RE/MAX(US:RMAX)2024-05-02 20:41Financial Performance - Total revenue for the first quarter of 2024 was $78.3 million, a decrease of 8.3% from $85.4 million in the same period in 2023[123] - Revenue excluding Marketing Funds decreased 9.3% to $58.1 million, driven by negative organic revenue growth of 9.3%[123] - Net loss attributable to RE/MAX Holdings, Inc. was $3.4 million, compared to a loss of $0.7 million in the prior year[123] - Adjusted EBITDA was $19.0 million with an Adjusted EBITDA margin of 24.3%, compared to $19.9 million and 23.3% in the prior year[128] - Revenue from Continuing Franchise Fees decreased due to a reduction in U.S. agent count, partially offset by higher Mortgage segment revenue[135] - Revenue from Broker Fees decreased primarily due to a reduction in U.S. agent count, partially offset by an increase in average home sales price[136] - Total operating expenses for the three months ended March 31, 2024, were $73.763 million, a decrease of 6.0% from $78.490 million in the prior year[140] - Adjusted EBITDA was $19.0 million for the three months ended March 31, 2024, a decrease of $0.9 million from the comparable prior year period[147] - Interest expense increased to $9.256 million for the three months ended March 31, 2024, compared to $8.245 million in the prior year, reflecting a 12.3% increase[143] - Total other expenses, net increased to $8.627 million for the three months ended March 31, 2024, compared to $7.198 million in the prior year, a 19.9% increase[143] Agent and Franchise Metrics - Total agent count decreased 0.2% to 143,287 agents, with a 4.3% decline in U.S. and Canada combined agent count to 78,955 agents[128] - RE/MAX franchise sales in the U.S. decreased by 55.4% to 25, while total franchise sales dropped by 29.6% to 145[130] - Franchise sales and other revenue decreased by approximately $3.3 million due to lower attendance at the annual RE/MAX agent convention[138] Cash and Debt Management - The company agreed to a settlement amount of $55.0 million related to industry litigation, with $27.5 million already paid[127] - The company is focused on rebuilding cash reserves following the settlement and current market challenges[127] - Cash provided by operating activities increased to $9.4 million for the three months ended March 31, 2024, compared to $3.1 million for the same period in 2023[170] - The company had $447.4 million in term loans outstanding as of March 31, 2024, with no revolving loans drawn under the Senior Secured Credit Facility[169] - The interest rate on the term loan facility was 7.9% as of March 31, 2024, with a potential additional annual interest expense of $1.1 million for each hypothetical 0.25% increase[190] - As of March 31, 2024, RE/MAX, LLC's Total Leverage Ratio (TLR) was 8.51:1, exceeding the 4.50:1 threshold, which restricts access to borrowings under the revolving line of credit[165] Operational Changes and Future Plans - A modified pilot program to attract and grow teams of real estate agents was extended to the majority of the U.S. as of April 1, 2024[125] - The company plans to pursue acquisitions of Independent Regions in the U.S. and Canada as part of its growth strategy, funded by existing cash and cash flow from operations[176] - Total capital expenditures for 2024 are expected to be between $7.0 million and $9.0 million, primarily for building refresh and technology investments[177] - The company suspended its quarterly dividend in the fourth quarter of 2023 to preserve capital amid ongoing litigation and challenging market conditions[178] - During the three months ended March 31, 2024, the company did not repurchase any shares of Class A common stock, with $62.5 million remaining available under the share repurchase authorization[179] Compliance and Internal Controls - The company maintains effective disclosure controls and procedures as of March 31, 2024, ensuring timely reporting in compliance with SEC rules[195] - No changes in internal control over financial reporting were identified during the quarter ended March 31, 2024, that materially affected internal controls[196] Miscellaneous - Total open Motto Mortgage offices increased by 4.7% to 243 offices[128] - Cash and cash equivalents were $82.1 million as of March 31, 2024, with approximately $33.0 million in foreign currencies[170] - The consolidated EBITDA for RE/MAX, LLC was $42.8 million on a trailing twelve-month basis as of March 31, 2024[162] - Total selling, operating and administrative expenses decreased to $45.705 million for the three months ended March 31, 2024, from $49.115 million in the prior year, a decrease of 6.9%[141]