Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Feb. 28, 2018 | |
Entity Registrant Name | RE/MAX Holdings, Inc. | |
Entity Central Index Key | 1,581,091 | |
Document Period End Date | Sep. 30, 2017 | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Current Reporting Status | No | |
Entity Filer Category | Large Accelerated Filer | |
Common Class A | ||
Entity Common Stock, Shares Outstanding | 17,696,991 | |
Common Class B | ||
Entity Common Stock, Shares Outstanding | 1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 83,936,000 | $ 57,609,000 |
Accounts and notes receivable, current portion, less allowances of $6,247 and $5,535, respectively | 19,002,000 | 19,419,000 |
Income taxes receivable | 1,747,000 | |
Other current assets | 5,357,000 | 4,186,000 |
Total current assets | 110,042,000 | 81,214,000 |
Property and equipment, net of accumulated depreciation of $12,865 and $12,196, respectively | 2,993,000 | 2,691,000 |
Franchise agreements, net | 99,634,000 | 109,140,000 |
Other intangible assets, net | 9,207,000 | 9,811,000 |
Goodwill | 123,013,000 | 126,633,000 |
Deferred tax assets, net | 101,649,000 | 105,770,000 |
Other assets, net of current portion | 1,548,000 | 1,894,000 |
Total assets | 448,086,000 | 437,153,000 |
Current liabilities: | ||
Accounts payable | 449,000 | 855,000 |
Accounts payable to affiliates | 83,000 | 145,000 |
Accrued liabilities | 15,302,000 | 13,268,000 |
Income taxes payable | 401,000 | 379,000 |
Deferred revenue and deposits | 17,470,000 | 16,306,000 |
Current portion of debt | 2,350,000 | 2,350,000 |
Current portion of payable pursuant to tax receivable agreements | 6,135,000 | 13,235,000 |
Total current liabilities | 42,190,000 | 46,538,000 |
Debt, net of current portion | 227,094,000 | 228,470,000 |
Payable pursuant to tax receivable agreements, net of current portion | 85,850,000 | 85,574,000 |
Deferred tax liabilities, net | 151,000 | 133,000 |
Other liabilities, net of current portion | 20,064,000 | 15,729,000 |
Total liabilities | 375,349,000 | 376,444,000 |
Commitments and contingencies (note 13) | ||
Stockholders' equity: | ||
Additional paid-in capital | 450,317,000 | 448,713,000 |
Retained earnings | 22,675,000 | 16,005,000 |
Accumulated other comprehensive income (loss), net of tax | 439,000 | (28,000) |
Total stockholders' equity attributable to RE/MAX Holdings, Inc. | 473,433,000 | 464,692,000 |
Non-controlling interest | (400,696,000) | (403,983,000) |
Total stockholders' equity | 72,737,000 | 60,709,000 |
Total liabilities and stockholders' equity | 448,086,000 | 437,153,000 |
Common Class A | ||
Stockholders' equity: | ||
Common stock | 2,000 | 2,000 |
Total stockholders' equity | 2,000 | 2,000 |
Common Class B | ||
Stockholders' equity: | ||
Common stock |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Accounts Receivable, allowance | $ 6,247 | $ 5,535 |
Property and equipment, accumulated depreciation | $ 12,865 | $ 12,196 |
Common Class A | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 180,000,000 | 180,000,000 |
Common stock, shares issued | 17,696,991 | 17,652,548 |
Common stock, shares outstanding | 17,696,991 | 17,652,548 |
Common Class B | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 1,000 | 1,000 |
Common stock, shares issued | 1 | 1 |
Common stock, shares outstanding | 1 | 1 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenue: | ||||
Continuing franchise fees | $ 23,049 | $ 20,938 | $ 69,298 | $ 59,691 |
Annual dues | 8,592 | 8,321 | 25,148 | 24,271 |
Broker fees | 12,125 | 10,517 | 32,914 | 28,102 |
Franchise sales and other franchise revenue | 5,611 | 5,783 | 19,065 | 19,704 |
Brokerage revenue | 112 | |||
Total revenue | 49,377 | 45,559 | 146,425 | 131,880 |
Operating expenses: | ||||
Selling, operating and administrative expenses | 31,832 | 20,539 | 79,263 | 62,866 |
Depreciation and amortization | 4,286 | 3,889 | 15,678 | 11,482 |
Loss (gain) on sale or disposition of assets, net | 451 | (11) | 426 | 85 |
Total operating expenses | 36,569 | 24,417 | 95,367 | 74,433 |
Operating income | 12,808 | 21,142 | 51,058 | 57,447 |
Other expenses, net: | ||||
Interest expense | (2,598) | (2,121) | (7,414) | (6,493) |
Interest income | 145 | 32 | 195 | 118 |
Foreign currency transaction gains (losses) | 273 | (115) | 289 | 69 |
Loss on early extinguishment of debt | (136) | |||
Total other expenses, net | (2,180) | (2,204) | (6,930) | (6,442) |
Income before provision for income taxes | 10,628 | 18,938 | 44,128 | 51,005 |
Provision for income taxes | (3,091) | (4,632) | (10,883) | (12,176) |
Net income | 7,537 | 14,306 | 33,245 | 38,829 |
Less: net income attributable to non-controlling interest (note 3) | 3,702 | 7,520 | 16,968 | 20,290 |
Net income attributable to RE/MAX Holdings, Inc. | $ 3,835 | $ 6,786 | $ 16,277 | $ 18,539 |
Weighted average shares of Class A common stock outstanding | ||||
Cash dividends declared per share of Class A common stock | $ 0.54 | $ 0.45 | ||
Common Class A | ||||
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock | ||||
Basic | $ 0.22 | $ 0.38 | 0.92 | 1.05 |
Diluted | $ 0.22 | $ 0.38 | $ 0.92 | $ 1.05 |
Weighted average shares of Class A common stock outstanding | ||||
Basic | 17,696,991 | 17,645,696 | 17,685,683 | 17,622,298 |
Diluted | 17,737,786 | 17,691,641 | 17,726,447 | 17,666,740 |
Cash dividends declared per share of Class A common stock | $ 0.18 | $ 0.15 | $ 0.54 | $ 0.45 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income | $ 7,537 | $ 14,306 | $ 33,245 | $ 38,829 |
Change in cumulative translation adjustment | 536 | (147) | 999 | 417 |
Other comprehensive income (loss), net of tax | 536 | (147) | 999 | 417 |
Comprehensive income | 8,073 | 14,159 | 34,244 | 39,246 |
Less: comprehensive income attributable to non-controlling interest | 3,987 | 7,442 | 17,500 | 20,513 |
Comprehensive income attributable to RE/MAX Holdings, Inc., net of tax | $ 4,086 | $ 6,717 | $ 16,744 | $ 18,733 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - 9 months ended Sep. 30, 2017 - USD ($) | Additional paid-in capital | (Accumulated deficit) retained earnings | Accumulated other comprehensive income | Non-controlling interest | Common Class A | Common Class B | Total |
Balances, January 1, 2017 at Dec. 31, 2016 | $ 448,713,000 | $ 16,005,000 | $ (28,000) | $ (403,983,000) | $ 2,000 | $ 60,709,000 | |
Beginning balance, Shares at Dec. 31, 2016 | 17,652,548 | 1 | |||||
Net income | 16,277,000 | 16,968,000 | 33,245,000 | ||||
Distributions to non-controlling unitholders | (14,213,000) | (14,213,000) | |||||
Equity-based compensation expense and related dividend equivalents, value | 2,161,000 | (53,000) | $ 0 | 2,108,000 | |||
Equity-based compensation expense and related dividend equivalents, shares | 58,426 | ||||||
Dividends to Class A common stockholders | (9,554,000) | $ (9,554,000) | (9,554,000) | ||||
Change in accumulated other comprehensive income | 467,000 | 532,000 | 999,000 | ||||
Payroll taxes related to net settled restricted stock units | (816,000) | 0 | (816,000) | ||||
Payroll taxes related to net settled restricted stock units (in shares) | (13,983) | ||||||
Other | 259,000 | 259,000 | |||||
Ending balance, Value at Sep. 30, 2017 | $ 450,317,000 | $ 22,675,000 | $ 439,000 | $ (400,696,000) | $ 2,000 | $ 72,737,000 | |
Ending balance, Shares at Sep. 30, 2017 | 17,696,991 | 1 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 33,245,000 | $ 38,829,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 15,678,000 | 11,482,000 |
Bad debt expense | 836,000 | 1,177,000 |
Loss on sale or disposition of assets and sublease, net | (3,859,000) | (85,000) |
Loss on early extinguishment of debt | 136,000 | |
Equity-based compensation expense | 2,161,000 | 1,812,000 |
Deferred income tax expense | 3,919,000 | 3,244,000 |
Fair value adjustments to contingent consideration | 250,000 | |
Payments pursuant to tax receivable agreements | (7,296,000) | (1,344,000) |
Other | 888,000 | 802,000 |
Changes in operating assets and liabilities | (100,000) | (7,183,000) |
Net cash provided by operating activities | 53,440,000 | 49,040,000 |
Cash flows from investing activities: | ||
Purchases of property, equipment and software | (1,733,000) | (3,229,000) |
Proceeds from sale of property and equipment | 12,000 | |
Capitalization of trademark costs | (48,000) | (35,000) |
Acquisitions, net of cash acquired of $0 and $131, respectively | (17,869,000) | |
Other investing activity, net | 54,000 | |
Net cash used in investing activities | (1,781,000) | (21,067,000) |
Cash flows from financing activities: | ||
Payments on debt | (1,763,000) | (14,220,000) |
Distributions paid to non-controlling unitholders | (14,213,000) | (14,094,000) |
Dividends and dividend equivalents paid to Class A common stockholders | (9,607,000) | (7,932,000) |
Payments on capital lease obligations | (9,000) | (72,000) |
Proceeds from exercise of stock options | 101,000 | |
Payment of payroll taxes related to net settled restricted stock units | (816,000) | (360,000) |
Net cash used in financing activities | (26,408,000) | (36,577,000) |
Effect of exchange rate changes on cash | 1,076,000 | 373,000 |
Net increase (decrease) in cash and cash equivalents | 26,327,000 | (8,231,000) |
Cash and cash equivalents, beginning of year | 57,609,000 | 110,212,000 |
Cash and cash equivalents, end of period | 83,936,000 | 101,981,000 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 7,477,000 | 6,195,000 |
Net cash paid for income taxes | 8,619,000 | 9,492,000 |
Schedule of non-cash investing and financing activities: | ||
Note receivable received as consideration for sale of brokerage operations assets | 150,000 | |
Capital lease for property and equipment | 33,000 | |
Increase in accounts payable for capitalization of trademark costs and purchases of property, equipment and software | $ 310,000 | 89,000 |
Contingent consideration issued in a business acquisition | $ 6,300,000 |
Consolidated Statements of Cas8
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Consolidated Statements of Cash Flows | ||
Cash acquired | $ 0 | $ 131 |
Business and Organization
Business and Organization | 9 Months Ended |
Sep. 30, 2017 | |
Business and Organization | |
Business and Organization | 1. Business and Organizat RE/MAX Holdings, Inc. (“RE/MAX Holdings”) was formed as a Delaware corporation on June 25, 2013. On October 7, 2013, RE/MAX Holdings completed an initial public offering (the “IPO”) of its shares of Class A common stock. RE/MAX Holdings’ only business is to act as the sole manager of RMCO, LLC (“RMCO”). As of September 30, 2017, RE/MAX Holdings owns 58.49% of the common membership units in RMCO, while RIHI, Inc. (“RIHI”) owns the remaining 41.51% of common membership units in RMCO. RE/MAX Holdings and its consolidated subsidiaries, including RMCO, are referred to hereinafter as the “Company.” The Company is a franchisor in the real estate industry, franchising real estate brokerages globally under the RE/MAX brand (“RE/MAX”) and mortgage brokerages within the United States (“U.S.”) under the Motto Mortgage brand. RE/MAX, founded in 1973, has over 115,000 agents operating in over 7,000 offices and a presence in more than 100 countries and territories. Motto Mortgage (“Motto”), founded in 2016, is the first nationally franchised mortgage brokerage in the U.S. The Company sold certain operating assets and liabilities of its owned brokerage offices during 2015 and the first quarter of 2016 to existing RE/MAX franchisees (See Note 5, Acquisitions and Dispositions ). Since then, the Company is 100% franchised, no longer operates any real estate brokerage offices and no longer recognizes brokerage revenue (which consisted of fees assessed by the Company’s owned brokerages for services provided to their affiliated real estate agents). While the Company operates through both RE/MAX and Motto, due to the immateriality of revenue earned by Motto, the Company discloses only one reportable segment. The Company’s revenue is derived as follows: · Continuing franchise fees which consist of fixed contractual fees paid monthly by regional franchise owners and franchisees based on the number of RE/MAX agents in the respective franchised region or office and the number of Motto offices (no significant continuing franchise fees were generated by Motto during the periods presented); · Annual dues from RE/MAX agents; · Broker fees, which consist of fees paid by regional RE/MAX franchise owners and franchisees for real estate commissions paid by customers when an agent sells a home; · Franchise sales and other franchise revenue which consist of fees from initial sales and renewals of RE/MAX and Motto franchises, regional franchise fees, preferred marketing arrangements, approved supplier programs and event-based revenue from training and other programs; and · Brokerage revenue prior to the sale of the Company’s brokerage offices in January 2016. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated balance sheet at December 31, 2016, which was derived from the audited consolidated financial statements at that date, and the unaudited interim condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and with Article 10 of Regulation S-X. In compliance with those instructions, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying condensed consolidated financial statements are presented on a consolidated basis and include the accounts of RE/MAX Holdings and its consolidated subsidiaries. All significant intercompany accounts and transactions have been eliminated. In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal and recurring adjustments necessary to present fairly the Company’s financial position as of September 30, 2017 and December 31, 2016, the results of its operations and comprehensive income for the three and nine months ended September 30, 2017 and 2016, cash flows for the nine months ended September 30, 2017 and 2016, and changes in its stockholders’ equity for the nine months ended September 30, 2017. Interim results may not be indicative of full year performance. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements within the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. During 2016, the Company completed the acquisitions of six independent regions. Their results of operations, cash flows and financial positions are included in the consolidated financial statements from their respective dates of acquisition. See Note 5, Acquisitions and Dispositions for additional information. Reclassifications Certain items in the accompanying condensed consolidated financial statements as of December 31, 2016 have been reclassified to conform to the current year’s presentation. These reclassifications did not affect the Company’s consolidated results of operations. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Principles of Consolidation As of September 30, 2017, RE/MAX Holdings owns 58.49% of the common membership units in RMCO and, as its managing member, RE/MAX Holdings controls RMCO’s operations, management and activities. As a result, RE/MAX Holdings consolidates RMCO and records a non-controlling interest in the accompanying Condensed Consolidated Balance Sheets and records net income attributable to the non-controlling interest and comprehensive income attributable to the non-controlling interest in the accompanying Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income, respectively. New Accounting Pronouncements Not Yet Adopted In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220), which adjusts the classification of stranded tax effects resulting from the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. ASU 2018-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The standard is to be applied either in the period of adoption or retrospectively to each period effected by the Tax Cuts and Jobs Act. The Company plans to adopt this ASU on January 1, 2019. As of December 31, 2017, the Company completed the majority of its accounting for the tax effects of the Tax Cuts and Jobs Act. The Company believes the amendments of ASU 2018-02 will not have a significant impact on the Company’s consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350) , which simplifies the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. ASU 2017-04 is effective for annual and interim impairment tests beginning January 1, 2020 for the Company and is required to be adopted using a prospective approach. Early adoption is allowed for annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements and related disclosures. Also in January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business , which clarifies when transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 is effective for fiscal years, and interim reporting periods within those years, beginning January 1, 2018 for the Company and is required to be adopted using a prospective approach. Early adoption is permitted for transactions not previously reported in issued financial statements. The Company has not yet determined the effect of the standard on its consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , which clarifies classification for certain cash receipts and cash payments on the consolidated statement of cash flow. ASU 2016-15 is effective for fiscal years, and interim reporting periods within those years, beginning January 1, 2018 for the Company. The standard requires a retrospective transition method for each period presented. Under the new guidance, the contingent consideration payments related to the purchase of Full House Mortgage Connection, Inc. (“Full House”) will be classified as financing outflows up to the $6,300,000 acquisition date fair value and any cash payments paid in excess of the acquisition date fair value will be classified as operating outflows. (See Note 5, Acquisitions and Dispositions ). The Company expects no other material impact on its financial statements and related disclosures upon the adoption of this standard. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , which requires lessees to recognize the assets and liabilities that arise from all leases on the consolidated balance sheets. ASU 2016-02 is required to be adopted by the Company on January 1, 2019. Early adoption is permitted in any interim or annual reporting period. The standard requires a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company has not yet determined the effect of the standard on its consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , with several subsequent amendments, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The Company adopted this standard on January 1, 2018. The Company will use the modified retrospective transition method, which will result in restating each prior reporting period presented, fiscal years 2016 and 2017, in the year of adoption. Additionally, a cumulative effect adjustment will be recorded to the opening balance sheet as of the first day of fiscal year 2016, the earliest period presented. The adoption of the new guidance will change the timing of recognition of franchise sales and franchise renewal revenue. Currently, the Company recognizes revenue upon completion of a sale or renewal. Under the new guidance, franchise sales and renewal revenue, which are included in “Franchise Sales and Other Franchise Revenue” in the Consolidated Statements of Income, will be recognized over the contractual term of the franchise agreement. The impact to both “Franchise Sales and Other Franchise Revenue” and “Operating Income” in the Consolidated Statements of Income for 2017 from this change will be a decrease of less than $2,000,000. However, the Consolidated Balance Sheet as of December 31, 2017 will be adjusted in the first quarter of 2018 to reflect an increase in “Deferred revenue and deposits” of approximately $26,000,000. The commissions related to franchise sales will be recorded as a contract asset and be recognized over the contractual term of the franchise agreement. Currently, the Company expenses the commissions upon franchise sale completion. The impact from this change to “Selling, operating and administrative expenses” and “Operating Income” in the Consolidated Statements of Income for 2017 is immaterial and the Consolidated Balance Sheet as of December 31, 2017 will be adjusted in the first quarter of 2018 to reflect an increase in “Total assets” of approximately $4,000,000. The Company does not expect the adoption of the standard to have a material impact on other revenue streams. |
Non-controlling Interest
Non-controlling Interest | 9 Months Ended |
Sep. 30, 2017 | |
Noncontrolling Interest | |
Non-controlling Interest | 3. Non-controlling Interest RE/MAX Holdings is the sole managing member of RMCO and operates and controls all of the business affairs of RMCO. The ownership of the common units in RMCO is summarized as follows: September 30, December 31, 2017 2016 Shares Ownership % Shares Ownership % Non-controlling unitholders ownership of common units in RMCO 12,559,600 41.51 % 12,559,600 41.57 % RE/MAX Holdings, Inc. outstanding Class A common stock (equal to RE/MAX Holdings, Inc. common units in RMCO) 17,696,991 58.49 % 17,652,548 58.43 % Total common units in RMCO 30,256,591 100.00 % 30,212,148 100.00 % The weighted average ownership percentages for the applicable reporting periods are used to calculate the net income attributable to RE/MAX Holdings. A reconciliation of “Income before provision for income taxes” to “Net Income attributable to RE/MAX Holdings, Inc.” and “Net Income attributable to non-controlling interest” in the accompanying Condensed Consolidated Statements of Income for the periods indicated is detailed as follows (in thousands, except for percentages): Three Months Ended September 30, 2017 2016 RE/MAX Holdings, Inc. Non-controlling interest Total RE/MAX Holdings, Inc. Non-controlling interest Total Weighted average ownership percentage of RMCO (a) 58.49 % 41.51 % 100.00 % % 41.58 % 100.00 % Income before provision for income taxes $ 6,180 $ 4,448 $ 10,628 $ 11,025 $ 7,913 $ 18,938 Provision for income taxes (b)(c) (2,345) (746) (3,091) (4,239) (393) (4,632) Net income $ 3,835 $ 3,702 $ 7,537 $ 6,786 $ 7,520 $ 14,306 Nine Months Ended September 30, 2017 2016 RE/MAX Holdings, Inc. Non-controlling interest Total RE/MAX Holdings, Inc. Non-controlling interest Total Weighted average ownership percentage of RMCO (a) 58.47 % 41.53 % 100.00 % % 41.61 % 100.00 % Income before provision for income taxes $ 25,763 $ 18,365 $ 44,128 $ 29,742 $ 21,263 $ 51,005 Provision for income taxes (b)(c) (9,486) (1,397) (10,883) (11,203) (973) (12,176) Net income $ 16,277 $ 16,968 $ 33,245 $ 18,539 $ 20,290 $ 38,829 (a) The weighted average ownership percentage of RMCO differs slightly from the allocation of income before provision for income taxes between RE/MAX Holdings and the non-controlling interest as there are certain relatively insignificant expenses recorded at RE/MAX Holdings. (b) The provision for income taxes attributable to RE/MAX Holdings is primarily comprised of U.S. federal and state income taxes on its proportionate share of the pass-through income from RMCO. However, it also includes its share of taxes imposed directly on RE/MAX, LLC and its consolidated subsidiaries (“RE/MAX, LLC”), a wholly-owned subsidiary of RMCO, related primarily to tax liabilities in certain foreign jurisdictions. (c) The provision for income taxes attributable to the non-controlling interest represents its share of taxes imposed on RE/MAX, LLC related primarily to tax liabilities in certain foreign jurisdictions. Distributions and Other Payments to Non-controlling Unitholders Under the terms of RMCO’s fourth amended and restated limited liability company operating agreement (the “New RMCO, LLC Agreement”), RMCO makes cash distributions to non-controlling unitholders. The distributions paid or payable to or on behalf of non-controlling unitholders are summarized as follows (in thousands): Nine Months Ended September 30, 2017 2016 Tax and other distributions $ 7,430 $ 8,442 Dividend distributions 6,783 5,652 Total distributions to non-controlling unitholders $ 14,213 $ 14,094 On November 1, 2017, the Company declared a distribution to non-controlling unitholders of $2,261,000, which was paid on November 29, 2017. On February 21, 2018, the Company declared a distribution to non-controlling unitholders of $2,512,000, which is payable on March 21, 2018. Payments Pursuant to the Tax Receivable Agreements As of September 30, 2017, the Company reflected a total liability of $91,985,000 representing the payments due to RIHI and Oberndorf Investments LLC (“Oberndorf”) under the terms of the tax receivable agreements (the “TRAs”) (see current and non-current portion of “Payable pursuant to tax receivable agreements” in the accompanying Condensed Consolidated Balance Sheets). As of September 30, 2017, the Company estimates that amounts payable pursuant to the TRAs within the next 12-month period will be approximately $6,135,000, which is related to RE/MAX Holdings’ 2016 federal and state tax returns. To determine the current amount of the payments due to RIHI and Oberndorf, the Company estimated the amount of taxable income that RE/MAX Holdings generated as well as the amount of the specified deductions subject to the TRAs which were realized by RE/MAX Holdings in its federal and state tax returns. This amount was then used as a basis for determining the Company’s increase in estimated tax cash savings as a result of such deductions on which 85% is owed as a current TRA obligation (i.e. payable within 12 months of the Company’s year-end). These calculations are performed pursuant to the terms of the TRAs. The Company paid $7,296,000 and $1,344,000 pursuant to the terms of the TRAs during the nine months ended September 30, 2017 and 2016, respectively. On December 22, 2017, the Tax Cuts and Jobs Act was signed into law. Given this date of enactment, the financial statements for the period ended September 30, 2017 do not reflect the impact of this legislation. The law includes significant changes to the U.S. corporate tax system, including a federal corporate rate reduction from 35% to 21%. During the fourth quarter of 2017, the period in which the Tax Cuts and Jobs Act was enacted, the deferred tax asset was reduced for the impact of the lower rate, resulting in a charge to “Provision for income taxes” of $40,900,000. Correspondingly, the TRA liability was also reduced for the rate change, resulting in a benefit to operating income of $32,700,000. The net effect on net income was $8,200,000, with the entirety of this impact allocated to RE/MAX Holdings as U.S. federal and most state income taxes do not apply to the non-controlling interest. |
Earnings Per Share and Dividend
Earnings Per Share and Dividends | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share and Dividends | |
Earnings Per Share and Dividends | 4. Earnings Per Share and Dividends Earnings Per Share Basic earnings per share (“EPS”) measures the performance of an entity over the reporting period. Diluted EPS measures the performance of an entity over the reporting period while giving effect to all potentially dilutive common shares that were outstanding during the period. The treasury stock method is used to determine the dilutive potential of stock options and restricted stock units. The following is a reconciliation of the numerator and denominator used in the basic and diluted EPS calculations (in thousands, except share and per share information): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Numerator Net income attributable to RE/MAX Holdings, Inc. $ 3,835 $ 6,786 $ 16,277 $ 18,539 Denominator for basic net income per share of Class A common stock Weighted average shares of Class A common stock outstanding 17,696,991 17,645,696 17,685,683 17,622,298 Denominator for diluted net income per share of Class A common stock Weighted average shares of Class A common stock outstanding 17,696,991 17,645,696 17,685,683 17,622,298 Add dilutive effect of the following: Stock options — — — 6,714 Restricted stock units 40,795 45,945 40,764 37,728 Weighted average shares of Class A common stock outstanding, diluted 17,737,786 17,691,641 17,726,447 17,666,740 Earnings per share of Class A common stock Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, basic $ 0.22 $ 0.38 $ 0.92 $ 1.05 Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, diluted $ 0.22 $ 0.38 $ 0.92 $ 1.05 There were no anti-dilutive shares for the three and nine months ended September 30, 2017 and 2016. The one share of Class B common stock outstanding does not share in the earnings of RE/MAX Holdings and is therefore not a participating security. Accordingly, basic and diluted net income per share of Class B common stock has not been presented. Dividends Dividends declared and paid quarterly per share on all outstanding shares of Class A common stock were as follows (in thousands, except share and per share information): Nine Months Ended September 30, 2017 2016 Date paid Per share Amount paid to Class A stockholders Amount paid to non-controlling unitholders Date paid Per share Amount paid to Class A stockholders Amount paid to non-controlling unitholders Dividend declared during quarter ended: March 31 March 22, 2017 $ $ 3,184 $ 2,261 March 23, 2016 $ $ 2,638 $ 1,884 June 30 May 31, 2017 3,185 2,261 June 2, 2016 2,647 1,884 September 30 August 30, 2017 3,185 2,261 August 31, 2016 2,647 1,884 $ $ 9,554 $ 6,783 $ $ 7,932 $ 5,652 On November 1, 2017, the Company’s Board of Directors declared a quarterly dividend of $0.18 per share on all outstanding shares of Class A common stock, which was paid on November 29, 2017 to shareholders of record at the close of business on November 15, 2017. On February 21, 2018, the Company’s Board of Directors declared a quarterly dividend of $0.20 per share on all outstanding shares of Class A common stock, which is payable on March 21, 2018 to stockholders of record at the close of business on March 7, 2018. |
Acquisitions and Dispositions
Acquisitions and Dispositions | 9 Months Ended |
Sep. 30, 2017 | |
Acquisitions and Dispositions | |
Acquisitions and Dispositions | 5. Acquisitions and Dispositions Acquisitions RE/MAX of Georgia, Inc., RE/MAX of Kentucky/Tennessee, Inc. and RE/MAX of Southern Ohio, Inc. On December 15, 2016, RE/MAX, LLC acquired certain assets of RE/MAX of Georgia, Inc. (“RE/MAX of Georgia”), RE/MAX of Kentucky/Tennessee, Inc. (“RE/MAX of Kentucky/Tennessee”), and RE/MAX of Southern Ohio, Inc. (“RE/MAX of Southern Ohio”), collectively (“RE/MAX Regional Services”) including the franchise agreements issued by the Company permitting the sale of RE/MAX franchises in the states of Georgia, Kentucky and Tennessee and in Southern Ohio for cash consideration of $50,400,000. RE/MAX, LLC acquired these assets in order to expand its owned and operated regional franchising operations. The Company funded the acquisition by refinancing its then outstanding credit facility (See Note 8, Debt ) and using cash from operations. RE/MAX of New Jersey, Inc. On December 1, 2016, RE/MAX, LLC acquired certain assets and assumed certain liabilities of RE/MAX of New Jersey, Inc. (“RE/MAX of New Jersey”), including the franchise agreements issued by the Company permitting the sale of RE/MAX franchises in the state of New Jersey for cash consideration of $45,000,000. RE/MAX, LLC acquired these assets and liabilities in order to expand its owned and operated regional franchising operations. The Company used cash generated from operations to fund the acquisition. The Company finalized its accounting for the acquisitions of RE/MAX Regional Services and RE/MAX of New Jersey during the three months ended September 30, 2017. Adjustments recorded during the measurement-period are calculated as if they were known at the acquisition date, but are recognized in the reporting period in which they are determined. The Company does not revise or adjust any prior period information. In finalizing the accounting for these acquisitions, adjustments were made during the three months ended September 30, 2017 to the condensed consolidated balance sheet to decrease “Goodwill” by $4,200,000 with a corresponding increase to “Franchise agreements, net” of $4,200,000. The Company recognized a reduction in depreciation and amortization expense of $765,000 during the three months ended September 30, 2017 in connection with these measurement adjustments. Full House Mortgage Connection, Inc. Motto Franchising, LLC (“Motto Franchising”), a wholly-owned subsidiary of RE/MAX, LLC, was formed and developed to franchise mortgage brokerages. On September 12, 2016, Motto Franchising acquired certain assets of Full House, a franchisor of mortgage brokerages that created concepts used to develop Motto, for initial cash consideration of $8,000,000. Motto Franchising, as a franchisor, grants each franchisee a license to use the Motto Mortgage brand, trademark, promotional and operating materials and concepts. The Company used cash generated from operations to initially fund the acquisition. Additional cash consideration may be required based on future revenues generated. The contingent purchase consideration and its subsequent valuation is more fully described in Note 9, Fair Value Measurements . The following table summarizes the consideration at acquisition (in thousands): Cash consideration $ 8,000 Contingent purchase consideration (See note 9) 6,300 Total purchase price $ 14,300 RE/MAX of Alaska, Inc. On April 1, 2016, RE/MAX, LLC acquired certain assets of RE/MAX of Alaska, Inc. (“RE/MAX of Alaska”), including the franchise agreements issued by the Company permitting the sale of RE/MAX franchises in the state of Alaska for cash consideration of $1,500,000. RE/MAX, LLC acquired these assets in order to expand its owned and operated regional franchising operations. The Company used cash generated from operations to fund the acquisition. RE/MAX of New York, Inc. On February 22, 2016, RE/MAX, LLC acquired certain assets of RE/MAX of New York, Inc. (“RE/MAX of New York”), including the franchise agreements issued by the Company permitting the sale of RE/MAX franchises in the state of New York for cash consideration of $8,500,000. RE/MAX, LLC acquired these assets in order to expand its owned and operated regional franchising operations. The Company used cash generated from operations to fund the acquisition. The following table summarizes the allocation of the purchase price to the fair value of assets acquired and liabilities assumed for the aforementioned acquisitions (in thousands): RE/MAX Regional Services RE/MAX of New Jersey Full House RE/MAX of Alaska RE/MAX of New York Total Cash and cash equivalents $ - $ 335 $ - $ - $ 131 $ 466 Franchise agreements 30,700 29,700 - 529 5,000 65,929 Non-compete agreement - - 2,500 - - 2,500 Other assets - - - - 340 340 Goodwill 19,700 15,300 11,800 971 3,029 50,800 Other liabilities - (335) - - - (335) Total purchase price $ 50,400 $ 45,000 $ 14,300 $ 1,500 $ 8,500 $ 119,700 Unaudited Pro Forma Financial Information The following unaudited pro forma financial information reflects the consolidated results of operations of the Company as if the acquisitions of RE/MAX Regional Services, RE/MAX of New Jersey, Full House, RE/MAX of Alaska and RE/MAX of New York had occurred on January 1, 2016. The historical financial information has been adjusted to give effect to events that are (1) directly attributed to the acquisitions, (2) factually supportable and (3) expected to have a continuing impact on the combined results, including additional amortization expense associated with the valuation of the acquired franchise agreements. This unaudited pro forma information should not be relied upon as necessarily being indicative of the historical results that would have been obtained if the acquisitions had actually occurred on that date, nor of the results that may be obtained in the future (in thousands, except per share information). Three Months Ended Nine Months Ended September 30, 2016 September 30, 2016 Total revenue $ 48,781 $ 141,073 Net income attributable to RE/MAX Holdings, Inc. (a) $ 7,090 $ 18,165 Basic earnings per common share $ 0.40 $ 1.03 Diluted earnings per common share $ 0.40 $ 1.03 (a) Nine months ended September 30, 2016 includes the net impact of $ 1,000,000 in professional fees and debt extinguishment costs incurred related to the amendment of the Company’s credit facility. See Note 8, Debt for a discussion of the credit facility. Dispositions STC Northwest, LLC d/b/a RE/MAX Northwest Realtors On January 20, 2016, the Company sold certain operating assets and liabilities related to three owned brokerage offices located in the U.S., of STC Northwest, LLC d/b/a RE/MAX Northwest Realtors, a wholly owned subsidiary of the Company. The Company recognized a loss on the sale of the assets and the liabilities transferred of approximately $90,000 during the first quarter of 2016, which is reflected in “Loss (gain) on sale or disposition of assets, net” in the accompanying Condensed Consolidated Statements of Income. In connection with this sale, the Company transferred separate office franchise agreements to the purchaser, under which the Company will receive ongoing monthly continuing franchise fees and broker fees. Sacagawea, LLC d/b/a RE/MAX Equity Group On December 31, 2015, the Company sold certain operating assets and liabilities related to 12 owned brokerage offices located in the U.S., of Sacagawea, LLC d/b/a/ RE/MAX Equity Group (“RE/MAX Equity Group”), a wholly owned subsidiary of the Company. During the third quarter of 2017 the Company recognized a loss of approximately $463,000 as a revised estimate of the final settlement on certain provisions of the asset sale agreement which is reflected in the “Loss (gain) on sale or disposition of assets, net” in the accompanying Condensed Consolidated Statements of Income. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 9 Months Ended |
Sep. 30, 2017 | |
Intangible Assets and Goodwill | |
Intangible Assets and Goodwill | 6. Intangible Assets and Goodwill The following table provides the components of the Company’s intangible assets, other than goodwill (in thousands, except weighted average amortization period in years): Weighted Average As of September 30, 2017 As of December 31, 2016 Amortization Initial Accumulated Net Initial Accumulated Net Period Cost Amortization Balance Cost Amortization Balance Franchise agreements 12.1 $ 197,977 $ (98,343) $ 99,634 $ 224,167 $ (115,027) $ 109,140 Other intangible assets: Software (a) 4.5 $ 13,902 $ (8,177) $ 5,725 $ 13,207 $ (7,154) $ 6,053 Trademarks 14.1 3,153 (1,921) 1,232 3,102 (1,782) 1,320 Non-compete 10.0 2,500 (250) 2,250 2,500 (62) 2,438 Total other intangible assets 7.6 $ 19,555 $ (10,348) $ 9,207 $ 18,809 $ (8,998) $ 9,811 (a) As of September 30, 2017 and December 31, 2016, capitalized software development costs of $782,000 and $ 356,000 , respectively, were information technology infrastructure projects not yet complete and ready for their intended use and thus were not subject to amortization. Amortization expense for the three months ended September 30, 2017 and 2016 was $4,066,000 and $3,666,000, respectively. Amortization expense for the nine months ended September 30, 2017 and 2016 was $15,055,000 and $10,836,000, respectively. Amounts for the three and nine months ended September 30, 2017 include the measurement period adjustment of $765,000. Refer to Note 5, Acquisitions and Dispositions for additional information. As of September 30, 2017, the estimated future amortization expense for the next five years related to intangible assets is as follows (in thousands): As of September 30, 2017: Remainder of 2017 $ 4,031 2018 15,685 2019 15,522 2020 15,293 2021 14,786 $ 65,317 The following table presents changes to goodwill for the period from January 1, 2017 to September 30, 2017 (in thousands): Balance, January 1, 2017 $ 126,633 Change in purchase price allocations for 2016 acquisitions (3,865) Effect of changes in foreign currency exchange rates 245 Balance, September 30, 2017 $ 123,013 |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2017 | |
Accrued Liabilities. | |
Accrued Liabilities | 7. Accrued Liabilities Accrued liabilities consist of the following (in thousands): September 30, December 31, 2017 2016 Accrued payroll and related employee costs $ 5,205 $ 7,035 Accrued taxes 1,219 1,554 Accrued professional fees 1,894 1,382 Other (a) 6,984 3,297 $ 15,302 $ 13,268 (a) Other accrued liabilities include a $4,500,000 payable in connection with the February 13, 2018 settlement resulting from the litigation matter concerning the Company’s 2013 acquisition of the net assets of Tails, Inc. (“Tails”), as discussed in Note 13, Commitments and Contingencies. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt | |
Debt | 8. Debt Debt, net of current portion, consists of the following (in thousands): September 30, December 31, 2017 2016 2016 Senior Secured Credit Facility $ 232,650 $ 234,412 Less unamortized debt issuance costs (1,854) (2,076) Less unamortized debt discount costs (1,352) (1,516) Less current portion (2,350) (2,350) $ 227,094 $ 228,470 Maturities of debt are as follows (in thousands): As of September 30, 2017: Remainder of 2017 $ 588 2018 2,350 2019 2,350 2020 2,350 2021 2,350 Thereafter 222,662 $ 232,650 Senior Secured Credit Facility On December 15, 2016, RE/MAX, LLC, entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and various lenders party thereto (the “2016 Senior Secured Credit Facility”), which amended and restated a prior credit agreement (the “2013 Senior Secured Credit Facility”). The 2016 Senior Secured Credit Facility consists of a $235,000,000 term loan facility which matures on December 15, 2023 and a $10,000,000 revolving loan facility which, if drawn, must be repaid on December 15, 2021. Borrowings under the term loans and revolving loans, if any outstanding, accrue interest at LIBOR (as long as LIBOR is not less than the floor of 0.75%) plus a maximum applicable margin of 2.75%. As of September 30, 2017, the interest rate was 4.08%. Mandatory principal payments of approximately $588,000 are due quarterly until the facility matures on December 15, 2023. RE/MAX, LLC may make optional prepayments on the term loan facility at any time without penalty; however, no such optional prepayments were made during the nine months ended September 30, 2017. Under the 2013 Senior Secured Credit Facility, RE/MAX, LLC was required to make additional principal payments out of excess cash flow. RE/MAX, LLC made an excess cash flow prepayment of $12,727,000 on March 31, 2016. RE/MAX, LLC accounted for the mandatory principal excess cash flow prepayment as an early extinguishment of debt and recorded a loss during the nine months ended September 30, 2016 of $136,000 related to unamortized debt discount and issuance costs. Under the 2016 Senior Secured Credit Facility no additional mandatory prepayment and commitment reduction is required if the total leverage ratio as defined by the 2016 Senior Secured Credit Facility as of the last day of such fiscal year is less than 2.75 to 1.0. RE/MAX, LLC’s total leverage ratio was less than 2.75 to 1.0 as of September 30, 2017, and RE/MAX, LLC does not expect to make an excess cash flow principal prepayment within the next 12-month period. As of September 30, 2017, RE/MAX, LLC had no revolving loans outstanding under our 2016 Senior Secured Credit Facility. Whenever amounts are drawn under the revolving line of credit, the 2016 Senior Secured Credit Facility requires compliance with a leverage ratio and an interest coverage ratio. A commitment fee of 0.5% per annum accrues on the amount of unutilized revolving line of credit. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Measurements | |
Fair Value Measurements | 9. Fair Value Measurements Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering assumptions, the Company follows a three-tier fair value hierarchy, which is described in detail in the Company’s Annual Report on Form 10-K for the year-ended December 31, 2016. A summary of the Company’s liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 is as follows (in thousands): As of September 30, 2017 As of December 31, 2016 Fair Value Level 1 Level 2 Level 3 Fair Value Level 1 Level 2 Level 3 Liabilities Contingent consideration $ 6,650 $ - $ - $ 6,650 $ 6,400 $ - $ - $ 6,400 The Company is required to pay additional purchase consideration totaling eight percent of gross revenues generated by Motto each year for the ten years following the acquisition date with no limitation as to the maximum payout. The consideration is payable following each anniversary, beginning October 1, 2017 and ending September 30, 2026. The acquisition date fair value of the contingent purchase consideration represents the forecasted discounted cash payments that the Company expects to pay Full House with respect to the acquired business. The Company measures this liability each reporting period and recognizes changes in fair value, if any, in earnings of the Company. Any changes are included in “Selling, operating and administrative expenses” in the accompanying Condensed Consolidated Statements of Income. Increases or decreases in the fair value of the contingent purchase consideration can result from changes in discount rates as well as the timing and amount of forecasted cash payments derived from anticipated gross revenues. The table below presents a reconciliation of all assets and liabilities of the Company measured at fair value on a recurring basis using significant unobservable inputs for the period from January 1, 2017 to September 30, 2017 (in thousands): Fair Value of Contingent Consideration Liability Balance at January 1, 2017 $ 6,400 Fair value adjustments 250 Balance at September 30, 2017 $ 6,650 The Company assesses categorization of assets and liabilities by level at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer. There were no transfers between Levels I, II and III during the nine months ended September 30, 2017 . The following table summarizes the carrying value and fair value of the 2016 Senior Secured Credit Facility as of September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, 2017 2016 Carrying Amount Fair Value Level 2 Carrying Amount Fair Value Level 2 Senior Secured Credit Facility $ 229,444 $ 233,522 $ 230,820 $ 233,240 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Taxes | |
Income Taxes | 10. Income Taxes RE/MAX Holdings is subject to U.S. federal and state income taxation on its allocable portion of the income of RMCO. The “Provision for income taxes” in the accompanying Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2017 and 2016 is based on an estimate of the Company’s annualized effective income tax rate. The Company’s effective tax rate includes a rate benefit attributable to the fact that the Company’s subsidiaries operate as a series of limited liability companies which are not themselves subject to federal income tax. Accordingly, the portion of the Company’s subsidiaries’ earnings attributable to the non-controlling interest are not subject to U.S. federal and state income tax as the income is passed through to the non-controlling interest holders. The “Provision for income taxes” is comprised of a provision for income taxes attributable to RE/MAX Holdings and to entities other than RE/MAX Holdings. The provision for income taxes attributable to RE/MAX Holdings is primarily comprised of U.S. federal and state income taxes on its proportionate share of the pass-through income from RMCO. However, it also includes its share of taxes imposed directly on RE/MAX, LLC, related primarily to tax liabilities in certain foreign jurisdictions. The provision for income taxes attributable to the non-controlling interest represents its share of taxes imposed on RE/MAX, LLC related to tax liabilities primarily in certain foreign jurisdictions. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. As of September 30, 2017, the Company does not believe it has any significant uncertain tax positions. The Company and its subsidiaries file, or will file, income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. RMCO is not subject to federal income taxes as it is a flow-through entity, however, RMCO is required to file an annual U.S. Return of Partnership Income. |
Equity-Based Compensation
Equity-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Equity-Based Compensation | |
Equity-Based Compensation | 11. Equity-Based Compensation The Company’s Board of Directors adopted the RE/MAX Holdings, Inc. 2013 Omnibus Incentive Plan (the “2013 Incentive Plan”), under which 3,576,466 shares are currently authorized. (See below for shares available for grant at September 30, 2017.) The 2013 Incentive Plan provides for the grant of incentive stock options to the Company’s employees, and for the grant of shares of RE/MAX Holdings Class A common stock, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”) which may have time-based or performance-based vesting criteria, dividend equivalent rights, cash-based awards and any combination thereof to employees, directors and consultants of the Company. The Company recognizes equity-based compensation expense in “Selling, operating and administrative expenses” in the accompanying Condensed Consolidated Statements of Income. The Company recognizes corporate income tax benefits relating to the exercise of options and vesting of restricted stock units in “Provision for income taxes” in the accompanying Condensed Consolidated Statements of Income. Employee stock-based compensation expense under the Company’s 2013 Incentive Plan was as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Expense from Time-based RSUs $ 750 $ 501 $ 1,892 $ 1,812 Expense from Performance-based RSUs 118 - 269 - Equity-based compensation expense 868 501 2,161 1,812 Tax benefit from equity-based compensation (191) (110) (475) (398) Excess tax benefit from equity-based compensation - - (324) (201) Net compensation cost $ 677 $ 391 $ 1,362 $ 1,213 Time-based Restricted Stock Units Time-based RSUs granted under the 2013 Incentive Plan are valued using the Company’s closing stock price on the date of grant. Grants awarded to the Company’s Board of Directors generally vest over a one year period. Grants awarded to the Company’s employees generally vest equally in annual installments over a three year period. Compensation expense is recognized on a straight line basis over the vesting period. The following table summarizes equity-based compensation activity related to time-based RSUs as of and for the nine months ended September 30, 2017: Time-based restricted stock units Weighted average grant date fair value per share Balance, January 1, 2017 127,011 $ 33.00 Granted 43,450 $ 55.45 Shares vested (including tax withholding) (a) (58,426) $ 33.03 Forfeited (2,935) $ 40.70 Balance, September 30, 2017 109,100 $ 41.71 (a) Pursuant to the terms of the 2013 Incentive Plan, RSUs withheld by the Company for the payment of the employee's tax withholding related to an RSU vesting are added back to the pool of shares available for future awards. At September 30, 2017, there was $3,001,000 of total unrecognized time-based RSU expense, all of which is related to unvested awards. This compensation expense is expected to be recognized over the weighted-average remaining vesting period of 1.63 years for time-based restricted stock units. Performance-based Restricted Stock Units Performance-based RSUs granted under the 2013 Incentive Plan are stock-based awards in which the number of shares ultimately received depends on the Company’s achievement of a specified revenue as well as the Company’s total shareholder return (“TSR”) relative to the TSR of all companies in the S&P SmallCap 600 Index over a three year performance period. The number of shares that could be issued range from 0% to 150% of the participant’s target award. Performance-based RSUs are valued on the date of grant using a Monte Carlo simulation for the TSR element of the award. The Company’s expense will be adjusted based on the estimated achievement of revenue versus target. Earned performance-based RSUs cliff-vest at the end of the three year performance period. Compensation expense is recognized over the vesting period based on the Company’s estimated performance. The following table summarizes equity-based compensation activity related to performance-based RSUs as of and for the nine months ended September 30, 2017: Performance-based restricted stock units Weighted average grant date fair value per share Balance, January 1, 2017 — $ — Granted (a) 33,961 $ 57.88 Forfeited (1,155) $ 57.88 Balance, September 30, 2017 32,806 $ 57.88 (a) Represents the total participant target award. At September 30, 2017, there was $1,060,000 of total unrecognized performance-based RSU expense, all of which is related to unvested awards. This compensation expense is expected to be recognized over the weighted-average remaining vesting period of 2.25 years for performance-based RSUs. After giving effect to all outstanding awards (assuming maximum achievement of performance goals for performance-based awards), there were 2,396,156 additional shares available for the Company to grant under the 2013 Incentive Plan as of September 30, 2017. |
Leadership Changes
Leadership Changes | 9 Months Ended |
Sep. 30, 2017 | |
Leadership Changes | |
Leadership Changes | 12. Leadership Changes On January 7, 2016, the Company’s former Chief Financial Officer and Chief Operating Officer entered into a separation and transition agreement (the “Separation and Transition Agreement”) pursuant to which he separated from the Company effective March 31, 2016. The Company incurred a total cost of $1,043,000, including $331,000 of equity-based compensation expense, which was recorded to “Selling, operating and administrative expenses” in the accompanying Condensed Consolidated Statements of Income during the nine months ended September 30, 2016. There were no such expenses incurred during the nine months ended September 30, 2017. On December 31, 2014, the Company’s former Chief Executive Officer retired and pursuant to the terms of the Separation and Release of Claims Agreement (the “Separation Agreement”), the Company is required to provide severance and other related benefits over a 36-month period. The Company recorded a liability, measured at its estimated fair value, for payments that will be made under the Separation Agreement, with a corresponding charge to “Selling, general and administrative expenses.” The Company incurred a total cost of $3,581,000, including $1,007,000 of equity-based compensation expense related to this retirement in 2014. The following table presents a rollforward of the estimated fair value liability for the period from January 1, 2017 to September 30, 2017 established for the aforementioned leadership changes (in thousands): Balance, January 1, 2017 $ 964 Accretion 17 Cash payments (783) Balance, September 30, 2017 $ 198 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies | |
Commitments and Contingencies | 13. Commitments and Contingencies Commitments The Company leases offices and equipment under noncancelable leases, subject to certain provisions for renewal options and escalation clauses. On August 16, 2017, the Company entered into a sublease agreement for certain office space at its corporate headquarters where the Company’s expected costs related to the subleased space, including lease payments the Company will make to its lessor, exceed the anticipated revenue, and as a result, the Company recorded a loss of $3,725,000 during the three and nine months ended September 30, 2017. On September 11, 2017, the Company amended an existing sublease agreement for certain office space at its corporate headquarters. The existing liability was reduced, resulting in a net gain of $294,000 during the three and nine months ended September 30, 2017. As of September 30, 2017, the liability related to the aforementioned sublease agreements was included in “Other liabilities, net of current portion” in the accompanying Condensed Consolidated Balance Sheets. Contingencies In connection with the purchase of Full House, as described in Note 5, Acquisitions and Dispositions the Company entered into an arrangement to pay additional purchase consideration based on Motto’s future gross revenues, excluding certain fees, over the next ten years. As of September 30, 2017, this liability was estimated to be $6,650,000. In connection with the sale of the assets and liabilities related to the Company’s previously owned brokerages, the Company entered into three Assignment and Assumption of Lease Agreements (the “Assignment Agreements”) pursuant to which the Company assigned its obligations under and rights, title and interest in 21 leases to the respective purchasers. For certain leases, the Company remains secondarily liable for future lease payments through July 2021 under the respective lease agreements and accordingly, as of September 30, 2017, the Company has outstanding lease guarantees of $4,284,000. This amount represents the maximum potential amount of future payments under the respective lease guarantees. In the event of default by the purchaser, the indemnity and default clauses in the Assignment Agreements govern the Company’s ability to pursue and recover damages incurred, if any, against the purchaser. Litigation The Company is subject to litigation claims arising in the ordinary course of business. The Company believes that it has adequately accrued for legal matters as appropriate. The Company records litigation accruals for legal matters which are both probable and estimable and for related legal costs as incurred. The Company does not reduce these liabilities for potential insurance or third-party recoveries. On October 7, 2013, RE/MAX Holdings acquired the net assets, excluding cash, of Tails for consideration paid of $20,175,000. Following earlier litigation that was dismissed, several shareholders of Tails filed a complaint entitled Robert B. Fisher, Carla L. Fisher, Bradley G. Rhodes and James D. Schwartz v. Gail Liniger, Dave Liniger, Bruce Benham, RE/MAX Holdings, Inc. and Tails Holdco, Inc. in Denver District Court ("Tails II"). On February 13, 2018, the parties signed a formal Settlement Agreement and Mutual General Release resulting in the Company recording a charge of $2,550,000 in “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income during the nine months ended September 30, 2017. On February 27, 2018 the Company received $1,950,000 from its insurance carriers as reimbursement of attorneys’ fees and a portion of the settlement. On February 28, 2018, the Company paid $4,500,000 to satisfy the terms of the Settlement Agreement. As a result of the settlement, the litigation was dismissed with prejudice on March 1, 2018. Management of the Company believes no other such litigation matters involving a reasonably possible chance of loss will not, individually or in the aggregate, result in a material adverse effect on the Company's financial condition, results of operations and cash flows. |
Related-Party Transactions
Related-Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions | |
Related-Party Transactions | 14. Related-Party Transactions The majority stockholders of RIHI, including the Company’s current Chairman and Co-Founder and the Company’s Vice Chair and Co-Founder have made and continue to make a golf course they own available to the Company for business purposes. The Company used the golf course and related facilities for business purposes at minimal charge in both 2017 and 2016. Additionally, the Company recorded expense of $502,000 and $204,000 for the value of the benefits provided to Company personnel for the complimentary use of the golf course during the three months ended September 30, 2017 and 2016, respectively, and $502,000 and $454,000 during the nine months ended September 30, 2017 and 2016, respectively, with an offsetting increase in additional paid in capital. See Note 15, Immaterial Corrections to Prior Period Financial Statements for further discussion regarding the amounts recorded for the three and nine months ended September 30, 2016. The Company provides services, such as accounting, legal, marketing, technology, human resources and public relations services, to certain affiliated entities (primarily the advertising funds), and it allows these companies to share its leased office space. During the three months ended September 30, 2017 and 2016, the total amounts allocated for services rendered and rent for office space provided on behalf of affiliated entities were $930,000 and $507,000, respectively. During the nine months ended September 30, 2017 and 2016, the total amounts allocated for services rendered and rent for office space provided on behalf of affiliated entities were $2,409,000 and $1,459,000, respectively. Amounts are generally paid within 30 days and no amounts were outstanding at September 30, 2017 or December 31, 2016. Related party advertising funds had current outstanding amounts due from the Company of $83,000 and $145,000 as of September 30, 2017 and December 31, 2016, respectively. Such amounts are included in “Accounts payable to affiliates” in the accompanying Condensed Consolidated Balance Sheets. |
Immaterial Corrections to Prior
Immaterial Corrections to Prior Period Financial Statements | 9 Months Ended |
Sep. 30, 2017 | |
Immaterial Corrections to Prior Period Financial Statements | |
Immaterial Corrections to Prior Period Financial Statements | 15. Immaterial Corrections to Prior Period Financial Statements The Company identified certain related party transactions with its controlling stockholder that had not been recognized as expenses in previously issued financial statements, the largest being the complimentary use by Company personnel of a golf facility owned by David and Gail Liniger. The value of these benefits is required to be reflected as an expense in the financial statements with a corresponding increase to additional paid in capital. The Company concluded that the omission of the expense associated with these transactions from prior period financial statements was immaterial to each affected reporting period and therefore amendment of previously filed reports was not required. However, the Company corrected this immaterial error in the prior years included herein. These adjustments resulted in an increase in “Selling, operating, and administrative expenses” with a corresponding decrease in “Net Income” in the Condensed Consolidated Statements of Income of $214,000 and $467,000 for the three and nine months ended September 30, 2016, respectively. In addition, these adjustments resulted in an increase to “Additional paid-in capital” of $1,712,000, a decrease to “Retained earnings” of $803,000 and a decrease to “Non-controlling interest” of $909,000 in the Condensed Consolidated Balance Sheets as of December 31, 2016. This adjustment to “Additional paid-in capital” in the Consolidated Balance Sheets includes adjustments of $584,000, $575,000 and $553,000 for the years ended December 31, 2016, 2015 and 2014, respectively. |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated balance sheet at December 31, 2016, which was derived from the audited consolidated financial statements at that date, and the unaudited interim condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and with Article 10 of Regulation S-X. In compliance with those instructions, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying condensed consolidated financial statements are presented on a consolidated basis and include the accounts of RE/MAX Holdings and its consolidated subsidiaries. All significant intercompany accounts and transactions have been eliminated. In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal and recurring adjustments necessary to present fairly the Company’s financial position as of September 30, 2017 and December 31, 2016, the results of its operations and comprehensive income for the three and nine months ended September 30, 2017 and 2016, cash flows for the nine months ended September 30, 2017 and 2016, and changes in its stockholders’ equity for the nine months ended September 30, 2017. Interim results may not be indicative of full year performance. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements within the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. During 2016, the Company completed the acquisitions of six independent regions. Their results of operations, cash flows and financial positions are included in the consolidated financial statements from their respective dates of acquisition. See Note 5, Acquisitions and Dispositions for additional information. |
Reclassifications | Reclassifications Certain items in the accompanying condensed consolidated financial statements as of December 31, 2016 have been reclassified to conform to the current year’s presentation. These reclassifications did not affect the Company’s consolidated results of operations. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Principles of Consolidation | Principles of Consolidation As of September 30, 2017, RE/MAX Holdings owns 58.49% of the common membership units in RMCO and, as its managing member, RE/MAX Holdings controls RMCO’s operations, management and activities. As a result, RE/MAX Holdings consolidates RMCO and records a non-controlling interest in the accompanying Condensed Consolidated Balance Sheets and records net income attributable to the non-controlling interest and comprehensive income attributable to the non-controlling interest in the accompanying Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income, respectively. |
Non-controlling Interest (Table
Non-controlling Interest (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Noncontrolling Interest | |
Summary of Ownership of the Common Units | September 30, December 31, 2017 2016 Shares Ownership % Shares Ownership % Non-controlling unitholders ownership of common units in RMCO 12,559,600 41.51 % 12,559,600 41.57 % RE/MAX Holdings, Inc. outstanding Class A common stock (equal to RE/MAX Holdings, Inc. common units in RMCO) 17,696,991 58.49 % 17,652,548 58.43 % Total common units in RMCO 30,256,591 100.00 % 30,212,148 100.00 % |
Reconciliation from Income Before Provision for Income Taxes to Net Income | A reconciliation of “Income before provision for income taxes” to “Net Income attributable to RE/MAX Holdings, Inc.” and “Net Income attributable to non-controlling interest” in the accompanying Condensed Consolidated Statements of Income for the periods indicated is detailed as follows (in thousands, except for percentages): Three Months Ended September 30, 2017 2016 RE/MAX Holdings, Inc. Non-controlling interest Total RE/MAX Holdings, Inc. Non-controlling interest Total Weighted average ownership percentage of RMCO (a) 58.49 % 41.51 % 100.00 % % 41.58 % 100.00 % Income before provision for income taxes $ 6,180 $ 4,448 $ 10,628 $ 11,025 $ 7,913 $ 18,938 Provision for income taxes (b)(c) (2,345) (746) (3,091) (4,239) (393) (4,632) Net income $ 3,835 $ 3,702 $ 7,537 $ 6,786 $ 7,520 $ 14,306 Nine Months Ended September 30, 2017 2016 RE/MAX Holdings, Inc. Non-controlling interest Total RE/MAX Holdings, Inc. Non-controlling interest Total Weighted average ownership percentage of RMCO (a) 58.47 % 41.53 % 100.00 % % 41.61 % 100.00 % Income before provision for income taxes $ 25,763 $ 18,365 $ 44,128 $ 29,742 $ 21,263 $ 51,005 Provision for income taxes (b)(c) (9,486) (1,397) (10,883) (11,203) (973) (12,176) Net income $ 16,277 $ 16,968 $ 33,245 $ 18,539 $ 20,290 $ 38,829 (a) The weighted average ownership percentage of RMCO differs slightly from the allocation of income before provision for income taxes between RE/MAX Holdings and the non-controlling interest as there are certain relatively insignificant expenses recorded at RE/MAX Holdings. (b) The provision for income taxes attributable to RE/MAX Holdings is primarily comprised of U.S. federal and state income taxes on its proportionate share of the pass-through income from RMCO. However, it also includes its share of taxes imposed directly on RE/MAX, LLC and its consolidated subsidiaries (“RE/MAX, LLC”), a wholly-owned subsidiary of RMCO, related primarily to tax liabilities in certain foreign jurisdictions. (c) The provision for income taxes attributable to the non-controlling interest represents its share of taxes imposed on RE/MAX, LLC related primarily to tax liabilities in certain foreign jurisdictions. |
Distributions Paid or Payable | The distributions paid or payable to or on behalf of non-controlling unitholders are summarized as follows (in thousands): Nine Months Ended September 30, 2017 2016 Tax and other distributions $ 7,430 $ 8,442 Dividend distributions 6,783 5,652 Total distributions to non-controlling unitholders $ 14,213 $ 14,094 |
Earnings Per Share and Divide26
Earnings Per Share and Dividends (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share and Dividends | |
Reconciliation of Numerator and Denominator used in Basic and Diluted EPS Calculations | The following is a reconciliation of the numerator and denominator used in the basic and diluted EPS calculations (in thousands, except share and per share information): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Numerator Net income attributable to RE/MAX Holdings, Inc. $ 3,835 $ 6,786 $ 16,277 $ 18,539 Denominator for basic net income per share of Class A common stock Weighted average shares of Class A common stock outstanding 17,696,991 17,645,696 17,685,683 17,622,298 Denominator for diluted net income per share of Class A common stock Weighted average shares of Class A common stock outstanding 17,696,991 17,645,696 17,685,683 17,622,298 Add dilutive effect of the following: Stock options — — — 6,714 Restricted stock units 40,795 45,945 40,764 37,728 Weighted average shares of Class A common stock outstanding, diluted 17,737,786 17,691,641 17,726,447 17,666,740 Earnings per share of Class A common stock Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, basic $ 0.22 $ 0.38 $ 0.92 $ 1.05 Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, diluted $ 0.22 $ 0.38 $ 0.92 $ 1.05 |
Schedule of Dividends Declared and Paid Quarterly per Share | Dividends declared and paid quarterly per share on all outstanding shares of Class A common stock were as follows (in thousands, except share and per share information): Nine Months Ended September 30, 2017 2016 Date paid Per share Amount paid to Class A stockholders Amount paid to non-controlling unitholders Date paid Per share Amount paid to Class A stockholders Amount paid to non-controlling unitholders Dividend declared during quarter ended: March 31 March 22, 2017 $ $ 3,184 $ 2,261 March 23, 2016 $ $ 2,638 $ 1,884 June 30 May 31, 2017 3,185 2,261 June 2, 2016 2,647 1,884 September 30 August 30, 2017 3,185 2,261 August 31, 2016 2,647 1,884 $ $ 9,554 $ 6,783 $ $ 7,932 $ 5,652 |
Acquisitions and Dispositions (
Acquisitions and Dispositions (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Business Acquisition [Line Items] | |
Summary of Estimated Fair Value of Assets at Acquisition Date | The following table summarizes the allocation of the purchase price to the fair value of assets acquired and liabilities assumed for the aforementioned acquisitions (in thousands): RE/MAX Regional Services RE/MAX of New Jersey Full House RE/MAX of Alaska RE/MAX of New York Total Cash and cash equivalents $ - $ 335 $ - $ - $ 131 $ 466 Franchise agreements 30,700 29,700 - 529 5,000 65,929 Non-compete agreement - - 2,500 - - 2,500 Other assets - - - - 340 340 Goodwill 19,700 15,300 11,800 971 3,029 50,800 Other liabilities - (335) - - - (335) Total purchase price $ 50,400 $ 45,000 $ 14,300 $ 1,500 $ 8,500 $ 119,700 |
Summary of Unaudited Pro Forma Information | This unaudited pro forma information should not be relied upon as necessarily being indicative of the historical results that would have been obtained if the acquisitions had actually occurred on that date, nor of the results that may be obtained in the future (in thousands, except per share information). Three Months Ended Nine Months Ended September 30, 2016 September 30, 2016 Total revenue $ 48,781 $ 141,073 Net income attributable to RE/MAX Holdings, Inc. (a) $ 7,090 $ 18,165 Basic earnings per common share $ 0.40 $ 1.03 Diluted earnings per common share $ 0.40 $ 1.03 (a) Nine months ended September 30, 2016 includes the net impact of $ 1,000,000 in professional fees and debt extinguishment costs incurred related to the amendment of the Company’s credit facility. See Note 8, Debt for a discussion of the credit facility. |
Full House Mortgage Connection, Inc. | |
Business Acquisition [Line Items] | |
Consideration Transferred | The following table summarizes the consideration at acquisition (in thousands): Cash consideration $ 8,000 Contingent purchase consideration (See note 9) 6,300 Total purchase price $ 14,300 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Intangible Assets and Goodwill | |
Schedule of components of intangible assets | The following table provides the components of the Company’s intangible assets, other than goodwill (in thousands, except weighted average amortization period in years): Weighted Average As of September 30, 2017 As of December 31, 2016 Amortization Initial Accumulated Net Initial Accumulated Net Period Cost Amortization Balance Cost Amortization Balance Franchise agreements 12.1 $ 197,977 $ (98,343) $ 99,634 $ 224,167 $ (115,027) $ 109,140 Other intangible assets: Software (a) 4.5 $ 13,902 $ (8,177) $ 5,725 $ 13,207 $ (7,154) $ 6,053 Trademarks 14.1 3,153 (1,921) 1,232 3,102 (1,782) 1,320 Non-compete 10.0 2,500 (250) 2,250 2,500 (62) 2,438 Total other intangible assets 7.6 $ 19,555 $ (10,348) $ 9,207 $ 18,809 $ (8,998) $ 9,811 (a) As of September 30, 2017 and December 31, 2016, capitalized software development costs of $782,000 and $ 356,000 , respectively, were information technology infrastructure projects not yet complete and ready for their intended use and thus were not subject to amortization. |
Schedule of estimated future amortization of intangible assets, other than goodwill | As of September 30, 2017, the estimated future amortization expense for the next five years related to intangible assets is as follows (in thousands): As of September 30, 2017: Remainder of 2017 $ 4,031 2018 15,685 2019 15,522 2020 15,293 2021 14,786 $ 65,317 |
Schedule of changes to goodwill | The following table presents changes to goodwill for the period from January 1, 2017 to September 30, 2017 (in thousands): Balance, January 1, 2017 $ 126,633 Change in purchase price allocations for 2016 acquisitions (3,865) Effect of changes in foreign currency exchange rates 245 Balance, September 30, 2017 $ 123,013 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accrued Liabilities. | |
Schedule of Accrued Liabilities | Accrued liabilities consist of the following (in thousands): September 30, December 31, 2017 2016 Accrued payroll and related employee costs $ 5,205 $ 7,035 Accrued taxes 1,219 1,554 Accrued professional fees 1,894 1,382 Other (a) 6,984 3,297 $ 15,302 $ 13,268 Other accrued liabilities include a $4,500,000 payable in connection with the February 13, 2018 settlement resulting from the litigation matter concerning the Company’s 2013 acquisition of the net assets of Tails, Inc. (“Tails”), as discussed in Note 13, Commitments and Contingencies. |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt | |
Schedule of debt | Debt, net of current portion, consists of the following (in thousands): September 30, December 31, 2017 2016 2016 Senior Secured Credit Facility $ 232,650 $ 234,412 Less unamortized debt issuance costs (1,854) (2,076) Less unamortized debt discount costs (1,352) (1,516) Less current portion (2,350) (2,350) $ 227,094 $ 228,470 |
Schedule of Maturities of Debt | Maturities of debt are as follows (in thousands): As of September 30, 2017: Remainder of 2017 $ 588 2018 2,350 2019 2,350 2020 2,350 2021 2,350 Thereafter 222,662 $ 232,650 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Measurements | |
Liabilities Measured at Fair Value on a Recurring Basis | A summary of the Company’s liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 is as follows (in thousands): As of September 30, 2017 As of December 31, 2016 Fair Value Level 1 Level 2 Level 3 Fair Value Level 1 Level 2 Level 3 Liabilities Contingent consideration $ 6,650 $ - $ - $ 6,650 $ 6,400 $ - $ - $ 6,400 |
Reconciliation of Assets And Liabilities Measured Using Significant Unobservable Inputs | The table below presents a reconciliation of all assets and liabilities of the Company measured at fair value on a recurring basis using significant unobservable inputs for the period from January 1, 2017 to September 30, 2017 (in thousands): Fair Value of Contingent Consideration Liability Balance at January 1, 2017 $ 6,400 Fair value adjustments 250 Balance at September 30, 2017 $ 6,650 |
Summary of carrying value and fair value of senior secured credit facility | The following table summarizes the carrying value and fair value of the 2016 Senior Secured Credit Facility as of September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, 2017 2016 Carrying Amount Fair Value Level 2 Carrying Amount Fair Value Level 2 Senior Secured Credit Facility $ 229,444 $ 233,522 $ 230,820 $ 233,240 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Employee Stock-Based Compensation Expense | Employee stock-based compensation expense under the Company’s 2013 Incentive Plan was as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Expense from Time-based RSUs $ 750 $ 501 $ 1,892 $ 1,812 Expense from Performance-based RSUs 118 - 269 - Equity-based compensation expense 868 501 2,161 1,812 Tax benefit from equity-based compensation (191) (110) (475) (398) Excess tax benefit from equity-based compensation - - (324) (201) Net compensation cost $ 677 $ 391 $ 1,362 $ 1,213 |
Time-based Restricted Stock Units | |
Restricted Stock Units | Time-based restricted stock units Weighted average grant date fair value per share Balance, January 1, 2017 127,011 $ 33.00 Granted 43,450 $ 55.45 Shares vested (including tax withholding) (a) (58,426) $ 33.03 Forfeited (2,935) $ 40.70 Balance, September 30, 2017 109,100 $ 41.71 (a) Pursuant to the terms of the 2013 Incentive Plan, RSUs withheld by the Company for the payment of the employee's tax withholding related to an RSU vesting are added back to the pool of shares available for future awards. |
Performance-based Restricted Stock Units | |
Restricted Stock Units | Performance-based restricted stock units Weighted average grant date fair value per share Balance, January 1, 2017 — $ — Granted (a) 33,961 $ 57.88 Forfeited (1,155) $ 57.88 Balance, September 30, 2017 32,806 $ 57.88 (a) Represents the total participant target award. |
Leadership Changes and Restruct
Leadership Changes and Restructuring Activities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Leadership Changes | |
Rollforward of Estimated Fair Value Liability Established for the Aforementioned Leadership Changes And Restructuring Activities | The following table presents a rollforward of the estimated fair value liability for the period from January 1, 2017 to September 30, 2017 established for the aforementioned leadership changes (in thousands): Balance, January 1, 2017 $ 964 Accretion 17 Cash payments (783) Balance, September 30, 2017 $ 198 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Event [Line Items] | |
Summary of Estimated Fair Value of Assets at Acquisition Date | The following table summarizes the allocation of the purchase price to the fair value of assets acquired and liabilities assumed for the aforementioned acquisitions (in thousands): RE/MAX Regional Services RE/MAX of New Jersey Full House RE/MAX of Alaska RE/MAX of New York Total Cash and cash equivalents $ - $ 335 $ - $ - $ 131 $ 466 Franchise agreements 30,700 29,700 - 529 5,000 65,929 Non-compete agreement - - 2,500 - - 2,500 Other assets - - - - 340 340 Goodwill 19,700 15,300 11,800 971 3,029 50,800 Other liabilities - (335) - - - (335) Total purchase price $ 50,400 $ 45,000 $ 14,300 $ 1,500 $ 8,500 $ 119,700 |
Re/Max Of Northern Illinois Inc. | |
Subsequent Event [Line Items] | |
Summary of Estimated Fair Value of Assets at Acquisition Date | The following table summarizes the preliminary allocation of the purchase price to the fair value of assets acquired and liabilities assumed for RE/MAX of Northern Illinois (in thousands): Franchise agreements $ 23,500 Goodwill 12,220 Total purchase price $ 35,720 |
Business and Organization (Deta
Business and Organization (Details) | 9 Months Ended | |
Sep. 30, 2017segmentcountryOfficeitem | Dec. 31, 2016 | |
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Number of agents | item | 115,000 | |
Number of offices | Office | 7,000 | |
Number of countries in which entity operates | country | 100 | |
Percentage of Company consisting of franchises | 100.00% | |
Number Of Reportable Segments | segment | 1 | |
RMCO, LLC | ||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Parent economic interest in RMCO (as a percent) | 58.49% | 58.43% |
Non-controlling unitholders ownership of common units in RMCO as a percentage | 41.51% | 41.57% |
RIHI | RMCO, LLC | ||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Non-controlling unitholders ownership of common units in RMCO as a percentage | 41.51% |
Summary of Significant Accoun36
Summary of Significant Accounting Policies (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017USD ($) | Dec. 31, 2016region | |
Significant Accounting Policies [Line Items] | ||
Number of independent regions acquired | region | 6 | |
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ | $ 6,300,000 | |
RMCO, LLC | ||
Significant Accounting Policies [Line Items] | ||
Parent economic interest in RMCO (as a percent) | 58.49% | 58.43% |
Summary of Significant Accoun37
Summary of Significant Accounting Policies - Revenue From Contracts With Customers (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2017 | Jan. 01, 2018 | Dec. 31, 2016 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||||
Franchise Revenue | $ 5,611,000 | $ 5,783,000 | $ 19,065,000 | $ 19,704,000 | ||||
Operating Income Loss | 12,808,000 | $ 21,142,000 | 51,058,000 | $ 57,447,000 | ||||
Assets | $ 448,086,000 | $ 448,086,000 | $ 437,153,000 | |||||
Accounting Standards Update 2014-09 | Scenario, Forecast | ||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||||
Contract with Customer, Asset, Net | $ 4,000,000 | |||||||
Accounting Standards Update 2014-09 | Scenario, Forecast | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | ||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||||
Increase (Decrease) in Deferred Revenue and Customer Advances and Deposits | $ (26,000,000) | |||||||
Maximum | Accounting Standards Update 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | ||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||||
Franchise Revenue | $ (2,000,000) | |||||||
Operating Income Loss | $ (2,000,000) |
Non-controlling Interest - Owne
Non-controlling Interest - Ownership of common units in RMCO (Details) - RMCO, LLC - shares | Sep. 30, 2017 | Dec. 31, 2016 |
Shares [Abstract] | ||
Non-controlling unitholders ownership of common units in RMCO | 12,559,600 | 12,559,600 |
RE/MAX Holdings, Inc. outstanding Class A common stock (equal to RE/MAX Holdings, Inc. common units | 17,696,991 | 17,652,548 |
Total number of common stock units | 30,256,591 | 30,212,148 |
Ownership Percentage [Abstract] | ||
Non-controlling unitholders ownership of common units in RMCO as a percentage | 41.51% | 41.57% |
RE/MAX Holdings, Inc. outstanding Class A common stock (equal to RE/MAX Holdings, Inc. common units | 58.49% | 58.43% |
Total percentage of common stock units | 100.00% | 100.00% |
Non-controlling Interest - Net
Non-controlling Interest - Net income reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Noncontrolling Interest | ||||
Weighted average ownership percentage of controlling interest | 58.49% | 58.42% | 58.47% | 58.39% |
Weighted average ownership percentage of noncontrolling interest | 41.51% | 41.58% | 41.53% | 41.61% |
Total (as a percentage) | 100.00% | 100.00% | 100.00% | 100.00% |
Income before provision for income taxes attributable to RE/MAX Holdings, Inc. | $ 6,180 | $ 11,025 | $ 25,763 | $ 29,742 |
Provision for income taxes attributable to RE/MAX Holdings, Inc. | (2,345) | (4,239) | (9,486) | (11,203) |
Net income attributable to RE/MAX Holdings, Inc. | 3,835 | 6,786 | 16,277 | 18,539 |
Income before provision for income taxes: Non-controlling interest | 4,448 | 7,913 | 18,365 | 21,263 |
Provision for income taxes: Non-controlling interest | (746) | (393) | (1,397) | (973) |
Net income: Non-controlling interest | 3,702 | 7,520 | 16,968 | 20,290 |
Income before provision for income taxes | 10,628 | 18,938 | 44,128 | 51,005 |
Provision for income taxes | (3,091) | (4,632) | (10,883) | (12,176) |
Net income | $ 7,537 | $ 14,306 | $ 33,245 | $ 38,829 |
Non-controlling Interest - Dist
Non-controlling Interest - Distributions Paid or Payable (Details) - USD ($) | Feb. 21, 2018 | Nov. 01, 2017 | Sep. 30, 2017 | Sep. 30, 2016 |
Dividends Payable [Line Items] | ||||
Distributions paid or payable to or on behalf of non-controlling unitholders | $ 2,512,000 | $ 2,261,000 | $ 14,213,000 | $ 14,094,000 |
Tax and other distributions | ||||
Dividends Payable [Line Items] | ||||
Distributions paid or payable to or on behalf of non-controlling unitholders | 7,430,000 | 8,442,000 | ||
Dividend distributions | ||||
Dividends Payable [Line Items] | ||||
Distributions paid or payable to or on behalf of non-controlling unitholders | $ 6,783,000 | $ 5,652,000 |
Non-controlling Interest - Narr
Non-controlling Interest - Narrative (Details) - USD ($) | Jan. 01, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 |
Significant Accounting Policies [Line Items] | ||||||
Percentage of cash savings in federal, state and local taxes to be paid in cash under tax receivable agreements | 85.00% | |||||
Current portion of payable pursuant to tax receivable agreements | $ 6,135,000 | $ 13,235,000 | ||||
Amounts paid pursuant to Tax Receivable Agreements (TRAs) | 7,296,000 | $ 1,344,000 | ||||
Statutory federal rate (as a percent) | 35.00% | |||||
Provision for income taxes | $ 40,900,000 | |||||
Benefit as a result of reduction in TRA Liability | 32,700,000 | |||||
Net effect on net income | $ 8,200,000 | |||||
Scenario, Forecast | ||||||
Significant Accounting Policies [Line Items] | ||||||
Statutory federal rate (as a percent) | 21.00% | |||||
RIHI | ||||||
Significant Accounting Policies [Line Items] | ||||||
Liability representing the payments due pursuant to tax receivable agreements | 91,985,000 | |||||
Current portion of payable pursuant to tax receivable agreements | $ 6,135,000 |
Earnings Per Share and Divide42
Earnings Per Share and Dividends - Reconciliation of the numerator and denominator used in basic and diluted EPS calculations (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Numerator | |||||
Net income attributable to RE/MAX Holdings, Inc. | $ 3,835 | $ 6,786 | $ 16,277 | $ 18,539 | |
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock | |||||
Anti-dilutive shares | 0 | 0 | 0 | 0 | |
Common Class A | |||||
Denominator for basic net income per share of common stock | |||||
Weighted average shares of Class A common stock outstanding | 17,696,991 | 17,645,696 | 17,685,683 | 17,622,298 | |
Denominator for diluted net income per share of common stock | |||||
Weighted average shares of Class A common stock outstanding | 17,696,991 | 17,645,696 | 17,685,683 | 17,622,298 | |
Add dilutive effect of the following: | |||||
Weighted average shares of Class A common stock outstanding, diluted | 17,737,786 | 17,691,641 | 17,726,447 | 17,666,740 | |
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock | |||||
Basic | $ 0.22 | $ 0.38 | $ 0.92 | $ 1.05 | |
Diluted | $ 0.22 | $ 0.38 | $ 0.92 | $ 1.05 | |
Share Outstanding Abstract | |||||
Common stock, shares outstanding | 17,696,991 | 17,696,991 | 17,652,548 | ||
Common Class B | |||||
Share Outstanding Abstract | |||||
Common stock, shares outstanding | 1 | 1 | 1 | ||
Employee Stock Option | Common Class A | |||||
Add dilutive effect of the following: | |||||
Dilutive effect | 6,714 | ||||
Restricted Stock Units (RSUs) | Common Class A | |||||
Add dilutive effect of the following: | |||||
Dilutive effect | 40,795 | 45,945 | 40,764 | 37,728 |
Earnings Per Share and Divide43
Earnings Per Share and Dividends - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | Feb. 21, 2018 | Nov. 01, 2017 | Aug. 30, 2017 | May 31, 2017 | Mar. 22, 2017 | Aug. 31, 2016 | Jun. 02, 2016 | Mar. 23, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 |
Dividends Payable [Line Items] | ||||||||||||
Cash dividends declared per share of Class A common stock | $ 0.18 | $ 0.18 | $ 0.18 | $ 0.15 | $ 0.15 | $ 0.15 | $ 0.54 | $ 0.45 | ||||
Dividends declared and paid | $ 9,554 | |||||||||||
Common Class A | ||||||||||||
Dividends Payable [Line Items] | ||||||||||||
Cash dividends declared per share of Class A common stock | $ 0.18 | $ 0.15 | $ 0.54 | $ 0.45 | ||||||||
Dividends declared and paid | $ 3,185 | $ 3,185 | $ 3,184 | $ 2,647 | $ 2,647 | $ 2,638 | $ 9,554 | $ 7,932 | ||||
Quarterly dividend | Common Class A | ||||||||||||
Dividends Payable [Line Items] | ||||||||||||
Cash dividends declared per share of Class A common stock | $ 0.20 | $ 0.18 | ||||||||||
Non-controlling interest | ||||||||||||
Dividends Payable [Line Items] | ||||||||||||
Distributions declared to non-controlling unitholders | $ 2,261 | $ 2,261 | $ 2,261 | $ 1,884 | $ 1,884 | $ 1,884 | $ 6,783 | $ 5,652 |
Acquisitions and Dispositions -
Acquisitions and Dispositions - Acquisitions (Details) - USD ($) | Nov. 15, 2017 | Dec. 15, 2016 | Dec. 01, 2016 | Sep. 12, 2016 | Apr. 01, 2016 | Feb. 22, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Purchase Price Allocation | |||||||||||
Goodwill | $ 123,013,000 | $ 123,013,000 | $ 126,633,000 | ||||||||
Finalized accounting goodwill | |||||||||||
Decrease in goodwill | (3,865,000) | ||||||||||
Pro Forma Information | |||||||||||
Total revenue | $ 48,781,000 | $ 141,073,000 | |||||||||
Net income attributable to RE/MAX Holdings, Inc. | $ 7,090,000 | $ 18,165,000 | |||||||||
Basic earnings per common share | $ 0.40 | $ 1.03 | |||||||||
Diluted earnings per common share | $ 0.40 | $ 1.03 | |||||||||
Professional fees and debt extinguishment costs related to amendment of credit facility | $ 1,000,000 | ||||||||||
RE/MAX Regional Services | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Cash consideration | $ 50,400,000 | ||||||||||
Purchase Price Allocation | |||||||||||
Franchise agreements | 30,700,000 | ||||||||||
Goodwill | 19,700,000 | ||||||||||
Total purchase price | $ 50,400,000 | ||||||||||
RE/MAX of New Jersey | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Cash consideration | $ 45,000,000 | ||||||||||
Purchase Price Allocation | |||||||||||
Cash and cash equivalents | 335,000 | ||||||||||
Franchise agreements | 29,700,000 | ||||||||||
Goodwill | 15,300,000 | ||||||||||
Other liabilities | (335,000) | ||||||||||
Total purchase price | $ 45,000,000 | ||||||||||
Reduction in depreciation and amortization | 765,000 | 765,000 | |||||||||
Re Max Regional Services And Re Max Of New Jersey Inc [Member] | |||||||||||
Purchase Price Allocation | |||||||||||
Reduction in depreciation and amortization | 765,000 | ||||||||||
Finalized accounting goodwill | |||||||||||
Decrease in goodwill | (4,200,000) | ||||||||||
Finalized accounting franchise agreements | |||||||||||
Increase in franchise agreements | 4,200,000 | ||||||||||
Full House Mortgage Connection, Inc. | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Cash consideration | $ 8,000,000 | ||||||||||
Purchase Price Allocation | |||||||||||
Non-compete agreement | 2,500,000 | ||||||||||
Goodwill | 11,800,000 | ||||||||||
Total purchase price | 14,300,000 | ||||||||||
Contingent consideration liability | $ 6,300,000 | ||||||||||
RE/MAX of Alaska, Inc. | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Cash consideration | $ 1,500,000 | ||||||||||
Purchase Price Allocation | |||||||||||
Franchise agreements | 529,000 | ||||||||||
Goodwill | 971,000 | ||||||||||
Total purchase price | $ 1,500,000 | ||||||||||
Re/Max of New York, Inc. | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Cash consideration | $ 8,500,000 | ||||||||||
Purchase Price Allocation | |||||||||||
Cash and cash equivalents | 131,000 | ||||||||||
Franchise agreements | 5,000,000 | ||||||||||
Other assets | 340,000 | ||||||||||
Goodwill | 3,029,000 | ||||||||||
Total purchase price | $ 8,500,000 | ||||||||||
Re/Max Of Georgia, Re/Max Of Kentucky And Tennessee, Re/Max Of Southern Ohio, Re/Max Of New Jersey, Full House, Re/Max Of New York And Re/Max Of Alaska | |||||||||||
Purchase Price Allocation | |||||||||||
Cash and cash equivalents | 466,000 | 466,000 | |||||||||
Franchise agreements | 65,929,000 | 65,929,000 | |||||||||
Non-compete agreement | 2,500,000 | 2,500,000 | |||||||||
Other assets | 340,000 | 340,000 | |||||||||
Goodwill | 50,800,000 | 50,800,000 | |||||||||
Other liabilities | (335,000) | (335,000) | |||||||||
Total purchase price | $ 119,700,000 | $ 119,700,000 | |||||||||
Re/Max Of Northern Illinois Inc. | Subsequent Event | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Cash consideration | $ 35,720,000 | ||||||||||
Purchase Price Allocation | |||||||||||
Franchise agreements | 23,500,000 | ||||||||||
Goodwill | 12,220,000 | ||||||||||
Total purchase price | $ 35,720,000 |
Acquisitions and Dispositions45
Acquisitions and Dispositions - Dispositions (Details) | Jan. 20, 2016facility | Dec. 31, 2015facility | Sep. 30, 2017USD ($) | Mar. 31, 2016USD ($) |
RE/MAX Northwest Realtors | ||||
Summary of dispositions | ||||
Number of brokerages having assets and liabilities sold | facility | 3 | |||
Loss on sale or disposition of assets, net | $ | $ (90,000) | |||
RE/MAX Equity Group | ||||
Summary of dispositions | ||||
Number of brokerages having assets and liabilities sold | facility | 12 | |||
Gain Loss On Sale Or Disposition Of Assets Net [Member] | RE/MAX Equity Group | ||||
Summary of dispositions | ||||
Loss on sale or disposition of assets, net | $ | $ (463,000) |
Intangible Assets and Goodwil46
Intangible Assets and Goodwill - Components of Company's Intangible Assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Finite Lived Intangible Assets [Line Items] | |||||
Net Balance | $ 99,634,000 | $ 99,634,000 | $ 109,140,000 | ||
Amortization expense | 4,066,000 | $ 3,666,000 | 15,055,000 | $ 10,836,000 | |
RE/MAX of New Jersey | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Reduction in depreciation and amortization | 765,000 | 765,000 | |||
Franchise agreements | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Initial Cost | 197,977,000 | 197,977,000 | 224,167,000 | ||
Accumulated Amortization | (98,343,000) | (98,343,000) | (115,027,000) | ||
Net Balance | 99,634,000 | $ 99,634,000 | 109,140,000 | ||
Franchise agreements | Weighted Average | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Useful life of intangible assets | 12 years 1 month 6 days | ||||
Other Intangible Assets | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Initial Cost | 19,555,000 | $ 19,555,000 | 18,809,000 | ||
Accumulated Amortization | (10,348,000) | (10,348,000) | (8,998,000) | ||
Net Balance | 9,207,000 | $ 9,207,000 | 9,811,000 | ||
Other Intangible Assets | Weighted Average | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Useful life of intangible assets | 7 years 7 months 6 days | ||||
Software and Software Development Costs | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Initial Cost | 13,902,000 | $ 13,902,000 | 13,207,000 | ||
Accumulated Amortization | (8,177,000) | (8,177,000) | (7,154,000) | ||
Net Balance | 5,725,000 | $ 5,725,000 | 6,053,000 | ||
Software and Software Development Costs | Weighted Average | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Useful life of intangible assets | 4 years 6 months | ||||
Trademarks | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Initial Cost | 3,153,000 | $ 3,153,000 | 3,102,000 | ||
Accumulated Amortization | (1,921,000) | (1,921,000) | (1,782,000) | ||
Net Balance | 1,232,000 | $ 1,232,000 | 1,320,000 | ||
Trademarks | Weighted Average | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Useful life of intangible assets | 14 years 1 month 6 days | ||||
Software Development | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Software development costs, not yet completed | 782,000 | $ 782,000 | 356,000 | ||
Non-compete | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Initial Cost | 2,500,000 | 2,500,000 | 2,500,000 | ||
Accumulated Amortization | (250,000) | (250,000) | (62,000) | ||
Net Balance | $ 2,250,000 | $ 2,250,000 | $ 2,438,000 | ||
Non-compete | Weighted Average | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Useful life of intangible assets | 10 years |
Intangible Assets and Goodwil47
Intangible Assets and Goodwill - Estimated Future Amortization of Intangible Assets, Other Than Goodwill (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Finite Lived Intangible Assets Future Amortization Expense Current And Five Succeeding Fiscal Years [Abstract] | |
Remainder of 2017 | $ 4,031 |
2,018 | 15,685 |
2,019 | 15,522 |
2,020 | 15,293 |
2,021 | 14,786 |
Estimated future amortization expense over next five years | $ 65,317 |
Intangible Assets and Goodwil48
Intangible Assets and Goodwill - Schedule of Changes in Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Changes to goodwill | |
Beginning Balance | $ 126,633 |
Change in purchase price allocations for 2016 acquisitions | (3,865) |
Effect of changes in foreign currency exchange rates | 245 |
Ending Balance | $ 123,013 |
Accrued Liabilities - Schedule
Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Accrued Liabilities [Line Items] | |||
Accrued payroll and related employee costs | $ 5,205,000 | $ 7,035,000 | |
Accrued taxes | 1,219,000 | 1,554,000 | |
Accrued professional fees | 1,894,000 | 1,382,000 | |
Other | 6,984,000 | 3,297,000 | |
Accrued liabilities | $ 15,302,000 | $ 13,268,000 | |
Tails Inc. | |||
Accrued Liabilities [Line Items] | |||
Other | $ 4,500,000 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Debt | ||
Senior Secured Credit Facility | $ 232,650 | $ 234,412 |
Less unamortized debt issuance costs | (1,854) | (2,076) |
Less unamortized debt discount | (1,352) | (1,516) |
Less current portion | (2,350) | (2,350) |
Debt, net of current portion | $ 227,094 | $ 228,470 |
Debt - Schedule of Maturities o
Debt - Schedule of Maturities of Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Debt | ||
Remainder of 2017 | $ 588 | |
2,018 | 2,350 | |
2,019 | 2,350 | |
2,020 | 2,350 | |
2,021 | 2,350 | |
Thereafter | 222,662 | |
Senior Secured Credit Facility | $ 232,650 | $ 234,412 |
Debt - Additional Information (
Debt - Additional Information (Details) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 15, 2016USD ($) | |
Debt Instrument [Line Items] | ||||
Loss on early extinguishment of debt | $ 136,000 | |||
2013 Senior Secured Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Excess cash flow payment | $ 12,727,000 | |||
2016 Senior Secured Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, interest rate | 4.08% | |||
Mandatory principal payments | $ 588,000 | |||
Optional prepayment made | 0 | |||
Additional mandatory prepayment if total leverage ratio is not achieved | 0 | |||
Additional mandatory commitment reduction if total leverage ratio is not achieved | $ 0 | |||
2016 Senior Secured Credit Facility | Maximum | ||||
Debt Instrument [Line Items] | ||||
Leverage ratio under debt covenant | 2.75 | |||
2016 Senior Secured Credit Facility | London Interbank Offered Rate (LIBOR) | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 2.75% | |||
2016 Senior Secured Credit Facility | London Interbank Offered Rate (LIBOR) | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.75% | |||
2013 Senior Secured Credit Facility | 2013 Senior Secured Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Loss on early extinguishment of debt | $ 136,000 | |||
Term loan | 2016 Senior Secured Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Notes Payable to Bank | $ 235,000,000 | |||
Revolving loan facility | 2016 Senior Secured Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Credit facility, borrowing capacity | $ 10,000,000 | |||
Revolving loan facility commitment fee on average daily amount of unused portion | 0.50% | |||
Amounts drawn on line of credit | $ 0 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - Full House Mortgage Connection, Inc. - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2017 | Dec. 31, 2016 | Sep. 12, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration liability | $ 6,300 | ||
Percentage of gross revenues to be paid yearly | 8.00% | ||
Contingent consideration period | 10 years | ||
Measured on a recurring basis | Contingent consideration | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration liability | $ 6,650 | $ 6,400 | |
Level 3 | Measured on a recurring basis | Contingent consideration | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration liability | $ 6,650 | $ 6,400 |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of Assets and Liabilities Measured Using Significant Unboservable Inputs (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fair value adjustment | $ (250) |
Full House Mortgage Connection, Inc. | Measured on a recurring basis | Contingent consideration | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Balance at January 1, 2017 | 6,400 |
Balance at September 30, 2017 | 6,650 |
Full House Mortgage Connection, Inc. | Level 3 | Measured on a recurring basis | Contingent consideration | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Balance at January 1, 2017 | 6,400 |
Fair value adjustment | 250 |
Balance at September 30, 2017 | $ 6,650 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Senior Secured Credit Facility (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | ||
Transfer of asset fair value Level 1 to 2 | $ 0 | |
Transfer of liability fair value Level 1 to 2 | 0 | |
Transfer of asset fair value Level 2 to 1 | 0 | |
Transfer of liability fair value Level 2 to 1 | 0 | |
Transfers of assets or liabilities between the fair value measurement levels 3 | 0 | |
Carrying amounts | 2016 Senior Secured Credit Facility | ||
Debt Instrument [Line Items] | ||
Long term debt, carrying amount | 229,444,000 | $ 230,820,000 |
Fair Value, Inputs, Level 2 | Estimated fair value | 2016 Senior Secured Credit Facility | ||
Debt Instrument [Line Items] | ||
Long term debt, fair value | $ 233,522,000 | $ 233,240,000 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Income Taxes | ||
Income taxes payable | $ 401,000 | $ 379,000 |
Uncertain tax positions | $ 0 |
Equity-Based Compensation - (De
Equity-Based Compensation - (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | ||
Employee stock-based compensation expense | |||||
Equity-based compensation expense | $ 868,000 | $ 501,000 | $ 2,161,000 | $ 1,812,000 | |
Tax benefit from share-based compensation | (191,000) | (110,000) | (475,000) | (398,000) | |
Excess tax benefit from share-based compensation | (324,000) | (201,000) | |||
Net compensation cost | $ 677,000 | 391,000 | $ 1,362,000 | 1,213,000 | |
2013 Stock Incentive Plan | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Number of shares authorized | 3,576,466 | 3,576,466 | |||
Restricted Stock Units | |||||
Additional shares available to grant under plan (in shares) | 2,396,156 | 2,396,156 | |||
Time-based Restricted Stock Units | |||||
Employee stock-based compensation expense | |||||
Equity-based compensation expense | $ 750,000 | $ 501,000 | $ 1,892,000 | $ 1,812,000 | |
Restricted Stock Units | |||||
Nonvested at beginning of period | 127,011 | ||||
Granted | 43,450 | ||||
Shares vested (including tax withholding) | [1] | (58,426) | |||
Forfeited | (2,935) | ||||
Nonvested at end of period | 109,100 | 109,100 | |||
Nonvested at beginning of period, Weighted average grant date fair value per share | $ 33 | ||||
Granted, Weighted average grant date fair value per share | 55.45 | ||||
Shares vested (including tax withholding), Weighted average grant date fair value per share | [1] | 33.03 | |||
Forfeited, Weighted average grant date fair value per share | 40.70 | ||||
Nonvested at end of period, Weighted average grant date fair value per share | $ 41.71 | $ 41.71 | |||
Unrecognized compensation cost | $ 3,001,000 | $ 3,001,000 | |||
Period for recognition of RSU compensation expense | 1 year 7 months 17 days | ||||
Time-based Restricted Stock Units | Directors | |||||
Restricted Stock Units | |||||
Vesting Period | 1 year | ||||
Time-based Restricted Stock Units | Employees | |||||
Restricted Stock Units | |||||
Vesting Period | 3 years | ||||
Performance-based Restricted Stock Units | |||||
Employee stock-based compensation expense | |||||
Equity-based compensation expense | $ 118,000 | $ 269,000 | |||
Restricted Stock Units | |||||
Nonvested at beginning of period | 0 | ||||
Granted | [2] | 33,961 | |||
Forfeited | (1,155) | ||||
Nonvested at end of period | 32,806 | 32,806 | |||
Nonvested at beginning of period, Weighted average grant date fair value per share | $ 0 | ||||
Granted, Weighted average grant date fair value per share | [2] | 57.88 | |||
Forfeited, Weighted average grant date fair value per share | 57.88 | ||||
Nonvested at end of period, Weighted average grant date fair value per share | $ 57.88 | $ 57.88 | |||
Period of performance measurement | 3 years | ||||
Unrecognized compensation cost | $ 1,060,000 | $ 1,060,000 | |||
Period for recognition of RSU compensation expense | 2 years 3 months | ||||
Performance-based Restricted Stock Units | Minimum | |||||
Restricted Stock Units | |||||
Shares issued upon participants target award | 0.00% | ||||
Performance-based Restricted Stock Units | Maximum | |||||
Restricted Stock Units | |||||
Shares issued upon participants target award | 150.00% | ||||
[1] | Pursuant to the terms of the 2013 Incentive Plan, RSUs withheld by the Company for the payment of the employee's tax withholding related to an RSU vesting are added back to the pool of shares available for future awards. | ||||
[2] | Represents the total participant target award. |
Leadership Changes and Restru58
Leadership Changes and Restructuring Activities (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2014 | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||||
Equity-based compensation expense | $ 868,000 | $ 501,000 | $ 2,161,000 | $ 1,812,000 | |
Former Chief Financial Officer and Chief Operating Officer | Separation And Transition Agreement | Selling, General and Administrative Expenses [Member] | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||||
Severance and other related expenses | $ 0 | 1,043,000 | |||
Equity-based compensation expense | $ 331,000 | ||||
Former Chief Executive Officer | Separation Agreement | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||||
Severance period | 36 months | ||||
Former Chief Executive Officer | Separation Agreement | Selling, General and Administrative Expenses [Member] | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||||
Equity-based compensation expense | $ 1,007,000 | ||||
Severance liability | $ 3,581,000 |
Leadership Changes and Restru59
Leadership Changes and Restructuring Activities - Rollforward of Estimated Fair Value Liability Established for Total Severance and Other Related Costs (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Leadership Changes | |
Balance, January 1 | $ 964 |
Accretion | 17 |
Cash payments | (783) |
Balance, September 30, 2017 | $ 198 |
Commitments and Contingencies -
Commitments and Contingencies - Contingencies (Details) | Feb. 28, 2018USD ($) | Sep. 12, 2016USD ($) | Oct. 07, 2013leaseagreement | Sep. 30, 2017USD ($) | Sep. 30, 2017USD ($) |
Loss Contingencies [Line Items] | |||||
Loss recorded related to sublease agreement | $ 3,725,000 | $ 3,725,000 | |||
Gain recognized on amendment of sublease agreement | 294,000 | 294,000 | |||
Payment of legal settlement | $ 4,500,000 | ||||
Assignment and Assumption of Lease Agreements | |||||
Loss Contingencies [Line Items] | |||||
Number of leases assigned to purchasers | lease | 21 | ||||
Number of assignment agreements | agreement | 3 | ||||
Outstanding lease guarantees | $ 4,284,000 | $ 4,284,000 | |||
Full House Mortgage Connection, Inc. | |||||
Loss Contingencies [Line Items] | |||||
Contingent consideration period | 10 years | ||||
Contingent consideration liability | $ 6,300,000 |
Commitments and Contingencies61
Commitments and Contingencies - Litigation (Details) - USD ($) | Feb. 28, 2018 | Feb. 27, 2018 | Feb. 13, 2018 | Oct. 07, 2013 |
Loss Contingencies [Line Items] | ||||
Payment of legal settlement | $ 4,500,000 | |||
Amount of reimbursement of fees and portion of settlement. | $ 1,950,000 | |||
Tails Inc. | ||||
Loss Contingencies [Line Items] | ||||
Cash consideration | $ 20,175,000 | |||
Selling, General and Administrative Expenses [Member] | ||||
Loss Contingencies [Line Items] | ||||
Charges on settlement | $ 2,550,000 |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Related party balances and activity | |||||
Expenses recorded for benefits provided by related party | $ 502,000 | $ 204,000 | $ 502,000 | $ 454,000 | |
Accounts payable to affiliates | 83,000 | 83,000 | $ 145,000 | ||
Services rendered and rent for office space provided | |||||
Related party balances and activity | |||||
Amounts allocated for services rendered and rent for office space | 930,000 | $ 507,000 | $ 2,409,000 | $ 1,459,000 | |
Affiliated Entity | Services rendered and rent for office space provided | |||||
Related party balances and activity | |||||
General payment period | 30 days | ||||
Accounts receivable from affiliates | $ 0 | $ 0 | $ 0 |
Immaterial Corrections to Pri63
Immaterial Corrections to Prior Period Financial Statements (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 36 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quantifying Misstatement in Current Year Financial Statements [Line Items] | |||||||
Increase in selling, operating and administrative expenses | $ 31,832,000 | $ 20,539,000 | $ 79,263,000 | $ 62,866,000 | |||
Decrease in net income | (7,537,000) | (14,306,000) | (33,245,000) | (38,829,000) | |||
Increase in additional paid capital | 259,000 | ||||||
Decrease in retained earnings | (22,675,000) | (22,675,000) | $ (16,005,000) | ||||
Decrease in non controlling interest | 400,696,000 | 400,696,000 | 403,983,000 | ||||
Increase in additional paid-in capital | $ 450,317,000 | $ 450,317,000 | 448,713,000 | ||||
Restatement Adjustment | Revision of selling, operating and administrative expense | |||||||
Quantifying Misstatement in Current Year Financial Statements [Line Items] | |||||||
Increase in selling, operating and administrative expenses | 214,000 | 467,000 | |||||
Decrease in net income | $ 214,000 | $ 467,000 | |||||
Increase in additional paid capital | 1,712,000 | ||||||
Decrease in retained earnings | 803,000 | ||||||
Decrease in non controlling interest | 909,000 | ||||||
Increase in additional paid-in capital | $ 584,000 | $ 575,000 | $ 553,000 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Feb. 26, 2018 | Feb. 09, 2018 | Nov. 15, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Purchase Price Allocation | |||||
Goodwill | $ 123,013,000 | $ 126,633,000 | |||
Re/Max Of Northern Illinois Inc. | Subsequent Event | |||||
Purchase Price Allocation | |||||
Franchise agreements | $ 23,500,000 | ||||
Goodwill | 12,220,000 | ||||
Total purchase price | 35,720,000 | ||||
Cash consideration | $ 35,720,000 | ||||
Booj | Subsequent Event | |||||
Purchase Price Allocation | |||||
Cash consideration | $ 26,250,000 | ||||
Booj | Subsequent Event | Maximum | |||||
Purchase Price Allocation | |||||
Equity-based compensation | $ 10,000,000 | ||||
Former President | Subsequent Event | |||||
Purchase Price Allocation | |||||
Accrued costs under Separation Agreement | $ 1,900,000 | ||||
The period for payment of costs incurred under the Separation Agreement | 39 months |