RE/MAX Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2020.

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

For the transition period from to .

Commission file number 001-36101

RE/MAX Holdings, Inc.

(Exact name of registrant as specified in its charter)



Delaware		80-0937145
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

5075 South Syracuse Street Denver, Colorado		80237
(Address of principal executive offices)		(Zip Code)

(303) 770-5531

(Registrant’s telephone number, including area code)

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

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐	Emerging growth company	☐
Non-accelerated filer	☐	Smaller reporting 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of the registrant’s Class A common stock, par value $0.0001 per share, and Class B common stock, par value $0.0001, as of July 31, 2020 was 18,123,963 and 1, respectively.

Table of Contents

TABLE OF CONTENTS


		Page No.
	PART I. – FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	RE/MAX Holdings, Inc. Unaudited Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019	3

	RE/MAX Holdings, Inc. Unaudited Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2020 and June 30, 2019	4

	RE/MAX Holdings, Inc. Unaudited Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2020 and June 30, 2019	5

	RE/MAX Holdings, Inc. Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2020 and June 30, 2019	6

	RE/MAX Holdings, Inc. Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and June 30, 2019	7

	RE/MAX Holdings, Inc. Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risks	37

Item 4.	Controls and Procedures	38

	PART II. – OTHER INFORMATION

Item 1.	Legal Proceedings	38

Item 1A.	Risk Factors	39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40

Item 3.	Defaults Upon Senior Securities	40

Item 4.	Mine Safety Disclosures	40

Item 5.	Other Information	40

Item 6.	Exhibits	41

	SIGNATURES	42

Table of Contents

PART I. – FINANCIAL INFORMATION

Item 1. Financial Statements

RE/MAX HOLDINGS, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)


	June 30,		December 31,
	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	84,545	$	83,001
Restricted cash		14,752		20,600
Accounts and notes receivable, current portion, less allowances of $15,112 and $12,538, respectively		29,732		28,644
Income taxes receivable		639		896
Other current assets		9,773		9,638
Total current assets		139,441		142,779
Property and equipment, net of accumulated depreciation of $15,914 and $14,940, respectively		5,124		5,444
Operating lease right of use assets		48,787		51,129
Franchise agreements, net		79,933		87,670
Other intangible assets, net		27,628		32,315
Goodwill		161,814		159,038
Deferred tax assets, net		50,169		52,595
Income taxes receivable, net of current portion		1,690		1,690
Other assets, net of current portion		13,126		9,692
Total assets	$	527,712	$	542,352
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	4,225	$	2,983
Accrued liabilities		44,442		60,163
Income taxes payable		8,210		6,854
Deferred revenue		25,362		25,663
Current portion of debt		2,566		2,648
Current portion of payable pursuant to tax receivable agreements		6,478		3,583
Operating lease liabilities		5,381		5,102
Total current liabilities		96,664		106,996
Debt, net of current portion		222,051		223,033
Payable pursuant to tax receivable agreements, net of current portion		30,745		33,640
Deferred tax liabilities, net		351		293
Deferred revenue, net of current portion		17,905		18,763
Operating lease liabilities, net of current portion		53,197		55,959
Other liabilities, net of current portion		4,642		5,292
Total liabilities		425,555		443,976
Commitments and contingencies (note 12)
Stockholders' equity:
Class A common stock, par value $.0001 per share, 180,000,000 shares authorized; 18,123,963 and 17,838,233 shares issued and outstanding as of June 30, 2020 and December 31, 2019, 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, 2020 and December 31, 2019		—		—
Additional paid-in capital		473,451		466,945
Retained earnings		28,385		30,525
Accumulated other comprehensive income, net of tax		440		414
Total stockholders' equity attributable to RE/MAX Holdings, Inc.		502,278		497,886
Non-controlling interest		(400,121)		(399,510)
Total stockholders' equity		102,157		98,376
Total liabilities and stockholders' equity	$	527,712	$	542,352

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

RE/MAX HOLDINGS, INC.

Condensed Consolidated Statements of Income

(In thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Revenue:
Continuing franchise fees	$	16,738	$	24,894	$	40,881	$	49,850
Annual dues		8,745		8,819		17,666		17,673
Broker fees		10,426		13,459		19,870		22,047
Marketing Funds fees		11,765		18,060		29,287		36,832
Franchise sales and other revenue		4,533		6,149		14,775		16,157
Total revenue		52,207		71,381		122,479		142,559
Operating expenses:
Selling, operating and administrative expenses		25,348		25,710		60,025		59,613
Marketing Funds expenses		11,765		18,060		29,287		36,832
Depreciation and amortization		6,412		5,541		12,722		11,099
Total operating expenses		43,525		49,311		102,034		107,544
Operating income		8,682		22,070		20,445		35,015
Other expenses, net:
Interest expense		(2,187)		(3,154)		(4,869)		(6,309)
Interest income		34		342		303		662
Foreign currency transaction gains (losses)		101		61		(169)		116
Total other expenses, net		(2,052)		(2,751)		(4,735)		(5,531)
Income before provision for income taxes		6,630		19,319		15,710		29,484
Provision for income taxes		(706)		(3,186)		(4,496)		(5,094)
Net income	$	5,924	$	16,133	$	11,214	$	24,390
Less: net income attributable to non-controlling interest (note 3)		2,435		7,563		5,094		11,411
Net income attributable to RE/MAX Holdings, Inc.	$	3,489	$	8,570	$	6,120	$	12,979

Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock
Basic	$	0.19	$	0.48	$	0.34	$	0.73
Diluted	$	0.19	$	0.48	$	0.34	$	0.73
Weighted average shares of Class A common stock outstanding
Basic		18,123,963		17,808,321		18,049,114		17,791,942
Diluted		18,146,886		17,833,958		18,090,259		17,825,880
Cash dividends declared per share of Class A common stock	$	0.22	$	0.21	$	0.44	$	0.42

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

RE/MAX HOLDINGS, INC.

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Net income	$	5,924	$	16,133	$	11,214	$	24,390
Change in cumulative translation adjustment		117		65		(113)		134
Other comprehensive income (loss), net of tax		117		65		(113)		134
Comprehensive income		6,041		16,198		11,101		24,524
Less: comprehensive income attributable to non-controlling interest		2,490		7,595		4,955		11,476
Comprehensive income attributable to RE/MAX Holdings, Inc., net of tax	$	3,551	$	8,603	$	6,146	$	13,048

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

RE/MAX HOLDINGS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)


											Accumulated other
	Class A			Class B			Additional				comprehensive		Non-		Total
	common stock			common stock			paid-in		Retained		income (loss),		controlling		stockholders'
	Shares	Amount		Shares	Amount		capital		earnings		net of tax		interest		equity
Balances, January 1, 2020	17,838,233	$	2	1	$	—	$	466,945	$	30,525	$	414	$	(399,510)	$	98,376
Net income	—		—	—		—		—		2,631		—		2,659		5,290
Distributions to non-controlling unitholders	—		—	—		—		—		—		—		(2,777)		(2,777)
Equity-based compensation expense and related dividend equivalents	368,375		—	—		—		5,962		(289)		—		—		5,673
Dividends to Class A common stockholders	—		—	—		—		—		(3,986)		—		—		(3,986)
Change in accumulated other comprehensive income	—		—	—		—		—		—		(36)		(194)		(230)
Payroll taxes related to net settled restricted stock units	(82,645)		—	—		—		(2,268)		—		—		—		(2,268)
Balances, March 31, 2020	18,123,963		2	1		—		470,639		28,881		378		(399,822)		100,078
Net income	—		—	—		—		—		3,489		—		2,435		5,924
Distributions to non-controlling unitholders	—		—	—		—		—		—		—		(2,789)		(2,789)
Equity-based compensation expense and related dividend equivalents	—		—	—		—		2,812		—		—		—		2,812
Dividends to Class A common stockholders	—		—	—		—		—		(3,987)		—		—		(3,987)
Change in accumulated other comprehensive income	—		—	—		—		—		—		62		55		117
Other	—		—	—		—		—		2		—		—		2
Balances, June 30, 2020	18,123,963	$	2	1	$	—	$	473,451	$	28,385	$	440	$	(400,121)	$	102,157


											Accumulated other
	Class A			Class B			Additional				comprehensive		Non-		Total
	common stock			common stock			paid-in		Retained		income (loss),		controlling		stockholders'
	Shares	Amount		Shares	Amount		capital		earnings		net of tax		interest		equity
Balances, January 1, 2019	17,754,416	$	2	1	$	—	$	460,101	$	21,138	$	328	$	(402,294)	$	79,275
Net income	—		—	—		—		—		4,409		—		3,848		8,257
Distributions to non-controlling unitholders	—		—	—		—		—		—		—		(2,693)		(2,693)
Equity-based compensation expense and related dividend equivalents	70,797		—	—		—		3,213		(42)		—		—		3,171
Dividends to Class A common stockholders	—		—	—		—		—		(3,740)		—		—		(3,740)
Change in accumulated other comprehensive income	—		—	—		—		—		—		36		33		69
Payroll taxes related to net settled restricted stock units	(17,265)		—	—		—		(713)		—		—		—

Price	1.00	EPS	-52,720,000
Shares	-0	P/E	-0
MCap	-0	P/FCF	-0
Net Debt	121	EBIT	78
TEV	121	TEV/EBIT	2
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-08-06
10-Q	2020-03-31	Filed 2020-05-06
10-K	2019-12-31	Filed 2020-02-21
10-Q	2019-09-30	Filed 2019-11-01
10-Q	2019-06-30	Filed 2019-08-02
10-Q	2019-03-31	Filed 2019-05-03
10-K	2018-12-31	Filed 2019-02-22
10-Q	2018-09-30	Filed 2018-11-02
10-Q	2018-06-30	Filed 2018-08-03
10-Q	2018-03-31	Filed 2018-05-04
10-K	2017-12-31	Filed 2018-03-15
10-Q	2017-09-30	Filed 2018-03-15
10-Q	2017-06-30	Filed 2017-08-04
10-Q	2017-03-31	Filed 2017-05-05
10-K	2016-12-31	Filed 2017-02-24
10-Q	2016-09-30	Filed 2016-11-04
10-Q	2016-06-30	Filed 2016-08-05
10-Q	2016-03-31	Filed 2016-05-06
10-K	2015-12-31	Filed 2016-02-26
10-Q	2015-09-30	Filed 2015-11-06
10-Q	2015-06-30	Filed 2015-08-07
10-Q	2015-03-31	Filed 2015-05-08
10-K	2014-12-31	Filed 2015-03-13
10-Q	2014-09-30	Filed 2014-11-14
10-Q	2014-06-30	Filed 2014-08-14
10-Q	2014-03-31	Filed 2014-05-15
10-K	2013-12-31	Filed 2014-03-28
10-Q	2013-09-30	Filed 2013-11-14

8-K	2020-09-01	Regulation FD, Exhibits
8-K	2020-08-06	Earnings, Exhibits
8-K	2020-06-23
8-K	2020-05-27
8-K	2020-05-06
8-K	2020-04-17
8-K	2020-04-14
8-K	2020-03-19
8-K	2020-02-20
8-K	2019-12-18
8-K	2019-10-31
8-K	2019-08-01
8-K	2019-05-22
8-K	2019-05-22
8-K	2019-05-02
8-K	2019-02-21
8-K	2019-01-01
8-K	2018-12-05
8-K	2018-12-04
8-K	2018-11-01
8-K	2018-09-26
8-K	2018-08-02
8-K	2018-05-24
8-K	2018-05-04
8-K	2018-05-03
8-K	2018-02-28
8-K	2018-02-27
8-K	2018-02-22
8-K	2018-02-22
8-K	2018-02-14
8-K	2018-02-08

EX-31.1	rmax-20200630xex31d1.htm
EX-31.2	rmax-20200630xex31d2.htm
EX-32.1	rmax-20200630xex32d1.htm

RMAX 10Q Quarterly Report

RE/MAX Earnings 2020-06-30