EPS of $-0.97 increased by 75.2% from previous year
Gross margin of 13.5%
Net income of -712.00K
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Portsmouth Square Inc (PRSI) QQ3 2025 Results Analysis – San Francisco Hilton Hotel Performance in a Microcyclic Travel Lodging Market
Executive Summary
Portsmouth Square Inc (PRSI) delivered a revenue increase in QQ3 2025, with reported revenue of $12.21 million, up 13.5% year-over-year and 22.5% quarter-over-quarter. EBITDA of $3.523 million produced an EBITDAR of 28.85%, signaling underlying operating leverage at the property level despite a modest gross margin of 13.5% and an operating margin of 10.35%. The quarter culmined in a net loss of $0.712 million driven by substantial non-operating costs, notably interest expense of $3.361 million and a negative swing in total other income/expenses, which eclipsed the positive operating performance.
From a liquidity and balance sheet perspective, PRSI exhibits meaningful leverage in the non-operating liability stack and limited near-term liquidity headroom. Reported current ratio of 0.23 underscores a stressed working capital position, while total stockholders’ equity sits at a negative $121.63 million on total assets of $45.37 million. The company generated negative cash flow from operating activities (-$8.854 million) and negative free cash flow (-$7.158 million) in QQ3 2025, with financing activities providing a material inflow (+$11.591 million) to support operations and capital activity, leaving ending cash around $9.976 million.
Absent a formal guidance outline, the near-term trajectory hinges on the hotel’s ability to sustain occupancy and peak effective rates (RevPAR drivers), optimize controllable costs, and secure further capital or refinancing on favorable terms. In the current configuration, PRSI presents an asymmetric risk/return profile: robust EBITDA relative to net income and a fragile liquidity/equity base, which implies a high-sensitivity to macro travel demand, interest costs, and financing conditions.
Net Income: -$0.712 million; Net Margin: -5.83%; EPS: -$0.97.
Cash flow and liquidity:
Net cash provided by operating activities: -$8.854 million.
Financial Highlights
Revenue performance:
- QQ3 2025 revenue: $12.210 million; YoY growth: 13.50%; QoQ growth: 22.53% (from QQ2 2025: $9.965 million).
Gross Profit: $1.651 million; Gross Margin: 13.52%.
Profitability:
- Operating Income: $1.264 million; Operating Margin: 10.35%.
- EBITDA: $3.523 million; EBITDA Margin: 28.85%.
- Net Income: -$0.712 million; Net Margin: -5.83%; EPS: -$0.97.
Cash flow and liquidity:
- Net cash provided by operating activities: -$8.854 million.
- Depreciation & amortization: $0.874 million; Capex: $1.696 million.
- Free Cash Flow: -$7.158 million; CFO per share: -$12.06; FCF per share: -$9.75.
- Net change in cash: +$3.088 million; Ending cash: $9.976 million; Beginning cash: $6.889 million.
Balance sheet health:
- Total assets: $45.365 million; Total liabilities: $166.995 million; Total stockholders’ equity: -$121.630 million.
- Current ratio: 0.230; Quick ratio: 0.230; Cash and cash equivalents: $3.004 million; Total cash including short-term investments: $3.103 million.
- Major liability components: Other current liabilities: -$15.229 million; Total non-current liabilities: $151.766 million; No long-term debt reported; Net debt: -$3.004 million (net cash).
Valuation and comparisons:
- Price to book and related leverage metrics are negative due to negative equity, complicating traditional value comparisons. Relative EBITDA margin sits within typical lodging ranges, but the company’s negative net income and weak liquidity distort investment appeal in the near term.
Key takeaway: PRSI demonstrates a positive operating trajectory at the EBITDA/operating level but remains encumbered by a weak balance sheet, negative net income, and near-term liquidity risks. Management commentary, where available, should be weighted toward strategic financing, capital structure normalization, and occupancy/ADR optimization to normalize cash flows.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
12.21M
13.50%
22.53%
Gross Profit
1.65M
166.72%
5 059.38%
Operating Income
1.26M
313.07%
578.79%
Net Income
-712.00K
75.20%
82.36%
EPS
-0.97
75.19%
82.36%
Key Financial Ratios
currentRatio
0.23
returnOnAssets
-1.57%
returnOnEquity
0.59%
operatingCashFlowPerShare
$-12.06
freeCashFlowPerShare
$-9.75
priceToBookRatio
-0.01
priceEarningsRatio
-0.52
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript was provided in the dataset for QQ3 2025 PRSI results. Consequently, there are no management quotes available to quote verbatim. If a transcript becomes available, we will extract quotes by themes (strategy, operations, market conditions) with attribution and assess their implications for the forward outlook.
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Forward Guidance
Management did not publish formal QQ3 2025 guidance within the provided data. The near-term outlook depends on: (1) the San Francisco travel market recovery and PRSI’s ability to capture higher ADR and occupancy; (2) continued access to favorable financing terms or refinanced debt to reduce carrying costs; (3) ongoing operating discipline to improve gross margins and reduce non-operating expense drag. Our assessment suggests achievability hinges on occupancy stabilization and a favorable financing environment. Key monitoring points include: occupancy and ADR trends in San Francisco, RevPAR trajectory, cost containment progress in G&A, and the status of any debt refinancing or capital raises to address the negative equity base.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
PRSI Focus
13.52%
0.00%
0.59%
-51.80%
GHG
42.50%
29.80%
4.21%
8.40%
LUXH
-1.28%
-2.21%
40.50%
-6.29%
IHG
68.40%
23.80%
-7.46%
21.32%
ATAT
41.90%
25.90%
14.80%
16.41%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Qualitative and quantitative signals point to a high-risk, turnaround-oriented investment thesis. While PRSI generates EBITDA and has a recognizable asset in a top-tier market, the company operates with negative net income, negative equity, and a precarious liquidity position. The near-term equity deleveraging would likely require capital injections, asset-side monetization, or favorable refinancing terms. Investors should consider a scenario analysis that contemplates (1) successful refinancing and operational efficiency driving cash flow improvement, and (2) continued liquidity constraints or asset impairment. Given the current balance sheet structure and cash flow profile, PRSI is best suited for high-risk, turnaround-oriented portfolios or strategic investors with an appetite for restructuring-friendly opportunities.
Key Investment Factors
Growth Potential
Potential comes from leveraging the Hilton brand in a high-demand urban gateway (San Francisco) and stabilizing occupancy/ADR to lift gross margins. A sustained mid-single-digit to high-teens revenue uplift could expand EBITDA leverage if fixed cost absorption improves and financing costs are stabilized. Repricing and refinancing of intercompany or external debt could unlock meaningful value if leverage normalizes.
Profitability Risk
Key risks include negative equity and high non-current liabilities that threaten solvency and limit liquidity flexibility. The absence of positive net income despite EBITDA signals structural cost and non-operating headwinds. Dependence on financing to fund operations and capital activity exposes PRSI to funding risk if credit markets tighten. The SF lodging market is cyclical and exposed to macro shocks, competition, and regulatory dynamics.
Financial Position
Balance sheet shows negative equity (-$121.63m) with total liabilities ($166.995m) vastly exceeding assets ($45.365m). Very low liquidity (current ratio 0.23) and negative net cash from operations emphasize the need for capital structure optimization, potential asset-light initiatives, or asset-level refinancings. Net debt remains negative, aided by cash reserves, but sustainability is questionable without improving operating cash flow.
SWOT Analysis
Strengths
Iconic Hilton-branded hotel asset in a premier San Francisco market (544 rooms and facilities) with a diversified revenue base.
EBITDA-driven operating performance shows meaningful margin potential despite net income pressure.
Cash position improved through financing activities, providing optionality to fund near-term liquidity needs.
Weaknesses
Negative corporate equity (-$121.63m) and a highly leveraged balance sheet on a net basis.
Negative net income and sustained negative operating cash flow despite positive EBITDA.
Extremely tight liquidity with current ratio of 0.23 and heavy reliance on external financing.
Opportunities
SF market recovery and RevPAR/ADR strength could lift top-line performance and gross margins.
Opportunities to renegotiate debt terms, refinance, or monetize non-core assets to de-lever.
Cost optimization programs and improved working capital management could convert EBITDA into free cash flow.
Threats
Macro travel downturns or SF-specific headwinds; dependence on financing conditions for liquidity.
Competitive hotel supply growth and potential occupancy softness could compress margins.
Regulatory changes or changes in tourism demand affecting hotel occupancy and pricing power.
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