Attached files
| file | filename |
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| 8-K - 8-K - Ashford Inc. | ainc2020q38-ker.htm |
EXHIBIT 99.1
 | NEWS RELEASE | |||||
Contact: | Deric Eubanks | Jordan Jennings | Joe Calabrese | |||
Chief Financial Officer | Investor Relations | Financial Relations Board | ||||
(972) 490-9600 | (972) 778-9487 | (212) 827-3772 | ||||
ASHFORD REPORTS THIRD QUARTER 2020 RESULTS
Gross Assets Under Management $7.2 Billion at Quarter End
DALLAS, October 28, 2020 - Ashford Inc. (NYSE American: AINC) (“Ashford” or the “Company”) today reported the following results and performance measures for the third quarter ended September 30, 2020. Unless otherwise stated, all reported results compare the third quarter ended September 30, 2020, with the third quarter ended September 30, 2019 (see discussion below). The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release.
STRATEGIC OVERVIEW
While COVID-19 has altered the Company’s short-term priorities, its long-term strategy remains unchanged:
• | High-growth, fee-based business model |
• | Diversified platform of multiple fee generators |
• | Seeks to grow in two primary areas: |
◦ | Grow our existing REIT platforms accretively and create new platforms; and |
◦ | Grow our service businesses via increased AUM and third-party business |
• | 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 third quarter of 2020 totaled $22.0 million, or $9.53 per diluted share. |
• | Total revenue for the third quarter of 2020 was $55.9 million. |
• | Adjusted EBITDA for the third quarter was $6.8 million. |
• | At the end of the third quarter of 2020, the Company had approximately $7.2 billion of gross assets under management. |
• | As of September 30, 2020, the Company had corporate cash of approximately $63.1 million. |
OPENKEY UPDATE
Ashford currently owns a 49% interest in OpenKey. OpenKey is the universal, industry-standard smartphone App for keyless entry in hotel guestrooms. OpenKey continues to expand its platform with 216 hotels under contract at the end of the third quarter. As the hospitality industry strives to implement measures to provide a clean and safe environment for their guests, the Company expects that the digital benefits OpenKey offers, such as automated check-in (bypassing the front desk), keyless entry, and secure digital key capability, will gain accelerated adoption and growth at hotels nationwide. OpenKey continues to see the benefits of this growth as the number of hotels under contract at the end of the third quarter increased 46% over the prior-year quarter. Total Revenue for OpenKey in the third quarter increased
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October 28, 2020
approximately 9% over the prior-year quarter, despite several properties being closed and travel restrictions being in place.
REMINGTON’S HOTEL MANAGEMENT BUSINESS UPDATE
On November 6, 2019, the Company completed the combination with Remington Holdings, LP (“Remington”). The acquisition of Remington’s high-margin, low-capex Hotel Management business adds scale, diversification and an enhanced competitive position for Ashford. It also expands 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 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 Hotel Management business currently has very little third-party business outside of the Company’s advised REITs, which will be a long-term growth opportunity and area of focus for the Company going forward.
In the third quarter, Remington generated hotel management fee revenue of $3.8 million, Net Loss Attributable to the Company of $3.3 million, and Adjusted EBITDA of $0.9 million. Since the beginning of the COVID-19 pandemic in March, Remington has aggressively cut staffing and overhead to minimize the negative impact of the pandemic on its business and financial results.
LISMORE CAPITAL UPDATE
During the first quarter, Ashford Trust and Braemar entered into agreements with Lismore Capital (“Lismore”) for Lismore to seek modifications, forbearances or refinancings of Ashford’s advised REITs’ debt totaling approximately $5.1 billion across over 40 different loans. Total revenue of $4.0 million was recognized during the third quarter associated with these agreements.
PREMIER PROJECT MANAGEMENT UPDATE
In August 2018, the Company completed the acquisition of Premier Project Management (“Premier”). Premier provides comprehensive and cost-effective architecture, design, development, and project management services. It also 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 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. In the third quarter, Premier generated $1.8 million of project management fee revenue, Net Loss Attributable to the Company of $2.4 million, and $0.2 million of Adjusted EBITDA. During the quarter, Premier signed one contract to provide project management services on a third-party basis. Since the beginning of the COVID-19 pandemic in March, Premier has aggressively cut staffing and overhead to minimize the negative impact of the pandemic on its operations.
JSAV UPDATE
The Company owns a controlling interest in a privately-held company that conducts the business of J&S Audio Visual (“JSAV”) in the United States, Mexico and internationally. 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 and the operations are now reported on a combined basis. During the third quarter of 2020, JSAV (including BAV) had revenue of $3.1 million, Net Loss Attributable to the Company of $2.4 million, and Adjusted EBITDA of negative $1.2 million. Since
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the beginning of the COVID-19 pandemic in March, JSAV has taken aggressive steps to mitigate the impact of the pandemic on its business including reducing corporate overhead and furloughing or laying off approximately 94% of its workforce.
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 and Florida. Over the past 12 months, RED Hospitality continued as the beach and watersports services provider to the Ritz-Carlton St. Thomas Club - the timeshare and rental property adjacent to the Ritz-Carlton St. Thomas hotel, commenced ferry transportation services and beach and watersports services to the Westin St. John, and completed the acquisition of Sebago, a leading provider of watersports activities and excursion services based in Key West, Florida. Long term, 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, elsewhere in the Caribbean, and in the U.S.
PURE ROOMS UPDATE
The Company currently owns a 70% controlling interest in Pure Wellness’ Pure Rooms, a leading provider of hypo-allergenic hotel rooms in the United States. Pure Rooms utilizes state-of-the-art purification technology to create allergy-friendly guestrooms. Pure Rooms’ hypo-allergenic rooms are designed to provide a better night’s sleep for all guests, especially allergy sufferers. Pure Rooms' patented 7-step purification process treats a room’s surfaces, including the air, and removes up to 99% of pollutants. Pure Rooms currently has contracts in place with 205 hotels (approximately 2,900 rooms) throughout the United States, including 118 hotels owned by Ashford’s advised REIT platforms.
As the hospitality industry strives to implement measures to provide a clean and safe environment for their guests, the Company expects that the health and wellness benefits Pure Wellness offers - including its air purification technology -- will gain accelerated adoption and growth at hotels nationwide. Pure Wellness transforms interior spaces into world-class wellness environments that protect against viral & bacterial contaminants and promote overall wellbeing. Pure Rooms provide a refreshing, relaxing experience to guests around the world, at hotels, resorts, office buildings, senior living facilities and more. Pure Rooms are designed to meet the needs of wellness-minded travelers and guests.
FINANCIAL RESULTS
Net loss attributable to common stockholders for the quarter totaled $22.0 million, or $9.53 per diluted share. Adjusted net income for the quarter was $2.8 million, or $0.37 per diluted share.
For the quarter ended September 30, 2020, base advisory fee revenue was $11.0 million. The base advisory fee revenue in the third quarter was comprised of $8.7 million from Ashford Trust and $2.4 million from Braemar.
Adjusted EBITDA for the quarter was $6.8 million.
CAPITAL STRUCTURE
At the end of the third quarter of 2020, the Company had approximately $7.2 billion of gross assets under management from its advised platforms. The Company had corporate cash of $63.1 million and 7.5 million fully diluted shares. The Company’s fully diluted shares include 4.1 million common shares associated with its Series D convertible preferred stock. The Company had $62.8 million of loans at September 30, 2020, of which approximately $3.8 million related to its joint venture partners’ share of those loans.
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October 28, 2020
“We remain in the middle of an immeasurable public health crisis from the COVID-19 pandemic,” commented Monty J. Bennett, Ashford’s Chairman and Chief Executive Officer. “While the pandemic continues to impact the overall U.S. economy, and alter our near-term focus, we are operating Ashford in a disciplined manner and certain areas of our business, like OpenKey and Pure Rooms, continue to see a strong increase in demand. We have an unwavering commitment to protect value for our shareholders and believe the actions we have undertaken reflect that commitment. Looking ahead, with our talented and dedicated management team, along with our long-term strategy on finding growth opportunities in our business, I am confident we will navigate through this difficult time.”
INVESTOR CONFERENCE CALL AND SIMULCAST
The Company will conduct a conference call on Thursday, October 29, 2020, at 12:00 p.m. ET. The number to call for this interactive teleconference is (201) 493-6725. A replay of the conference call will be available through Thursday, November 5, 2020, by dialing (412) 317-6671 and entering the confirmation number, 13709740.
The Company will also provide an online simulcast and rebroadcast of its third quarter 2020 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 Thursday, October 29, 2020, 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. 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 Reports on Form 8-K.
This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities. Securities will be offered only by means of a registration statement and prospectus which can be found at www.sec.gov.
* * * * *
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.
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October 28, 2020
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 federal securities regulations. Forward-looking statements in this press release may include, among others, statements about the implied share price for the Company's common stock. When we use the words "will likely result," "may," "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 Inc.’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: the impact of COVID-19 on our business and investment strategy; anticipated or expected purchases or sales of assets; our projected operating results; completion of any pending transactions; our ability to restructure our current or obtain future financing arrangements; our understanding of our competition; market trends; projected capital expenditures; and the impact of technology on our operations and business. Such forward-looking statements are based on our beliefs, assumptions, and expectations of our future performance taking into account all information currently known to us. These beliefs, assumptions, and expectations can change as a result of many potential events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, results of operations, plans, and other objectives may vary materially from those expressed in our forward-looking statements. You should carefully consider this risk when you make an investment decision concerning our securities. These and other risk factors are more fully discussed in Ashford Inc.’s filings with the Securities and Exchange Commission.
The forward-looking statements included in this press release are only made as of the date of this press release. The Company can give no assurance that these forward-looking statements will be attained or that any deviation will not occur. 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)
September 30, 2020 | December 31, 2019 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 68,623 | $ | 35,349 | |||
Restricted cash | 36,577 | 17,900 | |||||
Restricted investment | 156 | 1,195 | |||||
Accounts receivable, net | 3,833 | 7,241 | |||||
Due from affiliates | 108 | 357 | |||||
Due from Ashford Trust | 2,585 | 4,805 | |||||
Due from Braemar | 124 | 1,591 | |||||
Inventories | 1,550 | 1,642 | |||||
Prepaid expenses and other | 7,693 | 7,212 | |||||
Total current assets | 121,249 | 77,292 | |||||
Investments in unconsolidated entities | 3,777 | 3,476 | |||||
Property and equipment, net | 96,623 | 116,190 | |||||
Operating lease right-of-use assets | 31,450 | 31,699 | |||||
Goodwill | 66,834 | 205,606 | |||||
Intangible assets, net | 278,777 | 347,961 | |||||
Other assets | 3,131 | 276 | |||||
Total assets | $ | 601,841 | $ | 782,500 | |||
LIABILITIES | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 42,093 | $ | 39,160 | |||
Dividends payable | 15,860 | 4,725 | |||||
Due to affiliates | 733 | 1,011 | |||||
Deferred income | 15,883 | 233 | |||||
Deferred compensation plan | 17 | 35 | |||||
Notes payable, net | 57,719 | 3,550 | |||||
Finance lease liabilities | 560 | 572 | |||||
Operating lease liabilities | 3,696 | 3,207 | |||||
Other liabilities | 34,023 | 19,066 | |||||
Total current liabilities | 170,584 | 71,559 | |||||
Deferred income | 9,338 | 13,047 | |||||
Deferred tax liability, net | 46,739 | 69,521 | |||||
Deferred compensation plan | 1,139 | 4,694 | |||||
Notes payable, net | 4,574 | 33,033 | |||||
Finance lease liabilities | 42,710 | 41,482 | |||||
Operating lease liabilities | 27,810 | 28,519 | |||||
Other liabilities | — | 430 | |||||
Total liabilities | 302,894 | 262,285 | |||||
MEZZANINE EQUITY | |||||||
Series D Convertible Preferred Stock, $0.001 par value, 19,120,000 shares issued and outstanding, net of discount, as of September 30, 2020 and December 31, 2019 | 476,446 | 474,060 | |||||
Redeemable noncontrolling interests | 2,962 | 4,131 | |||||
EQUITY (DEFICIT) | |||||||
Common stock, 100,000,000 shares authorized, $0.001 par value, 2,539,046 and 2,202,580 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively | 3 | 2 | |||||
Additional paid-in capital | 290,674 | 285,825 | |||||
Accumulated deficit | (469,651 | ) | (244,084 | ) | |||
Accumulated other comprehensive income (loss) | (1,363 | ) | (216 | ) | |||
Treasury stock, at cost, 31,840 and 1,638 shares at September 30, 2020 and December 31, 2019, respectively | (436 | ) | (131 | ) | |||
Total equity (deficit) of the Company | (180,773 | ) | 41,396 | ||||
Noncontrolling interests in consolidated entities | 312 | 628 | |||||
Total equity (deficit) | (180,461 | ) | 42,024 | ||||
Total liabilities and equity (deficit) | $ | 601,841 | $ | 782,500 | |||
6
ASHFORD INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
REVENUE | |||||||||||||||
Advisory services: | |||||||||||||||
Base advisory fees | $ | 11,040 | $ | 10,570 | $ | 33,707 | $ | 32,382 | |||||||
Incentive advisory fees | (339 | ) | 170 | — | 509 | ||||||||||
Other advisory revenue | 131 | 131 | 391 | 389 | |||||||||||
Hotel management: | |||||||||||||||
Base management fees | 3,777 | — | 13,592 | — | |||||||||||
Project management fees | 1,790 | 6,660 | 7,780 | 19,533 | |||||||||||
Audio visual | 3,114 | 22,430 | 33,758 | 83,532 | |||||||||||
Other | 8,222 | 5,627 | 18,250 | 14,719 | |||||||||||
Cost reimbursement revenue | 28,133 | 11,301 | 127,830 | 32,611 | |||||||||||
Total revenues | 55,868 | 56,889 | 235,308 | 183,675 | |||||||||||
EXPENSES | |||||||||||||||
Salaries and benefits | 12,143 | 11,524 | 40,087 | 34,472 | |||||||||||
Non-cash equity-based compensation | 1,776 | 2,087 | 4,088 | 6,949 | |||||||||||
Cost of revenues for project management | 703 | 1,456 | 3,032 | 4,366 | |||||||||||
Cost of revenues for audio visual | 3,126 | 17,732 | 25,872 | 61,400 | |||||||||||
Depreciation and amortization | 10,094 | 8,048 | 30,172 | 16,671 | |||||||||||
General and administrative | 5,441 | 6,791 | 15,696 | 21,622 | |||||||||||
Impairment | — | — | 178,213 | — | |||||||||||
Other | 9,147 | 4,849 | 14,734 | 9,326 | |||||||||||
Reimbursed expenses | 28,072 | 11,203 | 127,638 | 32,185 | |||||||||||
Total operating expenses | 70,502 | 63,690 | 439,532 | 186,991 | |||||||||||
OPERATING INCOME (LOSS) | (14,634 | ) | (6,801 | ) | (204,224 | ) | (3,316 | ) | |||||||
Equity in earnings (loss) of unconsolidated entities | 48 | 464 | 301 | (109 | ) | ||||||||||
Interest expense | (1,259 | ) | (456 | ) | (3,681 | ) | (1,198 | ) | |||||||
Amortization of loan costs | (86 | ) | (75 | ) | (242 | ) | (214 | ) | |||||||
Interest income | — | — | 29 | 29 | |||||||||||
Realized gain (loss) on investments | — | — | (386 | ) | — | ||||||||||
Other income (expense) | (44 | ) | (20 | ) | (499 | ) | (115 | ) | |||||||
INCOME (LOSS) BEFORE INCOME TAXES | (15,975 | ) | (6,888 | ) | (208,702 | ) | (4,923 | ) | |||||||
Income tax (expense) benefit | 1,835 | 297 | 7,404 | (1,429 | ) | ||||||||||
NET INCOME (LOSS) | (14,140 | ) | (6,591 | ) | (201,298 | ) | (6,352 | ) | |||||||
(Income) loss from consolidated entities attributable to noncontrolling interests | 319 | 101 | 757 | 395 | |||||||||||
Net (income) loss attributable to redeemable noncontrolling interests | 604 | 334 | 1,688 | 623 | |||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY | (13,217 | ) | (6,156 | ) | (198,853 | ) | (5,334 | ) | |||||||
Preferred dividends, declared and undeclared | (7,985 | ) | (2,909 | ) | (23,800 | ) | (8,492 | ) | |||||||
Amortization of preferred stock discount | (781 | ) | (363 | ) | (2,386 | ) | (1,338 | ) | |||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | (21,983 | ) | $ | (9,428 | ) | $ | (225,039 | ) | $ | (15,164 | ) | |||
INCOME (LOSS) PER SHARE - BASIC AND DILUTED | |||||||||||||||
Basic: | |||||||||||||||
Net income (loss) attributable to common stockholders | $ | (9.53 | ) | $ | (3.65 | ) | $ | (99.62 | ) | $ | (6.09 | ) | |||
Weighted average common shares outstanding - basic | 2,306 | 2,580 | 2,259 | 2,489 | |||||||||||
Diluted: | |||||||||||||||
Net income (loss) attributable to common stockholders | $ | (9.53 | ) | $ | (3.94 | ) | $ | (99.62 | ) | $ | (7.95 | ) | |||
Weighted average common shares outstanding - diluted | 2,306 | 2,782 | 2,259 | 2,679 | |||||||||||
7
ASHFORD INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA
(unaudited, in thousands)
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income (loss) | $ | (14,140 | ) | $ | (6,591 | ) | $ | (201,298 | ) | $ | (6,352 | ) | |||
(Income) loss from consolidated entities attributable to noncontrolling interests | 319 | 101 | 757 | 395 | |||||||||||
Net (income) loss attributable to redeemable noncontrolling interests | 604 | 334 | 1,688 | 623 | |||||||||||
Net income (loss) attributable to the company | (13,217 | ) | (6,156 | ) | (198,853 | ) | (5,334 | ) | |||||||
Interest expense | 1,212 | 400 | 3,537 | 1,050 | |||||||||||
Amortization of loan costs | 84 | 69 | 235 | 197 | |||||||||||
Depreciation and amortization | 11,200 | 9,408 | 33,156 | 20,790 | |||||||||||
Income tax expense (benefit) | (1,833 | ) | (291 | ) | (7,404 | ) | 1,360 | ||||||||
Net income (loss) attributable to redeemable noncontrolling interests | (35 | ) | (15 | ) | (396 | ) | (25 | ) | |||||||
EBITDA | (2,589 | ) | 3,415 | (169,725 | ) | 18,038 | |||||||||
Non-cash stock-based compensation | 2,013 | 2,083 | 4,762 | 6,930 | |||||||||||
Market change in deferred compensation plan | (869 | ) | (1,526 | ) | (3,566 | ) | (5,603 | ) | |||||||
Change in contingent consideration fair value | 134 | 2,784 | 745 | 4,229 | |||||||||||
Transaction costs | 214 | 1,984 | 777 | 6,184 | |||||||||||
Loss on disposal of assets | 6,513 | — | 6,541 | — | |||||||||||
Reimbursed software costs, net | (98 | ) | (424 | ) | (293 | ) | (1,591 | ) | |||||||
Legal, advisory and settlement costs | 1,209 | — | 983 | — | |||||||||||
Severance and executive recruiting costs | 165 | 52 | 2,689 | 712 | |||||||||||
Amortization of hotel signing fees and lock subsidies | 120 | 131 | 389 | 458 | |||||||||||
Other (gain) loss | (15 | ) | (95 | ) | 369 | (73 | ) | ||||||||
Impairment | — | — | 177,950 | — | |||||||||||
Adjusted EBITDA | $ | 6,797 | $ | 8,404 | $ | 21,621 | $ | 29,284 | |||||||
8
ASHFORD INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME (LOSS)
(unaudited, in thousands, except per share amounts)
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income (loss) | $ | (14,140 | ) | $ | (6,591 | ) | $ | (201,298 | ) | $ | (6,352 | ) | |||
(Income) loss from consolidated entities attributable to noncontrolling interests | 319 | 101 | 757 | 395 | |||||||||||
Net (income) loss attributable to redeemable noncontrolling interests | 604 | 334 | 1,688 | 623 | |||||||||||
Preferred dividends, declared and undeclared | (7,985 | ) | (2,909 | ) | (23,800 | ) | (8,492 | ) | |||||||
Amortization of preferred stock discount | (781 | ) | (363 | ) | (2,386 | ) | (1,338 | ) | |||||||
Net income (loss) attributable to common stockholders | (21,983 | ) | (9,428 | ) | (225,039 | ) | (15,164 | ) | |||||||
Amortization of loan costs | 84 | 69 | 235 | 197 | |||||||||||
Depreciation and amortization | 11,200 | 9,408 | 33,156 | 20,790 | |||||||||||
Net income (loss) attributable to redeemable noncontrolling interests | (35 | ) | (15 | ) | (396 | ) | (25 | ) | |||||||
Preferred dividends, declared and undeclared | 7,985 | 2,909 | 23,800 | 8,492 | |||||||||||
Amortization of preferred stock discount | 781 | 363 | 2,386 | 1,338 | |||||||||||
Non-cash stock-based compensation | 2,013 | 2,083 | 4,762 | 6,930 | |||||||||||
Market change in deferred compensation plan | (869 | ) | (1,526 | ) | (3,566 | ) | (5,603 | ) | |||||||
Change in contingent consideration fair value | 134 | 2,784 | 745 | 4,229 | |||||||||||
Transaction costs | 214 | 1,984 | 777 | 6,184 | |||||||||||
Loss on disposal of assets | 6,513 | — | 6,541 | — | |||||||||||
Non-cash interest from finance lease | 153 | — | 461 | — | |||||||||||
Reimbursed software costs, net | (98 | ) | (424 | ) | (293 | ) | (1,591 | ) | |||||||
Legal, advisory and settlement costs | 1,209 | — | 983 | — | |||||||||||
Severance and executive recruiting costs | 165 | 52 | 2,689 | 712 | |||||||||||
Amortization of hotel signing fees and lock subsidies | 120 | 131 | 389 | 458 | |||||||||||
Other (gain) loss | (15 | ) | (95 | ) | 369 | (73 | ) | ||||||||
Impairment | — | — | 177,950 | — | |||||||||||
GAAP income tax expense (benefit) | (1,833 | ) | (291 | ) | (7,404 | ) | 1,360 | ||||||||
Adjusted income tax (expense) benefit (1) | (2,988 | ) | (1,014 | ) | (5,952 | ) | (2,421 | ) | |||||||
Adjusted net income | $ | 2,750 | $ | 6,990 | $ | 12,593 | $ | 25,813 | |||||||
Adjusted net income per diluted share available to common stockholders | $ | 0.37 | $ | 1.58 | $ | 1.75 | $ | 5.98 | |||||||
Weighted average diluted shares | 7,494 | 4,434 | 7,180 | 4,313 | |||||||||||
Components of weighted average diluted shares | |||||||||||||||
Common shares | 2,306 | 2,580 | 2,259 | 2,489 | |||||||||||
Convertible preferred stock | 4,136 | 1,450 | 4,091 | 1,450 | |||||||||||
Deferred compensation plan | 200 | 202 | 200 | 203 | |||||||||||
Stock options | — | — | — | 29 | |||||||||||
Put options | 528 | 164 | 400 | 113 | |||||||||||
Acquisition related shares | 307 | 22 | 198 | 15 | |||||||||||
Restricted shares and units | 17 | 16 | 32 | 14 | |||||||||||
Weighted average diluted shares | 7,494 | 4,434 | 7,180 | 4,313 | |||||||||||
Reconciliation of income tax expense (benefit) to adjusted income tax (expense) benefit | |||||||||||||||
GAAP income tax (expense) benefit | $ | 1,835 | $ | 297 | $ | 7,404 | $ | (1,429 | ) | ||||||
Less GAAP income tax (expense) benefit attributable to noncontrolling interests | 2 | 6 | — | (69 | ) | ||||||||||
GAAP income tax (expense) benefit excluding noncontrolling interests | 1,833 | 291 | 7,404 | (1,360 | ) | ||||||||||
Less deferred income tax (expense) benefit | 4,821 | 1,305 | 12,918 | 1,061 | |||||||||||
Less cash income tax benefit from CARES Act | — | — | 438 | — | |||||||||||
Adjusted income tax (expense) benefit (1) | $ | (2,988 | ) | $ | (1,014 | ) | $ | (5,952 | ) | $ | (2,421 | ) | |||
(1) Income tax expense (benefit) is adjusted to exclude the effects of deferred income tax expense (benefit) and cash income tax benefits from the CARES Act 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. See Note 12 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019.
9
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 September 30, 2020 | Three Months Ended September 30, 2019 | ||||||||||||||||||||||||||||||
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 fees - Trust | $ | 8,653 | $ | — | $ | — | $ | 8,653 | $ | 8,003 | $ | — | $ | — | $ | 8,003 | |||||||||||||||
Base advisory fees - Braemar | 2,387 | — | — | 2,387 | 2,567 | — | — | 2,567 | |||||||||||||||||||||||
Incentive advisory fees - Braemar | (339 | ) | — | — | (339 | ) | 170 | — | — | 170 | |||||||||||||||||||||
Other advisory revenue - Braemar | 131 | — | — | 131 | 131 | — | — | 131 | |||||||||||||||||||||||
Hotel Management: | |||||||||||||||||||||||||||||||
Base management fees | — | 3,777 | — | 3,777 | — | — | — | — | |||||||||||||||||||||||
Project management fees | — | 1,790 | — | 1,790 | — | 6,660 | — | 6,660 | |||||||||||||||||||||||
Audio visual | — | 3,114 | — | 3,114 | — | 22,430 | — | 22,430 | |||||||||||||||||||||||
Other | 55 | 8,166 | 1 | 8,222 | 1,080 | 4,547 | — | 5,627 | |||||||||||||||||||||||
Cost reimbursement revenue | 5,903 | 21,510 | 720 | 28,133 | 9,430 | 1,221 | 650 | 11,301 | |||||||||||||||||||||||
Total revenues | 16,790 | 38,357 | 721 | 55,868 | 21,381 | 34,858 | 650 | 56,889 | |||||||||||||||||||||||
EXPENSES | |||||||||||||||||||||||||||||||
Salaries and benefits | — | 5,729 | 7,283 | 13,012 | — | 5,235 | 7,815 | 13,050 | |||||||||||||||||||||||
Market change in deferred compensation plan | — | — | (869 | ) | (869 | ) | — | — | (1,526 | ) | (1,526 | ) | |||||||||||||||||||
Non-cash equity-based compensation | — | 36 | 1,740 | 1,776 | — | 27 | 2,060 | 2,087 | |||||||||||||||||||||||
Cost of audio visual revenues | — | 3,126 | — | 3,126 | — | 17,732 | — | 17,732 | |||||||||||||||||||||||
Cost of project management revenues | — | 703 | — | 703 | — | 1,456 | — | 1,456 | |||||||||||||||||||||||
Depreciation and amortization | 2,128 | 7,587 | 379 | 10,094 | 2,396 | 5,534 | 118 | 8,048 | |||||||||||||||||||||||
General and administrative | — | 3,406 | 2,035 | 5,441 | — | 3,833 | 2,958 | 6,791 | |||||||||||||||||||||||
Other | — | 2,699 | 6,448 | 9,147 | — | 4,848 | 1 | 4,849 | |||||||||||||||||||||||
Reimbursed expenses | 1,934 | 21,329 | 721 | 23,984 | 2,689 | 1,120 | 650 | 4,459 | |||||||||||||||||||||||
REIT non-cash equity-based compensation | 3,907 | 181 | — | 4,088 | 6,643 | 101 | — | 6,744 | |||||||||||||||||||||||
Total operating expenses | 7,969 | 44,796 | 17,737 | 70,502 | 11,728 | 39,886 | 12,076 | 63,690 | |||||||||||||||||||||||
OPERATING INCOME (LOSS) | 8,821 | (6,439 | ) | (17,016 | ) | (14,634 | ) | 9,653 | (5,028 | ) | (11,426 | ) | (6,801 | ) | |||||||||||||||||
Other | — | (943 | ) | (398 | ) | (1,341 | ) | — | (4 | ) | (83 | ) | (87 | ) | |||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | 8,821 | (7,382 | ) | (17,414 | ) | (15,975 | ) | 9,653 | (5,032 | ) | (11,509 | ) | (6,888 | ) | |||||||||||||||||
Income tax (expense) benefit | (2,093 | ) | 306 | 3,622 | 1,835 | (2,093 | ) | 192 | 2,198 | 297 | |||||||||||||||||||||
NET INCOME (LOSS) | 6,728 | (7,076 | ) | (13,792 | ) | (14,140 | ) | 7,560 | (4,840 | ) | (9,311 | ) | (6,591 | ) | |||||||||||||||||
(Income) loss from consolidated entities attributable to noncontrolling interests | — | 319 | — | 319 | — | 101 | — | 101 | |||||||||||||||||||||||
Net (income) loss attributable to redeemable noncontrolling interests | — | 569 | 35 | 604 | — | 319 | 15 | 334 | |||||||||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY | $ | 6,728 | $ | (6,188 | ) | $ | (13,757 | ) | $ | (13,217 | ) | $ | 7,560 | $ | (4,420 | ) | $ | (9,296 | ) | $ | (6,156 | ) | |||||||||
Interest expense | — | 900 | 312 | 1,212 | — | 365 | 35 | 400 | |||||||||||||||||||||||
Amortization of loan costs | — | 14 | 70 | 84 | — | 21 | 48 | 69 | |||||||||||||||||||||||
Depreciation and amortization | 2,128 | 8,693 | 379 | 11,200 | 2,722 | 6,566 | 120 | 9,408 | |||||||||||||||||||||||
Income tax expense (benefit) | 2,093 | (304 | ) | (3,622 | ) | (1,833 | ) | 2,093 | (186 | ) | (2,198 | ) | (291 | ) | |||||||||||||||||
Net income (loss) attributable to redeemable noncontrolling interests | — | — | (35 | ) | (35 | ) | — | — | (15 | ) | (15 | ) | |||||||||||||||||||
EBITDA | 10,949 | 3,115 | (16,653 | ) | (2,589 | ) | 12,375 | 2,346 | (11,306 | ) | 3,415 | ||||||||||||||||||||
Non-cash stock-based compensation | — | 33 | 1,980 | 2,013 | — | 23 | 2,060 | 2,083 | |||||||||||||||||||||||
Market change in deferred compensation plan | — | — | (869 | ) | (869 | ) | — | — | (1,526 | ) | (1,526 | ) | |||||||||||||||||||
Change in contingent consideration fair value | — | 134 | — | 134 | — | 2,784 | — | 2,784 | |||||||||||||||||||||||
Transaction related costs | — | 107 | 107 | 214 | — | 311 | 1,673 | 1,984 | |||||||||||||||||||||||
Loss on disposal of assets | 6,430 | 83 | — | 6,513 | — | — | — | — | |||||||||||||||||||||||
Reimbursed software costs, net | (98 | ) | — | — | (98 | ) | (424 | ) | — | — | (424 | ) | |||||||||||||||||||
Legal, advisory and settlement costs | 339 | 15 | 855 | 1,209 | — | — | — | — | |||||||||||||||||||||||
Severance and executive recruiting costs | — | 159 | 6 | 165 | — | 52 | — | 52 | |||||||||||||||||||||||
Amortization of hotel signing fees and lock subsidies | — | 120 | — | 120 | — | 131 | — | 131 | |||||||||||||||||||||||
Other (gain) loss | — | (31 | ) | 16 | (15 | ) | — | (95 | ) | — | (95 | ) | |||||||||||||||||||
Adjusted EBITDA | 17,620 | 3,735 | (14,558 | ) | 6,797 | 11,951 | 5,552 | (9,099 | ) | 8,404 | |||||||||||||||||||||
Interest expense | — | (900 | ) | (312 | ) | (1,212 | ) | — | (365 | ) | (35 | ) | (400 | ) | |||||||||||||||||
Non-cash interest from finance lease | — | 153 | — | 153 | — | — | — | — | |||||||||||||||||||||||
Adjusted income tax (expense) benefit | (3,245 | ) | (1,635 | ) | 1,892 | (2,988 | ) | (1,164 | ) | (1,107 | ) | 1,257 | (1,014 | ) | |||||||||||||||||
Adjusted net income (loss) | $ | 14,375 | $ | 1,353 | $ | (12,978 | ) | $ | 2,750 | $ | 10,787 | $ | 4,080 | $ | (7,877 | ) | $ | 6,990 | |||||||||||||
Adjusted net income (loss) per diluted share available to common stockholders (1) | $ | 1.92 | $ | 0.18 | $ | (1.73 | ) | $ | 0.37 | $ | 2.43 | $ | 0.92 | $ | (1.78 | ) | $ | 1.58 | |||||||||||||
Weighted average diluted shares | 7,494 | 7,494 | 7,494 | 7,494 | 4,434 | 4,434 | 4,434 | 4,434 | |||||||||||||||||||||||
(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.
10
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)
Nine Months Ended September 30, 2020 | Nine Months Ended September 30, 2019 | ||||||||||||||||||||||||||||||
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 fees - Trust | $ | 26,127 | $ | — | $ | — | $ | 26,127 | $ | 24,463 | $ | — | $ | — | $ | 24,463 | |||||||||||||||
Base advisory fees - Braemar | 7,580 | — | — | 7,580 | 7,919 | — | — | 7,919 | |||||||||||||||||||||||
Incentive advisory fees - Braemar | — | — | — | — | 509 | — | — | 509 | |||||||||||||||||||||||
Other advisory revenue - Braemar | 391 | — | — | 391 | 389 | — | — | 389 | |||||||||||||||||||||||
Hotel Management: | |||||||||||||||||||||||||||||||
Base management fees | — | 13,592 | — | 13,592 | — | — | — | — | |||||||||||||||||||||||
Project management fees | — | 7,780 | — | 7,780 | — | 19,532 | — | 19,532 | |||||||||||||||||||||||
Audio visual | — | 33,758 | — | 33,758 | — | 83,532 | — | 83,532 | |||||||||||||||||||||||
Other | 195 | 18,054 | 1 | 18,250 | 3,236 | 11,484 | — | 14,720 | |||||||||||||||||||||||
Cost reimbursement revenue | 19,004 | 106,516 | 2,310 | 127,830 | 28,122 | 3,839 | 650 | 32,611 | |||||||||||||||||||||||
Total revenues | 53,297 | 179,700 | 2,311 | 235,308 | 64,638 | 118,387 | 650 | 183,675 | |||||||||||||||||||||||
EXPENSES | |||||||||||||||||||||||||||||||
Salaries and benefits | — | 20,633 | 23,020 | 43,653 | — | 16,408 | 23,667 | 40,075 | |||||||||||||||||||||||
Market change in deferred compensation plan | — | — | (3,566 | ) | (3,566 | ) | — | — | (5,603 | ) | (5,603 | ) | |||||||||||||||||||
Non-cash equity-based compensation | — | 29 | 4,059 | 4,088 | — | 123 | 6,826 | 6,949 | |||||||||||||||||||||||
Cost of audio visual revenues | — | 25,872 | — | 25,872 | — | 61,400 | — | 61,400 | |||||||||||||||||||||||
Cost of project management revenues | — | 3,032 | — | 3,032 | — | 4,366 | — | 4,366 | |||||||||||||||||||||||
Depreciation and amortization | 7,004 | 22,633 | 535 | 30,172 | 4,311 | 12,023 | 337 | 16,671 | |||||||||||||||||||||||
General and administrative | — | 10,816 | 4,880 | 15,696 | — | 11,842 | 9,780 | 21,622 | |||||||||||||||||||||||
Impairment | — | 178,213 | — | 178,213 | — | — | — | — | |||||||||||||||||||||||
Other | — | 8,250 | 6,484 | 14,734 | — | 9,326 | — | 9,326 | |||||||||||||||||||||||
Reimbursed expenses | 6,440 | 105,599 | 2,311 | 114,350 | 8,784 | 3,524 | 650 | 12,958 | |||||||||||||||||||||||
REIT non-cash equity-based compensation | 12,371 | 917 | — | 13,288 | 18,912 | 315 | — | 19,227 | |||||||||||||||||||||||
Total operating expenses | 25,815 | 375,994 | 37,723 | 439,532 | 32,007 | 119,327 | 35,657 | 186,991 | |||||||||||||||||||||||
OPERATING INCOME (LOSS) | 27,482 | (196,294 | ) | (35,412 | ) | (204,224 | ) | 32,631 | (940 | ) | (35,007 | ) | (3,316 | ) | |||||||||||||||||
Other | — | (3,370 | ) | (1,108 | ) | (4,478 | ) | — | (1,388 | ) | (219 | ) | (1,607 | ) | |||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | 27,482 | (199,664 | ) | (36,520 | ) | (208,702 | ) | 32,631 | (2,328 | ) | (35,226 | ) | (4,923 | ) | |||||||||||||||||
Income tax (expense) benefit | (6,516 | ) | 3,802 | 10,118 | 7,404 | (7,132 | ) | (1,470 | ) | 7,173 | (1,429 | ) | |||||||||||||||||||
NET INCOME (LOSS) | 20,966 | (195,862 | ) | (26,402 | ) | (201,298 | ) | 25,499 | (3,798 | ) | (28,053 | ) | (6,352 | ) | |||||||||||||||||
(Income) loss from consolidated entities attributable to noncontrolling interests | — | 757 | — | 757 | — | 395 | — | 395 | |||||||||||||||||||||||
Net (income) loss attributable to redeemable noncontrolling interests | — | 1,292 | 396 | 1,688 | — | 598 | 25 | 623 | |||||||||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY | $ | 20,966 | $ | (193,813 | ) | $ | (26,006 | ) | $ | (198,853 | ) | $ | 25,499 | $ | (2,805 | ) | $ | (28,028 | ) | $ | (5,334 | ) | |||||||||
Interest expense | — | 2,734 | 803 | 3,537 | — | 945 | 105 | 1,050 | |||||||||||||||||||||||
Amortization of loan costs | — | 47 | 188 | 235 | — | 53 | 144 | 197 | |||||||||||||||||||||||
Depreciation and amortization | 7,004 | 25,617 | 535 | 33,156 | 5,475 | 14,977 | 338 | 20,790 | |||||||||||||||||||||||
Income tax expense (benefit) | 6,516 | (3,802 | ) | (10,118 | ) | (7,404 | ) | 7,132 | 1,401 | (7,173 | ) | 1,360 | |||||||||||||||||||
Net income (loss) attributable to redeemable noncontrolling interests | — | — | (396 | ) | (396 | ) | — | — | (25 | ) | (25 | ) | |||||||||||||||||||
EBITDA | 34,486 | (169,217 | ) | (34,994 | ) | (169,725 | ) | 38,106 | 14,571 | (34,639 | ) | 18,038 | |||||||||||||||||||
Non-cash stock-based compensation | — | 346 | 4,416 | 4,762 | — | 104 | 6,826 | 6,930 | |||||||||||||||||||||||
Market change in deferred compensation plan | — | — | (3,566 | ) | (3,566 | ) | — | — | (5,603 | ) | (5,603 | ) | |||||||||||||||||||
Change in contingent consideration fair value | — | 745 | — | 745 | — | 4,229 | — | 4,229 | |||||||||||||||||||||||
Transaction related costs | — | 281 | 496 | 777 | — | 784 | 5,400 | 6,184 | |||||||||||||||||||||||
Loss on disposal of assets | 6,430 | 111 | — | 6,541 | — | — | — | — | |||||||||||||||||||||||
Reimbursed software costs, net | (293 | ) | — | — | (293 | ) | (1,591 | ) | — | — | (1,591 | ) | |||||||||||||||||||
Legal, advisory and settlement costs | — | 15 | 968 | 983 | — | — | — | — | |||||||||||||||||||||||
Severance and executive recruiting costs | — | 2,159 | 530 | 2,689 | — | 703 | 9 | 712 | |||||||||||||||||||||||
Amortization of hotel signing fees and lock subsidies | — | 389 | — | 389 | — | 458 | — | 458 | |||||||||||||||||||||||
Other (gain) loss | — | 224 | 145 | 369 | — | (73 | ) | — | (73 | ) | |||||||||||||||||||||
Impairment | — | 177,950 | — | 177,950 | — | — | — | — | |||||||||||||||||||||||
Adjusted EBITDA | 40,623 | 13,003 | (32,005 | ) | 21,621 | 36,515 | 20,776 | (28,007 | ) | 29,284 | |||||||||||||||||||||
Interest expense | — | (2,734 | ) | (803 | ) | (3,537 | ) | — | (945 | ) | (105 | ) | (1,050 | ) | |||||||||||||||||
Non-cash interest from finance lease | — | 461 | — | 461 | — | — | — | — | |||||||||||||||||||||||
Adjusted income tax (expense) benefit | (10,073 | ) | (2,526 | ) | 6,647 | (5,952 | ) | (3,841 | ) | (3,865 | ) | 5,285 | (2,421 | ) | |||||||||||||||||
Adjusted net income (loss) | $ | 30,550 | $ | 8,204 | $ | (26,161 | ) | $ | 12,593 | $ | 32,674 | $ | 15,966 | $ | (22,827 | ) | $ | 25,813 | |||||||||||||
Adjusted net income (loss) per diluted share available to common stockholders (1) | $ | 4.25 | $ | 1.14 | $ | (3.64 | ) | $ | 1.75 | $ | 7.58 | $ | 3.70 | $ | (5.29 | ) | $ | 5.98 | |||||||||||||
Weighted average diluted shares | 7,180 | 7,180 | 7,180 | 7,180 | 4,313 | 4,313 | 4,313 | 4,313 | |||||||||||||||||||||||
(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.
11
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 September 30, 2020 | Three Months Ended September 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||
Remington | Premier | JSAV | OpenKey | Other (1) | Hospitality Products & Services | Premier | JSAV | OpenKey | Other (1) | Hospitality Products & Services | |||||||||||||||||||||||||||||||||
REVENUE | |||||||||||||||||||||||||||||||||||||||||||
Hotel Management: | |||||||||||||||||||||||||||||||||||||||||||
Base management fees | $ | 3,777 | $ | — | $ | — | $ | — | $ | — | $ | 3,777 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||
Project management fees | — | 1,790 | — | — | — | 1,790 | 6,660 | — | — | — | 6,660 | ||||||||||||||||||||||||||||||||
Audio visual | — | — | 3,114 | — | — | 3,114 | — | 22,430 | — | — | 22,430 | ||||||||||||||||||||||||||||||||
Other | — | — | — | 341 | 7,825 | 8,166 | — | — | 313 | 4,234 | 4,547 | ||||||||||||||||||||||||||||||||
Cost reimbursement revenue | 21,023 | 487 | — | — | — | 21,510 | 1,221 | — | — | — | 1,221 | ||||||||||||||||||||||||||||||||
Total revenues | 24,800 | 2,277 | 3,114 | 341 | 7,825 | 38,357 | 7,881 | 22,430 | 313 | 4,234 | 34,858 | ||||||||||||||||||||||||||||||||
EXPENSES | |||||||||||||||||||||||||||||||||||||||||||
Salaries and benefits | 2,643 | 615 | 1,177 | 650 | 644 | 5,729 | 1,113 | 3,091 | 436 | 595 | 5,235 | ||||||||||||||||||||||||||||||||
Non-cash equity-based compensation | (2 | ) | 25 | 12 | 1 | — | 36 | 9 | 12 | 6 | — | 27 | |||||||||||||||||||||||||||||||
Cost of audio visual revenues | — | — | 3,126 | — | — | 3,126 | — | 17,732 | — | — | 17,732 | ||||||||||||||||||||||||||||||||
Cost of project management revenues | — | 703 | — | — | — | 703 | 1,456 | — | — | — | 1,456 | ||||||||||||||||||||||||||||||||
Depreciation and amortization | 3,514 | 3,157 | 494 | 5 | 417 | 7,587 | 4,937 | 513 | 7 | 77 | 5,534 | ||||||||||||||||||||||||||||||||
General and administrative | 460 | 319 | 1,584 | 271 | 772 | 3,406 | 368 | 2,507 | 336 | 622 | 3,833 | ||||||||||||||||||||||||||||||||
Other | — | — | 134 | 113 | 2,452 | 2,699 | — | 1,623 | 118 | 3,107 | 4,848 | ||||||||||||||||||||||||||||||||
Reimbursed expenses | 20,885 | 444 | — | — | — | 21,329 | 1,120 | — | — | — | 1,120 | ||||||||||||||||||||||||||||||||
REIT non-cash equity-based compensation | 138 | 43 | — | — | — | 181 | 101 | — | — | — | 101 | ||||||||||||||||||||||||||||||||
Total operating expenses | 27,638 | 5,306 | 6,527 | 1,040 | 4,285 | 44,796 | 9,104 | 25,478 | 903 | 4,401 | 39,886 | ||||||||||||||||||||||||||||||||
OPERATING INCOME (LOSS) | (2,838 | ) | (3,029 | ) | (3,413 | ) | (699 | ) | 3,540 | (6,439 | ) | (1,223 | ) | (3,048 | ) | (590 | ) | (167 | ) | (5,028 | ) | ||||||||||||||||||||||
Other | — | — | (209 | ) | — | (734 | ) | (943 | ) | — | (263 | ) | (3 | ) | 262 | (4 | ) | ||||||||||||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | (2,838 | ) | (3,029 | ) | (3,622 | ) | (699 | ) | 2,806 | (7,382 | ) | (1,223 | ) | (3,311 | ) | (593 | ) | 95 | (5,032 | ) | |||||||||||||||||||||||
Income tax (expense) benefit | (502 | ) | 624 | 816 | — | (632 | ) | 306 | 9 | 698 | — | (515 | ) | 192 | |||||||||||||||||||||||||||||
NET INCOME (LOSS) | (3,340 | ) | (2,405 | ) | (2,806 | ) | (699 | ) | 2,174 | (7,076 | ) | (1,214 | ) | (2,613 | ) | (593 | ) | (420 | ) | (4,840 | ) | ||||||||||||||||||||||
(Income) loss from consolidated entities attributable to noncontrolling interests | — | — | — | 181 | 138 | 319 | — | — | 146 | (45 | ) | 101 | |||||||||||||||||||||||||||||||
Net (income) loss attributable to redeemable noncontrolling interests | — | — | 392 | 177 | — | 569 | — | 165 | 154 | — | 319 | ||||||||||||||||||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY | $ | (3,340 | ) | $ | (2,405 | ) | $ | (2,414 | ) | $ | (341 | ) | $ | 2,312 | $ | (6,188 | ) | $ | (1,214 | ) | $ | (2,448 | ) | $ | (293 | ) | $ | (465 | ) | $ | (4,420 | ) | |||||||||||
Interest expense | — | — | 165 | — | 735 | 900 | — | 263 | — | 102 | 365 | ||||||||||||||||||||||||||||||||
Amortization of loan costs | — | — | 13 | — | 1 | 14 | — | 13 | 3 | 5 | 21 | ||||||||||||||||||||||||||||||||
Depreciation and amortization | 3,514 | 3,157 | 1,559 | 2 | 461 | 8,693 | 4,937 | 1,456 | 3 | 170 | 6,566 | ||||||||||||||||||||||||||||||||
Income tax expense (benefit) | 502 | (624 | ) | (814 | ) | — | 632 | (304 | ) | (9 | ) | (692 | ) | — | 515 | (186 | ) | ||||||||||||||||||||||||||
EBITDA | 676 | 128 | (1,491 | ) | (339 | ) | 4,141 | 3,115 | 3,714 | (1,408 | ) | (287 | ) | 327 | 2,346 | ||||||||||||||||||||||||||||
Non-cash stock-based compensation | (3 | ) | 25 | 11 | — | — | 33 | 9 | 11 | 3 | — | 23 | |||||||||||||||||||||||||||||||
Change in contingent consideration fair value | — | — | 134 | — | — | 134 | — | 1,635 | — | 1,149 | 2,784 | ||||||||||||||||||||||||||||||||
Transaction related costs | 92 | — | — | — | 15 | 107 | — | 199 | — | 112 | 311 | ||||||||||||||||||||||||||||||||
Loss on disposal of assets | — | — | 79 | — | 4 | 83 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Legal, advisory and settlement costs | — | — | 15 | — | — | 15 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Severance and executive recruiting costs | 94 | 65 | — | — | — | 159 | 8 | 24 | — | 20 | 52 | ||||||||||||||||||||||||||||||||
Amortization of hotel signing fees and lock subsidies | — | — | 112 | 8 | — | 120 | — | 110 | 21 | — | 131 | ||||||||||||||||||||||||||||||||
Other (gain) loss | — | — | (31 | ) | — | — | (31 | ) | — | (97 | ) | — | 2 | (95 | ) | ||||||||||||||||||||||||||||
Adjusted EBITDA | 859 | 218 | (1,171 | ) | (331 | ) | 4,160 | 3,735 | 3,731 | 474 | (263 | ) | 1,610 | 5,552 | |||||||||||||||||||||||||||||
Interest expense | — | — | (165 | ) | — | (735 | ) | (900 | ) | — | (263 | ) | — | (102 | ) | (365 | ) | ||||||||||||||||||||||||||
Non-cash interest from finance lease | — | — | — | — | 153 | 153 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Adjusted income tax (expense) benefit | (614 | ) | (175 | ) | 178 | — | (1,024 | ) | (1,635 | ) | (1,669 | ) | 40 | — | 522 | (1,107 | ) | ||||||||||||||||||||||||||
Adjusted net income (loss) | $ | 245 | $ | 43 | $ | (1,158 | ) | $ | (331 | ) | $ | 2,554 | $ | 1,353 | $ | 2,062 | $ | 251 | $ | (263 | ) | $ | 2,030 | $ | 4,080 | ||||||||||||||||||
Adjusted net income (loss) per diluted share available to common stockholders (2) | $ | 0.03 | $ | 0.01 | $ | (0.15 | ) | $ | (0.04 | ) | $ | 0.34 | $ | 0.18 | $ | 0.47 | $ | 0.06 | $ | (0.06 | ) | $ | 0.46 | $ | 0.92 | ||||||||||||||||||
Weighted average diluted shares | 7,494 | 7,494 | 7,494 | 7,494 | 7,494 | 7,494 | 4,434 | 4,434 | 4,434 | 4,434 | 4,434 | ||||||||||||||||||||||||||||||||
(1) Represents RED Hospitality & Leisure LLC, Pure Wellness, Lismore Capital, AINC Bar Draught LLC and Marietta Leasehold L.P.
(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.
12
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)
Nine Months Ended September 30, 2020 | Nine Months Ended September 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||
Remington | Premier | JSAV | OpenKey | Other (1) | Hospitality Products & Services | Premier | JSAV | OpenKey | Other (1) | Hospitality Products & Services | |||||||||||||||||||||||||||||||||
REVENUE | |||||||||||||||||||||||||||||||||||||||||||
Hotel Management: | |||||||||||||||||||||||||||||||||||||||||||
Base management fees | 13,592 | $ | — | $ | — | $ | — | $ | — | $ | 13,592 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||
Project management fees | — | 7,780 | — | — | — | 7,780 | 19,532 | — | — | — | 19,532 | ||||||||||||||||||||||||||||||||
Audio visual | — | — | 33,758 | — | — | 33,758 | — | 83,532 | — | — | 83,532 | ||||||||||||||||||||||||||||||||
Other | — | — | — | 1,155 | 16,899 | 18,054 | — | — | 764 | 10,720 | 11,484 | ||||||||||||||||||||||||||||||||
Cost reimbursement revenue | 104,123 | 2,393 | — | — | — | 106,516 | 3,839 | — | — | — | 3,839 | ||||||||||||||||||||||||||||||||
Total revenues | 117,715 | 10,173 | 33,758 | 1,155 | 16,899 | 179,700 | 23,371 | 83,532 | 764 | 10,720 | 118,387 | ||||||||||||||||||||||||||||||||
EXPENSES | |||||||||||||||||||||||||||||||||||||||||||
Salaries and benefits | 9,305 | 2,223 | 5,507 | 1,564 | 2,034 | 20,633 | 3,170 | 10,377 | 1,321 | 1,540 | 16,408 | ||||||||||||||||||||||||||||||||
Non-cash equity-based compensation | (81 | ) | 68 | 38 | 4 | — | 29 | 69 | 21 | 33 | — | 123 | |||||||||||||||||||||||||||||||
Cost of audio visual revenues | — | — | 25,872 | — | — | 25,872 | — | 61,400 | — | — | 61,400 | ||||||||||||||||||||||||||||||||
Cost of project management revenues | — | 3,032 | — | — | — | 3,032 | 4,366 | — | — | — | 4,366 | ||||||||||||||||||||||||||||||||
Depreciation and amortization | 10,425 | 9,471 | 1,486 | 15 | 1,236 | 22,633 | 10,413 | 1,471 | 21 | 118 | 12,023 | ||||||||||||||||||||||||||||||||
General and administrative | 1,529 | 1,226 | 5,309 | 779 | 1,973 | 10,816 | 1,091 | 8,209 | 1,000 | 1,542 | 11,842 | ||||||||||||||||||||||||||||||||
Impairment | 126,548 | 49,524 | 2,141 | — | — | 178,213 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Other | — | — | 752 | 410 | 7,088 | 8,250 | — | 3,262 | 260 | 5,804 | 9,326 | ||||||||||||||||||||||||||||||||
Reimbursed expenses | 103,539 | 2,060 | — | — | — | 105,599 | 3,524 | — | — | — | 3,524 | ||||||||||||||||||||||||||||||||
REIT non-cash equity-based compensation | 584 | 333 | — | — | — | 917 | 315 | — | — | — | 315 | ||||||||||||||||||||||||||||||||
Total operating expenses | 251,849 | 67,937 | 41,105 | 2,772 | 12,331 | 375,994 | 22,948 | 84,740 | 2,635 | 9,004 | 119,327 | ||||||||||||||||||||||||||||||||
OPERATING INCOME (LOSS) | (134,134 | ) | (57,764 | ) | (7,347 | ) | (1,617 | ) | 4,568 | (196,294 | ) | 423 | (1,208 | ) | (1,871 | ) | 1,716 | (940 | ) | ||||||||||||||||||||||||
Other | (360 | ) | — | (992 | ) | (6 | ) | (2,012 | ) | (3,370 | ) | — | (1,016 | ) | (4 | ) | (368 | ) | (1,388 | ) | |||||||||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | (134,494 | ) | (57,764 | ) | (8,339 | ) | (1,623 | ) | 2,556 | (199,664 | ) | 423 | (2,224 | ) | (1,875 | ) | 1,348 | (2,328 | ) | ||||||||||||||||||||||||
Income tax (expense) benefit | 1,212 | 1,351 | 1,853 | — | (614 | ) | 3,802 | (759 | ) | 130 | — | (841 | ) | (1,470 | ) | ||||||||||||||||||||||||||||
NET INCOME (LOSS) | (133,282 | ) | (56,413 | ) | (6,486 | ) | (1,623 | ) | 1,942 | (195,862 | ) | (336 | ) | (2,094 | ) | (1,875 | ) | 507 | (3,798 | ) | |||||||||||||||||||||||
(Income) loss from consolidated entities attributable to noncontrolling interests | — | — | — | 420 | 337 | 757 | — | — | 475 | (80 | ) | 395 | |||||||||||||||||||||||||||||||
Net (income) loss attributable to redeemable noncontrolling interests | — | — | 870 | 422 | — | 1,292 | — | 71 | 527 | — | 598 | ||||||||||||||||||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY | $ | (133,282 | ) | $ | (56,413 | ) | $ | (5,616 | ) | $ | (781 | ) | $ | 2,279 | $ | (193,813 | ) | $ | (336 | ) | $ | (2,023 | ) | $ | (873 | ) | $ | 427 | $ | (2,805 | ) | ||||||||||||
Interest expense | — | — | 555 | — | 2,179 | 2,734 | — | 761 | — | 184 | 945 | ||||||||||||||||||||||||||||||||
Amortization of loan costs | — | — | 38 | — | 9 | 47 | — | 36 | 9 | 8 | 53 | ||||||||||||||||||||||||||||||||
Depreciation and amortization | 10,425 | 9,471 | 4,555 | 7 | 1,159 | 25,617 | 10,413 | 4,224 | 10 | 330 | 14,977 | ||||||||||||||||||||||||||||||||
Income tax expense (benefit) | (1,212 | ) | (1,351 | ) | (1,853 | ) | — | 614 | (3,802 | ) | 759 | (199 | ) | — | 841 | 1,401 | |||||||||||||||||||||||||||
EBITDA | (124,069 | ) | (48,293 | ) | (2,321 | ) | (774 | ) | 6,240 | (169,217 | ) | 10,836 | 2,799 | (854 | ) | 1,790 | 14,571 | ||||||||||||||||||||||||||
Non-cash stock-based compensation | 242 | 68 | 34 | 2 | — | 346 | 69 | 19 | 16 | — | 104 | ||||||||||||||||||||||||||||||||
Change in contingent consideration fair value | — | — | 747 | — | (2 | ) | 745 | — | 3,080 | — | 1,149 | 4,229 | |||||||||||||||||||||||||||||||
Transaction related costs | 235 | — | — | — | 46 | 281 | — | 478 | — | 306 | 784 | ||||||||||||||||||||||||||||||||
Loss on disposal of assets | — | — | 107 | — | 4 | 111 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Legal, advisory and settlement costs | — | — | 15 | — | — | 15 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Severance and executive recruiting costs | 881 | 483 | 732 | 6 | 57 | 2,159 | 106 | 557 | 20 | 20 | 703 | ||||||||||||||||||||||||||||||||
Amortization of hotel signing fees and lock subsidies | — | — | 363 | 26 | — | 389 | — | 372 | 86 | — | 458 | ||||||||||||||||||||||||||||||||
Other (gain) loss | — | — | 224 | — | — | 224 | — | (75 | ) | — | 2 | (73 | ) | ||||||||||||||||||||||||||||||
Impairment | 126,548 | 49,524 | 1,878 | — | — | 177,950 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Adjusted EBITDA | 3,837 | 1,782 | 1,779 | (740 | ) | 6,345 | 13,003 | 11,011 | 7,230 | (732 | ) | 3,267 | 20,776 | ||||||||||||||||||||||||||||||
Interest expense | — | — | (555 | ) | — | (2,179 | ) | (2,734 | ) | — | (761 | ) | — | (184 | ) | (945 | ) | ||||||||||||||||||||||||||
Non-cash interest from finance lease | — | — | — | — | 461 | 461 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Adjusted income tax (expense) benefit | (1,524 | ) | (815 | ) | 772 | — | (959 | ) | (2,526 | ) | (3,831 | ) | (236 | ) | — | 202 | (3,865 | ) | |||||||||||||||||||||||||
Adjusted net income (loss) | $ | 2,313 | $ | 967 | $ | 1,996 | $ | (740 | ) | $ | 3,668 | $ | 8,204 | $ | 7,180 | $ | 6,233 | $ | (732 | ) | $ | 3,285 | $ | 15,966 | |||||||||||||||||||
Adjusted net income (loss) per diluted share available to common stockholders (2) | $ | 0.32 | $ | 0.13 | $ | 0.28 | $ | (0.10 | ) | $ | 0.51 | $ | 1.14 | $ | 1.66 | $ | 1.45 | $ | (0.17 | ) | $ | 0.76 | $ | 3.70 | |||||||||||||||||||
Weighted average diluted shares | 7,180 | 7,180 | 7,180 | 7,180 | 7,180 | 7,180 | 4,313 | 4,313 | 4,313 | 4,313 | 4,313 | ||||||||||||||||||||||||||||||||
(1) Represents RED Hospitality & Leisure LLC, Pure Wellness, Lismore Capital, AINC Bar Draught LLC and Marietta Leasehold L.P.
(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.
13