RE/MAX HOLDINGS, INC. REPORTS THIRD QUARTER 2024 RESULTS
Total Revenue of $78.5 Million, Adjusted EBITDA of $27.3 Million
DENVER, Oct. 31, 2024 /PRNewswire/ --
Third Quarter 2024 Highlights(Compared to third quarter 2023 unless otherwise noted)
Total Revenue decreased 3.4% to $78.5 million
Revenue excluding the Marketing Funds1 decreased 3.3% to $58.4 million, driven by negative 3.0% organic growth2 and 0.3% adverse foreign currency movements
Net income attributable to RE/MAX Holdings, Inc. of $1.0 million and earnings per diluted share (GAAP EPS) of $0.05
Adjusted EBITDA3 increased 2.0% to $27.3 million, Adjusted EBITDA margin3 of 34.8% and Adjusted earnings per diluted share (Adjusted EPS3) of $0.38
Total agent count increased 174 agents, or 0.1%, to 145,483 agents
U.S. and Canada combined agent count decreased 4.4% to 78,201 agents
Total open Motto Mortgage franchises decreased 3.3% to 234 offices4
RE/MAX Holdings, Inc. (the "Company" or "RE/MAX Holdings") (NYSE:RMAX), parent company of RE/MAX, one of the world's leading franchisors of real estate brokerage services, and Motto Mortgage ("Motto"), the first and only national mortgage brokerage franchise brand in the U.S., today announced operating results for the quarter ended September 30, 2024.
"We continue to drive operational efficiency across the enterprise, which helped generate better-than-forecasted third-quarter financial results," said Erik Carlson, RE/MAX Holdings Chief Executive Officer. "Our team is developing new revenue opportunities while working to run our core business better each day. That effort has contributed to our strong margin performance the past two quarters, which is an encouraging trend."
Carlson continued: "Business optimization, having a growth mindset, and delivering the absolute best customer experience possible are the cornerstones of our playbook. We are making measurable progress on each of these. With increasing optimism about the trajectory of future interest rates, our growing global agent count, and our bold new initiatives, including providing innovative and enhanced technology products to our RE/MAX affiliates, improving the agent-customer experience by cultivating leads, and starting to monetize our digital assets, we are well-positioned to finish the year with positive momentum."
Third Quarter 2024 Operating Results
Agent Count
The following table compares agent count as of September 30, 2024 and 2023:
As of September 30,
Change
2024
2023
#
%
U.S.
52,808
56,494
(3,686)
(6.5)
Canada
25,393
25,288
105
0.4
Subtotal
78,201
81,782
(3,581)
(4.4)
Outside the U.S. & Canada
67,282
63,527
3,755
5.9
Total
145,483
145,309
174
0.1
Revenue
RE/MAX Holdings generated revenue of $78.5 million in the third quarter of 2024, a decrease of $2.7 million, or 3.4%, compared to $81.2 million in the third quarter of 2023. Revenue excluding the Marketing Funds was $58.4 million in the third quarter of 2024, a decrease of $2.0 million, or 3.3%, versus the same period in 2023. The decrease in Revenue excluding the Marketing Funds was attributable to negative organic revenue growth of 3.0% and adverse foreign currency movements of 0.3%. Negative organic revenue growth was principally driven by a decrease in U.S. agent count and a reduction in revenue from previous acquisitions, partially offset by an increase in Broker fee revenue.
Recurring revenue streams, which consist of continuing franchise fees and annual dues, decreased $1.5 million, or 3.8%, compared to the third quarter of 2023 and accounted for 66.4% of Revenue excluding the Marketing Funds in the third quarter of 2024 compared to 66.7% of Revenue excluding the Marketing Funds in the prior-year period.
Operating Expenses
Total operating expenses were $63.3 million for the third quarter of 2024, a decrease of $39.0 million, or 38.1%, compared to $102.2 million in the third quarter of 2023. During the third quarter of 2023, the Company agreed to pay $55.0 million to settle various industry class-action lawsuits, which was recorded in the third quarter of 2023. A $24.9 million gain on reduction in tax receivable agreement liability was also recorded in the third quarter of 2023.
Selling, operating and administrative expenses were $35.9 million in the third quarter of 2024, a decrease of $7.2 million, or 16.6%, compared to the third quarter of 2023 and represented 61.5% of Revenue excluding the Marketing Funds, compared to 71.4% in the prior-year period. Third quarter 2024 selling, operating and administrative expenses decreased primarily due to lower personnel costs and a decrease in bad debt, legal, and other technology expenses.
Net Income (Loss) and GAAP EPS
Net income attributable to RE/MAX Holdings was $1.0 million for the third quarter of 2024 compared to net loss of ($59.5) million for the third quarter of 2023. Reported basic and diluted GAAP earnings per share were $0.05 each for the third quarter of 2024 compared to basic and diluted GAAP loss per share of ($3.28) each in the third quarter of 2023.
Adjusted EBITDA and Adjusted EPS
Adjusted EBITDA was $27.3 million for the third quarter of 2024, an increase of $0.5 million, or 2.0%, compared to the third quarter of 2023. Third quarter 2024 Adjusted EBITDA increased primarily due to a decrease in bad debt, legal, personnel, and other technology expenses, partially offset by a decrease in U.S. agent count. Adjusted EBITDA margin was 34.8% in the third quarter of 2024, compared to 32.9% in the third quarter of 2023.
Adjusted basic and diluted EPS were $0.39 and $0.38, respectively, for the third quarter of 2024 compared to Adjusted basic and diluted EPS of $0.40 each for the third quarter of 2023. The ownership structure used to calculate Adjusted basic and diluted EPS for the quarter ended September 30, 2024, assumes RE/MAX Holdings owned 100% of RMCO, LLC ("RMCO"). The weighted average ownership RE/MAX Holdings had in RMCO was 60.0% for the quarter ended September 30, 2024.
Balance Sheet
As of September 30, 2024, the Company had cash and cash equivalents of $83.8 million, an increase of $1.2 million from December 31, 2023. As of September 30, 2024, the Company had $441.8 million of outstanding debt, net of an unamortized debt discount and issuance costs, compared to $444.6 million as of December 31, 2023.
Share Repurchases and Retirement
As previously disclosed, in January 2022 the Company's Board of Directors authorized a common stock repurchase program of up to $100 million. During the three months ended September 30, 2024, the Company did not repurchase any shares. As of September 30, 2024, $62.5 million remained available under the share repurchase program.
Impact of Hurricanes Helene and Milton
Several of the Company's affiliates were impacted by the recent hurricanes. While the extent of the hurricanes' full impact on the Company's networks is not entirely known at this time, the Company currently estimates that its fourth quarter revenue will be lower than previously expected as financial support is provided to affected affiliates for a limited time. As a result, the Company's fourth quarter and full year revenue (below) was reduced by approximately $1.0 million to $1.5 million, of which approximately 40% relates to the Marketing Funds, to reflect expected foregone revenue in the form of fee waivers provided to affiliates impacted by these storms.
Outlook
The Company's fourth quarter and full year 2024 Outlook includes the impact of the fee waivers to hurricane-impacted affiliates and assumes no further currency movements, acquisitions, or divestitures.
For the fourth quarter of 2024, RE/MAX Holdings expects:
Agent count to change 0.0% to 1.0% over fourth quarter 2023;
Revenue in a range of $71.0 million to $76.0 million (including revenue from the Marketing Funds in a range of $18.5 million to $20.5 million); and
Adjusted EBITDA in a range of $20.5 million to $23.5 million.
For the full year 2024, the Company now expects:
Agent count to change 0.0% to 1.0% over full year 2023, changed from negative 1.0% to positive 1.0%;
Revenue in a range of $306.0 million to $311.0 million (including revenue from the Marketing Funds in a range of $78.5 million to $80.5 million), changed from $305.0 million to $315.0 million (including revenue from the Marketing Funds in a range of $78.0 million to $82.0 million); and
Adjusted EBITDA in a range of $95.0 million to $98.0 million, changed from $93.0 million to $98.0 million.
Webcast and Conference Call
The Company will host a conference call for interested parties on Friday, November 1, 2024, beginning at 8:30 a.m. Eastern Time. Interested parties can register in advance for the conference call using the link below:
https://registrations.events/direct/Q4I941153
Interested parties also can access a live webcast through the Investor Relations section of the Company's website at http://investors.remaxholdings.com. Please dial-in or join the webcast 10 minutes before the start of the conference call. An archive of the webcast will be available on the Company's website for a limited time as well.
Basis of Presentation
Unless otherwise noted, the results presented in this press release are consolidated and exclude adjustments attributable to the non-controlling interest.
Footnotes:
1Revenue excluding the Marketing Funds is a non-GAAP measure of financial performance that differs from U.S. Generally Accepted Accounting Principles ("U.S. GAAP") and a reconciliation to the most directly comparable U.S. GAAP measure is as follows (in thousands):
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Revenue excluding the Marketing Funds:
Total revenue
$
78,478
$
81,223
$
235,218
$
249,071
Less: Marketing Funds fees
20,098
20,853
60,331
63,272
Revenue excluding the Marketing Funds
$
58,380
$
60,370
$
174,887
$
185,799
2The Company defines organic revenue growth as revenue growth from continuing operations excluding (i) revenue from Marketing Funds, (ii) revenue from acquisitions, and (iii) the impact of foreign currency movements. The Company defines revenue from acquisitions as the revenue generated from the date of an acquisition to its first anniversary (excluding Marketing Funds revenue related to acquisitions where applicable).
3Adjusted EBITDA, Adjusted EBITDA margin and Adjusted EPS are non-GAAP measures. These terms are defined at the end of this release. Please see Tables 5 and 6 appearing later in this release for reconciliations of these non-GAAP measures to the most directly comparable GAAP measures.
4Total open Motto Mortgage franchises includes only "bricks and mortar" offices with a unique physical address with rights granted by a full franchise agreement with Motto Franchising, LLC and excludes any "virtual" offices or BranchiseSM offices.
# # #
About RE/MAX Holdings, Inc.
RE/MAX Holdings, Inc. (NYSE:RMAX) is one of the world's leading franchisors in the real estate industry, franchising real estate brokerages globally under the RE/MAX® brand, and mortgage brokerages within the U.S. under the Motto® Mortgage brand. RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. Now with more than 140,000 agents in nearly 9,000 offices and a presence in more than 110 countries and territories, nobody in the world sells more real estate than RE/MAX, as measured by total residential transaction sides. Dedicated to innovation and change in the real estate industry, RE/MAX launched Motto Franchising, LLC, a ground-breaking mortgage brokerage franchisor, in 2016. Motto Mortgage, the first and only national mortgage brokerage franchise brand in the U.S., has grown to over 225 offices across more than 40 states.
Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are often identified by the use of words such as "believe," "intend," "expect," "estimate," "plan," "outlook," "project," "anticipate," "may," "will," "would" and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. Forward-looking statements include statements related to agent count; Motto open offices; franchise sales; revenue; operating expenses and cost management; the Company's outlook for the fourth quarter and full year 2024; non-GAAP financial measures; housing and mortgage market conditions; interest rates; the amount of fee waivers to affiliates affected by recent hurricanes and the impact of such fee waivers on our fourth quarter and full year 2024 outlook; operational efficiencies; business optimization and delivering the absolute best customer experience; development of new revenue opportunities; our strong margin performance being an encouraging trend; increasing optimism about future interest rates; our growing global agent count and our bold new initiatives, including enhanced technology, improved customer experience with leads, and monetizing our digital assets; and being well positioned to finish the year with positive momentum. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily accurately indicate the times at which such performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include, without limitation, (1) changes in the real estate market or interest rates and availability of financing, (2) changes in business and economic activity in general, (3) the Company's ability to attract and retain quality franchisees, (4) the Company's franchisees' ability to recruit and retain real estate agents and mortgage loan originators, (5) changes in laws and regulations, (6) the Company's ability to enhance, market, and protect its brands, (7) the Company's ability to implement its technology initiatives, (8) risks related to the Company's leadership transition, (9) fluctuations in foreign currency exchange rates, (10) the nature and amount of the exclusion of charges in future periods when determining Adjusted EBITDA is subject to uncertainty and may not be similar to such charges in prior periods, and (11) those risks and uncertainties described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission ("SEC") and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company's website at www.remaxholdings.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no obligation, to update this information to reflect future events or circumstances.
TABLE 1
RE/MAX Holdings, Inc.
Consolidated Statements of Income (Loss)
(In thousands, except share and per share amounts)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Revenue:
Continuing franchise fees
$
30,798
$
31,834
$
92,223
$
96,011
Annual dues
7,969
8,456
24,345
25,661
Broker fees
14,915
14,255
40,159
39,468
Marketing Funds fees
20,098
20,853
60,331
63,272
Franchise sales and other revenue
4,698
5,825
18,160
24,659
Total revenue
78,478
81,223
235,218
249,071
Operating expenses:
Selling, operating and administrative expenses
35,932
43,090
116,488
132,417
Marketing Funds expenses
20,098
20,853
60,331
63,272
Depreciation and amortization
7,237
8,195
22,489
24,236
Settlement and impairment charges
—
55,000
—
55,000
Gain on reduction in tax receivable agreement liability
—
(24,917)
—
(24,917)
Total operating expenses
63,267
102,221
199,308
250,008
Operating income (loss)
15,211
(20,998)
35,910
(937)
Other expenses, net:
Interest expense
(9,249)
(9,292)
(27,696)
(26,377)
Interest income
885
1,173
2,835
3,318
Foreign currency transaction gains (losses)
74
125
(568)
383
Total other expenses, net
(8,290)
(7,994)
(25,429)
(22,676)
Income (loss) before provision for income taxes
6,921
(28,992)
10,481
(23,613)
Provision for income taxes
(3,507)
(53,680)
(6,484)
(56,494)
Net income (loss)
$
3,414
$
(82,672)
$
3,997
$
(80,107)
Less: net income (loss) attributable to non-controlling interest
2,448
(23,218)
2,679
(21,992)
Net income (loss) attributable to RE/MAX Holdings, Inc.
$
966
$
(59,454)
$
1,318
$
(58,115)
Net income (loss) attributable to RE/MAX Holdings, Inc. per shareof Class A common stock
Basic
$
0.05
$
(3.28)
$
0.07
$
(3.22)
Diluted
$
0.05
$
(3.28)
$
0.07
$
(3.22)
Weighted average shares of Class A common stock outstanding
Basic
18,863,793
18,150,557
