Q2 2024 Mobile Infrastructure Corp Earnings Call
Operator: Marc Riddick, Bryan Maher, Casey Kotary [inaudible] Good afternoon and welcome to the Mobile Infrastructure Corporation second quarter 2024 earnings conference. All participants will be in this room only. For any assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. If you want to ask a question, you may press star, then 1 until the end of the... To withdraw your question, please press star three.
Speaker Change: Good afternoon and welcome to the Mobile Infrastructure Corporation's second quarter 2024 earnings conference call.
Speaker Change: All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Casey Kotary, Investor Relations Representative. Please go ahead.
Operator: .. .. .. .. .. .. .. .. MR WIDMER, I would now like to turn the call over to Casey Kotary, Investor Relations Representative. Please go ahead.
Casey Kotary: Thank you, Operator. Good afternoon, everyone, and thank you for joining us to review Mobile's second quarter 2024 performance. With us today from Mobile are Manuel Chavez, CEO, and Stephanie Hogue, President. In a moment, we will hear management statements about the company's results of operations for the second quarter of 2024. Before we begin, we would like to remind everyone that today's discussion includes forward-looking statements, including projections and estimates of future events, business or industry trends, or business or financial results.
Casey Kotary: Thank you, Operator. Good afternoon, everyone, and thank you for joining us to review Mobile's second quarter 2024 performance.
Casey Kotary: with us today from mobile are Manuel Chavez, CEO, and Stephanie Hogue, President. In a moment we will hear management statements about the company's results of operations as of the second quarter of 2024.
Casey Kotary: Actual results may vary significantly from those statements and may be affected by the risks Mobile has identified in today's press release and those identified in its filings with the SEC, including Mobile's most recent annual report on Form 10-K and its most recent quarterly report on Form 10-Q. Mobile assumes no obligation and does not intend to update or comment on forward-looking statements made on this call. Today's discussion also contains references to non-GAAP financial measures that Mobile believes provide useful information to its investors. However, these non-GAAP measures should not be considered in isolation from, or as a substitute for, GAAP results.
Speaker Change: Before we begin, we would like to remind everyone that today's discussion includes forward-looking statements.
Speaker Change: including projections and estimates of future events.
Speaker Change: Business or Industry Trends or Business or Financial Results.
Speaker Change: Actual results may vary significantly from those statements and may be affected by the risks Mobile has identified in today's press release and those identified in its filings with the SEC, including Mobile's most recent annual report on Form 10-K and its most recent quarterly report on Form 10-Q.
Speaker Change: Mobile assumes no obligation and does not intend to update or comment on forward-looking statements made on this call.
Speaker Change: Today's discussion also contains references to non-GAAP financial measures that Mobile Believes provide useful information to its investors. These non-GAAP measures should not be considered in isolation from, or as a substitute for, GAAP results.
Manuel Chavez: Mobile's earnings release and the most recent quarterly report on Form 10-Q provide a reconciliation of those measures to the most directly comparable GAAP measures and a list of the reasons why Mobile uses these measures. I will now turn the call over to Mobile's CEO, Manuel Chavez, to discuss Mobile's second quarter 2024 performance.
Speaker Change: Mobile's earnings release and the most recent quarterly report on Form 10-Q provide a reconciliation of those measures to the most directly comparable GAAP measures and a list of the reasons why Mobile uses these measures.
Speaker Change: I will now turn the call over to Mobile's CEO, Manuel Chavez, to discuss second quarter 2024 performance. Manuel?
Manuel Chavez: Thank you, Stephanie. Thank you, Casey, and thanks to all the participants. On today's call, we will review our second quarter operating and financial performance and discuss our business outlook. This was another quarter of progress for our company. Our asset portfolio continued to show solid year-on-year improvements, highlighted by a 14% increase in net operating income, which is the key metric that we managed. This NOI growth is particularly noteworthy considering the challenging business environment that persists in many of our markets.
Manuel Chavez: Thank you, Casey, and thanks to all the participants.
Speaker Change: On today's call, we will review our second quarter operating and financial performance and discuss our business outlook.
Manuel Chavez: This was another quarter of progress for our company.
Manuel Chavez: Our asset portfolio continued to show solid year-on-year improvements, highlighted by a 14% increase in net operating income, which is the key metric that we managed to.
Manuel Chavez: This NOI growth is particularly noteworthy considering the challenging business environment that persists in many of our markets.
Manuel Chavez: Our team executed effectively, as evidenced by the increase in portfolio yields, while at the same time working on initiatives that we expect will accelerate long-term growth. Our asset portfolio consists of 42 parking properties, 18 garages, and 24 surface parking lots. These assets are primarily located in the Midwest and Southwest, where driving is the main mode of transportation.
Manuel Chavez: Our team executed effectively, as evidenced by the increase in portfolio yields, while at the same time working on initiatives that we expect will accelerate long-term growth.
Manuel Chavez: Our asset portfolio consists of 42 parking properties, 18 garages, and 24 surface parking lots.
Manuel Chavez: These assets are primarily located in the Midwest and Southwest, where driving is the main mode of transportation.
Manuel Chavez: We have contracts with service providers who maintain our parking properties, and at the beginning of this year, we converted a large portion of these contracts from leases to management contracts. This strategic shift has made a significant difference in three key ways. First, it has given us greater access to the data that we are leveraging to maximize utilization. We now have improved visibility of parking usage and demand metrics. This enables us to employ marketing techniques and pricing adjustments to increase utilization, which should, over the long term, enable us to accelerate growth.
Speaker Change: We have contracts with service providers who maintain our parking properties, and at the beginning of this year, we converted a large portion of these contracts from leases to management contracts. This strategic shift has made a significant difference in three key ways.
Speaker Change: first.
Speaker Change: has given us greater access to the data that we are leveraging to maximize utilization.
Speaker Change: We now have improved visibility of parking usage and demand metrics.
Speaker Change: This enables us to employ marketing techniques and pricing adjustments to increase utilization, which over the long term should enable us to accelerate growth.
Manuel Chavez: Management contracts provide us with greater transparency to control and manage expenses at the asset level, which has helped us deploy resources more efficiently. As of the end of the second quarter, 27 of our assets have been converted to management contracts, and we have already converted two additional assets during the third quarter. Sir, the conversion to management contracts has given us improved insight into the marketplace and the flexibility to take advantage of unique opportunities as they arise.
Speaker Change: second
Speaker Change: Management contracts provide us with greater transparency to control and manage expenses at the asset level, which has helped us deploy resources more efficiently.
Speaker Change: As of the end of the second quarter, 27 of our assets have been converted to management contracts and we have already converted two additional assets during the third quarter.
Speaker Change: Third, the conversion to management contracts has given us improved insight into the marketplace.
Speaker Change: and the flexibility to take advantage of unique opportunities as they arise. For example,
Manuel Chavez: If we see an increase in requests for large blocks of parking spaces, we have the ability to reorganize existing parkers and ship them to other nearby locations, taking a closer look at our second quarter business results. The conversion to management contracts allows us to drill into detailed monthly and transient performance at each asset.
Speaker Change: If we see an increase in requests for large blocks of parking spaces, we have the ability to reorganize existing parkers and ship them to other nearby locations.
Speaker Change: taking a closer look at our second quarter business results.
Speaker Change: The conversion to management contracts allows us to drill into detailed monthly and transient performance at each asset.
Manuel Chavez: While the current economic environment seems to be more challenging than a year ago, specifically in the transient parking sector, analyzing data has allowed us to focus on increasing market share and utilization of our assets through strategic rate deployment and or expanding relationships within the micromarket. We believe there are opportunities throughout the portfolio for targeted rate improvement. In the second quarter, these initiatives contributed to a low single-digit rate improvement that offset marginal transient volume declines.
Speaker Change: While the current economic environment seems to be more challenging than a year ago, specifically in the transient parking.
Speaker Change: Analyzing data has allowed us to focus on increasing market share and utilization of our assets through strategic rate deployment and or expanding relationships within the micro market.
Speaker Change: We believe there are opportunities throughout the portfolio for targeted rate improvement. In the second quarter, these initiatives contributed to a low single-digit rate improvement that offset marginal transient volume declines.
Manuel Chavez: We believe our team can continue to drive improved NOI by adjusting rates as micro-markets evolve. While demand in most central business districts continues to be sluggish, our team has witnessed continued strength in monthly parking for medical and social service facilities, municipal offices, and residential locations. Geographically, the Midwest remained our strongest market.
Speaker Change: We believe our team can continue to drive improved NOI by adjusting rates as micro markets evolve.
Speaker Change: While demand in most central business districts continues to be sluggish, our team has witnessed continued strength in monthly parking for medical and social service facilities, municipal offices and residential locations.
Speaker Change: Geographically, the Midwest remained our strongest market.
Manuel Chavez: Despite near-term economic uncertainty, we are seeing early signs of a pick-up in demand that we expect to begin materializing in 2025. First and foremost, there is a multi-year conversion of Class B office space into residential apartment living that is currently underway in several of our markets. The pace of these conversions has accelerated since the beginning of this year, and the developers of these new residential units are keen to offer parking as part of their sales proposition.
Speaker Change: Despite near-term economic uncertainty, we are seeing early signs of a pickup in demand that we expect to begin materializing in 2025.
Speaker Change: First and foremost, there is a multi-year conversion of Class B office space into residential apartment living that is currently underway in several of our markets.
Speaker Change: The pace of these conversions has accelerated since the beginning of this year and the developers of these new residential units are keen to offer parking as part of their sales proposition.
Manuel Chavez: Our expertise in micromarket relationships has provided early insight into these opportunities, and we are actively engaged in discussions on pricing and the number of required spaces with developers. This is a new and important demand driver for us, as the shift from the previous commercial usage of a five-day-a-week, 8 a.m. to 5 p.m. parking access to a 24--7 parking access could result in a significant increase in utilization and revenue for our company. Additionally, the current economic uncertainty appears to be enhancing the return to office mandates in our market. We are starting to get inbound inquiries from corporations that are anticipating more employees returning to the office, maybe not five days a week, but often enough to require a regular practice.
Speaker Change: Our expertise in micro-market relationships has provided early insight into these opportunities, and we are actively engaged in discussions on pricing and number of required spaces with developers.
Speaker Change: This is a new and important demand driver for us, as the shift from the previous commercial usage of a five-day-a-week, 8 a.m. to 5 p.m. parking access to a 24-7 parking access could result in a significant increase in utilization and revenue for our company.
Speaker Change: Additionally, the current economic uncertainty appears to be enhancing the return-to-office mandates in our markets.
Speaker Change: We are starting to get inbound inquiries from corporates that are anticipating more employees returning to the office, maybe not five days a week, but often enough to require a regular parking space.
Stephanie Hogue: It's too early to call this a trend, but despite unemployment taking a higher, our contract parkers are actually up from 6,500 to 6,900, or 6%, which indicates this long-overdue return-to-office shift may be underway. Now I will turn the call over to our president, Stephanie Hogue, who will provide a more detailed review of our second quarter operating and business results.
Speaker Change: It's too early to call this a trend, but despite unemployment ticking higher, our contract parkers are actually up from 6,500 to 6,900, or 6%, which indicates this long overdue return to office shift may be underway.
Stephanie Hogue: Now I will turn the call over to our president, Stephanie Hogue, who will provide a more detailed review of our second quarter operating and business results. Stephanie?
Stephanie Hogue: Thank you, Manuel. And good afternoon, everyone. I am pleased to provide additional details on our second quarter 2024 financial performance. Before I dive into the quarter, I want to note that today we are disclosing an important financial metric to help you evaluate our business, our internal NAV calculation, which we have included in our earnings press release. Our NAV was calculated to be $7.25 per share. This NAV was based on our trailing 12-month net operating income, assuming a weighted average capitalization rate of our portfolio that is consistent with national industry cap rates and BEAPS divestiture history. The valuation was then adjusted for the fair value of outstanding debt, working capital, and preferred equity on the balance sheet.
Stephanie Hogue: Thank you, Manuel, and good afternoon, everyone. I am pleased to provide additional details on our second quarter 2024 financial performance.
Stephanie Hogue: Before I dive into the quarter, I want to note that today we are disclosing an important financial metric to help you evaluate our business, our internal NAV calculation, which we have included in our earnings press release.
Stephanie Hogue: Our NAP was calculated to be $7.25 per share.
Stephanie Hogue: This NAV was based on our trailing 12-month net operating income, assuming a weighted average capitalization rate of our portfolio that is consistent with national industry cap rates and BEEPS divestiture history.
Stephanie Hogue: The valuation was then adjusted for fair value of outstanding debt, working capital, and preferred equity on the balance sheet.
Stephanie Hogue: We plan to update this metric periodically in an effort to provide investors with an additional method to track our financial progress. We believe that our stock price materially undervalues our assets in mobile today as a result of a few factors affecting the stock. First and foremost, we are a small publicly traded company and have spent this year positioning the company for growth through operational improvements and debt refinancing. In addition, we are only now starting to see the benefits of a post-pandemic normalization of return to office and redevelopment of commercial real estate to alternative uses.
Stephanie Hogue: We plan to update this metric periodically in an effort to provide investors with an additional method to track our financial progress.
Stephanie Hogue: We believe that our stock price materially undervalues our assets and mobile today, and as a result of a few factors influencing the stock. First and foremost, we are a small publicly traded company and have spent this year positioning the company for growth through operational improvements and debt refinancing.
Stephanie Hogue: In addition, we are only now starting to see the benefits of a post-pandemic normalization of return to office and redevelopment of commercial real estate to alternative uses.
Stephanie Hogue: This has taken time and temporarily disrupted the reoccurring nature of parking demand in many of our markets. Finally, while our results and performance will help garner additional attention for our company and its inherent value, we believe that one of the greatest issues facing the company, which may have created an overhang on our stock, is the preferred equity conversion to common stock over the prior 12 months. While these conversions of preferred equity into common stock have created additional float in the market to date, they have also created selling pressure on the stock as many of these preferred shareholders have promptly sold their newly acquired shares of common stock.
Stephanie Hogue: This has taken time and temporarily disrupted the reoccurring nature of parking demand in many of our markets.
Speaker Change: Finally, while our results and performance will help garner additional attention for our company and its inherent value, we believe that one of the greatest issues facing the company, which may have created an overhang on our stock, is the preferred equity conversion to common stock over the prior 12 months.
Speaker Change: While these conversions of preferred equity into common stock have created additional float in the market to date, they have also created selling pressure on the stock as many of these preferred shareholders have promptly sold their newly acquired shares of common stock.
Stephanie Hogue: At our current trading price, the conversions are highly dilutive. As such, management and our board are moving to address the preferred stock, and we look forward to discussing further details in the near term.
Speaker Change: At our current trading price, the conversions are highly dilutive. As such, management and our board are moving to address the preferred stock, and we look forward to discussing further details in the near term.
Stephanie Hogue: Second quarter revenue of $9.3 million increased 28% year over year from $7.2 million in the second quarter of 2023. We benefited from the conversion of 27 of our assets to management contracts from leases, including one additional during the second quarter, which results in higher revenue, as we recognize revenue based on volumes and transient or contracted rates rather than cash collections from operators, which doesn't always correlate directly to parking traffic. The revenue recognition for management contracts is accrual-based and, in our view, is a better indication of underlying business trends.
Speaker Change: Now turning to the quarter.
Speaker Change: Second quarter revenue of $9.3 million increased 28% year-over-year from $7.2 million in the second quarter of 2023.
Speaker Change: We benefited from the conversion of 27 of our assets to management contracts from leases.
Speaker Change: including one additional during the second quarter which results in higher revenue as we recognize revenue based on volumes and transient or contracted rates rather than cash collections from operators which doesn't always correlate directly to parking traffic.
Speaker Change: The revenue recognition for management contracts is accrual-based and, in our view, is a better indication of underlying business trends.
Stephanie Hogue: As a reminder, we have been working to convert more of our facilities to management contracts and have converted two more in the third quarter, with the remainder to be completed as leases rollover in 2026 and 2027. Property operating expenses are $1.8 million compared to half a million dollars in last year's second quarter.
Speaker Change: As a reminder, we have been working to convert more of our facilities to management contracts and have converted two more in the third quarter, with the remainder to be completed as leases roll over in 2026 and 2027.
Speaker Change: Property operating expenses are 1.8 million dollars compared to half a million dollars in last year's second quarter.
Stephanie Hogue: The increase primarily resulted from the shift to management contracts and the related accounting treatment. By shifting to management contracts, we have the ability to more readily control discretionary expenses and to reprioritize expense items in real time to enhance the parking experience without sacrificing the overall quality of our assets. We have been successful in timing these expenses more readily to revenue recognition as we shift toward management contracts. Property taxes were $1.8 million, up slightly from $1.7 million one year ago.
Speaker Change: The increase primarily resulted from the shift to management contracts and the related accounting treatment.
Speaker Change: By shifting to management contracts, we have the ability to more readily control discretionary expenses and to reprioritize expense items in real time to enhance the parking experience without sacrificing the overall quality of our assets.
Speaker Change: We have been successful in timing these expenses more readily to revenue recognition as we shift toward management contracts. Property taxes were $1.8 million, up slightly from $1.7 million one year ago.
Stephanie Hogue: Net operating income, or NOI, was $5.6 million, up 14.1% from $4.9 million in last year's second quarter. Importantly, the bulk of the NOI growth came from managed locations, underscoring our shift in the business model. NOI represented 60% of second quarter 2024 revenue. General and administrative expenses of $2.9 million were up from $2.4 million in last year's second quarter.
Speaker Change: Net operating income, or NOI, was $5.6 million, up 14.1% from $4.9 million in last year's second quarter.
Speaker Change: Importantly, the bulk of the NOI growth came from managed locations, underscoring our shift in the business model. NOI represented 60% of second quarter 2024 revenue.
Speaker Change: General and administrative expenses of $2.9 million were up from $2.4 million in last year's second quarter.
Stephanie Hogue: This reflected public company costs, additional headcount, and technology expense, as well as non-cash compensation of $1.6 million in the current year quarter compared with $1.4 million of non-cash comp in the prior year quarter. As we grow our business, we do not expect significant G&A growth as we have built the infrastructure to support a larger revenue base and our business model scales well. Said another way, we would expect to find significant operating leverage via margin contribution as revenue grows both organically and inorganically.
Speaker Change: This reflected public company costs, additional headcount, and technology expense, as well as non-cash compensation of $1.6 million in the current year quarter, compared with $1.4 million of non-cash comp in the prior year quarter.
Speaker Change: As we grow our business, we do not expect significant G&A growth as we have built the infrastructure to support a larger revenue base and our business model scales well. Said another way, we would expect to find significant operating leverage via margin contribution as revenue grows both organically and inorganically.
Stephanie Hogue: Adjusted EBITDA was $4.2 million, up 16.3% from $3.6 million last year, and adjusted EBITDA margin was 45.4%. Looking at our balance sheet, Mobile Infrastructure had $13.3 million in cash and restricted cash at the end of the second quarter. Total debt outstanding was $192 million, down modestly from year-end 2023.
Speaker Change: Adjusted EBITDA was $4.2 million, up 16.3% from $3.6 million last year and adjusted EBITDA margin was 45.4%.
Speaker Change: Looking at our balance sheet, mobile infrastructure had $13.3 million in cash and restricted cash at the end of the second quarter.
Speaker Change: Total debt outstanding was $192 million, down modestly from year-end 2023. We continue to actively work with our lenders on refinancing upcoming debt maturities and expect to have more to say on this over the next few months.
Stephanie Hogue: We continue to actively work with our lenders on refinancing upcoming debt maturities and expect to have more to say on this over the next few months. As a reminder, we extended our revolver earlier this year and have flexibility on that line currently through June 2025. We continue to evaluate a variety of refinancing options and are working to balance upcoming maturities with the best solution for BEPS balance sheets. Given our strong year-to-date performance, we are reaffirming our prior 2024 guidance and continuing to expect revenue in the range of $38 to $40 million, which implies mid-single-digit organic growth, as well as the benefit of the shift from leases to management contracts. NOI is our operational North Star, and we continue to expect NOI of $22.5 million to $23.25 million. Assuming the midpoint, this implies growth of 8.3% from 2023.
Speaker Change: As a reminder, we extended our revolver earlier this year and have flexibility on that line currently through June 2025. We continue to evaluate a variety of refinancing options and are working to balance upcoming maturities with the best solution for BEAP's balance sheet.
Speaker Change: Given our strong year-to-date performance we are reaffirming our prior 2024 guidance and continue to expect revenue in the range of 38 to 40 million dollars which implies mid single-digit organic growth as well as the benefit of the shift from leases to management contracts.
Speaker Change: NOI is our Operational North Star, and we continue to expect NOI of $22.5M to $23.25M. Assuming the midpoint, this implies growth of 8.3% from 2023.
Manuel Chavez: While we continue to build on the pipeline of potential acquisitions, we currently plan to stay on the sidelines with regard to acquisitions until more favorable market conditions prevail. And with that, I will turn the call back over to Manuel for closing remarks. Thanks, Stephanie.
Speaker Change: While we continue to build on the pipeline of potential acquisitions, we currently plan to stay on the sidelines with regard to acquisitions until more favorable market conditions prevail. And with that, I will turn the call back over to Manuel for closing remarks.
Manuel Chavez: Before I turn the call over to Q&A, I want to take a minute to share a few observations about our stock price. We understand these SPACs have performed poorly over the last two years, and mobile is no exception. Considering our confidence in Mobile's long-term strategy and opportunities to drive material shareholder value creation through actively managing our existing assets and delivering accretive M&A, we believe our stock price is materially undervalued. As Stephanie shared, Mobile's recent stock price is trading at an approximate 60% discount to NIAV, and we believe it is an even greater discount to replacement value.
Manuel Chavez: Thanks, Stephanie.
Manuel Chavez: Before I turn the call over to Q&A, I want to take a minute to share a few observations about our stock price.
Speaker Change: We understand these SPACs have performed poorly over the last two years, and Mobile is no exception.
Manuel Chavez: Considering our confidence in Mobil's long-term strategy and opportunities to drive material shareholder value creation through actively managing our existing assets and delivering accretive M&A, we believe our stock price is materially undervalued.
Manuel Chavez: As Stephanie shared, mobile's recent stock price is trading at an approximate 60% discount to live, and we believe to be an even greater discount to replacement value.
Manuel Chavez: Mobile owns a portfolio of extremely valuable central business district real estate assets that cash flow and have significant captive opportunities for growth and margin improvement. Stephanie also touched on the outstanding convertible preferred stock that we believe has resulted in outsized pressure on Mobile.
Moho: Moho owns a portfolio of extremely valuable central business district real estate assets that cash flow and have significant captive opportunities for growth and margin improvement.
Speaker Change: Stephanie also touched on the outstanding convertible preferred stock that we believe has resulted in outsized pressure on mobile stocks.
Manuel Chavez: While we have nothing to share today, our board is actively focused on addressing this conversion overhead. To sum up, we are pleased with our year-to-date performance as it puts us on track to reach full year 2024 guidance and demonstrate the team's ability to operate effectively and create value in a challenging demand environment. As you know, our long-term vision is to become the acquirer of choice in a fragmented parking industry. While we have a sizable pipeline of potential acquisitions, we intend to remain patient and disciplined until we see more favorable financial conditions.
Speaker Change: While we have nothing to share today, our board is actively focused on addressing this convert overhang.
Speaker Change: To sum up, we are pleased with our year-to-date performance as it puts us on track to reach full year 2024 guidance.
Speaker Change: and demonstrate the team's ability to operate effectively and create value in a challenging demand environment.
Speaker Change: As you know, our long-term vision is to become the acquirer of choice in a fragmented parking industry.
Speaker Change: Well, we have a sizable pipeline of potential acquisitions.
Speaker Change: We intend to remain patient and disciplined until we see more favorable financial conditions.
Operator: Operator, please open the call to questions. We will now begin the question and answer session. To ask a question, you may press star then one of your telephone keypads. Using a speakerphone, please pick up your handset before pressing the keys.
Speaker Change: Operator, please open the call to questions.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question, you may press star then 1 on your telephone keypad. If using a speakerphone, please pick up your handset before pressing the keys. To withdraw from the question queue, please press star then 2. At this time, we'll pause momentarily to assemble our roster.
Operator: To withdraw from the question queue, please press star then down. At this time, we'll pause momentarily to sum up our... Our first question will come from Bryan Maher on Be Right. He may not go ahead.
Speaker Change: Our first question will come from Brian Mayer with Be Riley. You may now go ahead.
Bryan Maher: Thank you and good afternoon. Just a few from me today. We really didn't have much time to look at the information coming out after the market closed on the call at 4.30. Maybe going forward, we can push it back a little bit so we've got time to dig into the numbers a little bit. But can we start off by maybe talking a little bit about actual property utilization? Are you guys going to be supplying, you know, a supplementary of some kind where we can see, you know, a trailing year or two's worth of data on kind of, you know, parking spots sold per day or per month or per quarter per lot to help us model it?
Speaker Change: Thank you and good afternoon.
Speaker Change: Just a few for me today. We really didn't have much time to look at the information Coming out after the market closed on the call 430 Maybe going forward we can push it back a little bit. So we've got time to
Bryan Maher: And kind of the second part of that question, do you guys even have available, since you changed the structure from leases to management contracts, as to what the actual revenue was per lot that you owned over the past two years? Yeah, that's a really good question. So, um...
Speaker Change: Dig into the numbers a little bit
Speaker Change: But can we start off with maybe talking a little bit about, you know, actual property utilization?
Speaker Change: Are you guys going to be supplying, you know, a supplemental of some kind where we can see, you know, trailing year or two's worth of data on kind of
Speaker Change: You know, parking spots sold per day or per month or per quarter per lot to help us model it and kind of the second part of that question, do you guys even have available since you've changed the structure from leases to management contracts?
Speaker Change: as to what the actual revenue was per lot that you owned over the past two years.
Speaker Change: Yeah, that's a really good question.
Manuel Chavez: I would guess two things here. Number one would be because there's a myriad of different revenue controls, systems, and the different ways that people pay for parking on assets across our portfolio. Consolidating sort of real-time utilization is still sort of an effort in progress. But what we've come up with as a placeholder is the concept of RevPASS, which is our revenue per available space. And so that would give sort of a blended average.
Speaker Change: So
Speaker Change: I would guess two things here. Number one would be because there's a myriad of different revenue controls.
Speaker Change: Systems and the different ways that people hit pay for parking on assets across our portfolio. Consolidating sort of real-time utilization is still sort of an effort in progress, but what we've come up with as a placeholder is
Speaker Change: a concept of RevPath, which is our...
Speaker Change: revenue, per available space. That would give sort of a blended average. Now, granted the two the two inputs in that are both rate and utilization but it sort of gives you an economic utilization, so to speak. And we can't go back in that.
Bryan Maher: Now granted, the two inputs into that are both rate and utilization, but it sort of gives you an economic utilization, so to speak, and we can go back to that. And that's certainly something that we'll be continuing to share. Yeah, look, I feel your pain for where your stock price is compared to your calculated NAV.
Speaker Change: and that's certainly something that we'll be continuing to share.
Bryan Maher: But having been doing this for 25 years, I can tell you that, you know, I think once the street starts to see those type of numbers, and we can model out based upon a year or two at a minimum of historical data, model out into the future relative to what trends we're hearing and seeing, I think that it's imperative to get out to us in the investment community to kind of get the stock to work. That's just, you know Moving on, are you guys seeing each other out in the marketplace? I know you're not active in the transaction markets at the moment, but are you starting to see assets trade? And if so, in what markets and at what cap rates?
Speaker Change: Yeah, look, I feel your pain for the way your stock price is to your...
Speaker Change: Calculated Nav, but having been doing this for 25 years, I can tell you that, you know, I think once the street starts to see those type of numbers and we can model out based upon a year or two at a minimum of historical data, model out into the future relative to what trends we're hearing and seeing.
Speaker Change: I think that's imperative to get out to us in the investment community to kind of get the stock to work is just, you know, kind of my view on that.
Speaker Change: Moving on, are you guys seeing out in the marketplace, I know you're not active in the transaction markets at the moment, but are you starting to see assets trade? And if so, kind of in what markets and at what cap rates?
Manuel Chavez: Yeah, so you're not seeing a lot of asset trades yet; you're starting to see, you know, assets that are tied to office towers, you're starting to see those be turned back into lenders, and you're starting to see some opportunities around that. But we're actually not seeing a lot of deals get done. The pipeline, I'll tell you, it continues to build and expand on sort of what's potentially out there. Okay, and then in your prepared earnings release, you talk, and in your prepared comments, you talk about this kind of, you know, office to residential, and you have a statement here.
Speaker Change: Yeah, so you're not seeing a lot of assets trades yet. You're starting to see...
Speaker Change: You know, assets that are tied to office towers, you're starting to see those be turned back into lenders. You're starting to see some opportunities around that.
Speaker Change: So we're actually not seeing a lot of deals get done. The pipeline, I'll tell you, just it continues to build and expand on sort of what's potentially out there.
Speaker Change: Okay, and then in your prepared, in your earnings release, you talk, and in your prepared comments, you talked about this kind of, you know, office to residential, and you have a statement in here, we already are engaged with several developers in our markets to determine pricing and access. Can you kind of further define what it is you're getting at there?
Manuel Chavez: We already are engaged with several developers in our markets to determine pricing and access. Can you kind of further define what it is you're getting at there? Yeah, so when you're selling contractual parking, there are kind of different product types out there. There's 24-7 access, there's reserved parking, unreserved, Monday through Friday, 6-6 parking.
Speaker Change: Yeah, so when you're selling contractual parking, you know, there's kind of different product types out there. There's 24-7 access, there's reserve parking, unreserved, Monday through Friday, six-to-six parking.
Manuel Chavez: And so when you're bringing in a residential component, you're pricing those products differently. And so what we're doing is sitting down to understand what the developer thinks as far as an array of options that they need. And then we're sort of tailoring a menu of options for them so that they can provide those to their prospective tenants. And just last for me, I think Stephanie talked about the preferred conversions to common and then subsequent sales. Can you tell us maybe how far along that process is? Is there a lot more to go? What steps can you take to slow that pain?
Speaker Change: And so when you're bringing a residential component, you're pricing those products differently. And so what we're doing is sitting down to understand what the developer thinks.
Speaker Change: as far as an array of options that they need and then we're sort of tailor-fitting a menu of options options for them so that they can provide those to their prospective tenants.
Speaker Change: Okay, and just last for me, I think Stephanie talked about the preferred conversions to common and then subsequent sales. Can you tell us like maybe how far along that process is? Is there a lot more to go? What steps can you take to slow that pain?
Stephanie Hogue: Yeah, Bryan is a good question. So we're working on that right now. I think in remarks, we talked about working through that with our board. So, nothing definitive to share to date, but you know, we will be commenting on it going forward. I think it's about 25% of the PREP that's converted to date, and so, as Manuel noted at the end of the prepared remarks, it's just, you know, the PREP holders are, What they're when they choose to sell is when they're converting. So, you know, there's still, I think, about 33 million of prof outstanding today. There were about 43 when we listed a year ago.
Speaker Change: Yeah, Brian, it's a good question. So we're working on that right now. I think in remarks we've talked about working through that with our board. So nothing definitive to share to date, but you know we will be commenting on it going forward.
Speaker Change: I think it's about 25% of the PrEP that's converted to date. And so, as Manuel noted at the end of the prepared remarks, it's just, you know, the PrEP holders are...
Bryan Maher: So it's roughly 20 to 25%. Okay, thank you. That's all for me. Again, if you have a question, please press star then 1. Our next question will come from Mark Riddick with Sidoti. You may now go ahead. Good afternoon. Hi, how are you?
Manuel Chavez: So, it's roughly 20 to 25 percent.
Manuel Chavez: Okay, thank you. That's all for me.
Manuel Chavez: [inaudible]
Speaker Change: Again, if you have a question, please press star then 1.
Speaker Change: Good afternoon.
Mark Riddick: Good, good. I was wondering if you could talk a little bit about what you're seeing there to date. Maybe you could talk a little bit about what that mix looks like, and is it a matter of certain days picking up, certain days of the week, and then maybe how that might play into the pricing dynamics involved.
Speaker Change: Hi, how are you?
Speaker Change: Good, good. So, I wonder if we could go back to the return to office commentary. I was wondering if you could talk a little bit about what it is you're seeing there to date. Maybe you can talk a little bit about what that mix looks like, and is it a matter of certain days picking up, certain days of the week, and then maybe how that might play into pricing dynamics involved.
Mark Riddick: Right. So certainly, we're seeing Tuesday, Wednesday, and Thursday are like a different week than Monday and Friday, and that's really across markets in the U.S. We're seeing that holidays are still extended, so, you know, whereas, you know, people used to take just the Monday off on the three-day weekend, we're seeing them really take four and five days off.
Speaker Change: Right.
Speaker Change: So certainly we're seeing Tuesday, Wednesday, and Thursday are like a different week than Monday and Friday, and that's really across markets in the in in the US.
Speaker Change: We're seeing that holiday
Speaker Change: holidays have are still still extended so you know whereas you know people used to take just just the Monday off on the three-day weekend we're seeing them really take four and five days days off so that's that's that's remained pretty consistent for us
Manuel Chavez: So, that's remained pretty consistent for us. What we're starting to see, though, is for the first time really since the pandemic, we're starting to see people actually, and Innovation. We're just switching gears and sort of starting to bring people back downtown. And it is not five days a week.
Speaker Change: What we're starting to see, though, is for the first time, really, since the pandemic, we're starting to see people actually...
Speaker Change: switching course and sort of starting to bring people back downtown. And it is not five days a week, it's in packages of two and three days a week. And so, we're creating sort of options for them so that they can utilize our assets during that time.
Manuel Chavez: It's in packages of two and three days a week. And so, you know, we're creating sort of options for them so that they can utilize our assets during that time that they need. You know, across industries, I would say we're still seeing a lot of demand from, you know, hospitality employees, municipal employees are starting to come back, courthouses are coming back online, which we've got a fair number of assets around courthouse
Speaker Change: that they need.
Speaker Change: You know, around industries, I would say we're still seeing a lot of demand from, you know, hospitality employees,
Manuel Chavez: We are not seeing, we're seeing some movement still of tenants that are upgrading to more amenitized properties. So we're keenly watching that and trying to really take advantage of that when our assets are positioned more readily to those sort of Class A amenitized office towers. Okay, great.
Speaker Change: We are not seeing, we're seeing some movement still of tenants that are upgrading to more amenitized properties.
Speaker Change: So, we're keenly watching that and trying to really take advantage of that when our assets are positioned more readily to those sort of Class A amenitized office towers.
Manuel Chavez: And then some commentary about the offerings that kind of fit with what you're seeing and the changes in the return-to-office traffic. Can you talk a little bit about the rate of those packages that you're sort of customizing now and how that might compare as far as year-over-year rates? Is it similar, or is it better pricing for you, better margins?
Speaker Change: Okay, great. And then commentary about the offerings that kind of fit with what you're seeing and the changes in the return-to-office traffic. Can you talk a little bit about...
Operator: Good afternoon and welcome to the Mobile Infrastructure Corporation 2nd Quarter 2024 Earnings Conference Call. All participants will be in listen only mode. Should new assistants please signal conference specials by pressing the star key followed by zero.
Speaker Change: the rate of those packages that you're sort of customizing now and how that might compare as far as year-over-year rate. Is it similar? Is there better pricing for you, better margins? How should we think about it?
Manuel Chavez: How should we think about how you're packaging the pricing to the end consumer to fit that return-to-office flow? Right. So, it's a two-step process for us. Because in parking... to facilitate or to provoke a trial, we oftentimes have to discount our rate.
Operator: After today's presentation there will be an opportunity to ask questions. To ask a question you may press star then when you telephone keypad. To withdraw your question please press star then two. Please note this event is being recorded.
Speaker Change: How you're packaging the pricing to the end consumer is to fit that return-to-office flow. Right, so it's a two-step process.
Casey Kotary: I would now like to turn the conference or to Casey Kotary, investor relations representative. Please go ahead. Thank you operator.
Speaker Change: process for us because in parking...
Speaker Change: to facilitate or to provoke trial.
Manuel Chavez: But it's after they have tried us and it's been a good experience that's when we actually have pricing power. So right now, we are in the phase of trying to drive volumes in our contract parking. And so we are discounting rates for those groups of parkers out there with the goal of getting to a point where utilization reaches a level where we are starting to get back into revenue management, which historically was what you did, which is AKA in our industry, you are just moving rates up and down depending on day of the week and maybe even time of day.
Casey Kotary: Good afternoon everyone and thank you for joining us to review Mobile 2nd Quarter 2024 performance.
Speaker Change: we oftentimes have to discount our rate.
Speaker Change: But it's after they have tried us and it's been a good experience, that's when we actually have price and power. So right now, we are in the phase of trying to drive volumes in our contract parking.
Casey Kotary: With us today from Mobile Armandale Chavez, CEO and Stephanie Hogue president. In a moment we will hear management statements about the company's results of operations as of the 2nd quarter of 2024. Before we begin we would like to remind everyone that today's discussion includes forward-looking statements including projections and estimates of future events, business or industry trends or business or financial results.
Speaker Change: And so we are discounting rates for those.
Speaker Change: groups of parkers out there.
Speaker Change: with the goal of getting to a point where utilization reaches
Speaker Change: I'm going to turn it over to you, Stephanie, to talk a little bit about how you guys are doing. Thank you. Thank you. Thank you. Thank you. Thank you.
Casey Kotary: Actual results may vary significantly from those statements and may be affected by the risks Mobile has identified in today's press release and those identified in its filing with the SEC including Mobile's most recent annual report on form 10K and its most recent quarterly report on form 10Q. Mobile assumes no application and does not intend to update or comment on forward-looking statements made on this call. Today's discussion also contains references to non-GAAP financial measures that Mobile believes provide useful information to its investors. These non-GAAP measures should not be considered in isolation from or as a substitute for GAAP results.
Manuel Chavez: But we are definitely in the first phase of that where we are driving volume and using discounted rates to help that. One from me, I just wanted to sort of shift over to the..., a little bit about, I guess, being part of the early stages of that and discussions with those early stages of all of that. Can you sort of maybe walk us through the sort of time frame that you see when that might end up being a benefit to you?
Stephanie Hogue: and maybe even time of day. But we're definitely in the first phase of that where we're driving volume and using discounted rates to help that.
Speaker Change: One from me, I just wanted to sort of shift over to the
Casey Kotary: Mobile's earnings release and the most recent quarterly report on form 10Q provide a reconciliation of those measures to the most directly comparable GAAP measures and a list of the reasons why Mobile uses these measures.
Speaker Change: [inaudible]
Speaker Change: [inaudible]
Speaker Change: a little bit about I guess being part of the early stages of that and discussions with all of that. Can you sort of maybe walk us through the sort of time frame that you see when that might end up being a benefit to you? Thank you.
Mark Riddick: Thank you. I'm sorry, but you faded in and out there. I missed about half of the questions. I'm sorry, but as far as the timing around working with those that are converting to residential assets, can you maybe talk about, as they're planning that process, how long do you think it would be before it begins to be a positive benefit for you? Yeah, no, we're going to see some benefit in the latter part of this year, and it will really pick up steam into 2025, and we've got visibility out beyond that as well.
Operator: Thank you. It appears there are no further questions. This concludes our question and answer session. I would like to turn the conference back over to Manuel Chavez for any closing remarks. Thank you all for your participation in today's call. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: I'm sorry, but you faded in and out there. I missed about half of the question. I'm sorry. As far as the timing around working with those that are converting to residential assets, can you maybe talk about, as they're planning that process, how long do you think it would be before it begins to be a positive benefit for you?
Manuel Chavez: I will now turn the call over to Mobile CEO Maniel Chavis to discuss 2nd quarter 2024 performance. Maniel? Thank you, Jaycee and thanks to all the participants. On today's call we will review our 2nd quarter operating and financial performance and discuss our business outlook. This was another quarter of progress for our company. Our asset portfolio continued to show a solid year-on-year improvements highlighted by a 14% increase in net operating in-tone which is the key metric that we managed to.
Speaker Change: Yeah, no, we're going to see some benefit in the latter part of this year, and it will really pick up steam into 2025, and we've got visibility out beyond that as well.
Speaker Change: Thank you.
Manuel Chavez: This NOI growth is particularly no worthy considering the challenging business environment that persisted many of our markets. Our team executed effectively as evidenced by the increase in portfolio yields. While at the same time working on initiatives that we expect will accelerate long-term growth. Our asset portfolio consists of 42 parking properties, 18 garages and 24 surface parking lots. These assets are primarily located in the Midwest and Southwest where driving is the main mode of transportation.
Speaker Change: It appears there are no further questions. This concludes our question and answer session. I would like to turn the conference back over to Manuel Chavez for any closing remarks.
Manuel Chavez: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Manuel Chavez: We have contracts with service providers who maintain our parking properties and at the beginning of this year we converted a large portion of these contracts from leases to management contracts. This strategic shaft has made a significant difference in three key ways, is given us greater access to the data that we are leveraging to maximize utilization. We now have improved visibility of parking usage and demand metrics. This enables us to employ marketing techniques and pricing adjustments to increase utilization which over the long term should enable us to accelerate growth.
Manuel Chavez: Second, management contracts provide us with greater transparency to control and manage expenses at the asset level, which has helped us deploy resources more efficiently. As of the end of the second quarter, 27-hour assets have been converted to management contracts, and we have already converted two additional assets during the third quarter. Third, the conversion to management contracts has given us improved insight into the marketplace and the flexibility to take advantage of unique opportunities as they arise.
Manuel Chavez: For example, if we see an increase in requests for large blocks of parking spaces, we have the ability to reorganize existing parkers and ship them to other nearby locations. Taking a closer look at our second quarter business results, the conversion to management contracts allows us to drill into detailed and monthly and transient performance at each asset. While the current economic environment seems to be more challenging than a year ago, specifically in the transient parking.
Manuel Chavez: Analyzing data has allowed us to focus on increasing market share and utilization of our assets through strategic rate deployment and or expanded relationships within the micro market. We believe there are opportunities throughout the portfolio for targeted rate improvement. In the second quarter, these initiatives contributed to a low single-digit rate improvement that offset marginal transient volume declines. We believe our team can continue to drive improved NOI by adjusting rates as micro markets evolve.
Manuel Chavez: While demand in most central business districts continues to be sluggish, our team has witnessed continued strength and monthly parking for medical and social service facilities, municipal offices and residential locations. Geographically, the Midwest remained our strongest market. Despite near-term economic uncertainty, we are seeing early signs of the pickup and demand that we expect to begin materializing in 2025. First and foremost, there is a multi-year conversion of Class B office space into residential apartment living that has currently underway in several of our markets.
Manuel Chavez: The pace of these conversions has accelerated since the beginning of this year, and the developers of these new residential units are keen to offer parking as part of their sales proposition. Our expertise in micro market relationships has provided early insight into these opportunities, and we are actively engaged in discussions on pricing and number of required spaces with developers. This is a new and important demand driver for us. As a shift from a previous commercial usage of a five-day-a-week 8 a.m, to 5 p.m, parking access to a 24-7 parking access could result in a significant increase in utilization and revenue for our company.
Manuel Chavez: Committee. Additionally, the current economic uncertainty appears to be enhancing the return to office mandates in our markets. We are starting to get inbound inquiries from corporates that are anticipating more employees returning to the office, maybe not five days a week, but often enough to require a regular parking space. It's too early to call this a trend, but despite unemployment taking higher, our contract partners are actually up from 6,500 to 6,900, or 6%, which indicates this long overdue return to office shift may be underway.
Stephanie Hogue: Now we'll turn the call over to our president, Stephanie Hogue, who will provide a more detailed review of our second quarter of operating and business results. Stephanie? Thank you, Daniel, and good afternoon, everyone. I am pleased to provide additional details on our second quarter, 2024 financial performance.
Stephanie Hogue: Before I dive into the quarter, I want to note that today we are disclosing an important financial metrics to help you evaluate our business, our internal NAV calculation, which we have included in our earnings press release. Our NAV was calculated to be $7.25 per share. This NAV was based on our trailing 12-month net operating income, assuming a weighted average capitalization rate of our portfolio that is consistent with national industry cap rates and beeps to vestiture history.
Stephanie Hogue: The valuation was then adjusted for fair value about standing debt, working capital, and preferred equity on the balance sheet. We plan to update this metric periodically in an effort to provide investors with an additional method to track our financial progress.
Stephanie Hogue: We believe that our stock price materially undervalue their assets and mobile today and as a result of a few factors influencing the stock. First and foremost, we are a small publicly traded company and have spent this year positioning the company for growth through operational improvements and debt refinancing. In addition, we are only now starting to see the benefits of a post-pandemic normalization of return to office and redevelopment of commercial real estate to alternative uses.
Stephanie Hogue: This has taken time and temporarily disrupted the re-occurring nature of parking demand in many of our markets. Finally, while our results and performance will help garner additional attention for our company and its inherent value, we believe that one of the greatest issues facing the company which may have created an overhang on our stock is the preferred equity conversion to common stock over the prior 12 months. While these conversions of preferred equity in the common stock have created additional float in the market to date, they have also created selling pressure on the stock as many of these preferred shareholders have promptly sold their newly acquired shares of common stock. At our current trading price, the conversions are highly dilutive.
Stephanie Hogue: As such, management and our board are moving to address the preferred stock and we look forward to discussing further details in the near term.
Stephanie Hogue: Now turning to the quarter. Second quarter revenue of $9.3 million increased 28% year-over-year from $7.2 million in the second quarter of 2023. We benefited from the conversion of 27 of our assets to management contracts from leases, including one additional during the second quarter, which results in higher revenue as we recognize revenue based on volumes in transient or contracted rates, rather than cash collections from operators, which doesn't always correlate directly to parking traffic.
Stephanie Hogue: Research. The revenue recognition for management contracts is a cruel based, and in our view is a better indication of underlying business trends. As a reminder, we have been working to convert more of our facilities to management contracts and have converted two more in the third quarter with the remainder to be completed as Lisa's role over in 2026 and 2027. Property operating expenses are $1.8 million compared to half a million dollars in last year's second quarter.
Stephanie Hogue: The increase primarily resulted from the shift to management contracts in the related accounting treatment. By shifting to management contracts, we have the ability to more readily control discretionary expenses, and to reprioritize expense items in real time to enhance the parking experience without sacrificing the overall quality of our assets. We have been successful in timing these expenses were readily to revenue recognition as we shift toward management contracts. Property taxes were $1.8 million, up slightly from $1.7 million one year ago.
Stephanie Hogue: Net operating income or NOI was $5.6 million, up 14.1% from $4.9 million in last year's second quarter. Importantly, the bulk of the NOI growth came from managed locations, underscoring our shift in the business model. NOI represented 60% of second quarter 2024 revenue. General and administrative expenses of $2.9 million were up from $2.4 million in last year's second quarter. This reflected public company costs, additional headcount, and technology expense, as well as non-cash compensation of $1.6 million in the current year quarter compared with $1.4 million of non-cash comp in the prior year quarter.
Stephanie Hogue: As we grow our business, we do not expect significant G&A growth as we have built the infrastructure to support a larger revenue base and our business model skills well. Set another way, we would expect to find significant operating leverage via margin contribution as revenue grows both organically and inorganically. Adjusted EBITDA was $4.2 million, up 16.3% from $3.6 million last year, and adjusted EBITDA margin was 45.4%. Looking at our balance sheet, mobile infrastructure had $13.3 million in cash and restricted cash at the end of the second quarter.
Stephanie Hogue: Total data outstanding was $192 million down modestly from year in 2023. We continue to actively work with our lenders on refinancing upcoming debt maturities and expect to have more to say on this over the next few months. As a reminder, we extended our revolver earlier this year and have flexibility on that line currently through June 2025. We continue to evaluate a variety of refinancing options and are working to balance upcoming maturities with the best solution for BEAP's balance sheet.
Stephanie Hogue: Given our strong year-to-day performance, we are reaffirming our prior 2024 guidance and continue to expect revenue in the range of $38 to $40 million, which implies mid-single-digit organic growth as well as the benefit of the shift from leases to management contracts. NOI is our operational north star, and we continue to expect NOI of $22.5 million to $23.25 million, assuming the midpoint, this implies growth of 8.3% from 2023. Well, we continue to build on the pipeline of potential acquisitions.
Stephanie Hogue: We currently plan to stay on the sidelines with regard to acquisitions until more favorable market conditions prevail.
Manuel Chavez: And with that, I will turn the call back over to Manuel for closing remarks. Thanks, Stephanie. Before I turn the call over to Q&A, I want to take a minute to share a few observations about a stock price. We understand these facts have performed poorly over the last two years. And mobile is no exception. Considering our confidence in mobile's long-term strategy and opportunities to drive material, shareholder value, creation through actively managing our existing assets and delivering a creative M&A, we believe our stock price is materially undervalued.
Manuel Chavez: As Stephanie shared, mobile's recent stock price is trading at approximate 60% discount to last. And we believe to be an even greater discount to replacement value. Mobile owned the portfolio of extremely valuable central business district real estate assets that cash flow and has significant captive opportunities for growth and margin improvement. Stephanie also touched on the outstanding convertible preferred stock that we believe has resulted in outsized pressure on mobile stock. While we have nothing to share today, our board is actively focused on addressing this convertible range.
Manuel Chavez: So, some up, we are pleased with our year-to-date performance as it puts us on track to reach full year 2024 guidance and demonstrate the team's ability to operate effectively and create value in a challenging demand environment. As you know, our long-term vision is to become the required choice in the fragmented parking industry. While we have a sizable pipeline of potential acquisitions, we intend to remain patient and disciplined until we see more stable financial conditions.
Operator: Operator, please open the call to questions. We will now begin the question and answer session. To ask the question, you may press star than one of your telephone keypad. If using a speaker phone, please pick up your hands up before pressing the keys. To withdraw from the question, please press star than two. At this time, we'll pause momentarily to send our roster.
Bryan Mayer: Our first question will come from Brian Mayer with B. Riley. You may now go ahead. Thank you and good afternoon. Just a few for me today. We really didn't have much time to look at the information coming out after the market closed and the call 430.
Bryan Mayer: Maybe going forward, we can push it back a little bit so we've got time to dig into the numbers a little bit. But can we start off with maybe talking a little bit about actual property utilization? Are you guys going to be supplying a supplemental of some kind where we can see trailing your two's worth of data on kind of, you know, parking spots sold per day or per month or per quarter per lot to help us model it.
Bryan Mayer: And kind of the second part of that question, do you guys even have available since you changed the structure from lease to management contracts as to what the actual revenue was per lot that you owned over the past two years? I would guess two things here. Number one would be, because there's a myriad of different revenue controls, systems in the different ways that people hit pay for parking, asset across our portfolio, consolidating sort of real-time utilization that's still sort of effort in progress.
Bryan Mayer: But what we've come up with, as a placeholder, is a concept of redpass, which is our revenue per available space. And so that would give sort of a blended average, not granted to two, the two inputs in that are both rate and utilization. But it sort of something that will be continuing to share. Yeah, look, I feel your pain for where your stock price is to your calculated NAS. But having been doing this for 25 years, I can tell you that, you know, I think once the street starts to see those type of numbers, and we can model out based upon a year or two at a minimum of historical data, model out into the future, relative to what trends we're hearing and seeing. I think that that's imperative to get out to us in the investment community to kind of get the stock to work, is just, you know, kind of my view on that.
Bryan Mayer: Moving on, are you guys seeing out in the marketplace? I know you're not active in the transaction markets at the moment. But are you starting to see assets trade, and if so, kind of in what markets in it, what cap rates? Yeah, so you're not seeing a lot of assets trade yet. You're starting to see, you know, assets that are tied to office towers, you're starting to see those be turned back into lenders, you're starting to see some opportunities around that. So we're actually not seeing a lot of deals get done. The pipeline I'll tell you just, it continues to build and expand on sort of what's potentially out there.
Bryan Mayer: Okay, and then in your prepared, in your earnings release, you talk and in your prepared comments, you talked about this kind of, you know, office to residential, and you have a statement in here, we already are engaged with several developers in our markets to determine pricing and access. Can you kind of further define what it is you're getting at there? Yeah, so when you're selling contractual parking, you know, there's kind of different product types out there.
Bryan Mayer: There's 24, 7 access, there's reserve parking, unreserved Monday through Friday, 6 to 6 parking. And so when you're bringing a residential component, you're pricing those products differently. And so what we're doing is sitting down to understand what the developer thinks as far as an array of options that they need. And then we're sort of tailor-fitting a menu of options for them so that they can provide those to their prospective tenants.
Bryan Mayer: Okay, and just last for me, I think Stephanie you talked about the preferred conversions to common and then subsequent sales, can you tell us maybe how far along that process is, is there a lot more to go? What steps can you take to slow that pain? Yeah, Bryan is a good question, so we're working on that right now. I think in remarks we talked about working through that with our board. So nothing definitive to share today, but we will be commenting on it going forward.
Bryan Mayer: I think it's about 25% of the prep that's converted to date, and so as Manuel noted at the end of prepared remarks, it's just, you know, the prep holders are, when they choose to sell is when they're converting. So, you know, there's still, I think about 33 million of prep outstanding today. There was about 43 when we listed a year ago. So it's roughly 20 to 25%. Okay, thank you.
Bryan Mayer: That's all for me. Okay.
Operator: Again, if you have a question, please press star then one.
Marc Riddick: Our next question will come from Marc Riddick with Cidodi. You may now go ahead. Good afternoon. Good. So I have to go back to the return to office commentary. I was wondering if you could talk a little bit about what it is you're seeing there. Today is it maybe can talk a little bit about what that mix looks like and is it a matter of certain days picking up certain days of the week and then maybe how that might play into pricing dynamics involved.
Marc Riddick: Right. So certainly we're seeing Tuesday, Wednesday and Thursday are like a different week in Monday and Friday. And that's really a cross market in the US. We're seeing that holiday holidays are still extended. So, you know, whereas, you know, people used to take just the Monday off on the three day weekend. We're seeing them really take four and five days off. So that's that's that's remained pretty consistent for us. What we're starting to see though is sort of first time really since the pandemic we're starting to see people actually switching course and sort of starting to bring people back downtown.
Marc Riddick: And it is not five days a week. It's in packages of two and three days a week. And so, you know, we're creating sort of options for them so that they can they can utilize our assets during that during that time that they need. You know, around around industries, I would say, we're still seeing a lot of demand from, you know, hospitality employees, municipal employees are starting to come back core houses are coming back online, which we've got a certain number of assets around core houses.
Marc Riddick: We are not seeing we're seeing some movement still of tenants that are upgrading to more miniatized properties. So, we're keenly watching that and trying to really take advantage of that when when when our assets are positioned more readily to those to those sort of class a miniatized office towers, and the offerings that kind of fit with what you're seeing and the changes in the return to office traffic. Can you talk a little bit about the rate of those packages that you're sort of customizing now and how that might compare as far as year-over, as far as year-over how should we think about how you're packaging the pricing to the consumer is to fit that return to office flow.
Marc Riddick: Right, so it's a two-step process for us because in parking to facilitate or to provoke trial, we oftentimes have to discount our rate. But it's after they have tried us and it's been a good experience, that's when we actually have pricing power. So right now, we are in the phase of trying to drive volumes in our contract parking. So we are discounting rate for those groups of partners out there. With the goal of getting to a point where utilization reaches a level where we're starting to get back into revenue management, which historically is what you did, which is a.k.a, in our industry, you're just moving rates up and down depending on day of the week and maybe even time of day.
Marc Riddick: But we're definitely in the first phase of that where we're driving volume and using discounted rates to help out. One from me, I just wanted to sort of shift over to the area. A little bit about, I guess, being part of the early stages of that and discussions with all of that, can you sort of maybe walk us through the time frame that you see when that might end up being a benefit to you?
Marc Riddick: Thank you. I'm sorry, but you faded in and out there. I missed about half of the question. I'm sorry. As far as the timing around working with those that are converting to residential assets came me to talk about as they're planning that process, how long do you think it would be before it begins to be a positive benefit for you? Yeah, now we're going to see some benefit in the latter part of this year.
Marc Riddick: And it will really pick up theme in the 2025. And we've got the visibility out beyond that as well. Okay, thank you. It appears I know further questions. This concludes our question and answer session. I'd like to turn the conference back over manual chavis for any closing remarks. Thank you all for your participation in today's call. The conference is not concluded. Thank you for listening to today's presentation. You may now