The RMR Group Inc. Announces Third Quarter Fiscal 2022 Results

Rhea-AI Summary

The RMR Group reported a net income of $17.3 million for the fiscal quarter ended June 30, 2022, an 18% increase compared to the previous quarter. Adjusted net income reached $0.59 per diluted share. Revenues from management and advisory services grew by 16% year-over-year to $53 million, driven by increased assets under management. The company maintains a strong financial position with $196 million in cash and no debt. Adjusted EBITDA was $29.4 million, reflecting a margin of 53.1%.

Positive

• Net income increased to $17.3 million, an 18% sequential quarter rise.
• Management and advisory services revenues increased 16% year-over-year to $53 million.
• Adjusted EBITDA rose to $29.4 million, with a margin of 53.1%.
• Strong financial position with $196 million in cash and no debt.

Negative

• Net income margin dipped to 32.6% from 41.8% year-over-year.

Net Income of $17.3 Million, or $0.46 Per Diluted Share, both an 18% Sequential Quarter Increase

Adjusted Net Income of $0.59 Per Diluted Share, an 18% Sequential Quarter Increase

Adjusted EBITDA of $29.4 Million, a 14% Sequential Quarter Increase

NEWTON, Mass.--(BUSINESS WIRE)-- The RMR Group Inc. (Nasdaq: RMR) today announced its financial results for the fiscal quarter ended June 30, 2022.

Adam Portnoy, President and Chief Executive Officer, made the following statement regarding the third quarter fiscal 2022 results:

“For the third fiscal quarter, RMR reported management and advisory services revenues of $53.0 million, a 16% increase from last year and a 7% sequential quarter increase, primarily driven by the increase in assets under management, growth in construction management revenues and increases in management fees from some of our Managed Operating Companies. Despite inflationary and geopolitical headwinds, we generated $17.3 million of Net Income, or a 32.6% Net Income Margin, and $29.4 million of Adjusted EBITDA, or a 53.1% Adjusted EBITDA Margin. We believe these results continue to reflect the benefits of RMR’s operating leverage, our diverse client base and our overall fee durability.

Our dividend remains well covered, and with almost $196 million of cash and no debt, we remain well positioned to continue pursuing a range of capital allocation strategies to advance continued long term growth.”

Third Quarter Fiscal 2022 Highlights:

• The RMR Group LLC’s assets under management, or AUM, and management and advisory services revenue by source are as follows (dollars in thousands):

								Total Management
								and Advisory
			AUM					Services Revenues (4)
	As of or for the Three Months Ended June 30, 2022
	Managed Public Real Estate Capital (1)		$	30,918,739		83.0%		$	39,509		74.6%
	Managed Private Real Estate Capital (2)			3,856,386		10.4%			5,276		10.0%
	Managed Operating Companies (3)			2,470,780		6.6%			8,171		15.4%
	Total		$	37,245,905		100.0%		$	52,956		100.0%
	As of or for the Three Months Ended June 30, 2021
	Managed Public Real Estate Capital (1)		$	29,240,087		89.9%		$	36,396		80.0%
	Managed Private Real Estate Capital (2)			1,336,872		4.1%			2,138		4.7%
	Managed Operating Companies (3)			1,950,830		6.0%			6,976		15.3%
	Total		$	32,527,789		100.0%		$	45,510		100.0%

	(1)	Managed Public Real Estate Capital includes: Diversified Healthcare Trust (DHC), Industrial Logistics Properties Trust (ILPT), Office Properties Income Trust (OPI) and Service Properties Trust (SVC), which are collectively referred to as the Managed Equity REITs, as well as Seven Hills Realty Trust (SEVN) and, until its merger with and into SEVN on September 30, 2021, Tremont Mortgage Trust (TRMT).
	(2)	Managed Private Real Estate Capital primarily consists of private entities that own commercial real estate. Some of the Managed Equity REITs own minority interests in those entities.
	(3)	Managed Operating Companies include: AlerisLife Inc. (ALR), Sonesta International Hotels Corporation (Sonesta) and TravelCenters of America Inc. (TA).
	(4)	Includes construction supervision fees of $4,596 and $2,178 for the three months ended June 30, 2022 and 2021, respectively.

• For the three months ended June 30, 2022, net income was $17.3 million and net income attributable to The RMR Group Inc. was $7.6 million, or $0.46 per diluted share, compared to net income of $19.0 million and net income attributable to The RMR Group Inc. of $8.2 million, or $0.50 per diluted share, for the three months ended June 30, 2021.

• For the three months ended June 30, 2022, adjusted net income attributable to The RMR Group Inc. was $9.8 million, or $0.59 per diluted share, compared to $7.8 million, or $0.47 per diluted share, for the three months ended June 30, 2021. The adjustments to net income attributable to The RMR Group Inc. this quarter included $2.1 million, or $0.12 per diluted share, of unrealized losses on its equity method investments in SEVN and TA and $0.2 million, or $0.01 per diluted share, of separation costs.

• For the three months ended June 30, 2022, Adjusted EBITDA was $29.4 million, Net Income Margin was 32.6% and Adjusted EBITDA Margin was 53.1%, compared to Adjusted EBITDA of $24.4 million, Net Income Margin of 41.8% and Adjusted EBITDA Margin of 51.1% for the three months ended June 30, 2021.

• As of June 30, 2022, The RMR Group Inc. had $195.9 million in cash and cash equivalents with no outstanding debt obligations.

Reconciliations to U.S. Generally Accepted Accounting Principles, or GAAP:

Adjusted net income attributable to The RMR Group Inc., Adjusted net income attributable to The RMR Group Inc. per diluted share, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA less Cash Tax Obligation are non-GAAP financial measures. The GAAP financial measure that is most directly comparable to adjusted net income attributable to The RMR Group Inc. is net income attributable to The RMR Group Inc. The GAAP financial measure that is most directly comparable to adjusted net income attributable to The RMR Group Inc. per diluted share is net income attributable to The RMR Group Inc. per diluted share. The GAAP financial measure that is most directly comparable to EBITDA, Adjusted EBITDA and Adjusted EBITDA less Cash Tax Obligation is net income and the GAAP financial measure that is most directly comparable to Adjusted EBITDA Margin is Net Income Margin, which represents net income divided by total management and advisory services revenues. Reconciliations of net income attributable to The RMR Group Inc. determined in accordance with GAAP to adjusted net income attributable to The RMR Group Inc., net income attributable to The RMR Group Inc. per diluted share determined in accordance with GAAP to adjusted net income attributable to The RMR Group Inc. per diluted share, and of net income to EBITDA and Adjusted EBITDA, as well as calculations of Net Income Margin, Adjusted EBITDA Margin and Adjusted EBITDA less Cash Tax Obligation for each of the three months ended June 30, 2022 and 2021 are presented later in this press release.

Assets Under Management:

The calculation of AUM primarily includes: (i) the historical cost of real estate and related assets, excluding depreciation, amortization, impairment charges or other non-cash reserves, of the Managed Equity REITs and the Managed Private Real Estate Capital clients, plus (ii) the gross book value of real estate assets, property and equipment of the Managed Operating Companies, excluding depreciation, amortization, impairment charges or other non-cash reserves, plus (iii) the carrying value of loans held for investment at SEVN. Upon deconsolidation from a Managed Equity REIT, the respective real estate and related assets are characterized as Managed Private Real Estate Capital and their historical cost represents the fair value of the real estate at the time of deconsolidation.

All references in this press release to AUM on, or as of, a date are calculated at a point in time.

For additional information on the calculation of AUM for purposes of the fee provisions of the business management agreements, see The RMR Group Inc.’s Annual Report on Form 10-K for the fiscal year ended September 30, 2021, filed with the Securities and Exchange Commission, or SEC. The RMR Group Inc.’s SEC filings are available at the SEC website: www.sec.gov.

Conference Call:

On Friday, August 5, 2022 at 1:00 p.m. Eastern Time, President and Chief Executive Officer, Adam Portnoy, and Executive Vice President, Chief Financial Officer and Treasurer, Matt Jordan, will host a conference call to discuss The RMR Group Inc.’s fiscal third quarter ended June 30, 2022 financial results.

The conference call telephone number is (877) 270-2148. Participants calling from outside the United States and Canada should dial (412) 902-6510. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through 11:59 p.m. Eastern Time on Friday, August 12, 2022. To access the replay, dial (412) 317-0088. The replay pass code is 9494221.

A live audio webcast of the conference call will also be available in a listen only mode on The RMR Group Inc.’s website, at www.rmrgroup.com. Participants wanting to access the webcast should visit The RMR Group Inc.’s website about five minutes before the call. The archived webcast will be available for replay on The RMR Group Inc.’s website following the call for about one week. The transcription, recording and retransmission in any way of The RMR Group Inc.’s fiscal third quarter ended June 30, 2022 financial results conference call are strictly prohibited without the prior written consent of The RMR Group Inc.

About The RMR Group Inc.

The RMR Group is a leading U.S. alternative asset management company, unique for its focus on commercial real estate (CRE) and related businesses. RMR’s vertical integration is supported by approximately 600 real estate professionals in more than 30 offices nationwide who manage over $37 billion in assets under management and leverage more than 35 years of institutional experience in buying, selling, financing and operating CRE. RMR benefits from a scalable platform, a deep and experienced management team and a diversity of direct real estate strategies across its clients. RMR is headquartered in Newton, MA and was founded in 1986. For more information, please visit www.rmrgroup.com.

The RMR Group Inc. Condensed Consolidated Statements of Income (amounts in thousands, except per share amounts) (unaudited)
		Three Months Ended June 30,								Nine Months Ended June 30,
			2022				2021				2022				2021
Revenues:
Management services (1)		$	51,819			$	44,376			$	144,867			$	125,365
Incentive business management fees			—				—				—				620
Advisory services			1,137				1,134				3,392				2,849
Total management and advisory services revenues			52,956				45,510				148,259				128,834
Reimbursable compensation and benefits			14,189				13,069				42,092				39,453
Reimbursable equity based compensation			(69	)			1,402				2,896				5,611
Other reimbursable expenses			144,012				85,263				397,063				259,856
Total reimbursable costs			158,132				99,734				442,051				304,920
Total revenues			211,088				145,244				590,310				433,754
Expenses:
Compensation and benefits			32,170				30,530				95,671				90,610
Equity based compensation			512				1,954				4,719				7,267
Separation costs			400				—				617				4,159
Total compensation and benefits expense			33,082				32,484				101,007				102,036
General and administrative			8,323				6,320				24,464				19,684
Other reimbursable expenses			144,012				85,263				397,063				259,856
Transaction and acquisition related costs			—				61				—				474
Depreciation and amortization			253				245				731				734
Total expenses			185,670				124,373				523,265				382,784
Operating income			25,418				20,871				67,045				50,970
Interest and other income			279				179				402				614
Equity in earnings of investees			—				28				—				755
Unrealized (loss) gain on equity method investments accounted for under the fair value option			(5,489	)			1,312				(8,853	)			6,032
Income before income tax expense			20,208				22,390				58,594				58,371
Income tax expense			(2,943	)			(3,361	)			(8,448	)			(8,109	)
Net income			17,265				19,029				50,146				50,262
Net income attributable to noncontrolling interest			(9,695	)			(10,797	)			(28,142	)			(28,192	)
Net income attributable to The RMR Group Inc.		$	7,570			$	8,232			$	22,004			$	22,070
Weighted average common shares outstanding - basic (2)			16,343				16,269				16,332				16,259
Weighted average common shares outstanding - diluted (2)			31,353				31,308				31,342				31,271
Net income attributable to The RMR Group Inc. per common share - basic (2)		$	0.46			$	0.50			$	1.33			$	1.35
Net income attributable to The RMR Group Inc. per common share - diluted (2)		$	0.46			$	0.50			$	1.33			$	1.31
Substantially all revenues are earned from related parties. See Notes beginning on page 6.

The RMR Group Inc. Notes to Condensed Consolidated Statements of Income (dollars in thousands) (unaudited)
(1)	Includes base business management fees earned from the Managed Equity REITs monthly based upon the lower of (i) the average historical cost of each REIT’s properties and (ii) each REIT’s average market capitalization. The following table presents a summary of each Managed Equity REIT’s primary strategy and the lesser of the historical cost of its assets under management and its market capitalization as of June 30, 2022 and 2021, as applicable:

					Lesser of Historical Cost of Assets
					Under Management or
					Total Market Capitalization (a)
					As of June 30,
	REIT		Primary Strategy		2022			2021
	DHC		Medical office and life science properties, senior living communities and wellness centers		$	3,541,918		$	5,337,144
	ILPT		Industrial and logistics properties			5,372,641			1,997,990
	OPI		Office properties primarily leased to single tenants, including the government			3,481,695			3,962,573
	SVC		Hotels and net lease service and necessity-based retail properties			7,363,672			9,277,211
					$	19,759,926		$	20,574,918

(a)

The basis on which base business management fees are calculated for the three months ended June 30, 2022 and 2021 may differ from the basis at the end of the periods presented in the table above. As of June 30, 2022, the market capitalization was lower than the historical cost of assets under management for the Managed Equity REITs. The historical cost of assets under management for DHC, ILPT, OPI and SVC as of June 30, 2022, were $7,198,520, $5,644,407, $6,076,279 and $11,368,553, respectively.

The RMR Group Inc. Notes to Condensed Consolidated Statements of Income (Continued) (amounts in thousands, except per share amounts) (unaudited)
(2)	The RMR Group Inc. calculates earnings per share, or EPS, using the two-class method. As such, earnings attributable to unvested participating shares are excluded from earnings before calculating per share amounts. In addition, diluted EPS includes the assumed issuance of Class A Common Shares pursuant to The RMR Group Inc.’s equity compensation plan using the treasury stock method and the issuance of Class A Common Shares related to the assumed redemption of the noncontrolling interest’s 15,000 Class A Units using the if-converted method. In computing the dilutive effect, if any, that the aforementioned redemption would have on EPS, The RMR Group Inc. considered that net income available to holders of Class A Common Shares would increase due to elimination of the noncontrolling interest offset by any tax effect, which may be dilutive. For the three and nine months ended June 30, 2022 and 2021, the assumed redemption is dilutive to earnings per share as presented in the table below. The calculation of basic and diluted EPS is as follows:

			Three Months Ended June 30,								Nine Months Ended June 30,
				2022				2021				2022				2021
	Numerators:
	Net income attributable to The RMR Group Inc.		$	7,570			$	8,232			$	22,004			$	22,070
	Less: income attributable to unvested participating securities			(72	)			(72	)			(213	)			(194	)
	Net income attributable to The RMR Group Inc. used in calculating basic EPS			7,498				8,160				21,791				21,876
	Effect of dilutive securities:
	Add back: income attributable to unvested participating securities			72				72				213				194
	Add back: net income attributable to noncontrolling interest			9,695				10,797				28,142				28,192
	Add back: income tax expense			2,943				3,361				8,448				8,109
	Less: income tax expense assuming redemption of noncontrolling interest’s Class A Units for Class A Common Shares (a)			(5,851	)			(6,686	)			(16,833	)			(17,346	)
	Net income used in calculating diluted EPS		$	14,357			$	15,704			$	41,761			$	41,025
	Denominators:
	Common shares outstanding			16,501				16,408				16,501				16,408
	Unvested participating securities			(158	)			(139	)			(169	)			(149	)
	Weighted average common shares outstanding - basic			16,343				16,269				16,332				16,259
	Effect of dilutive securities:
	Assumed redemption of noncontrolling interest’s Class A Units for Class A Common Shares			15,000				15,000				15,000				15,000
	Incremental unvested shares			10				39				10				12
	Weighted average common shares outstanding - diluted			31,353				31,308				31,342				31,271
	Net income attributable to The RMR Group Inc. per common share - basic		$	0.46			$	0.50			$	1.33			$	1.35
	Net income attributable to The RMR Group Inc. per common share - diluted		$	0.46			$	0.50			$	1.33			$	1.31

(a)

Income tax expense assumes the hypothetical conversion of the noncontrolling interest, which results in estimated tax rates of 29.0% and 29.9% for the three months ended June 30, 2022 and 2021, respectively, and 28.7% and 29.7% for the nine months ended June 30, 2022 and 2021, respectively.

The RMR Group Inc. Reconciliation of Adjusted Net Income and Adjusted Net Income Per Diluted Share (amounts in thousands, except per share amounts) (unaudited)
The RMR Group Inc. is providing the reconciliations below regarding certain individually significant items occurring or impacting its financial results for the three months ended June 30, 2022 and 2021 for supplemental informational purposes in order to enhance the understanding of The RMR Group Inc.’s condensed consolidated statements of income and to facilitate a comparison of The RMR Group Inc.’s current operating performance with its historical operating performance. This information should be considered in conjunction with net income, net income attributable to The RMR Group Inc., net income attributable to The RMR Group Inc. per diluted share and operating income as presented in The RMR Group Inc.’s condensed consolidated statements of income.
The following tables assume the redemption of the noncontrolling interest’s 15,000 Class A Units is dilutive to earnings per share as presented on page 7:
		Net Income Attributable to The RMR Group Inc.				Add: Net Income Attributable to Noncontrolling Interest				Add: Income Tax Expense				Income Before Income Tax Expense				Less: Estimated Income Tax Expense (1)				Net Income Used in Calculating Diluted EPS				Weighted Average Common Shares Outstanding - Diluted		Net Income Attributable to The RMR Group Inc. per Common Share - Diluted
Three Months Ended June 30, 2022:
Net income attributable to The RMR Group Inc.		$	7,570			$	9,695			$	2,943			$	20,208			$	(5,851	)		$	14,357			31,353		$	0.46
Unrealized loss on equity method investments accounted for under the fair value option			2,074				2,614				801				5,489				(1,593	)			3,896			31,353			0.12
Separation costs			152				190				58				400				(116	)			284			31,353			0.01
Adjusted net income attributable to The RMR Group Inc.		$	9,796			$	12,499			$	3,802			$	26,097			$	(7,560	)		$	18,537			31,353		$	0.59
Three Months Ended June 30, 2021:
Net income attributable to The RMR Group Inc.		$	8,232			$	10,797			$	3,361			$	22,390			$	(6,686	)		$	15,704			31,308		$	0.50
Unrealized gain on equity method investment accounted for under the fair value option			(488	)			(627	)			(197	)			(1,312	)			392				(920	)		31,308			(0.03	)
Transaction and acquisition related costs			23				29				9				61				(18	)			43			31,308			—
Adjusted net income attributable to The RMR Group Inc.		$	7,767			$	10,199			$	3,173			$	21,139			$	(6,312	)		$	14,827			31,308		$	0.47

(1)	Estimated income tax expense assumes the hypothetical conversion of the noncontrolling interest and the resulting consolidated entities’ estimated tax rate of approximately 29.0% and 29.9% for the three months ended June 30, 2022 and 2021, respectively.

The RMR Group Inc. Reconciliation of EBITDA and Adjusted EBITDA from Net Income and Calculation of Net Income Margin, Adjusted EBITDA Margin and Adjusted EBITDA less Cash Tax Obligation (1) (2) (dollars in thousands) (unaudited)
	Three Months Ended June 30,								Nine Months Ended June 30,
		2022				2021				2022				2021
Reconciliation of EBITDA and Adjusted EBITDA from net income:
Net income	$	17,265			$	19,029			$	50,146			$	50,262
Income tax expense		2,943				3,361				8,448				8,109
Depreciation and amortization		253				245				731				734
EBITDA		20,461				22,635				59,325				59,105
Other asset amortization		2,354				2,354				7,062				7,062
Operating expenses paid in the form of The RMR Group Inc.'s common shares		581				552				2,370				2,427
Separation costs		400				—				617				4,159
Transaction and acquisition related costs		—				61				—				474
Straight line office rent		(96	)			13				(247	)			60
Unrealized loss (gain) on equity method investments accounted for under the fair value option		5,489				(1,312	)			8,853				(6,032	)
Equity in earnings of investees		—				(28	)			—				(755	)
Distributions from equity method investments		207				160				415				1,024
Incentive business management fees earned		—				—				—				(620	)
Adjusted EBITDA	$	29,396			$	24,435			$	78,395			$	66,904

Calculation of Net Income Margin:
Total management and advisory services revenues	$	52,956			$	45,510			$	148,259			$	128,834
Net income	$	17,265			$	19,029			$	50,146			$	50,262
Net Income Margin		32.6	%			41.8	%			33.8	%			39.0	%

Calculation of Adjusted EBITDA Margin:
Contractual management and advisory fees (excluding incentive business management fees, if any) (3)	$	55,310			$	47,864			$	155,321			$	135,276
Adjusted EBITDA	$	29,396			$	24,435			$	78,395			$	66,904
Adjusted EBITDA Margin		53.1	%			51.1	%			50.5	%			49.5	%

Calculation of Adjusted EBITDA less Cash Tax Obligation:
Adjusted EBITDA	$	29,396			$	24,435			$	78,395			$	66,904
Less: Tax distributions to members (4)		(8,783	)			(7,775	)			(21,969	)			(23,201	)
Adjusted EBITDA less Cash Tax Obligation	$	20,613			$	16,660			$	56,426			$	43,703
Common share distributions	$	11,401			$	10,737			$	32,930			$	32,197

(1)	EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures calculated as presented in the tables above. The RMR Group Inc. considers EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to be appropriate supplemental measures of its operating performance, along with net income, net income attributable to The RMR Group Inc. and net income margin. The RMR Group Inc. believes that EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to investors because by excluding the effects of certain amounts, such as those outlined in the tables above, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin may facilitate a comparison of current operating performance with The RMR Group Inc.’s historical operating performance and with the performance of other asset management businesses. In addition, The RMR Group Inc. believes that providing Adjusted EBITDA Margin may help investors assess The RMR Group Inc.’s performance of its business by providing the margin that Adjusted EBITDA represents to its contractual management and advisory fees (excluding incentive business management fees, if any). EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income, net income attributable to The RMR Group Inc. or net income margin as an indicator of The RMR Group Inc.’s financial performance or as a measure of The RMR Group Inc.’s liquidity. Other asset management businesses may calculate EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin differently than The RMR Group Inc. does.
(2)	Adjusted EBITDA less Cash Tax Obligation is a non-GAAP financial measure calculated as presented in the table above. The RMR Group Inc. considers Adjusted EBITDA less Cash Tax Obligation to be an appropriate measure of its operating performance, along with net income attributable to The RMR Group Inc. The RMR Group Inc. believes that Adjusted EBITDA less Cash Tax Obligation provides useful information to investors because by excluding amounts payable for tax obligations, it increases comparability between periods and more accurately reflects earnings that may be available for distribution to shareholders. Adjusted EBITDA less Cash Tax Obligation is among the factors The RMR Group Inc.’s Board of Directors considers when determining the amount of dividends to its shareholders. Other asset management businesses may calculate Adjusted EBITDA less Cash Tax Obligation differently than The RMR Group Inc. does.
(3)	Contractual management and advisory fees are the base business management fees, property management fees and advisory fees The RMR Group Inc. or its subsidiaries earns pursuant to its management agreements. These amounts are calculated pursuant to the contractual formulas and do not deduct other asset amortization of $2,354 for each of the three months ended June 30, 2022 and 2021, or $7,062 for each of the nine months ended June 30, 2022 and 2021, required to be recognized as a reduction to management services revenues in accordance with GAAP and do not include the incentive business management fees of $620 that The RMR Group Inc. recognized under GAAP for the nine months ended June 30, 2021.
(4)	Under the RMR LLC operating agreement, RMR LLC is required to make quarterly pro rata cash distributions to The RMR Group Inc. and its noncontrolling interest based on each’s estimated tax liabilities and respective ownership percentages. Estimated tax liabilities are determined quarterly on a cumulative basis. As such, there may be fluctuations from quarter to quarter to account for prior periods where pro rata cash distributions were more or less than amounts determined cumulatively through a particular quarter. For the three and nine months ended June 30, 2022 and 2021, RMR LLC made required quarterly tax distributions as follows:

			Three Months Ended June 30,						Nine Months Ended June 30,
			2022			2021			2022			2021
	RMR LLC tax distributions to The RMR Group Inc.		$	4,629		$	4,180		$	11,559		$	12,327
	RMR LLC tax distributions to non-controlling interest			4,154			3,595			10,410			10,874
	Total RMR LLC tax distributions to members		$	8,783		$	7,775		$	21,969		$	23,201

The RMR Group Inc. Condensed Consolidated Balance Sheets (dollars in thousands, except per share amounts) (unaudited)
		June 30,				September 30,
			2022				2021
Assets
Current assets:
Cash and cash equivalents		$	195,936			$	159,835
Due from related parties			93,939				88,661
Prepaid and other current assets			6,003				6,021
Total current assets			295,878				254,517
Property and equipment, net			2,629				2,218
Due from related parties, net of current portion			15,167				14,331
Equity method investments accounted for under the fair value option			39,677				39,476
Goodwill and intangible assets, net of amortization			2,066				2,094
Operating lease right of use assets			29,567				32,293
Deferred tax asset			18,803				18,671
Other assets, net of amortization			127,249				134,311
Total assets		$	531,036			$	497,911
Liabilities and Equity
Current liabilities:
Reimbursable accounts payable and accrued expenses		$	67,320			$	55,115
Accounts payable and accrued expenses			32,063				15,027
Operating lease liabilities			4,867				4,922
Employer compensation liability			2,804				6,076
Total current liabilities			107,054				81,140
Operating lease liabilities, net of current portion			26,230				29,148
Amounts due pursuant to tax receivable agreement, net of current portion			25,577				25,577
Employer compensation liability, net of current portion			15,167				14,331
Total liabilities			174,028				150,196
Commitments and contingencies
Equity:
Class A common stock, $0.001 par value; 31,600,000 shares authorized; 15,500,716 and 15,485,236 shares issued and outstanding, respectively			16				15
Class B-1 common stock, $0.001 par value; 1,000,000 shares authorized, issued and outstanding			1				1
Class B-2 common stock, $0.001 par value; 15,000,000 shares authorized, issued and outstanding			15				15
Additional paid in capital			112,396				109,910
Retained earnings			343,949				321,945
Cumulative common distributions			(255,896	)			(236,766	)
Total shareholders’ equity			200,481				195,120
Noncontrolling interest			156,527				152,595
Total equity			357,008				347,715
Total liabilities and equity		$	531,036			$	497,911

WARNING CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Forward-looking statements can be identified by use of words such as “outlook,” “believe,” “expect,” “potential,” “will,” “may,” “estimate,” “anticipate” and derivatives or negatives of such words or similar words. Forward-looking statements in this press release are based upon present beliefs or expectations. However, forward-looking statements and their implications are not guaranteed to occur and may not occur for various reasons, including some reasons beyond The RMR Group Inc.’s control. For example:

• Mr. Portnoy states that for the third fiscal quarter, management and advisory services revenues of $53.0 million increased 16% from last year and 7% from last quarter, primarily driven by the increase in assets under management, growth in construction management revenues and increases in management fees from some of the Managed Operating Companies. Mr. Portnoy also states that despite inflationary and geopolitical headwinds, The RMR Group Inc. generated $17.3 million of Net Income, or a 32.6% Net Income Margin, and $29.4 million of Adjusted EBITDA, or a 53.1% Adjusted EBITDA Margin. These statements may imply that The RMR Group Inc. will continue to earn increased management and advisory services revenues and improved financial results in the future. However, The RMR Group Inc.’s and its clients’ businesses are subject to various risks, including risks outside its and their control. Further, the impact and duration of the COVID-19 pandemic is not known and economic conditions could deteriorate, including as a result of increasing interest rates, inflation and adverse geopolitical conditions, for a prolonged period and negatively impact The RMR Group Inc.’s and its clients’ businesses and operating and financial results;

• Mr. Portnoy refers to the benefits of The RMR Group Inc.’s operating leverage, diverse client base and overall fee durability. These references may imply that The RMR Group Inc.’s business will realize steady, or avoid significantly decreased or negative, operating results and returns as a result of these characteristics that it believes its business has. However, these characteristics may not be as certain as The RMR Group Inc. may believe and they may not be sufficient to adequately prevent future events or conditions, including those outside its control, from negatively impacting The RMR Group Inc.’s business and operating results; and

• Mr. Portnoy states that The RMR Group Inc.’s dividend remains well covered and with almost $196 million of cash and no debt, The RMR Group Inc. remains well positioned to continue pursuing a range of capital allocation strategies to advance continued long term growth. This statement may imply that The RMR Group Inc. will continue to pay a regular quarterly dividend at the current rate and successfully identify and execute one or more capital allocation strategies and that any capital allocation strategy it may pursue will be successful and benefit it and its shareholders and advance its long term growth. However, there can be no assurance that The RMR Group Inc. will continue to pay any regular dividends or that it will continue to pay dividends at the current rate. The RMR Group Inc. may decide to lower or even eliminate its dividends. Further, identifying and executing on capital allocation strategies are subject to various uncertainties and risks, it may take an extended period of time to realize any benefits and there can be no assurance that any capital allocation strategy that it does pursue will advance continued long term growth. In addition, The RMR Group Inc. may elect to not continue pursuing a capital allocation strategy or abandon any such strategy it may pursue.

The information contained in The RMR Group Inc.’s filings with the SEC, including under the caption “Risk Factors” in The RMR Group Inc.’s periodic reports, or incorporated therein, identifies important factors that could cause differences from the forward-looking statements in this press release. The RMR Group Inc.’s filings with the SEC are available on its website and at www.sec.gov.

You should not place undue reliance on forward-looking statements.

Except as required by law, The RMR Group Inc. undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220804005792/en/

Michael Kodesch, Director, Investor Relations

(617) 796-8230

Source: The RMR Group Inc.

FAQ

What were RMR's earnings results for Q3 fiscal 2022?

RMR reported a net income of $17.3 million for the third fiscal quarter of 2022.

What is the adjusted net income per share for RMR?

The adjusted net income per diluted share for RMR is $0.59.

What are the management and advisory services revenues for RMR?

RMR generated management and advisory services revenues of $53 million, a 16% increase year-over-year.

What is RMR's financial position as of June 30, 2022?

As of June 30, 2022, RMR had $196 million in cash and no debt obligations.

What is RMR's Adjusted EBITDA for the latest quarter?

RMR's Adjusted EBITDA for the quarter ended June 30, 2022, was $29.4 million.