -- XX we MLA have We units. have short-term X,XXX under rental properties under totaling

June and and $XX,XXX respectively, end at per of $X,XXX, in the across New our low high York were at with portfolio, XXXX, and D.C. As $XX,XXX security unit investment deposits in our being XX, per New in Orleans the $X,XXX unit.

these consistent to the expect near future. amounts in remain We relatively

guidance. Regarding

for our maintained net XXXX rental and and EBITDA revenue have guidance XXXX. We

to be EBITDA XX%. believe expect expect this we for XX% noncash We of margins items, XX and G&A, margins that result to that We in year. between the all-in plus excluding of will XX XXX XX% XX% approximate XXXX RevPAR and percent. will gross XXX, during to will

of X,XXX the by partner. could the the hotel reduced XXX X,XXX agreement. guidance X,XXX over how of XX, one, year. continue comments under financing pipeline; time, as Wyndham We MLA, the of of X, We units partnership. about we believe and revenue the to dialogue perform stages to additional timing our be with goal to positively agreement; required key increase the course for today. XXXX, between over the our initial us few up impact X,XXX reach estimate this provides million year-end the synthetic A to, of units continued subject We $XX short-term at quality X,XXX may and CapEx of The X, and money over December under expect units operating from and between the

improve about of on significant reducing reduce us The Based after benefits, operational impact, operating starting to drive impact XXXX by booking we transaction will Wyndham's will and provides current will traffic expected booking net The channels. when our which fully expenses once be year-end. RevPAR, we're costs we booking we based X/X fees. our OTA case, believe us on

have at Brian. Wyndham to the back as turn heading to LuxUrban over continue on of operational With we resources benefits secondary staffing an currently yet basis. we conversation on Finally, and quantify the are become dependent items more we to that, I'll for

Brian Ferdinand

going believe questions we're Thank open you, Shanoop. to now. up for I this

for over And turn thank for up participating. open everyone to I'll to want it Just Devin to questions.

Operator

Allen of with line Instructions] And Maxim the Klee the question [Operator first comes from Group.

Allen Klee

very a there? -- Could strong give the into at positive some I on Congrats available just on color there our what that compared area drove jump look was there's was your a strong revenue model where variance go What RevPAR? one room. quarter. When things of to lot a per you

Shanoop Kothari

Yes, take sure, I'll that.

so quarter. part side. $XXX the the did sort months we January up as is XXX well the to the coupled early of the -- properties for Allen, quarter sort for of with season, came So jump of of last second summer X higher-quality to tick downside million certain jump primarily the of timing the as so The that on related

of on than at So quality think expected, related but a quarter. higher better to the average put part I it's little just that properties the early bit were the we

Allen Klee

savings didn't your from their by come of net that. little of heard system reclined In through Could you catch to the in I around decline X.X%, Wyndham? will -- fee get Wyndham, orders the a in rise you'll looking the order about that decline and to a say you booking some I but X% was expenses from will gross say them terms as and can quite beginning, on that using you're that factors pay that. of something franchising units result you the talk sense a your cost expenses which booking XX-Q and going the in it, I X/X.

Shanoop Kothari

sure. Yes,

along fees, X/X platform, are about booking franchise less what agreements. than on currently So OTA is with fees their we

it, to a they driving -- do. we're negotiated So fees. traffic call If to we it's have and we go about use OTA basically, the we other that continue Wyndham's through if platform, better rate a extent OTAs, than reduction, X/X

ramp from the the plus more of But a about to fully the The is as than it over expensive. So that that of is is that through breakeven their their the than way our sort rewards go gotten half guidance all we much expect members we've and fully future time and expect we we team fully bookings fees little will for part significant platform modeled we've less franchise and is Wyndham up. but such. through higher be a it,

Allen Klee

also this I that Wyndham could explain you you RevPAR. say improve And your transaction I the RevPAR? how the thought heard would improve Could

Brian Ferdinand

Yes. that from Brian. Allen, it's take perspective. I'll just a marketing

over has the million largest the rewards XXX Wyndham rewards worldwide So members world. program and in

words, So Wyndham limited they -- has have have the as York New and looking people in Wyndhams both through of particular, rooms cities the where that utilize oversupply City, an well. members supply the internally, through so because in other certainly

being well increase handsomely New as rewards the in particular, to through So in able programs we as York, RevPAR at marketing very program. look Wyndham's

channels, have we which we to through It's don't substantial. very, today. So think demand very see access we'll those increased

Allen Klee

the back jump I'll and question, last my And great. in That's queue.

of synthetic it said million capital. could also $XX provide around You

maybe be and of been get anything terms of which that some from maybe of of you there one the the costs X? year that add eased Is over the add. Like paying they'll higher up. providing capital of or could growth in next you're color amount basically that, about could the security the to constrain going can some benefit working think maybe rooms deposit, you some how so And that on you had your

Brian Ferdinand

Absolutely.

of So invested from if the $X.X go balance deposits letter of this a into sheet Q, point have fact, credit. we just security of million $XX.X as to with million you

capital terms for the it that was of hotels. total million of So those largest generated portfolio of call portfolio $X.X our And $XX outlay invested about EBITDA. which million deposits, in into

an $XX quarter million million invested and a $XX ROI properties, So investment, EBITDA when the at million into annualized $X.X of generating or got looking of you're you $XX invested. hotel on you're EBITDA about million

then about We're than $X particular, capital security. working had us investment Wyndham of property operations $X that the in we portion or return the security to EBITDA. enhancements property franchise and of agreement, And into as as part well as a previously So greater talked seeing the provides the the for for currently. capital a of of of

Shanoop Kothari

$XX Allen, it, we've modeled it's not million. million And the $XX way

Operator

And line with B. Riley the comes Securities. question Maher of the Bryan next from

Bryan Maher

of you inbound a seeing owners second bit of through kind are to hotels of little And some lieu you? an to companies for and see part the a to refinancing you first changes relative opportunities starting subsequently to We're a any banks handbacks from of in as pickup Are the our of in acceleration today looking in that in calls the are of coverage what that for terms question, seeing up kind you quarter. saw difficulties.

Brian Ferdinand

we throughout distressed yes, getting refinancing where a in a day. shown We're several seeing are overlevered. deal is of definitely that every So that

the underwriting really carefully very from since in then Only we're selecting moved are the CapEx start perspective of turnkey a properties a disciplined that meet very and also our So approach. which the business. hasn't criteria,

bands underwriting same opportunities or rent historically. we So significant we're the pipeline opportunities, seeing that done significant still in have

in the So moved lower. our same up seeing We're come things or underwriting at not we criteria. have

Bryan Maher

there any you've been in past, you I your talked before any markets outside you're your outside are within talked or focusing where London attention? the the about what markets Okay. think about change U.S.? U.S. has the target And there maybe in of

Brian Ferdinand

Yes.

rapidly scale the the and continued it's it's we're Boston opportunity. pursuing in and that largest actively X in to opportunities. We've today represents So York London cities we're then New

and travelers our New for and underwriting York the attributes and represents well. terms risk of also sustainable are City pipeline that our cities profile. that other of we We as meet will are look both be X in volumes that concentrated meet in RevPARs that have part But largest London the our Boston criteria

partnership opportunities a will concerned, X-City really as that It's is footprint. on. Wyndham around cities far look focused now, possible at right the we in other X-City with But So it's specific in that we're footprint future. the LuxUrban as

Bryan Maher

Okay. And me City York maybe for last up. you that brought New in since

TV Hotel. Roosevelt the paying rooms. it of is Roosevelt at turn York and Roosevelt there is newspaper or What's New York what relates going kind in their know a You hotels I that for can't impacting don't New what that outside a as disaster seeing City But down open strike a might inbound staying on Hotel New without the showing you able be with up to on in closed with. of to take immigration ability your and any York City to or the people deal those hotels. cost the

you're curious Just what seeing.

Brian Ferdinand

distressed, is provides owners mean city contract. it hotel for I but that short-term doesn't them a allow what Yes. are to on it refinance alternative a

into we're like city their went if particular, So the It now to you took them owners in at, the to debt. who an money York foreclosure restructure. owner restructure allowed City, hasn't New look trying and

So larger and that hotels I secondary opting about I a XXX on think It's it's cash. create some pipeline. it really to owners a that believe short-term in problem, band-aid do for a will program. are -- close

they ways even programs, those to with net pipeline to around well restructure in programs that as hotels. out their the talked clear hotels for refurbish obligations turn X back city that hotels, then secondary program. take beyond back, I a give on care We've in us a X-City up So turn owner triple several as bringing think it to clean is to the that and city are leases. will them are that that debt the owners online looking over going them deals We've to program and done of long-term

opportunity for So us. it's really secondary a just pipeline

Operator

Group. Craig-Hallum line next question the with comes the of from And Alex Fuhrman Capital

Alex Fuhrman

the from Wyndham you a on us of function there. kind expect of rates of channels other natural how that any existing removing for just get many you members deal or Can that channel? Wyndham Just anything to the like through bookings that that on any that a of follow-up kind or were plan walk level to your properties in OTAs to of raising exposed things way? kind help direct or being you Is

Brian Ferdinand

that? repeat you of a little. lost I'm part the I sorry, last could Alex, up broke it

Alex Fuhrman

are guess question that going to how your to function from exposed level many how you you the just OTAs happen getting Or as any to other you I other is Wyndham being -- or channels? be your you do do channel rates going Wyndham members? partners a of are bookings? to Are envision that -- hotels organically that of any think is raising through removing

Brian Ferdinand

we think We're I mean I with Yes. internally OTA-driven them. today. model XX% ran our

close to XX%. So paying

this was in million OTA $X.X was third-party our with $X.X I think quarter million plus number, cost processing in -- commissions about the fees. additional

about million went an door So XX% quarter urban core direct all in, the this expense. $X.X properties. on out typically They their booking. in provide

So savings we're modelling our talking X/X. cost about at

sales distribution specific And sophisticated company in sales, to pick So not X,XXX specifically, a substantial they well. in remove the them, as I plus bookings, -- large And leverage up question also your of and they -- globally, through departments around Also, world. have hotels both have but answer we franchise largest pretty think that rewards. a will would group BXB that. sales, not have would they they portion our

So an and distribution their as sales as is very if not almost powerful, itself. OTA powerful,

there. looking savings cost So redistributing we're at

So and did it's work pretty it. yes, extensive we a on pretty powerful,

Operator

JonesTrading. the Erdner line next the of comes question with And from Matthew

Matthew Erdner

Are the increases rent going in the that guys expense? costs are expectation on seeing side, to kind terms such to as Sticking the see utilities, of and stuff we there similar labor, forward? property-related like TV, WiFi, expenses of going you what

Brian Ferdinand

look we of last additions impact of Part were EBITDA drag. less quarter. so that we margins property XXs quarter. new is way it, the the so is to of the about We low a got at Yes, in this XX.X%

the we we're portfolio, hire when becomes to As new up the it the we less impact. associated we to a revenues into grow ramping enter an on of staffing, property, continue

we start-up grow, we historically As were to bootstrap scrappy, very company. continue

in continue sort to of We that sort of mindset. run

crews companies now consolidation operations, We're speak and economies properties of the GMs maintenance utility cross-staffing leverage that we meeting forth. So different to with actually with we're developing. and personnel, as so

are think I there where plenty areas look, improve. I would So can overall, we say, still of

we a we as can look So larger a we player, become to I'd more think increases. and offset perspective a savings it from I get better capitalized, different grow pricing actually at some

net-net, at looking So of would level be cost. of I sort same the

Matthew Erdner

that you once And terms in the is you in best Okay. it any have tracking there. That's helpful the and the XX%. schools believe, of ever occupancy, is of summer? this had for what quarter at the if I back insight guys, there remainder expectation fall quarter, then How starts And your into session?

Brian Ferdinand

Yes.

to up balance going pick in through improve Miami we So that the year. in weather, right the with I of think tough now but fall. continue It's the should as we're occupancy the

time continues every to one New stay tell to I for difficult me New to of come a very robust. our mean, York room I that I York, it's anecdotally, properties. people find in

way. be to selling we We're inventory the that also continues pretty it have. focused perishable perishable So on

So look, better would at getting -- we're optimizing. I

it You in picked terms of up occupancy.

have I that. increase a have lost some bake think room We still every of night to we run we by, where goes revenue. that business room, a it's

and so We balance brand our to partner that to we will continue the try that. to have but and forth, increase with

So the the we I of for to would where sort say right baseline we're of year, that improve the now. at of like balance with that would

Operator

next Research. And with the Kerr from of line Zacks comes the Investment Tom question

Thomas Kerr

fit, this they deal? any operate the is follow-up have type confused deal. Do hotels reservation see pricing just that? One the on was operational as you I Or a input? you on winded still more do and

Shanoop Kothari

standards and well. operating and we property on also customer maintain collaborate control and internally as We then service management, as as standards revenue distribution well sales and on the

Thomas Kerr

pricing collaborate mean your the have algorithms that? on Does you that you you that Or don't years? developed over use

Shanoop Kothari

we team. -- We with still We in run still and sales their connection distribution collaborate.

Thomas Kerr

questions. Okay. quick Got couple A of it. financial

the share be of ending because shares average be quarter increased agreement, so shares count ending? Or the the that will third revenue the the for should million. of share the So $XX.X

Brian Ferdinand

Yes.

call share chairs. slightly agreements structured look debt Q, shares issued are at of can under additional the the cover the $XX holder way million. So are the if the on you rev the The

committed share that's all-in been number the rev an of XX, agreement. the what's on that's So

Thomas Kerr

know don't those issued execute... But have been until if they we

Shanoop Kothari

be We to They asked those Yes. for Yes. issued them. issued.

when we issue. So that's the the numbers ask, sort between X of delta they

will So $XX it million. eventually, get to that for

Thomas Kerr

long way or it But several away could be out. quarters Okay. a

Shanoop Kothari

Correct. Yes, an through lockup there's those XXXX. extended on

Thomas Kerr

right. the in the confusing? little of or color on rate then second the tax And second All rates any the a year, half guidance quarter tax seemed

Shanoop Kothari

Yes.

majority tax are So limitation noncash and do. there's nondeductible of -- the can for on purposes expenses what non the you also a expense, interest

So our interest a XX%. our cash of is the moving expense for taxes That's we're way combined financing on But so on roughly if based the is calculate noncash, to kind I'd you around. state. basis to take out XX%

Thomas Kerr

it. Got one. All Last right.

units -- that? So for like the units units, the meaning number of would in third end at units rough would estimate -- the $XX.XX quarter quarter, X,XXX average the operating the the something that be be or the third of

Shanoop Kothari

the laid XX. if section look at out, the think it it out, Q, I've I we've of So you laid MD&A it's Page

beginning are right that So not quarter. X quarter the this quite we operating There's now. balance. at with properties the that have the Those operating X XX, XX are of operating were currently

it'd be operate and So and the open we X,XXX end the now between quarter. of plus what

higher than So probably somewhere that.

Operator

there I'd further comments. it Brian time, Ferdinand And to questions. no over closing this for back are pass to any At like

Brian Ferdinand

the participation updating forward Thank pleased great with everyone, We hotels. interest to very day, Have everyone. LuxUrban and throughout you continued you, thank progress again, and a look and your you were for in year. our

Operator

Ladies and today's gentlemen, this concludes teleconference.

your you for Thank a and disconnect have this great may time. You day. participation, lines at your

LuxUrban Hotels (LUXH) 9 Aug 232023 Q2 Earnings call transcript