Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2019 |
Dec. 31, 2018 |
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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 Comprehensive Income - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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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 Cash Flows (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Consolidated Statements of Cash Flows | |||
Cash acquired | $ 55 | $ 362 | $ 0 |
Business and Organization |
12 Months Ended |
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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 Accounting Policies |
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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 for additional information. 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:
See Note 18 Segment Information for additional information about segment reporting. 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):
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):
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):
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 technology subscription revenue such as for the First app. Disaggregated Revenue In the following table, segment revenue is disaggregated by geographical area (in thousands):
In the following table, segment revenue is disaggregated by Company-owned or Independent Regions in the U.S., Canada and Global (in thousands):
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):
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):
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):
Prior to January 1, 2019, the Marketing Funds were not owned by the Company (see Note 6 Acquisitions). During that time, the Marketing funds still incurred significant technology costs, however, these services were provided by and paid directly to third parties and were not provided by the Company. In 2019, RE/MAX Franchising (through the booj technology team) began providing these services as noted above. 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):
(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 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 2019, and . 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), which adjusts the classification of stranded tax effects resulting from the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. ASU 2018-02 became effective for the Company on January 1, 2019. The standard is to be applied either in the period of adoption or retrospectively to each period affected by the Tax Cuts and Jobs Act. The Company completed the majority of its accounting for the tax effects of the Tax Cuts and Jobs Act as of December 31, 2017. The amendments of ASU 2018-02 did not have a significant impact on the Company’s consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), with several subsequent amendments, which requires lessees to recognize the assets and liabilities that arise from operating and finance leases on the consolidated balance sheets, with a few exceptions. ASU 2016-02 became effective for the Company on January 1, 2019 and replaced the existing lease guidance in U.S. GAAP when it became effective. The Company did not retrospectively recast prior periods presented and instead adjusted assets and liabilities on January 1, 2019. In addition, the Company elected the package of practical permitted under the transition guidance, which allowed the Company to forgo reassessing (a) whether a contract contains a lease, (b) lease classification, and (c) whether capitalized costs associated with a lease are initial direct costs. The practical expedient was applied consistently to all the Company’s leases, including those for which the Company acts as the lessor. In addition, the Company elected the practical expedient relating to the combination of lease and non-lease components as a single lease component. The Company chose not to apply the hindsight practical expedient. The new lease guidance has been applied to all the Company’s leases as of January 1, 2019, which impacted how operating lease assets and liabilities were recorded within the Consolidated Balance Sheet, resulting in the recording of approximately $65.8 million of lease liabilities and approximately $55.6 million of right-of-use (“ROU”) assets on the Consolidated Balance Sheet. Deferred rent and sublease loss balances as of January 1, 2019 of approximately $9.3 million and approximately $2.4 million, respectively, and intangible assets of approximately $1.5 million were subsumed into the ROU asset at transition. Adoption of the new standard did not materially affect the Company’s consolidated net earnings and had no impact on cash flows. See Note 3, Leases, for more information.In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), which simplifies the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. The Company early adopted ASU 2017-04 and it was effective for annual and interim impairment tests beginning January 1, 2019 using a prospective approach. The adoption of this standard had no impact on the Company’s financial statements and related disclosures. 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, which clarifies that implementation costs incurred by customers in cloud computing arrangements are deferred if they would be capitalized by customers in the software licensing arrangements under the internal-use software guidance. ASU 2018-15 also clarifies that any capitalized costs should not be recorded to “Depreciation and amortization” in the Consolidated Statements of Income. ASU 2018-15 is effective for the Company beginning January 1, 2020 and provides for the alternative to adopt the ASU (a) prospectively only for new costs incurred after the adoption date or (b) by adjusting existing costs to comply with this standard, including the requirement to present the amortization of costs outside “Depreciation and amortization”. The Company plans to adopt this ASU prospectively to all new implementation costs incurred after adoption. Given this implementation approach, the adoption of the standard on January 1, 2020 will have no immediate impact. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which eliminates certain disclosure requirements for fair value measurements and requires new or modified disclosures. ASU 2018-13 is effective for the Company beginning January 1, 2020; early adoption is permitted. Certain changes are applied retrospectively to each period presented and others are to be applied either in the period of adoption or prospectively. The Company believes the amendments of ASU 2018-13 will not have a significant impact on the Company’s financial statements and related disclosures. |
Leases |
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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 to 20 years depending on the lease. Of these renewal options, the Company determined that none are reasonably certain to be exercised. All the Company’s material leases are classified as operating leases.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):
Maturities under non-cancellable leases as of December 31, 2019 were as follows (in thousands):
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):
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Non-controlling Interest |
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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:
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):
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):
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 for further information on the impact of the Tax Cuts and Jobs Act. |
Earnings Per Share and Dividends |
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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):
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):
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 |
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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):
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 for additional information). The Company acquired booj in order to deliver core technology solutions designed for and with RE/MAX affiliates. The following table summarizes the Company’s allocation of the purchase price to the fair value of assets acquired and liabilities assumed (in thousands):
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.
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Property and Equipment | 7. Property and Equipment Property and equipment consist of the following (in thousands):
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 |
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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):
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):
The following table presents changes to goodwill for the period from January 1, 2018 to December 31, 2019 (in thousands):
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Accrued Liabilities |
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Accrued Liabilities | 9. Accrued Liabilities Accrued liabilities consist of the following (in thousands):
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Debt | 10. Debt Debt, net of current portion, consists of the following (in thousands):
Maturities of debt are as follows (in thousands):
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 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 |
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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:
A summary of the Company’s liabilities measured at fair value on a recurring basis is as follows (in thousands):
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):
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 , and 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):
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Income Taxes |
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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):
Components of the “Provision for income taxes” in the accompanying Consolidated Statements of Income consist of the following (in thousands):
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:
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, are related to intangible assets from the Company’s Western Canada operations. The deductions expected to be taken from these tax basis step-ups are no longer expected to be realized by the Company due to now being subject to a foreign tax credit limitation. As a result, the Company recognized a $6.3 million valuation allowance against the related deferred tax assets and an increase in “Provision for income taxes” in the accompanying Consolidated Statements of Income (reflected in the rate reconciliation table above as a 9.5% adjustment in 2018). The loss in value of the step-up, along with other less significant changes, also reduced the value of the TRA liabilities, resulting in a $6.1 benefit to operating income. The net impact of these items was insignificant to net income. In addition, the Company is now limited on the amount of foreign tax credit that can be claimed in its U.S. return. 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, 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 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:
The Company’s uncertain tax position has a reasonable possibility of being paid within the next 12 months. |
Equity-Based Compensation |
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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):
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:
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, 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:
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 Service Model |
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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 |
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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 Plan |
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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 |
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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 and Note 6 Acquisitions for additional information. |
Segment Information |
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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):
*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):
*Amounts in the years ended December 31, 2018 and 2017 have been recast to show Motto separately.
The following table presents total assets of the Company’s segments (in thousands):
*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):
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Quarterly Financial Information |
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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):
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Summary of Significant Accounting Policies (Policies) |
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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 for additional information. |
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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. |
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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. |
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Segment Reporting | Segment Reporting The Company operates under the following segments:
See Note 18 Segment Information for additional information about segment reporting. |
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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. |
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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):
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):
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):
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 technology subscription revenue such as for the First app. Disaggregated Revenue In the following table, segment revenue is disaggregated by geographical area (in thousands):
In the following table, segment revenue is disaggregated by Company-owned or Independent Regions in the U.S., Canada and Global (in thousands):
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):
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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):
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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):
Prior to January 1, 2019, the Marketing Funds were not owned by the Company (see Note 6 Acquisitions). During that time, the Marketing funds still incurred significant technology costs, however, these services were provided by and paid directly to third parties and were not provided by the Company. In 2019, RE/MAX Franchising (through the booj technology team) began providing these services as noted above. |
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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. |
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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. |
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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):
(a) For the year ended December 31, 2019, $1.5 million of expense was attributable to the acquired Marketing Funds. |
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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.” |
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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. |
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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 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. |
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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 2019, and . |
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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. |
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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. |
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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), which adjusts the classification of stranded tax effects resulting from the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. ASU 2018-02 became effective for the Company on January 1, 2019. The standard is to be applied either in the period of adoption or retrospectively to each period affected by the Tax Cuts and Jobs Act. The Company completed the majority of its accounting for the tax effects of the Tax Cuts and Jobs Act as of December 31, 2017. The amendments of ASU 2018-02 did not have a significant impact on the Company’s consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), with several subsequent amendments, which requires lessees to recognize the assets and liabilities that arise from operating and finance leases on the consolidated balance sheets, with a few exceptions. ASU 2016-02 became effective for the Company on January 1, 2019 and replaced the existing lease guidance in U.S. GAAP when it became effective. The Company did not retrospectively recast prior periods presented and instead adjusted assets and liabilities on January 1, 2019. In addition, the Company elected the package of practical permitted under the transition guidance, which allowed the Company to forgo reassessing (a) whether a contract contains a lease, (b) lease classification, and (c) whether capitalized costs associated with a lease are initial direct costs. The practical expedient was applied consistently to all the Company’s leases, including those for which the Company acts as the lessor. In addition, the Company elected the practical expedient relating to the combination of lease and non-lease components as a single lease component. The Company chose not to apply the hindsight practical expedient. The new lease guidance has been applied to all the Company’s leases as of January 1, 2019, which impacted how operating lease assets and liabilities were recorded within the Consolidated Balance Sheet, resulting in the recording of approximately $65.8 million of lease liabilities and approximately $55.6 million of right-of-use (“ROU”) assets on the Consolidated Balance Sheet. Deferred rent and sublease loss balances as of January 1, 2019 of approximately $9.3 million and approximately $2.4 million, respectively, and intangible assets of approximately $1.5 million were subsumed into the ROU asset at transition. Adoption of the new standard did not materially affect the Company’s consolidated net earnings and had no impact on cash flows. See Note 3, Leases, for more information.In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), which simplifies the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. The Company early adopted ASU 2017-04 and it was effective for annual and interim impairment tests beginning January 1, 2019 using a prospective approach. The adoption of this standard had no impact on the Company’s financial statements and related disclosures. |
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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, which clarifies that implementation costs incurred by customers in cloud computing arrangements are deferred if they would be capitalized by customers in the software licensing arrangements under the internal-use software guidance. ASU 2018-15 also clarifies that any capitalized costs should not be recorded to “Depreciation and amortization” in the Consolidated Statements of Income. ASU 2018-15 is effective for the Company beginning January 1, 2020 and provides for the alternative to adopt the ASU (a) prospectively only for new costs incurred after the adoption date or (b) by adjusting existing costs to comply with this standard, including the requirement to present the amortization of costs outside “Depreciation and amortization”. The Company plans to adopt this ASU prospectively to all new implementation costs incurred after adoption. Given this implementation approach, the adoption of the standard on January 1, 2020 will have no immediate impact. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which eliminates certain disclosure requirements for fair value measurements and requires new or modified disclosures. ASU 2018-13 is effective for the Company beginning January 1, 2020; early adoption is permitted. Certain changes are applied retrospectively to each period presented and others are to be applied either in the period of adoption or prospectively. The Company believes the amendments of ASU 2018-13 will not have a significant impact on the Company’s financial statements and related disclosures. |
Summary of Significant Accounting Policies (Tables) |
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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):
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Commissions related to franchise sales |
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Schedule of disaggregated revenue | In the following table, segment revenue is disaggregated by geographical area (in thousands):
In the following table, segment revenue is disaggregated by Company-owned or Independent Regions in the U.S., Canada and Global (in thousands):
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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):
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Schedule of reconciliation of cash, both unrestricted and restricted |
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Schedule of cost charges to intersegment | Costs charged from RE/MAX Franchising to the Marketing Funds are as follows (in thousands):
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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):
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Schedule of contract liability |
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Leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of lease cost and other information |
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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):
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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):
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Non-controlling Interest (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Ownership of the Common Units |
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Reconciliation from Income Before Provision for Income Taxes to Net Income |
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Distributions Paid or Payable |
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Earnings Per Share and Dividends (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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):
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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):
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Acquisitions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Unaudited Pro Forma Information |
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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):
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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):
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Property and Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and equipment consist of the following (in thousands):
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Intangible Assets and Goodwill (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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):
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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):
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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):
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Accrued Liabilities (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities | Accrued liabilities consist of the following (in thousands):
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Debt (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt | Debt, net of current portion, consists of the following (in thousands):
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Schedule of Maturities of Debt | Maturities of debt are as follows (in thousands):
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Fair Value Measurements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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):
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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):
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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):
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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):
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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):
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Schedule of Reconciliation of U.S. Statutory Income Tax Rate to Company's Effective Tax Rate |
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Summary of Deferred Tax Assets and Liabilities |
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Schedule of Unrecognized Tax Benefits |
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Equity-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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):
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Time-based awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Units | The following table summarizes equity-based compensation activity related to RSUs:
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Performance-based awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Units | The following table summarizes equity-based compensation activity related to PSUs:
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Segment Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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):
*Amounts in the years ended December 31, 2018 and 2017 have been recast to show Motto separately. |
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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):
*Amounts in the years ended December 31, 2018 and 2017 have been recast to show Motto separately.
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Summary of Total Assets by Segment | The following table presents total assets of the Company’s segments (in thousands):
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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):
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Quarterly Financial Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Quarterly Financial Information (unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information | Summarized quarterly results were as follows (in thousands, except shares and per share amounts):
|
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 Accounting Policies - Commissions Related to Franchise Sales (Details) - Commissions Related to Franchise Sales $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2019
USD ($)
| |
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 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 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 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 Accounting Policies - Additional Information (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2019
USD ($)
country
|
Dec. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
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 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 - Lease Cost (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2019
USD ($)
| |
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 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 accounting, maturities of lease liabilities (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
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 - 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 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 - Distributions Paid or Payable (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
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 - 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 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 Dividends - Additional Information (Details) - $ / shares |
3 Months Ended | 12 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
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 |
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 Goodwill - Estimated Future Amortization of Intangible Assets, Other Than Goodwill (Details) $ in Thousands |
Dec. 31, 2019
USD ($)
|
---|---|
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 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 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 (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 of Debt (Details) $ in Thousands |
Dec. 31, 2019
USD ($)
|
---|---|
Debt | |
2020 | $ 2,648 |
2021 | 2,414 |
2022 | 2,350 |
2023 | 220,313 |
Long term debt | $ 227,725 |
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 - 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 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 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 - 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 |
Commitments and Contingencies - Contingencies (Details) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2019
USD ($)
lease
|
Dec. 31, 2018
USD ($)
|
|
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 - Litigation (Details) - USD ($) $ in Millions |
1 Months Ended | ||
---|---|---|---|
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 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 (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) |
12 Months Ended |
---|---|
Dec. 31, 2019
segment
| |
Segment Information | |
Number of Operating Segments | 4 |
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 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 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 |