Total Revenue of $78.3
Million, Adjusted EBITDA of $19.0
Million
DENVER, May 2, 2024
/PRNewswire/ --
First Quarter 2024 Highlights
(Compared to first
quarter 2023 unless otherwise noted)
- Total Revenue decreased 8.3% to $78.3
million
- Revenue excluding the Marketing Funds1 decreased
9.3% to $58.1 million, driven by
negative 9.3% organic growth2
- Net loss attributable to RE/MAX Holdings, Inc. of $3.4 million and loss per diluted share (GAAP
EPS) of $0.18
- Adjusted EBITDA3 decreased 4.7% to $19.0 million, Adjusted EBITDA margin3
of 24.3% and Adjusted earnings per diluted share (Adjusted
EPS3) of $0.20
- Total agent count decreased 236 agents, or 0.2%, to 143,287
agents
- U.S. and Canada combined agent
count decreased 4.3% to 78,955 agents
- Total open Motto Mortgage franchises increased 4.7% to 243
offices4
Operating Statistics as of April 30,
2024
(Compared to April 30,
2023, unless otherwise noted)
- Total agent count decreased 672 agents, or 0.5%, to 143,087
agents
- U.S. and Canada combined agent
count decreased 4.4% to 78,741 agents
- Total open Motto Mortgage franchises increased 4.3% to 244
offices4
RE/MAX Holdings, Inc. (the "Company" or "RE/MAX
Holdings") (NYSE: RMAX), parent company of RE/MAX one of the
world's leading franchisors of real estate brokerage services, and
Motto Mortgage ("Motto"), the first national mortgage brokerage
franchise brand in the U.S., today announced operating results for
the quarter ended March 31,
2024.
"Effective cost management led to solid first-quarter margin
performance, as we continue to operate our business as efficiently
as possible amidst an environment of uncertainty," said
Erik Carlson, RE/MAX Holdings Chief
Executive Officer. "This, coupled with our growth mindset and
a focus on delivering the absolute best customer experience, are
the cornerstones of our playbook, supported by RE/MAX agents who
are among the highest quality and most trusted in the
profession.
Carlson continued: "A widely respected industry survey recently
confirmed RE/MAX agents are the most productive in the U.S.,
outperforming competitors at participating large brokerages 2-to-1,
for the 16th year in a row. Our industry-leading
productivity – a hallmark of our brand – continues to differentiate
us from the competition and is a major reason we have succeeded
over the past 51 years. It is also why we are confident we will
successfully navigate today's housing market and evolving real
estate industry."
First Quarter 2024 Operating Results
Agent Count
The following table compares agent count as of March 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
March 31,
|
|
Change
|
|
|
|
2024
|
|
2023
|
|
#
|
|
%
|
U.S.
|
|
|
53,919
|
|
57,450
|
|
(3,531)
|
|
(6.1)
|
Canada
|
|
|
25,036
|
|
25,071
|
|
(35)
|
|
(0.1)
|
Subtotal
|
|
|
78,955
|
|
82,521
|
|
(3,566)
|
|
(4.3)
|
Outside the U.S. &
Canada
|
|
|
64,332
|
|
61,002
|
|
3,330
|
|
5.5
|
Total
|
|
|
143,287
|
|
143,523
|
|
(236)
|
|
(0.2)
|
Revenue
RE/MAX Holdings generated revenue of $78.3 million in the first quarter of 2024, a
decrease of $7.1 million, or 8.3%,
compared to $85.4 million in the
first quarter of 2023. Revenue excluding the Marketing Funds was
$58.1 million in the first quarter of
2024, a decrease of $6.0 million, or
9.3%, versus the same period in 2023. The decrease in Revenue
excluding the Marketing Funds was attributable to negative organic
revenue growth of 9.3%. Negative organic revenue growth was
principally driven by a reduction in revenue from our annual RE/MAX
agent convention, due to the 50th anniversary
celebration in the prior year, and a decrease in U.S. agent count,
partially offset by higher Mortgage segment revenue.
Recurring revenue streams, which consist of continuing franchise
fees and annual dues, decreased $1.4
million, or 3.4%, compared to the first quarter of 2023 and
accounted for 67.7% of Revenue excluding the Marketing Funds in the
first quarter of 2024 compared to 63.5% of Revenue excluding the
Marketing Funds in the prior-year period.
Operating Expenses
Total operating expenses were $73.8
million for the first quarter of 2024, a decrease of
$4.7 million, or 6.0%, compared to
$78.5 million in the first quarter of
2023. First quarter 2024 total operating expenses decreased
primarily due to lower selling, operating and administrative
expenses and reduced Marketing Funds expenses.
Selling, operating and administrative expenses were $45.7 million in the first quarter of 2024, a
decrease of $3.4 million, or 6.9%,
compared to the first quarter of 2023 and represented 78.7% of
Revenue excluding the Marketing Funds, compared to 76.7% in the
prior-year period. First quarter 2024 selling, operating and
administrative expenses decreased primarily due to lower expenses
from our annual RE/MAX agent convention and reduced legal expenses,
partially offset by higher equity-based compensation expense.
Net Income (Loss) and GAAP EPS
Net loss attributable to RE/MAX Holdings was $3.4 million for the first quarter of 2024
compared to net loss of $0.7 million
for the first quarter of 2023. Reported basic and diluted GAAP loss
per share were each $0.18 for the
first quarter of 2024 compared to basic and diluted GAAP loss per
share of $0.04 each in the first
quarter of 2023.
Adjusted EBITDA and Adjusted EPS
Adjusted EBITDA was $19.0 million
for the first quarter of 2024, a decrease of $0.9 million, or 4.7%, compared to the first
quarter of 2023. First quarter 2024 Adjusted EBITDA decreased
primarily due to a decrease in U.S. agent count and the net impact
of our annual RE/MAX agent convention, partially offset by lower
compensation expense and lower legal fees. Adjusted EBITDA margin
was 24.3% in the first quarter of 2024, compared to 23.3% in the
first quarter of 2023.
Adjusted basic and diluted EPS were each $0.20 for the first quarter of 2024 compared to
Adjusted basic and diluted EPS of $0.26 each for the first quarter of 2023. The
ownership structure used to calculate Adjusted basic and diluted
EPS for the quarter ended March 31,
2024, assumes RE/MAX Holdings owned 100% of RMCO, LLC
("RMCO"). The weighted average ownership RE/MAX Holdings had in
RMCO was 59.5% for the quarter ended March
31, 2024.
Balance Sheet
As of March 31, 2024, the Company
had cash and cash equivalents of $82.1
million, a decrease of $0.5
million from December 31,
2023. As of March 31, 2024,
the Company had $443.6 million of
outstanding debt, net of an unamortized debt discount and issuance
costs, compared to $444.6 million as
of December 31, 2023.
Share Repurchases and Retirement
As previously disclosed, in January
2022 the Company's Board of Directors authorized a common
stock repurchase program of up to $100
million. During the three months ended March 31, 2024, the Company did not repurchase
any shares. As of March 31, 2024,
$62.5 million remained available
under the share repurchase program.
Outlook
The Company's second quarter and full-year 2024 Outlook assumes
no further currency movements, acquisitions, or divestitures.
For the second quarter of 2024, RE/MAX Holdings expects:
- Agent count to change negative 1.5% to 0.0% over second quarter
2023;
- Revenue in a range of $75.0
million to $80.0 million
(including revenue from the Marketing Funds in a range of
$19.0 million to $21.0 million); and
- Adjusted EBITDA in a range of $24.0
million to $27.0 million.
For the full year 2024, the Company expects:
- Agent count to change negative 0.5% to positive 1.5% over full
year 2023;
- Revenue in a range of $300.0
million to $320.0 million
(including revenue from the Marketing Funds in a range of
$78.0 million to $82.0 million); and
- Adjusted EBITDA in a range of $90.0
million to $100.0
million.
Webcast and Conference Call
The Company will host a conference call for interested parties
on Friday, May 3, 2024, beginning at
8:30 a.m. Eastern Time. Interested
parties can register in advance for the conference call using the
link below:
https://registrations.events/direct/Q4I941152
Interested parties also can access a live webcast through the
Investor Relations section of the Company's website at
http://investors.remaxholdings.com. Please dial-in or join the
webcast 10 minutes before the start of the conference call. An
archive of the webcast will be available on the Company's website
for a limited time as well.
Basis of Presentation
Unless otherwise noted, the results presented in this press
release are consolidated and exclude adjustments attributable to
the non-controlling interest.
Footnotes:
1Revenue excluding the Marketing Funds is a non-GAAP
measure of financial performance that differs from U.S. Generally
Accepted Accounting Principles ("U.S. GAAP") and a reconciliation
to the most directly comparable U.S. GAAP measure is as follows (in
thousands):
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March 31,
|
|
|
2024
|
|
2023
|
Revenue excluding
the Marketing Funds:
|
|
|
|
|
|
|
Total
revenue
|
|
$
|
78,287
|
|
$
|
85,401
|
Less: Marketing Funds
fees
|
|
|
20,206
|
|
|
21,342
|
Revenue excluding the
Marketing Funds
|
|
$
|
58,081
|
|
$
|
64,059
|
2The Company defines organic revenue growth as
revenue growth from continuing operations excluding (i) revenue
from Marketing Funds, (ii) revenue from acquisitions, and (iii) the
impact of foreign currency movements. The Company defines revenue
from acquisitions as the revenue generated from the date of an
acquisition to its first anniversary (excluding Marketing Funds
revenue related to acquisitions where applicable).
3Adjusted EBITDA, Adjusted EBITDA margin and Adjusted
EPS are non-GAAP measures. These terms are defined at the end of
this release. Please see Tables 5 and 6 appearing later in this
release for reconciliations of these non-GAAP measures to the most
directly comparable GAAP measures.
4Total open Motto Mortgage franchises includes only
"bricks and mortar" offices with a unique physical address with
rights granted by a full franchise agreement with Motto
Franchising, LLC and excludes any "virtual" offices or
BranchiseSM offices.
About RE/MAX Holdings, Inc.
RE/MAX Holdings, Inc. (NYSE: RMAX) is one of the world's leading
franchisors in the real estate industry, franchising real estate
brokerages globally under the RE/MAX® brand, and
mortgage brokerages within the U.S. under the
Motto® Mortgage brand. RE/MAX was founded in 1973
by Dave and Gail Liniger, with an
innovative, entrepreneurial culture affording its agents and
franchisees the flexibility to operate their businesses with great
independence. Now with more than 140,000 agents in nearly 9,000
offices and a presence in more than 110 countries and territories,
nobody in the world sells more real estate than RE/MAX, as measured
by total residential transaction sides. Dedicated to innovation and
change in the real estate industry, RE/MAX launched Motto
Franchising, LLC, a ground-breaking mortgage brokerage franchisor,
in 2016. Motto Mortgage, the first-and-only national mortgage
brokerage franchise brand in the U.S., has grown to over 225
offices across more than 40 states.
Forward-Looking Statements
This press release includes "forward-looking statements" within
the meaning of the "safe harbor" provisions of the United States
Private Securities Litigation Reform Act of 1995. Forward-looking
statements are often identified by the use of words such as
"believe," "intend," "expect," "estimate," "plan," "outlook,"
"project," "anticipate," "may," "will," "would" and other similar
words and expressions that predict or indicate future events or
trends that are not statements of historical matters.
Forward-looking statements include statements related to agent
count; Motto open offices; franchise sales; revenue; operating
expenses and cost management; the Company's outlook for the second
quarter and full year 2024; non-GAAP financial measures; housing
and mortgage market conditions; RE/MAX agent productivity; and our
confidence as to our ability to successfully navigate today's
housing market and evolving real estate industry. Forward-looking
statements should not be read as a guarantee of future performance
or results and will not necessarily accurately indicate the times
at which such performance or results may be achieved.
Forward-looking statements are based on information available at
the time those statements are made and/or management's good faith
belief as of that time with respect to future events and are
subject to risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in
or suggested by the forward-looking statements. These risks and
uncertainties include, without limitation, (1) changes in the real
estate market or interest rates and availability of financing, (2)
changes in business and economic activity in general, (3) the
Company's ability to attract and retain quality franchisees, (4)
the Company's franchisees' ability to recruit and retain real
estate agents and mortgage loan originators, (5) changes in laws
and regulations, (6) the Company's ability to enhance, market, and
protect its brands, (7) the Company's ability to implement its
technology initiatives, (8) risks related to the Company's
leadership transition, (9) fluctuations in foreign currency
exchange rates, (10) the nature and amount of the exclusion of
charges in future periods when determining Adjusted EBITDA is
subject to uncertainty and may not be similar to such charges in
prior periods, and (11) those risks and uncertainties described in
the sections entitled "Risk Factors" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in
the most recent Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q filed with the Securities and Exchange Commission ("SEC")
and similar disclosures in subsequent periodic and current reports
filed with the SEC, which are available on the investor relations
page of the Company's website at www.remaxholdings.com and on the
SEC website at www.sec.gov. Readers are cautioned not to place
undue reliance on forward-looking statements, which speak only as
of the date on which they are made. Except as required by law, the
Company does not intend, and undertakes no obligation, to update
this information to reflect future events or circumstances.
TABLE
1
|
|
RE/MAX Holdings,
Inc.
Consolidated
Statements of Income (Loss)
(In thousands,
except share and per share amounts)
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
March 31,
|
|
|
2024
|
|
2023
|
Revenue:
|
|
|
|
|
|
|
Continuing franchise
fees
|
|
$
|
31,085
|
|
$
|
32,076
|
Annual dues
|
|
|
8,225
|
|
|
8,618
|
Broker fees
|
|
|
10,716
|
|
|
10,892
|
Marketing Funds
fees
|
|
|
20,206
|
|
|
21,342
|
Franchise sales and
other revenue
|
|
|
8,055
|
|
|
12,473
|
Total
revenue
|
|
|
78,287
|
|
|
85,401
|
Operating
expenses:
|
|
|
|
|
|
|
Selling, operating and
administrative expenses
|
|
|
45,705
|
|
|
49,115
|
Marketing Funds
expenses
|
|
|
20,206
|
|
|
21,342
|
Depreciation and
amortization
|
|
|
7,852
|
|
|
8,033
|
Total operating
expenses
|
|
|
73,763
|
|
|
78,490
|
Operating income
(loss)
|
|
|
4,524
|
|
|
6,911
|
Other expenses,
net:
|
|
|
|
|
|
|
Interest
expense
|
|
|
(9,256)
|
|
|
(8,245)
|
Interest
income
|
|
|
1,001
|
|
|
1,004
|
Foreign currency
transaction gains (losses)
|
|
|
(372)
|
|
|
43
|
Total other expenses,
net
|
|
|
(8,627)
|
|
|
(7,198)
|
Income (loss) before
provision for income taxes
|
|
|
(4,103)
|
|
|
(287)
|
Provision for income
taxes
|
|
|
(1,504)
|
|
|
(392)
|
Net income
(loss)
|
|
$
|
(5,607)
|
|
$
|
(679)
|
Less: net income
(loss) attributable to non-controlling interest
|
|
|
(2,254)
|
|
|
(8)
|
Net income (loss)
attributable to RE/MAX Holdings, Inc.
|
|
$
|
(3,353)
|
|
$
|
(671)
|
|
|
|
|
|
|
|
Net income (loss)
attributable to RE/MAX Holdings, Inc. per share
of Class A common stock
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.18)
|
|
$
|
(0.04)
|
Diluted
|
|
$
|
(0.18)
|
|
$
|
(0.04)
|
Weighted average shares
of Class A common stock outstanding
|
|
|
|
|
|
|
Basic
|
|
|
18,481,848
|
|
|
17,916,841
|
Diluted
|
|
|
18,481,848
|
|
|
17,916,841
|
Cash dividends declared
per share of Class A common stock
|
|
$
|
—
|
|
$
|
0.23
|
TABLE
2
|
|
RE/MAX Holdings,
Inc.
Consolidated Balance
Sheets
(In
thousands, except share and per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
March 31,
|
|
December 31,
|
|
|
2024
|
|
2023
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
82,077
|
|
$
|
82,623
|
Restricted
cash
|
|
|
45,359
|
|
|
43,140
|
Accounts and notes
receivable, current portion, net of allowances
|
|
|
33,182
|
|
|
33,427
|
Income taxes
receivable
|
|
|
2,015
|
|
|
1,706
|
Other current
assets
|
|
|
13,100
|
|
|
15,669
|
Total current
assets
|
|
|
175,733
|
|
|
176,565
|
Property and equipment,
net of accumulated depreciation
|
|
|
8,936
|
|
|
8,633
|
Operating lease right
of use assets
|
|
|
21,710
|
|
|
23,013
|
Franchise agreements,
net
|
|
|
95,841
|
|
|
101,516
|
Other intangible
assets, net
|
|
|
18,126
|
|
|
19,176
|
Goodwill
|
|
|
239,930
|
|
|
241,164
|
Other assets, net of
current portion
|
|
|
6,446
|
|
|
7,083
|
Total
assets
|
|
$
|
566,722
|
|
$
|
577,150
|
Liabilities and
stockholders' equity (deficit)
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
3,074
|
|
$
|
4,700
|
Accrued
liabilities
|
|
|
104,385
|
|
|
107,434
|
Income taxes
payable
|
|
|
1,286
|
|
|
766
|
Deferred
revenue
|
|
|
23,214
|
|
|
23,077
|
Current portion of
debt
|
|
|
4,600
|
|
|
4,600
|
Current portion of
payable pursuant to tax receivable agreements
|
|
|
285
|
|
|
822
|
Operating lease
liabilities
|
|
|
8,028
|
|
|
7,920
|
Total current
liabilities
|
|
|
144,872
|
|
|
149,319
|
Debt, net of current
portion
|
|
|
439,044
|
|
|
439,980
|
Deferred tax
liabilities
|
|
|
10,499
|
|
|
10,797
|
Deferred revenue, net
of current portion
|
|
|
16,911
|
|
|
17,607
|
Operating lease
liabilities, net of current portion
|
|
|
29,358
|
|
|
31,479
|
Other liabilities, net
of current portion
|
|
|
3,891
|
|
|
4,029
|
Total
liabilities
|
|
|
644,575
|
|
|
653,211
|
Commitments and
contingencies
|
|
|
|
|
|
|
Stockholders' equity
(deficit):
|
|
|
|
|
|
|
Class A common stock,
par value $.0001 per share, 180,000,000 shares authorized;
18,852,858 and 18,269,284 shares issued and outstanding as of
March 31, 2024 and December 31, 2023,
respectively
|
|
|
2
|
|
|
2
|
Class B common stock,
par value $.0001 per share, 1,000 shares authorized; 1 share issued
and outstanding as of March 31, 2024 and
December 31, 2023, respectively
|
|
|
—
|
|
|
—
|
Additional paid-in
capital
|
|
|
556,285
|
|
|
550,637
|
Accumulated
deficit
|
|
|
(144,155)
|
|
|
(140,217)
|
Accumulated other
comprehensive income (deficit), net of tax
|
|
|
(105)
|
|
|
638
|
Total stockholders'
equity attributable to RE/MAX Holdings, Inc.
|
|
|
412,027
|
|
|
411,060
|
Non-controlling
interest
|
|
|
(489,880)
|
|
|
(487,121)
|
Total stockholders'
equity (deficit)
|
|
|
(77,853)
|
|
|
(76,061)
|
Total liabilities
and stockholders' equity (deficit)
|
|
$
|
566,722
|
|
$
|
577,150
|
|
|
|
|
|
|
|
TABLE
3
|
|
RE/MAX Holdings,
Inc.
Consolidated
Statements of Cash Flows
(In
thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March 31,
|
|
|
2024
|
|
2023
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
(5,607)
|
|
$
|
(679)
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
7,852
|
|
|
8,033
|
Equity-based
compensation expense
|
|
|
5,923
|
|
|
4,451
|
Bad debt
expense
|
|
|
1,314
|
|
|
1,614
|
Deferred income tax
expense (benefit)
|
|
|
(202)
|
|
|
(1,579)
|
Fair value adjustments
to contingent consideration
|
|
|
34
|
|
|
(4)
|
Loss (gain) on sale or
disposition of assets, net
|
|
|
—
|
|
|
178
|
Non-cash lease
benefit
|
|
|
(705)
|
|
|
(766)
|
Non-cash debt
charges
|
|
|
215
|
|
|
212
|
Other, net
|
|
|
(5)
|
|
|
(116)
|
Changes in operating
assets and liabilities
|
|
|
562
|
|
|
(8,280)
|
Net cash provided by
operating activities
|
|
|
9,381
|
|
|
3,064
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Purchases of property,
equipment and capitalization of software
|
|
|
(2,619)
|
|
|
(1,489)
|
Other
|
|
|
189
|
|
|
195
|
Net cash used in
investing activities
|
|
|
(2,430)
|
|
|
(1,294)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Payments on
debt
|
|
|
(1,150)
|
|
|
(1,150)
|
Distributions paid to
non-controlling unitholders
|
|
|
—
|
|
|
(2,889)
|
Dividends and dividend
equivalents paid to Class A common stockholders
|
|
|
(585)
|
|
|
(4,824)
|
Payments related to
tax withholding for share-based compensation
|
|
|
(2,498)
|
|
|
(3,458)
|
Common shares
repurchased
|
|
|
—
|
|
|
(3,408)
|
Payment of contingent
consideration
|
|
|
(120)
|
|
|
(120)
|
Net cash used in
financing activities
|
|
|
(4,353)
|
|
|
(15,849)
|
Effect of exchange rate
changes on cash
|
|
|
(925)
|
|
|
34
|
Net increase
(decrease) in cash, cash equivalents and restricted cash
|
|
|
1,673
|
|
|
(14,045)
|
Cash, cash equivalents
and restricted cash, beginning of period
|
|
|
125,763
|
|
|
138,128
|
Cash, cash equivalents
and restricted cash, end of period
|
|
$
|
127,436
|
|
$
|
124,083
|
TABLE
4
|
|
RE/MAX Holdings,
Inc.
Agent
Count
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
March
31,
|
|
December
31,
|
|
September
30,
|
|
June
30,
|
|
March
31,
|
|
December
31,
|
|
September
30,
|
|
June
30,
|
|
March
31,
|
|
|
2024
|
|
2023
|
|
2023
|
|
2023
|
|
2023
|
|
2022
|
|
2022
|
|
2022
|
|
2022
|
Agent
Count:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-Owned
Regions
|
|
47,302
|
|
48,401
|
|
49,576
|
|
50,011
|
|
50,340
|
|
51,491
|
|
52,804
|
|
53,415
|
|
53,338
|
Independent
Regions
|
|
6,617
|
|
6,730
|
|
6,918
|
|
6,976
|
|
7,110
|
|
7,228
|
|
7,311
|
|
7,410
|
|
7,379
|
U.S.
Total
|
|
53,919
|
|
55,131
|
|
56,494
|
|
56,987
|
|
57,450
|
|
58,719
|
|
60,115
|
|
60,825
|
|
60,717
|
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-Owned
Regions
|
|
20,151
|
|
20,270
|
|
20,389
|
|
20,354
|
|
20,172
|
|
20,228
|
|
20,174
|
|
20,098
|
|
19,751
|
Independent
Regions
|
|
4,885
|
|
4,898
|
|
4,899
|
|
4,864
|
|
4,899
|
|
4,892
|
|
4,844
|
|
4,756
|
|
4,692
|
Canada
Total
|
|
25,036
|
|
25,168
|
|
25,288
|
|
25,218
|
|
25,071
|
|
25,120
|
|
25,018
|
|
24,854
|
|
24,443
|
U.S. and Canada
Total
|
|
78,955
|
|
80,299
|
|
81,782
|
|
82,205
|
|
82,521
|
|
83,839
|
|
85,133
|
|
85,679
|
|
85,160
|
Outside U.S. and
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent
Regions
|
|
64,332
|
|
64,536
|
|
63,527
|
|
62,305
|
|
61,002
|
|
60,175
|
|
59,167
|
|
58,260
|
|
57,245
|
Outside U.S. and
Canada Total
|
|
64,332
|
|
64,536
|
|
63,527
|
|
62,305
|
|
61,002
|
|
60,175
|
|
59,167
|
|
58,260
|
|
57,245
|
Total
|
|
143,287
|
|
144,835
|
|
145,309
|
|
144,510
|
|
143,523
|
|
144,014
|
|
144,300
|
|
143,939
|
|
142,405
|
TABLE
5
|
|
RE/MAX Holdings,
Inc.
Adjusted EBITDA
Reconciliation to Net Income (Loss)
(In
thousands, except percentages)
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
March 31,
|
|
|
|
2024
|
|
2023
|
|
Net income
(loss)
|
|
$
|
(5,607)
|
|
$
|
(679)
|
|
Depreciation and
amortization
|
|
|
7,852
|
|
|
8,033
|
|
Interest
expense
|
|
|
9,256
|
|
|
8,245
|
|
Interest
income
|
|
|
(1,001)
|
|
|
(1,004)
|
|
Provision for income
taxes
|
|
|
1,504
|
|
|
392
|
|
EBITDA
|
|
|
12,004
|
|
|
14,987
|
|
Equity-based
compensation expense
|
|
|
5,923
|
|
|
4,451
|
|
Acquisition-related
expense (1)
|
|
|
—
|
|
|
37
|
|
Fair value adjustments
to contingent consideration (2)
|
|
|
34
|
|
|
(4)
|
|
Restructuring charges
(3)
|
|
|
(32)
|
|
|
39
|
|
Other
(4)
|
|
|
1,064
|
|
|
410
|
|
Adjusted EBITDA
(5)
|
|
$
|
18,993
|
|
$
|
19,920
|
|
Adjusted EBITDA Margin
(5)
|
|
|
24.3
|
%
|
|
23.3
|
%
|
(1)
|
Acquisition-related
expense includes personnel, legal, accounting, advisory and
consulting fees incurred in connection with acquisition activities
and integration of acquired companies.
|
(2)
|
Fair value adjustments
to contingent consideration include amounts recognized for changes
in the estimated fair value of the contingent consideration
liabilities.
|
(3)
|
During the third
quarter of 2023, the Company announced a reduction in force and
reorganization intended to streamline the Company's operations and
yield cost savings over the long term.
|
(4)
|
Other is primarily made
up of employee retention related expenses from the Company's CEO
transition.
|
(5)
|
Non-GAAP measure. See
the end of this press release for definitions of non-GAAP
measures.
|
TABLE
6
|
|
RE/MAX Holdings,
Inc.
Adjusted Net Income
(Loss) and Adjusted Earnings per Share
(In
thousands, except share and per share amounts)
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
March 31,
|
|
|
2024
|
|
2023
|
Net income
(loss)
|
|
$
|
(5,607)
|
|
$
|
(679)
|
Amortization of
acquired intangible assets
|
|
|
5,470
|
|
|
5,758
|
Provision for income
taxes
|
|
|
1,504
|
|
|
392
|
Add-backs:
|
|
|
|
|
|
|
Equity-based
compensation expense
|
|
|
5,923
|
|
|
4,451
|
Acquisition-related
expense (1)
|
|
|
—
|
|
|
37
|
Fair value adjustments
to contingent consideration (2)
|
|
|
34
|
|
|
(4)
|
Restructuring charges
(3)
|
|
|
(32)
|
|
|
39
|
Other
(4)
|
|
|
1,064
|
|
|
410
|
Adjusted pre-tax net
income
|
|
|
8,356
|
|
|
10,404
|
Less: Provision for
income taxes at 25% (5)
|
|
|
(2,089)
|
|
|
(2,601)
|
Adjusted net income
(6)
|
|
$
|
6,267
|
|
$
|
7,803
|
|
|
|
|
|
|
|
Total basic pro forma
shares outstanding
|
|
|
31,041,448
|
|
|
30,476,441
|
Total diluted pro forma
shares outstanding
|
|
|
31,041,448
|
|
|
30,476,441
|
|
|
|
|
|
|
|
Adjusted net income
basic earnings per share (6)
|
|
$
|
0.20
|
|
$
|
0.26
|
Adjusted net income
diluted earnings per share (6)
|
|
$
|
0.20
|
|
$
|
0.26
|
(1)
|
Acquisition-related
expense includes personnel, legal, accounting, advisory and
consulting fees incurred in connection with acquisition activities
and integration of acquired companies.
|
(2)
|
Fair value adjustments
to contingent consideration include amounts recognized for changes
in the estimated fair value of the contingent consideration
liabilities.
|
(3)
|
During the third
quarter of 2023, the Company announced a reduction in force and
reorganization intended to streamline the Company's operations and
yield cost savings over the long term.
|
(4)
|
Other is primarily made
up of employee retention related expenses from the Company's CEO
transition.
|
(5)
|
The long-term tax rate
assumes the exchange of all outstanding non-controlling interest
partnership units for Class A Common Stock that (a) removes the
impact of unusual, non-recurring tax matters and (b) does not
estimate the residual impacts to foreign taxes of additional
step-ups in tax basis from an exchange because that is dependent on
stock prices at the time of such exchange and the calculation is
impracticable.
|
(6)
|
Non-GAAP measure. See
the end of this press release for definitions of non-GAAP
measures.
|
TABLE
7
|
|
RE/MAX Holdings,
Inc.
Pro Forma Shares
Outstanding
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
March 31,
|
|
|
2024
|
|
2023
|
Total basic weighted
average shares outstanding:
|
|
|
|
|
Weighted average
shares of Class A common stock outstanding
|
|
18,481,848
|
|
17,916,841
|
Remaining equivalent
weighted average shares of stock outstanding on a pro forma basis
assuming RE/MAX Holdings owned 100% of RMCO
|
|
12,559,600
|
|
12,559,600
|
Total basic pro forma
weighted average shares outstanding
|
|
31,041,448
|
|
30,476,441
|
|
|
|
|
|
Total diluted
weighted average shares outstanding:
|
|
|
|
|
Weighted average
shares of Class A common stock outstanding
|
|
18,481,848
|
|
17,916,841
|
Remaining equivalent
weighted average shares of stock outstanding on a pro forma basis
assuming RE/MAX Holdings owned 100% of RMCO
|
|
12,559,600
|
|
12,559,600
|
Dilutive effect of
unvested restricted stock units (1)
|
|
—
|
|
—
|
Total diluted pro
forma weighted average shares outstanding
|
|
31,041,448
|
|
30,476,441
|
(1)
|
In accordance with the
treasury stock method.
|
TABLE
8
|
|
RE/MAX Holdings,
Inc.
Adjusted Free Cash
Flow & Unencumbered Cash
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
March 31,
|
|
|
2024
|
|
2023
|
Cash flow from
operations
|
|
$
|
9,381
|
|
$
|
3,064
|
Less: Purchases of
property, equipment, and capitalization of software
|
|
|
(2,619)
|
|
|
(1,489)
|
(Increases) decreases
in restricted cash of the Marketing Funds (1)
|
|
|
(2,219)
|
|
|
2,136
|
Adjusted free cash
flow (2)
|
|
|
4,543
|
|
|
3,711
|
|
|
|
|
|
|
|
Adjusted free cash flow
(2)
|
|
|
4,543
|
|
|
3,711
|
Less: Tax/Other
non-dividend distributions to RIHI
|
|
|
—
|
|
|
—
|
Adjusted free cash
flow after tax/non-dividend distributions to RIHI (2)
|
|
|
4,543
|
|
|
3,711
|
|
|
|
|
|
|
|
Adjusted free cash flow
after tax/non-dividend distributions to RIHI
(2)
|
|
|
4,543
|
|
|
3,711
|
Less: Debt principal
payments
|
|
|
(1,150)
|
|
|
(1,150)
|
Unencumbered cash
generated (2)
|
|
$
|
3,393
|
|
$
|
2,561
|
|
|
|
|
|
|
|
Summary
|
|
|
|
|
|
|
Cash flow from
operations
|
|
$
|
9,381
|
|
$
|
3,064
|
Adjusted free cash flow
(2)
|
|
$
|
4,543
|
|
$
|
3,711
|
Adjusted free cash flow
after tax/non-dividend distributions to RIHI
(2)
|
|
$
|
4,543
|
|
$
|
3,711
|
Unencumbered cash
generated (2)
|
|
$
|
3,393
|
|
$
|
2,561
|
|
|
|
|
|
|
|
Adjusted EBITDA
(2)
|
|
$
|
18,993
|
|
$
|
19,920
|
Adjusted free cash flow
as % of Adjusted EBITDA (2)
|
|
|
23.9 %
|
|
|
18.6 %
|
Adjusted free cash flow
less distributions to RIHI as % of Adjusted EBITDA
(2)
|
|
|
23.9 %
|
|
|
18.6 %
|
Unencumbered cash
generated as % of Adjusted EBITDA (2)
|
|
|
17.9 %
|
|
|
12.9 %
|
(1)
|
This line reflects any
subsequent changes in the restricted cash balance (which under GAAP
reflects as either (a) an increase or decrease in cash flow from
operations or (b) an incremental amount of purchases of property
and equipment and capitalization of developed software) to remove
the impact of changes in restricted cash in determining adjusted
free cash flow.
|
(2)
|
Non-GAAP measure. See
the end of this press release for definitions of non-GAAP
measures.
|
Non-GAAP Financial Measures
The SEC has adopted rules to regulate the use in filings with
the SEC and in public disclosures of financial measures that are
not in accordance with U.S. GAAP, such as revenue excluding the
Marketing Funds, Adjusted EBITDA and the ratios related thereto,
Adjusted net income, Adjusted basic and diluted earnings per share
(Adjusted EPS) and adjusted free cash flow. These measures are
derived based on methodologies other than in accordance with U.S.
GAAP.
Revenue excluding the Marketing Funds is calculated directly
from our consolidated financial statements as Total revenue less
Marketing Funds fees.
The Company defines Adjusted EBITDA as EBITDA (consolidated net
income before depreciation and amortization, interest expense,
interest income and the provision for income taxes, each of which
is presented in the unaudited consolidated financial statements
included earlier in this press release), adjusted for the impact of
the following items that are either non-cash or that the Company
does not consider representative of its ongoing operating
performance: loss or gain on sale or disposition of assets and
sublease, settlement and impairment charges, equity-based
compensation expense, acquisition-related expense, gain on
reduction in tax receivable agreement liability, expense or income
related to changes in the estimated fair value measurement of
contingent consideration, restructuring charges and other
non-recurring items.
Because Adjusted EBITDA and Adjusted EBITDA margin omit certain
non-cash items and other non-recurring cash charges or other items,
the Company believes that each measure is less susceptible to
variances that affect its operating performance resulting from
depreciation, amortization and other non-cash and non-recurring
cash charges or other items. The Company presents Adjusted EBITDA
and the related Adjusted EBITDA margin because the Company believes
they are useful as supplemental measures in evaluating the
performance of its operating businesses and provides greater
transparency into the Company's results of operations. The
Company's management uses Adjusted EBITDA and Adjusted EBITDA
margin as factors in evaluating the performance of the
business.
Adjusted EBITDA and Adjusted EBITDA margin have limitations as
analytical tools, and you should not consider these measures in
isolation or as a substitute for analyzing the Company's results as
reported under U.S. GAAP. Some of these limitations are:
- these measures do not reflect changes in, or cash requirements
for, the Company's working capital needs;
- these measures do not reflect the Company's interest expense,
or the cash requirements necessary to service interest or principal
payments on its debt;
- these measures do not reflect the Company's income tax expense
or the cash requirements to pay its taxes;
- these measures do not reflect the cash requirements to pay
dividends to stockholders of the Company's Class A common stock and
tax and other cash distributions to its non-controlling
unitholders;
- these measures do not reflect the cash requirements pursuant to
the tax receivable agreements;
- these measures do not reflect the cash requirements for share
repurchases;
- these measures do not reflect the cash requirements for the
settlement of industry class-action lawsuits and other legal
settlements;
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often require
replacement in the future, and these measures do not reflect any
cash requirements for such replacements;
- although equity-based compensation is a non-cash charge, the
issuance of equity-based awards may have a dilutive impact on
earnings per share; and
- other companies may calculate these measures differently so
similarly named measures may not be comparable.
The Company's Adjusted EBITDA guidance does not include certain
charges and costs. The adjustments to EBITDA in future periods are
generally expected to be similar to the kinds of charges and costs
excluded from Adjusted EBITDA in prior quarters, such as gain or
loss on sale or disposition of assets and sublease, settlement and
impairment charges, equity-based compensation expense,
acquisition-related expense, gains or losses from changes in the
tax receivable agreement liability, expense or income related to
changes in the fair value measurement of contingent consideration,
restructuring charges and other non-recurring items. The exclusion
of these charges and costs in future periods will have a
significant impact on the Company's Adjusted EBITDA. The Company is
not able to provide a reconciliation of the Company's non-GAAP
financial guidance to the corresponding U.S. GAAP measures without
unreasonable effort because of the uncertainty and variability of
the nature and amount of these future charges and costs.
Adjusted net income is calculated as Net income attributable to
RE/MAX Holdings, assuming the full exchange of all outstanding
non-controlling interests for shares of Class A common stock as of
the beginning of the period (and the related increase to the
provision for income taxes after such exchange), plus primarily
non-cash items and other items that management does not consider to
be useful in assessing the Company's operating performance (e.g.,
amortization of acquired intangible assets, gain on sale or
disposition of assets and sub-lease, non-cash impairment charges,
acquisition-related expense, restructuring charges and equity-based
compensation expense).
Adjusted basic and diluted earnings per share (Adjusted EPS) are
calculated as Adjusted net income (as defined above) divided by pro
forma (assuming the full exchange of all outstanding
non-controlling interests) basic and diluted weighted average
shares, as applicable.
When used in conjunction with GAAP financial measures, Adjusted
net income and Adjusted EPS are supplemental measures of operating
performance that management believes are useful measures to
evaluate the Company's performance relative to the performance of
its competitors as well as performance period over period. By
assuming the full exchange of all outstanding non-controlling
interests, management believes these measures:
- facilitate comparisons with other companies that do not have a
low effective tax rate driven by a non-controlling interest on a
pass-through entity;
- facilitate period over period comparisons because they
eliminate the effect of changes in Net income attributable to
RE/MAX Holdings, Inc. driven by increases in its ownership of RMCO,
LLC, which are unrelated to the Company's operating performance;
and
- eliminate primarily non-cash and other items that management
does not consider to be useful in assessing the Company's operating
performance.
Adjusted free cash flow is calculated as cash flows from
operations less capital expenditures and any changes in restricted
cash of the Marketing Funds, all as reported under GAAP, and
quantifies how much cash a company has to pursue opportunities that
enhance shareholder value. The restricted cash of the Marketing
Funds is limited in use for the benefit of franchisees and any
impact to adjusted free cash flow is removed. The Company believes
adjusted free cash flow is useful to investors as a supplemental
measure as it calculates the cash flow available for working
capital needs, re-investment opportunities, potential Independent
Region and strategic acquisitions, dividend payments or other
strategic uses of cash.
Adjusted free cash flow after tax and non-dividend distributions
to RIHI is calculated as adjusted free cash flow less tax and other
non-dividend distributions paid to RIHI (the non-controlling
interest holder) to enable RIHI to satisfy its income tax
obligations. Similar payments would be made by the Company directly
to federal and state taxing authorities as a component of the
Company's consolidated provision for income taxes if a full
exchange of non-controlling interests occurred in the future. As a
result and given the significance of the Company's ongoing tax and
non-dividend distribution obligations to its non-controlling
interest, adjusted free cash flow after tax and non-dividend
distributions, when used in conjunction with GAAP financial
measures, provides a meaningful view of cash flow available to the
Company to pursue opportunities that enhance shareholder value.
Unencumbered cash generated is calculated as adjusted free cash
flow after tax and non-dividend distributions to RIHI less
quarterly debt principal payments less annual excess cash flow
payment on debt, as applicable. Given the significance of the
Company's excess cash flow payment on debt, when applicable,
unencumbered cash generated, when used in conjunction with GAAP
financial measures, provides a meaningful view of the cash flow
available to the Company to pursue opportunities that enhance
shareholder value after considering its debt service
obligations.
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SOURCE RE/MAX Holdings, Inc.