EPS of $-1.26 decreased by 82.6% from previous year
Gross margin of 22.0%
Net income of -2.73M
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The InterGroup Corporation (INTG) QQ2 2025 Results Analysis – Revenue Stabilization Amid High Leverage and Negative Equity in Travel Lodging
Executive Summary
The InterGroup Corporation delivered a modest revenue base in QQ2 2025, with revenue of $14.44 million and gross margins around 22%. EBITDA stood at $1.94 million and operating income was $0.85 million, yet the quarter recorded a net loss of $2.73 million and earnings per share of negative $1.26. The loss is predominantly driven by heavyweight interest expense ($3.87 million) and other non-operating items, including a total other income/expense line of roughly $4.43 million, underscoring the company’s dependence on financing activities to manage leverage rather than operating cash flow strength.
From a balance sheet perspective, INTG remains highly levered with long-term debt of $196.98 million and total liabilities of $221.93 million against negative shareholders’ equity of $83.92 million. Cash generation is weak with negative cash flow from operations (-$0.781 million) and free cash flow of the same magnitude, even as cash and short-term investments total about $16.08 million and ending cash stood at $14.39 million. Management commentary is not available in the provided dataset, limiting insight into strategic actions for deleveraging or portfolio optimization.
The near-term investment thesis hinges on liquidity management and deleveraging: potential refinancing opportunities, asset sales of non-core assets, and stabilizing or improving hotel performance to lift EBITDA. However, the combination of negative equity, low interest coverage (0.221x), and a negative net income print raises red flags on solvency risk should operating conditions weaken or financing markets tighten. Investors should monitor occupancy trends, ADR (average daily rate) developments, covenant clarity, refinancing timelines, and any announced asset dispositions that could meaningfully improve leverage dynamics.
Key Performance Indicators
Revenue
14.44M
QoQ: -14.58% | YoY:0.84%
Gross Profit
3.18M
22.01% margin
QoQ: -43.82% | YoY:50.62%
Operating Income
853.00K
QoQ: -72.74% | YoY:163.37%
Net Income
-2.73M
QoQ: -584.67% | YoY:-78.22%
EPS
-1.26
QoQ: -600.00% | YoY:-82.61%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $14.441 million in QQ2 2025, YoY +0.84% (as reported in metrics), QoQ -14.58% from Q1 2025.
Net Income: -$2.725 million; net margin -18.87%; YoY -78.22%, QoQ -584.67%
Financial Highlights
Revenue and Profitability
- Revenue: $14.441 million in QQ2 2025, YoY +0.84% (as reported in metrics), QoQ -14.58% from Q1 2025.
- Gross Profit: $3.178 million; gross margin 22.01%; YoY +50.62%, QoQ -43.82%
- EBITDA: $1.937 million; EBITDA margin ~13.41%
- Operating Income: $0.853 million; operating margin ~5.91%
- Net Income: -$2.725 million; net margin -18.87%; YoY -78.22%, QoQ -584.67%
- EPS: -$1.26; diluted EPS -$1.26; YoY -82.61%, QoQ -600%
Liquidity and Cash Flow
- Net cash provided by operating activities (CFO): -$0.781 million (negative)
- Free cash flow (FCF): -$0.781 million
- Net change in cash: +$4.168 million; cash at end of period: $14.386 million; cash at beginning: $10.218 million
- Cash conversion metrics indicate weak operating cash flow generation relative to net income.
Balance Sheet and Leverage
- Total assets: $110.594 million; total liabilities: $221.929 million; total stockholders’ equity: -$83.919 million (negative equity)
- Long-term debt: $196.978 million; total debt: $196.978 million; net debt: $186.558 million
- Current ratio: 1.085x; quick ratio: 1.085x; cash ratio: 0.564x
- Interest coverage: 0.221x; debt to capitalization: 1.742x (high leverage with negative equity)
- Value indicators show a negative book value per share; price-to-book negative and price-to-sales around 2.14x (as per provided ratios)
Operational and Efficiency Signals
- Asset turnover: 0.131x; receivables/payables turnover show limited operational efficiency; operating cash flow per share: -$0.361; free cash flow per share: -$0.361
- Net income per EBT: 0.762; EBT per EBIT: -4.19; EBIT margin modest at ~5.9%
Notes on Guidance and Comparables
- No forward guidance provided in the QQ2 2025 filing within the supplied data. Benchmarking against hotel peers in broad terms suggests INTG trails on profitability and balance sheet strength, given major hotel operators typically exhibit positive equity, stronger EBITDA, and healthier debt service metrics. Pearson/peer comparisons in the dataset show significantly higher margins and more robust cash flow for established operators, indicating INTG’s current leverage and earnings dynamics are the primary constraints to valuation.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
14.44M
0.84%
-14.58%
Gross Profit
3.18M
50.62%
-43.82%
Operating Income
853.00K
163.37%
-72.74%
Net Income
-2.73M
-78.22%
-584.67%
EPS
-1.26
-82.61%
-600.00%
Key Financial Ratios
currentRatio
1.09
grossProfitMargin
22%
operatingProfitMargin
5.91%
netProfitMargin
-18.9%
returnOnAssets
-2.46%
returnOnEquity
3.25%
debtEquityRatio
-2.35
operatingCashFlowPerShare
$-0.36
freeCashFlowPerShare
$-0.36
priceToBookRatio
-0.37
priceEarningsRatio
-2.84
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Earnings call transcript for QQ2 2025 is not provided in the data set. Consequently, there are no management-depth quotes or thematic highlights to cite. If a transcript becomes available, we will extract management commentary on occupancy trends, capital deployment plans, refinancing strategies, and any asset-sale catalysts.
Transcript not available.
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Transcript not available.
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Forward Guidance
There is no explicit forward guidance disclosed for QQ2 2025 in the supplied materials. Given the leverage burden and negative equity, forward-looking commentary would plausibly focus on deleveraging efforts, refinancing milestones, and stabilizing or improving hotel-level cash flows. Investors should monitor: (a) occupancy levels and ADR trends that could lift revenue and EBITDA, (b) refinancings or debt maturities that could alter interest costs or covenants, (c) any planned asset dispositions to unlock liquidity, and (d) capital allocation that could improve liquidity runway. In the absence of formal guidance, our view is cautious: meaningful upside requires demonstrable deleveraging and operating leverage improvements to convert negative free cash flow into sustainable cash generation.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
INTG Focus
22.01%
5.91%
3.25%
-2.84%
HTHT
39.30%
25.60%
8.48%
17.97%
ATAT
42.10%
21.80%
11.40%
15.49%
LUXH
-1.22%
-1.45%
48.90%
-10.41%
IHG
24.70%
22.60%
-15.70%
12.32%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
CURRENT: The InterGroup Corporation faces a challenging near-term risk/return profile due to elevated leverage, negative equity, and limited cash flow from operations. The QQ2 2025 results show modest revenue and EBITDA strength but a substantial net loss driven by interest and non-operating expenses, underscoring solvency risk if operating performance deteriorates or debt markets tighten. The stock’s valuation is hampered by negative book value and weak cash flow metrics, with EV/Revenue and other valuation ratios reflecting elevated risk premiums.
ALTERNATIVE SCENARIOS: Catalysts that could improve the investment case include: (1) successful deleveraging via asset sales or refinancing at favorable terms, (2) meaningful occupancy/ADR improvements that lift hotel-level profitability, (3) asset re-pricing and potential portfolio optimization that could unlock latent value. Absent these catalysts, the outlook remains constrained due to financing dependence and fragile equity position.
RECOMMENDATION: Given the lack of management guidance and the current leverage/negative equity profile, investors should adopt a conservative stance, emphasize liquidity and covenant monitoring, and watch for concrete deleveraging milestones before re-rating the business more positively. Downside risks include aggressive debt service costs and potential liquidity stress in a weaker travel cycle.
Key Investment Factors
Growth Potential
Moderate near-term upside if occupancy and ADR improve, enabling higher EBITDA; potential value unlock from non-core asset sales or portfolio optimization; optionality through refinancing and favorable debt terms.
Profitability Risk
High leverage and negative equity create solvency and covenant risk; weak operating cash flow increases liquidity pressure; sensitivity to travel demand cycles and macroeconomic shocks; concentration of asset base and potential valuation volatility in real estate/investment holdings.
Financial Position
Aggressive leverage with negative book value equity; limited cushion in operating cash flow; liquidity supported by financing activities and existing cash, but debt service remains a critical constraint.
SWOT Analysis
Strengths
Prime hotel asset in San Francisco Financial District with 544 rooms and significant meeting space, offering potential value appreciation and resilience in urban markets.
Diversified asset base (Hotel Operations, Real Estate Operations, Investment Transactions) which could unlock value through asset recycling or strategic investments.
Some positive gross margin and a positive EBITDA in QQ2 2025, indicating operational profitability at the hotel level despite overall negative net income.
Weaknesses
Negative shareholders’ equity (~$83.9 million) and heavy long-term debt (~$197 million) create a fragile capital structure.
Negative net income and negative operating cash flow signal ongoing cash generation challenges.
Low liquidity buffer relative to debt obligations and covenant risk given interest burden and cash flow limitations.
Opportunities
Asset sales or portfolio optimization could reduce leverage and bolster liquidity.
Potential refinancing at more favorable terms to extend maturities and reduce interest burden.
Stabilization and growth of hotel occupancy/ADR could lift EBITDA and improve cash flow dynamics.
Threats
Macro travel downturns or regional economic weakness could compress occupancy and ADR, worsening margins.
Rising interest rates and tighter credit conditions could hinder refinancing and capital access.
Regulatory and covenant-related risks tied to a highly levered balance sheet and negative equity.