DALLAS, April 13, 2017 /PRNewswire/ -- Ashford Inc.
(NYSE MKT: AINC) ("Ashford" or the "Company") today announced that
it has acquired a controlling interest in a privately held company
that conducts the business of Pure Rooms ("Pure Rooms") for
approximately $97,000 in cash
consideration (excluding transaction costs). Pure Rooms
utilizes state-of-the-art purification technology to create
allergy-friendly guestrooms. Pure Rooms currently has
contracts in place with approximately 160 hotels (approximately
2,400 rooms) throughout the United States. Pure Rooms'
hypo-allergenic rooms are designed to provide a better night's
sleep for all guests, especially allergy sufferers.
Pure Rooms' patented 7-step purification process treats a room's
surfaces, including the air, and removes up to 99% of
pollutants. Hotel rooms participating in this program
typically achieve between a $20 and
$30 premium per night. Based on historical
performance, Ashford's asset managed hotels that have been included
in the Pure Rooms program have experienced an internal rate of
return of between 50% and 70% on the Pure Rooms
investment.
In addition to owning a 70% interest in the common equity of
Pure Rooms, Ashford owns $300,000, or
50%, of the Series B-2 Preferred Equity of Pure Rooms. The total
capitalization of Pure Rooms also includes approximately
$475,000 of bank debt and
$200,000 of Series B-1 Preferred
Equity which will be senior to Ashford's investment. During the
twelve months ended January 31, 2017,
Pure Rooms had Net Income of approximately $11,000 and Adjusted EBITDA of approximately
$472,000. The implied total
purchase price represents, as of January 31,
2017, a trailing 12-month Adjusted EBITDA multiple of 2.9x,
according to the Company's preliminary estimates based on unaudited
operating financial data provided by Pure Rooms.
After inclusion of all planned Ashford Hospitality Trust, Inc.
(NYSE: AHT) ("Ashford Hospitality Trust") and Ashford Hospitality
Prime, Inc. (NYSE: AHP) ("Ashford Hospitality Prime") hotels in the
Pure Rooms program over the next 24 months and without any
additional growth, Net Income and Adjusted EBITDA are expected to
increase by approximately $434,000
and $257,000, respectively. Ashford
expects Pure Rooms to initially contribute approximately
$0.07 to its Adjusted Net Income per
share. Pure Rooms should add approximately $0.15 to the Company's Adjusted Net Income per
share after all planned Ashford Hospitality Trust and Ashford
Hospitality Prime hotels are included in the Pure Rooms
program. Pure Rooms has also made progress in additional
vertical markets, such as assisted living, cruise ships and office
buildings, to drive additional growth. Existing management
for Pure Rooms will remain in place, and Brian Brault will retain the title of Chief
Executive Officer.
"This transaction is the next evolution of Pure Rooms' strategy
of being the leading provider of hypo-allergenic hotel rooms in
the United States," commented
Brian Brault, Chief Executive
Officer of Pure Rooms. "We look forward to leveraging Ashford's
hotel experience, operating experience and track record of success
to further solidify our market position and support the tremendous
potential for growth in our business."
"We continue to use our hospitality and management experience to
identify and invest in unique business opportunities in the
industry and are excited to integrate our deep operating experience
with the innovation of Pure Rooms," said Monty J. Bennett, Ashford's Chairman and Chief
Executive Officer. "There is growing demand for health and
wellness offerings in the hospitality industry, and we are excited
about the future of this partnership."
Ashford provides global asset management, investment management
and related services to the real estate and hospitality
sectors.
Follow Chairman and CEO Monty
Bennett on Twitter at www.twitter.com/MBennettAshford or
@MBennettAshford.
Ashford has created an Ashford App for the hospitality REIT
investor community. The Ashford App is available for free
download at Apple's App Store and
the Google Play Store by searching "Ashford."
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. 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'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: changes in the business or operating prospects of Pure
Rooms; adverse litigation or regulatory developments; our success
in implementing our business development plans of integrating Pure
Rooms' business and realizing the expected benefits of the
transaction; general volatility of the capital markets and the
market price of our common stock; changes in our business or
investment strategy; availability, terms and deployment of capital;
availability of qualified personnel; changes in our industry and
the market in which we operate, interest rates or the general
economy; and the degree and nature of our competition.
The forward-looking statements included in this press release
are only made as of the date of this press release. Investors
should not place undue reliance on these forward-looking
statements. 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.
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PURE ROOMS
(1), (2)
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RECONCILIATION OF
NET INCOME TO ADJUSTED EBITDA AND ADJUSTED NET
INCOME
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(unaudited, in
thousands)
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Estimated
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12 Months
Ended
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12 Months
Ended
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January
31,
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December
31,
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2017
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2019
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Net
Income
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$
11
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$
445
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Interest
expense
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253
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5
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Depreciation
and amortization
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310
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40
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Income tax
expense
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5
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239
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EBITDA
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$
578
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$
729
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Acquisition
Adjustments (3)
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(107)
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-
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Adjusted
EBITDA
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$
472
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$
729
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Interest
expense
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(253)
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(5)
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Income tax
expense
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(5)
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(239)
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Adjusted Net
Income
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$
214
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$
485
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(1) All
historical information in this table is based upon unaudited
operating financial data provided by Pure Rooms.
Financial statements for Pure Rooms have not been prepared and this
data has not been audited, reviewed or compiled
by the Company's independent registered public accounting firm, and
therefore the financial information presented will
likely change.
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(2) All information
in this table represents 100% of Pure Rooms financial information,
as such the amount of net income,
Adjusted EBITDA, and Adjusted Net Income attributable to Ashford's
interest will be less than the amount presented.
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(3) Acquisition
adjustments represent pro forma expenses related to executive
management compensation of Pure Rooms.
These additional costs will be incurred by Pure Rooms after
close.
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A reconciliation
of non-GAAP financial measures is included in the table above.
Adjusted EBITDA is defined as net income (loss), computed in
accordance with generally accepted accounting principles ("GAAP"),
before interest, taxes, depreciation and amortization. Adjusted Net
Income is defined as net income, computed in accordance with GAAP,
before depreciation and amortization.
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ASHFORD INC. AND
SUBSIDIARIES' SHARE OF ADJUSTED NET INCOME PER SHARE ATTRIBUTABLE
TO PURE ROOMS (1)
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(unaudited, in
thousands, except per share amounts)
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Estimated
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12 Months
Ended
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12 Months
Ended
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January
31,
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December
31,
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2017
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2019
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Adjusted Net
Income (2)
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$
150
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$
339
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Diluted shares
(3)
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2,273
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2,273
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Adjusted Net
Income per diluted share
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$
0.07
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$
0.15
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(1) All
historical information in this table is based upon unaudited
operating financial data provided
by Pure Rooms. Financial statements for Pure Rooms have not
been prepared and this data has
not been audited, reviewed or compiled by the Company's independent
registered public accounting
firm, and therefore the financial information presented will likely
change.
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(2) Represents the
Company's 70% share of Adjusted Net Income attributable to Pure
Rooms.
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(3) Represents the
weighted average diluted shares of the Company for the three months
ended
December 31, 2016 and is held constant for the periods
presented.
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PURE
ROOMS
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Capitalization
(1)
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(unaudited)
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Bank Debt as of
December 31, 2016
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$432,000
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Series B-1 Preferred
Equity
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$200,000
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Series B-2 Preferred
Equity (2)
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$600,000
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Common Equity
(3)
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$138,507
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Total
Capitalization
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$1,370,507
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(1) As of March 20,
2017 after giving effect to the transaction.
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(2) Includes
Ashford's ownership of 50% of the Series B-2 Preferred
Equity.
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(3) Includes
Ashford's ownership of 70% of the Common Equity.
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To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/ashford-announces-agreement-for-strategic-investment-in-leading-provider-of-hypo-allergenic-hotel-rooms-300439714.html
SOURCE Ashford Inc.