Good day, everyone and welcome to today's conference call to review results for Ashford for the third quarter of 2020 and to update you on recent developments. On the call today will be Jeremy Welter, President and Chief Operating Officer; and Deric Eubanks, Chief Financial Officer.

The results as well as notice of the accessibility of this conference call on a listen-only basis over the internet were distributed yesterday in our press release. At this time, let me remind you that certain statements and assumptions in this conference call contain or are based upon forward-looking information and are being made pursuant to the safe harbor provisions of the federal securities regulation.

Such forward-looking statements are subject to numerous assumptions, uncertainties and known or unknown risks, which could cause actual results to differ materially from those anticipated. These factors are more fully discussed in the company's filings with the Securities and Exchange Commission.

These forward-looking statements included in this conference call are only made as of the date of this call and the company is not obligated to publicly update or revise them. In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the company's earnings release and accompanying tables or schedules, which have been filed on Form 8-K with the SEC on October 28, 2020 and may also be accessed through the company's website at www.ashfordinc.com.

Each listener is encouraged to review those reconciliations provided in the earnings release, together with all other information provided in the release. Also, unless otherwise stated, all report -- results discussed in this call compare the third quarter of 2020 with the third quarter of 2019.

I will now turn the call over to Jeremy.

Good morning and welcome to our call to discuss our financial results for the third quarter of 2020. I'll begin by discussing Ashford's operations, strategy and response in light of the ongoing COVID-19 pandemic.

Afterward, Deric will review our financial results. Then I will provide an update regarding our hospitality products and services businesses and then we will open it up for Q&A.

I want to begin by thanking our senior management team, as well as the thousands of associates who've been at our side during this unprecedented time. I can't tell you how proud I am of our executive leadership team, as well as our associates spread out across the country.

They've all experienced some serious hardships, whether it'd be reducing of their pay, reducing of bonuses, long hours, lengthy furloughs, or in many cases, outright terminations. Through this difficult time, they've shown great resilience and energy.

Our deepest gratitude to you all. Due to the pandemic, we have adjusted the way we operate and how we manage the company and its existing advisory platforms, as well as our portfolio of products and services businesses.

Our top priority has been to protect the health and safety of our associates and guests, while at the same time mitigating the impact on our business. We remain diligently focused on our priorities and have been managing our decisions in coordination with the responsibility to all of our stakeholders.

This includes an unwavering commitment to protect value of our shareholders. Reflecting that commitment, we've taken steps to maintain our financial flexibility and have implemented meaningful cost saving measures.

The hotels that we asset manage and our products and services businesses have experienced widespread disruption during this pandemic. We've implemented significant cost-cutting measures at our hotels and our products and services businesses designed to enhance the financial flexibility, while remaining focused on the long-term growth and competitive position.

Ashford advises two publicly traded REIT platforms; Ashford Trust and Braemar, which together own 116 hotels, with approximately 26,000 rooms and approximately $7.2 billion of gross assets as of September 30, 2020. Although, operations were suspended at some properties during the peak of the pandemic, all Braemar hotels are currently open and operating, and all, but two of Ashford Trust hotels are open and operating.

Both Remington and Premier Project Management continue to execute on their long-term growth strategies, while making the decisions necessary to ensure that at the end of the crisis, they both remain strong, vibrant company. They both have adopted a stringent focus on reducing expenses, which has included instituting pay cuts for executives, furloughing or eliminating a large number of associates and significantly reducing discretionary spending.

In short, those businesses are taking the necessary actions to navigate this pandemic and position themselves for a successful future. We continue to believe that these two businesses are well-positioned to achieve growth through third-party channels.

The industry is incredibly fragmented and both Remington and Premier have solid reputations, and historically, have not focused on third-party business. This effort has really just started, but we have seen strong early momentum with Remington signing four new hotel management contracts with third-party hotel owners, and Premier Project Management signing seven new third-party contracts.

Looking ahead, we are extremely excited about the long-term opportunity for third-party growth at both Remington and Premier. Periods of dislocation of volatility have created new opportunities for growth.

For example, the American Hotel Margin Association recently released its safe stay guidelines for hotel guests. Two of the main components of these guidelines include guests choosing contactless options and requesting enhanced cleaning options.

We believe the products offered by OpenKey and Pure Wellness are well-positioned to thrive in this environment. As the hotel industry strives to implement measures to provide a clean and safe environment, many hotels and guests will be seeking automatic check-ins, allowing them to bypass the front desk, with keyless entry and secure digital key capabilities.

It will also be seeking enhanced sanitation and air purification standards within the guest rooms. We believe the benefits that OpenKey and Pure Wellness offer will position them well to achieve accelerated adoption and growth of hotels nationwide.

We continue to see strong growth in demand for OpenKey's digital key product, which I will discuss in more detail. In response to COVID-19, JSAV has pivoted to offering comprehensive virtual meeting services and is seeing increasing demand for virtual events and webcasts.

Their integrated suite of audio visual services includes virtual meetings, live virtual Q&A sessions, with presenters web streaming webcast and digital signage. Additionally, earlier this year, Ashford Trust and Braemar entered into agreements with Lismore Capital for Lismore to seek modifications, forbearances or refinancing of the REIT's debt totaling approximately $5.1 billion across 40 different loans.

We have reallocated significant corporate resources to this effort and have already completed several forbearance agreements given the REIT much needed flexibility in order to meet requirements under the respective loans. Looking ahead, these are uncertain times and our people and businesses are being impacted in unprecedented ways.

Despite these near-term challenges, our management team has deep talent and has operated numerous economic downturns and periods a meaningful industry disruption, including 9/11 and the Great Recession. We remain optimistic about the long-term prospects for our company and believe we are making the right strategic decisions to position our business to be even more successful once we emerge on the other side of this pandemic.

I will now turn the call over to Deric.

Thanks, Jeremy. Net loss attributable to common stockholders for the third quarter was $22 million.

Adjusted EBITDA for the third quarter was $6.8 million and adjusted net income for the third quarter was $2.8 million. In terms of financial results for our portfolio of businesses, I'll provide some highlights and then Jeremy will discuss more details.

Lismore recorded revenue of $4 million in the quarter related to its agreements with Ashford Trust and Braemar to seek modifications and forbearance for the REITs debt. Remington realized hotel management fee revenue of $3.8 million in the quarter, net loss attributable to the company of $3.3 million and adjusted EBITDA of $0.9 million.

For the third quarter, Premier had project management fee revenue of $1.8 million, net loss attributable to the company of $2.4 million and adjusted EBITDA of $0.2 million. OpenKey saw year-to-date revenue through the third quarter increased by 51% over the prior year period and finished the quarter with 216 hotels under contract.

While recognition of booked revenue was slowed by hotel closures and travel restrictions, OpenKey added seven hotels under contract in the third quarter, which represented growth of 46% over the prior year quarter. The strong sales growth has been supported by a significant shift in guest preferences.

Utilization of digital keys increased by 196% in the third quarter over the prior year quarter, with the majority of guest from July to September opting to use a digital key when offered. Financial results for JSAV for the third quarter included revenue of $3.1 million, net loss attributable to the company of $2.4 million and adjusted EBITDA of negative $1.2 million.

As of September 30, 2020, we had 7.5 million fully diluted shares of common stock and units, which included 4.1 million common shares associated with our Series D convertible preferred stock. We had 2.3 million common shares issued and outstanding, 0.2 million common shares earmarked for issuance under our deferred compensation program, and the balance relates to put options associated with minority interest of our strategic investments, acquisition related shares and some restricted stock.

I'll now turn the call back over to Jeremy.

Thank you, Deric. We are pleased to provide updates on our hospitality products and services businesses and how we have responded with significant measures during the third quarter in the face of the COVID-19 pandemic.

As was the case across the hospitality sector, our hospitality products and services businesses were among the hardest hit industries from the global pandemic. We have faced headwinds from sharp declines in occupancy and group business at our advised hotels.

Before I get into more details on our operations, I want to say how proud I am of all of our associates and leadership across our entire platform for their hard work, dedication and perseverance during these very tough and challenging times. As the seriousness of the pandemic became more apparent in early March, our hospitality products and services executive leadership and I began an extensive review of our G&A expenses and policies around each business.

We implemented broad furloughs at that time and in total at the peak of the crisis, 70% of our associates were furloughed or termed. The hospitality products and services businesses also implemented stringent spending controls to preserve cash and reduce non-critical spending, which we continue to this day.

In fact, several of our hospitality products and services businesses have pivoted their operations to launch new offerings that are focused on the safety of our guests and associates. Our core strategy for hospitality products and services remains, but to more fully explain this strategy, our products and services initiative is a very unique investment strategy in the hospitality industry, where we strategically invest in operating companies that service the industry and we act as an accelerator to grow these companies.

In doing so, we believe we are able to establish synergies for our hotel platforms, providing attractive pricing and higher levels of service than they would receive from a third-party vendor. We are also able to grow our portfolio of companies in a number of ways by referring them to the hotels owned by our advised REITs, by leveraging our vast industry relationships and by consulting on best operating practices.

The business where we are seeing the strongest growth at the moment is RED Hospitality. RED Hospitality & Leisure is a leading provider of watersports activities and other travel and transportation services in the U.S.

Virgin Islands and Key West Florida. RED also faced reductions in bookings and trips from both markets and took actions to furlough or term 85% of its workforce during this pandemic.

With the Key West market, RED had a very strong quarter capped off with a record breaking September, driven by strong leisure demand. RED anticipates that Key West will continue the strong performance during fall and as drive to -- as a drive-to-market, we expect leisure business to pick up from guests driving into Key West more quickly compared to the USVI.

The ability for the USVI to rebound is somewhat limited given the airlift requirement, but we see it benefiting by the strong business we anticipate at the Westin's timeshare property. Taken together, we are optimistic about RED's ability to navigate this pandemic.

Further, we have plans to expand into the Sarasota market in 2021. Additionally, Chris Batchelor, our CEO at RED, is working on some exciting business development opportunities in Florida and the Caribbean, and we hope to be able to discuss those on future calls.

Profitability for the quarter was adversely affected due to the U.S. Virgin Islands closing for 30 days in response to a spike in COVID cases.

OpenKey is a leading provider of Bluetooth-enabled lock upgrade module that can be added to existing locks at a fraction of the cost of replacing the entire lock system. This is a very attractive option for hotels as they balance tighter CapEx budgets, while satisfying growth, guest demand for a contactless digital check and experience.

OpenKey works with all major hotel lock manufacturers and property management systems. We continue to be excited about the future growth prospects for the business.

Pure Wellness is also seeing strong opportunities for its products in this pandemic environment. Pure Wellness is the industry leader in wellness applications and is shifting its focus from hypoallergenic rooms to a suite of services designed to eliminate viruses, bacteria and other contaminants within guest rooms and public spaces.

While Pure Wellness will still offer its signature Pure Room for hotels, which includes the medical grade virus killing air purification system, it is designed cleaning protocols that can be rolled out to hotels, remediation cleaning service for areas impacted by the virus and a proactive electrostatic spray protocol and provide a growth inhibiting protective layer. Pure Wellness uses only chemical sprays that are EPA registered and CDC approved for use against COVID-19.

Remington is a dynamic and growing hotel management company providing top quality service and expertise. Credit must be given to Remington CEO, Sloan Dean and his team, who navigated challenging situations, including numerous hotel closures over the last couple of months.

At the beginning of the crisis, Remington furloughed or termed approximately 93% of its workforce. However, as hotels reopen and people begin traveling again, Remington is in great shape financially to ramp up its hotel operations at its 77 managed hotels in 23 states and Washington DC across 15 brands, including 12 independent and boutique properties.

We find this current moment in the industry is aiding our growth and development, which is focused on growing Remington third-party business. Remington established a strong pipeline for new third-party contracts and is actively seeking more deals.

Additionally, Remington prioritizes the safety of its guests and associates as it launched the Ultra Touch program that strives for the highest cleanliness standards in rooms and public spaces for hotel guests. Premier Project Management provides comprehensive and cost effective design, development, architecture procurement and project management services to the hospitality industry.

Premier will be impacted greatly by hotel owners cutting back on CapEx spend. And during the last several months, approximately 53% of its workforce was furloughed or termed.

With that said, Premier has done a great job pivoting to incorporate multifamily business opportunities into the marketing efforts and has signed up several multifamily projects during this year. In addition to third-party hotel project management deals signed, in total, Premier has signed up seven non-Ashford projects this year and there's a strong pipeline to add more to finish the year.

We expect capital investment to rebound and we expect Premier to be in great position to capitalize when that occurs. JSAV is a leading single-source solution for meeting event needs with an integrated suite of audio visual services, including show and event services, hospitality services, creative services and design and integration.

With the elimination of group travel and bookings due to the pandemic, JSAV was significantly impacted and has to furlough or term 94% of its workforce due to lack of demand. JSAV was proactive and quick to retool strategy to focus on virtual meetings in lieu of in-person meetings.

They've established numerous virtual showrooms at locations around the country and these services result in higher margins as they require less labor. Additionally, JSAV continues to pursue in-house hotel AV contracts alongside its virtual meetings, and JSAV has created a strong pipeline of opportunities as group business returns.

JSAV has done a great job to reduce its variable costs. However, profitability was adversely affected this quarter due to fixed cost associated with its core business that we expect to rebound in 2021.

That concludes our prepared remarks, and we'll now open the call for Q&A.

Good afternoon. Two housekeeping kind of items, maybe for Deric and then a bigger picture question.

On the EBITDA adjustment line, there was a $6.5 million loss on disposal assets. What was that related to, Deric?

Yeah. Bryan, that relates to FF&E that was associated with the Embassy Suites New York Manhattan as part of our ERFP program that Ashford Inc.

acquired that FF&E as part of that ERFP. And when that asset was given back to the lender, Ashford Inc.

had to write that off. So, Ashford Inc.

still got the tax benefit from the ERFP contribution, but from an accounting and GAAP standpoint just had to write that off if that was still on our books based on a lease that we do as part of that ERFP program.

Great. That's helpful.

And then the other expense line was unusually big this quarter, what was tucked in there that made that go up?

Let's see. Looking at other expense on the income statement?

Correct. It was like a little over $9 million, and we've been looking for around $2.5 million.

Yeah. I mean, a lot of that is a function of the fact that -- well, let's see.

Yeah. I didn't mean to catch you on that.

If you want to call me later, we can go over that line item, if that's better.

Yeah. Let me circle back with you on that -- perhaps us dig into it.

I'm just trying to -- that could be where that loss is hitting, but let me just circle back with you on that.

Okay. That’s great.

And then, on a bigger picture question, is there an opportunity for Remington as assets get handed back to lenders or CMBS servicers over the next couple of months, couple of quarters to possibly be hired to run or manage assets, while those properties are looking for a new home? Is that a type of business that you explore and what's the opportunity there if any?

Yeah. Definitely.

And that's where the focus is for -- Remington's growth is transactions. Transactions facilitate a need or an opportunity to change property management companies, whether it be transactions where lender takes control of an asset, or if an asset is sold.

And so, our business development team at Remington is spending a lot of times, not only with lenders, but also potential private equity partners. And they spend a lot of time actually just underwriting deals on behalf of companies or businesses or lenders that are looking to potentially acquire or step in the shoes as an owner.

And so, that's just a very important part of our business and that's very active right now.

Okay. And just lastly from me.

On the preferred dividend, there has been some kind of movement there with partial payment, then a catch up, and then a not payment and then kind of a catch up. What is management's thought of the preferred dividend, which is kind of sizable relative to trying to maintain a decent cash position?

And might we see some type of conversion or activity there?

Well, Bryan, this is Deric. I mean, I can tell you that there is a -- there is an incentive for the company to pay the preferred and that if it is not paid for two consecutive quarters, then it begins to accrue at a higher rate.

And so that's kind of explains why we've done what we've done to this point. I would say going forward, that's going to be up to the board in terms of those dividend declarations going forward.

But that's why you saw one quarter we paid in full and then one quarter not paid, and then one quarter paid again.

So, just to be clear, if you kind of skip a quarter and then pay, don't pay, pay, don't pay, then that rate doesn't increase, but yet you still accrue owing the dividends on that to be paid in a later date. Is that a proper read?

Yeah. That's correct.

Okay. Thank you.

That's all for me.

Thanks, Bryan.

Hey, Bryan. And let me -- I just wanted to confirm that other expense line item is where that loss on disposal of assets was hitting.

Got it. Thank you.

Hey, good morning. I appreciate you taking my question.

Just one really for me. This is more just -- when you look at the broader competitive environment within some of your hospitality products and services businesses, because obviously, you guys are a well capitalized owner of a number of these businesses here.

I mean, are you starting to see any sort of dislocation in some of the markets from your competitors, meaning competitors going out of business. Is that a potential opportunity for you on either the acquisition side or a potential opportunity to grow and add some incremental revenue opportunities just you maybe take some business away from some of the other competitors that were out there?

Yeah. Tyler, I appreciate it.

This is Jeremy. Yeah.

Of course, there is -- this is -- this pandemic in our industry has decimated the industry and has been impactful to every operator across the board. But you're right.

We've done a good job we feel at Ashford, cutting costs and putting ourselves in position for growth and that's what we're looking forward to. There are definitely opportunities that are out there and we can go by -- probably the best way to look at it is by business segment.

Let's start with RED. We have identified lots of very attractive potential acquisitions for RED that we may pursue.

And I think that the ones we've done in the past, generate pretty high attractive cash and cash returns for our investors. And so, there is definitely opportunities there.

Remington has opportunities -- not only to assume just third-party business, but there are some acquisition opportunities out there. What it comes down to is access to capital for us as well, but there could be opportunities.

And we've had some discussions, but they're all very, very preliminary at this point. There are opportunities that we potentially could raise capital and do a JV with some of our businesses as well, which I think could be attractive.

JSAV, there is really -- what's interesting there is that you obviously know the PSAV-Encore merger and they're a 800-pound gorilla in the space, but what slowly has happened over time -- or maybe not slowly. I mean, we kind of accelerated the growth when we bought JSAV in 2017, which was a company that we didn't know existed.

We had a search for an acquisition opportunity for audio visual and it just so happens that we found one in our backyard. The owner of the company actually lived in my neighborhood.

And so, it's very unusual and we bought the company and we accelerate the growth pretty significantly and we've got an incredible team that we've built there. I think as good as the management team is exist, but they've slowly become -- or like I said, maybe quickly became the second largest AV provider.

And so, they're a good alternative for a lot of owners that want maybe another option and certainly, that space has been the most hardest impacted of all our businesses, because obviously, events and group meetings just aren't taking place. And so, I think that when you look at -- on the smaller competitors, there's definitely going to be some opportunities to capture share there.

I don't know that would make sense to buy any business there, just because I think that the opportunity is going to exist to just do it on a much more cost effective way of just the old fashion way to grow. And our CEO at JSAV did come with the non-compete initially and that has burned off.

His background is to sell third-party business. He's great at it.

And so we anticipate that he is going to be focused very much on growing outside of our advisory platforms. And actually, when you look at each one -- one of the things we spend money on over the last couple of years as we've kind of developed this hospitality products and services businesses is that we have built at the very top level sales oriented leaders.

And if you knew each one of the CEOs, they're all focused heavily on sales. We've got incredible sales and marketing plans that we are putting in place right now that we're finalizing.

We kind of look at a five-year growth plan and each one of them, I think, is uniquely positioned to grow outside our advised REITs. Premier as well.

Premier, we just recently during the pandemic had our new CEO there. And his name is Hector Sanchez.

He is very talented and he has done a very good job of kind of retooling that business to really focus on third-party growth. So, I'm optimistic.

And then there's OpenKey, which as you've seen that there has been a lot of demand there as well. And we're working on some potential large partnerships there where we could do system-wide potential upgrades on locks.

And so, I think that we've got a good group of products and services and I think they're all uniquely positioned for growth. And I think, there's also the opportunity for us to expand in other business lines as well, which we continue to look at.

Okay. I appreciate all the detail.

That's very helpful. I'll leave it there.

Thank you.