RE/MAX HOLDINGS, INC. REPORTS SECOND QUARTER 2022 RESULTS – QNT Press Release


Total Revenue Grew 19.3%, Organic Revenue Grew 1.7%, and Adjusted EBITDA Grew 14.4%

DENVER, Aug. 4, 2022 /PRNewswire/ —

Second Quarter 2022 Highlights
(Compared to second quarter 2021 unless otherwise noted)

  • Total Revenue increased 19.3% to $92.2 million
  • Revenue excluding the Marketing Funds1 increased 17.0% to $69.3 million, and was comprised of 1.7% organic growth2, 15.9% growth attributable to acquisitions, partially offset by 0.6% due to foreign currency movements
  • Net income attributable to RE/MAX Holdings, Inc. of $5.8 million and income per diluted share (GAAP EPS) of $0.30
  • Adjusted EBITDA3 increased 14.4% to $35.1 million, Adjusted EBITDA margin3 of 38.1% and Adjusted earnings per diluted share (Adjusted EPS3) of $0.68
  • Total agent count increased 2.7% to 143,939 agents
  • U.S. and Canada combined agent count increased 185 agents to 85,679 agents
  • Total open Motto Mortgage franchises increased 22.0% to 200 offices4

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

  • Total agent count increased 2.3% to 143,761 agents
  • U.S. and Canada combined agent count decreased 183 agents to 85,524 agents
  • Total open Motto Mortgage franchises increased 22.0% to 205 offices4

RE/MAX Holdings, Inc. (the "Company" or "RE/MAX Holdings") (NYSE:RMAX), parent company of RE/MAX, one of the world's leading franchisors of real estate brokerage services, and Motto Mortgage ("Motto"), the first and only national mortgage brokerage franchise brand in the U.S., today announced operating results for the quarter ended June 30, 2022. 

"Our strong second-quarter results demonstrate the strength and resilience of our 100%-franchise model, particularly amid shifting housing market conditions," said Steve Joyce, RE/MAX Holdings Chief Executive Officer. "RE/MAX INTEGRA's North American regions again contributed meaningfully to both our top-line and bottom-line performance. Motto, which opened its 200th franchise during the quarter, continues to grow and RE/MAX agent count reached another record high driven by Canadian and global growth."

Joyce continued: "We have two terrific industry-leading brands, a network of experienced and productive real estate professionals, a strong balance sheet, and fantastic cash-generating ability, all of which should continue to serve us well in virtually any kind of market. We intend to leverage these strengths to actively seek the best opportunities that will support our future growth, such as our recently announced strategic initiatives. We believe that these initiatives, coupled with our strong business model, will position us well to generate profitable growth over the long term and should help mitigate the impact of additional market volatility."

Second Quarter 2022 Operating Results

Agent Count

The following table compares agent count as of June 30, 2022 and 2021:

As of June 30, 

Change

2022

2021

#

%

U.S.

60,825

62,428

(1,603)

(2.6)

Canada

24,854

23,066

1,788

7.8

Subtotal

85,679

85,494

185

0.2

Outside the U.S. & Canada

58,260

54,707

3,553

6.5

Total

143,939

140,201

3,738

2.7

Revenue

RE/MAX Holdings generated revenue of $92.2 million in the second quarter of 2022, an increase of $14.9 million, or 19.3%, compared to $77.2 million in the second quarter of 2021. Revenue excluding the Marketing Funds was $69.3 million in the second quarter of 2022, an increase of $10.1 million, or 17.0%, versus the same period in 2021. This increase was comprised of revenue growth of 15.9% from acquisitions, organic revenue growth of 1.7%, partially offset by 0.6% due to foreign-currency movements. Organic growth increased primarily due to Motto growth, Gadberry Group data services subscription revenue, higher event-based revenue, incremental revenue from fewer agent recruiting initiatives, partially offset by lower Broker fees. Revenue growth from acquisitions was attributable to revenue from the RE/MAX INTEGRA North American regions ("INTEGRA") acquisition completed in July 2021.

Recurring revenue streams, which consist of continuing franchise fees and annual dues, increased $7.3 million, or 20.4%, compared to the second quarter of 2021 and accounted for 62.3% of revenue (excluding the Marketing Funds) in the second quarter of 2022 compared to 60.5% of revenue in the prior-year period.

Operating Expenses

Total operating expenses were $75.3 million for the second quarter of 2022, an increase of $11.6 million, or 18.1%, compared to $63.7 million in the second quarter of 2021. Second quarter 2022 total operating expenses increased primarily due to increased selling, operating and administrative expenses as discussed below; an increase in Marketing Funds expenses and  depreciation and amortization expenses primarily as a result of the INTEGRA acquisition; and a $2.5 million loss on termination of the Company's booj office lease.

Selling, operating and administrative expenses were $40.8 million in the second quarter of 2022, an increase of $2.0 million, or 5.1%, compared to the second quarter of 2021 and represented 58.9% of revenue, excluding the Marketing Funds, compared to 65.6% in the prior-year period. Second quarter 2022 selling, operating and administrative expenses increased primarily due to estimated increases in the fair value of contingent consideration liabilities, higher travel and events expenses and increased investments in technology, partially offset by lower professional fees due to lower costs associated with acquiring and integrating new companies.

Net Income and GAAP EPS

Net income attributable to RE/MAX Holdings was $5.8 million for the second quarter of 2022 compared to $5.3 million the second quarter of 2021. Reported basic and diluted GAAP income per share were $0.31 and $0.30, respectively, for the second quarter of 2022 compared to basic and diluted GAAP EPS of $0.28 each in the second quarter of 2021.

Adjusted EBITDA and Adjusted EPS

Adjusted EBITDA was $35.1 million for the second quarter of 2022, an increase of $4.4 million, or 14.4%, compared to the second quarter of 2021. Second quarter 2022 Adjusted EBITDA increased primarily due to contributions from the INTEGRA acquisition, partially offset by increased investments in technology and our Mortgage segment. Adjusted EBITDA margin was 38.1% in the second quarter of 2022, compared to 39.7% in the second quarter of 2021.

Adjusted basic and diluted EPS were each $0.68 for the second quarter of 2022 compared to Adjusted basic and diluted EPS of $0.64 each for the second quarter of 2021. The ownership structure used to calculate Adjusted basic and diluted EPS for the quarter ended June 30, 2022 assumes RE/MAX Holdings owned 100% of RMCO, LLC ("RMCO"). The weighted average ownership RE/MAX Holdings had in RMCO was 60.2% for the quarter ended June 30, 2022.

Balance Sheet

As of June 30, 2022, the Company had cash and cash equivalents of $118.1 million, a decrease of $8.1 million from December 31, 2021. As of June 30, 2022, the Company had $450.2 million of outstanding debt, net of an unamortized debt discount and issuance costs, compared to $452.1 million as of December 31, 2021.

Dividend

On August 2, 2022, the Company announced that its Board of Directors approved a quarterly cash dividend of $0.23 per share of Class A common stock.  The quarterly dividend is payable on August 30, 2022, to shareholders of record at the close of business on August 16, 2022.

Share Repurchases and Retirement

As previously disclosed, in January 2022 the Company's Board of Directors authorized a common stock repurchase program of up to $100 million. During the six months ended June 30, 2022, 487,196 shares of the Company's Class A common stock were repurchased and retired for $11.9 million excluding commissions, at an average cost of $24.36 per share. As of June 30, 2022, $88.1 million remained available under the share repurchase program.

Outlook

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

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

  • Agent count to increase 1.5% to 2.5% over third quarter 2021;
  • Revenue in a range of $87.0 million to $91.0 million (including revenue from the Marketing Funds in a range of $22.0 million to $24.0 million); and
  • Adjusted EBITDA in a range of $30.5 million to $33.0 million.

For the full-year 2022, the Company is reducing its guidance to reflect current housing market conditions and other related macroeconomic trends. The Company expects:

  • Agent count to increase 1.0% to 2.5% over full-year 2021, down from 2.0% to 4.0%;
  • Revenue in a range of $354.0 million to $364.0 million (including revenue from the Marketing Funds in a range of $90.0 million to $93.0 million), down from $366.0 million to $376.0 million (including revenue from the Marketing Funds in a range of $91.5 million to $95.5 million); and
  • Adjusted EBITDA in a range of $123.0 million to $128.0 million, down from $130.0 million to $135.0 million.

Webcast and Conference Call

The Company will host a conference call for interested parties on Friday, August 5, 2022, beginning at 8:30 a.m. Eastern Time. Interested parties can register in advance for the conference call using the link below:

https://conferencingportals.com/event/tTSuEepd

Interested parties also can access a live webcast through the Investor Relations section of the Company's website at http://investors.remaxholdings.com. Please dial-in or join the webcast 10 minutes before the start of the conference call. An archive of the webcast will be available on the Company's website for a limited time as well.

Basis of Presentation

Unless otherwise noted, the results presented in this press release are consolidated and exclude adjustments attributable to the non-controlling interest.

Footnotes:

1Revenue excluding the Marketing Funds is a non-GAAP measure of financial performance that differs from U.S. Generally Accepted Accounting Principles ("U.S. GAAP") and a reconciliation to the most directly comparable U.S. GAAP measure is as follows (in thousands):

Three Months Ended

Six Months Ended

June 30, 

June 30, 

2022

2021

2022

2021

Revenue excluding the Marketing Funds:

Total revenue

$

92,172

$

77,246

$

183,176

$

149,541

Less: Marketing Funds fees

22,909

18,042

45,760

36,187

Revenue excluding the Marketing Funds

$

69,263

$

59,204

$

137,416

$

113,354

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

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

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

About RE/MAX Holdings, Inc.

RE/MAX Holdings, Inc. (NYSE:RMAX) is one of the world's leading franchisors in the real estate industry, franchising real estate brokerages globally under the RE/MAX® brand, and mortgage brokerages within the U.S. under the Motto® Mortgage brand. RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. Now with more than 140,000 agents in almost 9,000 offices and a presence in over 110 countries and territories, nobody in the world sells more real estate than RE/MAX, as measured by total residential transaction sides. Dedicated to innovation and change in the real estate industry, RE/MAX launched Motto Franchising, LLC, a ground-breaking mortgage brokerage franchisor, in 2016. Motto Mortgage has grown to over 200 offices across almost 40 states.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are often identified by the use of words such as "believe," "intend," "expect," "estimate," "plan," "outlook," "project," "anticipate," "may," "will," "would" and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. Forward-looking statements include statements related to agent count; franchise sales; revenue; operating expenses; the Company's outlook for the third quarter and full year 2022; non-GAAP financial measures; housing and mortgage market conditions; strategic initiatives; growth; the strength and resilience of the Company's business model; the Company's balance sheet; the Company's cash-generating ability; the Company's ability to generate profitable growth over the long-term; and the Company's ability to mitigate the impact of market volatility. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily accurately indicate the times at which such performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include, without limitation, (1) the global COVID-19 pandemic, which continues to pose significant and widespread risks and ongoing uncertainty for the Company's business, including the Company's agents, loan originators, franchisees and employees, as well as home buyers and sellers, (2) changes in the real estate market or interest rates and availability of financing, (3) changes in business and economic activity in general, (4) the Company's ability to attract and retain quality franchisees, (5) the Company's franchisees' ability to recruit and retain real estate agents and mortgage loan originators, (6) changes in laws and regulations, (7) the Company's ability to enhance, market, and protect its brands, including the RE/MAX and Motto Mortgage brands, (8) the Company's ability to implement its technology initiatives, (9) risks related to the Company's CEO transition, (10) fluctuations in foreign currency exchange rates, and (11) those risks and uncertainties described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission ("SEC") and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company's website at www.remaxholdings.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no obligation, to update this information to reflect future events or circumstances.

<td …

TABLE 1

RE/MAX Holdings, Inc.

Consolidated Statements of Income

(In thousands, except share and per share amounts)

(Unaudited)

Three Months Ended

Six Months Ended

June 30, 

June 30, 

2022

2021

2022

2021

Revenue:

Continuing franchise fees

$

34,128

$

26,955

$

67,627

$

52,329

Annual dues

9,016

8,869

17,936

17,541

Broker fees

19,317

17,453

34,402

29,406

Marketing Funds fees

22,909

18,042

45,760

36,187

Franchise sales and other revenue

6,802

5,927

17,451

14,078

Total revenue

92,172

77,246

183,176

149,541

Operating expenses:

Selling, operating and administrative expenses

40,781

38,816

88,612

82,492

Marketing Funds expenses

22,909

18,042

45,760

36,187

Depreciation and amortization

9,113

6,846

18,098

13,654

Settlement and impairment charges

2,460

6,195

Total operating expenses

75,263

63,704

158,665

132,333

Operating income (loss)

16,909

13,542

24,511

17,208

Other expenses, net:

Interest expense

(4,032)

(2,124)

(7,683)

(4,222)

Interest income

159

19

178

182

Foreign currency transaction gains (losses)

(160)

(363)

20

(383)

Total other expenses, net

(4,033)

(2,468)

(7,485)

(4,423)

Income (loss) before provision for income taxes

12,876

11,074

17,026

12,785

Provision for income taxes

(2,601)

(714)

(3,806)

(662)

Net income (loss)

$

10,275

$

10,360

$

13,220

$

12,123

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

4,446

5,099

5,940

5,699

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

$

5,829

$

5,261

$

7,280

$

6,424

Net income (loss) attributable to RE/MAX Holdings, Inc. per share
of Class A common stock

Basic

$

0.31

$

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