DENVER, Feb. 25, 2016 /PRNewswire/ --
Full-Year 2015 Highlights
(Compared to full-year
2014 unless otherwise noted)
- Agent count grew by 7.0% to 104,826 agents
- Revenue grew by 3.4% to $176.9
million
- Operating Income grew by 16.2% to $74.2
million
- Adjusted EBITDA1 of $91.4
million, up 9.1%
- Adjusted EBITDA1 margin of 51.7%, up from 49.0%
- Adjusted basic and diluted earnings per share1
("EPS") of $1.65 and $1.64, respectively
- FX negatively impacted full-year 2015 Adjusted EBITDA by
$5.3 million, Adjusted EBITDA margin
by 179 basis points and Adjusted basic and diluted EPS by
approximately $0.11
- 100% franchised business after converting the remaining owned
brokerage offices to independent RE/MAX franchises
- Acquired the master franchise rights to the New York region on February 22, 2016
- Announced 20% increase to quarterly dividend on February 24, 2016
Fourth Quarter 2015 Highlights
(Compared to fourth
quarter 2014 unless otherwise noted)
- Revenue grew by 1.7% to $43.3
million
- Operating income grew by 37.6% to $16.9
million
- Adjusted EBITDA1 up 7.6% to $21.9 million
- Adjusted EBITDA1 margin of 50.6%, up from 47.8%
- Adjusted basic and diluted EPS of $0.38
- FX negatively impacted Q4 Adjusted EBITDA margin by 120 basis
points and Adjusted basic and diluted EPS by approximately
$0.02
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
fourth quarter and full-year ended December
31, 2015.
"RE/MAX had a strong year in 2015 led by two of our key growth
drivers, agent count growth and office franchise sales. Over 6,800
agents chose to join RE/MAX in 2015, our largest agent count gain
in ten years, and our office franchise sales outpaced every year
since 2010," stated Dave Liniger,
Chief Executive Officer and Co-Founder of RE/MAX. "Efficient
execution of our strategic plan enabled us to grow our network,
expand our footprint, and increase brand awareness. As a result, we
expanded our Adjusted EBITDA margin by 270 basis points, despite
foreign exchange headwinds. As the housing market continues to
improve in 2016, we believe our agent-centric model will continue
to attract quality agents, and result in four to five percent
growth of our global agent network in 2016."
Liniger continued, "With nearly sixty percent of our revenue
represented by recurring fees, we have a stable business model that
delivers strong free cash flow. We've increased our quarterly
dividend by 140 percent in the past two years and paid a special
dividend last year. We also acquired the master franchise rights to
the New York region and we're
excited to grow our presence in the region. Both of these actions
are a testament to our ability to invest, acquire, and return
capital while still maintaining a strong cash position."
Full-Year 2015 Operating Results
Agent Count
Total agent count grew by 6,816 agents to 104,826 agents or 7.0%
compared to year-end 2014. In the United
States ("U.S."), agent count increased by 2,813 agents to
59,918 agents or 4.9%. Agent count in U.S. Company-owned and
Independent regions grew by 5.5% and 4.0%, respectively. In
Canada, agent count increased by
628 agents to 19,668 agents or 3.3% compared to the prior year end.
Outside the U.S. and Canada, agent
count increased by 3,375 agents to 25,240 agents or 15.4%.
Revenue
RE/MAX generated total revenue of $176.9
million for the full-year 2015, a 3.4% increase compared to
$171.0 million in 2014, primarily
driven by agent count growth and franchise sales, partially offset
by lower brokerage revenue due to the sale of six Company-owned
offices to an existing RE/MAX franchisee in April 2015. The strengthening of the U.S. dollar
compared to the Canadian dollar and the Euro negatively impacted
full-year 2015 revenue by $4.1
million. Recurring revenue streams, which include continuing
franchise fees and annual dues, accounted for 59.7% of revenues in
2015 compared to 60.5% in the prior year.
Revenue from continuing franchise fees was $73.8 million, up $1.0
million or 1.4% compared to the prior year primarily due to
agent count growth. Continuing franchise fee revenue growth was
partially offset by fee waivers used to recruit new agents
associated with our Momentum agent and broker development
program.
Revenue from annual dues was $31.8
million, up $1.0 million or
3.4% compared to the prior year primarily due to an increase in
total agent count of 6,816 for the full-year 2015, of which 3,441
new agents were located in the U.S. and Canada.
Revenue from broker fees was $32.3
million, up $3.6 million or
12.7% compared to the prior year, and the increase was driven by
increased agent count and home sale transaction activity.
Franchise sales and other franchise revenue was $25.5 million, up $2.0
million or 8.7% compared to the prior year driven by an
increase in office franchise sales in U.S. Company-owned and
Independent regions and an increase in registration income
associated with company events due to higher attendance and
increased registration rates.
Brokerage revenue was $13.6
million, a decrease of $1.9
million or 12.1% from the prior year. The decrease was
attributable to the sale of six Company-owned brokerage offices to
an existing RE/MAX franchisee in April
2015. As of January 20, 2016,
the Company completed the sale of its 15 remaining owned brokerage
offices to existing RE/MAX franchises and is now 100% franchised
across its nearly 7,000 global office footprint.
Operating Expenses
Total operating expenses were $102.7
million for the full-year 2015, a decrease of $4.4 million or 4.1% compared to the prior year.
Selling, operating and administrative expenses were $91.0 million, down $0.9
million or 0.9% from the prior year and represented 51.4% of
revenue compared to 53.7% in 2014. The reduction in operating
expenses was primarily due to a large gain recognized on the sale
of six Company-owned brokerage offices in April 2015 and 12 Company-owned brokerage offices
on December 31, 2015. The reduction
was also attributable to lower personnel expense related to a
re-organization at the corporate headquarters in the fourth quarter
of 2014. The reductions were partially offset by expenses
associated with the secondary offering of the Company's common
stock by its controlling stockholder, RIHI, Inc. (the "Secondary
Offering") in November 2015 and a
charge recorded in the fourth quarter related to the resolution of
litigation associated with the acquisition of the Southwest region
in October of 2013.
Adjusted EBITDA
Adjusted EBITDA was $91.4 million
for the full-year 2015, up $7.6
million or 9.1% from the prior year. Adjusted EBITDA margin
was 51.7% compared to 49.0% in the prior year, driven by revenue
growth from increased agent count and lower operating expenses. The
strength of the U.S. dollar compared to the Canadian dollar and the
Euro negatively impacted Adjusted EBITDA and Adjusted EBITDA margin
by $5.3 million and 179 basis points,
respectively, for the full-year 2015.
Net Income
Reported net income was $51.4
million for the full-year 2015, an increase of $7.4 million or 16.8% compared to the prior year.
The increase was primarily due to revenue growth and lower
operating expenses.
Adjusted net income2 was $49.4
million for the full-year 2015, an increase of $4.1 million or 8.9% compared to the prior year.
Adjusted basic and diluted EPS were $1.65 and $1.64,
respectively, for the full-year 2015, compared to $1.54 and $1.51 for
the prior year, respectively. The strength of the U.S. dollar
compared to the Canadian dollar and the Euro negatively impacted
both Adjusted basic and diluted EPS by $0.11 for the full-year 2015.
Net income attributable to RE/MAX Holdings, Inc. was
$16.7 million for the full-year 2015.
This amount excludes net income attributable to the non-controlling
interest. Reported basic and diluted EPS attributable to RE/MAX
Holdings, Inc. were $1.31 and
$1.30, respectively, for the
full-year 2015. 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 and twelve months ended December 31, 2015 assumes RE/MAX owned 100% of
RMCO, LLC ("RMCO"). The weighted average ownership RE/MAX had in
RMCO was 47.43% and 42.33% for the three and twelve months ended
December 31, 2015, respectively.
Balance Sheet
As of December 31, 2015, the
Company had a cash balance of $110.2
million, an increase of $3.0
million from December 31,
2014. The cash balance reflects the aggregate payment of
approximately $15.0 million for
quarterly dividends paid in 2015 and approximately $45.0 million for a special dividend of
$1.50 per share paid in April 2015. The Company had $201.9 million of term loans outstanding, net of
unamortized discount as of December 31,
2015, down from $211.7
million, net as of December 31,
2014.
Dividend
In 2015, the Company doubled its quarterly dividend and paid a
special dividend, returning approximately $60 million to shareholders during the year. On
February 24, 2016 the Company
announced that its Board of Directors raised the quarterly dividend
by 20% to $0.15 per share. The
quarterly dividend is payable on March 23,
2016 to shareholders of record at the close of business on
March 9, 2016.
Outlook
The Company's 2016 Outlook reflects the acquisition of the
New York region, the impact of the
strengthening of the U.S. dollar against the Canadian dollar and
the Euro as well as the sale of the remaining Company-owned
brokerages. Revenue, selling, operating and administrative expenses
and Adjusted EBITDA margin are subject to currency exchange rate
fluctuations principally related to changes in the Canadian dollar
to U.S. dollar and Euro to U.S. dollar exchange rates. In 2015, the
Company generated 12% of its revenue in Canada and realized an average exchange rate
of $0.78 U.S. for every $1.00 Canadian. The Company's 2016 outlook
reflects an annualized estimated exchange rate of $0.70 U.S. for every $1.00 Canadian.
RE/MAX is providing the following outlook for the first quarter
and full-year 2016:
First Quarter 2016 Outlook:
- Agent count is estimated to increase by 5.5% to 6.0% over first
quarter 2015;
- Revenue is estimated to decrease by 2.0% to 3.0% from first
quarter 2015;
- This reflects the sale of the 21 owned brokerage offices;
adjusting for the sale, revenue would have been estimated to
increase by 4.0% to 5.0% over first quarter 2015;
- Selling, operating and administrative expenses are estimated to
be 56.0% to 57.0% of first quarter 2016 revenue;
- Higher SO&A expense as a percent of revenue in the first
quarter is normal due to expenses associated with the Company's
annual convention in March and seasonality of revenue;
- Adjusted EBITDA margin is estimated to be in the 45.0% to 46.0%
range;
- Capital expenditures expected to be between $1.0 to $1.5 million;
- Includes estimated project related capital expenditures of
$750 thousand to $1.0 million;
and
- Project related operating expenditures are estimated to be
$750 thousand to $1.0 million.
Full-Year 2016 Outlook:
- Agent count is estimated to be 4.0% to 5.0% over 2015;
- Revenue is estimated to decrease by 3.0% to 4.0% compared to
2015;
- Revenue would have been estimated to increase by 3.25% to 3.75%
over 2015 after adjusting for the sale of the brokerage offices,
the negative impact of FX, and the incremental contribution of the
acquired New York region;
- Selling, operating and administrative expenses are estimated to
be 48.0% to 49.0% of 2016 revenue;
- Adjusted EBITDA margin is estimated to be in the 51.5% to 53.0%
range;
- Total estimated capital expenditures of $3.5 to $4.0 million;
- Includes project related capital expenditures of $1.5 to $2.0 million; and
- Project related operating expenditures expected to be
approximately $4.0 to $4.5
million.
As a result of the Secondary Offering in November 2015, the ownership RE/MAX had of RMCO
as of December 31, 2015 was 58.33%.
Also, due to the change in ownership percentage, the effective tax
rate attributable to RE/MAX Holdings, Inc. is estimated to be
between 23% and 25% in 2016.
Webcast and Conference Call
The Company will host a conference call for interested parties
on Friday, February 26, 2016,
beginning at 8:30 a.m. Eastern Time.
Interested parties are able to access the conference call using the
following dial-in numbers:
U.S.
|
1-877-201-0168
|
Canada &
International
|
1-647-788-4901
|
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. 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 as measured by total residential
transaction sides.
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 "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 first quarter and full fiscal year,
including expectations regarding agent count, revenue, SO&A
expenses, and Adjusted EBITDA margins for its first quarter of 2016
and full fiscal year, the Company's optimism for agent recruitment,
investment, acquisitions and improving market conditions, as well
as other statements regarding the Company's strategic and
operational plans and business models. 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 on Form 10-K
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.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 December 31, 2015, RE/MAX actually owned 58.33%
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.
|
Consolidated
Statements of Income
|
(Amounts in
thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing franchise
fees
|
|
$
|
18,917
|
|
$
|
18,455
|
|
$
|
73,750
|
|
$
|
72,706
|
Annual dues
|
|
|
8,071
|
|
|
7,880
|
|
|
31,758
|
|
|
30,726
|
Broker fees
|
|
|
7,346
|
|
|
6,832
|
|
|
32,334
|
|
|
28,685
|
Franchise sales and
other franchise revenue
|
|
|
5,933
|
|
|
5,505
|
|
|
25,468
|
|
|
23,440
|
Brokerage
revenue
|
|
|
3,007
|
|
|
3,893
|
|
|
13,558
|
|
|
15,427
|
Total
revenue
|
|
|
43,274
|
|
|
42,565
|
|
|
176,868
|
|
|
170,984
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, operating and
administrative expenses
|
|
|
25,461
|
|
|
26,526
|
|
|
90,986
|
|
|
91,847
|
Depreciation and
amortization
|
|
|
3,740
|
|
|
3,799
|
|
|
15,124
|
|
|
15,316
|
Gain on sale or
disposition of assets, net
|
|
|
(2,791)
|
|
|
(13)
|
|
|
(3,397)
|
|
|
(14)
|
Total operating
expenses
|
|
|
26,410
|
|
|
30,312
|
|
|
102,713
|
|
|
107,149
|
Operating
income
|
|
|
16,864
|
|
|
12,253
|
|
|
74,155
|
|
|
63,835
|
Other expenses,
net:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(2,965)
|
|
|
(2,288)
|
|
|
(10,413)
|
|
|
(9,295)
|
Interest
income
|
|
|
42
|
|
|
108
|
|
|
178
|
|
|
313
|
Foreign currency
transaction losses
|
|
|
(76)
|
|
|
(844)
|
|
|
(1,661)
|
|
|
(1,348)
|
Loss on early
extinguishment of debt
|
|
|
—
|
|
|
—
|
|
|
(94)
|
|
|
(178)
|
Equity in earnings of
investees
|
|
|
252
|
|
|
206
|
|
|
1,215
|
|
|
600
|
Total other expenses,
net
|
|
|
(2,747)
|
|
|
(2,818)
|
|
|
(10,775)
|
|
|
(9,908)
|
Income before
provision for income taxes
|
|
|
14,117
|
|
|
9,435
|
|
|
63,380
|
|
|
53,927
|
Provision for income
taxes
|
|
|
(3,148)
|
|
|
(1,818)
|
|
|
(12,030)
|
|
|
(9,948)
|
Net income
|
|
$
|
10,969
|
|
$
|
7,617
|
|
$
|
51,350
|
|
$
|
43,979
|
Less: net income
attributable to non-controlling interest
|
|
|
6,923
|
|
|
5,241
|
|
|
34,695
|
|
|
30,543
|
Net income
attributable to RE/MAX Holdings, Inc.
|
|
$
|
4,046
|
|
$
|
2,376
|
|
$
|
16,655
|
|
$
|
13,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to RE/MAX Holdings, Inc. per share of Class A common
stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.28
|
|
$
|
0.20
|
|
$
|
1.31
|
|
$
|
1.16
|
Diluted
|
|
$
|
0.28
|
|
$
|
0.19
|
|
$
|
1.30
|
|
$
|
1.10
|
Weighted average
shares of Class A common stock outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
14,283,839
|
|
|
11,662,874
|
|
|
12,671,051
|
|
|
11,611,164
|
Diluted
|
|
|
14,351,911
|
|
|
12,259,440
|
|
|
12,829,214
|
|
|
12,241,977
|
Cash dividends
declared per share of Class A common stock
|
|
$
|
0.1250
|
|
$
|
0.0625
|
|
$
|
2.0000
|
|
$
|
0.2500
|
TABLE
2
|
|
RE/MAX Holdings,
Inc.
|
Consolidated
Balance Sheets
|
(Amounts in
thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2015
|
|
2014
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
110,212
|
|
$
|
107,199
|
Escrow cash -
restricted
|
|
|
—
|
|
|
693
|
Accounts and notes
receivable, current portion, less allowances of $4,483 and $4,495,
respectively
|
|
|
16,769
|
|
|
16,641
|
Accounts receivable
from affiliates
|
|
|
—
|
|
|
231
|
Income taxes
receivable
|
|
|
—
|
|
|
765
|
Assets held for
sale
|
|
|
354
|
|
|
—
|
Other current
assets
|
|
|
7,411
|
|
|
5,237
|
Total current
assets
|
|
|
134,746
|
|
|
130,766
|
Property and
equipment, net of accumulated depreciation of $13,183 and $19,993,
respectively
|
|
|
2,395
|
|
|
2,661
|
Franchise agreements,
net of accumulated amortization of $100,499 and $87,330,
respectively
|
|
|
61,939
|
|
|
75,505
|
Other intangible
assets, net of accumulated amortization of $8,929 and $8,550,
respectively
|
|
|
4,941
|
|
|
2,725
|
Goodwill
|
|
|
71,871
|
|
|
72,463
|
Deferred tax assets,
net
|
|
|
106,033
|
|
|
66,903
|
Investments in equity
method investees
|
|
|
—
|
|
|
3,693
|
Debt issuance costs,
net
|
|
|
1,527
|
|
|
1,896
|
Other assets, net of
current portion
|
|
|
1,861
|
|
|
1,715
|
Total
assets
|
|
$
|
385,313
|
|
$
|
358,327
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
449
|
|
$
|
561
|
Accounts payable to
affiliates
|
|
|
66
|
|
|
1,114
|
Escrow
liabilities
|
|
|
—
|
|
|
693
|
Accrued
liabilities
|
|
|
16,082
|
|
|
9,380
|
Income taxes
payable
|
|
|
451
|
|
|
189
|
Deferred revenue and
deposits
|
|
|
16,501
|
|
|
17,142
|
Current portion of
debt
|
|
|
14,805
|
|
|
9,460
|
Current portion of
payable pursuant to tax receivable agreements
|
|
|
8,478
|
|
|
3,914
|
Liabilities held for
sale
|
|
|
351
|
|
|
—
|
Other current
liabilities
|
|
|
71
|
|
|
211
|
Total current
liabilities
|
|
|
57,254
|
|
|
42,664
|
Debt, net of current
portion
|
|
|
187,079
|
|
|
202,213
|
Payable pursuant to
tax receivable agreements, net of current portion
|
|
|
91,557
|
|
|
63,504
|
Deferred tax
liabilities, net
|
|
|
120
|
|
|
190
|
Other liabilities,
net of current portion
|
|
|
9,889
|
|
|
10,473
|
Total
liabilities
|
|
|
345,899
|
|
|
319,044
|
Commitments and
contingencies
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
Class A common stock,
par value $0.0001 per share, 180,000,000 shares authorized;
17,584,351 shares issued and outstanding as of
December 31, 2015; 11,768,041 shares issued and
outstanding as of December 31, 2014
|
|
|
2
|
|
|
1
|
Class B common stock,
par value $0.0001 per share, 1,000 shares authorized; 1 share
issued and outstanding as of December 31, 2015 and
December 31, 2014
|
|
|
—
|
|
|
—
|
Additional paid-in
capital
|
|
|
445,081
|
|
|
241,882
|
Retained
earnings
|
|
|
4,693
|
|
|
12,041
|
Accumulated other
comprehensive (loss) income
|
|
|
(105)
|
|
|
886
|
Total stockholders'
equity attributable to RE/MAX Holdings, Inc.
|
|
|
449,671
|
|
|
254,810
|
Non-controlling
interest
|
|
|
(410,257)
|
|
|
(215,527)
|
Total stockholders'
equity
|
|
|
39,414
|
|
|
39,283
|
Total liabilities
and stockholders' equity
|
|
$
|
385,313
|
|
$
|
358,327
|
TABLE
3
|
|
RE/MAX Holdings,
Inc.
|
Consolidated
Statements of Cash Flow
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
2015
|
|
2014
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
51,350
|
|
$
|
43,979
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
15,124
|
|
|
15,316
|
Bad debt
expense
|
|
|
433
|
|
|
630
|
Gain on sale or
disposition of assets, net
|
|
|
(3,397)
|
|
|
(14)
|
Loss on early
extinguishment of debt
|
|
|
94
|
|
|
178
|
Equity in earnings of
investees
|
|
|
(1,215)
|
|
|
(600)
|
Distributions received
from equity investees
|
|
|
1,178
|
|
|
549
|
Equity-based
compensation expense
|
|
|
1,453
|
|
|
2,002
|
Non-cash interest
expense
|
|
|
439
|
|
|
365
|
Deferred income tax
expense
|
|
|
2,531
|
|
|
1,865
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
Accounts and notes
receivable, current portion
|
|
|
(999)
|
|
|
(1,466)
|
Advances from/to
affiliates
|
|
|
(771)
|
|
|
(161)
|
Other current and
noncurrent assets
|
|
|
502
|
|
|
100
|
Other current and
noncurrent liabilities
|
|
|
7,000
|
|
|
858
|
Deferred revenue and
deposits, current portion
|
|
|
866
|
|
|
1,094
|
Payment pursuant to
tax receivable agreements
|
|
|
—
|
|
|
(986)
|
Net cash provided by
operating activities
|
|
|
74,588
|
|
|
63,709
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Purchases of property,
equipment and software
|
|
|
(3,546)
|
|
|
(2,026)
|
Proceeds from sale of
property and equipment
|
|
|
25
|
|
|
5
|
Capitalization of
trademark costs
|
|
|
(82)
|
|
|
(122)
|
Acquisitions
|
|
|
—
|
|
|
—
|
Dispositions
|
|
|
5,650
|
|
|
100
|
Cost to sell
assets
|
|
|
(383)
|
|
|
—
|
Net cash provided by
(used in) investing activities
|
|
|
1,664
|
|
|
(2,043)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Payments on
debt
|
|
|
(9,400)
|
|
|
(16,816)
|
Capitalized debt
amendment costs
|
|
|
(555)
|
|
|
—
|
Distributions paid to
non-controlling unitholders
|
|
|
(42,827)
|
|
|
(22,197)
|
Dividends paid to
Class A common stockholders
|
|
|
(24,003)
|
|
|
(2,901)
|
Payments on capital
lease obligations
|
|
|
(322)
|
|
|
(204)
|
Proceeds from exercise
of stock options
|
|
|
2,248
|
|
|
486
|
Excess tax benefit
realized on exercise of stock options and delivery of vested
restricted stock units
|
|
|
2,770
|
|
|
736
|
Cancellation of vested
restricted stock units for required tax withholding
payments
|
|
|
(327)
|
|
|
(1,781)
|
Net cash used in
financing activities
|
|
|
(72,416)
|
|
|
(42,677)
|
Effect of exchange
rate changes on cash
|
|
|
(823)
|
|
|
(165)
|
Net increase in cash
and cash equivalents
|
|
|
3,013
|
|
|
18,824
|
Cash and cash
equivalents, beginning of year
|
|
|
107,199
|
|
|
88,375
|
Cash and cash
equivalents, end of year
|
|
$
|
110,212
|
|
$
|
107,199
|
TABLE
4
|
|
RE/MAX Holdings,
Inc.
|
Agent
Count
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of
|
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
|
2015
|
|
2015
|
|
2015
|
|
2015
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
2013
|
Agent
Count:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-owned regions
(1)
|
|
37,250
|
|
37,146
|
|
36,545
|
|
35,845
|
|
35,299
|
|
35,377
|
|
34,686
|
|
33,911
|
|
33,416
|
Independent regions
(1)
|
|
22,668
|
|
22,633
|
|
22,459
|
|
22,100
|
|
21,806
|
|
21,804
|
|
21,576
|
|
21,375
|
|
21,075
|
U.S.
Total
|
|
59,918
|
|
59,779
|
|
59,004
|
|
57,945
|
|
57,105
|
|
57,181
|
|
56,262
|
|
55,286
|
|
54,491
|
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-owned
regions
|
|
6,553
|
|
6,512
|
|
6,440
|
|
6,327
|
|
6,261
|
|
6,258
|
|
6,212
|
|
6,117
|
|
6,084
|
Independent
regions
|
|
13,115
|
|
12,994
|
|
12,992
|
|
12,834
|
|
12,779
|
|
12,849
|
|
12,818
|
|
12,852
|
|
12,838
|
Canada
Total
|
|
19,668
|
|
19,506
|
|
19,432
|
|
19,161
|
|
19,040
|
|
19,107
|
|
19,030
|
|
18,969
|
|
18,922
|
Outside U.S. and
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-owned regions
(2)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
328
|
|
312
|
|
301
|
|
323
|
|
338
|
Independent regions
(2)
|
|
25,240
|
|
24,206
|
|
23,467
|
|
22,849
|
|
21,537
|
|
21,047
|
|
20,496
|
|
19,807
|
|
19,477
|
Outside U.S. and
Canada Total
|
|
25,240
|
|
24,206
|
|
23,467
|
|
22,849
|
|
21,865
|
|
21,359
|
|
20,797
|
|
20,130
|
|
19,815
|
Total
|
|
104,826
|
|
103,491
|
|
101,903
|
|
99,955
|
|
98,010
|
|
97,647
|
|
96,089
|
|
94,385
|
|
93,228
|
Net change in agent
count compared to the prior period
|
|
1,335
|
|
1,588
|
|
1,948
|
|
1,945
|
|
363
|
|
1,558
|
|
1,704
|
|
1,157
|
|
497
|
(1)
|
As of each quarter
end in 2015 and 2014, and as of December 31, 2013, U.S.
Company-owned Regions include agents in the Southwest and Central
Atlantic regions which converted from Independent Regions to
Company-owned regions in connection with the acquisitions of the
business assets of HBN and Tails on October 7, 2013. As of the
acquisition date, the Southwest and Central Atlantic regions had
5,918 agents.
|
(2)
|
As of December 31,
2015, Independent Regions outside of the U.S. and Canada include
530 agents in the Caribbean and Central America regions which
converted from Company-owned Regions to Independent Regions in
connection with the regional franchising agreements the Company
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
December 31,
|
|
Year Ended
December 31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(1)
|
$
|
10,969
|
|
$
|
7,617
|
|
$
|
51,350
|
|
$
|
43,979
|
|
Depreciation and
amortization
|
|
3,740
|
|
|
3,799
|
|
|
15,124
|
|
|
15,316
|
|
Interest
expense
|
|
2,965
|
|
|
2,288
|
|
|
10,413
|
|
|
9,295
|
|
Interest
income
|
|
(42)
|
|
|
(108)
|
|
|
(178)
|
|
|
(313)
|
|
Provision for income
taxes
|
|
3,148
|
|
|
1,818
|
|
|
12,030
|
|
|
9,948
|
|
EBITDA
|
|
20,780
|
|
|
15,414
|
|
|
88,739
|
|
|
78,225
|
|
Gain on sale or
disposition of assets and sublease (2)
|
|
(2,877)
|
|
|
(63)
|
|
|
(3,650)
|
|
|
(340)
|
|
Loss on early
extinguishment of debt (3)
|
|
—
|
|
|
—
|
|
|
94
|
|
|
178
|
|
Non-cash
straight-line rent expense (4)
|
|
208
|
|
|
198
|
|
|
889
|
|
|
812
|
|
Public offering
related expenses (5)
|
|
1,097
|
|
|
—
|
|
|
1,097
|
|
|
—
|
|
Severance related
expenses (6)
|
|
—
|
|
|
4,617
|
|
|
1,482
|
|
|
4,617
|
|
Acquisition related
expenses (7)
|
|
2,673
|
|
|
163
|
|
|
2,750
|
|
|
313
|
|
Adjusted
EBITDA
|
$
|
21,881
|
|
$
|
20,329
|
|
$
|
91,401
|
|
$
|
83,805
|
|
Adjusted EBITDA
Margin
|
|
50.6
|
%
|
|
47.8
|
%
|
|
51.7
|
%
|
|
49.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FX impact on
Adjusted EBITDA (8)
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
transaction losses
|
$
|
76
|
|
$
|
844
|
|
$
|
1,661
|
|
$
|
1,348
|
|
FX impact on
operating income
|
|
1,057
|
|
|
575
|
|
|
3,674
|
|
|
1,430
|
|
Adjusted EBITDA
adjusted for FX
|
$
|
23,014
|
|
$
|
21,748
|
|
$
|
96,736
|
|
$
|
86,583
|
|
Adjusted EBITDA
Margin adjusted for FX (9)
|
|
51.8
|
%
|
|
50.4
|
%
|
|
53.5
|
%
|
|
50.2
|
%
|
(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 (gains)
losses on the sale or disposition of assets as well as the (gains)
losses 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 and previous senior secured credit
facility for each period presented.
|
(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 costs
incurred in connection with the Secondary Offering.
|
(6)
|
Represents severance
related expenses for expenses of $1.3 million incurred during the
year ended December 31, 2014 for severance and outplacement
services provided to former employees in connection with a
restructuring plan implemented at the Company's corporate
headquarters. Severance related expenses also includes $3.3 million
recognized for the retirement of the former Chief Executive Officer
on December 31, 2014, which includes $1.8 million of expenses
related to continued salary, benefits and related payroll costs to
be paid over a 36-month period beginning in the fourth quarter of
2015, $1.0 million of additional equity-based compensation expense
for the accelerated vesting of certain restricted stock units and
$0.5 million of expenses related to a one-time salary payment made
on December 31, 2014. Subsequent thereto, severance related
expenses were recognized during the year ended December 31, 2015
for organizational changes implemented during 2015, including the
retirement of the Company's former President on August 19, 2015.
See Note 13 to the audited consolidated financial statements
included in the Annual Report on Form 10-K.
|
(7)
|
Costs include legal,
accounting and advisory fees as well as consulting fees for
integration services. Acquisition integration expenses also include
a one-time charge of $2.7 million resulting from a litigation
judgment concerning the net assets of HBN during the year ended
December 31, 2015.
|
(8)
|
As compared to the
prior year on a constant currency basis. Numbers reflect FX impact
primarily from Canadian and European operations which accounts for
the majority of the total FX related impact on revenue generated
from operations outside the U.S.
|
(9)
|
Revenue adjusted for
the impact of foreign exchange and used to calculate the Adjusted
EBITDA margin adjusted for FX is equal to $44.5 million and $43.2
million for the fourth quarter of 2015 and 2014, respectively, and
$180.9 million and $172.6 million for the full-year 2015 and 2014,
respectively.
|
TABLE
6
|
|
RE/MAX Holdings,
Inc.
|
Adjusted Net
Income and Adjusted Earnings per Share
|
(Amounts in
thousands, except share and per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(1)
|
|
$
|
10,969
|
|
$
|
7,617
|
|
$
|
51,350
|
|
$
|
43,979
|
Amortization of
franchise agreements
|
|
|
3,392
|
|
|
3,392
|
|
|
13,566
|
|
|
13,566
|
Provision for income
taxes
|
|
|
3,148
|
|
|
1,818
|
|
|
12,030
|
|
|
9,948
|
Add-backs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale or
disposition of assets and sublease (2)
|
|
|
(2,877)
|
|
|
(63)
|
|
|
(3,650)
|
|
|
(340)
|
Loss on early
extinguishment of debt (3)
|
|
|
—
|
|
|
—
|
|
|
94
|
|
|
178
|
Non-cash straight-line
rent expense (4)
|
|
|
208
|
|
|
198
|
|
|
889
|
|
|
812
|
Public offering
related expenses (5)
|
|
|
1,097
|
|
|
—
|
|
|
1,097
|
|
|
—
|
Severance related
expenses (6)
|
|
|
—
|
|
|
4,617
|
|
|
1,482
|
|
|
4,617
|
Acquisition related
expenses (7)
|
|
|
2,673
|
|
|
163
|
|
|
2,750
|
|
|
313
|
Adjusted pre-tax net
income
|
|
|
18,610
|
|
|
17,742
|
|
|
79,608
|
|
|
73,073
|
Less: Provision for
income taxes at 38%
|
|
|
(7,072)
|
|
|
(6,742)
|
|
|
(30,251)
|
|
|
(27,768)
|
Adjusted net
income
|
|
$
|
11,538
|
|
$
|
11,000
|
|
$
|
49,357
|
|
$
|
45,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total basic pro forma
shares outstanding
|
|
|
30,113,276
|
|
|
29,397,474
|
|
|
29,925,446
|
|
|
29,345,764
|
Total diluted pro
forma shares outstanding
|
|
|
30,181,348
|
|
|
29,994,040
|
|
|
30,083,609
|
|
|
29,976,577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
income basic earnings per share:
|
|
$
|
0.38
|
|
$
|
0.37
|
|
$
|
1.65
|
|
$
|
1.54
|
Adjusted net
income diluted earnings per share:
|
|
$
|
0.38
|
|
$
|
0.37
|
|
$
|
1.64
|
|
$
|
1.51
|
(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 (gains)
losses on the sale or disposition of assets as well as the (gains)
losses 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 and previous senior secured credit
facility for each period presented.
|
(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 costs
incurred in connection with the Secondary Offering.
|
(6)
|
Represents severance
related expenses for expenses of $1.3 million incurred during the
year ended December 31, 2014 for severance and outplacement
services provided to former employees in connection with a
restructuring plan implemented at the Company's corporate
headquarters. Severance related expenses also includes $3.3 million
recognized for the retirement of the former Chief Executive Officer
on December 31, 2014, which includes $1.8 million of expenses
related to continued salary, benefits and related payroll costs to
be paid over a 36-month period beginning in the fourth quarter of
2015, $1.0 million of additional equity-based compensation expense
for the accelerated vesting of certain restricted stock units and
$0.5 million of expenses related to a one-time salary payment made
on December 31, 2014. Subsequent thereto, severance related
expenses were recognized during the year ended December 31, 2015
for organizational changes implemented during 2015, including the
retirement of the Company's former President on August 19, 2015.
See Note 13 to the audited consolidated financial statements
included in the Annual Report on Form 10-K.
|
(7)
|
Costs include legal,
accounting and advisory fees as well as consulting fees for
integration services. Acquisition integration expenses also include
a one-time charge of $2.7 million resulting from a litigation
judgment concerning the net assets of HBN during the year ended
December 31, 2015.
|
TABLE
7
|
|
RE/MAX Holdings,
Inc.
|
Pro Forma Shares
Outstanding
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Total basic
weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
Weighted average
shares of Class A common stock outstanding
|
|
14,283,839
|
|
11,662,874
|
|
12,671,051
|
|
11,611,164
|
Remaining equivalent
weighted average shares of stock outstanding on a pro forma basis
assuming RE/MAX Holdings owned 100% of RMCO
|
|
15,829,437
|
|
17,734,600
|
|
17,254,395
|
|
17,734,600
|
Total basic pro forma
weighted average shares outstanding
|
|
30,113,276
|
|
29,397,474
|
|
29,925,446
|
|
29,345,764
|
|
|
|
|
|
|
|
|
|
Total diluted
weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
Weighted average
shares of Class A common stock outstanding
|
|
14,283,839
|
|
11,662,874
|
|
12,671,051
|
|
11,611,164
|
Remaining equivalent
weighted average shares of stock outstanding on a pro forma basis
assuming RE/MAX Holdings owned 100% of RMCO
|
|
15,829,437
|
|
17,734,600
|
|
17,254,395
|
|
17,734,600
|
Dilutive effect of
stock options (1)
|
|
29,067
|
|
542,623
|
|
130,001
|
|
578,888
|
Dilutive effect of
unvested restricted stock units (1)
|
|
39,005
|
|
53,943
|
|
28,162
|
|
51,925
|
Total diluted pro
forma weighted average shares outstanding
|
|
30,181,348
|
|
29,994,040
|
|
30,083,609
|
|
29,976,577
|
(1)
|
In accordance with
the treasury stock method
|
Non-GAAP Financial Measures
The Securities and Exchange Commission ("SEC") has adopted rules
to regulate the use in filings with the SEC and in public
disclosures of financial measures not in accordance with U.S.
generally accepted accounting principles ("U.S. GAAP"), such as
Adjusted EBITDA and the ratios related thereto. These measures are
derived on the basis of methodologies other than in accordance with
U.S. GAAP.
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 audited consolidated financial statements
included in the Annual Report on Form 10-K), adjusted for the
impact of the following items that the Company does not consider
representative of its ongoing operating performance: loss or gain
on sale or disposition of assets and sublease, loss on early
extinguishment of debt, equity-based compensation incurred in
connection with grants of RMCO common units prior to the IPO and
fully vested restricted stock units granted in conjunction with the
IPO, non-cash straight-line rent expense, salaries paid to David
Liniger, the Company's Chief Executive Officer,
Chairman and Co-Founder, and Gail
Liniger, the Company's Vice Chair and Co-Founder, that the
Company discontinued upon completing the IPO, professional fees and
certain expenses incurred in connection with the IPO and subsequent
secondary offerings, acquisition related expenses and severance
related expenses. During the third quarter of 2014, the Company
revised its definition of Adjusted EBITDA to eliminate the
adjustment of equity-based compensation expense incurred for equity
awards granted since the IPO, and Adjusted EBITDA in prior periods
was revised to reflect this change for consistency of
presentation. During the fourth quarter of 2014, the Company
revised its definition of Adjusted EBITDA to include an adjustment
for severance related charges incurred during or after such
quarter.
Because Adjusted EBITDA omits certain non-cash items and other
non-recurring cash charges or other items, the Company believes
that it 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 and is more
reflective of other factors that affect its operating performance.
The Company presents Adjusted EBITDA because the Company believes
it is useful as a supplemental measure in evaluating the
performance of the operating businesses and provides greater
transparency into the Company's results of operations. The
Company's management uses Adjusted EBITDA as a factor in evaluating
the performance of the business.
Adjusted EBITDA has limitations as an analytical tool, and you
should not consider Adjusted EBITDA either in isolation or as a
substitute for analyzing the Company's results as reported under
U.S. GAAP. Some of these limitations are:
- this measure does not reflect changes in, or cash requirements
for, the Company's working capital needs;
- this measure does not reflect the Company's interest expense,
or the cash requirements necessary to service interest or principal
payments on its debt;
- this measure does not reflect the Company's income tax expense
or the cash requirements to pay its taxes;
- this measure does not reflect historical cash expenditures or
future requirements for capital expenditures or contractual
commitments;
- this measure does 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;
- this measure does not reflect the cash requirements to pay RIHI
and Oberndorf pursuant to the TRAs;
- 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; and
- other companies may calculate this measure differently so they
may not be comparable.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/remax-holdings-reports-fourth-quarter-and-full-year-2015-results-300226516.html
SOURCE RE/MAX Holdings, Inc.