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Remax Holdings, Inc. (RMAX) SEC Filing 10-K Annual Report for the fiscal year ending Friday, December 31, 2021

Remax Holdings, Inc.

CIK: 1581091 Ticker: RMAX
Exhibit 99.1

RE/MAX HOLDINGS, INC. REPORTS FOURTH QUARTER AND FULL-YEAR 2021 RESULTS

DENVER, Feb. 23, 2022 /PRNewswire/ --

Full-Year 2021 Highlights
(Compared to full-year 2020 unless otherwise noted)

  • Total Revenue increased 23.9% to $329.7 million
  • Revenue excluding the Marketing Funds1 increased 22.7% to $247.3 million, and was comprised of 11.8% organic growth2, 9.8% growth from acquisitions and 1.1% growth from foreign currency movements
  • Net loss attributable to RE/MAX Holdings, Inc. of $15.6 million and loss per diluted share (GAAP EPS) of $0.84
  • Adjusted EBITDA3 increased 29.3% to $119.7 million, Adjusted EBITDA margin3 of 36.3% and Adjusted earnings per diluted share (Adjusted EPS3) of $2.43
  • Total agent count increased 3.1% to 141,998 agents
  • U.S. and Canada combined agent count increased 1.4% to 85,471 agents
  • Total open Motto Mortgage franchises increased 32.6% to 187 offices4

Fourth Quarter 2021 Highlights
(Compared to fourth quarter 2020 unless otherwise noted)

  • Total Revenue increased 23.1% to $89.2 million
  • Revenue excluding the Marketing Funds increased 21.2% to $66.2 million, and was comprised of 5.0% organic growth, 15.3% growth from acquisitions and 0.9% growth from foreign currency movements
  • Net income attributable to RE/MAX Holdings, Inc. of $3.1 million and earnings per diluted share (GAAP EPS) of $0.16
  • Adjusted EBITDA increased 30.7% to $31.1 million, Adjusted EBITDA margin of 34.8% and Adjusted earnings per diluted share (Adjusted EPS) of $0.60

Operating Statistics as of January 31, 2022
(Compared to January 31, 2021 unless otherwise noted)

  • Total agent count increased 2.9% to 141,716 agents
  • U.S. and Canada combined agent count increased 1.1% to 84,911 agents
  • Total open Motto Mortgage franchises increased 35.2% to 192 offices

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 national mortgage brokerage franchise brand in the U.S., today announced operating results for the fourth quarter and full year ended December 31, 2021.

"Continued solid organic growth from our core operations and strong contributions from our acquisition of the RE/MAX INTEGRA North American regions drove our fourth quarter outperformance," said Adam Contos, RE/MAX Holdings Chief Executive Officer. "The INTEGRA acquisition has been more impactful than we anticipated, generating higher-than-expected agent count, revenue and Adjusted EBITDA.

"We added more than 2,000 RE/MAX agents in Canada year over year, which more than offset softer results in the U.S. On the mortgage side, Motto Mortgage opened nearly 60 offices in 2021 – a record – and we continue to sell franchises at a healthy pace. We believe both brands are well positioned to grow meaningfully in 2022."

Steve Joyce, RE/MAX Holdings Director and incoming Chief Executive Officer, echoed that outlook: "Over the past few years, Adam and the leadership team have done an outstanding job investing for growth, expanding our services and positioning RE/MAX Holdings for continued future success. The strategic investments we've made have significantly diversified our revenue and broadened our growth opportunities. Those investments started to pay off in 2021, and, as evidenced by our 2022 financial guidance, we expect that to continue in the year ahead."

Joyce continued, "I look forward to working with our talented team to further strengthen RE/MAX Holdings. My goals as CEO are straightforward. First, amplify our growth – and revitalize our U.S. agent count growth, in particular – by focusing on a few core strategic initiatives. And, second, work with our Board of Directors to identify our next company leader. I am excited about both opportunities and look forward to sharing more good news in the coming weeks and months."

Fourth Quarter 2021 Operating Results

Agent Count

The following table compares agent count as of December 31, 2021 and 2020:














As of December 31, 


Change




2021


2020


#


%

U.S.



61,327


62,303


(976)


(1.6)

Canada



24,144


21,947


2,197


10.0

Subtotal



85,471


84,250


1,221


1.4

Outside the U.S. & Canada



56,527


53,542


2,985


5.6

Total



141,998


137,792


4,206


3.1

Revenue

RE/MAX Holdings generated $89.2 million in the fourth quarter of 2021, an increase of $16.7 million, or 23.1%, compared to $72.4 million in the fourth quarter of 2020. Revenue excluding the Marketing Funds was $66.2 million in the fourth quarter of 2021, an increase of 21.2% versus the same period in 2020. This increase was comprised of 5.0% organic growth, 15.3% acquisitive growth and 0.9% growth from foreign-currency movements. Organic growth increased primarily due to fewer agent recruiting initiatives versus the prior year, a price increase in RE/MAX continuing franchise fees, increased events-related revenue, and Motto growth. Growth attributable to acquisitions was due to revenue from the RE/MAX INTEGRA North American regions acquisition.

Recurring revenue streams, which consist of continuing franchise fees and annual dues, increased $9.0 million, or 26.6%, compared to the fourth quarter of 2020 and accounted for 64.6% of revenue (excluding the Marketing Funds) in the fourth quarter of 2021 compared to 61.8% of revenue in the prior-year period.

Operating Expenses

Total operating expenses were $78.7 million for the fourth quarter of 2021, an increase of $13.2 million, or 20.1%, compared to $65.5 million in the fourth quarter of 2020. Fourth quarter 2021 total operating expenses increased primarily due to higher selling, operating and administrative expenses; increased Marketing Funds expenses; and higher depreciation and amortization expenses.

Selling, operating and administrative expenses were $46.3 million in the fourth quarter of 2021, an increase of $5.5 million, or 13.6%, compared to the fourth quarter of 2020 and represented 69.9% of revenue, excluding the Marketing Funds, compared to 74.6% in the prior-year period. Fourth quarter 2021 selling, operating and administrative expenses increased primarily due to an increase in acquisition-related expenses, higher travel and events expenses, and higher personnel costs from headcount increases.

Fourth quarter 2021 depreciation and amortization expenses increased primarily due to incremental acquisition-related amortization expense and placing internally developed software into service.

Net Income and GAAP EPS

Net income attributable to RE/MAX Holdings was $3.1 million for the fourth quarter of 2021 compared to $1.4 million the fourth quarter of 2020. Reported basic and diluted GAAP income per share were $0.17 and $0.16, respectively, for the fourth quarter of 2021 compared to basic and diluted GAAP EPS of $0.07 each in the fourth quarter of 2020.

Adjusted EBITDA and Adjusted EPS

Adjusted EBITDA was $31.1 million for the fourth quarter of 2021, an increase of $7.3 million, or 30.7%, compared to the fourth quarter of 2020. Fourth quarter 2021 Adjusted EBITDA increased primarily due to contributions from the acquisition of RE/MAX INTEGRA's North American regions. Adjusted EBITDA also increased due to incremental revenue from fewer agent recruiting initiatives in the current year and increased revenue from a price increase in RE/MAX continuing franchise fees partially offset by increased travel costs and continued investment in our mortgage business. Adjusted EBITDA margin was 34.8% in the fourth quarter of 2021, up compared to 32.8% in the fourth quarter of 2020.

Adjusted basic and diluted EPS were $0.61 and $0.60, respectively, for the fourth quarter of 2021 compared to Adjusted basic and diluted EPS of $0.48 and $0.47, respectively, for the fourth quarter of 2020. The ownership structure used to calculate Adjusted basic and diluted EPS for the quarter ended December 31, 2021 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 December 31, 2021.

Balance Sheet

As of December 31, 2021, the Company had cash and cash equivalents of $126.3 million, an increase of $24.9 million from December 31, 2020. As of December 31, 2021, the Company had $452.1 million of outstanding debt, net of an unamortized debt discount and issuance costs, compared to $223.6 million as of December 31, 2020.

Share Repurchase Program

RE/MAX Holdings previously announced on January 11, 2022, that its Board of Directors authorized a common stock repurchase program of up to $100 million, reflecting confidence in the Company's performance and the strength of its balance sheet.

Dividend

On February 22, 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 March 16, 2022, to shareholders of record at the close of business on March 4, 2022.

Outlook

The Company's first quarter and full-year 2022 Outlook assumes no further currency movements, acquisitions or divestitures.

For the first quarter of 2022, RE/MAX Holdings expects:

  • Agent count to increase 1.5% to 2.5% over first quarter 2021;
  • Revenue in a range of $88.0 million to $92.0 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 $25.0 million to $28.0 million.

For the full-year 2022, the Company expects:

  • Agent count to increase 2.0% to 4.0% over full-year 2021;
  • Revenue in a range of $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 $130.0 million to $135.0 million.

Webcast and Conference Call

The Company will host a conference call for interested parties on Thursday, February 24, 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 the U.S. Generally Accepted Accounting Principles and a reconciliation to the most directly comparable U.S. GAAP measure is as follows (in thousands):
















Three Months Ended


Year Ended



December 31, 


December 31, 



2021


2020


2021


2020

Revenue excluding the Marketing Funds:













Total revenue


$

89,163


$

72,449


$

329,701


$

266,001

Less: Marketing Funds fees



22,935



17,825



82,391



64,402

Revenue excluding the Marketing Funds


$

66,228


$

54,624


$

247,310


$

201,599

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 "Branchises".

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 175 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 first quarter and full year 2022; non-GAAP financial measures; housing and mortgage market conditions; the benefits of strategic investment including statements about investments diversifying and broadening revenue and growth opportunities; our current goals and strategic priorities including the identification of the next leader for the Company; the Company's share repurchase program; and the Company's strategic and operating plans and business models. 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 and uncertainties related to the share repurchase program including the timing, amount and the price at which any share repurchases might be made in connection with the program, (10) risks related to the Company's CEO transition, (11) fluctuations in foreign currency exchange rates, and (12) 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 (Loss)
(In thousands, except share and per share amounts)
(Unaudited)








Three Months Ended


Year Ended



December 31, 


December 31, 



2021


2020


2021


2020

Revenue:













Continuing franchise fees


$

33,711


$

24,997


$

118,504


$

90,217

Annual dues



9,041



8,771



35,549



35,075

Broker fees



16,805



14,701



65,456



50,028

Marketing Funds fees



22,935



17,825



82,391



64,402

Franchise sales and other revenue



6,671



6,155



27,801



26,279

Total revenue



89,163



72,449



329,701



266,001

Operating expenses:













Selling, operating and administrative expenses



46,282



40,757



179,873



128,998

Marketing Funds expenses



22,935



17,825



82,391



64,402

Depreciation and amortization



9,097



6,952



31,333



26,106

Settlement and impairment charges



412





46,035



7,902

Total operating expenses



78,726



65,534



339,632



227,408

Operating income (loss)



10,437



6,915



(9,931)



38,593

Other expenses, net:













Interest expense



(3,807)



(2,195)



(11,344)



(9,223)

Interest income



16



12



217



340

Foreign currency transaction gains (losses)



(21)



73



(839)



(2)

Loss on early extinguishment of debt







(264)



Total other expenses, net



(3,812)



(2,110)



(12,230)



(8,885)

Income (loss) before provision for income taxes



6,625



4,805



(22,161)



29,708

Provision for income taxes



(1,005)



(2,578)



(2,459)



(9,162)

Net income (loss)


$

5,620


$

2,227


$

(24,620)


$

20,546

Less: net income (loss) attributable to non-controlling interest



2,511



860



(9,004)



9,296

Net income (loss) attributable to RE/MAX Holdings, Inc.


$

3,109


$

1,367


$

(15,616)


$

11,250














Net income (loss) attributable to RE/MAX Holdings, Inc. per share

of Class A common stock













Basic


$

0.17


$

0.07


$

(0.84)


$

0.62

Diluted


$

0.16


$

0.07


$

(0.84)


$

0.61

Weighted average shares of Class A common stock outstanding













Basic



18,806,194



18,386,709



18,690,442



18,170,348

Diluted



19,112,039



18,748,412



18,690,442



18,324,246

Cash dividends declared per share of Class A common stock


$

0.23


$

0.22


$

0.92


$

0.88

TABLE 2

RE/MAX Holdings, Inc.
Consolidated Balance Sheets
 (In thousands, except share and per share amounts)
(Unaudited)











As of December 31,



2021


2020

Assets







Current assets:







Cash and cash equivalents


$

126,270


$

101,355

Restricted cash



32,129



19,872

Accounts and notes receivable, current portion, net of allowances



34,611



29,985

Income taxes receivable



1,754



1,222

Other current assets



16,010



13,938

Total current assets



210,774



166,372

Property and equipment, net of accumulated depreciation



12,686



7,872

Operating lease right of use assets



36,523



38,878

Franchise agreements, net



143,832



69,802

Other intangible assets, net



32,530



29,969

Goodwill



269,115



165,358

Deferred tax assets, net



51,314



50,702

Income taxes receivable, net of current portion



1,803



1,980

Other assets, net of current portion



17,556



15,435

Total assets


$

776,133


$

546,368

Liabilities and stockholders' equity







Current liabilities:







Accounts payable


$

5,189


$

2,108

Accrued liabilities



96,768



68,571

Income taxes payable



2,546



9,579

Deferred revenue



27,178



25,282

Current portion of debt



4,600



2,428

Current portion of payable pursuant to tax receivable agreements



3,610



3,590

Operating lease liabilities



6,328



5,687

Total current liabilities



146,219



117,245

Debt, net of current portion



447,459



221,137

Payable pursuant to tax receivable agreements, net of current portion



26,893



29,974

Deferred tax liabilities, net



14,699



490

Deferred revenue, net of current portion



18,929



19,864

Operating lease liabilities, net of current portion



45,948



50,279

Other liabilities, net of current portion



6,919



5,722

Total liabilities



707,066



444,711

Commitments and contingencies







Stockholders' equity:







Class A common stock, par value $.0001 per share, 180,000,000 shares authorized;
18,806,194 and 18,390,691 shares issued and outstanding as of December 31, 2021 and 2020,
respectively



2



2

Class B common stock, par value $.0001 per share, 1,000 shares authorized; 1 share issued
and outstanding as of December 31, 2021 and 2020, respectively





Additional paid-in capital



515,443



491,422

Retained earnings (accumulated deficit)



(7,821)



25,628

Accumulated other comprehensive income, net of tax



650



612

Total stockholders' equity attributable to RE/MAX Holdings, Inc.



508,274



517,664

Non-controlling interest



(439,207)



(416,007)

Total stockholders' equity



69,067



101,657

Total liabilities and stockholders' equity


$

776,133


$

546,368








TABLE 3

RE/MAX Holdings, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)




Year Ended December 31, 



2021


2020


2019

Cash flows from operating activities:










Net income (loss)


$

(24,620)


$

20,546


$

47,314

Adjustments to reconcile net income (loss) to net cash provided by operating activities:










Depreciation and amortization



31,333



26,106



21,792

Impairment charge - leased assets





7,902



Impairment charge - goodwill



5,123





Bad debt expense



(1,345)



2,903



4,964

Loss on early extinguishment of debt



264





Equity-based compensation expense



34,298



16,267



10,934

Deferred income tax expense (benefit)



(2,528)



1,899



2,383

Fair value adjustments to contingent consideration



309



814



241

Non-cash change in tax receivable agreements liability



382





Non-cash lease expense (benefit)



(1,335)



(508)



Other, net



522



1,051



1,252

Changes in operating assets and liabilities










Accounts and notes receivable, current portion



3,329



(3,460)



(5,614)

Other current and noncurrent assets



(2,090)



(10,665)



(6,084)

Other current and noncurrent liabilities



11,882



9,035



6,737

Payments pursuant to tax receivable agreements



(3,444)



(3,562)



(3,556)

Income taxes receivable/payable



(9,775)



2,109



178

Deferred revenue, current and noncurrent



137



410



(1,566)

Net cash provided by operating activities



42,442



70,847



78,975

Cash flows from investing activities:










Purchases of property, equipment and capitalization of software



(15,239)



(6,903)



(13,226)

Acquisitions, net of cash acquired of $14.1 million, $0.9 million and $0.1 million,
respectively



(180,002)



(10,627)



(14,945)

Restricted cash acquired







28,495

Other



319





(1,200)

Net cash used in investing activities



(194,922)



(17,530)



(876)

Cash flows from financing activities:










Proceeds from the issuance of debt



458,850





Payments on debt



(227,390)



(2,634)



(2,622)

Capitalized debt amendment costs



(3,871)





Distributions paid to non-controlling unitholders



(14,206)



(14,058)



(15,430)

Dividends and dividend equivalents paid to Class A common stockholders



(17,833)



(16,354)



(15,074)

Payments related to tax withholding for share-based compensation



(5,329)



(2,544)



(1,110)

Payment of contingent consideration



(869)



(409)



(306)

Net cash provided by (used in) financing activities



189,352



(35,999)



(34,542)

Effect of exchange rate changes on cash



300



308



70

Net increase in cash, cash equivalents and restricted cash



37,172



17,626



43,627

Cash, cash equivalents and restricted cash, beginning of period



121,227



103,601



59,974

Cash, cash equivalents and restricted cash, end of period


$

158,399


$

121,227


$

103,601

TABLE 4

RE/MAX Holdings, Inc.
Agent Count
(Unaudited)




As of




December 31,


September 30,


June 30,


March 31,


December 31,


September 30,


June 30, 


March 31,


December 31,




2021


2021


2021


2021


2020


2020


2020


2020


2019


Agent Count:




















U.S.




















Company-Owned Regions


53,946


54,578


48,025


48,041


48,212


48,263


47,886


48,840


49,267


Independent Regions


7,381


7,429


14,403


14,220


14,091


14,041


13,791


13,828


13,854


U.S. Total


61,327


62,007


62,428


62,261


62,303


62,304


61,677


62,668


63,121


Canada




















Company-Owned Regions


19,596


19,207


6,387


6,262


6,182


6,135


6,102


6,217


6,338


Independent Regions


4,548


4,442


16,679


16,248


15,765


15,363


15,193


15,306


15,229


Canada Total


24,144


23,649


23,066


22,510


21,947


21,498


21,295


21,523


21,567


U.S. and Canada Total


85,471


85,656


85,494


84,771


84,250


83,802


82,972


84,191


84,688


Outside U.S. and Canada




















Independent Regions


56,527


55,280


54,707


55,443


53,542


50,967


48,933


47,625


46,201


Outside U.S. and Canada Total


56,527


55,280


54,707


55,443


53,542


50,967


48,933


47,625


46,201


Total


141,998


140,936


140,201


140,214


137,792


134,769


131,905


131,816


130,889


TABLE 5

RE/MAX Holdings, Inc.
Adjusted EBITDA Reconciliation to Net Income (Loss)
 (In thousands, except percentages)
(Unaudited)




Three Months Ended


Year Ended




December 31, 


December 31, 




2021


2020


2021


2020


Net income (loss) (1)


$

5,620


$

2,227


$

(24,620)


$

20,546


Depreciation and amortization (1)



9,097



6,952



31,333



26,106


Interest expense



3,807



2,195



11,344



9,223


Interest income



(16)



(12)



(217)



(340)


Provision for income taxes (1)



1,005



2,578



2,459



9,162


EBITDA



19,513



13,940



20,299



64,697


(Gain) loss on sale or disposition of assets



15



633



5



600


Loss on contract settlement (2)



400





40,900




Loss on extinguishment of debt (3)







264




Impairment charge - leased assets (4)









7,902


Impairment charge - goodwill (5)







5,123




Equity-based compensation expense



6,983



7,920



34,298



16,267


Acquisition-related expense (6)



3,119



460



17,422



2,375


Fair value adjustments to contingent consideration (7)



(21)



919



309



814


Other



1,057



(97)



1,057



(97)


Adjusted EBITDA (8)


$

31,066


$

23,775


$

119,677


$

92,558


Adjusted EBITDA Margin (8)



34.8

%


32.8

%


36.3

%


34.8

%


(1)

Amounts for the three months ended December 31, 2020  have been restated to reflect the immaterial correction of amortization for certain acquired Independent Regions.

(2)

Represents the effective settlement of the pre-existing master franchise agreement with RE/MAX INTEGRA that was recognized with the acquisition.

(3)

Represents the loss recognized in connection with the amended and restated Senior Secured Credit Facility.

(4)

Represents the impairment recognized on a portion of the Company's corporate headquarters office building in the prior year.

(5)

Lower-than-expected adoption rates on the First technology, resulted in downward revision to long-term forecasts, resulting in an impairment charge to the First reporting unit goodwill.

(6)

Acquisition-related expense includes personnel, legal, accounting, advisory and consulting fees incurred in connection with the evaluation, due diligence, execution and integration of acquisitions.

(7)

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

(8)

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


Year Ended



December 31, 


December 31, 



2021


2020


2021


2020

Net income (loss) (1)


$

5,620


$

2,227


$

(24,620)


$

20,546

Amortization of acquired intangible assets (1)



6,979



4,748



22,557



18,879

Provision for income taxes (1)



1,005


2,578



2,459



9,162

Add-backs:













(Gain) loss on sale or disposition of assets



15



633



5



600

Loss on contract settlement (2)



400





40,900



Loss on extinguishment of debt (3)







264



Impairment charge - leased assets (4)









7,902

Impairment charge - goodwill (5)







5,123



Equity-based compensation expense



6,983



7,920



34,298



16,267

Acquisition-related expense (6)



3,119



460



17,422



2,375

Fair value adjustments to contingent consideration (7)



(21)



919



309



814

Other



1,057



(97)



1,057



(97)

Adjusted pre-tax net income



25,157



19,388



99,774



76,448

Less: Provision for income taxes at 24% (8)



(6,038)



(4,653)



(23,946)



(18,348)

Adjusted net income (9)


$

19,119


$

14,735


$

75,828


$

58,100














Total basic pro forma shares outstanding



31,365,794



30,946,309



31,250,042



30,729,948

Total diluted pro forma shares outstanding



31,671,639



31,308,012



31,250,042



30,883,846














Adjusted net income basic earnings per share (9)


$

0.61


$

0.48


$

2.43


$

1.89

Adjusted net income diluted earnings per share (9)


$

0.60


$

0.47


$

2.43


$

1.88


(1)

Amounts for the three months ended December 31, 2020 have been restated to reflect the immaterial correction of amortization for certain acquired Independent Regions.  

(2)

Represents the effective settlement of the pre-existing master franchise agreement with RE/MAX INTEGRA that was recognized with the acquisition.

(3)

Represents the loss recognized in connection with the amended and restated Senior Secured Credit Facility.

(4)

Represents the impairment recognized on a portion of the Company's corporate headquarters office building in the prior year.

(5)

Lower-than-expected adoption rates of the First technology, resulted in downward revision to long-term forecasts, resulting in an impairment charge to the First reporting unit goodwill.

(6)

Acquisition-related expense includes personnel, legal, accounting, advisory and consulting fees incurred in connection with the evaluation, due diligence, execution, and integration of acquisitions.

(7)

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

(8)

24% is an estimate of the long-term tax rate assuming 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.

(9)

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


Year Ended



December 31, 


December 31, 



2021


2020


2021


2020

Total basic weighted average shares outstanding:









Weighted average shares of Class A common stock outstanding


18,806,194


18,386,709


18,690,442


18,170,348

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


31,365,794


30,946,309


31,250,042


30,729,948










Total diluted weighted average shares outstanding:









Weighted average shares of Class A common stock outstanding


18,806,194


18,386,709


18,690,442


18,170,348

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)


305,845


361,703



153,898

Total diluted pro forma weighted average shares outstanding


31,671,639


31,308,012


31,250,042


30,883,846


(1)    In accordance with the treasury stock method.

TABLE 8

RE/MAX Holdings, Inc.
Adjusted Free Cash Flow & Unencumbered Cash
(Unaudited)




Year Ended



December 31, 



2021


2020

Cash flow from operations (1)


$

42,442


$

70,847

Less: Purchases of property, equipment and capitalization of software



(15,239)



(6,903)

(Increases) decreases in restricted cash of the Marketing Funds (2)



(12,257)



728

Adjusted free cash flow (3)



14,946



64,672








Adjusted free cash flow (3)



14,946



64,672

Less: Tax/Other non-dividend distributions to RIHI



(2,650)



(3,006)

Adjusted free cash flow after tax/non-dividend distributions to RIHI (3)



12,296



61,666








Adjusted free cash flow after tax/non-dividend distributions to RIHI (3)



12,296



61,666

Less: Debt principal payments



(3,553)



(2,634)

Unencumbered cash generated (3)


$

8,743


$

59,032








Summary







Cash flow from operations


$

42,442


$

70,847

Adjusted free cash flow (3)


$

14,946


$

64,672

Adjusted free cash flow after tax/non-dividend distributions to RIHI (3)


$

12,296


$

61,666

Unencumbered cash generated (2)


$

8,743


$

59,032








Adjusted EBITDA (3)


$

119,677


$

92,558

Adjusted free cash flow as % of Adjusted EBITDA (3)



12.5%



69.9%

Adjusted free cash flow less distributions to RIHI as % of Adjusted EBITDA (3)



10.3%



66.6%

Unencumbered cash generated as % of Adjusted EBITDA (3)



7.3%



63.8%


(1)

Cash flow from operations was significantly lower in 2021 due to the allocation of $40.9 million of the total consideration paid to RE/MAX INTEGRA toward a loss on settlement of the pre-existing franchise contracts, which resulted in a corresponding reduction to cash flow from operations.  Such amount is unusual and not expected to recur in future periods.

(2)

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.

(3)

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 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. See Footnotes for a reconciliation to the most directly comparable U.S. GAAP measure.

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.



Investor Contact: Andy Schulz, (303) 796-3287, aschulz@remax.com; Media Contact: Samantha Rotbart, (303) 796-3303, srotbart@remax.com


The following information was filed by Remax Holdings, Inc. (RMAX) on Wednesday, February 23, 2022 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Remax Holdings, Inc.'s 10-K Annual Report:

Financial Statements, Disclosures and Schedules

Inside this 10-K Annual Report

Document And Entity Information
Consolidated Balance Sheets
Consolidated Balance Sheets (Parenthetical)
Consolidated Statements Of Cash Flows
Consolidated Statements Of Cash Flows (Parenthetical)
Consolidated Statements Of Comprehensive Income (Loss)
Consolidated Statements Of Income (Loss)
Consolidated Statements Of Stockholders' Equity
Accrued Liabilities
Accrued Liabilities (Tables)
Accrued Liabilities - Schedule Of Accrued Liabilities (Details)
Acquisitions
Acquisitions (Tables)
Acquisitions - Other Acquisition (Details)
Acquisitions - Remax Integra North America Acquisition (Details)
Acquisitions - Remax Integra North America Acquisition Purchase Price Allocation (Details)
Acquisitions - Unaudited Pro Forma (Details)
Business And Organization
Business And Organization (Details)
Commitments And Contingencies
Debt
Debt (Tables)
Debt - Additional Information (Details)
Debt - Schedule Of Debt (Details)
Debt - Schedule Of Maturities Of Debt (Details)
Defined-Contribution Savings Plan
Defined-Contribution Savings Plan (Details)
Earnings (Loss) Per Share And Dividends
Earnings (Loss) Per Share And Dividends (Tables)
Earnings (Loss) Per Share And Dividends - Additional Information (Details)
Earnings (Loss) Per Share And Dividends - Reconciliation Of The Numerator And Denominator Used In Basic And Diluted Eps Calculations (Details)
Equity-Based Compensation
Equity-Based Compensation (Tables)
Equity-Based Compensation - 2013 Omnibus Incentive Plan (Details)
Equity-Based Compensation - Performance-Based Restricted Stock (Details)
Equity-Based Compensation - Time-Based Restricted Stock (Details)
Fair Value Measurements
Fair Value Measurements (Tables)
Fair Value Measurements - Company's Liabilities Measured At Fair Value On A Recurring Basis (Details)
Fair Value Measurements - Reconciliation Of The Contingent Consideration (Details)
Fair Value Measurements - Schedule Of Senior Secured Credit Facility (Details)
Income Taxes
Income Taxes (Tables)
Income Taxes - Additional Information (Details)
Income Taxes - Schedule Of Components Of Provision For Income Taxes (Details)
Income Taxes - Schedule Of Income Before Provision For Income Taxes (Details)
Income Taxes - Schedule Of Reconciliation Of U.S. Statutory Income Tax Rate To Company's Effective Tax Rate (Details)
Income Taxes - Summary Of Deferred Tax Assets And Liabilities (Details)
Income Taxes - Uncertain Tax Position Liabilities (Details)
Intangible Assets And Goodwill
Intangible Assets And Goodwill (Tables)
Intangible Assets And Goodwill - Components Of Company's Intangible Assets (Details)
Intangible Assets And Goodwill - Estimated Future Amortization Of Intangible Assets, Other Than Goodwill (Details)
Intangible Assets And Goodwill - Schedule Of Changes In Goodwill (Details)
Leases
Leases (Details)
Leases (Tables)
Leases - Lease Cost (Details)
Leases - Maturities Of Lease Liabilities Under Non-Cancellable Leases (Details)
Non-Controlling Interest
Non-Controlling Interest (Tables)
Non-Controlling Interest - Distributions Paid Or Payable (Details)
Non-Controlling Interest - Narrative (Details)
Non-Controlling Interest - Net Income Reconciliation (Details)
Non-Controlling Interest - Ownership Of Common Units In Rmco (Details)
Property And Equipment
Property And Equipment (Tables)
Property And Equipment - Property And Equipment (Details)
Segment Information
Segment Information (Details)
Segment Information (Tables)
Segment Information - Reconciliation (Details)
Segment Information - Revenue (Details)
Segment Information - Summary Of Total Assets (Details)
Summary Of Significant Accounting Policies
Summary Of Significant Accounting Policies (Policies)
Summary Of Significant Accounting Policies (Tables)
Summary Of Significant Accounting Policies - Additional Information (Details)
Summary Of Significant Accounting Policies - Cash, Cash Equivalents And Restricted Cash (Details)
Summary Of Significant Accounting Policies - Commissions Related To Franchise Sales (Details)
Summary Of Significant Accounting Policies - Disaggregated Revenue (Details)
Summary Of Significant Accounting Policies - Foreign Currency Derivatives (Details)
Summary Of Significant Accounting Policies - Recently Adopted Accounting Pronouncements (Details)
Summary Of Significant Accounting Policies - Schedule Of Allowances Against Accounts And Notes Receivable (Details)
Summary Of Significant Accounting Policies - Schedule Of Deferred Revenue (Details)
Summary Of Significant Accounting Policies - Services Provided To Marketing Funds By Re/Max Franchising (Details)
Summary Of Significant Accounting Policies - Transaction Price (Details)
Ticker: RMAX
CIK: 1581091
Form Type: 10-K Annual Report
Accession Number: 0001558370-22-001747
Submitted to the SEC: Wed Feb 23 2022 4:28:42 PM EST
Accepted by the SEC: Wed Feb 23 2022
Period: Friday, December 31, 2021
Industry: Real Estate Agents And Managers For Others

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