Q2 2021 Ashford Inc Earnings Call
Greetings and welcome to the Ashford, Inc. Second quarter 2021 results conference call. At this time, all participants are in a listen only mode.
And and answer session will follow the formal presentation for anyone should require operator assistance during the conference. Please.
Press Star Zero on your telephone keypad as a reminder, this conference is being recorded.
My pleasure to introduce Jordan Jennings Investor Relations for Ashford. Thank you you may begin.
Good day, everyone and welcome to today's conference call to review results for Ashford for the second quarter of 2021 and.
And to update you on recent developments.
On the call today will be Jeremy Welter, President and Chief operating Officer, Derek Eubanks, Chief Financial Officer, and Eric Davis, Managing director and senior Vice President of portfolio management.
The result, as well as notice of the flexibility and this conference call on a listen only basis over.
For the Internet were distributed yesterday and a press release.
At this time, and let remind you that certain statements and assumptions and this conference call contain or are based upon forward looking information and are being made pursuant to the safe Harbor provision other federal securities regulations. So.
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 and the company's filings with the Securities and Exchange Commission.
Before looking statements included in this conference call are only made as of the date of this call.
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 and the company's earnings release and accompanying tables or schedules, which have been filed on form 8-K with the SEC on July 29, 2021 and May also.
And the Capex through the company's website at Www Dot Ashford, Inc. Dot com.
Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided and really also unless otherwise stated all reported results discussed in this call compare the second quarter of 2021 was.
The second quarter of 2020.
I'll now turn the call over to Jeremy.
Good morning, and welcome to our call to discuss our financial results for the second quarter of 2021.
I will begin by discussing the Ashford operations and strategy.
Derek will then review our financial results for the quarter and.
And so beautiful will provide an update regarding our products and services businesses.
After that we will open it up for Q&A.
I want to begin by thanking our associates for their relentless hard work during this unprecedented time.
I can't tell you how proud I am of our executive leadership team as well.
And then associates throughout the country.
And the long year for those of us and lifestyle the industry.
And we're now experiencing return and demand and the recovery is here and.
And we look for I am extremely optimistic about the future of our company.
We reported strong growth and adjusted EBITDA.
For the second quarter, driven by GSV Remington and Red.
We're excited to report positive adjusted EBITDA for the quarter for GSV.
Our business that was hit the hardest by the pandemic.
We have a lot of exciting developments to discuss on today's call.
EBITDA for key themes, we were going to highlight today are first.
We have stabilized Ashford trust.
And secured ample liquidity for that platform with runway for the future.
While braemar is back on offense.
And growing and continues to be cash flow positive at the corporate level.
Okay.
Second we continue to see strong results and our third party and growth initiatives.
Third we are ramping up our efforts at Ashford Securities.
And fourth we have a comprehensive asset light business.
And a hostile the industry and well.
And for growth going forward.
As the recovery and the lodging industry gained momentum we're starting to see positive trends and our operating results and we believe Ashford is uniquely positioned to outperform.
This is why back in May for the first time.
For the 18 year history of running public companies, we provided guidance to the market in terms of what we think the earnings potential is for our businesses over the next 3 and 5 year periods.
If you haven't had a chance to review the presentation can be found and the investors section of our website.
And at Www Dot Ashford, Inc. Dot com.
We're excited about the growth prospects for our businesses over the coming years and would love to discuss that with you in more detail if you're interested.
Ashford advisers, 2 publicly traded REIT platforms, Ashford Trust, and Braemar, which together own.
Site for 113 hotels with approximately 26000 rooms.
And had approximately $7.6 billion of gross assets as of June 32021.
For a market currently benefiting from its focus on the luxury segment and specifically its luxury resorts, which.
He has been the first demand segment to recover and had a solid second quarter operationally.
For a more also recently announced its first planned acquisition of the cycle with 138 room, Mr. C. Beverly Hills Hotel and Los Angeles, California.
As we discussed.
Owned quarters call Ashford Trust completed a $450 million strategic corporate financing during the first quarter that provides multiple years of liquidity.
Ashford Trust has also continued to grow as cash balance, which and which ended the quarter at $520 million.
And lastly, both reach and joined the U S small cap Russell 2000 index.
Broad market Russell 3000 index, and the Russell Microcap index, respectively.
Looking ahead, both platforms now have ample liquidity with both reached stabilized and performing well.
And then we believe both are well positioned for the continued recovery of the hotel industry and we remain focused on their future strategic objectives.
Remington and Premier continue to execute on their long term growth strategies.
Both companies are benefiting from the improved demand trends, we are seeing at our hotels.
And we continue to believe that these 2 businesses are well positioned to achieve growth with their third party business initiatives.
Both Remington and premier have solid reputation and the industry.
We're still in the early stages of the growth of our third party business, we have already seen strong momentum.
And since signing 9 New hotel management contracts with third party hotel owners and Premier signing 27, New third party contracts.
Looking ahead, we are extremely excited about the long term opportunity for third party growth for both Remington and Premier.
We formed Ashford securities and 2019 to be.
A dedicated platform to raise retail capital through financial intermediaries and broker dealer channels.
And in order to grow our existing and future platforms.
Our goal for Ashford Securities is to provide the market with highly differentiated alternative investment products.
Types of capital raise.
And may include but are not limited to non traded preferred equity non traded convertible preferred equity and non traded REIT common equity for future platforms.
Ashford Securities is ramping up nicely and has recently began raising capital for Braemar.
And his first month of cap rate and for Braemar and Ashford.
Securities raised over $2.1 million or <unk>.
<unk> non traded preferred stock.
This is fantastic.
Results for the first month of operations.
And we are excited to pursue a fresh source of capital that will grow us grow our all of our platforms over the long term.
With the goal of increasing shareholder value.
1 of the businesses, we are seeing strong growth as red hospitality.
Red hospitality and leisure is a leading provider of watersports activities and other travel and transportation services and U S. Virgin Islands key West, Florida, and most recently and Turkey and cake.
<unk>.
Red had a very strong quarter, driven by strong leisure demand and its markets and red anticipates that these markets will continue their strong performance and the coming months and addition read recently entered into an agreement with Ritz Carlton Turks and Caicos resort to provide services, including.
Leading water sports Beach and recreation operations.
As well as destination and transportation services to the property.
It's a great expansion opportunity for Red and.
And we're excited about the potential to grow this business at other properties and Turks and Caicos.
Additionally, the products offered by other <unk> and pure wellness continued to thrive.
Thrive in this environment and.
As the hotel industry strive to implement measures to provide a clean and safe environment.
Many hotels and guests are seeking automatic check ins alone and bypass the front desk with keyless entry and secure digital key capabilities.
The industry is also seeking enhanced sanitation and air purification standards within the GAAP.
We believe the benefits and opened key and pure wellness offer will position them well to achieve accelerated adoption and growth for hotels nationwide.
I'm also pleased that Ashford was added to the Russell Microcap index as part of the Russell annual reconstitution.
As the only publicly traded asset manager and <unk>.
<unk> room planner and the hospitality and Street. We believe the addition will expose ashford to a wider range of institutions and investors and that.
Allowing us to potentially broaden our shareholder base and increase our stocks liquidity.
Looking ahead, we believe we have a superior strategy and structure that is unique within the hospitality space.
<unk> provides starting to see the recovery and our industry and we're also seeing investment opportunities are very attractive unlevered returns.
And we did not see pre pandemic.
We believe there are 4 key areas of growth for Ashford.
The recovery of the hospitality industry and higher hotel revenues.
And.
Based on our assets under management.
Growth of our third party businesses.
And the acquisition or incubation of additional businesses.
For investors seeking exposure to and industry significantly impacted by the pandemic.
We believe Ashford is an attractive option.
I'll now turn the call over to.
And increase thanks.
Thanks, Jeremy.
Net loss attributable to common stockholders for the second quarter was $14.7 million.
Adjusted EBITDA for the second quarter was $10.7 million, which reflected growth of 235% over the prior year quarter.
The growth and adjusted EBITDA over the.
The prior year quarter was led by <unk>.
With an increase of $3.1 million.
<unk> with an increase of $2.8 million and red with an increase of $2.6 million <unk>.
Adjusted net income for the second quarter was $8.7 million and adjusted net income per share was $1.
Dollars 17.
As it relates to our advised Reits during the second quarter Ashford Trust continued to make significant progress in converting and preferred stock and the common stock and has exchanged approximately $15.2 million shares of its preferred stock representing approximately 67% of the share count prior to the exchanges into.
Approximately $10.2 million shares of common stock.
Also year to date Ashford Trust has raised approximately $478 million from the sale of shares of its common stock.
Braemar has raised equity capital of approximately $78 million from the sale of shares of its common stock year to date Braemar.
<unk> is.
So exchange a significant portion of its preferred stock for common stock to date Braemar as exchanged approximately 2 million shares of its preferred stock representing approximately 39% and for share count prior to the exchanges and to approximately 7.3 million shares of common stock.
Braemar <unk> also closed.
<unk> on a private placement of $86.5 million aggregate principal amount of its 4.5% convertible senior notes due 2026.
These capital raises and exchanges have helped shore up both reached liquidity and lower leverage.
In terms of financial results for our portfolio of companies.
Companies I'll provide some highlights and then Eric will discuss more details.
Lismore recorded revenue of $2.3 million and the quarter related to its agreements with Ashford Trust and Braemar to seek modifications and forbearance for the REIT debt.
This forbearance effort is mostly completed but listen we will continue to record this revenue.
Revenue over the remaining term of the agreement, which expires in April of 2022.
<unk> and realized hotel management fee revenue of $6.5 million and the quarter net loss attributable to the company of zero point $5 million and adjusted EBITDA of $3.4 million.
For the second quarter Premier had design and construction fee revenue of $1.9 million net loss attributable to the company of $2.9 million and adjusted EBITDA of negative zero point $4 million.
Open key finished the quarter with 255 hotels under.
Her contract, which compares to 236 hotels under contract at the end of the first quarter.
This growth was driven by a significant shift and guest preferences with utilization of digital keys, increasing by 182% and the second quarter over the prior year quarter with the majority of guests from April through June.
Opting to use the digital key when offered.
<unk> also reported revenue growth of 63% over the prior year quarter.
Financial results for <unk> for the second quarter included revenue of $9.5 million net.
Net loss attributable to the company of $1 million and.
June that EBITDA.
Positive $1 million.
This is the first quarter of positive adjusted EBITDA for <unk> since the onset of the pandemic.
As of June 32021, we had $7.4 million fully diluted shares of common stock and units, which included $4.2 million common shares associated.
And adjusted with our series D convertible preferred stock.
We had $2.8 million common shares issued and outstanding 0.2 million common shares earmarked for issuance under our deferred compensation plan and the balance primarily comprised of restricted stock.
I will now turn the call over to Eric.
Thank.
Associate it.
We are pleased to provide updates on our products and services businesses and we are encouraged by their forward momentum established during the second quarter of the year.
Our strong results this quarter demonstrate we are delivering upon the strategies and objectives previously outlined.
Namely driving third party.
Thank you Dan growth hiring sales leaders and creating a deep selling culture and.
In short we believe the strong performance and the second quarter is setting the stage for future growth.
Today, I will spend the majority of our time talking about the quarter as a whole and it is worth noting that the second quarter revenue generated by the business.
Mrs. We are about to discuss.
And was 185% higher than the prior year quarter.
We are starting to see fruit from some of the sales focused initiatives established and late 2020.
I would compare it to planting seeds, which our portfolio companies have grown and now begin to harvest.
Before starting the process.
And again.
These initiatives are fueling and acceleration and the growth and quality of the company's earnings.
As a reminder, our mandate is to invest and market leading businesses with seasoned management teams and identify growth opportunities supported by enticing macro dynamics to.
To explain this strategy more full.
Fully.
Our products and services Division is a unique investment strategy and the hospitality industry, where through a multi pronged approach, we aim to accelerate growth and create shareholder value through rigorous industry research and the implementation of best operating practices and the execution of bolt on acquisitions.
We are also able to utilize our extensive relationships and refer these businesses to our advised Reits and sharing their hotels received best in market service with best in market pricing.
The first business I'd like to discuss is red hospitality and leisure a leading provider of water sports activities and other travel services.
And the U S Virgin Islands, key West and Turks and Caicos.
I'd like to call particular attention to the month of June were red generated $2.6 million of revenue and approximately $903000 of adjusted EBITDA.
Both of these figures represent the highest month ever recorded and.
And the history of the company.
Prior to June both April and May respectively were record breaking revenue months.
Recently read moved into the Ritz, Carlton Turks, and Caicos and began providing activities and services to guests.
We are proud to begin our operations at this beautiful new property as.
The Reds first hotel contract outside the U S and U S territories and are excited about the future prospects for this region.
With pent up demand being released and tourism activity and Reds markets remaining high and we.
We anticipate red will continue delivering strong results.
<unk> has an exciting future.
And with several near term organic and inorganic growth initiatives and we look forward to keeping you updated on their progress.
And other business that continues to grow as open key which provides Bluetooth enabled lock upgrade modules. These modules are incorporated into existing locks and a fraction of the cost of replacing and entire lock system.
Resulting in significant savings to the hotel owners.
<unk> continues to capitalize on growing customer preference for our mobile contactless check in experience.
The company posted an impressive second quarter, which included key delivery growth of 182% over the prior year period.
Some 19, new hotel contracts.
And while open key operating metrics continued to be robust the second quarter was headlined by going live at several for seasons properties.
We anticipate going live at additional properties and the 4 seasons system and the third quarter.
We also have successfully completed.
And another phase of our agreement with Wyndham hotels, and resorts and are now focused on adding more wyndham branded properties.
For both of these agreements open key is providing mobile room key services through the respective brand App and we continue to discuss similar agreements with other large hotel brands.
We.
The highlight at about these partnerships and look forward to providing updates and the coming quarters.
Remington is a dynamic hotel management company, providing best in class service and expertise to hotels across the country.
Hotel operations continued to stabilize with each passing week and to satisfy demand Remington has.
<unk> hired half of its previously furloughed employees and has an additional 687 current job openings.
CEO Sloan Dean and his team were awarded 1 verbal and 2 signed third party management agreements and the second quarter all of which are expected to begin soon.
We look forward to a robust.
<unk> hundred 21 recovery for Remington as they focus on adding new third party contracts to their roster of 79 hotels across 15 brands and 23 States and Washington D C.
Premier provides comprehensive and cost effective design development architecture procurement and project management.
Trusses.
The company continues to add staff in order to support its growth objectives..1 major accomplishment during the second quarter was premier securing its first student housing project with a top 5 player in this space.
By focusing on penetrating both the multifamily and student housing markets premiers Prime.
And then <unk> delivering big wins from third party contracts.
For your second quarter was also highlighted by 1 new multifamily contract and for new hospitality contracts and addition to the previously mentioned student housing contract collectively totaling $540000 of potential fees.
I'm talking with its new sales leaders in place and a laser focus on attacking both the multifamily and student housing markets. We anticipate strong performance from Premier as capital investment Boomerangs and response to recovering markets and companies begin to deploy capital.
Premier has an exciting future and is exploring.
Several inorganic growth opportunities and we look forward to keeping you updated on their progress and future quarters.
<unk> is a leading single source solution for meeting and event needs with an integrated suite of audiovisual services, including show and event services hospitality services creative.
Flooring services and design and integration.
While <unk> reported positive adjusted EBITDA for the second quarter. It reported $3.9 million of revenue just for the month of June which was 164% higher than the trailing 11 month average.
In addition to and.
<unk> focus on operations to return to profitability. The company has continued sales efforts as it was verbally awarded 2 new in house AB contracts, which we believe should total $1.3 million of annual stabilized revenue.
The upward trend and hospitality revenue for the year is another bright spot.
And and Tech savvy.
Hospitality revenue was $2.4 million and June up 331% since March.
Sales executives at the company have been hard at work trying to meet the surging influx of demand as groups begin to return to in person meetings events and conferences.
Spot, we are optimistic for a continued uptick and sales opportunities as the pipeline for the remainder of 2021 rose 100% for March to the end of the quarter.
Pure wellness provides wellness applications designed to eliminate viruses bacteria and other contaminants within guestrooms opposite.
And public spaces.
<unk> second quarter is highlighted by 12, new contracts for its recently launched pure office technology.
Through the first half of 2021 peer office is now and 25 locations. This technology uses advanced surface protection and purified air to eliminate 90.
$9, 99% of contaminants.
Employees are increasingly returning to their offices and pure office will give employers and employees alike comfort and returning to a safe and healthy workplace.
Lastly, I would like to discuss Ashford securities our retail capital raising platform.
Jay Steigerwald.
Offices team continued to build out the organization and they recently executed the first closing of the Braemar series E and M non traded preferred equity offering to.
To date 10, selling agreements have been signed and the series E and M offering has raised over $2.1 million.
Separately.
And his Ashford Securities continues to work on additional investment products that can be sold through the broker dealer channel, allowing us to continue to grow our assets under management and we hope to have more details around those efforts and the coming quarters.
We continue to believe there is substantial opportunity for Ashford securities to offer differentiated.
<unk> product structures and strategies to retail investors and short we're excited to pursue a fresh source of retail capital that will help us grow all our platforms over the long term with the goal of increasing shareholder value.
That concludes our prepared remarks, and we will now open up the call for Q&A.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star 1 on your telephone keypad.
For confirmation tone will indicate your line is and the question queue.
You May press star 2 to remove your question from the queue for.
And for participants using speaker equipment, and it may be necessary to pick up your.
Your handset before pressing the star keys, 1 moment, please while we poll for your questions.
Our first question is come from the line of Bryan Maher with B Riley. Please proceed with your questions.
Good afternoon, so I wanted.
Focus on kind of the lodging component because those numbers tend to flow.
Lamar Braemar and Ashford models as you know so that and on a day.
Yeah, we were surprised by the revenue increase and this quarter can you talk about.
What is the pace of acceleration.
And might be over the next 12 months and how long do you think it takes to get back in 2019 levels.
And Brian This is Jeremy I think that's a difficult question for us to answer what I can tell you is that a week over week.
And I'm still approving.
Moving.
Weekly payables for that company by the way and so as our submitted I get it and updated probability adjusted revenue outlook by quarter.
And for that for the upcoming quarters and.
And there is pretty calm and every week I was getting at and their revenues for coming down.
There are more cancellations and every week I get.
That update more and more revenues are coming and and what I'm surprised about is b and the quarter for the quarter revenue pick up and we're getting.
We received a lot of that and Q2, and we were very surprised and pleased with the revenue that we generate and keep you and.
We continue to see that ramp up.
It's still slower than I would've liked to see.
But it continues to accelerate what we've done though is we've done a really good job of maintaining.
Really attractive margins as we ramp the company back up.
And keep the cost structure.
Much more efficient.
And then.
For what it was pre pandemic and certainly when we bought the company.
And you recall once we once we acquired and clothes and GSV, we put together a lot of cost.
Optimization plans if were still in process and we never really get the full benefit of it until 2 early today.
But I.
I think we do see a good outlook.
Still very difficult to know.
How how that advances I think that if you listen to <unk> call earlier today group pace is basically flat for next year, although that's a decrease and room nights, but.
But still it's flat year over year.
And so if we end up with I'm, sorry versus 2019, if we end up anywhere close to 2019 levels and this company and ramps up very very quickly, but I would guess, it's probably a 2023 to 2020 for recovery to get to pre pandemic levels and part of guests.
Great and as it relates to <unk>.
<unk>.
And maybe even Remington and how hard is it bringing employees back I mean, we've heard you know news stories and the media.
And how so many hospitality employee and moved on to other jobs or careers.
Are you seeing that and what type of incentives you have to make and bring people in it.
Yeah, I don't I don't think I want to disclose or incentives that were doing and that varies by management company and and location, but we certainly are doing those we're doing incentives were there actually are signing bonuses to bring associates back we're definitely having wage pressure and many markets where we are.
Ah proactively.
And increasing the wage scales to attract associates, but specifically as it relates to Remington and I think I'd put it yesterday that were about 10% of our positions are open which is.
Unusually high for us.
And so it continues to be a challenge it continues to be a challenge and bring such as back to work.
And we're just doing the best we can I don't think it's a pervasive issue in terms of having a closeout rooms, because we can't serve some but that has happened certainly.
As it relates to <unk>.
We've had some of our techs and left the industry.
Nature of that industry are they the audiovisual industries that.
A lot of the associates are kind of the end of the Turkey.
<unk> services side, where they want to put on these productions and they kind of live and breathe. It is is.
As a passion.
And so while it still is.
And challenge I would say, it's probably a little bit less of a challenge right now for JCB is versus maybe the hotel management side.
Okay. Thanks.
Last for me on Red.
And I don't think maybe anybody on this call realized you know how quickly and profitably that could grow.
But can you give us your internal.
Internal thoughts on how big that can be for Ashford Inc. Over the next couple of years and what type of costs are going to be associated with growing that business and that's all for me.
Yeah, Yeah. So.
And our presentation.
We put out of 2025 estimate of 9 million.
And adjusted EBITDA and.
And.
I think that we can.
Well exceed that if we're able to do some acquisitions.
And we have a good amount of acquisitions and our pipeline for red there that could really.
And the ramp that that company up pretty significantly.
So I think it could easily be a 20 plus million or even a company. After we do some bolt on acquisitions and in terms of the cost to grow.
It usually is.
Typically a 30% cash on cash return for.
For most of our investment opportunities.
And in some cases it's.
It's a 50% plus I would say the Turks and Caicos will prove out to be a 50% plus cash and cash return.
After we get that property ramped up and so it's a very attractive way for us to invest capital.
And do believe we have.
Our proprietary operating platform that.
It's very unique and very scalable.
From not only from a from a service perspective from an operating perspective from a standard perspective, but then also from an e-commerce and revenue generation perspective, we're very efficient and how we get.
Cost effectively our passengers and our boats and we get them to return as they come in and stay and the resorts that we service. So I think we got a great business model, we've got a great team and I am very optimistic that we will continue to grow that platform and.
We'll continue to be impressed with the results and we generate.
Great. Thank.
And.
As a reminder, you can press star 1 if you would like to ask a question.
Our next questions come from the line of Tyler Batori with Janney. Please proceed with your question.
Good morning, appreciate you, taking my questions and congratulations on the on the strongest.
Long results here and first.
First question I have is a multi part question.
In terms of the and vessels engaged and that you put out last month.
And some long term targets and I think certainly.
And the notable for that for.
For the growth, but also the first time, if you've ever done something like this.
So can you touch more.
Or if you could on the on the process behind coming up with some of those financial targets and that $85 million of EBITDA by 2025 mm and keeps tremendous amount of growth how.
How much confidence do you have and that number how conservative Mike that estimate and up being.
And what sort of macro backdrop do you think is necessary to achieve that target.
Yes sure.
I think just taking a step back.
I think that.
We learn and we understand we live and breathe this business.
I'm very involved with all of our hotel operations and variable with all our teams.
And all our companies.
It is a passion for all of US and we're very excited about what we're doing and what we're creating here and.
And what we felt like is it and investors knew what we know.
In terms of what we can do and this platform.
And then our stock should be trading up.
Our higher than what it was before you certainly filed his presentation I think there's still a good amount of upside where we train a day.
If you if you project out what we think we can do from a from an earnings power perspective, and then and discount that back to the present value and reasonable trading multiples.
There.
And of upside and the stock, but but that's for investors to choose whether or not they agree with that but the but we felt like if if we could articulate the opportunity that we have at this platform debt that was good service, we can do for our shareholders existing shareholders and future shareholders because.
We're just getting much business has been hit so hard by the pandemic debt.
It's hard for a lot of people to see a path to recovery the way, we see it and.
And in terms of where you want to talk about how we layered this and and projected it we went by each 1 and the companies.
And we have a very detailed model.
You know this through and projects the assets under management, we have at our advisory platforms and what amount of capital. We can think we can generate at Ashford securities and and and then when we think we can do from a third party perspective.
And so we did that we you know we start with kind of looking at 2 parts of the business and the AUM and third party, but then.
And we do that all in and individual basis by company by company. So there's a good amount of detail.
Behind all of the information, we laid out and the presentation and I think we did a decent job given some of the assumptions.
But it is a combination other recovery.
We do believe is going to happen lodging.
Always comes back and proves to come back and Pat and in fact, if you look at previous recoveries it tended to come back faster than what industry estimates for <unk>.
And so I think we're taking a reasonable outlook and that recovery and then reasonable projections that we believe are readily achievable.
Which is what we.
Wanted to share it with the with the community because this is the first time we've done it.
And I don't think were sticking your neck out I think that we have a high level of confidence that if we execute the way. We believe we will execute and the market rebounds, a way that we believe it will rebound that we can meet or exceed those numbers and my hope is is that.
This is something we keep our going forward at least for the for the time being and update it and I plan to provide an update and our Investor day that we have mentioned in previous calls and we're now in October and hopefully the numbers maybe are higher we will have to see I can tell you that the second quarter, we generated today.
With a nice surprise to us we didn't think it would be we'd have the level of EBITDA and we were able to achieve so.
I think we're confident that we can.
Debt that we're being prudent in terms of our outlook.
Okay excellent I appreciate that detail and.
And then.
A follow up question.
A key part of the growth story here is the third party business. So I think this is probably something that's worth asking each quarter and you're obviously, you're making a lot of progress on that but just help us put into perspective.
And you know how the strategy is going versus your expectations.
And you know any change and the opportunity set versus 90 days ago, and when you look at the cost structure.
At Remington and and Premier and.
And you sort of expectation that youre going to need to hire some more people as you start to ramp up that third party business.
Yes.
So we just recently added 1 other.
And your memory and the business development side.
So if you look at the.
Yeah look I think we're estimating.
$6 million of third party revenue in 2020.5.
We were <unk>.
Strategically and what.
And I think is.
And.
You know reasonably conservative on that estimate.
And I would be disappointed if that's all we generated in 2020.5 so my expectation is that the team does a much better job day to attract a.
More contracts and then what we're projecting out and we certainly have been.
Very pleased with the progress we've had so far and I think we've announced that we've had 9 sign contracts and we've got a good amount of it and have also been verbally awarded but are and the contracting phase.
And so we're just starting from for nothing during the time and the pandemic I think we're getting a lot of traction and Remington.
And I think.
I don't think that the revenue components, certainly is going to be a big part of what we've.
And on the $85 million of EBITDA, and so hopefully there's some upside of that.
Moving onto Premier, we projected $7 million and third party revenue.
Interest in there.
There is debt.
Yeah.
And I'm surprised that we have 27 contracts, so far and signed up and we also had some major renovations that are repeat business, which I think is phenomenal that we've already got customers who are already so pleased with what we're doing from a.
And from a renovation perspective that they've hired us.
On a second 1 and theyre good fees.
And and great projects for Premier and so.
As we continue to kind of expand out I think that there's a good amount of upside and if we did $7 million and and third party revenue and 2025 I'd be disappointed with the team and I know the team we'd be disappointed with themselves.
The other.
And as interesting as debt.
Tremendously expanded.
The total addressable market I think that we've kind of put it out initial and a presentation, mainly geared towards hospitality, but now that we're in multifamily and Werent student housing those are huge markets and we're going to get them.
A fraction and both and so.
And when we originally started this campaign we were just focused on hospitality. We this has been a very pleasant surprise debt.
And have been able to find ourselves and multifamily and student housing, which again are just massive opportunities for us.
In terms.
And of Red <unk> proven we can grow third party.
No.
I am excited and we're able to get that contract and Turks and Caicos with Ritz Carlton and that just is.
<unk> for the confidence and.
And our ability to service the resort St. Thomas Obviously, we own 1 and St. Thomas we don't own the 1 and.
And Turks and Caicos and they sought red because they wanted to provide the same experience for the customer is there and I think there'll be other opportunities and other markets and other resorts to expand.
Without acquisition and then we also have the ability to acquire and and the same thing with JCB that the business was 100%.
And third party when we bought it and we have proven that we can grow that business third party I think that theres, a tremendous amount of opportunity I think we're very uniquely positioned.
Within within that space, and the second largest now and being much smaller than the primary provider.
And so actually during the.
A pandemic, we picked up some really nice pieces of business, we have only lost 1 contract.
And the hospitality segment, but we picked up I think for 5 nice contracts nice sized contracts that are very exciting for us and.
As it stands right now there's just not a lot of momentum because a lot of the existing hotels.
Or not really bidding out audiovisual services right now because they're just getting ramped back up and the last thing on their mind is mainly provider, but as that and that starts to occur I do think we will see a lot more additional growth in terms of adding new contracts and then certainly works that we're doing for Michelle services perspective. So.
And I think it is the third party side.
I think that there is a lot of opportunity over the next 5 years. So we're excited about it.
Okay, Great. That's all for me thank you for the detail.
Okay.
Thank you and there are no further questions at this time I'd like to hand the call.
And back over to management for any closing comments.
Yeah. Thank you for joining today's call and we look forward to speaking with you again next quarter. And addition, we will be looking to host an investor day, and New York on October 12, and will provide additional detail later.
Yeah.
Yeah.
Thank you that does conclude today's teleconference. You may disconnect your lines at this time.
Have a great day.