The RMR Group Inc. (NASDAQ:RMR) Q2 2024 Results Conference Call May 8, 2024 1:00 PM ET

Company Participants

Kevin Barry - Senior Director, IR
Adam Portnoy - President and CEO
Matt Jordan - CFO

Conference Call Participants

Bryan Maher - B. Riley Securities
Mitch Germain - Citizens JMP
Ronald Kamdem - Morgan Stanley

Operator

Good afternoon. And welcome to the RMR Group Fiscal Second Quarter 2024 Earnings Conference Call. All participants will be in listen only mode [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Kevin Barry, Senior Director of Investor Relations. Please go ahead.

Kevin Barry

Good afternoon. And thank you for joining RMR's second quarter of fiscal 2024 conference call. With me on today's call are President and CEO, Adam Portnoy; and Chief Financial Officer, Matt Jordan. In just a moment, they will provide details about our business and quarterly results, followed by a question-and-answer session. First, I would like to note that management will not be answering questions about the debt exchange offer that its client Office Properties Income Trust announced last week as the offering period is currently open. I would also like to note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company. Today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements are based on RMR's beliefs and expectations as of today, May 8, 2024, and actual results may differ materially from those that we project. The company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call. Additional information concerning factors that could cause those differences is contained in our filings with the Securities and Exchange Commission, which can be found on our Web site at www.rmrgroup.com. Investors are cautioned not to place undue reliance upon any forward-looking statements. In addition, we may discuss non-GAAP numbers during this call, including adjusted net income, adjusted earnings per share, distributable earnings and adjusted EBITDA. A reconciliation of net income determined in accordance with US Generally Accepted Accounting Principles to these non-GAAP figures can be found in our financial results. I will now turn the call over to Adam.

Adam Portnoy

Thanks, Kevin. And thank you all for joining us today. Since our last earnings call, we have continued to advance our business and support our clients through the current headwinds facing many aspects of commercial real estate. Overall, real estate transaction volumes have remained subdued for over a year, largely a result of an increase in interest rates, persistent inflation and uncertainty regarding whether the Federal Reserve will cut interest rates later this year. While interest rates may remain higher for longer, we do remain cautiously optimistic about an improving market environment later this year and into 2025. The resiliency and strength of the RMR platform over many years and through numerous business cycles gives us a solid foundation to continue creating long term value for all our stakeholders. Last night, we reported second quarter results that reflect both revenue growth, driven by our recent residential platform acquisition, and investments we are making to ensure RMR remains well-positioned to take advantage of growth opportunities in the future. This quarter, we generated distributable earnings per share of $0.51 and adjusted EBITDA of $22.7 million. With nearly $200 million of cash and no corporate debt, we have ample flexibility to continue making the necessary investments to further our strategic objectives. The strength of our balance sheet and the durability of our cash flows also led to our recent announcement regarding an increase to our recurring dividend by 12.5% to $0.45 per quarter, which remains well covered in a 64% payout ratio.