Ashford Inc. (Holding Company)

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Ashford Incorporated First Quarter 2023 Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Should you require operator assistance during the conference, please press star zero to signal an operator. Please note this conference is being recorded. I will now turn the conference over to your host, Jordan Jennings, Manager, Investor Relations. Thank you. You may begin.

Good day and welcome to today's conference call to review results for Ashford for the first quarter of 2023 and to update you on recent developments. On the call today will be Derek Eubanks, Chief Finance Officer, and Eric Batis, Executive Vice President of Operations. The results as well as notice of accessibility of this conference call on a listen-only basis over their internet were distributed yesterday and in practice. 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. Some forward-looking statements are subject to numerous assumptions, uncertainties, and known or unknown risks which could cause actual results to differ materially from those anticipated. These factors are more fully discussed in accompanying 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 relief and the company's tables or schedules, which have been filed on Form 8K with the SEC on May 1, 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 their earnings release together with all their information provided in the release. Also, unless otherwise stated, all reported results discussed in this call compare the first quarter ended March 31st, 2023 with the first quarter ended March 31st, 2022. I will now turn the call over to Derek.

Good morning and welcome to our call to discuss our financial results for the first quarter of 2023. 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're going to highlight today are, first, we achieved strong growth in adjusted EBITDA across our portfolio companies during the quarter, as the lodging industry continued to see strong trends in both demand and pricing. Second, through our focus on growing our 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, and to date have placed $21.5 million of Ashford Trust non-traded preferred stock. And third, during the quarter, we completed a bolt-on acquisition for Red Hospitality, which expanded that business into the Hawaiian market. As of March 31st, 2023, our two publicly traded REIT platforms, Ashford Trust and Braemar, had ownership interests in 118 hotels with approximately 27,000 rooms and approximately $8.1 billion of growth assets. While Braemar's exposure to the resort segment has fueled its strong performance for several quarters now, in the last three quarters, we've seen its urban hotels ramp up significantly. Braemar continues to report strong results with RevCar in the first quarter of 8.4% compared to the prior year quarter. Braemar has been active on the acquisition front and has completed three acquisitions this cycle. The iconic 96-room Ritz-Carlton Reserve Dorado Beach in Puerto Rico, the 210-room Four Seasons Resort Scottsdale at Trin North, and the 143-room Mr. C. Beverly Hills Hotel. We are also pleased to see these recent acquisitions for Braemar outperforming our original underwriting models. Ashford Trust has significantly deleveraged its balance sheet from a few years ago and into the quarter with over $442 million of networking capital. Ashford Trust has issued $21.5 million of its non-traded preferred stock to date, and we anticipate capital raising for Ashford Trust to accelerate with Braymar's offering now completed. This source of capital could be very attractive for Ashford Trust as we look to deleverage and grow that platform. Our strategy and structure are designed for growth. We have a powerful ecosystem of businesses that all benefit as we grow our asset center management. Our size and scale in the lodging industry also bring 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've completed numerous bolt-on acquisitions for our operating businesses, and with ample dry powder, we continue to look for attractive opportunities to strategically and accretively grow our business. During the quarter, Red Hospitality and Leisure acquired privately held Ali Nui and Maui Dive Shop, Maui's premier luxury catamaran and diving operation. We're very excited about this acquisition, as Alignui has developed a reputation to provide the ultimate Maui luxury sailing and water sport experience. Red also intends to expand the Alignui fleet in 2023 with an additional vessel. This transaction expands Red's geographic footprint into the premier Maui market and geographically diversifies its revenue stream. By establishing a foothold in this coveted market, we believe Red is well-positioned to continue to grow its business in Hawaii. Eric will discuss the elite annuity acquisition in greater detail later in the call. I will now turn to our financial results for the quarter. Net loss attributable to common stockholders for the quarter was $7.7 million. Adjusted EBITDA was $17.6 million for the first quarter, and adjusted EBITDA on a trailing 12-month basis as of the end of the quarter was $78.3 million. Our strong growth in adjusted EBITDA for the quarter was driven primarily by Inspire, Remington, and Premier. Adjusted net income for the quarter was $13.4 million, and adjusted net income for diluted share was $1.67. Total advisory fee revenue from Braemar in the first quarter increased 24% 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 a deferred compensation plan, 4.2 million common shares associated with our Series B convertible preferred stock, and the remaining 0.6 million shares are for acquisition-related shares and restricted stock. I'll now turn the call over to Eric to discuss our operating businesses in more detail.