EX-99.1 2 tm2421160d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

RE/MAX HOLDINGS, INC. REPORTS SECOND QUARTER 2024 RESULTS

Total Revenue of $78.5 Million, Adjusted EBITDA of $28.1 Million

 

DENVER, August 8, 2024

 

Second Quarter 2024 Highlights

(Compared to second quarter 2023 unless otherwise noted)

 

§Total Revenue decreased 4.8% to $78.5 million
§Revenue excluding the Marketing Funds1 decreased 4.8% to $58.4 million, driven by negative 4.5% organic growth2 and 0.3% adverse foreign currency movements
§Net income attributable to RE/MAX Holdings, Inc. of $3.7 million and earnings per diluted share (GAAP EPS) of $0.19
§Adjusted EBITDA3 increased 5.4% to $28.1 million, Adjusted EBITDA margin3 of 35.8% and Adjusted earnings per diluted share (Adjusted EPS3) of $0.41
§Total agent count decreased 968 agents, or 0.7%, to 143,542 agents
§U.S. and Canada combined agent count decreased 4.4% to 78,599 agents
§Total open Motto Mortgage franchises increased 2.6% to 241 offices4

 

Operating Statistics as of July 31, 2024

(Compared to July 31, 2023, unless otherwise noted)

 

§Total agent count decreased 302 agents, or 0.2%, to 144,281 agents
§U.S. and Canada combined agent count decreased 4.3% to 78,440 agents
§Total open Motto Mortgage franchises increased 0.8% to 239 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, 2024.

 

“We continue to operate our business as efficiently and effectively as possible, which contributed to better-than-expected second-quarter financial results,” said Erik Carlson, RE/MAX Holdings Chief Executive Officer. “Both during and after the quarter, we were pleased to announce notable brokerage and team conversions to RE/MAX, testament to our brand’s strong reputation and value proposition in the market. Our mortgage business also continues to be resilient as we saw a year-over-year increase in open Motto Mortgage franchises.

 

Carlson continued: “As sector dynamics continue to change, skill is no longer optional. Agents who are experienced, productive, and trustworthy – attributes widely associated with RE/MAX affiliates – have a distinct competitive advantage. Those professionals, supplemented by our extensive support and resources, including outstanding education and marketing, our industry-leading brands, and our abundant presence in local markets, position RE/MAX Holdings to succeed in the months and years ahead.”

 

RE/MAX Holdings, Inc. – Second Quarter 2024Page 1 of 16

 

 

Second Quarter 2024 Operating Results

 

Agent Count

 

The following table compares agent count as of June 30, 2024 and 2023:

 

   As of June 30,   Change 
   2024   2023   #   % 
U.S.   53,406    56,987    (3,581)   (6.3)
Canada   25,193    25,218    (25)   (0.1)
Subtotal   78,599    82,205    (3,606)   (4.4)
Outside the U.S. & Canada   64,943    62,305    2,638    4.2 
Total   143,542    144,510    (968)   (0.7)

 

Revenue

 

RE/MAX Holdings generated revenue of $78.5 million in the second quarter of 2024, a decrease of $4.0 million, or 4.8%, compared to $82.4 million in the second quarter of 2023. Revenue excluding the Marketing Funds was $58.4 million in the second quarter of 2024, a decrease of $2.9 million, or 4.8%, versus the same period in 2023. The decrease in Revenue excluding the Marketing Funds was attributable to negative organic revenue growth of 4.5% and adverse foreign currency movements of 0.3%. Negative organic revenue growth was principally driven by a decrease in U.S. agent count and a reduction in revenue from previous acquisitions, partially offset by an increase in Broker fee revenue.

 

Recurring revenue streams, which consist of continuing franchise fees and annual dues, decreased $2.2 million, or 5.4%, compared to the second quarter of 2023 and accounted for 65.9% of Revenue excluding the Marketing Funds in the second quarter of 2024 compared to 66.3% of Revenue excluding the Marketing Funds in the prior-year period.

 

Operating Expenses

 

Total operating expenses were $62.3 million for the second quarter of 2024, a decrease of $7.0 million, or 10.1%, compared to $69.3 million in the second quarter of 2023. Second quarter 2024 total operating expenses decreased primarily due to lower selling, operating and administrative expenses. Depreciation and amortization and Marketing Funds expenses were also lower compared to the second quarter of 2023.

 

Selling, operating and administrative expenses were $34.9 million in the second quarter of 2024, a decrease of $5.4 million, or 13.3%, compared to the second quarter of 2023 and represented 59.6% of Revenue excluding the Marketing Funds, compared to 65.5% in the prior-year period. Second quarter 2024 selling, operating and administrative expenses decreased primarily due to lower personnel costs and a decrease in bad debt, legal, property taxes, and technology expenses.

 

Net Income and GAAP EPS

 

Net income attributable to RE/MAX Holdings was $3.7 million for the second quarter of 2024 compared to $2.0 million for the second quarter of 2023. Reported basic and diluted GAAP earnings per share were $0.20 and $0.19, respectively, for the second quarter of 2024 compared to basic and diluted GAAP earnings per share of $0.11 each in the second quarter of 2023.

 

RE/MAX Holdings, Inc. – Second Quarter 2024Page 2 of 16

 

 

Adjusted EBITDA and Adjusted EPS

 

Adjusted EBITDA was $28.1 million for the second quarter of 2024, an increase of $1.4 million, or 5.4%, compared to the second quarter of 2023. Second quarter 2024 Adjusted EBITDA increased primarily due to a decrease in bad debt expense, lower personnel costs, decreased property taxes, a reduction in technology expenses, and lower legal expenses, partially offset by a decrease in U.S. agent count. Adjusted EBITDA margin was 35.8% in the second quarter of 2024, compared to 32.3% in the second quarter of 2023.

 

Adjusted basic and diluted EPS were $0.41 each for the second quarter of 2024 compared to Adjusted basic and diluted EPS of $0.41 and $0.40, respectively, for the second quarter of 2023. The ownership structure used to calculate Adjusted basic and diluted EPS for the quarter ended June 30, 2024, assumes RE/MAX Holdings owned 100% of RMCO, LLC (“RMCO”). The weighted average ownership RE/MAX Holdings had in RMCO was 60.0% for the quarter ended June 30, 2024.

 

Balance Sheet

 

As of June 30, 2024, the Company had cash and cash equivalents of $66.1 million, a decrease of $16.6 million from December 31, 2023. As of June 30, 2024, the Company had $442.7 million of outstanding debt, net of an unamortized debt discount and issuance costs, compared to $444.6 million as of December 31, 2023.

 

Share Repurchases and Retirement

 

As previously disclosed, in January 2022 the Company’s Board of Directors authorized a common stock repurchase program of up to $100 million. During the three months ended June 30, 2024, the Company did not repurchase any shares. As of June 30, 2024, $62.5 million remained available under the share repurchase program.

 

Outlook

 

The Company’s third quarter and full year 2024 Outlook assumes no further currency movements, acquisitions, or divestitures.

 

For the third quarter of 2024, RE/MAX Holdings expects:

 

§Agent count to change negative 1.5% to 0.0% over third quarter 2023;
§Revenue in a range of $75.0 million to $80.0 million (including revenue from the Marketing Funds in a range of $19.0 million to $21.0 million); and
§Adjusted EBITDA in a range of $24.5 million to $27.5 million.

 

For the full year 2024, the Company is slightly reducing its agent count guidance and narrowing its Revenue and Adjusted EBITDA guidance ranges. The Company now expects:

 

§Agent count to change negative 1.0% to positive 1.0% over full year 2023, changed from negative 0.5% to positive 1.5%;
§Revenue in a range of $305.0 million to $315.0 million (including revenue from the Marketing Funds in a range of $78.0 million to $82.0 million), changed from $300.0 million to $320.0 million (including revenue from the Marketing Funds in a range of $78.0 million to $82.0 million); and
§Adjusted EBITDA in a range of $93.0 million to $98.0 million, changed from $90.0 million to $100.0 million.

 

RE/MAX Holdings, Inc. – Second Quarter 2024Page 3 of 16

 

 

Webcast and Conference Call

 

The Company will host a conference call for interested parties on Friday, August 9, 2024, beginning at 8:30 a.m. Eastern Time. Interested parties can register in advance for the conference call using the link below:

 

https://registrations.events/direct/Q4I9411581

 

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, 
   2024   2023   2024   2023 
Revenue excluding the Marketing Funds:                    
Total revenue  $78,453   $82,447   $156,740   $167,848 
Less: Marketing Funds fees   20,027    21,077    40,233    42,419 
Revenue excluding the Marketing Funds  $58,426   $61,370   $116,507   $125,429 

 

2The Company defines organic revenue growth as revenue growth from continuing operations excluding (i) revenue from Marketing Funds, (ii) revenue from acquisitions, and (iii) the impact of foreign currency movements. The Company defines revenue from acquisitions as the revenue generated from the date of an acquisition to its first anniversary (excluding Marketing Funds revenue related to acquisitions where applicable).

 

3Adjusted EBITDA, Adjusted EBITDA margin and Adjusted EPS are non-GAAP measures. These terms are defined at the end of this release. Please see Tables 5 and 6 appearing later in this release for reconciliations of these non-GAAP measures to the most directly comparable GAAP measures.

 

4Total open Motto Mortgage franchises includes only “bricks and mortar” offices with a unique physical address with rights granted by a full franchise agreement with Motto Franchising, LLC and excludes any “virtual” offices or BranchiseSM offices.

 

# # #

 

About RE/MAX Holdings, Inc.

 

RE/MAX Holdings, Inc. (NYSE: RMAX) is one of the world’s leading franchisors in the real estate industry, franchising real estate brokerages globally under the RE/MAX® brand, and mortgage brokerages within the U.S. under the Motto® Mortgage brand. RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. Now with more than 140,000 agents in nearly 9,000 offices and a presence in more than 110 countries and territories, nobody in the world sells more real estate than RE/MAX, as measured by total residential transaction sides. Dedicated to innovation and change in the real estate industry, RE/MAX launched Motto Franchising, LLC, a ground-breaking mortgage brokerage franchisor, in 2016. Motto Mortgage, the first and only national mortgage brokerage franchise brand in the U.S., has grown to over 225 offices across more than 40 states.

 

RE/MAX Holdings, Inc. – Second Quarter 2024Page 4 of 16

 

 

Forward-Looking Statements

 

This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are often identified by the use of words such as “believe,” “intend,” “expect,” “estimate,” “plan,” “outlook,” “project,” “anticipate,” “may,” “will,” “would” and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. Forward-looking statements include statements related to agent count; Motto open offices; franchise sales; revenue; operating expenses and cost management; the Company’s outlook for the third quarter and full year 2024; non-GAAP financial measures; housing and mortgage market conditions; the resilience of our mortgage business and competitive advantages of RE/MAX; the operation of the Company’s business as efficiently and effectively as possible; brokerage and team conversions to RE/MAX and the Company’s strong reputation and value proposition in the market; the distinct competitive advantage of agents who are experienced, productive and trustworthy, which are attributes widely associated with RE/MAX affiliates; and our professionals positioning the Company to succeed in the months and years ahead. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily accurately indicate the times at which such performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include, without limitation, (1) changes in the real estate market or interest rates and availability of financing, (2) changes in business and economic activity in general, (3) the Company’s ability to attract and retain quality franchisees, (4) the Company’s franchisees’ ability to recruit and retain real estate agents and mortgage loan originators, (5) changes in laws and regulations, (6) the Company’s ability to enhance, market, and protect its brands, (7) the Company’s ability to implement its technology initiatives, (8) risks related to the Company’s leadership transition, (9) fluctuations in foreign currency exchange rates, (10) the nature and amount of the exclusion of charges in future periods when determining Adjusted EBITDA is subject to uncertainty and may not be similar to such charges in prior periods, and (11) those risks and uncertainties described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company’s website at www.remaxholdings.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no obligation, to update this information to reflect future events or circumstances.

 

Investor Contact: Media Contact:
Andy Schulz Kimberly Golladay
(303) 796-3287  (303) 224-4258
aschulz@remax.com kgolladay@remax.com

 

RE/MAX Holdings, Inc. – Second Quarter 2024Page 5 of 16

 

 

TABLE 1

 

RE/MAX Holdings, Inc.

Consolidated Statements of Income (Loss)

(In thousands, except share and per share amounts)

(Unaudited)

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2024   2023   2024   2023 
Revenue:                    
Continuing franchise fees  $30,340   $32,101   $61,425   $64,177 
Annual dues   8,151    8,587    16,376    17,205 
Broker fees   14,528    14,321    25,244    25,213 
Marketing Funds fees   20,027    21,077    40,233    42,419 
Franchise sales and other revenue   5,407    6,361    13,462    18,834 
Total revenue   78,453    82,447    156,740    167,848 
Operating expenses:                    
Selling, operating and administrative expenses   34,851    40,212    80,556    89,327 
Marketing Funds expenses   20,027    21,077    40,233    42,419 
Depreciation and amortization   7,400    8,008    15,252    16,041 
Total operating expenses   62,278    69,297    136,041    147,787 
Operating income (loss)   16,175    13,150    20,699    20,061 
Other expenses, net:                    
Interest expense   (9,191)   (8,840)   (18,447)   (17,085)
Interest income   949    1,141    1,950    2,145 
Foreign currency transaction gains (losses)   (270)   215    (642)   258 
Total other expenses, net   (8,512)   (7,484)   (17,139)   (14,682)
Income (loss) before provision for income taxes   7,663    5,666    3,560    5,379 
Provision for income taxes   (1,473)   (2,422)   (2,977)   (2,814)
Net income (loss)  $6,190   $3,244   $583   $2,565 
Less: net income (loss) attributable to non-controlling interest   2,485    1,234    231    1,226 
Net income (loss) attributable to RE/MAX Holdings, Inc.  $3,705   $2,010   $352   $1,339 
                     
Net income (loss) attributable to RE/MAX Holdings, Inc. per share of Class A common stock                    
Basic  $0.20   $0.11   $0.02   $0.07 
Diluted  $0.19   $0.11   $0.02   $0.07 
Weighted average shares of Class A common stock outstanding                    
Basic   18,853,929    18,124,630    18,667,889    18,020,736 
Diluted   19,003,962    18,387,669    18,853,020    18,152,256 
Cash dividends declared per share of Class A common stock  $—   $0.23   $—   $0.46 

 

RE/MAX Holdings, Inc. – Second Quarter 2024Page 6 of 16

 

 

TABLE 2

 

RE/MAX Holdings, Inc.

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

 

   As of 
   June 30,   December 31, 
   2024   2023 
Assets          
Current assets:          
Cash and cash equivalents  $66,064   $82,623 
Restricted cash   74,610    43,140 
Accounts and notes receivable, current portion, net of allowances   32,610    33,427 
Income taxes receivable   4,122    1,706 
Other current assets   11,369    15,669 
Total current assets   188,775    176,565 
Property and equipment, net of accumulated depreciation   8,583    8,633 
Operating lease right of use assets   20,448    23,013 
Franchise agreements, net   91,072    101,516 
Other intangible assets, net   16,807    19,176 
Goodwill   239,492    241,164 
Other assets, net of current portion   6,192    7,083 
Total assets  $571,369   $577,150 
Liabilities and stockholders' equity (deficit)          
Current liabilities:          
Accounts payable  $3,088   $4,700 
Accrued liabilities   102,056    107,434 
Income taxes payable   1,590    766 
Deferred revenue   23,831    23,077 
Current portion of debt   4,600    4,600 
Current portion of payable pursuant to tax receivable agreements   285    822 
Operating lease liabilities   8,227    7,920 
Total current liabilities   143,677    149,319 
Debt, net of current portion   438,109    439,980 
Deferred tax liabilities   11,517    10,797 
Deferred revenue, net of current portion   16,054    17,607 
Operating lease liabilities, net of current portion   27,224    31,479 
Other liabilities, net of current portion   3,944    4,029 
Total liabilities   640,525    653,211 
Commitments and contingencies          
Stockholders' equity (deficit):          
Class A common stock, par value $.0001 per share, 180,000,000 shares authorized; 18,854,662 and 18,269,284 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively   2    2 
Class B common stock, par value $.0001 per share, 1,000 shares authorized; 1 share issued and outstanding as of June 30, 2024 and December 31, 2023, respectively   —    — 
Additional paid-in capital   559,280    550,637 
Accumulated deficit   (140,486)   (140,217)
Accumulated other comprehensive income (deficit), net of tax   (380)   638 
Total stockholders' equity attributable to RE/MAX Holdings, Inc.   418,416    411,060 
Non-controlling interest   (487,572)   (487,121)
Total stockholders' equity (deficit)   (69,156)   (76,061)
Total liabilities and stockholders' equity (deficit)  $571,369   $577,150 

 

RE/MAX Holdings, Inc. – Second Quarter 2024Page 7 of 16

 

 

TABLE 3

 

RE/MAX Holdings, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

   Six Months Ended 
   June 30, 
   2024   2023 
Cash flows from operating activities:          
Net income (loss)  $583   $2,565 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:          
Depreciation and amortization   15,252    16,041 
Equity-based compensation expense   9,825    9,159 
Bad debt expense   1,552    3,532 
Deferred income tax expense (benefit)   4,097    (1,017)
Fair value adjustments to contingent consideration   137    (99)
Loss (gain) on sale or disposition of assets, net   150    365 
Non-cash lease benefit   (1,378)   (1,516)
Non-cash debt charges   429    427 
Payment of contingent consideration in excess of acquisition date fair value   (240)   — 
Other, net   (53)   (82)
Changes in operating assets and liabilities   (5,088)   (27,133)
Net cash provided by operating activities   25,266    2,242 
Cash flows from investing activities:          
Purchases of property, equipment and capitalization of software   (4,510)   (2,831)
Other   417    434 
Net cash used in investing activities   (4,093)   (2,397)
Cash flows from financing activities:          
Payments on debt   (2,300)   (2,300)
Distributions paid to non-controlling unitholders   —    (5,778)
Dividends and dividend equivalents paid to Class A common stockholders   (587)   (8,995)
Payments related to tax withholding for share-based compensation   (2,505)   (3,477)
Common shares repurchased   —    (3,408)
Payment of contingent consideration   —    (240)
Other financing   5    — 
Net cash used in financing activities   (5,387)   (24,198)
Effect of exchange rate changes on cash   (875)   661 
Net increase (decrease) in cash, cash equivalents and restricted cash   14,911    (23,692)
Cash, cash equivalents and restricted cash, beginning of period   125,763    138,128 
Cash, cash equivalents and restricted cash, end of period  $140,674   $114,436 

 

RE/MAX Holdings, Inc. – Second Quarter 2024Page 8 of 16

 

 

 

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,  June 30, 
   2024  2024  2023  2023  2023  2023  2022  2022  2022 
Agent Count:                                     
U.S.                                     
Company-Owned Regions   46,780   47,302   48,401   49,576   50,011   50,340   51,491   52,804   53,415 
Independent Regions   6,626   6,617   6,730   6,918   6,976   7,110   7,228   7,311   7,410 
U.S. Total   53,406   53,919   55,131   56,494   56,987   57,450   58,719   60,115   60,825 
Canada                                     
Company-Owned Regions   20,347   20,151   20,270   20,389   20,354   20,172   20,228   20,174   20,098 
Independent Regions   4,846   4,885   4,898   4,899   4,864   4,899   4,892   4,844   4,756 
Canada Total   25,193   25,036   25,168   25,288   25,218   25,071   25,120   25,018   24,854 
U.S. and Canada Total   78,599   78,955   80,299   81,782   82,205   82,521   83,839   85,133   85,679 
Outside U.S. and Canada                                     
Independent Regions   64,943   64,332   64,536   63,527   62,305   61,002   60,175   59,167   58,260 
Outside U.S. and Canada Total   64,943   64,332   64,536   63,527   62,305   61,002   60,175   59,167   58,260 
Total   143,542   143,287   144,835   145,309   144,510   143,523   144,014   144,300   143,939 

 

RE/MAX Holdings, Inc. – Second Quarter 2024Page 9 of 16

 

 

TABLE 5

 

RE/MAX Holdings, Inc.

Adjusted EBITDA Reconciliation to Net Income (Loss)

(In thousands, except percentages)

(Unaudited)

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2024   2023   2024   2023 
Net income (loss)  $6,190   $3,244   $583   $2,565 
Depreciation and amortization   7,400    8,008    15,252    16,041 
Interest expense   9,191    8,840    18,447    17,085 
Interest income   (949)   (1,141)   (1,950)   (2,145)
Provision for income taxes   1,473    2,422    2,977    2,814 
EBITDA   23,305    21,373    35,309    36,360 
Equity-based compensation expense   3,902    4,708    9,825    9,159 
Acquisition-related expense (1)   —    64    —    101 
Fair value adjustments to contingent consideration (2)   103    (95)   137    (99)
Restructuring charges (3)   (9)   (72)   (41)   (33)
Other (4)   775    666    1,839    1,076 
Adjusted EBITDA (5)  $28,076   $26,644   $47,069   $46,564 
Adjusted EBITDA Margin (5)   35.8%   32.3%   30.0%   27.7%

 

(1)Acquisition-related expense includes personnel, legal, accounting, advisory and consulting fees incurred in connection with acquisition activities and integration of acquired companies.

(2)Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liabilities.

(3)During the third quarter of 2023, the Company announced a reduction in force and reorganization intended to streamline the Company’s operations and yield cost savings over the long term.

(4)Other is primarily made up of employee retention related expenses from the Company’s CEO transition.

(5)Non-GAAP measure. See the end of this press release for definitions of non-GAAP measures.

 

RE/MAX Holdings, Inc. – Second Quarter 2024Page 10 of 16

 

 

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, 
   2024   2023   2024   2023 
Net income (loss)  $6,190   $3,244   $583   $2,565 
Amortization of acquired intangible assets   4,943    5,773    10,413    11,531 
Provision for income taxes   1,473    2,422    2,977    2,814 
Add-backs:                    
Equity-based compensation expense   3,902    4,708    9,825    9,159 
Acquisition-related expense (1)   —    64    —    101 
Fair value adjustments to contingent consideration (2)   103    (95)   137    (99)
Restructuring charges (3)   (9)   (72)   (41)   (33)
Other (4)   775    666    1,839    1,076 
Adjusted pre-tax net income   17,377    16,710    25,733    27,114 
Less: Provision for income taxes at 25% (5)   (4,344)   (4,178)   (6,433)   (6,779)
Adjusted net income (6)  $13,033   $12,532   $19,300   $20,335 
                     
Total basic pro forma shares outstanding   31,413,529    30,684,230    31,227,489    30,580,336 
Total diluted pro forma shares outstanding   31,563,562    30,947,269    31,412,620    30,711,856 
                     
Adjusted net income basic earnings per share (6)  $0.41   $0.41   $0.62   $0.66 
Adjusted net income diluted earnings per share (6)  $0.41   $0.40   $0.61   $0.66 

 

(1)Acquisition-related expense includes personnel, legal, accounting, advisory and consulting fees incurred in connection with acquisition activities and integration of acquired companies.

(2)Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liabilities.

(3)During the third quarter of 2023, the Company announced a reduction in force and reorganization intended to streamline the Company’s operations and yield cost savings over the long term.

(4)Other is primarily made up of employee retention related expenses from the Company’s CEO transition.

(5)The long-term tax rate assumes the exchange of all outstanding non-controlling interest partnership units for Class A Common Stock that (a) removes the impact of unusual, non-recurring tax matters and (b) does not estimate the residual impacts to foreign taxes of additional step-ups in tax basis from an exchange because that is dependent on stock prices at the time of such exchange and the calculation is impracticable.

(6)Non-GAAP measure. See the end of this press release for definitions of non-GAAP measures.

 

RE/MAX Holdings, Inc. – Second Quarter 2024Page 11 of 16

 

 

TABLE 7

 

RE/MAX Holdings, Inc.

Pro Forma Shares Outstanding

(Unaudited)

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2024   2023   2024   2023 
Total basic weighted average shares outstanding:                    
Weighted average shares of Class A common stock outstanding   18,853,929    18,124,630    18,667,889    18,020,736 
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   31,413,529    30,684,230    31,227,489    30,580,336 
                     
Total diluted weighted average shares outstanding:                    
Weighted average shares of Class A common stock outstanding   18,853,929    18,124,630    18,667,889    18,020,736 
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)   150,033    263,039    185,131    131,520 
Total diluted pro forma weighted average shares outstanding   31,563,562    30,947,269    31,412,620    30,711,856 

 

(1)In accordance with the treasury stock method.

 

RE/MAX Holdings, Inc. – Second Quarter 2024Page 12 of 16

 

 

TABLE 8

 

RE/MAX Holdings, Inc.

Adjusted Free Cash Flow & Unencumbered Cash

(Unaudited)

 

   Six Months Ended 
   June 30, 
   2024   2023 
Cash flow from operations  $25,266   $2,242 
Less: Purchases of property, equipment and capitalization of software   (4,510)   (2,831)
(Increases) decreases in restricted cash of the Marketing Funds (1)   (3,970)   11,786 
Adjusted free cash flow (2)   16,786    11,197 
           
Adjusted free cash flow (2)   16,786    11,197 
Less: Tax/Other non-dividend distributions to RIHI   —    — 
Adjusted free cash flow after tax/non-dividend distributions to RIHI (2)   16,786    11,197 
           
Adjusted free cash flow after tax/non-dividend distributions to RIHI (2)   16,786    11,197 
Less: Debt principal payments   (2,300)   (2,300)
Unencumbered cash generated (2)  $14,486   $8,897 
           
Summary          
Cash flow from operations  $25,266   $2,242 
Adjusted free cash flow (2)  $16,786   $11,197 
Adjusted free cash flow after tax/non-dividend distributions to RIHI (2)  $16,786   $11,197 
Unencumbered cash generated (2)  $14,486   $8,897 
           
Adjusted EBITDA (2)  $47,069   $46,564 
Adjusted free cash flow as % of Adjusted EBITDA (2)   35.7%   24.0%
Adjusted free cash flow less distributions to RIHI as % of Adjusted EBITDA (2)   35.7%   24.0%
Unencumbered cash generated as % of Adjusted EBITDA (2)   30.8%   19.1%

 

(1)This line reflects any subsequent changes in the restricted cash balance (which under GAAP reflects as either (a) an increase or decrease in cash flow from operations or (b) an incremental amount of purchases of property and equipment and capitalization of developed software) to remove the impact of changes in restricted cash in determining adjusted free cash flow.

(2)Non-GAAP measure. See the end of this press release for definitions of non-GAAP measures.

 

RE/MAX Holdings, Inc. – Second Quarter 2024Page 13 of 16

 

 

Non-GAAP Financial Measures

 

The SEC has adopted rules to regulate the use in filings with the SEC and in public disclosures of financial measures that are not in accordance with U.S. GAAP, such as revenue excluding the Marketing Funds, Adjusted EBITDA and the ratios related thereto, Adjusted net income, Adjusted basic and diluted earnings per share (Adjusted EPS) and adjusted free cash flow. These measures are derived based on methodologies other than in accordance with U.S. GAAP.

 

Revenue excluding the Marketing Funds is calculated directly from our consolidated financial statements as Total revenue less Marketing Funds fees.

 

The Company defines Adjusted EBITDA as EBITDA (consolidated net income before depreciation and amortization, interest expense, interest income and the provision for income taxes, each of which is presented in the unaudited consolidated financial statements included earlier in this press release), adjusted for the impact of the following items that are either non-cash or that the Company does not consider representative of its ongoing operating performance: loss or gain on sale or disposition of assets and sublease, settlement and impairment charges, equity-based compensation expense, acquisition-related expense, gain on reduction in tax receivable agreement liability, expense or income related to changes in the estimated fair value measurement of contingent consideration, restructuring charges and other non-recurring items. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of revenue.

 

Because Adjusted EBITDA and Adjusted EBITDA margin omit certain non-cash items and other non-recurring cash charges or other items, the Company believes that each measure is less susceptible to variances that affect its operating performance resulting from depreciation, amortization and other non-cash and non-recurring cash charges or other items. The Company presents Adjusted EBITDA and the related Adjusted EBITDA margin because the Company believes they are useful as supplemental measures in evaluating the performance of its operating businesses and provides greater transparency into the Company’s results of operations. The Company’s management uses Adjusted EBITDA and Adjusted EBITDA margin as factors in evaluating the performance of the business.

 

Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analyzing the Company’s results as reported under U.S. GAAP. Some of these limitations are:

 

●these measures do not reflect changes in, or cash requirements for, the Company’s working capital needs;
●these measures do not reflect the Company’s interest expense, or the cash requirements necessary to service interest or principal payments on its debt;
●these measures do not reflect the Company’s income tax expense or the cash requirements to pay its taxes;
●these measures do not reflect the cash requirements to pay dividends to stockholders of the Company’s Class A common stock and tax and other cash distributions to its non-controlling unitholders;

 

RE/MAX Holdings, Inc. – Second Quarter 2024Page 14 of 16

 

 

●these measures do not reflect the cash requirements pursuant to the tax receivable agreements;
●these measures do not reflect the cash requirements for share repurchases;
●these measures do not reflect the cash requirements for the settlement of industry class-action lawsuits and other legal settlements;
●although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often require replacement in the future, and these measures do not reflect any cash requirements for such replacements;
●although equity-based compensation is a non-cash charge, the issuance of equity-based awards may have a dilutive impact on earnings per share; and
●other companies may calculate these measures differently so similarly named measures may not be comparable.

 

The Company's Adjusted EBITDA guidance does not include certain charges and costs. The adjustments to EBITDA in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior quarters, such as gain or loss on sale or disposition of assets and sublease, settlement and impairment charges, equity-based compensation expense, acquisition-related expense, gains or losses from changes in the tax receivable agreement liability, expense or income related to changes in the fair value measurement of contingent consideration, restructuring charges and other non-recurring items. The exclusion of these charges and costs in future periods will have a significant impact on the Company's Adjusted EBITDA. The Company is not able to provide a reconciliation of the Company's non-GAAP financial guidance to the corresponding U.S. GAAP measures without unreasonable effort because of the uncertainty and variability of the nature and amount of these future charges and costs.

 

Adjusted net income is calculated as Net income attributable to RE/MAX Holdings, assuming the full exchange of all outstanding non-controlling interests for shares of Class A common stock as of the beginning of the period (and the related increase to the provision for income taxes after such exchange), plus primarily non-cash items and other items that management does not consider to be useful in assessing the Company’s operating performance (e.g., amortization of acquired intangible assets, gain on sale or disposition of assets and sub-lease, non-cash impairment charges, acquisition-related expense, restructuring charges and equity-based compensation expense).

 

Adjusted basic and diluted earnings per share (Adjusted EPS) are calculated as Adjusted net income (as defined above) divided by pro forma (assuming the full exchange of all outstanding non-controlling interests) basic and diluted weighted average shares, as applicable.

 

RE/MAX Holdings, Inc. – Second Quarter 2024Page 15 of 16

 

 

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.

 

RE/MAX Holdings, Inc. – Second Quarter 2024Page 16 of 16