Ashford Inc. (Holding Company)

Greetings and welcome to Ashford second quarter 2023 results conference call. At this time, all participants are on 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. Thank you. You may begin.

Good day and welcome to today's conference call to review results for Ashford for the second quarter of 2023 and to update you on recent developments. 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 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 a 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, and the company's earnings release and accompanying tables or schedules, which have been filed in Form 8K with SEC on August 2, 2023, and may also be accessed through the company's website at www.ashfordinc.com. Each listener is encouraged to review those recommendations provided in their earnings release together with all other information provided in the release. Also, unless otherwise stated, all reported results discussed in this call compare the second quarter ended June 30th, 2023 with the second quarter ended June 30th, 2022. I will now turn the call over to Derek.

Thanks, Jordan, and welcome everyone to our call to discuss our financial results for the second 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 had strong revenue growth in the quarter, but a difficult year-over-year comparison, as last year we reported record results in the second quarter. as demand came roaring back to hotels and labor conditions made it difficult to fill open positions. Second, we continue to see growth in the pace of capital raising through Ashford Securities, and we're pleased to announce the milestone of over $500 million of capital raised through Ashford Securities since its launch in 2021. And third, Remington had a record quarter in terms of the number of new third-party management agreements signed during the quarter. We continue to be excited about the potential for Remington and all of our portfolio companies to continue to grow their third-party business. As of June 30, 2023, our two publicly traded REIT platforms, Ashford Trust and Braemar, had ownership interests in 118 hotels with approximately 27,000 rooms and approximately $7.9 billion in gross assets. Braymar's resort portfolio has seen some stabilization in both demand and pricing, as leisure guests now have more options for travel, while its urban hotels continue to recover nicely, as both corporate and group demand continues to strengthen. Braymar has also 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 and the 210-room Four Seasons Resort Scottsdale at True North, and the 143-room Mr. C. Beverly Hills Hotel. We are excited about Braymar's recent announcement regarding the planned conversion of the Mr. C. Beverly Hills to Hilton's LXR brand. We believe the strength of the Hilton reservation system will make a big impact at that property. Asher Trust continues to focus on deleveraging its balance sheet and extending its debt maturities, and ended the quarter with over $344 million of networking capital. Today, Ashford Trust has issued over $50 million of its non-traded preferred stock, and we believe this is an attractive source of capital for that platform. Further, in early July, Ashford Trust made the strategic decision to not make the required pay down of approximately $255 million for 19 hotels secured by its Keys A, B, and F loans. It's important to note that in the event those hotels end up being transferred to the lender, we estimate the annual impact to Ashford, Inc. will only be a reduction in annual adjusted EBITDA between $2 and $3 million. 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 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'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. I will now turn to our financial results for the quarter. Net loss attributable to common stockholders for the second quarter was $7.5 million. Adjusted EBITDA was $17.8 million for the second quarter. As I previously mentioned, we had difficult comparisons to last year, and our portfolio companies are working to balance their cost structures while experiencing robust revenue growth. Adjusted net income for the second quarter was $12.7 million, and adjusted net income per diluted share was $1.57. Total advisory fee revenue for Braemar in the second quarter increased 15.1% over the prior year quarter. Our share count currently stands at 8 million fully diluted shares outstanding, which is comprised of 3.1 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 0.5 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.