ASHFORD : REPORTS THIRD QUARTER 2023 RESULTS - Form 8-K

ASHFORD REPORTS THIRD QUARTER 2023 RESULTS

DALLAS, November 8, 2023 - Ashford Inc., an alternative asset management company with a portfolio of strategic operating businesses (NYSE American: AINC) ("Ashford" or the "Company"), today reported the following results and performance measures for the third quarter ended September 30, 2023. Unless otherwise stated, all reported results compare the third quarter ended September 30, 2023, with the third quarter ended September 30, 2022 (see discussion below). The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release.

STRATEGIC OVERVIEW

•High-growth, fee-based business model

•Diversified platform of multiple fee generators

•Three paths to growth:

◦Increase assets under management (AUM);

◦Growth of third-party business; and

◦Acquisition or incubation of additional businesses

•Highly-aligned management team with superior long-term track record

•Leader in asset and investment management for the real estate & hospitality sectors

THIRD QUARTER 2023 FINANCIAL HIGHLIGHTS

•Net loss attributable to common stockholders for the quarter was $(12.0) million, or $(3.87) per diluted share. Adjusted net income for the quarter was $7.8 million, or $0.96 per diluted share.

•Total revenue, excluding cost reimbursement revenue, for the quarter was $73.3 million, reflecting a 7.9% growth rate over the prior year quarter.

•Adjusted EBITDA for the quarter was $11.8 million.

•At the end of the third quarter, the Company had approximately $7.9 billion of gross assets under management.

•As of September 30, 2023, the Company had corporate cash of approximately $19.0 million.

ASHFORD SECURITIES UPDATE

Ashford Securities is a dedicated capital raising platform created to fund investment opportunities sponsored and asset-managed by Ashford. Ashford Securities recently completed the offering of a non-traded preferred equity security for Braemar Hotels & Resorts Inc. ("Braemar") (NYSE: BHR) placing approximately $460 million. Ashford Securities currently has two offerings in the market: (1) a non-traded preferred equity security for Ashford Hospitality Trust, Inc. ("Ashford Trust") (NYSE: AHT) and (2) a growth oriented private offering targeting investments in all types of commercial real estate in the state of Texas ("Texas Strategic Growth Fund").

Ashford Trust has issued $76.8 million of its Series J and Series K Redeemable Preferred Stock through Ashford Securities since the offering commenced, including $28.3 million during the quarter. In connection with the Ashford Trust offering of Series J & K Redeemable Preferred Stock, Ashford Securities has assembled a syndicate of 40 broker-dealers and RIA firms.

During the quarter, Ashford invested $2.5 million in the Texas Strategic Growth Fund. The proceeds from that investment, along with other funds raised, were used to make an equity investment in a multi-family property located in San Antonio.

Long term, the Company believes there is a substantial opportunity to grow its assets under management by offering differentiated alternative investment products through Ashford Securities to help investors further diversify their portfolios.

REMINGTON UPDATE

Remington's high-margin, low-capex Hotel Management business continues to benefit from the recovery in the lodging industry and has experienced significant growth in its third-party business. In the third quarter, Remington generated hotel management fee revenue of $12.4 million, Net Income Attributable to the Company of $1.1 million, and Adjusted EBITDA of $4.7 million.

Remington continues to focus on growing its mix of third-party managed hotels, which currently account for approximately 40% of Remington's managed hotels. At the end of the third quarter, Remington managed 121 properties that were open and operating - 49 under third-party management agreements and 72 for Ashford Trust and Braemar - located in 26 states and Washington, D.C. across 26 brands, including 13 independent and boutique properties.

INSPIRE UPDATE

INSPIRE is an event technology company that provides an integrated suite of audio-visual services, including show and event services, hospitality services, and creative services, making it a leading single-source solution for its clients' meeting and event needs. INSPIRE has seen its hospitality business rebound very strongly as both corporate and social groups have been eager to gather. It has seen a similar recovery in its show services segment. In the third quarter, INSPIRE had audio visual revenue of $30.6 million, Net Loss Attributable to the Company of $(1.1) million, and Adjusted EBITDA of $0.8 million.

PREMIER UPDATE

Premier provides comprehensive and cost-effective architecture, design, development, and project management services. It also provides project oversight, coordination, planning, and execution of renovation, capital expenditure and ground-up development projects. Premier is responsible for managing and implementing substantially all capital improvements at Ashford Trust and Braemar hotels. Additionally, it has extensive experience working with major hotel brands in renovating, converting, developing and repositioning hotels. Similar to Remington, Premier has also made a concerted effort to grow its third-party business, and during the third quarter, Premier signed 5 third-party engagements, totaling $0.5 million in expected fees. In the third quarter, Premier generated $7.4 million of design and construction fee revenue, Net Loss Attributable to the Company of $(0.1) million, and Adjusted EBITDA of $2.7 million.

RED HOSPITALITY & LEISURE UPDATE

RED Hospitality is a leading provider of watersports activities and other travel and transportation services in the U.S. Virgin Islands ("USVI"), Puerto Rico, Florida and Turks & Caicos. RED Hospitality has continued to benefit from the resurgence in leisure travel and the desire of consumers for unique and memorable experiences. RED Hospitality has several opportunities for expansion into additional Ashford-advised and third-party hotels in the USVI, elsewhere in the Caribbean, and in U.S. coastal markets. During the third quarter, RED Hospitality generated $8.4 million of revenue, Net Loss Attributable to the Company of $(0.3) million, and $0.9 million of Adjusted EBITDA.

FINANCIAL RESULTS

Net loss attributable to common stockholders for the quarter totaled $(12.0) million, or $(3.87) per diluted share. Adjusted net income for the quarter was $7.8 million, or $0.96 per diluted share.

For the quarter ended September 30, 2023, base advisory fee revenue was $11.5 million. The base advisory fee revenue in the third quarter was comprised of $8.1 million from Ashford Trust and $3.4 million from Braemar.

Adjusted EBITDA for the quarter was $11.8 million.

CAPITAL STRUCTURE

At the end of the third quarter, the Company had approximately $7.9billion of gross assets under management from its advised platforms. The Company had corporate cash of $19.0 million and 8.2 million fully diluted shares. The Company's fully diluted shares include 4.2 million common shares associated with its Series D convertible preferred stock. The Company had $127.5 million of loans as of September 30, 2023.

QUARTERLY HIGHLIGHTS FOR ADVISED PLATFORMS

ASHFORD TRUST HIGHLIGHTS

•Reported Adjusted EBITDAre of $82.5 million for the third quarter.

•Third quarter Comparable RevPAR increased 4.0% over the prior year quarter.

•During the quarter, Ashford Trust announced that its Crowne Plaza La Concha Hotel in Key West, Florida is on track to convert to a Marriott Autograph Collection® property in 2024 at which time it will be rebranded to La Concha Key West.

•Subsequent to quarter end, Ashford Trust announced that it entered into a new franchise agreement with Marriott International to convert its Le Pavillon Hotel in New Orleans, Louisiana to a Tribute Portfolio property during the first quarter of 2024.

•To date, Ashford Trust has issued approximately $76.8 million of its non-traded preferred stock.

BRAEMAR HOTELS & RESORTS HIGHLIGHTS

•Reported Adjusted EBITDAre of $27.0 million for the third quarter.

•Third quarter Comparable RevPAR was $264.

•During the quarter, the Company announced the planned conversion of its Mr. C Beverly Hills Hotel to Hilton's LXR brand under the new name, Cameo Beverly Hills.

•During the quarter, Braemar completed a $200 million corporate financing consisting of a $150 million term loan and a $50 million credit facility.

•During the quarter, the Company upsized and extended its loan secured by the Four Seasons Resort Scottsdale at Troon North.

•Subsequent to quarter end, the Company extended its loan secured by the Ritz-Carlton Lake Tahoe.

TEXAS STRATEGIC GROWTH FUND HIGHLIGHTS

•Including the Company's $2.5 million investment, the fund has raised approximately $6 million of capital.

•Completed first equity investment of $5 million in a 466-unit multi-family property in San Antonio, TX.

"The lodging industry continues to perform well despite a normalization of leisure travel and general macroeconomic concerns," commented Monty J. Bennett, Ashford's Chairman and Chief Executive Officer. "While we reported solid revenue growth at INSPIRE, Premier and RED Hospitality, our margins were negatively impacted as those businesses resume more normalized staffing levels compared to the prior year quarter, and we continue to be encouraged with the pace of capital raising at Ashford Securities."

Mr. Bennett concluded, "Moving forward, we will continue to focus on growing our third-party business for our portfolio companies and growing our assets under management at our advised platforms."

INVESTOR CONFERENCE CALL AND SIMULCAST

The Company will conduct a conference call on Thursday, November 9, 2023, at 12:00 p.m. ET. The number to call for this interactive teleconference is (646) 960-0375. A replay of the conference call will be available through Thursday, November 16, 2023, by dialing (647) 362-9199 and entering the confirmation number, 1818099.

The Company will also provide an online simulcast and rebroadcast of its third quarter 2023 earnings release conference call. The live broadcast of the Company's quarterly conference call will be available online at the Company's website, www.ashfordinc.com, on Thursday, November 9, 2023, beginning at 12:00 p.m. ET. The online replay will follow shortly after the call and continue for approximately one year.

Included in this press release are certain supplemental measures of performance, which are not measures of operating performance under GAAP, to assist investors in evaluating the Company's historical or future financial performance. These supplemental measures include adjusted earnings before interest, tax, depreciation and amortization ("Adjusted EBITDA") and Adjusted Net Income. We believe that Adjusted EBITDA and Adjusted Net Income provide investors and management with a meaningful indicator of operating performance. Management also uses Adjusted EBITDA and Adjusted Net Income, among other measures, to evaluate profitability. We calculate Adjusted EBITDA by subtracting or adding to net income (loss): interest expense, income taxes, depreciation, amortization, net income (loss) to noncontrolling interests, transaction costs, and other expenses. We calculate Adjusted Net Income by subtracting or adding to net income (loss): net income (loss) to noncontrolling interests, transaction costs, and other expenses. Our methodology for calculating Adjusted EBITDA and Adjusted Net Income may differ from the methodologies used by other comparable companies, when calculating the same or similar supplemental financial measures and may not be comparable with these companies. Neither Adjusted EBITDA nor Adjusted Net Income represents cash generated from operating activities as determined by GAAP and should not be considered as an alternative to (a) GAAP net income (loss) as an indication of our financial performance or (b) GAAP cash flows from operating activities as a measure of our liquidity nor are such measures indicative of funds available to satisfy our cash needs. The Company urges investors to carefully review the U.S. GAAP financial information as shown in our periodic reports on Form 10-Q and Form 10-K, as amended and our Current Reports on Form 8-K.

This press release does 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 at www.sec.gov.

* * * * *

Ashford is an alternative asset management company with a portfolio of strategic operating businesses that provides global asset management, investment management and related services to the real estate and hospitality sectors.

Certain statements and assumptions in this press release contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this press release include, among others, statements about the Company's strategy and future plans. These forward-looking statements are subject to risks and uncertainties. When we use the words "will likely result," "may," "anticipate," "estimate," "should," "expect," "believe," "intend," or similar expressions, we intend to identify forward-looking statements. Such statements are subject to numerous assumptions and uncertainties, many of which are outside Ashford Inc.'s control.

These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated, including, without limitation: our ability to maintain compliance with NYSE American LLC continued listing standards; our ability to regain Form S-3 eligibility; our ability to repay, refinance or restructure our debt and the debt of certain of our subsidiaries; anticipated or expected purchases or sales of assets; our projected operating results; completion of any pending transactions; our understanding of our competition; market trends; projected capital expenditures; the impact of technology on our operations and business; general volatility of the capital markets and the market price of our common stock and preferred stock; availability, terms and deployment of capital; availability of qualified personnel; changes in our industry and the markets in which we operate, interest rates or the general economy; and the degree and nature of our competition. These and other risk factors are more fully discussed in the Company's filings with the Securities and Exchange Commission.

The forward-looking statements included in this press release are only made as of the date of this press release. Such forward-looking statements are based on our beliefs, assumptions, and expectations of our future performance taking into account all information currently known to us. These beliefs, assumptions, and expectations can change as a result of many potential events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, results of operations, plans, and other objectives may vary materially from those expressed in our forward-looking statements. You should carefully consider this risk when you make an investment decision concerning our securities. Investors should not place undue reliance on these forward-looking statements. The Company can give no assurance that these forward-looking statements will be attained or that any deviation will not occur. We are not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, changes in expectations, or otherwise, except to the extent required by law.

ASHFORD INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share and per share amounts)

September 30, 2023	December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	28,018	$	44,390
Restricted cash	36,215	37,058
Restricted investment	88	303
Accounts receivable, net of allowance of $1,251 and $175, respectively	31,038	17,615
Due from affiliates	575	463
Due from Ashford Trust	7,625	-
Due from Braemar	-	11,828
Inventories	2,544	2,143
Prepaid expenses and other	14,062	11,226
Total current assets	120,165	125,026
Investments	7,542	4,217
Property and equipment, net	54,942	41,791
Operating lease right-of-use assets	22,140	23,844
Goodwill	61,013	58,675
Intangible assets, net	216,184	226,544
Other assets, net	1,118	2,259
Total assets	$	483,104	$	482,356
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses	$	42,067	$	56,079
Dividends payable	28,318	27,285
Due to affiliates	49	15
Due to Ashford Trust	-	1,197
Due to Braemar	3,533	-
Deferred income	673	444
Notes payable, net	4,145	5,195
Finance lease liabilities	426	1,456
Operating lease liabilities	4,076	3,868
Claims liabilities and other	32,677	25,630
Total current liabilities	115,964	121,169
Deferred income	7,971	7,356
Deferred tax liability, net	27,613	27,873
Deferred compensation plan	1,370	2,849
Notes payable, net	119,241	89,680
Finance lease liabilities	2,947	1,962
Operating lease liabilities	20,180	20,082
Other liabilities	3,716	3,237
Total liabilities	299,002	274,208
MEZZANINE EQUITY
Series D Convertible Preferred Stock, $0.001 par value, 19,120,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022	478,000	478,000
Redeemable noncontrolling interests	1,764	1,614
EQUITY (DEFICIT)
Common stock, 100,000,000 shares authorized, $0.001 par value, 3,317,786 and 3,181,585 shares issued and 3,213,975 and 3,110,044 shares outstanding at September 30, 2023 and December 31, 2022, respectively	3	3
Additional paid-in capital	299,365	297,715
Accumulated deficit	(595,717)	(568,482)
Accumulated other comprehensive income (loss)	(30)	78
Treasury stock, at cost, 103,811 and 71,541 shares at September 30, 2023 and December 31, 2022, respectively	(1,331)	(947)
Total equity (deficit) of the Company	(297,710)	(271,633)
Noncontrolling interests in consolidated entities	2,048	167
Total equity (deficit)	(295,662)	(271,466)
Total liabilities, mezzanine equity and equity (deficit)	$	483,104	$	482,356

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ASHFORD INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share amounts)

7

ASHFORD INC. AND SUBSIDIARIES

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA

(unaudited, in thousands)

8

ASHFORD INC. AND SUBSIDIARIES

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME (LOSS)

(unaudited, in thousands, except per share amounts)

	Three Months Ended	Nine Months Ended
September 30,	September 30,
2023	2022	2023	2022
Net income (loss)	$	(3,070)	$	(1,103)	$	(393)	$	4,901
Net (income) loss from consolidated entities attributable to noncontrolling interests	190	272	692	830
Net (income) loss attributable to redeemable noncontrolling interests	(111)	(158)	(399)	(290)
Preferred dividends, declared and undeclared	(9,054)	(9,029)	(27,132)	(27,422)
Net income (loss) attributable to common stockholders	(12,045)	(10,018)	(27,232)	(21,981)
Amortization of loan costs	268	219	773	524
Depreciation and amortization	8,998	9,603	26,222	27,782
Net income (loss) attributable to unitholders redeemable noncontrolling interests	111	158	399	290
Preferred dividends, declared and undeclared	9,054	9,029	27,132	27,422
Deferred compensation plans	(689)	(78)	(1,479)	(567)
Stock/unit-based compensation	465	1,912	1,944	3,663
Change in contingent consideration fair value	130	300	430	300
Transaction costs	685	501	1,307	2,369
Loss on disposal of assets	13	58	1,032	822
Non-cash interest from finance lease	-	160	-	487
Reimbursed software costs, net	-	(75)	(74)	(312)
Legal, advisory and settlement costs	117	300	1,043	1,163
Severance and executive recruiting costs	785	731	3,061	1,459
Amortization of hotel signing fees and lock subsidies	334	160	879	511
Other (gain) loss	89	27	214	156
GAAP income tax expense (benefit)	(205)	617	1,642	5,971
Adjusted income tax (expense) benefit (1)	(311)	(1,825)	(3,468)	(9,593)
Adjusted net income available to common stockholders, unitholders and Series D convertible preferred stockholders on an "as converted" basis	$	7,799	$	11,779	$	33,825	$	40,466
Adjusted net income per diluted share available to common stockholders, unitholders and Series D convertible preferred stockholders on an "as converted" basis	$	0.96	$	1.48	$	4.19	$	5.24
Weighted average diluted shares	8,154	7,932	8,066	7,729
Components of weighted average diluted shares
Common shares	3,116	2,960	3,065	2,895
Series D convertible preferred stock	4,234	4,221	4,230	4,218
Deferred compensation plan	223	205	214	203
Acquisition related shares	472	376	443	269
Restricted shares and units	109	170	114	144
Weighted average diluted shares	8,154	7,932	8,066	7,729
Reconciliation of income tax expense (benefit) to adjusted income tax (expense) benefit
GAAP income tax (expense) benefit	$	205	$	(617)	$	(1,642)	$	(5,971)
Less deferred income tax (expense) benefit	516	1,208	1,826	3,622
Adjusted income tax (expense) benefit (1)	$	(311)	$	(1,825)	$	(3,468)	$	(9,593)

(1) Income tax expense (benefit) is adjusted to exclude the effects of deferred income tax expense (benefit) because current income tax expense (benefit) (i) provides a more accurate period-over-period comparison of the ongoing operating performance of our advisory and products and services businesses, and (ii) provides more useful information to investors regarding our economic performance. See Note 18 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022.

9

10

(1) The sum of net income (loss) per diluted share and adjusted net income (loss) per diluted share, as calculated for the segments, may differ from the consolidated total due to rounding.

11

12

(1) The sum of net income (loss) per diluted share and adjusted net income (loss) per diluted share, as calculated for the segments, may differ from the consolidated total due to rounding.

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ASHFORD INC. AND SUBSIDIARIES

PRODUCTS & SERVICES

CONSOLIDATED STATEMENTS OF OPERATIONS AND

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA, ADJUSTED EBITDA AND ADJUSTED NET INCOME (LOSS)

(unaudited, in thousands, except per share amounts)

(1) Represents Pure Wellness and Lismore Capital.

(2) The sum of net income (loss) per diluted share and adjusted net income (loss) per diluted share, as calculated for the subsidiaries, may differ from the Products & Services total due to rounding.

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ASHFORD INC. AND SUBSIDIARIES

PRODUCTS & SERVICES

CONSOLIDATED STATEMENTS OF OPERATIONS AND

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA, ADJUSTED EBITDA AND ADJUSTED NET INCOME (LOSS)

(unaudited, in thousands, except per share amounts)

(1) Represents Pure Wellness, Lismore Capital, Marietta Leasehold L.P. Marietta Leasehold L.P. was acquired by Ashford Hospitality Trust, Inc. on December 16, 2022.

(2) The sum of net income (loss) per diluted share and adjusted net income (loss) per diluted share, as calculated for the subsidiaries, may differ from the Products & Services total due to rounding.

15

ASHFORD INC. AND SUBSIDIARIES

PRODUCTS & SERVICES

CONSOLIDATED STATEMENTS OF OPERATIONS AND

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA, ADJUSTED EBITDA AND ADJUSTED NET INCOME (LOSS)

(unaudited, in thousands, except per share amounts)

(1) Represents Pure Wellness and Lismore Capital.

(2) The sum of net income (loss) per diluted share and adjusted net income (loss) per diluted share, as calculated for the subsidiaries, may differ from the Products & Services total due to rounding.

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ASHFORD INC. AND SUBSIDIARIES

PRODUCTS & SERVICES

CONSOLIDATED STATEMENTS OF OPERATIONS AND

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA, ADJUSTED EBITDA AND ADJUSTED NET INCOME (LOSS)

(unaudited, in thousands, except per share amounts)

(1) Represents Pure Wellness, Lismore Capital and Marietta Leasehold L.P. Marietta Leasehold L.P. was acquired by Ashford Hospitality Trust, Inc. on December 16, 2022.

(2) The sum of net income (loss) per diluted share and adjusted net income (loss) per diluted share, as calculated for the subsidiaries, may differ from the Products & Services total due to rounding.

17

ASHFORD INC. AND SUBSIDIARIES

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA

(unaudited, in thousands)

18