Ashford Inc.
Q4 2019 Earnings Call Transcript

Published: 26 Feb 2020

[Operator:]

Greetings, and welcome to the Ashford's Fourth Quarter 2019 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.It is now my pleasure to introduce your host, Jordan Jennings. Please go ahead.

[Jordan Jennings:]

Good day, everyone, and welcome to today's conference call to review results for Ashford for the fourth quarter and full-year 2019, and to update you on recent developments. On the call today will be Monty Bennett, Chairman and Chief Executive Officer; Deric Eubanks, Chief Financial Officer; Jeremy Welter, Co-President and Chief Operating Officer.Year results, as well as notice of the accessibility of this conference call on a listen-only basis over the internet were distributed yesterday afternoon in a press release that has been covered by the financial media. At this time, I remind you that certain statements and assumptions in this conference call contain or are based upon forward-looking information, and are being made pursuant to the Safe Harbor provisions of the Federal Securities Regulations. Such forward-looking statements are subject to numbers, assumptions, uncertainties, and known or unknown risk, which could cause actual results to differ materially from those anticipated. These factors are more fully discussed in the company's filings with the Securities and Exchange Commission. The forward-looking statements included in this conference call are only made as of the date of this call, and the company is not obligated to publicly update or revise them. Statements made during this call do not constitute an offer to sell or a solicitation of an offer to buy any securities. Securities will be offered only by means of a registration statement and prospectus which can be found who www.sec.gov.In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the company's earnings release and accompanying tables or schedules, which have been filed on Form 8-Kwith the SEC on February 25 2020, and may also be accessed through the company's website at www.ashfordinc.com. Each listener is encouraged to review those reconciliations provided in the earnings release together with all information provided in the release. Also, unless otherwise stated, all reports results discussed in this call compare the fourth quarter of 2019 with the fourth quarter of 2018.I will now turn the call over to Monty.

[Montgomery Bennett:]

Good afternoon, and welcome to our call to discuss our financial results for the fourth quarter and full year of 2019. I will begin by giving a brief overview of our quarterly results, and then we'll discuss our recent acquisition of the hotel management business of Remington. I will also provide an update regarding our recent formation of Ashford Securities, a dedicated platform to raise retail capital. I will conclude with an update on our investor outreach efforts. Afterward, Deric will review our financial results, Jeremy will provide an update regarding our hospitality products and services businesses, and then we will open it up for Q&A.We delivered strong operating and financial performance in the fourth quarter, and are pleased with the groundwork we are laying for the continued success of our platform. For the quarter, revenues increased by 111%. Adjusted EBITDA was $8.9 million, which reflects 11.9% growth over the prior year quarter, and adjusted net income per share was $1.27. Ashford Inc. is a growth platform, and we believe these strong results demonstrate the benefits of our strategy.In November, we completed the acquisition of the hotel management business of Remington. This is a very compelling transaction for Ashford. Upon closing of that acquisition, we believe all the pieces are now in place to significantly grow our business. We have a one of a kind, unique structure that no one else in our space has. With our existing advisory platforms and our growing stable of products and services businesses, we are uniquely positioned to grow and create value for our shareholders. We have two main strategies to grow our businesses, increase our hotel AUM, and separately pursuing third-party clients.We plan to grow our AUM through the creation of Ashford Securities. In late September, we announced the formation of Ashford Securities LLC, a dedicated platform to raise retail capital through financial intermediaries and the broker dealer channel in order to grow our existing and future platforms. Our goal for Ashford Securities is to provide the market with highly differentiated alternative investment products. Types of capital raised may include, but are not limited to, preferred equity, convertible preferred equity, mezzanine debt, or non-traded REIT common equity for future platforms. We believe it's a natural fit for us. Additionally, given Ashford’s broad experience and ability to execute on many different types of lodging strategies, we believe we have a unique opportunity for new investors. Also, having a dedicated fundraising platform will provide Ashford and its advised platforms an additional source of capital that is not dependent on the traditional publicly traded capital markets.In the fourth quarter, [indiscernible] filed a registration statement with the SEC for non-traded preferred equity. That registration statement has since become effective. In addition, I am pleased to report that FINRA recently approved Ashford Securities’ application to be a registered broker dealer. We are excited to pursue a fresh source of capital that will help us prudently grow all our platforms over the long term and increase shareholder value, and we expect to begin raising capital towards the end of the second quarter.Regarding third-party growth, the Remington Hotel Management transaction immediately adds scale, diversification, and an enhanced competitive position for Ashford in the hospitality industry. It expands the breadth of services we can offer to our advisories, as well as third-party owners. Remington, which is not historically pursued third-party business, recently appointed Sloan Dean as a CEO to drive the next stage of growth for the company. Sloan is an emerging talent in the hospitality industry who has done a fantastic job guiding Remington as its chief operating officer over the past two years. During that time, he implemented numerous operational enhancements, continuing to outperform the market, and shifting the company's culture to be more engaging and empowering of its associates. We are excited about the prospects for Sloan and his team to grow this part of our business. The third-party growth initiative is off to a strong start, as Remington has already signed three new hotel management contracts with third-party hotel owners.Strategically, with the completion of the acquisition, we added hotel management to our stable of hotel related businesses, which already includes our asset management business, Premier Project Management, Pure Wellness, OpenKey, JSAV, RED Hospitality and Leisure, and Lismore Capital. Now, when our advisory platforms acquire hotels, we will have the exclusive right to provide all of these services to those hotels. These services include hotel asset management, hotel management, project management, interior design, architecture, procurement, construction management, audio visual services, financing services, advisory services, property sales services, mobile room key services, hypoallergenic hotel rooms, and water sports activities.Also in October, we purchased 412,974 shares of our common stock from Ashford Trust and Braemar. Deric will provide additional details. But we were extremely pleased to complete this transaction, as we believed acquiring the significant block of approximately 16% of our common stock will provide substantial long-term accretion. Given our track record of buying back stock at Ashford Trust during the global financial crisis, we clearly understood the benefits of share repurchases, and remain committed to actively pursuing prudent capital management strategies.Additionally, both Ashford Trust and Braemar distributed the remaining shares of Ashford Inc. to the respective common shareholders and unit holders. Ashford currently advises two publicly traded REIT platforms, Ashford Trust and Braemar, which together own 130 hotels with approximately 29,000 rooms and approximately $8.1 billion of gross assets, as of December 31, 2019. Ashford has a high growth fee-based business model with a diversified platform of multiple fee generators. We believe it to be a scalable platform with attractive margins. Additionally, it has a very stable cash flow base, as the advisor agreements with the REITs stipulate that the base fee is maintained at a level, at least 90% of the previous year’s base fee. We have a fee structure in place that incentivizes Ashford to create shareholder value at its advisory platforms. With our base fee driven by their share price performance and our incentive fee based on total shareholder return outperformance versus the REIT peers, our management team’s primary focus is maximizing returns.We continue to be excited for all of our strategic investments, and we are optimistic about the prospects for our two advisory platforms. We also believe that our hospitality service businesses are well positioned to initiate meaningful growth, both through our advised REITs, as well as third-party channels. We see great opportunity for this platform to grow and deliver superior returns to our shareholders by adding additional investment platforms.On the investor relations front, we believe having an active investor outreach effort and broadening our investor base are important areas of focus. To that end, since the beginning of 2019, we have had hundreds of meetings and interactions with sell side analysts, existing shareholders, and potential shareholders. We also held our annual Ashford Investor Day in New York in October, which was very well attended, and gave us the opportunity to share the Ashford story and strategy with a number of existing and potential investors. Moving forward, we will continue to focus on this outreach effort.I will now turn the call over to Deric.

[Deric Eubanks:]

Thanks, Monty. Net loss attributable to common stockholders for the fourth quarter was $15.1 million, or $6.31 per share, compared with net income of $0.3 million or $0.14 per share for the prior year quarter. Net loss attributable to common stockholders for the full-year 2019 was $30.2 million, or $12.03 per share, compared with net income of $5 million, or $2.29 per share for the prior year. For the fourth quarter, total revenues were $107.6 million, reflecting a 111% growth rate over the prior year quarter. For the full year of 2019, total revenues were $291.3 million, reflecting a 49% growth rate over the prior year.Adjusted EBITDA for the fourth quarter was $8.9 million, reflecting an 11.9% growth rate over the prior year quarter. Adjusted net income for the fourth quarter was $7.2 million, or $1.27 per diluted share. For the full year of 2019, adjusted EBITDA was $38.1 million, reflecting a 32% growth rate over the prior year, and adjusted net income was $32.9 million, or $7.07 per diluted share.In early October, we repurchased 412,974 shares of our common stock from Ashford Trust and Braemar, resulting in a total cost of approximately $12.4 million. This stock purchase represented approximately 16% of the company's common shares outstanding. Due to the parameters of the private letter ruling received by each of Ashford Trust and Braemar from the Internal Revenue Service, the company was only able to acquire the shares held by Ashford Trust and Braemar’s taxable REIT subsidiaries. Subsequently, in early November, both Ashford Trust and Braemar, distributed the remaining shares of Ashford common stock to their respective common shareholders and unit holders through a pro rata distribution. At the end of the fourth quarter, the company had $32.3 million in corporate cash.Also, as of December 31, 2019, the company had 5.7 million fully diluted total shares of common stock and units, which included 3.0 million common shares associated with our series D convertible preferred stock. We had 2.2 million common shares issued and outstanding, 0.2 million common shares earmarked for issuance under our deferred compensation plan, and the balance relates to put options associated with minority interests of our strategic investments, acquisition related shares, and some restricted stock.I will now turn the call over to Jeremy.

[Jeremy Welter:]

Thank you, Deric. We're excited to provide updates on our hospitality products and services businesses, and their strong results and accomplishments during the fourth quarter. To explain this strategy more fully, our products and services initiative is a unique investment strategy in the hospitality industry, where we strategically invest in operating companies that service the industry, and we act as an accelerator to grow these companies. In doing so, we believe we are able to establish synergies for our hotel platforms, providing attractive pricing and higher levels of service than they would receive from a third-party vendor. We're also able to grow our portfolio companies in a number of ways by referring them to the hotel's own by advised REITs by leveraging our vast industry relationships, and by consulting on best operating practices.The first business I'd like to discuss is Ashford Securities, our new retail capital raising platform. Jay Steigerwald is leading this effort as President and Head of Distribution for the company. Most recently, Jay was an executive at WP Carey Inc. for nine years, and was instrumental in raising $7 billion of fresh capital of building strong relationships with the broker dealer community. We are currently in the process of hiring other key executives and support staff, as a full team continues to be developed. Ashford Securities believes the key to success is to offer a differentiated investment strategy, hire the best people in the industry, build excellent relationships with our distribution partners, and provide exceptional service and support to all of our stakeholders along with exceptional shareholder returns.As I mentioned earlier, we're excited to announce the national securities became a FINRA member firm earlier this month. In addition, Braemar has an effective registration statement on file with the SEC for a non-traded perpetual preferred security. Longer term, we believe there is a substantial opportunity to offer different types of product structures and strategies all with the goal of providing differentiated alternative investment products, to retail investors looking to diversify their portfolios. Our goal is to take a disciplined approach to raising retail capital through multiple products and distribution channels. In short, we're excited to pursue a fresh source of retail capital that will help us grow all our platforms over the long term, with the goal of increasing shareholder value.During the quarter, we completed our business combination with Remington, an industry-leading provider of Hotel Management Services. Remington is a dynamic and growing hotel management company providing top quality service and expertise in hotel management. Today, Remington manages 18 hotels in 27 states across 17 brands, including 12 independent and boutique properties. The company recently promoted Sloan Dean from COO to CEO. We're very excited about the team he is building to grow Remington third party business. Recently, Remington signed 3 new third party contracts and is actively seeking more deals. Premier project management provides a comprehensive and cost-effective design, development architecture, procurement and project management services to the hospitality industry.Through our first full year of ownership, we have been focused on executing several initiatives to accelerate growth and profitability over the long term. Premier's new architecture service, which was launched in April 2019 generated $438,000 of revenue in the fourth quarter and $2 million of revenue for the full year. Donald Kelly was appointed as co-CEO in May and continues to focus on opportunities to expand Premier services to other owners, property managers and institutions in the hospitality industry. To that end, Premier has developed a robust pipeline of third party business including opportunities to be the exclusive Project Manager for several large hospitality ownership groups.Financial results for the fourth quarter include project management fee revenue of $6.1 million and adjusted EBITDA of $2.9 million. For the full year Premier generated $25.6 million of project management fee revenue and $14 million of adjusted EBITDA. Premier recently signed its first third party deal and we continue to see significant growth opportunities for this business going forward. BAV is a leading single-source signal solution for meeting event needs with an integrated suite of audiovisual services, including show in event services, hospitality services, Creative Services and design in integration. We continue to see outstanding growth as a company with revenue up 36% in the fourth quarter, compared to prior year period and 36% for the full year 2019 compared to the prior year period. As part of this growth story, the company's acquisition of BAV in the first quarter of 2019 is already providing meaningful upside as BAV's adjusted EBITDA is up 34% through our first full 3 quarters of ownership compared to the prior year period.Overall, the company continues to see success from the implementation of several initiatives over the past year with adjusted EBITDA up $800,000 in the fourth quarter compared to the prior year period highlighting the great team we have at JSAV. From our executive management leaders to our associates in the field. We remain focused on additional initiatives being implemented to support future growth and profitability, including assimilating a new executive management team led by CEO Jeff Bowman retooling the company show services business unit to optimize performance, integrating and enhancing BAV sales processes and cost-sharing and streamlining the integration and ramp-up of newly transition hotels. We remain excited about the opportunity and free performance going forward and continue to grow profitability.We also continue to see positive results from integrating JSAV in Ashford managed hotels. In the fourth quarter, JSAV executed 3 new Ashford hotel contracts, increasing the number of multi-year contracts in place with hotels and convention centers to 94 compared to 59 at the end of 2017 representing 59% growth. For the full year, JSAV took over a record-setting 27 hotels, which included 10 new third party agreements. At the beginning of 2018, we have engaged JSAV at 31 hotels owned by our advisories. Once JSAV partners with the hotel, it can take a year or two for AV operations to ramp up so we believe there are still significant growth opportunities for JSAV and Ashford hotels. We see tremendous opportunity for integrating JSAV into more hotels in the U.S. and internationally given the company's outstanding reputation as the leading service provider in the industry.RED Hospitality and Leisure is a leading provider of our sports activities and other travel and transportation services in the U.S. Virgin Islands and Key West. We continue to see significant ramp-up of the company's US operations, including the ferry transportation services and beach and water sports services to the West and St. JOHN beach and water sports services to the Ritz Carlton St. Thomas club, the timeshare and rental property adjacent to the Ritz Carlton St. Thomas hotel, the reopening of the Ritz Carlton St. Thomas hotel and increased direct bookings in private charter businesses. In the fourth quarter, the company still generated $1.6 million of revenue representing 235% growth over the prior year period, and $308,000 have adjusted EBITDA. For the full year, the company generated $6.8 million of revenue and $1.6 million of adjusted EBITDA representing 387% and 700% growth respectively over the prior year period.Additionally, the company continues to make progress on the integration of its recent Sebago acquisition, with a revenue of $1.4 million, adjusted EBITDA of $235,000 and 4 new recently signed contracts. It will take 2 to 3 years to ramp up operations of the new contracts and once achieved, we see them adding $1.5 million to $2 million in adjusted EBITDA per year. We remain optimistic about the growth outlook for RED Hospitality going forward including this robust pipeline in Key West for concierge and other related travel services.That concludes our prepared remarks and we'll now open the call up for Q&A.

[Operator:]

[Operator Instructions] Our first question comes from Tyler Batory with Janney Capital Markets, please go ahead.

[Tyler Batory:]

Good afternoon. Thanks for taking my questions. Just a couple of them for me. Maybe the first place to start this is it so top of mind. I know you guys don't want to give guidance on this but obviously lots of news out there about coronavirus and whatnot. Are there any data points you could provide in terms of your potential exposure to that besides just maybe general economic weakness? Are you seeing any new cancellations of events impacting JSAV or any sort of? Any sort of color you could provide would be helpful.

[Montgomery Bennett:]

On that, at Ashford Inc, we're not seeing much direct impact at all at this point. The platforms that we manage Braemar and Ashford Trust have seen some cancellations. At this point, they're fairly modest in the groups and maybe several hundred thousand dollars' worth of cancellations but on platforms, the size they are just not material. So at this point, we're not seeing anything much specific related to the coronavirus. Of course, that could change but at this point, we just aren't.

[Tyler Batory:]

Okay, great. That's helpful. Just a couple of questions for you on Ashford securities considering you're going to start raising capital towards the end of the second quarter. Are there any more steps whether it be regulatory or legal that you need to complete to start raising some of that money? Then once you go out there any sense as far as timeline, how long it might take to raise as much as you think you can?

[Jeremy Welter:]

This is Jeremy. There's not really any more regulatory or legal hurdles that are significant. The biggest thing is just getting syndicates put together instead and so that requires a process of going through diligence. There are firms that are diligencing Ashford securities as a sponsor and then Braemar as an issuer and the type of security that we are looking to sell at Braemar as well. So as we do that, you go through a diligence process and then ultimately, you build out your syndicate, which is what we're working to do right now, which is why we've given the guidance of the end of the second quarter. There are some additional key hires that we need to make as well. In terms of the ramp, that's really difficult to say. It can be very, very lumpy because some of the firms that we're looking to be able to sell through have massive distribution channels and so it's very, very difficult for us to predict. But I do think that within, let's say, 6 to 9 months, I think we should be pretty well ramped up. So that would be basically at the end of this year in terms of being able to raise any meaningful capital.

[Montgomery Bennett:]

This is a Monty just to add to that. We have some internal schedules to start raising money at the end of the second quarter. At this point, we're ahead of schedule. So feel pretty good about that, unless something big changes. So what's really left is a piece of due diligence companies that need to go through and get on their platforms to start selling. As the amount, Jeremy's right to be cautious. We do anticipate to raise in the hundred millions of dollars through the separate for Braemar alone. How fast we do that? It's just hard to say, certainly in the multiple 10s of millions of dollars in the second half of the year, maybe even more over $100 million just in the second half the year. It just depends on several factors. One of which how many of these platforms picks up. At this point, it's just hard to know.

[Jeremy Welter:]

One thing I could add is that so far, the management is fantastic and folks really like our offering. So we're pretty excited about it.

[Tyler Batory:]

I appreciate all that detail and switching gears to RED Hospitality, Jeremy I think you mentioned that you had a couple of new contracts that were signed there. So can you talk a little bit more about that and then also if you can expand on the opportunities in terms of growing that business into other Ashford hotels or other geographies. That would be helpful too. Thanks.

[Jeremy Welter:]

Sure. So we actually signed 4 contracts recently and one of those is within the Ashford restructure. The other 3 are third party. Two of those three- I'm sorry, one of those three is in Key West, the other two are actually in the Virgin Islands. The latter one is going to be ramped up more towards the end of this year. But we've given guidance that we think it's going to be about $1.5 million to $2 million of profitability from those 4 contracts. So we're excited about that. Then in terms of the pipeline, we've got a pretty robust pipeline in Key West. We're in the process of- we actually have several proposals out that we're waiting to hear back on. But I would anticipate that in the next quarter, we probably would have at least a couple of more third party agreements signed up as well as another Ashford contract signed up in Key West.

[Tyler Batory:]

Okay, great. That's all for me. Thank you.

[Operator:]

Our next question comes from Bryan Maher with FBR. Please go ahead.

[Bryan Maher:]

Good afternoon. A couple of questions. Circling back to Ashford securities, can you talk a little bit about the impetus behind doing that in the first place? Was it generally because most of the Wall Street exposure you have is more institutional money and this gives you access to more retail money? Then second question on Ashford securities as it relates to your comments on Braemar fundraising. Does Braemar have a pipeline of assets or prospects of acquisitions to deploy all that capital that you would raise over the next year or 2?

[Montgomery Bennett:]

Hey, Brian, this is Monte. Regarding the reason to do it. The reason is the public markets. The public trading markets have windows about when it's a good time to raise capital and when it's not such a good time to raise capital and how stock prices perform. Over the past 5 years, generally, it's just been a difficult market in our space to raise capital. It's just fickle. We wanted to be in a position where we never had to go back to the public markets again, in order to raise capital. At least right now, that's the plan so we don't have to go back and raise any comments in the public markets. We can raise capital this way because our feature of the preferred that we're raising through these retail channels is that we can push it to convert to common if we so choose. We just like that approach. It's just going to be much more consistent capital force. Regarding opportunities over in Braemar of course, we have some opportunities teed up that we've got to be a little careful because the capital takes a while to come in. And any deal you’re looking at right now, I doubt would be in the market, maybe six months from now would have the capital to build, buy something. But at our listing properties, we have a number of opportunities to expand them, and to do very well by that. Recently, we - over the Barcelona hotel, we built this Maple Grove suite, which is about three suites all linked together for around $3 million bucks or so. And it may very well add as much of a $1 million EBITDA to that property’s bottom line. So, just incredible returns on investments, great uses of capital, and a great potential home for this new capital raised. And we're seeing a decent stream of opportunities out there in the marketplace, and expect to continue to see them as the capital starts to come in.

[Bryan Maher:]

Okay. And then my other question relates to the Remington Hotel management business. I know you added a couple of hotels, few hotels over this past quarter. If you had to guess, I mean, where do you think that that business grows in 2020 and 2021? Is it 10 hotels a year? Is it 20 hotels a year? What are your thoughts there?

[Montgomery Bennett:]

When I'm giving guidance on what we think that might be right now, although we definitely want it to grow rapidly, to do very well, although we've got upfront costs as we bring on seasoned executives that are expensive to go out and to sell the services. So, our full sales effort is still ramping up there, and probably won't be fully ramped up until maybe a year from now because it'll take that long to start producing revenues that will cover the expense of these additional folks. So, it's hard to say, but we definitely want to continue to add these hotel management contracts and to grow, grow, grow.

[Bryan Maher:]

And I know, Monty, that you and your team have deep and longstanding industry relationships in the hotel business, but what is the most kind of common way that you're prospecting for those hotel management contracts pieces?

[Montgomery Bennett:]

At least right now, it's mainly the relationships of the folks that we have working for us, Sloan Dean and Jared, who came on as our top sales guy. Already have an extraordinary number of existing contacts. Jared used to work over at Benchmark doing the same thing. So, we've been able just to trade off of those relationships right out of the box here.

[Bryan Maher:]

And then just lastly, for me, I mean, kudos to you guys for buying JS Audio Visual, and then the second piece as well. And the growth has come because of that. But if you had to think out a couple of years and the potential for that business, what inning do you think you're in in growing that business as we sit here today? Is it the third inning? Is the fifth inning? Where do you think we're at?

[Montgomery Bennett:]

For JSAV?

[Bryan Maher:]

Yes.

[Montgomery Bennett:]

The second ending.

[Bryan Maher:]

Okay, great. That's all for me. Thank you.

[Montgomery Bennett:]

Thank you.

[Operator:]

[Operator Instructions] Our next question comes from Stephen Biggar with Argus Research. Please go ahead.

[Stephen Biggar:]

Yes, thanks, guys. Good afternoon. Just to expand on the sales opportunities for - the third-party growth opportunities have been a common theme for both project management and hotel management. So, you mentioned the elevation of Sloan Dean, and just wondering on the new third-party contracts that were already signed up, has there been some staffing up already for those? I was just curious about the expense run rate due to that sales staff expansion you mentioned is going to take place, what, over the next year?

[Montgomery Bennett:]

We've staffed up a few folks on the sales side, on the operation side, in order to accommodate the business, but just on the sales side. So, we've got how many folks over there now, Jeremy? Maybe three folks over there selling on that side?

[Jeremy Welter:]

A team of three folks.

[Montgomery Bennett:]

A team of three folks on the on the Remington side to bring in that third-party business.

[Stephen Biggar:]

Is there cross-selling between - do they sell both project management and hotel management then?

[Montgomery Bennett:]

Not really. They sell hotel management, and that's how we run each one of these platforms to be specific on the platform. However, a lot of cross-selling occurs, and we've got a tremendous amount of business. So, someone that's, over at RED finding opportunities to add a water craft services to a resort, will discover that they need new audio visual services that makes the introduction. So, we have a lot of that cross sales going on. But as far as direct selling, no. They are charged with selling hotel management contracts and not to try to be a salesperson for everything.

[Stephen Biggar:]

Okay. And switching topics, just the large cost reimbursement revenue line, that's new, skewed the revenue comparisons, and I'm sure there's a great accounting rationale for doing that. But just going forward, what would be the expectations there? I know most of it was reversed in the expense line. So, any color on that on that line?

[Deric Eubanks:]

Yes, Stephen. This is Derek, and that - we broke out our reimbursement revenue that used to be part of the advisory services line, and there was some there was in the project management line, and there was some there was in other, and there's obviously a significant amount that flows through now that we've got hotel management because of the way GAAP requires us to record those expenses that are at the hotels that Remington manages. We have to actually gross those up on our income statement and show those as both a revenue and expense item. So, there's no impact to the bottom line. But you'll see in the - if you go through the earnings release in the back tables, or if you look at Remington specifically, a large amount of that revenue is reimbursement revenue. And so, we thought it'd be helpful to break that out and put it on its own line. Also, so that you can analyze the businesses and see what the margins are of the individual businesses without that cost reimbursement messing up the metrics.

[Stephen Biggar:]

Right. Okay. Great. Thanks.

[Operator:]

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.