Braemar Hotels & Resorts Inc. - Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K, dated February 1, 2023, addresses a material misstatement in the Company's previously issued unaudited financial statements for the periods ended September 30, 2022. The report was filed by Braemar Hotels & Resorts Inc., a Maryland corporation.
Key Financial Metrics and Restatement Details
The filing identifies a correction regarding the presentation of a non-cash item associated with Series E and Series M Redeemable Preferred Stock. This item was omitted from the statement of operations but was correctly reflected in the statements of equity. The correction impacts Net Income and Earnings Per Share (EPS) but has no impact on Adjusted Funds From Operations (AFFO) or Adjusted EBITDAre.
| Period | Adjustment Amount | Impact on Net Income (Common) | Impact on EPS (Basic/Diluted) |
|---|---|---|---|
| Three months ended Sept 30, 2022 | $2.6 million | Decreased from $(14.1)M to $(16.7)M | Decreased from $(0.20) to $(0.24) |
| Nine months ended Sept 30, 2022 | $4.8 million | Decreased from $7.594M to $2.792M | Decreased from $0.11 to $0.04 |
Material Changes and Internal Controls
The Audit Committee concluded that the previously filed Form 10-Q (filed November 7, 2022) should not be relied upon. The Company anticipates reporting a material weakness in internal control over financial reporting in its upcoming Form 10-Q/A for the third quarter of 2022. The matter has been discussed with the independent registered public accounting firm, BDO USA, LLP.
Outlook and Management Commentary
Management confirmed that the misstatement was non-cash in nature. Consequently, the Company's reported metrics for AFFO and Adjusted EBITDAre remain unchanged. The Company is proceeding with the restatement of its condensed consolidated statement of operations for the nine months ended September 30, 2022.
Key Facts for Investor Verification
- Verify the upcoming Form 10-Q/A filing for the third quarter of 2022 to confirm the restated financial figures.
- Monitor the disclosure regarding the material weakness in internal controls over financial reporting.
- Confirm that AFFO and Adjusted EBITDAre metrics remain unaffected by this restatement.
- Note that the correction reduces Net Income attributable to common stockholders for the periods ended September 30, 2022.