EPS of $-5.96 increased by 59.5% from previous year
Gross margin of 7.4%
Net income of -4.38M
"No earnings call transcript available for QQ4 2024." - N/A
Portsmouth Square Inc (PRSI) QQ4 2024 Results: Modest Property-Level Profitability Yet Heavy Leverage and Negative Equity in San Francisco Hilton Asset
Executive Summary
Portsmouth Square Inc (PRSI) reported QQ4 2024 revenue of USD 9.81 million with a gross profit of USD 0.724 million and EBITDA of USD 0.968 million, yielding a modest asset-level profitability profile. Operating income reached USD 0.096 million, but a sizable financing burden drove a net loss of USD 4.378 million and an EPS of -5.96 for the quarter. Interest expense of USD 4.401 million and other financing costs more than offset operating gains, underscoring the outsized impact of leverage on reported earnings. Despite positive operating cash flow (USD 0.661 million) and a cash balance of approximately USD 4.78 million at period-end, free cash flow remained negative (-USD 0.767 million) due to capex of USD 1.428 million. The balance sheet reveals a highly levered structure: total debt USD 129.664 million, total liabilities USD 156.412 million, and negative stockholders’ equity of USD -115.010 million, resulting in a net debt position of USD 126.153 million. Such risk factors raise the bar for near-term profitability and liquidity, with deleveraging and potential refinancing as critical catalysts.
On a year-over-year basis, revenue rose about 4.4% and gross profit increased roughly 16%, signaling improving asset-level profitability even as financing costs suppress net income. Quarter-over-quarter, the company shows a decline in revenue (-8.81%) and a sharp deterioration in profitability driven by non-operating items. The quarter reflects a single-asset lodging operation with exposure to urban travel demand dynamics in San Francisco and sensitivity to financing costs, occupancy levels, and room-rate strength. The near-term outlook hinges on capital structure actions (refinancing or equity infusion), occupancy trends, and any asset-optimization initiatives that could lift margins and reduce leverage.
Net Income: USD -4.378 million; Net Margin -44.63%
Financial Highlights
Revenue and margins:
- Revenue: USD 9.81 million; YoY +4.42%, QoQ -8.81%
- Gross Profit: USD 0.724 million; Gross Margin 7.38%; YoY +16.21%, QoQ +16.96%
Profitability and cash flow:
- EBITDA: USD 0.968 million; EBITDA margin 9.87%
- Operating Income: USD 0.096 million; Operating Margin ~0.98%
- Net Income: USD -4.378 million; Net Margin -44.63%
- EPS: -5.96; Weighted Avg Shares 734,153
Cash flow and liquidity:
- Net cash provided by operating activities: USD 0.661 million
- Capital expenditures: USD -1.429 million
- Free cash flow: USD -0.767 million
- Cash and equivalents at period-end: USD 3.511 million (cash components total ~USD 3.72 million in short-term assets); Net change in cash: -USD 0.434 million
Balance sheet and leverage:
- Total assets: USD 41.402 million
- Total liabilities: USD 156.412 million; Long-term debt: USD 129.664 million; Net debt: USD 126.153 million
- Stockholders’ equity: USD -115.010 million (negative equity)
- Liquidity ratios (Q4 data): current ratio 0.227, quick ratio 0.226, cash ratio 0.131
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
9.81M
4.42%
-8.81%
Gross Profit
724.00K
16.21%
16.96%
Operating Income
96.00K
-36.42%
-68.63%
Net Income
-4.38M
59.53%
-52.49%
EPS
-5.96
59.54%
-52.43%
Key Financial Ratios
currentRatio
0.23
grossProfitMargin
7.38%
operatingProfitMargin
0.98%
netProfitMargin
-44.6%
returnOnAssets
-10.6%
returnOnEquity
3.81%
debtEquityRatio
-1.13
operatingCashFlowPerShare
$0.9
freeCashFlowPerShare
$-1.05
priceToBookRatio
-0.01
priceEarningsRatio
-0.06
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript data provided for QQ4 2024. Accordingly, there are no management-quoted themes to summarize. If a transcript becomes available, the highlights would typically cover: - Strategy: any deleveraging plans, asset optimization, and capital allocation priorities. - Operations: occupancy trends, rate discipline, and competitive positioning in San Francisco. - Market conditions: SF tourism/conventions activity, macro headwinds, and competitive landscape. - Financial stewardship: debt maturities, refinancing options, covenant considerations, and liquidity management.
No earnings call transcript available for QQ4 2024.
— N/A
No earnings call transcript available for QQ4 2024.
— N/A
Forward Guidance
There is no formal forward guidance disclosed in the provided data. Given PRSI’s capital structure and sizeable debt load, near-term sensitivity to refinancing conditions and occupancy/rate momentum in San Francisco is high. Investors should monitor: (1) debt maturity schedule and any announced refinancing/credit facilities, (2) occupancy trends, average daily rate (ADR), and convention-driven demand in SF, (3) potential capital actions (sale-leaseback, asset divestiture, or equity infusion) to deleverage, and (4) covenant risk and liquidity headroom under stressed scenarios. Management’s ability to secure favorable refinancing terms and to sustain positive operating cash flow despite high financing costs will be decisive for the path to improved profitability and a return to positive equity.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
PRSI Focus
7.38%
0.98%
3.81%
-6.29%
GHG
43.10%
12.60%
-2.13%
-22.12%
LUXH
-52.40%
-1.07%
15.41%
-1.09%
IHG
20.30%
20.30%
-14.80%
13.00%
ATAT
67.90%
14.20%
10.60%
19.26%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
PRSI presents a high-risk, high-uncertainty investment profile. The QQ4 2024 results show the company generating modest EBITDA and operating income, but financing costs and a heavy debt load drive a substantial net loss and negative equity. The key to a more favorable investment thesis is deleveraging: successful debt refinancing, asset optimization (including potential sale-leaseback), or equity infusions that improve debt-service capacity and restore equity value. In the absence of such catalysts, the company remains exposed to liquidity risk, continued erosion of book value, and limited upside in a traditional equity narrative. Investors should focus on debt maturity timelines, refinancing outcomes, occupancy/ADR trajectories in San Francisco, and any strategic capital actions that could shift PRSI toward a more sustainable financial trajectory.
Key Investment Factors
Growth Potential
Limited near-term growth potential given a single-asset portfolio and a leverage-heavy balance sheet; upside hinges on deleveraging, occupancy/ADR improvements, and potential asset optimization (e.g., sale-leaseback) that could unlock capital for redeployment.
Profitability Risk
High credit and solvency risk due to negative equity and long-term debt of USD 129.664 million. Dependence on SF travel demand, sensitivity to financing costs, and covenant stress risk pose material downside. Earnings are heavily weighed down by interest and other financing expenses despite modest asset-level profitability.
Financial Position
Stressed balance sheet with negative stockholders’ equity (-USD 115.01 million) and elevated net debt (~USD 126.15 million). Cash generation from operations is modest (USD 0.661 million), but free cash flow is negative due to capex. Liquidity currently supported by cash on hand (~USD 4.78 million), yet leverage remains a dominant overhang.
SWOT Analysis
Strengths
Premium Hilton-branded hotel asset in a high-demand urban market (San Francisco) with 544 rooms
Asset-level profitability evidenced by positive EBITDA and operating income in QQ4 2024
Established brand and affiliation with The InterGroup Corporation umbrella
Potential for occupancy and rate-driven upside in a stabilizing urban hospitality market
Weaknesses
Severe leverage: long-term debt USD 129.66 million and total liabilities USD 156.41 million
Negative stockholders’ equity (USD -115.01 million) and reliance on high-interest servicing
Very tight liquidity metrics (current ratio ~0.23) and negative net income despite EBITDA
Concentration in a single asset increases exposure to local demand shocks
Opportunities
Debt refinancing, debt-for-equity considerations, or sale-leaseback arrangements to reduce leverage
Strategic capex optimization to lift margins and cash flow generation
Occupancy recovery and ADR improvements tied to SF convention/business travel
Operational enhancements and potential brand-driven marketing to stabilize demand
Threats
Macro and regional travel downturns affecting urban hotel demand
Rising interest rates and covenant risk increasing potential financing constraints
Regulatory or city-specific factors impacting SF hospitality demand
Impairment risk on underperforming assets if market conditions deteriorate
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