Full-Year 2020 Highlights (Compared to full-year 2019 unless otherwise noted)

• Total agent count increased 5.3% to 137,792 agents • U.S. and Canada combined agent count decreased 0.5% to 84,250 agents • Total open Motto Mortgage franchises increased 27.0% to 141 offices1 • Total Revenue of $266.0 million; Revenue excluding the Marketing Funds decreased 4.0% to $201.6 million • Net income attributable to RE/MAX Holdings, Inc. of $11.0 million and earnings per diluted share (GAAP EPS) of $0.60 • Adjusted EBITDA2 of $92.6 million, Adjusted EBITDA margin2 of 34.8% and Adjusted earnings per diluted share (Adjusted EPS2) of $1.88

Fourth Quarter 2020 Highlights (Compared to fourth quarter 2019 unless otherwise noted)

• Total Revenue of $72.4 million; Revenue excluding the Marketing Funds increased 7.6% to $54.6 million • Net income attributable to RE/MAX Holdings, Inc. of $1.3 million and earnings per diluted share (GAAP EPS) of $0.07 • Adjusted EBITDA2 of $23.8 million, Adjusted EBITDA margin2 of 32.8% and Adjusted earnings per diluted share (Adjusted EPS2) of $0.47

Operating Statistics as of January 31, 2021 (Compared to January 31, 2020 unless otherwise noted)

• Total agent count increased 5.3% to 137,742 agents • U.S. and Canada combined agent count decreased 112 agents to 83,991 agents • Total open Motto Mortgage franchises increased 21.4% to 142 offices1

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 national mortgage brokerage franchise brand in the U.S., today announced operating results for the full year and fourth quarter ended December 31, 2020. 

“A surging housing market underpinned strong fourth quarter results and provided a nice tailwind heading into 2021,” stated Adam Contos, RE/MAX Holdings Chief Executive Officer. “Despite the pandemic, we delivered good organic growth, resulting in better-than-expected fourth-quarter revenue and profit, as well as robust free cash flow generation. Overall RE/MAX agent count and Motto franchise sales continued to grow in the fourth quarter, with our Canadian agent count increasing nicely during the period. Agent count outside the U.S. and Canada also accelerated during the fourth quarter and grew an impressive 16% year-over-year. Motto Mortgage had an especially memorable year and finished off strong. We sold over 70 Motto franchises during 2020, a record, and over 35% higher than in 2019.”

Contos continued, “We expect the macro housing environment will remain buoyant in the coming year with ongoing amplified demand continuing to outpace supply. The battle for listings will stay highly competitive, and agents who are experienced, productive and armed with seller-focused tools, such as our First app, should enjoy an edge in that regard. We continue to support the productivity of our networks by enhancing our value proposition and strengthening our technology and data core.  At the same time, we are also creating additional promising revenue possibilities, both by organic means and through strategic acquisitions, such as wemlo and Gadberry Group. Overall, we believe we are poised for meaningful growth in 2021 and beyond.”

Fourth Quarter 2020 Operating Results

Agent Count

The following compares agent count as of December 31, 2020 and 2019:

As of December 31, 2020: U.S. agent count: 62,303 Canada agent count: 21,947 Subtotal: 84,250 Outside the U.S. and Canada: 53,542 Total: 137,792

As of December 31, 2019: U.S. agent count: 63,121 Canada agent count: 21,567 Subtotal: 84,688 Outside the U.S. and Canada: 46,201 Total: 130,889

Revenue

RE/MAX Holdings generated total revenue of $72.4 million in the fourth quarter of 2020, an increase of $4.3 million, or 6.2%, compared to $68.2 million in the fourth quarter of 2019. Total revenue grew primarily due to increased broker fees stemming from higher existing home sales and rising home prices, incremental revenue from acquisitions, and Motto growth, partially offset by less events-related revenue due to COVID-19 restrictions and by previously announced agent recruiting initiatives that reduced both continuing franchise fees and Marketing Funds fees. Recurring revenue streams, which consist of continuing franchise fees and annual dues, were essentially flat compared to the fourth quarter of 2019 and accounted for 61.8% of revenue (excluding the Marketing Funds) in the fourth quarter of 2020, compared to 66.6% in the comparable period in 2019.

Operating Expenses

Total operating expenses were $65.7 million for the fourth quarter of 2020, an increase of $7.5 million, or 12.9%, compared to $58.2 million in the fourth quarter of 2019. Fourth quarter total operating expenses increased primarily due to higher selling, operating and administrative expenses and increased depreciation and amortization expenses. Excluding the Marketing Funds, fourth quarter 2020 operating expenses totaled $47.9 million, an increase of $7.1 million or 17.4% compared to $40.8 million in the fourth quarter of 2019.

Selling, operating and administrative expenses were $40.8 million in the fourth quarter of 2020, an increase of $5.6 million, or 15.9%, compared to the fourth quarter of 2019 and, excluding the Marketing Funds, represented 74.6% of revenue, compared to 69.2% in the prior-year period. Selling, operating and administrative expenses increased primarily due to higher equity-based compensation expense, discretionary bonuses, and increased personnel costs largely from acquisitions, partially offset by cost-savings measures implemented in 2020, including a reduction in travel and events spend and the temporary suspension of the Company’s 401(k) match, as well as lower bad debt expense due to strong collections.

Depreciation and amortization expenses increased primarily due to placing the booj Platform in service and additional acquisition-related amortization expense from the acquisitions of First, wemlo and Gadberry Group.

Net Income and GAAP EPS

Net income attributable to RE/MAX Holdings was $1.3 million for the fourth quarter of 2020, a decrease of $1.6 million compared to the fourth quarter of 2019. Reported basic and diluted GAAP EPS were each $0.07, respectively, for the fourth quarter of 2020 compared to $0.16 each in the fourth quarter of 2019.  

Adjusted EBITDA and Adjusted EPS

Adjusted EBITDA was $23.8 million for the fourth quarter of 2020, an increase of $1.3 million or 5.7% from the fourth quarter of 2019. Adjusted EBITDA increased primarily due to higher broker fee revenue from increased existing home sales and rising home prices, the Company’s cost-savings measures and lower bad debt expense, partially offset by discretionary bonuses and increased personnel costs largely from the acquisitions. Adjusted EBITDA margin was 32.8% in the fourth quarter of 2020, down slightly compared to 33.0% in the fourth quarter of 2019.

Adjusted basic and diluted EPS were $0.48 and $0.47, respectively, for the fourth quarter of 2020 compared to adjusted diluted and basic EPS of $0.47 for the fourth quarter of 2019. The ownership structure used to calculate Adjusted basic and diluted EPS for the quarter ended December 31, 2020 assumes RE/MAX Holdings owned 100% of RMCO, LLC (“RMCO”). The weighted average ownership RE/MAX Holdings had in RMCO was 59.4% for the quarter ended December 31, 2020.

Balance Sheet

As of December 31, 2020, the Company had cash and cash equivalents of $101.4 million, an increase of $18.4 million from December 31, 2019. As of December 31, 2020, the Company had $223.6 million of outstanding debt, net of an unamortized debt discount and issuance costs, a decrease of $2.1 million compared to $225.7 million as of December 31, 2019.

Dividend

On February 17, 2021, the Company’s Board of Directors approved a quarterly cash dividend of $0.23 per share of Class A common stock.  The quarterly dividend is payable on March 17, 2021, to shareholders of record at the close of business on March 3, 2021.

Outlook

The Company’s first quarter and full-year 2021 Outlook assumes no further currency movements, acquisitions or divestitures.

For the first quarter of 2021, RE/MAX Holdings expects: • Agent count to increase 4.5% to 5.5% over first quarter 2020; • Revenue in a range of $71.0 million to $75.0 million (including revenue from the Marketing Funds in a range of $18.0 million to $19.0 million); and • Adjusted EBITDA in a range of $21.5 million to $24.5 million.

For the full-year 2021, RE/MAX Holdings expects: • Agent count to increase 4.0% to 5.0% over full-year 2020; • Revenue in a range of $300.0 million to $310.0 million (including revenue from the Marketing Funds in a range of $71.0 million to $74.0 million), and • Adjusted EBITDA in a range of $103.0 million to $107.0 million.

The effective U.S. GAAP tax rate attributable to RE/MAX Holdings is estimated to be between 22% and 24% in 2021.

Webcast and Conference Call

The Company will host a conference call for interested parties on Friday, February 26, 2021, beginning at 8:30 a.m. Eastern Time. Interested parties can access the conference call using the link below:

http://www.directeventreg.com/registration/event/4038718

Interested parties can access a live webcast through the Investor Relations section of the Company’s website at http://investors.remax.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:

1 Total 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 “Branchises”. 

2 Adjusted 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.

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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 David 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 135,000 agents across over 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 has grown to over 125 offices across more than 30 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; franchise sales; revenue; operating expenses; the Company’s outlook for the first quarter and full year 2021; dividends; non-GAAP financial measures; estimated effective tax rates for 2021; housing and mortgage market conditions, including demand and supply; the competition for listings; the advantages RE/MAX agents have over competitors; additional revenue opportunities, including through acquisitions; the enhancement of the Company’s value proposition and strengthening of its technology and data core; and the Company’s strategic and operating plans and business models. 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 the global COVID-19 pandemic, which continues to pose significant and widespread risks to the Company’s business, including the Company’s agents, loan originators, franchisees and employees, as well as home buyers and sellers. The duration and magnitude of the impact from the COVID-19 pandemic depends on future developments that cannot be predicted at this time. The Company has already experienced significant disruption to its business as a result of the COVID-19 pandemic and such disruptions may continue. Notwithstanding any mitigation actions the Company has initiated and expects to continue as the crisis is ongoing, sustained material revenue declines relating to this crisis could impact the Company’s financial condition, results of operations, stock price and ability to access the capital markets. Other important 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 the RE/MAX and Motto Mortgage brands, (7) the Company’s ability to implement its technology initiatives, and (8) fluctuations in foreign currency exchange rates, and 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.remax.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.

Investor Contact: Andy Schulz (303) 796-3287  aschulz@remax.com

Media Contact: Kerry McGovern (303) 796-3283 kmcgovern@remax.com

To access appendix tables, download a PDF of the press release via the Media Tray.