Ashford Inc. (Holding Company)

If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw a question, again, press star followed by the number one. Thank you. Jordan Jennings, Director of Investor Relations. You may begin your conference.

Good day and welcome to today's conference call to review results for efforts for the third 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 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 of 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 accompanying tables or schedules, which have been filed on Form 8K with the SEC on November 8, 2023, and may also be accessed through the company's website at www.ashfordinc.com. Each listener is encouraged to review the 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 third quarter ended September 30th, 2023, the third quarter ended September 30th, 2022. I'll now turn the call over to Derek.

Thanks, Jordan, and welcome everyone to our call to discuss our financial results for the third 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 will open it up for Q&A. The key themes we're going to highlight today are, first, the lodging industry has continued to perform well, and for the quarter, we reported revenue growth over the prior year at most of our portfolio companies. However, our margins have been negatively impacted as our businesses resume more normalized staffing levels. Second, we continue to see an attractive pace of capital raising through Ashford Securities. and have raised approximately $540 million of capital since its launch in 2021. And third, we're excited to provide an update on our newest advice platform, the Texas Strategic Growth Fund. The Texas Strategic Growth Fund is a private investment vehicle focused on investing in all types of commercial real estate in Texas. As of September 30, 2023, our two publicly traded REIT platforms, AstroTrust and Braemar, had ownership interests in 116 hotels, with approximately 27,000 rooms and approximately $7.9 billion of gross assets. Braemar's resort portfolio continues to see 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. Asher Trust continues to focus on deleveraging its balance sheet and extending its maturities. and ended the quarter with $271 million of net working capital. To date, Ashford Trust has issued approximately $77 million of its non-traded preferred stock. We believe this is an attractive source of capital for that platform. Ashford Trust recently announced the planned conversion of its Crowne Plaza La Concha Hotel in Key West, Florida to a Marriott Autograph Collection property in early 2024. and the planned conversion of the Le Pavillon Hotel in New Orleans, Louisiana, to a tribute portfolio property, also part of the Marriott brand family. Both of these announcements illustrate how Ask for Trust can unlock embedded value in its high-quality, geographically diversified portfolio. Ask for Trust continues to focus on paying off its corporate financing, primarily through select asset sales, refinancing and extending upcoming debt maturities, and raising capital through its non-traded preferred stock offering. Our newest advised platform is the Texas Strategic Growth Fund, which we launched late last year. We recently made a $2.5 million investment in this fund, and that capital, along with other capital raised from outside investors, was used to make an equity investment in a multifamily property in San Antonio, Texas. 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 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 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 third quarter was $12 million. Adjusted EBITDA was $11.8 million for the third quarter. Adjusted net income for the third quarter was $7.8 million, and adjusted net income for diluted share was 96 cents. Total advisory fee revenue from Braemar in the third quarter increased 5.8% over the prior year quarter. Our share count currently stands at 8.2 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 0.7 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.