Ashford Inc. (Holding Company)

Greetings and welcome to the Ashford, Inc. fourth quarter 2021 results call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jordan Jennings, Manager of Investor Relations for Ashford, Inc. Thank you. You may begin.

Good day, everyone, and welcome to today's conference call to review results for Ashford for the fourth quarter and full year 2021 and to update you on recent developments. On the call today will be Jeremy Walter, President and Chief Operating Officer, Derek Eubanks, Chief Financial Officer, and Eric Batis, Managing Director and Senior Vice President of Portfolio Management. The results as well as notice of accessibility of this conference call on a listen-only basis over the internet were distributed yesterday in a press release. At this time, let me remind you that certain statements and assumptions in this conference call contain or are based upon forward-looking information and are being made pursuant to the safe harbor provisions of the federal security regulations. Such forward-looking statements are subject to numerous assumptions, uncertainties, and known or unknown risk, which could cause actual results to differ materially from those anticipated. These factors are more fully discussed in the company's filings with the Securities and Exchange Commission. The forward-looking statements included in this conference call are only made as of the date of this call, and the company is not obligated to publicly update or revise them. In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the company's earnings release and the company's tables or schedules, which have been filed on form AKA with the SEC on February 24, 2022, and may also be accessed through the company's website at www.ashfordinc.com. Each listener is encouraged to review those reconciliations provided in the earnings relief together with all other information provided in the relief. Also, unless otherwise stated, all reported results discussed in this call compare the fourth quarter of 2021 with the fourth quarter of 2020. I will now turn the call over to Jeremy.

Good morning and welcome to our call to discuss our financial results for the fourth quarter of 2021. I will begin by discussing Ashford's operations and strategy. Derek will then review our financial results for the quarter, and then Eric will provide an update regarding our products and services businesses. After that, we will open it up for Q&A. We had a great fourth quarter, highlighted by the highest quarterly adjusted EBITDA in the company's history. Our strong growth in adjusted EBITDA for the quarter was driven by our REIT advisory business and the ability to recognize the fee deferral from Ashford Trust as well as continued recovery and improved financial performance at Inspire, Remington, and Premier. As a reminder, during the quarter, we rebranded our audiovisual and event technology business, formerly known as JSAV, to Inspire. We're particularly excited to report $3 million of adjusted EBITDA for Inspire in the fourth quarter, our business that was hit the hardest by the pandemic. As we look forward, I'm extremely optimistic about the future of our company, and we have a lot of exciting developments to discuss on today's call. The key things we're going to highlight today are, first, both of our advisory platforms are on solid footing. Ashford Trust has significant liquidity, recently reinstated its preferred dividends, and plans to be S3 eligible very soon. Raymar is back on offense and growing with its recent announcement of its proposed acquisition of the Dorado Beach, a Ritz Carlton reserve in Puerto Rico. Second, we continue to see strong results in our third party growth initiative at Remington and Premier. Third, we have been successful in raising substantial amounts of capital and we're ramping up our capital raising efforts at Ashford Securities. Through its first three quarters, Ashford Security's capital raising effort has outpaced peer sponsors that subsequently raised billions of dollars. And fourth, we have built up a robust acquisition pipeline, and we hope to announce new, attractive, and accretive transactions soon. Fifth, we have a comprehensive asset-light business that is unique in our hospitality industry and well-positioned for growth going forward. Asher devises two publicly traded REIT platforms, Asher Trust and Braemar, which together owned 114 hotels with approximately 26,000 rooms and had approximately $7.8 billion of gross assets as of December 31st, 2021. Braemar is currently benefiting from its focus on the luxury segment and specifically its luxury resorts, which has been the first man segment to recover and had a solid fourth quarter operationally. Raymar also recently announced its second acquisition of this cycle with the 96-Rim Dorado Beach, a Ritz-Carlton Reserve in Dorado, Puerto Rico. Asher Trust has significantly deleveraged its balance sheet, is now paying interest current on its strategic financing, and reinstated and caught up on its accrued preferred dividends, which was one of the key requirements for being S3 eligible. Asher Trust also continued to maintain a significant cash balance, which ended the quarter at $593 million. Looking ahead, both platforms now have significant liquidity, and with both REITs stabilized and performing well, we believe both are well positioned for the continued recovery of the hotel industry and remain focused on their future strategic objectives. Remington and Premier continue to execute on their long-term growth strategies. Both companies are benefiting from the improved demand trends we are seeing at our hotels, and we continue to believe that these two businesses are well positioned to achieve growth with their third-party business initiatives. Both Remington and Premier have solid reputations in the industry. While we are still in the early stages of the growth of our third-party business, we have already seen strong momentum, with Remington signing 20 new hotel management contracts with third-party hotel owners and Premier signing 35 new third-party contracts, totaling over $11 million in fees. What's even more exciting is that seven of the 12 customers at Remington are repeat customers signing more than one contract with Remington. Looking ahead, we are extremely excited about the long-term opportunity for third-party growth of both Remington and Premier. During 2021, we raised approximately $930 million of capital at our advised REITs. Only approximately 4% of this capital was through Ashford Securities. We formed Ashford Securities to be a dedicated platform to raise retail capital through financial intermediaries and the broker-dealer channel in order to grow our existing and future platforms. Our goal for Ashford Securities is to provide the market with highly differentiated alternative investment products. Types of capital raised may include, but are not limited to, non-traded preferred equity, non-traded convertible preferred equity, and non-traded REIT common equity for future platforms. Ashford Securities is ramping up nicely and has recently begun raising capital for Braymar. Ashford Securities has raised $62 million in net proceeds during the first eight months of capital raising through the sale of Braymar's non-traded preferred stock. Comparing this performance against its peers, Ashford Securities has raised 129% more capital then the next closest peer product during his first three quarters of capital raising, highlighting the strong appetite for Braymore's non-traded securities. We have signed up 29 dealer agreements that represent over 4,500 brokers, and we continue to have conversations with more dealers about signing onto this capital raise. We're excited to pursue a fresh source of capital that will help us grow all of our platforms over the long term, all with the goal of increasing shareholder value. Throughout 2021, we have continued to search for and analyze acquisition opportunities across the industry, which can be accretive to our businesses from both a bolt-on and new platform perspective. Our teams are actively engaging with potential targets to identify opportunities to rapidly expand our operating footprint and increase market share. We're excited about the robust pipeline our team has created and look forward to sharing more details in future quarters. One of our portfolio companies where we're seeing strong growth is RED Hospitality and Leisure. RED is a leading provider of water sports activities and other travel and transportation services in the US Virgin Islands, Key West, Florida, and most recently in Turks and Caicos and Puerto Rico. RED has had a very strong quarter driven by strong leisure demand in its markets, and RED anticipates that these markets will continue their strong performance in the coming months. Additionally, the products offered by Open Key and Pure Wellness continue to thrive in this environment. As the hotel industry strives to implement measures to provide a clean and safe environment, many hotels and guests are seeking automatic check-ins, allowing them to bypass the front desk with keyless entry and secure digital key capabilities. The industry is also seeking enhanced sanitation and air purification standards within the guest rooms. We believe the benefits that Open Key and Pure Wellness offer will position them well to achieve accelerated adoption and growth of hotels nationwide. As previously discussed during the quarter, JSAB completed a strategic rebranding as now named Inspire. Throughout its 35-year history, the full-service event technology company has developed creative and individualized event production solutions, and the new name, Inspire, reflects the energy and momentum the company brings to each of its clients and the aspiration to create events that move people. The upward trend in hospitality revenue for the year is a bright spot and inspire, and looking forward, we are optimistic for a continued uptick in sales opportunities. On the investor relations front, we believe having an active investor outreach effort and broadening our investor base are important areas of focus. In recent months, we attended several investor conferences and during the fourth quarter held an investor day in New York. It was very well attended and gave us the opportunity to share the Ashford story and strategy with existing and potential investors. Looking ahead to 2022 and the months ahead, we plan to attend several conferences targeting a wide range of investors from small and mid-cap focused funds to industry dedicated investors as well as family offices and retail holders. We believe exposure at these conferences will provide further opportunity to tell our story and provide a meaningful dialogue with potential investors, which should in turn continue to have a positive impact on expanding our investment base. We believe we have a superior strategy and structure that is unique within the hospitality space. We're starting to see the recovery in our industry and are also seeing investment opportunities of very attractive, unlevered returns that we did not see pre-pandemic. We believe there are four key areas of growth for Ashford. Recovery of the hospitality industry and higher hotel revenues, an increase in our assets under management, growth of our third-party business, and the acquisition or incubation of additional businesses. We are excited about each of these potential paths to growth and feel very confident in the future of our business. I will now turn the call over to Derek.