Company Performance - RMR Group reported quarterly earnings of $0.28 per share, missing the Zacks Consensus Estimate of $0.30 per share, and down from $0.39 per share a year ago, representing an earnings surprise of -6.67% [1] - The company posted revenues of $166.67 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 22.23%, and down from $217.75 million year-over-year [2] - RMR Group has not surpassed consensus EPS or revenue estimates over the last four quarters [2] Stock Performance - RMR Group shares have declined approximately 29.9% since the beginning of the year, compared to a decline of -3.9% for the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $0.35 on revenues of $204.06 million, and for the current fiscal year, it is $1.35 on revenues of $849.39 million [7] Industry Outlook - The Real Estate - Operations industry, to which RMR Group belongs, is currently ranked in the bottom 36% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact RMR Group's stock performance [5]

PART I. Financial Information [Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements as of March 31, 2025, including balance sheets, income statements, cash flows, and related notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities decreased as of March 31, 2025, driven by reductions in related party receivables and reimbursable payables Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$649,741** | **$700,494** | | Cash and cash equivalents | $137,186 | $141,599 | | Due from related parties | $95,670 | $143,380 | | Investments | $36,178 | $23,733 | | **Total Liabilities** | **$234,816** | **$281,077** | | Reimbursable accounts payable and accrued expenses | $53,152 | $90,444 | | Secured financing facility, net | $41,084 | $41,109 | | **Total Equity** | **$414,925** | **$419,417** | [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Revenues and net income declined for both the three and six-month periods ended March 31, 2025, primarily due to lower reimbursable expenses and management fees Income Statement Highlights (in thousands, except per share amounts) | Metric | Q2 2025 (Three Months) | Q2 2024 (Three Months) | H1 2025 (Six Months) | H1 2024 (Six Months) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$166,668** | **$217,947** | **$386,144** | **$479,644** | | Management services | $44,382 | $48,460 | $90,565 | $93,554 | | Total reimbursable costs | $119,092 | $168,103 | $289,008 | $383,256 | | **Operating Income** | **$7,560** | **$12,127** | **$20,948** | **$22,745** | | **Net Income** | **$7,694** | **$12,713** | **$21,802** | **$28,239** | | Net Income Attributable to RMR Inc. | $3,616 | $5,862 | $9,996 | $12,859 | | **Diluted EPS** | **$0.21** | **$0.34** | **$0.58** | **$0.75** | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations increased for the six months ended March 31, 2025, while significantly lower investing outflows resulted in a smaller overall decrease in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $37,994 | $35,016 | | Net Cash from Investing Activities | ($11,132) | ($80,644) | | Net Cash from Financing Activities | ($31,275) | ($30,253) | | **Decrease in Cash** | **($4,413)** | **($75,881)** | | Cash at End of Period | $137,186 | $192,108 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail significant accounting policies, the acquisition of RMR Residential, new debt facilities, and key related party transactions - On December 19, 2023, RMR LLC acquired MPC Partnership Holdings LLC (now RMR Residential), subsequently selling an acquired property in January 2025 for **$9.8 million** and realizing a **$445 thousand gain**[32](index=32&type=chunk)[33](index=33&type=chunk) - In January 2025, the company entered into a new **$100 million senior secured revolving credit facility** to enhance financial flexibility for private capital initiatives, with no amounts outstanding as of April 30, 2025[80](index=80&type=chunk) - In April 2025, the company acquired a 77% leased community shopping center in Chicago, IL for **$21.25 million** in an all-cash transaction to expand its private capital business[135](index=135&type=chunk) Quarterly Dividends Declared (per common share) | Declaration Date | Paid Date | Amount per Share | | :--- | :--- | :--- | | 10/16/2024 | 11/14/2024 | $0.45 | | 1/16/2025 | 2/20/2025 | $0.45 | | 10/12/2023 | 11/16/2023 | $0.40 | | 1/11/2024 | 2/15/2024 | $0.40 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a decline in management services revenue due to market conditions and highlights a strategic focus on growing its private capital business [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Revenues and operating income decreased for the three and six-month periods due to lower fees from Managed Equity REITs, partially offset by the RMR Residential acquisition Change in Operating Results (Q2 2025 vs Q2 2024, in thousands) | Line Item | Q2 2025 | Q2 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Management services revenue | $44,382 | $48,460 | ($4,078) | (8.4)% | | Total revenues | $166,668 | $217,947 | ($51,279) | (23.5)% | | Total expenses | $159,108 | $205,820 | ($46,712) | (22.7)% | | Operating income | $7,560 | $12,127 | ($4,567) | (37.7)% | | Net income attributable to RMR Inc. | $3,616 | $5,862 | ($2,246) | (38.3)% | - The decrease in Q2 management services revenue was primarily due to a **$1.7 million decline** in base business management fees from Managed Equity REITs and a **$1.8 million drop** in construction supervision revenues[157](index=157&type=chunk) Change in Operating Results (H1 2025 vs H1 2024, in thousands) | Line Item | H1 2025 | H1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Management services revenue | $90,565 | $93,554 | ($2,989) | (3.2)% | | Total revenues | $386,144 | $479,644 | ($93,500) | (19.5)% | | Total expenses | $365,196 | $456,899 | ($91,703) | (20.1)% | | Operating income | $20,948 | $22,745 | ($1,797) | (7.9)% | | Net income attributable to RMR Inc. | $9,996 | $12,859 | ($2,863) | (22.3)% | - For the six-month period, the decrease in management services revenue was driven by a **$3.7 million drop** in construction supervision fees and a **$2.8 million decline** in base business management fees, partially offset by **$3.2 million in revenue growth** from the MPC acquisition[175](index=175&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with $137.2 million in cash and a new $100 million credit facility to fund operations and growth - As of March 31, 2025, the company had cash and cash equivalents of **$137.2 million**[191](index=191&type=chunk) - A new **$100 million senior secured revolving credit facility** was established in January 2025 to support growth in the private capital business; as of April 30, 2025, no amount was outstanding[194](index=194&type=chunk) - Net cash from operating activities increased to **$38.0 million** for the six months ended March 31, 2025, up from $35.0 million in the prior year period, reflecting favorable working capital changes[195](index=195&type=chunk)[17](index=17&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market exposures are interest rate risk on its floating-rate debt and credit risk within its loan portfolio - The company is subject to **interest rate risk** on its floating-rate debt and new revolving credit facility, both of which are based on SOFR[198](index=198&type=chunk)[199](index=199&type=chunk) - The company is exposed to **credit risk** from borrowers in its 'loans held for investment' portfolio, which it seeks to mitigate through a comprehensive underwriting and monitoring process[198](index=198&type=chunk) - A substantial amount of cash is invested in money market bank accounts, with some balances **exceeding FDIC insurance limits**, but the company believes this does not pose a material risk[201](index=201&type=chunk) [Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - Management concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2025[205](index=205&type=chunk) - There were **no changes in internal control** over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[206](index=206&type=chunk) PART II. Other Information [Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) The company reports no material changes to the risk factors previously disclosed in its 2024 Annual Report on Form 10-K - There have been **no material changes** to the risk factors from those previously provided in the 2024 Annual Report[212](index=212&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased shares during the quarter to satisfy tax withholding obligations related to vested employee stock awards Issuer Purchases of Equity Securities (March 2025) | Calendar Month | Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | March 1 - March 31, 2025 | 1,377 | $16.70 | - The share repurchases were conducted to **satisfy tax withholding and payment obligations** in connection with the vesting of Class A Common Share awards[216](index=216&type=chunk) [Other Information](index=47&type=section&id=Item%205.%20Other%20Information) The Board adopted the RMR Residential Promote Program, a new long-term incentive plan for senior employees involved with RMR Residential - The Board adopted the **RMR Residential Promote Program** on May 2, 2025, to incentivize senior employees and enable them to participate in the financial success of RMR Residential[217](index=217&type=chunk) - Participants will be granted interests in RMR Employee Carry Holdco LLC, which are subject to a **four-year service-based vesting schedule** and certain restrictive covenants[218](index=218&type=chunk) - The Compensation Committee approved allocations for named executive officers, including up to **6.5% of aggregate participants' interests** for the CEO and CFO in each RMR Residential investment[220](index=220&type=chunk) [Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including material contracts, equity plans, and required certifications - A list of exhibits filed with the report is provided, including corporate governance documents, material contracts, and required certifications[222](index=222&type=chunk)

THE RMR GROUP Financial Results and Supplemental Information THE RMR GROUP SECOND QUARTER FISCAL 2025 May 6, 2025 Exhibit 99.2 Table of Contents QUARTERLY RESULTS | The RMR Group Inc. Announces Second Quarter Fiscal 2025 Financial Results. | | --- | | Second Quarter Fiscal 2025 Highlights | | FINANCIALS | | Key Financial Data ... | | Adjusted Net Income Attributable to The RMR Group Inc. Bridge | | AUM by Source | | Management and Advisory Services Revenues by Source | | Well-Covered Dividend | | GAAP Resul ...

Core Viewpoint - The market anticipates a year-over-year decline in RMR Group's earnings due to lower revenues, with a focus on how actual results will compare to estimates [1][3]. Earnings Expectations - RMR Group is expected to report quarterly earnings of $0.30 per share, reflecting a year-over-year decrease of 23.1%, and revenues are projected to be $214.32 million, down 1.6% from the previous year [3]. - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analyst expectations [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model shows a positive Earnings ESP of +1.70% for RMR Group, suggesting analysts have recently become more optimistic about the company's earnings prospects [10]. - A positive Earnings ESP is a strong indicator of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [8]. Historical Performance - RMR Group has not been able to beat consensus EPS estimates in any of the last four quarters, with the last reported quarter matching expectations exactly at $0.35 per share [12][13]. Investment Considerations - While an earnings beat may not solely dictate stock movement, betting on stocks expected to exceed earnings expectations can enhance the likelihood of success [14][15]. - RMR Group is viewed as a compelling candidate for an earnings beat, but investors should consider other influencing factors before making investment decisions [16].

Group 1 - The RMR Group Inc. (NASDAQ: RMR) is identified as an attractive stock amidst falling market prices, showing resilience against reciprocal tariffs [1] - The author expresses a value investing approach, focusing on emerging markets and seeking low-risk, high-uncertainty investment opportunities [1] - The investment philosophy is influenced by notable economists and authors, indicating a shift towards Austrian economic principles in future writings [1] Group 2 - The article emphasizes the importance of maintaining an investment journal to track successes and learn from failures [1] - The author graduated from NYU Stern with a Bachelor's in Business and a concentration in Finance, highlighting a solid educational background in finance [1]

Financial Data and Key Metrics Changes - The RMR Group Inc. reported adjusted net income of $0.35 per share and distributable earnings of $0.46 per share for Q1 2025, with net income at $0.38 per share [7][20] - Adjusted EBITDA for the quarter was approximately $21 million, with expectations for the next quarter to be around $20 million [7][24] - Recurring service revenues decreased to $47.3 million, down approximately $700,000 sequentially, with expectations of around $46 million for the next quarter [21][22] Business Line Data and Key Metrics Changes - Recurring cash compensation was $42.6 million, reflecting a decline of approximately $1.5 million sequentially due to headcount actions and technology investments [23] - Recurring G&A expenses were $11.1 million, with expectations to remain at or slightly below this level in the next quarter [24] Market Data and Key Metrics Changes - The company has established a $100 million line of credit to enhance liquidity for growth initiatives, with nearly $150 million in cash on hand and no outstanding corporate debt [8][25] - The company is optimistic about the commercial real estate market improving in 2025, with a focus on residential, credit strategies, and development initiatives [9][10] Company Strategy and Development Direction - The RMR Group Inc. aims to raise a committed fund focused on residential investments and is currently executing a value-add business strategy on newly acquired properties [12][11] - The company is exploring development opportunities within its portfolio, including redeveloping obsolete structures into industrial or multifamily residential spaces [38][42] Management's Comments on Operating Environment and Future Outlook - Management believes the cyclical bottom for commercial real estate is likely behind, with improving fundamentals across most real estate sectors [8][9] - The company expects to see a return to growth in earnings metrics after the upcoming quarter, despite seasonal headwinds impacting Q1 results [65][76] Other Important Information - The company executed $1.8 billion in financings, including a debt exchange transaction related to OPI's 2025 debt maturity [15] - Seven Hills Realty Trust achieved a total shareholder return of over 12%, outperforming its industry benchmark [18] Q&A Session Summary Question: Can you elaborate on the RMR residential JV investments and the pipeline? - Management indicated a gross investment of about $200 million in residential joint ventures, with expected returns in the mid-teens and a target of $500 million to $1 billion in total investments for fiscal 2025 [31][32] Question: What are the development opportunities mentioned? - Management highlighted opportunities to redevelop older structures into industrial or multifamily residential spaces, with significant projects underway in Nashville and Boston [38][40] Question: What is the likelihood of utilizing the revolver in 2025? - Management stated there is less than a 50% chance of drawing on the revolver, as current cash balances are sufficient for planned investments [82][84] Question: What is the outlook for EBITDA margins? - Management aims to return EBITDA margins to the 50% range, currently impacted by the residential platform's performance [74][75] Question: How will the company approach residential investments moving forward? - Management expects to pursue both joint venture deals and potential on-balance sheet investments, with a strong bias towards joint ventures [88][90]

The RMR Group Inc. Announces First Quarter Fiscal 2025 Financial Results February 5, 2025 THE RMR GROUP INC. ANNOUNCES FIRST QUARTER FISCAL 2025 FINANCIAL RESULTS Newton, MA (February 5, 2025). The RMR Group Inc. (Nasdaq: RMR) today announced its financial results for the fiscal quarter ended December 31, 2024. Dividend RMR has declared a quarterly dividend on its Class A Common Stock and Class B-1 Common Stock of $0.45 per share to shareholders of record as of the close of business on January 27, 2025. Thi ...

Core Insights - RMR Group reported a revenue of $219.48 million for the quarter ended December 2024, reflecting a 16.1% decline year-over-year and a significant miss of 16.71% against the Zacks Consensus Estimate of $263.5 million [1] - The company's EPS was $0.35, down from $0.49 in the same quarter last year, aligning with the consensus EPS estimate, indicating no surprise in earnings [1] Revenue Breakdown - Management services revenue was $46.18 million, slightly below the average estimate of $48.63 million, representing a year-over-year increase of 2.4% [4] - Total management, termination, incentive, and advisory services revenues amounted to $47.39 million, compared to the two-analyst average estimate of $50.05 million, showing a year-over-year increase of 1.9% [4] - Total reimbursable costs from other reimbursable expenses were reported at $148.56 million, significantly lower than the average estimate of $190.50 million, marking a year-over-year decline of 24.2% [4] - Advisory services revenue was $1.14 million, slightly below the average estimate of $1.18 million, with a year-over-year increase of 1.4% [4] Stock Performance - RMR Group's shares have returned -2.1% over the past month, contrasting with the Zacks S&P 500 composite's increase of 1.7%, indicating potential underperformance in the near term [3]

Core Viewpoint - RMR Group reported quarterly earnings of $0.35 per share, matching the Zacks Consensus Estimate, but down from $0.49 per share a year ago, indicating a decline in profitability [1] - The company missed revenue expectations, posting $219.48 million, which was 16.71% below the consensus estimate and down from $261.67 million year-over-year [2] Financial Performance - RMR Group has not surpassed consensus EPS estimates in the last four quarters, indicating consistent underperformance [2] - The company’s shares have decreased by approximately 8% since the beginning of the year, contrasting with the S&P 500's gain of 2.7% [3] Future Outlook - The company's earnings outlook is critical for assessing future stock performance, with current consensus EPS estimates at $0.36 for the next quarter and $1.51 for the current fiscal year [7] - The Zacks Rank for RMR Group is currently 5 (Strong Sell), suggesting expected underperformance in the near future [6] Industry Context - The Real Estate - Operations industry, to which RMR Group belongs, is currently ranked in the bottom 16% of over 250 Zacks industries, which may negatively impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, emphasizing the importance of monitoring these revisions [5]

Acquisition and Growth - RMR Inc. completed the acquisition of MPC Partnership Holdings LLC for a total consideration of $99,021, enhancing its residential capabilities[133] - Management services revenue increased by $1,089, or 2.4%, primarily due to growth from the acquisition of MPC[2] - Reimbursable compensation and benefits rose by $4,962, or 29.5%, due to a full quarter of RMR Residential's operations following the MPC acquisition[3] Financial Performance - Total revenues decreased by $44,363, or 17.0%, from $261,697 in Q4 2023 to $219,476 in Q4 2024[1] - Operating income increased by $2,770, or 26.1%, from $10,618 in Q4 2023 to $13,388 in Q4 2024[1] - Net income attributable to The RMR Group Inc. decreased by $617, or 8.8%, from $6,997 in Q4 2023 to $6,380 in Q4 2024[1] Market Trends and Economic Outlook - The Managed Equity REITs' total market capitalization decreased from $18,588,598 in 2023 to $17,105,736 in 2024, reflecting a decline of approximately 8%[136] - The company anticipates that the U.S. economy is likely headed for a "soft-landing," with inflation possibly having peaked, which may influence future investment decisions[131] - Special servicing rates for commercial mortgage-backed securities (CMBS) and CRE collateralized loan obligations have continued to increase, indicating ongoing challenges in the commercial real estate sector[132] Cash Management and Financial Flexibility - Cash and cash equivalents increased from $141,599 as of September 30, 2024, to $147,580 as of December 31, 2024[1] - The company entered into a $100,000 senior secured revolving credit facility to enhance financial flexibility[1] - The company maintains a substantial amount of cash in money market bank accounts, primarily in U.S. banks, with some balances exceeding FDIC insurance limits, mitigating material interest rate risk[172] Debt and Interest Rate Exposure - As of December 31, 2024, the company has floating rate debt governed by a master repurchase agreement with UBS AG, with interest paid at SOFR plus a premium[169] - The company entered into a credit agreement in January 2025, with interest on borrowings at SOFR plus a margin of 225 basis points, indicating vulnerability to changes in U.S. dollar short-term rates[170] Risk Management - The company is subject to credit risk from borrowers related to loans held for investment, which is mitigated through comprehensive underwriting and ongoing monitoring[169] - The company has relationships with related persons, including the Chair of the Board, which may pose risks as outlined in the 2024 Annual Report[173] - The company has not experienced material changes in risk factors since the previous annual report, indicating stability in its operational environment[186] Operational Controls and Accounting - The company emphasizes the importance of maintaining effective disclosure controls and procedures, as evaluated by its management[177] - There have been no significant changes in critical accounting estimates since the fiscal year ended September 30, 2024, impacting the financial statements[175] Revenue Generation - Base business management revenues from Managed Equity REITs for the three months ended December 31, 2024, totaled $20,399, compared to $21,550 for the same period in 2023, indicating a decrease of about 5.3%[138] - AlerisLife and Sonesta generated management fee revenues of $1,400 and $2,224 respectively for the three months ended December 31, 2024, showing slight increases from $1,382 and $2,223 in 2023[141] - Tremont earned advisory services revenue of $1,141 for the three months ended December 31, 2024, up from $1,125 in 2023, reflecting a growth of 1.4%[143] Strategic Outlook - The company believes it can grow real estate-based businesses despite national trends, reflecting a strategic outlook on market conditions[180]