Total Revenues of $65.1 Million, a 15% Increase from the Fourth
Quarter Last Year
Net Income Attributable to The RMR Group Inc. of $0.50 Per Share and
Adjusted Net Income Attributable to The RMR Group Inc. of $0.61 Per
Share, Both Increases of Over 38% from the Fourth Quarter Last Year
Adjusted EBITDA of $31.2 Million for the Fourth Quarter, a 15%
Increase from the Fourth Quarter Last Year
NEWTON, Mass.--(BUSINESS WIRE)--
The RMR Group Inc. (Nasdaq: RMR) today announced its financial results
for the fiscal quarter ended September 30, 2018.
Adam Portnoy, President and Chief Executive Officer, made the following
statement regarding the fourth quarter fiscal 2018 results:
"The fourth quarter marked the close of another strong fiscal year
with continued growth in revenues, net income per share and Adjusted
EBITDA. We are especially pleased with this fiscal quarter's Adjusted
EBITDA of $31.2 million and Adjusted EBITDA margin of 59.7%, both at
their highest levels since we became a public company in 2015 and
reflecting the strength and stability of our operating platform.
In this fiscal year we also made progress on our goals to diversify
our revenues and grow assets under management through the formation of
two new client companies, including our first real estate investment
vehicle targeting private investors."
Fourth Quarter Fiscal 2018 Highlights:
-
Total revenues for the quarter ended September 30, 2018 were $65.1
million, compared to total revenues for the quarter ended
September 30, 2017 of $56.6 million.
-
The RMR Group Inc. earned management services revenues for the three
months ended September 30, 2018 and 2017 from the following sources
(dollars in thousands):
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
2018
|
|
2017
|
Managed Equity REITs (1) |
|
|
|
$
|
41,032
|
|
|
83.5
|
%
|
|
$
|
36,845
|
|
|
83.3
|
%
|
Managed Operators (2) |
|
|
|
6,903
|
|
|
14.0
|
%
|
|
6,779
|
|
|
15.3
|
%
|
Other
|
|
|
|
1,202
|
|
|
2.5
|
%
|
|
634
|
|
|
1.4
|
%
|
Total Management Services Revenues
|
|
|
|
49,137
|
|
|
100.0
|
%
|
|
44,258
|
|
|
100.0
|
%
|
|
|
(1)
|
|
Managed Equity REITs collectively refers to: Government Properties
Income Trust (GOV), Hospitality Properties Trust (HPT), Industrial
Logistics Properties Trust (ILPT), Select Income REIT (SIR) and
Senior Housing Properties Trust (SNH).
|
|
|
|
|
|
|
|
(2)
|
|
Managed Operators collectively refers to: Five Star Senior Living
Inc. (FVE), Sonesta International Hotels Corporation and
TravelCenters of America LLC (TA).
|
|
|
|
|
|
-
For the three months ended September 30, 2018, net income was $19.0
million and net income attributable to The RMR Group Inc. was $8.2
million, or $0.50 per diluted share, compared to net income of $13.1
million and net income attributable to The RMR Group Inc. of $5.0
million, or $0.31 per diluted share, for the three months ended
September 30, 2017.
-
For the three months ended September 30, 2018, adjusted net income
attributable to The RMR Group Inc. was $9.9 million, or $0.61 per
diluted share, compared to $7.1 million, or $0.44 per diluted share,
for the three months ended September 30, 2017. The adjustments to net
income attributable to The RMR Group Inc. this quarter included $1.6
million, or $0.10 per diluted share, of impairment losses on our
investment in Tremont Mortgage Trust, or TRMT, as well as $0.5
million, or $0.03 per diluted share, of separation costs related to
former officers, and $0.3 million, or $0.02 per diluted share, of
transaction costs related to the formation of the RMR Office Property
Fund LP, or the Private Fund, offset by $0.7 million, or $0.04 per
diluted share, related to certain one time compensation adjustments.
The adjustments to net income attributable to The RMR Group Inc. for
the fiscal fourth quarter last year were primarily related to $2.1
million, or $0.13 per share, of transaction costs.
-
For the three months ended September 30, 2018, Adjusted EBITDA was
$31.2 million and Adjusted EBITDA Margin was 59.7%, compared to
Adjusted EBITDA of $27.1 million and Adjusted EBITDA Margin of 56.8%
for the three months ended September 30, 2017.
-
As of September 30, 2018, The RMR Group Inc. had $256.8 million in
cash and cash equivalents on a consolidated basis with no outstanding
debt obligations.
-
As of September 30, 2018, The RMR Group Inc. had $30.1 billion of
total assets under management, compared to total assets under
management of $28.5 billion as of September 30, 2017.
Reconciliations to GAAP:
Adjusted net income attributable to The RMR Group Inc., EBITDA, Adjusted
EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures.
Reconciliations of net income determined in accordance with GAAP to
EBITDA and Adjusted EBITDA as well as calculations of Adjusted EBITDA
Margin for the three and twelve months ended September 30, 2018 to the
three and twelve months ended September 30, 2017 are presented later in
this press release. Also, a reconciliation of net income attributable to
The RMR Group Inc. to adjusted net income attributable to The RMR Group
Inc. for the three months ended September 30, 2018 and 2017 is presented
later in this press release.
Total Assets Under Management:
The calculation of total assets under management primarily includes: (i)
the gross book value of real estate and related assets, excluding
depreciation, amortization, impairment charges or other non-cash
reserves, of the Managed Equity REITs and ABP Trust, plus (ii) the gross
book value of real estate assets, property and equipment of the Managed
Operators, excluding depreciation, amortization, impairment charges or
other non-cash reserves, plus (iii) the fair value of investments of
Affiliates Insurance Company and the Private Fund, the managed assets of
RMR Real Estate Income Fund and the equity of TRMT. This calculation of
total assets under management may include amounts in respect of the
Managed Equity REITs that are higher than the calculations of assets
under management used for purposes of calculating fees under the terms
of the business management agreements, which are based, in part, upon
the lesser of the historical cost of real estate assets or total market
capitalization. For information on the calculation of assets under
management of the Managed Equity REITs for purposes of the fee
provisions of the business management agreements, see The RMR Group
Inc.'s Annual Report on Form 10-K filed with the Securities and Exchange
Commission, or SEC. The RMR Group Inc.'s SEC filings are available at
the SEC website: www.sec.gov.
Conference Call:
At 1:00 p.m. Eastern Time this afternoon, President and Chief Executive
Officer, Adam Portnoy, and Executive Vice President, Chief Financial
Officer and Treasurer, Matt Jordan, will host a conference call to
discuss The RMR Group Inc.’s fiscal fourth quarter ended September 30,
2018 financial results.
The conference call telephone number is (877) 329-4297. Participants
calling from outside the United States and Canada should dial (412)
317-5435. No pass code is necessary to access the call from either
number. Participants should dial in about 15 minutes prior to the
scheduled start of the call. A replay of the conference call will be
available through 11:59 p.m. Eastern Time on Monday, December 10, 2018.
To access the replay, dial (412) 317-0088. The replay pass code is
10123895.
A live audio webcast of the conference call will also be available in a
listen only mode on RMR’s website, at www.rmrgroup.com.
Participants wanting to access the webcast should visit RMR’s website
about five minutes before the call. The archived webcast will be
available for replay on RMR’s website following the call for about one
week. The transcription, recording and retransmission in any way of
The RMR Group Inc.'s fiscal fourth quarter ended September 30, 2018
financial results conference call are strictly prohibited without the
prior written consent of The RMR Group Inc.
About The RMR Group Inc.
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 that
primarily provides management services to publicly traded REITs and real
estate operating companies. As of September 30, 2018, The RMR Group LLC
had $30.1 billion of total assets under management, including more than
1,700 properties, and employed almost 600 real estate professionals in
more than 30 offices throughout the United States; and the companies
managed by The RMR Group LLC collectively had over 52,000 employees. The
RMR Group Inc. is headquartered in Newton, Massachusetts.
WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND
OTHER SECURITIES LAWS. FORWARD LOOKING STATEMENTS CAN BE IDENTIFIED BY
USE OF WORDS SUCH AS “OUTLOOK”, “BELIEVE”, “EXPECT”, “POTENTIAL”,
“WILL”, “MAY”, “ESTIMATE”, “ANTICIPATE”, AND DERIVATIVES OR NEGATIVES OF
SUCH WORDS OR SIMILAR WORDS. FORWARD LOOKING STATEMENTS IN THIS PRESS
RELEASE ARE BASED UPON PRESENT BELIEFS OR EXPECTATIONS. HOWEVER, FORWARD
LOOKING STATEMENTS AND THEIR IMPLICATIONS ARE NOT GUARANTEED TO OCCUR
AND MAY NOT OCCUR FOR VARIOUS REASONS, INCLUDING SOME REASONS BEYOND THE
RMR GROUP INC.'S CONTROL. FOR EXAMPLE:
-
MR. PORTNOY STATES THAT FOURTH QUARTER OF FISCAL 2018 MARKED THE CLOSE
OF ANOTHER STRONG FISCAL YEAR FOR RMR WITH CONTINUED GROWTH IN
REVENUES, NET INCOME PER SHARE AND ADJUSTED EBITDA. HE FURTHER NOTED
THAT RMR’S ADJUSTED EBITDA AND MARGIN FOR THE FOURTH QUARTER FISCAL
2018 WERE AT THEIR HIGHEST LEVELS SINCE RMR BECAME A PUBLIC COMPANY IN
2015 AND THAT THESE RESULTS REFLECT THE STRENGTH AND STABILITY OF
RMR’S OPERATING PLATFORM. THESE STATEMENTS MAY IMPLY THAT RMR’S
REVENUES, NET INCOME PER SHARE AND ADJUSTED EBITDA MAY CONTINUE TO
GROW IN FUTURE PERIODS AND THAT ITS OPERATING PLATFORM WILL REMAIN
STRONG AND STABLE; HOWEVER, RMR’S BUSINESS IS SUBJECT TO VARIOUS
RISKS, INCLUDING RISKS OUTSIDE ITS CONTROL. AS A RESULT, RMR’S
REVENUES, NET INCOME PER SHARE AND ADJUSTED EBITDA MAY NOT GROW IN
FUTURE PERIODS AND COULD DECLINE.
-
MR. PORTNOY STATES THAT RMR MADE PROGRESS ON ITS GOALS TO DIVERSIFY
REVENUES AND GROW ASSETS UNDER MANAGEMENT THROUGH THE FORMATION OF TWO
NEW CLIENT COMPANIES, INCLUDING RMR'S FIRST REAL ESTATE INVESTMENT
VEHICLE TARGETING PRIVATE INVESTORS. THERE CAN BE NO ASSURANCE THAT
RMR’S RESULTS WILL BENEFIT FROM THE FORMATION AND MANAGEMENT OF THESE
NEW CLIENT COMPANIES, OR THAT RMR’S EFFORTS TO GROW AND DIVERSIFY ITS
BUSINESS WILL BE SUCCESSFUL. IN FACT, RMR'S BUSINESS COULD BECOME
SMALLER AND LESS DIVERSIFIED IN THE FUTURE. IN ADDITION, ANY FURTHER
REVENUE STREAM DIVERSIFICATION THAT RMR MAY REALIZE MAY NOT IMPROVE
ITS PROFITABILITY. THERE CAN ALSO BE NO ASSURANCE THAT RMR’S OPERATING
PLATFORM WILL CONTINUE TO REMAIN STRONG AND STABLE WITH CONTINUED
GROWTH IN REVENUES, NET INCOME AND ADJUSTED EBITDA.
THE INFORMATION CONTAINED IN THE RMR GROUP INC.’S FILINGS WITH THE SEC,
INCLUDING UNDER THE CAPTION “RISK FACTORS” IN THE RMR GROUP INC.’S
PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES IMPORTANT FACTORS
THAT COULD CAUSE DIFFERENCES FROM THE FORWARD LOOKING STATEMENTS IN THIS
PRESS RELEASE. THE RMR GROUP INC.’S FILINGS WITH THE SEC ARE AVAILABLE
ON ITS WEBSITE AT WWW.SEC.GOV.
EXCEPT AS REQUIRED BY LAW, THE RMR GROUP INC. UNDERTAKES NO OBLIGATION
TO UPDATE ANY FORWARD LOOKING STATEMENT, WHETHER AS A RESULT OF NEW
INFORMATION, FUTURE EVENTS OR OTHERWISE.
|
The RMR Group Inc.
Condensed Consolidated
Statements of Income
(amounts in thousands, except per
share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Fiscal Year Ended September 30,
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Management services (1) |
|
|
|
$
|
49,137
|
|
|
$
|
44,258
|
|
|
$
|
191,594
|
|
|
$
|
174,887
|
|
Incentive business management fees
|
|
|
|
—
|
|
|
—
|
|
|
155,881
|
|
|
52,407
|
|
Reimbursable payroll related and other costs
|
|
|
|
15,076
|
|
|
11,309
|
|
|
53,152
|
|
|
40,332
|
|
Advisory services
|
|
|
|
860
|
|
|
1,069
|
|
|
4,352
|
|
|
4,102
|
|
Total revenues
|
|
|
|
65,073
|
|
|
56,636
|
|
|
404,979
|
|
|
271,728
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
|
|
25,887
|
|
|
23,879
|
|
|
108,763
|
|
|
92,625
|
|
Equity based compensation
|
|
|
|
4,621
|
|
|
3,324
|
|
|
10,906
|
|
|
7,128
|
|
Separation costs
|
|
|
|
1,372
|
|
|
—
|
|
|
3,247
|
|
|
—
|
|
Total compensation and benefits expense
|
|
|
|
31,880
|
|
|
27,203
|
|
|
122,916
|
|
|
99,753
|
|
General and administrative
|
|
|
|
6,868
|
|
|
6,116
|
|
|
27,149
|
|
|
25,189
|
|
Transaction costs
|
|
|
|
780
|
|
|
6,734
|
|
|
1,697
|
|
|
9,187
|
|
Depreciation and amortization
|
|
|
|
252
|
|
|
488
|
|
|
1,248
|
|
|
2,038
|
|
Total expenses
|
|
|
|
39,780
|
|
|
40,541
|
|
|
153,010
|
|
|
136,167
|
|
Operating income
|
|
|
|
25,293
|
|
|
16,095
|
|
|
251,969
|
|
|
135,561
|
|
Interest and other income
|
|
|
|
1,463
|
|
|
506
|
|
|
4,546
|
|
|
1,565
|
|
Tax receivable agreement remeasurement
|
|
|
|
—
|
|
|
—
|
|
|
24,710
|
|
|
—
|
|
Impairment loss on TRMT investment
|
|
|
|
(4,359
|
)
|
|
—
|
|
|
(4,359
|
)
|
|
—
|
|
Income before income tax expense and equity in losses of investees
|
|
|
|
22,397
|
|
|
16,601
|
|
|
276,866
|
|
|
137,126
|
|
Income tax expense
|
|
|
|
(3,376
|
)
|
|
(3,440
|
)
|
|
(58,862
|
)
|
|
(28,251
|
)
|
Equity in losses of investees
|
|
|
|
(10
|
)
|
|
(45
|
)
|
|
(578
|
)
|
|
(206
|
)
|
Net income
|
|
|
|
19,011
|
|
|
13,116
|
|
|
217,426
|
|
|
108,669
|
|
Net income attributable to noncontrolling interest
|
|
|
|
(10,827
|
)
|
|
(8,073
|
)
|
|
(121,385
|
)
|
|
(66,376
|
)
|
Net income attributable to The RMR Group Inc.
|
|
|
|
8,184
|
|
|
5,043
|
|
|
96,041
|
|
|
42,293
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic
|
|
|
|
16,094
|
|
|
16,041
|
|
|
16,077
|
|
|
16,032
|
|
Weighted average common shares outstanding - diluted
|
|
|
|
16,144
|
|
|
16,062
|
|
|
16,120
|
|
|
16,048
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to The RMR Group Inc. per common share -
basic
|
|
|
|
$
|
0.51
|
|
|
$
|
0.31
|
|
|
$
|
5.94
|
|
|
$
|
2.63
|
|
Net income attributable to The RMR Group Inc. per common share -
diluted
|
|
|
|
$
|
0.50
|
|
|
$
|
0.31
|
|
|
$
|
5.92
|
|
|
$
|
2.63
|
|
|
|
(1)
|
|
Includes business management fees earned from the Managed Equity
REITs based upon the lower of (i) the average historical cost of
each REIT’s properties and (ii) each REIT’s average market
capitalization. The following table presents a summary of each
Managed Equity REIT's primary strategy and the lesser of the
historical cost of its assets under management and its market
capitalization as of September 30, 2018 and 2017, as applicable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lesser of Historical Cost of Assets
Under
Management or Market Capitalization
(a)
As
of September 30,
|
REIT
|
|
|
|
Primary Strategy
|
|
|
|
2018
|
|
2017
|
GOV
|
|
|
|
Office properties primarily leased to government tenants
|
|
|
|
$
|
3,277,442
|
|
|
$
|
2,221,945
|
HPT
|
|
|
|
Hotels and travel centers
|
|
|
|
8,935,518
|
|
|
8,740,307
|
ILPT
|
|
|
|
Industrial and logistics properties
|
|
|
|
1,547,219
|
|
|
—
|
SIR
|
|
|
|
Office properties primarily leased to single tenants
|
|
|
|
3,445,824
|
|
|
4,575,215
|
SNH
|
|
|
|
Senior living, medical office and life science properties
|
|
|
|
7,915,213
|
|
|
8,233,984
|
|
|
|
|
|
|
|
|
$
|
25,121,216
|
|
|
$
|
23,771,451
|
|
|
(a)
|
|
The basis on which our base business management fees are calculated
for the three and twelve months ended September 30, 2018 and 2017
may differ from the basis at the end of the periods presented in the
table above. As of September 30, 2018, the market capitalization was
lower than the historical costs of assets under management for GOV,
HPT and SNH; the historical costs of assets under management for
GOV, HPT and SNH as of September 30, 2018, were $3,467,169,
$10,161,067 and $8,567,230, respectively. For ILPT and SIR, the
historical costs of assets under management were lower than their
market capitalization of $1,926,057 and $3,684,685, respectively,
calculated as of September 30, 2018.
|
|
|
|
|
|
|
The RMR Group Inc. Reconciliation of Adjusted Net Income
Attributable to The RMR Group Inc. from Net Income
Attributable to The RMR Group Inc. (dollars in thousands,
except per share amounts) (unaudited)
|
|
The RMR Group Inc. is providing the below reconciliation and
information regarding certain individually significant items
occurring or impacting its financial results for the three months
ended September 30, 2018 and 2017 for supplemental informational
purposes and to enhance understanding of The RMR Group Inc.'s
condensed consolidated statements of income and to facilitate a
comparison of The RMR Group Inc.'s current operating performance
with its historical operating performance. This information should
be considered in conjunction with net income, net income
attributable to The RMR Group Inc. and operating income as presented
in The RMR Group Inc.'s condensed consolidated statements of income.
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2018
|
|
|
|
|
|
Impact on Net Income
Attributable to The RMR
Group
Inc.
|
|
Impact on Net Income
Attributable to The RMR
Group
Inc. Per Common
Share - Diluted
|
Net income attributable to The RMR Group Inc.
|
|
|
|
|
$
|
8,184
|
|
|
$
|
0.50
|
|
Impairment loss on TRMT investment, net of noncontrolling interest (1) |
|
|
|
|
1,608
|
|
|
0.10
|
|
Certain one time compensation adjustments, net of noncontrolling
interest (2) |
|
|
|
|
(682
|
)
|
|
(0.04
|
)
|
Separation costs, net of noncontrolling interest (3) |
|
|
|
|
506
|
|
|
0.03
|
|
Transaction costs related to the Private Fund, net of noncontrolling
interest (4) |
|
|
|
|
288
|
|
|
0.02
|
|
Adjusted net income attributable to The RMR Group Inc.
|
|
|
|
|
$
|
9,904
|
|
|
$
|
0.61
|
|
|
|
(1)
|
|
Includes $4,359 in impairment losses on the TRMT investment,
adjusted to reflect amounts attributable to the noncontrolling
interest and for tax at a rate of approximately 15.1%.
|
|
|
|
|
|
|
|
(2)
|
|
Includes $1,847 of certain one time compensation adjustments related
to annual bonus estimates, adjusted to reflect amounts attributable
to the noncontrolling interest and for tax at a rate of
approximately 15.1%.
|
|
|
|
|
|
|
|
(3)
|
|
Includes $1,372 of separation costs, adjusted to reflect amounts
attributable to the noncontrolling interest and for tax at a rate of
approximately 15.1%.
|
|
|
|
|
|
|
|
(4)
|
|
Includes $780 of transaction costs related to the formation of the
Private Fund, adjusted to reflect amounts attributable to the
noncontrolling interest and for tax at a rate of approximately 15.1%.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2017
|
|
|
|
|
|
Impact on Net Income
Attributable to The RMR
Group
Inc.
|
|
Impact on Net Income
Attributable to The RMR
Group
Inc. Per Common
Share - Diluted
|
Net income attributable to The RMR Group Inc.
|
|
|
|
|
$
|
5,043
|
|
|
$
|
0.31
|
Transaction costs related to TRMT, net of noncontrolling interest (1) |
|
|
|
|
1,394
|
|
|
0.09
|
Transaction costs related to RIF, net of noncontrolling interest (2) |
|
|
|
|
712
|
|
|
0.04
|
Adjusted net income attributable to The RMR Group Inc.
|
|
|
|
|
$
|
7,149
|
|
|
$
|
0.44
|
|
|
(1)
|
|
Includes $4,457 of transaction costs related to the formation and
initial public offering of TRMT, adjusted to reflect amounts
attributable to the noncontrolling interest and for tax at a rate of
approximately 20.6%.
|
|
|
|
|
|
|
|
(2)
|
|
Includes $2,277 of transaction costs related to RIF's rights
offering, adjusted to reflect amounts attributable to the
noncontrolling interest and for tax at a rate of approximately 20.6%.
|
|
|
|
|
|
|
The RMR Group Inc.
Reconciliation of EBITDA and
Adjusted EBITDA from Net Income
and Calculation of
Adjusted EBITDA Margin
(1)
(dollars
in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Fiscal Year Ended September 30,
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Reconciliation of EBITDA and Adjusted EBITDA from net income:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
19,011
|
|
|
$
|
13,116
|
|
|
$
|
217,426
|
|
|
$
|
108,669
|
|
Plus: income tax expense
|
|
|
|
3,376
|
|
|
3,440
|
|
|
58,862
|
|
|
28,251
|
|
Plus: depreciation and amortization
|
|
|
|
252
|
|
|
488
|
|
|
1,248
|
|
|
2,038
|
|
EBITDA
|
|
|
|
22,639
|
|
|
17,044
|
|
|
277,536
|
|
|
138,958
|
|
Plus: other asset amortization
|
|
|
|
2,354
|
|
|
2,354
|
|
|
9,416
|
|
|
9,416
|
|
Plus: operating expenses paid in The RMR Group Inc.'s common shares
|
|
|
|
1,567
|
|
|
949
|
|
|
4,348
|
|
|
1,970
|
|
Plus: separation costs
|
|
|
|
1,372
|
|
|
—
|
|
|
3,247
|
|
|
—
|
|
Plus: transaction costs
|
|
|
|
780
|
|
|
6,734
|
|
|
1,697
|
|
|
9,187
|
|
Plus: business email compromise fraud costs
|
|
|
|
—
|
|
|
89
|
|
|
225
|
|
|
774
|
|
Plus: impairment loss on TRMT investment
|
|
|
|
4,359
|
|
|
—
|
|
|
4,359
|
|
|
—
|
|
Less: certain one time compensation adjustments
|
|
|
|
(1,847
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Less: tax receivable agreement remeasurement due to the Tax Cuts and
Jobs Act
|
|
|
|
—
|
|
|
—
|
|
|
(24,710
|
)
|
|
—
|
|
Less: incentive business management fees earned
|
|
|
|
—
|
|
|
—
|
|
|
(155,881
|
)
|
|
(52,407
|
)
|
Certain other net adjustments
|
|
|
|
10
|
|
|
(77
|
)
|
|
87
|
|
|
(681
|
)
|
Adjusted EBITDA
|
|
|
|
$
|
31,234
|
|
|
$
|
27,093
|
|
|
$
|
120,324
|
|
|
$
|
107,217
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Adjusted EBITDA Margin:
|
|
|
|
|
|
|
|
|
|
|
Contractual management and advisory fees (excluding any incentive
business management fees) (2)
|
|
|
|
$
|
52,351
|
|
|
$
|
47,681
|
|
|
$
|
205,362
|
|
|
$
|
188,405
|
|
Adjusted EBITDA
|
|
|
|
$
|
31,234
|
|
|
$
|
27,093
|
|
|
$
|
120,324
|
|
|
$
|
107,217
|
|
Adjusted EBITDA Margin
|
|
|
|
59.7
|
%
|
|
56.8
|
%
|
|
58.6
|
%
|
|
56.9
|
%
|
|
|
(1)
|
|
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP
financial measures calculated as presented in the tables above. The
RMR Group Inc. considers EBITDA, Adjusted EBITDA and Adjusted EBITDA
Margin to be appropriate supplemental measures of its operating
performance, along with net income, net income attributable to The
RMR Group Inc. and operating income. The RMR Group Inc. believes
that EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin provide
useful information to investors because by excluding the effects of
certain amounts, such as income tax expense, depreciation and
amortization, other asset amortization, operating expenses paid in
The RMR Group Inc.'s common shares, separation costs, transaction
costs, business email compromise fraud costs, impairment loss on
TRMT investment, certain one time compensation adjustments, tax
receivable agreement remeasurement due to the Tax Cuts and Jobs Act,
incentive business management fees earned, and certain other net
adjustments, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin may
facilitate a comparison of current operating performance with The
RMR Group Inc.’s historical operating performance and with the
performance of other asset management businesses. In addition, The
RMR Group Inc. believes that providing Adjusted EBITDA Margin may
help investors assess The RMR Group Inc.’s performance of its
business by providing the margin that Adjusted EBITDA represents to
its contractual management and advisory fees (excluding any
incentive business management fees). EBITDA, Adjusted EBITDA and
Adjusted EBITDA Margin do not represent cash generated by operating
activities in accordance with GAAP and should not be considered as
alternatives to net income, net income attributable to The RMR Group
Inc. or operating income as an indicator of The RMR Group Inc.’s
financial performance or as a measure of The RMR Group Inc.’s
liquidity. These measures should be considered in conjunction with
net income, net income attributable to The RMR Group Inc. and
operating income as presented in The RMR Group Inc.'s condensed
consolidated statements of income. Also, other asset management
businesses may calculate EBITDA, Adjusted EBITDA and Adjusted EBITDA
Margin differently than The RMR Group Inc. does.
|
|
|
|
|
|
|
|
(2)
|
|
These contractual management fees are the base business management
fees, property management fees and advisory fees The RMR Group Inc.
earns pursuant to its management and investment advisory agreements
with its client companies. These amounts are calculated pursuant to
the contractual formulas and do not deduct other asset amortization
of $2,354 for each of the three months ended September 30, 2018 and
2017 and $9,416 for each of the twelve months ended September 30,
2018 and 2017, required to be recognized as a reduction to
management services revenues in accordance with GAAP and do not
include the incentive business management fees of $155,881 and
$52,407 that The RMR Group Inc. recognized under GAAP during the
twelve months ended September 30, 2018 and 2017, respectively, which
were earned for the calendar years 2017 and 2016, respectively.
|
|
|
|
|
|
|
The RMR Group Inc.
Condensed Consolidated Balance
Sheets
(dollars in thousands, except per share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2018
|
|
September 30,
2017
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
256,848
|
|
|
$
|
108,640
|
|
Due from related parties
|
|
|
|
28,846
|
|
|
25,161
|
|
Prepaid and other current assets
|
|
|
|
10,392
|
|
|
7,092
|
|
Total current assets
|
|
|
|
296,086
|
|
|
140,893
|
|
|
|
|
|
|
|
|
Furniture and equipment
|
|
|
|
4,444
|
|
|
4,800
|
|
Leasehold improvements
|
|
|
|
1,063
|
|
|
1,094
|
|
Capitalized software costs
|
|
|
|
478
|
|
|
1,876
|
|
Total property and equipment
|
|
|
|
5,985
|
|
|
7,770
|
|
Accumulated depreciation
|
|
|
|
(3,396
|
)
|
|
(4,494
|
)
|
Total property and equipment, net
|
|
|
|
2,589
|
|
|
3,276
|
|
Due from related parties, net of current portion
|
|
|
|
8,183
|
|
|
7,551
|
|
Equity method investments
|
|
|
|
7,051
|
|
|
12,162
|
|
Goodwill
|
|
|
|
1,859
|
|
|
1,859
|
|
Intangible assets, net of amortization
|
|
|
|
375
|
|
|
462
|
|
Deferred tax asset
|
|
|
|
25,726
|
|
|
45,541
|
|
Other assets, net of amortization
|
|
|
|
162,559
|
|
|
171,975
|
|
Total assets
|
|
|
|
$
|
504,428
|
|
|
$
|
383,719
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
|
|
$
|
28,307
|
|
|
$
|
26,414
|
|
Total current liabilities
|
|
|
|
28,307
|
|
|
26,414
|
|
Long term portion of deferred rent payable, net of current portion
|
|
|
|
1,229
|
|
|
1,028
|
|
Amounts due pursuant to tax receivable agreement, net of current
portion
|
|
|
|
32,048
|
|
|
59,063
|
|
Employer compensation liability, net of current portion
|
|
|
|
8,183
|
|
|
7,551
|
|
Total liabilities
|
|
|
|
69,767
|
|
|
94,056
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
Class A common stock, $0.001 par value; 31,600,000 shares
authorized; 15,229,957 and 15,164,066 shares issued and outstanding,
respectively
|
|
|
|
15
|
|
|
15
|
|
Class B-1 common stock, $0.001 par value; 1,000,000 shares
authorized, issued and outstanding
|
|
|
|
1
|
|
|
1
|
|
Class B-2 common stock, $0.001 par value; 15,000,000 shares
authorized, issued and outstanding
|
|
|
|
15
|
|
|
15
|
|
Additional paid in capital
|
|
|
|
99,239
|
|
|
95,878
|
|
Retained earnings
|
|
|
|
182,877
|
|
|
86,836
|
|
Cumulative other comprehensive income
|
|
|
|
82
|
|
|
84
|
|
Cumulative common distributions
|
|
|
|
(49,467
|
)
|
|
(33,298
|
)
|
Total shareholders’ equity
|
|
|
|
232,762
|
|
|
149,531
|
|
Noncontrolling interest
|
|
|
|
201,899
|
|
|
140,132
|
|
Total equity
|
|
|
|
434,661
|
|
|
289,663
|
|
Total liabilities and equity
|
|
|
|
$
|
504,428
|
|
|
$
|
383,719
|
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20181203005149/en/
Timothy A. Bonang, Senior Vice President
(617) 796-8230
Source: The RMR Group Inc.