Ashford Reports Fourth Quarter And Year End 2018 Results

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DALLAS, Feb. 28, 2019 /PRNewswire/ -- Ashford Inc. AINC ("Ashford" or the "Company") today reported the following results and performance measures for the fourth quarter and year ended December 31, 2018.  Unless otherwise stated, all reported results compare the fourth quarter and year ended December 31, 2018, with the fourth quarter and year ended December 31, 2017 (see discussion below).  The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release. 

STRATEGIC OVERVIEW

  • High-growth, fee-based business model
  • Diversified platform of multiple fee generators
  • Seeks to grow in three primary areas:
    • Expanding existing platforms accretively, and accelerating performance to earn incentive fees;
    • Starting new platforms for additional base and incentive fees; and
    • Investing in or incubating strategic businesses that can achieve accelerated growth through doing business with our existing platforms, and by leveraging our deep knowledge and extensive relationships within the hospitality sector
  • Highly-aligned management team with superior long-term track record
  • Leader in asset and investment management for the real estate & hospitality sectors

FINANCIAL AND OPERATING HIGHLIGHTS

  • Net income attributable to common stockholders for the fourth quarter of 2018 totaled $0.3 million, or $0.14 per share, compared with a net loss of $7.4 million, or $3.58 per share, in the prior year quarter. Adjusted net income for the fourth quarter was $9.3 million, or $2.20 per diluted share, compared with $4.9 million, or $1.91 per diluted share, in the prior year quarter.
  • Total revenue for the fourth quarter of 2018 was $51.0 million, reflecting a growth rate of 72% over the prior year quarter. Total revenue for the full year 2018 was $195.5 million, reflecting a growth rate of 140% over the prior year.
  • Adjusted EBITDA for the fourth quarter was $8.0 million reflecting a growth rate of 65% over the prior year quarter. Adjusted EBITDA for the full year 2018 was $28.8 million, reflecting a growth rate of 65% over the prior year.
  • At the end of the fourth quarter of 2018, the Company had approximately $6.5 billion of assets under management.
  • In September and October, the Company completed an underwritten public offering of 280,000 shares of common stock resulting in net proceeds of approximately $19 million.
  • On January 17, 2019, the Company announced the new Enhanced Return Funding Program agreement with Braemar Hotels & Resorts.
  • As of December 31, 2018, the Company had corporate cash of $50.4 million.

ENHANCED RETURN FUNDING PROGRAM WITH BRAEMAR HOTELS & RESORTS

On January 17, 2019, the Company announced that it entered into an agreement with Braemar Hotels & Resorts, Inc. BHR ("Braemar") for the new Enhanced Return Funding Program ("ERFP" or the "Program").  Under the Program with Braemar, the Company has agreed to provide up to $50 million in connection with the acquisition by Braemar of additional hotels. Ashford will provide 10% of the purchase price of each hotel acquired by Braemar up to $500 million in total acquisitions.

Braemar's acquisition of the Ritz-Carlton Lake Tahoe located in Truckee, California, which was completed on January 15, 2019 for $103 million, is the first hotel acquisition by Braemar to benefit from the Program. In connection with this acquisition, and subject to the terms of the ERFP, the Company has committed to provide Braemar with approximately $10.3 million of cash via the future purchase of hotel furniture, fixtures, and equipment ("FF&E") at Braemar properties.

The Program is expected to generate attractive returns on invested capital for Ashford via incremental base advisory fees, potential incentive fees, fees for various products and services offered, and tax savings.   

ENHANCED RETURN FUNDING PROGRAM WITH ASHFORD TRUST

During the second quarter of 2018, the Company entered into an agreement with Ashford Hospitality Trust, Inc. AHT ("Ashford Trust" or "Trust") for an ERFP. Under the Program with Trust, the Company agreed to provide $50 million in connection with the acquisition by Trust of additional hotels. Ashford will provide 10% of the purchase price of each hotel acquired by Trust, and, to date, Trust has acquired four hotels for a combined $406 million under the Program.

During the quarter, Trust completed the acquisition of the La Posada de Santa Fe in Santa Fe, New Mexico for $50 million, which is the second hotel acquisition to benefit from the ERFP.  Also, during the quarter, the Company acquired $16.1 million in FF&E from Ashford Trust, fulfilling its ERFP obligation on the Hilton Alexandria Old Town and La Posada de Santa Fe acquisitions. 

Subsequent to quarter end, Trust completed the acquisition of the Embassy Suites New York Midtown Manhattan in New York, New York for $195 million, becoming the third hotel acquisition to benefit from the ERFP. In connection with the acquisition, the Company has committed to provide Ashford Trust with approximately $19.5 million of cash under the ERFP via the future purchase of FF&E at Trust properties.

Subsequent to quarter end, Trust completed the acquisition of the Hilton Santa Cruz/Scotts Valley in Santa Cruz, California for $50 million, becoming the fourth hotel acquisition to benefit from the ERFP. In connection with the acquisition, the Company has committed to provide Ashford Trust with approximately $5 million of cash under the ERFP via the future purchase of FF&E at Trust properties.

PREMIER PROJECT MANAGEMENT UPDATE

In August 2018, the Company completed the acquisition of Premier Project Management ("Premier") for $203 million.  Premier provides comprehensive and cost-effective design, development, and project management services. It provides project oversight, coordination, planning, and execution of renovation, capital expenditure or ground-up development projects. Its operations are responsible for managing and implementing substantially all capital improvements at Ashford Trust and Braemar hotels. Additionally, it has extensive experience working with many of the major hotel brands in the areas of renovating, converting, developing or repositioning hotels. Premier produced Adjusted EBITDA of $3.7 million in the fourth quarter and $5.4 million since the acquisition.

J&S AUDIO VISUAL UPDATE

The Company currently owns an 85% controlling interest in a privately-held company that conducts the business of J&S Audio Visual in the United States, Mexico, and the Dominican Republic ("J&S"). J&S provides an integrated suite of audio visual services, including show and event services, hospitality services, creative services, and design and integration, making J&S a leading single-source solution for their clients' meeting and event needs.  The Company's 85% interest in J&S resulted in Adjusted EBITDA of $0.3 million in the fourth quarter, which is consistent with historical seasonality, and $5.1 million in Adjusted EBITDA for the full year.  Additionally, as of the end of the fourth quarter, J&S had multi-year contracts in place with 74 hotels and convention centers, in addition to regular business representing over 2,500 annual events and productions, 500 venue locations, and 650 clients.

FINANCIAL RESULTS

Net income attributable to common stockholders for the quarter totaled $0.3 million, or $0.14 per share, compared with a net loss of $7.4 million, or $3.58 per share, in the prior year quarter.  Adjusted net income for the quarter was $9.3 million, or $2.20 per diluted share, compared with $4.9 million, or $1.91 per diluted share, in the prior year quarter.

For the quarter ended December 31, 2018, base advisory fee revenue was $11.4 million, which reflected a growth rate of 4.0% over the prior year quarter.  The base advisory fee revenue in the fourth quarter was comprised of $8.9 million from Ashford Trust and $2.5 million from Braemar.

Adjusted EBITDA for the quarter was $8.0 million, compared with $4.8 million for the fourth quarter of 2017, reflecting a growth rate of 65%.

For 2018, the Company earned a $2.0 million incentive fee from Braemar.  The incentive fee will be paid and recognized as revenue by the Company over a three-year period, subject to the FCCR condition in accordance with the advisory agreement. 

CAPITAL STRUCTURE

At the end of the fourth quarter of 2018, the Company had approximately $6.5 billion of assets under management from its advised platforms.  The Company had corporate cash of $50.4 million, 2.8 million fully diluted shares, and a current fully diluted equity market capitalization of approximately $165 million.  The Company's financial results include 1.45 million common shares associated with its Series B convertible preferred stock.  The Company had $18.0 million of loans at December 31, 2018, of which approximately $2.8 million related to its joint venture partners' share of those loans.

In September and October 2018, the Company completed its underwritten public offering of 280,000 shares of common stock at a price to the public of $74.50 per share.  Total net proceeds from the offering, after deducting the underwriters' discounts, commissions and offering expenses, were approximately $19 million.

QUARTERLY HIGHLIGHTS FOR ADVISED PLATFORMS

ASHFORD TRUST HIGHLIGHTS

  • During the quarter, Trust completed the acquisition of the 157-room La Posada de Santa Fe in Santa Fe, New Mexico for $50 million. This was the second Trust acquisition to benefit from the ERFP.
  • Subsequent to quarter end, Trust completed the acquisition of the 310-room Embassy Suites New York Midtown Manhattan in New York, New York for $195 million. This was the third Trust acquisition to benefit from the ERFP.
  • Subsequent to quarter end, Trust completed the acquisition of the 178-room Hilton Santa Cruz/Scotts Valley in Santa Cruz, California for $50 million. This was the fourth Trust acquisition to benefit from the ERFP.

BRAEMAR HOTELS & RESORTS HIGHLIGHTS

  • During the quarter, Braemar completed an offering of its 8.25% Series D Cumulative Preferred Stock raising net proceeds of approximately $38.7 million, which were used to partially fund the acquisition of the Ritz-Carlton Lake Tahoe.
  • Braemar remains on track with its Autograph Collection conversions at both the Courtyard Philadelphia Downtown and Courtyard San Francisco Downtown.
  • Subsequent to quarter end, Braemar entered into the new Enhanced Return Funding Program with Ashford Inc.
  • Subsequent to quarter end, Braemar completed the acquisition of the 170-room Ritz-Carlton Lake Tahoe in Truckee, California for $103 million. This was the first Braemar acquisition to benefit from the ERFP.
  • Subsequent to quarter end, Braemar refinanced a mortgage loan with an existing outstanding balance totaling approximately $187 million with a new mortgage loan totaling $195 million.

"We are pleased with our operating results for 2018, which reflect the diligent execution of our strategy focused on growing our advised platforms and acquiring growth-oriented hospitality-related businesses," commented Monty J. Bennett, Ashford's Chairman and Chief Executive Officer. "During the year, through the acquisition of Premier Project Management, we added scale, diversification and enhanced our competitive position in the hospitality industry, and we also continued to benefit from strong growth within our service businesses.  We remain extremely excited about our Enhanced Return Funding Program with our advised platforms and so far have successfully partnered with them on the acquisition of five high-quality hotels totaling over $500 million in new assets.  We believe these two ERFP Programs should continue to create substantial growth in assets under management for us while also delivering attractive returns to our shareholders and the shareholders of our advised platforms.  Looking ahead to 2019, we are well-positioned to continue to successfully execute on our strategy."

INVESTOR CONFERENCE CALL AND SIMULCAST

The Company will conduct a conference call on Friday, March 1, 2019, at 12:00 p.m. ET.  The number for this interactive teleconference is (323) 794-2093.  A replay of the conference call will be available through Friday, March 8, 2019, by dialing (719) 457-0820 and entering the confirmation number 8529693.

The Company will also provide an online simulcast and rebroadcast of its fourth quarter 2018 earnings release conference call.  The live broadcast of the Company's quarterly conference call will be available online at the Company's web site, www.ashfordinc.com on Friday, March 1, 2019, beginning at 12:00 p.m. ET.  The online replay will follow shortly after the call and continue for approximately one year.

Included in this press release are certain supplemental measures of performance which are not measures of operating performance under GAAP, to assist investors in evaluating the Company's historical or future financial performance. These supplemental measures include adjusted earnings before interest, tax, depreciation and amortization ("Adjusted EBITDA") and Adjusted Net Income. We believe that Adjusted EBITDA and Adjusted Net Income provide investors and management with a meaningful indicator of operating performance. Management also uses Adjusted EBITDA and Adjusted Net Income, among other measures, to evaluate profitability and our board of directors includes these measures in reviews to determine quarterly distributions to stockholders. We calculate Adjusted EBITDA by subtracting or adding to net income (loss): interest expense, income taxes, depreciation, amortization, net income (loss) to noncontrolling interests, transaction costs, and other expenses. We calculate Adjusted Net Income by subtracting or adding to net income (loss): net income (loss) to noncontrolling interests, transaction costs, and other expenses. Our methodology for calculating Adjusted EBITDA and Adjusted Net Income may differ from the methodologies used by other comparable companies, when calculating the same or similar supplemental financial measures and may not be comparable with these companies. Neither Adjusted EBITDA nor Adjusted Net Income represents cash generated from operating activities as determined by GAAP and should not be considered as an alternative to a) GAAP net income (loss) as an indication of our financial performance or b) GAAP cash flows from operating activities as a measure of our liquidity nor are such measures indicative of funds available to satisfy our cash needs. The Company urges investors to carefully review the U.S. GAAP financial information as shown in our periodic reports on Form 10-Q and Form 10-K, as amended and our Current Report on Form 8-K to reflect the acquisition of the Remington project management business.

*  *  *  *  *

Ashford provides global asset management, investment management and related services to the real estate and hospitality sectors.

Follow Chairman and CEO Monty Bennett on Twitter at www.twitter.com/MBennettAshford or @MBennettAshford.

Ashford has created an Ashford App for the hospitality REIT investor community.  The Ashford App is available for free download at Apple's App Store and the Google Play Store by searching "Ashford."

Forward Looking Statements

Certain statements and assumptions in this press release contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties. When we use the words "will likely result," "may," "can," "anticipate," "estimate," "should," "expect," "believe," "intend," or similar expressions, we intend to identify forward-looking statements. Such statements are subject to numerous assumptions and uncertainties, many of which are outside Ashford's control.

These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated, including, without limitation:  adverse litigation or regulatory developments; general volatility of the capital markets and the market price of our common stock; changes in our business or investment strategy; availability, terms and deployment of capital; availability of qualified personnel; changes in our industry and the market in which we operate, interest rates or the general economy; the degree and nature of our competition; risks associated with the Remington Project Management business combination transaction, such as the risk that the Project Management business will not be integrated successfully, that such integration may be more difficult, time-consuming or costly than expected or that the expected benefits of the acquisition will not be realized. These and other risk factors are more fully discussed in Ashford's filings with the Securities and Exchange Commission (SEC) including Ashford's definitive proxy statement filed with the SEC on July 12, 2018 and Ashford's 10-K filed with the SEC on March 12, 2018. 

The forward-looking statements included in this press release are only made as of the date of this press release. Investors should not place undue reliance on these forward-looking statements. We are not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, changes in expectations or otherwise.

 

 

ASHFORD INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share and per share amounts)





December 31, 2018



December 31, 2017

ASSETS







Current assets:







Cash and cash equivalents

$

51,529





$

36,480



Restricted cash

7,914





9,076



Accounts receivable, net

4,928





5,127



Due from affiliates

45







Due from Ashford Trust OP

5,293





13,346



Due from Braemar OP

1,996





1,738



Inventories

1,202





1,066



Prepaid expenses and other

3,902





2,913



Total current assets

76,809





69,746



Investments in unconsolidated entities

500





500



Furniture, fixtures and equipment, net

47,947





21,154



Goodwill

59,683





12,947



Intangible assets, net

193,194





9,713



Other assets

872





750



Total assets

$

379,005





$

114,810



LIABILITIES







Current liabilities:







Accounts payable and accrued expenses

$

24,880





$

20,451



Due to affiliates

2,032





4,272



Deferred income

148





459



Deferred compensation plan

173





311



Notes payable, net

2,595





1,751



Other liabilities

8,418





9,076



Total current liabilities

38,246





36,320



Accrued expenses





78



Deferred income

13,396





13,440



Deferred tax liability, net

31,506







Deferred compensation plan

10,401





18,948



Notes payable, net

15,177





9,956



Total liabilities

108,726





78,742



MEZZANINE EQUITY







Series B cumulative convertible preferred stock, $25 par value, 8,120,000 shares issued and outstanding, 

     net of discount at December 31, 2018

200,847







Redeemable noncontrolling interests

3,531





5,111



EQUITY







Preferred stock, $0.01 par value, 50,000,000 shares authorized:







Series A cumulative preferred stock, no shares issued and outstanding at December 31, 2018 and 

     December 31, 2017







Common stock, $0.01 par value, 100,000,000 shares authorized, 2,391,541 and 2,093,556 shares issued 

     and outstanding at December 31, 2018 and December 31, 2017, respectively

24





21



Additional paid-in capital

280,159





249,695



Accumulated deficit

(214,242)





(219,396)



Accumulated other comprehensive income (loss)

(498)





(135)



Total stockholders' equity of the Company

65,443





30,185



Noncontrolling interests in consolidated entities

458





772



Total equity

65,901





30,957



Total liabilities and equity

$

379,005





$

114,810



 

ASHFORD INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share amounts)





Three Months Ended



Year Ended



December 31,



December 31,



2018



2017



2018



2017

REVENUE















Advisory services:















Base advisory fee

$

11,365





$

10,924





$

44,905





$

43,523



Incentive advisory fee

1,131





771





2,487





3,083



Reimbursable expenses

2,785





2,251





9,837





9,705



Non-cash stock/unit-based compensation

5,946





3,945





31,726





9,394



Other advisory revenue

131





131





521





277



Audio visual

19,974





9,186





81,186





9,186



Project management

7,018









10,634







Other

2,626





2,458





14,224





6,405



Total revenue

50,976





29,666





195,520





81,573



EXPENSES















Salaries and benefits

7,243





16,033





37,853





43,610



Non-cash stock/unit-based compensation

8,017





6,044





41,917





17,863



Cost of revenues for audio visual

16,555





7,757





64,555





7,757



Cost of revenues for project management

1,978









3,167







Depreciation and amortization

4,137





891





9,342





2,527



General and administrative

7,137





4,870





34,356





17,113



Impairment









1,919





1,072



Other

1,078





1,535





3,250





2,153



Total operating expenses

46,145





37,130





196,359





92,095



OPERATING INCOME (LOSS)

4,831





(7,464)





(839)





(10,522)



Interest expense

(366)





(72)





(959)





(83)



Amortization of loan costs

(64)





(15)





(241)





(39)



Interest income

41





91





329





244



Dividend income













93



Unrealized gain (loss) on investments













203



Realized gain (loss) on investments













(294)



Other income (expense)

(496)





(47)





(834)





(73)



INCOME (LOSS) BEFORE INCOME TAXES

3,946





(7,507)





(2,544)





(10,471)



Income tax (expense) benefit

(1,229)





(475)





10,364





(9,723)



NET INCOME (LOSS)

2,717





(7,982)





7,820





(20,194)



(Income) loss from consolidated entities attributable to noncontrolling

interests

220





91





924





358



Net (income) loss attributable to redeemable noncontrolling interests

621





489





1,438





1,484



NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY

3,558





(7,402)





10,182





(18,352)



Preferred dividends

(2,791)









(4,466)







Amortization of preferred stock discount

(427)









(730)







NET INCOME (LOSS) ATTRIBUTABLE TO COMMON

STOCKHOLDERS

$

340





$

(7,402)





$

4,986





$

(18,352)



















INCOME (LOSS) PER SHARE - BASIC AND DILUTED















Basic:















Net income (loss) attributable to common stockholders

$

0.14





$

(3.58)





$

2.29





$

(9.04)



Weighted average common shares outstanding - basic

2,381





2,069





2,170





2,031



Diluted:















Net income (loss) attributable to common stockholders

$

(1.96)





$

(3.72)





$

(2.11)





$

(9.59)



Weighted average common shares outstanding - diluted

2,652





2,118





2,332





2,067



 

ASHFORD INC. AND SUBSIDIARIES

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA

(unaudited, in thousands)





Three Months Ended



Year Ended



December 31,



December 31,



2018



2017



2018



2017

Net income (loss)

$

2,717





$

(7,982)





$

7,820





$

(20,194)



(Income) loss from consolidated entities attributable to noncontrolling

interests

220





91





924





358



Net (income) loss attributable to redeemable noncontrolling interests

621





489





1,438





1,484



Net income (loss) attributable to the company

3,558





(7,402)





10,182





(18,352)



Interest expense

313





60





826





68



Amortization of loan costs

59





10





215





23



Depreciation and amortization

4,788





1,182





12,330





2,799



Income tax expense (benefit)

1,217





475





(10,431)





9,723



Net income (loss) attributable to redeemable noncontrolling

interests (1)





(15)





9





(19)



EBITDA

9,935





(5,690)





13,131





(5,758)



Equity-based compensation

1,960





2,092





10,013





8,440



Market change in deferred compensation plan

(4,904)





6,737





(8,444)





10,410



Change in contingent consideration fair value





1,066





338





1,066



Transaction costs

836





593





11,213





2,906



Software implementation costs





17





45





165



Reimbursed software costs

(462)





(218)





(1,627)





(710)



Impairment









1,919







Dead deal costs

8









17







Realized and unrealized (gain) loss on derivatives













41



Legal and settlement costs





(8)





(50)





470



Severance costs

3









1,319





170



Amortization of hotel signing fees and lock subsidies

245





174





628





174



Other (gain) loss on disposal of assets

279









188







Foreign currency transactions (gain) loss

55





51





60





51



Adjusted EBITDA

$

7,955





$

4,814





$

28,750





$

17,425





(1) Represents the 0.2% interest in Ashford Hospitality Advisors, LLC prior to our legal entity restructuring on April 6, 2017 and 0.2% interest in Ashford Hospitality Holdings, LLC thereafter.

 

ASHFORD INC. AND SUBSIDIARIES

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME (LOSS)

(unaudited, in thousands, except per share amounts)





Three Months Ended



Year Ended



December 31,



December 31,



2018



2017



2018



2017

Net income (loss)

$

2,717





$

(7,982)





$

7,820





$

(20,194)



(Income) loss from consolidated entities attributable to noncontrolling

interests

220





91





924





358



Net (income) loss attributable to redeemable noncontrolling interests

621





489





1,438





1,484



Preferred dividends

(2,791)









(4,466)







Amortization of preferred stock discount

(427)









(730)







Net income (loss) attributable to common stockholders

340





(7,402)





4,986





(18,352)



Amortization of loan costs

59





10





215





23



Depreciation and amortization

4,788





1,182





12,330





2,799



Net income (loss) attributable to redeemable noncontrolling

interests (1)





(15)





9





(19)



Preferred dividends

2,791









4,466







Amortization of preferred stock discount

427









730







Equity-based compensation

1,960





2,092





10,013





8,440



Market change in deferred compensation plan

(4,904)





6,737





(8,444)





10,410



Change in contingent consideration fair value





1,066





338





1,066



Transaction costs

836





593





11,213





2,906



Software implementation costs





17





45





165



Reimbursed software costs

(462)





(218)





(1,627)





(710)



Impairment









1,919







Dead deal costs

8









17







Realized and unrealized (gain) loss on derivatives













41



Legal and settlement costs





(8)





(50)





470



Severance costs

3









1,319





170



Amortization of hotel signing fees and lock subsidies

245





174





628





174



Other (gain) loss on disposal of assets

279









188







Foreign currency transactions (gain) loss

55





51





60





51



GAAP income tax expense (benefit)

1,217





475





(10,431)





9,723



Adjusted income tax (expense) benefit (2) (3)

1,691





155





(1,809)





(1,290)



Adjusted net income

$

9,333





$

4,909





$

26,115





$

16,067



Adjusted net income per diluted share available to common

stockholders

$

2.20





$

1.91





$

8.01





$

6.75



Weighted average diluted shares

4,236





2,572





3,262





2,381



















Components of weighted average diluted shares















Common shares

2,385





2,072





2,174





2,037



Series B cumulative convertible preferred stock

1,450









575







Deferred compensation plan

205





208





206





209



Stock options

121





243





239





99



OpenKey put option

31





23





24





30



J&S put option

35





26





35





6



Restricted shares

9









9







Weighted average diluted shares

4,236





2,572





3,262





2,381



















Reconciliation of income tax expense (benefit) to adjusted income

tax (expense) benefit















GAAP Income tax (expense) benefit

$

(1,229)





$

(475)





$

10,364





$

(9,723)



Less current income tax (expense) benefit attributable to

noncontrolling interests

(12)









(67)







GAAP Income tax (expense) benefit excluding noncontrolling

interests

(1,217)





(475)





10,431





(9,723)



Less deferred income tax (expense) benefit

(2,908)









12,240







Less adjustment to income tax expense from restructuring





(630)









(8,433)



Adjusted income tax (expense) benefit (2) (3)

$

1,691





$

155





$

(1,809)





$

(1,290)





(1) Represents the 0.2% interest in Ashford Hospitality Advisors, LLC prior to the legal restructuring of our organizational structure on April 6, 2017 and 0.2% interest in Ashford Hospitality Holdings, LLC thereafter.



(2) Beginning in 2018, income tax expense (benefit) is adjusted to exclude the effects of deferred income tax expense (benefit) because current income tax expense (benefit) (i) provides a more accurate period-over-period comparison of the ongoing operating performance of our advisory and hospitality products and services businesses, and (ii) provides more useful information to investors regarding our economic performance inclusive of the impacts from the Tax Cuts and Jobs Act beginning January 1, 2018. See Note 12 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2017.



(3) Prior period amounts represent the impact of our second quarter 2017 legal entity restructuring on income tax expense for the three and twelve month periods ended December 31, 2017.



 

ASHFORD INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA, ADJUSTED EBITDA AND ADJUSTED NET INCOME (LOSS) BY SEGMENT

(unaudited, in thousands, except per share amounts)





Three Months Ended December 31, 2018



Three Months Ended December 31, 2017



REIT

Advisory



Hospitality Products & Services



Corporate/

Other



Ashford Inc. Consolidated



REIT

Advisory



Hospitality Products & Services



Corporate/

Other



Ashford Inc. Consolidated

REVENUE































Advisory services:































Base advisory fee - Trust

$

8,871





$





$





$

8,871





$

8,704





$





$





$

8,704



Incentive advisory fee - Trust

453













453





453













453



Reimbursable expenses - Trust

2,260













2,260





1,698













1,698



Non-cash stock/unit-based compensation - Trust

4,705













4,705





3,329













3,329



Base advisory fee - Braemar

2,494













2,494





2,220













2,220



Incentive advisory fee - Braemar

678













678





318













318



Reimbursable expenses - Braemar

525













525





553













553



Non-cash stock/unit-based compensation - Braemar

1,241













1,241





616













616



Other advisory revenue - Braemar

131













131





131













131



Audio visual





19,974









19,974









9,186









9,186



Project management





7,018









7,018



















Other

769





1,857









2,626





1,657





801









2,458



Total revenue

22,127





28,849









50,976





19,679





9,987









29,666



EXPENSES































Salaries and benefits





3,688





7,929





11,617









1,592





7,382





8,974



Market change in deferred compensation plan









(4,904)





(4,904)













6,737





6,737



REIT non-cash stock/unit-based compensation expense

5,946





109









6,055





3,945













3,945



AINC and subsidiary non-cash stock/unit-based compensation expense





4





1,958





1,962









12





2,087





2,099



Reimbursable expenses

2,785













2,785





2,251













2,251



Cost of audio visual revenues





16,555









16,555









7,757









7,757



Cost of project management revenues





1,978









1,978



















General and administrative





3,171





1,711





4,882









1,433





1,508





2,941



Depreciation and amortization

562





3,458





117





4,137





376





344





171





891



Other





1,080





(2)





1,078









469





1,066





1,535



Total operating expenses

9,293





30,043





6,809





46,145





6,572





11,607





18,951





37,130



OPERATING INCOME (LOSS)

12,834





(1,194)





(6,809)





4,831





13,107





(1,620)





(18,951)





(7,464)



Other





(841)





(44)





(885)









(134)





91





(43)



INCOME (LOSS) BEFORE INCOME TAXES

12,834





(2,035)





(6,853)





3,946





13,107





(1,754)





(18,860)





(7,507)



Income tax (expense) benefit

(4,525)





152





3,144





(1,229)





(5,429)





280





4,674





(475)



NET INCOME (LOSS)

8,309





(1,883)





(3,709)





2,717





7,678





(1,474)





(14,186)





(7,982)



(Income) loss from consolidated entities attributable to noncontrolling interests





220









220









91









91



Net (income) loss attributable to redeemable noncontrolling interests





621









621









474





15





489



NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY

$

8,309





$

(1,042)





$

(3,709)





$

3,558





$

7,678





$

(909)





$

(14,171)





$

(7,402)



Interest expense





277





36





313









60









60



Amortization of loan costs





14





45





59









10









10



Depreciation and amortization

562





4,109





117





4,788





376





635





171





1,182



Income tax expense (benefit)

4,525





(164)





(3,144)





1,217





5,429





(280)





(4,674)





475



Net income (loss) attributable to redeemable noncontrolling interests (1)

























(15)





(15)



EBITDA

13,396





3,194





(6,655)





9,935





13,483





(484)





(18,689)





(5,690)



Equity-based compensation





1





1,959





1,960









5





2,087





2,092



Market change in deferred compensation plan









(4,904)





(4,904)













6,737





6,737



Change in contingent consideration fair value

























1,066





1,066



Transaction costs





6





830





836









3





590





593



Software implementation costs

















16









1





17



Reimbursed software costs, net

(462)













(462)





(218)













(218)



Dead deal costs









8





8



















Legal and settlement costs

























(8)





(8)



Severance costs





3









3



















Amortization of hotel signing fees and lock subsidies





245









245









174









174



Other (gain) loss on disposal of assets





279









279



















Foreign currency transactions (gain) loss





55









55









51









51



Adjusted EBITDA

12,934





3,783





(8,762)





7,955





13,281





(251)





(8,216)





4,814



Interest expense





(277)





(36)





(313)









(60)









(60)



Adjusted income tax (expense) benefit

(275)





(62)





2,028





1,691





(5,429)





280





4,674





(475)



Adjustment to income tax expense from restructuring

























630





630



Adjusted net income (loss)

$

12,659





$

3,444





$

(6,770)





$

9,333





$

7,852





$

(31)





$

(2,912)





$

4,909



Adjusted net income (loss) per diluted share available to common stockholders (2)

$

2.99





$

0.81





$

(1.60)





$

2.20





$

3.05





$

(0.01)





$

(1.13)





$

1.91



Weighted average diluted shares

4,236





4,236





4,236





4,236





2,572





2,572





2,572





2,572





(1)     Represents the 0.2% interest in Ashford Hospitality Advisors, LLC prior to our legal entity restructuring on April 6, 2017 and 0.2% interest in Ashford Hospitality Holdings, LLC thereafter.

(2)      The sum of the adjusted net income (loss) per diluted share available to common stockholders as calculated for the segments may differ from the consolidated total due to rounding.

 

ASHFORD INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA, ADJUSTED EBITDA AND ADJUSTED NET INCOME (LOSS) BY SEGMENT

(unaudited, in thousands, except per share amounts)





Year Ended December 31, 2018



Year Ended December 31, 2017



REIT

Advisory



Hospitality Products & Services



Corporate/

Other



Ashford Inc. Consolidated



REIT

Advisory



Hospitality Products & Services



Corporate/

Other



Ashford Inc. Consolidated

REVENUE































Advisory services:































Base advisory fee - Trust

$

35,482





$





$





$

35,482





$

34,724





$





$





$

34,724



Incentive advisory fee - Trust

1,809













1,809





1,809













1,809



Reimbursable expenses - Trust

7,905













7,905





7,600













7,600



Non-cash stock/unit-based compensation - Trust

25,245













25,245





11,077













11,077



Base advisory fee - Braemar

9,423













9,423





8,799













8,799



Incentive advisory fee - Braemar

678













678





1,274













1,274



Reimbursable expenses - Braemar

1,932













1,932





2,105













2,105



Non-cash stock/unit-based compensation - Braemar

6,481













6,481





(1,683)













(1,683)



Other advisory revenue - Braemar

521













521





277













277



Audio visual





81,186









81,186









9,186









9,186



Project management





10,634









10,634



















Other

8,467





5,757









14,224





4,006





2,399









6,405



Total revenue

97,943





97,577









195,520





69,988





11,585









81,573



EXPENSES































Salaries and benefits





11,325





33,412





44,737









3,351





28,561





31,912



Market change in deferred compensation plan









(8,444)





(8,444)













10,410





10,410



REIT non-cash stock/unit-based compensation expense

31,726





173









31,899





9,394













9,394



AINC and subsidiary non-cash stock/unit-based compensation expense





10





10,008





10,018









39





8,430





8,469



Reimbursable expenses

9,837













9,837





9,705













9,705



Cost of audio visual revenues





64,555









64,555









7,757









7,757



Cost of project management revenues





3,167









3,167



















General and administrative





11,410





14,669





26,079









2,998





5,698





8,696



Depreciation and amortization

2,129





6,685





528





9,342





1,373





394





760





2,527



Impairment

1,863









56





1,919





1,041









31





1,072



Other





2,913





337





3,250









1,087





1,066





2,153



Total operating expenses

45,555





100,238





50,566





196,359





21,513





15,626





54,956





92,095



OPERATING INCOME (LOSS)

52,388





(2,661)





(50,566)





(839)





48,475





(4,041)





(54,956)





(10,522)



Other





(1,764)





59





(1,705)









(181)





232





51



INCOME (LOSS) BEFORE INCOME TAXES

52,388





(4,425)





(50,507)





(2,544)





48,475





(4,222)





(54,724)





(10,471)



Income tax (expense) benefit

(12,566)





(175)





23,105





10,364





(18,324)





280





8,321





(9,723)



NET INCOME (LOSS)

39,822





(4,600)





(27,402)





7,820





30,151





(3,942)





(46,403)





(20,194)



(Income) loss from consolidated entities attributable to noncontrolling interests





924









924









504





(146)





358



Net (income) loss attributable to redeemable noncontrolling interests





1,447





(9)





1,438









1,465





19





1,484



NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY

$

39,822





$

(2,229)





$

(27,411)





$

10,182





$

30,151





$

(1,973)





$

(46,530)





$

(18,352)



Interest expense





708





118





826









68









68



Amortization of loan costs





65





150





215









23









23



Depreciation and amortization

2,129





9,673





528





12,330





1,373





666





760





2,799



Income tax expense (benefit)

12,566





108





(23,105)





(10,431)





18,324





(280)





(8,321)





9,723



Net income (loss) attributable to redeemable noncontrolling interests (1)









9





9













(19)





(19)



EBITDA

54,517





8,325





(49,711)





13,131





49,848





(1,496)





(54,110)





(5,758)



Equity-based compensation





4





10,009





10,013









10





8,430





8,440



Market change in deferred compensation plan









(8,444)





(8,444)













10,410





10,410



Change in contingent consideration fair value









338





338













1,066





1,066



Transaction costs





76





11,137





11,213









170





2,736





2,906



Software implementation costs









45





45





160









5





165



Reimbursed software costs, net

(1,627)













(1,627)





(741)









31





(710)



Impairment

1,863









56





1,919



















Dead deal costs









17





17



















Realized and unrealized (gain) loss on derivatives

























41





41



Legal and settlement costs









(50)





(50)













470





470



Severance costs





18





1,301





1,319









88





82





170



Amortization of hotel signing fees and lock subsidies





628









628









174









174



Other (gain) loss on disposal of assets





188









188



















Foreign currency transactions (gain) loss





60









60









51









51



Adjusted EBITDA

54,753





9,299





(35,302)





28,750





49,267





(1,003)





(30,839)





17,425



Interest expense





(708)





(118)





(826)









(68)









(68)



Adjusted income tax (expense) benefit

(7,206)





143





5,254





(1,809)





(18,324)





280





8,321





(9,723)



Adjustment to income tax expense from restructuring

























8,433





8,433



Adjusted net income (loss)

$

47,547





$

8,734





$

(30,166)





$

26,115





$

30,943





$

(791)





$

(14,085)





$

16,067



Adjusted net income (loss) per diluted share available to common stockholders (2)

$

14.58





$

2.68





$

(9.25)





$

8.01





$

13.00





$

(0.33)





$

(5.92)





$

6.75



Weighted average diluted shares

3,262





3,262





3,262





3,262





2,381





2,381





2,381





2,381





(1)     Represents the 0.2% interest in Ashford Hospitality Advisors, LLC prior to our legal entity restructuring on April 6, 2017 and 0.2% interest in Ashford Hospitality Holdings, LLC thereafter.

(2)      The sum of the adjusted net income (loss) per diluted share available to common stockholders as calculated for the segments may differ from the consolidated total due to rounding.

 

ASHFORD INC. AND SUBSIDIARIES

HOSPITALITY PRODUCTS & SERVICES

CONSOLIDATED STATEMENTS OF OPERATIONS AND

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA, ADJUSTED EBITDA AND ADJUSTED NET INCOME (LOSS)

(unaudited, in thousands, except per share amounts)





Three Months Ended December 31, 2018



Three Months Ended December 31, 2017



Premier



J&S



OpenKey



Other (1)



Hospitality Products & Services



Premier



J&S



OpenKey



Other (1)



Hospitality Products & Services

REVENUE







































Audio visual

$





$

19,974





$





$





$

19,974





$





$

9,186





$





$





$

9,186



Project management

7,018

















7,018























Other









226





1,631





1,857













187





614





801



Total revenue

7,018





19,974





226





1,631





28,849









9,186





187





614





9,987



EXPENSES







































Salaries and benefits

888





2,076





392





332





3,688









868





553





171





1,592



REIT non-cash stock/unit-based

compensation expense

109

















109























AINC and subsidiary non-cash

stock/unit-based compensation

expense









4









4













12









12



Cost of audio visual revenues





16,555













16,555









7,757













7,757



Cost of project management

revenues

1,978

















1,978























General and administrative

362





1,964





523





322





3,171









1,030





299





104





1,433



Depreciation and amortization

2,740





691





7





20





3,458









319





8





17





344



Other









246





834





1,080













166





303





469



Total operating expenses

6,077





21,286





1,172





1,508





30,043









9,974





1,038





595





11,607



OPERATING INCOME (LOSS)

941





(1,312)





(946)





123





(1,194)









(788)





(851)





19





(1,620)



Other





(823)





(5)





(13)





(841)









(121)





(4)





(9)





(134)



INCOME (LOSS) BEFORE

INCOME TAXES

941





(2,135)





(951)





110





(2,035)









(909)





(855)





10





(1,754)



Income tax (expense) benefit

(232)





415









(31)





152









252









28





280



NET INCOME (LOSS)

709





(1,720)





(951)





79





(1,883)









(657)





(855)





38





(1,474)



(Income) loss from consolidated

entities attributable to

noncontrolling interests









241





(21)





220









(49)





142





(2)





91



Net (income) loss attributable to

redeemable noncontrolling

interests





332





289









621









136





338









474



NET INCOME (LOSS)

ATTRIBUTABLE TO THE

COMPANY

$

709





$

(1,388)





$

(421)





$

58





$

(1,042)





$





$

(570)





$

(375)





$

36





$

(909)



Interest expense





239









38





277









58









2





60



Amortization of loan costs





10





2





2





14









5





1





4





10



Depreciation and amortization

2,740





1,297





3





69





4,109









608





3





24





635



Income tax expense (benefit)

232





(427)









31





(164)









(252)









(28)





(280)



EBITDA

3,681





(269)





(416)





198





3,194









(151)





(371)





38





(484)



Equity-based compensation









1









1













5









5



Transaction costs





6













6

















3





3



Severance costs









3









3























Amortization of hotel signing fees

and lock subsidies





234





11









245









152





22









174



Other (gain) loss on disposal of

assets





250





29









279























Foreign currency transactions

(gain) loss





55













55









51













51



Adjusted EBITDA

3,681





276





(372)





198





3,783









52





(344)





41





(251)



Interest expense





(239)









(38)





(277)









(58)









(2)





(60)



Adjusted income tax (expense)

benefit

(704)





622









20





(62)









252









28





280



Adjusted net income (loss)

$

2,977





$

659





$

(372)





$

180





$

3,444





$





$

246





$

(344)





$

67





$

(31)



Adjusted net income (loss) per

diluted share available to common

stockholders (2)

$

0.70





$

0.16





$

(0.09)





$

0.04





$

0.81





$





$

0.10





$

(0.13)





$

0.03





$

(0.01)



Weighted average diluted shares

4,236





4,236





4,236





4,236





4,236





2,572





2,572





2,572





2,572





2,572





(1)     Represents Pure Wellness, and for the three months ended December 31, 2018, also includes RED Hospitality & Leisure LLC.

(2)      The sum of the adjusted net income (loss) per diluted share available to common stockholders as calculated for the subsidiaries may differ from the Hospitality Products & Services total due to rounding.

 

ASHFORD INC. AND SUBSIDIARIES

HOSPITALITY PRODUCTS & SERVICES

CONSOLIDATED STATEMENTS OF OPERATIONS AND

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA, ADJUSTED EBITDA AND ADJUSTED NET INCOME (LOSS)

(unaudited, in thousands, except per share amounts)





Year Ended December 31, 2018



Year Ended December 31, 2017



Premier



J&S



OpenKey



Other (1)



Hospitality Products & Services



Premier



J&S



OpenKey



Other (1)



Hospitality Products & Services

REVENUE







































Audio visual

$





$

81,186





$





$





$

81,186





$





$

9,186





$





$





$

9,186



Project management

10,634

















10,634























Other









999





4,758





5,757













327





2,072





2,399



Total revenue

10,634





81,186





999





4,758





97,577









9,186





327





2,072





11,585



EXPENSES







































Salaries and benefits

1,386





6,644





2,051





1,244





11,325









868





1,816





667





3,351



REIT non-cash stock/unit-based

compensation expense

173

















173























AINC and subsidiary non-cash

stock/unit-based compensation

expense









10









10













39









39



Cost of audio visual revenues





64,555













64,555









7,757













7,757



Cost of project management

revenues

3,167

















3,167























General and administrative

534





7,994





1,783





1,099





11,410









1,030





1,431





537





2,998



Depreciation and amortization

4,358





2,221





27





79





6,685









319





25





50





394



Other









666





2,247





2,913













192





895





1,087



Total operating expenses

9,618





81,414





4,537





4,669





100,238









9,974





3,503





2,149





15,626



OPERATING INCOME (LOSS)

1,016





(228)





(3,538)





89





(2,661)









(788)





(3,176)





(77)





(4,041)



Other





(1,675)





(23)





(66)





(1,764)









(121)





(31)





(29)





(181)



INCOME (LOSS) BEFORE

INCOME TAXES

1,016





(1,903)





(3,561)





23





(4,425)









(909)





(3,207)





(106)





(4,222)



Income tax (expense) benefit

(239)





76









(12)





(175)









252









28





280



NET INCOME (LOSS)

777





(1,827)





(3,561)





11





(4,600)









(657)





(3,207)





(78)





(3,942)



(Income) loss from consolidated

entities attributable to

noncontrolling interests





58





826





40





924









(49)





515





38





504



Net (income) loss attributable to

redeemable noncontrolling

interests





361





1,086









1,447









136





1,329









1,465



NET INCOME (LOSS)

ATTRIBUTABLE TO THE

COMPANY

$

777





$

(1,408)





$

(1,649)





$

51





$

(2,229)





$





$

(570)





$

(1,363)





$

(40)





$

(1,973)



Interest expense





633









75





708









58









10





68



Amortization of loan costs





40





11





14





65









5





8





10





23



Depreciation and amortization

4,358





5,090





12





213





9,673









608





11





47





666



Income tax expense (benefit)

239





(143)









12





108









(252)









(28)





(280)



EBITDA

5,374





4,212





(1,626)





365





8,325









(151)





(1,344)





(1)





(1,496)



Equity-based compensation









4









4













10









10



Transaction costs





70









6





76

















170





170



Severance costs









3





15





18

















88





88



Amortization of hotel signing fees

and lock subsidies





587





41









628









152





22









174



Other (gain) loss on disposal of

assets





194









(6)





188























Foreign currency transactions

(gain) loss





60













60









51













51



Adjusted EBITDA

5,374





5,123





(1,578)





380





9,299









52





(1,312)





257





(1,003)



Interest expense





(633)









(75)





(708)









(58)









(10)





(68)



Adjusted income tax (expense)

benefit

(1,123)





259









1,007





143









252









28





280



Adjusted net income (loss)

$

4,251





$

4,749





$

(1,578)





$

1,312





$

8,734





$





$

246





$

(1,312)





$

275





$

(791)



Adjusted net income (loss) per

diluted share available to common

stockholders (2)

$

1.30





$

1.46





$

(0.48)





$

0.40





$

2.68





$





$

0.10





$

(0.55)





$

0.12





$

(0.33)



Weighted average diluted shares

3,262





3,262





3,262





3,262





3,262





2,381





2,381





2,381





2,381





2,381





(1)     Represents Pure Wellness, and for the year ended December 31, 2018, also includes RED Hospitality & Leisure LLC.

(2)      The sum of the adjusted net income (loss) per diluted share available to common stockholders as calculated for the subsidiaries may differ from the Hospitality Products & Services total due to rounding.

 

Cision View original content:http://www.prnewswire.com/news-releases/ashford-reports-fourth-quarter-and-year-end-2018-results-300804536.html

SOURCE Ashford Inc.

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