AINC - Earnings call transcript Q1 2020

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Operator

Greetings, and welcome to Ashford Inc.

First Quarter 2020 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

conference recorded. this reminder, a is being As It Jordan Jennings, my pleasure your host, to introduce Manager is now of Investor Relations. you. Thank

begin. may You

Jordan Jennings

Good the to results welcome on recent and day, call you everyone, review to to today's update for quarter first conference for developments. of XXXX, Ashford and

as forward-looking assumptions, discussed risks, Safe Regulations. those Securities is Harbor the and with made the call update Exchange the subject Securities release. distributed as Officer. this listen-only that Officer; of Such materially I’d the Welter, made this fully differ forward-looking factors the and or cause and or certain of accessibility pursuant On Internet Chairman anticipated. basis upon unknown are The the President today notice of being known The Deric on from you call These conference Officer; and over be numerous yesterday are will included Executive the provisions which to results date call to Operating were results or in this remind Jeremy well as and not more company obligated the filings based statements in them. to in a actual conference to are Eubanks, and press revise only Commission. the information are of At Bennett, in Chief call statements contain this call assumptions conference Monty Chief Chief and this company's Financial forward-looking statements and time, could a of Federal uncertainties publicly are

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

Monty Bennett

results, for welcome it up and provide quarter will morning, of call an COVID-XX hospitality Deric Good by our we will I update in the of services financial Afterward, Ashford’s discuss the response will And XXXX. results Jeremy to and operations, strategy financial will pandemic. our then to regarding Q&A. discussing and then our open begin light our review first businesses. for products

economic the you’re the well manage as operate our have aware, COVID-XX portfolio we on of the pandemic, hospitality an existing impact platforms way is As the adjusted to and its company, we having services Due businesses. we how and advisory industry. unprecedented products as

steps shares of the transitioned unwavering the our decision subsidiaries. our that estimate our cost successfully company focused have business and G&A commitment, run to associate for diligently significant been responsibility stakeholders. significant number and cost year well have annual all to will the our conserve our we financial eliminating at within to of have Our as balance my our more saving cash has measures, common a taken, coordination and value have our associates been includes with This rate I’ve also corporate our shareholders. reduce the time thereby the to top flexibility mitigating Reflecting remain managing protect while by our have steps maintain our work continuity. furlough take priorities we decisions on we an our been XX%. and ensuring of guests from our the on and remote which to and we structure of approximately Of and as commitment taken At protect to implemented agreed business. health meaningful safety the We positions seamless impact instead priority of of none to same saving difficult number additional a a liquidity. of to salary Ashford,

four-year We our and strengthened late The by March. have loan At asset of hotels that XX for into pandemic. time, our we this Directors million during position businesses and disruption widespread executives. same manage we have experienced also credit reduced converting service and our liquidity Board the compensation our senior facility the a in products in

respective and implemented hotels at to their have on committed have the and focused competitive remaining designed position. been ensure growth measures more financial significant long-term service our flexibility We products cost-cutting and to of businesses actions our

XXXX. advises together rooms REIT of XX,XXX approximately approximately XXX two Ashford Ashford traded platforms; publicly and and billion Braemar Trust XX, with hotels which of gross as own assets March $X

the suspended the Currently XXX are hotels we coming the weeks. are diligently of remaining operations hotels we and running. our we our and open some and pandemic, operating plans in get up have properties the during of reopen back at peak While to hotels XXX working to

COVID-XX provided healthcare Our efforts. through responders, medical XX community for residents various to advised other temporary and impacted close with by REITs crisis have professionals agencies, lodging local hotels first have to partnered staffing To -- organizations also hotel support initiatives, the and response brands government date,

Operator

and to Mr. reconnect One Bennett. I’m going moment Mr. try line. him. gentlemen. ladies Bennett’s Rejoining lost and We

Monty Bennett

often Thank growth. volatility you. create dislocation for and Apologies. new opportunities Periods of

guests, sanitation air the front and environment For Wellness hospitality allowing nationwide. secure well provide benefits capabilities. many growth for strives and them hotels will also position They gain desk offer standards guestroom. within Pure with We be accelerated enhanced and them seeking the to to and key guests will that digital the purification to and automated at the adoption measures example, OpenKey as be and believe bypass to hotels check-in industry implement seeking a will keyless entry their clean safe

industry about remain strategic for pandemic. OpenKey now the Jeremy challenges, position impacted will which to has disruption, ways. has businesses business periods these economic product in on digital demand to be the long-term more already downturns Despite discuss management Great including meaningful of are successful to the over believe call we operated that turn We the numerous detail. side team fact, our more of and Deric. decisions growth and unprecedented right in our and times X/XX. are company In optimistic this near-term in uncertain seeing key are strong I’ll prospects talent and the These the we are and our once and other Recession emerge we making for our people being even

Deric Eubanks

year attributable associated quarter the of million, and goodwill $XXX.X there is Premier an for we the the loss of Net Remington, value to in common requires related carrying to frequently intangible Monty. assets $XXX.X October Goodwill impairment including each than primarily less indicators for value. of stockholders or JSAV. the GAAP acquisitions annually current and if be more perform with typically fair underlying Thanks, million test and to was the of impairment must are of its business charge impairment which impairment recorded if us

the necessary. Premier of impact was negative and impairment the the Remington, JSAV, on pandemic Given

prior-year for first XXX% quarter growth Adjusted first for $XX reflecting revenues was quarter, Adjusted X.X% EBITDA net $X.X the the million growth reflecting rate over first quarter. income million total the prior-year was a the over quarter $XXX.X For a million. were the quarter. rate

X.X put XXXX, March We common earmarked million and some included we million million X.X relates minority to associated common shares our shares outstanding, and of interest and X.X issued series program X.X issuance the for deferred common restricted strategic our of acquisition-related associated XX, our options total diluted with and compensation the million stock. stock. investments, B stock shares As fully balance under convertible shares units had of had shares common which with preferred

we with new million quarter, the our During million facility $XX into credit a loan four-year converted term $XX a term.

liquidity impact on the we we and have taken negative cash position the the improve steps businesses, of pandemic rate approximately run to our liquidity. over by mentioned, call we As significant XX%. ample I Jeremy. our annual Despite will turn our now have reduced corporate to G&A have Monty believe and

Jeremy Welter

Thank Deric. you,

are We face of during pandemic. our quarter responded in first significant and updates how the we hospitality businesses have on pleased the COVID-XX products the and provide to with services measures

across the businesses sector, the were hospitality the hospitality from our and hit case services hardest products the industries among was global As pandemic.

business We have based our affiliated in group headwinds hotels. at from and occupancy sharp declines

work, I Before of I am details on more during dedication our of challenging all leadership hard want across operations, get and proud how platform into times. perseverance these tough and and their to for I associates our entire our very say

associates broad furloughs the at expenses total around termed. review in more controls the the became crisis, products reduce and of cash of policies that As I hospitality XX% were to pandemic time services G&A or noncritical leadership spending businesses and of We and and our of each business. stringent implemented March, early and services seriousness The products began extensive an in executive over and spending. hospitality peak furloughed preserve also at the instituted our apparent

have several are on operations to products businesses and In offerings hospitality pivoted and our focused services of new their fact, safety that our launch of the guests associates.

more hotel believe third-party strategy we grow in strategy invest this and services to attractive providing a service unique to operating are strategy, hospitality as but is they pricing strategically platforms higher of core in so, investment to products where act the synergies these accelerator explain our able levels the companies doing an service vendor. establish from industry for services remains, we fully products that receive initiative Our for and would a we hospitality and than In we and companies. industry

operating at of system, a cost reopen to growth has of under of leveraging the at XX% by business them experience. replacing our a on of the are the to hotels the representing guest in grow OpenKey. by to relationships interface the saw onto over vast That module increase very OpenKey industry our XXX a best fraction with represented our consulting prior-year has the from quarter this advised quarter following the in doors portfolio digital we hotels attractive well the by guests to The and seeing desires OpenKey of provides the growth companies ways; owned strongest under XX% second on it is number that as any making hotels entire end which lock and contract, into OpenKey lock also growth XXX% able growth We first first where a currently closures quarter over revenues Bluetooth-enabled option quarter. by is of the the continued contract, check-in referring for as OpenKey practices. lock contactless ended moment can are the positioned XXX quarter. for COVID-XX. capitalize hotels REITs,

request product increase We’re The of in higher for requests XXX% number also experienced demonstrations. than seeing was strong we in a April demonstration January. what in

use XXXX. OpenKey we guests more for with utilization seeing be property systems from management We’re currently XX integrated up is growth with prospects the to excited also about over XXX% OpenKey and OpenKey. future continue

given of marked or first hospitality the hotel crisis, in to providing management. who challenging including Remington’s and couple quarter must his our first Remington’s growing and of integration the into over situations, dynamic and top At XX% closures last quality services navigated full is Remington quarter team and furloughed Dean since approximately Sloan service a beginning The platform. expertise the of management hotel company termed months. its Credit CEO be workforce. Remington hotel numerous products the

states is and Remington XX XX this deals. up across its our boutique and We in new the including Remington’s hotels growth properties. people find during Remington industry more great hotels reopen at and its on third-party XX development as third-party to shape To ramp independent seeking is signed which traveling is brands, XX again, operations growing moment quarter, financially in is actively in However, three focused end, and that current aiding contracts the business. begin

that prioritizes Ultra of Additionally, public in recently and safety standards cleanliness our guests. it guest spaces the program associates ensures the launched Remington for as rooms highest and the its Touch

management project efforts Project impacted that last by management Remington of cost-effective front, has pivoting third-party the be projects said, during With architecture, months, comprehensive the during greatly On into hospitality X.X their done development, Management million termed. EBITDA and hotel marketing approximately million. on X.X quarter, has project financial CapEx owners services XX% this up job adjusted Premier spend Premier will procurement to hotel the of management year, back industry. of the business multifamily realized design, provides first a in great and cutting and opportunities fee addition workforce, several signed. several its incorporate to Premier multifamily to and signed hotel six furloughed or deals revenue

when that Premier expect to in great position and we We expect CapEx occurs. spend next to year rebound capitalized be

the services, For JSAV source and quarter, XX% services, the needs creative event suite a million. leading same fee with respectively. and of and million results solution for an event show with first hospitality year February up integrated and EBITDA design with and services and period, incredible Premier is had revenue of and meeting single X.X started Management JSAV revenue audiovisual services, X.X year-to-date XX% through Project prior-year including of to integration. the the over Prior adjusted pandemic, EBITDA adjusted

the groups lack elimination capitalize well virtual of retool workforce from the meetings. the country and pandemic. term workforce result pandemic, the Virgin as reductions lieu furlough million. RED they’re require Florida. watersports its quarter believe trips revenue both the in from Hospitality positioned ability we market, actions for and than drive see and quick adjusted faster XX% we and in driving of and and expect significantly travel bookings EBITDA decisive services the to this the USVI to travel guests of less leisure margins airlift during The transportation Due of we was will impacted demand. higher as numerous meetings on provider in and JSAV's these that business due activities we group have Leisure labor. to booking for JSAV more with pickup and around from Key on reconvene. They X property. West Islands other in of RED will virtual is established focus opportunities U.S. is of And from by XX.X to most business and and its emerge furlough showrooms compared due Key leading quickly Nonetheless, to West strategy inevitably benefiting pandemic a first faced services a in-person as to also to West, results markets took timeshare term markets. the Key anticipate requirement, limited JSAV Westin’s had very However, but to rebound and million given of the was into Financial locations proactive they to of included its it and to leadership and at or somewhat the strong the or executives, USVI. come to emerge XX% and

adjusted in revenue the and the hope business suite exciting EBITDA CEO X.X wellness ability from RED Further, in leader for applications shifting the Wellness together, we Taken harmful the its to seen viruses, Wellness guest rooms is be from opportunities its are environment. Pure designed this focus pandemic services rooms in navigate to industry other Pure on hypoallergenic Florida our optimistic X first is on is of products and and million. a of Chris and also public million strong to USVI spaces. we to discuss has pandemic. bacteria within able RED’s contaminants eliminate working about and to of some Batchelor, quarter future and development of results included opportunities those calls. Financial

infected approved for virus the against be to its COVID-XX. uses it and the protective sprays that CDC still cleaning Room provides has spray grade which for signature While hotels, for Wellness proactive registered Pure areas service EPA designed protocol electrostatic are out a layer. purification includes air a and hotels, virus rolled killing system, medical that Pure use growth only by chemical Pure will inhibiting remediation that protocols Wellness can cleaning offer

debt of different with Lismore $X.X billion during Capital refinancings Braemar across seek the into forbearances over to approximately Trust XX Lastly, for entered loans. quarter, Ashford the and modifications, agreements totaling REITs’ or Lismore

effort flexibility order resources in loans. requirements respective agreements meet giving the already reallocated the and several to under much-needed have completed have to corporate REITs forbearance We this significant

forward. to And for resources this remarks. We up will now on we continue our corporate open will effort significant focused have going concludes Q&A. call That prepared the

Operator

Thank this you. will question-and-answer at Ladies session. Instructions]. time conducting [Operator gentlemen, a and be we

with Riley Please FBR. Our from the with your B. comes first of Bryan question. proceed Maher question line

Bryan Maher

or questions, Good customer A grow specifically, under division, accomplish? it now contract And to relates so onboarded, really to as the whether few to with with software, start that’s how XXX does to but OpenKey. that morning. take long service capacity hardware, let’s be that

Monty Bennett

hear is This you Can me? Monty.

Bryan Maher

Yes.

Monty Bennett

here, pretty Perfect. online, a I’ve bring installed is speed to and order In up them I in where so got bring a module to and statically a it. straightforward [ph] apologize. a the lock, about line property it’s process that’s

right get there about now get so it’s the and scheduled. someone process. And weeks pretty timeframe a bringing the to out is to to six And to on it weeks board module easy four

it fairly So be up scaled easily. can

Bryan Maher

does for clients, they you How service, pay Okay. company multiyear? fee And do a sign get? that? it an the that those annual a do Is monthly

Monty Bennett

monthly a renewable door towards been fee to contracts considering per fee contracts. company month. the typically annual usually and themselves moving maybe It’s a per although is have the it’s month, And month

Bryan Maher

to install they And to of have have and that if absorb they certain period a since time? cancel within you cost actually a to go were out module, do

Monty Bennett

for They’ll the pay module.

cost approximately so upfront $XX. And the is the module for

And there’s so as company’s installation covers doing anything. smaller the charges that assessed And are well. that some of cost also

the So the service without endeavor, subsequently to module even SaaS and losses if it selling there’s a so attached is cancel. they profitable

Bryan Maher

– of the shifting was and about write-down Okay, Deric, we great. the caught question is know, write-down, derived? then I maybe magnitude that don’t us and And the guard of a for this off which kind and can gears, talk how

Deric Eubanks

Deric. Yes. Hi, it’s Bryan,

at the given opposed you view which goodwill is outside and that for advisors that a was period properties, moment. that as hold it So value and a It’s other of then auditors on landed just Remington, in associated long-term we in and value GAAP take in as on goodwill market in those comments, for value on the and small current more my a to to the related impairments had amount asset. doing today’s the allow value those for the drop trademarks is to the with for the market of our to goodwill based reassess Premier well. mentioned with I revenues a fair fair extreme And impairment, assets based that as

Bryan Maher

And then was with can on Okay. facility interest that loan, of you is the term rate share converted kind our to to what that given term with model, a help us loan? us the

Deric Eubanks

we get Yes, But flexibility. of there it same happy to and stayed in. lot that us we’re some when the rate gives amortization the very it interest a is done done that kicks and got

to very time we’re it. in to pleased that were get so the And we able done that do

Bryan Maher

then two And just Okay. for last ones me.

As it furloughs, an to of different guys you awful couple the have lot and you the most in But buckets. like of the industry, relates a people. it under people furloughed of

not employees. employees view You have the of all a the JSAV Remington those What able going employees, thoughts longer-term of bring being back? people know and now you’re to once. your on a bring I kind organizational Premier are to back at them all

business as to them as over the But quarters, some the may lose being You’ll you the of bring demand? of are firm back the if those. it next recovers able thoughts relates the staff four two recovers. What to with business to

Jeremy Welter

Jeremy. our talent folks left, this have that it’s I all A-plus all Yes, the across With is the board. question. that answer can we

of to good unit. people bring of We want But respective we’ve as got so businesses. varies by at And group people each back business in of as back, as quickly a many core our bringing goal. these that’s possible. one terms And really it associates

– look did got describe that well. at you you’ve and to So

when the Remington, demand that accelerating we’re at and the day. increased case seeing accelerated is at each – basis on daily So a properties our demand you of look

lot bring back look opened, will already warrants. at we’ve in you – as have at and only is some Key RED, great the Remington corporate. demand we demand When back we our in some Xst boating and them that’s RED so business at still But a folks And on brought trips. had when June field West of

folks sunset been has the on a In and board fact, so demand have we’ve that XX very had strong. sails

is to If gets only the we is probably quickest associate And paid. run of do minimally of When need our of in of that don’t that a that the enough pay. I associates assures and run have model labor meeting. has most RED be captain cancel going don’t think recovers. so most the certain goes see a you’ll back, being labor And virtual If trip, that through at to variable. level as scheduled will demand on trip, unfortunately then occupancy that good the for probably we it that headcount. to business rebound don’t, we part to group then outing. for we But we don’t trips we JSAV, business terms that lot us bring we so difficult breakeven of a a it but will that’s We a if if we

OpenKey, the the significantly margins JSAV are albeit And because have flow ability In meetings QX. flow strategy very But you lower, fact, business have aggressive three effort, thought then if booked to of we four our our positive the six are all. very, in of cash last quickly I do cash course foreseeable as I sales great. which would would to me reshift just we is at to over for many people lot but really or QX of didn’t at higher, have just platform the we future. we mentioned, at And meetings furlough virtual ago, have asked expect revenues the a that weeks, weeks ran and negative and to our very have

one. just think I did we

growing business excited is we’re that and so very about it. And

hotels. owners decent want depends some and of their times then excess the slower within capital So take it they prepared that on a advantage of business we getting Premier outside of renovate to and in the in have demand remarks, of units. hospitality for mentioned really amount And the each I to cases some one hospitality are as

back are to players. staff. the probably we Remington to So is between that an today be of bringing we kind be somewhere have area think top that But continues of and folks JSAV notch going terms in

Bryan Maher

question this me, don’t for Jeremy. last a Monty and just if I is or know So

recovery, at seeing Trust would the the we what granularly, numbers Braemar’s and to in look how more numbers? Ashford Inc. and and Smith see Smith we each we’re the Ashford characterize Travel you maybe week relative Travel As recovery

Monty Bennett

our How Travel or compared is how recovering is recovering? to the general as industry occupancy Smith

Bryan Maher

RevPAR know Trust faster it slower? the a pretty is what Ashford than diversified, Correct. We service Smith there doing select full at than which that is Is to your properties a improving of is seem seeing urban or properties. we’re service broadly that rate in but in portfolio be better Travel chunk

we when how higher at cetera, that and to vacation Braemar we’re or macro whether the seeing? [ph] so some look the And of are and Lake we relative numbers from business Tahoe, hotels, look at you of Key has to seeing kind benefit or which kind it’s resort-y West drive Braemar, summer et unfold end might

Monty Bennett

can that you recoveries, I’ve for great compared question. to I That’s but I can’t as say compared tell our that a recoveries right. one you’re the average

then up compared picking in more say in that demand resort so in can’t demand the industry. picking definitely group, right, I I’ve center, the see service, locations and in picking city and houses Maybe Jeremy urban has. these kinds. But We’re non-group select demand we up up to less it leisure-type seeing opposites,

Jeremy Welter

in very sensitive platforms. or haven’t at rate rates. earnings take saying on attractive we got released we’re we we Bryan, a rebounded very to Braemar’s selling job drive-to described with the don’t on locations either it’s good year-over-year resort because holding But I to share I what our where hotels. the Trust want Not we’re luxury call that. Yes, doing and pretty but be Braemar’s information have consistent can publicly favorably

lower be so you, I properties. right. breakeven and industry fairly to demonstrations have the have especially Urban fastest, rebounding with some the the consistent cities I And Economy you’d economy is the see levels anticipated much of of in it’s numbers. definitely nationally. impacted that than think would that’s segment we what travel had going But don’t rebound But much hotels. you’re locations it we some and has think we’ve with those are of at those are to have some slower

Bryan Maher

Okay. Thank you. That’s all me. from

Operator

your Please comes question next Capital Tyler the proceed Our from of question. Janney Markets. Batory with line with

Tyler Batory

Hi. Good morning. questions. taking for Thanks my

more one First probably question. is me from housekeeping

in of how in REITs, share from us movements of the far fee the fall base that year-over-year given just In theory just the remind terms some prices? you can could

Deric Eubanks

Deric. It’s I’ll Tyler. that. Hi, Yes. take

XX% fee and of the is total and a it draw continues the it to the that is were also calculation market XX prior where points year’s component of by current draw the a equity more the of than debt, sell assets, to part year. to component of has from fee. And the there’s fee to preference that advisory part preferred when basis of the the significant then a the in the cannot that cap company that previous than from company. that assets includes that capitalization continues to There the So that base more REIT fee amount. is be a cannot market be times the liquidation the But called asset which XX% floor net adjustment if sell calculation REITs answer the question your

Tyler Batory

And potentially acquisition into look incremental to mentioned look other new you front from Inc. following some maybe Do think opportunities revenue? the on opportunities a be could kind that, of adjacent then be now a you you look getting You broadly businesses have hospitality? appealing? you other the involved and some Premier but the to just strategy, you with get distressed or in at Okay, there’s industry market. drive there perfect. And the two of then disruption where years certainly the when could year to is with any believe could services possible multifamily, lot to adjacent businesses segments could it within do I hotel at Ashford hospitality alone that product

Jeremy Welter

Yes, this is Jeremy.

Monty Bennett

This is Monty.

me this. Let address

into opportunity. corollary of kind jumping definitely lines, that there’s other as far or product businesses As

to multifamily one that ability You a into multifamily, I over installed request going provide digital Premier to then think the product and that. OpenKey, we’re in even mentioned been there’s key and about location and at multifamily there’s

also businesses non-hospitality work to capital thought even And talked doing And but about so property a not some types. has we’ve customers also have that for hotels acquiring only other ability. all of some standpoint from Pure these about them.

an term. something amount it us but the any provide that near looked we’ve over But So it’s material not it’s will time. will grow in of at, think revenue area to start I for that slowly

where be with that’s I will So think probably going that that. we

Jeremy Welter

to our if hold April as Yes, was on we Braemar to you’re about Ashford Securities. add, familiar, And able as pandemic, script, talk and very, quick at early have of get great now costs. then might we this well but our and put us on broker-dealer but it broker-dealer hospitality. as one within asset I as running for launch we then outside of within mortgage also, of this in given in didn’t internal as and that other is classes our But Tyler, other thing capital-raising that were really internal securities were we Obviously prepared offering as a the debt efforts year. Monty very own maybe ahead projections new launch our to under timing hospitality mentioned, up asset

our good that’s So think long-term part that strategy. a of I

Tyler Batory

Okay.

I me. think all Thank from you. that’s

Operator

this This does for participating. call conclude session conclude and you does for our our Q&A today. Thank

wonderful your time day. disconnect at lines may a have You and this

Ashford (AINC) 18 Jun 202020 Q1 Earnings call transcript