RE/MAX Holdings, Inc. (NYSE:RMAX) Q4 2018 Earnings Conference Call - Final Transcript

Feb 22, 2019 • 08:30 am ET


RE/MAX Holdings, Inc. (NYSE:RMAX) Q4 2018 Earnings Conference Call - Final Transcript


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Good morning. And welcome to the RE/MAX Holdings Fourth Quarter 2018 Earnings Conference Call and Webcast. My name is James, and I will be facilitating the audio portion of today's call.

At this time, I'd like to turn the call over to Andy Schulz, Vice President of Investor Relations. Mr. Schulz?

Andy Schulz

Thank you, operator. Good morning, everyone. And welcome to RE/MAX Holdings fourth quarter and full year 2018 earnings conference call. Please visit the Investor Relations page of for all earnings related materials and to access the live webcast and the replay of the call today. If you are participating through the webcast, please note that you will need to advance the slides as we move through the presentation.

Turning to slide two. Our prepared remarks and answers to your questions on today's call may contain forward-looking statements. Forward-looking statements include those related to agent count, franchise sales, financial measures and guidance, brand expansion, competition, technology, housing market conditions, dividends, strategic and operational plans, and business models.

Forward-looking statements represent management's current estimates. RE/MAX assumes no obligation to update any forward-looking statements in the future. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ materially from those projected in forward-looking statements. These are discussed in our fourth quarter and full year 2018 financial results press release and other SEC filings.

Also, we will refer to certain non-GAAP measures on today's call. Please see the definitions and reconciliations of non-GAAP measures contained in our most recent quarterly financial results press release, which is available on our website.

Joining me on our call today are Adam Contos, our Chief Executive Officer; and Karri Callahan, our Chief Financial Officer. Ward Morrison, President of Motto Mortgage will join us for the Q&A.

With that, I'd like to turn the call over to RE/MAX Holdings' CEO, Adam Contos. Adam?

Adam Contos

Thank you, Andy, and thanks to everyone for joining our call today. Looking at slide three. We are pleased with our fourth quarter performance, as our differentiated business model continue to grow in a correcting market. Highlights of the quarter included, revenue increased almost 5% to $50.8 million, recurring revenue streams, which consist of continuing franchise fees and annual dues increased almost 4% and represented over 67% of total revenue during the quarter. Adjusted EBITDA was $23.3 million, down compared to Q4 of last year, due to investments in our business and higher severance costs. And adjusted EPS was $0.49 per share, up 9%.

For full year 2018, we increased agent count, revenue, adjusted EBITDA and free cash flow, while continuing to invest meaningfully in future organic growth opportunities. We achieved all of this, despite US existing home sales decreasing more than 3% for the year. These results illustrate how our differentiated business model tied primarily to recurring fees based on RE/MAX agent count and Motto office count is more insulated and resilient to fluctuations in transaction volumes. In 2018, total agent count increased over 4% to