Revenues of $55.5 million, a 6.3% Increase Compared to Last Year
NEWTON, Mass.--(BUSINESS WIRE)--
The RMR Group Inc. (Nasdaq: RMR) today announced its financial results
for the fiscal quarter ended June 30, 2017.
Adam Portnoy, President and Chief Executive Officer, made the following
statement regarding the third quarter fiscal 2017 results:
“During the quarter ended June 30, 2017, RMR was active assisting its
client companies to grow their businesses and simultaneously pursuing
our long term goal to diversify revenues.
"During the quarter, one of our managed REITs, Government Properties
Income Trust, or GOV, announced its intention to acquire another
publicly owned equity REIT, First Potomac Realty Trust, or FPO. Because
of the synergies available to our client companies by contracting with
RMR for management services, GOV expects to realize material cost
savings from the G&A expense historically incurred by FPO.
"Also, during the quarter, RMR was actively engaged in exploring
various means to diversify its revenues, including conducting diligence
on acquisition opportunities and making initial SEC filings for a new
mortgage REIT to be managed by an investment adviser subsidiary of RMR.
These initiatives resulted in RMR incurring approximately $1.8 million
for legal and the other third party costs.”
Third Quarter Fiscal 2017 Highlights:
-
As of June 30, 2017, The RMR Group Inc. had approximately $27.9
billion of total assets under management.
-
The RMR Group Inc. earned real estate business and property management
services revenues for the three months ended June 30, 2017 and 2016
from the following sources (dollars in thousands):
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Three Months Ended June 30,
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2017
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2016
|
|
Managed REITs
|
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$
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37,505
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|
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84.0
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%
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$
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34,863
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83.3
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%
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Managed Operators
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6,556
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14.7
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%
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6,716
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16.0
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%
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Other
|
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583
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1.3
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%
|
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|
|
288
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|
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0.7
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%
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|
Total Management Services Revenues
|
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$
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44,644
|
|
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100.0
|
%
|
|
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|
$
|
41,867
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|
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100.0
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%
|
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-
For the three months ended June 30, 2017, net income was $17.6 million
and net income attributable to The RMR Group Inc. was $6.9 million, or
$0.43 per share, compared to net income of $17.4 million and net
income attributable to The RMR Group Inc. of $6.7 million, or $0.42
per share, for the three months ended June 30, 2016.
-
For the three months ended June 30, 2017, Adjusted EBITDA was $27.4
million and Adjusted EBITDA Margin was 57.2%, compared to Adjusted
EBITDA of $26.1 million and Adjusted EBITDA Margin of 58.3% for the
three months ended June 30, 2016. 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 and do not include incentive business
management fees earned, if any.
-
As of June 30, 2017, The RMR Group Inc. had cash and cash equivalents
of $137.7 million and no indebtedness.
Summary Results for the Quarter Ended June 30, 2017:
Total revenues for the quarter ended June 30, 2017 increased 6.3% to
$55.5 million from $52.2 million for the same period in 2016. Net income
attributable to The RMR Group Inc. for the quarter ended June 30, 2017
was $6.9 million, or $0.43 per share, compared to net income
attributable to The RMR Group Inc. of $6.7 million, or $0.42 per share,
for the quarter ended June 30, 2016. Net income attributable to The RMR
Group Inc. for the quarter ended June 30, 2017 includes $1.8 million, or
$0.04 per share, of transaction and acquisition related costs.
Net income attributable to The RMR Group Inc. for the quarter ended June
30, 2017, also includes $0.7 million, or $0.01 per share, of charges to
general and administrative expenses as a result of The RMR Group Inc.
being the victim of a criminal fraud that law enforcement authorities
refer to as business email compromise fraud that caused funds to be sent
to what was believed to be, but in fact was not, a legitimate business
account. As a result of this fraud, The RMR Group LLC lost $0.6 million
of funds and incurred additional expenses of $0.1 million for the
quarter ending June 30, 2017. The RMR Group LLC is working with law
enforcement authorities and the banks involved to pursue recovery of
these misdirected funds. It is unknown at this time whether any of these
funds will be recovered.
Net income attributable to The RMR Group Inc. for the quarter ended June
30, 2016 includes $1.5 million, or $0.04 per share, of separation,
transaction and acquisition related costs.
Adjusted EBITDA for the quarter ended June 30, 2017 was $27.4 million
compared to Adjusted EBITDA of $26.1 million for the quarter ended
June 30, 2016.
Summary Results for the Nine Months Ended June 30, 2017:
Total revenues for the nine months ended June 30, 2017 were $215.1
million, including $52.4 million of incentive business management fees,
compared to $210.7 million, including $62.3 million of incentive
business management fees, for the nine months ended June 30, 2016. Net
income attributable to The RMR Group Inc. for the nine months ended
June 30, 2017 was $37.3 million, or $2.31 per share, compared to $29.9
million, or $1.87 per share, for the nine months ended June 30, 2016.
Adjusted EBITDA for the nine months ended June 30, 2017 was $80.1
million compared to $72.8 million for the nine months ended June 30,
2016.
Reconciliations to GAAP:
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 appear later in this press
release. Also, comparisons of The RMR Group Inc.'s revenues, EBITDA,
Adjusted EBITDA, Adjusted EBITDA Margin, net income and net income
attributable to The RMR Group Inc. for the three and nine months ended
June 30, 2017 to the three and nine months ended June 30, 2016 are
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 REITs, 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
managed assets of RMR Real Estate Income Fund, plus (iv) the contributed
capital 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 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. For
information on the calculation of assets under management of the Managed
REITs for purposes of the fee provisions of the business management
agreements, see The RMR Group Inc.'s Quarterly Reports on Form 10-Q and
Annual Reports 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, 2017 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 16, 2017.
To access the replay, dial (412) 317-0088. The replay pass code is
10110435. The transcription, recording and retransmission in any way
of The RMR Group Inc.'s fiscal third quarter ended June 30, 2017
financial results conference call are strictly prohibited without the
prior written consent of 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, 2017, The RMR Group LLC had
approximately $27.9 billion of total assets under management, including
more than 1,400 properties, and employed over 475 real estate
professionals in more than 30 offices throughout the United States; the
companies managed by The RMR Group LLC collectively had approximately
53,000 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:
-
THIS PRESS RELEASE STATES THAT ONE OF RMR'S MANAGED REITS, GOV, HAS
ANNOUNCED ITS INTENTION TO ACQUIRE FPO. THIS TRANSACTION IS SUBJECT TO
CLOSING CONDITIONS, INCLUDING THE APPROVAL OF AT LEAST A MAJORITY OF
FPO’S COMMON SHAREHOLDERS. ACCORDINGLY, THIS TRANSACTION MAY NOT BE
CONSUMMATED OR IT MAY BE DELAYED,
-
THIS PRESS RELEASE STATES THAT GOV EXPECTS TO REALIZE MATERIAL COST
SAVINGS FROM THE G&A EXPENSE HISTORICALLY INCURRED BY FPO. THE G&A
EXPENSE INCREASE WHICH GOV WILL INCUR IF AND AFTER IT ACQUIRES FPO
WILL INCLUDE COSTS OTHER THAN THE FEES GOV PAYS RMR. ALSO, GOV'S
FUTURE FEES TO RMR MAY INCLUDE INCENTIVE FEES WHICH CAUSE ANY
INCREASED G&A EXPENSE TO EXCEED FPO'S HISTORICAL G&A EXPENSES.
ACCORDINGLY, IF GOV'S ACQUISITION OF FPO IS COMPLETED, ANY G&A EXPENSE
INCREASE EXPERIENCED BY GOV MAY NOT BE LESS THAN FPO'S HISTORICAL G&A
EXPENSES,
-
THE STATEMENTS IN THIS PRESS RELEASE WHICH REFER TO RMR'S MANAGEMENT
OF GOV AFTER GOV ACQUIRES FPO MAY IMPLY THAT THE MANAGEMENT FEES RMR
EARNS FROM GOV WILL INCREASE. RMR'S FUTURE MANAGEMENT FEES FROM GOV
ARE BASED UPON COMPLEX FORMULAS AND THERE IS NO ASSURANCE THAT RMR'S
FEES FROM GOV AFTER GOV ACQUIRES FPO WILL INCREASE. THE ADDED COSTS
THAT RMR INCURS TO MANAGE AN ENLARGED GOV IF AND AFTER GOV ACQUIRES
FPO MAY EXCEED ANY INCREASED FEES RMR RECEIVES, AND RMR MAY NOT
REALIZE ANY NET BENEFIT FROM INCREASED FEES GOV PAYS RMR. ALSO, AS A
RESULT OF GOV'S ACQUISITION OF FPO, INCENTIVE FEES PAYABLE TO RMR BY
GOV MAY BE LESS THAN RMR WOULD REALIZE IF GOV DID NOT ACQUIRE FPO. FOR
THESE REASONS, AMONG OTHERS, RMR MAY NOT EXPERIENCE INCREASED REVENUES
OR IMPROVED EARNINGS AS A RESULT OF GOV'S ACQUISITION OF FPO, BUT RMR
MAY INCUR LOSSES,
-
THIS PRESS RELEASE REFERS TO RMR'S CONDUCTING DILIGENCE AND INCURRING
LEGAL AND OTHER THIRD PARTY COSTS TO EXPLORE ACQUISITION OPPORTUNITIES
TO DIVERSIFY RMR'S REVENUES. THERE CAN BE NO ASSURANCE THAT ANY OF
THESE EFFORTS AND EXPENSE WILL RESULT IN THE RMR GROUP MAKING ANY
ACQUISITIONS WHICH WILL DIVERSIFY ITS REVENUES, AND THE EFFORTS AND
EXPENSES INCURRED BY RMR TO INVESTIGATE POTENTIAL ACQUISITIONS MAY BE
LOST. ALSO, ONE OR MORE OF RMR'S EXISTING CLIENT CONTRACTS MAY BE
TERMINATED AND RMR'S REVENUES MAY BECOME LESS DIVERSE THAN THEY ARE AT
PRESENT,
-
THIS PRESS RELEASE REFERENCES THE FACT THAT RMR HAS MADE INITIAL SEC
FILINGS FOR A NEW MORTGAGE REIT TO BE MANAGED BY AN INVESTMENT ADVISER
SUBSIDIARY OF THE RMR GROUP. CREATING A NEW MORTGAGE REIT THAT WILL BE
PUBLICLY OWNED INVOLVES COMPLEX, EXPENSIVE AND TIME CONSUMING
PROCESSES. ALSO, THE SUCCESS OF THIS PROJECT WILL DEPEND LARGELY UPON
MARKET CONDITIONS IF AND AFTER THE OFFERING OF SECURITIES BY THE NEW
MORTGAGE REIT PROCEEDS, AND MARKET CONDITIONS ARE BEYOND RMR'S
CONTROL. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT A NEW MORTGAGE
REIT WILL BE CREATED AND IT IS POSSIBLE THAT THE EXPENSES AND EFFORTS
THAT RMR HAS DEVOTED TO CREATING THIS NEW REIT MAY BE LOST, AND
-
THE RMR GROUP INC. WAS THE VICTIM OF A BUSINESS EMAIL COMPROMISE
CRIMINAL FRAUD WHICH RESULTED IN IT DIRECTING FUNDS TO A WRONG ACCOUNT
AND INCURRING A LOSS OF $0.6 MILLION AS A RESULT. THE RMR GROUP INC.
IS WORKING WITH LAW ENFORCEMENT AUTHORITIES AND THE BANKS INVOLVED TO
PURSUE RECOVERY OF THESE MISDIRECTED FUNDS. IT IS UNCLEAR WHETHER THE
RMR GROUP INC. WILL RECOVER ANY OF THESE FUNDS.
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.
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The RMR Group Inc.
Condensed Consolidated Statements of Income
(amounts in thousands, except per share amounts)
(unaudited)
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Three Months Ended June 30,
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Nine Months Ended June 30,
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2017
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2016
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2017
|
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|
2016
|
|
Revenues
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Management services
|
|
|
|
$
|
44,644
|
|
|
|
|
$
|
41,867
|
|
|
|
|
$
|
183,036
|
|
|
|
|
$
|
182,940
|
|
|
Reimbursable payroll and related costs
|
|
|
|
9,839
|
|
|
|
|
9,744
|
|
|
|
|
29,023
|
|
|
|
|
25,993
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|
Advisory services
|
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|
|
1,019
|
|
|
|
|
600
|
|
|
|
|
3,033
|
|
|
|
|
1,741
|
|
|
Total revenues
|
|
|
|
55,502
|
|
|
|
|
52,211
|
|
|
|
|
215,092
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|
|
|
210,674
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|
|
Expenses
|
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|
|
|
|
|
|
|
|
|
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|
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Compensation and benefits
|
|
|
|
24,769
|
|
|
|
|
22,719
|
|
|
|
|
72,550
|
|
|
|
|
65,584
|
|
|
Separation costs
|
|
|
|
—
|
|
|
|
|
1,195
|
|
|
|
|
—
|
|
|
|
|
1,358
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|
|
General and administrative
|
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|
|
8,539
|
|
|
|
|
6,110
|
|
|
|
|
21,526
|
|
|
|
|
19,110
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|
|
Depreciation and amortization
|
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|
467
|
|
|
|
|
349
|
|
|
|
|
1,550
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|
|
|
|
1,333
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|
|
Total expenses
|
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|
|
33,775
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|
|
|
|
30,373
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|
|
|
|
95,626
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|
|
|
|
87,385
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|
Operating income
|
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|
|
21,727
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|
|
|
|
21,838
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|
|
|
|
119,466
|
|
|
|
|
123,289
|
|
|
Interest and other income
|
|
|
|
402
|
|
|
|
|
68
|
|
|
|
|
1,059
|
|
|
|
|
144
|
|
|
Income before income tax expense and equity in earnings (loss) of
investee
|
|
|
|
22,129
|
|
|
|
|
21,906
|
|
|
|
|
120,525
|
|
|
|
|
123,433
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|
|
Income tax expense
|
|
|
|
(4,528
|
)
|
|
|
|
(4,504
|
)
|
|
|
|
(24,811
|
)
|
|
|
|
(19,904
|
)
|
|
Equity in earnings (loss) of investee
|
|
|
|
4
|
|
|
|
|
—
|
|
|
|
|
(161
|
)
|
|
|
|
—
|
|
|
Net income
|
|
|
|
17,605
|
|
|
|
|
17,402
|
|
|
|
|
95,553
|
|
|
|
|
103,529
|
|
|
Net income attributable to noncontrolling interest
|
|
|
|
(10,748
|
)
|
|
|
|
(10,704
|
)
|
|
|
|
(58,303
|
)
|
|
|
|
(73,663
|
)
|
|
Net income attributable to The RMR Group Inc.
|
|
|
|
$
|
6,857
|
|
|
|
|
$
|
6,698
|
|
|
|
|
$
|
37,250
|
|
|
|
|
$
|
29,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic
|
|
|
|
16,037
|
|
|
|
|
16,008
|
|
|
|
|
16,029
|
|
|
|
|
16,003
|
|
|
Weighted average common shares outstanding - diluted
|
|
|
|
16,058
|
|
|
|
|
16,008
|
|
|
|
|
16,044
|
|
|
|
|
16,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to The RMR Group Inc. per common share -
basic
|
|
|
|
$
|
0.43
|
|
|
|
|
$
|
0.42
|
|
|
|
|
$
|
2.32
|
|
|
|
|
$
|
1.87
|
|
|
Net income attributable to The RMR Group Inc. per common share -
diluted
|
|
|
|
$
|
0.43
|
|
|
|
|
$
|
0.42
|
|
|
|
|
$
|
2.31
|
|
|
|
|
$
|
1.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The RMR Group Inc.
Reconciliation of EBITDA and Adjusted EBITDA and Calculation of
Adjusted EBITDA Margin (1)
(dollars in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Nine Months Ended June 30,
|
|
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
2017
|
|
|
|
2016
|
|
Reconciliation of EBITDA and Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
17,605
|
|
|
|
|
$
|
17,402
|
|
|
|
|
$
|
95,553
|
|
|
|
|
$
|
103,529
|
|
|
Plus: income tax expense
|
|
|
|
4,528
|
|
|
|
|
4,504
|
|
|
|
|
24,811
|
|
|
|
|
19,904
|
|
|
Plus: depreciation and amortization
|
|
|
|
467
|
|
|
|
|
349
|
|
|
|
|
1,550
|
|
|
|
|
1,333
|
|
|
EBITDA
|
|
|
|
22,600
|
|
|
|
|
22,255
|
|
|
|
|
121,914
|
|
|
|
|
124,766
|
|
|
Plus: other asset amortization
|
|
|
|
2,354
|
|
|
|
|
2,354
|
|
|
|
|
7,062
|
|
|
|
|
7,062
|
|
|
Plus: operating expenses paid in The RMR Group Inc.'s common shares
|
|
|
|
146
|
|
|
|
|
—
|
|
|
|
|
1,021
|
|
|
|
|
257
|
|
|
Plus: separation costs
|
|
|
|
—
|
|
|
|
|
1,195
|
|
|
|
|
—
|
|
|
|
|
1,358
|
|
|
Plus: transaction and acquisition related costs
|
|
|
|
1,760
|
|
|
|
|
327
|
|
|
|
|
2,453
|
|
|
|
|
1,640
|
|
|
Plus: business email compromise fraud costs
|
|
|
|
685
|
|
|
|
|
—
|
|
|
|
|
685
|
|
|
|
|
—
|
|
|
Less: certain other net adjustments
|
|
|
|
(101
|
)
|
|
|
|
—
|
|
|
|
|
(604
|
)
|
|
|
|
—
|
|
|
Less: incentive business management fees earned
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(52,407
|
)
|
|
|
|
(62,263
|
)
|
|
Adjusted EBITDA
|
|
|
|
$
|
27,444
|
|
|
|
|
$
|
26,131
|
|
|
|
|
$
|
80,124
|
|
|
|
|
$
|
72,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Adjusted EBITDA Margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual management and advisory fees (excluding any incentive
business management fees)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
48,017
|
|
|
|
|
$
|
44,821
|
|
|
|
|
$
|
140,724
|
|
|
|
|
$
|
129,480
|
|
|
Adjusted EBITDA
|
|
|
|
$
|
27,444
|
|
|
|
|
$
|
26,131
|
|
|
|
|
$
|
80,124
|
|
|
|
|
$
|
72,820
|
|
|
Adjusted EBITDA Margin
|
|
|
|
57.2
|
%
|
|
|
|
58.3
|
%
|
|
|
|
56.9
|
%
|
|
|
|
56.2
|
%
|
(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, depreciation and amortization, incentive business management
fees, 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 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. or 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 ongoing or 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, 2017
and 2016 and $7,062 for each of the nine months ended June 30, 2017 and
2016, 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 $52,407 and $62,263 that The RMR Group Inc.
recognized under GAAP pursuant to such contracts during the nine months
ended June 30, 2017 and 2016, respectively, for the calendar years 2016
and 2015, respectively.
|
|
|
|
|
|
|
|
|
|
|
The RMR Group Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands, except per share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
September 30,
|
|
|
|
|
|
2017
|
|
|
|
2016
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
137,711
|
|
|
|
|
$
|
65,833
|
|
|
Due from related parties
|
|
|
|
27,027
|
|
|
|
|
24,862
|
|
|
Prepaid and other current assets
|
|
|
|
8,307
|
|
|
|
|
4,690
|
|
|
Total current assets
|
|
|
|
173,045
|
|
|
|
|
95,385
|
|
|
|
|
|
|
|
|
|
|
|
|
Furniture and equipment
|
|
|
|
4,572
|
|
|
|
|
5,024
|
|
|
Leasehold improvements
|
|
|
|
1,094
|
|
|
|
|
1,077
|
|
|
Capitalized software costs
|
|
|
|
3,786
|
|
|
|
|
4,250
|
|
|
Total property and equipment
|
|
|
|
9,452
|
|
|
|
|
10,351
|
|
|
Accumulated depreciation
|
|
|
|
(6,123
|
)
|
|
|
|
(6,549
|
)
|
|
|
|
|
|
3,329
|
|
|
|
|
3,802
|
|
|
Due from related parties, net of current portion
|
|
|
|
7,278
|
|
|
|
|
7,754
|
|
|
Equity method investment
|
|
|
|
208
|
|
|
|
|
—
|
|
|
Goodwill
|
|
|
|
1,859
|
|
|
|
|
2,295
|
|
|
Intangible assets, net of amortization
|
|
|
|
608
|
|
|
|
|
1,085
|
|
|
Deferred tax asset
|
|
|
|
43,332
|
|
|
|
|
45,819
|
|
|
Other assets, net of amortization
|
|
|
|
174,329
|
|
|
|
|
181,391
|
|
|
Total assets
|
|
|
|
$
|
403,988
|
|
|
|
|
$
|
337,531
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable, accrued expenses and deposits
|
|
|
|
$
|
41,209
|
|
|
|
|
$
|
20,579
|
|
|
Total current liabilities
|
|
|
|
41,209
|
|
|
|
|
20,579
|
|
|
Long term portion of deferred rent payable, net of current portion
|
|
|
|
975
|
|
|
|
|
778
|
|
|
Amounts due pursuant to tax receivable agreement, net of current
portion
|
|
|
|
62,029
|
|
|
|
|
62,029
|
|
|
Employer compensation liability, net of current portion
|
|
|
|
7,278
|
|
|
|
|
7,754
|
|
|
Total liabilities
|
|
|
|
111,491
|
|
|
|
|
91,140
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
Class A common stock, $0.001 par value; 31,600,000 shares
authorized; 15,094,510 and 15,082,432 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
|
|
|
|
95,267
|
|
|
|
|
94,266
|
|
|
Retained earnings
|
|
|
|
81,793
|
|
|
|
|
44,543
|
|
|
Cumulative other comprehensive income
|
|
|
|
83
|
|
|
|
|
83
|
|
|
Cumulative common distributions
|
|
|
|
(29,274
|
)
|
|
|
|
(17,209
|
)
|
|
Total shareholders’ equity
|
|
|
|
147,900
|
|
|
|
|
121,714
|
|
|
Noncontrolling interest
|
|
|
|
144,597
|
|
|
|
|
124,677
|
|
|
Total equity
|
|
|
|
292,497
|
|
|
|
|
246,391
|
|
|
Total liabilities and equity
|
|
|
|
$
|
403,988
|
|
|
|
|
$
|
337,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170809005200/en/
Source: The RMR Group Inc.