DENVER, Aug. 6, 2015 /PRNewswire/ --
Second Quarter 2015 Highlights
(Compared to the second quarter 2014 unless otherwise
noted)
- Agent count grew by 6.1% to 101,903 agents
- Revenue grew by 4.7% to $44.3
million
- Operating Income grew by 12.3% to $21.4
million
- Adjusted EBITDA1 of $25.7
million, up 6.4%
- Adjusted EBITDA1 margin of 57.9%, up from 57.0%
- Adjusted basic and diluted earnings per share1
("EPS") of $0.48 and $0.47, respectively
- Declared quarterly dividend of $0.125 per share
- Raising full-year agent count growth outlook to 5.0% to 5.5%
from 4.0% to 5.0%
RE/MAX Holdings, Inc. (the "Company" or "RE/MAX") (NYSE:
RMAX), one of the world's leading franchisors of real estate
brokerage services, today announced operating results for the
second quarter ended June 30,
2015.
"We continue to expand our network, gaining nearly 4,000 agents
through the first half of the year," stated Dave Liniger, Chief Executive Officer and
Co-Founder of RE/MAX. "The housing market continues to improve,
with nine consecutive months of higher year-over-year sales of U.S.
existing homes. While inventory remains constrained in many
markets, recent sales activity indicates that more buyers and
sellers are getting into the market. Given these positive trends,
our strong agent recruiting initiatives and the addition of 513
agents in July, we are raising our full-year agent growth outlook
to 5.0% to 5.5% over 2014."
Second Quarter 2015 Operating Results
Agent Count
Total agent count grew by 5,814 agents to 101,903 agents or 6.1%
over the second quarter ended June 30,
2014. In the United States
("U.S."), agent count increased by 2,742 agents to 59,004 agents or
4.9%. Agent count in U.S. Company-owned and Independent regions
grew by 5.4% and 4.1%, respectively. In Canada, agent count increased by 402 agents to
19,432 agents or 2.1% over the prior year quarter. Outside the
U.S. and Canada, agent count
increased by 2,670 agents to 23,467 agents or 12.8%. During the six
months ended June 30, 2015, the
Company grew total agent count by 3,893 agents or 4.0% compared to
total agent count growth of 2,861 agents or 3.1% during the same
period in 2014.
Revenue
RE/MAX generated total revenue of $44.3
million for the second quarter of 2015, a 4.7% increase
compared to $42.3 million in the
second quarter of 2014, primarily driven by increased revenue from
broker fees and franchise sales.
Revenue from continuing franchise fees was $18.3 million, up $0.2
million or 1.4% compared to the prior year quarter primarily
due to growth in agent count, offset by a decrease in aggregate fee
revenue per agent partly due to fee waivers for certain new agents
associated with the Company's Momentum agent development and
recruiting program that began in the fourth quarter of 2014, and
the divestiture of the Caribbean
and Central America regions on
December 31, 2014. The strength of
the U.S. dollar compared to the Canadian dollar also negatively
impacted revenue from continuing franchise fees during the
quarter.
Revenue from annual dues was $7.9
million, up $0.2 million or
3.0% compared to the prior year quarter primarily due to an
increase in total agent count of 5,814 from the prior year quarter,
of which 3,144 agents were located in the U.S. and Canada.
Revenue from broker fees was $9.2
million, up $1.2 million or
15.4% compared to the prior year quarter. The increase was driven
by growth in agent count and increased transaction activity due in
part to improving market conditions.
Franchise sales and other franchise revenue was $5.5 million, up $0.9
million or 20.4% compared to the prior year quarter driven
by an increase in revenue associated with global franchise sales
and increased office franchise sales in the U.S.
Brokerage revenue was $3.4
million, a decrease of $0.7
million or 16.2% from the prior year quarter largely
attributable to the sale of six previously owned brokerage offices
to an existing RE/MAX franchisee in April
2015. The six offices had 270 agents at the time of the sale
and are located in Maryland and
Virginia.
Operating Expenses
Total operating expenses were $22.9
million for the second quarter of 2015, a decrease of
$0.4 million or 1.6% compared to the
prior year quarter. The reduction in total operating expenses was
primarily due to the gain on sale of assets related to the sale of
the six previously owned brokerage offices during the second
quarter of 2015. Selling, operating and administrative expenses
were $19.7 million, up $0.3 million or 1.3% from the prior year quarter.
Selling, operating and administrative expenses were 44.6% of
revenue in the second quarter compared to 46.0% in the prior year
quarter.
Net Income
Reported net income was $16.1
million for the second quarter of 2015, an increase of
$1.5 million or 10.7% compared to the
prior year quarter. The increase was primarily due to higher
operating income, partially offset by lower foreign currency
transaction gains and a higher provision for income taxes.
Adjusted net income2 was $14.2
million for the second quarter of 2015, an increase of
$0.9 million or 7.0% compared to the
prior year quarter. Adjusted basic and diluted EPS were
$0.48 and $0.47, respectively, for the second quarter of
2015, compared to $0.45 and
$0.44 for the prior year quarter,
respectively. The strength of the U.S. dollar compared to the
Canadian dollar negatively impacted both Adjusted basic and diluted
EPS by approximately $0.01 in the
second quarter of 2015.
Net income attributable to RE/MAX Holdings, Inc. was
$5.0 million for the second quarter
of 2015. This amount excludes net income attributable to the
non-controlling interest. Reported basic and diluted EPS
attributable to RE/MAX Holdings, Inc. were $0.41 and $0.40,
respectively. Refer to Table 1 for the share counts used in the
calculation of basic and diluted EPS attributable to RE/MAX
Holdings, Inc. in accordance with U.S. generally accepted
accounting principles ("U.S. GAAP").
The ownership structure used to calculate Adjusted basic and
diluted EPS for the three months ended June
30, 2015 assumes RE/MAX owning 100% of RMCO, LLC ("RMCO").
The weighted average ownership RE/MAX had of RMCO was 40.81% for
the three months ended June 30, 2015.
Refer to Table 6 for a reconciliation of Adjusted net income to net
income and the share counts used in the Adjusted basic and diluted
EPS calculations.
Adjusted EBITDA
Adjusted EBITDA was $25.7 million
for the second quarter of 2015, up $1.5
million or 6.4% from the prior year quarter. Adjusted EBITDA
margin was 57.9% for the second quarter of 2015 compared to 57.0%
in the prior year quarter, driven by higher revenue. This was
offset by the strength of the U.S. dollar compared to the Canadian
dollar, which decreased Adjusted EBITDA margin by approximately
$0.6 million or 43 basis points for
the second quarter of 2015. A reconciliation of Adjusted EBITDA to
net income is included in Table 5.
Balance Sheet
As of June 30, 2015, the Company
had a cash balance of $80.3 million,
a decrease of $26.9 million from
December 31, 2014. As announced on
March 11, 2015, RE/MAX doubled its
quarterly dividend to $0.125 per
share and declared a special cash dividend of $1.50 per share. The aggregate payment for the
special dividend, paid in April, was approximately $45.0 million and was funded through existing
cash. The Company had $202.8 million
of term loans outstanding, net of unamortized discount as of
June 30, 2015, down from $211.7 million, net as of December 31, 2014.
Dividend
The Company's Board of Directors approved a quarterly dividend
of $0.125 per share, which is payable
on September 3, 2015 to shareholders
of record at the close of business on August
20, 2015.
Outlook
Based on the Company's performance through the first six months
of this year, the agent count increase in July and the sale of six
of its owned brokerage offices in April of this year, RE/MAX is
providing the following outlook for its third quarter and its
full-year 2015:
Third Quarter 2015 Outlook:
- Agent count is estimated to increase by 4.75% to 5.25% over
third quarter 2014;
- Revenue is estimated to decrease by 1.0% to 1.5% over third
quarter 2014;
- Revenue would have increased by an estimated 1.0% to 1.5% over
third quarter 2014 after adjusting for the sale of the six owned
brokerage offices and the sale of the Caribbean and Central America regions;
- Selling, operating and administrative expenses are estimated to
be 50.0% to 51.0% of third quarter 2015 revenue; and
- Adjusted EBITDA margin is estimated to be in the 51.0% to 52.0%
range.
Full-Year 2015 Outlook:
- Raising full-year agent count outlook to 5.0% to 5.5% from 4.0%
to 5.0% over 2014;
- Revenue is estimated to increase by 1.0% to 2.0% over 2014;
- Revenue would have increased by an estimated 3.0% to 4.0% over
2014 after adjusting for the sale of the six owned brokerage
offices and the sale of the Caribbean and Central America regions;
- Selling, operating and administrative expenses are estimated to
be 50.0% to 52.0% of 2015 revenue;
- Adjusted EBITDA margin is estimated to be in the 49.0% to 50.0%
range;
- Total capital expenditures of $3.5 to
$4.0 million
- Includes project related capital expenditures of $2.0 to $2.5 million; and
- Project related operating expenditures of approximately
$3.0 million.
The Company's 2015 outlook reflects an annualized estimated
exchange rate of $0.78 U.S. for every
$1.00 Canadian.
Webcast and Conference Call
The Company will host a conference call for interested parties
on Friday, August 7, 2015, beginning
at 8:00 a.m. Eastern Time. Interested
parties are able to access the conference call using the following
dial-in numbers:
U.S.
|
|
1-877-512-8755
|
Canada
|
|
1-855-669-9657
|
International
|
|
1-412-902-4144
|
|
|
|
Interested parties are also able to access a live webcast
through the Investor Relations section of the Company's website at
investors.remax.com. Please dial-in or join the webcast 10 minutes
before the start of the conference call.
A replay of the call will be available approximately one hour
after the end of the call on August 7,
2015 through September 6,
2015, by dialing 1-877-344-7529 (U.S.), 1-855-669-9658
(Canada) or 1-412-317-0088
(International) and entering the pass code 10069538. 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.
About the RE/MAX Network
RE/MAX was founded in 1973 by David and
Gail Liniger, with an innovative, entrepreneurial culture
affording its agents and franchisees the flexibility to operate
their businesses with great independence. Over 100,000 agents
provide RE/MAX a global reach of nearly 100 countries. Nobody sells
more real estate than RE/MAX.
RE/MAX, LLC, one of the world's leading franchisors of real
estate brokerage services, is a wholly-owned subsidiary of RMCO,
which is controlled and managed by RE/MAX Holdings, Inc. (NYSE:
RMAX).
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 may be identified by the use of words such as
"anticipate," "believe," "intend," "expect," "estimate," "plan,"
"outlook," "project" and other similar words and expressions that
predict or indicate future events or trends that are not statements
of historical matters. These forward-looking statements include
statements regarding the Company's outlook for the third quarter
and full fiscal year, including expectations regarding agent count
and Adjusted EBITDA margins for its third quarter and full fiscal
year, the Company's optimism for agent recruitment and improving
market conditions, as well as other statements regarding the
Company's strategic and operational plans. Forward-looking
statements should not be read as a guarantee of future performance
or results, and will not necessarily be accurate indications of the
times at, or by, which such performance or results will 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. Such risks and
uncertainties include, without limitation, (1) changes in business
and economic activity in general, (2) changes in the real estate
market, including changes due to interest rates and availability of
financing, (3) the Company's ability to attract and retain quality
franchisees, (4) the Company's franchisees' ability to recruit and
retain agents, (5) changes in laws and regulations that may affect
the Company's business or the real estate market, (6) failure to
maintain, protect and enhance the RE/MAX brand, (7) fluctuations in
foreign currency exchange rates, as well as those risks and
uncertainties described in the sections entitled "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operation" in the most recent Annual Report or Form 10-K
filed with the Securities and Exchange Commission ("SEC") and
similar disclosures in subsequent reports filed with the SEC, which
are available on the investor relations page of the Company's
website at www.remax.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 duty, to update this information
to reflect future events or circumstances.
1
Non-GAAP measures. See Table 5 for a reconciliation of net
income to Adjusted EBITDA. See Table 6 for a reconciliation of net
income to Adjusted net income and related calculation of Adjusted
EPS. See the end of this press release for a definition of Non-GAAP
measures.
|
|
2
Non-GAAP measure. Adjusted net income measure assumes RE/MAX
owns 100% of RMCO. As of June 30, 2015, RE/MAX actually owned
41.01% of RMCO. See Table 6 for a reconciliation of Adjusted net
income and Adjusted EPS to net income. See the end of this press
release for a definition of Non-GAAP measures.
|
TABLE
1
|
RE/MAX Holdings,
Inc.
Condensed
Consolidated Statements of Income
(Amounts in
thousands, except share and per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing franchise
fees
|
|
$
|
18,268
|
|
$
|
18,024
|
|
$
|
35,928
|
|
$
|
35,728
|
Annual dues
|
|
|
7,875
|
|
|
7,643
|
|
|
15,677
|
|
|
15,149
|
Broker fees
|
|
|
9,247
|
|
|
8,016
|
|
|
15,667
|
|
|
13,574
|
Franchise sales and
other franchise revenue
|
|
|
5,485
|
|
|
4,554
|
|
|
13,911
|
|
|
12,463
|
Brokerage
revenue
|
|
|
3,402
|
|
|
4,062
|
|
|
7,301
|
|
|
7,265
|
Total
revenue
|
|
|
44,277
|
|
|
42,299
|
|
|
88,484
|
|
|
84,179
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, operating and
administrative expenses
|
|
|
19,730
|
|
|
19,475
|
|
|
44,801
|
|
|
44,762
|
Depreciation and
amortization
|
|
|
3,808
|
|
|
3,812
|
|
|
7,619
|
|
|
7,750
|
Gain on sale or
disposition of assets, net
|
|
|
(617)
|
|
|
-
|
|
|
(615)
|
|
|
(1)
|
Total operating
expenses
|
|
|
22,921
|
|
|
23,287
|
|
|
51,805
|
|
|
52,511
|
Operating
income
|
|
|
21,356
|
|
|
19,012
|
|
|
36,679
|
|
|
31,668
|
Other expenses,
net:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(2,301)
|
|
|
(2,286)
|
|
|
(5,110)
|
|
|
(4,752)
|
Interest
income
|
|
|
33
|
|
|
66
|
|
|
100
|
|
|
147
|
Foreign currency
transaction gains (losses)
|
|
|
37
|
|
|
836
|
|
|
(1,384)
|
|
|
307
|
Loss on early
extinguishment of debt
|
|
|
—
|
|
|
(178)
|
|
|
(94)
|
|
|
(178)
|
Equity in earnings of
investees
|
|
|
390
|
|
|
188
|
|
|
602
|
|
|
129
|
Total other expenses,
net
|
|
|
(1,841)
|
|
|
(1,374)
|
|
|
(5,886)
|
|
|
(4,347)
|
Income before
provision for income taxes
|
|
|
19,515
|
|
|
17,638
|
|
|
30,793
|
|
|
27,321
|
Provision for income
taxes
|
|
|
(3,457)
|
|
|
(3,129)
|
|
|
(5,605)
|
|
|
(5,014)
|
Net income
|
|
$
|
16,058
|
|
$
|
14,509
|
|
$
|
25,188
|
|
$
|
22,307
|
Less: net income
attributable to non-controlling interest
|
|
|
11,088
|
|
|
10,132
|
|
|
17,500
|
|
|
15,519
|
Net income
attributable to RE/MAX Holdings, Inc.
|
|
$
|
4,970
|
|
$
|
4,377
|
|
$
|
7,688
|
|
$
|
6,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to RE/MAX Holdings, Inc. per share of Class A common
stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.41
|
|
$
|
0.38
|
|
$
|
0.64
|
|
$
|
0.59
|
Diluted
|
|
$
|
0.40
|
|
$
|
0.36
|
|
$
|
0.62
|
|
$
|
0.55
|
Weighted average
shares of Class A common stock outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
12,225,678
|
|
|
11,593,885
|
|
|
12,022,769
|
|
|
11,600,889
|
Diluted
|
|
|
12,399,527
|
|
|
12,230,014
|
|
|
12,346,834
|
|
|
12,238,189
|
Cash dividends
declared per share of Class A common stock
|
|
$
|
0.1250
|
|
$
|
0.0625
|
|
$
|
1.7500
|
|
$
|
0.1250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE
2
|
RE/MAX Holdings,
Inc.
Condensed
Consolidated Balance Sheets
(Amounts in
thousands, except share and per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
2015
|
|
2014
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
80,276
|
|
$
|
107,199
|
Escrow cash -
restricted
|
|
95
|
|
|
693
|
Accounts and notes
receivable, current portion, less allowances of $4,794 and $4,495,
respectively
|
|
19,455
|
|
|
16,641
|
Accounts receivable
from affiliates
|
|
-
|
|
|
231
|
Income taxes
receivable
|
|
1,340
|
|
|
765
|
Other current
assets
|
|
3,839
|
|
|
5,237
|
Total current
assets
|
|
105,005
|
|
|
130,766
|
Property and
equipment, net of accumulated depreciation of $19,184 and $19,993,
respectively
|
|
2,645
|
|
|
2,661
|
Franchise agreements,
net of accumulated amortization of $94,039 and $87,330,
respectively
|
|
68,722
|
|
|
75,505
|
Other intangible
assets, net of accumulated amortization of $8,751 and $8,550,
respectively
|
|
3,450
|
|
|
2,725
|
Goodwill
|
|
72,247
|
|
|
72,463
|
Deferred tax assets,
net
|
|
65,382
|
|
|
66,903
|
Investments in equity
method investees
|
|
3,878
|
|
|
3,693
|
Debt issuance costs,
net
|
|
1,681
|
|
|
1,896
|
Other
assets
|
|
2,068
|
|
|
1,715
|
Total
assets
|
$
|
325,078
|
|
$
|
358,327
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
192
|
|
$
|
561
|
Accounts payable to
affiliates
|
|
1,199
|
|
|
1,114
|
Escrow
liabilities
|
|
95
|
|
|
693
|
Accrued
liabilities
|
|
9,611
|
|
|
9,380
|
Income taxes
payable
|
|
112
|
|
|
189
|
Deferred revenue and
deposits
|
|
18,900
|
|
|
17,142
|
Current portion of
debt
|
|
12,381
|
|
|
9,460
|
Current portion of
payable pursuant to tax receivable agreements
|
|
3,914
|
|
|
3,914
|
Other current
liabilities
|
|
343
|
|
|
211
|
Total current
liabilities
|
|
46,747
|
|
|
42,664
|
Debt, net of current
portion
|
|
190,466
|
|
|
202,213
|
Payable pursuant to
tax receivable agreements, net of current portion
|
|
63,504
|
|
|
63,504
|
Deferred tax
liabilities, net
|
|
184
|
|
|
190
|
Other liabilities,
net of current portion
|
|
10,392
|
|
|
10,473
|
Total
liabilities
|
|
311,293
|
|
|
319,044
|
Commitments and
contingencies (note 12)
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Class A common stock,
par value $0.0001 per share, 180,000,000 shares authorized;
12,329,110 shares issued and outstanding as of
June 30, 2015; 11,768,041 shares issued and outstanding
as of December 31, 2014
|
|
1
|
|
|
1
|
Class B common stock,
par value $0.0001 per share, 1,000 shares authorized; 1 share
issued and outstanding as of June 30, 2015 and
December 31, 2014
|
|
—
|
|
|
—
|
Additional paid-in
capital
|
|
246,923
|
|
|
241,882
|
(Accumulated deficit)
retained earnings
|
|
(1,183)
|
|
|
12,041
|
Accumulated other
comprehensive income
|
|
127
|
|
|
886
|
Total stockholders'
equity attributable to RE/MAX Holdings, Inc.
|
|
245,868
|
|
|
254,810
|
Non-controlling
interest
|
|
(232,083)
|
|
|
(215,527)
|
Total stockholders'
equity
|
|
13,785
|
|
|
39,283
|
Total liabilities
and stockholders' equity
|
$
|
325,078
|
|
$
|
358,327
|
TABLE
3
|
RE/MAX Holdings,
Inc.
Condensed
Consolidated Statements of Cash Flow
(Amounts in
thousands)
(Unaudited)
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
$
|
25,188
|
|
$
|
22,307
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
7,619
|
|
|
7,750
|
Bad debt
expense
|
|
487
|
|
|
305
|
Gain on sale or
disposition of assets, net
|
|
(615)
|
|
|
(1)
|
Loss on early
extinguishment of debt
|
|
94
|
|
|
178
|
Equity-based
compensation
|
|
668
|
|
|
332
|
Non-cash interest
expense
|
|
209
|
|
|
186
|
Deferred income tax
expense and other
|
|
1,083
|
|
|
1,313
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts and notes
receivable, current portion
|
|
(3,516)
|
|
|
(3,542)
|
Advances from/to
affiliates
|
|
333
|
|
|
(12)
|
Other current and
noncurrent assets
|
|
567
|
|
|
1,854
|
Other current and
noncurrent liabilities
|
|
113
|
|
|
(2,777)
|
Deferred revenue and
deposits
|
|
1,976
|
|
|
1,549
|
Net cash provided by
operating activities
|
|
34,206
|
|
|
29,442
|
Cash flows from
investing activities:
|
|
|
|
|
|
Purchases of property,
equipment and software
|
|
(919)
|
|
|
(702)
|
Proceeds from sale of
property and equipment
|
|
11
|
|
|
1
|
Capitalization of
trademark costs
|
|
(41)
|
|
|
(58)
|
Disposition
|
|
20
|
|
|
—
|
Cost to sell
assets
|
|
(71)
|
|
|
—
|
Net cash used in
investing activities
|
|
(1,000)
|
|
|
(759)
|
Cash flows from
financing activities:
|
|
|
|
|
|
Payments on
debt
|
|
(8,360)
|
|
|
(15,740)
|
Capitalized debt
amendment costs
|
|
(555)
|
|
|
—
|
Distributions paid to
non-controlling unitholders
|
|
(34,357)
|
|
|
(14,437)
|
Dividends paid to
Class A common stockholders
|
|
(20,912)
|
|
|
(1,449)
|
Payments on capital
lease obligations
|
|
(154)
|
|
|
(103)
|
Proceeds from exercise
of stock options
|
|
2,013
|
|
|
—
|
Excess tax benefit
realized on exercise of stock options and delivery of vested
restricted stock units
|
|
2,361
|
|
|
125
|
Cancellation of vested
restricted stock units for required tax withholding
|
|
—
|
|
|
(818)
|
Net cash used in
financing activities
|
|
(59,964)
|
|
|
(32,422)
|
Effect of exchange
rate changes on cash
|
|
(165)
|
|
|
(16)
|
Net decrease in cash
and cash equivalents
|
|
(26,923)
|
|
|
(3,755)
|
Cash and cash
equivalents, beginning of year
|
|
107,199
|
|
|
88,375
|
Cash and cash
equivalents, end of period
|
$
|
80,276
|
|
$
|
84,620
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
Cash paid for interest
and debt amendment costs
|
$
|
4,901
|
|
$
|
4,507
|
Cash paid for income
taxes
|
|
2,367
|
|
|
4,197
|
Schedule of non-cash
investing and financing activities:
|
|
|
|
|
|
Note receivable
received as consideration for sale of brokerage operations
assets
|
$
|
430
|
|
$
|
—
|
Capital leases for
property and equipment
|
|
412
|
|
|
18
|
Increase in accounts
payable for capitalization of trademark costs and purchases of
property, equipment and software
|
|
459
|
|
|
50
|
TABLE
4
|
RE/MAX Holdings,
Inc.
Agent
Count
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
2015
|
|
2015
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
2013
|
Agent
Count:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-owned
regions
|
36,545
|
|
35,845
|
|
35,299
|
|
35,377
|
|
34,686
|
|
33,911
|
|
33,416
|
Independent
regions
|
22,459
|
|
22,100
|
|
21,806
|
|
21,804
|
|
21,576
|
|
21,375
|
|
21,075
|
U.S.
Total
|
59,004
|
|
57,945
|
|
57,105
|
|
57,181
|
|
56,262
|
|
55,286
|
|
54,491
|
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-owned
regions
|
6,440
|
|
6,327
|
|
6,261
|
|
6,258
|
|
6,212
|
|
6,117
|
|
6,084
|
Independent
regions
|
12,992
|
|
12,834
|
|
12,779
|
|
12,849
|
|
12,818
|
|
12,852
|
|
12,838
|
Canada
Total
|
19,432
|
|
19,161
|
|
19,040
|
|
19,107
|
|
19,030
|
|
18,969
|
|
18,922
|
Outside U.S. and
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-owned regions
(1)
|
—
|
|
—
|
|
328
|
|
312
|
|
301
|
|
323
|
|
338
|
Independent regions
(1)
|
23,467
|
|
22,849
|
|
21,537
|
|
21,047
|
|
20,496
|
|
19,807
|
|
19,477
|
Outside U.S. and
Canada Total
|
23,467
|
|
22,849
|
|
21,865
|
|
21,359
|
|
20,797
|
|
20,130
|
|
19,815
|
Total
|
101,903
|
|
99,955
|
|
98,010
|
|
97,647
|
|
96,089
|
|
94,385
|
|
93,228
|
Net change in agent
count compared to the prior period
|
1,948
|
|
1,945
|
|
363
|
|
1,558
|
|
1,704
|
|
1,157
|
|
497
|
____________________________
|
(1)
|
As of June 30, 2015
and March 31, 2015, Independent Regions outside of the U.S. and
Canada include 328 agents in the Caribbean and Central America
regions which converted from Company-owned Regions to Independent
Regions in connection with the regional franchising agreements we
entered into with new independent owners of the Caribbean and
Central America regions on January 1, 2015.
|
TABLE
5
|
RE/MAX Holdings,
Inc.
Adjusted EBITDA
Reconciliation to Net Income
(Amounts in
thousands, except percentages)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(1)
|
$
|
16,058
|
|
$
|
14,509
|
|
$
|
25,188
|
|
$
|
22,307
|
Depreciation and
amortization
|
|
3,808
|
|
|
3,812
|
|
|
7,619
|
|
|
7,750
|
Interest
expense
|
|
2,301
|
|
|
2,286
|
|
|
5,110
|
|
|
4,752
|
Interest
income
|
|
(33)
|
|
|
(66)
|
|
|
(100)
|
|
|
(147)
|
Provision for income
taxes
|
|
3,457
|
|
|
3,129
|
|
|
5,605
|
|
|
5,014
|
EBITDA
|
|
25,591
|
|
|
23,670
|
|
|
43,422
|
|
|
39,676
|
Gain on sale or
disposition of assets and sublease (2)
|
|
(664)
|
|
|
(47)
|
|
|
(707)
|
|
|
(225)
|
Loss on early
extinguishment of debt (3)
|
|
-
|
|
|
178
|
|
|
94
|
|
|
178
|
Non-cash
straight-line rent expense (4)
|
|
249
|
|
|
270
|
|
|
480
|
|
|
417
|
Non-recurring
severance and other related expenses (5)
|
|
588
|
|
|
-
|
|
|
1,039
|
|
|
-
|
Acquisition
integration and professional fees expense (6)
|
|
(106)
|
|
|
45
|
|
|
77
|
|
|
63
|
Adjusted
EBITDA
|
$
|
25,658
|
|
$
|
24,116
|
|
$
|
44,405
|
|
$
|
40,109
|
Adjusted EBITDA
Margin
|
|
57.9%
|
|
|
57.0%
|
|
|
50.2%
|
|
|
47.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
FX impact on
Adjusted EBITDA (7)
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
transaction (gains) losses
|
$
|
(37)
|
|
$
|
(836)
|
|
$
|
1,384
|
|
$
|
(307)
|
FX impact on
operating income
|
|
651
|
|
|
313
|
|
|
1,223
|
|
|
581
|
Adjusted EBITDA
adjusted for FX
|
$
|
26,272
|
|
$
|
23,593
|
|
$
|
47,012
|
|
$
|
40,383
|
Adjusted EBITDA
Margin adjusted for FX (8)
|
|
58.4%
|
|
|
55.3%
|
|
|
52.3%
|
|
|
47.6%
|
__________________________________
|
(1)
|
Consolidated net
income excludes all adjustments associated with the non-controlling
interest and presents the results of operations as if all
outstanding common units of RMCO were exchanged for or converted
into shares of the Company's Class A common stock on a one-for-one
basis for the entire period presented.
|
(2)
|
Represents losses
(gains) on the sale or disposition of assets as well as the losses
(gains) on the sublease of a portion of the Company's corporate
headquarters office building.
|
(3)
|
Represents losses
incurred on early extinguishment of debt on the Company's 2013
Senior Secured Credit Facility for the three and six months ended
June 30, 2015 and 2014.
|
(4)
|
Represents the
non-cash charge to appropriately record rent expense on a
straight-line basis over the term of the lease agreement taking
into consideration escalation in monthly cash payments.
|
(5)
|
Represents
non-recurring severance and other related expenses recognized for
certain employees who were terminated during the three and six
months ended June 30, 2015 as a result of the retirement of our
former Chief Executive Officer on December 31, 2014 and subsequent
organizational changes implemented during 2015, and a retirement
agreement entered into by the Company's President Emeritus on May
4, 2015.
|
(6)
|
Acquisition
integration and professional fees expense include fees incurred in
connection with the Company's acquisitions of certain assets of
HBN, Inc. and Tails, Inc. in October 2013. Costs include legal,
accounting and advisory fees as well as consulting fees for
integration services.
|
(7)
|
As compared to the
prior year period on a constant currency basis.
|
(8)
|
Revenue adjusted for
the impact of foreign exchange and used to calculate the Adjusted
EBITDA margin adjusted for FX is equal to $45.0 million and $42.6
million for the second quarter of 2015 and 2014, respectively, and
$89.9 million and $84.9 million for the six months ended June 30,
2015 and 2014, respectively.
|
TABLE
6
|
RE/MAX Holdings,
Inc.
Adjusted Net
Income and Adjusted Earnings per Share(1)
(Amounts in
thousands, except share and per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(1)
|
|
$
|
16,058
|
|
$
|
14,509
|
|
$
|
25,188
|
|
$
|
22,307
|
|
Amortization of
franchise agreements
|
|
|
3,392
|
|
|
3,392
|
|
|
6,783
|
|
|
6,783
|
|
Non-controlling
interest income tax expense & RE/MAX Holdings tax
provision
|
|
|
3,457
|
|
|
3,129
|
|
|
5,605
|
|
|
5,014
|
|
Add-backs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale or
disposition of assets and sublease (2)
|
|
|
(664)
|
|
|
(47)
|
|
|
(707)
|
|
|
(225)
|
|
Loss on early
extinguishment of debt (3)
|
|
|
—
|
|
|
178
|
|
|
94
|
|
|
178
|
|
Non-cash straight-line
rent expense (4)
|
|
|
249
|
|
|
270
|
|
|
480
|
|
|
417
|
|
Non-recurring
severance and other related expenses (5)
|
|
|
588
|
|
|
—
|
|
|
1,039
|
|
|
—
|
|
Acquisition
integration and professional fees expense (6)
|
|
|
(106)
|
|
|
45
|
|
|
77
|
|
|
63
|
|
Adjusted pre-tax net
income
|
|
|
22,974
|
|
|
21,476
|
|
|
38,559
|
|
|
34,537
|
|
Less: Provision for
income taxes at 38%
|
|
|
(8,730)
|
|
|
(8,161)
|
|
|
(14,652)
|
|
|
(13,124)
|
|
Adjusted net
income
|
|
$
|
14,244
|
|
$
|
13,315
|
|
$
|
23,907
|
|
$
|
21,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total basic pro forma
shares outstanding
|
|
|
29,960,278
|
|
|
29,328,485
|
|
|
29,757,369
|
|
|
29,335,489
|
|
Total diluted pro
forma shares outstanding
|
|
|
30,134,127
|
|
|
29,964,614
|
|
|
30,081,434
|
|
|
29,972,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
income basic earnings per share:
|
|
$
|
0.48
|
|
$
|
0.45
|
|
$
|
0.80
|
|
$
|
0.73
|
|
Adjusted net
income diluted earnings per share:
|
|
$
|
0.47
|
|
$
|
0.44
|
|
$
|
0.79
|
|
$
|
0.71
|
|
_________________________________
|
(1)
|
Excludes all
adjustments associated with the non-controlling interest and
presents the results of operations as if all outstanding common
units of RMCO were exchanged for or converted into shares of the
Company's Class A common stock on a one-for-one basis for the
entire period presented.
|
(2)
|
Represents losses
(gains) on the sale or disposition of assets as well as the losses
(gains) on the sublease of a portion of the Company's corporate
headquarters office building.
|
(3)
|
Represents losses
incurred on early extinguishment of debt on the Company's 2013
Senior Secured Credit Facility for the three and six months ended
June 30, 2015 and 2014.
|
(4)
|
Represents the
non-cash charge to appropriately record rent expense on a
straight-line basis over the term of the lease agreement taking
into consideration escalation in monthly cash payments.
|
(5)
|
Represents
non-recurring severance and other related expenses recognized for
certain employees who were terminated during the three and six
months ended June 30, 2015 as a result of the retirement of our
former Chief Executive Officer on December 31, 2014 and subsequent
organizational changes implemented during 2015, and a retirement
agreement entered into by the Company's President Emeritus on May
4, 2015.
|
(6)
|
Acquisition
integration and professional fees expense include fees incurred in
connection with the Company's acquisitions of certain assets of
HBN, Inc. and Tails, Inc. in October 2013. Costs include legal,
accounting and advisory fees as well as consulting fees for
integration services.
|
TABLE
7
|
RE/MAX Holdings,
Inc.
Pro Forma Shares
Outstanding
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Total basic
weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
Weighted average
shares of Class A common stock outstanding
|
|
12,225,678
|
|
11,593,885
|
|
12,022,769
|
|
11,600,889
|
Remaining equivalent
weighted average shares of stock outstanding on a pro forma basis
assuming RE/MAX Holdings owned 100% of RMCO
|
|
17,734,600
|
|
17,734,600
|
|
17,734,600
|
|
17,734,600
|
Total basic pro forma
weighted average shares outstanding
|
|
29,960,278
|
|
29,328,485
|
|
29,757,369
|
|
29,335,489
|
|
|
|
|
|
|
|
|
|
Total diluted
weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
Weighted average
shares of Class A common stock outstanding
|
|
12,225,678
|
|
11,593,885
|
|
12,022,769
|
|
11,600,889
|
Remaining equivalent
weighted average shares of stock outstanding on a pro forma basis
assuming RE/MAX Holdings owned 100% of RMCO
|
|
17,734,600
|
|
17,734,600
|
|
17,734,600
|
|
17,734,600
|
Dilutive effect of
stock options(1)
|
|
146,638
|
|
587,906
|
|
301,928
|
|
590,953
|
Dilutive effect of
unvested restricted stock units(1)
|
|
27,211
|
|
48,223
|
|
22,137
|
|
46,347
|
Total diluted pro
forma weighted average shares outstanding
|
|
30,134,127
|
|
29,964,614
|
|
30,081,434
|
|
29,972,789
|
________________________
|
(1)
|
In accordance with
the treasury stock method
|
|
|
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 Adjusted EBITDA and
Adjusted net income and the ratios related thereto. These measures
are derived on the basis of methodologies other than in accordance
with U.S. GAAP.
RE/MAX defines Adjusted EBITDA as EBITDA (consolidated net
income before depreciation and amortization, interest expense, net
and the provision for income taxes, each of which is presented in
the Company's condensed consolidated financial statements included
elsewhere in this press release), adjusted for the impact of the
following items that the Company does not consider representative
of the Company's ongoing operating performance: loss or gain on
sale or disposition of assets and sublease, loss on early
extinguishment of debt, non-cash straight-line rent expense,
non-recurring severance and other related expenses and acquisition
integration and professional fees expense. During the third quarter
of 2014, the Company revised its definition of Adjusted EBITDA to
no longer adjust for recurring equity-based compensation expense.
Adjusted EBITDA in prior periods has been revised to reflect this
change for consistency of presentation. During the fourth quarter
of 2014, the Company revised its definition of Adjusted EBITDA to
adjust for non-recurring severance and other related expenses.
RE/MAX defines Adjusted net income as net income, excluding the
impact of amortization expense related to the Company's franchise
agreements, non-controlling interest income tax expense and RE/MAX
Holdings tax provision, loss or gain on sale or disposition of
assets and sublease, loss on early extinguishment of debt, non-cash
straight-line rent expense, non-recurring severance and other
related expenses, and acquisition integration and professional fees
expense, but reflects income taxes and is presented as if all
outstanding common units of RMCO were exchanged for or converted
into shares of the Company's Class A common stock on a one-for-one
basis. Assuming the full exchange and conversion, all income of
RMCO is treated as if it were allocated to RE/MAX, and the adjusted
provision for income taxes represents an estimate of income tax
expense at an effective rate reflecting assumed federal, state, and
local income tax rates. The estimated effective tax rate was
38%.
Because Adjusted EBITDA and Adjusted net income omit certain
non-cash items and other non-recurring cash charges or other items,
the Company feels that these metrics are less susceptible to
variances that affect the Company's operating performance resulting
from depreciation, amortization and other non-cash and
non-recurring cash charges or other items and is more reflective of
other factors that affect the Company's operating performance. The
Company presents Adjusted EBITDA and Adjusted net income because it
believes the metrics are useful as supplemental measures in
evaluating the performance of the Company's operating businesses
and provide greater transparency into the Company's results of
operations. The Company's management uses Adjusted EBITDA as a
factor in evaluating the performance of its business.
Adjusted EBITDA and Adjusted net income have limitations as
analytical tools, and should not be considered in isolation or as a
substitute for analyzing the results the Company 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 historical cash expenditures or
future requirements for capital expenditures or contractual
commitments;
- 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;
- Adjusted EBITDA does not reflect the Company's interest
expense, or the cash requirements necessary to service interest or
principal payments on the Company's debt;
- Adjusted EBITDA does not reflect the Company's income tax
expense or the cash requirements to pay the Company's taxes;
- Adjusted EBITDA and Adjusted net income do not reflect the cash
requirements to pay dividends to shareholders of the Company's
Class A common stock and tax and other cash distributions to
non-controlling unitholders;
- Adjusted EBITDA and Adjusted net income do not reflect the cash
requirements to pay RIHI, Inc. and Oberndorf Investments LLC
pursuant to the tax receivable agreements entered into at the time
of the IPO; and
- other companies may calculate these measures differently, so
they may not be comparable.
With respect to the Company's outlook with respect to Adjusted
EBITDA margin for the third quarter and the full fiscal year 2015,
the Company is not able to provide a reconciliation of this
non-GAAP financial measure to U.S. GAAP because it does not provide
specific guidance for the various reconciling non-cash items and
other non-recurring cash and non-cash charges, such as loss or gain
on sale or disposition of assets and sublease and loss on early
extinguishment of debt, among others. Certain items that impact
these measures have not yet occurred, are out of the Company's
control or cannot be reasonably predicted, and as a result,
reconciliation of these non-GAAP guidance measures to U.S. GAAP is
not available without unreasonable effort.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/remax-holdings-reports-second-quarter-2015-results-300125010.html
SOURCE RE/MAX Holdings, Inc.