The RMR Group Inc. Announces First Quarter Fiscal 2019 Results
The RMR Group Inc. (Nasdaq: RMR) today announced its financial results for the fiscal quarter ended December 31, 2018.
Adam Portnoy, President and Chief Executive Officer, made the following statement regarding the first quarter fiscal 2019 results:
"We are pleased with our first quarter operating results, as adjusted net income of $0.62 per diluted share was up 3% compared to last year. During the quarter, we generated net income of $118.1 million, Adjusted EBITDA of $29.4 million and an Adjusted EBITDA Margin of 58%.
During the quarter, we also successfully helped facilitate the merger of Government Properties Income Trust and Select Income REIT to form Office Properties Income Trust, or OPI. This merger received significant shareholder support and we look forward to advancing OPI's investment strategy of owning buildings primarily leased to single tenants and those with high credit quality characteristics, like government entities.
At the close of the first fiscal quarter, our balance sheet continues to leave us well positioned to assess strategic opportunities for future growth."
First Quarter Fiscal 2019 Highlights:
- Total management and advisory services revenues for the quarter ended December 31, 2018 were $168.4 million, including $120.1 million of incentive business management fees, compared to $205.8 million for the quarter ended December 31, 2017, which included $155.9 million in incentive business management fees.
- We earned management services revenues for the three months ended December 31, 2018 and 2017 from the following sources (dollars in thousands):
|Three Months Ended December 31,|
|Managed Equity REITs (1)||$||39,639||83.5||%||$||40,965||84.3||%|
|Managed Operators (2)||6,785||14.3||%||6,741||13.9||%|
|Total Management Services Revenues||47,488||100.0||%||48,570||100.0||%|
|(1)||Managed Equity REITs for the periods presented includes: Hospitality Properties Trust (HPT), Industrial Logistics Properties Trust (ILPT), Office Properties Income Trust (OPI), Select Income REIT (SIR) and Senior Housing Properties Trust (SNH). SIR merged with and into a subsidiary of OPI (formerly named Government Properties Income Trust) on December 31, 2018 and the surviving entity merged with and into OPI, with OPI as the surviving entity.|
|(2)||Managed Operators collectively refers to: Five Star Senior Living Inc. (FVE), Sonesta International Hotels Corporation (Sonesta) and TravelCenters of America LLC (TA).|
- For the three months ended December 31, 2018 and December 31, 2017, we earned incentive business management fees of $120.1 million and $155.9 million, respectively. Incentive business management fees included fees earned from HPT, SIR and SNH of $53.6 million, $25.8 million and $40.7 million, respectively, and $74.6 million, $25.6 million and $55.7 million, respectively, for the three months ended December 31, 2018 and December 31, 2017, respectively.
- For the three months ended December 31, 2018, net income was $118.1 million and net income attributable to The RMR Group Inc. was $52.2 million, or $3.22 per diluted share, compared to net income of $159.3 million and net income attributable to The RMR Group Inc. of $71.1 million, or $4.39 per diluted share, for the three months ended December 31, 2017.
- For the three months ended December 31, 2018, adjusted net income attributable to The RMR Group Inc. was $10.0 million, or $0.62 per diluted share, compared to $9.7 million, or $0.60 per diluted share, for the three months ended December 31, 2017.
- On December 22, 2017, the U.S government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act, or the Tax Act. The Tax Act significantly revised the U.S. corporate income tax system by, among other things, lowering corporate income tax rates. Since we have a September 30 fiscal year end, our corporate income tax rates were phased in for our 2018 fiscal year, resulting in a federal statutory tax rate of approximately 24.5% for the fiscal year 2018. Beginning October 1, 2018, our federal statutory tax rate was reduced further to 21.0%.
- For the three months ended December 31, 2018, Adjusted EBITDA was $29.4 million and Adjusted EBITDA Margin was 58.0%, compared to Adjusted EBITDA of $30.5 million and Adjusted EBITDA margin of 58.4% for the three months ended December 31, 2017.
- As of December 31, 2018, The RMR Group Inc. had $284.2 million in cash and cash equivalents with no outstanding debt obligations. We received the $120.1 million of incentive business management fees earned for the calendar year ended December 31, 2018 in January 2019.
- As of December 31, 2018 and December 31, 2017, The RMR Group Inc. had approximately $29.7 billion and $30.0 billion of total assets under management, respectively.
Reconciliations to GAAP: