Good afternoon, and welcome to the Mobile Infrastructure Corporation Fourth Quarter and Full Year 2023 Earnings Conference Call. All participants will be in listen-only mode. Please note today's event is being recorded. I would now like to turn the conference over to Casey Kotary, Investor Relations Representative. Please go ahead.

Thank you, operator. Good afternoon, everyone. And thank you for joining us to review Mobile's fourth quarter and full year 2023 performance. With us today are Manuel Chavez, CEO, and Stephanie Hogue, President and CFO. During this conference call, we will make forward-looking statements to assist you in understanding Mobile management's expectations about our future performance. These statements are subject to a number of risks that could cause actual events and results to differ materially, and I refer you to our March 14, 2024, press release and our SEC filings for discussions of those risks. In addition, our statements during this call are based on our views as of today. We anticipate that future developments will cause our views to change. Please consider the information presented in that light. We may at some point elect to update the forward-looking statements made today but specifically disclaim any obligation to do so. I will now turn the call over to Mobile's CEO, Manuel Chavez, to discuss fourth quarter and full year 2023 performance, Manuel?

Thank you, Casey. And thank you all for participating in today's call to review our fourth quarter results and discuss our outlook for 2024. As this is our first conference call since listing on the New York Stock Exchange of America, I’ll begin with a brief overview of the company and then discuss our quarterly business performance and the progress we expect to achieve in 2024. Mobile Infrastructure is the owner of a diversified portfolio of 43 parking assets, which are split between garages and lots across 21 markets with an average MSA population of about 2.9 million people, most of whom drive to their destinations. In 2022, this asset portfolio was valued at $520 million by an independent national financial services firm. Since 2022, our net operating income has increased by 9.5%. Thus, while we are a small cap company, our underlying asset base is quite substantial. Our team has deep industry expertise in acquiring and operating parking assets. The parking industry represents an enormous addressable market, yet the vast majority of parking assets are passively managed. In contrast, our corporate strategy is centered around actively managing each of our assets with the objective of driving utilization, rate optimization, and economies of scale. To support these goals, we have invested in technology infrastructure that provides our team with a unique insight and a differentiated competitive perspective across our entire portfolio. Longer term, we intend to leverage our experience, relationships, and technology to become the acquirer of choice in the fragmented parking industry. We see secular industry trends that point to the potential for significant value creation. But more on that a little later. With this snapshot of Mobile Infrastructure as a base, here are the key takeaways from our fourth quarter results. First, we substantially improved the performance of our asset portfolio compared to a year ago levels. Second, we converted 26 of our parking assets from leased to management contracts during the first quarter of 2024. Consistent with our corporate strategy, this transition gives us greater flexibility to optimize REITs and utilization and closely manage expenses. Lastly, we entered 2024 with positive business momentum and an improved financial position. We view our parking facilities as infrastructure assets, and it may be constructive to provide more detail into our strategy to actively manage our asset portfolio to increase return. By leveraging our proprietary technology platform, we can work directly with our service providers to customize offerings that address the needs of our customers. This is a key differentiator for us in a fragmented and often passively managed parking industry. For example, we saw growth in hotel overnight traffic in certain markets in the fourth quarter, we offered options, like providing hotel guests drive in and out privileges that can be charged through the hotel room, which creates yield for us, almost overnight guest parking spaces. Additionally, our technology investments enabled us to rapidly identify special events and conventions in our market and develop relevant options for those attending, which has resulted in increased parking reservations for us. We take a similar active approach to building the contract parking pipeline and customizing solutions that enhance customer conversion. For example, we carefully track Central Business District announcements that are near our facilities. In many cases, we put together attractive parking options for potential tenants before they even enter the market. We are seeing increased transient parking activity in several regions, which we are capturing by offering validations with restaurants and other retail destinations. As a result of our active management strategy, fourth quarter revenues increased 14% year-over-year. We are pleased with these top-line results, which when combined with the reduction in operating expenses resulted in a net operating income growth of 28% compared to the 2023 fourth quarter. Net operating income, or NOI, is a priority metric for us, as it most closely reflects the performance of our asset portfolio. With 2023 in the rearview mirror, let me share our expectations for the business trends in 2024, as well as our long-term vision for Mobile Infrastructure. Definitely we will discuss our specific 2024 guidance in a moment, but I can say that the growth we anticipated in 2024 is supported by several business trends we saw in the fourth quarter of 2023, namely continued positive momentum in our sales and leasing efforts, improved event-driven rates, and further strengthened hotel traffic. In 2024, revenue and net operating income are expected to benefit from the conversion to management contracts that we completed at the end of 2023. Following a transformational year in 2023, 2024 will be a year in which we accelerate operational improvements as we work to further strengthen the performance of our existing assets portfolio. Over the medium term, we will continue to monitor return-to-office trends, as improvement in these metrics will be a growth tailwind for the business. We are seeing the conversion of commercial to residential in several of our markets, particularly in the Midwest. This has the potential to have a significant positive impact on our business because it creates an overnight demand that historically has not existed in tier 2 or smaller cities. Additionally, there has been a loosening of traditional parking requirements associated with new construction, with several cities having lowered or eliminated parking requirements for new developments. This is happening across the U.S. For example, in Cincinnati, the first apartment tower was built without any parking requirement. Similar trends are taking place in Minneapolis and Cleveland. Developers can turn that space into more residential, hospitality, or commercial. This makes parking assets that are already built in good standing more valuable to a city, which is a positive trend for us that should build over time. Our long-term vision is to become the acquirer of choice in the parking industry. Our experience, relationships, and technology infrastructure have attracted substantial interest in a fragmented and traditionally single-asset owner market. On our side, we are disciplined in identifying assets that are exposed to multiple demand drivers on adjacent blocks, or as we call them micro-markets. What I mean by that is that we can have an asset in a smaller, more local market, but if it's surrounded by multiple demand drivers like multifamily residences, hotels, shopping venues, event locations, et cetera, we have the opportunity to significantly increase net operating income.

At this point, I would like to turn over the call to Stephanie Hogue, President and Chief Financial Officer, for a financial review. Stephanie. Thank you, Manuel. And good afternoon, everyone. I will provide additional details about our financial performance in the fourth quarter of 2023 and the full year, as well as review our guidance for 2024. Fourth quarter revenue of $7.9 million increased 14% year-over-year compared to $6.9 million in the fourth quarter of 2022. We benefited from higher rent revenue as parking activity increased. We saw particular strengths in parking activity at our southwestern locations, which benefited from broad-based activity as well as continued historically high demand for premier events and higher hotel and valet traffic. At the same time, our team's disciplined approach to our cost structure resulted in reduced property operating expenses of $544,000, or roughly half of 2020 to $912,000. We managed property level costs more tightly through reductions in discretionary spending, insurance, and professional fees. Property taxes were $1.9 million, up slightly from $1.7 million a year ago. The impact of higher revenue and lower operating expenses resulted in net operating income, or NOI, of $5.5 million, which was up 27.7% year-over-year and represented 69% of revenue. General and Administrative expenses of $3.9 million increased by $1.2 million year-over-year, reflecting public company costs as well as non-cash compensation expense of $2.4 million. Adjusted EBITDA was $3.4 million, up 36.5% from $2.5 million last year, representing a 43% margin on revenue. We believe our cost structure can support significant contribution margins on incremental revenue growth. Shifting to full year results, revenue of $30 million increased 4% year-over-year, with NOI of $21.1 million, up 10% when compared to 2022. Similar to the fourth quarter, lower property operating costs allowed NOI to grow significantly faster than revenue. Adjusted EBITDA of $14.8 million increased 34% year-over-year in 2023. As Manuel mentioned, we converted 26 locations to management contracts in the first quarter of 2024. This conversion gives us greater control of our profitability as we can more directly focus on REITs and utilization and manage our expenses in a way that is reflective of the performance of the underlying assets. For example, earlier this year, when we became aware of a high demand driver for parking near one of our locations, we were able to adjust pricing and increase targeted advertising, which delivered tangible financial and operational benefits. From an accounting standpoint, the shift to management contracts will also move our revenue recognition to a more standardized accrual recognition and away from cash-based accounting. As a result of this shift, reported revenue will be a better indication of business trends. In the past, our reported revenue has been skewed by the timing of collections, creating some lumpiness in our reported results. Turning to our balance sheet. At the end of 2023, Mobile Infrastructure has $17 million of cash and restricted cash. We ended the year with a $29 million pay down of debt. Total debt outstanding was $193 million, compared to $220 million at the end of 2022. Recently, we refinanced $59 million of our outstanding debts, and our next significant maturity is now a year away. While 2024 is a year dedicated to implementing operational improvements to our existing portfolio, we continue to plan for an accelerated acquisition program. We have an active pipeline of potential transactions, including many family-owned operations that are being passed along to the next generation. These owners are extremely comfortable within the asset class, and there's an opportunity in partnering or selling to us, which offers sellers tax advantages and diversification as their asset base, as well as the benefit of becoming an owner in our larger portfolio with tech-enabled, data-driven asset management. We have successfully integrated recent acquisitions and are confident we can continue to significantly improve NOI within the first 12 to 24 months of ownership. Our ability to acquire assets is predicated on our equity valuation returning to a more appropriate level. While we await more favorable economic conditions, we continue to build a robust deal pipeline, which stood at approximately $300 million at the end of 2023, as well as consider creative solutions to become more active in the acquisition market. Turning to 2024, we believe that the strategic plans put into place in 2023 are continuing to gain momentum, which should result in accelerating NOI growth. We are introducing initial 2024 guidance for revenue of $38 million to $40 million, which represents mid-single digit organic net growth from the shift from lease to management contracts. That being said, I would like to note that we manage the business to net operating income, which is our operational north star. Net operating income, or NOI, for 2024 is expected to range from $22.5 million to $23.25 million representing year-on-year growth of 8% at the midpoint. We look forward to sharing more of our progress as the year progresses ahead.

Thank you, Stephanie. To sum up, Mobile Infrastructure has a substantial asset portfolio that is set to have another year of improved performance in 2024. Our active management strategy is unique in our industry and has enabled us to gain market share in our markets and will continue to be a differentiator for us as we further improve our operations in 2024. We have ambitious long-term growth plans that are underpinned by favorable secular trends and a robust acquisition pipeline. Our management team has significant ownership and is fully aligned with the shareholders' interests. Operator, I would like to open the call for questions.

Thank you, we will now begin the question-and-answer session. The first question comes from Brian Maher with B. Riley. Please go ahead.

Great, thank you. And good afternoon. Just a few for me today. In the pipeline, I think you said $300 million Stephanie, how many assets would that represent? And maybe for Manuel, how long do you think it will take until you see positive indicators to pull the trigger on some of those or is it just simply a matter of the equity value of your stock?

Thanks, Brian. Good to hear from you. To answer the first part of your question, the $300 million represents about 15 to 20 acquisitions in the pipeline.

Yes. So when it comes to acquisitions, our eyes are wide open. We're having continuous conversations with relationships throughout the country that we continue to build on that pipeline. There still is a significant gap between seller valuations, as far as their expectations, and what the market will bear. It's been our experience that these seller expectations tend to lag the capital markets by a significant amount of time. We are going to be very disciplined, and we're going to continue to build that pipeline and continue to build relationships. When the cost of capital and capital markets come in line with seller expectations, then we are going to look to execute. You brought up a good point, though, there's another side to that coin, using our currency or stock. We believe our stock does not reflect the value of the portfolio. So we are going to continue to focus on organic growth and see where the stock goes. In the short term, we are discovering and discussing creative structures in order to facilitate transactions. And that's how we're organizing the acquisition efforts.

And this asset class is new to some, as there aren't many parking REITs available in the market. What kind of cap rates should we consider for the bid/ask spread? How should we approach that?

That's fair. Historically, parking assets have traded from mid-4 cap rates to mid-6 cap rates, depending on the market. There's been some movement in the market where you've seen 100 and 150 basis points of movement. If you look back at the beginning of 2023, the cost of capital, at least debt capital, was perhaps 500 basis points below where it is today. So that's the delta on the bid/ask that we're dealing with today.

Okay, and just shifting gears on the conversions from leases to management contracts, how many more of those are there to go and how many of the ones that remain do you think you should be able to get done in 2024?

That's a great question. So we've converted 26, and we're working through three additional that we are confident should be done by the end of 2024. There are two potentials that may be done that would take us to a total of 31. The balance of those assets are on long-term leases. Those will run off and as the leases terminate, we will convert those to management contracts, but that's really a '26-‘27 exercise.

Okay. And just two more for me, and I hope I'm not holding anybody up in the queue. But Stephanie, do you have kind of a run rate G&A number that we can think about for the quarters for this year?

No, we did not budget by quarter, it's really annual. I think we're expecting between $5 and $6 million, still comparable to where we were last year on a cash basis.

Okay. And then just last, and again, sticking with Stephanie, when you look at your expenses, where is the most low-hanging fruit to get those numbers down as we move through the year?

On the property side, we had a number of discretionary expenses last year that were one-time in nature, including some CapEx upgrades that were really related to technology and revenue control. There were also some engineering studies that we conducted. As I said, those are one-time in nature, so we don't anticipate picking those up again going forward. On the G&A side, I think we're pretty normalized for the year ahead. Given the size of the company, I'm not sure. As a public company, these are just public company costs. I think we've got that pretty well normalized.

Thanks. That's all for me. And welcome to the world of quarterly conference calls.

We're looking forward to it, Brian.

Thank you. Our next question comes from Bryan Frackman with Lion Street Capital. Please go ahead.

Hey, guys, congratulations on your first call.

Thank you.

Wanted to just touch base on return to office. How does that dynamic impact your forecasting strategies, and what assumptions are embedded in that topic?

That's a great question, particularly with what we're seeing out there today. We are not basing our annual operating plan or budgeting on a return-to-office movement. The return-to-office movement has been anecdotal. It's been our experience over the past 18 months that it's been almost flat. Our assumptions are that the status quo is the new normal. However, we do believe that continued densification of the urban core is essential. We firmly believe in and support civic and public infrastructure, and that infrastructure remains a significant demand driver. For example, athletic stadiums, ballparks, arenas, convention centers, concentration of hotel rooms, interstate connectivity, and the increasingly residential development and redevelopment. Our strategy to grow our business is to focus on those demand drivers and to drive utilization and rental rates by capturing those demands.

Thanks, guys.

See you.

Thank you. This concludes our question-and-answer session. I'd like to turn the conference back over to the management team for any closing remarks.

Thank you, everybody. Appreciate your time this afternoon.

Thanks, all.

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.