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]

Financial Performance - RMR Group reported net income of $14.1 million for Q1 FY2025, with net income attributable to the company at $6.4 million or $0.38 per diluted share[15]. - Adjusted net income attributable to RMR Group was $5.8 million, or $0.35 per share, while distributable earnings were $14.7 million, or $0.46 per diluted share[15]. - Total revenues for the quarter reached $219.476 million, representing a 21% increase compared to the previous period[30]. - Operating income was reported at $13.388 million, with a net income attributable to The RMR Group Inc. of $6.380 million[31]. - Basic earnings per share (EPS) was $0.38, with diluted EPS also at $0.38[34]. - Net income attributable to The RMR Group Inc. for the three months ended December 31, 2023, was $6,997,000, with adjusted net income of $8,279,000[52]. - Adjusted EBITDA for the same period was $20,923,000, resulting in an adjusted EBITDA margin of 42.1%[55]. - The distribution payout ratio for the quarter was 69.8%, compared to 63.3% in the previous quarter[16]. - The distribution payout ratio for The RMR Group LLC was 69.8%[57]. - The estimated income tax expense for the quarter was approximately 28.5%[53]. Assets and Management - Assets under management (AUM) increased to $40.3 billion, with fee-earning AUM at $27.0 billion[15]. - The principal balance of real estate loans held for investment totaled $58.6 million, with secured financing of $69.3 million[29]. - Total current assets amounted to $291.045 million, while total liabilities were reported at $270.988 million[35]. - Cash and cash equivalents held by The RMR Group Inc. were $24.4 million as of December 31, 2024[77]. - The company holds cash and cash equivalents totaling $147.580 million, indicating strong liquidity[35]. Investments and Acquisitions - RMR entered into a $100 million senior secured revolving credit facility, maturing on January 22, 2028, with an interest rate of SOFR plus a margin[15]. - The company closed a joint venture acquisition of a residential community in Pompano Beach, FL, and is under contract for another acquisition in Sunrise, FL, with a total transaction value of $19 million[15]. - RMR expects to raise $63.1 million in equity to capitalize these joint ventures and secure $122.4 million in financing[15]. - The acquisition of MPC Partnership Holdings LLC included an earnout of up to $1 million, contingent on capital commitments[68]. Revenue and Earnings Breakdown - The company generated $46.5 million in run rate net operating income (NOI) from its real estate investments[29]. - Total management and advisory services revenues amounted to $47,392,000, with a net income margin of 29.8%[55]. - The company reported a total of $28,347,000 in base business management and advisory revenues[62]. - The total distributions from The RMR Group LLC were $12,381,000[55]. - The company experienced a gain on investments of $1,071,000 during the quarter[54]. Operational Efficiency - Adjusted EBITDA for the quarter was $20.9 million, with an adjusted EBITDA margin of 42.1%[15]. - The company incurred total expenses of $206.088 million, leading to an operating margin of approximately 6.1%[30]. - Technology transformation investments accounted for $273,000 in the adjusted EBITDA calculation[54]. - Annualized net operating income (NOI) excludes interest expense and depreciation, reflecting the company's focus on core rental income[79]. Market Strategy and Future Outlook - The company continues to explore market expansion and new strategies, including the management of private capital vehicles[79]. - RMR's financial results were supported by continued cost containment efforts to offset challenges in managed equity REITs[8]. - The net income margin for the three months ended December 31, 2024, was impacted by a net loss attributable to noncontrolling interest in consolidated entities[73]. - The RMR Group LLC's tax distributions are based on estimated tax liabilities and ownership percentages, leading to fluctuations in quarterly distributions[73].

Core Viewpoint - RMR Group is anticipated to report a year-over-year decline in earnings despite an increase in revenues for the quarter ending December 2024, with the actual results being crucial for its near-term stock price movement [1][2]. Earnings Expectations - The upcoming earnings report is expected to reveal quarterly earnings of $0.35 per share, reflecting a year-over-year decrease of 28.6%, while revenues are projected to be $263.5 million, a slight increase of 0.7% from the previous year [3]. - The consensus EPS estimate has been revised down by 8.97% over the last 30 days, indicating a bearish sentiment among analysts regarding the company's earnings prospects [4][10]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate for RMR Group is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -1.45%, which complicates the prediction of an earnings beat [10][11]. - A positive Earnings ESP is generally a strong predictor of an earnings beat, especially when combined with a favorable Zacks Rank, but RMR Group currently holds a Zacks Rank of 3, making it challenging to predict a positive outcome [8][11]. Historical Performance - In the last reported quarter, RMR Group was expected to post earnings of $0.38 per share but only achieved $0.34, resulting in a surprise of -10.53% [12]. - Over the past four quarters, the company has only beaten consensus EPS estimates once, indicating a pattern of underperformance [13]. Conclusion - RMR Group does not appear to be a strong candidate for an earnings beat, and investors should consider other factors when making decisions regarding this stock ahead of its earnings release [16].

Financial Data and Key Metrics Changes - The company reported adjusted net income per share of $0.34, distributable earnings per share of $0.51, and adjusted EBITDA of $21.8 million for Q4 2024, which were generally in line with expectations [6][18] - Recurring service revenues decreased to $48 million, down approximately $900,000 sequentially, primarily due to declines in Managed Equity REIT share prices and construction supervision fees [19] - The company expects adjusted earnings per share to range from $0.34 to $0.36, adjusted EBITDA to range from $21 million to $22 million, and distributable earnings to range from $0.46 to $0.48 for the next quarter [25] Business Line Data and Key Metrics Changes - The real estate lending platform, Tremont Realty Capital, has originated $67 million in aggregate commitments for a private debt vehicle, expected to generate mid-teen returns [9] - The Denver multifamily investment generated approximately $900,000 of net operating income this quarter, with expectations to contribute approximately $1.1 million going forward [22] - Recurring cash compensation was $44 million, reflecting a decline of approximately $1 million sequentially due to headcount actions [23] Market Data and Key Metrics Changes - The company is seeing increased transaction activity and a more energized fundraising environment, particularly from legacy institutional partners and potential new capital partners [7][8] - The U.S. multifamily market is positioned for significant long-term growth due to a housing shortage and high homeownership costs [11] Company Strategy and Development Direction - The company is focused on expanding its private capital business while supporting public clients through a challenging commercial real estate environment [7] - Strategic initiatives include progressing the fundraising process for a private debt vehicle and expanding the RMR Residential platform [9][10] - The company aims to assist managed equity REITs with operational and financial strategies, including significant actions to improve liquidity and reduce leverage [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about entering a more favorable market environment, with a robust and growing pipeline of opportunities [8][17] - The fundraising cycle remains elongated, but the company is confident in its ability to capture opportunities as the commercial real estate market improves [8] - Management highlighted the importance of deleveraging and rightsizing the balance sheets of public vehicles to enhance stock price performance over time [30][31] Other Important Information - The company arranged 5.2 million square feet of leasing on behalf of clients during the quarter, including significant renewals with Vertex Pharmaceuticals and FedEx [12] - DHC is conducting a comprehensive portfolio analysis to transform its asset mix, with agreements to sell 28 properties for estimated proceeds of $348 million [16] Q&A Session Summary Question: Cash position and deployment in RMR Residential - Management indicated that a good amount of cash is open for investment in various initiatives, with $5 million to $10 million needed for general operations [26][27] Question: Syndicating equity stakes in RMR Residential - Management noted increased receptivity in the market for syndicating equity, with expectations to retain less than 20% equity stake in investments [28] Question: Impact of asset sales on management fees - Management discussed the balance between base management fees and potential incentive management fees, focusing on the long-term benefits of deleveraging public vehicles [29][30] Question: Pipeline for RMR Residential and private lending vehicle - Management indicated that both the lending vehicle and residential investments are likely more of a 2025 story, with increasing momentum observed [33][34] Question: Expected cash balance at year-end - Management expects cash to increase to approximately $150 million by December 31, with strategic investments anticipated to accelerate in 2025 [35][36] Question: Additional loan and multifamily investments - Management confirmed the potential for more investments in both credit and residential sectors, with significant interest from investors [39]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-37616 THE RMR GROUP INC. (Exact Name of Registrant as Specified in Its Charter) Maryland 47-4122583 (State of Organization) (IRS Employer Identification No.) T ...

THE RMR GROUP The RMR Group Inc. Announce: Fourth Quarter Fiscal 2024 Financial Results November 11, 2024 THE RMR GROUP INC. ANNOUNCES FOURTH QUAR FISCAL 2024 FINANCIAL RESULTS Newton, MA (November 11, 2024). The RMR Group Inc. (Nasdaq: RMR) today announced its financial results for the fiscal | --- | --- | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

RMR Group (RMR) reported $212.3 million in revenue for the quarter ended September 2024, representing a year-over-year decline of 4.8%. EPS of $0.34 for the same period compares to $0.48 a year ago.The reported revenue represents a surprise of -3.57% over the Zacks Consensus Estimate of $220.15 million. With the consensus EPS estimate being $0.38, the EPS surprise was -10.53%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Stre ...