DENVER, May 5, 2016 /PRNewswire/ --

First Quarter 2016 Highlights
(Compared to first quarter 2015 unless otherwise noted)

• Agent count grew by 6.8% to 106,708 agents
• Revenue decreased 2.9% to $42.9 million; revenue would have increased 4.7% after adjusting for the sale of the Company-owned brokerage offices
• Operating income grew by 3.5% to $15.9 million
• Adjusted EBITDA¹ increased 14.0% to $21.4 million
• Adjusted EBITDA margin expanded to 49.8%, up from 42.4%
• Adjusted basic and diluted EPS¹ were both $0.39 per share
• Announced $0.15 quarterly dividend on May 5, 2016

RE/MAX Holdings, Inc. (the "Company" or "RE/MAX") (NYSE: RMAX), one of the world's leading franchisors of real estate brokerage services, today announced operating results for the first quarter ended March 31, 2016.

"Our first quarter results demonstrate the strength of the RE/MAX model and our continued ability to execute on its most attractive features, which are increasing agent count, acquiring independent regions, growing recurring revenues, expanding margins and generating strong free cash flow," stated Dave Liniger, Chief Executive Officer and Co-Founder of RE/MAX. "Our consistent focus on effectively implementing our strategic plan combined with a gradually improving housing market resulted in an encouraging start to 2016 for RE/MAX, establishing a solid foundation for the balance of the year."

"We continue to deploy our capital in accordance with our strategic priorities. We recently acquired the New York and Alaska regions, reinvested in our business and returned capital to our shareholders," stated Karri Callahan, Chief Financial Officer. "In April, we launched the new remax.com, providing the most-visited real estate franchise website with a greatly enhanced consumer experience. We are committed to providing our network of the most-productive agents with world-class tools, technology and training."

First Quarter 2016 Operating Results

Agent Count

Total agent count grew by 6,753 agents to 106,708 agents or 6.8% compared to the first quarter 2015. In the United States ("U.S."), agent count increased by 2,372 agents to 60,317 agents or 4.1%. Agent count in U.S. Company-owned and Independent regions grew by 7.3% and decreased by 1.1%, respectively. After adjusting for the purchase of the New York region, organic agent growth in U.S. Company-owned and Independent regions was 4.9% and 2.8%, respectively, compared to the prior-year quarter. In Canada, agent count increased by 658 agents to 19,819 agents or 3.4% compared to the prior-year quarter. Outside the U.S. and Canada, agent count increased by 3,723 agents to 26,572 agents or 16.3%. During the three months ended March 31, 2016, the Company grew total agent count by 1,882 or 1.8%.

Revenue

RE/MAX generated total revenue of $42.9 million for the first quarter of 2016, a 2.9% decrease compared to $44.2 million for the first quarter of 2015 due to the sale of the Company-owned brokerages. After adjusting for the sale, revenue would have increased $2.1 million or 4.7% over the prior-year quarter.

Revenue growth was primarily driven by agent count growth and increased home-sales volume, partially offset by the strong U.S. dollar compared to the Canadian dollar. Recurring revenue streams, which include continuing franchise fees and annual dues, increased $1.3 million or 5.3% over the prior-year period and accounted for 62.5% of revenues in the first quarter 2016 compared to 57.6% in the prior-year quarter.

Revenue from continuing franchise fees was $18.9 million, an increase of $1.2 million or 7.1% compared to the prior-year quarter, up primarily due to agent count growth.

Revenue from annual dues was $7.9 million, up $0.1 million or 1.3% compared to the first quarter 2015 primarily due to increased agent count growth, partially offset by the adverse impact of the strong U.S. dollar against the Canadian dollar.

Revenue from broker fees was $7.2 million, an increase of $0.8 million or 12.2% compared to the prior-year quarter. The increase was driven by increased agent count and home-sales volume.

Franchise sales and other franchise revenue was $8.8 million, up $0.4 million or 4.4% compared to first quarter 2015, driven by increased revenue from approved supplier programs and increased registration income due to higher attendance at our annual convention held in March, partially offset by reduced global franchise sales.

Brokerage revenue was $0.1 million, a decrease of $3.8 million or 97.1% from the prior-year quarter. The decrease was attributable to the sale of the Company-owned brokerage offices to existing RE/MAX franchisees.

Operating Expenses

Total operating expenses were $27.1 million for the first quarter 2016, a decrease of $1.8 million or 6.3% compared to the prior-year quarter. Selling, operating and administrative expenses were $23.2 million, down $1.8 million or 7.3% from the prior-year quarter and represented 54.1% of revenue compared to 56.7% in the first quarter 2015.

The reduction in operating expenses was primarily due to the sale of the Company-owned brokerages, partially offset by increased compliance fees and investments in our technology infrastructure.

Adjusted EBITDA

Adjusted EBITDA was $21.4 million for the first quarter 2016, an increase of $2.6 million or 14.0% from the prior-year quarter, driven by agent count growth and the positive change in year-over-year foreign currency transaction gains and losses. Adjusted EBITDA margin was 49.8% for the first quarter 2016 compared to 42.4% in the prior-year quarter, an increase of 740 basis points, driven by organic growth (+130 bps), the sale of the Company-owned brokerages (+300 bps), and the positive net foreign-exchange impact (+310 bps).

Net Income

Reported net income was $10.4 million for the first quarter 2016, an increase of $1.3 million or 13.9% compared to the prior-year period. The increase was primarily due to increased revenue from organic growth.

Adjusted net income² was $11.7 million for the first quarter 2016, an increase of $2.0 million or 21.1% compared to the prior-year quarter. Adjusted basic and diluted EPS were both $0.39 per share for the first quarter 2016 compared to $0.33 per share and $0.32 per share, respectively, in the prior-year quarter.

Net income attributable to RE/MAX Holdings, Inc. was $4.9 million for the first quarter 2016. This amount excludes net income attributable to the non-controlling interest. Reported basic and diluted EPS attributable to RE/MAX Holdings, Inc. were both $0.28 per share for the first quarter 2016. Refer to Table 1 for the share counts used in the calculation of basic and diluted EPS attributable to RE/MAX Holdings, Inc. in accordance with U.S. generally accepted accounting principles ("U.S. GAAP").

The ownership structure used to calculate Adjusted basic and diluted EPS for the three months ended March 31, 2016 assumes RE/MAX owned 100% of RMCO, LLC ("RMCO"). The weighted average ownership RE/MAX had in RMCO was 58.33% for the three months ended March 31, 2016.

Balance Sheet

As of March 31, 2016, the Company had a cash balance of $95.7 million, a decrease of $14.5 million from December 31, 2015. The cash balance reflects the aggregate payment of approximately $4.5 million in dividends, $8.5 million for the acquisition of the New York region and a $12.7 million excess cash flow principal payment on the Company's term loan in the first quarter of 2016. As of March 31, 2016, RE/MAX had $187.4 million of term loans outstanding, net of unamortized debt discount and issuance costs, down from $200.4 million as of December 31, 2015.

Dividend

On May 5, 2016, the Company's Board of Directors approved a quarterly dividend of $0.15 per share. The quarterly dividend is payable on June 2, 2016 to shareholders of record at the close of business on May 19, 2016.

Outlook

The Company's second-quarter and full-year 2016 Outlook reflect the acquisitions of the New York and Alaska regions, the impact of the strong U.S. dollar against the Canadian dollar as well as the sale of the Company-owned brokerages. Revenue, selling, operating and administrative expenses and Adjusted EBITDA margin are subject to currency exchange rate fluctuations principally related to changes in the U.S. dollar to Canadian dollar exchange rates. The Company's outlook reflects an estimated exchange rate of $0.74 U.S. for every $1.00 Canadian.

Second Quarter 2016 Outlook:

• Agent count is estimated to increase by 5.5% to 6.0% over second quarter 2015 driven by strong agent growth outside the U.S. and Canada;
• Revenue is estimated to decrease by 3.5% to 4.5% from second quarter 2015;
  • Revenue would have been estimated to increase by 2.5% to 3.5% over 2015 after adjusting for the sale of the brokerage offices, the negative impact of foreign exchange, and the incremental contribution from the acquired New York and Alaska regions;
• Selling, operating and administrative expenses are estimated to be 44.0% to 45.0% of second quarter 2016 revenue;
  • Project-related operating expenditures are estimated to be $1.0 to $1.25 million;
• Adjusted EBITDA margin is estimated to be in the 55.0% to 56.0% range; and
• Capital expenditures estimated to be between $1.5 to $2.0 million;
  • Includes estimated project-related capital expenditures of $750 thousand to $1.0 million.

RE/MAX is reiterating its Full-Year 2016 Outlook and updating its foreign exchange guidance:

• Agent count is estimated to increase by 4.0% to 5.0% over 2015;
• Revenue is estimated to decrease by 3.0% to 4.0% compared to 2015;
  • Revenue would have been estimated to increase by 3.25% to 3.75% over 2015 after adjusting for the sale of the brokerage offices, the negative impact of foreign exchange, and the incremental contribution from the acquired New York and Alaska regions;
  • Foreign exchange is estimated to negatively impact full-year revenue by $1.0 to $1.5 million, down from $2.0 to $2.5 million, on a constant currency basis;
• Selling, operating and administrative expenses are estimated to be 48.0% to 49.0% of 2016 revenue;
  • Project-related operating expenditures is estimated to be $4.0 to $4.5 million;
• Adjusted EBITDA margin is estimated to be in the 51.5% to 53.0% range; and
• Capital expenditures estimated to be between $3.5 to $4.0 million;
  • Includes project-related capital expenditures of $2.0 to $2.5 million, up from $1.5 to $2.0 million.

The ownership RE/MAX had of RMCO as of March 31, 2016 was 58.33%. The effective U.S. GAAP tax rate attributable to RE/MAX is estimated to be between 23% and 25% in 2016.

Webcast and Conference Call

The Company will host a conference call for interested parties on Friday, May 6, 2016, beginning at 8:30 a.m. Eastern Time. Interested parties are able to access the conference call using the following dial-in numbers:

Interested parties are also able to access a live webcast through the Investor Relations section of the Company's website at 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.

About the RE/MAX Network

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. Over 100,000 agents provide RE/MAX a global reach of nearly 100 countries. Nobody sells more real estate than RE/MAX as measured by total residential transaction sides.

RE/MAX, LLC, one of the world's leading franchisors of real estate brokerage services, is a wholly-owned subsidiary of RMCO, which is controlled and managed by RE/MAX Holdings, Inc. (NYSE: RMAX).

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 may be identified by the use of words such as "believe," "intend," "expect," "estimate," "plan," "outlook," "project" and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding the Company's outlook for the second quarter and full fiscal year, including expectations regarding agent count, revenue, SO&A expenses, and Adjusted EBITDA margins for its second quarter of 2016 and full fiscal year, the Company's optimism for agent recruitment, investment, acquisitions and improving market conditions, as well as other statements regarding the Company's strategic and operational plans and business models. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will 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. Such risks and uncertainties include, without limitation, (1) changes in business and economic activity in general, (2) changes in the real estate market, including changes due to interest rates and availability of financing, (3) the Company's ability to attract and retain quality franchisees, (4) the Company's franchisees' ability to recruit and retain agents, (5) changes in laws and regulations that may affect the Company's business or the real estate market, (6) failure to maintain, protect and enhance the RE/MAX brand, (7) fluctuations in foreign currency exchange rates, as well as those risks and uncertainties described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operation" in the most recent Annual Report on Form 10-K 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 duty, to update this information to reflect future events or circumstances.

¹ Non-GAAP measures. See Table 5 for a reconciliation of Net income to Adjusted EBITDA. See Table 6 for a reconciliation of Net income to Adjusted net income and related calculation of Adjusted EPS. See the end of this press release for a definition of Non-GAAP measures.

² Non-GAAP measures. Adjusted net income measure assumes RE/MAX owns 100% of RMCO. As of March 31, 2016, RE/MAX actually owned 58.33% of RMCO. See Table 6 for a reconciliation of Adjusted net income and Adjusted EPS to net income. See the end of this press release for a definition of Non-GAAP measures.

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 not in accordance with U.S. GAAP, such as Adjusted EBITDA and the ratios related thereto. These measures are derived on the basis of methodologies other than in accordance with U.S. GAAP.

The Company defines Adjusted EBITDA as EBITDA (consolidated net income before depreciation and amortization, interest expense, interest income and the provision for income taxes, each of which is presented in the unaudited condensed consolidated financial statements included in the Quarterly Report on Form 10-Q, adjusted for the impact of the following items that the Company does not consider representative of its ongoing operating performance: loss or gain on sale or disposition of assets and sublease, loss on early extinguishment of debt, non-cash straight-line rent expense, professional fees and certain expenses incurred in connection with the IPO and subsequent secondary offerings, acquisition related expenses and severance related expenses. During the fourth quarter of 2014, the Company revised its definition of Adjusted EBITDA to include an adjustment for severance related charges incurred during or after such quarter.

Because Adjusted EBITDA omits certain non-cash items and other non-recurring cash charges or other items, the Company believes that it is less susceptible to variances that affect its operating performance resulting from depreciation, amortization and other non-cash and non-recurring cash charges or other items and is more reflective of other factors that affect its operating performance. The Company presents Adjusted EBITDA because the Company believes it is useful as a supplemental measure in evaluating the performance of the operating businesses and provides greater transparency into the Company's results of operations. The Company's management uses Adjusted EBITDA as a factor in evaluating the performance of the business.

Adjusted EBITDA has limitations as an analytical tool, and you should not consider Adjusted EBITDA either in isolation or as a substitute for analyzing the Company's results as reported under U.S. GAAP. Some of these limitations are:

• this measure does not reflect changes in, or cash requirements for, the Company's working capital needs;
• this measure does not reflect the Company's interest expense, or the cash requirements necessary to service interest or principal payments on its debt;
• this measure does not reflect the Company's income tax expense or the cash requirements to pay its taxes;
• this measure does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;
• this measure does not reflect the cash requirements to pay dividends to stockholders of the Company's Class A common stock and tax and other cash distributions to its non-controlling unitholders; 
• this measure does not reflect the cash requirements to pay RIHI Inc. and Oberndorf pursuant to the tax receivable agreements,
• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often require replacement in the future, and these measures do not reflect any cash requirements for such replacements; and
• other companies may calculate this measure differently so they may not be comparable.

Free Cash Flow is defined as operating cash flow minus capital expenditures. Free cash flow after tax/non-dividend discretionary distributions to RIHI is defined as free cash flow minus tax and other discretionary on-dividend distributions paid to RIHI to enable RIHI to satisfy its income tax obligations. Unencumbered cash generated is defined as free cash flow after tax/non-dividend discretionary distributions to RIHI minus quarterly debt principal payment minus annual excess cash flow payment on debt.

CONTACT: Investor Contact, Peter Crowe, (303) 796-3815, pcrowe@remax.com, or Media Contact, Shaun White, (303) 796-3405, shaunwhite@remax.com