RMAX RE MAX Holdings Inc

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): August 7, 2024

 

RE/MAX Holdings, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware		001-36101		80-0937145
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(IRS Employer Identification No.)

 

5075 South Syracuse Street

Denver, Colorado 80237

(Address of principal executive offices, including Zip code)

 

(303) 770-5531

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

	¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Class A Common Stock $0.0001 par value per share		RMAX		New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

Item 2.02. Results of Operations and Financial Conditions. *

 

On August 8, 2024, RE/MAX Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2024. The full text of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

 

The Company is also disclosing that it may use the remaxholdings.com, investors.remaxholdings.com, remax.com, remax.ca, mottomortgage.com, and wemlo.io websites as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.

 

On August 7, 2024, Kathleen Cunningham informed the Company that she would retire from the Company’s Board of Directors (the “Board”), effective August 19, 2024.

 

As disclosed in the Company’s definitive proxy statement for its annual meeting of stockholders filed with the Securities and Exchange Commission on April 11, 2024 (the “Proxy Statement”), Ms. Cunningham had previously indicated a desire to retire from the Board in 2024. Ms. Cunningham’s retirement is not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices.

 

On August 7, 2024, the Board appointed Cathleen Raffaeli to fill the vacancy that will be created by Ms. Cunningham’s retirement. Ms. Raffaeli’s appointment to the Board will be effective on August 19, 2024. She will serve as a Class II member of the Board for a term that expires at the Company’s 2027 annual meeting of stockholders. The Board appointed Ms. Raffaeli to its Audit Committee and Compensation Committee.

 

Ms. Raffaeli will receive the same compensation that other non-employee directors receive from the Company as previously disclosed in the Company’s Proxy Statement.

 

There is no arrangement or understanding between Ms. Raffaeli and any other person pursuant to which she was selected as a director. Ms. Raffaeli has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K. Ms. Raffaeli and the Company will enter into the standard Company director indemnification agreement whereby the Company agrees to indemnify, defend and hold its directors harmless from and against losses and expenses incurred as a result of their board service, subject to the terms and conditions provided in the agreement.

 

Item 9.01. Financial Statements and Exhibits. *

 

Exhibit No.	Description
99.1	Press release issued on August 8, 2024
104	Cover Page Interactive Data File (formatted as inline XBRL)

 

*                 The information contained in Items 2.02 and 9.01 and Exhibit 99.1 of this Current Report on Form 8-K is being “furnished” and shall not be deemed “filed” for purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any registration statement or other filings of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be set forth by specific reference in such filing.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	RE/MAX HOLDINGS, INC.
Date: August 8, 2024	By:	/s/ Karri Callahan
		Karri Callahan
		Chief Financial Officer

 

 

 

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.”

 

 

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.

 

 

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.

 

 

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 Branchise^SM offices.

 

# # #

 

About RE/MAX Holdings, Inc.

 

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

 

 

Forward-Looking Statements

 

This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are often identified by the use of words such as “believe,” “intend,” “expect,” “estimate,” “plan,” “outlook,” “project,” “anticipate,” “may,” “will,” “would” and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. Forward-looking statements include statements related to agent count; Motto open offices; franchise sales; revenue; operating expenses and cost management; the Company’s outlook for the 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

 

 

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

 

 

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

 

 

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

 

 

 

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

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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;

 

 

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

 

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

 

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

 

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

 

 

When used in conjunction with GAAP financial measures, Adjusted net income and Adjusted EPS are supplemental measures of operating performance that management believes are useful measures to evaluate the Company’s performance relative to the performance of its competitors as well as performance period over period. By assuming the full exchange of all outstanding non-controlling interests, management believes these measures:

 

	●	facilitate comparisons with other companies that do not have a low effective tax rate driven by a non-controlling interest on a pass-through entity;
	●	facilitate period over period comparisons because they eliminate the effect of changes in Net income attributable to RE/MAX Holdings, Inc. driven by increases in its ownership of RMCO, LLC, which are unrelated to the Company’s operating performance; and
	●	eliminate primarily non-cash and other items that management does not consider to be useful in assessing the Company’s operating performance.

 

Adjusted free cash flow is calculated as cash flows from operations less capital expenditures and any changes in restricted cash of the Marketing Funds, all as reported under GAAP, and quantifies how much cash a company has to pursue opportunities that enhance shareholder value. The restricted cash of the Marketing Funds is limited in use for the benefit of franchisees and any impact to adjusted free cash flow is removed. The Company believes adjusted free cash flow is useful to investors as a supplemental measure as it calculates the cash flow available for working capital needs, re-investment opportunities, potential Independent Region and strategic acquisitions, dividend payments or other strategic uses of cash.

 

Adjusted free cash flow after tax and non-dividend distributions to RIHI is calculated as adjusted free cash flow less tax and other non-dividend distributions paid to RIHI (the non-controlling interest holder) to enable RIHI to satisfy its income tax obligations. Similar payments would be made by the Company directly to federal and state taxing authorities as a component of the Company’s consolidated provision for income taxes if a full exchange of non-controlling interests occurred in the future. As a result and given the significance of the Company’s ongoing tax and non-dividend distribution obligations to its non-controlling interest, adjusted free cash flow after tax and non-dividend distributions, when used in conjunction with GAAP financial measures, provides a meaningful view of cash flow available to the Company to pursue opportunities that enhance shareholder value.

 

Unencumbered cash generated is calculated as adjusted free cash flow after tax and non-dividend distributions to RIHI less quarterly debt principal payments less annual excess cash flow payment on debt, as applicable. Given the significance of the Company’s excess cash flow payment on debt, when applicable, unencumbered cash generated, when used in conjunction with GAAP financial measures, provides a meaningful view of the cash flow available to the Company to pursue opportunities that enhance shareholder value after considering its debt service obligations.

 

 

v3.24.2.u1

Cover	Aug. 07, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 07, 2024
Entity File Number	001-36101
Entity Registrant Name	RE/MAX Holdings, Inc.
Entity Central Index Key	0001581091
Entity Tax Identification Number	80-0937145
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	5075 South Syracuse Street
Entity Address, City or Town	Denver
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80237
City Area Code	303
Local Phone Number	770-5531
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Class A Common Stock $0.0001 par value per share
Trading Symbol	RMAX
Security Exchange Name	NYSE
Entity Emerging Growth Company	false

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