Market Overview

Ashford Reports Second Quarter 2019 Results

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DALLAS, Aug. 1, 2019 /PRNewswire/ -- Ashford Inc. (NYSE:AINC) ("Ashford" or the "Company") today reported the following results and performance measures for the second quarter ended June 30, 2019.  Unless otherwise stated, all reported results compare the second quarter ended June 30, 2019, with the second quarter ended June 30, 2018 (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 loss attributable to common stockholders for the second quarter of 2019 totaled $3.2 million, or $3.00 per diluted share, compared with net income of $9.0 million, or $0.93 per diluted share, in the prior-year quarter.  Adjusted net income for the second quarter was $8.7 million, or $2.04 per diluted share, compared with $9.5 million, or $3.61 per diluted share, in the prior-year quarter.
  • Total revenue for the second quarter of 2019 was $63.5 million, reflecting a growth rate of 16% over the prior-year quarter.
  • Adjusted EBITDA for the second quarter was $9.6 million.
  • At the end of the second quarter of 2019, the Company had approximately $8.2 billion of gross assets under management.
  • During the quarter, the Company signed a definitive agreement to acquire the Hotel Management business of privately-held Remington Holdings, LP.
  • Subsequent to the end of the quarter, the Company closed on the acquisition of Sebago for $7 million, which equates to an implied trailing 12-month Adjusted EBITDA multiple of 4.4x.
  • As of June 30, 2019, the Company had corporate cash of $38.2 million.

AGREEMENT TO ACQUIRE REMINGTON'S HOTEL MANAGEMENT BUSINESS
On June 3, 2019, the Company announced that it had signed a definitive agreement to acquire the Hotel Management business of privately-held Remington Holdings, LP ("Remington"). The proposed acquisition of Remington's high-margin, low-capex Hotel Management business is expected to close sometime in the fourth quarter of 2019. The transaction is expected to be immediately accretive to adjusted net income per share and will immediately add scale, diversification and an enhanced competitive position for Ashford. It will also expand the breadth of services the Company offers to its advised REITs. Additionally, the Company believes the transaction represents a compelling opportunity to further diversify its earnings stream and, moving forward, the potential to expand business to other third-party clients.

Remington is an independent hotel management company with over 40 years of experience in the hospitality business. Remington's Hotel Management business currently provides comprehensive and cost-effective hotel management services for both Ashford Hospitality Trust, Inc. (NYSE:AHT) ("Ashford Trust" or "Trust") and Braemar Hotels & Resorts Inc. (NYSE:BHR) ("Braemar"). Remington's portfolio consists of almost 90 hotels with over 17,400 rooms of full-service and select-service properties representing over a dozen brands across 28 states as well as the District of Columbia. Remington's Hotel Management business currently has very little third-party business outside of the Company's advised REITs, which will be an immediate growth opportunity and area of focus for the Company going forward.

ENHANCED RETURN FUNDING PROGRAM WITH BRAEMAR
During the first quarter of 2019, the Company announced that it entered into an agreement with Braemar for the new Enhanced Return Funding Program ("ERFP" or the "Program").  Under the Program, 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 and, to date, Braemar has acquired one hotel for $103 million under the Program. 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 Trust for an ERFP. Similar to the Braemar Program, 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 completed four acquisitions totaling $406 million under the ERFP, which amounts to approximately 80% committed utilization of the $50 million of ERFP funding from Ashford Inc.

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 architecture, 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 generated $7.7 million of revenue and $3.5 million of Adjusted EBITDA in the second quarter, including $347,000 of revenue from its new architectural services initiative.

On May 15, 2019, Donald R. Kelly was appointed Co-Chief Executive Officer to work alongside Mark Matz, who was promoted from Co-President and Chief Operating Officer to Co-Chief Executive Officer and Chief Operating Officer, to lead Premier's new growth initiatives.

JSAV UPDATE
The Company owns a controlling interest in a privately-held company that conducts the business of JSAV in the United States, Mexico, and the Dominican Republic ("JSAV"). JSAV provides an integrated suite of audio visual services, including show and event services, hospitality services, creative services, and design and integration, making JSAV a leading single-source solution for their clients' meeting and event needs.  In the first quarter of 2019, JSAV completed the acquisition of BAV.  During the second quarter, JSAV had revenue growth of 29% compared to the prior-year period.  Additionally, at the end of the second quarter, JSAV had multi-year contracts in place with 93 hotels and convention centers, in addition to regular business representing over 2,700 annual events and productions, 500 venue locations, and 750 clients. 

RED HOSPITALITY & LEISURE UPDATE
RED Hospitality & Leisure ("RED Hospitality") is a leading provider of watersports activities and other travel and transportation services in the U.S. Virgin Islands. RED Hospitality has several potential avenues for future growth including opportunities to expand into other hotels at Ashford-advised REITs or non-Ashford hotels in the USVI, the Caribbean, and the U.S. To that end, with the commencement of ferry transportation services and beach and watersports services to the Westin St. John in January, continued beach and watersports services to the Ritz-Carlton St. Thomas Club - the timeshare and rental property adjacent to the Ritz-Carlton St. Thomas hotel - and increased direct bookings and private charter business, in the second quarter, RED Hospitality generated $1.9 million of revenue and $490,000 of Adjusted EBITDA. Second quarter revenue growth was 397% compared to the prior-year period, and Adjusted EBITDA growth was 579% compared to the prior-year period.

ACQUISITION OF SEBAGO
On July 23, 2019, the Company announced that RED Hospitality completed the acquisition of substantially all of the assets of Sebago, a leading provider of watersports activities and excursion services based in Key West, Florida for approximately $2.5 million in cash and $4.5 million of Ashford common stock (excluding transaction costs and working capital adjustments). Based on unaudited financials provided by the seller, Sebago's Adjusted EBITDA for the trailing twelve-month period ended April 30, 2019 was $1.6 million. The implied Adjusted EBITDA multiple based on the total purchase price is 4.4x which the Company believes represents an attractive potential return on investment. After giving effect to the transaction, Ashford will own an approximately 84% interest in the common equity of RED Hospitality.

With over 25 years of operating history, Sebago provides watersports activities and excursion services in the Key West market. Sebago's watersports activities and excursion services include sunset sails, reef snorkeling, kayak tours, jet ski tours, and all-day adventure tours combining the best of all their excursion products. Sebago has a leading brand with 3 of the top 10 ranked tours on TripAdvisor.   Sebago's sales booths are well-located across the Key West market, and they have ideal dock locations for marketing and boarding the company's tours in the Key West Bight marina – a hub of tourism centrally located in Key West. Based on local regulations, significant barriers to entry exist for this competitive market including the transfer of boat slips, the supply of boat slips for commercial use, and physical limitations to expanding the Key West Bight marina. The Company believes the brand recognition, existing employee base, lead time to replicate existing assets, and other significant barriers to entry support Sebago's competitive advantage and future growth potential.

FINANCIAL RESULTS
Net loss attributable to common stockholders for the quarter totaled $3.2 million, or $3.00 per diluted share, compared with net income of $9.0 million, or $0.93 per diluted share, in the prior-year quarter.  Adjusted net income for the quarter was $8.7 million, or $2.04 per diluted share, compared with $9.5 million, or $3.61 per diluted share in the prior-year quarter.

For the quarter ended June 30, 2019, base advisory fee revenue was $11.2 million.  The base advisory fee revenue in the second quarter was comprised of $8.4 million from Ashford Trust and $2.8 million from Braemar.

Adjusted EBITDA for the quarter was $9.6 million.

CAPITAL STRUCTURE
At the end of the second quarter of 2019, the Company had approximately $8.2 billion of gross assets under management from its advised platforms.  The Company had corporate cash of $38.2 million, 2.8 million fully diluted shares, and a current fully diluted equity market capitalization of approximately $94 million.  The Company's financial results include 1.45 million common shares associated with its Series B convertible preferred stock.  The Company had $25.1 million of loans at June 30, 2019, of which approximately $3.2 million related to its joint venture partners' share of those loans.

QUARTERLY HIGHLIGHTS FOR ADVISED PLATFORMS

ASHFORD TRUST HIGHLIGHTS

  • During the quarter, Ashford Trust refinanced its loan on the Ashton Hotel for approximately $8.9 million.

BRAEMAR HOTELS & RESORTS HIGHLIGHTS

  • Subsequent to quarter end, Braemar opened The Notary Hotel, an Autograph Collection property, in downtown Philadelphia after a multi-million dollar conversion of its Courtyard Downtown Philadelphia.
  • Subsequent to quarter end, Braemar announced the planned opening of The Clancy, an Autograph Collection property, in downtown San Francisco after a multi-million dollar conversion of its Courtyard San Francisco Downtown.

"We are pleased with our second quarter results, which reflect the diligent execution of our operating strategy focused on accretively growing our advised platforms and acquiring growth-oriented, hospitality-related businesses," commented Monty J. Bennett, Ashford's Chairman and Chief Executive Officer. "To this end, the proposed acquisition of Remington's Hotel Management business will immediately add scale, diversification and an enhanced competitive position for Ashford in the hospitality industry. It will also expand the breadth of services we offer to our advised REITs as well as the potential to expand business to third-party clients. We are also pleased with the progress of our Enhanced Return Funding Programs with our advised platforms. To date, the ERFP initiative has resulted in the acquisition of five high-quality hotels totaling over $500 million in new assets, and these two 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.  Adding hotel management to our growing list of service businesses should significantly increase our returns from the ERFP.  Looking ahead to the remainder of 2019, we remain committed to maximizing value for our shareholders as we look to opportunistically grow our business by accretively expanding our existing REIT platforms, adding additional investment platforms and investing in other hospitality-related businesses through which we can accelerate meaningful, profitable growth."

The Company plans to host an Investor Day on October 3, 2019 at the St. Regis Hotel in New York City.  More information will be forthcoming about this event.

INVESTOR CONFERENCE CALL AND SIMULCAST
The Company will conduct a conference call on Friday, August 2, 2019, at 12:00 p.m. ET.  The number for this interactive teleconference is (323) 794-2597.  A replay of the conference call will be available through Friday, August 9, 2019, by dialing (719) 457-0820 and entering the confirmation number 5922675.

The Company will also provide an online simulcast and rebroadcast of its second quarter 2019 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, August 2, 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 April 1, 2019 and Ashford's 10-K filed with the SEC on March 8, 2019. 

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)



June 30, 2019


December 31, 2018

ASSETS




Current assets:




Cash and cash equivalents

$

40,039



$

51,529


Restricted cash

13,276



7,914


Accounts receivable, net

9,232



4,928


Due from affiliates

93



45


Due from Ashford Trust OP

4,872



5,293


Due from Braemar OP

1,830



1,996


Inventories

1,504



1,202


Prepaid expenses and other

3,875



3,902


Total current assets

74,721



76,809


Investments in unconsolidated entities

2,990



500


Furniture, fixtures and equipment, net

62,546



47,947


Operating lease right-of-use assets

21,597




Goodwill

65,040



59,683


Intangible assets, net

189,742



193,194


Other assets

1,542



872


Total assets

$

418,178



$

379,005


LIABILITIES




Current liabilities:




Accounts payable and accrued expenses

$

26,154



$

24,880


Dividends payable

2,791




Due to affiliates

726



2,032


Deferred income

138



148


Deferred compensation plan

77



173


Notes payable, net

2,933



2,595


Operating lease liabilities

2,066




Other liabilities

14,532



8,418


Total current liabilities

49,417



38,246


Deferred income

11,088



13,396


Deferred tax liability, net

31,750



31,506


Deferred compensation plan

6,347



10,401


Notes payable, net

21,925



15,177


Operating lease liabilities

19,546




Other liabilities

2,670




Total liabilities

142,743



108,726


MEZZANINE EQUITY




Series B convertible preferred stock, $25 par value, 8,120,000 shares issued and outstanding, net of discount at 
     June 30, 2019 and December 31, 2018

201,822



200,847


Redeemable noncontrolling interests

3,615



3,531


EQUITY




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




Series A cumulative preferred stock, no shares issued and outstanding at June 30, 2019 and December 31, 2018




Common stock, $0.01 par value, 100,000,000 shares authorized, 2,475,848 and 2,391,541 shares issued and 
     outstanding at June 30, 2019 and December 31, 2018, respectively

25



24


Additional paid-in capital

289,821



280,159


Accumulated deficit

(219,965)



(214,242)


Accumulated other comprehensive income (loss)

(293)



(498)


Total stockholders' equity of the Company

69,588



65,443


Noncontrolling interests in consolidated entities

410



458


Total equity

69,998



65,901


Total liabilities and equity

$

418,178



$

379,005


 

 

ASHFORD INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share amounts)



Three Months Ended


Six Months Ended


June 30,


June 30,


2019


2018


2019


2018

REVENUE








Advisory services:








Base advisory fee

$

11,190



$

11,174



$

21,812



$

21,885


Incentive advisory fee

169



452



339



904


Reimbursable expenses

3,220



2,496



5,729



4,445


Non-cash stock/unit-based compensation

6,511



10,318



12,269



19,610


Other advisory revenue

130



130



258



258


Audio visual

30,127



23,376



61,102



46,686


Project management

7,700





15,490




Other

4,419



6,865



9,787



9,191


Total revenue

63,466



54,811



126,786



102,979


EXPENSES








Salaries and benefits

9,536



3,476



24,296



16,944


Non-cash stock/unit-based compensation

9,319



12,590



17,345



25,679


Cost of revenues for audio visual

22,229



17,021



43,668



33,608


Cost of revenues for project management

2,602





5,314




Depreciation and amortization

4,934



1,193



9,461



2,233


General and administrative

10,765



8,769



18,740



15,024


Impairment







1,919


Other

3,138



892



4,477



1,738


Total operating expenses

62,523



43,941



123,301



97,145


OPERATING INCOME (LOSS)

943



10,870



3,485



5,834


Equity in earnings (loss) of unconsolidated entities

(298)





(573)




Interest expense

(445)



(161)



(742)



(304)


Amortization of loan costs

(70)



(24)



(139)



(47)


Interest income

9



73



29



185


Other income (expense)

(42)



(221)



(95)



(260)


INCOME (LOSS) BEFORE INCOME TAXES

97



10,537



1,965



5,408


Income tax (expense) benefit

(426)



(1,605)



(1,726)



(2,311)


NET INCOME (LOSS)

(329)



8,932



239



3,097


(Income) loss from consolidated entities attributable to noncontrolling
interests

131



118



294



291


Net (income) loss attributable to redeemable noncontrolling interests

310



(90)



289



(151)


NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY

112



8,960



822



3,237


Preferred dividends

(2,791)





(5,583)




Amortization of preferred stock discount

(484)





(975)




NET INCOME (LOSS) ATTRIBUTABLE TO COMMON
STOCKHOLDERS

$

(3,163)



$

8,960



$

(5,736)



$

3,237










INCOME (LOSS) PER SHARE - BASIC AND DILUTED








Basic:








Net income (loss) attributable to common stockholders

$

(1.28)



$

4.26



$

(2.35)



$

1.54


Weighted average common shares outstanding - basic

2,462



2,095



2,441



2,094


Diluted:








Net income (loss) attributable to common stockholders

$

(3.00)



$

0.93



$

(3.94)



$

(1.40)


Weighted average common shares outstanding - diluted

2,717



2,487



2,583



2,219




 

 

ASHFORD INC. AND SUBSIDIARIES

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

(unaudited, in thousands)



Three Months Ended


Six Months Ended


June 30,


June 30,


2019


2018


2019


2018

Net income (loss)

$

(329)



$

8,932



$

239



$

3,097


(Income) loss from consolidated entities attributable to noncontrolling
interests

131



118



294



291


Net (income) loss attributable to redeemable noncontrolling interests

310



(90)



289



(151)


Net income (loss) attributable to the company

112



8,960



822



3,237


Interest expense

393



135



650



256


Amortization of loan costs

65



17



128



33


Depreciation and amortization

6,036



1,741



11,382



3,244


Income tax expense (benefit)

421



1,620



1,651



2,252


Net income (loss) attributable to redeemable noncontrolling
interests

(6)



18



(10)



6


EBITDA

7,021



12,491



14,623



9,028


Non-cash stock-based compensation

2,691



2,272



4,847



6,065


Market change in deferred compensation plan

(4,817)



(6,375)



(4,077)



(5,814)


Change in contingent consideration fair value

1,430



346



1,445



559


Transaction costs

3,133



3,020



4,113



4,176


Software implementation costs



18





45


Reimbursed software costs

(526)



(439)



(1,167)



(676)


Impairment







1,919


Dead deal costs





87




Legal and settlement costs



(104)





(50)


Severance and executive recruiting costs

457





660



1,301


Amortization of hotel signing fees and lock subsidies

149



109



327



248


Other (gain) loss on disposal of assets

69



(117)



43



(117)


Foreign currency transactions (gain) loss

(32)



58



(21)



22


Adjusted EBITDA

$

9,575



$

11,279



$

20,880



$

16,706




 

 

ASHFORD INC. AND SUBSIDIARIES

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

 (unaudited, in thousands, except per share amounts)



Three Months Ended


Six Months Ended


June 30,


June 30,


2019


2018


2019


2018

Net income (loss)

$

(329)



$

8,932



$

239



$

3,097


(Income) loss from consolidated entities attributable to noncontrolling
interests

131



118



294



291


Net (income) loss attributable to redeemable noncontrolling interests

310



(90)



289



(151)


Preferred dividends

(2,791)





(5,583)




Amortization of preferred stock discount

(484)





(975)




Net income (loss) attributable to common stockholders

(3,163)



8,960



(5,736)



3,237


Amortization of loan costs

65



17



128



33


Depreciation and amortization

6,036



1,741



11,382



3,244


Net income (loss) attributable to redeemable noncontrolling interests

(6)



18



(10)



6


Preferred dividends

2,791





5,583




Amortization of preferred stock discount

484





975




Non-cash stock-based compensation

2,691



2,272



4,847



6,065


Market change in deferred compensation plan

(4,817)



(6,375)



(4,077)



(5,814)


Change in contingent consideration fair value

1,430



346



1,445



559


Transaction costs

3,133



3,020



4,113



4,176


Software implementation costs



18





45


Reimbursed software costs

(526)



(439)



(1,167)



(676)


Impairment







1,919


Dead deal costs





87




Legal and settlement costs



(104)





(50)


Severance and executive recruiting costs

457





660



1,301


Amortization of hotel signing fees and lock subsidies

149



109



327



248


Other (gain) loss on disposal of assets

69



(117)



43



(117)


Foreign currency transactions (gain) loss

(32)



58



(21)



22


GAAP income tax expense (benefit)

421



1,620



1,651



2,252


Adjusted income tax (expense) benefit (1)

(477)



(1,620)



(1,407)



(2,252)


Adjusted net income

$

8,705



$

9,524



$

18,823



$

14,198


Adjusted net income per diluted share available to common stockholders

$

2.04



$

3.61



$

4.43



$

5.33


Weighted average diluted shares

4,270



2,640



4,251



2,664










Components of weighted average diluted shares








Common shares

2,466



2,099



2,444



2,098


Series B cumulative convertible preferred stock

1,450





1,450




Deferred compensation plan

203



206



203



207


Stock options

16



250



43



290


OpenKey put option

52



26



42



22


JSAV put option

72



50



59



38


Restricted shares

11



9



10



9


Weighted average diluted shares

4,270



2,640



4,251



2,664










Reconciliation of income tax expense (benefit) to adjusted income tax
(expense) benefit








GAAP income tax (expense) benefit

$

(426)



$

(1,605)



$

(1,726)



$

(2,311)


Less GAAP income tax (expense) benefit attributable to noncontrolling
interests

(5)



15



(75)



(59)


GAAP income tax (expense) benefit excluding noncontrolling interests

(421)



(1,620)



(1,651)



(2,252)


Less deferred income tax (expense) benefit

56





(244)




Adjusted income tax (expense) benefit (1)

$

(477)



$

(1,620)



$

(1,407)



$

(2,252)




(1) 

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. See Note 12 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2018.



 

 

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 June 30, 2019


Three Months Ended June 30, 2018


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

$

8,415



$



$



$

8,415



$

8,862



$



$



$

8,862


Incentive advisory fee - Trust









452







452


Reimbursable expenses - Trust

2,658







2,658



1,997







1,997


Non-cash stock/unit-based compensation - Trust

4,548







4,548



8,940







8,940


Base advisory fee - Braemar

2,775







2,775



2,312







2,312


Incentive advisory fee - Braemar

169







169










Reimbursable expenses - Braemar

562







562



499







499


Non-cash stock/unit-based compensation - Braemar

1,963







1,963



1,378







1,378


Other advisory revenue - Braemar

130







130



130







130


Audio visual



30,127





30,127





23,376





23,376


Project management



7,700





7,700










Other

1,421



2,998





4,419



628



6,237





6,865


Total revenue

22,641



40,825





63,466



25,198



29,613





54,811


EXPENSES
















Salaries and benefits



5,675



8,164



13,839





2,418



7,101



9,519


Market change in deferred compensation plan





(4,817)



(4,817)







(6,375)



(6,375)


REIT non-cash stock/unit-based compensation

6,511



105





6,616



10,318







10,318


AINC and subsidiary non-cash stock-based compensation



90



2,613



2,703







2,272



2,272


Reimbursable expenses

3,220







3,220



2,496







2,496


Cost of audio visual revenues



22,229





22,229





17,021





17,021


Cost of project management revenues



2,602





2,602










General and administrative



4,001



4,058



8,059





2,733



3,872



6,605


Depreciation and amortization

1,570



3,268



96



4,934



369



503



321



1,193


Other



3,139



(1)



3,138





545



347



892


Total operating expenses

11,301



41,109



10,113



62,523



13,183



23,220



7,538



43,941


OPERATING INCOME (LOSS)

11,340



(284)



(10,113)



943



12,015



6,393



(7,538)



10,870


Other



(773)



(73)



(846)



27



(432)



72



(333)


INCOME (LOSS) BEFORE INCOME TAXES

11,340



(1,057)



(10,186)



97



12,042



5,961



(7,466)



10,537


Income tax (expense) benefit

(2,550)



(49)



2,173



(426)



(1,848)



(1,658)



1,901



(1,605)


NET INCOME (LOSS)

8,790



(1,106)



(8,013)



(329)



10,194



4,303



(5,565)



8,932


(Income) loss from consolidated entities attributable to noncontrolling interests



131





131





118





118


Net (income) loss attributable to redeemable noncontrolling interests



304



6



310





(72)



(18)



(90)


NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY

$

8,790



$

(671)



$

(8,007)



$

112



$

10,194



$

4,349



$

(5,583)



$

8,960


Interest expense



357



36



393





135





135


Amortization of loan costs



17



48



65





17





17


Depreciation and amortization

1,570



4,371



95



6,036



369



1,051



321



1,741


Income tax expense (benefit)

2,550



44



(2,173)



421



1,848



1,673



(1,901)



1,620


Net income (loss) attributable to redeemable noncontrolling interests





(6)



(6)







18



18


EBITDA

12,910



4,118



(10,007)



7,021



12,411



7,225



(7,145)



12,491


Non-cash stock-based compensation



77



2,614



2,691







2,272



2,272


Market change in deferred compensation plan





(4,817)



(4,817)







(6,375)



(6,375)


Change in contingent consideration fair value



1,430





1,430







346



346


Transaction costs



199



2,934



3,133







3,020



3,020


Software implementation costs













18



18


Reimbursed software costs, net

(526)







(526)



(439)







(439)


Legal and settlement costs













(104)



(104)


Severance and executive recruiting costs



448



9



457










Amortization of hotel signing fees and lock subsidies



149





149





109





109


Other (gain) loss on disposal of assets



69





69





(117)





(117)


Foreign currency transactions (gain) loss



(32)





(32)





58





58


Adjusted EBITDA

12,384



6,458



(9,267)



9,575



11,972



7,275



(7,968)



11,279


Interest expense



(357)



(36)



(393)





(135)





(135)


Adjusted income tax (expense) benefit

(1,168)



(1,016)



1,707



(477)



(1,848)



(1,673)



1,901



(1,620)


Adjusted net income (loss)

$

11,216



$

5,085



$

(7,596)



$

8,705



$

10,124



$

5,467



$

(6,067)



$

9,524


Adjusted net income (loss) per diluted share available to common stockholders (1)

$

2.63



$

1.19



$

(1.78)



$

2.04



$

3.83



$

2.07



$

(2.30)



$

3.61


Weighted average diluted shares

4,270



4,270



4,270



4,270



2,640



2,640



2,640



2,640




(1)     

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)



Six Months Ended June 30, 2019


Six Months Ended June 30, 2018


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

$

16,460



$



$



$

16,460



$

17,466



$



$



$

17,466


Incentive advisory fee - Trust









904







904


Reimbursable expenses - Trust

4,698







4,698



3,526







3,526


Non-cash stock/unit-based compensation - Trust

8,837







8,837



15,685







15,685


Base advisory fee - Braemar

5,352







5,352



4,419







4,419


Incentive advisory fee - Braemar

339







339










Reimbursable expenses - Braemar

1,031







1,031



919







919


Non-cash stock/unit-based compensation - Braemar

3,432







3,432



3,925







3,925


Other advisory revenue - Braemar

258







258



258







258


Audio visual



61,102





61,102





46,686





46,686


Project management



15,490





15,490










Other

2,850



6,937





9,787



1,117



8,074





9,191


Total revenue

43,257



83,529





126,786



48,219



54,760





102,979


EXPENSES
















Salaries and benefits



11,173



16,172



27,345





4,567



17,527



22,094


Market change in deferred compensation plan





(4,077)



(4,077)







(5,814)



(5,814)


REIT non-cash stock/unit-based compensation

12,269



214





12,483



19,610







19,610


AINC and subsidiary non-cash stock-based compensation



96



4,766



4,862





8



6,061



6,069


Reimbursable expenses

5,729







5,729



4,445







4,445


Cost of audio visual revenues



43,668





43,668





33,608





33,608


Cost of project management revenues



5,314





5,314










General and administrative



8,009



6,030



14,039





5,227



6,016



11,243


Depreciation and amortization

2,753



6,489



219



9,461



759



995



479



2,233


Impairment









1,863





56



1,919


Other



4,478



(1)



4,477





1,179



559



1,738


Total operating expenses

20,751



79,441



23,109



123,301



26,677



45,584



24,884



97,145


OPERATING INCOME (LOSS)

22,506



4,088



(23,109)



3,485



21,542



9,176



(24,884)



5,834


Other



(1,384)



(136)



(1,520)



46



(656)



184



(426)


INCOME (LOSS) BEFORE INCOME TAXES

22,506



2,704



(23,245)



1,965



21,588



8,520



(24,700)



5,408


Income tax (expense) benefit

(5,039)



(1,662)



4,975



(1,726)



(3,964)



(2,539)



4,192



(2,311)


NET INCOME (LOSS)

17,467



1,042



(18,270)



239



17,624



5,981



(20,508)



3,097


(Income) loss from consolidated entities attributable to noncontrolling interests



294





294





291





291


Net (income) loss attributable to redeemable noncontrolling interests



279



10



289





(145)



(6)



(151)


NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY

$

17,467



$

1,615



$

(18,260)



$

822



$

17,624



$

6,127



$

(20,514)



$

3,237


Interest expense



580



70



650





256





256


Amortization of loan costs



32



96



128





33





33


Depreciation and amortization

2,753



8,411



218



11,382



759



2,006



479



3,244


Income tax expense (benefit)

5,039



1,587



(4,975)



1,651



3,964



2,480



(4,192)



2,252


Net income (loss) attributable to redeemable noncontrolling interests





(10)



(10)







6



6


EBITDA

25,259



12,225



(22,861)



14,623



22,347



10,902



(24,221)



9,028


Non-cash stock-based compensation



81



4,766



4,847





4



6,061



6,065


Market change in deferred compensation plan





(4,077)



(4,077)







(5,814)



(5,814)


Change in contingent consideration fair value



1,445





1,445







559



559


Transaction costs



473



3,640



4,113





70



4,106



4,176


Software implementation costs













45



45


Reimbursed software costs, net

(1,167)







(1,167)



(676)







(676)


Impairment









1,863





56



1,919


Dead deal costs





87



87










Legal and settlement costs













(50)



(50)


Severance and executive recruiting costs



651



9



660







1,301



1,301


Amortization of hotel signing fees and lock subsidies



327





327





248





248


Other (gain) loss on disposal of assets



43





43





(117)





(117)


Foreign currency transactions (gain) loss



(21)





(21)





22





22


Adjusted EBITDA

24,092



15,224



(18,436)



20,880



23,534



11,129



(17,957)



16,706


Interest expense



(580)



(70)



(650)





(256)





(256)


Adjusted income tax (expense) benefit

(2,677)



(2,758)



4,028



(1,407)



(3,964)



(2,480)



4,192



(2,252)


Adjusted net income (loss)

$

21,415



$

11,886



$

(14,478)



$

18,823



$

19,570



$

8,393



$

(13,765)



$

14,198


Adjusted net income (loss) per diluted share available to common stockholders (1)

$

5.04



$

2.80



$

(3.41)



$

4.43



$

7.35



$

3.15



$

(5.17)



$

5.33


Weighted average diluted shares

4,251



4,251



4,251



4,251



2,664



2,664



2,664



2,664




(1)     

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 June 30, 2019


Three Months Ended June 30, 2018


Premier


JSAV


OpenKey


Other (1)


Hospitality
Products
& Services


Premier


JSAV


OpenKey


Other (1)


Hospitality
Products
& Services

REVENUE




















Audio visual



30,127







30,127





23,376







23,376


Project management

7,700









7,700












Other





194



2,804



2,998







153



6,084



6,237


Total revenue

7,700



30,127



194



2,804



40,825





23,376



153



6,084



29,613


EXPENSES




















Salaries and benefits

1,115



3,707



399



454



5,675





1,622



499



297



2,418


REIT non-cash stock/unit-based compensation

105









105












AINC and subsidiary non-cash stock-based compensation

57



9



24





90












Cost of audio visual revenues



22,229







22,229





17,021







17,021


Cost of project management revenues

2,602









2,602












General and administrative

439



2,730



296



536



4,001





2,065



407



261



2,733


Depreciation and amortization

2,738



503



7



20



3,268





489



7



7



503


Other



1,621



49



1,469



3,139







(3)



548



545


Total operating expenses

7,056



30,799



775



2,479



41,109





21,197



910



1,113



23,220


OPERATING INCOME (LOSS)

644



(672)



(581)



325



(284)





2,179



(757)



4,971



6,393


Other



(420)





(353)



(773)





(412)



(7)



(13)



(432)


INCOME (LOSS) BEFORE INCOME TAXES

644



(1,092)



(581)



(28)



(1,057)





1,767



(764)



4,958



5,961


Income tax (expense) benefit

(342)



319





(26)



(49)





(502)





(1,156)



(1,658)


NET INCOME (LOSS)

302



(773)



(581)



(54)



(1,106)





1,265



(764)



3,802



4,303


(Income) loss from consolidated entities attributable to
noncontrolling interests





152



(21)



131





(82)



187



13



118


Net (income) loss attributable to redeemable noncontrolling
interests



133



171





304





(295)



223





(72)


NET INCOME (LOSS) ATTRIBUTABLE TO THE
COMPANY

$

302



$

(640)



$

(258)



$

(75)



$

(671)



$



$

888



$

(354)



$

3,815



$

4,349


Interest expense



314





43



357





122





13



135


Amortization of loan costs



12



3



2



17





10



3



4



17


Depreciation and amortization

2,738



1,542



4



87



4,371





1,001



3



47



1,051


Income tax expense (benefit)

342



(324)





26



44





517





1,156



1,673


EBITDA

3,382



904



(251)



83



4,118





2,538



(348)



5,035



7,225


Non-cash stock-based compensation

57



8



12





77












Change in contingent consideration fair value



1,430







1,430












Transaction costs



80





119



199












Severance and executive recruiting costs

98



350







448












Amortization of hotel signing fees and lock subsidies



122



27





149





100



9





109


Other (gain) loss on disposal of assets



69







69





(111)





(6)



(117)


Foreign currency transactions (gain) loss



(32)







(32)





58







58


Adjusted EBITDA

3,537



2,931



(212)



202



6,458





2,585



(339)



5,029



7,275


Interest expense



(314)





(43)



(357)





(122)





(13)



(135)


Adjusted income tax (expense) benefit

(1,089)



49





24



(1,016)





(517)





(1,156)



(1,673)


Adjusted net income (loss)

$

2,448



$

2,666



$