RMR Group, Inc. (NASDAQ:RMR) Q1 2023 Earnings Conference Call February 3, 2023 11:00 AM ET Company Participants Melissa McCarthy - Manager, Investor Relations Adam Portnoy - President and Chief Executive Officer Matthew Jordan - Executive Vice President, Chief Financial Officer and Treasure Conference Call Participants Bryan Maher - B. Riley FBR Ronald Kamdem - Morgan Stanley Operator Good morning and welcome to the RMR First Quarter of Fiscal 2023 Financial Results Conference Call. All participants will b ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2022 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.) Two Newton P ...

Financial Data and Key Metrics Changes - For Q4 2022, the company reported adjusted net income of $9.4 million or $0.57 per share, and adjusted EBITDA of $29.5 million, both reflecting at least a 12% increase year-over-year [8][27] - Total management advisory service revenues were $52 million, an increase of almost $5 million year-over-year but down approximately $1 million sequentially [28] Business Line Data and Key Metrics Changes - The leasing volumes for the entire fiscal year 2022 exceeded 13.5 million square feet, marking a 28% increase compared to fiscal year 2021 and a 78% increase compared to pre-pandemic levels in fiscal year 2019 [11] - At ILPT, the portfolio is over 99% leased, with new and renewable leases for approximately 1.7 million square feet and weighted average rental rates that were 77.5% higher than prior rates [13] - SVC's FFO doubled from prior year levels, while EBITDA increased 26% year-over-year, reflecting improvements in lodging fundamentals [17] Market Data and Key Metrics Changes - The company arranged 2.7 million square feet of leases this quarter, resulting in a 23% roll-up in rents and a weighted average lease term of 5.8 years [10] - DHC's same-property cash basis NOI for the office portfolio increased 4.7% year-over-year, while occupancy improved 110 basis points sequentially [20] Company Strategy and Development Direction - The company aims to navigate ongoing headwinds related to inflation, increasing interest rates, and capital markets volatility while focusing on operational improvements across managed equity REITs [9][21] - The company is pursuing external opportunities to grow and diversify its platform, with AUM increasing by $4.6 billion and private capital AUM growing to $3.9 billion [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of managed equity REITs and highlighted the alignment with REIT shareholders, noting that revenues and cash flows are directly impacted by changes in REIT share prices [22][23] - The management team is focused on improving operational performance and addressing balance sheet issues to enhance shareholder performance [70] Other Important Information - The company closed the quarter with almost $190 million in cash and generated interest income of approximately $900,000 [36] - G&A costs were flat sequentially at $8.5 million, with projections of approximately $9 million per quarter in fiscal 2023 [35] Q&A Session Summary Question: Outlook on construction oversight for next year - The expected $500 million in projects will be fairly ratable, transitioning from OPI spend, with anticipated quarterly spending of $130 million to $120 million [38] Question: Appetite for acquisitions and investments in 2023 - Sovereign wealth funds remain open to investing in commercial real estate, while other capital providers are more cautious, preferring to wait for market stabilization [40][44] Question: Thoughts on share repurchases within capital allocation plans - The company has biased towards dividends over share repurchases but maintains significant liquidity for potential strategic M&A opportunities [52][54] Question: Factors driving potential improvements in managed equity REITs share prices - Improvements in operating performance and addressing balance sheet issues are crucial, with a focus on operational excellence to drive stock price performance [58][61]

```markdown [PART I. Financial Information](index=4&type=section&id=PART%20I.%20Financial%20Information) [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents The RMR Group Inc.'s unaudited condensed consolidated financial statements and detailed accounting notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows total assets increased to **$531.0 thousand** from **$497.9 thousand**, driven by cash, with total equity rising to **$357.0 thousand** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | September 30, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $195,936 | $159,835 | | Total current assets | $295,878 | $254,517 | | Total assets | $531,036 | $497,911 | | **Liabilities & Equity** | | | | Total current liabilities | $107,054 | $81,140 | | Total liabilities | $174,028 | $150,196 | | Total equity | $357,008 | $347,715 | [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q3 2022 total revenues rose to **$211.1 thousand**, but net income attributable to RMR Inc. slightly decreased to **$7.6 thousand** due to unrealized losses Q3 Financial Performance (Three Months Ended June 30, in thousands, except per share data) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Total Revenues | $211,088 | $145,244 | | Operating Income | $25,418 | $20,871 | | Net Income Attributable to RMR Inc. | $7,570 | $8,232 | | Diluted EPS | $0.46 | $0.50 | Year-to-Date Financial Performance (Nine Months Ended June 30, in thousands, except per share data) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Total Revenues | $590,310 | $433,754 | | Operating Income | $67,045 | $50,970 | | Net Income Attributable to RMR Inc. | $22,004 | $22,070 | | Diluted EPS | $1.33 | $1.31 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased to **$89.9 thousand** for the nine months ended June 30, 2022, reflecting improved performance Cash Flow Summary (Nine Months Ended June 30, in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash from operating activities | $89,856 | $72,371 | | Net cash used in investing activities | ($10,384) | ($940) | | Net cash used in financing activities | ($43,371) | ($43,293) | | **Increase in cash and cash equivalents** | **$36,101** | **$28,138** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes provide critical details on accounting policies and financial results - The company operates through its majority-owned subsidiary, RMR LLC, and provides management services to Managed Equity REITs (DHC, ILPT, OPI, SVC), Managed Operating Companies (ALR, Sonesta, TA), and advisory services via Tremont Realty Capital to SEVN[22](index=22&type=chunk)[23](index=23&type=chunk)[25](index=25&type=chunk) - For Q3 2022, total revenues from related parties were **$211.0 thousand**, accounting for substantially all of the company's consolidated revenues[73](index=73&type=chunk) - The company holds equity method investments in Seven Hills Realty Trust (SEVN) and TravelCenters of America (TA), which resulted in a **$5.5 thousand** unrealized loss in Q3 2022 due to changes in their market values[55](index=55&type=chunk)[57](index=57&type=chunk) - On May 11, 2022, the company's subsidiary purchased **882,407 shares** of SEVN from Diane Portnoy, the mother of the company's Chair, for **$9.5 thousand**[85](index=85&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the business environment, revenue drivers, liquidity, and capital allocation priorities [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Q3 2022 management services revenue increased **16.8%** to **$51.8 thousand**, but net income attributable to RMR Inc. fell **8.0%** due to equity investment losses Q3 2022 vs. Q3 2021 Key Changes (in thousands) | Metric | Q3 2022 | Q3 2021 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Management services revenue | $51,819 | $44,376 | $7,443 | 16.8% | | Operating income | $25,418 | $20,871 | $4,547 | 21.8% | | Unrealized (loss) gain on equity investments | ($5,489) | $1,312 | ($6,801) | n/m | | Net income Attributable to RMR Inc. | $7,570 | $8,232 | ($662) | (8.0)% | - The increase in management services revenue was primarily due to growth in fees from ILPT following its acquisition of Monmouth Real Estate Investment Corporation (MNR) and a **$1.9 thousand** increase in construction supervision fees from OPI, DHC, and SVC[137](index=137&type=chunk) - General and administrative expenses rose **31.7%** to **$8.3 thousand** in Q3 2022, driven by higher technology infrastructure costs, third-party construction oversight costs, and increased recruiting and professional fees[144](index=144&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with **$195.9 thousand** in cash and no debt, primarily funding operations and shareholder distributions - Cash and cash equivalents increased to **$195.9 thousand** at June 30, 2022, from **$159.8 thousand** at September 30, 2021[163](index=163&type=chunk) - The company declared a quarterly dividend of **$0.40 per share** on July 14, 2022, to be paid in August 2022[166](index=166&type=chunk) - As of June 30, 2022, the company has a liability of **$27.8 thousand** related to its tax receivable agreement with ABP Trust, with an expected payment of **$2.2 thousand** in Q4 2022[171](index=171&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company has no direct market risk but acknowledges indirect exposure through its clients' businesses and market capitalizations - The company's primary market risk is indirect; its revenues would likely decline if market risks (e.g., interest rate changes) negatively impact its clients' businesses or market capitalizations[172](index=172&type=chunk) - A substantial amount of the company's cash is invested in money market funds, which are believed not to be subject to material interest rate or credit risk[173](index=173&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of the end of the quarter - Based on an evaluation as of June 30, 2022, the President and CEO and the Executive VP, CFO, and Treasurer concluded that the company's disclosure controls and procedures are effective[177](index=177&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, internal controls[178](index=178&type=chunk) [PART II. Other Information](index=45&type=section&id=PART%20II.%20Other%20Information) [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported, with key risks including client dependence, revenue variability, and impacts of inflation and interest rates - The company reports no material changes to the risk factors from those disclosed in its 2021 Annual Report[186](index=186&type=chunk) - Key operational risks highlighted in the forward-looking statement warning include: - Heavy reliance on revenue from a limited number of clients - High variability of revenues, which are tied to client asset values and market capitalizations - The impact of inflation and rising interest rates on clients' businesses - The potential for termination of management agreements[182](index=182&type=chunk) [Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including CEO/CFO certifications and a Sonesta management agreement amendment - Exhibit 10.1 is the First Amendment to the Amended and Restated Business Management and Shared Services Agreement between The RMR Group LLC and Sonesta International Hotels Corporation, dated May 31, 2022[187](index=187&type=chunk) - Exhibits 31.1, 31.2, and 32.1 contain the required certifications by the principal executive officer and principal financial officer regarding the report's accuracy and the company's disclosure controls[187](index=187&type=chunk) ```

Financial Data and Key Metrics Changes - The company reported adjusted net income of $0.50 per share and adjusted EBITDA of $25.7 million, both showing meaningful sequential quarter increases [5][18] - Total revenues for the quarter were $49.3 million, approximately $7 million higher year-over-year and over $3 million higher sequentially [18] - The company expects revenues for the remaining quarters of the fiscal year to be between $52 million and $54 million [19][30] Business Line Data and Key Metrics Changes - The acquisition of Monmouth Real Estate Investment Corporation by ILPT contributed significantly to the increase in assets under management, reaching almost $38 billion [5][6] - RMR arranged almost 2 million square feet of leases with a weighted average lease term of approximately 9 years and a weighted average roll-up in rent of over 10% [8] - Managed private capital AUM ended the quarter at approximately $4 billion, a significant increase from less than $500 million two years ago [15] Market Data and Key Metrics Changes - Approximately 85% of leases managed by RMR have annual rent escalators, CPI adjustments, or percentage rent provisions, which help mitigate inflationary risks [7] - Office utilization and leasing volumes have shown steady improvement, with less available sublease space in the market [10] - SVC's hotel portfolio saw increases in hotel occupancy and RevPAR throughout the quarter as business travel rebounds [11] Company Strategy and Development Direction - The company is focused on expanding its private capital assets under management and is in discussions with institutional investors for potential joint ventures [15][16] - The management team emphasizes strengthening corporate governance by adding new independent trustees to the boards of its managed entities [17] - The company aims to leverage its infrastructure for increased profitability as assets under management grow [23] Management's Comments on Operating Environment and Future Outlook - Management believes the portfolio is well-positioned to weather market volatility, especially in inflationary environments [7] - There is optimism regarding the recovery of business travel and hospitality demand, which is expected to benefit OPI and SVC [9] - Management is confident in the trajectory of DHC, citing improvements in operating performance and liquidity [14] Other Important Information - The company closed the quarter with over $181 million in cash and continues to have no debt, positioning it well for future strategies [23] - AlerisLife appointed a new Interim President and CEO and retained a consulting group for an operational review, aiming for enhanced financial performance [13] Q&A Session Summary Question: How should investors think about further deleveraging in light of REIT performance? - Management indicated no capital at risk and emphasized focusing on operations and prudent balance sheet management, particularly for SVC and DHC [27][28] Question: Clarification on revenue guidance and construction revenues? - The revenue guidance of $52 million to $54 million is an all-in number, with construction revenues expected to increase as development projects progress [30] Question: Impact of Sonesta brand transition on SVC operations? - Management expressed optimism about Sonesta's growth and the potential for improved margins, highlighting the significance of the 34% ownership in Sonesta [34] Question: Insights on ILPT's capital discussions and refinancing? - Management is having productive discussions with equity providers for the joint venture, which is expected to significantly reduce leverage [39][40] Question: Will Amazon's overcapacity comments affect industrial market deals? - Management believes long-term fundamentals for industrial space remain strong despite Amazon's comments, with continued high occupancy and rent growth expected [41][42]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 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.) Two Newton Plac ...

Financial Data and Key Metrics Changes - The company reported adjusted net income of $0.46 per share and adjusted EBITDA of $23.3 million for Q1 2022, slightly below quarterly guidance due to higher cash compensation than expected [8][21] - The company ended the quarter with $33.4 billion in assets under management and over $181 million in cash, with no debt [8][26] Business Line Data and Key Metrics Changes - Management and advisory service revenues were $46 million, an increase of $4.7 million year-over-year but a sequential decline of approximately $800,000 due to reduced business management fees at SBC and DHC [22] - Construction management fees increased by 31% sequentially to $3.2 million, with expectations for further growth as clients engage in redevelopment activities [23] Market Data and Key Metrics Changes - The commercial real estate market showed strong fundamentals, with fourth-quarter transaction volumes increasing by 97% year-over-year [9] - Leasing volumes reached approximately four million square feet for an average term of 8.5 years, representing a 39% sequential increase and a 35% increase over pre-pandemic 2019 levels [10] Company Strategy and Development Direction - The company is focused on expanding private capital relationships and has successfully increased private capital assets under management from $1.3 billion to $3.2 billion, a 139% increase [19] - The pending $4 billion acquisition of Monmouth Real Estate Investment Corporation is expected to close soon, which will enhance the company's assets under management without raising public equity [15][32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business outlook despite ongoing COVID-19 challenges, citing strong consumer spending and healthy real estate fundamentals [8][9] - The company anticipates a gradual recovery in the senior living sector, while the hotel sector may rebound more quickly due to increased business travel [44][48] Other Important Information - The company plans to issue annual share grants in March, which will result in additional G&A costs of approximately $600,000 [26] - The company has not collected incentive fees for two years and is focused on de-leveraging to improve shareholder returns [75] Q&A Session Summary Question: Transitioning capital from managed REIT to private markets - Management indicated that the expected fees from private vehicles are generally in line with those from REITs, and the Monmouth transaction marks a significant step in growing net AUM [30][32] Question: Outlook for DHC and SVC - Management is optimistic about recovery in the hotel sector by the second half of 2022, while the senior living sector may see a more gradual improvement [44][48] Question: Leasing activity and return to office skepticism - Management noted record leasing activity in Q4 and emphasized that the delay in return to office is more about employee preferences than health concerns [50][52] Question: Guidance for next quarter's revenue - Management provided guidance of $48 million to $49 million for the next quarter, factoring in recent share price levels and expected incremental fees from upcoming transactions [24][57] Question: Exposure to rising inflation - Management expressed confidence in their diverse portfolio's ability to handle inflation, with many leases having CPI adjustments or fixed step-ups [62] Question: Cap rates outlook - Management believes cap rates may rise slightly due to increasing debt costs but expects demand for real estate to temper significant increases [67][69] Question: Private capital transactions and future opportunities - Management is in discussions with private capital partners across various sectors and sees potential for additional joint ventures to improve shareholder returns [73][75] Question: Wage pressures in construction - Management acknowledged wage inflation and labor shortages as significant challenges, with average wage growth around 5% [80][82]

PART I. Financial Information This section presents the company's unaudited financial statements, management's discussion and analysis, and disclosures on market risk and controls [Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28unaudited%29) This section presents The RMR Group Inc.'s unaudited condensed consolidated financial statements, including balance sheets, income statements, cash flows, and detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased as of December 31, 2021, primarily due to higher cash and cash equivalents, with a corresponding rise in total liabilities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2021 | Sep 30, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $181,887 | $159,835 | | Total current assets | $270,730 | $254,517 | | **Total assets** | **$522,402** | **$497,911** | | **Liabilities & Equity** | | | | Total current liabilities | $89,665 | $81,140 | | **Total liabilities** | **$168,525** | **$150,196** | | **Total equity** | **$353,877** | **$347,715** | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Total revenues increased for the three months ended December 31, 2021, driving operating income growth, though net income attributable to RMR Inc. decreased due to lower unrealized gains Income Statement Summary (in thousands, except per share data) | Metric | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :--- | :--- | :--- | | Total management and advisory services revenues | $46,015 | $41,333 | | Total revenues | $181,568 | $156,946 | | Operating income | $20,093 | $13,732 | | Net income | $18,292 | $19,753 | | Net income attributable to The RMR Group Inc. | $8,042 | $8,897 | | Diluted EPS | $0.49 | $0.51 | [Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) Total equity increased during the quarter, driven by net income, partially offset by common share and tax distributions - For the three months ended Dec 31, 2021, total equity increased by **$6,200 thousand**, reflecting **$18,300 thousand** in net income, less **$10,800 thousand** in common share distributions and **$2,000 thousand** in tax distributions to members[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased for the three months ended December 31, 2021, with net cash used in financing activities primarily for distributions, resulting in higher cash and cash equivalents Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net cash from operating activities | $34,968 | $27,660 | | Net cash used in investing activities | ($165) | ($560) | | Net cash used in financing activities | ($12,751) | ($13,550) | | **Increase in cash and cash equivalents** | **$22,052** | **$13,550** | | **Cash and cash equivalents at end of period** | **$181,887** | **$383,213** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's structure, revenue recognition, related party transactions, and segment reporting, highlighting management services to various clients and equity investments - RMR LLC provides management services to four Managed Equity REITs (DHC, ILPT, OPI, SVC), three Managed Operating Companies (ALR, Sonesta, TA), and other private clients[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) Management & Advisory Services Revenue by Client Type (Q1 FY22 vs Q1 FY21, in thousands) | Client Type | Q1 FY2022 | Q1 FY2021 | | :--- | :--- | :--- | | Managed Public Real Estate Capital | $36,992 | $33,866 | | Managed Private Real Estate Capital | $2,400 | $1,570 | | Managed Operating Companies | $6,570 | $5,638 | | **Total from Related Parties** | **$45,962** | **$41,074** | - The company holds equity method investments in Seven Hills Realty Trust (SEVN) and TravelCenters of America Inc. (TA), accounted for under the fair value option. As of Dec 31, 2021, the market value of these investments was **$8,600 thousand** in SEVN and **$32,100 thousand** in TA[54](index=54&type=chunk)[58](index=58&type=chunk) - For the three months ended Dec 31, 2021, the company declared and paid dividends of **$0.38 per common share**, totaling **$6,300 thousand**[91](index=91&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's business environment, operational results, and financial condition, highlighting revenue drivers, liquidity, and the impact of the COVID-19 pandemic on client industries - The company's business is dependent on its ability to operate and grow its clients' businesses, which include Managed REITs, Managed Operating Companies, and private capital vehicles. The business generally follows the U.S. real estate cycle[109](index=109&type=chunk) - Despite challenges from the COVID-19 pandemic on client industries, the company believes its financial resources are sufficient. As of Dec 31, 2021, it had **$181,900 thousand** in cash and cash equivalents and no debt[112](index=112&type=chunk) - A key future event is ILPT's pending acquisition of Monmouth Real Estate Investment Corporation (MNR) for approximately **$4.0 billion**, expected to close in the first half of 2022 and increase RMR's management fees[110](index=110&type=chunk)[145](index=145&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Total revenues increased for the three months ended December 31, 2021, driving a significant rise in operating income, though net income attributable to RMR Inc. declined due to lower unrealized gains Comparison of Operating Results (in thousands) | Line Item | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Management services revenue | $44,897 | $40,747 | $4,150 | 10.2% | | Advisory services revenue | $1,118 | $586 | $532 | 90.8% | | Total revenues | $181,568 | $156,946 | $24,622 | 15.7% | | Total compensation and benefits expense | $34,010 | $37,214 | ($3,204) | (8.6)% | | Operating income | $20,093 | $13,732 | $6,361 | 46.3% | | Net income attributable to The RMR Group Inc. | $8,042 | $8,897 | ($855) | (9.6)% | - The **$4,150 thousand** increase in management services revenue was primarily due to higher fees from DHC, OPI, and SVC because of their increased enterprise values, and a **$1,460 thousand** increase in fees from Sonesta due to its expansion[127](index=127&type=chunk) - The **$6,900 thousand** decrease in unrealized gains on equity method investments was a major factor in the decline of net income[126](index=126&type=chunk)[140](index=140&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with significant cash and no debt, with primary cash uses being operating expenses, tax distributions, and dividends to shareholders - As of Dec 31, 2021, the company had **$181,900 thousand** in cash and cash equivalents and no outstanding debt[142](index=142&type=chunk) - Cash from operating activities increased by **$7,300 thousand** year-over-year to **$35,000 thousand** for the quarter, reflecting higher net income (excluding non-cash gains) and changes in working capital[148](index=148&type=chunk)[149](index=149&type=chunk) - On Jan 13, 2022, a quarterly dividend of **$0.38 per share** was declared, totaling approximately **$6,300 thousand**, to be paid on or about Feb 17, 2022[146](index=146&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is not subject to significant direct market risk, as it avoids derivative instruments and debt, with primary risk being indirect impacts on client performance - The company does not use derivative instruments and has not issued debt, limiting its direct exposure to interest rate, commodity, or credit risks[152](index=152&type=chunk) - Cash and cash equivalents, including **$131,100 thousand** in money market funds as of Dec 31, 2021, are believed to have no material market risk[143](index=143&type=chunk)[153](index=153&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures are effective, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of December 31, 2021, the President and CEO and the EVP, CFO and Treasurer concluded that the company's disclosure controls and procedures are effective[155](index=155&type=chunk) - There were no material changes to the company's internal control over financial reporting during the quarter[156](index=156&type=chunk) [Warning Concerning Forward-Looking Statements](index=30&type=section&id=Warning%20Concerning%20Forward-Looking%20Statements) This section cautions that the report contains forward-looking statements subject to various risks and uncertainties, including the impact of COVID-19 and reliance on a limited number of clients - Forward-looking statements are subject to risks including the impact of COVID-19, reliance on a few clients, and the potential for management agreement terminations[158](index=158&type=chunk)[160](index=160&type=chunk) - The company's base management fees are tied to client asset values or market capitalizations, and incentive fees are not guaranteed, making future revenues potentially volatile[160](index=160&type=chunk)[161](index=161&type=chunk) PART II. Other Information This section covers updates on risk factors, equity security sales, and required exhibits and signatures [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) The company reports no material changes to the risk factors from those previously disclosed in its Annual Report on Form 10-K for the fiscal year ended September 30, 2021 - There have been no material changes to the risk factors from those provided in the 2021 Annual Report[163](index=163&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's repurchase of 225 shares of Class A Common Stock in October 2021 to satisfy tax withholding obligations related to employee share awards Issuer Purchases of Equity Securities (Q1 FY2022) | Calendar Month | Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | October 2021 | 225 | $34.05 | | **Total** | **225** | **$34.05** | - The share purchases were made to satisfy tax withholding obligations in connection with the vesting of Class A Common Share awards[164](index=164&type=chunk) [Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section provides a list of exhibits filed with the Form 10-Q, including certifications by the CEO and CFO and XBRL data files - The report includes Rule 13a-14(a) and Section 1350 certifications as exhibits, along with XBRL data files[165](index=165&type=chunk) [Signatures](index=34&type=section&id=Signatures) The report is duly signed on behalf of the registrant by Matthew P. Jordan, Executive Vice President, Chief Financial Officer and Treasurer, on January 27, 2022 - The Form 10-Q was signed on January 27, 2022, by Matthew P. Jordan, the company's principal financial and accounting officer[168](index=168&type=chunk)

The RMR Group Inc. (NASDAQ:RMR) Q4 2021 Earnings Conference Call November 16, 2021 10:00 AM ET Company Participants Michael Kodesch – Director-Investor Relations Adam Portnoy – President and Chief Executive Officer Matt Jordan – Chief Financial Officer Conference Call Participants Bryan Maher – B. Riley FBR Ronald Kamdem – Morgan Stanley Jim Sullivan – BTIG Kenneth Lee – RBC Capital Market Operator Good day and welcome to RMR's Fiscal Fourth Quarter 2021 Earnings Conference Call. All participants will be in ...

Table of Contents or 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, 2021 ☐ 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 ...