AINC - Earnings call transcript Q2 2018

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Operator

Good day and welcome to the Ashford Second Quarter 2018 Conference Call. Today’s conference is being recorded. At this time, I would like to turn the call over to Joe Calabrese with the Financial Relations Board. Please go ahead.

Joe Calabrese

Good day, everyone and welcome to today’s conference call to review results for Ashford for the second quarter 2018 and to update you on recent developments.

Co-President we Hays, Bennett, Deric Co-President, Financial Jeremy today, Executive and Eubanks, call Officer. Officer; Rob Operating Officer; Chief Welter, the have Chairman Monty Chief Chief On Chief and Strategy Officer; The results the this yesterday the call the conference been afternoon over media. notice in a basis release were financial accessibility covered that listen-only has of on Internet well as as of distributed a press by this conference At made statements in of this Harbor time, and forward-looking Private upon Act you me pursuant the Litigation Securities Safe being contain certain that call information, let remind the provisions are based of XXXX. Reform are assumptions which to numerous forward-looking materially to known uncertainties differ and risks, those actual Such to or anticipated. results are from statements assumptions, which subject unknown could cause factors the discussed company’s in These more fully Commission. the Securities Exchange risk filings are and with this revise in of not only included or update this statements and as date obligated the call forward-looking conference company is them. of publicly the are The to made

In may used sir. in through the results will over information to Please are X-K of SEC of review reported quarter X, those which this the Monty in and the reconciliations on call in now the addition, provided together which other with Also ahead, been reconciliations turn certain measures, company’s accompanying call earnings release. otherwise XXXX. www.ashfordinc.com. XXXX and accessed filed all the second second provided on are in all listener go release discussed earnings at Bennett. in call with the is unless the have stated, company’s XXXX Each I Form to terms release, and quarter non-GAAP also of schedules, provided be with financial tables the August this website encouraged compare

Monty Bennett

regarding our for Funding business Enhanced discuss of efforts. results giving Hospitality other platform. Jeremy Trust. our Rooms, begin RED and our are program take the as provide financial strategic well & and Good of results Rob morning OpenKey, second an delivered outreach investments will and Pure second call recently the are brief for Project linked Leisure XXXX. of continued review Lismore will acquisition announced will Return your discuss and Deric our J&S, a our our then investor to quarterly we with Management and financial the then by Capital quarter quarter very I as our results. success growth to in We initiatives questions. strong of discuss overview Afterwards, pleased groundwork we welcome our will and in the our with Remington’s will update

For over XXX% – by XXX%, quarter, the quarter the net increased XXX%, by EBITDA adjusted revenues period. income next and prior adjusted increased increased year this for by

of highlight benefits our We believe are these and results very they the with strategy. pleased

I does Trust. hotel strong more discussing about funding growth this growth at produce in detail, at with Return are in we Before $XX investments minutes The is excited our spend commitment Funding to It would the Enhanced to agreement ERP very or the like Trust and a program designed on how RFP few Ashford. strong a strategy way. fee simple discussing a million new returns

Ashford acquisition new Trust from a return, will to Trust the receives returns Capital equity Ashford put of amount trust to that to hotel equal customarily fees, materially has its enhances the significantly That lower program equity order purchased of purposes, returns. immediate the hotels. capital for provides Trust Trust use next of Similar for is just $XXX furniture, improves it which form This our the from total expect acquisition million deduction equipment of Trust be Ashford previous into reduction fixtures in for price tax paid we for benefit each Ashford cycle. available and program, in of a of allows and of that our investment. investment makes to virtuous funding acquisitions. equity takes the the least that the hotel This will Trust the each incremental be hotel at get designed to and by at to sized create and European the assets. XX% the funding program

prices, assets, to lead virtuous cash upon this cycle. actively first Trust in would an streams repeats in in more Trust to the then process and capital Ashford to on to Trust. available equity prices is accretive Old itself is accretive Trust lead more Trust at to provides higher looking fee expect more increase the closed higher which Trust for growth, to higher fee already streams returns, itself to utilize has Ashford growth to Town to Trust, more equity potentially then result higher Hilton returns ERFP, creating buys capital to The Ashford stock builds lead stock to acquisition should Alexandria. leads the provide opportunities. acquisition And and additional

Our the stable our one main of like the competitive our our highly strategy we and both aligned and platforms have teams the industry effective and built We advantages. our in others most acting shareholders it industry. is that ability leverage company hospitality us expertise in team advise. distinguished our management from we of the of to consider to grow one management around believe combined I

Resorts two billion of XX, rooms XXXX. as advises publicly traded XX,XXX approximately together hotels assets currently platforms XXX Trust of and approximately and with June Braemar Ashford which own gross $X.X Hotels &

high generators. margins. attractive it Ashford the a with the be business based has platform scalable multiple fee believe model with of to fee growth diversified We platform

by agreements of fee. the year’s than minimum the on a stable advisory fee focused more base can’t base from as cash flow REITs the Additionally, the drop with stipulate Currently, it is previous three XX% company growth. very that areas our has base

to would accretively platforms. REIT we our existing First, like grow

in our our on service related Pure businesses through are to we as initiatives Second, such platforms advisory third, industry diligently Capital our as Leisure. can part would and hospitality investment relationships our or dramatically. accelerate like and invest RED we we incubate J&S, our and of business the growth & working additional Lismore Hospitality platforms. growth buy, to our management OpenKey, strategy add expertise, And asset with our to Then leveraging through connections opportunities Rooms,

the few to update investments just be providing of excited Jeremy continued these detailed We and all mentioned about on a more I will investments be in a minutes.

team’s value create out-performance shareholder versus our price have incentive returns. We Ashford focus fee maximizing is With performance that structure their shareholder in platforms. share a management our REIT peers, to REIT fee buy incents by return on place driven the base total and to based fee and primary our

are the our about which Project we acquired platforms. business for of two excited advisory prospects we to optimistic very about I Management speak the ahead, and our are prospects Looking will momentarily recently Remington of

as great investment see both for well platforms by to as turn platform incubating adding related call shareholders in we Additionally, now other to this grow the opportunity our will hospitality businesses. additional Rob. deliver or to and returns investing over superior I

Rob Hays

to at Thanks per stock our of consideration competitive expanding for add Management high like scale, we of discussing the Management believe Remington’s level. of share, business and REITs. margin enhance business. acquisition price position our to the was by acquisition preferred trading start in that Management $XXX the we current Project will premium closed operating would hospitality Mike. breadth recent the convertible offer business of million. a On we we a announced substantial Remington’s The I diversification that of Wednesday, From $XXX industry, services Project the to stock is in acquisition our Ashford Remington perspective, an also Project advised

business we believe to other Additionally, clients. with deep place, expand industry earnings diversify this moving for in to contracts third-party compelling forward transaction experience opportunity streams potentially a represents and long-term and its to Ashford

expenditure provides projects. execution and Project or for are operations project improvements our and business effective services. comprehensive background, implementing at and capital management all cost provide renovation, development planning project ground Management of development of Braemar. substantially the responsible the Trust oversight, and Its managing, As We coordination, design, capital

insiders believe and the operating advised with received of Management accretive the and hospitality and this the to a the of agreement and the of of the transaction favor the our from worth over increase of also provide developing with out overwhelming have of mutual earnings is the both these build increase areas to excluding approximately Ashford hotels. exclusivity owned potential. one Trust, breadth and point outstanding management in over other hotel shares portfolios, the want Braemar in expected benefit transaction. per present means their income of by Ashford’s EBITDA voting advantages of shares favor adjusted In project present shares to transaction. have this shareholders parties related provided net we shares approval This we hotels. exclusive Project right in million REITs The immediately voted share. converting, opportunity and will acquisition repositioning voting Trust approximately adjusted XX% and we to the terrific of is hotels a It’s brands our many majority company to key as and of Braemar. of In minority a our working This our companies proposal. to $XX.X services XXXX extensive I Additionally, majority Ashford and be noting summary, million. to approved transaction is of Remington revenues other scale, for get that that of $XX XX% had at in meeting, the with the words, Braemar in of at voting renovating, services of Trust experience holders major representing In add

believe like excited a the are have management XXXX and to very indices. this add the the XXXX pleased we that business. about going are We new also I prospects strong of with member transaction Russell project become are Russell to and forward

shareholders. exposure cap within we June Conferences wide meaningful industry our both provide the a believe and will conferences months of and in San is retail provide offices York will IPI New New late and tell to in Dallas provide our the turn will include These Gateway IDEAS to in November. September Francisco in the over with I XX, the September, and community investment dedicated Fall in and to Microcap Sidoti’s mid-cap for of priority one the improve remains XXXX, well stock dialogue used family small holders. number outreach Conference conferences coming liquidity York inclusion investors Chicago in Conference plan Fall as as index potential well range investors Conference of XXXX investors. in small a of the early during late investor attend and funds a of increased We us for over visibility Deric. most Midwest for companies of these now from performance story conferences to the call top as our Russell As we to Microcap benchmarks the opportunity focused widely the August, believe to as further Investor targeting

Deric Eubanks

the or year period. Rob. for of share Net was company quarter prior $X.X diluted for per Thanks, per loss $X.XX share a the $X $X.XX attributable the net million compared to or with diluted million income

$X revenues cash For prior the company the have million period. currently XXX% options fully earmarked under X.X issuance and units XX, company million June balance Rooms, other stock. common year. end of income quarter, compared $X.XX second rate X.X relates of stock diluted program. to our compensation GAAP Adjusted million share currently the shares the the corporate million. million quarter investments call equity stock and for treatment I $XX.X was put quarter, common over with initiatives. a Adjusted will diluted and RED million for in of and XXX%. $XXX or the rate XXXX, and for the restricted market or interest growth the common reflecting with million issued now Pure fully Also share We to to million, X.X the quarter million and $X.X J&S, shares deferred for approximately second with had diluted The in-the-money in turn prior a At per & the Leisure investments, of net $XX.X was total Lismore capitalization our $X.XX Jeremy the reflecting have minority were Hospitality diluted Capital, compared year options, some $XX.X we shares had for the period the growth of associated discuss a over of strategic EBITDA OpenKey, million as year total outstanding. prior per our $X.X outstanding for

Jeremy Welter

you, Thank Deric.

investment grow and this, strategy excited hospitality pricing updates strategically services are during is from and unique operating initiative levels we and these to we products companies accelerator receive we where companies. as able in they products We our the quarter. we this strategy doing more in a and synergies services are would hotel To than an to businesses service provide strong in establish initiatives our second industry, that believe their and explain our otherwise vendor. the fully, results for hospitality industry to In platforms higher attractive act a and third-party service providing the of invest

a are companies them able the by on also by in we vast REITs ways invest number hotels best the We referring to to opportunities. practices in grow in by which relationships and industry consulting of leveraging our our

and very that by services excited As forward and Remington’s owners. our We going can Rob the Project for that and platform We with are mentioned the our fit you on forward and and it of updating about the see services business. to well Management diversifying very significant to the our of be our acquisition earlier, Project businesses of we Management operations strategy to will provide products believe in it future. business hospitality to hotels growing look the progress very business we expect impactful in opportunity hotel

XX% on is leading design In and audiovisual for a services, creative services, J&S Moving integrated suite and and XX% prior end of growth integration. needs, $XX.X meeting with EBITDA million our year. increased $X.X revenues the services an and period. audiovisual over second services XX% solution event businesses, in the or year source show adjusted XX% adjusted through revenue was hospitality growth and and the quarter, products our including services, million event and compared to XXXX single November prior second EBITDA quarter, investment increased Since of to the was for

with team ability improve highlight five and from Cabos provider been undertaken to additional deep decision operations. add initiatives, the service initiatives also optimize and Since build and organizational familiar, the platforms. has in a operational making with. investment pipeline one review our of significant at transition resorts plan underscoring profitability to practices AV J&S up group, to incredible increasing accompanied analytics many as its action in room from reports resulted level. comprehensive and company’s contracts revenue increased positive J&S results revenue the at and and by of J&S in advisory highlighted to our have hotel Los hotels our highlighting time executed analysis of are company’s Additionally, the montage only to hotels quality prior value creation customer structure, quarter, value managed This impressive the average and a along of making. dive we relationships. relationships results up Moreover positions respective integrating industry including with the the new occurred dedicated into horsepower Cabos, the scores the seek night asset drive able best since during J&S and leveraging Los second have XX% sales results Ashford hotels, managed and strong satisfaction These the management average related the the to benefits XX% we provide analytics in strategy our to due These

convention with hotels As multi-year annual J&S of addition and over quarter and regular clients. in events the contracts second place centers had productions, business XX XXX in XXX locations representing venue to X,XXX and

J&S, the for trailing remaining Ashford total the XX, company hotels to growth only June revenue managed accelerate represented months highlighting business X% of For further. opportunity attributable exceptional asset XX ending period of the even

hotels the as to opportunity service and the competitors see into given internationally provider integrating we U.S. a leading J&S relative forward, the similar industry. Going reputation company’s in tremendous outstanding a for more in

generated at J&S. that is and filed Capital long-term deep quarter. along our the growth with previously advisory pricing Braemar hospitality third and note, One which to and Trust the since services to acquired an have like business knowledge seasonality our These over in the to continue otherwise remind you years relationships in detailing management X-K provided providing revenue past second level in seasonal J&S been quarter final Lismore historical hopefully know-how context To generated experience third-parties debt of J&S $X Lismore will extensive of quarters. I placement competitive we of the the placement would industry fuel for leverage and placement Capital XXXX. been have property has $X.X of by and financings. the fees debt team end fees are would We related accelerate to terms and by and resulting in million to million four quarter services that total in platform a

include quality benefits past the quarters the market, process of the transactions. interest from of a execution spreads available achieving Over debt the and annual best competitive high and four efficient Braemar benefited on These terms savings. to running and expected Trust achieve have debt significant lower Lismore’s placement service

the leading Trust million activities and As years first expense provider sourced the previous at Ashford. Islands. company to RED Thomas transportation it contract savings for in operations the when St. meaningful adjusted resort refinancing which $XXX,XXX $XXX,XXX the reopens quarter in past and generate to the agreement that resorts an be of that the outside the between in Hospitality RED services in RED of To contracts the would capitalize Through and to a in St. expected to the XXXX. and water have half terms. RED employees other with in to of executed provide West level. interest Virgin year of loan guests long-term resulted Hospitality Hospitality our the Hospitality this Leisure provided year Virgin in new reopen sports performance EBITDA early into charter had Lismore’s second and limited early annually represents expect half is under X and John the expected ferry the is travel Islands the as and example XXXX to business John have $XX services a end, began U.S. approximately and over approximately second & This the from what in ferry St. annual

We to end expect thereafter. establish RED a of have and an also on avenues Hospitality this Key to completed significant execute market growth the introductory plan West market with vertical business development year in analysis by

adjusted opportunities XX the been currently revenue revenue across base. well to compared to was the as outlook Columbia customer current in growth of and compared year. company continues and provider the of also with with prior in for hospitality the prior was we supported and year-to-date. be $XXX,XXX growth and hotel mobile OpenKey has office Hospitality remain excited growth manufacturers $XXX,XXX and instrumental XX,XXX second the into revenue Mexico by of and access revenue and platform key several adjusted lock industry company EBITDA Pure XXX% space. of portfolios hotels rooms as independent Additionally, and is hospitality XXX% leading optimistic OpenKey. brands EBITDA of of to quarter as leading countries. is rooms contract remain expand serving under prospects We generated The see We different Rica for company the our access business platforms. many hypoallergenic worldwide. XX quarter $XXX,XXX other $XX,XXX of Costa the Mexico, to year the RED second in in of with future In expand focused with this The continues the advisory approximately Guadalajara, which the platform interfaces year-to-date for to Rooms major in its hotels the thousands its to growth resellers

investment industry compared XX demand asset industry approximately the was to the seen synergistically. will In asset rooms second including company Pure managed our in the revenue the XXX and year, that throughout we us growth growth X,XXX States in believe optimize hospitality representing order in currently quarter the Rooms company to to expertise bring the contracts allow a for well hotels. managed and place in with growing and health as has prior XX% as hotels base United Ashford have to knowledge offerings wellness our We

the and a we to Rooms that believe that anticipate XX% found Rooms third-party Pure significant will premium Pure able additional we the value for on our program We is per at significant property be value between and XX% forward achieve by and returns we night adding proposition Ashford drive in integrating very hotels rate asset product this investment. rooms hotels typically and our compelling. creation into because managed experience of typically growth hotel participate to Going

resources the a We dedicated amount of sales revamped creation position. have invested a the new the and in-room year into implementing many time business company including through website, development and the new initiatives amenities of significant program including half of first

from the about in growth, recent Rooms. remain prospects initiatives these we very future With for place Pure excited

and remarks now evaluating on quarters. We prepared investments continue we in operating to additional the we to questions. share our call more company hope details open front remain your to upcoming and active in the up That in that concludes will

Operator

Maher Riley [Operator you. FBR. B. Thank our question with first take will Bryan We Instructions] from

Bryan Maher

to maybe about morning, how guys Good growth of think Deric, this and of you of we I don’t know, is should over business next project best business Management, Project the Remington that the that couple years? the regarding what be for seasonality

Monty Bennett

This is Monty.

if that. seasonality to that internally that about historically for will an to we release doing you business in of some sense think help there, makes to so I X-K us talk

guidance you as as don’t give As forward, know. going we far

the unlike into it third-party any all I plug hotels. we business, that of businesses bought opposite, we business. it don’t is Ashford third-party is just This but has doesn’t business a them lot think got already, think it Ashford about business. can the of they have that some have to They the Ashford immediately other have

its So into for business. for Ashford opportunities business plugging are not growth third-party

Bryan Maher

Remington exclusive now already out bid that you before? they how about and and to guys Okay. bids, was Project didn’t prepared did Management work Braemar, a And on comment made previously do won that the on remarks those Trust your or Ashford rights Remington call having then that

Monty Bennett

right just that past, business. that effectively had in might I right a think Ashford words with right, Remington bought in this has now be that mishmash the it it of Inc. that but and

Bryan Maher

the for in Trust, And this understand. is understanding how at lot that go it’s particularly think it my and in impact about upside activity, just quarter XQ on level refinancing a we then about reported we and Deric, it’s of basis? a should think second should of maybe forward from that the how came one the I Okay, Ashford

Deric Eubanks

Yes. Bryan, it’s Deric.

the million about for active So to placement of I Ashford they Ashford fees in Braemar $X debt case as in REITs by that’s revenue or was resulted debt get Inc. obviously the situation in either going mean when quarter when be quarter, refinancing to new case the second acquisitions. And debt but not a the also second Trust, in terms of refinance

So and existing as you its we as asset that. new debt. the has refinanced get associated Lismore expect debt put the buy those REITs Trust But significant know with fees a of on really assets, portion to Ashford would

lot other in refinance a of opportunities terms see it will So their to just other acquisitions that again we go has if But been as already that and some we of be haven’t our the of for. debt opportunistic spoken forward refinanced. in we with

Bryan Maher

Okay.

to clear for? give don’t be recurring we not you something modelling be guys So should guidance, that it’s and I know

Deric Eubanks

previously the will I with I just think that stick answer I gave.

Bryan Maher

have. all I That’s Thanks.

Operator

our Argus Research. from We question with Biggar will Stephen take next

Stephen Biggar

Thanks. morning. Good

one acquisition, so the J&S question out it fairly like reason but let’s First, easily can revenues there $XX the and going to the is if one contributions the could I it a soon, say this to here million seems you with that run $XX programs I given how guess acceleration? XX% I subscribed so an the does very on is their just the particular, is already for is that’s parts, appreciate be acquisitions that to in if helpful, if $XXX million that if say program on I secondly two now color anything to successful mean enhanced guess and it’s about is go pipeline believe can now million, EBITDA,

Monty Bennett

Monty. is This Yes. Sure.

program million full now said months Trust have our So acquisition if Ashford had XX tranche [indiscernible] the of Hilton take the about spoken $XXX that guidance with has sure, right of the it to it, million deployed into the do be been or the a million Ashford the Alexandria. so $XX Inc. and could Trust million be done we we certainly slower. for already On that’s $XXX are and within like $XX could faster, and that would deals Ashford has it between already first And that month We to been about wouldn’t guidance. given it. ERP the of

the sustaining agreement, there As interest agreement side, expand has into parties has an expansion, program does by the the far on as there both is but it. both baked million side potential then signing this the to time, at just time is were further, time that require been to there. and from of but it’s go kind agreement It to It start $XX the desire thoughts been the it expand of with and

We active the marketplace. very do it’s think got it’s out in marketplace, see very are, we excited that’s opportunities we it, where great potential. So about but

looking it within that on problem it obligation Ashford bidding of in Trust opportunities speak, year. capital and so at fulfilling will have hopefully is no the we as deploying a

Stephen Biggar

Thanks. Okay.

Monty Bennett

any questions? other Alright. there Are

management want here guys call. for Thank quarterly success. next And quarter, team talking look forward your We the an you. outstanding very you conference just thanking call and very, for none. are I with this on end to hard worked continued all have our by thanks to hearing tremendous our everyone to support shareholders and we

Operator

you conclude This today’s does participation. conference. for your I thank

disconnect. now may You

Ashford (AINC) 10 Aug 182018 Q2 Earnings call transcript