Investor Presentation November 2018
Forward-Looking Statements This presentation includes “forward -looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are often identified by the use of words such as “believe,” “intend,” “expect,” “estimate,” “plan,” “outlook,” “project,” “anticipate,” “may,” “will,” “would” and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. Forward-looking statements include statements related to: agent count; franchise sales; revenue; operating expenses; the Company’s outlook for the fourth quarter and full year 2018; our plans regarding dividends; non-GAAP financial measures; estimated effective tax rates for 2018; housing and mortgage market conditions, including the Company’s belief that recent market changes likely represent a temporary transition rather than a lasting trend and that a move towards equilibrium would be healthy for housing over the long run; economic and demographic trends; competition; technology initiatives; potential transactions; future expansion of Motto Mortgage and such expansion’s impact on revenue; and the Company’s strategic and operating plans and business models, including ability of the Company’s agents to adapt to slower market conditions and our belief that our agent-centric model is resilient and more insulated to a slowdown in real estate transactions compared to more traditional broker-centric businesses. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily accurately indicate the times at which such performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Such risks and uncertainties include, without limitation, (1) changes in the real estate market or interest rates and availability of financing, (2) changes in business and economic activity in general, (3) the Company’s ability to attract and retain quality franchisees, (4) the Company’s franchisees’ ability to recruit and retain real estate agents and mortgage loan originators, (5) changes in laws and regulations, (6) the Company’s ability to enhance, market, and protect the RE/MAX and Motto Mortgage brands, (7) the Company’s ability to implement its technology initiatives, (8) fluctuations in foreign currency exchange rates, (9) the existence and identification of control deficiencies, including the material weakness in our internal control over financial reporting, and any impact of such control deficiencies as well as costs in remediating those control deficiencies, (10) the impact of recent changes to our senior management team, (11) the impact of the findings and recommendations of the previously disclosed Special Committee investigation on the Company and its management and operations, including reputational damage to the Company, time and expenses incurred in implementing the recommendations of the Special Committee, any legal proceedings or governmental or regulatory investigations or actions related to the underlying matters of the Special Committee’s internal investigation or other matters, and the diversion of management’s time and resources to address such matters, and those risks and uncertainties described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company’s website at www.remax.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no obligation, to update this information to reflect future events or circumstances. 2
Why Invest in RE/MAX Holdings, Inc. Today? Shareholder Return Driven By Organic Growth Catalysts Return of Capital Stable recurring revenue Independent region Committed to returning acquisitions capital through dividend High margin & strong free payments over time cash flow Reinvest in the business Dividend metrics: Other acquisitions within Driven by: ~36% of FCF in 2017 1 our core competencies of – 1) Agent growth franchising and real $0.20 quarterly dividend – estate 2) Motto Mortgage 3) Franchise sales 4) Rising average home prices FCF Fuels Catalysts and Return of Capital to Create Shareholder Value 1 Free Cash Flow (“FCF”) = Operating Cash Flow – Capital Expenditures; $22M 2017 quarterly dividend payments / $61M 2017 FCF = 36%; see Appendix for reconciliation of non-GAAP measures 3
Strategic Acquisition of booj, a Real Estate Technology Company Proven real estate technology enabling the Talented and deep roster of real estate success of independent brokerages and technology developers and strategists agents across the U.S. Designed by and for the real estate industry, Will leverage the capabilities of booj and booj’s platforms include websites, mobile other strategic partners to deliver core apps, predictive analytics and systems for technology solutions designed for and with generating and cultivating leads RE/MAX affiliates 4
Smart Agents, Smarter Technology Automate, Customize, Mobile Mobile Initial broker & agent reaction very positive Early adopter program set to Social Media Lead Cultivation begin shortly Beta testing scheduled for spring 2019 Staged rollout of initial Websites product slated for summer 2019 CRM Websites Marketing Resources 5
The Real Estate Franchisor 6
Hallmarks of a Successful Franchise Business Key Success Factors of Successful Franchisors Franchisors Unique product or service offering Brand name and market share Training and productivity tools Group purchasing power 7
RE/MAX is a Premium Franchisor Nobody in the world sells more real estate than RE/MAX 1 100% franchised business, delivering the full economic benefits of the model Dual-brand franchisor, focused on our core businesses Among the best-in-class franchisor operating margins 1 As measured by residential transaction sides 8
RE/MAX Agents Outsell Other Agents by More Than 2 to 1 at Large Brokerages in the REAL Trends 500 Survey National, Full-Service Brokerage Brands Transactions Per U.S. Transaction Brand Awareness Countries and Agent (Large Offices Worldwide Agents Worldwide Sides 2 (unaided) 3 Territories brokerages only) 1 17.0 1 million+ 30.2% 100+ 7,841 119,041 11.1 Not Released 0.4% 11 500 8,000 9.4 Not Released 4.5% 1 1,400 45,000 8.8 133,225 1.3% 32 2,300 39,900 8.2 731,486 15.0% 47 3,200 94,300 7.8 417,337 21.0% 80 8,000 118,600 6.8 72,424 0.8% 3 350 11,500 6.6 122,475 2.1% 69 950 21,900 6.6 1 million+ 8.0% 30 930 177,000 5.2 10,543 0.1% 1 45 2,043 3.9 50,000 0.1% 1 127 14,500 3.8 24,655 0.1% 2 46 6,417 Data is full-year or as of year-end 2017, as applicable. Except as noted, Coldwell Banker, Century 21, ERA, Sotheby’s and Better Homes and Gardens data is as Realogy Brand reported by Realogy Corporation on SEC 10-K, Annual Report for 2017; Keller Williams, Realty Executives, Berkshire Hathaway HomeServices, Compass, HomeSmart and eXp Realty data is from company websites and industry reports. 1 Transaction sides per agent calculated by RE/MAX based on 2018 REAL Trends 500 data, citing 2017 transaction sides for the 1,752 largest participating U.S. brokerages for which agent counts were reported. Coldwell Banker includes NRT. Berkshire does not include HomeServices of America. 2 Compass and eXp Realty totals are for residential transactions only and do not include commercial transactions; totals for all other brands include commercial transactions. 3 MMR Strategy Group study of unaided awareness among buyers, sellers, and those planning to buy or sell; asked, when they think of real estate brands, which ones come to mind? 9
the Mortgage Brokerage Franchisor 10
Motto Mortgage Fact Sheet 100% franchised mortgage brokerage business Not a lender and does not underwrite loans Offers convenience to home buyers by bringing real estate agents and licensed loan originators together under one roof Motto Mortgage loan originators access a variety of quality loan options from multiple leading wholesalers Core operational team is scaling as Motto grows Franchises can be purchased by select qualified candidates both within and outside of RE/MAX network 11
Motto Mortgage Timeline Franchisee Attend Franchise Ramps to Training Opens Paying $4,500 Monthly Royalty Fee License Franchise Sold Obtained Estimated 14 to 17 months Illustrative of an expected sequence and timing of events for a new Motto Mortgage franchisee. Actual sequence and timing of events may vary. 12
Motto Mortgage Sells 100 th Franchise as Expansion Continues 13
Agent Count Growth 14
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