RMR - Earnings call transcript Q4 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to The RMR Group fourth quarter and year-end 2017 conference call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note, this event is being recorded. to President. conference like Bonang, to now Vice Senior would turn over the Tim I ahead. go Please

Timothy Bonang

to Thank recording call today's forward-looking would you. expectations are morning, as year-end will Matt Also details With Adam on And then They about good and call XXXX Jordan. me our us we for the Act Portnoy, within for those forward-looking and like moment, company note without on forward-looking of statements XX, of statements undertakes differ materially RMR's other to written beliefs today. In Litigation joining today, our and just call. revision the company. they'll in conference to the laws. Financial business December XXXX. call Chief securities from statements obligation or are results the President may Reform performance a of the that made and and the note consent CEO, fiscal fourth today's project. The everyone. based XXXX, and These of contains Officer, and the any revise Thank provide that prohibited is of conference that today's the publicly questions. actual conference of no quarter results I retransmission and release meaning Private Securities prior take the you

not in which rmrgroup.com, to the cautioned our upon Additional information can with contained website, website. from concerning or factors accessed forward-looking our statements. reliance SEC's undue or Investors filings is cause that and any differences be Exchange could place Securities the any are Commission, SEC,

begin or Adam net adjusted the numbers news and adjusted reconciliation now, EBITDA adjusted over like to margin. call, adjusted our we Principles, be accordance Generally GAAP, a addition, the turn I'd including of may in this to In calculation during determined EBITDA US Accounting call be morning. release in and this review. of with non-GAAP to Adam? Accepted A can found margin issued we discussing And income EBITDA EBITDA

Adam Portnoy

everyone morning. us this Thanks, And thank you to Tim. for joining

Trust, $X.X which pleased share with acquisitions For I'm the fourth result of per the share FPO we quarter September as and our fiscal $X.XX XX, attributable fiscal net under approximately year. well talented per the employees billion RMR acquisition that ended in real to of our to of of recent that client year as reported increase $XX.X from of the as income has management well. billion. expect billion, assets on report onboarding calendar It's a platform, estate year ended a to integration on time October close to of XXXX, billion X worth approximately last for at number the under First same of end we noting Potomac $XX assets or management management very services of the Realty by gone into GOV's a FPO, most notably companies, $X.X also

margins in during leases expected the lease eight weighted and operating square leverage transaction the of quarter will X perspective, over years. fiscal are to accretive year at From acquisition, million our We at be feet XXXX. heading REITs, this operations believe managed we approximately we average into and a of an realizing synergies equity operating arranged RMR's the term

during REITs capital million in approximately also supervised improvement the our quarter. $XX at We managed equity

its further REITs quarterly a seniors XX-year HPT managed per in earnings increase from the most unsecured $XXX Some million balance year-over-year of equity a and includes reported strengthened our normalized share highlights offering through sheet recently from X.XX%, reported the FFO following. notes. X%

feet, leases approximately basis approximately is into five $XXX on operating quarter, the momentum square continued office industry. results NOI senior a properties. continued and to generate a headwinds of SNH average cash $XX for entering and closed on approximately agreement, increase put for stable and nine approximately approximately SIR $XXX leasing hotels same-property, SNH year-over-year senior years. office X% to XX acquired a living purchase XXX,XXX of managing weighted basis completed a SIR million acquisition this recently million. buildings facing million. of X GOV with by lease its an under price focus also property also HPT operations quarter, for living saw occupancy continued term communities the its $XXX for for despite continued During effectively million. the medical

quarter, NOI third for into both level XXX,XXX leases cash the operating respectively prior-year. same generated also NOI entered X.X% property and results GOV the basis as During X.X% property and quarter GOV with compared solid over square up feet. to

it we discussed to help in of a diversify and our been client earnings companies. has our both calls, ours grow goal prior strategic As revenues

transitional proceeds an going the to offering, result the by revenues commercial which quarter. on strategies, share, mortgage In Fund, first addition to assets FPO be with Mortgage help or $XXX one-time transactions million RMR use managed IPO. will investment $X.XX made cost advisory we organizational Tremont by and to million managed Also, SEC-registered originating middle-market in rights public a per growth in a the investing RIF's funded estate. In September, during completed additional significant subsidiary raised in and the and model real to Trust million $X.X costs. initial strides this $XX the via quarter. in collective work service should a these put and leverage. these focuses able RMR RIF $XX To of underwriting loans will Tremont Real effects The to Estate plan forward approximately related leverage. total RMR additional offering after RMR of increase or leverage or Income be million transaction, shared accretive $XX floating-rate we launch and towards RIF, minimize goals its completed including almost million September, by the secured Tremont to of successfully Tremont will RMR. and Tremont

in running of Tremont TA, and of Tom than RMR his roles $XX TravelCenters to contributor Tom – December O'Brien, America, these its to years one a IPO. In of has thank addition and retiring In part XX nearly of this to years for over XX its effective and of in is we a the Tom November, been of also executive service executive period. some announced to operating more late or CEO key XX excellent companies costs, number as for being RMR after our the company. with invested in RMR growth million growth changes. President

of bench a has RMR Vice it TA become new board TA's of creates. and the about that The excellent current veteran TA, Senior Chief of structure the CFO is of TA One Andy strength Rebholz, and President great things Officer. XX-year RMR's to Executive appointed

Jordan, in of are expected of with be the on President Properties Because of to continue we November, initial TA's Also totaling Upon ILPT's Myers regarding as we for common to possible Trust, in ILPT common and SEC turn and located well the of board offering Matt are period transaction respond Chief for almost the for TA's comment Tom's IPO will that to shares. and provide any will XX the TA's Officer, ends registration SIR XXX directors. registration properties shares. will potential CFO. new of over now to is the quarter. registration an XX IPO, and about a states. located I'll the all until Logistics assuming call outstanding during or Bill to addition, ILPT, Richards results Officer in SEC, additional this Financial review appointed who statement the SIR Operating it board our financial filed Industrial other properties In be call. to position cannot SIR's own public I ILPT a this be questions Hawaii, in completion subsidiary, logistic as industrial majority our unable properties with industrial its that today's Chief own new Barry announced will

Matthew Jordan

Thanks, good And morning, Adam. everyone.

managed the REITs. construction reduction construction at management management growth As earlier, million services on on Management or business to revenues revenue $XXX,XXX and this fees. fee $XX.X reported due highlighted income at RMR per primarily a share basis, which represents quarter. related services year-over-year $X.XX primarily lower due $X in quarter were quarter, $XXX,XXX Adam increase decreased net the this Management to basis, of million attributable volume to GOV we a sequential equity

approximately As each $XXX fees year. XXXX or basis. period able of $XX.X December REITs return benchmarks. on we The to we September on only December If would've three November, are incentive ends relates that full total fees year November a of incentive continued due end a our the the a record had of of basis. measurement generating the XX respective to that incentive a reminder, be at their GAAP equity end would million XX, earned been fees revenues full measurement XX as XX managed exceeds have for period, as it $XX.X year Through million the of million

Turning driven vest reimbursed XX% restricted tranche additions, aggregate, million the high for primarily non-cash companies. in managed quarter cash a quarter, client first our of compensation compensation with million on to sequential Overall, companies. $X.X quarter in our approximately comprised associated was million awards share each fourth unusually million million we $X.X compensation expense with in quarter an companies. approximately benefits with fiscal client annual results share compensation fiscal bonus our and the of having in compensation basis. course of The the increase at Both to sequential to compensation flat cash at million, of recover expense grant total basis. of quarter this of headcount personnel-related In our expense in payments. quarter on on our XX% growth $XX.X of compensation the and increases year-over-year an of Cash expense. costs G&A and was reflects non-cash increase basis, approximately for of over by $XX.X continue non-cash restricted are of five primarily was costs, year-over-year $X.X tranches increases a this date, RMR $XX.X in XXXX. million, which grants the from a certain $XXX,XXX attributable share-based expenses turn $X.X $XXX,XXX G&A vesting recurring our represents REITs basis awards on and by merit client Non-cash

be result fiscal and $XXX,XXX next advisory a IPO, as the will impact approximately approximately revenues. to first in the RMR's revenues incremental to reimbursable quarter $XXX,XXX XXXX anticipate of ahead Tremont that quarter, Looking in we

annual impact of of in acquisition, $X $XX unreimbursed costs. full-year cost and approximately sales million, FPO asset GOV's normalized $X of fully $XX the payroll million will Additionally, we support the To GOV. approximately before in approximately strategic acquisition by of potential personnel million generate FPO increases in any revenues million, infrastructure anticipate reimbursed

an October on $X.X in well-positioned our of cash effect million cost the this we for increases pleased and regards on annual for we line formal the highlight that X% please our growth. quarterly merit results X Finally, would concludes each compensation first year, are to of approximately future increases average are basis. we remarks with open the questions. merit operator, were That quarter in our XXXX, you would to quarter. fiscal believe Overall, or fact take and

Operator

comes Thank Please you. first Our ahead. Instructions] JMP Mitch question with Securities. go from [Operator Germain

Mitch Germain

How guys. you? morning, are Good

Adam Portnoy

Good morning.

Matthew Jordan

Good morning.

kind a revenues guys, of have kind using significant able the by AUM of already that quick of growing of terms Just lot place. right? of just lot you've mechanisms of was without question the diversification that kind been Adam, going create you at you in strategy to through forward, on A just a – a investment of

or allocation capital of about start you question think utilizing Matt continues we've obviously, incentives, grow, we cash certain to obviously, point a that about where How just some and, other cash consider a should hits to referenced. balance strategy got the dividends mechanisms So, cash? that special when

Adam Portnoy

It's It's Thanks, Great. lot tell spend something a we about. great time of thinking can you Mitch. question. a I

are I'll First the is, and until tracking One, couple points. year. make fees incentive the a where don't we but of end of really cash we know yes, off, the

a highly reiterate with been and that aligned of very until at really of That sort myself. of for lot we said, the a one-time I'm everybody would know we've do So, dividend about am consider. or are is, end where clearly we policy thinking knows to We company any of could dividend I that, important we everyone can't anything large change course, of also what the the shareholder benefit obviously, shareholders speculative. in year. from

dividend opportunistic I last being increase several would would of I to in we thinking you the our that more it's So, We do about which think and will growth we're the if if of fee or hasn't think said, dividend. run revenues will around That dividend invest changed you'll cash in that is the rather I speaking, using ways than deploying think about same out, dividend tell changes the in hear thing to regular is – point using initiatives that a initiatives of generally any about for thinking important we RMR. out think, one-time preference all dividend. that, or have really dividend, all around we rate we focused to any prior think we're for to yes, to we're on, excess make a were think I've rate said, more the And the said invest change growth unable dividend. the being sort quarters, the would the say But cash growth – over I quarters. me way I

it especially. about or have want focused in reiterate, to on initiatives generate that capital we way up we But are with additional are still about now trying come I if to said, thinking the ways, we that's still fee accretively can, think growth thought to that revenue. very deploy I being all it, that

So, at. that's we're where

Mitch Germain

year mentioned success. mortgage been and you a REIT avenues clearly ago, question of asked about when the the growth, About different a that's

investment mentioned That RIF. You was clearly with done platform. in AUM your your growing

What AUM office maybe maybe was – really focus ILPT-FPO growing forward think with am interest estate that something FPO? missing? Is accomplished more do You're an be traditional going to commercial deal. would that that through real or area other Is somewhat you? What areas it you fund? of the I

Adam Portnoy

Mitch. Thanks, Yeah.

perhaps that way in the to the talked growing about about the we've we about securities you're area we've raising talked you and private capital. do management past, I mentioned talked one around platform, that as we about think correct, the talked mortgages, a office. also And

I I security mortgage to think we time of we have the is the And – time lot space. area to the said do last something side. that And are about spending do able private of on in have quarterly in We've a to continue yes, lot been on capital we been able one area a think call, an something even the thinking space. thinking the about I that. we spend

missing. the what anything you That's we area say, that's you So, -- [ph] one asking the on really one around done that haven't are the light area, stool I'd yet.

accomplish trying So, something to out I'd that. how still still figure that's to say we're

Mitch Germain

minority be RMR? or that by there'll And third-party do be think pure wouldn't capital you some of sort investment

Adam Portnoy

that and something, think to love be we'd have to would we think to that being were the if ground, that came you've we our seen, I capital capital. to to try think off to do prefer would said, have as – were But run, likely I in capital of pretty I it. any asset third-party RMR preference third-party that some I light, think sort get business especially invest

if So, capital I some surprised think launch to strategy, RMR I we see to a dedicated were it. wouldn't towards be

Mitch Germain

get that full way investors? $XX the owned of about not – $XX the right guys million you just Great is I you on other by full kind fee the million, lesson hear Is think for that Matt, did me. it? the to the

Matthew Jordan

whole million. The Correct. $XX

Mitch Germain

a Great. All year. good on right. Congrats, everyone,

Adam Portnoy

you. Thank

Operator

Instructions]. [Operator

Bryan Our FBR. next question comes with go Maher B. Please the from ahead. Riley

Wendy Ma

this is Actually, Good Bryan's Ma Wendy line. morning, for actually guys.

Adam Portnoy

morning. Good

Wendy Ma

I you So, talked about question about. have fee just incentive a quick the

the of a the So, XX the you September incentive year basis full fee measurement end if talked had on been about have period.

breakdown more amount please So, that, could provide for you details like little on REITs? the managed

Matthew Jordan

talked $XXX guess, prepared say I is Yeah. about – are where – even in probably relevant of I at our what we remarks million. the November, end I was is is more would which just

fee its by be benchmark its XX%. underperforming except its under GOV. is the our SIR by as of just paying SNH is outperforming of end of just benchmark HPT XX.X%. would is X%. November All under by a REITs benchmark outperforming

a helpful? changes pay $XX So, would and pay November about you HPT – million end Was evolve were the million enough, those the And could gets that would way SNH at three stress be I in period. almost of that would cap. which million, that is SIR fees, numbers. if December $XX $XX these the can't

Wendy Ma

Thanks. Yeah, That's that's Oh, for enough helpful. yeah. me.

Operator

Our next Chris question go Oppenheimer. comes with ahead. Please Kotowski from

Chris Kotowski

of Yeah. were asked. Most questions my

what to you say, to quickly deployed? any on guidance extent sure you give expect be not fully can how but Tremont the proceeds Just can from you

Adam Portnoy

for we six were conducting the around roughly we out about money When months the the the Tremont, talked IPO close of having from IPO.

So, months, that a we the – IPO September. in closed it six March from the call timeframe IPO because

to change can still timeline. on are no I There's that do on focused focused we think we be that.

Chris Kotowski

Okay, good. looking that there to than revenues, a just more is I'm component And – was bit the that were that? And $XX.X payroll the seasonal curious, million, we a then, for. reimbursable is related

Matthew Jordan

No.

to got prepared stock-based remember, also remarks, in reimbursable and talked as include You've about my cash would I revenue compensation.

the we given quarter is fourth shares. which quarter So, issue has $X this recovered. and every million that RMR it, awards share awards, stock of restricted of includes X.X

you're a every So, see initial pop QX going based on the the vests. tranche to way significant

historically, impact normalized And has on we you reimbursable should million, X.X stock-based significant back on line. X.X reimbursable look next a if on We pretty every the million quarter the comp fourth comp line. a a get quarter, about basis. to back should go So, and then,

effects of it's So, the the awards that up. stock driving just

Chris Kotowski

Yeah, pattern. seasonal was it All a Okay. like right. looks

you. thank me. for That's Okay, it

Operator

over question-and-answer the I like remarks. concludes now session. Portnoy back closing This to to for any would the turn Adam call

Adam Portnoy

this Thank Operator, you for morning. call. that concludes joining our us

Operator

Thank The has attending you. concluded. now you for Thank conference today's presentation.

now may disconnect. You

The RMR Group Inc. (RMR) 12 Dec 172017 Q4 Earnings call transcript