Total Revenues of $62.1 Million, a 12% Increase from the Third
Quarter Last Year
Net Income Attributable to The RMR Group Inc. of $0.52 Per Share and
Adjusted Net Income Attributable to The RMR Group Inc. of $0.58 Per
Share, Both Increases of 21% from the Third Quarter Last Year
$100 Million Commitment to and Launch of the RMR Office Property Fund
LP Expands on Growth Initiatives
NEWTON, Mass.--(BUSINESS WIRE)--
The RMR Group Inc. (Nasdaq: RMR) today announced its financial results
for the fiscal quarter ended June 30, 2018.
Adam Portnoy, President and Chief Executive Officer, made the following
statement regarding the third quarter fiscal 2018 results:
"The third quarter was marked by strong year over year growth in our
business.
The year over year growth in AUM, revenues, net income
and EBITDA all largely came from our existing businesses.
In
addition, we recently made good progress in our stated goal of
diversifying our revenues and AUM with the announced launch of the RMR
Office Property Fund LP, our first real estate investment vehicle that
is targeting private investors.
Since June 30, 2017, we formed
three new client companies in three different real estate businesses,
all of which may lead to enhanced growth in revenue and AUM in the
future."
Third Quarter Fiscal 2018 Highlights:
-
Total revenues for the quarter ended June 30, 2018 were $62.1 million,
compared to total revenues for the quarter ended June 30, 2017 of
$55.5 million.
-
For the three months ended June 30, 2018, net income was $19.4 million
and net income attributable to The RMR Group Inc. was $8.4 million, or
$0.52 per diluted share, compared to net income of $17.6 million and
net income attributable to The RMR Group Inc. of $6.9 million, or
$0.43 per diluted share, for the three months ended June 30, 2017. Net
income this quarter included $1.8 million, or $0.04 per share, of
separation costs related to a former officer as well as $0.8 million,
or $0.02 per share, of transaction and acquisition related costs. Net
income for the fiscal third quarter last year included $1.8 million,
or $0.04 per share, of transaction and acquisition related costs as
well as $0.7 million, or $0.01 per share, of business email compromise
fraud costs.
-
The RMR Group Inc. earned management services revenues for the three
months ended June 30, 2018 and 2017 from the following sources
(dollars in thousands):
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
|
2018
|
|
2017
|
Managed Equity REITs (1) |
|
|
|
$
|
39,706
|
|
|
83.9
|
%
|
|
$
|
37,505
|
|
|
84.0
|
%
|
Managed Operators (2) |
|
|
|
6,966
|
|
|
14.7
|
%
|
|
6,556
|
|
|
14.7
|
%
|
Other
|
|
|
|
656
|
|
|
1.4
|
%
|
|
583
|
|
|
1.3
|
%
|
Total Management Services Revenues
|
|
|
|
47,328
|
|
|
100.0
|
%
|
|
44,644
|
|
|
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 June 30, 2018, Adjusted EBITDA was $28.5
million and Adjusted EBITDA Margin was 56.1%, compared to Adjusted
EBITDA of $27.4 million and Adjusted EBITDA Margin of 57.2% for the
three months ended June 30, 2017. Adjusted EBITDA Margin equals
Adjusted EBITDA divided by the contractual management and advisory
fees earned from The RMR Group LLC’s client companies. These
contractual management and advisory fees are calculated pursuant to
The RMR Group LLC’s contracts with its client companies and do not
deduct non-cash asset amortization recognized in accordance with U.S.
generally accepted accounting principles, or GAAP, as a reduction to
management services revenues. Adjusted EBITDA and Adjusted EBITDA
Margin are also calculated on recurring revenues and do not include
incentive business management fees earned.
-
As of June 30, 2018, The RMR Group Inc. had $30.0 billion of total
assets under management, compared to total assets under management of
$27.9 billion as of June 30, 2017.
-
As of June 30, 2018, The RMR Group Inc. had $280.5 million in cash and
cash equivalents on a consolidated basis with no outstanding debt
obligations.
-
On July 31, 2018, The RMR Group LLC entered into a transaction
agreement pursuant to which it is committing to contribute up to $100
million and ABP Trust, or Portnoy Family Office, is contributing $206
million of owned office properties to a newly formed private open end
real estate fund, the RMR Office Property Fund LP, or the Fund. The
Fund will be a private, open end fund focused on the acquisition,
ownership and leasing of a diverse portfolio of office properties
throughout the United States. The Fund’s General Partner will be a
wholly owned subsidiary of ABP Trust. The RMR Group LLC will manage
the Fund and receive annual fund administration fees equal to 1.0% of
Net Asset Value. In addition, The RMR Group LLC will receive property
management fees equal to 3.0% of all rents collected from commercial
real estate investments and 5.0% of costs of construction or any
improvement at commercial real estate investments held by the Fund.
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 nine months ended June 30, 2018 to the three
and nine months ended June 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 June 30, 2018 and 2017 is presented later in this
press release.
Total Assets Under Management:
The calculation of total assets under management 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, the managed assets of RMR Real Estate
Income Fund and the equity of Tremont Mortgage Trust (TRMT), plus (iv)
the contributed capital of and outstanding principal of loans serviced
for certain private clients. 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 Chief Financial Officer and Treasurer, Matt
Jordan, will host a conference call to discuss The RMR Group Inc.’s
fiscal third quarter ended June 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 Wednesday, August 15, 2018.
To access the replay, dial (412) 317-0088. The replay pass code is
10121851. The transcription, recording and retransmission in any way
of The RMR Group Inc.'s fiscal third quarter ended June 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 June 30, 2018, The RMR Group LLC had
$30.0 billion of total assets under management, including more than
1,700 properties, and employed almost 600 real estate professionals in
more than 35 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 THE RMR GROUP INC., OR RMR, MADE GOOD PROGRESS
TOWARD ITS STATED GOAL OF DIVERSIFYING REVENUES AND AUM THROUGH
FORMING THREE NEW CLIENT COMPANIES WHICH MAY LEAD TO GROWTH IN RMR’S
REVENUE AND AUM IN THE FUTURE. HOWEVER, THERE CAN BE NO ASSURANCE THAT
RMR’S RESULTS WILL BENEFIT FROM THE LAUNCH OF THESE NEW CLIENT
COMPANIES, OR THAT RMR’S EFFORTS TO GROW AND DIVERSIFY ITS BUSINESS IN
THE FUTURE 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.
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 June 30,
|
|
Nine Months Ended June 30,
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Management services (1) |
|
|
|
$
|
47,328
|
|
|
$
|
44,644
|
|
|
$
|
142,457
|
|
|
$
|
130,629
|
|
Incentive business management fees
|
|
|
|
—
|
|
|
—
|
|
|
155,881
|
|
|
52,407
|
|
Reimbursable payroll related and other costs
|
|
|
|
13,711
|
|
|
9,839
|
|
|
38,076
|
|
|
29,023
|
|
Advisory services
|
|
|
|
1,045
|
|
|
1,019
|
|
|
3,492
|
|
|
3,033
|
|
Total revenues
|
|
|
|
62,084
|
|
|
55,502
|
|
|
339,906
|
|
|
215,092
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
|
|
28,606
|
|
|
23,731
|
|
|
82,876
|
|
|
68,746
|
|
Equity based compensation
|
|
|
|
2,347
|
|
|
1,038
|
|
|
6,285
|
|
|
3,804
|
|
Separation costs
|
|
|
|
1,739
|
|
|
—
|
|
|
1,875
|
|
|
—
|
|
Total compensation and benefits expense
|
|
|
|
32,692
|
|
|
24,769
|
|
|
91,036
|
|
|
72,550
|
|
General and administrative
|
|
|
|
6,551
|
|
|
6,779
|
|
|
20,281
|
|
|
19,073
|
|
Transaction and acquisition related costs
|
|
|
|
775
|
|
|
1,760
|
|
|
917
|
|
|
2,453
|
|
Depreciation and amortization
|
|
|
|
244
|
|
|
467
|
|
|
996
|
|
|
1,550
|
|
Total expenses
|
|
|
|
40,262
|
|
|
33,775
|
|
|
113,230
|
|
|
95,626
|
|
Operating income
|
|
|
|
21,822
|
|
|
21,727
|
|
|
226,676
|
|
|
119,466
|
|
Interest and other income
|
|
|
|
1,223
|
|
|
402
|
|
|
3,083
|
|
|
1,059
|
|
Tax receivable agreement remeasurement
|
|
|
|
—
|
|
|
—
|
|
|
24,710
|
|
|
—
|
|
Income before income tax expense and equity in losses of investees
|
|
|
|
23,045
|
|
|
22,129
|
|
|
254,469
|
|
|
120,525
|
|
Income tax expense
|
|
|
|
(3,462
|
)
|
|
(4,528
|
)
|
|
(55,486
|
)
|
|
(24,811
|
)
|
Equity in income (losses) of investees
|
|
|
|
(134
|
)
|
|
4
|
|
|
(568
|
)
|
|
(161
|
)
|
Net income
|
|
|
|
19,449
|
|
|
17,605
|
|
|
198,415
|
|
|
95,553
|
|
Net income attributable to noncontrolling interest
|
|
|
|
(11,068
|
)
|
|
(10,748
|
)
|
|
(110,558
|
)
|
|
(58,303
|
)
|
Net income attributable to RMR Inc.
|
|
|
|
8,381
|
|
|
6,857
|
|
|
87,857
|
|
|
37,250
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic
|
|
|
|
16,087
|
|
|
16,037
|
|
|
16,072
|
|
|
16,029
|
|
Weighted average common shares outstanding - diluted
|
|
|
|
16,135
|
|
|
16,058
|
|
|
16,111
|
|
|
16,044
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to RMR Inc. per common share - basic
|
|
|
|
$
|
0.52
|
|
|
$
|
0.43
|
|
|
$
|
5.43
|
|
|
$
|
2.32
|
|
Net income attributable to RMR Inc. per common share - diluted
|
|
|
|
$
|
0.52
|
|
|
$
|
0.43
|
|
|
$
|
5.42
|
|
|
$
|
2.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 for each Managed Equity
REIT: a summary of its primary strategy and the lesser of the
historical cost of its assets under management and its market
capitalization as of June 30, 2018 and 2017, as applicable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lesser of Historical Cost of Assets
|
|
|
|
|
|
|
Under Management or Market Capitalization
(a)
|
|
|
|
|
|
|
As of June 30,
|
REIT
|
|
|
Primary Strategy
|
|
|
2018
|
|
2017
|
GOV
|
|
|
Office properties leased to government and private sector tenants
|
|
|
$
|
3,457,505
|
|
|
$
|
2,235,767
|
HPT
|
|
|
Hotels and travel centers
|
|
|
8,874,447
|
|
|
8,666,849
|
ILPT
|
|
|
Industrial and logistics properties
|
|
|
1,496,199
|
|
|
—
|
SIR
|
|
|
Land and properties primarily leased to single tenants
|
|
|
3,446,029
|
|
|
4,611,115
|
SNH
|
|
|
Senior living, medical office and life science properties
|
|
|
8,006,840
|
|
|
8,272,965
|
|
|
|
|
|
|
$
|
25,281,020
|
|
|
$
|
23,786,696
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
The basis on which our base business management fees are calculated
for the three and nine months ended June 30, 2018 and 2017 may
differ from the basis at the end of the periods presented in the
table above. As of June 30, 2018, the market capitalization was
lower than the historical costs of assets under management for HPT
and SNH; the historical costs of assets under management for HPT and
SNH as of June 30, 2018, were $10,118,307 and $8,534,192,
respectively. For GOV, ILPT and SIR, the historical costs of assets
under management were lower than their market capitalization of
$3,715,117, $1,836,947 and $3,728,172, respectively, calculated as
of June 30, 2018.
|
|
|
|
The RMR Group Inc. Calculation of Adjusted Net Income
Attributable to The RMR Group Inc. (dollars in thousands,
except per share amounts) (unaudited)
|
|
The RMR Group Inc. is providing the below information regarding
certain individually significant items occurring or impacting its
financial results for the three months ended June 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 June 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.
|
|
|
|
$
|
8,381
|
|
|
$
|
0.52
|
Separation costs, net of noncontrolling interest (1) |
|
|
|
660
|
|
|
0.04
|
Transaction and acquisition related costs, net of noncontrolling
interest (2) |
|
|
|
285
|
|
|
0.02
|
Adjusted net income attributable to The RMR Group Inc.
|
|
|
|
$
|
9,326
|
|
|
$
|
0.58
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes $1,739 of separation costs and $55 from the acceleration of
unvested common share awards, adjusted to reflect amounts
attributable to the noncontrolling interest and for tax at a rate of
approximately 15.0%.
|
|
|
|
(2)
|
|
Includes $775 of transaction and acquisition related costs, adjusted
to reflect amounts attributable to the noncontrolling interest and
for tax at a rate of approximately 15.0%.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 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.
|
|
|
|
$
|
6,857
|
|
|
$
|
0.43
|
Transaction and acquisition related costs, net of noncontrolling
interest (1) |
|
|
|
548
|
|
|
0.04
|
Business email compromise fraud costs, net of noncontrolling
interest (2) |
|
|
|
214
|
|
|
0.01
|
Adjusted net income attributable to The RMR Group Inc.
|
|
|
|
$
|
7,619
|
|
|
$
|
0.48
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes $1,760 of transaction and acquisition related costs,
adjusted to reflect amounts attributable to the noncontrolling
interest and for tax at a rate of approximately 20.6%.
|
|
|
|
(2)
|
|
Includes $685 of one-time costs related to the business email
compromise fraud, 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 June 30,
|
|
Nine Months Ended June 30,
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Reconciliation of EBITDA and Adjusted EBITDA from net income:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
19,449
|
|
|
$
|
17,605
|
|
|
$
|
198,415
|
|
|
$
|
95,553
|
|
Plus: income tax expense
|
|
|
|
3,462
|
|
|
4,528
|
|
|
55,486
|
|
|
24,811
|
|
Plus: depreciation and amortization
|
|
|
|
244
|
|
|
467
|
|
|
996
|
|
|
1,550
|
|
EBITDA
|
|
|
|
23,155
|
|
|
22,600
|
|
|
254,897
|
|
|
121,914
|
|
Plus: other asset amortization
|
|
|
|
2,354
|
|
|
2,354
|
|
|
7,062
|
|
|
7,062
|
|
Plus: operating expenses paid in The RMR Group Inc.'s common shares
|
|
|
|
314
|
|
|
146
|
|
|
2,781
|
|
|
1,021
|
|
Plus: separation costs
|
|
|
|
1,739
|
|
|
—
|
|
|
1,875
|
|
|
—
|
|
Plus: transaction and acquisition related costs
|
|
|
|
775
|
|
|
1,760
|
|
|
917
|
|
|
2,453
|
|
Plus: business email compromise fraud costs
|
|
|
|
—
|
|
|
685
|
|
|
225
|
|
|
685
|
|
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
|
|
|
|
115
|
|
|
(101
|
)
|
|
77
|
|
|
(604
|
)
|
Adjusted EBITDA
|
|
|
|
$
|
28,452
|
|
|
$
|
27,444
|
|
|
$
|
87,243
|
|
|
$
|
80,124
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Adjusted EBITDA Margin:
|
|
|
|
|
|
|
|
|
|
|
Contractual management and advisory fees (excluding any incentive
business management fees) (2)
|
|
|
|
$
|
50,727
|
|
|
$
|
48,017
|
|
|
$
|
153,011
|
|
|
$
|
140,724
|
|
Adjusted EBITDA
|
|
|
|
$
|
28,452
|
|
|
$
|
27,444
|
|
|
$
|
87,243
|
|
|
$
|
80,124
|
|
Adjusted EBITDA Margin
|
|
|
|
56.1
|
%
|
|
57.2
|
%
|
|
57.0
|
%
|
|
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
and acquisition related costs, business email compromise fraud
costs, 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 June 30, 2018 and 2017
and $7,062 for each of the nine months ended June 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 nine months ended June 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)
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
September 30,
|
|
|
|
|
2018
|
|
2017
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
280,518
|
|
|
$
|
108,640
|
|
Due from related parties
|
|
|
|
24,262
|
|
|
25,161
|
|
Prepaid and other current assets
|
|
|
|
10,067
|
|
|
7,092
|
|
Total current assets
|
|
|
|
314,847
|
|
|
140,893
|
|
|
|
|
|
|
|
|
Total property and equipment, net
|
|
|
|
2,713
|
|
|
3,276
|
|
Due from related parties, net of current portion
|
|
|
|
6,672
|
|
|
7,551
|
|
Equity method investments
|
|
|
|
11,420
|
|
|
12,162
|
|
Goodwill
|
|
|
|
1,859
|
|
|
1,859
|
|
Intangible assets, net of amortization
|
|
|
|
396
|
|
|
462
|
|
Deferred tax asset
|
|
|
|
24,788
|
|
|
45,541
|
|
Other assets, net of amortization
|
|
|
|
164,914
|
|
|
171,975
|
|
Total assets
|
|
|
|
$
|
527,609
|
|
|
$
|
383,719
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
|
|
$
|
51,015
|
|
|
$
|
26,414
|
|
Total current liabilities
|
|
|
|
51,015
|
|
|
26,414
|
|
Long term portion of deferred rent payable, net of current portion
|
|
|
|
1,184
|
|
|
1,028
|
|
Amounts due pursuant to tax receivable agreement, net of current
portion
|
|
|
|
34,354
|
|
|
59,063
|
|
Employer compensation liability, net of current portion
|
|
|
|
6,672
|
|
|
7,551
|
|
Total liabilities
|
|
|
|
93,225
|
|
|
94,056
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
Class A common stock, $0.001 par value; 31,600,000 shares
authorized; 15,174,463 shares issued and outstanding
|
|
|
|
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
|
|
|
|
98,531
|
|
|
95,878
|
|
Retained earnings
|
|
|
|
174,693
|
|
|
86,836
|
|
Cumulative other comprehensive income
|
|
|
|
81
|
|
|
84
|
|
Cumulative common distributions
|
|
|
|
(45,423
|
)
|
|
(33,298
|
)
|
Total shareholders’ equity
|
|
|
|
227,913
|
|
|
149,531
|
|
Noncontrolling interest
|
|
|
|
206,471
|
|
|
140,132
|
|
Total equity
|
|
|
|
434,384
|
|
|
289,663
|
|
Total liabilities and equity
|
|
|
|
$
|
527,609
|
|
|
$
|
383,719
|
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20180808005095/en/
The RMR Group Inc.
Timothy A. Bonang, 617-796-8230
Senior Vice
President
Source: The RMR Group Inc.