Earnings call transcript: Mobile Infrastructure Corp sees Q1 2025 revenue dip

Mobile Infrastructure Corporation reported a 6.7% year-over-year decline in revenue for Q1 2025, alongside decreases in net operating income and adjusted EBITDA. Despite these challenges, the company’s stock experienced a notable 4.98% increase in aftermarket trading, closing at $4.22. The company maintains impressive gross profit margins of 61.2% and received a FAIR overall financial health rating from InvestingPro. The company is focusing on strategic initiatives, including management contract conversions and exploring new revenue streams, to navigate current market conditions.

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Key Takeaways

• Q1 2025 revenue declined by 6.7% year-over-year.
• Stock price rose by 4.98% in aftermarket trading.
• Strategic focus on management contract conversions and new revenue streams.
• Ongoing balance sheet optimization efforts.

Company Performance

Mobile Infrastructure Corporation faced a challenging first quarter in 2025, with a revenue drop to $8.2 million, a 6.7% decrease from the previous year. The company attributed this decline to seasonal headwinds, weather disruptions in the Midwest, and renovation activities at the Cincinnati convention center. Despite these setbacks, the company remains focused on its core portfolio and leveraging data-driven decision-making to position itself for future growth.

Financial Highlights

• Revenue: $8,200,000 (6.7% decrease year-over-year)
• Net Operating Income: $4,500,000 (17% decrease)
• Adjusted EBITDA: $2,700,000 (21% decrease)
• Cash on Hand: $16,000,000
• Total Debt: $214,000,000
• Internal NAV: $7.25 per share

Market Reaction

Mobile Infrastructure Corp’s stock saw a 4.98% increase in aftermarket trading, closing at $4.22. This positive movement came despite the financial declines reported for Q1 2025, suggesting investor optimism about the company’s strategic initiatives and future growth potential. The stock has shown strong momentum with a 25.2% price return over the past six months, marking a significant recovery from its 52-week low of $2.48. According to InvestingPro analysis, the stock is currently trading near its Fair Value.

Outlook & Guidance

The company has set a revenue guidance for 2025 in the range of $37 million to $40 million, with an expected net operating income growth of 7% year-over-year. Adjusted EBITDA is projected to be between $16.5 million and $18 million. Mobile Infrastructure Corp is also focusing on optimizing its balance sheet and exploring more flexible debt facilities.

Executive Commentary

CEO Manuel Chavez emphasized the importance of infrastructure and consumer wins, stating, "Our infrastructure and consumer wins combined with ever richer data is guiding disciplined capital deployment." President Stephanie Hoag highlighted the transformative impact of data, noting, "Better data is also reshaping our revenue mix."

Risks and Challenges

• Seasonal weather disruptions impacting operations.
• Renovation activities affecting parking demand.
• Potential market saturation in core areas.
• Macroeconomic pressures influencing consumer behavior.
• Dependence on successful implementation of strategic initiatives.

Q&A

During the earnings call, analysts inquired about the performance of the Detroit Renaissance Center asset and the company’s pricing sensitivity in monthly parking. Executives also elaborated on the implementation of the EV charging initiative and the company’s debt refinancing strategy.

Full transcript - Mobile Infrastructure Corp (BEEP) Q1 2025:

Conference Operator: Good day, and welcome to the Mobile Infrastructure Corporation First Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Casey Cotery, Investor Relations representative. Please go ahead.

Casey Cotery, Investor Relations Representative, Mobile Infrastructure Corporation: Thank you, operator. Good morning, everyone, and thank you for joining us to review Mobile’s first quarter twenty twenty five performance. With us today from Mobile are Manuel Chavez, CEO and Stephanie Hoag, President. In a moment, we will hear management’s statements about the company’s results of operations as of the first quarter of twenty twenty five. 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 and business or financial results.

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 ks 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. These non GAAP measures should not be considered in isolation from or as a substitute for GAAP results. 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 reasons why Mobile uses these measures.

I will now turn the call over to Mobile’s CEO, Manuel Chavez, to discuss first quarter twenty twenty five performance. Manuel?

Manuel Chavez, CEO, Mobile Infrastructure Corporation: Thank you, Casey, and thank you all for participating in today’s call to review our first quarter results and discuss our business outlook. To start off, underlying operating metrics moved in the right direction and the strategic pillars we detailed in March are firmly on track. That said, seasonal headwinds and some other factors muted top line growth in Q1. Our infrastructure and consumer lens combined with improved data is guiding disciplined capital deployment and positioning mobile infrastructure for value creation. Before we get into the details, I’d like to re ground you on the long term journey that guides our actions.

When we spoke in early March, barely seven weeks ago, we set out a multiyear, multi pronged strategy consisting of two primary focus areas. Our first focus area as expected is to continue to convert the balance of our core portfolio into management agreements, driving increased utilization via increasing our monthly residential and commercial contracts. The second focus area is our portfolio optimization strategy in which we aim to rotate out certain parking assets that have greater value for alternative stakeholders than they do as long term assets in our portfolio into new assets that will more closely align with the key characteristics of our core portfolio, ultimately maximizing value for our Mobile shareholders. As a reminder, our core portfolio is defined as parking structures that are near multiple demand drivers and likely clustered close to assets that are already in our portfolio. We believe rotating the non core segment of Mobile’s portfolio can generate at least $100,000,000 of proceeds that can be used to reinvest into our robust acquisition pipeline.

Second, our team sees a meaningful opportunity to further leverage data and enhance processes and use rigorous management of our core portfolio to increase asset utilization and grow NOI. Because specialized parking properties do not change hands quickly, this takes time and today’s remarks are meant as a progress report on initiatives whose most visible milestones will surface over the coming quarters. Mobile infrastructure’s garages occupy a distinctive niche. They are hard infrastructure, essential nodes in the flow of urban mobility, yet also behave like consumer microcosms. Their performance rising and falling the daily human patterns.

That dual nature shaped the first quarter story. The first quarter is our lightest season and this year was no different. Adding to the typical seasonality, weather proved harsher than usual, construction disrupted several central business district corridors and in Cincinnati, One of our largest markets, the convention center closed for renovation creating less demand in our transient and overnight hotel traffic. Even so, the team delivered a solid opening ninety days of twenty twenty five. Business development outreach secured more than two fifty net new monthly and lifted contract volume sequentially at essentially flat pricing.

Our pipeline for new monthly business continues to grow evidence that our go to market discipline is taking hold. Transient transactions declined versus the prior year quarter, but average transient rate rose, demonstrating the levers that we have at our disposal to protect price even when volume is softer. We also saw encouraging early signs from a wave of downtown residential conversions. For example, the Mercantile and the newly opened 1 West Seventh apartments in Cincinnati are seeing success in leasing even through the first quarter, a time when people are less likely to move. We are seeing some demand for parking from these new lessees, although there is some rate sensitivity early on.

Experience tells us that sustained higher use eventually converts to pricing power, and we will remain patient with our pricing lever until that threshold is reached. 29 of our 40 garages are now under management contracts. By the end of calendar year 2025, we will have transitioned 75% of our portfolio to run under management contracts with the balance scheduled for conversion in 2026 and 2027. Management contracts allow for full rate autonomy, transparent cost structures and crucially granular data on utilization, Parker mix and rate elasticity. That data allows us to fine tune decisions with a precision unavailable previously.

Building a data driven decision process has taken time and we believe the effects will become more obvious later this year and into 2026. Portfolio optimization remains an important pillar of our strategy. Last year’s sale of three assets at attractive multiples confirmed the latent value of our real estate holdings. These three assets were sold at a sub 2% capitalization rate on NOI, which is a function of our assets often playing a critical role in the real estate development plans of alternative stakeholders. Building on that success, we have launched a thirty six month disposition program targeting roughly 100,000,000 of non core properties whose value will be derived from the underlying land or equally as importantly, the buyer who would like to control the parking experience for their customers or employees.

Proceeds will be redeployed into locations supported by multiple demand drivers and higher net operating income potential in markets where we already hold scale advantages. We are working towards roughly one third of those assets to be under active negotiations or in contract by year end and we are preparing the balance sheet accordingly. Over the past quarter, we evaluated debt facilities including term debt, pooled asset debt and single asset level facilities to ensure we can close sales swiftly and reallocate the capital in a manner that is accretive to shareholders. Looking beyond the traditional parking income, we are layering complementary revenue streams into the portfolio. Revenue sharing negotiations are in late stages for electric vehicle charging at several garages as is the longer term vehicle storage and assets that have greater availability throughout the year.

And exploratory discussions with autonomous vehicle operators continue, positioning our centrally located assets as future fleet hubs. Each initiative is intended to add durable cash flow and enhance asset value. We look forward to sharing more details on those initiatives in coming quarters. Again, in short, seasonal headwinds muted top line growth, yet the underlying operating metrics moved in the right direction and the strategic pillars we detailed in March are firmly on track. Our infrastructure plus consumer wins combined with ever richer data is guiding disciplined capital deployment and positioning mobile infrastructure for sustained value creation.

Thank you for your time and continued support. I will now turn the call over to our President, Stephanie Hogue, who will elaborate on our financial performance through the quarter. Stephanie?

Stephanie Hoag, President, Mobile Infrastructure Corporation: Good morning, everyone, and thank you, Emmanuel. My remarks today will move through three interconnected topics: our balance sheet efforts, the financial performance of our assets and importantly, our path forward. Starting with our balance sheet. As you recall, last September, we put a $40,000,000 credit facility in place to give holders of our preferred stock a cash option rather than converting into common shares and immediately selling in the open market, which not only would have resulted in substantial dilution, but also created downward pressure on assembly traded stock. In addition, and as importantly, we reinstated the dividend to those shareholders, which was a core reason that they made the investment in the first place.

That facility is doing its job. During the first quarter, we redeemed just $1,200,000 of preferred, which is the lowest quarter of redemptions or conversions since early twenty twenty four. The preferred outstanding now sits at $19,000,000 down from $39,500,000 at the start of last year. At the same time, we continue to repurchase common shares. We have repurchased approximately 82,000 shares this quarter at an average price of $3.23 Our internal NAV remains $7.25 per share, which does not credit our assets for their operational value or replacement value premiums.

Considering material discount of mobile stock price relative to NAV, we intend to continue taking potential dilution off the table by settling preferred redemptions with cash and buying back our stock in the open market. This dovetails into our financing strategy. After refinancing $87,500,000 of secured debt late last year, we are now working through our debt maturities through 2027 and evaluating alternative structures that offer flexibility around our capital rotation strategy of non core assets. Traditional CMBS is restricted with asset sales, redeployment of capital and operating changes like leases to management contracts. As a result, we believe that continued focus on enhancing our balance sheet is an important value driver longer term, and it will allow us to continue to execute on our strategy.

With that backdrop in place, let’s turn to what’s happening inside the assets themselves. Dividends. Today, most of our revenue is recorded on an accrual basis, giving us a clear view of operating performance. Once we strip out performance from Detroit, which I will discuss shortly, the value per available stall increased 1% year over year in the first quarter. Because an empty space can never be resold, our first priority is increasing utilization.

And once this metric meets satisfactory thresholds, we will look to optimize price. Better data is also reshaping our revenue mix. Monthly or contract parking currently represents more than 35% of management contract parking revenue, providing stickier cash flow and smoothing the seasonality inherent in transient demand. The accounting noise that once clouded period to period comparisons is largely behind us, and we can now measure performance on a truly apples to apples basis. Underpinning this progress is the improvement in parking technology, allowing us to make data informed decisions.

License plate recognition, data aggregation and other tools are giving us granular insights into consumer behavior. Peaks and valleys of utilization, the ability to charge consumers according to their usage needs and pricing sensitivities that may not have been obvious with older technologies. We continuously evaluate our third party operators on a simple metric, who can deliver accurate, actionable data the fastest so we can adjust accordingly. Looking ahead, our roadmap is clear. First and foremost, we intend to continue to reposition our balance sheet through a more flexible debt facility that supports our non core asset rotation and reduces refinancing risk.

We will maintain rigorous capital allocation discipline, balancing share repurchases against investing in assets or revenue generating upgrades to our current facilities. And finally, we will evaluate data faster with our operators to make more informed decisions to drive increased utilization. Now let’s move on to our first quarter results. Financial results for the first quarter still have some element of lease conversion to management contract noise within the results. As the percent rent leases recognized revenue on an as collected cash basis, first quarter revenue of 2024 had a $600,000 benefit for activity occurring in the fourth quarter of twenty twenty three.

Revenue of $8,200,000 in the first quarter was stable compared to 2024 operating revenue when adjusting for this accounting change. That said, on a GAAP basis, revenue decreased 6.7% from $8,800,000 in the first quarter of twenty twenty four. Revenue per available stall or rev pass, a key metric we use to manage our portfolio was down modestly in the first quarter. However, we have provided an adjusted rev pass that excludes our Detroit location to give a clearer view of our business progress. Detroit is one of our larger assets and we spoke previously about the headwind this asset faces, but also of the longer term opportunity we believe the redevelopment in Detroit creates.

As a result, including it in ResPass skews our year over year comparisons for the remainder of the portfolio. Excluding Detroit, same location RevPAR was $184 per stall as compared to $183 per stall in the prior year, driven by modestly higher overall utilization, stronger transient and residential pricing rates and an increase in corporate monthly parking. As we convert more assets to management contracts and a larger portion of our portfolio is included in the calculation, our rev pass metric will become an increasingly valuable measure of our performance, offering a more clear and comprehensive view of our business. That said, as a reminder, our first quarter is typically seasonally slow and we experienced several quarter specific impacts that further affected performance, namely significant weather in the Midwest, temporary road closures and the temporary closure of Cincinnati’s Convention Center for a $240,000,000 upgrade. Property operating expenses were $1,900,000 compared to $1,500,000 in last year’s first quarter.

The increase primarily resulted from the shift to management contracts and the related accounting treatment of recognizing asset level expenses within our financial statements. Property taxes were $1,900,000 approximately flat compared to last year. Net operating income or NOI was $4,500,000 down 17% from last year’s first quarter. Last year’s NOI included the previously mentioned $600,000 of revenue that essentially dropped entirely to the bottom line. General and administrative expenses of $1,300,000 were slightly up from $1,200,000 in the prior year’s first quarter.

This excluded non cash compensation of $700,000 in the current year quarter compared with $1,800,000 of non cash comp in the prior year quarter. We continue to believe that the portfolio can scale significantly while corporate G and A can be held roughly flat. Adjusted EBITDA was $2,700,000 down about 21% from $3,500,000 in the prior year and adjusted EBITDA margin was 33.4%. It is worth noting here too that the $600,000 of prior period revenue increased profitability by a similar amount, explaining much of the year to date change. Turning to our balance sheet.

At the end of the first quarter, Mobile Infrastructure had $16,000,000 of cash and restricted cash on hand. We ended the quarter with total debt outstanding of $214,000,000 compared with $213,000,000 at the end of twenty twenty four. While our first quarter is always seasonally slow, we remain confident in our annual plan and are maintaining our 2025 guidance for revenue of $37,000,000 to $40,000,000 Net operating income or NOI for 2025 is still expected to range from $23,500,000 to $25,000,000 representing year on year growth of 7% at the midpoint. We expect adjusted EBITDA to be between $16,500,000 and $18,000,000 To close, the heavy lifting of 2024 contract conversions, refinancing groundwork and capital structure redesign is translating into more consistent revenue accrual, sharper operating insights and I believe a stronger platform for growth. We have more work ahead, but the trajectory is positive and unmistakable.

Thank you for your continued support of mobile infrastructure. And with that, I will turn the call to the operator to open the line for questions.

Conference Operator: The first question comes from John Massocca with B. Riley. Please go ahead.

John Massocca, Analyst, B. Riley: Good morning.

Stephanie Hoag, President, Mobile Infrastructure Corporation: Good morning, John.

John Massocca, Analyst, B. Riley: Just focusing in on some of the headwinds in 1Q twenty twenty five, obviously weather probably shouldn’t be a factor at least in 2Q and 3Q as much. But things around, for instance, the convention center remodel in Cincinnati or maybe the other kind of construction things that were called out, I mean, could those have longer tails? Could that be kind of affecting the rest of the year here?

Manuel Chavez, CEO, Mobile Infrastructure Corporation: The convention center redevelopment in Cincinnati, actually, the completion time frame was moved up. And as of late, they’re expecting opening of that in December of this year or January of next year. We also had some street closures associated with exterior facade and some apartment building redevelopments, which are coming to completion as well.

John Massocca, Analyst, B. Riley: Okay. And anything else on the operating expense side in the quarter that was either one time issue or maybe more permanent? Thought I remember in the press release something around security was kind of called out. Just curious if there’s any how we should kind of think about that OpEx number going forward?

Stephanie Hoag, President, Mobile Infrastructure Corporation: Yes. Security definitely has been an expense that we’re seeing through the portfolio. There was an element of expense though in this quarter that was moved forward. So it was planned R and M for the year that just came up either timing or it was the right opportunity to do it. So we expect that, that is online with guidance through the year.

John Massocca, Analyst, B. Riley: Okay. And the Renaissance Center in Detroit, splitting it out from RevPAS, is that kind of indication that, that asset maybe is potentially going to be a drag on kind of the overall portfolio in the near to intermediate term, just given some of the secular things going on with that specific asset? Or just kind of curious what the outlook for that specific asset is, just given you split it out from the rest of the portfolio?

Manuel Chavez, CEO, Mobile Infrastructure Corporation: Yes. Detroit is one of our biggest markets, and that asset is premier riverfront location, but connected directly to the Renaissance Center. And so what’s happened is that asset has moved from a revenue perspective. It’s moved to a trough much more quickly than anticipated, which is disappointing on one hand. But on the other hand, it says that the sort of movement of current tenants in the Renaissance Center is happening more quickly, meaning they’re moving out, which should make way for the redevelopment.

The downward pressure on our overall performance once this asset does truly hit the trough, that downward pressure will lessen up. But we wouldn’t anticipate any type of real growth there outside of some potential construction work being construction work or parking. Outside of that, we wouldn’t anticipate any real growth until the redevelopment is completed there.

John Massocca, Analyst, B. Riley: Is there a rough time frame from when you would expect that asset to kind of trough or maybe or have we already gotten there?

Manuel Chavez, CEO, Mobile Infrastructure Corporation: I think we’re getting pretty close.

John Massocca, Analyst, B. Riley: Okay. And then you called out debt a little bit, looking for maybe alternative sources of kind of debt capital that are more conducive to your operating model. I mean, can you provide a little more color on the conversations you’re having today and maybe kind of a rough timeline for when we might expect something on the refinancing front to that extent?

Stephanie Hoag, President, Mobile Infrastructure Corporation: Yes. John, most of our maturities are 26 and 27. So we’re moving a little bit faster from a refinancing perspective than we would otherwise. One the challenges as you look at our debt portfolio is you have a lot of CMBS portfolios that were done kind of prior to 2020. And they’re restrictive in what and when we can sell assets.

As you know, the non core asset piece of our strategy is really important. So we’ll have more to come later this year. We’ve been working on it. As you know, markets are somewhat volatile. So working to really find the right answer for the company long term that allows us to execute quickly on sales as they come, but also recycle that capital into assets that look more like the core portfolio.

So I would say later this year, we’ll have more detail, but working on it to give us really a lot of flexibility within the portfolio.

John Massocca, Analyst, B. Riley: Okay. That’s it for me. Thank you very much.

Stephanie Hoag, President, Mobile Infrastructure Corporation: Thanks, John. Thanks, John.

Conference Operator: Your next question comes from Kevin Steinke with Barrington Research. Please go ahead.

Kevin Steinke, Analyst, Barrington Research: Hey, thanks. Good morning. Just wanted to start off by asking about the improved contract parking demand trends you’re seeing and maybe how sustainable that is? And then you also mentioned initially some pricing sensitivity around monthly commercial parking, although you mentioned that could kind of go away as utilization builds. So maybe just kind of the timeline of how that typically works in terms of maybe when pricing sensitivity lessens in response to higher utilization?

Stephanie Hoag, President, Mobile Infrastructure Corporation: Yes. That’s a great question. I would say it’s sort of a tale of two stories. Transient, as we’re seeing continued activity in downtown, so it was certainly slower than we expected in the first quarter, rates held. So people that are coming downtown for whether it’s dinner events, wherever they’re moving around the city, there’s not a lot of pricing sensitivity.

But you are right, it is absolutely in kind of the return to office trend. Right now, there’s a surplus in downtown parking because people have, by and large, not been working Monday through Friday in offices and city course. So as that trend is shifting, we’re getting a lot more inbounds as opposed to just outbounds of us calling. We’re seeing our operators are reporting that they’re getting more inbounds from people looking for large blocks of parking. As that continues and garages fill up, we will see that pricing power shift towards the company.

Kevin Steinke, Analyst, Barrington Research: Okay. And then you mentioned some momentum on the ancillary revenue initiatives, specifically calling out revenue sharing for EVs. It sounds like maybe some revenue generation coming from that later in the year perhaps. Could you talk about that more and how widespread that is in terms of across your asset portfolio?

Stephanie Hoag, President, Mobile Infrastructure Corporation: Absolutely. We have EV in several of our garages. I would say performance and utilization takes time to build. Customers need to know that it’s there, that it is available. So it’s not that you put an EV charger in and automatically it’s 100% utilization.

We’re really focusing on garages that have that residential demand elements because those are people that don’t have an alternative place necessarily to charge. They can’t drive home and plug it in at their house. So EV charging will become more important. But it is one of those things that just takes probably several quarters before you really have insight in terms of utilization. And that’s subject to people knowing it’s there, that they’re using it consistently and it’s priced accordingly.

Conference Operator: This concludes our question and answer session and today’s conference call. Thank you for attending today’s presentation. You may now disconnect.

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