CorpHousing Group Inc. Announces 2022 Second Quarter Financial Results

Significant Increases in Net Rental Revenue, Gross Profit, and Net Income
Currently Operating ~600 Units with 1,200+ Units Scheduled to Commence Operations in Q4 2022
Managing Robust Pipeline of Long-Term Hotel Lease Opportunities

MIAMI, September 26, 2022--(BUSINESS WIRE)--CorpHousing Group Inc. ("CorpHousing," "CHG", or the "Company") (Nasdaq: CHG), which utilizes a long-term lease, asset-light business model to acquire and manage a growing portfolio of short-term rental properties in major metropolitan cities, today announced financial results for the second quarter ("Q2 2022") and six months ended June 30, 2022.

2022 Second Quarter Financial Overview Compared to 2021 Second Quarter

  • Net rental revenue rose 144% to $10.2 million from $4.2 million

  • Gross profit improved to $2.9 million, or 28% of net rental revenue, from $0.1 million, or 3.5% of net rental revenue

  • Income before provision for income taxes improved to $1.5 million from a loss of $(1.1) million

  • Net income improved to $0.8 million, or $0.04 per diluted share, from a net loss of $(1.1) million

  • EBITDA was $2.1 million compared to EBITDA of $(0.6) million

2022 Six Months Financial Overview Compared to 2021 Six Months

  • Net rental revenue rose 158% to $19.3 million from $7.5 million

  • Gross profit improved to $5.4 million, or 28% of net rental revenue, from a loss of $(0.4) million

  • Income before provision for income taxes improved to $2.9 million from a loss of $(2.4) million

  • Net income improved to $2.2 million, or $0.10 per diluted share, from a net loss of $(2.4) million

  • EBITDA was $4.1 million compared to EBITDA of $(1.8) million

Operational Highlights

  • Generated gross proceeds of $13.5 million via Initial Public Offering (August 2022)

  • Commenced trading on Nasdaq Capital Market (August 2022)

  • For the six months ended June 30, 2022, managed 590 units under long-term lease

  • Subsequent to June 30, 2022, CHG announced the signings of separate 15-year Master Lease Agreements ("MLA") with two luxury hotels in New York City and an historic boutique hotel in New Orleans

  • Inclusive of these new MLAs, CHG’s portfolio currently consists of 10 hotel properties in eight U.S. cities comprising 1,037 units

  • Based on current MLA pipeline, CHG expects more than 1,200 units to be operational in 10 cities during Q4 2022

"We are excited to announce our Q2 results, which we believe reflect the success of our asset-light business model, the vibrancy of our target markers, and the opportunities inherent in our industry," said Brian Ferdinand, Chairman and Chief Executive Officer of CorpHousing Group. "Q2 2022 net rental revenue increased by 144%, gross profit increased 19-fold, net income improved by $1.9 million, and EBITDA for the quarter was $2.1 million. Our available units for rent increased quarter over quarter, occupancy rates improved as the effects of COVID pandemic wane, and we realized certain efficiencies from scale.

"We currently operate hotels under long-term lease agreements in Boston, Denver, Los Angeles, greater Miami, New York City, Washington, DC, and Seattle, and will commence operations in New Orleans in mid-October.

We are in various stages of negotiation with a variety of potential partners that represent thousands of additional hotel units in destination locations across the United States and Europe. We believe that we are creating win-win opportunities by providing property owners the ability to create stable cash flow streams to maximize returns on their properties, which have been significantly impacted by restrictions on travel and leisure activities due to the COVID-19 pandemic. CHG then markets these units under our customer facing LuxUrbanTM brand to increase occupancy rates and drive operational efficiencies, thus creating the opportunity to generate high margin, recurring and predictable revenue streams. Supported by a strengthened balance sheet and seasoned team of executives, we believe that are well positioned to advance our highly scalable, predictable, and profitable business model and look forward to our future with confidence."

Q2 2022 Overview

Net rental revenue in Q2 2022 increased 144% to $10.2 million from $4.2 million in the second quarter ended June 30, 2021 ("Q2 2021"), driven primarily by an increase in average units available to rent from 376 in Q2 2021 to 565 at Q2 2022, as well as better occupancy rates and average daily rates ("ADRs") over this period.

Cost of revenue, which includes rental expenses for available units to rent, rose to $7.3 million in Q2 2022 from $4.0 million in Q2 2021, due primarily to the increase in size of CHG’s rental unit portfolio, as well as related increases in furniture rentals, cleaning costs, cable / WIFI costs and credit card processing fees.

Gross profit improved to $2.9 million, or 28% of net rental revenue, from $0.1 million, or 3.5% of net rental revenue. Higher gross profit and gross margin was primarily attributable to a reduction in the impact of COVID-19 on our operations, higher unit counts and better occupancy rates and ADRs.

Total general and administrative expenses in Q2 2022 increased to $0.9 million, or 9% of net rental revenue, from $0.7 million, or 18% of net rental revenue, in Q2 2021, attributable to an increased number of units in operation.

Income before provision for income taxes improved to $1.5 million from a loss of $(1.1) million, reflecting a significant increase in net rental revenue in Q2 2022 compared to Q2 2021 and the benefits of scale-driven operating efficiencies.

Net income improved to $0.8 million, or $0.04 per diluted share, compared to a net loss of $(1.1) million.

EBITDA rose to $2.1 million, or 21% of net rental revenue, in Q2 2022 compared to negative EBITDA of $(0.6) million.

For a discussion of the financial measures presented herein which are not calculated or presented in accordance with U.S. generally accepted accounting principles ("GAAP"), see "Note Regarding Use of Non-GAAP Financial Measures" below and the schedules to this press release for additional information and reconciliations of non-GAAP financial measures. The company presents non-GAAP measures such as EBITDA to assist in an analysis of its business. These non-GAAP measures should not be considered an alternative to GAAP measures as an indicator of the company's operating performance.

Conference Call and Webcast

The Company will host a conference call on Tuesday, September 27, 2022 at 9:00 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 webcast of the event may be accessed via the following link: https://event.choruscall.com/mediaframe/webcast.html?webcastid=ltKz5SSV.

CorpHousing Group Inc.

CorpHousing Group (CHG) utilizes a long-term lease, asset-light business model to acquire and manage a growing portfolio of short-term rental properties in major metropolitan cities. The Company’s future growth focuses primarily on seeking to create "win-win" opportunities for owners of dislocated hotels, including those impacted by COVID-19 travel restrictions, while providing CHG favorable operating margins. CHG operates these properties in a cost-effective manner by leveraging technology to identify, acquire, manage, and market them globally to business and vacation travelers through dozens of third-party sales and distribution channels, and the Company’s own online portal. Guests at the Company’s properties are provided Heroic Service™ under CHG’s consumer brands, including LuxUrban. CHG’s Heroic ServiceTM provides guests a hassle-free experience which exceeds their expectations with "Heroes" who respond to any issue in a timely, thoughtful, and thorough manner.

Forward Looking Statements

This press release contains forward-looking statements, including with respect to the expected closing of noted lease transactions and 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 the prospectus forming part of the Company’s effective Registration Statement on Form S-1 (File No. 333-262114). 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 projection 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.

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 before interest, taxes, and depreciation. The Company’s management uses this non-GAAP financial metric 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 this non-GAAP financial metric is 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 is 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.

A reconciliation of net income to EBITDA will be provided in the company’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2022 to be filed on September 26, 2022, under the section thereof entitled "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Reconciliation of Unaudited Historical Results to EBITDA."

Condensed Consolidated Balance Sheet

(Unaudited)

(unaudited)

June 30,

December 31,

2022

2021

ASSETS

Current Assets

Cash

$

556

$

6,998

Processor retained funds

4,616,255

56,864

Prepaid expenses and other current assets

512,939

166,667

Deferred offering costs

1,234,500

771,954

Security deposits – current

276,943

276,943

Total Current Assets

$

6,641,193

$

1,279,426

Other Assets

Furniture and equipment, net

8,944

11,500

Restricted cash

1,100,000

1,100,000

Security deposits – noncurrent

4,108,010

1,377,010

Operating lease right-of-use asset, net

49,941,971

Total Other Assets

55,158,925

2,488,510

Total Assets

$

61,800,118

$

3,767,936

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current Liabilities

Accounts payable and accrued expenses

$

5,301,053

$

4,209,366

Rents received in advance

4,071,095

1,819,943

Merchant cash advances – net of unamortized costs of $0 and $57,768, respectively

575,489

1,386,008

Loans payable – current portion

2,780,054

1,267,004

Loans payable – SBA – PPP Loan – current portion

815,183

815,183

Convertible loans payable – related parties – current portion

2,596,865

Loans payable – related parties – current portion

1,071,128

22,221

Operating lease liability – current

7,182,381

Income taxes payable

750,000

Total Current Liabilities

25,143,248

9,519,725

Long-Term Liabilities

Loans payable

545,789

925,114

Loans payable – SBA – EIDL Loan

800,000

800,000

Loans payable – related parties

496,500

Convertible loans payable – related parties

700,195

2,608,860

Line of credit

94,975

94,975

Deferred rent

536,812

Operating lease liability

43,962,492

Total Long-term Liabilities

46,103,451

5,462,261

Total Liabilities

71,246,699

14,981,986

Commitments and Contingencies

Stockholders’ Deficit

Members’ Deficit

(11,214,050

)

Common stock (shares authorized, issued and outstanding – 90,000,000; 21,675,001; 21,675,001; respectively)

216

Accumulated deficit

(9,446,797

)

Total Stockholders’ Deficit

(9,446,581

)

(11,214,050

)

Total Liabilities and Stockholders’ Deficit

$

61,800,118

$

3,767,936

Condensed Consolidated Statement of Operations

(Unaudited)

For the Three Months Ended

For the Six Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Rental Revenue

$

12,656,540

$

6,728,686

$

24,419,439

$

11,688,873

Refunds and Allowances

2,455,202

2,545,820

5,118,676

4,199,978

Net Rental Revenue

10,201,338

4,182,866

19,300,763

7,488,895

Cost of Revenue

7,344,720

4,035,238

13,930,882

7,920,531

Gross Profit (Loss)

2,856,618

147,628

5,369,881

(431,636

)

General and Administrative Expenses

Administrative and other

809,121

701,040

1,559,742

1,258,458

Professional fees

76,500

37,390

305,485

90,404

Total General and Administrative Expenses

885,621

738,430

1,865,227

1,348,862

Net Income (Loss) Before Other Income (Expense)

1,970,997

(590,802

)

3,504,654

(1,780,498

)

Other Income (Expense)

Other income

137,154

434

587,067

467

Interest and financing costs

(595,742

)

(542,764

)

(1,159,879

)

(660,007

)

Total Other Expenses

(458,588

)

(542,330

)

(572,812

)

(659,540

)

Income (Loss) Before Provision for Income Taxes

1,512,409

(1,133,132

)

2,931,842

(2,440,038

)

Provision for Income Taxes

Current

750,000

750,000

Net Income (Loss)

$

762,409

$

(1,133,132

)

$

2,181,842

$

(2,440,038

)

Basic and diluted earnings per common share

$

0.04

$

$

0.10

$

Basic and diluted weighted average number of common shares outstanding

21,675,001

21,315,747

Non-GAAP Financial Measures

To supplement the condensed consolidate financial statements, which are prepared in accordance with GAAP, we use EBITDA as a non-GAAP financial measure.

The following table provides reconciliation of net income (loss) to EBITDA:

Three Months Ended June 30, (unaudited)

Six Months Ended June 30, (unaudited)

2022

2021

2022

2021

Net Income (loss)

$

762,409

$

(1,133,132

)

$

2,181,842

$

(2,440,038

)

Provision for Income Taxes

$

750,000

$

$

750,000

$

Interest and Financing cost

$

595,742

$

542,764

$

1,159,879

$

660,007

Depreciation Expense

$

$

$

2,556

$

EBITDA

$

2,108,151

$

(590,368

)

$

4,094,277

$

(1,780,031

)

EBITDA is defined as net income or loss before the impact of interest, taxes and depreciation and amortization. EBITDA is a key measure of our financial performance and measures our efficiency and operating cash flow before financing costs, taxes and working capital needs. We utilize EBITDA because it provides us with an operating metric closely tied to the operations of the business.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220926005762/en/

Contacts

Shanoop Kothari
Chief Financial Officer
CorpHousing Group, Inc.
shanoop@corphousinggroup.com

Devin Sullivan, SVP
The Equity Group Inc.
(212) 836-9608
dsullivan@equityny.com

David Shayne, Analyst
The Equity Group Inc.
(212) 836-9628
dshayne@equityny.com