Investor Presentation€¦ · 20.03.2016 · Data is full-year or as of year-end 2014, as...

March 2016

Investor Presentation

Pete Crowe – SVP Investor Relations, Communications, Marketing – [email protected]

2

Forward Looking Statements and Non-GAAP Information

This presentation contains forward-looking statements within the meaning of federal securities laws, that are subject to risks and uncertainties. All statements other

than statements of historical facts contained in this presentation are forward-looking statements. Forward-looking statements give the company current expectations

and projections relating to the company’s financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-

looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such “may,” “will,” “should,” “expect,”

“plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or other words and terms of similar

meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.

These forward-looking statements are based on assumptions that the company has made in light of its industry experience and perceptions of historical trends, current

conditions, expected future developments and other factors the company believes are appropriate under the circumstances. As you consider this presentation, you

should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond the company’s

control) and assumptions. The company derives many of its forward-looking statements from its operating budgets and forecasts, which are based upon many detailed

assumptions. While the company believe that the assumptions are reasonable, the company cautions that it is very difficult to predict the impact of known factors and it

is impossible to anticipate all factors that could affect actual results. Important factors that could cause actual results to differ materially from the company’s

expectations, or cautionary statements, are disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition

and Results of Operations” in the Company’s most recent Form 10-K filed with the Securities and Exchange Commission (“SEC”) and similar disclosures in subsequent

reports filed with the SEC. All forward-looking statements attributable to the Company, or persons acting on the Company’s behalf, are expressly qualified in their

entirety by these cautionary statements. Because of these factors, the company cautions that you should not place undue reliance on any forward-looking statements.

Further, any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise from time to time, and it is impossible to predict

those events or how they may affect the company. Except as required by law, the company has no duty to, and does not intend to, update or revise the forward-looking

statements in this presentation after the date of this presentation.

This presentation refers to “Adjusted EBITDA,” “Adjusted Net Income”, “Free Cash Flow”, “Free Cash Flow less Distributions to RIHI” and “Unencumbered Cash.”

Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, Free Cash Flow less Distributions to RIHI and Unencumbered Cash are not measures of financial performance

or liquidity under generally accepted accounting principles (“GAAP”) and the use of Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, Free Cash Flow less

Distributions to RIHI and Unencumbered Cash is limited because they do not include certain material costs necessary to operate this business. In addition, Adjusted

EBITDA, Adjusted Net Income, Free Cash Flow, Free Cash Flow less Distributions to RIHI and Unencumbered Cash, as presented, may not be comparable to similarly

titled measures of other companies. See the Appendix for a reconciliation of Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, Free Cash Flow less Distributions

to RIHI and Unencumbered Cash with the most directly comparable measure under GAAP.

3

Highly productive network of more than 100,000 agents

Unmatched global footprint

Recurring fee streams based on agent count

High Adjusted EBITDA margins

Strong free cash flow generation

Low fixed-cost structure

Asset-light franchise business

Attractive Franchise Model

Leading Real Estate Franchise with Recurring Revenues, High Margins & Strong Free Cash Flow

4

Dave LinigerCo-Founder, Chairman & CEO

RE/MAX Management Team

Adam ContosChief Operating Officer

Geoff LewisPresident

Karri CallahanChief Financial Officer

Pete Crowe – SVP Investor Relations, Communications and Marketing – [email protected]: Dave Metzger is leaving the company on March 31, 2016; Karri Callahan will solely hold the position of Chief Financial Officer from that point forward.

mailto:[email protected]

5

Focused on Creating Shareholder Value

Organic Growth Catalysts

Shareholder Return Driven By

Agent Count Growth

+6,816 agents, +7% YoY

Office Franchise Sales Growth

+23.5% global growth YoY

Stable recurring revenue

Consistently ~60%

Delivered margin expansion

+270 basis points YoY

Strong FCF generation

$71M FCF in 2015

Sold remaining brokerages

100% franchised

Independent Region

acquisitions

New York – Feb. 2016

Commitment to reinvest

Momentum – Broker &

Agent Development

Technology upgrades

Other acquisitions and

partnerships

Committed to recurring

quarterly dividends

Increased 20% to

$0.15/share in Feb. 2016

Returned 21%1 of FCF in

2015, excluding special

dividend

Periodically assess use of

special dividend

Paid $1.50/share or

$45M in April 2015

1. Free Cash Flow (“FCF”) = Operating Cash Flow – Capital Expenditures; $15M 2015 quarterly dividend payments / $71M 2015 FCF = 21%; see appendix for reconciliation of non-GAAP measures

Return of Capital

6

Strong Execution has Delivered Solid Results

Financial

Performance

Continued mid-single digit revenue growth: 7.6% growth in 2014 and 3.4% YoY growth in 2015

Stable, high margins: ~51.7% 2015 Adjusted EBITDA margin

Operational

Excellence

7.0% and 5.1% YoY growth in agent count in 2015 and 2014, respectively

– Consistent positive agent growth since 2011

– Agent count grew by ~6,800 in 2015, highest growth in the last 10 years

– Strong agent count growth outside the U.S. (15.4% growth in 2015)

~9% growth in franchise sales and other franchise revenue in 2015

Housing

Fundamentals

Gradually improving housing market; existing home sales in the U.S. were up 6.3% in 2015(1)

New home sales were up 14.6% in 2015, with continued growth in building permits and housing starts that

indicate potential for continued strong growth

Home inventory still the main governor on the housing market

Capital

Allocation

Significant free cash flow (“FCF”)(2) committed towards increasing shareholder value

– Purchased New York Region for $8.5M on February 22, 2016

– ~21% of FCF distributed to shareholders in dividends in 2015, excluding special dividend

– Current dividend yield of ~1.8%(3)

– Paid special dividend of $1.50 per share or $45M in April 2015

Cash Flow &

Balance Sheet

Continued strong cash flow, with minimal capital expenditure requirements

– FCF ~78% of 2015 Adj. EBITDA and unencumbered cash ~59% of 2015 Adj. EBITDA (2)(4)

Low leverage to support opportunistic acquisitions: ~3.0x gross leverage post IPO to 2.2x as of year-end

2015

1. National Association of Realtors.; 2015 Existing Home Sales

2. Free Cash Flow = Operating Cash Flow – Capital Expenditures; $15M 2015 quarterly dividend payments / $71M 2015 FCF; see appendix for reconciliation of non-GAAP measures; see appendix for reconciliation of non-GAAP measures

3. Yield based on regular quarterly dividend of $0.15 and a stock price of $32.93 per share as of February 26, 2016

4. Unencumbered Cash Generated = Free Cash Flow less Distributions to RIHI – Quarterly debt principal payment – Annual excess cash flow payment on debt; see appendix for reconciliation of non-GAAP measures

7

Unique product or service offering

Brand name and market share

Training and productivity tools

Group purchasing power

Key Investment Highlights of a Franchise Business

1

2

3

4

Key Success Factors of Franchisors Successful Franchisors

8

Investment Highlights

1. Source: MMR Strategy Group survey of unaided brand awareness in the U.S. and Canada

#1 Real Estate Franchise

Brand (1) with Unmatched

Global Footprint

Highly Productive Network of

More Than 100,000 Agents in

nearly 100 Countries

Multiple Drivers of

Shareholder Value

Stable, Recurring Fee-Based

Revenue Model with Strong

Margins and Cash Flow

Asset-Light

Franchise Business

Committed and

Experienced

Leadership Team

9

U.S. Market Share (1)

Transaction Sides

Per Agent

in RT500 (2)

Agents Worldwide

YE 2015 Countries (3)

U.S. National T.V.

Share of Voice (4)

Offices

Worldwide

#1 16.6 104,826 98 53% 6,986

#2 8.5 84,800 34 11% 3,000

#3 6.7 133,212 13 0% 773

#4 7.5 101,400 63 4% 6,900

#5 9.0 36,800 30 0% 2,350

#6 6.1 18,800 44 0% 835

#7 6.7 10,200 2 0% 300

N/A 7.6 42,000 1 32% 1,200

#1 Real Estate Franchise Brand

Ranking RE/MAX vs. Other National Real Estate Franchise Brands

Realogy BrandData is full-year or as of year-end 2014, as applicable. Except as noted, Coldwell Banker, Century 21, ERA, Sotheby’s and Better Homes and Gardens data is as reported by Realogy Corporation on SEC 10-K, Annual Report for 2014; Keller

Williams, and Berkshire Hathaway HomeServices data is from company websites and industry reports

1. As measured by residential transaction sides; Keller Williams reports all transaction sides and does not itemize U.S. residential transactions

2. Transaction sides per agent calculated by RE/MAX based on 2015 REAL Trends 500 data, citing 2014 transaction sides for the 1,460 largest participating U.S. brokerages. Coldwell Banker includes NRT. Berkshire does not include

HomeServices of America

3. Based on lists of countries claimed at each franchisor’s website, excluding claimed locations that are not independent countries (i.e. territories, etc.)

4. Percentage of TV advertising impressions among national real estate brands. Source: Nielsen Monitor-Plus / A25-54 GRPs Unequivalized for ads placed through nationwide buys (not including Spanish-language television). Spot TV GRPs

are equivalized to national ratings for competitors running national campaigns

(1)

10

RE/MAX – Our Differentiated Approach

Owned / operated by broker

30-40% of commission goes to broker

Commission rate typically determined by broker, not agent

Marketing dictated by broker

Minimal training

Traditional Brokerage

vs.

100% franchised

― Relatively low initial franchisee fee

Recommended 95% / 5% commission split (agent / broker)

Ability for agent to set commission rates with sellers in many cases

Ability to self-promote

Multiple support channels

― Brand

― Marketing

― Training

Model Driven by Commission Model Driven by Agent Count

11

Organic GrowthDifferentiated Agent-Centric Approach Attracts Agents and Franchisees

#1 name in real estate (1)

RE/MAX agents average more than twice as many residential transaction sides compared

to the average of all competitors in the 2015 Real Trends 500 survey of the country’s

largest brokerages (2)

Founded by industry “mavericks”

Agent-centric model

Freedom to set commission rates, self-promote, etc.

We believe we generate more free leads than any other brand

Global agent network facilitates agent-to-agent referrals

#1 real estate franchise website (3), global websites attract buyers and sellers

Our Agents and Franchisees are in Business FOR Themselves, But NOT by Themselves

1. MMR Strategy Group survey of unaided brand awareness.

2. Calculated by RE/MAX based on 2015 REAL Trends 500 data, using 2014 transaction sides for the 1,460 largest participating U.S. Brokerages.

3. Hitwise January – June 2015 report of all U.S. websites in the “Business and Finance – Real Estate” category

Affiliation with #1

Brand

Attractive Agent &

Franchise

Economics

Entrepreneurial

Culture

Lead Referral

System

Training Programs

RE/MAX University; 24/7 on demand and certification training courses

Successful “Momentum” agent and broker development program focused on production

and profitability

Ability to achieve highly valued industry designations and certifications

Recommended 95% / 5% split with broker vs. 70% / 30% or 60% / 40% at traditional

brokerages

Sell more, earn more

Relatively low initial franchisee fee

12

Expansive Agent Network Growing Again

Since 1973

0

20,000

40,000

60,000

80,000

100,000

120,000

1973 1983 1993 2003 2013

33 years of

uninterrupted growth

1973-2006

– Growth through all

recessions prior to

2006

+17,350 agents from

year-end 2011 to year-

end 2015

Strongest 12 month

agent gain in 2015

since 2005

Peak 2006: 119,459

Trough 2011: 87,476

Number of Agents Growing Again

Dec. 31, 2014: 98,010

Dec. 31, 2015: 104,826

13

Unmatched Global Footprint

December 31, 2015

Canada19,668 Agents

Outside the U.S.

and Canada25,240 Agents

U.S.59,918 Agents

RE/MAX Regional or Franchise Presence

December 31, 2015

RE/MAX Global Footprint Agents by Geography

The RE/MAX brand spans nearly 100 countries

57%19%

24%

14

0.0

2.0

4.0

6.0

8.0

1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 '17e

7.1

4.1

U.S. Housing Market Steadily Improving

1. National Association of Realtors (NAR). 2016 estimates based on NAR forecast as of February 2016

2. 2015 Primary Mortgage Market Survey (Freddie Mac)

Existing Home Sales (1)

30-Year Fixed Rate Mortgage Interest Rate (%)

40-Year Average: 8.4%

Average30-Year Fixed Rate Mortgage Rate

Mortgage Rates Attractive (2)

(MM)

Non-Recession Years Recession Years NAR Forecast

0

5

10

15

20

1973 1976 1980 1984 1988 1992 1996 1999 2003 2007 2011 2015

’16e

5.55.4

15

Positive Forecasts for 2016 & 2017Gradual Expansion of the Housing Market Continues

Monthly Existing Home Sales (1) (Thousands) Annual Existing Home Sales (2)(3) (MM)

Housing Starts - Single Family (3)(4) (Thousands)Home Price Appreciation(2)(3) (YoY)

200

250

300

350

400

450

500

550

600

4.94

5.20

5.35

5.53

4.94

5.25

5.34

5.50

2014 2015 2016e 2017e

Fannie Mae NAR

5.0% 5.1% 5.2%

3.8%

5.7%6.2%

3.4%

4.1%

2014 2015 2016e 2017e

Fannie Mae NAR

1. Source: Federal Reserve Economic Data – Existing Home Sales, numbers presented are not seasonally adjusted; March 2011 through December 2015

2. Source: NAR (National Association of Realtors) – U.S. Economic Outlook, January 2016

3. Source: Fannie Mae – Economic and Strategic Research – Housing Forecast, January 2016

4. Source: NAHB (National Association of Home Builders) – Housing and Interest Rate Forecast, December 2015

648 707

827

945

647 711

840

1,089

2014 2015 2016e 2017e

Fannie Mae NAHB

16

0

200

400

600

800

1,000

1,200

1,400

1,600

Significant Pent-up Demand:Household Formations Expected to Bolster Demand for U.S. Existing Homes

1. Bloomberg and Wall Street Research; 2010-2020E projection per JCHS 2010 household projections

2. Pew Research Center Social and Demographic Trends – July 2015; young adults are 18- to 34- year olds, excludes 18- to 24- year-old college students enrolled full time

3. National Association of Home Builders and U.S. Census Bureau. Includes both single family and multifamily

U.S. Household Formations Have Yet to Stage a Full Comeback (1)

U.S. New Home Starts Remain Low

(Single and Multifamily) (3)

(000s) (MM) (MM)

2007 – 2012 Average

Annual Household

Formations Well Below

Recent and Projected

Levels

34.6

37.6

20.0

24.0

28.0

32.0

36.0

40.0

18 to 34 Year Olds Living With Parents

+8.7%

2007 2015

20-year Average: 837

1.6

1.7

1.8

2.0

2.1

1.8

1.4

0.9

0.60.60.6

0.8

0.91.0

1.2

1.5

0.0

0.5

1.0

1.5

2.0

2.5

'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14'15E'16E

20-year Average: 1.3

U.S. Adults Living With Parents

on the Rise (2)

DownturnAverage of selected years Average of forecast years

17

Return of Capital

Dividend

Stable Business Model Generates

Strong Cash Flow to Drive Shareholder Value

Organic Growth

Franchise Sales

Agent Growth

Value Creation

Catalysts

Acquisitions

Reinvestment

Shareholder Return Driven by Three Pillars of Value Creation

18

792

714 729692

752

929

26

1110

18

15

17

818

725739

710

767

946

2010 2011 2012 2013 2014 2015

Key Initiatives

Office Franchise Sales New Regions

Target underpenetrated

geographies in the U.S.

and Canada where

RE/MAX market share is

below network average

Franchise sales drive

organic agent growth

~25% of 2015 U.S. agent

gain is from offices

opened in 2015

Strong franchise sales

continued in 2015

Global Franchise Sales Consistently Strong

Organic GrowthFranchise Sales Drive Agent Growth

19

45% of Agents in the U.S./Canada are in

Independent Regions (1)

Washington

Oregon

Idaho

Montana

California

Hawaii

ColoradoUtah

Wyoming

SouthDakota

NorthDakota

Texas

Pennsylvania

Delaware

Florida

North Carolina

South Carolina

BritishColumbia

Alberta

Saskatchewan

Manitoba

Yukon

U.S./Canada Overview (1)

Company-owned Regions

– 13 regions

– ~44,700 agents

Independent Regions

– 16 regions

– ~34,885 agents

– U.S.: 13 regions with ~21,770

agents (36% of U.S. agents)

– Canada: 3 regions with ~13,100

agents (67% of Canadian agents)

Average Annual Revenue per Agent (2)

– Company-owned regions: $2,451

– Independent regions: $821

Company-owned Regions

Independent Regions

Nevada

Arizona New Mexico

Maryland

Virginia

WestVirginia

Missouri

Illinois

Ohio

Northwest

TerritoriesNunavut

1. Agent counts as of December 31, 2015

2. Average revenue to RE/MAX, LLC per agent for the year ended December 31, 2015

CatalystAcquire Independent Franchise Regions in the U.S. & Canada

New York

20

Capital Allocation Drives Shareholder Value

Catalysts

Internal Growth External Growth

Investing in the

Business

Independent region

acquisitions

“Momentum”

training initiative

Agent branding and

marketing tools

Technology tools to

enhance

productivity

Close to our core

competency (real

estate and franchise

focus)

Complementary to

value proposition

Organic Growth

Agent recruitment

and retention

Agent productivity

Franchise sales

Other Acquisitions

Shareholders

Consistent quarterly

dividend to date

Periodically assess

use of special

dividend

$1.50 special

dividend

declared in

March 2015

Dividends

Return of Capital

21

RE/MAX Four Tier Structure Drives Strong Recurring Revenues

Brand Equity

Market Share

TV Advertising

Marketing Strategies

Corporate Communications

RE/MAXOwns the right to the RE/MAX brand

and sells franchises and franchising rights

Owns rights to sell brokerage franchises

in a specified region

12 Company-owned Regions

20 Independent Regions

Typically 15 – 20 year agreement with renewal options

Owns rights to operate a RE/MAX branded

brokerage office, list properties

and recruit agents

5 year agreement

Office Infrastructure

Sales Tools / Management

Over 6,900 Offices Worldwide

Local Services

Regional Advertising

Franchise Sales

Works with Buyer or Seller

Sets Own Commission Rate

Branded independent contractors

who operate out of local franchise

brokerage offices

1 year agreement

Agent

(or Sales

Associate)

Franchisee

(or Broker /

Owner)

Region

Owner

DescriptionTiers Services Offered

22

Franchise and Agent Fees Drive Strong and Recurring Revenues

Franchise Sales and Other

Franchise Revenue

Broker Fees

Based on Real Estate Commissions; Paid Monthly

Continuing Franchise Fees

Based on Agent Count; Paid

Monthly

Annual Dues

Based on Agent Count; Paid

Annually

60%

18%

42% 18%

18%

1

3

2

Brokerage Revenue1

Company-Owned Brokerages22%

8%

4 5

14%

Franchise and Agent Fees Drive Strong and Recurring Cash Flows

% of 2015

Revenue

Agent Count

Based

Recurring

Fee Streams

Transaction

Based

Other

Revenue

1. As of January 20 2016 RE/MAX sold its remaining owned brokerages and going forward will be 100% franchised and discontinue the recognition of brokerage revenue.

23

$2,451 / Agent

Average

Revenue Model – Owned Regions in U.S. & Canada

$1,413 /

Agent

Average

$638 /

Agent

Average

$400 /

Agent

RE/MAX

Franchises / Brokerages

$400 / AgentPer Year

Recommended5% of AgentGeneratedCommissions

$500-600 / AgentPer Month

$123 Avg. / AgentPer Month

1% of Agent GeneratedCommissions

Agents

2015 Revenue Streams from Agent to Franchisee to RE/MAX

2015 Annual Revenue per Agent to RE/MAX(U.S. & Canada)

Annual DuesBroker FeeContinuing

Franchise Fees

Increased from

$120 Jan. 1, 2014

Increased from

$390 Jan. 1, 2014

24

Agents

RE/MAX

Franchises / Brokerages

Independent Regions

$400 / AgentPer Year

Recommended5% of AgentGeneratedCommissions

$500-600 / AgentPer Month

$120 Avg. / AgentPer Month

1% of Agent GeneratedCommissions

15%-30%of Continuing Franchise / Broker Fee Revenue

Implied

70%-85%

Upside

Through

Independent

Region

Acquisitions

$306 /

Agent

Average

$115 /

Agent

Average

$400 /

Agent

Revenue Model – Independent Regions in U.S. & Canada

$821 / Agent

Average

2015 Revenue Streams from Agent to Franchisee to Independent Region to RE/MAX

2015 Annual Revenue per Agent to RE/MAX(U.S. & Canada)

Annual DuesBroker FeeContinuing

Franchise Fees

Increased from

$390 Jan. 1, 2014

25

83%

12%

5%

Revenue by Stream and Geographic AreaStable Recurring Revenue Base

Revenue Streams

Franchise Sales &

Other Franchise

Revenue

Broker Fees

Annual Dues

Continuing

Franchise Fees

Brokerage Revenue11% 10% 9% 8%

16% 15% 14% 14%

14% 16% 17% 18%

20% 19% 18% 18%

39% 40% 42% 42%

2012 2013 2014 2015

Revenue by Geographic Area

$22.0M

$147M

$8M

U.S.

Canada

Outside the U.S.

and Canada

Recurring fees and dues (i.e. Continuing

Franchise Fees and Annual Dues) accounted for

60% of revenue in 2015

Full-year 2015

~95% of 2015 revenue

was generated in the U.S.

and Canada

26

52%54%

27%

12%15%

12%

Strong Adjusted EBITDA Margins In-Line with Franchisors

1. Adjusted for gain on sale or disposition of assets and sublease, loss on early extinguishment of debt, non-cash straight-line rent expense, non-recurring severance and other related expenses and acquisition integration and professional fees expense.

See appendix for reconciliation with GAAP measures

2. Excludes stock based compensation for comparable companies; Adjusted EBITDA and Adjusted EBITDA margin are not GAAP measures; other companies may calculate this measure differently so these measures may not be comparable; this chart

is for illustrative purposes only

3. Adjusted EBITDA margin calculations use financial statements from the most recent public filings of the companies listed

4. CBRE does not report Adjusted EBITDA and as such EBITDA has been used for the calculation of the margin

Adjusted EBITDA Margin (1)(2)(3)

Franchisors Real Estate Brokerages

(4)

Full-year 2015

27

$32$37

$45$49

2012 2013 2014 2015

$67

$77$84

$91

2012 2013 2014 2015

1. As applicable in each year or period presented, adjusted for (gain) or loss on sale or disposition of assets and sublease, loss on early extinguishment of debt, non-cash straight-line rent expense, severance related expenses, acquisition related expense, non-recurring equity based compensation, salaries paid to David Liniger and Gail Liniger that the Company discontinued subsequent to the completion of the IPO and professional fees and certain non-recurring expenses incurred in connection with the

IPO. See appendix for reconciliation with GAAP measures

2. Assumes consolidated income tax rate of 38%. As applicable in each year or period presented, amounts exclude the impact of amortization expense related to the Company’s franchise agreements, the GAAP provision for income taxes and are adjusted for (gain) or loss on sale or disposition of assets and sublease, loss on early extinguishment of debt, non-cash straight-line rent expense, non-recurring severance and other related expenses, acquisition integration and professional fees expense, non-recurring equity based compensation, salaries paid to David Liniger and Gail Liniger that the Company discontinued subsequent to the completion of the IPO and professional fees and certain non-recurring expenses incurred in connection

with the IPO. See appendix for reconciliation with GAAP measures

Annual Financial PerformanceGenerating High Margins

$144

$159$171

$177

2012 2013 2014 2015

MarginMargin

49%Stable, High Margins

Revenues Adjusted EBITDA (1) Adjusted Net Income (2)

23%46% 26%23%49% 28%52%

($M) ($M) ($M)

28

Recent Quarterly Performance Demonstrates Momentum in the Business…

80,000

85,000

90,000

95,000

100,000

105,000

(#)

+11,598 Agents

In Last 8 Quarters $40$42 $42

$44$43

$44 $44 $45$43

30

40

50

($MM)

45%38%

57%53%

48%42%

58% 56%52%

0

20

40

60

(%)

1. Reflects the sale of the Caribbean and Central America regions on December 31, 2014 and the sales of six owned brokerage offices to an existing RE/MAX franchisee in April, 2015

2. As applicable in each quarter presented, adjusted for (gain) or loss on sale or disposition of assets and sublease, loss on early extinguishment of debt, non-cash straight-line rent expense, severance related expenses, acquisition related

expense, non-recurring equity based compensation, salaries paid to David Liniger and Gail Liniger that the Company discontinued subsequent to the completion of the IPO and professional fees and certain non-recurring expenses incurred in

connection with the IPO. See appendix for reconciliation with GAAP measures

Q1 Seasonally

Low

Quarterly Agent Count on Rise Quarterly Revenue Growing (1)

Strong Quarterly Adjusted EBITDA Margins (1)(2)

29

…With Continued Strong Agent Count Growth

Agent Count Growth2013 vs. 2014 vs. 2015

93,228

54,491

18,922 19,815

98,010

57,105

19,040 21,865

104,826

59,918

19,668

25,240

Total U.S. Canada Outside U.S. &Canada

(+6,816 agents)

+7.0% YoY

+4.9%YoY(+2,813 agents)

+3.3% YoY(+628 agents)

+15.4% YoY(+3,375 agents)

December 31, 2013 December 31, 2014 December 31, 2015

30

Cash Flow Generation Fuels Capital Allocation Strategy

1. Free Cash Flow = Operating Cash Flow – Capital Expenditures

2. Free Cash Flow less Distributions to RIHI = Free Cash Flow – Tax and other discretionary non-dividend distributions paid to RIHI to enable RIHI to satisfy its income tax obligations

3. Unencumbered Cash Generated = Free Cash Flow less Distributions to RIHI – Quarterly debt principal payment – Annual excess cash flow payment on debt; see appendix for reconciliation of non-GAAP measures

$75$71

$64

$54

Operating CashFlow

Free CashFlow

Free CashFlow less

Distributionsto RIHI

UnencumberedCash Generated

December 31, 2015

Acquire independent regions

Reinvest in the business

Other acquisitions

Return of capital

1

2

3

4

(1)

(2)

(3)

78% 59%As % of 2015

Adj. EBITDA

Capital Allocation Strategy Drives Value Creation

Capital Allocation Priorities

70%

31

Cash Flow Fuels Catalysts…

Ongoing discussions and education on valuation process

Acquired New York region in February 2016

Purchase price: $8.5M (8.5x Adjusted EBITDA)

58 offices, 869 agents, ~1.8% of NAR in New York

Acquired Texas region in December 2012

Purchase price: $45.5M (7.5x LTM Adjusted EBITDA)

Pre-acquisition growth = 86 agents gained in 2012

Post-acquisition growth = 400 average agents gained per year (2013-2015)

Post-acquisition incremental Adjusted EBITDA contribution = $7.3M per year

Independent Regional Acquisitions

Other Potential Acquisitions

Other potential acquisitions targeted to be:

Close to our core competency (real estate and franchising)

Complementary and / or value additive to our current business model and value proposition

Reinvest in the Business

Momentum broker and agent development program

Technology – lead generation, mobile, agent branding and marketing tools

32

…And Stable Franchise Model Enables Flexible Return of Capital

$0.0625 in 2014

$0.125 in Q1 2015

$0.15 in Q1 2016

$1.50

Special Dividend

Declared in March

2015

~21% FCF

Distributed as

Dividends,

Excluding Special

Dividend

Increased Quarterly

Dividend 140%

Periodically Assess Use

of Special Cash DividendHigh FCF Distribution

Commitment to Returning Capital via Consistent Dividends Since IPO: ~1.8% Yield (1)

1. Yield based on regular quarterly dividend of $0.15 and a stock price of $32.93 per share as of February 26, 2016

33

Looking Ahead – FY 2016 OutlookGrowing our Network, our Business and our Brand

Agent count is estimated to increase by 4.0% - 5.0% over 2015;

Revenue is estimated to decrease by 3.0% - 4.0% compared to 2015;

− Revenue would have been estimated to increase by 3.25% to 3.75% over 2015 after adjusting for

the sale of the brokerage offices, the negative impact of FX, and the incremental contribution of

the acquired New York region;

− FX is estimated to negatively impact full-year revenue by $2.0 - $2.5 million;

Selling, Operating and Administrative Expenses are estimated to be 48.0% - 49.0% of

2016 revenue;

− The sale of the 21 brokerage offices will decrease SO&A expenses by approximately $11 million;

− Project related operating expense is estimated to be $4.0 - $4.5 million;

Adjusted EBITDA margin is estimated to be in the 51.5% - 53.0% range;

− FX is estimated to negatively impact full-year Adjusted EBITDA by $2.0 to $2.5 million or 50 to 75

basis points; and

Capital expenditures are estimated to be $3.5 to $4.0 million;

− Includes project related capital expenditures of $1.5 to $2.0 million.

Note: Revenue, Selling, operating and administrative expenses, and Adjusted EBITDA margin are subject to fluctuations in both the Canadian dollar and the Euro, to the U.S. dollar exchange

rates. The 2016 outlook reflects an annualized estimated exchange rate of $0.70 U.S. for every Canadian dollar.

FY 2016 Outlook

34

Highly productive network of more than 100,000 agents

Unmatched global footprint

Recurring fee streams based on agent count

High Adjusted EBITDA margins

Strong free cash flow generation

Low fixed-cost structure

Asset-light franchise business

Attractive Franchise Model

Leading Real Estate Franchise with Recurring Revenues, High Margins & Strong Free Cash Flow

As measured by residential transaction sides

Appendix

36

$14.8

$2.1 $2.1 $2.1

2016 2017 2018 2019 Thereafter

Maturities of Debt (1) Balance Sheet

New credit facility of $230.0 million with $10.0

million revolver in Q3 2013

Covenant light deal

Variable Rate: LIBOR + 325bps with 100bps

floor (4.25%)

$201.9(2) million in term loans and no revolving

loans outstanding as of December 31, 2015

Approved access to $50 million per year, up to

$100 million, under the credit facility for

acquisition purposes

Cash balance of $110.2 million on December

31, 2015

Total Debt / Adjusted EBITDA of 2.2x(3)

Net Debt / Adjusted EBITDA of 1.0x(4)

$181.5

1. Does not include excess cash flow payments associated with the 2013 credit facility of $7MM in 2015, an estimated $10MM in 2016 and future payments in 2017 and beyond dependent on leverage position

2. Net of unamortized discount

3. Based on twelve months ended December 31, 2015, Adjusted EBITDA of $91.4M and total debt, net of unamortized discount of $201.9M

4. Based on twelve months ended December 31, 2015, Adjusted EBITDA of $91.4M and total debt, net of unamortized discount of $201.9M and net of cash and cash equivalents of $110.2M

Low Leverage to Support Strategy

37

Revenue StreamsTop Line Driven by Agent Count Growth and Increased Volume

Revenue ($M)

Fourth Quarter 12 Months Ended December 31,

2015 2014Change

2015 2014Change

$ % $ %

Continuing Franchise Fees $18.92 $18.46 $0.46 2.5% $73.75 $72.71 $1.04 1.4%

Annual Dues $8.07 $7.88 $0.19 2.4% $31.76 $30.73 $1.03 3.4%

Broker Fees $7.35 $6.83 $0.51 7.5% $32.33 $28.69 $3.65 12.7%

Franchise Sales and Other

Franchise Revenue$5.93 $5.51 $0.43 7.8% $25.47 $23.44 $2.03 8.7%

Brokerage Revenue $3.01 $3.89 -$0.89 -22.8% $13.56 $15.43 -$1.87 -12.1%

Total Revenue $43.27 $42.57 $0.71 1.7% $176.87 $170.98 $5.88 3.4%

Recurring fees/dues1 accounted for:

─ 59.7% of revenue in full-year 2015 vs. 60.5% in full-year 2014

FY2015:

− Broker fee increased due to agent gain and increased transaction sides

− Franchise sales increased due to higher registration/attendance at company events &

trainings, and increased office sales in the U.S.

− Brokerage Revenue down due to the sale of six previously owned brokerages in April 2015

1. Recurring fees/dues are comprised of Continuing Franchise Fees and Annual Dues.

38

Selling, Operating, & Administrative Expenses

Selling, Operating and Administrative Expenses

SO&A Expenses ($M)

Fourth Quarter 12 Months Ended December 31,

2015 2014Change

2015 2014Change

$ % $ %

Personnel $11.78 $15.35 -$3.57 -23.3% $43.74 $47.04 -$3.30 -7.0%

Professional Fees $3.06 $2.36 $0.70 29.7% $9.36 $8.21 $1.15 14.0%

Rent $2.94 $3.16 -$0.22 -7.0% $11.96 $12.52 -$0.56 -4.5%

Other $7.67 $5.66 $2.02 35.6% $25.92 $24.08 $1.85 7.7%

Total $25.45 $26.53 -$1.08 -4.1% $90.99 $91.85 -$0.86 -0.9%

SO&A was 51.4% of revenue in 2015 vs. 53.7% in 2014

Selling, operating, and administrative expense variance YoY:

─ Personnel down due to lower severance and reduction in headcount

─ Professional fees increased due to the secondary offering completed in November 2015 and

technology related projects

─ Other expenses increased due to a charge in the fourth quarter related to the resolution of

litigation associated with the acquisition of the Southwest region in October of 2013

39

35,299

21,806

37,250

22,668

Company-Owned Independent

6,261

12,779

6,553

13,115

Company-Owned Independent

Agent Count in the U.S. and CanadaGrowth in Company-Owned & Independent Regions

Agents in the U.S. Agents in Canada

Agent Count Growth2014 vs. 2015

U.S. & Canada combined:

─ Agent count in Company-owned regions grew by 5.4% over 2014

─ Agent count in Independent regions grew by 3.5% over 2014

(+1,951 agents)

+5.5% YoY




December 31, 2014 December 31, 2015

40

98,010

57,105

19,040 21,865

104,826

59,918

19,668 25,240

Total U.S. Canada Outside U.S. &Canada

Year-to-Date Agent Count GrowthCompany-Owned Regions Driving Growth in U.S. & Canada

Agent Count Growth

2014 vs. 2015

Growth in U.S. Company-Owned regions of 1,951 agents or 5.5% in 2015

Growth in U.S. Independent regions of 862 agents or 4.0% in 2015

7.0%(+6,816 agents)

4.9%(+2,813 agents)

3.3%(+628 agents)

15.4%(+3,375 agents)

December 31, 2015December 31, 2014

41

$11$10

$14 $14

$12

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

$20$19

$26 $25

$22

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

1. Adjusted for (gain) loss on sale of assets and sublease, (gain) loss on extinguishment of debt, stock based compensation, deferred rent adjustments and acquisition related expenses; see appendix for reconciliation with GAAP measures

2. Assumes full corporate tax rate of 38%; adjusted for (gain) loss on sale of assets and sublease, (gain) loss on extinguishment of debt, stock based compensation, deferred rent adjustments, salary paid to Dave and Gail Liniger that will not be paid post IPO, expenses incurred in connection with the IPO and acquisition transaction costs and amortization expense; see appendix for reconciliation with GAAP measures

Quarterly Financial PerformanceGenerating High Margins

$43$44 $44 $45

$43

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

26% 22% 31% 27%51%48% 58% 56%Stable, High Margins

Revenues Adjusted EBITDA (1) Adjusted Net Income (2)

42% 32%

($M) ($M) ($M)

42

Key Terms of Tax Receivable Agreement

Corporate & Tax Structure

Class A shares of RE/MAX Holdings, Inc. are held by public investors

(Class A shares = one vote per share and 100% of economic rights in

RE/MAX Holdings, Inc.)

Class B shares of RE/MAX Holdings, Inc. are held by RIHI (Class B

shares = high vote and no economic rights in RE/MAX Holdings, Inc.)

RIHI and RE/MAX Holdings, Inc. hold common units in RMCO, LLC

RIHI has “redemption rights” to redeem RMCO, LLC common units for

Class A shares of RE/MAX Holdings, Inc. or cash (at the election of

RE/MAX Holdings, Inc.)

Continued taxation of RMCO, LLC as a partnership; RE/MAX Holdings,

Inc. taxed as a “C” Corporation at an estimated tax rate of 38%

Consistent with other “Up-C” IPO precedents, RE/MAX Holdings, Inc. is

party to a “Tax Receivable Agreement” (“TRA”) with each of RIHI and

Oberndorf Investments LLC

Under the terms of the TRA, RE/MAX Holdings, Inc. is obligated to make

cash payments to RIHI and Oberndorf Investments LLC in respect of

85% of the amount of certain tax savings that RE/MAX Holdings, Inc.

may realize as a result of its expected share of amortizable or

depreciable tax basis in specified assets of RMCO, LLC

RE/MAX Holdings, Inc. will retain 15% of any tax savings that it may

realize

RE/MAX Holdings, Inc. will fund its payments under the TRA from cash

distributions received from RMCO, LLC

Organizational Structure General Features of “Up-C” Structure

43

1. Excludes all adjustments associated with the non-controlling interest and presents the results of operations as if all outstanding common units of RMCO were exchanged for or converted into shares of the Company's Class A common stock on a one-for-one basis for each period presented

2. Represents (gains) losses on the sale or disposition of assets as well as (gains) losses on the sublease of a portion of the Company's corporate headquarters office building3. Represents losses incurred on early extinguishment of debt on the Company's 2013 Senior Secured Credit Facility for each period presented4. Represents the non-cash charge to appropriately record rent expense on a straight-line basis over the term of the lease agreement taking into consideration escalation in monthly

cash payments5. Non-recurring equity-based compensation includes non-cash compensation expense recorded related to restricted stock units granted in connection with the IPO pursuant to the

Company's 2013 Omnibus Incentive Plan during the three and twelve months ended December 31, 2013 as well as the non-cash compensation expense recorded related to unit options granted to certain employees pursuant to RMCO's 2011 Unit Option Plan prior to the IPO

6. Represents the salaries the Company paid to David Liniger, the Company's Chief Executive Officer, Chairman and Co-Founder, and Gail Liniger, the Company's Vice Chair and Co-Founder. Such salaries have not been paid subsequent to the IPO, and will not be paid in future periods

7. Represents costs incurred in connection with the IPO8. Represents severance related expenses recognized as a result of 2014 restructuring activities, the retirement of the Company's former Chief Executive Officer on December 31,

2014, subsequent organizational changes implemented during 2015, and the retirement of the Company's former President on August 19, 20159. Acquisition integration and professional fees expense include fees incurred in connection with the Company's acquisitions of certain assets of HBN, Inc. and Tails, Inc. in October

2013. Costs include legal, accounting and advisory fees as well as consulting fees for integration services

(Unaudited) (Amounts in thousands)

RE/MAX Holdings, Inc. Adjusted EBITDA Reconciliation to Net Income (Reflects RE/MAX Holdings with 100% ownership of RMCO, LLC)

2015 2014 2013

Consolidated:

Net income (1)

51,350$ 43,979$ 28,252$

Depreciation and amortization 15,124 15,316 15,166

Interest expense 10,413 9,295 14,647

Interest income (178) (313) (321)

Provision for income taxes 12,030 9,948 2,844

EBITDA 88,739 78,225 60,588

(Gain) loss on sale or disposition of assets and sublease (2)

(836) (340) 971

Loss on early extinguishment of debt (3)

94 178 1,798

Non-cash straight-line rent expense(4)

889 812 1,183

Equity-based compensation expense incurred prior to or in

conjunction with the IPO(5)

- - 2,748

Chairman executive compensation(6)

- - 2,261

Public offering related expenses(7)

1,097 - 6,995

Severance related expenses (8)

1,482 4,617 -

Acquisition related expenses (9)

2,750 313 495

Adjusted EBITDA 91,401$ 83,805$ 77,039$

Adjusted EBITDA Margin 51.7% 49.0% 48.5%

Year Ended December 31,

44


RE/MAX Holdings, Inc. Quarterly Adjusted EBITDA Reconciliation to Net Income (Reflects RE/MAX Holdings with 100% ownership of RMCO, LLC)


2. Represents (gains) losses on the sale or disposition of assets as well as (gains) losses on the sublease of a portion of the Company's corporate headquarters office building3. Represents losses incurred on early extinguishment of debt on the Company's 2013 Senior Secured Credit Facility for each period presented4. Non-recurring equity-based compensation includes non-cash compensation expense recorded related to restricted stock units granted in connection with the IPO pursuant to the Company's 2013 Omnibus Incentive

Plan during the three and twelve months ended December 31, 2013 as well as the non-cash compensation expense recorded related to unit options granted to certain employees pursuant to RMCO's 2011 Unit Option Plan prior to the IPO

5. Represents the non-cash charge to appropriately record rent expense on a straight-line basis over the term of the lease agreement taking into consideration escalation in monthly cash payments6. Represents the salaries the Company paid to David Liniger, the Company's Chief Executive Officer, Chairman and Co-Founder, and Gail Liniger, the Company's Vice Chair and Co-Founder. Such salaries have not

been paid subsequent to the IPO, and will not be paid in future periods7. Represents severance related expenses recognized as a result of 2014 restructuring activities, the retirement of the Company's former Chief Executive Officer on December 31, 2014, subsequent organizational

changes implemented during 2015, and the retirement of the Company's former President on August 19, 20158. Acquisition integration and professional fees expense include fees incurred in connection with the Company's acquisitions of certain assets of HBN, Inc. and Tails, Inc. in October 2013. Costs include legal, accounting

and advisory fees as well as consulting fees for integration services9. Represents costs incurred in connection with the IPO

Q4 2015 Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014 Q2 2014 Q1 2014 Q4 2013 Q3 2013 Q2 2013 Q1 2013

Consolidated:

Net income (1) $10,969 $ 15,193 $ 16,058 $ 9,130 $ 7,617 $ 14,055 $ 14,509 $ 7,798 $ 5,600 $ 7,697 $ 9,548 $ 5,407

Depreciation and amortization 3,740 3,765 3,808 3,811 3,799 3,767 3,812 3,938 4,078 3,656 3,707 3,725

Interest expense 2,965 2,338 2,301 2,809 2,288 2,255 2,286 2,466 2,594 5,128 3,411 3,514

Interest income (42) (36) (33) (67) (108) (58) (66) (81) (97) (82) (68) (74)

Provision for income taxes 3,148 3,277 3,457 2,148 1,818 3,116 3,129 1,885 1,111 702 577 454

EBITDA 20,780 24,537 25,591 17,831 15,414 23,135 23,670 16,006 13,286 17,101 17,175 13,026

(Gain) loss on sale or disposition of assets and sublease (2) (2,877) (66) (664) (43) (63) (52) (47) (178) 1,383 (164) (105) (143)

Loss on early extinguishment of debt (3) - - - 94 - - 178 - - 1,664 - 134

Non-recurring equity-based compensation (4) - - - - - - - - 2,047 - 321 380

Non-cash straight-line rent expense (5) 208 201 249 231 198 197 270 147 212 261 371 339

Chairman executive compensation (6) - - - - - - - - 11 750 750 750

Severance related expenses (7) - 443 588 451 4,617 - - - - - - -

Acquisition related expenses (8) 2,673 - (106) 183 163 87 45 18 246 27 222 -

Public offering related expenses (9) - - - - - - - - 1,079 2,436 2,533 947

Adjusted EBITDA $21,881 $ 25,115 $ 25,658 $ 18,747 $ 20,329 $ 23,367 $ 24,116 $ 15,993 $ 18,264 $ 22,075 $ 21,267 $ 15,433

Adjusted EBITDA Margin 50.6% 55.7% 57.9% 42.4% 47.8% 52.8% 57.0% 38.2% 45.4% 54.8% 54.2% 39.5%

45


RE/MAX Holdings, Inc. Adjusted Net Income (Reflects RE/MAX Holdings with 100% ownership of RMCO, LLC)


2. Represents (gains) losses on the sale or disposition of assets as well as (gains) losses on the sublease of a portion of the Company's corporate headquarters office building3. Represents losses incurred on early extinguishment of debt on the Company's 2013 Senior Secured Credit Facility for each period presented4. Non-recurring equity-based compensation includes non-cash compensation expense recorded related to restricted stock units granted in connection with the IPO pursuant to the Company's

2013 Omnibus Incentive Plan during the three and twelve months ended December 31, 2013 as well as the non-cash compensation expense recorded related to unit options granted to certain employees pursuant to RMCO's 2011 Unit Option Plan prior to the IPO

5. Represents the non-cash charge to appropriately record rent expense on a straight-line basis over the term of the lease agreement taking into consideration escalation in monthly cash payments

6. Represents the salaries the Company paid to David Liniger, the Company's Chief Executive Officer, Chairman and Co-Founder, and Gail Liniger, the Company's Vice Chair and Co-Founder. Such salaries have not been paid subsequent to the IPO, and will not be paid in future periods

7. Represents severance related expenses recognized as a result of 2014 restructuring activities, the retirement of the Company's former Chief Executive Officer on December 31, 2014, subsequent organizational changes implemented during 2015, and the retirement of the Company's former President on August 19, 2015

8. Acquisition integration and professional fees expense include fees incurred in connection with the Company's acquisitions of certain assets of HBN, Inc. and Tails, Inc. in October 2013. Costs include legal, accounting and advisory fees as well as consulting fees for integration services

9. Represents costs incurred in connection with the IPO

2015 2014 2013

Consolidated:

Net income (1) $ 51,350 $ 43,979 $ 28,252

Amortization of franchise agreements 13,566 13,566 12,274

Provision for income taxes 12,030 9,948 2,844

Add-backs:

(Gain) loss on sale or disposition of assets and sublease (2) (3,650) (340) 971

Loss on early extinguishment of debt (3) 94 178 1,798

Non-recurring equity based compensation (4) — — 2,748

Non-cash straight-line rent expense (5) 889 812 1,183

Chairman executive compensation (6) — — 2,261

Severance related expenses (7) 1,482 4,617 —

Acquisition integration and professional fees expense (8) 2,750 313 495

Public offering related expenses (9) 1,097 — 6,995

Adjusted pre-tax net income 79,608 73,073 59,821

Less: Provision for income taxes at 38% (30,251) (27,768) (22,732)

Adjusted net income $ 49,357 $ 45,305 $ 37,089

Year Ended December 31,

46


RE/MAX Holdings, Inc. Quarterly Adjusted Net Income (Reflects RE/MAX Holdings with 100% ownership of RMCO, LLC)


2. Represents (gains) losses on the sale or disposition of assets as well as (gains) losses on the sublease of a portion of the Company's corporate headquarters office building3. Represents losses incurred on early extinguishment of debt on the Company's 2013 Senior Secured Credit Facility for each period presented4. Non-recurring equity-based compensation includes non-cash compensation expense recorded related to restricted stock units granted in connection with the IPO pursuant to the Company's 2013 Omnibus Incentive

Plan during the three and twelve months ended December 31, 2013 as well as the non-cash compensation expense recorded related to unit options granted to certain employees pursuant to RMCO's 2011 Unit Option Plan prior to the IPO

5. Represents the non-cash charge to appropriately record rent expense on a straight-line basis over the term of the lease agreement taking into consideration escalation in monthly cash payments6. Represents the salaries the Company paid to David Liniger, the Company's Chief Executive Officer, Chairman and Co-Founder, and Gail Liniger, the Company's Vice Chair and Co-Founder. Such salaries have not

been paid subsequent to the IPO, and will not be paid in future periods7. Represents severance and other related expenses recognized as a result of 2014 restructuring activities, the retirement of the Company's former Chief Executive Officer on December 31, 2014, subsequent

organizational changes implemented during 2015, and the retirement of the Company's former President on August 19, 20158. Acquisition integration and professional fees expense include fees incurred in connection with the Company's acquisitions of certain assets of HBN, Inc. and Tails, Inc. in October 2013. Costs include legal, accounting

and advisory fees as well as consulting fees for integration services9. Represents costs incurred in connection with the IPO

Q4 2015 Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014 Q2 2014 Q1 2014 Q4 2013 Q3 2013 Q2 2013 Q1 2013

Consolidated:

Net income (1) $10,969 $ 15,193 $ 16,058 $ 9,130 $ 7,617 $ 14,055 $ 14,509 $ 7,798 $ 5,600 $ 7,697 $ 9,548 $ 5,407

Amortization of franchise agreements 3,392 3,391 3,392 3,392 3,392 3,392 3,392 3,392 3,376 2,966 2,966 2,966

Provision for income taxes 3,148 3,277 3,457 2,148 1,818 3,116 3,129 1,885 1,111 702 577 454

Add-backs:

(Gain) loss on sale or disposition of assets and sublease (2) (2,877) (66) (664) (43) (63) (52) (47) (178) 1,383 (164) (105) (143)

Loss on early extinguishment of debt (3) — — — 94 — — 178 — — 1,664 — 134

Non-recurring equity based compensation (4) — — — — — — — — 2,047 — 321 380

Non-cash straight-line rent expense (5) 208 201 249 231 198 197 270 147 212 261 371 339

Chairman executive compensation (6) — — — — — — — — 11 750 750 750

Severance related expenses (7) — 443 588 451 4,617 — — — — — — —

Acquisition integration and professional fees expense (8) 2,673 — (106) 183 163 87 45 18 246 27 222 —

Public offering related expenses (9) 1,097 — — — — — — — 1,079 2,436 2,533 947

Adjusted pre-tax net income 18,610 22,439 22,974 15,586 17,742 20,795 21,476 13,062 15,065 16,339 17,183 11,234

Less: Provision for income taxes at 38% (7,072) (8,527) (8,730) (5,923) (6,742) (7,902) (8,161) (4,964) (5,725) (6,209) (6,530) (4,269)

Adjusted net income $11,538 $ 13,912 $ 14,244 $ 9,663 $ 11,000 $ 12,893 $ 13,315 $ 8,098 $ 9,340 $ 10,130 $ 10,653 $ 6,965

47


RE/MAX Holdings, Inc. Free Cash Flow and Unencumbered Cash Generation

(1) $2.55M of tax distributions paid to non-controlling unitholders during the year ended December 31, 2014 were related to RMCO, LLC's 2013 tax year.

2015 2014

Cash flow from operations 74,588$ 63,709$

Less: Capital expenditures (3,546) (2,026)

Free cash flow 71,042 61,683


Less: Tax/Other non-dividend discretionary distributions to RIHI (1)

(7,358) (17,765)

Free cash flow after tax/non-dividend discretionary distributions to RIHI 63,684 43,918


Less: Quarterly debt principal payments (2,080) (2,189)

Less: Annual excess cash flow (ECF) payment (7,320) (14,627)

Unencumbered cash generated 54,284$ 27,102$

Summary

Cash flow from operations $ 74,588 $ 63,709



Unencumbered cash generated 54,284 27,102

Adjusted EBITDA 91,401$ 83,805$

FCF as % of Adjusted EBITDA 77.7% 73.6%

Free cash flow less distributions to RIHI as % of Adjusted EBITDA 69.7% 52.4%

Unencumbered cash generated as % of Adjusted EBITDA 59.4% 32.3%

Year Ended

48

(Unaudited)

RE/MAX Holdings, Inc. Agent Count

(1) As of each quarter end in 2015 and 2014, and as of December 31, 2013, U.S. Company-owned Regions include agents in the Southwest and Central Atlantic regions which converted from

Independent Regions to Company-owned regions in connection with the acquisitions of the business assets of HBN and Tails on October 7, 2013. As of the acquisition date, the Southwest and

Central Atlantic regions had 5,918 agents.

(2) As of December 31, 2015, Independent Regions outside of the U.S. and Canada include 530 agents in the Caribbean and Central America regions which converted from Company-owned

Regions to Independent Regions in connection with the regional franchising agreements the company entered into with new independent owners of the Caribbean and Central America regions on

January 1, 2015.

December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, December 31,

2015 2015 2015 2015 2014 2014 2014 2014 2013

Agent Count:

U.S.

Company-owned regions 37,250 37,146 36,545 35,845 35,299 35,377 34,686 33,911 33,416

Independent regions 22,668 22,633 22,459 22,100 21,806 21,804 21,576 21,375 21,075

U.S. Total 59,918 59,779 59,004 57,945 57,105 57,181 56,262 55,286 54,491

Canada

Company-owned regions 6,553 6,512 6,440 6,327 6,261 6,258 6,212 6,117 6,084

Independent regions 13,115 12,994 12,992 12,834 12,779 12,849 12,818 12,852 12,838

Canada Total 19,668 19,506 19,432 19,161 19,040 19,107 19,030 18,969 18,922

Outside U.S. and Canada

Company-owned regions (1)

— - - - 328 312 301 323 338

Independent regions (1)

25,240 24,206 23,467 22,849 21,537 21,047 20,496 19,807 19,477

Outside U.S. and Canada Total 25,240 24,206 23,467 22,849 21,865 21,359 20,797 20,130 19,815

Total 104,826 103,491 101,903 99,955 98,010 97,647 96,089 94,385 93,228

Net change in agent count compared to the

prior period 1,335 1,588 1,948 1,945 363 1,558 1,704 1,157 1,157

As of

49

Non-GAAP Financial Measures

The Securities and Exchange Commission (“SEC”) has adopted rules to regulate the use in filings with the SEC and in public disclosures of financial measures that are not in accordance with

U.S. generally accepted accounting principles (“U.S. GAAP”), such as Adjusted EBITDA and Adjusted net income and the ratios related thereto. These measures are derived on the basis of

methodologies other than in accordance with U.S. GAAP.

RE/MAX defines Adjusted EBITDA as EBITDA (consolidated net income before depreciation and amortization, interest expense, net and the provision for income taxes, each of which is

presented in the Company’s consolidated financial statements), adjusted for the impact of the following items, as applicable to each period presented, that the Company does not consider

representative of the Company’s ongoing operating performance: (gains) losses on sale or disposition of assets and sublease, loss on early extinguishment of debt, non-recurring equity

based compensation expense, non-cash straight-line rent expense, salaries paid to David and Gail Liniger, the Company’s Chief Executive Officer, Chairman and Co-Founder, and Vice Chair

and Co-Founder, respectively, that the Company discontinued subsequent to the completion of the IPO, non-recurring severance and other related expenses recognized as a result of a 2014

restructuring plan, the retirement of the Company’s former Chief Executive Officer on December 31, 2014, subsequent organizational changes implemented in 2015, and the retirement of the

Company’s former President on August 19, 2015, acquisition integration and professional fees expense and professional fees and certain non-recurring expenses incurred in connection with

the IPO.

RE/MAX defines Adjusted net income as net income, excluding the impact of amortization expense related to the Company’s franchise agreements, the GAAP provision for income taxes and

adjusted for the impact of the following items, as applicable to each period presented: (gains) losses on sale or disposition of assets and sublease, loss on early extinguishment of debt, non-

recurring equity based compensation expense, non-cash straight-line rent expense, salaries paid to David and Gail Liniger that the Company discontinued subsequent to the completion of the

IPO, non-recurring severance and other related expenses recognized as a result of a 2014 restructuring plan, the retirement of the Company’s former Chief Executive Officer on December 31,

2014, subsequent organizational changes implemented in 2015, and the retirement of the Company’s former President on August 19, 2015, acquisition integration and professional fees

expense and professional fees and certain non-recurring expenses incurred in connection with the IPO, but reflects income taxes and is presented as if all outstanding common units of

RMCO were exchanged for or converted into shares of the Company’s Class A common stock on a one-for-one basis. Assuming the full exchange and conversion, all income of RMCO is

treated as if it were allocated to RE/MAX, and the adjusted provision for income taxes represents an estimate of income tax expense at an effective rate reflecting assumed federal, state, and

local income tax rates. The estimated effective tax rate for all periods presented was 38%.

Because Adjusted EBITDA and Adjusted net income omit certain non-cash items and other non-recurring cash charges or other items, the Company believes that these metrics are less

susceptible to variances that affect the Company’s operating performance resulting from depreciation, amortization and other non-cash and non-recurring cash charges or other items and is

more reflective of other factors that affect the Company’s operating performance. The Company presents Adjusted EBITDA and Adjusted net income because it believes the metrics are useful

as supplemental measures in evaluating the performance of the Company’s operating businesses and provide greater transparency into the Company’s results of operations. The Company’s

management uses Adjusted EBITDA as a factor in evaluating the performance of their business.

Adjusted EBITDA and Adjusted net income have limitations as analytical tools, and should not be considered in isolation or as a substitute for analyzing results RE/MAX reported under U.S.

GAAP. Some of these limitations are:

• these measures do not reflect changes in, or cash requirements for, the Company’s working capital needs;

• these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often require replacement in the future, and these measures do not reflect

any cash requirements for such replacements;

• Adjusted EBITDA does not reflect the Company’s interest expense, or the cash requirements necessary to service interest or principal payments on the Company’s debt;

• Adjusted EBITDA does not reflect the Company’s income tax expense or the cash requirements to pay the Company’s taxes;

• Adjusted EBITDA and Adjusted Net Income do not reflect the cash requirements to pay dividends to shareholders of the Company’s Class A common stock and tax and other cash

distributions to non-controlling unitholders;

• Adjusted EBITDA and Adjusted net income do not reflect the cash requirements to pay RIHI, Inc. and Oberndorf Investments LLC pursuant to the tax receivable agreements entered into

at the time of the IPO; and

• other companies may calculate these measures differently, so they may not be comparable.

Investor Presentation€¦ · 20.03.2016 · Data is full-year or as of year-end 2014, as...

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