Ashford Announces Agreement For Strategic Investment In Leading Provider Of Integrated Audio Visual Services To The Hospitality And Corporate Industries

DALLAS, July 25, 2017 /PRNewswire/ -- Ashford Inc. (NYSE American: AINC) ("Ashford" or the "Company") today announced that it has agreed to acquire a controlling interest in a privately held company that conducts the business of J&S Audio Visual in the United States, Mexico, and the Dominican Republic ("J&S") for approximately $17.1 million in cash and $4.3 million of Ashford common stock consideration (excluding transaction costs and working capital adjustments), subject to certain closing conditions.  The transaction is expected to close in the third quarter.  J&S provides an integrated suite of audio visual services, including show & event services, hospitality services, creative services, and design & integration, making J&S a leading single-source solution for their clients' meeting and event needs. J&S currently has multi-year contracts in place with approximately 55 hotels and convention centers in addition to regular business representing over 2,500 annual events and productions, 500 venue locations, and 650 clients.

With over 30 years of operating history, J&S has grown into a leading integrated single-source audio visual service provider with a well-diversified geographical presence and customer base. J&S estimates its customer retention rate to be approximately 90% which highlights the high level of quality customer service, professional production quality, and unique, tailored solutions J&S provides. Ashford expects significant revenue and operational cost synergies with the addition of contracts between J&S and Ashford asset-managed hotels. Currently, J&S has two contracts in place with Ashford asset-managed hotels and further roll-out of J&S services into Ashford asset-managed hotels should create significant upside potential.

After giving effect to the transaction, Ashford will own approximately an 85% interest in the common equity of J&S.  The Company expects to finance the investment with a term loan of approximately $12 million.  In addition, J&S will retain or payoff approximately $777,000 of pre-existing debt, as well as any debt related to new contracts signed before the transaction is closed.  During the twelve months ended April 30, 2017, J&S had Net Income of approximately $1.2 million and Adjusted EBITDA of approximately $5.4 million.  The implied total purchase price represents, as of April 30, 2017, a trailing 12-month Adjusted EBITDA multiple of 5.7x, according to the Company's preliminary estimates based on unaudited operating financial data provided by J&S. Ashford believes that the implied total valuation of 5.7x Adjusted EBITDA represents an attractive potential return on investment relative to prior comparable transactions with publicly disclosed information.

After J&S becomes the preferred audio visual service provider at most of the planned Ashford Hospitality Trust, Inc. (NYSE: AHT) ("Ashford Trust") and Ashford Hospitality Prime, Inc. (NYSE: AHP) ("Ashford Prime") hotels over the next 2-3 years along with conservative growth assumptions on the legacy business, Net Income and Adjusted EBITDA are expected to increase by approximately $2.5 million and $5.2 million, respectively. Ashford expects J&S to initially contribute approximately $1.77 to its Adjusted Net Income per diluted share.  J&S should add approximately $2.83 to the Company's Adjusted Net Income per diluted share after J&S becomes the preferred audio visual service provider at most of the planned Ashford Trust and Ashford Prime hotels by December 31, 2020.  Existing management for J&S will remain in place and will be heavily incentivized to serve existing business and grow the Company.  Monroe Jost will retain the title of Chief Executive Officer.

"This transaction represents the next phase of growth for J&S becoming a leading provider of integrated audio visual services in the hospitality industry," commented Monroe Jost, Chief Executive Officer of J&S. "We look forward to leveraging Ashford's hotel and operating experience and track record of success to further solidify our market position and support the tremendous potential for growth in our business."  

"We continue to use our hospitality and management experience to identify and invest in unique business opportunities in the industry and are excited to integrate our deep operating experience with the customer service and professional quality of J&S," said Monty J. Bennett, Ashford's Chairman and Chief Executive Officer.  "J&S provides best-in-class solutions for the increasing demand for high-end audio visual needs for meetings and events, and we are excited about the future of this partnership." 

Ashford provides global asset management, investment management and related services to the real estate and hospitality sectors.

Follow Chairman and CEO Monty Bennett on Twitter at www.twitter.com/MBennettAshford or @MBennettAshford. 

Ashford has created an Ashford App for the hospitality REIT investor community.  The Ashford App is available for free download at Apple's App Store and the Google Play Store by searching "Ashford."

Certain statements and assumptions in this press release contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties. When we use the words "will likely result," "may," "anticipate," "estimate," "should," "expect," "believe," "intend," or similar expressions, we intend to identify forward-looking statements. Such statements are subject to numerous assumptions and uncertainties, many of which are outside Ashford's control.

These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated, including, without limitation: changes in the business or operating prospects of J&S; adverse litigation or regulatory developments; our success in implementing our business development plans of integrating J&S's business and realizing the expected benefits of the transaction; general volatility of the capital markets and the market price of our common stock; changes in our business or investment strategy; availability, terms and deployment of capital; availability of qualified personnel; changes in our industry and the market in which we operate, interest rates or the general economy; and the degree and nature of our competition.

The forward-looking statements included in this press release are only made as of the date of this press release. Investors should not place undue reliance on these forward-looking statements. We are not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, changes in expectations or otherwise.

SOURCE Ashford Inc.