- Earnings call transcript Q2 2022

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Operator

Greetings and welcome to the Ashford Inc.

Second Quarter 2022 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jordan Jennings, Investor Relations for Ashford Inc.

Jordan Jennings

Good day, everyone, and welcome to today's conference call to review results for Ashford for the second quarter of 2022 and to update you on recent developments.

will Managing Eubanks, President Director Management. today and Financial of call Batis, Eric and the be Chief Deric Officer; Portfolio On Senior Vice results internet were sensibility yesterday and of on A release. listen-only distributed as press conference a the this call the over basis a well as of notice the me of you are certain contain upon federal information and statements are this or assumptions in At based provisions remind time, and made safe pursuant securities regulations. to being let the call that harbor this conference forward-looking forward-looking known statements materially could results are uncertainties Such subject to differ or cause assumptions, numerous to from and which those anticipated. unknown risks, actual These Securities factors Commission. in the more discussed and company's filings Exchange fully with the are the obligated this is date the company statements publicly to and of are forward-looking The in of our call, not included or conference revise update them. as only made

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

Deric Eubanks

Eric results you financial provide we'll quarter XXXX. our an that, regarding of operations, an to operating I'll the then and start our update will and financial morning, welcome for to second Q&A. giving After call of for and strategy it discuss businesses. overview open our quarter, by up results the Good for our

continues key The replatforms today's in today to momentum. to developments are our things lot rapid gain highlight to of industry call. have footing. discuss are: exciting a of first, lodging we Both We recovery on solid the want on the revised

demand and Ashford increases liquidity. flow quarter quarter significant and demand key and to Braemar notable Trust leisure in cash markets. from urban from strongly has begun finally in recover. continues benefiting second generated saw It many corporate has the the positive and bounce hotels strong is in increased as group demand its back to rate benefit

end mix which at in recent minute. stood third-party Second, to significantly we with Remington's strong third-party hotels in results added highlighted around initiatives continue to of transformational growth this mix second details Chesapeake of business. our third-party Eric will At management see transaction discuss Hospitality, more Remington's under quarter, acquisition a the Remington's XX%. of the approximately of

substantial we growing of raising at we have our To AUM, continue capital retail focus into Third, preferred almost $XXX stock. successful Ashford in quarter, our a the quarter. to we on that capital to continue and through date, doubled of amounts of our efforts raising has trend been issued each Braemar ramp Securities. raising the nontraded its offering, this has approximately million inception expect capital third Since up

fourth, target pro only which level. forma EBITDA offering the state And effective. launched adjusted is of now of not highest $XX.X in private adjusted quarter, Texas. quarterly estate now we in above all the above is EBITDA million the EBITDA updated XXXX the have trailing as a but history. XXXX Trust guidance second real the well nontraded recently $XX our investments adjusted XX-month Ashford of company's commercial our million, growth that is we preferred end our reported of its And offering of oriented types will of stock And in

that believe we to We continue well future growth. are for positioned

XXX from approximately of owned focus Braemar, currently and assets benefiting XX,XXX approximately Trust is XX, billion and and June Ashford had rooms as resorts. its Braemar platforms, REIT hotels its $X gross XXXX. traded the with on publicly X luxury of specifically segment Our luxury

have exceeded Beach with urban its significantly in dividend Reserve, significantly strong now, Braemar industry-leading its iconic in Puerto hotels its reinstated performers and resorts second the quarters XXXX Braemar Dorado, ramp quarter Ritz-Carlton and to this for second up to Braemar's While of several began also quarterly completed Dorado room quarter. results. recently continues results its been the its report results Rico. common stock acquisition XX second cycle

its now significantly stock, preferred through its Trust delevered issued J is its on strategic of redeemable sheet, and has offering which Ashford will registration balance paying its on Ashford preferred Securities. K the for Series is and interest effective dividends financing, non-traded be current paying Series now is statement

Trust in a momentum positive Ashford at significant cash which quarter the remain portfolio. maintain balance, its encouraged to ended also and million $XXX by the continued

believe Looking ahead, recovery their the continued and hotel industry, with of we focused both positioned platforms remain well well, liquidity. performing we both stabilized on are strategic objectives. have and now significant both And for future the REITs

designed and strategy Our growth. is for structure

powerful businesses all management. benefit we that as a grow ecosystem have We under of our assets

Net about structure scale Our industry the turn the third-party hospitality benefits future that was and of EBITDA also now increase is owners size we the brings to financial believe for the to million, potential providers. have superior capital and lodging $XX.X attributable loss was the are our a prior million. stockholders quarter results growth second and strategy quarter. space, Adjusted unique XXX% over we the I'll an We common quarter. excited platform. other to year $X.X in and of within for our

strong INSPIRE was by and for Our driven quarter EBITDA the in Remington. growth adjusted

in $X to quarter. adjusted the second million report We excited EBITDA are for of particularly INSPIRE

bookings for events We continue that group to an is INSPIRE benefit in the seeing positioned acceleration recovery. are well and from to

adjusted In year. over EBITDA prior the growth terms in of

and million. second income of $XX.X per increase and was net INSPIRE Our performance an XX%, with was rates increase $X.X Adjusted results XX% million adjusted with reflect million, prior for Premier by Remington $X.XX. respectively. net $X of with the $X.X share increase of an then million then the was These led income growth of and an over quarter year

at X.X Our shares million shares which balance of common million plan, shares associated the share million common $X.X our with for deferred stock. and million with preferred common acquisition is currently comprised million count X.X diluted shares issuance common D the compensation is outstanding, X.X primarily earmarked stock, under outstanding, fully X.X associated stands our Series convertible shares restricted Chesapeake

plus X-year new interest a quarter, the million we initial corporate and into commitment The of $XX satisfaction we X corporate of the $XX options subject down draw has bears term drew During and million million entered closing, drawn financing have the loan. of months. rate to next the option LIBOR X.XX%. with the $XX We conditions a to on loan. have term million over extension At XX certain years currently X an at the additional $XXX

for preferred Board representing XX, the April XXXX, per to of a June now our discuss payments an reflecting detail. going cash hope dividends our in XXXX. We of accrued the We unpaid aggregate dividends preferred the the declared the and dividend quarters will XXXX. accrued currently Directors Series XX% operating call forward, more the current. during approximately businesses to cash preferred pay and And keep remaining accrued ending quarter, convertible Additionally, to during position on XX, XXXX, share Ashford's be I dividend stock, $X.XX December paid to in to XX, D dividends Eric turn for plan sometime of we dividends. over

Eric Batis

Deric. you, Thank

excited our are and our expectations. services We on continue to to updates outperform provide products businesses, which

our remains portfolio travel business strong, returns trajectory. its growth is and travel leisure As to continue poised

best unique strategy to practices division accretive the a reminder, As execution of in and accelerate investment value we our the a and of industry, through acquisitions. & Products where create implementation hospitality the is Services shareholder growth operating aim

our financial are and to utilize also these our their service advised performance. while refer receive extensive ensuring We businesses able optimizing to hotels exceptional REITs, relationships

record of that EBITDA representing XX% completing are the quarter of is second first services, delivered leading INSPIRE INSPIRE, $X single-source I'd million in our The services event excited and adjusted creative adjusted $XX of second hospitality we JSAV to quarter, and like a before as rebranding suite discuss generated meeting and a audiovisual an show revenue and including solution with margin. share for EBITDA million event previously strategic needs to a with you. services, integrated in services. business known INSPIRE, XXXX,

XXX% $X.X million the quarter. of Second provider, was were margin of quarter revenues, which EBITDA hospitality where contracts revenue the the prior was year executed INSPIRE company the XXX% Hospitality history. adjusted highest during revenues above X representing cumulative INSPIRE the margin which quarterly second year is as quarter, over exclusive growth stabilized quarter, prior in annual the at quarter. $XX.X new events represents and million hotels audiovisual also contracted in include

over business year. a provider Key Virgin RED and USVI look West XXXX rest We INSPIRE's Islands, discuss by strong year prior like continued Puerto U.S. I'd are XX% customer throughout respectively, is other the as and Caicos. to the the in the leading water Hospitality to average RED experiences benefit quarter. with to of and consumers next and the Leisure, and and of performance start activities X%, travel by for thrilled Turks unique services forward and spend desire to West sports has seeing from The evidenced Rico, and memorable of increasing Hospitality Key

EBITDA second ever prior EBITDA, in company highest million this history the adjusted of third XX% generated over USVI In representing growth highest the revenue $X.X million a $X.X for in and revenue of adjusted quarter, XX% year RED quarter million generated and the Additionally, market. over of revenue, June month and $X.X margin. the

agreement During and through the its growth services service in expect future Hospitality RED ferry market. Rico this in second to provide quarter, extended Puerto October

in Remington grow grew quarter. revenue and $XX.X markets hotel to company, over to market of which EBITDA across fee the to providing and Revenue and XXX% continues adjusted margin. service adjusted and generated XX% and expertise EBITDA opportunities second respectively, EBITDA RED share continue year represents XXX%, country. gain dynamic Remington a respectively, best-in-class existing Lastly, quarter million, management the new adjusted scale. to and hotels a $X.X prior and management M&A is hotel explore million

XX, $X.X March for XXXX ability previously unit. ending the properties consideration footprint million. of and to such complementary markets revenue has geographic quarter. in the additional for acquisition million Hospitality and its of cash of Chesapeake's potential of portfolio portfolio $X.X million As series to discussed, million based convertible will IHG to its base expanded preferred also CHP trailing added The also have total for closed Detroit management Louis. XX-month Remington's $XX.XX over $X.XX and on million Remington Milwaukee, acquisition XXXX hotel Midwestern Chesapeake earn up a It adjusted $X.X the and contribution of consideration issuance April as the on and and of Chesapeake Wyndham management March EBITDA just of periods fee Pittsburgh, a the new expanded Remington's contributed independent first $XX for fee of property. million St. on

addition contracts XX% manages year properties. Remington which Remington all and focus business million third-party represents to awarded XX its the of base approximately second currently acquisition, on quarter, properties, In in to the continues was first representing growing X $X.X fees. third-party Chesapeake managed full of

Premier are XX in brands and for that adjusted Premier of revenue a space million, in growth year architecture, the EBITDA provides in $X.X XX cost-effective project properties properties. of margin. boutique services. continued and development, its XXX% EBITDA, and including second and growth We design, adjusted construction are generated XX third-party fee comprehensive bolster prior states D.C., roster across also and XXX million Remington's XX% open Washington, representing design independent quarter. generated excited and quarter Premier to operating the management resulting over $X.X of procurement

has total which in of contract the One X $XXX,XXX the representing during fees. contract represents represents contracts contracts, of third-party was quarter, was XX Premier $XX.X this student addition, contract multifamily contract a in in Premier. housing, segment fees. ownership Premier for representing segment which the million one second and XX XXth groups, that of In across executed new in signed

on capital the of service are work projects, investments the will investors. come capitalize uptick and back and continue Premier owners excellent Premier. we Additionally, majority Premier's from exceptional By additional in delivering have confident third-party to contract customers by to

our Ashford extremely We're Turning fundraising Securities, dedicated Ashford the now year. Securities has with made to pleased the platform. during progress past

preferred million advisers. XX We at professionals best syndicate of have over commencement Ashford Braemar's firms the has in nontraded the they offering, Since financial of world-class $XXX do. industry approximately a placed built of Securities team the are with X,XXX XX through out who what a

estate Trust nontraded Ashford is for and real target provide new a approach investment preferred recently to dedicated capital income-focused Texas. of to the commercial aims and that offering Ashford taking stock institutional a types of investment in offering to raising differentiated opportunities to highly alternative investors. will an disciplined retail all growth-oriented in announced state and offerings, investments We X private

to We be outside designed of and the area offering investment launch growth are unique Ashford industry believe area in offers of investment the and an investors. this could us excited are of the very X focused first suite our on for growth-oriented Securities future. meet big Today, needs to hospitality of a income-oriented products that a

a retail to strategies and uniquely is strong this Securities designed see opportunity. to on markets. current traded capital continue that provide for Ashford investment on We differentiated growth market not capitalize is appetite dependent the And positioned to income

rooms revenues this with of excited the SaaS of Ashford posted which about future digital fourth of the hitting are We a XXXX, $XXX,XXX a continues the to million. solutions, forward devices, have trailing guests the quarter, OpenKey OpenKey business. to Securities quarter included seamless, as prospects $X experience. an quarter look almost key allowing have trailing to XXXX an This gain and of of that XXXX. impressive the mobile provider growth increase leading customers XX-month their XX% to and second time as dynamic risen unlock OpenKey, of frame. traction increased of contactless $XXX,XXX of quarter prefer represents as the quarter at over SaaS check-in every revenues XX-month fourth from end Since

the second OpenKey the XX,XXX of end rooms platform. the live of had As over quarter, on

the forward more future in and about providing to future excited OpenKey are We for look quarters. updates

recovery our hospitality continue of and products in strategic industry and throughout executing As initiatives: third-party XXXX, will X growing our ahead on we major the acquisitions to focus the look sales and businesses platform. the for remainder we our to services

opportunity and call now across all the in up portfolio meaningfully We the of Q&A. see will to to continue remarks, significant we all runway prepared businesses our our That scale concludes see companies. and for open our

Operator

B. comes Riley first Your Bryan Instructions] Securities. question with from [Operator Maher

Bryan Maher

down thanks on INSPIRE. higher. model. maybe JSAV of comments. there. versus venues? Ashford the little management outside a results by it other revenues to when those much affiliated And of what's trying more driving base for the to lot hotels business kind how those that, staff of percentage out And what our drill was is returned Eric, pre-COVID bit the is lastly thing A I figure pushing this on and was system of hotels coming platform? we're from then mean, the hotel color the of within fee, looking to I really And

Eric Batis

Yes.

Let This me take that, Eric. is Bryan.

performance thanks So well. very for we're last over and as the certainly the question, quarters interested in the INSPIRE X

about talked XXXX pre-COVID, part million. a a little budget, we is As On was our bit increase there, I last quarter, example, was $XX TTM of basis, just $XXX that believe still -- recovery. the huge revenue million around of a for revenue in

recovery, and So any runway for there's significant still we business. some or lost haven't hotels

things, addition, added we in and some them. -- and we've about we'll So as today, believe continue adding talked we

expected it faster The for about we than sure. we're to, benefiting happening from that So and that. is excited recovery we're

XXX% to staff. get don't ability never get know we'll of get EBITDA were of I numbers. margins those We can with a we I you. have of business. into we we had. And XXXX want terms of to had XXXX not the back And have, of I never recall, that that we single-digit hire. percentage of the back back for those look probably can -- staff XXX% of may because don't to here. staff don't probably, We will that to in we you, tell you that's lack and that to though, running XXX% not what In

have get bit cost, hand of And a we much to realizing a cut COVID, would. with amount don't we're as higher as it and much was even I significant our think always might than to we forced target to back have add obviously, that. Our those thought we

anywhere if a going we're all, these we stretching near continue do to that and while amazing, not we XX% less. So lot I'd can we're at more dip staff margins business and margins, because additional to with certainly love but realizing add the are those, will

the have party, on grow related or add third-party historically. going to continue did And that going much actually that and don't we basis, third of TTM as just business. much be it's element third-party is other as stabilized because But Ashford we what is. it hotels business Pretty our with to added platforms. XX% I Ashford we should XX% not to Trust Braemar as we're terms intend about now more a business as -- In the versus to business business with much buy until and of XX%

continue go that, So XX%. above just higher we to think will that

Deric Eubanks

just would I Bryan, add. Yes,

know is goal where of those and XX% from business. other so our majority Well platforms, You or business both to that of their a third-party come the from will grow third our That's our continues strategies third-party one business companies grow be their to revised business party. that of is INSPIRE third-party still vast their be but to our us RED the for opposed as strategies of currently revenues one it to that to grow parties is. third But where are segment. roughly

Bryan Maher

And there was the back when of out for looked profit kind think XX.X% my the of XXXX you I and XX.X% at you range. in potential to XXXX, that there? go of Do kind margin JSAV to Or kind is higher? model peaked pre-COVID,

Eric Batis

You're talking about RED or JSAV?

Bryan Maher

JSAV.

Eric Batis

today, levels. those at where at we weren't XX%. we are That's Pre-COVID,

don't So I --

Bryan Maher

XX.X%. is about JSAV In model you margin, were in it my EBITDA. XXXX, talking necessarily I'm was XXXX, profit Well, not XX.X%.

Deric Eubanks

Yes. up, more There's an are it's there margin. probably of and operating gross of just sort you some corporate picking costs

Eric Batis

we've talked business about during we we out room staffing. -- we're INSPIRE to there's would be able certainly expect and There's back. need staffing in that achieve would to question, and the additional answer to for XXXX. definitely COVID your there, goes the cut feel don't that costs add to bottom of that been I the some to what So we of We near the going a to say that XXXX

expected the ever business. XXXX better We we growth significant for far even expect XXXX budgeted than what with in would going forward and

Bryan Maher

Okay.

modeling a little know there bit. Is that need on a Moving running there we bit G&A we on little expected. for anything to going was than hotter purposes?

Deric Eubanks

to There's across of in That out. point a terms ramp-up continues staffing. be would the nothing I that businesses just

the then the think businesses, function I it I corporate to corporate on good at really the at with -- you look continue if run just some look But pretty across for think all a rate. staff if the side, is portfolio the G&A a companies. corporate you been of the it's quarter up of other we

Operator

Oppenheimer. Instructions] with next Your question comes Tyler Batory [Operator from

Tyler Batory

of Just all unique here. that terms unique for the perspective, runway growth own. pretty just significant of you a in at And viewpoint quite outlook, look macro couple your you've But right businesses of macro you July businesses. when out you for think feel healthy? future there. I lots of in time given your everything there's here? about seeing it you all into Or concerns, trend real the And still a lines questions still me slow I of a talked worries know is now, lots Are

Deric Eubanks

corporate there demand And our REIT, recovering. a softness. seeing. on corporate that. really of Tyler, seen stab we're driving any I know seeing Eric we mentioned why factors typically, recession driven has in the corporate been we're take been industry, And in haven't one trends if slowdown segments out are the the we sort wants. see or the there's transit Look, of from that chime industries and that I'll in and business, a still about talk Yes, that to that's group can by I lot he for of first one think of in we've terms been of calls economic the the not And our and at as that, potential

that been recovery leisure very while, so across we of segment still softness softness segment. be segment curve, in And to but in continues been the upswing that leisure in bracing for haven't strong the so The has some we're sort of We've a of ourselves seen that strong. board. kind for very and

reading sit here to any we we'd you because watch the but that hawk say trends same all still the are as things seeing so a We're today, not we're And we continue slowdown, it positive. are. like

Tyler Batory

Okay.

bolt-on That's second there. I'm then on out Okay. is real That's takeaways early of closed, And might -- that, the acquisitions kind also in of Hospitality. the be quarter, just terms any in you of acquisition And now there? thoughts transaction helpful. quick I really that that other helpful. Chesapeake curious closed mean potential

Eric Batis

an larger Yes. performance what Early differentiate on Chesapeake for for non-Ashford us, from underwrote that is And outperforming properties. base the fantastic it's of the have and to impression ability a both is deal. far we

to underwriting adjusted of what million was Chesapeake underwriting. also the contributed us just XX% EBITDA management fees, we conservatively for quarter $X.X by primarily but for performance better above $XXX,XXX, underwrote, the incentive So some very our about than frankly. That's due

about that. about it's think existing our the we our love very soon. with excited too how would those. say effectively opportunities do businesses, more very out anytime teams like are And see don't and indicative we're the much, looking want much of lot take stopping that and a at which on say I and in and There's certainly past there, and So and deals of of a with for other ourselves to bolt-on I pipeline to INSPIRE and seamlessly there's RED other and but accretively. businesses investments opportunities Remington Chesapeake deal, to acquiring do ability we we've operations don't to our done I we'd definitely

Tyler Batory

as little for new then terms raising to made the thought start that why a sense Okay. of Texas. in estate that, well? when talk real some that's perhaps you more some about of that? shifting be high-level estate Can money give you on of to gears area might an thoughts Kind on in real more us able And commercial bit you offering color Ashford Securities,

Deric Eubanks

it. say we Yes, a Tyler. It It's Deric. about offering, private launched it. I'll much can take not have but that. is we There's

soon. to to that capital capital. very raising offering the of Hospitality in raising period well thing preferred of of process because it's hard in know nontraded the when are sort applies terms timing the Ashford It's time. would Trust, anticipate a the So where start comes of as for open capital in and of an Same kind we would we that

that across as and But being our part an business that So of and It Premier viewed the hospitality. and was And the hospitality -- on and Texas. you diversified to to of sectors, an build asset we outside there's for raising industry. capital of start this know of to the of outside most where an just thought has start made just INSPIRE focus and expand just capital. little to most was strategic wanted a manager well. as of start syndicate don't are, our part. sort and we sense bit we in for hospitality be life it that different it important a we the outside platform process objective of At cycle managing us point, our more a we're important other in backyard XXX% hospitality-focused There's

As I'm felt a a moment job it's of there's resonate on very it relocations, to know, state people and investors. a sure it's et standpoint, from business relocation from standpoint, be from the we're like standpoint, growth, you attractive environment. business friendly thematic at moving investing and here, would Texas And cetera, a benefits to corporate ton whether the bullish a

fact launch be it's over of speak that initiative. it's given we information time, move process. But to sort about that detail And able on we to as the in still a us just to more private more in unfortunately, the a So can't offering it more provide lot forward. hope that's and I led what

Operator

question-and-answer concludes we gentlemen, reached conference. the session, the today's of this and have end and Ladies

disconnect may this for at your You Thank participation. your you all lines time.

Ashford (AINC) 6 Aug 222022 Q2 Earnings call transcript