RMR - Earnings call transcript Q2 2018

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Operator

Good morning and welcome to The RMR Group's second quarter 2018 financial results 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]. is event this note being recorded. Please now Tim Bonang, would like to to over conference the Senior turn I Vice President. Please go ahead.

Tim Bonang

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

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

over the to adjusted reconciliation and adjusted earnings non-GAAP adjusted U.S. income would numbers in quarterly of in calculations to begin morning. to now, adjusted Accepted turn to accordance or news our margin EBITDA earnings be found EBITDA will I And per this and during of we review. GAAP like issued the A Principles discussing call, Accounting addition, be share, we Generally Adam the determined call Portnoy EBITDA adjusted with net margin can including EBITDA share, adjusted release Adam? this per In

Adam Portnoy

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

For to net been of same or excluding fiscal per XX% which the Inc. of $XXX,XXX represents ended After $X.X we attributable $X.XX $X.XX per one-time adjusted share. income costs, this quarter the increase on have XXXX, compared reported $X.XX RMR per XX, year. quarter million March period second share, which would or share of a earnings last to

of compared an assets As $X $XX increase same is billion had year. period over March under of XX, RMR management, billion of which as approximately to the last

public square XXX,XXX the under million and of U.S. initial is term quarter. over properties During focused improve client and located of REITs years. an to on efforts of industrial managed an January, equity Trust our we REIT, or continued $XX Properties and share. common our ILPT, grow owning throughout companies with our help shares at launched client fifth In Logistics operations. operating quarter, Industrial combined XX per we offering of another quarter large strong in our for XX during of our From has just on perspective, lease operations leases average the a we feet basis, properties Hawaii. companies managed a behalf On the concentration weighted a had arranged ILPT

since the RevPAR a activity significant increased X% hotels. its renovation year-over-year rent increase almost year-over-year of in a XX% resulted a executed and ILPT Trust our despite quarterly recently XXX,XXX which results challenges term lease average equity published its approximately On leases managed IPO. basis, We ILPT cash increased NOI its by in first a REITs feet years. the improvements $XX roll-ups Hospitality Properties of also weighted of competition XX at in of square for during at X.X% supervised capital basis million and over quarter. and reported

ILPT During $XXX to SNH the continued of proceeds more in Properties recycle including year the issued four Also Senior of generated Trust the XXXX. proceeds during communities in transaction quarter, than assets resulted over during year Properties recycled in leasing X%. quarter, SNH momentum the or also senior notes $XXX Housing due continued REIT roll-ups utilized and unsecured of Trust rent quarter of $XXX Income Income the were itself senior beginning Government to Since million and acquisitions, X.XX% effectively million XXXX, XXX,XXX the into notes has notes saw million accretively unsecured a future feet $XXX $XXX over of in rate buildings senior from million term with X.XXX% Select growth two redeem leasing for the and that acquired to due million square issued medical sold the $XXX of position million HPT senior during asset loan. which and sales. activity XXXX. living almost quarter. office the

approximately helping property with $XXX sales million actively been agreement. plans in its under office on execute We and GOV disposition $XX dispositions in million have also

quarter $XXX in this and year we of fees We management million $XXX calendar Lastly, XXXX. incentive cash ended debt outstanding. no RMR in that the earned million collected quarter with

coming We the end continue make to put towards work work this announcements with strategic in to initiatives. to this some growth finding We months. to capital opportunities hope to

returns. to opportunities, be our complementary also have generate operations but regularly possible any accretive acquisition and acquisition to We evaluate existing would

Finally, will Officer, are our I dividend the Chief form will financial higher some results to use the cash in shareholders a to turn our the also our we now capital of Jordan, months, the quarter. over for considering depending who review rate. our of in Financial returning upon of call possibly Matt coming

Matt Jordan

$X.X GOV's seen at management $X revenues our managed by Management on primarily million our impacting managed managed sequential million calendar management the services increase in spend of REIT have due equity a headwinds declined construction seasonal to prices share continued basis, year-over-year including have were equity revenues driven the Thanks morning facing and the declines REITs. this beginning were a everyone. business general, property prices million Good Unfortunately, acquisition revenues quarter, REITs, the that On we since $XX.X year. and quarter share FPO. services Adam. incremental basis, down of a from adversely

a At due million a were payroll are October other acquisition an fact as service increase recoveries we earning FPO of quarter per The primarily represents lower total As on over reimbursed many of the of cost quarter, Total basis. fees base quarter assets points costs increase for or historical XXXX compensation paying recoverable recovery reimbursed would Tremont. and know, shared business additional on year-over-year or same of of average average have well from management headcount a were a $XX basis. the million the the cash in cash we operations historical a fees annualized capitalization. $XXX,XXX XXXX, of an of million Reimbursed our on been upon market capitalization as based compensation. basis rate, market RMR earns which sequentially now XX% by to which end driven fee XXX of under property the for the the GOV's average increases $XX.X our in based management of year-over-year represented base the assets is business management, and of cost management revenue second three of $XX.X managed fee you REITs group in under consistent fiscal recognized If million $X.X on that the have are an basis. quarter

a compensation to benefits of $XX.X sequential property includes support quarter. $XX.X $XX.X Turning recurring and was are million growth increases recently cost. non-cash the on a $X.X due expense GOV's on million, million cash of employees to Total managed quarter separation million most of year-over-year expenses million of $X.X basis. acquired onboarding an for $XXX,XXX $X.X REITs, the to of headcount FPO compensation in at and notably management properties. Cash additions basis compensation to increase is and the Both which payment support million, share-based

and on to ahead service million of incur to we quarter to to G&A expect to our $XXX,XXX increased share almost director approximately a $X.XX each G&A the to an awards. organization. additional increase represents professional as annual next approximately $X.X completes due of retiring impact and the Looking the primarily RMR awards due value $XXX,XXX basis share as March, annual of basis, modest appreciation inflation costs of or of expense his fees. $X sequential an per year-over-year a separation executive share expense well in as million directors granted quarter, On

interest in terms noncontrolling want is gross decline will our rate rate, to of our to and the as our rate or In our In XX.X% each XX.X% when RMR Cuts Tax fiscal for I tax reiterate gross effective to when is XXXX, or benefits Jobs fiscal quarter XX.X% effective tax of and applied. our interest Act is XXXX XX% tax further noncontrolling applied.

incentive relates the questions? or only period, are would March record formal our we the line incentive each over If at on had XX Operator, as XX ends December it Lastly, for we incentive earned you $XX December fees, as in million relates of XX, please of end that open a to fees That revenue been measurement XXXX $XX a measurement approximately concludes it year million the period remarks. able full basis. on to year. have fees would to

Operator

[Operator Instructions].

first question B. Your Maher from Bryan Riley FBR. comes with

Bryan Maher

Adam. morning Good

with respect dividend. type more in it about potential a grow complementary businesses increase? drill the to at, are returning and some prepared be new that of identifying comments, kind your hear timing the or assets potentially maybe the you of on looking in something that a down Can of touched cash You the little that into higher might we would either to the of of dividend bit form you the level

Adam Portnoy

Sure. are it's And Yes, thinking thanks that for imagine about. that we question. shareholders something

area source. growth, is additional that's of invest the past we big That's we get big Board a in raise to and estate us, from sort talked about in terms one open strategically over the quarters real think us sort place area strategic for months. in the In to we that funds of trying private to a are for coming capital to white of something have

us is we position really look job something imminent that's part tell also or to share hope It's folks bit and lot nothing in obviously with is speak to our take of the a that risen opportunities so acquisitions. that's we acquisitions. I of we regards And announcement we something to the obviously, acquisitions. just lot pending level coming the can present do of months us market to But that. do has know, But are to of or to exploring a There far A around an actively a want us actionable. that nothing so, heard in make so for mentioned at quite talk evaluate several and of it about I stuff. quarters. I a have be to with you you

it over work. the much and be what to of how out don't to a things of think terms months about have we a some regards and depending flux I it required we could capital announcing, part shake what going Unfortunately, in capital talking bit we for there. going much depends really of be are to to coming feel in be we terms to are in because the announcement. Then increase be money to going invest on the put that how as much of, initiatives are is to announcing really it, upon and we going when As can little are are the dividend, our we turn focus in things how about how dividend these

you, the will around dividend. tell all questions. can we have announcement those year we an I the will or So are of address in sort either this open-ended made But

Bryan Maher

Okay.

that would other if growth So Predominantly organic more to what? something headcount of the go but a investment? additions major be within service sourcing, RMR private into you you going alongside would that invest own be of that, private sources? into your whereby clear, capital Or cost capital would route that be capital not like do to that business

Adam Portnoy

the I to how I from capital meaning to into that much addressing think of we would amount the if that to, possibly available invest think keep business, RMR that's be about will likely were alluding dividend. capital question go alongside some we And others.

And go It's an at are the a part be into a tell about business? that it's that that's would I RMR. And are there raising so we as commitment, open the open that, business, commitment thinking open-ended of So from likely moment. to capital you some not little bit actively we can going question. privately. question,

think through how about to that, And much invest the and that, okay, get to have down. want we to on say, it dividend in then how once is behind we turn this we do we nail based get through money much We and if dividend. left money how we initiative, then

So it's sort of tied together.

Bryan Maher

where a a about became Okay. surprised growth How for do relative you is you valuation metric? relative at me since probably to do we really potential? Adam. your at people trading, stock's here for last question company and that of How think I you the think And are it's the publicly get traded. lot, six-fold look to it's the

Adam Portnoy

for question, Thanks the Bryan.

organization, But honestly, to of diversify Of work course and And focus the it. come me we a revenues, than and an a have spent the are grow, positively. cash about more the more our to business stock how in will and I is segments how I to grow growing about think into business day thinking My spent streams. to is, how do grow in. RMR. the a every if the price how about to think going cash we to exploring I try flows job our and try value diversifying diversify good on flows and to to revenue to cash react lot as Far thinking that for flows, time view time far businesses,

And so it. focus how on that's I

terms yes, the they I share my of marketplace. it. And do more approach, price is there People a who the the a company. large shares, in a different the job management, I look, ways important to relative the just to am valuation own is In time value the company, to about I amount have is in me. of thinking often several lot invest of But spend run company,

that's about think it. how not am addressing I but really your question, I So,

Bryan Maher

Thanks Adam. enough. Fair

Operator

Instructions]. [Operator like any over remarks. question-and-answer conference to concludes Adam to the back Portnoy closing session. This would I turn for our

Adam Portnoy

on FBR Thank on Monica the will Real Global XX Matt in Riley Conference you and Estate for and be the morning. joining us XX Santa this XX. and Tim May REIT Conference B. presenting and Mizuho at June at

during Operator, to our look conference progress quarter our you updating third We also forward concludes on our that call. call.

Operator

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

You may disconnect. now

The RMR Group Inc. (RMR) 10 May 182018 Q2 Earnings call transcript