Fourth Quarter Net Income of $16.3 Million and Net Income
Attributable to RMR of $0.40 Per Share
Fourth Quarter Adjusted EBITDA of $24.3 Million and Adjusted
EBITDA Margin of 56.9%
NEWTON, Mass.--(BUSINESS WIRE)--The RMR Group Inc. (NASDAQ: RMR) today announced its financial results
for the quarter and year ended September 30, 2015.
-
As of September 30, 2015, RMR had $21.0 billion of assets under
management.
-
RMR earned management services revenues (excluding reimbursable
payroll and related costs as well as advisory services revenues) for
the three months ended September 30, 2015 from the following sources
(dollars in thousands):
|
Managed REITs
|
|
|
|
$
|
32,889
|
|
|
82.6
|
%
|
Managed Operators
|
|
|
|
|
6,276
|
|
|
15.8
|
%
|
Other Client Companies
|
|
|
|
|
672
|
|
|
1.6
|
%
|
Total
|
|
|
|
$
|
39,837
|
|
|
100.0
|
%
|
-
For the three months ended September 30, 2015, net income was $16.3
million and net income attributable to RMR was $6.3 million, or $0.40
per share.
-
For the three months ended September 30, 2015, earnings before
interest, taxes, depreciation and amortization, as adjusted to exclude
the effects of certain historical amounts and non-recurring charges,
or Adjusted EBITDA, was $24.3 million and Adjusted EBITDA Margin was
56.9%.
-
As of September 30, 2015, RMR had cash and cash equivalents of $34.5
million and no indebtedness.
Adam Portnoy, President and Chief Executive Officer of RMR, made the
following statement:
“Earlier this month we successfully completed our transition to a
publicly traded company. We believe that our stable revenue base,
our historically high operating margins and our debt free balance sheet,
combined with our experienced management team, position RMR well for the
future.”
Summary Results for the Quarter and Year Ended September 30, 2015:
Total revenues for the quarter and year ended September 30, 2015 were
$48.1 million and $192.9 million, respectively. Net income for the
quarter and year ended September 30, 2015 were $16.3 million and $77.4
million, respectively. Net income attributable to RMR for the quarter
and year ended September 30, 2015 were $6.3 million, or $0.40 per share,
and $7.3 million, or $0.46 per share, respectively. Adjusted EBITDA for
the quarter and year ended September 30, 2015 were $24.3 million and
$92.3 million, respectively. Comparisons of RMR’s revenues, Adjusted
EBITDA and net income for the quarter and year ended September 30, 2015
to the quarter and year ended September 30, 2014 are presented later in
this press release.
When considering the financial data for the year ended September 30,
2015 and the comparison of the financial data for the quarter and year
ended September 30, 2015 to the financial data for the quarter and year
ended September 30, 2014, investors should note that RMR’s business was
reorganized after the termination of certain management contracts on
September 30, 2014, The RMR Group Inc. was not formed until May 28, 2015
and did not become part of the reorganized business until June 5, 2015,
when certain RMR management contracts were amended.
Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial
measures. A reconciliation of net income determined in accordance with
U.S. generally accepted accounting principles, or GAAP, to Adjusted
EBITDA and a calculation of Adjusted EBITDA Margin appears later in this
press release.
Dividend Policy:
RMR intends to pay a cash dividend equal to $0.25 per share of Class A
Common Stock per quarter ($1.00 per share per year). RMR expects its
next dividend will equal $0.2993 per share, which represents a dividend
of $0.25 per share for the quarter ended March 31, 2016 plus a pro rata
dividend for the period from December 14, 2015 (the date the
distribution of RMR’s shares to public shareholders was completed) to
December 31, 2015. RMR intends to declare and pay its dividends after
the end of each quarterly period beginning after March 31, 2016.
The RMR Group Inc. is a holding company and substantially all of its
business is conducted by its majority owned subsidiary, The RMR Group
LLC. The RMR Group LLC is an alternative asset management company which
primarily provides management services to publicly traded REITs and real
estate operating companies. As of September 30, 2015, The RMR Group LLC
employed over 400 real estate professionals in 25 offices throughout the
United States, and the companies managed by The RMR Group LLC
collectively had over 50,000 employees. The RMR Group Inc. is
headquartered in Newton, Massachusetts.
WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. WHENEVER RMR USES WORDS
SUCH AS “OUTLOOK,” “BELIEVES,” “EXPECTS,” “POTENTIAL,” “CONTINUES,”
“MAY,” “WILL,” “SHOULD,” “SEEKS,” “PREDICTS,” “INTENDS,” “PLANS,”
“ESTIMATES,” “ANTICIPATES” OR THE NEGATIVE VERSION OF THESE WORDS OR
OTHER COMPARABLE WORDS, IT IS MAKING FORWARD LOOKING STATEMENTS. RMR’S
FORWARD LOOKING STATEMENTS ARE LARGELY BASED ON ITS CURRENT EXPECTATIONS
AND PROJECTIONS ABOUT FUTURE EVENTS. FORWARD LOOKING STATEMENTS ARE
INHERENTLY SUBJECT TO RISKS AND UNCERTAINTIES, SOME OF WHICH CANNOT BE
PREDICTED OR QUANTIFIED. YOU SHOULD NOT RELY ON RMR’S FORWARD LOOKING
STATEMENTS AS PREDICTIONS OF FUTURE EVENTS. THE EVENTS AND CIRCUMSTANCES
STATED OR IMPLIED BY RMR’S FORWARD LOOKING STATEMENTS MAY NOT BE
ACHIEVED OR OCCUR AND ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
PROJECTED IN THE FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS
FACTORS. FOR EXAMPLE, SUBSTANTIALLY ALL OF RMR’S REVENUES ARE DERIVED
FROM RMR’S MANAGED REITS AND MANAGED OPERATING COMPANIES. A LOSS OF ANY
OF THESE CLIENTS OR A DECLINE IN THE CLIENTS BUSINESS, ASSETS OR MARKET
CAPITALIZATION OF ANY OF THESE CLIENTS MAY MATERIALLY REDUCE RMR’S
REVENUES AND EARNINGS. THE INFORMATION CONTAINED IN RMR’S FILINGS WITH
THE SECURITIES AND EXCHANGE COMMISSION, OR THE SEC, INCLUDING UNDER THE
CAPTION “RISK FACTORS” IN RMR’S PERIODIC REPORTS, OR INCORPORATED
THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES
FROM RMR’S FORWARD LOOKING STATEMENTS. RMR’S FILINGS WITH THE SEC ARE
AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.
RMR UNDERTAKES NO OBLIGATION TO UPDATE ANY FORWARD LOOKING STATEMENT,
WHETHER AS A RESULT OF NEW INFORMATION, FUTURE DEVELOPMENTS OR
OTHERWISE, EXCEPT AS REQUIRED BY LAW.
The RMR Group Inc.
|
Consolidated Statements of Comprehensive Income
|
(dollars in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Fiscal Year Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
Revenues
|
|
|
2015
|
|
2014
|
|
|
2015
|
|
2014
|
Management services
|
|
|
$
|
39,837
|
|
$
|
67,225
|
|
|
$
|
162,326
|
|
$
|
218,753
|
Reimbursable payroll and related costs
|
|
|
|
7,695
|
|
|
18,074
|
|
|
|
28,230
|
|
|
64,049
|
Advisory services
|
|
|
|
579
|
|
|
633
|
|
|
|
2,380
|
|
|
2,244
|
Total revenues
|
|
|
|
48,111
|
|
|
85,932
|
|
|
|
192,936
|
|
|
285,046
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
|
|
19,301
|
|
|
35,048
|
|
|
|
83,456
|
|
|
127,841
|
Members profit sharing
|
|
|
|
-
|
|
|
116,000
|
|
|
|
-
|
|
|
116,000
|
Separation expense
|
|
|
|
-
|
|
|
1,520
|
|
|
|
116
|
|
|
2,330
|
General and administrative
|
|
|
|
7,878
|
|
|
6,562
|
|
|
|
26,535
|
|
|
21,957
|
Depreciation expense
|
|
|
|
455
|
|
|
594
|
|
|
|
2,117
|
|
|
2,446
|
Total expenses
|
|
|
|
27,634
|
|
|
159,724
|
|
|
|
112,224
|
|
|
270,574
|
Operating income (loss)
|
|
|
|
20,477
|
|
|
(73,792)
|
|
|
|
80,712
|
|
|
14,472
|
Interest and other income
|
|
|
|
34
|
|
|
273
|
|
|
|
1,732
|
|
|
497
|
Unrealized losses attributable to changes in fair value of stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accounted for under the fair value option
|
|
|
|
-
|
|
|
(4,959)
|
|
|
|
(290)
|
|
|
(4,556)
|
Income (loss) before income tax expense and equity in earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of investee
|
|
|
|
20,511
|
|
|
(78,478)
|
|
|
|
82,154
|
|
|
10,413
|
Income tax expense
|
|
|
|
(4,194)
|
|
|
(76)
|
|
|
|
(4,848)
|
|
|
(280)
|
Equity in earnings of investee
|
|
|
|
-
|
|
|
38
|
|
|
|
115
|
|
|
160
|
Net income (loss)
|
|
|
|
16,317
|
|
$
|
(78,516)
|
|
|
|
77,421
|
|
$
|
10,293
|
Net income attributable to noncontrolling interest
|
|
|
|
(9,984)
|
|
|
|
|
|
|
(70,118)
|
|
|
|
Net income attributable to The RMR Group Inc.
|
|
|
$
|
6,333
|
|
|
|
|
|
$
|
7,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted
|
|
|
|
16,000
|
|
|
|
|
|
|
16,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to The RMR Group Inc. per common share -
basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and diluted
|
|
|
$
|
0.40
|
|
|
|
|
|
$
|
0.46
|
|
|
|
The RMR Group Inc.
|
Calculation of Adjusted Revenues, EBITDA, Adjusted EBITDA and
Adjusted EBITDA Margin(1)
|
(dollars in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Fiscal Year Ended
|
Calculation of Adjusted Revenues:
|
|
|
September 30,
|
|
|
|
September 30,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
2015
|
|
|
2014
|
Total revenue
|
|
|
$
|
48,111
|
|
|
$
|
85,932
|
|
|
|
$
|
192,936
|
|
|
$
|
285,046
|
Plus: other asset amortization
|
|
|
|
2,354
|
|
|
|
-
|
|
|
|
|
2,999
|
|
|
|
-
|
Less: Reimbursable payroll and related costs
|
|
|
|
(7,695)
|
|
|
|
(18,074)
|
|
|
|
|
(28,230)
|
|
|
|
(64,049)
|
Adjusted Revenues
|
|
|
$
|
42,770
|
|
|
$
|
67,858
|
|
|
|
$
|
167,705
|
|
|
$
|
220,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of EBITDA and Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
16,317
|
|
|
$
|
(78,516)
|
|
|
|
$
|
77,421
|
|
|
$
|
10,293
|
Plus: interest expense
|
|
|
|
-
|
|
|
|
44
|
|
|
|
|
-
|
|
|
|
144
|
Plus: income tax expense
|
|
|
|
4,194
|
|
|
|
76
|
|
|
|
|
4,848
|
|
|
|
280
|
Plus: depreciation expense
|
|
|
|
455
|
|
|
|
594
|
|
|
|
|
2,117
|
|
|
|
2,446
|
EBITDA
|
|
|
|
20,966
|
|
|
|
(77,802)
|
|
|
|
|
84,386
|
|
|
|
13,163
|
Plus: other asset amortization
|
|
|
|
2,354
|
|
|
|
-
|
|
|
|
|
2,999
|
|
|
|
-
|
Plus: transaction related costs
|
|
|
|
1,954
|
|
|
|
-
|
|
|
|
|
5,454
|
|
|
|
-
|
Plus: members profit sharing
|
|
|
|
-
|
|
|
|
116,000
|
|
|
|
|
-
|
|
|
|
116,000
|
Plus: separation expense
|
|
|
|
-
|
|
|
|
1,520
|
|
|
|
|
116
|
|
|
|
2,330
|
Plus: unrealized (gains) losses attributable to changes in fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of stock accounted for under the fair value option
|
|
|
|
-
|
|
|
|
4,959
|
|
|
|
|
290
|
|
|
|
4,556
|
Less: certain one time adjustments
|
|
|
|
(954)
|
|
|
|
-
|
|
|
|
|
(954)
|
|
|
|
-
|
Adjusted EBITDA
|
|
|
$
|
24,320
|
|
|
$
|
44,677
|
|
|
|
$
|
92,291
|
|
|
$
|
136,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Adjusted EBITDA Margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Revenues
|
|
|
$
|
42,770
|
|
|
$
|
67,858
|
|
|
|
$
|
167,705
|
|
|
$
|
220,997
|
Adjusted EBITDA
|
|
|
$
|
24,320
|
|
|
$
|
44,677
|
|
|
|
$
|
92,291
|
|
|
$
|
136,049
|
Adjusted EBITDA Margin
|
|
|
|
56.9%
|
|
|
|
65.8%
|
|
|
|
|
55.0%
|
|
|
|
61.6%
|
(1) Adjusted Revenues, EBITDA, Adjusted EBITDA and Adjusted EBITDA
Margin are calculated as presented in the tables above. We consider
Adjusted Revenues, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to
be appropriate measures of our operating performance, along with net
income, net income attributable to RMR, operating income and cash flow
from operating activities. RMR believes that Adjusted Revenues, EBITDA,
Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to
investors because by excluding the effects of certain historical
amounts, such as member’s profit sharing, interest and depreciation
expense, and certain non-recurring charges, such as the transaction
related costs in connection with the creation of The RMR Group Inc. and
the distribution of its shares of Class A Common Stock, Adjusted
Revenues, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin may
facilitate a comparison of current operating performance with the
performance of other asset management businesses. Adjusted Revenues,
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin do not represent cash
generated by operating activities in accordance with GAAP and should not
be considered an alternative to net income, net income attributable to
The RMR Group Inc., operating income or cash flow from operating
activities determined in accordance with GAAP, or as an indicator of
financial performance or liquidity, nor are these measures necessarily
indicative of sufficient cash flow to fund all of RMR’s needs. These
measures should be considered in conjunction with net income, net income
attributable to The RMR Group Inc., operating income and cash flow from
operating activities as presented in our consolidated statements of
comprehensive income and consolidated statements of cash flows. Also,
other asset management businesses may calculate Adjusted Revenues,
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin differently than we
do.
The RMR Group Inc.
|
Consolidated Balance Sheets
|
(dollars in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
September 30,
|
Assets
|
|
2015
|
|
|
2014
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
34,497
|
|
|
$
|
141,731
|
Due from related parties
|
|
|
17,986
|
|
|
|
74,717
|
Accounts receivable
|
|
|
-
|
|
|
|
26,229
|
Prepaid and other current assets
|
|
|
6,261
|
|
|
|
2,681
|
Total current assets
|
|
|
58,744
|
|
|
|
245,358
|
|
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
|
Available for sale securities
|
|
|
-
|
|
|
|
2,317
|
Equity investment in Affiliates Insurance Company
|
|
|
-
|
|
|
|
6,796
|
Equity investments under the fair value option
|
|
|
-
|
|
|
|
18,701
|
Total investments
|
|
|
-
|
|
|
|
27,814
|
|
|
|
|
|
|
|
|
Furniture and equipment
|
|
|
5,307
|
|
|
|
11,447
|
Leasehold improvements
|
|
|
852
|
|
|
|
3,341
|
Capitalized software costs
|
|
|
4,292
|
|
|
|
6,459
|
Total property and equipment
|
|
|
10,451
|
|
|
|
21,247
|
Accumulated depreciation
|
|
|
(5,772)
|
|
|
|
(14,379)
|
|
|
|
4,679
|
|
|
|
6,868
|
Due from related parties, net of current portion
|
|
|
6,446
|
|
|
|
7,183
|
Deferred tax asset
|
|
|
43,216
|
|
|
|
-
|
Other assets, net of amortization
|
|
|
190,807
|
|
|
|
-
|
Total assets
|
|
$
|
303,892
|
|
|
$
|
287,223
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable, accrued expenses and deposits
|
|
$
|
18,439
|
|
|
$
|
17,371
|
Due to related parties
|
|
|
-
|
|
|
|
32,023
|
Total current liabilities
|
|
|
18,439
|
|
|
|
49,394
|
Long term portion of deferred rent payable, net of current portion
|
|
|
450
|
|
|
|
402
|
Amounts due pursuant to tax receivable agreement
|
|
|
64,905
|
|
|
|
-
|
Employer compensation liability, net of current portion
|
|
|
6,446
|
|
|
|
7,183
|
Total liabilities
|
|
|
90,240
|
|
|
|
56,979
|
Commitments and contingencies
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
Members’ equity
|
|
|
-
|
|
|
|
230,430
|
Class A common shares, $0.001 par value; 31,000,000 shares
authorized;
|
|
|
|
|
|
|
|
15,000,000 shares issued and outstanding at September 30, 2015; none
authorized,
|
|
|
|
|
|
|
|
issued or outstanding at September 30, 2014
|
|
|
15
|
|
|
|
-
|
Class B-1 common shares, $0.001 par value; 1,000,000 shares
authorized;
|
|
|
|
|
|
|
|
1,000,000 shares issued and outstanding at September 30, 2015; none
authorized,
|
|
|
|
|
|
|
|
issued or outstanding at September 30, 2014
|
|
|
1
|
|
|
|
-
|
Class B-2 common shares, $0.001 par value; 15,000,000 shares
authorized,
|
|
|
|
|
|
|
|
issued and outstanding at September 30, 2015; none authorized,
issued or outstanding
|
|
|
|
|
|
|
|
at September 30, 2014
|
|
|
15
|
|
|
|
-
|
Additional paid in capital
|
|
|
93,425
|
|
|
|
-
|
Retained earnings
|
|
|
7,303
|
|
|
|
-
|
Cumulative other comprehensive income (loss)
|
|
|
73
|
|
|
|
(186)
|
Total Shareholders’ and Members’ equity
|
|
|
100,832
|
|
|
|
230,244
|
Noncontrolling interest
|
|
|
112,820
|
|
|
|
-
|
Total equity
|
|
|
213,652
|
|
|
|
230,244
|
Total liabilities and equity
|
|
$
|
303,892
|
|
|
$
|
287,223
|
Contacts
The RMR Group Inc.
Timothy A. Bonang, 617-796-8230
Senior Vice
President