Ashford Inc. (Holding Company)

Greetings and welcome to the Ashford Inc. 4th Quarter 2022 Results Conference Call. At this time, all participants are on a listen-only mode. A brief 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. It is now my pleasure to introduce your host, Jordan Jennings, Investor Relations. Thank you. Please go ahead.

Good day, everyone, and welcome to today's conference call to review results for Ashford for the fourth quarter and full year 2022 and to update you on recent development. On the call today will be Derek Eubanks, Chief Financial Officer, and Eric Batis, Executive Vice President of Operations. The results, as well as notice of the 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 securities 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 company tables or schedules, which have been filed on Form 8K with the SEC on February 22nd, 2023, 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 release together with all other information provided in the release. Also, unless otherwise stated, all reported results discussed in this call compare the fourth quarter and full year ended December 31st, 2022 with the fourth quarter and full year ended December 31st, 2021. I will now turn the call over to Derek.

Good morning and welcome to our call to discuss our financial results for the fourth quarter of 2022. I'll start by giving you an overview of our operations, strategy, and financial results for the quarter, and then Eric will provide an update regarding our operating businesses. After that, we'll open it up for Q&A. The key themes we are going to highlight today are, first, the recovery in the lodging industry continues to gain momentum, and both of our advised REIT platforms are well-positioned. Second, we continue to see strong results in our third party growth initiative for our operating businesses. And third, through our focus on growing assets under management, the pace of our capital raising efforts at Ashford Securities continues to accelerate. We recently completed the offering for Braemar's non-traded preferred stock, placing approximately $460 million. As of December 31st, 2022, our two publicly traded REIT platforms, Ashford Hospitality Trust and Braemar Hotels and Resorts had ownership interests in 116 hotels with approximately 26,000 rooms and had approximately $8.2 billion of gross assets as of December 31st, 2022. While Braemar's exposure to the resort segment has fueled its strong performance for several quarters now, in the last two quarters, we've seen its urban hotels ramp up significantly. Braymar continues to report strong results compared to 2019, with REFAR in the fourth quarter of 20% compared to the fourth quarter of 2019. Braymar has been active on the acquisition front and completed two acquisitions in 2022, the iconic 96-room Ritz-Carlton Reserve Dorado Beach in Puerto Rico and the 210-room Four Seasons Resort Scottsdale at True North. We anticipate that Braemar will continue to actively look to deploy capital into accretive hotel investment opportunities. Ashford Trust has significantly deleveraged its balance sheet from a few years ago and ended the quarter with over $500 million of networking capital. The offering for its non-traded preferred stock is effective and we anticipate capital raising to accelerate with Braemar's offering now completed. Looking ahead, we believe both advisory platforms have ample liquidity and we remain focused on their future strategic objectives. Our strategy and structure are designed for growth. We have a powerful ecosystem of businesses that all benefit as we grow our assets under management. Our size and scale in the lodging industry also brings benefits to third party owners and other capital providers as we are one of the largest owners and fee payers for the major hotel brands. We believe we have a superior strategy and structure that is unique within the hospitality space, and we are excited about the potential growth of our platform. Over the past few years, we have completed numerous bolt-on acquisitions for our operating businesses, and we continue to look for attractive opportunities to strategically and accretively grow our business. I will now turn to our financial results for the quarter. Net loss attributable to common stockholders for the fourth quarter was $10.8 million and net loss attributable to common stockholders for the full year was $32.8 million. Adjusted EBITDA was $19.4 million for the fourth quarter and $75.7 million for the full year. This full year result reflected a growth rate of 56% over 2021. Our strong growth in adjusted EBITDA for the year was driven primarily by Inspire, Remington, and Premier. Adjusted net income for the fourth quarter was $13.2 million, and adjusted net income per diluted share was $1.65. Adjusted net income and adjusted net income per share for the full year 2022 were $53.6 million and $6.88, respectively, reflecting strong growth over the prior year. I want to remind analysts and investors that in the fourth quarter of 2021, we recognized $5.5 million of base advisory fees from Ashford Trust that had been deferred in previous quarters. So as you think about the year-over-year comparison, it's important to keep that in mind. Total advisory fee revenue from Braemar in the fourth quarter increased 27% over the prior year quarter. Our share count currently stands at 8 million fully diluted shares outstanding, which is comprised of 3 million common shares outstanding, 0.2 million common shares earmarked for issuance under our deferred compensation plan, 4.2 million common shares associated with our Series D convertible preferred stock, and the remaining 0.6 million shares are for acquisition-related shares and restricted stock. I will now turn the call over to Eric to discuss our operating businesses in more detail.