Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Jan. 31, 2020 | Jun. 30, 2019 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2019 | ||
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, par value $0.0001 per share | ||
Trading Symbol | RMAX | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001581091 | ||
Amendment Flag | false | ||
Entity Public Float | $ 534.2 | ||
Common Class A | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 17,909,545 | ||
Common Class B | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 83,001 | $ 59,974 |
Restricted cash | 20,600 | 0 |
Accounts and notes receivable, current portion, less allowances of $12,538 and $7,980, respectively | 28,644 | 21,185 |
Income taxes receivable | 896 | 533 |
Other current assets | 9,638 | 5,855 |
Total current assets | 142,779 | 87,547 |
Property and equipment, net of accumulated depreciation of $14,940 and $13,280, respectively | 5,444 | 4,390 |
Operating lease right of use assets | 51,129 | 0 |
Franchise agreements, net | 87,670 | 103,157 |
Other intangible assets, net | 32,315 | 22,965 |
Goodwill | 159,038 | 150,684 |
Deferred tax assets, net | 52,595 | 53,852 |
Income taxes receivable, net of current portion | 1,690 | 1,379 |
Other assets, net of current portion | 9,692 | 4,399 |
Total assets | 542,352 | 428,373 |
Current liabilities: | ||
Accounts payable | 2,983 | 1,890 |
Accrued liabilities | 60,163 | 13,143 |
Income taxes payable | 6,854 | 208 |
Deferred revenue | 25,663 | 25,489 |
Current portion of debt | 2,648 | 2,622 |
Current portion of payable pursuant to tax receivable agreements | 3,583 | 3,567 |
Operating lease liabilities | 5,102 | 0 |
Total current liabilities | 106,996 | 46,919 |
Debt, net of current portion | 223,033 | 225,165 |
Payable pursuant to tax receivable agreements, net of current portion | 33,640 | 37,220 |
Deferred tax liabilities, net | 293 | 400 |
Income taxes payable, net of current portion | 0 | 5,794 |
Deferred revenue, net of current portion | 18,763 | 20,224 |
Operating lease liabilities, net of current portion | 55,959 | 0 |
Other liabilities, net of current portion | 5,292 | 17,637 |
Total liabilities | 443,976 | 353,359 |
Commitments and contingencies (note 15) | ||
Stockholders' equity: | ||
Additional paid-in capital | 466,945 | 460,101 |
Retained earnings | 30,525 | 20,559 |
Accumulated other comprehensive income, net of tax | 414 | 328 |
Total stockholders' equity attributable to RE/MAX Holdings, Inc. | 497,886 | 480,990 |
Non-controlling interest | (399,510) | (405,976) |
Total stockholders' equity | 98,376 | 75,014 |
Total liabilities and stockholders' equity | 542,352 | 428,373 |
Common Class A | ||
Stockholders' equity: | ||
Common stock | 2 | 2 |
Common Class B | ||
Stockholders' equity: | ||
Common stock | $ 0 | $ 0 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts and notes receivable, allowance | $ 12,538 | $ 7,980 |
Property and equipment, accumulated depreciation | $ 14,940 | $ 13,280 |
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 | 17,838,233 | 17,754,416 |
Common stock, shares outstanding | 17,838,233 | 17,754,416 |
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 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue: | |||
Total revenue | $ 282,293 | $ 212,626 | $ 193,714 |
Operating expenses: | |||
Selling, operating and administrative expenses | 118,890 | 120,179 | 106,946 |
Marketing Funds expenses | 72,299 | 0 | 0 |
Depreciation and amortization | 22,323 | 20,678 | 20,512 |
Loss on sale or disposition of assets, net | 342 | 63 | 660 |
Gain on reduction in tax receivable agreement liability (note 4) | 0 | (6,145) | (32,736) |
Total operating expenses | 213,854 | 134,775 | 95,382 |
Operating income | 68,439 | 77,851 | 98,332 |
Other expenses, net: | |||
Interest expense | (12,229) | (12,051) | (9,996) |
Interest income | 1,446 | 676 | 352 |
Foreign currency transaction gains (losses) | 109 | (312) | 174 |
Total other expenses, net | (10,674) | (11,687) | (9,470) |
Income before provision for income taxes | 57,765 | 66,164 | 88,862 |
Provision for income taxes | (10,909) | (16,342) | (57,542) |
Net income | 46,856 | 49,822 | 31,320 |
Less: net income attributable to non-controlling interest (note 4) | 21,816 | 22,939 | 21,221 |
Net income attributable to RE/MAX Holdings, Inc. | $ 25,040 | $ 26,883 | $ 10,099 |
Common Class A | |||
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock | |||
Basic | $ 1.41 | $ 1.52 | $ 0.57 |
Diluted | $ 1.40 | $ 1.51 | $ 0.57 |
Weighted average shares of Class A common stock outstanding | |||
Basic | 17,812,065 | 17,737,649 | 17,688,533 |
Diluted | 17,867,752 | 17,767,499 | 17,731,800 |
Cash dividends declared per share of Class A common stock | $ 0.84 | $ 0.80 | $ 0.72 |
Continuing franchise fees | |||
Revenue: | |||
Total revenue | $ 99,928 | $ 101,104 | $ 93,694 |
Annual dues | |||
Revenue: | |||
Total revenue | 35,409 | 35,894 | 33,767 |
Broker fees | |||
Revenue: | |||
Total revenue | 45,990 | 46,871 | 43,801 |
Marketing Funds fees | |||
Revenue: | |||
Total revenue | 72,299 | 0 | 0 |
Franchise sales and other revenue | |||
Revenue: | |||
Total revenue | $ 28,667 | $ 28,757 | $ 22,452 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Consolidated Statements of Comprehensive Income | |||
Net income | $ 46,856 | $ 49,822 | $ 31,320 |
Change in cumulative translation adjustment | 166 | (253) | 1,037 |
Other comprehensive income (loss), net of tax | 166 | (253) | 1,037 |
Comprehensive income | 47,022 | 49,569 | 32,357 |
Less: comprehensive income attributable to non-controlling interest | 21,896 | 22,817 | 21,752 |
Comprehensive income attributable to RE/MAX Holdings, Inc., net of tax | $ 25,126 | $ 26,752 | $ 10,605 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common StockCommon Class A | Common StockCommon Class B | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss), net of tax | Non-controlling interest | Common Class A | Common Class B | Total |
Beginning balance, Value at Dec. 31, 2016 | $ 2 | $ 448,713 | $ 10,676 | $ (47) | $ (418,729) | $ 40,615 | |||
Beginning balance, Shares at Dec. 31, 2016 | 17,652,548 | 1 | |||||||
Net income | 10,099 | 21,221 | 31,320 | ||||||
Distributions to non-controlling unitholders | (17,257) | (17,257) | |||||||
Equity-based compensation expense and related dividend equivalents, value | 2,900 | (53) | 2,847 | ||||||
Equity-based compensation expense and related dividend equivalents, shares | 58,426 | ||||||||
Dividends to Class A common stockholders | (12,740) | (12,740) | |||||||
Change in accumulated other comprehensive income | 506 | 531 | 1,037 | ||||||
Payroll taxes related to net settled restricted stock units, value | (816) | (816) | |||||||
Payroll taxes related to net settled restricted stock units, shares | (13,983) | ||||||||
Other | 402 | 402 | |||||||
Ending balance, Value at Dec. 31, 2017 | $ 2 | 451,199 | 7,982 | 459 | (414,234) | 45,408 | |||
Ending balance, Shares at Dec. 31, 2017 | 17,696,991 | 1 | |||||||
Net income | 26,883 | 22,939 | 49,822 | ||||||
Distributions to non-controlling unitholders | (14,559) | (14,559) | |||||||
Equity-based compensation expense and related dividend equivalents, value | 9,314 | (112) | 9,202 | ||||||
Equity-based compensation expense and related dividend equivalents, shares | 73,462 | ||||||||
Dividends to Class A common stockholders | (14,194) | (14,194) | |||||||
Change in accumulated other comprehensive income | (131) | (122) | (253) | ||||||
Payroll taxes related to net settled restricted stock units, value | (895) | (895) | |||||||
Payroll taxes related to net settled restricted stock units, shares | (16,037) | ||||||||
Other | 483 | 483 | |||||||
Ending balance, Value at Dec. 31, 2018 | $ 2 | 460,101 | 20,559 | 328 | (405,976) | 75,014 | |||
Ending balance, Shares at Dec. 31, 2018 | 17,754,416 | 1 | 17,754,416 | 1 | |||||
Net income | 25,040 | 21,816 | 46,856 | ||||||
Distributions to non-controlling unitholders | (15,430) | (15,430) | |||||||
Equity-based compensation expense and related dividend equivalents, value | 7,375 | (104) | 7,271 | ||||||
Equity-based compensation expense and related dividend equivalents, shares | 106,390 | ||||||||
Dividends to Class A common stockholders | (14,970) | (14,970) | |||||||
Change in accumulated other comprehensive income | 86 | 80 | 166 | ||||||
Payroll taxes related to net settled restricted stock units, value | (1,110) | (1,110) | |||||||
Payroll taxes related to net settled restricted stock units, shares | (22,573) | ||||||||
Other | 579 | 579 | |||||||
Ending balance, Value at Dec. 31, 2019 | $ 2 | $ 466,945 | $ 30,525 | $ 414 | $ (399,510) | $ 98,376 | |||
Ending balance, Shares at Dec. 31, 2019 | 17,838,233 | 1 | 17,838,233 | 1 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||
Net income | $ 46,856 | $ 49,822 | $ 31,320 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 22,323 | 20,678 | 20,512 |
Bad debt expense | 4,964 | 2,257 | 1,109 |
Loss (gain) on sale or disposition of assets and sublease, net | 342 | (139) | 4,260 |
Equity-based compensation expense | 10,934 | 9,176 | 2,900 |
Deferred income tax expense | 2,310 | 9,511 | 47,931 |
Fair value adjustments to contingent consideration | 241 | (1,289) | 180 |
Payments pursuant to tax receivable agreements | (3,556) | (6,305) | (13,371) |
Non-cash change in tax receivable agreement liability | 0 | (6,145) | (32,736) |
Other, net | 910 | 1,127 | 1,146 |
Changes in operating assets and liabilities | |||
Accounts and notes receivable, current portion | (5,614) | (3,241) | (2,825) |
Advances from/to affiliates | 0 | 581 | (106) |
Other current and noncurrent assets | (6,084) | 2,170 | (2,724) |
Other current and noncurrent liabilities | 6,737 | (3,466) | 1,592 |
Income taxes receivable/payable | 178 | 1,099 | (605) |
Deferred revenue, current and noncurrent | (1,566) | 228 | 4,705 |
Net cash provided by operating activities | 78,975 | 76,064 | 63,288 |
Cash flows from investing activities: | |||
Purchases of property, equipment and capitalization of software | (13,226) | (7,787) | (2,198) |
Acquisitions, net of cash acquired of $55, $362 and $0, respectively | (14,945) | (25,888) | (35,720) |
Restricted cash acquired with the Marketing Funds acquisition | 28,495 | 0 | 0 |
Other | (1,200) | 0 | 0 |
Net cash used in investing activities | (876) | (33,675) | (37,918) |
Cash flows from financing activities: | |||
Payments on debt | (2,622) | (3,171) | (2,366) |
Distributions paid to non-controlling unitholders | (15,430) | (14,559) | (17,260) |
Dividends and dividend equivalents paid to Class A common stockholders | (15,074) | (14,306) | (12,793) |
Payment of payroll taxes related to net settled restricted stock units | (1,110) | (895) | (816) |
Payment of contingent consideration | (306) | (221) | |
Net cash used in financing activities | (34,542) | (33,152) | (33,235) |
Effect of exchange rate changes on cash | 70 | (70) | 1,063 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 43,627 | 9,167 | (6,802) |
Cash, cash equivalents and restricted cash, beginning of year | 59,974 | 50,807 | 57,609 |
Cash, cash equivalents and restricted cash, end of period | 103,601 | 59,974 | 50,807 |
Supplemental disclosures of cash flow information: | |||
Cash paid for interest | 11,690 | 11,525 | 9,972 |
Net cash paid for income taxes | 8,429 | 5,769 | 10,078 |
Schedule of non-cash investing activities: | |||
Increase (decrease) in accounts payable and accrued liabilities for purchases of property, equipment and capitalization of software | $ (94) | $ 1,080 | $ 295 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Consolidated Statements of Cash Flows | |||
Cash acquired | $ 55 | $ 362 | $ 0 |
Business and Organization
Business and Organization | 12 Months Ended |
Dec. 31, 2019 | |
Business and Organization | |
Business and Organization | 1. Business and Organization RE/MAX Holdings, Inc. (“Holdings”) completed an initial public offering (the “IPO”) of its shares of Class A common stock on October 7, 2013. Holdings’ only business is to act as the sole manager of RMCO, LLC (“RMCO”). As of December 31, 2019, Holdings owns 58.7% of the common membership units in RMCO, while RIHI, Inc. (“RIHI”) owns the remaining 41.3%. Holdings and its consolidated subsidiaries, including RMCO, are referred to hereinafter as the “Company.” The Company is a franchisor 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”). RE/MAX, founded in 1973, has over 130,000 agents operating in over 8,000 offices and a presence in more than 110 countries and territories. Motto, founded in 2016, is the first nationally franchised mortgage brokerage in the U.S. During 2018, the Company acquired all membership interests in booj, LLC, formerly known as Active Website, LLC, (“booj”), a real estate technology company. RE/MAX and Motto are 100% franchised and do not operate any real estate or mortgage brokerage offices. Holdings Capital Structure Holdings has two classes of common stock, Class A common stock and Class B common stock: Class A common stock Holders of shares of Class A common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Additionally, holders of shares of Class A common stock are entitled to receive dividends when and if declared by the Company’s Board of Directors, subject to any statutory or contractual restrictions on the payment of dividends. Holders of shares of Class A common stock do not have preemptive, subscription, redemption or conversion rights. Class B common stock RIHI is the sole holder of Class B common stock and is controlled by David Liniger, the Company’s Chairman and Co-Founder, and Gail Liniger, the Company’s Vice Chair and Co-Founder. On October 7, 2018, pursuant to the terms of the Company’s Certificate of Incorporation, RIHI lost its previous effective control of a majority of the voting power of Holdings common stock. RIHI owns all Holdings’ Class B common stock which, prior to October 7, 2018, entitled RIHI to a number of votes on matters presented to Holdings stockholders equal to two times the number of RMCO common units that RIHI held. Effective October 7, 2018, the voting power of Class B common stock was reduced to equal the number of RMCO common units held, and therefore RIHI lost the controlling vote of Holdings. As a result of this change in the voting rights of the Class B common stock, RIHI no longer controls a majority of the voting power of Holdings’ common stock, and Holdings is no longer considered a “controlled company” under the corporate governance standards of the New York Stock Exchange (the “NYSE”). Holders of shares of Class B common stock do not have preemptive, subscription, redemption or conversion rights. Holders of shares of Class A common stock and Class B common stock vote together as a single class on all matters presented to the Company’s stockholders for their vote or approval, except as otherwise required by applicable law. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements (“financial statements”) and notes thereto included in this Annual Report on Form 10-K have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The accompanying financial statements 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 financial statements reflect all normal and recurring adjustments necessary to present fairly the Company’s financial position as of December 31, 2019 and 2018, the results of its operations and comprehensive income, changes in its stockholders’ equity and its cash flows for the years ended December 31, 2019, 2018 and 2017. On January 1, 2019 the Company acquired all of the regional and pan-regional advertising fund entities previously owned by its founder and Chairman of the Board of Directors, David Liniger, for a nominal amount. During 2018, the Company completed the acquisition of booj, and during 2017 the Company completed the acquisition of an independent region. Their results of operations, cash flows and financial positions are included in the financial statements from their respective dates of acquisition. See Note 6, Acquisitions Use of Estimates The preparation of the accompanying 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 financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain items in the Consolidated Statement of Cash Flows have been reclassified in the years ended December 31, 2018 and 2017 to conform with the current year presentation. Segment Reporting The Company operates under the following segments: ● RE/MAX Franchising – comprises the operations of the Company’s owned and independent global franchising operations under the RE/MAX brand name and corporate-wide shared services expenses. ● Motto Franchising – comprises the operations of the Company’s mortgage broker franchising operations under the Motto Mortgage brand name and does not include any charges related to the corporate-wide shared services expenses. ● Marketing Funds – comprises the operations of the Company’s marketing campaigns designed to build and maintain brand awareness and the development and operation of agent marketing technology. ● Other – comprises the legacy operations of booj (see Note 6, Acquisitions for additional information), which, due to quantitative insignificance, do not meet the criteria of a reportable segment. See Note 18 Segment Information Principles of Consolidation Holdings consolidates RMCO and records a non-controlling interest in the accompanying Consolidated Balance Sheets and records net income attributable to the non-controlling interest and comprehensive income attributable to the non-controlling interest in the accompanying Consolidated Statements of Income and Consolidated Statements of Comprehensive Income, respectively. Revenue Recognition The Company generates the substantial majority of its revenue from contracts with customers. The Company’s franchise agreements offer the following benefits to the franchisee: common use and promotion of RE/MAX and Motto trademarks; distinctive sales and promotional materials; access to technology; marketing tools and training; standardized supplies and other materials used in RE/MAX and Motto offices; and recommended procedures for operation of RE/MAX and Motto offices. The Company concluded that these benefits are highly related and all a part of one performance obligation for each franchise agreement, a license of symbolic intellectual property that is billed through a variety of fees including continuing franchise fees, annual dues, broker fees, marketing funds fees and franchise sales, described below. The Company has other performance obligations associated with contracts with customers in other revenue for training, marketing and events, and legacy booj customers. The method used to measure progress is over the passage of time for most streams of revenue. The following is a description of principal activities from which the Company generates its revenue. Continuing Franchise Fees Continuing franchise fees are fixed contractual fees paid monthly (a) by regional franchise owners in Independent Regions or franchisees in Company-owned Regions based on the number of RE/MAX agents in the respective franchised region or office or (b) by Motto franchisees based on the number of offices open. Motto offices reach the full monthly billing once the Motto office has been open for 12 to 14 months. This revenue is recognized in the month for which the fee is billed. This revenue is a usage-based royalty as it is dependent on the number of RE/MAX agents or number of Motto offices. Annual Dues Annual dues are a fixed membership fee paid annually by RE/MAX agents directly to the Company to be a part of the RE/MAX network and use the RE/MAX brand. Annual dues are a flat fee per agent. The Company defers the annual dues revenue when billed and recognizes the revenue ratably over the 12-month period to which it relates. Annual dues revenue is a usage-based royalty as it is dependent on the number of RE/MAX agents. The activity in the Company’s deferred revenue for annual dues is included in “Deferred revenue” and “Deferred revenue, net of current portion” on the Consolidated Balance Sheets, and consists of the following in aggregate (in thousands): Balance at New billings Revenue recognized (a) Balance at end Year ended December 31, 2019 $ 15,877 $ 35,514 $ (35,409) $ 15,982 (a) Revenue recognized related to the beginning balance was $14.4 million for the year ended December 31, 2019. (b) Broker Fees Broker fees are assessed against real estate commissions paid by customers when a RE/MAX agent sells a home. Generally, the amount paid is 1% of the total commission on the transaction, although in Independent Regions in Canada it is not charged. Additionally, agents in Company-owned Regions existing prior to 2004, the year the Company began assessing broker fees, are generally “grandfathered” and continue to be exempt from paying a broker fee. As of December 31, 2019, grandfathered agents represented approximately 17% of total agents in U.S. Company-owned Regions. Revenue from broker fees is recognized as a sales-based royalty and recognized in the month when a home sale transaction occurs. Motto franchisees do not pay any fees based on the number or dollar value of loans brokered. Marketing Funds Fees Marketing Funds fees are fixed contractual fees paid monthly by franchisees based on the number of RE/MAX agents in the respective franchised region or office or the number of Motto offices. These revenues are obligated to be used for marketing campaigns to build brand awareness and to support agent marketing technology. Amounts received into the Marketing Funds are recognized as revenue in the month for which the fee is billed. This revenue is a usage-based royalty as it is dependent on the number of RE/MAX agents or number of Motto offices. All assets of the Marketing Funds are contractually restricted for the benefit of franchisees, and the Company recognizes an equal and offsetting liability on the Company’s balance sheet for all amounts received. Additionally, this results in recording an equal and offsetting amount of expenses against all revenues such that there is no impact to overall profitability of the Company from these revenues. Franchise Sales Franchise sales comprises revenue from the sale or renewal of franchises. A fee is charged upon a franchise sale or renewal. Those fees are deemed to be a part of the license of symbolic intellectual property and are recognized as revenue over the contractual term of the franchise agreement, which is typically 5 years for RE/MAX and 7 years for Motto franchise agreements. The activity in the Company’s franchise sales deferred revenue accounts consists of the following (in thousands): Balance at New billings Revenue recognized (a) Balance at end Year ended December 31, 2019 $ 27,560 $ 7,750 $ (9,426) $ 25,884 (a) Revenue recognized related to the beginning balance was $ 8.4 million for the year ended December 31, 2019. Commissions Related to Franchise Sales 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 Consolidated Balance Sheets) consist of the following (in thousands): Balance at Expense Additions to contract Balance at end beginning of period recognized cost for new activity of period Year ended December 31, 2019 $ 3,748 $ (1,290) $ 1,120 $ 3,578 Other Revenue Other revenue is primarily revenue from preferred marketing arrangements and event-based revenue from training and other programs. Revenue from preferred marketing arrangements involves both flat fees paid in advance as well as revenue sharing, both of which are generally recognized over the period of the arrangement and are recorded net as the Company does not control the good or service provided. Event-based revenue is recognized when the event occurs and until then amounts collected are included in “Deferred revenue”. Other revenue also includes revenue from booj’s legacy operations for its external customers as booj continues to provide technology products and services, such as websites, mobile apps, reporting and website tools, to its legacy customers and Disaggregated Revenue In the following table, segment revenue is disaggregated by geographical area (in thousands): Year Ended December 31, 2019 2018 2017 U.S. $ 164,867 $ 170,496 $ 160,538 Canada 23,024 23,771 23,189 Global 11,745 10,237 9,431 Total RE/MAX Franchising 199,636 204,504 193,158 U.S. 64,906 — — Canada 6,559 — — Global 834 — — Total Marketing Funds 72,299 — — Motto Franchising (a) 4,542 2,536 556 Other 5,816 5,586 — Total $ 282,293 212,626 193,714 (a) Revenue from the Motto Franchising segment is derived exclusively within the U.S. In the following table, segment revenue is disaggregated by Company-owned or Independent Regions in the U.S., Canada and Global (in thousands): Year Ended December 31, 2019 2018 2017 Company-owned Regions $ 128,972 $ 133,925 $ 125,092 Independent Regions 44,686 46,289 44,799 Global and Other 25,978 24,290 23,267 Total RE/MAX Franchising 199,636 204,504 193,158 Marketing Funds 72,299 — — Motto Franchising 4,542 2,536 556 Other 5,816 5,586 — Total $ 282,293 $ 212,626 $ 193,714 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): 2020 2021 2022 2023 2024 Thereafter Total Annual dues $ 15,982 $ — $ — $ — $ — $ — $ 15,982 Franchise sales 7,141 5,801 4,368 2,881 1,589 4,104 25,884 Total $ 23,123 $ 5,801 $ 4,368 $ 2,881 $ 1,589 $ 4,104 $ 41,866 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 Consolidated Balance Sheets to the amounts presented in the Consolidated Statements of Cash Flows (in thousands): As of December 31, 2019 2018 Cash and cash equivalents $ 83,001 $ 59,974 Restricted cash 20,600 — Total cash, cash equivalents and restricted cash $ 103,601 $ 59,974 Services Provided to the Marketing Funds by RE/MAX Franchising RE/MAX Franchising charges the Marketing Funds for various services it performs. These services are primarily comprised of (a) providing agent marketing technology, including customer relationship management tools, the www.remax.com website, agent and office websites, and mobile apps, (b) dedicated employees focused on marketing campaigns, and (c) various administrative services including accounting and legal. Because these costs are ultimately paid by the Marketing Funds, they do not impact the net income of Holdings as the Marketing Funds have no reported net income. Costs charged from RE/MAX Franchising to the Marketing Funds are as follows (in thousands): Year Ended December 31, 2019 Technology development - operating $ 6,244 Technology development - capital 5,095 Marketing staff and administrative services (a) 3,763 Total $ 15,102 (a) Costs charged to the Marketing Funds for the years ended December 31, 2018 and 2017, while the Marketing Funds were a related party, were $3.8 million and $3.4 million, respectively. Prior to January 1, 2019, the Marketing Funds were not owned by the Company (see Note 6 Acquisitions Selling, Operating and Administrative Expenses Selling, operating and administrative expenses primarily consist of personnel costs, including salaries, benefits, payroll taxes and other compensation expenses, professional fees, lease costs, as well as expenses for marketing to customers, to expand the Company’s franchises and outsourced technology services. Fair Value of Financial Instruments The carrying amounts of financial instruments, net of any allowances, including cash equivalents, accounts and notes receivable, accounts payable and accrued expenses approximate fair value due to their short-term nature. Accounts and Notes Receivable Accounts receivable arising from monthly billings do not bear interest. The Company provides limited financing of certain franchise sales through the issuance of notes receivable with the associated interest recorded in “Interest income” in the accompanying Consolidated Statements of Income. Amounts collected on notes receivable are included in “Net cash provided by operating activities” in the accompanying Consolidated Statements of Cash Flows. The Company records allowances against its accounts and notes receivable balances for estimated probable losses. Increases and decreases in the allowance for doubtful accounts are established based upon changes in the credit quality of receivables and are included as a component of “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income. The allowance for doubtful accounts and notes is based on historical experience, general economic conditions, and the credit quality of specific accounts. The activity in the Company’s allowances against accounts and notes receivable consists of the following (in thousands): Balance at beginning of period Additions/charges to cost and expense for allowances for doubtful accounts (a) Deductions/write-offs Balance at end of period Year Ended December 31, 2019 $ 7,980 $ 4,964 $ (406) $ 12,538 Year Ended December 31, 2018 $ 7,223 $ 2,257 $ (1,500) $ 7,980 Year Ended December 31, 2017 $ 6,458 $ 1,109 $ (344) $ 7,223 (a) For the year ended December 31, 2019, $1.5 million of expense was attributable to the acquired Marketing Funds. Accumulated Other Comprehensive Income (Loss) and Foreign Currency Translation Accumulated other comprehensive income (loss) includes all changes in equity during a period that have yet to be recognized in income, except those resulting from transactions with stockholders and is comprised of foreign currency translation adjustments. As of December 31, 2019, the Company, directly and through its franchisees, conducted operations in over 110 countries and territories, including the U.S. and Canada. The functional currency for the Company’s operations is the U.S. dollar, except for its Canadian subsidiary which is the Canadian Dollar. Assets and liabilities of the Canadian subsidiary are translated at the spot rate in effect at the applicable reporting date, and the consolidated statements of income and cash flows are translated at the average exchange rates in effect during the applicable period. Exchange rate fluctuations on translating consolidated foreign currency financial statements into U.S. dollars that result in unrealized gains or losses are referred to as translation adjustments. Cumulative translation adjustments are recorded as a component of “Accumulated other comprehensive income,” and periodic changes are included in comprehensive income. When the Company sells a part or all of its investment in a foreign entity resulting in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided, it releases any related cumulative translation adjustment into net income. Foreign currency denominated monetary assets and liabilities and transactions occurring in currencies other than the Company’s or the Company’s consolidated foreign subsidiaries’ functional currencies are recorded based on exchange rates at the time such transactions arise. Changes in exchange rates with respect to amounts recorded in the accompanying Consolidated Balance Sheets related to these non-functional currency transactions result in transaction gains and losses that are reflected in the accompanying Consolidated Statements of Income as “Foreign currency transaction (losses) gains.” Property and Equipment Property and equipment, including leasehold improvements, are initially recorded at cost. Depreciation is provided for on a straight-line method over the estimated useful lives of each asset class and commences when the property is placed in service. Amortization of leasehold improvements is provided for on a straight-line method over the estimated benefit period of the related assets or the lease term, if shorter. Franchise Agreements and Other Intangible Assets The Company’s franchise agreements result from franchise rights acquired from Independent Region acquisitions and are initially recorded at fair value. The Company amortizes the franchise agreements over their estimated useful life on a straight-line basis. The Company also purchases and develops software for internal use. Software development costs and upgrade and enhancement costs incurred during the application development stage that result in additional functionality are capitalized. Costs incurred during the preliminary project and post-implementation-operation stages are expensed as incurred. Capitalized software costs are generally amortized over a term of two to five years . Purchased software licenses are amortized over their estimated useful lives. In addition, the Company owns the principal trademarks, service marks and trade names that it uses in conjunction with operating its business. These intangible assets increase when the Company pays to file trademark applications in the U.S. and certain other jurisdictions globally. The Company’s trademarks are amortized on a straight-line basis over their estimated useful lives. The Company reviews its franchise agreements and other intangible assets subject to amortization for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is assessed by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated from such asset. If not recoverable, the excess of the carrying amount of an asset over its estimated discounted cash flows would be charged to operations as an impairment loss. For each of the years ended December 31, 2019, 2018 and 2017, there were no material impairments indicated for such assets. Goodwill Goodwill is an asset representing the future economic benefits arising from the other assets acquired in a business combination that are not individually identified and separately recognized. The Company assesses goodwill for impairment at least annually at the reporting unit level or whenever an event occurs that would indicate impairment may have occurred. Reporting units are driven by the level at which segment management reviews operating results. The Company performs its required impairment testing annually on October 1. The Company’s impairment assessment begins with a qualitative assessment to determine if it is more likely than not that a reporting unit’s fair value is less than the carrying amount. The initial qualitative assessment includes comparing the overall financial performance of the reporting units against the planned results as well as other factors which might indicate that the reporting unit’s value has declined since the last assessment date. If it is determined in the qualitative assessment that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the standard two-step quantitative impairment test is performed. The impairment test consists of comparing the estimated fair value of each reporting unit with its carrying amount, including goodwill. The fair value of a reporting unit is determined by forecasting results, such as franchise sales for Motto, and applying and assumed discount rate to determine fair value as of the test date. If the estimated fair value of a reporting unit exceeds its carrying value, then it is not considered impaired and no further analysis is required. Goodwill impairment exists when the estimated implied fair value of a reporting unit’s goodwill is less than its carrying value. The Company did not record any goodwill impairments during the years ended December 31, 2019, 2018 and 2017 . Income Taxes The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Management periodically assesses the recoverability of its deferred tax assets based upon expected future earnings, future deductibility of the asset and changes in applicable tax laws and other factors. If management determines that it is not likely that the deferred tax asset will be fully recoverable in the future, a valuation allowance may be established for the difference between the asset balance and the amount expected to be recoverable in the future. The allowance will result in a charge to the Company’s Consolidated Statements of Income. RMCO complies with the requirements of the Internal Revenue Code that are applicable to limited liability companies that have elected to be treated as partnerships, which allow for the complete pass-through of taxable income or losses to RMCO’s unitholders, who are individually responsible for any federal tax consequences. The share of U.S. income allocable to Holdings results in a provision for income taxes for the federal and state taxes on that portion of income. The share of U.S. income allocable to RIHI does not result in a provision for income taxes for federal and state taxes given Holdings does not consolidate RIHI. RMCO is subject to certain global withholding taxes, which are ultimately allocated to both Holdings and RIHI since they are paid by RMCO. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Equity-Based Compensation The Company recognizes compensation expense associated with equity-based compensation as a component of “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income. All equity-based compensation is required to be measured at fair value on the grant date, is expensed over the requisite service, generally over a three-year period, and forfeitures are accounted for as they occur. The Company recognizes compensation expense on awards on a straight-line basis over the requisite service period for the entire award. Refer to Note 13, Equity-Based Compensation for additional discussion regarding details of the Company’s equity-based compensation plans. Recently Adopted Accounting Pronouncements In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220), In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) expedients Leases, In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350) New Accounting Pronouncements Not Yet Adopted In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases | |
Leases | 3. 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. The leases have remaining lease terms ranging from less than a year up to 14, some of which include one or more options to renew, with renewal terms that can extend the lease term from one The Company has a lease for its corporate headquarters office building (the “Master Lease”) that expires in 2028. The Company may, at its option, extend the Master Lease for two renewal periods of 10 years. Under the terms of the Master Lease, the Company pays an annual base rent, which escalates 3% each year, including the first optional renewal period. The second optional renewal period resets to fair market rental value, and the rent escalates 3% each year until expiration. The Company pays for insurance, property taxes and operating expenses of the leased space. The Master Lease is the Company’s only significant lease. The Company acts as the lessor for four sublease agreements on its corporate headquarters, consisting solely of operating leases, each of which include a renewal option for the lessee to extend the length of the lease. Renewal options for two of the sublease agreements are contingent upon renewal of the corporate headquarters lease, which is not reasonably certain to be exercised in 2028. As such, the Company determined these sublease renewal options are not reasonably certain to be exercised. Renewal options for the remaining two sublease agreements have already been exercised and will expire before the end of the corporate headquarters lease in 2028. The Company has made an accounting policy election not to recognize right-of-use assets and lease liabilities that arise from any of its short-term leases. All leases with a term of 12 months or less at commencement, for which the Company is not reasonably certain to exercise available renewal options that would extend the lease term past 12 months, will be recognized on a straight-line basis over the lease term. The Company used its Senior Secured Credit Facility interest rate to extrapolate a rate for each of its leases to calculate the present value of the lease liability and right-of-use asset. A summary of the Company’s lease cost is as follows (in thousands, except for weighted-averages): Year Ended December 31, 2019 Lease Cost Operating lease cost (a) $ 12,259 Sublease income (1,508) Short-term lease cost (b) 6,495 Total lease cost $ 17,246 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash outflows from operating leases $ 8,507 Weighted-average remaining lease term in years - operating leases 8.4 Weighted-average discount rate - operating leases 6.3 % (a) Includes approximately $3.7 million of taxes, insurance and maintenance. (b) Includes expenses associated with short-term leases of billboard advertisements and is included in “Marketing Funds expenses” on the Consolidated Statements of Income. Maturities under non-cancellable leases as of December 31, 2019 were as follows (in thousands): Rent Payments Sublease Receipts Total Cash Outflows Year ending December 31: 2020 $ 8,756 $ (888) $ 7,868 2021 9,010 (775) 8,235 2022 9,002 (804) 8,198 2023 9,173 (822) 8,351 2024 9,439 (785) 8,654 Thereafter 34,235 (597) 33,638 Total lease payments $ 79,615 $ (4,671) $ 74,944 Less: imputed interest 18,554 Present value of lease liabilities $ 61,061 As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting, maturities under non-cancellable leases as of December 31, 2018 were as follows (in thousands): Rent Payments Sublease Receipts Total Cash Outflows Year ending December 31: 2019 $ 9,402 $ (1,087) $ 8,315 2020 9,601 (873) 8,728 2021 9,341 (775) 8,566 2022 9,011 (804) 8,207 2023 9,169 (827) 8,342 Thereafter 43,556 (1,382) 42,174 Total lease payments $ 90,080 $ (5,748) $ 84,332 |
Non-controlling Interest
Non-controlling Interest | 12 Months Ended |
Dec. 31, 2019 | |
Noncontrolling Interest | |
Non-controlling Interest | 4. Non-controlling Interest Holdings is the sole managing member of RMCO and operates and controls all of the business affairs of RMCO. The ownership of the common units in RMCO is summarized as follows: As of December 31, 2019 2018 Shares Ownership % Shares Ownership % Non-controlling interest ownership of common units in RMCO 12,559,600 41.3 % 12,559,600 41.4 % Holdings outstanding Class A common stock (equal to Holdings common units in RMCO) 17,838,233 58.7 % 17,754,416 58.6 % Total common units in RMCO 30,397,833 100.0 % 30,314,016 100.0 % The weighted average ownership percentages for the applicable reporting periods are used to calculate the “Net income attributable to RE/MAX Holdings, Inc.” A reconciliation of “Income before provision for income taxes” to “Net income attributable to RE/MAX Holdings, Inc.” and “Net Income attributable to non-controlling interest” in the accompanying Consolidated Statements of Income for the periods indicated is detailed as follows (in thousands, except percentages): Year Ended December 31, 2019 2018 2017 RE/MAX Non-controlling Total RE/MAX Non-controlling Total RE/MAX Non-controlling Total Weighted average ownership percentage of RMCO (a) 58.6 % 41.4 % 100.0 % 58.6 % 41.4 % 100.0 % 58.5 % 41.5 % 100.0 % Income before provision for income taxes (a) $ 33,850 $ 23,915 $ 57,765 $ 41,238 $ 24,926 $ 66,164 $ 65,493 $ 23,369 $ 88,862 Provision for income taxes (b)(c) (8,810) (2,099) (10,909) (14,355) (1,987) (16,342) (55,394) (2,148) (57,542) Net income $ 25,040 $ 21,816 $ 46,856 $ 26,883 $ 22,939 $ 49,822 $ 10,099 $ 21,221 $ 31,320 (a) The weighted average ownership percentage of RMCO differs from the allocation of income before provision for income taxes between Holdings and the non-controlling interest due to (i) certain relatively insignificant expenses and (ii) the significant gain on reduction in TRA liability in 2018 and 2017 attributable only to Holdings. See Note 12, Income Taxes for additional information. (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 pass-through income from RMCO. It also includes Holdings’ share of taxes directly incurred by RMCO and its subsidiaries, related primarily to tax liabilities in certain foreign jurisdictions. In 2018 and 2017, the provision for income taxes attributable to Holdings also includes a significant decrease in the value of deferred tax assets. See Note 12, Income Taxes for additional information. (c) The provision for income taxes attributable to the non-controlling interest represents its share of taxes related primarily to tax liabilities in certain foreign jurisdictions directly incurred by RMCO or its subsidiaries. Because RMCO is a pass-through entity there is no U.S. federal and state income tax provision recorded on the non-controlling interest. 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): Year Ended December 31, 2019 2018 Tax and other distributions $ 4,880 $ 4,511 Dividend distributions 10,550 10,048 Total distributions to non-controlling unitholders $ 15,430 $ 14,559 On February 19, 2020, the Company declared a distribution to non-controlling unitholders of $2.8 million, which is payable on March 18, 2020. Holdings Ownership of RMCO and Tax Receivable Agreements Holdings has twice acquired significant portions of the ownership in RMCO; first in October 2013 at the time of IPO when Holdings acquired its initial 11.5 million common units of RMCO and, second, in November and December 2015 when it acquired 5.2 million additional common units. Holdings issued Class A common stock, which it exchanged for these common units of RMCO. RIHI then sold the Class A common stock to the market. When Holdings acquired common units in RMCO, it received a step-up in tax basis on the underlying assets held by RMCO. The step-up is principally equivalent to the difference between (1) the fair value of the underlying assets on the date of acquisition of the common units and (2) their tax basis in RMCO, multiplied by the percentage of units acquired. The majority of the step-up in basis relates to intangibles assets, primarily franchise agreements and goodwill, and the step-up is often substantial. These assets are amortizable under IRS rules and result in deductions on the Company’s tax return for many years and consequently, Holdings receives a future tax benefit. These future benefits are reflected within deferred tax assets on the Company’s consolidated balance sheets. If Holdings acquires additional common units of RMCO from RIHI, the percentage of Holdings’ ownership of RMCO will increase, and additional deferred tax assets will be created as additional tax basis step-ups occur. In connection with the initial sale of RMCO common units in October 2013, Holdings entered into Tax Receivable Agreements (“TRAs”) which require that Holdings make annual payments to the TRA holders equivalent to 85% of any tax benefits realized on each year’s tax return from the additional tax deductions arising from the step-up in tax basis. The TRA holders as of December 31, 2019 are RIHI and Parallaxes Rain Co-Investment, LLC (“Parallaxes”). TRA liabilities were established for the future cash obligations expected to be paid under the TRAs and are not discounted. As of December 31, 2019, this liability was $37.2 million and was recorded within “Current portion of payable pursuant to tax receivable agreements” and “Payable pursuant to tax receivable agreement” in the Consolidated Balance Sheets. Similar to the deferred tax assets, the TRA liabilities would increase if Holdings acquires additional common units of RMCO from RIHI. Both deferred tax assets and TRA liability were substantially reduced by the Tax Cuts and Jobs Act enacted in December 2017. The reduction in the corporate tax rate from 35% to 21% resulted in comparable reductions in both the deferred tax asset amounts and the TRA liabilities. The deferred tax assets and TRA liabilities were further reduced in 2018 as a result of the foreign tax provisions contained in the Tax Cuts and Jobs Act. See Note 12, Income Taxes |
Earnings Per Share and Dividend
Earnings Per Share and Dividends | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share and Dividends | |
Earnings Per Share and Dividends | 5. Earnings Per Share and Dividends Earnings Per Share Basic earnings per share (“EPS”) measures the performance of an entity over the reporting period. Diluted EPS measures the performance of an entity over the reporting period while giving effect to all potentially dilutive common shares that were outstanding during the period. The treasury stock method is used to determine the dilutive effect of time-based restricted stock units. The dilutive effect of performance-based restricted stock units is measured using the guidance for contingently issuable shares. The following is a reconciliation of the numerator and denominator used in the basic and diluted EPS calculations (in thousands, except shares and per share information): Year Ended December 31, 2019 2018 2017 Numerator Net income attributable to RE/MAX Holdings, Inc. $ 25,040 $ 26,883 $ 10,099 Denominator for basic net income per share of Class A common stock Weighted average shares of Class A common stock outstanding 17,812,065 17,737,649 17,688,533 Denominator for diluted net income per share of Class A common stock Weighted average shares of Class A common stock outstanding 17,812,065 17,737,649 17,688,533 Add dilutive effect of the following: Restricted stock units 55,687 29,850 43,267 Weighted average shares of Class A common stock outstanding, diluted 17,867,752 17,767,499 17,731,800 Earnings per share of Class A common stock Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, basic $ 1.41 $ 1.52 $ 0.57 Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, diluted $ 1.40 $ 1.51 $ 0.57 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 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): Year Ended December 31, 2019 2018 2017 Quarter end declared Date paid Per share Date paid Per share Date paid Per share March 31 March 20, 2019 $ 0.21 March 21, 2018 $ 0.20 March 22, 2017 $ 0.18 June 30 May 29, 2019 0.21 May 30, 2018 0.20 May 31, 2017 0.18 September 30 August 29, 2019 0.21 August 29, 2018 0.20 August 30, 2017 0.18 December 31 November 27, 2019 0.21 November 28, 2018 0.20 November 29, 2017 0.18 $ 0.84 $ 0.80 $ 0.72 On February 19, 2020, the Company’s Board of Directors declared a quarterly dividend of $0.22 per share on all outstanding shares of Class A common stock, which is payable on March 18, 2020 to stockholders of record at the close of business on March 4, 2020. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2019 | |
Acquisitions | |
Acquisitions | 6. Acquisitions First On December 16, 2019, the Company acquired First Leads, Inc. (“First”) for $15 million in cash generated from operations. First is a mobile app that leverages data science, machine learning and human interaction to help real estate professionals better leverage the value of their personal network and was acquired to complement the Company’s technology offerings and booj Platform. Marketing Funds On January 1, 2019, the Company acquired all of the regional and pan-regional advertising fund entities previously owned by its founder and Chairman of the Board of Directors, David Liniger, for a nominal amount. As in the past, the Marketing Funds are contractually obligated to use the funds collected to support both regional and pan-regional marketing campaigns designed to build and maintain brand awareness and to support the Company’s agent marketing technology. The Company does not plan for the use of the funds to change because of this acquisition and consolidation. The acquisitions of the Marketing Funds are part of the Company’s succession plan, and ownership of the Marketing Funds by the franchisor is a common structure. Expenses incurred with the acquisition of the Marketing Funds were not material. The total assets equal the total liabilities of the Marketing Funds and beginning January 1, 2019, are reflected in the consolidated financial statements of the Company. The Company also began recognizing revenue from the amounts collected, which substantially increased its revenues and expenses. The following table summarizes the Company’s allocation of the purchase price to the fair value of assets acquired and liabilities assumed (in thousands): Restricted cash $ 28,495 Other current assets 8,472 Property and equipment 788 Other assets, net of current portion 126 Total assets acquired 37,881 Other current liabilities 37,881 Total liabilities assumed 37,881 Total acquisition price $ - The Marketing Funds constitutes a business and was accounted for using the fair value acquisition method. The total purchase price was allocated to the assets acquired based on their estimated fair values. Booj, LLC On February 26, 2018, the Company acquired all membership interests in booj using $26.3 million in cash generated from operations, plus up to approximately $10.0 million in equity-based compensation to be earned over time, based on grant date fair value, which will be accounted for as compensation expense in the future (see Note 13, Equity-Based Compensation The following table summarizes the Company’s allocation of the purchase price to the fair value of assets acquired and liabilities assumed (in thousands): Cash $ 362 Other current assets 367 Property and equipment 625 Software 7,400 Trademarks 500 Non-compete agreement 1,200 Customer relationships 800 Other intangible assets 1,589 Other assets, net of current portion 336 Total assets acquired, excluding goodwill 13,179 Current portion of debt (606) Other current liabilities (557) Debt, net of current portion (805) Total liabilities assumed (1,968) Goodwill 15,039 Total purchase price $ 26,250 Booj constitutes a business and was accounted for using the fair value acquisition method. The total purchase price was allocated to the assets acquired based on their estimated fair values. The largest intangible assets acquired were valued using an income approach which utilizes Level 3 inputs and are being amortized over a weighted-average useful life using the straight-line method. The excess of the total purchase price over the fair value of the identifiable assets acquired was recorded as goodwill. The goodwill is attributable to expected synergies and projected long-term revenue growth for the RE/MAX network. All of the goodwill recognized is tax deductible. Independent Region Acquisition On November 15, 2017, the Company acquired certain assets of RE/MAX of Northern Illinois, Inc. for $35.7 million using cash generated from operations. The Company acquired the franchise agreements issued by the Company permitting the sale of RE/MAX franchises in the corresponding region as well as the franchise agreements between the region and the franchisees. The Company acquired these assets in order to expand its owned and operated regional franchising operations. Unaudited Pro Forma Financial Information The following unaudited pro forma financial information reflects the consolidated results of operations of the Company as if the acquisition of the Marketing Funds had occurred January 1, 2018, the acquisition of booj had occurred on January 1, 2017 and the acquisition of RE/MAX of Northern Illinois had occurred on January 1, 2016. The historical financial information has been adjusted to give effect to events that are (1) directly attributed to the acquisitions, (2) factually supportable and (3) expected to have a continuing impact on the combined results, including additional amortization expense associated with the valuation of the acquired franchise agreements. This unaudited pro forma information should not be relied upon as necessarily being indicative of the historical results that would have been obtained if the acquisitions had actually occurred on that date, nor of the results that may be obtained in the future. Year Ended December 31, 2018 2017 (in thousands, except per share amounts) Total revenue $ 287,394 $ 205,059 Net income attributable to Holdings $ 26,131 $ 7,628 Basic earnings per common share $ 1.47 $ 0.43 Diluted earnings per common share $ 1.47 $ 0.43 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment | |
Property and Equipment | 7. Property and Equipment Property and equipment consist of the following (in thousands): As of December 31, Depreciable Life 2019 2018 Leasehold improvements Shorter of estimated useful life or life of lease $ 3,327 $ 3,278 Office furniture, fixtures and equipment 2 17,057 14,392 Total property and equipment 20,384 17,670 Less accumulated depreciation (14,940) (13,280) Total property and equipment, net $ 5,444 $ 4,390 Depreciation expense was $1.7 million, $1.2 million and $0.9 million for the years ended December 31, 2019, 2018 and 2017, respectively. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 12 Months Ended |
Dec. 31, 2019 | |
Intangible Assets and Goodwill | |
Intangible Assets and Goodwill | 8. 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 December 31, 2019 As of December 31, 2018 Amortization Initial Accumulated Net Initial Accumulated Net Period Cost Amortization Balance Cost Amortization Balance Franchise agreements 12.5 $ 180,867 $ (93,197) $ 87,670 $ 180,867 $ (77,710) $ 103,157 Other intangible assets: Software (a) 4.0 $ 36,680 $ (9,653) $ 27,027 $ 20,579 $ (5,802) $ 14,777 Trademarks 9.3 1,904 (1,037) 867 1,857 (839) 1,018 Non-compete agreements 7.7 3,700 (1,546) 2,154 3,700 (896) 2,804 Training materials 5.0 2,400 (640) 1,760 2,350 (157) 2,193 Other (b) 5.0 800 (293) 507 2,389 (216) 2,173 Total other intangible assets 4.6 $ 45,484 $ (13,169) $ 32,315 $ 30,875 $ (7,910) $ 22,965 (a) As of December 31, 2019, and December 31, 2018, capitalized software development costs of $10.5 million and $4.5 million, respectively, were related to technology projects not yet complete and ready for their intended use and thus were not subject to amortization. (b) Other consists of customer relationships and a favorable market lease, both obtained in connection with the acquisition of booj. The favorable market lease was subsumed into “Operating lease right of use assets” on the accompanying Consolidated Balance Sheet upon adopting the new lease standard on January 1, 2019. See Note 2, Summary of Significant Accounting Policies for additional information. Amortization expense was $20.6 million, $19.5 million and $19.6 million for the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, the estimated future amortization expense for the next five years related to intangible assets includes the estimated amortization expense associated with the Company’s intangible assets assumed with the acquisition of booj and is as follows (in thousands): Year ending December 31: 2020 $ 25,438 2021 25,122 2022 21,946 2023 14,594 2024 12,146 $ 99,246 The following table presents changes to goodwill for the period from January 1, 2018 to December 31, 2019 (in thousands): RE/MAX Motto Franchising Total Balance, January 1, 2018 $ 123,413 $ 11,800 $ 135,213 Goodwill recognized related to acquisitions (a) 15,039 — 15,039 Adjustments to acquisition accounting during the measurement period 700 — 700 Effect of changes in foreign currency exchange rates (268) — (268) Balance, December 31, 2018 138,884 11,800 150,684 Goodwill recognized related to acquisitions (a) 8,207 — 8,207 Effect of changes in foreign currency exchange rates 147 — 147 Balance, December 31, 2019 $ 147,238 $ 11,800 $ 159,038 (a) The purpose of the booj and First acquisitions is to deliver technology solutions to RE/MAX franchisees and agents. As such, the Company allocated the goodwill arising from these acquisitions to RE/MAX Franchising. See Note 6 , Acquisitions for additional information. |
Accrued Liabilities
Accrued Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Accrued Liabilities. | |
Accrued Liabilities | 9. Accrued Liabilities Accrued liabilities consist of the following (in thousands): As of December 31, 2019 2018 Marketing Funds (a) $ 39,672 $ — Accrued payroll and related employee costs 11,900 6,517 Accrued taxes 2,451 1,480 Accrued professional fees 2,047 2,010 Other 4,093 3,136 $ 60,163 $ 13,143 (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. As previously noted, the Marketing Funds were acquired on January 1, 2019. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2019 | |
Debt | |
Debt | 10. Debt Debt, net of current portion, consists of the following (in thousands): As of December 31, 2019 2018 Senior Secured Credit Facility $ 227,363 $ 229,713 Other long-term financing (a) 362 635 Less unamortized debt issuance costs (1,182) (1,481) Less unamortized debt discount costs (862) (1,080) Less current portion (a) (2,648) (2,622) $ 223,033 $ 225,165 (a) Includes financing assumed with the acquisition of booj. As of December 31, 2019 and 2018, the carrying value of this financing approximates the fair value. Maturities of debt are as follows (in thousands): Year Ended December 31, 2019 2020 $ 2,648 2021 2,414 2022 2,350 2023 220,313 $ 227,725 Senior Secured Credit Facility In July 2013, the Company entered into a credit agreement with several lenders and administered by a bank, referred to herein as the “2013 Senior Secured Credit Facility.” In December 2016, the 2013 Senior Secured Credit Facility was amended and restated, referred to herein as the “Senior Secured Credit Facility.” The Senior Secured Credit Facility consists of a $235.0 million term loan facility which matures on December 15, 2023 and a $10.0 million revolving loan facility which must be repaid on December 15, 2021. In connection with the Senior Secured Credit Facility, the Company incurred costs of $3.5 million during 2016, of which $1.4 million was recorded in “Debt, net of current portion” in the accompanying Consolidated Balance Sheets and is being amortized to interest expense over the term of the Senior Secured Credit Facility and the remaining $2.1 million was expensed as incurred. 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 0.75% plus an applicable margin of 2.75% and, provided further, that LIBOR shall be adjusted for reserve requirements for eurocurrency liabilities, if any (the “LIBOR rate”) or (b) the greatest of (i) JPMorgan Chase Bank N.A.’s prime rate, (ii) the NYFRB Rate (as defined in the Senior Secured Credit Facility) plus 0.50% and (iii) the one-month Eurodollar Rate plus 1%, (such greatest rate, the “ABR”) plus, in each case, the applicable margin. The applicable margin for ABR loans is 1.75%. As of December 31, 2019, the Company selected the LIBOR rate resulting in an interest rate on the term loan facility of 4.55%. The Senior Secured Credit Facility requires RE/MAX, LLC to repay term loans and reduce revolving commitments with (i) 100.0% of proceeds of any incurrence of additional debt not permitted by the Senior Secured Credit Facility, (ii) 100.0% of proceeds of asset sales and 100.0% of amounts recovered under insurance policies, subject to certain exceptions and a reinvestment right and (iii) 50.0% of excess cash flow at the end of the applicable fiscal year if RE/MAX, LLC’s total leverage ratio as defined in the Senior Secured Credit Facility is in excess of 3.25 :1.00, with such percentage decreasing to zero as RE/MAX, LLC’s leverage ratio decreases below 2.75 to 1.0. The Company’s total leverage ratio was less than 2.75 to 1.0 as of December 31, 2019, and as a result, the Company does not expect to make an excess cash flow principal prepayment within the next 12 -month period. The Company may make optional prepayments on the term loan facility at any time without penalty; however, no such optional prepayments were made during the year ended December 31, 2019. Whenever amounts are drawn under the revolving line of credit, the Senior Secured Credit Facility requires compliance with a leverage ratio and an interest coverage ratio. A commitment fee of 0.5% per annum accrues on the amount of unutilized revolving line of credit. As of December 31, 2019, no amounts were drawn on the revolving line of credit. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | 11. 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 prioritizes the inputs used in measuring fair value as follows: ● Level 1: Quoted prices for identical instruments in active markets. ● Level 2: Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations, in which all significant inputs are observable in active markets. The fair value of the Company’s debt reflects a Level 2 measurement and was estimated based on quoted prices for the Company’s debt instruments in an inactive market. ● Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Level 3 liabilities that are measured at fair value on a recurring basis consist of the Company’s contingent consideration related to the acquisition of Motto. A summary of the Company’s liabilities measured at fair value on a recurring basis is as follows (in thousands): As of December 31, 2019 As of December 31, 2018 Fair Value Level 1 Level 3 Fair Value Level 1 Level 2 Level 3 Liabilities Contingent consideration $ 5,005 $ — — $ 5,005 $ 5,070 $ — $ — $ 5,070 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. Each Revenue Share Year ends September 30. 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 related to assumed franchise sales count for which the forecast assumes between 50 and 80 franchises sold annually. This assumption is based on historical sales and an assumption of growth over time. A 10% reduction in the number of franchise sales would decrease the liability by $0.3 million. A 1% change to the discount rate applied to the forecast changes the liability by approximately $0.2 million. The Company measures this liability each reporting period and recognizes changes in fair value, if any, in “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income. The table below presents a reconciliation of the contingent consideration (in thousands): Balance at January 1, 2018 $ 6,580 Fair value adjustments (a) (1,289) Cash payments (221) Balance at December 31, 2018 5,070 Fair value adjustments (a) 241 Cash payments (306) Balance at December 31, 2019 $ 5,005 (a) Fair value adjustments relate to realignment of future franchise sales assumptions to more closely reflect historical sales trends from inception to date. The Company assesses categorization of assets and liabilities by level at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer. There were no transfers between Levels I , II and III during the year ended December 31, 2019. The following table summarizes the carrying value and estimated fair value of the Senior Secured Credit Facility (in thousands): December 31, December 31, 2019 2018 Carrying Fair Value Carrying Fair Value Senior Secured Credit Facility $ 225,319 $ 227,363 $ 227,152 $ 221,673 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Income Taxes | 12. Income Taxes “Income before provision for income taxes” as shown in the accompanying Consolidated Statements of Income is comprised of the following (in thousands): Year Ended December 31, 2019 2018 2017 Domestic $ 44,343 $ 52,798 $ 77,346 Foreign 13,422 13,366 11,516 Total $ 57,765 $ 66,164 $ 88,862 Components of the “Provision for income taxes” in the accompanying Consolidated Statements of Income consist of the following (in thousands): Year Ended December 31, 2019 2018 2017 Current Federal $ 2,533 $ 1,393 $ 3,239 Foreign 4,929 4,738 5,203 State and local 1,137 700 1,169 Total current expense 8,599 6,831 9,611 Deferred expense Federal 2,084 8,795 47,045 Foreign (142) 12 323 State and local 368 704 563 Total deferred expense 2,310 9,511 47,931 Provision for income taxes $ 10,909 $ 16,342 $ 57,542 The provision for income taxes attributable to Holdings includes all U.S. federal and state income taxes on Holdings’ proportionate share of RMCO’s net income. The provision for income taxes attributable to entities other than Holdings represents taxes imposed directly on RMCO and its subsidiaries, primarily foreign taxes that are allocated to the non-controlling interest. A reconciliation of the U.S. statutory income tax rate to the Company’s effective tax rate is as follows: Year Ended December 31, 2019 2018 2017 U.S. statutory tax rate 21.0 % 21.0 % 35.0 % Increase due to state and local taxes, net of federal benefit 3.1 3.1 2.6 Non-creditable foreign taxes 1.1 1.2 - Foreign derived intangible income deduction (1.5) (1.3) - Income attributable to non-controlling interests (7.2) (7.3) (12.5) Uncertain Tax Positions 1.0 0.8 0.6 Other 1.4 (0.8) (0.8) Subtotal 18.9 16.7 24.9 Impact of TRA adjustment on NCI (a) - 0.7 4.5 Effect of permanent difference - TRA adjustment (b) - (2.2) (13.6) Tax Reform Rate Change (c) - - 49.0 Valuation allowance recognized on basis step-ups - 9.5 - 18.9 % 24.7 % 64.8 % (a) Reflects additional impact of non-controlling interest adjustment being on a larger base of income that includes the gain on reduction in TRA liability. (b) Reflects the impact of gain on TRA liability reduction, which is not taxable. (c) Reflects reduction in deferred tax assets and resulting increase in deferred tax expense due to U.S. Federal rate declining from 35% to 21% . In December 2017, the Tax Cut and Jobs Act (the “TCJA”) was enacted, which included a significant reduction in the U.S. corporate income tax rate from 35% to 21% along with several changes to taxation of foreign derived income. In 2017, the Company recorded a $42.8 million charge to “Provision for income taxes” in the accompanying Consolidated Statements of Income for the reduction in the value of its deferred tax assets related to this tax rate change (reflected in the rate reconciliation table above as a 49.0% adjustment in 2017). Correspondingly, the TRA liabilities were reduced because of the rate change, resulting in a benefit to operating income of $32.7 million. The net effect of these two adjustments was a reduction to 2017 net income of $10.1 million. When the aforementioned adjustments were recorded in 2017, the Company was still evaluating several aspects of the TCJA, most notably around foreign derived income. In 2018, the Company completed its evaluation of the impacts to its foreign derived income, particularly the tax credits received for foreign taxes and deductions allowed under the newly created foreign-derived intangible income deduction. The SEC staff issued Staff Accounting Bulletin 118 and later ASU 2018-05, which provided all companies through December of 2018 to finalize provisional estimates of the impacts of the TCJA. Starting with tax year 2018, the Company has foreign tax credit limitation due to the U.S. federal tax rate being lower than many foreign jurisdictions, particularly Canada. Certain of the tax basis step-ups, described in Note 4, Non-controlling interest, The Company will continue to evaluate tax planning opportunities as well as monitor any changes that might be contained in the final regulations related to foreign derived income. Such remaining final regulations are expected in 2020. Income taxes (payable) receivable, net were ($4.3) million and $0.3 million at December 31, 2019 and 2018, respectively. Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the accompanying Consolidated Balance Sheets. These temporary differences result in taxable or deductible amounts in future years. Details of the Company’s deferred tax assets and liabilities are summarized as follows (in thousands): As of December 31, 2019 2018 Long-term deferred tax assets Goodwill, other intangibles and other assets $ 42,800 $ 48,427 Imputed interest deduction pursuant to tax receivable agreements 2,651 2,719 Operating lease liabilities 1,618 1,845 Compensation and benefits 3,043 2,131 Allowance for doubtful accounts 1,629 944 Motto contingent liability 783 748 Deferred revenue 3,706 3,939 Foreign tax credit carryforward 1,862 1,259 Net operating loss 2,641 — Other 950 1,435 Total long-term deferred tax assets 61,683 63,447 Valuation allowance (a) (7,184) (7,051) Total long-term deferred tax assets, net of valuation allowance 54,499 56,396 Long-term deferred tax liabilities Property and equipment and other long lived assets (1,494) (2,944) Other (703) — Total long-term deferred tax liabilities (2,197) (2,944) Net long-term deferred tax assets 52,302 53,452 Total deferred tax assets and liabilities $ 52,302 $ 53,452 (a) Includes a valuation allowance on deferred tax assets for goodwill and intangibles in the Company’s Western Canada operations, as well as foreign tax credit carryforwards. As of December 31, 2019, the Company generated $1.1 million in unutilized foreign tax credits. These credits may be carried back one year and carried forward for 10 years until utilized. This amount is included in the valuation allowance as of December 31, 2019. Net deferred tax assets are recorded related to differences between the financial reporting basis and the tax basis of Holdings’ proportionate share of the net assets of RMCO. Based on the Company’s historical taxable income and its expected future earnings, management evaluates the uncertainty associated with booking tax benefits and determines whether the deferred tax assets are more likely than not to be realized, including evaluation of deferred tax liabilities and the expectation of future taxable income. If not expected to be realized, a valuation allowance is recognized to offset the deferred tax asset. The Company and its subsidiaries file, or will file, income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. Holdings will file its 2019 income tax returns by October 15, 2020. RMCO is not subject to domestic federal income taxes as it is a flow-through entity; however, RMCO is still required to file an annual U.S. Return of Partnership Income. With respect to state and local jurisdictions and countries outside of the U.S., the Company and its subsidiaries are typically subject to examination for three to four years after the income tax returns have been filed. As such, income tax returns filed since 2015 are subject to examination. Uncertain Tax Positions In 2019, the Company corrected immaterial errors to recognize uncertain tax position liabilities, and related tax expense for certain foreign tax matters, along with deferred tax assets for amounts of such foreign taxes expected to be creditable in the U.S. The Company concluded that the omission of tax expense for these matters from prior period financials was immaterial to each of the affected reporting periods and therefore amendment of previously filed reports was not required. However, the Company corrected those amounts in the prior years included herein. These adjustments resulted in an increase in “Provision for income taxes” of $0.5 million for each of the years ended December 31, 2018, and 2017, respectively. In addition, the Company recognized an uncertain tax position liability of $5.8 million (including interest and penalties), an income tax receivable of $1.4 million, a deferred tax asset of $0.2 million and a resulting reduction in “Total stockholders’ equity” of $4.2 million as of December 31, 2018 in the Consolidated Balance Sheets. The Company recognized a $3.7 million reduction in “Total stockholders’ equity” in the Consolidated Statements of Stockholders’ Equity as of December 31, 2017 in relation to this correction. While the Company believes the liabilities recognized for uncertain tax positions are adequate to cover reasonably expected tax risks, there can be no assurance that an issue raised by a tax authority will be resolved at a cost that does not exceed the liability recognized. Interest and penalties are accrued on uncertain tax positions and included in the “Provision for income taxes” in the accompanying Consolidated Statements of Income. Uncertain tax position liabilities represent the aggregate tax effect of differences between the tax return positions and the amounts otherwise recognized in the consolidated financial statements and are recognized in “Income taxes payable” in the Consolidated Balance Sheets. A reconciliation of the beginning and ending amount, excluding interest and penalties is as follows: As of December 31, 2019 2018 Balance, January 1 $ 4,278 $ 3,703 Increase related to current period tax positions 532 575 Balance, December 31 (a) $ 4,810 $ 4,278 (a) Excludes accrued interest and penalties of $1.9 million and $1.5 million for the years ended December 31, 2019 and 2018, respectively. These related interest and penalties are recognized in “Income taxes payable” within the Consolidated Balance Sheets. The Company’s uncertain tax position has a reasonable possibility of being paid within the next 12 months. |
Equity-Based Compensation
Equity-Based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Equity-Based Compensation | |
Equity-Based Compensation | 13. Equity-Based Compensation The RE/MAX Holdings, Inc. 2013 Omnibus Incentive Plan (the “Incentive Plan”) includes restricted stock units which may have time-based or performance-based vesting criteria. The Company recognizes equity-based compensation expense in “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income. The Company recognizes corporate income tax benefits relating to the vesting of restricted stock units in “Provision for income taxes” in the accompanying Consolidated Statements of Income. Employee stock-based compensation expense under the Company’s Incentive Plan, net of the amount capitalized in internally developed software, is as follows (in thousands): Year Ended December 31, 2019 2018 2017 Expense from Time-based awards (a) $ 7,554 $ 5,189 $ 2,523 Expense from Performance-based awards (a)(b) (179) 4,126 377 Expense from bonus to be settled in shares (c) 3,788 — — Equity-based compensation capitalized (a) (229) (139) — Equity-based compensation expense 10,934 9,176 2,900 Tax benefit from equity-based compensation (1,548) (1,297) (637) Deficit / (excess) tax benefit from equity-based compensation 55 (145) (324) Net compensation cost $ 9,441 $ 7,734 $ 1,939 (a) Includes expense recognized and costs capitalized in connection with the awards granted to booj employees and former owners at the time of acquisition. (b) Expense recognized for performance-based awards is re-assessed each quarter based on expectations of achievement against the performance conditions. For the year ended December 31, 2019, the Company reversed expense that had been recognized in 2018 for awards granted for certain booj work deliverables. This reversal was primarily a result of modifying the awards to extend the due date of the performance conditions, primarily through December 31, 2019, as the achievement of the goals at the previous date was no longer probable. Accounting for these modifications resulting in the reversal of the cumulative expense previously recognized and expensing the modified awards over the new vesting period resulting in a net $0.3 million recognized in 2019. Also, for the year ended December 31, 2019, certain conditions were no longer deemed probable of being met for other performance awards tied to the achievement of a revenue target measured over a three-year performance period. The cumulative expense previously recognized was reversed in the current period, resulting in a negative expense of ($0.5) million in 2019. (c) In 2019, the Company revised its annual bonus plan so that half of the bonus for most employees will be settled in shares. The share amounts to be issued will be determined based on the stock price at the time of vesting in early 2020. These amounts are recognized as “Accrued liabilities” in the accompanying Consolidated Balance Sheets and are not included in “Additional paid-in capital” until shares are issued. Time-based Restricted Stock Units Time-based restricted stock units (“RSUs”) are valued using the Company’s closing stock price on the date of grant. Grants awarded to the Company’s Board of Directors generally vest over a one-year period. Grants awarded to the Company’s employees, other than booj employees and former owners in connection with the acquisition, generally vest equally in annual installments over a three-year period. Grants awarded to booj employees and former owners in connection with the acquisition vest in three installments over a four-year period. Compensation expense is recognized on a straight-line basis over the vesting period. The following table summarizes equity-based compensation activity related to RSUs: RSUs Weighted average Balance, January 1, 2019 298,610 $ 51.97 Granted (a) 257,087 $ 38.43 Shares vested (including tax withholding) (b) (80,008) $ 43.30 Forfeited (20,237) $ 45.41 Balance, December 31, 2019 455,452 $ 46.15 (a) The weighted average grant date fair value for the years ended December 31, 2018 and 2017 were $53.04 and $55.45 per RSU granted, respectively. (b) Pursuant to the terms of the Incentive Plan, RSUs withheld by the Company for the payment of the employee's tax withholding related to an RSU vesting are added back to the pool of shares available for future awards. At December 31, 2019, there was $12.6 million of total unrecognized RSU expense. This compensation expense is expected to be recognized over the weighted-average remaining vesting period of 2.1 years for RSUs. Performance-based Restricted Stock Units Performance-based restricted stock units (“PSUs”) granted to employees, other than booj employees and former owners in connection with the acquisition, are stock-based awards in which the number of shares ultimately received depends on the Company’s achievement of either a specified revenue target or the Company’s total shareholder return (“TSR”) relative to a peer company index over a three-year performance period or achievement of both. If the minimum threshold conditions are not met, no shares will vest. The number of shares that could be issued range from 0% to 150% of the participant’s target award. PSUs are valued on the date of grant using a Monte Carlo simulation for the TSR element of the award. PSUs that vest upon achievement of a specified revenue target are valued using the Company’s closing stock price on the date of grant. The Company’s expense will be adjusted based on the estimated achievement of revenue versus target. Earned PSUs cliff-vest at the end of the three-year performance period. Compensation expense is recognized on a straight-line basis over the vesting period based on the Company’s probable performance, with cumulative to-date adjustments made when revenue performance expectations change. PSUs granted to booj employees and former owners in connection with the acquisition are stock-based awards in which the number of shares ultimately received depends on the achievement of certain technology milestones set forth in the related purchase agreement. The number of shares that could be issued range from 0% to 100% of the participant’s target award. The awards were valued using the Company’s closing stock price on the date of grant. The Company’s expense will be adjusted based on the estimated achievement of the milestones. The majority of these PSUs vested July 29, 2019 and December 31, 2019. The remaining PSUs vest on February 15, 2020 to the extent the corresponding milestones are achieved and provided the participant is still an employee of the Company at the time of vesting. Compensation expense is recognized on a straight-line basis over the vesting period based on the Company’s estimated performance, subject to adjustment for changes in expectations of the achievement of the technology milestones. The following table summarizes equity-based compensation activity related to PSUs: PSUs Weighted average Balance, January 1, 2019 179,615 $ 55.75 Granted (a)(b) 119,410 $ 38.87 Shares vested (97,436) $ 36.20 Forfeited (61,625) $ 56.24 Balance, December 31, 2019 139,964 $ 45.31 (a) Represents the total participant target award. (b) The weighted average grant date fair value for the years ended December 31, 2018 and 2017 were $55.38 and $57.88 per PSU granted, respectively. At December 31, 2019, there was $2.3 million of total unrecognized PSU expense. This compensation expense is expected to be recognized over the weighted-average remaining vesting period of 1.8 years for PSUs. After giving effect to all outstanding awards (assuming maximum achievement of performance goals for performance-based awards), there were 2,122,970 additional shares available for the Company to grant under the Incentive Plan as of December 31, 2019. |
Leadership Changes and the New
Leadership Changes and the New Service Model | 12 Months Ended |
Dec. 31, 2019 | |
Leadership Changes and the New Service Model | |
Leadership Changes and the New Service Model | 14. Leadership Changes and the New Service Model On February 9, 2018, the Company announced the retirement of the Company’s President. The Company entered into a Separation Agreement with the President, and pursuant to the terms of this agreement, the Company incurred a total cost of $1.8 million which was recorded to “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income during the year ended December 31, 2018, which will be paid over a 39 -month period. In addition, the Company announced a new service model in early 2019 designed to deliver more value to franchisees, as well as support franchisee growth and professional development (the “New Service Model”). In connection with the New Service Model, the Company incurred a total of approximately $2.1 million in expenses related to severance and outplacement services provided to certain former employees of the Company, of which $1.4 million in expense was recognized during the year ended December 31, 2018 and the remainder was recognized in 2019. These expenses are included in “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income. All of the above costs were attributable to the RE/MAX Franchising reportable segment. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 15. Commitments and Contingencies Contingencies In connection with the sale of the assets and liabilities related to the Company’s previously owned brokerages, the Company entered into three Assignment and Assumption of Leases Agreements (the “Assignment Agreements”) pursuant to which the Company assigned its obligations under and rights, title and interest in 21 leases to the respective purchasers. For certain leases, the Company remains secondarily liable for future lease payments through July 2021 under the respective lease agreements and accordingly, as of December 31, 2019, the Company has outstanding lease guarantees of $1.1 million. This amount represents the maximum potential amount of future payments under the respective lease guarantees. In addition, the Company maintains a self-insurance program for health benefits. As of December 31, 2019, and 2018, the Company recorded a liability of $0.3 million and $0.3 million, respectively, related to this program. Litigation In March and April of 2019, three putative class action complaints were filed against National Association of Realtors (“NAR”), Realogy Holdings Corp., HomeServices of America, Inc, RE/MAX Holdings, and Keller Williams Realty, Inc. The first was filed on March 6, 2019, by plaintiff Christopher Moehrl in the Northern District of Illinois. The second was filed on April 15, 2019, by plaintiff Sawbill Strategies, Inc., also in the Northern District of Illinois. These two actions have now been consolidated. A third action was filed by plaintiffs Joshua Sitzer and four other individual plaintiffs in the Western District of Missouri. The complaints (collectively “Moehrl/Sitzer suits”) make substantially similar allegations and seek substantially similar relief. The plaintiffs allege that a NAR rule requires brokers to make a blanket, non-negotiable offer of buyer broker compensation when listing a property, resulting in inflated costs to sellers 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 add allegations regarding buyer steering and non-disclosure of buyer-broker compensation to the buyer. Additionally, plaintiffs in the action filed by Sitzer et al allege violations of the Missouri Merchandising Practices Act. By agreement, RE/MAX, LLC was substituted for RE/MAX Holdings as defendant in the actions. Among other requested relief, plaintiffs seek damages against the defendants and an injunction enjoining defendants from requiring sellers to pay the buyer broker. The Company intends to vigorously defend against all claims. On October 7, 2013, RE/MAX Holdings acquired the net assets, excluding cash, of Tails for consideration paid of $20.2 million. Following earlier litigation that was dismissed, several shareholders of Tails filed a complaint entitled Robert B. Fisher, Carla L. Fisher, Bradley G. Rhodes and James D. Schwartz v. Gail Liniger, Dave Liniger, Bruce Benham, RE/MAX Holdings, Inc. and Tails Holdco, Inc. in Denver District Court ("Tails II"). On February 13, 2018, the parties signed a formal Settlement Agreement and Mutual General Release resulting in the Company recording a charge of $2.6 million in “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income during the year ended December 31, 2017. In February 2018, the Company received $1.9 million from its insurance carriers as reimbursement of attorneys’ fees and a portion of the settlement and paid $4.5 million to satisfy the terms of the Settlement Agreement. As a result of the settlement, the litigation was dismissed with prejudice on March 1, 2018. |
Defined-Contribution Savings Pl
Defined-Contribution Savings Plan | 12 Months Ended |
Dec. 31, 2019 | |
Defined-Contribution Savings Plan. | |
Defined-Contribution Savings Plan | 16. Defined-Contribution Savings Plan The Company sponsors an employee retirement plan (the “401(k) Plan”) that provides certain eligible employees of the Company an opportunity to accumulate funds for retirement. The Company provides matching contributions on a discretionary basis. During the years ended December 31, 2019, 2018 and 2017, the Company recognized expense of $2.1 million, $1.8 million and $1.5 million, respectively, for matching contributions to the 401(k) Plan. |
Related-Party Transactions
Related-Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions | |
Related-Party Transactions | 17. Related-Party Transactions The majority stockholders of RIHI, specifically the Company’s current Chairman and Co-Founder and the Company’s Vice Chair and Co-Founder have made and continue to make a golf course they own available to the Company for business purposes. The Company used the golf course and related facilities for business purposes at minimal charge during the years ended December 31, 2019, 2018 and 2017. Additionally, the Company recorded expense of $0.5 million for the value of the benefits provided to Company personnel and others for the complimentary use of the golf course during each year ended December 31, 2019, 2018 and 2017, with an offsetting increase in additional paid in capital. The Company also provided support services to the Marketing Funds prior to their acquisition on January 1, 2019. See Note 2 Summary of Significant Accounting Policies Acquisitions |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2019 | |
Segment Information | |
Segment Information | 18. Segment Information The Company operates under the following four operating segments: RE/MAX Franchising, Motto Franchising, Marketing Funds and booj. Due to quantitative insignificance, the booj operating segment does not meet the criteria of a reportable segment and is included in “Other”. Motto Franchising 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 Note 2, Summary of Significant Accounting Policies The following table presents revenue from external customers by segment (in thousands): Year Ended December 31, 2019 2018* 2017* Continuing franchise fees $ 95,853 $ 98,828 $ 93,232 Annual dues 35,409 35,894 33,767 Broker fees 45,990 46,871 43,801 Franchise sales and other revenue 22,383 22,911 22,357 Total RE/MAX Franchising 199,635 204,504 193,157 Continuing franchise fees 4,075 2,276 462 Franchise sales and other revenue 468 260 95 Total Motto Franchising 4,543 2,536 557 Marketing Funds fees 72,299 — — Other 5,816 5,586 — Total revenue $ 282,293 $ 212,626 $ 193,714 *Amounts in the years ended December 31, 2018 and 2017 have been recast to show Motto separately. The following table presents a reconciliation of Adjusted EBITDA by segment to income before provision for income taxes (in thousands): Year Ended December 31, 2019 2018* 2017* Adjusted EBITDA: RE/MAX Franchising $ 106,810 $ 108,669 $ 105,184 Adjusted EBITDA: Motto Franchising (2,709) (3,436) (3,039) Adjusted EBITDA: Other (586) (917) — Adjusted EBITDA: Consolidated 103,515 104,316 102,145 Gain (loss) on sale or disposition of assets and sublease, net (a) (342) 139 (4,260) Equity-based compensation expense (10,934) (9,176) (2,900) Acquisition-related expense (b) (1,127) (1,634) (5,889) Gain on reduction in TRA liability (c) — 6,145 32,736 Special Committee investigation and remediation expense (d) — (2,862) (2,634) Fair value adjustments to contingent consideration (e) (241) 1,289 (180) Interest income 1,446 676 352 Interest expense (12,229) (12,051) (9,996) Depreciation and amortization (22,323) (20,678) (20,512) Income before provision for income taxes $ 57,765 $ 66,164 $ 88,862 *Amounts in the years ended December 31, 2018 and 2017 have been recast to show Motto separately. (a) Represents gain (loss) on the sale or disposition of assets as well as the gains (losses) on the sublease of a portion of our corporate headquarters office building. (b) Acquisition-related expense includes legal, accounting, advisory and consulting fees incurred in connection with the acquisition and integration of acquired companies. (c) Gain on reduction in tax receivable agreement liability is a result of the Tax Cuts and Jobs Act enacted in December 2017 and further clarified in 2018. See Note 12, Income Taxes for additional information. (d) Special Committee investigation and remediation expense relates to costs incurred in relation to the previously disclosed investigation by the special committee of independent directors of actions of certain members of our senior management and the implementation of the remediation plan. (e) Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liability. See Note 11, Fair Value Measurements for additional information. The following table presents total assets of the Company’s segments (in thousands): As of December 31, 2019 2018* RE/MAX Franchising $ 479,370 $ 406,643 Marketing Funds 41,090 — Motto Franchising 20,161 21,346 Other 1,731 384 Total assets $ 542,352 $ 428,373 *Amounts as of December 31, 2018 have been recast to show Motto separately. The following table presents long-lived assets, net of accumulated depreciation disaggregated by geographical area (in thousands): As of December 31, 2019 2018 U.S. $ 5,406 $ 4,342 Global 38 48 Total long-lived assets $ 5,444 $ 4,390 |
Quarterly Financial Information
Quarterly Financial Information | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information (unaudited) | |
Quarterly Financial Information (unaudited) | 19. Quarterly Financial Information (unaudited) Summarized quarterly results were as follows (in thousands, except shares and per share amounts): For the Quarter Ended March 31, 2019 June 30, 2019 September 30, 2019 December 31, 2019 Total revenue $ 71,178 $ 71,381 $ 71,541 $ 68,193 Total operating expenses 58,233 49,311 48,097 58,213 Operating income 12,945 22,070 23,444 9,980 Total other expenses, net (2,780) (2,751) (2,727) (2,416) Income before provision for income taxes 10,165 19,319 20,717 7,564 Provision for income taxes (1,908) (3,186) (3,453) (2,362) Net income 8,257 16,133 17,264 5,202 Less: net income attributable to non-controlling interest 3,848 7,563 8,091 2,314 Net income attributable to Holdings $ 4,409 $ 8,570 $ 9,173 $ 2,888 Net income attributable to Holdings per share of Class A common stock Basic $ 0.25 $ 0.48 $ 0.51 $ 0.16 Diluted $ 0.25 $ 0.48 $ 0.51 $ 0.16 Weighted average shares of Class A common stock outstanding Basic 17,775,381 17,808,321 17,826,332 17,837,386 Diluted 17,817,620 17,833,958 17,840,158 17,978,431 For the Quarter Ended March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 Total revenue $ 52,642 $ 54,277 $ 54,866 $ 50,841 Total operating expenses 38,925 33,363 33,059 29,428 Operating income 13,717 20,914 21,807 21,413 Total other expenses, net (2,688) (3,176) (2,846) (2,977) Income before provision for income taxes 11,029 17,738 18,961 18,436 Provision for income taxes (1,997) (3,283) (3,555) (7,507) Net income 9,032 14,455 15,406 10,929 Less: net income attributable to non-controlling interest 4,089 6,848 7,307 4,695 Net income attributable to Holdings $ 4,943 $ 7,607 $ 8,099 $ 6,234 Net income attributable to Holdings per share of Class A common stock Basic $ 0.28 $ 0.43 $ 0.46 $ 0.35 Diluted $ 0.28 $ 0.43 $ 0.46 $ 0.35 Weighted average shares of Class A common stock outstanding Basic 17,709,095 17,746,042 17,746,184 17,748,745 Diluted 17,762,133 17,769,641 17,771,212 17,771,180 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements (“financial statements”) and notes thereto included in this Annual Report on Form 10-K have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The accompanying financial statements 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 financial statements reflect all normal and recurring adjustments necessary to present fairly the Company’s financial position as of December 31, 2019 and 2018, the results of its operations and comprehensive income, changes in its stockholders’ equity and its cash flows for the years ended December 31, 2019, 2018 and 2017. On January 1, 2019 the Company acquired all of the regional and pan-regional advertising fund entities previously owned by its founder and Chairman of the Board of Directors, David Liniger, for a nominal amount. During 2018, the Company completed the acquisition of booj, and during 2017 the Company completed the acquisition of an independent region. Their results of operations, cash flows and financial positions are included in the financial statements from their respective dates of acquisition. See Note 6, Acquisitions |
Use of Estimates | Use of Estimates The preparation of the accompanying 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 financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Reclassifications | Reclassifications Certain items in the Consolidated Statement of Cash Flows have been reclassified in the years ended December 31, 2018 and 2017 to conform with the current year presentation. |
Segment Reporting | Segment Reporting The Company operates under the following segments: ● RE/MAX Franchising – comprises the operations of the Company’s owned and independent global franchising operations under the RE/MAX brand name and corporate-wide shared services expenses. ● Motto Franchising – comprises the operations of the Company’s mortgage broker franchising operations under the Motto Mortgage brand name and does not include any charges related to the corporate-wide shared services expenses. ● Marketing Funds – comprises the operations of the Company’s marketing campaigns designed to build and maintain brand awareness and the development and operation of agent marketing technology. ● Other – comprises the legacy operations of booj (see Note 6, Acquisitions for additional information), which, due to quantitative insignificance, do not meet the criteria of a reportable segment. See Note 18 Segment Information |
Principles of Consolidation | Principles of Consolidation Holdings consolidates RMCO and records a non-controlling interest in the accompanying Consolidated Balance Sheets and records net income attributable to the non-controlling interest and comprehensive income attributable to the non-controlling interest in the accompanying Consolidated Statements of Income and Consolidated Statements of Comprehensive Income, respectively. |
Revenue Recognition | Revenue Recognition The Company generates the substantial majority of its revenue from contracts with customers. The Company’s franchise agreements offer the following benefits to the franchisee: common use and promotion of RE/MAX and Motto trademarks; distinctive sales and promotional materials; access to technology; marketing tools and training; standardized supplies and other materials used in RE/MAX and Motto offices; and recommended procedures for operation of RE/MAX and Motto offices. The Company concluded that these benefits are highly related and all a part of one performance obligation for each franchise agreement, a license of symbolic intellectual property that is billed through a variety of fees including continuing franchise fees, annual dues, broker fees, marketing funds fees and franchise sales, described below. The Company has other performance obligations associated with contracts with customers in other revenue for training, marketing and events, and legacy booj customers. The method used to measure progress is over the passage of time for most streams of revenue. The following is a description of principal activities from which the Company generates its revenue. Continuing Franchise Fees Continuing franchise fees are fixed contractual fees paid monthly (a) by regional franchise owners in Independent Regions or franchisees in Company-owned Regions based on the number of RE/MAX agents in the respective franchised region or office or (b) by Motto franchisees based on the number of offices open. Motto offices reach the full monthly billing once the Motto office has been open for 12 to 14 months. This revenue is recognized in the month for which the fee is billed. This revenue is a usage-based royalty as it is dependent on the number of RE/MAX agents or number of Motto offices. Annual Dues Annual dues are a fixed membership fee paid annually by RE/MAX agents directly to the Company to be a part of the RE/MAX network and use the RE/MAX brand. Annual dues are a flat fee per agent. The Company defers the annual dues revenue when billed and recognizes the revenue ratably over the 12-month period to which it relates. Annual dues revenue is a usage-based royalty as it is dependent on the number of RE/MAX agents. The activity in the Company’s deferred revenue for annual dues is included in “Deferred revenue” and “Deferred revenue, net of current portion” on the Consolidated Balance Sheets, and consists of the following in aggregate (in thousands): Balance at New billings Revenue recognized (a) Balance at end Year ended December 31, 2019 $ 15,877 $ 35,514 $ (35,409) $ 15,982 (a) Revenue recognized related to the beginning balance was $14.4 million for the year ended December 31, 2019. (b) Broker Fees Broker fees are assessed against real estate commissions paid by customers when a RE/MAX agent sells a home. Generally, the amount paid is 1% of the total commission on the transaction, although in Independent Regions in Canada it is not charged. Additionally, agents in Company-owned Regions existing prior to 2004, the year the Company began assessing broker fees, are generally “grandfathered” and continue to be exempt from paying a broker fee. As of December 31, 2019, grandfathered agents represented approximately 17% of total agents in U.S. Company-owned Regions. Revenue from broker fees is recognized as a sales-based royalty and recognized in the month when a home sale transaction occurs. Motto franchisees do not pay any fees based on the number or dollar value of loans brokered. Marketing Funds Fees Marketing Funds fees are fixed contractual fees paid monthly by franchisees based on the number of RE/MAX agents in the respective franchised region or office or the number of Motto offices. These revenues are obligated to be used for marketing campaigns to build brand awareness and to support agent marketing technology. Amounts received into the Marketing Funds are recognized as revenue in the month for which the fee is billed. This revenue is a usage-based royalty as it is dependent on the number of RE/MAX agents or number of Motto offices. All assets of the Marketing Funds are contractually restricted for the benefit of franchisees, and the Company recognizes an equal and offsetting liability on the Company’s balance sheet for all amounts received. Additionally, this results in recording an equal and offsetting amount of expenses against all revenues such that there is no impact to overall profitability of the Company from these revenues. Franchise Sales Franchise sales comprises revenue from the sale or renewal of franchises. A fee is charged upon a franchise sale or renewal. Those fees are deemed to be a part of the license of symbolic intellectual property and are recognized as revenue over the contractual term of the franchise agreement, which is typically 5 years for RE/MAX and 7 years for Motto franchise agreements. The activity in the Company’s franchise sales deferred revenue accounts consists of the following (in thousands): Balance at New billings Revenue recognized (a) Balance at end Year ended December 31, 2019 $ 27,560 $ 7,750 $ (9,426) $ 25,884 (a) Revenue recognized related to the beginning balance was $ 8.4 million for the year ended December 31, 2019. Commissions Related to Franchise Sales 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 Consolidated Balance Sheets) consist of the following (in thousands): Balance at Expense Additions to contract Balance at end beginning of period recognized cost for new activity of period Year ended December 31, 2019 $ 3,748 $ (1,290) $ 1,120 $ 3,578 Other Revenue Other revenue is primarily revenue from preferred marketing arrangements and event-based revenue from training and other programs. Revenue from preferred marketing arrangements involves both flat fees paid in advance as well as revenue sharing, both of which are generally recognized over the period of the arrangement and are recorded net as the Company does not control the good or service provided. Event-based revenue is recognized when the event occurs and until then amounts collected are included in “Deferred revenue”. Other revenue also includes revenue from booj’s legacy operations for its external customers as booj continues to provide technology products and services, such as websites, mobile apps, reporting and website tools, to its legacy customers and Disaggregated Revenue In the following table, segment revenue is disaggregated by geographical area (in thousands): Year Ended December 31, 2019 2018 2017 U.S. $ 164,867 $ 170,496 $ 160,538 Canada 23,024 23,771 23,189 Global 11,745 10,237 9,431 Total RE/MAX Franchising 199,636 204,504 193,158 U.S. 64,906 — — Canada 6,559 — — Global 834 — — Total Marketing Funds 72,299 — — Motto Franchising (a) 4,542 2,536 556 Other 5,816 5,586 — Total $ 282,293 212,626 193,714 (a) Revenue from the Motto Franchising segment is derived exclusively within the U.S. In the following table, segment revenue is disaggregated by Company-owned or Independent Regions in the U.S., Canada and Global (in thousands): Year Ended December 31, 2019 2018 2017 Company-owned Regions $ 128,972 $ 133,925 $ 125,092 Independent Regions 44,686 46,289 44,799 Global and Other 25,978 24,290 23,267 Total RE/MAX Franchising 199,636 204,504 193,158 Marketing Funds 72,299 — — Motto Franchising 4,542 2,536 556 Other 5,816 5,586 — Total $ 282,293 $ 212,626 $ 193,714 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): 2020 2021 2022 2023 2024 Thereafter Total Annual dues $ 15,982 $ — $ — $ — $ — $ — $ 15,982 Franchise sales 7,141 5,801 4,368 2,881 1,589 4,104 25,884 Total $ 23,123 $ 5,801 $ 4,368 $ 2,881 $ 1,589 $ 4,104 $ 41,866 |
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 Consolidated Balance Sheets to the amounts presented in the Consolidated Statements of Cash Flows (in thousands): As of December 31, 2019 2018 Cash and cash equivalents $ 83,001 $ 59,974 Restricted cash 20,600 — Total cash, cash equivalents and restricted cash $ 103,601 $ 59,974 |
Services Provided to the Marketing Funds By RE/MAX Franchising | Services Provided to the Marketing Funds by RE/MAX Franchising RE/MAX Franchising charges the Marketing Funds for various services it performs. These services are primarily comprised of (a) providing agent marketing technology, including customer relationship management tools, the www.remax.com website, agent and office websites, and mobile apps, (b) dedicated employees focused on marketing campaigns, and (c) various administrative services including accounting and legal. Because these costs are ultimately paid by the Marketing Funds, they do not impact the net income of Holdings as the Marketing Funds have no reported net income. Costs charged from RE/MAX Franchising to the Marketing Funds are as follows (in thousands): Year Ended December 31, 2019 Technology development - operating $ 6,244 Technology development - capital 5,095 Marketing staff and administrative services (a) 3,763 Total $ 15,102 (a) Costs charged to the Marketing Funds for the years ended December 31, 2018 and 2017, while the Marketing Funds were a related party, were $3.8 million and $3.4 million, respectively. Prior to January 1, 2019, the Marketing Funds were not owned by the Company (see Note 6 Acquisitions |
Selling, Operating and Administrative Expenses | Selling, Operating and Administrative Expenses Selling, operating and administrative expenses primarily consist of personnel costs, including salaries, benefits, payroll taxes and other compensation expenses, professional fees, lease costs, as well as expenses for marketing to customers, to expand the Company’s franchises and outsourced technology services. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of financial instruments, net of any allowances, including cash equivalents, accounts and notes receivable, accounts payable and accrued expenses approximate fair value due to their short-term nature. |
Accounts and Notes Receivable | Accounts and Notes Receivable Accounts receivable arising from monthly billings do not bear interest. The Company provides limited financing of certain franchise sales through the issuance of notes receivable with the associated interest recorded in “Interest income” in the accompanying Consolidated Statements of Income. Amounts collected on notes receivable are included in “Net cash provided by operating activities” in the accompanying Consolidated Statements of Cash Flows. The Company records allowances against its accounts and notes receivable balances for estimated probable losses. Increases and decreases in the allowance for doubtful accounts are established based upon changes in the credit quality of receivables and are included as a component of “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income. The allowance for doubtful accounts and notes is based on historical experience, general economic conditions, and the credit quality of specific accounts. The activity in the Company’s allowances against accounts and notes receivable consists of the following (in thousands): Balance at beginning of period Additions/charges to cost and expense for allowances for doubtful accounts (a) Deductions/write-offs Balance at end of period Year Ended December 31, 2019 $ 7,980 $ 4,964 $ (406) $ 12,538 Year Ended December 31, 2018 $ 7,223 $ 2,257 $ (1,500) $ 7,980 Year Ended December 31, 2017 $ 6,458 $ 1,109 $ (344) $ 7,223 (a) For the year ended December 31, 2019, $1.5 million of expense was attributable to the acquired Marketing Funds. |
Accumulated Other Comprehensive Income (Loss) and Foreign Currency Translation | Accumulated Other Comprehensive Income (Loss) and Foreign Currency Translation Accumulated other comprehensive income (loss) includes all changes in equity during a period that have yet to be recognized in income, except those resulting from transactions with stockholders and is comprised of foreign currency translation adjustments. As of December 31, 2019, the Company, directly and through its franchisees, conducted operations in over 110 countries and territories, including the U.S. and Canada. The functional currency for the Company’s operations is the U.S. dollar, except for its Canadian subsidiary which is the Canadian Dollar. Assets and liabilities of the Canadian subsidiary are translated at the spot rate in effect at the applicable reporting date, and the consolidated statements of income and cash flows are translated at the average exchange rates in effect during the applicable period. Exchange rate fluctuations on translating consolidated foreign currency financial statements into U.S. dollars that result in unrealized gains or losses are referred to as translation adjustments. Cumulative translation adjustments are recorded as a component of “Accumulated other comprehensive income,” and periodic changes are included in comprehensive income. When the Company sells a part or all of its investment in a foreign entity resulting in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided, it releases any related cumulative translation adjustment into net income. Foreign currency denominated monetary assets and liabilities and transactions occurring in currencies other than the Company’s or the Company’s consolidated foreign subsidiaries’ functional currencies are recorded based on exchange rates at the time such transactions arise. Changes in exchange rates with respect to amounts recorded in the accompanying Consolidated Balance Sheets related to these non-functional currency transactions result in transaction gains and losses that are reflected in the accompanying Consolidated Statements of Income as “Foreign currency transaction (losses) gains.” |
Property and Equipment | Property and Equipment Property and equipment, including leasehold improvements, are initially recorded at cost. Depreciation is provided for on a straight-line method over the estimated useful lives of each asset class and commences when the property is placed in service. Amortization of leasehold improvements is provided for on a straight-line method over the estimated benefit period of the related assets or the lease term, if shorter. |
Franchise Agreements and Other Intangible Assets | Franchise Agreements and Other Intangible Assets The Company’s franchise agreements result from franchise rights acquired from Independent Region acquisitions and are initially recorded at fair value. The Company amortizes the franchise agreements over their estimated useful life on a straight-line basis. The Company also purchases and develops software for internal use. Software development costs and upgrade and enhancement costs incurred during the application development stage that result in additional functionality are capitalized. Costs incurred during the preliminary project and post-implementation-operation stages are expensed as incurred. Capitalized software costs are generally amortized over a term of two to five years . Purchased software licenses are amortized over their estimated useful lives. In addition, the Company owns the principal trademarks, service marks and trade names that it uses in conjunction with operating its business. These intangible assets increase when the Company pays to file trademark applications in the U.S. and certain other jurisdictions globally. The Company’s trademarks are amortized on a straight-line basis over their estimated useful lives. The Company reviews its franchise agreements and other intangible assets subject to amortization for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is assessed by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated from such asset. If not recoverable, the excess of the carrying amount of an asset over its estimated discounted cash flows would be charged to operations as an impairment loss. For each of the years ended December 31, 2019, 2018 and 2017, there were no material impairments indicated for such assets. |
Goodwill | Goodwill Goodwill is an asset representing the future economic benefits arising from the other assets acquired in a business combination that are not individually identified and separately recognized. The Company assesses goodwill for impairment at least annually at the reporting unit level or whenever an event occurs that would indicate impairment may have occurred. Reporting units are driven by the level at which segment management reviews operating results. The Company performs its required impairment testing annually on October 1. The Company’s impairment assessment begins with a qualitative assessment to determine if it is more likely than not that a reporting unit’s fair value is less than the carrying amount. The initial qualitative assessment includes comparing the overall financial performance of the reporting units against the planned results as well as other factors which might indicate that the reporting unit’s value has declined since the last assessment date. If it is determined in the qualitative assessment that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the standard two-step quantitative impairment test is performed. The impairment test consists of comparing the estimated fair value of each reporting unit with its carrying amount, including goodwill. The fair value of a reporting unit is determined by forecasting results, such as franchise sales for Motto, and applying and assumed discount rate to determine fair value as of the test date. If the estimated fair value of a reporting unit exceeds its carrying value, then it is not considered impaired and no further analysis is required. Goodwill impairment exists when the estimated implied fair value of a reporting unit’s goodwill is less than its carrying value. The Company did not record any goodwill impairments during the years ended December 31, 2019, 2018 and 2017 . |
Income Taxes | Income Taxes The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Management periodically assesses the recoverability of its deferred tax assets based upon expected future earnings, future deductibility of the asset and changes in applicable tax laws and other factors. If management determines that it is not likely that the deferred tax asset will be fully recoverable in the future, a valuation allowance may be established for the difference between the asset balance and the amount expected to be recoverable in the future. The allowance will result in a charge to the Company’s Consolidated Statements of Income. RMCO complies with the requirements of the Internal Revenue Code that are applicable to limited liability companies that have elected to be treated as partnerships, which allow for the complete pass-through of taxable income or losses to RMCO’s unitholders, who are individually responsible for any federal tax consequences. The share of U.S. income allocable to Holdings results in a provision for income taxes for the federal and state taxes on that portion of income. The share of U.S. income allocable to RIHI does not result in a provision for income taxes for federal and state taxes given Holdings does not consolidate RIHI. RMCO is subject to certain global withholding taxes, which are ultimately allocated to both Holdings and RIHI since they are paid by RMCO. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. |
Equity Based Compensation | Equity-Based Compensation The Company recognizes compensation expense associated with equity-based compensation as a component of “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income. All equity-based compensation is required to be measured at fair value on the grant date, is expensed over the requisite service, generally over a three-year period, and forfeitures are accounted for as they occur. The Company recognizes compensation expense on awards on a straight-line basis over the requisite service period for the entire award. Refer to Note 13, Equity-Based Compensation for additional discussion regarding details of the Company’s equity-based compensation plans. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220), In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) expedients Leases, In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350) |
New Accounting Pronouncements Not Yet Adopted | New Accounting Pronouncements Not Yet Adopted In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Schedule of Annual Dues Deferred Revenue | The activity in the Company’s deferred revenue for annual dues is included in “Deferred revenue” and “Deferred revenue, net of current portion” on the Consolidated Balance Sheets, and consists of the following in aggregate (in thousands): Balance at New billings Revenue recognized (a) Balance at end Year ended December 31, 2019 $ 15,877 $ 35,514 $ (35,409) $ 15,982 (a) Revenue recognized related to the beginning balance was $14.4 million for the year ended December 31, 2019. (b) |
Commissions related to franchise sales | Balance at Expense Additions to contract Balance at end beginning of period recognized cost for new activity of period Year ended December 31, 2019 $ 3,748 $ (1,290) $ 1,120 $ 3,578 |
Schedule of disaggregated revenue | In the following table, segment revenue is disaggregated by geographical area (in thousands): Year Ended December 31, 2019 2018 2017 U.S. $ 164,867 $ 170,496 $ 160,538 Canada 23,024 23,771 23,189 Global 11,745 10,237 9,431 Total RE/MAX Franchising 199,636 204,504 193,158 U.S. 64,906 — — Canada 6,559 — — Global 834 — — Total Marketing Funds 72,299 — — Motto Franchising (a) 4,542 2,536 556 Other 5,816 5,586 — Total $ 282,293 212,626 193,714 (a) Revenue from the Motto Franchising segment is derived exclusively within the U.S. In the following table, segment revenue is disaggregated by Company-owned or Independent Regions in the U.S., Canada and Global (in thousands): Year Ended December 31, 2019 2018 2017 Company-owned Regions $ 128,972 $ 133,925 $ 125,092 Independent Regions 44,686 46,289 44,799 Global and Other 25,978 24,290 23,267 Total RE/MAX Franchising 199,636 204,504 193,158 Marketing Funds 72,299 — — Motto Franchising 4,542 2,536 556 Other 5,816 5,586 — Total $ 282,293 $ 212,626 $ 193,714 |
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): 2020 2021 2022 2023 2024 Thereafter Total Annual dues $ 15,982 $ — $ — $ — $ — $ — $ 15,982 Franchise sales 7,141 5,801 4,368 2,881 1,589 4,104 25,884 Total $ 23,123 $ 5,801 $ 4,368 $ 2,881 $ 1,589 $ 4,104 $ 41,866 |
Schedule of reconciliation of cash, both unrestricted and restricted | As of December 31, 2019 2018 Cash and cash equivalents $ 83,001 $ 59,974 Restricted cash 20,600 — Total cash, cash equivalents and restricted cash $ 103,601 $ 59,974 |
Schedule of cost charges to intersegment | Costs charged from RE/MAX Franchising to the Marketing Funds are as follows (in thousands): Year Ended December 31, 2019 Technology development - operating $ 6,244 Technology development - capital 5,095 Marketing staff and administrative services (a) 3,763 Total $ 15,102 |
Schedule of Allowances Against Accounts and Notes Receivable | The activity in the Company’s allowances against accounts and notes receivable consists of the following (in thousands): Balance at beginning of period Additions/charges to cost and expense for allowances for doubtful accounts (a) Deductions/write-offs Balance at end of period Year Ended December 31, 2019 $ 7,980 $ 4,964 $ (406) $ 12,538 Year Ended December 31, 2018 $ 7,223 $ 2,257 $ (1,500) $ 7,980 Year Ended December 31, 2017 $ 6,458 $ 1,109 $ (344) $ 7,223 |
Franchise sales | |
Schedule of contract liability | Balance at New billings Revenue recognized (a) Balance at end Year ended December 31, 2019 $ 27,560 $ 7,750 $ (9,426) $ 25,884 (a) Revenue recognized related to the beginning balance was $ 8.4 million for the year ended December 31, 2019. |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases | |
Schedule of lease cost and other information | Year Ended December 31, 2019 Lease Cost Operating lease cost (a) $ 12,259 Sublease income (1,508) Short-term lease cost (b) 6,495 Total lease cost $ 17,246 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash outflows from operating leases $ 8,507 Weighted-average remaining lease term in years - operating leases 8.4 Weighted-average discount rate - operating leases 6.3 % (a) Includes approximately $3.7 million of taxes, insurance and maintenance. (b) Includes expenses associated with short-term leases of billboard advertisements and is included in “Marketing Funds expenses” on the Consolidated Statements of Income. |
Schedule of maturities of lease liabilities under non-cancellable leases | Maturities under non-cancellable leases as of December 31, 2019 were as follows (in thousands): Rent Payments Sublease Receipts Total Cash Outflows Year ending December 31: 2020 $ 8,756 $ (888) $ 7,868 2021 9,010 (775) 8,235 2022 9,002 (804) 8,198 2023 9,173 (822) 8,351 2024 9,439 (785) 8,654 Thereafter 34,235 (597) 33,638 Total lease payments $ 79,615 $ (4,671) $ 74,944 Less: imputed interest 18,554 Present value of lease liabilities $ 61,061 |
Schedule of previous lease accounting, maturities of lease liabilities | As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting, maturities under non-cancellable leases as of December 31, 2018 were as follows (in thousands): Rent Payments Sublease Receipts Total Cash Outflows Year ending December 31: 2019 $ 9,402 $ (1,087) $ 8,315 2020 9,601 (873) 8,728 2021 9,341 (775) 8,566 2022 9,011 (804) 8,207 2023 9,169 (827) 8,342 Thereafter 43,556 (1,382) 42,174 Total lease payments $ 90,080 $ (5,748) $ 84,332 |
Non-controlling Interest (Table
Non-controlling Interest (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Noncontrolling Interest | |
Summary of Ownership of the Common Units | As of December 31, 2019 2018 Shares Ownership % Shares Ownership % Non-controlling interest ownership of common units in RMCO 12,559,600 41.3 % 12,559,600 41.4 % Holdings outstanding Class A common stock (equal to Holdings common units in RMCO) 17,838,233 58.7 % 17,754,416 58.6 % Total common units in RMCO 30,397,833 100.0 % 30,314,016 100.0 % |
Reconciliation from Income Before Provision for Income Taxes to Net Income | Year Ended December 31, 2019 2018 2017 RE/MAX Non-controlling Total RE/MAX Non-controlling Total RE/MAX Non-controlling Total Weighted average ownership percentage of RMCO (a) 58.6 % 41.4 % 100.0 % 58.6 % 41.4 % 100.0 % 58.5 % 41.5 % 100.0 % Income before provision for income taxes (a) $ 33,850 $ 23,915 $ 57,765 $ 41,238 $ 24,926 $ 66,164 $ 65,493 $ 23,369 $ 88,862 Provision for income taxes (b)(c) (8,810) (2,099) (10,909) (14,355) (1,987) (16,342) (55,394) (2,148) (57,542) Net income $ 25,040 $ 21,816 $ 46,856 $ 26,883 $ 22,939 $ 49,822 $ 10,099 $ 21,221 $ 31,320 (a) The weighted average ownership percentage of RMCO differs from the allocation of income before provision for income taxes between Holdings and the non-controlling interest due to (i) certain relatively insignificant expenses and (ii) the significant gain on reduction in TRA liability in 2018 and 2017 attributable only to Holdings. See Note 12, Income Taxes for additional information. (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 pass-through income from RMCO. It also includes Holdings’ share of taxes directly incurred by RMCO and its subsidiaries, related primarily to tax liabilities in certain foreign jurisdictions. In 2018 and 2017, the provision for income taxes attributable to Holdings also includes a significant decrease in the value of deferred tax assets. See Note 12, Income Taxes for additional information. (c) The provision for income taxes attributable to the non-controlling interest represents its share of taxes related primarily to tax liabilities in certain foreign jurisdictions directly incurred by RMCO or its subsidiaries. Because RMCO is a pass-through entity there is no U.S. federal and state income tax provision recorded on the non-controlling interest. |
Distributions Paid or Payable | Year Ended December 31, 2019 2018 Tax and other distributions $ 4,880 $ 4,511 Dividend distributions 10,550 10,048 Total distributions to non-controlling unitholders $ 15,430 $ 14,559 |
Earnings Per Share and Divide_2
Earnings Per Share and Dividends (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share and Dividends | |
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 EPS calculations (in thousands, except shares and per share information): Year Ended December 31, 2019 2018 2017 Numerator Net income attributable to RE/MAX Holdings, Inc. $ 25,040 $ 26,883 $ 10,099 Denominator for basic net income per share of Class A common stock Weighted average shares of Class A common stock outstanding 17,812,065 17,737,649 17,688,533 Denominator for diluted net income per share of Class A common stock Weighted average shares of Class A common stock outstanding 17,812,065 17,737,649 17,688,533 Add dilutive effect of the following: Restricted stock units 55,687 29,850 43,267 Weighted average shares of Class A common stock outstanding, diluted 17,867,752 17,767,499 17,731,800 Earnings per share of Class A common stock Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, basic $ 1.41 $ 1.52 $ 0.57 Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, diluted $ 1.40 $ 1.51 $ 0.57 |
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): Year Ended December 31, 2019 2018 2017 Quarter end declared Date paid Per share Date paid Per share Date paid Per share March 31 March 20, 2019 $ 0.21 March 21, 2018 $ 0.20 March 22, 2017 $ 0.18 June 30 May 29, 2019 0.21 May 30, 2018 0.20 May 31, 2017 0.18 September 30 August 29, 2019 0.21 August 29, 2018 0.20 August 30, 2017 0.18 December 31 November 27, 2019 0.21 November 28, 2018 0.20 November 29, 2017 0.18 $ 0.84 $ 0.80 $ 0.72 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Acquisitions | |
Summary of Unaudited Pro Forma Information | Year Ended December 31, 2018 2017 (in thousands, except per share amounts) Total revenue $ 287,394 $ 205,059 Net income attributable to Holdings $ 26,131 $ 7,628 Basic earnings per common share $ 1.47 $ 0.43 Diluted earnings per common share $ 1.47 $ 0.43 |
Marketing funds | |
Acquisitions | |
Schedule of Fair Value Of Assets at Acquisition Date | The following table summarizes the Company’s allocation of the purchase price to the fair value of assets acquired and liabilities assumed (in thousands): Restricted cash $ 28,495 Other current assets 8,472 Property and equipment 788 Other assets, net of current portion 126 Total assets acquired 37,881 Other current liabilities 37,881 Total liabilities assumed 37,881 Total acquisition price $ - |
Booj Llc | |
Acquisitions | |
Schedule of Fair Value Of Assets at Acquisition Date | The following table summarizes the Company’s allocation of the purchase price to the fair value of assets acquired and liabilities assumed (in thousands): Cash $ 362 Other current assets 367 Property and equipment 625 Software 7,400 Trademarks 500 Non-compete agreement 1,200 Customer relationships 800 Other intangible assets 1,589 Other assets, net of current portion 336 Total assets acquired, excluding goodwill 13,179 Current portion of debt (606) Other current liabilities (557) Debt, net of current portion (805) Total liabilities assumed (1,968) Goodwill 15,039 Total purchase price $ 26,250 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment | |
Property and Equipment | Property and equipment consist of the following (in thousands): As of December 31, Depreciable Life 2019 2018 Leasehold improvements Shorter of estimated useful life or life of lease $ 3,327 $ 3,278 Office furniture, fixtures and equipment 2 17,057 14,392 Total property and equipment 20,384 17,670 Less accumulated depreciation (14,940) (13,280) Total property and equipment, net $ 5,444 $ 4,390 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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 December 31, 2019 As of December 31, 2018 Amortization Initial Accumulated Net Initial Accumulated Net Period Cost Amortization Balance Cost Amortization Balance Franchise agreements 12.5 $ 180,867 $ (93,197) $ 87,670 $ 180,867 $ (77,710) $ 103,157 Other intangible assets: Software (a) 4.0 $ 36,680 $ (9,653) $ 27,027 $ 20,579 $ (5,802) $ 14,777 Trademarks 9.3 1,904 (1,037) 867 1,857 (839) 1,018 Non-compete agreements 7.7 3,700 (1,546) 2,154 3,700 (896) 2,804 Training materials 5.0 2,400 (640) 1,760 2,350 (157) 2,193 Other (b) 5.0 800 (293) 507 2,389 (216) 2,173 Total other intangible assets 4.6 $ 45,484 $ (13,169) $ 32,315 $ 30,875 $ (7,910) $ 22,965 (a) As of December 31, 2019, and December 31, 2018, capitalized software development costs of $10.5 million and $4.5 million, respectively, were related to technology projects not yet complete and ready for their intended use and thus were not subject to amortization. (b) Other consists of customer relationships and a favorable market lease, both obtained in connection with the acquisition of booj. The favorable market lease was subsumed into “Operating lease right of use assets” on the accompanying Consolidated Balance Sheet upon adopting the new lease standard on January 1, 2019. See Note 2, Summary of Significant Accounting Policies for additional information. |
Schedule of estimated future amortization of intangible assets, other than goodwill | As of December 31, 2019, the estimated future amortization expense for the next five years related to intangible assets includes the estimated amortization expense associated with the Company’s intangible assets assumed with the acquisition of booj and is as follows (in thousands): Year ending December 31: 2020 $ 25,438 2021 25,122 2022 21,946 2023 14,594 2024 12,146 $ 99,246 |
Schedule of changes to goodwill | The following table presents changes to goodwill for the period from January 1, 2018 to December 31, 2019 (in thousands): RE/MAX Motto Franchising Total Balance, January 1, 2018 $ 123,413 $ 11,800 $ 135,213 Goodwill recognized related to acquisitions (a) 15,039 — 15,039 Adjustments to acquisition accounting during the measurement period 700 — 700 Effect of changes in foreign currency exchange rates (268) — (268) Balance, December 31, 2018 138,884 11,800 150,684 Goodwill recognized related to acquisitions (a) 8,207 — 8,207 Effect of changes in foreign currency exchange rates 147 — 147 Balance, December 31, 2019 $ 147,238 $ 11,800 $ 159,038 (a) The purpose of the booj and First acquisitions is to deliver technology solutions to RE/MAX franchisees and agents. As such, the Company allocated the goodwill arising from these acquisitions to RE/MAX Franchising. See Note 6 , Acquisitions for additional information. |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accrued Liabilities. | |
Schedule of Accrued Liabilities | Accrued liabilities consist of the following (in thousands): As of December 31, 2019 2018 Marketing Funds (a) $ 39,672 $ — Accrued payroll and related employee costs 11,900 6,517 Accrued taxes 2,451 1,480 Accrued professional fees 2,047 2,010 Other 4,093 3,136 $ 60,163 $ 13,143 (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. As previously noted, the Marketing Funds were acquired on January 1, 2019. |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt | |
Schedule of debt | Debt, net of current portion, consists of the following (in thousands): As of December 31, 2019 2018 Senior Secured Credit Facility $ 227,363 $ 229,713 Other long-term financing (a) 362 635 Less unamortized debt issuance costs (1,182) (1,481) Less unamortized debt discount costs (862) (1,080) Less current portion (a) (2,648) (2,622) $ 223,033 $ 225,165 (a) Includes financing assumed with the acquisition of booj. As of December 31, 2019 and 2018, the carrying value of this financing approximates the fair value. |
Schedule of Maturities of Debt | Maturities of debt are as follows (in thousands): Year Ended December 31, 2019 2020 $ 2,648 2021 2,414 2022 2,350 2023 220,313 $ 227,725 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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 December 31, 2019 As of December 31, 2018 Fair Value Level 1 Level 3 Fair Value Level 1 Level 2 Level 3 Liabilities Contingent consideration $ 5,005 $ — — $ 5,005 $ 5,070 $ — $ — $ 5,070 |
Reconciliation of all liabilities of Company measured at fair value on a recurring basis using significant unobservable inputs | The table below presents a reconciliation of the contingent consideration (in thousands): Balance at January 1, 2018 $ 6,580 Fair value adjustments (a) (1,289) Cash payments (221) Balance at December 31, 2018 5,070 Fair value adjustments (a) 241 Cash payments (306) Balance at December 31, 2019 $ 5,005 (a) Fair value adjustments relate to realignment of future franchise sales assumptions to more closely reflect historical sales trends from inception to date. |
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): December 31, December 31, 2019 2018 Carrying Fair Value Carrying Fair Value Senior Secured Credit Facility $ 225,319 $ 227,363 $ 227,152 $ 221,673 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Schedule of Income Before Provision for Income Taxes | “Income before provision for income taxes” as shown in the accompanying Consolidated Statements of Income is comprised of the following (in thousands): Year Ended December 31, 2019 2018 2017 Domestic $ 44,343 $ 52,798 $ 77,346 Foreign 13,422 13,366 11,516 Total $ 57,765 $ 66,164 $ 88,862 |
Schedule of Components of Provision for Income Taxes | Components of the “Provision for income taxes” in the accompanying Consolidated Statements of Income consist of the following (in thousands): Year Ended December 31, 2019 2018 2017 Current Federal $ 2,533 $ 1,393 $ 3,239 Foreign 4,929 4,738 5,203 State and local 1,137 700 1,169 Total current expense 8,599 6,831 9,611 Deferred expense Federal 2,084 8,795 47,045 Foreign (142) 12 323 State and local 368 704 563 Total deferred expense 2,310 9,511 47,931 Provision for income taxes $ 10,909 $ 16,342 $ 57,542 |
Schedule of Reconciliation of U.S. Statutory Income Tax Rate to Company's Effective Tax Rate | Year Ended December 31, 2019 2018 2017 U.S. statutory tax rate 21.0 % 21.0 % 35.0 % Increase due to state and local taxes, net of federal benefit 3.1 3.1 2.6 Non-creditable foreign taxes 1.1 1.2 - Foreign derived intangible income deduction (1.5) (1.3) - Income attributable to non-controlling interests (7.2) (7.3) (12.5) Uncertain Tax Positions 1.0 0.8 0.6 Other 1.4 (0.8) (0.8) Subtotal 18.9 16.7 24.9 Impact of TRA adjustment on NCI (a) - 0.7 4.5 Effect of permanent difference - TRA adjustment (b) - (2.2) (13.6) Tax Reform Rate Change (c) - - 49.0 Valuation allowance recognized on basis step-ups - 9.5 - 18.9 % 24.7 % 64.8 % (a) Reflects additional impact of non-controlling interest adjustment being on a larger base of income that includes the gain on reduction in TRA liability. (b) Reflects the impact of gain on TRA liability reduction, which is not taxable. (c) Reflects reduction in deferred tax assets and resulting increase in deferred tax expense due to U.S. Federal rate declining from 35% to 21% . |
Summary of Deferred Tax Assets and Liabilities | As of December 31, 2019 2018 Long-term deferred tax assets Goodwill, other intangibles and other assets $ 42,800 $ 48,427 Imputed interest deduction pursuant to tax receivable agreements 2,651 2,719 Operating lease liabilities 1,618 1,845 Compensation and benefits 3,043 2,131 Allowance for doubtful accounts 1,629 944 Motto contingent liability 783 748 Deferred revenue 3,706 3,939 Foreign tax credit carryforward 1,862 1,259 Net operating loss 2,641 — Other 950 1,435 Total long-term deferred tax assets 61,683 63,447 Valuation allowance (a) (7,184) (7,051) Total long-term deferred tax assets, net of valuation allowance 54,499 56,396 Long-term deferred tax liabilities Property and equipment and other long lived assets (1,494) (2,944) Other (703) — Total long-term deferred tax liabilities (2,197) (2,944) Net long-term deferred tax assets 52,302 53,452 Total deferred tax assets and liabilities $ 52,302 $ 53,452 (a) Includes a valuation allowance on deferred tax assets for goodwill and intangibles in the Company’s Western Canada operations, as well as foreign tax credit carryforwards. |
Schedule of Unrecognized Tax Benefits | As of December 31, 2019 2018 Balance, January 1 $ 4,278 $ 3,703 Increase related to current period tax positions 532 575 Balance, December 31 (a) $ 4,810 $ 4,278 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Employee Stock-Based Compensation Expense | Employee stock-based compensation expense under the Company’s Incentive Plan, net of the amount capitalized in internally developed software, is as follows (in thousands): Year Ended December 31, 2019 2018 2017 Expense from Time-based awards (a) $ 7,554 $ 5,189 $ 2,523 Expense from Performance-based awards (a)(b) (179) 4,126 377 Expense from bonus to be settled in shares (c) 3,788 — — Equity-based compensation capitalized (a) (229) (139) — Equity-based compensation expense 10,934 9,176 2,900 Tax benefit from equity-based compensation (1,548) (1,297) (637) Deficit / (excess) tax benefit from equity-based compensation 55 (145) (324) Net compensation cost $ 9,441 $ 7,734 $ 1,939 (a) Includes expense recognized and costs capitalized in connection with the awards granted to booj employees and former owners at the time of acquisition. (b) Expense recognized for performance-based awards is re-assessed each quarter based on expectations of achievement against the performance conditions. For the year ended December 31, 2019, the Company reversed expense that had been recognized in 2018 for awards granted for certain booj work deliverables. This reversal was primarily a result of modifying the awards to extend the due date of the performance conditions, primarily through December 31, 2019, as the achievement of the goals at the previous date was no longer probable. Accounting for these modifications resulting in the reversal of the cumulative expense previously recognized and expensing the modified awards over the new vesting period resulting in a net $0.3 million recognized in 2019. Also, for the year ended December 31, 2019, certain conditions were no longer deemed probable of being met for other performance awards tied to the achievement of a revenue target measured over a three-year performance period. The cumulative expense previously recognized was reversed in the current period, resulting in a negative expense of ($0.5) million in 2019. (c) In 2019, the Company revised its annual bonus plan so that half of the bonus for most employees will be settled in shares. The share amounts to be issued will be determined based on the stock price at the time of vesting in early 2020. These amounts are recognized as “Accrued liabilities” in the accompanying Consolidated Balance Sheets and are not included in “Additional paid-in capital” until shares are issued. |
Time-based awards | |
Restricted Stock Units | The following table summarizes equity-based compensation activity related to RSUs: RSUs Weighted average Balance, January 1, 2019 298,610 $ 51.97 Granted (a) 257,087 $ 38.43 Shares vested (including tax withholding) (b) (80,008) $ 43.30 Forfeited (20,237) $ 45.41 Balance, December 31, 2019 455,452 $ 46.15 (a) The weighted average grant date fair value for the years ended December 31, 2018 and 2017 were $53.04 and $55.45 per RSU granted, respectively. (b) Pursuant to the terms of the Incentive Plan, RSUs withheld by the Company for the payment of the employee's tax withholding related to an RSU vesting are added back to the pool of shares available for future awards. |
Performance-based awards | |
Restricted Stock Units | The following table summarizes equity-based compensation activity related to PSUs: PSUs Weighted average Balance, January 1, 2019 179,615 $ 55.75 Granted (a)(b) 119,410 $ 38.87 Shares vested (97,436) $ 36.20 Forfeited (61,625) $ 56.24 Balance, December 31, 2019 139,964 $ 45.31 (a) Represents the total participant target award. (b) The weighted average grant date fair value for the years ended December 31, 2018 and 2017 were $55.38 and $57.88 per PSU granted, respectively. |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Information | |
Schedule of Revenue from External Customers By Segment | The following table presents revenue from external customers by segment (in thousands): Year Ended December 31, 2019 2018* 2017* Continuing franchise fees $ 95,853 $ 98,828 $ 93,232 Annual dues 35,409 35,894 33,767 Broker fees 45,990 46,871 43,801 Franchise sales and other revenue 22,383 22,911 22,357 Total RE/MAX Franchising 199,635 204,504 193,157 Continuing franchise fees 4,075 2,276 462 Franchise sales and other revenue 468 260 95 Total Motto Franchising 4,543 2,536 557 Marketing Funds fees 72,299 — — Other 5,816 5,586 — Total revenue $ 282,293 $ 212,626 $ 193,714 *Amounts in the years ended December 31, 2018 and 2017 have been recast to show Motto separately. |
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 before provision for income taxes (in thousands): Year Ended December 31, 2019 2018* 2017* Adjusted EBITDA: RE/MAX Franchising $ 106,810 $ 108,669 $ 105,184 Adjusted EBITDA: Motto Franchising (2,709) (3,436) (3,039) Adjusted EBITDA: Other (586) (917) — Adjusted EBITDA: Consolidated 103,515 104,316 102,145 Gain (loss) on sale or disposition of assets and sublease, net (a) (342) 139 (4,260) Equity-based compensation expense (10,934) (9,176) (2,900) Acquisition-related expense (b) (1,127) (1,634) (5,889) Gain on reduction in TRA liability (c) — 6,145 32,736 Special Committee investigation and remediation expense (d) — (2,862) (2,634) Fair value adjustments to contingent consideration (e) (241) 1,289 (180) Interest income 1,446 676 352 Interest expense (12,229) (12,051) (9,996) Depreciation and amortization (22,323) (20,678) (20,512) Income before provision for income taxes $ 57,765 $ 66,164 $ 88,862 *Amounts in the years ended December 31, 2018 and 2017 have been recast to show Motto separately. (a) Represents gain (loss) on the sale or disposition of assets as well as the gains (losses) on the sublease of a portion of our corporate headquarters office building. (b) Acquisition-related expense includes legal, accounting, advisory and consulting fees incurred in connection with the acquisition and integration of acquired companies. (c) Gain on reduction in tax receivable agreement liability is a result of the Tax Cuts and Jobs Act enacted in December 2017 and further clarified in 2018. See Note 12, Income Taxes for additional information. (d) Special Committee investigation and remediation expense relates to costs incurred in relation to the previously disclosed investigation by the special committee of independent directors of actions of certain members of our senior management and the implementation of the remediation plan. (e) Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liability. See Note 11, Fair Value Measurements for additional information. |
Summary of Total Assets by Segment | The following table presents total assets of the Company’s segments (in thousands): As of December 31, 2019 2018* RE/MAX Franchising $ 479,370 $ 406,643 Marketing Funds 41,090 — Motto Franchising 20,161 21,346 Other 1,731 384 Total assets $ 542,352 $ 428,373 |
Summary of Long-lived Assets, Net of accumulated depreciation by Geographic Areas | The following table presents long-lived assets, net of accumulated depreciation disaggregated by geographical area (in thousands): As of December 31, 2019 2018 U.S. $ 5,406 $ 4,342 Global 38 48 Total long-lived assets $ 5,444 $ 4,390 |
Quarterly Financial Informati_2
Quarterly Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information (unaudited) | |
Schedule of Quarterly Financial Information | Summarized quarterly results were as follows (in thousands, except shares and per share amounts): For the Quarter Ended March 31, 2019 June 30, 2019 September 30, 2019 December 31, 2019 Total revenue $ 71,178 $ 71,381 $ 71,541 $ 68,193 Total operating expenses 58,233 49,311 48,097 58,213 Operating income 12,945 22,070 23,444 9,980 Total other expenses, net (2,780) (2,751) (2,727) (2,416) Income before provision for income taxes 10,165 19,319 20,717 7,564 Provision for income taxes (1,908) (3,186) (3,453) (2,362) Net income 8,257 16,133 17,264 5,202 Less: net income attributable to non-controlling interest 3,848 7,563 8,091 2,314 Net income attributable to Holdings $ 4,409 $ 8,570 $ 9,173 $ 2,888 Net income attributable to Holdings per share of Class A common stock Basic $ 0.25 $ 0.48 $ 0.51 $ 0.16 Diluted $ 0.25 $ 0.48 $ 0.51 $ 0.16 Weighted average shares of Class A common stock outstanding Basic 17,775,381 17,808,321 17,826,332 17,837,386 Diluted 17,817,620 17,833,958 17,840,158 17,978,431 For the Quarter Ended March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 Total revenue $ 52,642 $ 54,277 $ 54,866 $ 50,841 Total operating expenses 38,925 33,363 33,059 29,428 Operating income 13,717 20,914 21,807 21,413 Total other expenses, net (2,688) (3,176) (2,846) (2,977) Income before provision for income taxes 11,029 17,738 18,961 18,436 Provision for income taxes (1,997) (3,283) (3,555) (7,507) Net income 9,032 14,455 15,406 10,929 Less: net income attributable to non-controlling interest 4,089 6,848 7,307 4,695 Net income attributable to Holdings $ 4,943 $ 7,607 $ 8,099 $ 6,234 Net income attributable to Holdings per share of Class A common stock Basic $ 0.28 $ 0.43 $ 0.46 $ 0.35 Diluted $ 0.28 $ 0.43 $ 0.46 $ 0.35 Weighted average shares of Class A common stock outstanding Basic 17,709,095 17,746,042 17,746,184 17,748,745 Diluted 17,762,133 17,769,641 17,771,212 17,771,180 |
Business and Organization (Deta
Business and Organization (Details) | 12 Months Ended | |
Dec. 31, 2019countryOfficeclassitemVote | Dec. 31, 2018 | |
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Number of classes of common stock | class | 2 | |
RMCO, LLC | ||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Parent economic interest in RMCO (as a percent) | 58.70% | 58.60% |
Non-controlling interest ownership of common units in RMCO as a percentage | 41.30% | 41.40% |
RIHI | RMCO, LLC | ||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Non-controlling interest ownership of common units in RMCO as a percentage | 41.30% | |
Minimum | ||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Number of agents | item | 130,000 | |
Number of offices | Office | 8,000 | |
Number of countries in which entity operates | country | 110 | |
REMAX [Member] | ||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Percentage of Company consisting of franchises | 100.00% | |
Common Class A | ||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Number of votes per share held | Vote | 1 | |
Common Class B | RIHI | ||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Ratio of votes in parent company to number of L L C common units held | 2 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Schedule of Deferred Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | |||
New billings | $ 1,566 | $ (228) | $ (4,705) |
Annual dues | |||
Disaggregation of Revenue [Line Items] | |||
Deferred revenue recognition period | 12 months | ||
Balance at beginning of period | $ 15,877 | ||
New billings | 35,514 | ||
Revenue recognized | (35,409) | ||
Balance at the end of period | 15,982 | 15,877 | |
Revenue recognized | 14,400 | ||
Franchise sales | |||
Disaggregation of Revenue [Line Items] | |||
Balance at beginning of period | 27,560 | ||
New billings | 7,750 | ||
Revenue recognized | (9,426) | ||
Balance at the end of period | 25,884 | $ 27,560 | |
Revenue recognized | $ 8,400 | ||
Franchise sales | RE/MAX franchise agreements | |||
Disaggregation of Revenue [Line Items] | |||
Period of franchise agreement | 5 years | ||
Franchise sales | Motto Franchising | |||
Disaggregation of Revenue [Line Items] | |||
Period of franchise agreement | 7 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Commissions Related to Franchise Sales (Details) - Commissions Related to Franchise Sales $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Capitalized Contract Cost [Line Items] | |
Balance at beginning of period | $ 3,748 |
Expense recognized | (1,290) |
Additions to contract cost for new activity | 1,120 |
Balance at end of period | $ 3,578 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Disaggregated revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | $ 68,193 | $ 71,541 | $ 71,381 | $ 71,178 | $ 50,841 | $ 54,866 | $ 54,277 | $ 52,642 | $ 282,293 | $ 212,626 | $ 193,714 |
Company -owned Regions | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 128,972 | 133,925 | 125,092 | ||||||||
Independent Regions | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 44,686 | 46,289 | 44,799 | ||||||||
Global and Other | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 25,978 | 24,290 | 23,267 | ||||||||
RE/MAX Franchising | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 199,636 | 204,504 | 193,158 | ||||||||
Motto Franchising | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 4,542 | 2,536 | 556 | ||||||||
Total Marketing Funds | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 72,299 | ||||||||||
Other | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 5,816 | 5,586 | |||||||||
U.S. | RE/MAX Franchising | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 164,867 | 170,496 | 160,538 | ||||||||
U.S. | Total Marketing Funds | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 64,906 | ||||||||||
Canada | RE/MAX Franchising | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 23,024 | 23,771 | 23,189 | ||||||||
Canada | Total Marketing Funds | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 6,559 | ||||||||||
Global | RE/MAX Franchising | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | 11,745 | $ 10,237 | $ 9,431 | ||||||||
Global | Total Marketing Funds | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total revenue | $ 834 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Transaction Price (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 41,866 |
Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | 15,982 |
Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | 25,884 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 23,123 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 15,982 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 7,141 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 5,801 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 0 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 5,801 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 4,368 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 0 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 4,368 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 2,881 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 0 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 2,881 |
Performance period | 1 year |
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 | $ 1,589 |
Performance period | 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 | $ 0 |
Performance period | 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 | $ 1,589 |
Performance period | 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 | $ 4,104 |
Performance period | 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] | |
Remaining performance obligation revenue | $ 0 |
Performance period | 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 | $ 4,104 |
Performance period | 1 year |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Cash, Cash Equivalents and Restricted Cash | ||||
Cash and cash equivalents | $ 83,001 | $ 59,974 | ||
Total cash, cash equivalents and restricted cash | 103,601 | 59,974 | $ 50,807 | $ 57,609 |
Marketing funds | ||||
Cash, Cash Equivalents and Restricted Cash | ||||
Cash and cash equivalents | 83,001 | 59,974 | ||
Restricted Cash | 20,600 | |||
Total cash, cash equivalents and restricted cash | $ 103,601 | $ 59,974 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Services Provided to Marketing Funds by RE/MAX Franchising (Details) - Marketing funds - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cost charges | $ 15,102 | ||
Technology development - operating | |||
Cost charges | 6,244 | ||
Technology development - capital | |||
Cost charges | 5,095 | ||
Marketing staff and administrative services | |||
Cost charges | $ 3,763 | $ 3,800 | $ 3,400 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Schedule of Allowances Against Accounts and Notes Receivable (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Balance at beginning of period | $ 7,980 | $ 7,223 | $ 6,458 |
Additions and charges to cost and expense for allowances for doubtful accounts | 4,964 | 2,257 | 1,109 |
Deductions/ write-offs | (406) | (1,500) | (344) |
Balance at end of period | 12,538 | $ 7,980 | $ 7,223 |
Marketing funds | |||
Additions and charges to cost and expense for allowances for doubtful accounts | $ 1,500 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Additional Information (Details) | 12 Months Ended | ||
Dec. 31, 2019USD ($)country | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Significant Accounting Policies [Line Items] | |||
Broker fees, as a percent | 1.00% | ||
Grandfathered agents as a percent | 17.00% | ||
Impairment of franchise agreements and other intangible assets subject to amortization | $ 0 | $ 0 | $ 0 |
Impairment of goodwill | $ 0 | $ 0 | $ 0 |
Equity-based compensation vesting period | 3 years | ||
Minimum | |||
Significant Accounting Policies [Line Items] | |||
Number of countries and territories operations conducted | country | 110 | ||
Software | Minimum | |||
Significant Accounting Policies [Line Items] | |||
Useful life of intangible assets | 2 years | ||
Software | Maximum | |||
Significant Accounting Policies [Line Items] | |||
Useful life of intangible assets | 5 years |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Recently Adopted Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jan. 01, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Summary of Significant Accounting Policies | |||
Lease, Practical Expedients, Package [true false] | true | ||
Lease, Practical Expedient, Use of Hindsight [true false] | false | ||
Operating Lease, Right-of-Use Asset | $ 55,600 | $ 51,129 | $ 0 |
Operating Lease, Liability | 65,800 | $ 61,061 | |
Deferred rent | 9,300 | ||
Sublease loss | 2,400 | ||
Intangible assets | $ 1,500 |
Leases (Details)
Leases (Details) | 12 Months Ended |
Dec. 31, 2019agreementitem | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 14 years |
Option to renew - lessee | true |
Number of sublease agreements | 4 |
Number of renewal options reasonably certain to be exercised | item | 0 |
Number of sublease agreements - contingent upon renewal | 2 |
Number of sublease agreements - exercised | 2 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Renewal of lease period | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Renewal of lease period | 20 years |
Master Lease | |
Lessee, Lease, Description [Line Items] | |
Number Of Renewal Terms | item | 2 |
Percentage Of Increase In Operating Lease Rent | 3.00% |
Renewal of lease period | 10 years |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Lease Cost | |
Operating lease cost | $ 12,259 |
Sublease income | (1,508) |
Short-term lease cost | 6,495 |
Total lease cost | 17,246 |
Operating cash flows from operating leases | $ 8,507 |
Weighted-average remaining lease term in years - operating leases | 8 years 4 months 24 days |
Weighted-average discount rate - operating leases | 6.30% |
Taxes, insurance and maintenance related to operating lease | $ 3,700 |
Leases - Maturities of lease li
Leases - Maturities of lease liabilities under non-cancellable leases (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jan. 01, 2019 |
Rent Payments | ||
2020 | $ 8,756 | |
2021 | 9,010 | |
2022 | 9,002 | |
2023 | 9,173 | |
2024 | 9,439 | |
Thereafter | 34,235 | |
Total lease payments | 79,615 | |
Less: imputed interest | 18,554 | |
Present value of lease liabilities | 61,061 | $ 65,800 |
Sublease Receipts | ||
2020 | (888) | |
2021 | (775) | |
2022 | (804) | |
2023 | (822) | |
2024 | (785) | |
Thereafter | (597) | |
Sublease Receipts | (4,671) | |
Total Cash Outflows | ||
2020 | 7,868 | |
2021 | 8,235 | |
2022 | 8,198 | |
2023 | 8,351 | |
2024 | 8,654 | |
Thereafter | 33,638 | |
Total Cash Outflows | $ 74,944 |
Leases - Previous lease account
Leases - Previous lease accounting, maturities of lease liabilities (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Rent Payments | |
2019 | $ 9,402 |
2020 | 9,601 |
2021 | 9,341 |
2022 | 9,011 |
2023 | 9,169 |
Thereafter | 43,556 |
Total lease payments | 90,080 |
Sublease Receipts | |
2019 | (1,087) |
2020 | (873) |
2021 | (775) |
2022 | (804) |
2023 | (827) |
Thereafter | (1,382) |
Total Sublease receipts | (5,748) |
Total Cash Outflows | |
2019 | 8,315 |
2020 | 8,728 |
2021 | 8,566 |
2022 | 8,207 |
2023 | 8,342 |
Thereafter | 42,174 |
Total Cash Outflows | $ 84,332 |
Non-controlling Interest - Owne
Non-controlling Interest - Ownership of common units in RMCO (Details) - RMCO, LLC - shares | Dec. 31, 2019 | Dec. 31, 2018 |
Shares | ||
Non-controlling interest ownership of common units in RMCO | 12,559,600 | 12,559,600 |
Holdings outstanding Class A common stock (equal to Holdings common units in RMCO) | 17,838,233 | 17,754,416 |
Total number of common stock units in RMCO | 30,397,833 | 30,314,016 |
Ownership Percentage | ||
Non-controlling interest ownership of common units in RMCO as a percentage | 41.30% | 41.40% |
Holdings outstanding Class A common stock (equal to Holdings common units in RMCO) | 58.70% | 58.60% |
Total percentage of common stock units | 100.00% | 100.00% |
RIHI | ||
Ownership Percentage | ||
Non-controlling interest ownership of common units in RMCO as a percentage | 41.30% |
Non-controlling Interest - Net
Non-controlling Interest - Net income reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Noncontrolling Interest | |||||||||||
Weighted average ownership percentage of controlling interest | 58.60% | 58.60% | 58.50% | ||||||||
Weighted average ownership percentage of noncontrolling interest | 41.40% | 41.40% | 41.50% | ||||||||
Total (as a percentage) | 100.00% | 100.00% | 100.00% | ||||||||
Income before provision for income taxes attributable to RE/MAX Holdings, Inc. | $ 33,850 | $ 41,238 | $ 65,493 | ||||||||
Income before provision for income taxes: Non-controlling interest | 23,915 | 24,926 | 23,369 | ||||||||
Income before provision for income taxes | $ 7,564 | $ 20,717 | $ 19,319 | $ 10,165 | $ 18,436 | $ 18,961 | $ 17,738 | $ 11,029 | 57,765 | 66,164 | 88,862 |
Provision for income taxes attributable to RE/MAX Holdings, Inc. | (8,810) | (14,355) | (55,394) | ||||||||
Provision for income taxes: Non-controlling interest | (2,099) | (1,987) | (2,148) | ||||||||
Provision for income taxes | (2,362) | (3,453) | (3,186) | (1,908) | (7,507) | (3,555) | (3,283) | (1,997) | (10,909) | (16,342) | (57,542) |
Net income attributable to RE/MAX Holdings, Inc. | 2,888 | 9,173 | 8,570 | 4,409 | 6,234 | 8,099 | 7,607 | 4,943 | 25,040 | 26,883 | 10,099 |
Net income: Non-controlling interest | 2,314 | 8,091 | 7,563 | 3,848 | 4,695 | 7,307 | 6,848 | 4,089 | 21,816 | 22,939 | 21,221 |
Net income | $ 5,202 | $ 17,264 | $ 16,133 | $ 8,257 | $ 10,929 | $ 15,406 | $ 14,455 | $ 9,032 | $ 46,856 | $ 49,822 | $ 31,320 |
Non-controlling Interest - Dist
Non-controlling Interest - Distributions Paid or Payable (Details) - USD ($) $ in Thousands | Feb. 19, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Dividends Payable [Line Items] | |||
Distributions paid or payable to or on behalf of non-controlling unitholders | $ 15,430 | $ 14,559 | |
Tax and other distributions | |||
Dividends Payable [Line Items] | |||
Distributions paid or payable to or on behalf of non-controlling unitholders | 4,880 | 4,511 | |
Dividend distributions | |||
Dividends Payable [Line Items] | |||
Distributions paid or payable to or on behalf of non-controlling unitholders | $ 10,550 | $ 10,048 | |
Subsequent Event | Quarterly distribution | |||
Dividends Payable [Line Items] | |||
Distributions paid or payable to or on behalf of non-controlling unitholders | $ 2,800 |
Non-controlling Interest - Narr
Non-controlling Interest - Narrative (Details) - USD ($) $ in Thousands, shares in Millions | 1 Months Ended | 2 Months Ended | 12 Months Ended | ||
Oct. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Significant Accounting Policies [Line Items] | |||||
Deferred tax assets, net | $ 52,302 | $ 53,452 | |||
Corporate tax rate | 21.00% | 21.00% | 35.00% | ||
RIHI | |||||
Significant Accounting Policies [Line Items] | |||||
Common stock issued at initial public offering | 11.5 | 5.2 | |||
TRA holders | |||||
Significant Accounting Policies [Line Items] | |||||
Tax benefit realized | 85.00% | ||||
RMCO, LLC | RIHI | |||||
Significant Accounting Policies [Line Items] | |||||
TRA liability | $ 37,200 |
Earnings Per Share and Divide_3
Earnings Per Share and Dividends - Reconciliation of the numerator and denominator used in basic and diluted EPS calculations (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Numerator | |||||||||||
Net income attributable to RE/MAX Holdings, Inc. | $ 2,888 | $ 9,173 | $ 8,570 | $ 4,409 | $ 6,234 | $ 8,099 | $ 7,607 | $ 4,943 | $ 25,040 | $ 26,883 | $ 10,099 |
Common Class A | |||||||||||
Denominator for basic net income per share of Class A common stock | |||||||||||
Weighted average shares of Class A common stock outstanding | 17,837,386 | 17,826,332 | 17,808,321 | 17,775,381 | 17,748,745 | 17,746,184 | 17,746,042 | 17,709,095 | 17,812,065 | 17,737,649 | 17,688,533 |
Denominator for diluted net income per share of Class A common stock | |||||||||||
Weighted average shares of Class A common stock outstanding | 17,837,386 | 17,826,332 | 17,808,321 | 17,775,381 | 17,748,745 | 17,746,184 | 17,746,042 | 17,709,095 | 17,812,065 | 17,737,649 | 17,688,533 |
Add dilutive effect of the following: | |||||||||||
Weighted average shares of Class A common stock outstanding, diluted | 17,978,431 | 17,840,158 | 17,833,958 | 17,817,620 | 17,771,180 | 17,771,212 | 17,769,641 | 17,762,133 | 17,867,752 | 17,767,499 | 17,731,800 |
Earnings per share of Class A common stock | |||||||||||
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, basic | $ 0.16 | $ 0.51 | $ 0.48 | $ 0.25 | $ 0.35 | $ 0.46 | $ 0.43 | $ 0.28 | $ 1.41 | $ 1.52 | $ 0.57 |
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, diluted | $ 0.16 | $ 0.51 | $ 0.48 | $ 0.25 | $ 0.35 | $ 0.46 | $ 0.43 | $ 0.28 | $ 1.40 | $ 1.51 | $ 0.57 |
Restricted Stock Units (RSUs) | Common Class A | |||||||||||
Add dilutive effect of the following: | |||||||||||
Restricted stock units | 55,687 | 29,850 | 43,267 |
Earnings Per Share and Divide_4
Earnings Per Share and Dividends - Additional Information (Details) - $ / shares | Feb. 19, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Common Class A | ||||||||||||||||
Dividends Payable [Line Items] | ||||||||||||||||
Cash dividends declared per share of Class A common stock | $ 0.84 | $ 0.80 | $ 0.72 | |||||||||||||
Quarterly dividend | ||||||||||||||||
Dividends Payable [Line Items] | ||||||||||||||||
Cash dividends declared per share of Class A common stock | $ 0.18 | $ 0.18 | $ 0.18 | $ 0.18 | $ 0.72 | |||||||||||
Quarterly dividend | Common Class A | ||||||||||||||||
Dividends Payable [Line Items] | ||||||||||||||||
Cash dividends declared per share of Class A common stock | $ 0.22 | $ 0.21 | $ 0.21 | $ 0.21 | $ 0.21 | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.84 | $ 0.80 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 16, 2019 | Feb. 26, 2018 | Nov. 15, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2019 | Jan. 01, 2019 |
Purchase Price Allocation | |||||||
Goodwill | $ 150,684 | $ 135,213 | $ 159,038 | ||||
Increase to goodwill | 700 | ||||||
Pro Forma Information | |||||||
Total revenue | 287,394 | 205,059 | |||||
Net income attributable to Holdings | $ 26,131 | $ 7,628 | |||||
Basic earnings per common share | $ 1.47 | $ 0.43 | |||||
Diluted earnings per common share | $ 1.47 | $ 0.43 | |||||
Booj Llc | |||||||
Business Acquisition [Line Items] | |||||||
Cash consideration | $ 26,300 | ||||||
Issuance of Class A common stock, equity-based compensation plans, value | 10,000 | ||||||
Purchase Price Allocation | |||||||
Cash | 362 | ||||||
Other current assets | 367 | ||||||
Property and equipment | 625 | ||||||
Software | 7,400 | ||||||
Trademarks | 500 | ||||||
Non-compete agreement | 1,200 | ||||||
Customer relationships | 800 | ||||||
Other intangible assets | 1,589 | ||||||
Other assets, net of current portion | 336 | ||||||
Total assets acquired | 13,179 | ||||||
Current portion of debt | (606) | ||||||
Other current liabilities | 557 | ||||||
Debt, net of current portion | (805) | ||||||
Total liabilities assumed | 1,968 | ||||||
Goodwill | 15,039 | ||||||
Total purchase price | $ 26,250 | ||||||
First Leads | |||||||
Business Acquisition [Line Items] | |||||||
Cash consideration | $ 15,000 | ||||||
Marketing funds | |||||||
Purchase Price Allocation | |||||||
Restricted cash | $ 28,495 | ||||||
Other current assets | 8,472 | ||||||
Property and equipment | 788 | ||||||
Other assets, net of current portion | 126 | ||||||
Total assets acquired | 37,881 | ||||||
Other current liabilities | 37,881 | ||||||
Total liabilities assumed | $ 37,881 | ||||||
Remax Of Northern Illinois Inc | |||||||
Business Acquisition [Line Items] | |||||||
Cash consideration | $ 35,700 |
Property and Equipment - Proper
Property and Equipment - Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property Plant And Equipment [Line Items] | |||
Property and equipment, gross | $ 20,384 | $ 17,670 | |
Less accumulated depreciation | (14,940) | (13,280) | |
Property and equipment, net | 5,444 | 4,390 | |
Depreciation expense | $ 1,700 | 1,200 | $ 900 |
Leasehold Improvements | |||
Property Plant And Equipment [Line Items] | |||
Depreciable life | Shorter of estimated useful life or life of lease | ||
Property and equipment, gross | $ 3,327 | 3,278 | |
Office furniture, fixtures and equipment | |||
Property Plant And Equipment [Line Items] | |||
Property and equipment, gross | $ 17,057 | $ 14,392 | |
Office furniture, fixtures and equipment | Minimum | |||
Property Plant And Equipment [Line Items] | |||
Depreciable life | 2 years | ||
Office furniture, fixtures and equipment | Maximum | |||
Property Plant And Equipment [Line Items] | |||
Depreciable life | 10 years |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill - Components of Company's Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Finite Lived Intangible Assets [Line Items] | |||
Net Balance | $ 87,670 | $ 103,157 | |
Amortization expense | 20,600 | 19,500 | $ 19,600 |
Franchise agreements | |||
Finite Lived Intangible Assets [Line Items] | |||
Initial Cost | 180,867 | 180,867 | |
Accumulated Amortization | (93,197) | (77,710) | |
Net Balance | $ 87,670 | 103,157 | |
Franchise agreements | Weighted Average | |||
Finite Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 12 years 6 months | ||
Other intangible assets | |||
Finite Lived Intangible Assets [Line Items] | |||
Initial Cost | $ 45,484 | 30,875 | |
Accumulated Amortization | (13,169) | (7,910) | |
Net Balance | $ 32,315 | 22,965 | |
Other intangible assets | Weighted Average | |||
Finite Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 4 years 7 months 6 days | ||
Software | |||
Finite Lived Intangible Assets [Line Items] | |||
Capitalized software development costs | $ 10,500 | 4,500 | |
Trademarks | |||
Finite Lived Intangible Assets [Line Items] | |||
Initial Cost | 1,904 | 1,857 | |
Accumulated Amortization | (1,037) | (839) | |
Net Balance | $ 867 | 1,018 | |
Trademarks | Weighted Average | |||
Finite Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 9 years 3 months 18 days | ||
Software Development | |||
Finite Lived Intangible Assets [Line Items] | |||
Initial Cost | $ 36,680 | 20,579 | |
Accumulated Amortization | (9,653) | (5,802) | |
Net Balance | $ 27,027 | 14,777 | |
Software Development | Weighted Average | |||
Finite Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 4 years | ||
Non-compete agreements | |||
Finite Lived Intangible Assets [Line Items] | |||
Initial Cost | $ 3,700 | 3,700 | |
Accumulated Amortization | (1,546) | (896) | |
Net Balance | $ 2,154 | 2,804 | |
Non-compete agreements | Weighted Average | |||
Finite Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 7 years 8 months 12 days | ||
Training materials | |||
Finite Lived Intangible Assets [Line Items] | |||
Initial Cost | $ 2,400 | 2,350 | |
Accumulated Amortization | (640) | (157) | |
Net Balance | $ 1,760 | 2,193 | |
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 | $ 800 | 2,389 | |
Accumulated Amortization | (293) | (216) | |
Net Balance | $ 507 | $ 2,173 | |
Other | Weighted Average | |||
Finite Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 5 years |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Estimated Future Amortization of Intangible Assets, Other Than Goodwill (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | |
2020 | $ 25,438 |
2021 | 25,122 |
2022 | 21,946 |
2023 | 14,594 |
2024 | 12,146 |
Estimated future amortization expense over next five years | $ 99,246 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill - Schedule of Changes in Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Changes to goodwill | ||
Beginning Balance | $ 150,684 | $ 135,213 |
Goodwill recognized related to acquisitions | 8,207 | 15,039 |
Adjustments to acquisition accounting during the measurement period | 700 | |
Effect of changes in foreign currency exchange rates | 147 | (268) |
Ending Balance | 159,038 | 150,684 |
RE/MAX Franchising | ||
Changes to goodwill | ||
Beginning Balance | 138,884 | 123,413 |
Goodwill recognized related to acquisitions | 8,207 | 15,039 |
Adjustments to acquisition accounting during the measurement period | 700 | |
Effect of changes in foreign currency exchange rates | 147 | (268) |
Ending Balance | 147,238 | 138,884 |
Motto Franchising | ||
Changes to goodwill | ||
Beginning Balance | 11,800 | 11,800 |
Ending Balance | $ 11,800 | $ 11,800 |
Accrued Liabilities - Schedule
Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Accrued Liabilities. | ||
Marketing Funds | $ 39,672 | |
Accrued payroll and related employee costs | 11,900 | $ 6,517 |
Accrued taxes | 2,451 | 1,480 |
Accrued professional fees | 2,047 | 2,010 |
Other | 4,093 | 3,136 |
Accrued liabilities | $ 60,163 | $ 13,143 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Long term debt | $ 227,725 | |
Less unamortized debt issuance costs | (1,182) | $ (1,481) |
Less unamortized debt discount costs | (862) | (1,080) |
Less current portion | (2,648) | (2,622) |
Debt, net of current portion | 223,033 | 225,165 |
Senior Secured Credit Facility | ||
Debt Instrument [Line Items] | ||
Long term debt | 227,363 | 229,713 |
Other long-term financing | ||
Debt Instrument [Line Items] | ||
Other long-term financing | $ 362 | $ 635 |
Debt - Schedule of Maturities o
Debt - Schedule of Maturities of Debt (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Debt | |
2020 | $ 2,648 |
2021 | 2,414 |
2022 | 2,350 |
2023 | 220,313 |
Long term debt | $ 227,725 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2016 | |
London Interbank Offered Rate (LIBOR) | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 2.75% | |
London Interbank Offered Rate (LIBOR) | Minimum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.75% | |
Senior Secured Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt issuance costs incurred | $ 3.5 | |
Debt Instrument, expense incurred | 2.1 | |
Excess cash flow repayment (as a percent) | 50.00% | |
Leverage ratio under debt covenant | 3.25 | |
Percentage of proceeds of additional debt incurred not permitted by credit facility required to repay term loans | 100.00% | |
Percentage of proceeds of assets sales required to repay term loans and reduce revolving commitments | 100.00% | |
Percentage of amounts recovered under insurance policies required to repay term loans and reduce revolving commitments | 100.00% | |
First periodic payment from current period | 12 months | |
Additional mandatory prepayment if total leverage ratio is not achieved | $ 0 | |
Additional mandatory commitment reduction if total leverage ratio is not achieved | $ 0 | |
Senior Secured Credit Facility | Minimum | ||
Debt Instrument [Line Items] | ||
Leverage ratio under debt covenant | 2.75 | |
Senior Secured Credit Facility | Federal Reserve Bank of New York | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.50% | |
Senior Secured Credit Facility | Base Rate | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.75% | |
Debt Net Of Current Portion | Senior Secured Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt issuance costs incurred | 1.4 | |
Term loan | Senior Secured Credit Facility | ||
Debt Instrument [Line Items] | ||
Notes Payable to Bank | 235 | |
Term loan | Senior Secured Credit Facility | London Interbank Offered Rate (LIBOR) | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate | 4.55% | |
Revolving loan facility | ||
Debt Instrument [Line Items] | ||
Revolving loan facility commitment fee on average daily amount of unused portion | 0.50% | |
Amounts drawn on line of credit | $ 0 | |
Revolving loan facility | Senior Secured Credit Facility | ||
Debt Instrument [Line Items] | ||
Credit facility, borrowing capacity | $ 10 | |
ABR loans | Senior Secured Credit Facility | Eurodollar | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.00% |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Percentage of gross revenues to be paid yearly | 8.00% | ||
Annual payment period | 120 days | ||
Deferred revenue, current and noncurrent | $ (1,566) | $ 228 | $ 4,705 |
Measured on a recurring basis | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration liability | 5,005 | 5,070 | |
Level 3 | Measured on a recurring basis | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration liability | 5,005 | $ 5,070 | $ 6,580 |
Ten Percent Reduction In Franchise Sales [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Deferred revenue, current and noncurrent | 300 | ||
One Percent Change To Discount Rate [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Deferred revenue, current and noncurrent | $ 200 | ||
Minimum | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assumed number of franchises sold annually | item | 50 | ||
Maximum | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assumed number of franchises sold annually | item | 80 |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of Assets and Liabilities Measured Using Significant Unobservable Inputs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair value adjustment | $ 241 | $ (1,289) | $ 180 |
Cash payments | (306) | (221) | |
Measured on a recurring basis | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Balance at Beginning | 5,070 | ||
Balance at Ending | 5,005 | 5,070 | |
Level 3 | Measured on a recurring basis | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Balance at Beginning | 5,070 | 6,580 | |
Fair value adjustment | 241 | 1,289 | |
Cash payments | (306) | (221) | |
Balance at Ending | $ 5,005 | $ 5,070 | $ 6,580 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Senior Secured Credit Facility (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Debt Instrument [Line Items] | ||
Transfer of asset fair value Level 1 to 2 | $ 0 | |
Transfer of liability fair value Level 1 to 2 | 0 | |
Transfer of asset fair value Level 2 to 1 | 0 | |
Transfer of liability fair value Level 2 to 1 | 0 | |
Transfers of assets or liabilities between the fair value measurement levels 3 | 0 | |
Carrying amounts | Senior Secured Credit Facility | ||
Debt Instrument [Line Items] | ||
Long term debt, carrying amount | 225,319 | $ 227,152 |
Level 2 | Estimated fair value | Senior Secured Credit Facility | ||
Debt Instrument [Line Items] | ||
Long term debt, fair value | $ 227,363 | $ 221,673 |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income Before Provision for Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes | |||||||||||
Domestic | $ 44,343 | $ 52,798 | $ 77,346 | ||||||||
Foreign | 13,422 | 13,366 | 11,516 | ||||||||
Income before provision for income taxes | $ 7,564 | $ 20,717 | $ 19,319 | $ 10,165 | $ 18,436 | $ 18,961 | $ 17,738 | $ 11,029 | $ 57,765 | $ 66,164 | $ 88,862 |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Provision for Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current | |||||||||||
Federal | $ 2,533 | $ 1,393 | $ 3,239 | ||||||||
Foreign | 4,929 | 4,738 | 5,203 | ||||||||
State and local | 1,137 | 700 | 1,169 | ||||||||
Total current expense | 8,599 | 6,831 | 9,611 | ||||||||
Deferred expense | |||||||||||
Federal | 2,084 | 8,795 | 47,045 | ||||||||
Foreign | (142) | 12 | 323 | ||||||||
State and local | 368 | 704 | 563 | ||||||||
Total deferred expense | 2,310 | 9,511 | 47,931 | ||||||||
Provision for income taxes | $ 2,362 | $ 3,453 | $ 3,186 | $ 1,908 | $ 7,507 | $ 3,555 | $ 3,283 | $ 1,997 | $ 10,909 | $ 16,342 | $ 57,542 |
Income Taxes - Schedule of Reco
Income Taxes - Schedule of Reconciliation of U.S. Statutory Income Tax Rate to Company's Effective Tax Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes | |||
U.S. statutory tax rate | 21.00% | 21.00% | 35.00% |
Increase due to state and local taxes, net of federal benefit | 3.10% | 3.10% | 2.60% |
Non-creditable foreign taxes | 1.10% | 1.20% | |
Foreign derived intangible income deduction | (1.50%) | (1.30%) | |
Income attributable to non-controlling interests | (7.20%) | (7.30%) | (12.50%) |
Uncertain Tax Positions | 1.00% | 0.80% | 0.60% |
Other | 1.40% | (0.80%) | (0.80%) |
Subtotal | 18.90% | 16.70% | 24.90% |
Impact of TRA adjustment on NCI | 0.70% | 4.50% | |
Effect of permanent difference - TRA adjustment | (2.20%) | (13.60%) | |
Tax Reform Rate Change | 49.00% | ||
Valuation allowance recognized on basis step-ups | 9.50% | ||
Effective tax rate | 18.90% | 24.70% | 64.80% |
Income tax expense (benefit) | $ 42,800 | ||
Benefit as a result of reduction in TRA Liability | $ 6,145 | 32,736 | |
Net effect on net income | $ (10,100) | ||
Valuation allowance against related deferred tax assets | 6,300 | ||
Value of TRA liability | 6,100 | ||
Income taxes (payable) receivable, net | $ (4,300) | $ 300 |
Income Taxes - Summary of Defer
Income Taxes - Summary of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Long-term deferred tax assets | ||
Goodwill, other intangibles and other assets | $ 42,800 | $ 48,427 |
Imputed interest deduction pursuant to tax receivable agreements | 2,651 | 2,719 |
Operating lease liabilities | 1,618 | 1,845 |
Compensation and benefits | 3,043 | 2,131 |
Allowance for doubtful accounts | 1,629 | 944 |
Motto contingent liability | 783 | 748 |
Deferred revenue | 3,706 | 3,939 |
Foreign tax credit carryforward | 1,862 | 1,259 |
Net operating loss (First acquisition) | 2,641 | |
Other | 950 | 1,435 |
Total long term deferred tax assets | 61,683 | 63,447 |
Valuation allowance | (7,184) | (7,051) |
Total long-term deferred tax assets, net of valuation allowance | 54,499 | 56,396 |
Long-term deferred tax liabilities | ||
Property and equipment and other long-lived assets | (1,494) | (2,944) |
Other | (703) | |
Total long-term deferred tax liabilities | (2,197) | (2,944) |
Net long-term deferred tax assets | 52,302 | 53,452 |
Total deferred tax assets and liabilities | $ 52,302 | $ 53,452 |
Income Taxes - Uncertain tax po
Income Taxes - Uncertain tax position liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Balance, January 1 | $ 4,278 | $ 3,703 |
Increase related to current period tax positions | 532 | 575 |
Balance, December 31 | $ 4,810 | $ 4,278 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Minority Interest [Line Items] | ||||||||||||
Unutilized foreign tax credits | $ 1,100 | |||||||||||
Carried back period (in years) | 1 year | |||||||||||
Carried forward period (in years) | 10 years | |||||||||||
Provision for income taxes | $ 2,362 | $ 3,453 | $ 3,186 | $ 1,908 | $ 7,507 | $ 3,555 | $ 3,283 | $ 1,997 | $ 10,909 | $ 16,342 | $ 57,542 | |
Deferred tax assets, net | 52,595 | 53,852 | 52,595 | 53,852 | ||||||||
Non-controlling interest | (399,510) | (405,976) | (399,510) | (405,976) | ||||||||
Total stockholders' equity | 98,376 | 75,014 | $ 98,376 | 75,014 | 45,408 | $ 40,615 | ||||||
Omission of Tax Expense | Restatement Adjustment | ||||||||||||
Minority Interest [Line Items] | ||||||||||||
Increase in Provision for income taxes | 500 | 500 | ||||||||||
Uncertain tax position liability including interest and penalties | 5,800 | 5,800 | ||||||||||
Income Taxes Receivable. | 1,400 | 1,400 | ||||||||||
Deferred tax assets, net | 200 | 200 | ||||||||||
Total stockholders' equity | (4,200) | (4,200) | $ 3,700 | |||||||||
Minimum | ||||||||||||
Minority Interest [Line Items] | ||||||||||||
Income tax examination, period | 3 years | |||||||||||
Maximum | ||||||||||||
Minority Interest [Line Items] | ||||||||||||
Income tax examination, period | 4 years | |||||||||||
Income Taxes Payable [Member] | ||||||||||||
Minority Interest [Line Items] | ||||||||||||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | $ 1,900 | $ 1,500 | $ 1,900 | $ 1,500 |
Equity-Based Compensation (Deta
Equity-Based Compensation (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($)installment$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / shares | |
Employee stock-based compensation expense | |||
Equity-based compensation capitalized (a) | $ | $ (229) | $ (139) | |
Equity-based compensation expense | $ | 10,934 | 9,176 | $ 2,900 |
Tax benefit from equity-based compensation | $ | (1,548) | (1,297) | (637) |
Deficit / (excess) tax benefit from equity-based compensation | $ | 55 | (145) | (324) |
Net compensation cost | $ | $ 9,441 | 7,734 | 1,939 |
Restricted Stock Units | |||
Vesting Period | 3 years | ||
Time-based awards | |||
Employee stock-based compensation expense | |||
Equity-based compensation expense | $ | $ 7,554 | $ 5,189 | $ 2,523 |
Restricted Stock Units | |||
Nonvested at beginning of period | shares | 298,610 | ||
Granted | shares | 257,087 | ||
Shares vested | shares | (80,008) | ||
Forfeited | shares | (20,237) | ||
Nonvested at end of period | shares | 455,452 | 298,610 | |
Nonvested at beginning of period, Weighted average grant date fair value per share | $ / shares | $ 51.97 | ||
Granted, Weighted average grant date fair value per share | $ / shares | 38.43 | $ 53.04 | $ 55.45 |
Shares vested, Weighted average grant date fair value per share | $ / shares | 43.30 | ||
Forfeited, Weighted average grant date fair value per share | $ / shares | 45.41 | ||
Nonvested at end of period, Weighted average grant date fair value per share | $ / shares | $ 46.15 | $ 51.97 | |
Unrecognized compensation cost | $ | $ 12,600 | ||
Period for recognition of RSU compensation expense | 2 years 1 month 6 days | ||
Time-based awards | Directors | |||
Restricted Stock Units | |||
Vesting Period | 1 year | ||
Time-based awards | Employees | |||
Restricted Stock Units | |||
Vesting Period | 3 years | ||
Performance-based awards | |||
Employee stock-based compensation expense | |||
Equity-based compensation expense | $ | $ (179) | $ 4,126 | $ 377 |
Restricted Stock Units | |||
Nonvested at beginning of period | shares | 179,615 | ||
Granted | shares | 119,410 | ||
Shares vested | shares | (97,436) | ||
Forfeited | shares | (61,625) | ||
Nonvested at end of period | shares | 139,964 | 179,615 | |
Nonvested at beginning of period, Weighted average grant date fair value per share | $ / shares | $ 55.75 | ||
Granted, Weighted average grant date fair value per share | $ / shares | 38.87 | $ 55.38 | $ 57.88 |
Shares vested, Weighted average grant date fair value per share | $ / shares | 36.20 | ||
Forfeited, Weighted average grant date fair value per share | $ / shares | 56.24 | ||
Nonvested at end of period, Weighted average grant date fair value per share | $ / shares | $ 45.31 | $ 55.75 | |
Vesting Period | 3 years | ||
Period of performance measurement | 3 years | ||
Unrecognized compensation cost | $ | $ 2,300 | ||
Period for recognition of RSU compensation expense | 1 year 9 months 18 days | ||
Number of shares that will vest if minimum threshold conditions are not met | shares | 0 | ||
Performance-based awards | Minimum | |||
Restricted Stock Units | |||
Shares issued upon participants target award | 0.00% | ||
Performance-based awards | Maximum | |||
Restricted Stock Units | |||
Shares issued upon participants target award | 150.00% | ||
Other performance awards | |||
Employee stock-based compensation expense | |||
Equity-based compensation expense | $ | $ (500) | ||
Bonus settled in shares | |||
Employee stock-based compensation expense | |||
Equity-based compensation expense | $ | $ 3,788 | ||
Restricted Stock Units (RSUs) | |||
Restricted Stock Units | |||
Additional shares available to grant under plan (in shares) | shares | 2,122,970 | ||
Booj Llc | Time-based awards | |||
Restricted Stock Units | |||
Vesting Period | 4 years | ||
Number of installments in a vesting period | installment | 3 | ||
Booj Llc | Performance-based awards | |||
Employee stock-based compensation expense | |||
Equity-based compensation expense | $ | $ 300 | ||
Booj Llc | Performance-based awards | Minimum | |||
Restricted Stock Units | |||
Shares issued upon participants target award | 0.00% | ||
Booj Llc | Performance-based awards | Maximum | |||
Restricted Stock Units | |||
Shares issued upon participants target award | 100.00% |
Leadership Changes and the Ne_2
Leadership Changes and the New Service Model (Details) - USD ($) $ in Thousands | Feb. 09, 2018 | Mar. 31, 2018 | Feb. 28, 2018 | Dec. 31, 2018 | Dec. 31, 2019 |
President | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||||
The period for payment of restructuring costs. | 39 months | ||||
RE/MAX Franchising | President | Separation And Transition Agreement | Selling, General and Administrative Expenses | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||||
Severance and other related expenses | $ 1,800 | ||||
RE/MAX Franchising | Restructuring Plan | Former Employees | Selling, General and Administrative Expenses | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||||
Severance and other related expenses | $ 1,400 | $ 1,400 | $ 1,400 | $ 1,400 | |
Pro Forma [Member] | RE/MAX Franchising | Restructuring Plan | Former Employees | Selling, General and Administrative Expenses | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||||
Severance and other related expenses | $ 2,100 |
Commitments and Contingencies -
Commitments and Contingencies - Contingencies (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2019USD ($)lease | Dec. 31, 2018USD ($) | |
Loss Contingencies [Line Items] | ||
Outstanding lease guarantees | $ | $ 1.1 | |
Self insurance program liability | $ | $ 0.3 | $ 0.3 |
Assignment and Assumption of Lease Agreements | ||
Loss Contingencies [Line Items] | ||
Number of leases assigned to purchasers | lease | 21 | |
Number of assignment agreements | lease | 3 |
Commitments and Contingencies_2
Commitments and Contingencies - Litigation (Details) - USD ($) $ in Millions | Feb. 13, 2018 | Oct. 07, 2013 | Feb. 28, 2018 |
Loss Contingencies [Line Items] | |||
Payment of legal settlement | $ 4.5 | ||
Amount of reimbursement of attorneys fees and portion of settlement. | $ 1.9 | ||
Tails Inc. | |||
Loss Contingencies [Line Items] | |||
Cash consideration | $ 20.2 | ||
Selling, General and Administrative Expenses | |||
Loss Contingencies [Line Items] | |||
Charges on settlement | $ 2.6 |
Defined-Contribution Savings _2
Defined-Contribution Savings Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Defined-Contribution Savings Plan | |||
Matching contribution Expenses | $ 2.1 | $ 1.8 | $ 1.5 |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Related Party Transactions | |||
Related party transaction expense - S, G and A | $ 0.5 | $ 0.5 | $ 0.5 |
Segment Information (Details)
Segment Information (Details) | 12 Months Ended |
Dec. 31, 2019segment | |
Segment Information | |
Number of Operating Segments | 4 |
Segment Information - Revenue (
Segment Information - Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Segment Reporting Information | |||||||||||
Total revenue | $ 68,193 | $ 71,541 | $ 71,381 | $ 71,178 | $ 50,841 | $ 54,866 | $ 54,277 | $ 52,642 | $ 282,293 | $ 212,626 | $ 193,714 |
RE/MAX Franchising | |||||||||||
Segment Reporting Information | |||||||||||
Total revenue | 199,635 | 204,504 | 193,157 | ||||||||
Motto Franchising | |||||||||||
Segment Reporting Information | |||||||||||
Total revenue | 4,543 | 2,536 | 557 | ||||||||
Marketing Funds fees | |||||||||||
Segment Reporting Information | |||||||||||
Total revenue | 72,299 | ||||||||||
Other | |||||||||||
Segment Reporting Information | |||||||||||
Total revenue | 5,816 | 5,586 | |||||||||
Continuing franchise fees | |||||||||||
Segment Reporting Information | |||||||||||
Total revenue | 99,928 | 101,104 | 93,694 | ||||||||
Continuing franchise fees | RE/MAX Franchising | |||||||||||
Segment Reporting Information | |||||||||||
Total revenue | 95,853 | 98,828 | 93,232 | ||||||||
Continuing franchise fees | Motto Franchising | |||||||||||
Segment Reporting Information | |||||||||||
Total revenue | 4,075 | 2,276 | 462 | ||||||||
Annual dues | |||||||||||
Segment Reporting Information | |||||||||||
Total revenue | 35,409 | 35,894 | 33,767 | ||||||||
Annual dues | RE/MAX Franchising | |||||||||||
Segment Reporting Information | |||||||||||
Total revenue | 35,409 | 35,894 | 33,767 | ||||||||
Broker fees | |||||||||||
Segment Reporting Information | |||||||||||
Total revenue | 45,990 | 46,871 | 43,801 | ||||||||
Broker fees | RE/MAX Franchising | |||||||||||
Segment Reporting Information | |||||||||||
Total revenue | 45,990 | 46,871 | 43,801 | ||||||||
Franchise sales and other revenue | |||||||||||
Segment Reporting Information | |||||||||||
Total revenue | 28,667 | 28,757 | 22,452 | ||||||||
Franchise sales and other revenue | RE/MAX Franchising | |||||||||||
Segment Reporting Information | |||||||||||
Total revenue | 22,383 | 22,911 | 22,357 | ||||||||
Franchise sales and other revenue | Motto Franchising | |||||||||||
Segment Reporting Information | |||||||||||
Total revenue | $ 468 | $ 260 | $ 95 |
Segment Information - Reconcili
Segment Information - Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated | |||||||||||
Adjusted EBITDA | $ 103,515 | $ 104,316 | $ 102,145 | ||||||||
(Gain) loss on sale or disposition of assets and sublease, net | (342) | 139 | (4,260) | ||||||||
Equity-based compensation expense | (10,934) | (9,176) | (2,900) | ||||||||
Acquisition-related expense | (1,127) | (1,634) | (5,889) | ||||||||
Gain on reduction in TRA liability | 6,145 | 32,736 | |||||||||
Special Committee investigation and remediation expense | (2,862) | (2,634) | |||||||||
Fair value adjustments to contingent consideration | (241) | 1,289 | (180) | ||||||||
Interest income | 1,446 | 676 | 352 | ||||||||
Interest expense | (12,229) | (12,051) | (9,996) | ||||||||
Depreciation and amortization | (22,323) | (20,678) | (20,512) | ||||||||
Income before provision for income taxes | $ 7,564 | $ 20,717 | $ 19,319 | $ 10,165 | $ 18,436 | $ 18,961 | $ 17,738 | $ 11,029 | 57,765 | 66,164 | 88,862 |
RE/MAX Franchising | |||||||||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated | |||||||||||
Adjusted EBITDA | 106,810 | 108,669 | 105,184 | ||||||||
Motto Franchising | |||||||||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated | |||||||||||
Adjusted EBITDA | (2,709) | (3,436) | $ (3,039) | ||||||||
Other | |||||||||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated | |||||||||||
Adjusted EBITDA | $ (586) | $ (917) |
Segment Information - Summary o
Segment Information - Summary of Total Assets (Detail) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Segment Total Assets [Line Items] | ||
Total assets | $ 542,352 | $ 428,373 |
RE/MAX Franchising | ||
Segment Total Assets [Line Items] | ||
Total assets | 479,370 | 406,643 |
Marketing Funds fees | ||
Segment Total Assets [Line Items] | ||
Total assets | 41,090 | |
Motto Franchising | ||
Segment Total Assets [Line Items] | ||
Total assets | 20,161 | 21,346 |
Other | ||
Segment Total Assets [Line Items] | ||
Total assets | $ 1,731 | $ 384 |
Segment Information - Summary_2
Segment Information - Summary of Long-Lived Assets by Geographical Area (Detail) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Long-lived assets, net of accumulated depreciation | $ 5,444 | $ 4,390 |
U.S. | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Long-lived assets, net of accumulated depreciation | 5,406 | 4,342 |
Global | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Long-lived assets, net of accumulated depreciation | $ 38 | $ 48 |
Quarterly Financial Informati_3
Quarterly Financial Information - Schedule of Quarterly Financial Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Financial Information [Line Items] | |||||||||||
Total revenue | $ 68,193 | $ 71,541 | $ 71,381 | $ 71,178 | $ 50,841 | $ 54,866 | $ 54,277 | $ 52,642 | $ 282,293 | $ 212,626 | $ 193,714 |
Total operating expenses | 58,213 | 48,097 | 49,311 | 58,233 | 29,428 | 33,059 | 33,363 | 38,925 | 213,854 | 134,775 | 95,382 |
Operating income | 9,980 | 23,444 | 22,070 | 12,945 | 21,413 | 21,807 | 20,914 | 13,717 | 68,439 | 77,851 | 98,332 |
Total other expenses, net | (2,416) | (2,727) | (2,751) | (2,780) | (2,977) | (2,846) | (3,176) | (2,688) | (10,674) | (11,687) | (9,470) |
Income before provision for income taxes | 7,564 | 20,717 | 19,319 | 10,165 | 18,436 | 18,961 | 17,738 | 11,029 | 57,765 | 66,164 | 88,862 |
Provision for income taxes | (2,362) | (3,453) | (3,186) | (1,908) | (7,507) | (3,555) | (3,283) | (1,997) | (10,909) | (16,342) | (57,542) |
Net income | 5,202 | 17,264 | 16,133 | 8,257 | 10,929 | 15,406 | 14,455 | 9,032 | 46,856 | 49,822 | 31,320 |
Less: net income attributable to non-controlling interest (note 4) | 2,314 | 8,091 | 7,563 | 3,848 | 4,695 | 7,307 | 6,848 | 4,089 | 21,816 | 22,939 | 21,221 |
Net income attributable to RE/MAX Holdings, Inc. | $ 2,888 | $ 9,173 | $ 8,570 | $ 4,409 | $ 6,234 | $ 8,099 | $ 7,607 | $ 4,943 | $ 25,040 | $ 26,883 | $ 10,099 |
Common Class A | |||||||||||
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock | |||||||||||
Basic | $ 0.16 | $ 0.51 | $ 0.48 | $ 0.25 | $ 0.35 | $ 0.46 | $ 0.43 | $ 0.28 | $ 1.41 | $ 1.52 | $ 0.57 |
Diluted | $ 0.16 | $ 0.51 | $ 0.48 | $ 0.25 | $ 0.35 | $ 0.46 | $ 0.43 | $ 0.28 | $ 1.40 | $ 1.51 | $ 0.57 |
Weighted average shares of Class A common stock outstanding | |||||||||||
Basic | 17,837,386 | 17,826,332 | 17,808,321 | 17,775,381 | 17,748,745 | 17,746,184 | 17,746,042 | 17,709,095 | 17,812,065 | 17,737,649 | 17,688,533 |
Diluted | 17,978,431 | 17,840,158 | 17,833,958 | 17,817,620 | 17,771,180 | 17,771,212 | 17,769,641 | 17,762,133 | 17,867,752 | 17,767,499 | 17,731,800 |