DENVER, Feb. 23, 2017 /PRNewswire/ --

Full-Year 2016 Highlights
(Compared to full-year 2015 unless otherwise noted)

• Total agent count grew by 6.8% to 111,915 agents
• U.S. and Canada combined agent count increased 3.5% to 82,402 agents
• Revenue of $176.3 million, down 0.3%; revenue would have increased 6.9% after adjusting for the sale of the Company-owned brokerage offices
• Net income attributable to RE/MAX Holdings, Inc. of $22.7 million and earnings per diluted share (GAAP EPS) of $1.29
• Adjusted EBITDA¹ of $94.6 million, Adjusted EBITDA margin¹ of 53.7% and Adjusted earnings per diluted share (Adjusted EPS¹) of $1.74
• Launched the Motto Mortgage franchise in October
• Acquired the master franchise rights to six independent regions in the U.S.
• Refinanced existing credit facility in December, enhancing financial flexibility

Fourth Quarter 2016 Highlights
(Compared to fourth quarter 2015 unless otherwise noted)

• Revenue of $44.4 million, up 2.7%; revenue increased 9.1% after adjusting for the sale of the Company-owned brokerage offices
• Net income attributable to RE/MAX Holdings, Inc. of $3.9 million and GAAP EPS of $0.22
• Adjusted EBITDA of $22.4 million, Adjusted EBITDA margin of 50.4% and Adjusted EPS of $0.41
• Announced a 20% increase to the quarterly dividend on February 22, 2017

RE/MAX Holdings, Inc. (the "Company" or "RE/MAX Holdings") (NYSE: RMAX), parent company of RE/MAX, LLC ("RE/MAX"), one of the world's leading franchisors of real estate brokerage services, and Motto Franchising, LLC ("Motto"), an innovative mortgage brokerage franchise, today announced operating results for the fourth quarter and full year ended December 31, 2016.

"RE/MAX Holdings had a landmark 2016 as we continue to successfully execute on all aspects of our strategy," stated Dave Liniger, Chief Executive Officer and Co-Founder. "This past year, we achieved our largest annual agent gain in ten years, acquired six independent regions, launched Motto Mortgage and sold our remaining Company-owned brokerages. Our strong performance across our business delivered enhanced value to our shareholders and allowed us to increase our quarterly dividend by 20%."

Liniger continued, "We began 2017 with momentum. Our new brand, Motto Mortgage, is off to a successful start with the first franchises sold and the inaugural class of brokers trained. Looking ahead, many factors are working to support our continued momentum, including a gradually improving housing market, the potential of Motto and the benefit of integrating the regional acquisitions from last year—all of which should continue to strengthen the RE/MAX network and help us create value for shareholders."

Fourth Quarter 2016 Operating Results

Agent Count

The following table compares agent count as of December 31, 2016 and 2015:

Revenue

RE/MAX generated total revenue of $44.4 million for the fourth quarter of 2016, a $1.1 million or 2.7% increase compared to $43.3 million in the fourth quarter of 2015, primarily due to agent count growth in the U.S. and Canada, rate increases in the Company-owned regions and acquisitions of previously independent regions, partially offset by the sale of the Company-owned brokerages. After adjusting for the sale, revenue increased $3.7 million or 9.1% over the prior-year quarter.

Recurring revenue streams, which include continuing franchise fees and annual dues, increased $2.9 million or 10.7% over the fourth quarter of 2015 and accounted for 67.3% of revenue in the fourth quarter of 2016 compared to 62.4% in the prior-year period.

Operating Expenses

Total operating expenses were $29.9 million for the fourth quarter of 2016, an increase of $3.5 million or 13.3% compared to the fourth quarter of 2015. Operating expenses in 2015 benefited from a $2.8 million gain related to the sale of certain Company-owned brokerages in December 2015. Excluding the gain on sale, total operating expenses increased in the fourth quarter of 2016 compared to the fourth quarter of 2015 as a result of additional amortization expense from the acquired independent regions, which more than offset lower selling, operating and administrative expenses.

Selling, operating and administrative expenses were $25.2 million in the fourth quarter of 2016, down $0.2 million or 0.9% from the fourth quarter of 2015 and represented 56.8% of revenue compared to 58.8% in the prior-year period. The reduction in operating expenses was primarily due to the sale of the Company-owned brokerages, which was partially offset by an increase in expenses related to the initial investment in Motto, the independent region acquisitions and the debt refinancing.

Net Income and GAAP EPS

Net income attributable to RE/MAX Holdings was $3.9 million for the fourth quarter of 2016, a decrease of $0.1 million or 3.0% over the prior-year quarter. Net income decreased primarily due to the sale of the Company-owned brokerages and increased operating expenses, largely related to expenses from the initial investment in Motto, the independent region acquisitions and the debt refinancing. The decrease in net income was partially offset by agent-count growth as well as comparatively lower net income attributable to the non-controlling interest in RMCO, LLC ("RMCO") as a result of a change in ownership percentages in the fourth quarter of 2015. Reported basic and diluted EPS attributable to RE/MAX Holdings were both $0.22 per share for the fourth quarter of 2016.

Adjusted EBITDA and Adjusted EPS

Adjusted EBITDA was $22.4 million for the fourth quarter of 2016, an increase of $0.5 million or 2.3% from the prior-year quarter. Adjusted EBITDA increased primarily due to agent count growth and contributions from the acquired independent regions, partially offset by the sale of the Company-owned brokerages and the initial investment in Motto Mortgage. Adjusted EBITDA margin was 50.4% in the fourth quarter of 2016 compared to 50.6% in the fourth quarter of 2015.

Adjusted basic and diluted EPS were both $0.41 for the fourth quarter of 2016. The ownership structure used to calculate Adjusted basic and diluted EPS for the quarter ended December 31, 2016 assumes RE/MAX owned 100% of RMCO. The weighted average ownership RE/MAX had in RMCO was 58.4% for the three months ended December 31, 2016.

Balance Sheet

As of December 31, 2016, the Company had a cash balance of $57.6 million, a decrease of $52.6 million from December 31, 2015. On December 15, 2016, the Company amended and restated its credit agreement, both expanding its size and extending the term as well as enhancing overall financial flexibility. The Company used proceeds from the refinancing to repay existing indebtedness and fund certain of the independent region acquisitions. As of December 31, 2016, RE/MAX had $230.8 million of term loans outstanding, net of unamortized debt discount and issuance costs, up from $200.4 million as of December 31, 2015.

"Refinancing our credit facility allowed us to take advantage of favorable market conditions," stated Karri Callahan, Chief Financial Officer of RE/MAX. "The additional financial flexibility we obtained combined with our strong cash flow generation permits us to continue to invest in our business, pursue attractive acquisition opportunities and return capital to shareholders while still maintaining a healthy balance sheet."

Dividend

On February 22, 2017, the Company's Board of Directors approved a quarterly dividend of $0.18 per share. The quarterly dividend is payable on March 22, 2017, to shareholders of record at the close of business on March 8, 2017.

Outlook

The Company's first-quarter and full-year 2017 Outlook assumes no further currency movements, acquisitions or divestitures.

For the first quarter of 2017, RE/MAX expects:

• Agent count to increase 5.5% to 6.5% over first quarter 2016;
• Revenue in a range of $47.0 million to $48.5 million;
• Selling, operating and administrative expenses in a range of 56.0% to 57.5% of first quarter 2017 revenue;
  • Higher Selling, operating and administrative expenses as a percentage of revenue in the first quarter are expected due to expenses associated with the Company's annual convention in March, seasonality of revenue, and, in 2017, the investment in Motto; and
• Adjusted EBITDA margin in a range of 45.0% to 46.0% of first quarter 2017 revenue.

For the full-year 2017, RE/MAX Holdings expects:

• Agent count to increase 4.0% to 5.0% over 2016;
• Revenue in a range of $194.0 million to $197.0 million;
• Selling, operating and administrative expenses in a range of 48.0% to 49.5% of 2017 revenue; and
• Adjusted EBITDA margin in a range of 52.5% to 54.0% of 2017 revenue.

The effective U.S. GAAP tax rate attributable to RE/MAX is estimated to be between 23% and 25% in 2017.

The Company is changing the way it calculates certain non-GAAP measures beginning in 2017. The above Outlook reflects these changes. For additional information on the changes, please see the Company's fourth quarter 2016 earnings presentation available on the Investor Relations section of the Company's website at investors.remax.com.

Webcast and Conference Call

The Company will host a conference call for interested parties on Friday, February 24, 2016, beginning at 8:30 a.m. Eastern Time. Interested parties are able to access the conference call using the following dial-in numbers:

Interested parties are also able to access a live webcast through the Investor Relations section of the Company's website at investors.remax.com. Please dial-in or join the webcast 10 minutes before the start of the conference call. An archive of the webcast will be available on the Company's website for a limited time as well. For the RE/MAX Quarterly Update Q4 2016 infographic, visit http://rem.ax/2cYFT50.

Basis of Presentation

Unless otherwise noted, the results presented in this press release are consolidated and exclude adjustments attributable to the non-controlling interest.

About the RE/MAX Network

RE/MAX was founded in 1973 by David and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. Over 110,000 agents provide RE/MAX a global reach of over 100 countries and territories. Nobody sells more real estate than RE/MAX as measured by total residential transaction sides.

RE/MAX, LLC, one of the world's leading franchisors of real estate brokerage services, and Motto Franchising, LLC, an innovative mortgage brokerage franchise, are subsidiaries of RMCO, which is controlled and managed by RE/MAX Holdings, Inc. (NYSE: RMAX).

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "believe," "intend," "expect," "estimate," "plan," "outlook," "project" and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding the Company's outlook for the first quarter and full fiscal year, including expectations regarding agent count, revenue, SO&A (Selling, operating and administrative) expenses, and Adjusted EBITDA margins for its first quarter of 2017 and full fiscal year; the Company's optimism for agent recruitment, investment, acquisitions (including the integration of regional acquisitions), Motto Mortgage, and improving housing conditions; the expected benefits related to refinancing the Company's credit facility; the factors working to continue the Company's momentum; the Company's channels for long-term organic growth; the absences of extraordinary items or unanticipated events in future time periods; currency exchange rates; the productivity of the agent network; the focus on growing the highest quality real estate network in the world; and consistent execution of the Company's plan and continued success; as well as other statements regarding the Company's strategic and operational plans and business models. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Such risks and uncertainties include, without limitation, (1) changes in business and economic activity in general, (2) changes in the real estate market, including changes due to interest rates and availability of financing, (3) the Company's ability to attract and retain quality franchisees, (4) the Company's franchisees' ability to recruit and retain real estate agents and mortgage loan originators, (5) changes in laws and regulations that may affect the Company's business or the real estate market, (6) failure to maintain, protect and enhance the RE/MAX and Motto Mortgage brands, (7) fluctuations in foreign currency exchange rates, as well as those risks and uncertainties described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company's website at www.remax.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.

Non-GAAP Financial Measures

The SEC has adopted rules to regulate the use in filings with the SEC and in public disclosures of financial measures not in accordance with U.S. GAAP, such as Adjusted EBITDA and the ratios related thereto, Adjusted net income, Adjusted basic and diluted earnings per share (Adjusted EPS) and Free cash flow. These measures are derived on the basis of methodologies other than in accordance with U.S. GAAP.

The Company defines Adjusted EBITDA as EBITDA (consolidated net income before depreciation and amortization, interest expense, interest income and the provision for income taxes, each of which is presented in the audited consolidated financial statements included in the Annual Report on Form 10-K), adjusted for the impact of the following items that the Company does not consider representative of its ongoing operating performance: loss or gain on sale or disposition of assets and sublease, loss on early extinguishment of debt, non-cash straight-line rent expense, professional fees and certain expenses incurred in connection with the IPO and subsequent secondary offering, acquisition related expenses and severance related expenses. During the third quarter of 2014, the Company revised its definition of Adjusted EBITDA to eliminate the adjustment of equity-based compensation expense incurred for equity awards granted since the IPO, and Adjusted EBITDA in prior periods was revised to reflect this change for consistency of presentation. During the fourth quarter of 2014, the Company revised its definition of Adjusted EBITDA to include an adjustment for severance related charges incurred during or after such quarter.

Because Adjusted EBITDA omits certain non-cash items and other non-recurring cash charges or other items, the Company believes that it is less susceptible to variances that affect its 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 its operating performance. The Company presents Adjusted EBITDA because the Company believes it is useful as a supplemental measure in evaluating the performance of the operating businesses and provides greater transparency into the Company's results of operations. The Company's management uses Adjusted EBITDA as a factor in evaluating the performance of the business.

Adjusted EBITDA has limitations as an analytical tool, and you should not consider Adjusted EBITDA either in isolation or as a substitute for analyzing the Company's results as reported under U.S. GAAP. Some of these limitations are:

• this measure does not reflect changes in, or cash requirements for, the Company's working capital needs;
• this measure does not reflect the Company's interest expense, or the cash requirements necessary to service interest or principal payments on its debt;
• this measure does not reflect the Company's income tax expense or the cash requirements to pay its taxes;
• this measure does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;
• this measure does not reflect the cash requirements to pay dividends to stockholders of the Company's Class A common stock and tax and other cash distributions to its non-controlling unitholders;
• this measure does not reflect the cash requirements to pay RIHI Inc. and Oberndorf pursuant to the tax receivable agreements,
• 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; and
• other companies may calculate this measure differently so they may not be comparable.

Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of Revenue.

Adjusted net income is defined as net income plus primarily non-cash items and other items that management does not consider to be useful in assessing the Company's operating performance (e.g., amortization of franchise agreements, gain on sale or disposition of assets and sub-lease, loss on debt extinguishment, non-cash straight-line rent expense, public offering related expenses, severance-related expenses, and acquisition-related costs).

Adjusted basic and diluted earnings per share (Adjusted EPS) are defined as Adjusted net income (as defined above) divided by pro forma basic and diluted weighted average shares, as applicable.

Free cash flow is defined as operating cash flow minus capital expenditures. Free cash flow after tax and non-dividend discretionary distributions to RIHI is defined as free cash flow minus tax and other discretionary non-dividend distributions paid to RIHI to enable RIHI to satisfy its income tax obligations. Unencumbered cash generated is defined as free cash flow after tax and non-dividend discretionary distributions to RIHI minus quarterly debt principal payments minus annual excess cash flow payment on debt, as applicable.

The Company's Adjusted EBITDA margin guidance does not include certain charges and costs. The adjustments to EBITDA margin in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA margin in prior quarters, such as gain on sale or disposition of assets and sublease and acquisition related expenses, among others. The exclusion of these charges and costs in future periods will have a significant impact on the Company's Adjusted EBITDA margin. The Company is not able to provide a reconciliation of the Company's non-GAAP financial guidance to the corresponding U.S. GAAP measures without unreasonable effort because of the uncertainty and variability of the nature and amount of these future charges and costs.

CONTACT: Investor Contact, Andy Schulz, (303) 796-3287, aschulz@remax.com; Media Contact, Jason Lindaman, (303) 796-3546, jlindaman@remax.com