Slide 1: Forward-Looking Statements and Preliminary Financial Information
Forward-Looking Statements and Preliminary Financial Information This presentation 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 us
Slide 2: RE/MAX - 45 Years and Still Going Strong
RE/MAX - 45 Years and Still Going Strong RE/MAX Competitive Advantages Unique “agent-centric” model Most-productive agents of any national brand1 #1 global market share2 Unmatched global footprint #1 name in real estate3 1Two surveys of the largest participating U.S. brokerages. The 2017 REAL Trends
Slide 3: Focused on Creating Shareholder Value
Focused on Creating Shareholder Value 1Free Cash Flow (“FCF”) = Operating Cash Flow – Capital Expenditures; $22M 2017 quarterly dividend payments / $61M 2017 FCF = 36%; see Appendix for reconciliation of non-GAAP measures Shareholder Return is Driven By Agent growth Over 7,000 agents, +6.4% YoY Fran
Slide 4: Iconic RE/MAX Brand Refreshed
Iconic RE/MAX Brand Refreshed Extensive Customer Surveys Drove the Outcome More than 20,000 U.S. & Canadian consumers surveyed Contemporary twist on #1 real estate brand1 Works well across all social, digital and mobile marketing platforms 1Source: MMR Strategy Group study of unaided brand awareness
Slide 5: Motto Mortgage Growth Increases
Motto Mortgage Growth Increases Over 70 franchise sales in 29 states during our first 16 months of operations Over 30 offices open Validating the concept with each new office opened Scaling the business efficiently and effectively Franchise sales in 2018 expected to be comparable to 2017
Slide 6: Solid Home Sales Continue, Low Inventory and Rising Prices Maintain Seller's Market
Solid Home Sales Continue, Low Inventory and Rising Prices Maintain the Seller’s Market Dynamic Source: February 2018 RE/MAX National Housing Report. See About The RE/MAX National Housing Report in the Appendix for Description and Definitions Closed Transactions year over year change Months Supply 6
Slide 7: Growing Our Global Network
Growing Our Global Network Year-over-Year Agent Count Growth of 6.4% (+7,126 agents) +6.4% YoY +2.3% YoY (+1,872 agents) +17.8% YoY (+5,254 agents) December 31, 2016 December 31, 2017 Agent Count Growth Year-over-Year 111,915 82,402 29,513 119,041 84,274 34,767 Total RE/MAX U.S. & Canada Outside U.S
Slide 8: Agent Count in the U.S. and Canada Increases
Agent Count in the U.S. and Canada Increases Agents in the U.S. Agent Count Growth FY 2017 over FY 2016 Agents in Canada +2.1% (+440 Agents) +2.3% (+1,432 Agents)
Slide 9: RE/MAX Rallied in Support of Hurricane-Impacted Associates and Communities
RE/MAX Rallied in Support of Hurricane-Impacted Associates and Their Communities Continuing franchise fees and broker fees waived for those impacted Based on individual facts and circumstances ~$2.0 million of fees waived reduced both FY17 revenue and Adjusted EBITDA1 by same amount Fees waived redu
Slide 10: Northern Illinois Acquisition Overview
Northern Illinois Acquisition Overview Includes America’s 3rd Largest City, Chicago Purchase price: $35.7 million Acquired November 2017 Key Statistics 1As of acquisition date 2Based on data from the Midwest Real Estate Data Multiple Listing Service 3Adjusted EBITDA is a non-GAAP measure. See the Ap
Slide 11: Preliminary Revenue
Preliminary Revenue Acquired Regions, Agent Growth Driving Revenue FY 2017: Recurring revenue accounted for 65.1% of revenue in 2017 vs. 64.6% in 2016 Continuing franchise fees increased primarily due to contributions from the acquired regions, agent count growth, fee increases in Company-owned regi
Slide 12: Preliminary Selling, Operating and Administrative Expenses
Preliminary Selling, Operating and Administrative Expenses For Q4 2017: SO&A was 56.6% of revenue in Q4 2017 vs. 56.8% in Q4 2016 Selling, operating and administrative expenses increased mainly due to $2.6 million in special investigation expenses, investments in Motto, as well as an increase in oth
Slide 13: U.S. Tax Reform to Reduce Effective Tax Rate
U.S. Tax Reform to Reduce Effective Tax Rate Capital Allocation Priorities Remain Unchanged Net Financial Impact Preliminary Q4 and FY2017 net expense of $8.2 million or reduction of $0.46 per diluted share (GAAP EPS) Effective tax rate is expected to drop from current 23-25% to 14-17% beginning in
Slide 14: Looking Ahead – Q1 2018 and FY 2018 Outlook
Looking Ahead – Q1 2018 and FY 2018 Outlook Growing Our Network, Our Business and Our Brand For the first quarter of 2018, RE/MAX Holdings expects: Agent count to increase 5.5% to 6.5% over first quarter 2017; Revenue in a range of $49.5 million to $51.0 million; Adjusted EBITDA margin2 in a range o
Slide 15: Leading Real Estate Franchisor with Recurring Revenues, High Margins and Strong Free Cash Flow
Leading Real Estate Franchisor with Recurring Revenues, High Margins and Strong Free Cash Flow #1 Real Estate Franchise Brand1 with Unmatched Global Footprint Highly Productive Network of More Than 115,000 Agents Agent-Centric Model is Different and Better Largely Recurring Fee-Based Revenue Model w
Slide 16: Leading Real Estate Franchisor with Recurring Revenues, High Margins and Strong Free Cash Flow
Leading Real Estate Franchisor with Recurring Revenues, High Margins and Strong Free Cash Flow Qo @® O #1 Real Estate Franchise Highly Productive Agent-Centric Model is Brand! with Unmatched Network of More Than Different and Better Global Footprint 115,000 Agents Largely Recurring Fee- 100% Franchi
Slide 17: Nobody in the World Sells More Real Estate Than RE/MAX
y NOBODY IN THE WORLD SELLS MORE REAL ESTATE THAN RE/MAX
Slide 18: About The RE/MAX National Housing Report
About The RE/MAX National Housing Report Description The RE/MAX National Housing Report is distributed each month on or about the 15th. The first Report was distributed in August 2008. The Report is based on MLS data in approximately 53 metropolitan areas, includes all residential property types, an
Slide 19: Preliminary Adjusted EBITDA Growth
Adjusted EBITDA1 ($M) Preliminary Adjusted EBITDA Growth For Q4 2017: Adjusted EBITDA up year-over-year due to the acquired regions and agent count growth Increases were partially offset by investments in Motto Mortgage and the brand refresh 1Adjusted EBITDA and Adjusted EBITDA margin are Non-GAAP n
Slide 20: Strong Balance Sheet Bolsters Ability to Reinvest and Return Capital
Strong Balance Sheet Bolsters Ability to Reinvest and Return Capital to Shareholders Preliminary Balance Sheet & Leverage Cash balance of $50.8 million on December 31, 2017, down $6.8 million from December 31, 2016 $229.0 million in term loans1 and no revolving loans outstanding Total Debt / Adjuste
Slide 21: Amortization Expense for Acquired Intangible Assets Expected to Decrease in 2018
Amortization Expense for Acquired Intangible Assets is Expected to Decrease in 2018 During 2017, franchise agreements related to earlier independent region acquisitions, including California and Texas, became fully amortized causing amortization expense to decline throughout the year Total amortizat
Slide 22: Positive Forecasts for 2017 & 2018
Positive Forecasts for 2017 & 2018 Gradual Expansion of the Housing Market Continues Monthly Existing Home Sales1 (Thousands) Annual Existing Home Sales2,3 (M) Housing Starts - Single Family3,4 (Thousands) Home Price Appreciation2,3 (YoY) 1Source: NAR (National Association of Realtors) – Existing Ho
Slide 23: Mortgage Finance Forecasts
Mortgage Finance Forecasts Purchase Originations Expected to Grow, Rates to Rise Slowly 1Source: Mortgage Bankers Association – MBA Mortgage Finance Forecast January 2018 Loan Originations1 (Billions) Mortgage & Interest Rates1 3.8% 4.0% 4.8% 5.3% 2.1% 2.4% 3.0% 3.4% 2016 2017e 2018e 2019e 30-Year F
Slide 24: Agent count footnotes
As of each quarter ended December 31, 2017, U.S. Company-owned Regions include agents in the Northern Illinois region, which converted from an Independent Region to a Company-owned Region in connection with the acquisition of certain assets of RE/MAX of Northern Illinois, Inc. (“RE/MAX of Northern I
Slide 25: Represents loss (gain) on the sale or disposition of assets as well as the
Represents loss (gain) on the sale or disposition of assets as well as the losses (gains) on the sublease of a portion of the Company’s corporate headquarters office building. Acquisition-related expenses include fees incurred in connection with the Company’s acquisition and integration of certain a
Slide 26: Represents loss (gain) on the sale or disposition of assets as well as the
Represents loss (gain) on the sale or disposition of assets as well as the losses (gains) on the sublease of a portion of the Company’s corporate headquarters office building. Acquisition-related expenses include fees incurred in connection with the Company’s acquisition and integration of certain a
Slide 27: Preliminary Free Cash Flow & Unencumbered Cash Generation
Non-GAAP measure. See the end of this presentation for definitions of non-GAAP measures. RE/MAX Holdings, Inc. Preliminary Free Cash Flow & Unencumbered Cash Generation (Amounts in 000s) 2017 2016 Cash flow from operations $ 63,288 $ 64,379 Less: Purchases of property, equipment and software (2,126)
Slide 28: Non-GAAP Financial Measures
The SEC has adopted rules to regulate the use in filings with the SEC and in public disclosures of financial measures that are not in accordance with U.S. GAAP, such as Adjusted EBITDA and the ratios related thereto, Adjusted net income, Adjusted basic and diluted earnings per share (Adjusted EPS) a
Slide 29: Non-GAAP Financial Measures (definitions)
Adjusted net income is calculated as Net income attributable to RE/MAX Holdings, assuming the full exchange of all outstanding non-controlling interests for shares of Class A common stock as of the beginning of the period (and the related increase to the provision for income taxes after such exchang
Slide 30: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) ‘Adjusted net income is calculated as Net income stiibutable to REIMAX Holdings, assuming the ful exchange of all outstanding non-controing intrest fr shares of Cass A common ‘sock as ofthe boginring ofthe period (and the rlated increase othe provision for inc