Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 29, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-36101 | |
Entity Registrant Name | RE/MAX Holdings, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 80-0937145 | |
Entity Address Line One | 5075 South Syracuse Street | |
Entity Address City or Town | Denver | |
Entity Address State or Province | CO | |
Entity Address Postal Zip Code | 80237 | |
City Area Code | 303 | |
Local Phone Number | 770-5531 | |
Title of 12(b) Security | Class A Common Stock, $0.0001 par value per share | |
Trading Symbol | RMAX | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001581091 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Common Class A | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 18,123,911 | |
Common Class B | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 96,754 | $ 108,663 |
Restricted cash | 27,329 | 29,465 |
Accounts and notes receivable, current portion, net of allowances | 33,284 | 32,518 |
Income taxes receivable | 1,561 | 2,138 |
Other current assets | 18,216 | 20,178 |
Total current assets | 177,144 | 192,962 |
Property and equipment, net of accumulated depreciation | 9,249 | 9,793 |
Operating lease right of use assets | 26,359 | 25,825 |
Franchise agreements, net | 115,334 | 120,174 |
Other intangible assets, net | 23,750 | 25,763 |
Goodwill | 258,686 | 258,626 |
Deferred tax assets, net | 52,464 | 51,441 |
Income taxes receivable, net of current portion | 754 | 754 |
Other assets, net of current portion | 8,869 | 9,896 |
Total assets | 672,609 | 695,234 |
Current liabilities: | ||
Accounts payable | 3,409 | 6,165 |
Accrued liabilities | 65,464 | 70,751 |
Income taxes payable | 838 | 1,658 |
Deferred revenue | 25,014 | 27,784 |
Current portion of debt | 4,600 | 4,600 |
Current portion of payable pursuant to tax receivable agreements | 1,642 | 1,642 |
Operating lease liabilities | 7,371 | 7,068 |
Total current liabilities | 108,338 | 119,668 |
Debt, net of current portion | 442,782 | 443,720 |
Payable pursuant to tax receivable agreements, net of current portion | 24,917 | 24,917 |
Deferred tax liabilities, net | 12,505 | 13,113 |
Deferred revenue, net of current portion | 18,117 | 18,287 |
Operating lease liabilities, net of current portion | 37,453 | 37,989 |
Other liabilities, net of current portion | 5,554 | 5,838 |
Total liabilities | 649,666 | 663,532 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Additional paid-in capital | 538,743 | 535,566 |
Accumulated deficit | (63,137) | (53,999) |
Accumulated other comprehensive income (deficit), net of tax | (313) | (395) |
Total stockholders' equity attributable to RE/MAX Holdings, Inc. | 475,295 | 481,174 |
Non-controlling interest | (452,352) | (449,472) |
Total stockholders' equity | 22,943 | 31,702 |
Total liabilities and stockholders' equity | 672,609 | 695,234 |
Common Class A | ||
Stockholders' equity: | ||
Common stock | 2 | 2 |
Common Class B | ||
Stockholders' equity: | ||
Common stock |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
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 | 18,121,947 | 17,874,238 |
Common stock, shares outstanding | 18,121,947 | 17,874,238 |
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 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue: | ||
Total revenue | $ 85,401 | $ 91,004 |
Operating expenses: | ||
Selling, operating and administrative expenses | 49,115 | 47,831 |
Marketing Funds expenses | 21,342 | 22,851 |
Depreciation and amortization | 8,033 | 8,985 |
Settlement and impairment charges | 3,735 | |
Total operating expenses | 78,490 | 83,402 |
Operating income (loss) | 6,911 | 7,602 |
Other expenses, net: | ||
Interest expense | (8,245) | (3,651) |
Interest income | 1,004 | 19 |
Foreign currency transaction gains (losses) | 43 | 180 |
Total other expenses, net | (7,198) | (3,452) |
Income (loss) before provision for income taxes | (287) | 4,150 |
Provision for income taxes | (392) | (1,205) |
Net income (loss) | (679) | 2,945 |
Less: net income (loss) attributable to non-controlling interest | (8) | 1,494 |
Net income (loss) attributable to RE/MAX Holdings, Inc. | $ (671) | $ 1,451 |
Common Class A | ||
Net income (loss) attributable to RE/MAX Holdings, Inc. per share of Class A common stock | ||
Basic | $ (0.04) | $ 0.08 |
Diluted | $ (0.04) | $ 0.08 |
Weighted average shares of Class A common stock outstanding | ||
Basic | 17,916,841 | 18,934,424 |
Diluted | 17,916,841 | 19,211,603 |
Cash dividends declared per share of Class A common stock | $ 0.23 | $ 0.23 |
Continuing franchise fees | ||
Revenue: | ||
Total revenue | $ 32,076 | $ 33,499 |
Annual dues | ||
Revenue: | ||
Total revenue | 8,618 | 8,920 |
Broker fees | ||
Revenue: | ||
Total revenue | 10,892 | 15,085 |
Marketing Funds fees | ||
Revenue: | ||
Total revenue | 21,342 | 22,851 |
Franchise sales and other revenue | ||
Revenue: | ||
Total revenue | $ 12,473 | $ 10,649 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) | ||
Net income (loss) | $ (679) | $ 2,945 |
Change in cumulative translation adjustment | 99 | 482 |
Other comprehensive income (loss), net of tax | 99 | 482 |
Comprehensive income (loss) | (580) | 3,427 |
Less: Comprehensive income (loss) attributable to non-controlling interest | 9 | 1,734 |
Comprehensive income (loss) attributable to RE/MAX Holdings, Inc., net of tax | $ (589) | $ 1,693 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Class A Common Stock | Common Class A | Common Class B Common Stock | Common Class B | Additional paid-in capital | Retained earnings (accumulated deficit) | Accumulated other comprehensive income (loss), net of tax | Non-controlling interest | Total |
Beginning balance, Value at Dec. 31, 2021 | $ 2 | $ 515,443 | $ (7,821) | $ 650 | $ (439,207) | $ 69,067 | |||
Beginning balance, Shares at Dec. 31, 2021 | 18,806,194 | 1 | |||||||
Net income (loss) | 1,451 | 1,494 | 2,945 | ||||||
Distributions to non-controlling unitholders | (2,894) | (2,894) | |||||||
Equity-based compensation expense and dividend equivalents, Value | 12,215 | (685) | 11,530 | ||||||
Equity-based compensation expense and dividend equivalents, Shares | 587,283 | ||||||||
Dividends to Class A common stockholders | (4,439) | (4,439) | |||||||
Repurchase and retirement of common shares, Value | (1,314) | (1,314) | |||||||
Repurchase and retirement of common shares, Shares | (45,885) | ||||||||
Change in accumulated other comprehensive income (loss) | 242 | 240 | 482 | ||||||
Payroll taxes related to net settled restricted stock units, Value | (5,586) | (5,586) | |||||||
Payroll taxes related to net settled restricted stock units, Shares | (175,048) | ||||||||
Ending balance, Value at Mar. 31, 2022 | $ 2 | 522,072 | (12,808) | 892 | (440,367) | 69,791 | |||
Ending balance, Shares at Mar. 31, 2022 | 19,172,544 | 1 | |||||||
Beginning balance, Value at Dec. 31, 2022 | $ 2 | 535,566 | (53,999) | (395) | (449,472) | 31,702 | |||
Beginning balance, Shares at Dec. 31, 2022 | 17,874,238 | 17,874,238 | 1 | 1 | |||||
Net income (loss) | (671) | (8) | (679) | ||||||
Distributions to non-controlling unitholders | (2,889) | (2,889) | |||||||
Equity-based compensation expense and dividend equivalents, Value | 6,635 | (660) | 5,975 | ||||||
Equity-based compensation expense and dividend equivalents, Shares | 593,463 | ||||||||
Dividends to Class A common stockholders | (4,164) | (4,164) | |||||||
Repurchase and retirement of common shares, Value | $ (3,400) | (3,408) | (3,408) | ||||||
Repurchase and retirement of common shares, Shares | (160,405) | (160,405) | |||||||
Change in accumulated other comprehensive income (loss) | 82 | 17 | 99 | ||||||
Payroll taxes related to net settled restricted stock units, Value | (3,458) | (3,458) | |||||||
Payroll taxes related to net settled restricted stock units, Shares | (185,349) | ||||||||
Other | (235) | (235) | |||||||
Ending balance, Value at Mar. 31, 2023 | $ 2 | $ 538,743 | $ (63,137) | $ (313) | $ (452,352) | $ 22,943 | |||
Ending balance, Shares at Mar. 31, 2023 | 18,121,947 | 18,121,947 | 1 | 1 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (679) | $ 2,945 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 8,033 | 8,985 |
Equity-based compensation expense | 4,451 | 5,637 |
Bad debt expense | 1,614 | 170 |
Deferred income tax expense (benefit) | (1,579) | 20 |
Fair value adjustments to contingent consideration | (4) | 285 |
Impairment charge - leased assets | 3,735 | |
Loss on sale or disposition of assets, net | 178 | 6 |
Non-cash lease benefit | (766) | (368) |
Non-cash debt charges | 212 | 212 |
Other, net | (116) | 49 |
Changes in operating assets and liabilities | (8,280) | (5,174) |
Net cash provided by operating activities | 3,064 | 16,502 |
Cash flows from investing activities: | ||
Purchases of property, equipment and capitalization of software | (1,489) | (3,723) |
Other | 195 | |
Net cash used in investing activities | (1,294) | (3,723) |
Cash flows from financing activities: | ||
Payments on debt | (1,150) | (1,150) |
Distributions paid to non-controlling unitholders | (2,889) | (2,894) |
Dividends and dividend equivalents paid to Class A common stockholders | (4,824) | (5,124) |
Payments related to tax withholding for share-based compensation | (3,458) | (5,586) |
Common shares repurchased | (3,408) | (1,314) |
Payment of contingent consideration | (120) | |
Net cash used in financing activities | (15,849) | (16,068) |
Effect of exchange rate changes on cash | 34 | 274 |
Net decrease in cash, cash equivalents and restricted cash | (14,045) | (3,015) |
Cash, cash equivalents and restricted cash, beginning of period | 138,128 | 158,399 |
Cash, cash equivalents and restricted cash, end of period | 124,083 | 155,384 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 8,109 | 3,433 |
Net cash paid for income taxes | $ 2,197 | $ 1,542 |
Business and Organization
Business and Organization | 3 Months Ended |
Mar. 31, 2023 | |
Business and Organization | |
Business and Organization | 1. Business and Organization RE/MAX Holdings, Inc. (“Holdings”) and its consolidated subsidiaries, including RMCO, LLC (“RMCO”), are referred to hereinafter as the “Company.” The Company is one of the world’s leading franchisors 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 (“Motto”). The Company also sells ancillary products and services, including loan processing services, to its Motto network through the wemlo brand. The Company focuses on enabling its networks’ success by providing powerful technology, quality education, and valuable marketing to build the strength of the RE/MAX and Motto brands. RE/MAX and Motto are 100% franchised—the Company does not own any of the brokerages that operate under these brands. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
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, 2022, which was derived from the audited consolidated financial statements at that date, and the unaudited interim condensed consolidated financial statements and notes thereto have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). 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 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 March 31, 2023 and the results of its operations and comprehensive income, cash flows and changes in its stockholders’ equity for the three months ended March 31, 2023 and 2022. 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, 2022 (“2022 Annual Report on Form 10-K”). Please refer to that document for a fuller discussion of all significant accounting policies. Use of Estimates The preparation of the accompanying 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. Segment Reporting The Company operates under the following four operating segments: Real Estate, Mortgage, Marketing Funds and Other. Due to quantitative insignificance, the “Other” operating segment is comprised of operations which do not meet the criteria of a reportable segment. Revenue Recognition The Company generates most of its revenue from contracts with customers. The Company’s major streams of revenue are: ● Continuing franchise fees, which are fixed contractual fees paid monthly by RE/MAX or Motto franchisees or Independent Region sub-franchisors based on the number of RE/MAX agents or Motto franchisees based on the number of open offices. ● Annual dues, which are fees charged directly to RE/MAX agents. ● Broker fees, which are fees on real estate commissions when a RE/MAX agent assists a consumer with buying or selling a home. ● Marketing Funds fees, which are fixed contractual fees paid monthly by franchisees based on the number of RE/MAX agents or Motto franchisees based on the number of offices. ● Franchise sales and other revenue, which consists of fees from initial sales of RE/MAX and Motto franchises, renewals of RE/MAX franchises and master franchise fees, as well as data services subscription revenue, preferred marketing arrangements, technology products and subscription revenue, events-related revenue from education and other programs and mortgage loan processing revenue. Deferred Revenue and Commissions Related to Franchise Sales Deferred revenue is primarily driven by Franchise sales and Annual dues, as discussed above, and is included in “Deferred revenue” and “Deferred revenue, net of current portion” on the Condensed Consolidated Balance Sheets. Other deferred revenue is primarily related to events-related revenue. The activity consists of the following (in thousands): Balance at Revenue Balance at January 1, 2023 New billings recognized (a) March 31, 2023 Franchise sales $ 25,281 $ 2,252 $ (2,372) $ 25,161 Annual dues 14,164 9,475 (8,618) 15,021 Other 6,626 6,366 (10,043) 2,949 $ 46,071 $ 18,093 $ (21,033) $ 43,131 (a) Revenue recognized related to the beginning balance for Franchise sales and Annual dues were $2.3 million and $6.4 million, respectively, for the three months ended March 31, 2023. Commissions paid on franchise sales are recognized as an asset and amortized over the contract life of the franchise agreement. The activity in the Company’s capitalized contract costs for commissions (which are included in “other current assets” and “other assets, net of current portion” on the Condensed Consolidated Balance Sheets) consist of the following (in thousands): Additions to Balance at contract cost Expense Balance at January 1, 2023 for new activity recognized March 31, 2023 Capitalized contract costs for commissions $ 3,974 $ 678 $ (543) $ 4,109 Transaction Price Allocated to the Remaining Performance Obligations The following table includes estimated revenue by year, excluding certain other immaterial items, expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period (in thousands): Remainder of 2023 2024 2025 2026 2027 2028 Thereafter Total Annual dues $ 14,294 $ 727 $ — $ — $ — $ — $ — $ 15,021 Franchise sales 5,351 6,163 4,947 3,573 2,125 989 2,013 25,161 Total $ 19,645 $ 6,890 $ 4,947 $ 3,573 $ 2,125 $ 989 $ 2,013 $ 40,182 Disaggregated Revenue In the following table, segment revenue is disaggregated by Company-Owned or Independent Regions, where applicable, by segment and by geographical area (in thousands): Three Months Ended March 31, 2023 2022 U.S. Company-Owned Regions $ 33,861 $ 39,154 U.S. Independent Regions 1,476 1,701 Canada Company-Owned Regions 9,798 10,475 Canada Independent Regions 724 703 Global 3,198 3,092 Fee revenue (a) 49,057 55,125 Franchise sales and other revenue (b) 11,573 9,612 Total Real Estate 60,630 64,737 U.S. 16,305 17,559 Canada 4,763 5,013 Global 274 279 Total Marketing Funds 21,342 22,851 Mortgage (c) 3,188 3,028 Other (c) 241 388 Total $ 85,401 $ 91,004 (a) Fee revenue includes Continuing franchise fees, Annual dues and Broker fees. (b) Franchise sales and other revenue is derived primarily within the U.S. (c) Revenue from Mortgage and Other are derived exclusively within the U.S. Cash, Cash Equivalents and Restricted Cash All cash held by the Marketing Funds is contractually restricted. The following table reconciles the amounts presented for cash, both unrestricted and restricted, in the Condensed Consolidated Balance Sheets to the amounts presented in the Condensed Consolidated Statements of Cash Flows (in thousands): March 31, 2023 December 31, 2022 Cash and cash equivalents $ 96,754 $ 108,663 Restricted cash 27,329 29,465 Total cash, cash equivalents and restricted cash $ 124,083 $ 138,128 Services Provided to the Marketing Funds by Real Estate Real Estate charges the Marketing Funds for various services it performs. These services are primarily comprised of (a) building and maintaining the remax.com and remax.ca websites and mobile apps, (b) dedicated employees focused on marketing campaigns, and (c) various administrative services including customer support of technology; accounting and legal. In 2022 and prior, the additional services provided were (a) agent marketing technology; including customer relationship management tools and (b) agent, office and team websites. Because these costs are ultimately paid by the Marketing Funds, they do not impact the net income (loss) of Holdings as the Marketing Funds have no reported net income. The Company’s transition to the kvCORE platform, paid for directly by the Marketing Funds, reduces the charges Real Estate had historically charged the Marketing Funds (See Restructuring Charges Costs charged from Real Estate to the Marketing Funds are as follows (in thousands): Three Months Ended March 31, 2023 2022 Technology − operating $ 1,169 $ 4,224 Technology – capital (a) (203) 631 Marketing staff and administrative services 1,492 1,541 Total $ 2,458 $ 6,396 (a) During the first quarter of 2023, the Company determined that certain development projects were no longer needed and therefore $0.2 million, reflecting the cost of work in process assets that would no longer be placed in service, was refunded to the Marketing Funds. Accounts and Notes Receivable As of March 31, 2023, and December 31, 2022, the Company had allowances against accounts and notes receivable of $10.0 million and $9.1 million, respectively. Property and Equipment As of March 31, 2023, and December 31, 2022, the Company had accumulated depreciation of $11.6 million and $10.9 million, respectively. Leases The Company leases corporate offices, a distribution center, billboards and certain equipment. As all franchisees are independently owned and operated; there are no leases recognized for any offices used by the Company’s franchisees. All the Company’s material leases are classified as operating leases. The Company acts as the lessor for sublease agreements on its corporate headquarters, consisting solely of operating leases. During the first quarter of 2022, the Company subleased a portion of its corporate headquarters. As a result, the Company performed impairment tests on the portion subleased. Based on a comparison of undiscounted cash flows to the right of use (“ROU”) asset, the Company determined that the asset was impaired, driven largely by the difference between the existing lease rate on the Company’s corporate headquarters and the sublease rates received. This resulted in impairment charges of $3.7 million for the first quarter of 2022, which reflect the excess of the ROU asset carrying value over its fair value. Restructuring Charges During the third quarter of 2022, the Company began incurring expenses related to a restructuring in its business and technology offerings with the phased rollout of the kvCORE platform, replacing the functionality previously provided by the booj platform. A significant amount of these costs are termination benefits related to workforce reductions including severance and related expenses that were incurred in the second half of 2022. See Note 6, Accrued Liabilities Foreign Currency Derivatives The Company is exposed to foreign currency transaction gains and losses related to certain foreign currency denominated asset and liability positions, with the Canadian dollar representing the most significant exposure primarily from an intercompany loan from a U.S. subsidiary to a Canadian subsidiary. The Company uses short duration foreign currency forward contracts, generally with maturities ranging from a few days to a few months, to minimize its exposures related to foreign currency exchange rate fluctuations. None of these contracts are designated as accounting hedges as the underlying currency positions are revalued through “Foreign currency transaction gains (losses)” along with the related derivative contracts. The Company has a short-term $74.0 million Canadian dollar forward contract that matures in the second quarter of 2023 that net settles in U.S. dollars based on the prevailing spot rates at maturity. Recently Adopted Accounting Pronouncements In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets (commissions related to franchise sales) and contract liabilities (deferred revenue) acquired in a business combination in accordance with ASC 2014-09, Revenue from Contracts with Customers (Topic 606). The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. The new standard is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. The impact to future acquisitions could be material depending on the significance of future acquisitions. There would be no impact to cash flows. New Accounting Pronouncements Not Yet Adopted In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) Debt |
Non-controlling Interest
Non-controlling Interest | 3 Months Ended |
Mar. 31, 2023 | |
Non-controlling Interest. | |
Non-controlling Interest | 3. Non-controlling Interest Holdings is the sole managing member of RMCO and operates and controls all the business affairs of RMCO. The ownership of the common units in RMCO is summarized as follows: March 31, 2023 December 31, 2022 Shares Ownership % Shares Ownership % Non-controlling interest ownership of common units in RMCO 12,559,600 40.9 % 12,559,600 41.3 % Holdings outstanding Class A common stock (equal to Holdings common units in RMCO) 18,121,947 59.1 % 17,874,238 58.7 % Total common units in RMCO 30,681,547 100.0 % 30,433,838 100.0 % The weighted average ownership (“WAO”) percentages for the applicable reporting periods are used to calculate the “Net income (loss) attributable to RE/MAX Holdings, Inc.” A reconciliation of “Income (loss) before provision for income taxes” to “Net income (loss) attributable to RE/MAX Holdings, Inc.” and “Net Income (loss) attributable to non-controlling interest” in the accompanying Condensed Consolidated Statements of Income (Loss) for the periods indicated is detailed as follows (in thousands, except percentages): Three Months Ended March 31, 2023 2022 RE/MAX Holdings, Inc. Non-controlling interest Total RE/MAX Holdings, Inc. Non-controlling interest Total WAO percentage of RMCO (a) 58.8 % 41.2 % 100.0 % 60.1 % 39.9 % 100.0 % Income (loss) before provision for income taxes (a) $ (168) $ (119) $ (287) $ 2,485 $ 1,665 $ 4,150 (Provision) / benefit for income taxes (b) (503) 111 (392) (1,034) (171) (1,205) Net income (loss) $ (671) $ (8) $ (679) $ 1,451 $ 1,494 $ 2,945 (a) The WAO percentage of RMCO differs from the allocation of income (loss) before provision for income taxes between Holdings and the non-controlling interest due to certain relatively insignificant items recorded at Holdings. (b) The provision for income taxes attributable to Holdings is primarily comprised of U.S. federal and state income taxes on its proportionate share of the flow-through income from RMCO. It also includes Holdings’ share of taxes directly incurred by RMCO and its subsidiaries, including taxes in certain foreign jurisdictions. See Note 9, Income Taxes for additional information. Distributions and Other Payments to Non-controlling Unitholders Under the terms of RMCO’s limited liability company operating agreement, RMCO makes cash distributions to non-controlling unitholders on a pro-rata basis. The distributions paid or payable to non-controlling unitholders are summarized as follows (in thousands): Three Months Ended March 31, 2023 2022 Tax distributions $ — $ 5 Dividend distributions 2,889 2,889 Total distributions to non-controlling unitholders $ 2,889 $ 2,894 |
Earnings (loss) Per Share, Divi
Earnings (loss) Per Share, Dividends and Repurchases | 3 Months Ended |
Mar. 31, 2023 | |
Earnings (loss) Per Share, Dividends and Repurchases | |
Earnings (loss) Per Share, Dividends and Repurchases | 4. Earnings (loss) Per Share, Dividends and Repurchases Earnings (loss) Per Share The following is a reconciliation of the numerator and denominator used in the basic and diluted earnings (loss) per share (“EPS”) calculations (in thousands, except shares and per share information): Three Months Ended March 31, 2023 2022 Numerator Net income (loss) attributable to RE/MAX Holdings, Inc. $ (671) $ 1,451 Denominator for basic net income (loss) per share of Class A common stock Weighted average shares of Class A common stock outstanding 17,916,841 18,934,424 Denominator for diluted net income (loss) per share of Class A common stock Weighted average shares of Class A common stock outstanding 17,916,841 18,934,424 Add dilutive effect of the following: Restricted stock and restricted stock units (a) — 277,179 Weighted average shares of Class A common stock outstanding, diluted 17,916,841 19,211,603 Net income (loss) attributable to RE/MAX Holdings, Inc. per share of Class A common stock Basic $ (0.04) $ 0.08 Diluted $ (0.04) $ 0.08 (a) As the Company had a net loss for the three months ended March 31, 2023, the dilutive effect of restricted stock and restricted stock units would have been considered anti-dilutive and therefore there is no effect on the weighted average shares of Class A common stock outstanding EPS calculation. Outstanding Class B common stock does not share in the earnings of Holdings and is therefore not a participating security. Accordingly, basic and diluted net income (loss) per share of Class B common stock has not been presented. Dividends Dividends declared and paid during each quarter ended per share on all outstanding shares of Class A common stock were as follows (in thousands, except per share information): Three Months Ended March 31, 2023 2022 Quarter end declared Date paid Per share Class A stockholders ($) Non-controlling unitholders ($) Date paid Per share Class A stockholders ($) Non-controlling unitholders ($) March 31 March 22, 2023 $ 0.23 $ 4,164 $ 2,889 March 16, 2022 $ 0.23 $ 4,439 $ 2,889 $ 0.23 $ 4,164 $ 2,889 $ 0.23 $ 4,439 $ 2,889 On May 3, 2023, the Company’s Board of Directors declared a quarterly dividend of $0.23 per share on all outstanding shares of Class A common stock, payable on May 31, 2023 to stockholders of record at the close of business on May 17, 2023. Share Repurchases and Retirement In January 2022, the Company’s Board of Directors authorized a common stock repurchase program of up to $100 million. During the three months ended March 31, 2023, 160,405 shares of the Company’s Class A common stock were repurchased and retired for $3.4 million excluding commissions, at a weighted average cost of $21.24. As of March 31, 2023, $62.5 million remained available under the share repurchase program. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 3 Months Ended |
Mar. 31, 2023 | |
Intangible Assets and Goodwill | |
Intangible Assets and Goodwill | 5. Intangible Assets and Goodwill The following table provides the components of the Company’s intangible assets (in thousands, except weighted average amortization period in years): Weighted Average As of March 31, 2023 As of December 31, 2022 Amortization Initial Accumulated Net Initial Accumulated Net Period Cost Amortization Balance Cost Amortization Balance Franchise agreements 12.3 $ 224,454 $ (109,120) $ 115,334 $ 224,397 $ (104,223) $ 120,174 Other intangible assets: Software (a) 4.1 $ 49,475 $ (34,009) $ 15,466 $ 48,658 $ (32,198) $ 16,460 Trademarks 9.2 1,713 (1,307) 406 1,713 (1,272) 441 Non-compete agreements 4.3 12,958 (5,687) 7,271 12,953 (4,878) 8,075 Training materials 5.0 2,400 (2,200) 200 2,400 (2,080) 320 Other 7.0 870 (463) 407 870 (403) 467 Total other intangible assets 4.4 $ 67,416 $ (43,666) $ 23,750 $ 66,594 $ (40,831) $ 25,763 (a) As of March 31, 2023 and December 31, 2022, capitalized software development costs of $ 5.2 million and $ 4.6 million, respectively, were related to technology projects not yet complete and ready for their intended use and thus were not subject to amortization. Amortization expense was $7.4 million and $8.4 million for the three months ended March 31, 2023 and 2022. As of March 31, 2023, the estimated future amortization expense related to intangible assets includes the estimated amortization expense associated with the Company’s intangible assets assumed with the Company’s acquisitions (in thousands): Remainder of 2023 $ 22,235 2024 25,336 2025 21,512 2026 14,902 2027 8,979 Thereafter 46,120 $ 139,084 The following table presents changes to goodwill by reportable segment (in thousands): Real Estate Mortgage Total Balance, January 1, 2023 $ 239,993 $ 18,633 $ 258,626 Effect of changes in foreign currency exchange rates 60 — 60 Balance, March 31, 2023 $ 240,053 $ 18,633 $ 258,686 |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Mar. 31, 2023 | |
Accrued Liabilities. | |
Accrued Liabilities | 6. Accrued Liabilities Accrued liabilities consist of the following (in thousands): March 31, 2023 December 31, 2022 Marketing Funds (a) $ 46,381 $ 47,670 Accrued payroll and related employee costs 8,130 14,419 Accrued taxes 1,637 2,025 Accrued professional fees 1,314 1,331 Other 8,002 5,306 $ 65,464 $ 70,751 (a) Consists primarily of liabilities recognized to reflect the contractual restriction that all funds collected in the Marketing Funds must be spent for designated purposes. See Note 2, Summary of Significant Accounting Policies for additional information. The following table presents a rollforward of the liability as related to the strategic shift and restructure of its business, which is in “Accrued payroll and related employee costs” in the table above (in thousands): Balance, January 1, 2023 $ 3,631 Severance and other related expenses 39 Cash payments (1,919) Balance, March 31, 2023 $ 1,750 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2023 | |
Debt | |
Debt | 7. Debt Debt, net of current portion, consists of the following (in thousands): March 31, 2023 December 31, 2022 Senior Secured Credit Facility $ 451,950 $ 453,101 Less unamortized debt issuance costs (3,375) (3,532) Less unamortized debt discount costs (1,193) (1,249) Less current portion (4,600) (4,600) $ 442,782 $ 443,720 As of March 31, 2023, maturities of debt are as follows (in thousands): Remainder of 2023 $ 3,450 2024 4,600 2025 4,600 2026 4,600 2027 4,600 Thereafter 430,100 $ 451,950 Senior Secured Credit Facility On July 21, 2021, the Company amended and restated its Senior Secured Credit Facility to refinance its existing facility. The revised facility provides for a seven-year $460.0 million term loan facility which matures on July 21, 2028, and a $50.0 million revolving loan facility which must be repaid on July 21, 2026. The Senior Secured Credit Facility requires RE/MAX, LLC to repay term loans at $1.2 million per quarter. RE/MAX, LLC is also required to repay the term loans and reduce revolving commitments with (i) 100% of proceeds of any incurrence of additional debt not permitted by the Senior Secured Credit Facility, (ii) 100% of proceeds of asset sales and 100% of amounts recovered under insurance policies, subject to certain exceptions and a reinvestment right and (iii) 50% of Excess Cash Flow (or “ECF” as defined in the Senior Secured Credit Facility) at the end of the applicable fiscal year if RE/MAX, LLC’s Total Leverage Ratio (or “TLR” as defined in the Senior Secured Credit Facility) is in excess of 4.25:1. If the TLR as of the last day of such fiscal year is equal to or less than 4.25:1 but above 3.75:1, the repayment percentage is 25% of ECF and if the TLR as of the last day of such fiscal year is less than 3.75:1, no repayment from ECF is required. In addition, the Company is limited in the amount of restricted payments it can make as defined in the Senior Secured Credit Facility. These restricted payments include declaration or payment of dividends, repurchase of shares, or other distributions. In general, the Company can make unlimited restricted payments, so long as the TLR is below 3.50:1 (both before and after giving effect to such payments). As of March 31, 2023, our TLR was 3.10:1, as such no ECF payment was required, and the limits on restricted payments were not applicable. Borrowings under the term loans and revolving loans accrue interest, at the Company’s option on (a) LIBOR, provided LIBOR shall be no less than 0.50% plus an applicable margin of 2.50% and, provided further that such rate shall be adjusted for reserve requirements for eurocurrency liabilities, if any (the “LIBOR Rate”) or (b) the greatest of (i) the prime rate as quoted by the Wall Street Journal, (ii) the NYFRB Rate (as defined in the Senior Secured Credit Facility) plus 0.50% and (iii) the one-month Eurodollar Rate plus 1.00%, (such greatest rate, the “ABR”) plus, in each case, an applicable margin of 1.50%. The Senior Secured Credit Facility includes a provision for transition from LIBOR to the alternative reference rate of Term SOFR on or before June 2023 (the LIBOR Rate cessation date). As of March 31, 2023, the interest rate on the term loan facility was 7.4%. Whenever amounts are drawn under the revolving line of credit, the Senior Secured Credit Facility requires compliance with a leverage ratio (calculated as net debt to EBITDA as defined therein). A commitment fee of 0.5% per annum (subject to reductions) accrues on the amount of unutilized revolving line of credit. As of the date of this report, no amounts were drawn on the revolving line of credit. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Measurements | |
Fair Value Measurements | 8. 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 is 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 2022 Annual Report on Form 10-K. A summary of the Company’s liabilities measured at fair value on a recurring basis is as follows (in thousands): As of March 31, 2023 As of December 31, 2022 Fair Value Level 1 Level 2 Level 3 Fair Value Level 1 Level 2 Level 3 Liabilities Motto contingent consideration $ 3,700 $ — $ — $ 3,700 $ 3,710 $ — $ — $ 3,710 Gadberry Group contingent consideration 703 — — 703 817 — — 817 Contingent consideration (a) $ 4,403 $ — $ — $ 4,403 $ 4,527 $ — $ — $ 4,527 (a) Recorded as a component of “Accrued liabilities” and “Other liabilities, net of current portion” in the accompanying Condensed Consolidated Balance Sheets. The Company is required to pay additional purchase consideration totaling 8% of gross receipts collected by Motto each year (the “Revenue Share Year”) through September 30, 2026, with no limitation as to the maximum payout. The annual payment is required to be made within 120 days of the end of each Revenue Share Year. The fair value of the contingent purchase consideration represents the forecasted discounted cash payments that the Company expects to pay. 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 revenues. The forecasted revenue growth assumption that is most sensitive is the assumed franchise sales count for which the forecast assumes between 60-140 franchises sold annually. This assumption is based on historical sales and an assumption of growth over time. A 10% change in the number of franchise sales would change the liability by $0.1 million. A 1% change to the discount rate applied to the forecast changes the liability by approximately $0.1 million. As of March 31, 2023, contingent consideration also includes an amount recognized in connection with the acquisition of the Gadberry Group.The Company measures these liabilities each reporting period and recognizes changes in fair value, if any, in “Selling, operating and administrative expenses” in the accompanying Condensed Consolidated Statements of Income (Loss). The table below presents a reconciliation of the contingent consideration (in thousands): Total Balance at January 1, 2023 $ 4,527 Fair value adjustments (4) Cash payments (120) Balance at March 31, 2023 $ 4,403 The following table summarizes the carrying value and estimated fair value of the Senior Secured Credit Facility (in thousands): March 31, 2023 December 31, 2022 Carrying Amount Fair Value Level 2 Carrying Amount Fair Value Level 2 Senior Secured Credit Facility $ 447,382 $ 411,275 $ 448,320 $ 414,587 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Taxes | |
Income Taxes | 9. Income Taxes The “Provision for income taxes” in the accompanying Condensed Consolidated Statements of Income (Loss) is based on an estimate of the Company’s annualized effective income tax rate and discrete items recorded during the three months ended March 31, 2023. |
Equity-Based Compensation
Equity-Based Compensation | 3 Months Ended |
Mar. 31, 2023 | |
Equity-Based Compensation | |
Equity-Based Compensation | 10. Equity-Based Compensation Equity-based compensation expense under the RE/MAX Holdings, Inc. 2013 Omnibus Incentive Plan (the “Incentive Plan”), net of the amount capitalized in internally developed software, is as follows (in thousands): Three Months Ended March 31, 2023 2022 Expense from time-based awards $ 2,504 $ 3,848 Expense from performance-based awards (a) 717 90 Expense from bonus to be settled in shares (b) 1,230 1,699 Equity-based compensation expense $ 4,451 $ 5,637 (a) Expense recognized for performance-based awards is re-assessed each quarter based on expectations of achievement against the performance conditions. During the first quarter of 2022, the Company had a significant amount of forfeitures related to performance-based awards issued to the Company’s former CEO which, subsequent to his departure, will no longer vest. (b) A portion of the annual corporate bonus earned is to be settled in shares. These amounts are recognized as “Accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets and are not included in “Additional paid-in capital” until the shares are issued. Time-based Restricted Stock The following table summarizes equity-based compensation activity related to time-based restricted stock units and restricted stock awards: Shares Weighted average grant date fair value per share Balance, January 1, 2023 611,102 $ 32.23 Granted (a) 474,511 $ 18.46 Shares vested (including tax withholding) (b) (255,621) $ 30.62 Forfeited (19,111) $ 26.65 Balance, March 31, 2023 810,881 $ 24.81 (a) Pursuant to the terms of the Incentive Plan, shares withheld by the Company for the payment of the employee's tax withholding related to shares vesting are added back to the pool of shares available for future awards. As of March 31, 2023, there was $13.3 million of total unrecognized expense. This compensation expense is expected to be recognized over the weighted-average remaining vesting period of 2.0 years. Performance-based Restricted Stock The following table summarizes equity-based compensation activity related to performance-based restricted stock units: Shares Weighted average grant date fair value per share Balance, January 1, 2023 143,199 $ 32.11 Granted (a) 174,418 $ 20.53 Shares vested (including tax withholding) (b) (24,122) $ 17.77 Forfeited (22,778) $ 27.85 Balance, March 31, 2023 270,717 $ 26.29 (a) Represents the total participant target award. (b) Pursuant to the terms of the Incentive Plan, shares withheld by the Company for the payment of the employee's tax withholding related to shares vesting are added back to the pool of shares available for future awards. As of March 31, 2023, there was $4.4 million of total unrecognized expense. This compensation expense is expected to be recognized over the weighted-average remaining vesting period of 1.7 years. The Incentive Plan expires on October 1, 2023 and during the first quarter, the Company’s Board of Directors approved a new 2023 Omnibus Incentive Plan (“2023 Plan”). The 2023 Plan is subject to approval by the Company’s stockholders in the 2023 annual meeting. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | 11. Commitments and Contingencies A number of putative class action complaints are pending against the National Association of Realtors (“NAR”), Anywhere Real Estate, Inc. (formerly Realogy Holdings Corp.), HomeServices of America, Inc., RE/MAX, LLC and Keller Williams Realty, Inc. The first was filed on March 6, 2019, by plaintiff Christopher Moehrl in the United States District Court for the Northern District of Illinois (the “Moehrl Action”). Similar actions have been filed in various federal courts. The complaints make substantially similar allegations and seek substantially similar relief. For convenience, all of these lawsuits are collectively referred to as the “Moehrl-related antitrust litigations.” In the Moehrl Action, the plaintiffs allege that a NAR rule that requires brokers to make a blanket, non-negotiable offer of buyer broker compensation when listing a property, results in increased costs to sellers and is in violation of federal antitrust law. They further allege that certain defendants use their agreements with franchisees to require adherence to the NAR rule in violation of federal antitrust law. Amended complaints added allegations regarding buyer steering and non-disclosure of buyer-broker compensation to the buyer. While similar to the Moehrl Action, the Moehrl-related antitrust litigations also allege: state antitrust violations; unjust enrichment; state consumer protection statute violations; harm to home buyers rather than sellers; violations of the Missouri Merchandising Practices Act; and claims against a multiple listing service (MLS) defendant rather than NAR. In one of the Moehrl-related antitrust litigations, filed by plaintiffs Scott and Rhonda Burnett and others in the Western District of Missouri, the court on April 22, 2022 granted plaintiffs’ motion for class certification and a trial date is now set for October 2023. Among other relief, plaintiffs seek damages equal to all buyer commissions paid by sellers in four MLSs primarily in Missouri during the class period from April 29, 2015 to present. If any damages are awarded, such damages could be trebled and defendants would be jointly and severally liable. In the Moehrl Action, plaintiffs sought certification of two classes of home sellers: (1) a class seeking an award of alleged damages incurred by home sellers who paid a commission between March 6, 2015 and December 31, 2020, to a brokerage affiliated with a corporate defendant in connection with the sale of residential real estate listed on any of the 20 covered MLSs in various parts of the country; and (2) a class of current or future owners of residential real estate, who are presently listing or will in the future list a home for sale on any of the 20 covered MLSs, seeking to prohibit defendants from maintaining and enforcing the NAR rules at issue in the complaint. On March 29, 2023, the court in the Moehrl Action granted plaintiffs’ motion for class certification as to both classes. On April 12, 2023, RE/MAX, LLC petitioned the United States Court of Appeals for the Seventh Circuit for permission to appeal the Court’s class certification decision. On April 9, 2021, a putative class action claim (the “Sunderland Action”) was filed in the Federal Court of Canada against the Toronto Regional Real Estate Board (“TRREB”), The Canadian Real Estate Association (“CREA”), RE/MAX Ontario-Atlantic Canada Inc. (“RE/MAX OA”), which was acquired by the Company in July 2021, Century 21 Canada Limited Partnership, Royal Lepage Real Estate Services Ltd., and many other real estate companies, collectively the “Defendants”, by the putative representative plaintiff, Mark Sunderland (the “Plaintiff”). The Plaintiff alleges that the Defendants conspired, agreed or arranged with each other and acted in furtherance of their conspiracy to fix, maintain, increase, control, raise, or stabilize the rate of real estate buyers’ brokerages’ and salespersons’ commissions in respect of the purchase and sale of properties listed on TRREB’s multiple listing service system (the “Toronto MLS”) in violation of the Canadian Competition Act. On February 24, 2022, Plaintiff filed a Fresh as Amended Statement of Claim. With respect RE/MAX OA, the amended claim alleges franchisor defendants aided and abetted their respective franchisee brokerages and their salespeople in violation of the section 45(1) of the Competition Act. Among other requested relief, Plaintiff seeks damages against the defendants and injunctive relief. The Company intends to vigorously defend against all claims. The Company may become involved in additional litigation or other legal proceedings concerning the same or similar claims. The Company is unable to predict whether resolution of these matters would have a material effect on its financial position or results of operations. The Moehrl Action, Moehrl-related antitrust litigations (collectively referred to as the “Moehrl-related antitrust litigations”), and Sunderland Action consist of: Christopher Moehrl et al. v. The National Association of Realtors, Realogy Holdings Corp., HomeServices of America, Inc., BHH Affiliates, LLC, HSF Affiliates, LLC, The Long & Foster Companies, Inc. RE/MAX, LLC., and Keller Williams Realty, Inc., Scott and Rhonda Burnett et al. v. The National Association of Realtors, Realogy Holdings Corp., HomeServices of America, Inc., BHH Affiliates, LLC, HSF Affiliates, LLC, RE/MAX, LLC, and Keller Williams Realty, Inc., Jennifer Nosalek et al. v. MLS Property Information Network, Inc., Anywhere Real Estate Inc. (f/k/a Realogy Holdings Corp.), Century 21 Real Estate LLC, Coldwell Banker Real Estate LLC, Sotheby’s International Realty Affiliates LLC, Better Homes and Gardens Real Estate LLC, ERA Franchise System LLC, HomeServices of America, Inc., BHH Affiliates, LLC, HSF Affiliates, LLC, RE/MAX, LLC, Polzler & Schneider Holdings Corp., Integra Enterprises Corp., RE/MAX of New England, Inc., RE/MAX Integrated Regions, LLC, and Keller Williams Realty, Inc., Mya Batton et al. v. The National Association of Realtors, Realogy Holdings Corp., HomeServices of America, Inc., BHH Affiliates, LLC, HSF Affiliates, LLC, The Long & Foster Companies, Inc., RE/MAX, LLC, and Keller Williams Realty, Inc., Mark Sunderland v. Toronto Regional Real Estate Board (TRREB), The Canadian Real Estate Association (CREA), RE/MAX Ontario-Atlantic Canada Inc. o/a RE/MAX INTEGRA, Century 21 Canada Limited Partnership, Residential Income Fund, L.P., Royal Lepage Real Estate Services Ltd., Homelife Realty Services Inc., Right At Home Realty Inc., Forest Hill Real Estate Inc., Harvey Kalles Real Estate Ltd., Max Wright Real Estate Corporation, Chestnut Park Real Estate Limited, Sutton Group Realty Services Ltd. and IPRO Realty Ltd., |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2023 | |
Segment Information | |
Segment Information | 12. Segment Information The Company operates under the following four operating segments: Real Estate, Mortgage, Marketing Funds and Other. Mortgage does not meet the quantitative significance test; however, management has chosen to report results for the segment as it believes it will be a key driver of future success for Holdings. Management evaluates the operating results of its segments based upon revenue and adjusted earnings before interest, the provision for income taxes, depreciation and amortization and other non-cash and non-recurring cash charges or other items (“Adjusted EBITDA”). The Company’s presentation of Adjusted EBITDA may not be comparable to similar measures used by other companies. Except for the adjustments identified below in arriving at Adjusted EBITDA, the accounting policies of the reportable segments are the same as those described in the Company’s 2022 Annual Report on Form 10-K. The following table presents revenue from external customers by segment (in thousands): Three Months Ended March 31, 2023 2022 Continuing franchise fees $ 29,547 $ 31,120 Annual dues 8,618 8,920 Broker fees 10,892 15,085 Franchise sales and other revenue 11,573 9,612 Total Real Estate 60,630 64,737 Continuing franchise fees 2,529 2,379 Franchise sales and other revenue 659 649 Total Mortgage 3,188 3,028 Marketing Funds fees 21,342 22,851 Other 241 388 Total revenue $ 85,401 $ 91,004 The following table presents a reconciliation of Adjusted EBITDA by segment to income (loss) before provision for income taxes (in thousands): Three Months Ended March 31, 2023 2022 Adjusted EBITDA: Real Estate $ 22,692 $ 30,116 Adjusted EBITDA: Mortgage (2,597) (2,173) Adjusted EBITDA: Other (175) (26) Adjusted EBITDA: Consolidated 19,920 27,917 Impairment charge - leased assets (a) — (3,735) Equity-based compensation expense (4,451) (5,637) Acquisition-related expense (b) (37) (1,257) Fair value adjustments to contingent consideration (c) 4 (285) Restructuring charges (39) — Other (410) (236) Interest income 1,004 19 Interest expense (8,245) (3,651) Depreciation and amortization (8,033) (8,985) Income (loss) before provision for income taxes $ (287) $ 4,150 (a) Represents the impairment recognized on a portion of the Company’s corporate headquarters office building in the prior year. See Note 2, Summary of Significant Accounting Policies for additional information. (b) Acquisition-related expense includes personnel, legal, accounting, advisory and consulting fees incurred in connection with the acquisition activities and integration of acquired companies. (c) Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liabilities. See Note 8, Fair Value Measurements for additional information. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying Condensed Consolidated Balance Sheet at December 31, 2022, which was derived from the audited consolidated financial statements at that date, and the unaudited interim condensed consolidated financial statements and notes thereto have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). 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 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 March 31, 2023 and the results of its operations and comprehensive income, cash flows and changes in its stockholders’ equity for the three months ended March 31, 2023 and 2022. 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, 2022 (“2022 Annual Report on Form 10-K”). Please refer to that document for a fuller discussion of all significant accounting policies. |
Use of Estimates | Use of Estimates The preparation of the accompanying 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. |
Segment Reporting | Segment Reporting The Company operates under the following four operating segments: Real Estate, Mortgage, Marketing Funds and Other. Due to quantitative insignificance, the “Other” operating segment is comprised of operations which do not meet the criteria of a reportable segment. |
Revenue Recognition | Revenue Recognition The Company generates most of its revenue from contracts with customers. The Company’s major streams of revenue are: ● Continuing franchise fees, which are fixed contractual fees paid monthly by RE/MAX or Motto franchisees or Independent Region sub-franchisors based on the number of RE/MAX agents or Motto franchisees based on the number of open offices. ● Annual dues, which are fees charged directly to RE/MAX agents. ● Broker fees, which are fees on real estate commissions when a RE/MAX agent assists a consumer with buying or selling a home. ● Marketing Funds fees, which are fixed contractual fees paid monthly by franchisees based on the number of RE/MAX agents or Motto franchisees based on the number of offices. ● Franchise sales and other revenue, which consists of fees from initial sales of RE/MAX and Motto franchises, renewals of RE/MAX franchises and master franchise fees, as well as data services subscription revenue, preferred marketing arrangements, technology products and subscription revenue, events-related revenue from education and other programs and mortgage loan processing revenue. Deferred Revenue and Commissions Related to Franchise Sales Deferred revenue is primarily driven by Franchise sales and Annual dues, as discussed above, and is included in “Deferred revenue” and “Deferred revenue, net of current portion” on the Condensed Consolidated Balance Sheets. Other deferred revenue is primarily related to events-related revenue. The activity consists of the following (in thousands): Balance at Revenue Balance at January 1, 2023 New billings recognized (a) March 31, 2023 Franchise sales $ 25,281 $ 2,252 $ (2,372) $ 25,161 Annual dues 14,164 9,475 (8,618) 15,021 Other 6,626 6,366 (10,043) 2,949 $ 46,071 $ 18,093 $ (21,033) $ 43,131 (a) Revenue recognized related to the beginning balance for Franchise sales and Annual dues were $2.3 million and $6.4 million, respectively, for the three months ended March 31, 2023. Commissions paid on franchise sales are recognized as an asset and amortized over the contract life of the franchise agreement. The activity in the Company’s capitalized contract costs for commissions (which are included in “other current assets” and “other assets, net of current portion” on the Condensed Consolidated Balance Sheets) consist of the following (in thousands): Additions to Balance at contract cost Expense Balance at January 1, 2023 for new activity recognized March 31, 2023 Capitalized contract costs for commissions $ 3,974 $ 678 $ (543) $ 4,109 Transaction Price Allocated to the Remaining Performance Obligations The following table includes estimated revenue by year, excluding certain other immaterial items, expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period (in thousands): Remainder of 2023 2024 2025 2026 2027 2028 Thereafter Total Annual dues $ 14,294 $ 727 $ — $ — $ — $ — $ — $ 15,021 Franchise sales 5,351 6,163 4,947 3,573 2,125 989 2,013 25,161 Total $ 19,645 $ 6,890 $ 4,947 $ 3,573 $ 2,125 $ 989 $ 2,013 $ 40,182 Disaggregated Revenue In the following table, segment revenue is disaggregated by Company-Owned or Independent Regions, where applicable, by segment and by geographical area (in thousands): Three Months Ended March 31, 2023 2022 U.S. Company-Owned Regions $ 33,861 $ 39,154 U.S. Independent Regions 1,476 1,701 Canada Company-Owned Regions 9,798 10,475 Canada Independent Regions 724 703 Global 3,198 3,092 Fee revenue (a) 49,057 55,125 Franchise sales and other revenue (b) 11,573 9,612 Total Real Estate 60,630 64,737 U.S. 16,305 17,559 Canada 4,763 5,013 Global 274 279 Total Marketing Funds 21,342 22,851 Mortgage (c) 3,188 3,028 Other (c) 241 388 Total $ 85,401 $ 91,004 (a) Fee revenue includes Continuing franchise fees, Annual dues and Broker fees. (b) Franchise sales and other revenue is derived primarily within the U.S. (c) Revenue from Mortgage and Other are derived exclusively within the U.S. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash All cash held by the Marketing Funds is contractually restricted. The following table reconciles the amounts presented for cash, both unrestricted and restricted, in the Condensed Consolidated Balance Sheets to the amounts presented in the Condensed Consolidated Statements of Cash Flows (in thousands): March 31, 2023 December 31, 2022 Cash and cash equivalents $ 96,754 $ 108,663 Restricted cash 27,329 29,465 Total cash, cash equivalents and restricted cash $ 124,083 $ 138,128 |
Services Provided to the Marketing Funds by Real Estate | Services Provided to the Marketing Funds by Real Estate Real Estate charges the Marketing Funds for various services it performs. These services are primarily comprised of (a) building and maintaining the remax.com and remax.ca websites and mobile apps, (b) dedicated employees focused on marketing campaigns, and (c) various administrative services including customer support of technology; accounting and legal. In 2022 and prior, the additional services provided were (a) agent marketing technology; including customer relationship management tools and (b) agent, office and team websites. Because these costs are ultimately paid by the Marketing Funds, they do not impact the net income (loss) of Holdings as the Marketing Funds have no reported net income. The Company’s transition to the kvCORE platform, paid for directly by the Marketing Funds, reduces the charges Real Estate had historically charged the Marketing Funds (See Restructuring Charges Costs charged from Real Estate to the Marketing Funds are as follows (in thousands): Three Months Ended March 31, 2023 2022 Technology − operating $ 1,169 $ 4,224 Technology – capital (a) (203) 631 Marketing staff and administrative services 1,492 1,541 Total $ 2,458 $ 6,396 (a) During the first quarter of 2023, the Company determined that certain development projects were no longer needed and therefore $0.2 million, reflecting the cost of work in process assets that would no longer be placed in service, was refunded to the Marketing Funds. |
Accounts and Notes Receivable | Accounts and Notes Receivable As of March 31, 2023, and December 31, 2022, the Company had allowances against accounts and notes receivable of $10.0 million and $9.1 million, respectively. |
Property and Equipment | Property and Equipment As of March 31, 2023, and December 31, 2022, the Company had accumulated depreciation of $11.6 million and $10.9 million, respectively. |
Leases | Leases The Company leases corporate offices, a distribution center, billboards and certain equipment. As all franchisees are independently owned and operated; there are no leases recognized for any offices used by the Company’s franchisees. All the Company’s material leases are classified as operating leases. The Company acts as the lessor for sublease agreements on its corporate headquarters, consisting solely of operating leases. During the first quarter of 2022, the Company subleased a portion of its corporate headquarters. As a result, the Company performed impairment tests on the portion subleased. Based on a comparison of undiscounted cash flows to the right of use (“ROU”) asset, the Company determined that the asset was impaired, driven largely by the difference between the existing lease rate on the Company’s corporate headquarters and the sublease rates received. This resulted in impairment charges of $3.7 million for the first quarter of 2022, which reflect the excess of the ROU asset carrying value over its fair value. |
Restructuring Charges | Restructuring Charges During the third quarter of 2022, the Company began incurring expenses related to a restructuring in its business and technology offerings with the phased rollout of the kvCORE platform, replacing the functionality previously provided by the booj platform. A significant amount of these costs are termination benefits related to workforce reductions including severance and related expenses that were incurred in the second half of 2022. See Note 6, Accrued Liabilities |
Foreign Currency Derivatives | Foreign Currency Derivatives The Company is exposed to foreign currency transaction gains and losses related to certain foreign currency denominated asset and liability positions, with the Canadian dollar representing the most significant exposure primarily from an intercompany loan from a U.S. subsidiary to a Canadian subsidiary. The Company uses short duration foreign currency forward contracts, generally with maturities ranging from a few days to a few months, to minimize its exposures related to foreign currency exchange rate fluctuations. None of these contracts are designated as accounting hedges as the underlying currency positions are revalued through “Foreign currency transaction gains (losses)” along with the related derivative contracts. The Company has a short-term $74.0 million Canadian dollar forward contract that matures in the second quarter of 2023 that net settles in U.S. dollars based on the prevailing spot rates at maturity. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets (commissions related to franchise sales) and contract liabilities (deferred revenue) acquired in a business combination in accordance with ASC 2014-09, Revenue from Contracts with Customers (Topic 606). The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. The new standard is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. The impact to future acquisitions could be material depending on the significance of future acquisitions. There would be no impact to cash flows. |
New Accounting Pronouncements Not Yet Adopted | New Accounting Pronouncements Not Yet Adopted In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) Debt |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Significant Accounting Policies | |
Schedule of deferred revenue for franchise sales and annual dues | The activity consists of the following (in thousands): Balance at Revenue Balance at January 1, 2023 New billings recognized (a) March 31, 2023 Franchise sales $ 25,281 $ 2,252 $ (2,372) $ 25,161 Annual dues 14,164 9,475 (8,618) 15,021 Other 6,626 6,366 (10,043) 2,949 $ 46,071 $ 18,093 $ (21,033) $ 43,131 (a) Revenue recognized related to the beginning balance for Franchise sales and Annual dues were $2.3 million and $6.4 million, respectively, for the three months ended March 31, 2023. |
Schedule of commissions related to franchise sales | The activity in the Company’s capitalized contract costs for commissions (which are included in “other current assets” and “other assets, net of current portion” on the Condensed Consolidated Balance Sheets) consist of the following (in thousands): Additions to Balance at contract cost Expense Balance at January 1, 2023 for new activity recognized March 31, 2023 Capitalized contract costs for commissions $ 3,974 $ 678 $ (543) $ 4,109 |
Schedule of transaction price allocated to the remaining performance obligations | The following table includes estimated revenue by year, excluding certain other immaterial items, expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period (in thousands): Remainder of 2023 2024 2025 2026 2027 2028 Thereafter Total Annual dues $ 14,294 $ 727 $ — $ — $ — $ — $ — $ 15,021 Franchise sales 5,351 6,163 4,947 3,573 2,125 989 2,013 25,161 Total $ 19,645 $ 6,890 $ 4,947 $ 3,573 $ 2,125 $ 989 $ 2,013 $ 40,182 |
Schedule of disaggregated revenue | In the following table, segment revenue is disaggregated by Company-Owned or Independent Regions, where applicable, by segment and by geographical area (in thousands): Three Months Ended March 31, 2023 2022 U.S. Company-Owned Regions $ 33,861 $ 39,154 U.S. Independent Regions 1,476 1,701 Canada Company-Owned Regions 9,798 10,475 Canada Independent Regions 724 703 Global 3,198 3,092 Fee revenue (a) 49,057 55,125 Franchise sales and other revenue (b) 11,573 9,612 Total Real Estate 60,630 64,737 U.S. 16,305 17,559 Canada 4,763 5,013 Global 274 279 Total Marketing Funds 21,342 22,851 Mortgage (c) 3,188 3,028 Other (c) 241 388 Total $ 85,401 $ 91,004 (a) Fee revenue includes Continuing franchise fees, Annual dues and Broker fees. (b) Franchise sales and other revenue is derived primarily within the U.S. (c) Revenue from Mortgage and Other are derived exclusively within the U.S. |
Schedule of reconciliation of cash, both unrestricted and restricted | The following table reconciles the amounts presented for cash, both unrestricted and restricted, in the Condensed Consolidated Balance Sheets to the amounts presented in the Condensed Consolidated Statements of Cash Flows (in thousands): March 31, 2023 December 31, 2022 Cash and cash equivalents $ 96,754 $ 108,663 Restricted cash 27,329 29,465 Total cash, cash equivalents and restricted cash $ 124,083 $ 138,128 |
Schedule of cost charges to intersegment | Costs charged from Real Estate to the Marketing Funds are as follows (in thousands): Three Months Ended March 31, 2023 2022 Technology − operating $ 1,169 $ 4,224 Technology – capital (a) (203) 631 Marketing staff and administrative services 1,492 1,541 Total $ 2,458 $ 6,396 |
Non-controlling Interest (Table
Non-controlling Interest (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Non-controlling Interest. | |
Summary of Ownership of the Common Units | The ownership of the common units in RMCO is summarized as follows: March 31, 2023 December 31, 2022 Shares Ownership % Shares Ownership % Non-controlling interest ownership of common units in RMCO 12,559,600 40.9 % 12,559,600 41.3 % Holdings outstanding Class A common stock (equal to Holdings common units in RMCO) 18,121,947 59.1 % 17,874,238 58.7 % Total common units in RMCO 30,681,547 100.0 % 30,433,838 100.0 % |
Reconciliation from Income Before Provision for Income Taxes to Net Income | A reconciliation of “Income (loss) before provision for income taxes” to “Net income (loss) attributable to RE/MAX Holdings, Inc.” and “Net Income (loss) attributable to non-controlling interest” in the accompanying Condensed Consolidated Statements of Income (Loss) for the periods indicated is detailed as follows (in thousands, except percentages): Three Months Ended March 31, 2023 2022 RE/MAX Holdings, Inc. Non-controlling interest Total RE/MAX Holdings, Inc. Non-controlling interest Total WAO percentage of RMCO (a) 58.8 % 41.2 % 100.0 % 60.1 % 39.9 % 100.0 % Income (loss) before provision for income taxes (a) $ (168) $ (119) $ (287) $ 2,485 $ 1,665 $ 4,150 (Provision) / benefit for income taxes (b) (503) 111 (392) (1,034) (171) (1,205) Net income (loss) $ (671) $ (8) $ (679) $ 1,451 $ 1,494 $ 2,945 (a) The WAO percentage of RMCO differs from the allocation of income (loss) before provision for income taxes between Holdings and the non-controlling interest due to certain relatively insignificant items recorded at Holdings. (b) The provision for income taxes attributable to Holdings is primarily comprised of U.S. federal and state income taxes on its proportionate share of the flow-through income from RMCO. It also includes Holdings’ share of taxes directly incurred by RMCO and its subsidiaries, including taxes in certain foreign jurisdictions. See Note 9, Income Taxes for additional information. |
Distributions Paid or Payable | The distributions paid or payable to non-controlling unitholders are summarized as follows (in thousands): Three Months Ended March 31, 2023 2022 Tax distributions $ — $ 5 Dividend distributions 2,889 2,889 Total distributions to non-controlling unitholders $ 2,889 $ 2,894 |
Earnings (loss) Per Share, Di_2
Earnings (loss) Per Share, Dividends and Repurchases (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings (loss) Per Share, Dividends and Repurchases | |
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 earnings (loss) per share (“EPS”) calculations (in thousands, except shares and per share information): Three Months Ended March 31, 2023 2022 Numerator Net income (loss) attributable to RE/MAX Holdings, Inc. $ (671) $ 1,451 Denominator for basic net income (loss) per share of Class A common stock Weighted average shares of Class A common stock outstanding 17,916,841 18,934,424 Denominator for diluted net income (loss) per share of Class A common stock Weighted average shares of Class A common stock outstanding 17,916,841 18,934,424 Add dilutive effect of the following: Restricted stock and restricted stock units (a) — 277,179 Weighted average shares of Class A common stock outstanding, diluted 17,916,841 19,211,603 Net income (loss) attributable to RE/MAX Holdings, Inc. per share of Class A common stock Basic $ (0.04) $ 0.08 Diluted $ (0.04) $ 0.08 (a) As the Company had a net loss for the three months ended March 31, 2023, the dilutive effect of restricted stock and restricted stock units would have been considered anti-dilutive and therefore there is no effect on the weighted average shares of Class A common stock outstanding EPS calculation. |
Schedule of Dividends Declared and Paid Quarterly per Share | Dividends declared and paid during each quarter ended per share on all outstanding shares of Class A common stock were as follows (in thousands, except per share information): Three Months Ended March 31, 2023 2022 Quarter end declared Date paid Per share Class A stockholders ($) Non-controlling unitholders ($) Date paid Per share Class A stockholders ($) Non-controlling unitholders ($) March 31 March 22, 2023 $ 0.23 $ 4,164 $ 2,889 March 16, 2022 $ 0.23 $ 4,439 $ 2,889 $ 0.23 $ 4,164 $ 2,889 $ 0.23 $ 4,439 $ 2,889 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Intangible Assets and Goodwill | |
Schedule of components of intangible assets | The following table provides the components of the Company’s intangible assets (in thousands, except weighted average amortization period in years): Weighted Average As of March 31, 2023 As of December 31, 2022 Amortization Initial Accumulated Net Initial Accumulated Net Period Cost Amortization Balance Cost Amortization Balance Franchise agreements 12.3 $ 224,454 $ (109,120) $ 115,334 $ 224,397 $ (104,223) $ 120,174 Other intangible assets: Software (a) 4.1 $ 49,475 $ (34,009) $ 15,466 $ 48,658 $ (32,198) $ 16,460 Trademarks 9.2 1,713 (1,307) 406 1,713 (1,272) 441 Non-compete agreements 4.3 12,958 (5,687) 7,271 12,953 (4,878) 8,075 Training materials 5.0 2,400 (2,200) 200 2,400 (2,080) 320 Other 7.0 870 (463) 407 870 (403) 467 Total other intangible assets 4.4 $ 67,416 $ (43,666) $ 23,750 $ 66,594 $ (40,831) $ 25,763 (a) As of March 31, 2023 and December 31, 2022, capitalized software development costs of $ 5.2 million and $ 4.6 million, respectively, were related to technology 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 March 31, 2023, the estimated future amortization expense related to intangible assets includes the estimated amortization expense associated with the Company’s intangible assets assumed with the Company’s acquisitions (in thousands): Remainder of 2023 $ 22,235 2024 25,336 2025 21,512 2026 14,902 2027 8,979 Thereafter 46,120 $ 139,084 |
Schedule of changes to goodwill | The following table presents changes to goodwill by reportable segment (in thousands): Real Estate Mortgage Total Balance, January 1, 2023 $ 239,993 $ 18,633 $ 258,626 Effect of changes in foreign currency exchange rates 60 — 60 Balance, March 31, 2023 $ 240,053 $ 18,633 $ 258,686 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accrued Liabilities. | |
Schedule of Accrued Liabilities | Accrued liabilities consist of the following (in thousands): March 31, 2023 December 31, 2022 Marketing Funds (a) $ 46,381 $ 47,670 Accrued payroll and related employee costs 8,130 14,419 Accrued taxes 1,637 2,025 Accrued professional fees 1,314 1,331 Other 8,002 5,306 $ 65,464 $ 70,751 (a) Consists primarily of liabilities recognized to reflect the contractual restriction that all funds collected in the Marketing Funds must be spent for designated purposes. See Note 2, Summary of Significant Accounting Policies for additional information. |
Schedule of restructure by type of cost | The following table presents a rollforward of the liability as related to the strategic shift and restructure of its business, which is in “Accrued payroll and related employee costs” in the table above (in thousands): Balance, January 1, 2023 $ 3,631 Severance and other related expenses 39 Cash payments (1,919) Balance, March 31, 2023 $ 1,750 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt | |
Schedule of debt | Debt, net of current portion, consists of the following (in thousands): March 31, 2023 December 31, 2022 Senior Secured Credit Facility $ 451,950 $ 453,101 Less unamortized debt issuance costs (3,375) (3,532) Less unamortized debt discount costs (1,193) (1,249) Less current portion (4,600) (4,600) $ 442,782 $ 443,720 |
Schedule of Maturities of Debt | As of March 31, 2023, maturities of debt are as follows (in thousands): Remainder of 2023 $ 3,450 2024 4,600 2025 4,600 2026 4,600 2027 4,600 Thereafter 430,100 $ 451,950 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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 is as follows (in thousands): As of March 31, 2023 As of December 31, 2022 Fair Value Level 1 Level 2 Level 3 Fair Value Level 1 Level 2 Level 3 Liabilities Motto contingent consideration $ 3,700 $ — $ — $ 3,700 $ 3,710 $ — $ — $ 3,710 Gadberry Group contingent consideration 703 — — 703 817 — — 817 Contingent consideration (a) $ 4,403 $ — $ — $ 4,403 $ 4,527 $ — $ — $ 4,527 (a) Recorded as a component of “Accrued liabilities” and “Other liabilities, net of current portion” in the accompanying Condensed Consolidated Balance Sheets. |
Reconciliation of the contingent consideration | The table below presents a reconciliation of the contingent consideration (in thousands): Total Balance at January 1, 2023 $ 4,527 Fair value adjustments (4) Cash payments (120) Balance at March 31, 2023 $ 4,403 |
Summary of carrying value and fair value of senior secured credit facility | The following table summarizes the carrying value and estimated fair value of the Senior Secured Credit Facility (in thousands): March 31, 2023 December 31, 2022 Carrying Amount Fair Value Level 2 Carrying Amount Fair Value Level 2 Senior Secured Credit Facility $ 447,382 $ 411,275 $ 448,320 $ 414,587 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Schedule of Employee Stock-Based Compensation Expense | Equity-based compensation expense under the RE/MAX Holdings, Inc. 2013 Omnibus Incentive Plan (the “Incentive Plan”), net of the amount capitalized in internally developed software, is as follows (in thousands): Three Months Ended March 31, 2023 2022 Expense from time-based awards $ 2,504 $ 3,848 Expense from performance-based awards (a) 717 90 Expense from bonus to be settled in shares (b) 1,230 1,699 Equity-based compensation expense $ 4,451 $ 5,637 (a) Expense recognized for performance-based awards is re-assessed each quarter based on expectations of achievement against the performance conditions. During the first quarter of 2022, the Company had a significant amount of forfeitures related to performance-based awards issued to the Company’s former CEO which, subsequent to his departure, will no longer vest. (b) A portion of the annual corporate bonus earned is to be settled in shares. These amounts are recognized as “Accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets and are not included in “Additional paid-in capital” until the shares are issued. |
Time-based awards | |
Schedule of Restricted Stock Units | The following table summarizes equity-based compensation activity related to time-based restricted stock units and restricted stock awards: Shares Weighted average grant date fair value per share Balance, January 1, 2023 611,102 $ 32.23 Granted (a) 474,511 $ 18.46 Shares vested (including tax withholding) (b) (255,621) $ 30.62 Forfeited (19,111) $ 26.65 Balance, March 31, 2023 810,881 $ 24.81 (a) Pursuant to the terms of the Incentive Plan, shares withheld by the Company for the payment of the employee's tax withholding related to shares vesting are added back to the pool of shares available for future awards. |
Performance-based awards | |
Schedule of Restricted Stock Units | The following table summarizes equity-based compensation activity related to performance-based restricted stock units: Shares Weighted average grant date fair value per share Balance, January 1, 2023 143,199 $ 32.11 Granted (a) 174,418 $ 20.53 Shares vested (including tax withholding) (b) (24,122) $ 17.77 Forfeited (22,778) $ 27.85 Balance, March 31, 2023 270,717 $ 26.29 (a) Represents the total participant target award. (b) Pursuant to the terms of the Incentive Plan, shares withheld by the Company for the payment of the employee's tax withholding related to shares vesting are added back to the pool of shares available for future awards. |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Information | |
Schedule of Revenue from External Customers By Segment | The following table presents revenue from external customers by segment (in thousands): Three Months Ended March 31, 2023 2022 Continuing franchise fees $ 29,547 $ 31,120 Annual dues 8,618 8,920 Broker fees 10,892 15,085 Franchise sales and other revenue 11,573 9,612 Total Real Estate 60,630 64,737 Continuing franchise fees 2,529 2,379 Franchise sales and other revenue 659 649 Total Mortgage 3,188 3,028 Marketing Funds fees 21,342 22,851 Other 241 388 Total revenue $ 85,401 $ 91,004 |
Schedule of Revenue and Adjusted EBITDA of the Company's Reportable Segment | The following table presents a reconciliation of Adjusted EBITDA by segment to income (loss) before provision for income taxes (in thousands): Three Months Ended March 31, 2023 2022 Adjusted EBITDA: Real Estate $ 22,692 $ 30,116 Adjusted EBITDA: Mortgage (2,597) (2,173) Adjusted EBITDA: Other (175) (26) Adjusted EBITDA: Consolidated 19,920 27,917 Impairment charge - leased assets (a) — (3,735) Equity-based compensation expense (4,451) (5,637) Acquisition-related expense (b) (37) (1,257) Fair value adjustments to contingent consideration (c) 4 (285) Restructuring charges (39) — Other (410) (236) Interest income 1,004 19 Interest expense (8,245) (3,651) Depreciation and amortization (8,033) (8,985) Income (loss) before provision for income taxes $ (287) $ 4,150 (a) Represents the impairment recognized on a portion of the Company’s corporate headquarters office building in the prior year. See Note 2, Summary of Significant Accounting Policies for additional information. (b) Acquisition-related expense includes personnel, legal, accounting, advisory and consulting fees incurred in connection with the acquisition activities and integration of acquired companies. (c) Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liabilities. See Note 8, Fair Value Measurements for additional information. |
Business and Organization (Deta
Business and Organization (Details) | 3 Months Ended |
Mar. 31, 2023 | |
REMAX | Motto | |
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |
Percentage of Company consisting of franchises | 100% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Segment Reporting (Details) | 3 Months Ended |
Mar. 31, 2023 segment | |
Summary of Significant Accounting Policies | |
Number of Operating Segments | 4 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Deferred Revenue (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Disaggregation of Revenue [Line Items] | |
Balance at beginning of period | $ 46,071 |
New billings | 18,093 |
Revenue recognized | (21,033) |
Balance at the end of period | 43,131 |
Franchise sales | |
Disaggregation of Revenue [Line Items] | |
Balance at beginning of period | 25,281 |
New billings | 2,252 |
Revenue recognized | (2,372) |
Balance at the end of period | 25,161 |
Revenue recognized related to the beginning balance | 2,300 |
Annual dues | |
Disaggregation of Revenue [Line Items] | |
Balance at beginning of period | 14,164 |
New billings | 9,475 |
Revenue recognized | (8,618) |
Balance at the end of period | 15,021 |
Revenue recognized related to the beginning balance | 6,400 |
Other | |
Disaggregation of Revenue [Line Items] | |
Balance at beginning of period | 6,626 |
New billings | 6,366 |
Revenue recognized | (10,043) |
Balance at the end of period | $ 2,949 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Commissions Related to Franchise Sales (Details) - Commissions Related to Franchise Sales $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Capitalized Contract Cost [Line Items] | |
Balance at beginning of period | $ 3,974 |
Additions to contract cost for new activity | 678 |
Expense recognized | (543) |
Balance at end of period | $ 4,109 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Transaction Price (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 40,182 |
Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | 15,021 |
Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | 25,161 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01 | Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 19,645 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01 | Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 14,294 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01 | Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 5,351 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 6,890 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 727 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 6,163 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 4,947 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 4,947 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 3,573 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 3,573 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01 | Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 2,125 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01 | Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01 | Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 2,125 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-01-01 | Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 989 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-01-01 | Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-01-01 | Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 989 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2029-01-01 | Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 2,013 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2029-01-01 | Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2029-01-01 | Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 2,013 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Disaggregated revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 85,401 | $ 91,004 |
Franchise sales and other revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 12,473 | 10,649 |
Real Estate | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 60,630 | 64,737 |
Real Estate | Fee revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 49,057 | 55,125 |
Real Estate | Franchise sales and other revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 11,573 | 9,612 |
Marketing Funds | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 21,342 | 22,851 |
Mortgage | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 3,188 | 3,028 |
Mortgage | Franchise sales and other revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 659 | 649 |
Other. | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 241 | 388 |
U.S. | Company -Owned Regions | Fee revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 33,861 | 39,154 |
U.S. | Independent Regions | Fee revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,476 | 1,701 |
U.S. | Marketing Funds | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 16,305 | 17,559 |
Canada | Company -Owned Regions | Fee revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 9,798 | 10,475 |
Canada | Independent Regions | Fee revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 724 | 703 |
Canada | Marketing Funds | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 4,763 | 5,013 |
Global | Global. | Fee revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 3,198 | 3,092 |
Global | Marketing Funds | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 274 | $ 279 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Cash, Cash Equivalents and Restricted Cash | ||||
Cash and cash equivalents | $ 96,754 | $ 108,663 | ||
Restricted cash | 27,329 | 29,465 | ||
Total cash, cash equivalents and restricted cash | 124,083 | 138,128 | $ 155,384 | $ 158,399 |
Marketing funds | ||||
Cash, Cash Equivalents and Restricted Cash | ||||
Cash and cash equivalents | 96,754 | 108,663 | ||
Restricted cash | 27,329 | 29,465 | ||
Total cash, cash equivalents and restricted cash | $ 124,083 | $ 138,128 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Services Provided to Marketing Funds by REMAX Franchising (Details) - Marketing funds - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Costs charged | $ 2,458 | $ 6,396 |
Work in progress assets | ||
Costs charged | 200 | |
Technology - operating | ||
Costs charged | 1,169 | 4,224 |
Technology - capital | ||
Costs charged | (203) | 631 |
Marketing staff and administrative services | ||
Costs charged | $ 1,492 | $ 1,541 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Accounts and Notes Receivable (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Summary of Significant Accounting Policies | ||
Accounts and notes receivable, allowance | $ 10 | $ 9.1 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Property and Equipment (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Summary of Significant Accounting Policies | ||
Property and equipment, accumulated depreciation | $ 11.6 | $ 10.9 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Foreign Currency Derivatives (Details) $ in Millions | Jun. 30, 2023 USD ($) |
Foreign Currency Exchange | |
Derivative [Line Items] | |
Notional amount | $ 74 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Leases (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 USD ($) | Mar. 31, 2023 lease | |
Leases | ||
Number of franchisees' leases recognized by the Company | lease | 0 | |
Impairment charge - leased assets | $ | $ 3,735 |
Non-controlling Interest - Owne
Non-controlling Interest - Ownership of common units in RMCO (Details) - RMCO, LLC - shares | Mar. 31, 2023 | Dec. 31, 2022 |
Shares | ||
Holdings outstanding Class A common stock (equal to Holdings common units in RMCO) | 18,121,947 | 17,874,238 |
Total number of common stock units in RMCO | 30,681,547 | 30,433,838 |
Ownership Percentage | ||
Holdings outstanding Class A common stock (equal to Holdings common units in RMCO) | 59.10% | 58.70% |
Total percentage of common stock units | 100% | 100% |
RIHI | ||
Shares | ||
Non-controlling interest ownership of common units in RMCO | 12,559,600 | 12,559,600 |
Ownership Percentage | ||
Non-controlling interest ownership of common units in RMCO | 40.90% | 41.30% |
Non-controlling Interest - Net
Non-controlling Interest - Net income reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Minority Interest [Line Items] | |||
Income (loss) before provision for income taxes attributable to RE/MAX Holdings, Inc. | $ (168) | $ 2,485 | |
Income (loss) before provision for income taxes: Non-controlling interest | (119) | 1,665 | |
Income (loss) before provision for income taxes | (287) | 4,150 | |
(Provision)/benefit for income taxes attributable to RE/MAX Holdings, Inc. | (503) | (1,034) | |
(Provision)/benefit for income taxes: Non-controlling interest | 111 | (171) | |
(Provision)/benefit for income taxes | (392) | (1,205) | |
Net income (loss) attributable to RE/MAX Holdings, Inc. | (671) | 1,451 | |
Net income (loss): Non-controlling interest | (8) | 1,494 | |
Net income (loss) | $ (679) | $ 2,945 | |
RMCO, LLC | |||
Minority Interest [Line Items] | |||
Weighted average ownership percentage | 100% | 100% | |
RMCO, LLC | Weighted Average | |||
Minority Interest [Line Items] | |||
Weighted average ownership percentage attributable to RE/MAX Holdings, Inc. | 58.80% | 60.10% | |
Weighted average ownership percentage | 100% | 100% | |
RIHI | RMCO, LLC | Weighted Average | |||
Minority Interest [Line Items] | |||
Weighted average ownership percentage: Non-controlling interest | 41.20% | 39.90% |
Non-controlling Interest - Dist
Non-controlling Interest - Distributions Paid or Payable (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Dividends Payable [Line Items] | ||
Distributions paid or payable to or on behalf of non-controlling unitholders | $ 2,889 | $ 2,894 |
Tax distributions | ||
Dividends Payable [Line Items] | ||
Distributions paid or payable to or on behalf of non-controlling unitholders | 5 | |
Dividend distributions | ||
Dividends Payable [Line Items] | ||
Distributions paid or payable to or on behalf of non-controlling unitholders | $ 2,889 | $ 2,889 |
Earnings (loss) Per Share, Di_3
Earnings (loss) Per Share, Dividends and Repurchases - Reconciliation of the numerator and denominator used in basic and diluted EPS calculations (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Numerator | ||
Net income (loss) attributable to RE/MAX Holdings, Inc. | $ (671) | $ 1,451 |
Common Class A | ||
Denominator for basic net income (loss) per share of Class A common stock | ||
Weighted average shares of Class A common stock outstanding | 17,916,841 | 18,934,424 |
Denominator for diluted net income (loss) per share of Class A common stock | ||
Weighted average shares of Class A common stock outstanding | 17,916,841 | 18,934,424 |
Add dilutive effect of the following: | ||
Weighted average shares of Class A common stock outstanding, diluted | 17,916,841 | 19,211,603 |
Net income (loss) attributable to RE/MAX Holdings, Inc. per share of Class A common stock | ||
Net income (loss) attributable to RE/MAX Holdings, Inc. per share of Class A common stock, basic | $ (0.04) | $ 0.08 |
Net income (loss) attributable to RE/MAX Holdings, Inc. per share of Class A common stock, diluted | $ (0.04) | $ 0.08 |
Restricted stock and restricted stock units | ||
Add dilutive effect of the following: | ||
Restricted stock and restricted stock units | 277,179 |
Earnings (loss) Per Share, Di_4
Earnings (loss) Per Share, Dividends and Repurchases - Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
May 03, 2023 | Mar. 31, 2023 | Mar. 31, 2022 | |
Dividends Payable [Line Items] | |||
Dividends to Class A common stockholders | $ 4,164 | $ 4,439 | |
Common Class A | |||
Dividends Payable [Line Items] | |||
Cash dividends declared per share of Class A common stock | $ 0.23 | $ 0.23 | |
Quarterly dividend | Common Class A | |||
Dividends Payable [Line Items] | |||
Cash dividends declared per share of Class A common stock | $ 0.23 | $ 0.23 | |
Dividends to Class A common stockholders | $ 4,164 | $ 4,439 | |
Dividend to Non-controlling unitholders | $ 2,889 | $ 2,889 | |
Quarterly dividend | Common Class A | Subsequent Event | |||
Dividends Payable [Line Items] | |||
Cash dividends declared per share of Class A common stock | $ 0.23 |
Earnings (loss) Per Share, Di_5
Earnings (loss) Per Share, Dividends and Repurchases - Share Repurchases and Retirement (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Jan. 31, 2022 | |
Share Repurchases And Retirement [Line Items] | |||
Shares repurchased and retired, Value | $ 3,408 | $ 1,314 | |
Common Class A | |||
Share Repurchases And Retirement [Line Items] | |||
Authorized amount | $ 100,000 | ||
Shares repurchased and retired, Shares | 160,405 | ||
Shares repurchased and retired, Value | $ 3,400 | ||
Shares repurchased, average cost | $ 21.24 | ||
Share repurchase authorization, Value | $ 62,500 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill - Components of Company's Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Finite Lived Intangible Assets [Line Items] | |||
Net Balance | $ 115,334 | $ 120,174 | |
Amortization expense | 7,400 | $ 8,400 | |
Franchise agreements | |||
Finite Lived Intangible Assets [Line Items] | |||
Initial Cost | 224,454 | 224,397 | |
Accumulated Amortization | (109,120) | (104,223) | |
Net Balance | $ 115,334 | 120,174 | |
Franchise agreements | Weighted Average | |||
Finite Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 12 years 3 months 18 days | ||
Other Intangible Assets | |||
Finite Lived Intangible Assets [Line Items] | |||
Initial Cost | $ 67,416 | 66,594 | |
Accumulated Amortization | (43,666) | (40,831) | |
Net Balance | $ 23,750 | 25,763 | |
Other Intangible Assets | Weighted Average | |||
Finite Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 4 years 4 months 24 days | ||
Software | |||
Finite Lived Intangible Assets [Line Items] | |||
Initial Cost | $ 49,475 | 48,658 | |
Accumulated Amortization | (34,009) | (32,198) | |
Net Balance | $ 15,466 | 16,460 | |
Software | Weighted Average | |||
Finite Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 4 years 1 month 6 days | ||
Software Development | |||
Finite Lived Intangible Assets [Line Items] | |||
Capitalized software development costs | $ 5,200 | 4,600 | |
Trademarks | |||
Finite Lived Intangible Assets [Line Items] | |||
Initial Cost | 1,713 | 1,713 | |
Accumulated Amortization | (1,307) | (1,272) | |
Net Balance | $ 406 | 441 | |
Trademarks | Weighted Average | |||
Finite Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 9 years 2 months 12 days | ||
Non-compete agreements | |||
Finite Lived Intangible Assets [Line Items] | |||
Initial Cost | $ 12,958 | 12,953 | |
Accumulated Amortization | (5,687) | (4,878) | |
Net Balance | $ 7,271 | 8,075 | |
Non-compete agreements | Weighted Average | |||
Finite Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 4 years 3 months 18 days | ||
Training materials | |||
Finite Lived Intangible Assets [Line Items] | |||
Initial Cost | $ 2,400 | 2,400 | |
Accumulated Amortization | (2,200) | (2,080) | |
Net Balance | $ 200 | 320 | |
Training materials | Weighted Average | |||
Finite Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 5 years | ||
Other.. | |||
Finite Lived Intangible Assets [Line Items] | |||
Initial Cost | $ 870 | 870 | |
Accumulated Amortization | (463) | (403) | |
Net Balance | $ 407 | $ 467 | |
Other.. | Weighted Average | |||
Finite Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 7 years |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Estimated Future Amortization of Intangible Assets, Other Than Goodwill (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | |
Remainder of 2023 | $ 22,235 |
2024 | 25,336 |
2025 | 21,512 |
2026 | 14,902 |
2027 | 8,979 |
Thereafter | 46,120 |
Estimated future amortization expense | $ 139,084 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill - Schedule of Changes in Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Changes to goodwill | |
Beginning Balance | $ 258,626 |
Effect of changes in foreign currency exchange rates | 60 |
Ending Balance | 258,686 |
Real Estate | |
Changes to goodwill | |
Beginning Balance | 239,993 |
Effect of changes in foreign currency exchange rates | 60 |
Ending Balance | 240,053 |
Mortgage | |
Changes to goodwill | |
Beginning Balance | 18,633 |
Ending Balance | $ 18,633 |
Accrued Liabilities - Schedule
Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Accrued Liabilities. | ||
Marketing Funds | $ 46,381 | $ 47,670 |
Accrued payroll and related employee costs | 8,130 | 14,419 |
Accrued taxes | 1,637 | 2,025 |
Accrued professional fees | 1,314 | 1,331 |
Other | 8,002 | 5,306 |
Accrued liabilities | $ 65,464 | $ 70,751 |
Accrued Liabilities - Rollforwa
Accrued Liabilities - Rollforward related to restructure (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Accrued Liabilities. | |
Beginning balance | $ 3,631 |
Severance and other related expenses | 39 |
Cash payments | (1,919) |
Ending balance | $ 1,750 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Debt | ||
Debt instrument carrying value | $ 451,950 | $ 453,101 |
Less unamortized debt issuance costs | (3,375) | (3,532) |
Less unamortized debt discount costs | (1,193) | (1,249) |
Less current portion | (4,600) | (4,600) |
Debt, net of current portion | $ 442,782 | $ 443,720 |
Debt - Schedule of Maturities o
Debt - Schedule of Maturities of Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Debt | ||
Remainder of 2023 | $ 3,450 | |
2024 | 4,600 | |
2025 | 4,600 | |
2026 | 4,600 | |
2027 | 4,600 | |
Thereafter | 430,100 | |
Long term debt | $ 451,950 | $ 453,101 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jul. 21, 2021 | Mar. 31, 2023 | |
London Interbank Offered Rate (LIBOR) | Minimum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.50% | |
Senior Secured Credit Facility Refinancing | ||
Debt Instrument [Line Items] | ||
Excess cash flow payment | $ 0 | |
Excess cash flow repayment (as a percent) | 50% | |
Leverage ratio under debt covenant | 3.10 | |
Percentage of proceeds of additional debt incurred not permitted by credit facility required to repay term loans | 100% | |
Percentage of proceeds of assets sales required to repay term loans and reduce revolving commitments | 100% | |
Percentage of amounts recovered under insurance policies required to repay term loans and reduce revolving commitments | 100% | |
Percentage of excess cash flow repayments | 25% | |
Senior Secured Credit Facility Refinancing | Equal To or Less Than 4.25 | ||
Debt Instrument [Line Items] | ||
Leverage ratio under debt covenant | 4.25 | |
Senior Secured Credit Facility Refinancing | Less Than 3.75 Percent | ||
Debt Instrument [Line Items] | ||
Leverage ratio under debt covenant | 3.75 | |
Senior Secured Credit Facility Refinancing | Below 3.50 Percent | ||
Debt Instrument [Line Items] | ||
Leverage ratio under debt covenant | 3.50 | |
Senior Secured Credit Facility Refinancing | Excess of 4.25 Percent | ||
Debt Instrument [Line Items] | ||
Leverage ratio under debt covenant | 4.25 | |
Senior Secured Credit Facility Refinancing | Federal Reserve Bank of New York | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.50% | |
Senior Secured Credit Facility Refinancing | London Interbank Offered Rate (LIBOR) | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 2.50% | |
Term loan | Senior Secured Credit Facility Refinancing | ||
Debt Instrument [Line Items] | ||
Credit facility, borrowing capacity | $ 460 | |
Mandatory principal payments | $ 1.2 | |
Loan term | 7 years | |
Debt instrument, interest rate | 7.40% | |
Frequency of payments | quarter | |
Revolving loan facility | ||
Debt Instrument [Line Items] | ||
Amounts drawn on line of credit | $ 0 | |
Revolving loan facility | Senior Secured Credit Facility Refinancing | ||
Debt Instrument [Line Items] | ||
Credit facility, borrowing capacity | $ 50 | |
Revolving loan facility commitment fee on average daily amount of unused portion | 0.50% | |
ABR loans | Senior Secured Credit Facility Refinancing | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.50% | |
ABR loans | Senior Secured Credit Facility Refinancing | Eurodollar | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1% |
Fair Value Measurements - Compa
Fair Value Measurements - Company's liabilities measured at fair value on a recurring basis (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) item | Dec. 31, 2022 USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Percentage of gross revenues to be paid yearly | 8% | |
Change in franchise sales - percentage | 10% | |
Annual payment period | 120 days | |
Change in discount rate | 1% | |
Measured on a recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration liability | $ 4,403 | $ 4,527 |
Level 3 | Measured on a recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration liability | 4,403 | 4,527 |
Motto | Measured on a recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration liability | 3,700 | 3,710 |
Motto | Level 3 | Measured on a recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration liability | 3,700 | 3,710 |
Gadberry | Measured on a recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration liability | 703 | 817 |
Gadberry | Level 3 | Measured on a recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration liability | 703 | $ 817 |
10% change in franchise sales | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
New billings | 100 | |
One Percent Change To Discount Rate [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
New billings | $ 100 | |
Minimum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assumed number of franchises sold annually | item | 60 | |
Maximum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assumed number of franchises sold annually | item | 140 |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of the contingent consideration (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value adjustments | $ (4) | $ 285 |
Cash payments | (120) | |
Measured on a recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Balance at Beginning | 4,527 | |
Balance at Ending | 4,403 | |
Level 3 | Measured on a recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Balance at Beginning | 4,527 | |
Fair value adjustments | (4) | |
Cash payments | (120) | |
Balance at Ending | $ 4,403 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Senior Secured Credit Facility (Details) - Senior Secured Credit Facility Refinancing - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Carrying amounts | ||
Debt Instrument [Line Items] | ||
Long term debt, carrying amount | $ 447,382 | $ 448,320 |
Level 2 | Estimated fair value | ||
Debt Instrument [Line Items] | ||
Long term debt, fair value | $ 411,275 | $ 414,587 |
Equity-Based Compensation - 201
Equity-Based Compensation - 2013 Omnibus Incentive Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Employee stock-based compensation expense | ||
Equity-based compensation expense | $ 4,451 | $ 5,637 |
Time-based awards | ||
Employee stock-based compensation expense | ||
Equity-based compensation expense | 2,504 | 3,848 |
Performance-based awards | ||
Employee stock-based compensation expense | ||
Equity-based compensation expense | 717 | 90 |
Bonus settled in shares | ||
Employee stock-based compensation expense | ||
Equity-based compensation expense | $ 1,230 | $ 1,699 |
Equity-Based Compensation - Tim
Equity-Based Compensation - Time-Based Restricted Stock (Details) - Time-based awards $ / shares in Units, $ in Millions | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Restricted Stock Units | |
Nonvested at beginning of period | shares | 611,102 |
Granted | shares | 474,511 |
Shares vested (including tax withholding) | shares | (255,621) |
Forfeited | shares | (19,111) |
Nonvested at end of period | shares | 810,881 |
Nonvested at beginning of period, Weighted average grant date fair value per share | $ / shares | $ 32.23 |
Granted, Weighted average grant date fair value per share | $ / shares | 18.46 |
Shares vested (including tax withholding) , Weighted average grant date fair value per share | $ / shares | 30.62 |
Forfeited, Weighted average grant date fair value per share | $ / shares | 26.65 |
Nonvested at end of period, Weighted average grant date fair value per share | $ / shares | $ 24.81 |
Unrecognized compensation cost | $ | $ 13.3 |
Period for recognition of RSU compensation expense | 2 years |
Equity-Based Compensation - Per
Equity-Based Compensation - Performance-based Restricted Stock (Details) - Performance-based awards $ / shares in Units, $ in Millions | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Restricted Stock Units | |
Nonvested at beginning of period | shares | 143,199 |
Granted | shares | 174,418 |
Shares vested (including tax withholding) | shares | (24,122) |
Forfeited | shares | (22,778) |
Nonvested at end of period | shares | 270,717 |
Nonvested at beginning of period, Weighted average grant date fair value per share | $ / shares | $ 32.11 |
Granted, Weighted average grant date fair value per share | $ / shares | 20.53 |
Shares vested (including tax withholding) , Weighted average grant date fair value per share | $ / shares | 17.77 |
Forfeited, Weighted average grant date fair value per share | $ / shares | 27.85 |
Nonvested at end of period, Weighted average grant date fair value per share | $ / shares | $ 26.29 |
Unrecognized compensation cost | $ | $ 4.4 |
Period for recognition of RSU compensation expense | 1 year 8 months 12 days |
Segment Information (Details)
Segment Information (Details) | 3 Months Ended |
Mar. 31, 2023 segment | |
Segment Information | |
Number of operating segments | 4 |
Segment Information - Revenue (
Segment Information - Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Segment Reporting Information | ||
Total revenue | $ 85,401 | $ 91,004 |
Real Estate | ||
Segment Reporting Information | ||
Total revenue | 60,630 | 64,737 |
Mortgage | ||
Segment Reporting Information | ||
Total revenue | 3,188 | 3,028 |
Marketing Funds fees | ||
Segment Reporting Information | ||
Total revenue | 21,342 | 22,851 |
Other. | ||
Segment Reporting Information | ||
Total revenue | 241 | 388 |
Continuing franchise fees | ||
Segment Reporting Information | ||
Total revenue | 32,076 | 33,499 |
Continuing franchise fees | Real Estate | ||
Segment Reporting Information | ||
Total revenue | 29,547 | 31,120 |
Continuing franchise fees | Mortgage | ||
Segment Reporting Information | ||
Total revenue | 2,529 | 2,379 |
Annual dues | ||
Segment Reporting Information | ||
Total revenue | 8,618 | 8,920 |
Annual dues | Real Estate | ||
Segment Reporting Information | ||
Total revenue | 8,618 | 8,920 |
Broker fees | ||
Segment Reporting Information | ||
Total revenue | 10,892 | 15,085 |
Broker fees | Real Estate | ||
Segment Reporting Information | ||
Total revenue | 10,892 | 15,085 |
Franchise sales and other revenue | ||
Segment Reporting Information | ||
Total revenue | 12,473 | 10,649 |
Franchise sales and other revenue | Real Estate | ||
Segment Reporting Information | ||
Total revenue | 11,573 | 9,612 |
Franchise sales and other revenue | Mortgage | ||
Segment Reporting Information | ||
Total revenue | $ 659 | $ 649 |
Segment Information - Reconcili
Segment Information - Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated | ||
Adjusted EBITDA | $ 19,920 | $ 27,917 |
Impairment charge - leased assets | (3,735) | |
Equity-based compensation expense | (4,451) | (5,637) |
Acquisition-related expense | (37) | (1,257) |
Fair value adjustments to contingent consideration | 4 | (285) |
Restructuring charges | (39) | |
Other | (410) | (236) |
Interest income | 1,004 | 19 |
Interest expense | (8,245) | (3,651) |
Depreciation and amortization | (8,033) | (8,985) |
Income (loss) before provision for income taxes | (287) | 4,150 |
Real Estate | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated | ||
Adjusted EBITDA | 22,692 | 30,116 |
Mortgage | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated | ||
Adjusted EBITDA | (2,597) | (2,173) |
Other. | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated | ||
Adjusted EBITDA | $ (175) | $ (26) |