LuxUrban Hotels Inc.

Ladies and gentlemen, thank you for standing by. The event will begin momentarily. Once again, thank you for standing by. Ladies and gentlemen, thank you for standing by. Welcome everyone to the Lux Urban Hotels Inc. First Quarter 2024 Financial Results Conference Call. At this time, all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you'd like to withdraw your question, please press the star followed by the one once again. Thank you. I would now like to hand the call over to Devin Sullivan, Managing Director of the Equity Group. You may begin your conference.

Thank you, Bhavesh. Good morning, everyone, and thank you for joining us today for Lux Urban Hotels' 2020-2024 First Quarter Financial Results Conference Call. Our speakers for today will be Shanukh Katari, the company's Chief Executive Officer, and Robert Arrigo, Chief Operating Officer. Before we begin, I'd like to remind everyone that this call may contain certain forward-looking statements within the meeting 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. Statements 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 or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Generally, the words anticipates, believes, continues, could, estimates, projects, intends, may, might, plans, possible, potential, predicts, projects, would, and should, and similar expressions may identify forward-looking statements. But the absence of those words does not mean that a statement is not forward-looking. Forward-looking statements may include, for example, statements with respect to the company's ability to successfully de-platform its properties from its former franchise partner and operate independently. its ability to improve its working capital and cash flow profiles, enhance its balance sheet, and deliver organic revenue growth, scheduled property openings, expected closings of noted lease transactions, and the company's ability to continue closing on additional leases for properties in their pipeline, as well as the company's anticipated ability to commercialize efficiently and profitably the properties it leases and will lease in the future. These statements are based on current expectations and beliefs concerning future developments and their potential effect on the company, and 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 or 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 item 1A of our annual report on Form 10-K for the year ended December 31, 2023, and our Form 10-Q for the three months ended March 31, 2024, filed with the SEC on May 13, 2024, and any updates to those factors as set forth in subsequent quarterly reports on Form 10-Q or other public filings with the SEC. The forward-looking information and forward-looking statements are made as of today's date, and the company does not undertake any update 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. Management will also be discussing non-GAAP financial metrics. The reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in the company's press release. With that said, I'll now like to turn the call over to Shanukh Katari. Shanukh, please go ahead.

Thank you, Devin. Thank you, everyone, for joining us today. We filed our 10-Q and issued our press release. yesterday afternoon. Both documents contain significant details on our operating results. With that in mind, I'll focus my remarks on selected highlights and key terms. After that, I'll turn the conversation over to our recently appointed Chief Operating Officer, Rob Arrigo. Rob joined us in March and hit the ground running. He's going to provide an update on his first 60 days in his new role, including insight on the current state of our properties and relationships, his plans for enhancing certain aspects of our operations, and progress to date in those areas. We remain laser-focused on rebuilding trust with our stakeholders and will hold ourselves accountable in every step of the way. In collaboration with our new board, our executive team has taken a hard look at every aspect of our business model to address weaknesses, enhance efficiencies, and construct a better path to deliver long-term value. We're early in that process. And while we are encouraged by what we've been able to accomplish to date, we fully acknowledge the challenges that lie ahead. The most significant of these initiatives is our mutual decision to unwind our franchise agreement with Wyndham. Management and the board concluded over long-term, LuxServum will be better served operationally and financially as an independent operator. Started this business as an independent operator and are fully prepared to go back to our origins. We're in the process of deplatforming our properties from Wyndham Systems and moving each of our hotel listings back under full company control. We expect that process to be completed by the end of May 2024 with minimal operational disruption. Let's discuss our results for the first quarter. Net rentable revenue rose 27.6% to $29.1 million from $22.8 million, driven by an increase in average units available to rent to $15.35 from $571, partially offset by lower total rev par, the impact of seasonality to our current portfolio, and other operational impacts mentioned above. Total rev par declined to $208 from $257 due to the surrender of properties and the greater impact of seasonality on the portfolio versus the prior year. As a reminder, we estimate property level break even to be at 160 to 180 per night, so we're still well above that threshold. As we look out to 2024, we expect that total rep par will rise quarter over quarter for the remainder of the year. We reported a gross profit loss of 4.6 million as compared to the gross profit of 5.4 million. The loss in Q1 2024 included lease surrender expense of $1.2 million related to property in Brooklyn and an increase of expenses that include, among other items, greater commission costs, relocation costs, and employee costs due to the surrender of certain properties. General administrative expense without non-cash items and charges was $3.3 million compared to $2.7 million, reflecting higher unit costs and higher unit counts and associated costs. As a percentage of net rental revenues, excluding non-cash charges, GNA was 11% compared to 12% last year's first quarter. GNA margin for the 2024 first quarter was within the range of our target for the full year 2024. Total GNA expenses with non-cash items rose to $7.6 million from $4.2 million, due primarily to $4.3 million in non-cash items, including the non-recurring partnership consideration costs associated with our exit from our franchise partnership. Total operating expenses including non-cash items comprised of $26.2 million of net rental revenue on Q1 2024 compared to $18.5 in last year's first quarter. Our operating loss for the quarter was $12.2 million. Net loss was $16.8 million compared to net loss of $2.7 million. Net loss for Q1 2024 included above-referenced items, plus cash interest and financing costs of $2.5 million and non-cash financing costs of $2.3 million, which taken together rose by approximately $950,000 from last year's first quarter. Adjusted EBITDA was $2.5 million compared to $4.0 million. Our EBITDA margin in the quarter has been impacted significantly by all the initiatives we've taken recently, and we expect margins to continue to rise during 2024 to our stated goal of 20% EBITDA margins. Moving to the balance sheet as compared to December 31st, 2023. Cash and cash equivalents rose to approximately 1.0 million compared to 0.8 million at December 31st, 2023. Total debt was approximately 6.8 million as compared to total debt of 4.3 million. Accounts payable and accrued expenses increased approximately 28.9 million from 23.2 million. The increase in accounts payable and accrued expense primarily related to the surrender of properties and the termination of the partnership agreement. With respect to our property portfolio, as of March 31st, 2024, the company leased 13 properties with 1341 units available for rent with an average weighted lease terms of 15.2 years and 19.5 years including extension options. We're down one property from December 31st, 2023 due to reevaluation of our Brooklyn operations. At this point, we do not expect to reduce our current portfolio any further. We welcomed approximately 120,000 guests in the first quarter. We continue to believe that there are opportunities for us to raise capital in a strategic and efficient manner, and we will be pursuing these opportunities with the best long-term interests of our shareholders in mind. Now I'll turn things over to Rob Arrigo, our Chief Operating Officer, who will provide an overview of our properties and operations. Rob?