Total Revenue Grew 19.3%, Organic Revenue Grew
1.7%, and Adjusted EBITDA Grew 14.4%
DENVER, Aug. 4, 2022
/PRNewswire/ --
Second Quarter 2022 Highlights
(Compared to second
quarter 2021 unless otherwise noted)
- Total Revenue increased 19.3% to $92.2
million
- Revenue excluding the Marketing Funds1 increased
17.0% to $69.3 million, and was
comprised of 1.7% organic growth2, 15.9% growth
attributable to acquisitions, partially offset by 0.6% due to
foreign currency movements
- Net income attributable to RE/MAX Holdings, Inc. of
$5.8 million and income per diluted
share (GAAP EPS) of $0.30
- Adjusted EBITDA3 increased 14.4% to $35.1 million, Adjusted EBITDA margin3
of 38.1% and Adjusted earnings per diluted share (Adjusted
EPS3) of $0.68
- Total agent count increased 2.7% to 143,939 agents
- U.S. and Canada combined agent
count increased 185 agents to 85,679 agents
- Total open Motto Mortgage franchises increased 22.0% to 200
offices4
Operating Statistics as of July 31,
2022
(Compared to July 31,
2021 unless otherwise noted)
- Total agent count increased 2.3% to 143,761 agents
- U.S. and Canada combined agent
count decreased 183 agents to 85,524 agents
- Total open Motto Mortgage franchises increased 22.0% to 205
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 and only national mortgage
brokerage franchise brand in the U.S., today announced operating
results for the quarter ended June
30, 2022.
"Our strong second-quarter results demonstrate the strength and
resilience of our 100%-franchise model, particularly amid shifting
housing market conditions," said Steve
Joyce, RE/MAX Holdings Chief Executive Officer. "RE/MAX
INTEGRA's North American regions again contributed meaningfully to
both our top-line and bottom-line performance. Motto, which opened
its 200th franchise during the quarter, continues to
grow and RE/MAX agent count reached another record high driven by
Canadian and global growth."
Joyce continued: "We have two terrific industry-leading brands,
a network of experienced and productive real estate professionals,
a strong balance sheet, and fantastic cash-generating ability, all
of which should continue to serve us well in virtually any kind of
market. We intend to leverage these strengths to actively seek the
best opportunities that will support our future growth, such as our
recently announced strategic initiatives. We believe that these
initiatives, coupled with our strong business model, will position
us well to generate profitable growth over the long term and should
help mitigate the impact of additional market volatility."
Second Quarter 2022 Operating Results
Agent Count
The following table compares agent count as of June 30, 2022 and 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
June 30,
|
|
Change
|
|
|
|
2022
|
|
2021
|
|
#
|
|
%
|
U.S.
|
|
|
60,825
|
|
62,428
|
|
(1,603)
|
|
(2.6)
|
Canada
|
|
|
24,854
|
|
23,066
|
|
1,788
|
|
7.8
|
Subtotal
|
|
|
85,679
|
|
85,494
|
|
185
|
|
0.2
|
Outside the U.S. &
Canada
|
|
|
58,260
|
|
54,707
|
|
3,553
|
|
6.5
|
Total
|
|
|
143,939
|
|
140,201
|
|
3,738
|
|
2.7
|
|
|
Revenue
RE/MAX Holdings generated revenue of $92.2 million in the second quarter of 2022, an
increase of $14.9 million, or 19.3%,
compared to $77.2 million in the
second quarter of 2021. Revenue excluding the Marketing Funds was
$69.3 million in the second quarter
of 2022, an increase of $10.1
million, or 17.0%, versus the same period in 2021. This
increase was comprised of revenue growth of 15.9% from
acquisitions, organic revenue growth of 1.7%, partially offset by
0.6% due to foreign-currency movements. Organic growth increased
primarily due to Motto growth, Gadberry Group data services
subscription revenue, higher event-based revenue, incremental
revenue from fewer agent recruiting initiatives, partially offset
by lower Broker fees. Revenue growth from acquisitions was
attributable to revenue from the RE/MAX INTEGRA North American
regions ("INTEGRA") acquisition completed in July 2021.
Recurring revenue streams, which consist of continuing franchise
fees and annual dues, increased $7.3
million, or 20.4%, compared to the second quarter of 2021
and accounted for 62.3% of revenue (excluding the Marketing Funds)
in the second quarter of 2022 compared to 60.5% of revenue in the
prior-year period.
Operating Expenses
Total operating expenses were $75.3
million for the second quarter of 2022, an increase of
$11.6 million, or 18.1%, compared to
$63.7 million in the second quarter
of 2021. Second quarter 2022 total operating expenses increased
primarily due to increased selling, operating and administrative
expenses as discussed below; an increase in Marketing Funds
expenses and depreciation and amortization expenses primarily
as a result of the INTEGRA acquisition; and a $2.5 million loss on termination of the Company's
booj office lease.
Selling, operating and administrative expenses were $40.8 million in the second quarter of 2022, an
increase of $2.0 million, or 5.1%,
compared to the second quarter of 2021 and represented 58.9% of
revenue, excluding the Marketing Funds, compared to 65.6% in the
prior-year period. Second quarter 2022 selling, operating and
administrative expenses increased primarily due to estimated
increases in the fair value of contingent consideration
liabilities, higher travel and events expenses and increased
investments in technology, partially offset by lower professional
fees due to lower costs associated with acquiring and integrating
new companies.
Net Income and GAAP EPS
Net income attributable to RE/MAX Holdings was $5.8 million for the second quarter of 2022
compared to $5.3 million the second
quarter of 2021. Reported basic and diluted GAAP income per share
were $0.31 and $0.30, respectively, for the second quarter of
2022 compared to basic and diluted GAAP EPS of $0.28 each in the second quarter of 2021.
Adjusted EBITDA and Adjusted EPS
Adjusted EBITDA was $35.1 million
for the second quarter of 2022, an increase of $4.4 million, or 14.4%, compared to the second
quarter of 2021. Second quarter 2022 Adjusted EBITDA increased
primarily due to contributions from the INTEGRA acquisition,
partially offset by increased investments in technology and our
Mortgage segment. Adjusted EBITDA margin was 38.1% in the second
quarter of 2022, compared to 39.7% in the second quarter of
2021.
Adjusted basic and diluted EPS were each $0.68 for the second quarter of 2022 compared to
Adjusted basic and diluted EPS of $0.64 each for the second quarter of 2021. The
ownership structure used to calculate Adjusted basic and diluted
EPS for the quarter ended June 30,
2022 assumes RE/MAX Holdings owned 100% of RMCO, LLC
("RMCO"). The weighted average ownership RE/MAX Holdings had in
RMCO was 60.2% for the quarter ended June
30, 2022.
Balance Sheet
As of June 30, 2022, the Company
had cash and cash equivalents of $118.1
million, a decrease of $8.1
million from December 31,
2021. As of June 30, 2022, the
Company had $450.2 million of
outstanding debt, net of an unamortized debt discount and issuance
costs, compared to $452.1 million as
of December 31, 2021.
Dividend
On August 2, 2022, the Company
announced that its Board of Directors approved a quarterly cash
dividend of $0.23 per share of Class
A common stock. The quarterly dividend is payable on
August 30, 2022, to shareholders of
record at the close of business on August
16, 2022.
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 six months ended June 30, 2022, 487,196 shares of the Company's
Class A common stock were repurchased and retired for $11.9 million excluding commissions, at an
average cost of $24.36 per share. As
of June 30, 2022, $88.1 million remained available under the share
repurchase program.
Outlook
The Company's third quarter and full-year 2022 Outlook assumes
no further currency movements, acquisitions or divestitures.
For the third quarter of 2022, RE/MAX Holdings expects:
- Agent count to increase 1.5% to 2.5% over third quarter
2021;
- Revenue in a range of $87.0
million to $91.0 million
(including revenue from the Marketing Funds in a range of
$22.0 million to $24.0 million); and
- Adjusted EBITDA in a range of $30.5
million to $33.0 million.
For the full-year 2022, the Company is reducing its guidance to
reflect current housing market conditions and other related
macroeconomic trends. The Company expects:
- Agent count to increase 1.0% to 2.5% over full-year 2021, down
from 2.0% to 4.0%;
- Revenue in a range of $354.0
million to $364.0 million
(including revenue from the Marketing Funds in a range of
$90.0 million to $93.0 million), down from $366.0 million to $376.0
million (including revenue from the Marketing Funds in a
range of $91.5 million to
$95.5 million); and
- Adjusted EBITDA in a range of $123.0
million to $128.0 million,
down from $130.0 million to
$135.0 million.
Webcast and Conference Call
The Company will host a conference call for interested parties
on Friday, August 5, 2022, beginning
at 8:30 a.m. Eastern Time. Interested
parties can register in advance for the conference call using the
link below:
https://conferencingportals.com/event/tTSuEepd
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
|
|
Six Months
Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenue excluding
the Marketing Funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
|
$
|
92,172
|
|
$
|
77,246
|
|
$
|
183,176
|
|
$
|
149,541
|
Less: Marketing Funds
fees
|
|
|
22,909
|
|
|
18,042
|
|
|
45,760
|
|
|
36,187
|
Revenue excluding the
Marketing Funds
|
|
$
|
69,263
|
|
$
|
59,204
|
|
$
|
137,416
|
|
$
|
113,354
|
|
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 almost 9,000
offices and a presence in over 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 has grown to over 200 offices across almost
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; franchise sales; revenue; operating expenses; the Company's
outlook for the third quarter and full year 2022; non-GAAP
financial measures; housing and mortgage market conditions;
strategic initiatives; growth; the strength and resilience of the
Company's business model; the Company's balance sheet; the
Company's cash-generating ability; the Company's ability to
generate profitable growth over the long-term; and the Company's
ability to mitigate the impact of market volatility.
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) the global COVID-19
pandemic, which continues to pose significant and widespread risks
and ongoing uncertainty for the Company's business, including the
Company's agents, loan originators, franchisees and employees, as
well as home buyers and sellers, (2) changes in the real estate
market or interest rates and availability of financing, (3) changes
in business and economic activity in general, (4) the Company's
ability to attract and retain quality franchisees, (5) the
Company's franchisees' ability to recruit and retain real estate
agents and mortgage loan originators, (6) changes in laws and
regulations, (7) the Company's ability to enhance, market, and
protect its brands, including the RE/MAX and Motto Mortgage brands,
(8) the Company's ability to implement its technology initiatives,
(9) risks related to the Company's CEO transition,
(10) fluctuations in foreign currency exchange rates, 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
|
(In thousands,
except share and per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing franchise
fees
|
|
$
|
34,128
|
|
$
|
26,955
|
|
$
|
67,627
|
|
$
|
52,329
|
Annual dues
|
|
|
9,016
|
|
|
8,869
|
|
|
17,936
|
|
|
17,541
|
Broker fees
|
|
|
19,317
|
|
|
17,453
|
|
|
34,402
|
|
|
29,406
|
Marketing Funds
fees
|
|
|
22,909
|
|
|
18,042
|
|
|
45,760
|
|
|
36,187
|
Franchise sales and
other revenue
|
|
|
6,802
|
|
|
5,927
|
|
|
17,451
|
|
|
14,078
|
Total
revenue
|
|
|
92,172
|
|
|
77,246
|
|
|
183,176
|
|
|
149,541
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, operating and
administrative expenses
|
|
|
40,781
|
|
|
38,816
|
|
|
88,612
|
|
|
82,492
|
Marketing Funds
expenses
|
|
|
22,909
|
|
|
18,042
|
|
|
45,760
|
|
|
36,187
|
Depreciation and
amortization
|
|
|
9,113
|
|
|
6,846
|
|
|
18,098
|
|
|
13,654
|
Settlement and
impairment charges
|
|
|
2,460
|
|
|
—
|
|
|
6,195
|
|
|
—
|
Total operating
expenses
|
|
|
75,263
|
|
|
63,704
|
|
|
158,665
|
|
|
132,333
|
Operating income
(loss)
|
|
|
16,909
|
|
|
13,542
|
|
|
24,511
|
|
|
17,208
|
Other expenses,
net:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(4,032)
|
|
|
(2,124)
|
|
|
(7,683)
|
|
|
(4,222)
|
Interest
income
|
|
|
159
|
|
|
19
|
|
|
178
|
|
|
182
|
Foreign currency
transaction gains (losses)
|
|
|
(160)
|
|
|
(363)
|
|
|
20
|
|
|
(383)
|
Total other expenses,
net
|
|
|
(4,033)
|
|
|
(2,468)
|
|
|
(7,485)
|
|
|
(4,423)
|
Income (loss) before
provision for income taxes
|
|
|
12,876
|
|
|
11,074
|
|
|
17,026
|
|
|
12,785
|
Provision for income
taxes
|
|
|
(2,601)
|
|
|
(714)
|
|
|
(3,806)
|
|
|
(662)
|
Net income
(loss)
|
|
$
|
10,275
|
|
$
|
10,360
|
|
$
|
13,220
|
|
$
|
12,123
|
Less: net income
(loss) attributable to non-controlling interest
|
|
|
4,446
|
|
|
5,099
|
|
|
5,940
|
|
|
5,699
|
Net income (loss)
attributable to RE/MAX Holdings, Inc.
|
|
$
|
5,829
|
|
$
|
5,261
|
|
$
|
7,280
|
|
$
|
6,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to RE/MAX Holdings, Inc. per share
of Class A common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.31
|
|
$
|
0.28
|
|
$
|
0.38
|
|
$
|
0.35
|
Diluted
|
|
$
|
0.30
|
|
$
|
0.28
|
|
$
|
0.38
|
|
$
|
0.34
|
Weighted average shares
of Class A common stock outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
18,997,397
|
|
|
18,719,477
|
|
|
18,965,911
|
|
|
18,608,005
|
Diluted
|
|
|
19,153,349
|
|
|
18,941,343
|
|
|
19,182,477
|
|
|
18,904,036
|
Cash dividends declared
per share of Class A common stock
|
|
$
|
0.23
|
|
$
|
0.23
|
|
$
|
0.46
|
|
$
|
0.46
|
TABLE
2
|
RE/MAX Holdings,
Inc.
|
Consolidated Balance
Sheets
|
(In
thousands, except share and per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
2022
|
|
2021
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
118,132
|
|
$
|
126,270
|
Restricted
cash
|
|
|
35,677
|
|
|
32,129
|
Accounts and notes
receivable, current portion, net of allowances
|
|
|
36,198
|
|
|
34,611
|
Income taxes
receivable
|
|
|
2,421
|
|
|
1,754
|
Other current
assets
|
|
|
17,217
|
|
|
16,010
|
Total current
assets
|
|
|
209,645
|
|
|
210,774
|
Property and equipment,
net of accumulated depreciation
|
|
|
10,467
|
|
|
12,686
|
Operating lease right
of use assets
|
|
|
30,274
|
|
|
36,523
|
Franchise agreements,
net
|
|
|
131,983
|
|
|
143,832
|
Other intangible
assets, net
|
|
|
32,387
|
|
|
32,530
|
Goodwill
|
|
|
268,054
|
|
|
269,115
|
Deferred tax assets,
net
|
|
|
51,418
|
|
|
51,314
|
Income taxes
receivable, net of current portion
|
|
|
754
|
|
|
1,803
|
Other assets, net of
current portion
|
|
|
11,711
|
|
|
17,556
|
Total
assets
|
|
$
|
746,693
|
|
$
|
776,133
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
6,019
|
|
$
|
5,189
|
Accrued
liabilities
|
|
|
76,887
|
|
|
96,768
|
Income taxes
payable
|
|
|
2,499
|
|
|
2,546
|
Deferred
revenue
|
|
|
26,431
|
|
|
27,178
|
Current portion of
debt
|
|
|
4,600
|
|
|
4,600
|
Current portion of
payable pursuant to tax receivable agreements
|
|
|
3,672
|
|
|
3,610
|
Operating lease
liabilities
|
|
|
6,672
|
|
|
6,328
|
Total current
liabilities
|
|
|
126,780
|
|
|
146,219
|
Debt, net of current
portion
|
|
|
445,586
|
|
|
447,459
|
Payable pursuant to tax
receivable agreements, net of current portion
|
|
|
26,856
|
|
|
26,893
|
Deferred tax
liabilities, net
|
|
|
14,378
|
|
|
14,699
|
Deferred revenue, net
of current portion
|
|
|
18,569
|
|
|
18,929
|
Operating lease
liabilities, net of current portion
|
|
|
41,621
|
|
|
45,948
|
Other liabilities, net
of current portion
|
|
|
9,362
|
|
|
6,919
|
Total
liabilities
|
|
|
683,152
|
|
|
707,066
|
Commitments and
contingencies
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
Class A common stock,
par value $.0001 per share, 180,000,000 shares authorized;
18,753,835 and 18,806,194 shares issued and outstanding as of
June 30, 2022 and December 31, 2021,
respectively
|
|
|
2
|
|
|
2
|
Class B common stock,
par value $.0001 per share, 1,000 shares authorized; 1 share issued
and outstanding as of June 30, 2022 and
December 31, 2021, respectively
|
|
|
—
|
|
|
—
|
Additional paid-in
capital
|
|
|
526,122
|
|
|
515,443
|
Accumulated
deficit
|
|
|
(21,958)
|
|
|
(7,821)
|
Accumulated other
comprehensive income, net of tax
|
|
|
309
|
|
|
650
|
Total stockholders'
equity attributable to RE/MAX Holdings, Inc.
|
|
|
504,475
|
|
|
508,274
|
Non-controlling
interest
|
|
|
(440,934)
|
|
|
(439,207)
|
Total stockholders'
equity
|
|
|
63,541
|
|
|
69,067
|
Total liabilities
and stockholders' equity
|
|
$
|
746,693
|
|
$
|
776,133
|
|
|
|
|
|
|
|
TABLE
3
|
RE/MAX Holdings,
Inc.
|
Consolidated
Statements of Cash Flows
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
June 30,
|
|
|
2022
|
|
2021
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
13,220
|
|
$
|
12,123
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
18,098
|
|
|
13,654
|
Impairment charge -
leased assets
|
|
|
3,735
|
|
|
—
|
Non-cash loss on lease
termination
|
|
|
1,175
|
|
|
—
|
Bad debt
expense
|
|
|
396
|
|
|
261
|
Equity-based
compensation expense
|
|
|
10,172
|
|
|
18,307
|
Deferred income tax
expense (benefit)
|
|
|
1,020
|
|
|
335
|
Fair value adjustments
to contingent consideration
|
|
|
1,995
|
|
|
10
|
Non-cash lease expense
(benefit)
|
|
|
(867)
|
|
|
(635)
|
Other, net
|
|
|
691
|
|
|
177
|
Changes in operating
assets and liabilities
|
|
|
(10,716)
|
|
|
(13,893)
|
Net cash provided by
operating activities
|
|
|
38,919
|
|
|
30,339
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Purchases of property,
equipment and capitalization of software
|
|
|
(6,144)
|
|
|
(7,551)
|
Net cash used in
investing activities
|
|
|
(6,144)
|
|
|
(7,551)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Payments on
debt
|
|
|
(2,300)
|
|
|
(1,253)
|
Distributions paid to
non-controlling unitholders
|
|
|
(7,423)
|
|
|
(6,999)
|
Dividends and dividend
equivalents paid to Class A common stockholders
|
|
|
(9,551)
|
|
|
(9,143)
|
Payments related to
tax withholding for share-based compensation
|
|
|
(5,659)
|
|
|
(5,298)
|
Common shares
repurchased
|
|
|
(11,866)
|
|
|
—
|
Payment of contingent
consideration
|
|
|
(120)
|
|
|
—
|
Net cash used in
financing activities
|
|
|
(36,919)
|
|
|
(22,693)
|
Effect of exchange rate
changes on cash
|
|
|
(446)
|
|
|
355
|
Net (decrease)
increase in cash, cash equivalents and restricted cash
|
|
|
(4,590)
|
|
|
450
|
Cash, cash equivalents
and restricted cash, beginning of period
|
|
|
158,399
|
|
|
121,227
|
Cash, cash equivalents
and restricted cash, end of period
|
|
$
|
153,809
|
|
$
|
121,677
|
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,
|
|
September
30,
|
|
|
2022
|
|
2022
|
|
2021
|
|
2021
|
|
2021
|
|
2021
|
|
2020
|
|
2020
|
Agent
Count:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-Owned
Regions
|
|
53,415
|
|
53,338
|
|
53,946
|
|
54,578
|
|
48,025
|
|
48,041
|
|
48,212
|
|
48,263
|
Independent
Regions
|
|
7,410
|
|
7,379
|
|
7,381
|
|
7,429
|
|
14,403
|
|
14,220
|
|
14,091
|
|
14,041
|
U.S.
Total
|
|
60,825
|
|
60,717
|
|
61,327
|
|
62,007
|
|
62,428
|
|
62,261
|
|
62,303
|
|
62,304
|
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-Owned
Regions
|
|
20,098
|
|
19,751
|
|
19,596
|
|
19,207
|
|
6,387
|
|
6,262
|
|
6,182
|
|
6,135
|
Independent
Regions
|
|
4,756
|
|
4,692
|
|
4,548
|
|
4,442
|
|
16,679
|
|
16,248
|
|
15,765
|
|
15,363
|
Canada
Total
|
|
24,854
|
|
24,443
|
|
24,144
|
|
23,649
|
|
23,066
|
|
22,510
|
|
21,947
|
|
21,498
|
U.S. and Canada
Total
|
|
85,679
|
|
85,160
|
|
85,471
|
|
85,656
|
|
85,494
|
|
84,771
|
|
84,250
|
|
83,802
|
Outside U.S. and
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent
Regions
|
|
58,260
|
|
57,245
|
|
56,527
|
|
55,280
|
|
54,707
|
|
55,443
|
|
53,542
|
|
50,967
|
Outside U.S. and
Canada Total
|
|
58,260
|
|
57,245
|
|
56,527
|
|
55,280
|
|
54,707
|
|
55,443
|
|
53,542
|
|
50,967
|
Total
|
|
143,939
|
|
142,405
|
|
141,998
|
|
140,936
|
|
140,201
|
|
140,214
|
|
137,792
|
|
134,769
|
TABLE
5
|
RE/MAX Holdings,
Inc.
|
Adjusted EBITDA
Reconciliation to Net Income
|
(In
thousands, except percentages)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Net income
(loss)
|
|
$
|
10,275
|
|
$
|
10,360
|
|
$
|
13,220
|
|
$
|
12,123
|
|
Depreciation and
amortization
|
|
|
9,113
|
|
|
6,846
|
|
|
18,098
|
|
|
13,654
|
|
Interest
expense
|
|
|
4,032
|
|
|
2,124
|
|
|
7,683
|
|
|
4,222
|
|
Interest
income
|
|
|
(159)
|
|
|
(19)
|
|
|
(178)
|
|
|
(182)
|
|
Provision for income
taxes
|
|
|
2,601
|
|
|
714
|
|
|
3,806
|
|
|
662
|
|
EBITDA
|
|
|
25,862
|
|
|
20,025
|
|
|
42,629
|
|
|
30,479
|
|
Impairment charge -
leased assets (1)
|
|
|
—
|
|
|
—
|
|
|
3,735
|
|
|
—
|
|
Loss on lease
termination (2)
|
|
|
2,460
|
|
|
—
|
|
|
2,460
|
|
|
—
|
|
Equity-based
compensation expense
|
|
|
4,535
|
|
|
6,253
|
|
|
10,172
|
|
|
18,307
|
|
Acquisition-related
expense (3)
|
|
|
328
|
|
|
3,928
|
|
|
1,585
|
|
|
4,871
|
|
Fair value adjustments
to contingent consideration (4)
|
|
|
1,710
|
|
|
290
|
|
|
1,995
|
|
|
10
|
|
Other
|
|
|
236
|
|
|
202
|
|
|
1,035
|
|
|
50
|
|
Adjusted EBITDA
(5)
|
|
$
|
35,131
|
|
$
|
30,698
|
|
$
|
63,611
|
|
$
|
53,717
|
|
Adjusted EBITDA Margin
(5)
|
|
|
38.1
|
%
|
|
39.7
|
%
|
|
34.7
|
%
|
|
35.9
|
%
|
(1)
|
Represents the
impairment recognized on a portion of the Company's corporate
headquarters office building.
|
(2)
|
During the second
quarter of 2022, a loss was recognized in connection with the
termination of the booj office lease.
|
(3)
|
Acquisition-related
expense includes personnel, legal, accounting, advisory and
consulting fees incurred in connection with acquisition activities
and integration of acquired companies.
|
(4)
|
Fair value adjustments
to contingent consideration include amounts recognized for changes
in the estimated fair value of the contingent consideration
liabilities.
|
(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
|
|
Six Months
Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net income
(loss)
|
|
$
|
10,275
|
|
$
|
10,360
|
|
$
|
13,220
|
|
$
|
12,123
|
Amortization of
acquired intangible assets
|
|
|
6,565
|
|
|
4,639
|
|
|
12,734
|
|
|
9,365
|
Provision for income
taxes
|
|
|
2,601
|
|
|
714
|
|
|
3,806
|
|
|
662
|
Add-backs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment charge -
leased assets (1)
|
|
|
—
|
|
|
—
|
|
|
3,735
|
|
|
—
|
Loss on lease
termination (2)
|
|
|
2,460
|
|
|
—
|
|
|
2,460
|
|
|
—
|
Equity-based
compensation expense
|
|
|
4,535
|
|
|
6,253
|
|
|
10,172
|
|
|
18,307
|
Acquisition-related
expense (3)
|
|
|
328
|
|
|
3,928
|
|
|
1,585
|
|
|
4,871
|
Fair value adjustments
to contingent consideration (4)
|
|
|
1,710
|
|
|
290
|
|
|
1,995
|
|
|
10
|
Other
|
|
|
236
|
|
|
202
|
|
|
1,035
|
|
|
50
|
Adjusted pre-tax net
income
|
|
|
28,710
|
|
|
26,386
|
|
|
50,742
|
|
|
45,388
|
Less: Provision for
income taxes at 25% and 24%, respectively (5)
|
|
|
(7,178)
|
|
|
(6,333)
|
|
|
(12,686)
|
|
|
(10,893)
|
Adjusted net income
(6)
|
|
$
|
21,532
|
|
$
|
20,053
|
|
$
|
38,056
|
|
$
|
34,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total basic pro forma
shares outstanding
|
|
|
31,556,997
|
|
|
31,279,077
|
|
|
31,525,511
|
|
|
31,167,605
|
Total diluted pro forma
shares outstanding
|
|
|
31,712,949
|
|
|
31,500,943
|
|
|
31,742,077
|
|
|
31,463,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
basic earnings per share (6)
|
|
$
|
0.68
|
|
$
|
0.64
|
|
$
|
1.21
|
|
$
|
1.11
|
Adjusted net income
diluted earnings per share (6)
|
|
$
|
0.68
|
|
$
|
0.64
|
|
$
|
1.20
|
|
$
|
1.10
|
(1)
|
Represents the
impairment recognized on a portion of the Company's corporate
headquarters office building.
|
(2)
|
During the second
quarter of 2022, a loss was recognized in connection with the
termination of the booj office lease.
|
(3)
|
Acquisition-related
expense includes personnel, legal, accounting, advisory and
consulting fees incurred in connection with acquisition activities
and integration of acquired companies.
|
(4)
|
Fair value adjustments
to contingent consideration include amounts recognized for changes
in the estimated fair value of the contingent consideration
liabilities.
|
(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, (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, and
(c) increased to 25% due to the acquisition of INTEGRA in
2021.
|
(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
|
|
Six Months
Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Total basic weighted
average shares outstanding:
|
|
|
|
|
|
|
|
|
Weighted average
shares of Class A common stock outstanding
|
|
18,997,397
|
|
18,719,477
|
|
18,965,911
|
|
18,608,005
|
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
|
|
12,559,600
|
|
12,559,600
|
Total basic pro forma
weighted average shares outstanding
|
|
31,556,997
|
|
31,279,077
|
|
31,525,511
|
|
31,167,605
|
|
|
|
|
|
|
|
|
|
Total diluted
weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
Weighted average
shares of Class A common stock outstanding
|
|
18,997,397
|
|
18,719,477
|
|
18,965,911
|
|
18,608,005
|
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
|
|
12,559,600
|
|
12,559,600
|
Dilutive effect of
unvested restricted stock units (1)
|
|
155,952
|
|
221,866
|
|
216,566
|
|
296,031
|
Total diluted pro
forma weighted average shares outstanding
|
|
31,712,949
|
|
31,500,943
|
|
31,742,077
|
|
31,463,636
|
(1)
|
In accordance with the
treasury stock method.
|
TABLE
8
|
RE/MAX Holdings,
Inc.
|
Adjusted Free Cash
Flow & Unencumbered Cash
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
June 30,
|
|
|
2022
|
|
2021
|
Cash flow from
operations
|
|
$
|
38,919
|
|
$
|
30,339
|
Less: Purchases of
property, equipment and capitalization of software
|
|
|
(6,144)
|
|
|
(7,551)
|
(Increases) decreases
in restricted cash of the Marketing Funds (1)
|
|
|
(3,548)
|
|
|
5,447
|
Adjusted free cash
flow (2)
|
|
|
29,227
|
|
|
28,235
|
|
|
|
|
|
|
|
Adjusted free cash flow
(2)
|
|
|
29,227
|
|
|
28,235
|
Less: Tax/Other
non-dividend distributions to RIHI
|
|
|
(1,645)
|
|
|
(1,221)
|
Adjusted free cash
flow after tax/non-dividend distributions to RIHI
(2)
|
|
|
27,582
|
|
|
27,014
|
|
|
|
|
|
|
|
Adjusted free cash flow
after tax/non-dividend distributions to RIHI
(2)
|
|
|
27,582
|
|
|
27,014
|
Less: Debt principal
payments
|
|
|
(2,300)
|
|
|
(1,253)
|
Unencumbered cash
generated (2)
|
|
$
|
25,282
|
|
$
|
25,761
|
|
|
|
|
|
|
|
Summary
|
|
|
|
|
|
|
Cash flow from
operations
|
|
$
|
38,919
|
|
$
|
30,339
|
Adjusted free cash flow
(2)
|
|
$
|
29,227
|
|
$
|
28,235
|
Adjusted free cash flow
after tax/non-dividend distributions to RIHI
(2)
|
|
$
|
27,582
|
|
$
|
27,014
|
Unencumbered cash
generated (2)
|
|
$
|
25,282
|
|
$
|
25,761
|
|
|
|
|
|
|
|
Adjusted EBITDA
(2)
|
|
$
|
63,611
|
|
$
|
53,717
|
Adjusted free cash flow
as % of Adjusted EBITDA (2)
|
|
|
45.9 %
|
|
|
52.6 %
|
Adjusted free cash flow
less distributions to RIHI as % of Adjusted EBITDA
(2)
|
|
|
43.4 %
|
|
|
50.3 %
|
Unencumbered cash
generated as % of Adjusted EBITDA (2)
|
|
|
39.7 %
|
|
|
48.0 %
|
(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) so as 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 on the basis of 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 and other non-recurring items.
Because 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;
- 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 on
sale or disposition of assets and sublease and acquisition-related
expense, among others. 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 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.