UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2022.
OR
☐
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to
Commission file number: 001-36101
RE/MAX Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware
80-0937145
(State or other jurisdiction ofincorporation or organization)
(I.R.S. EmployerIdentification Number)
5075 South Syracuse StreetDenver, Colorado
80237
(Address of principal executive offices)
(Zip Code)
(303) 770-5531
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per share
RMAX
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Emerging growth company
Non-accelerated filer
Smaller reporting company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
On July 29, 2022, there were 18,770,797 outstanding shares of the registrant’s Class A common stock (including unvested restricted stock), $0.0001 par value per share, and 1 outstanding share of Class B common stock, $0.0001 par value per share.
Table of Contents
TABLE OF CONTENTS
Page No.
PART I. – FINANCIAL INFORMATION
Item 1.
Financial Statements
3
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Income
4
Condensed Consolidated Statements of Comprehensive Income
5
Condensed Consolidated Statements of Stockholders’ Equity
6
Condensed Consolidated Statements of Cash Flows
7
Notes to Unaudited Condensed Consolidated Financial Statements
8
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
24
Item 3.
Quantitative and Qualitative Disclosures About Market Risks
38
Item 4.
Controls and Procedures
PART II. – OTHER INFORMATION
Legal Proceedings
39
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
40
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
41
SIGNATURES
42
2
Item 1. Financial Statements
RE/MAX HOLDINGS, INC.
(In thousands, except share and per share amounts)
(Unaudited)
June 30,
December 31,
2022
2021
Assets
Current assets:
Cash and cash equivalents
$
118,132
126,270
Restricted cash
35,677
32,129
Accounts and notes receivable, current portion, net of allowances
36,198
34,611
Income taxes receivable
2,421
1,754
Other current assets
17,217
16,010
Total current assets
209,645
210,774
Property and equipment, net of accumulated depreciation
10,467
12,686
Operating lease right of use assets
30,274
36,523
Franchise agreements, net
131,983
143,832
Other intangible assets, net
32,387
32,530
Goodwill
268,054
269,115
Deferred tax assets, net
51,418
51,314
Income taxes receivable, net of current portion
754
1,803
Other assets, net of current portion
11,711
17,556
Total assets
746,693
776,133
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
6,019
5,189
Accrued liabilities
76,887
96,768
Income taxes payable
2,499
2,546
Deferred revenue
26,431
27,178
Current portion of debt
4,600
Current portion of payable pursuant to tax receivable agreements
3,672
3,610
Operating lease liabilities
6,672
6,328
Total current liabilities
126,780
146,219
Debt, net of current portion
445,586
447,459
Payable pursuant to tax receivable agreements, net of current portion
26,856
26,893
Deferred tax liabilities, net
14,378
14,699
Deferred revenue, net of current portion
18,569
18,929
Operating lease liabilities, net of current portion
41,621
45,948
Other liabilities, net of current portion
9,362
6,919
Total liabilities
683,152
707,066
Commitments and contingencies
Stockholders' equity:
Class A common stock, par value $.0001 per share, 180,000,000 shares authorized; 18,753,835 and 18,806,194 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
Class B common stock, par value $.0001 per share, 1,000 shares authorized; 1 share issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
—
Additional paid-in capital
526,122
515,443
Accumulated deficit
(21,958)
(7,821)
Accumulated other comprehensive income, net of tax
309
650
Total stockholders' equity attributable to RE/MAX Holdings, Inc.
504,475
508,274
Non-controlling interest
(440,934)
(439,207)
Total stockholders' equity
63,541
69,067
Total liabilities and stockholders' equity
See accompanying notes to unaudited condensed consolidated financial statements.
Three Months Ended
Six Months Ended
Revenue:
Continuing franchise fees
34,128
26,955
67,627
52,329
Annual dues
9,016
8,869
17,936
17,541
Broker fees
19,317
17,453
34,402
29,406
Marketing Funds fees
22,909
18,042
45,760
36,187
Franchise sales and other revenue
6,802
5,927
17,451
14,078
Total revenue
92,172
77,246
183,176
149,541
Operating expenses:
Selling, operating and administrative expenses
40,781
38,816
88,612
82,492
Marketing Funds expenses
Depreciation and amortization
9,113
6,846
18,098
13,654
Settlement and impairment charges
2,460
6,195
Total operating expenses
75,263
63,704
158,665
132,333
Operating income (loss)
16,909
13,542
24,511
17,208
Other expenses, net:
Interest expense
(4,032)
(2,124)
(7,683)
(4,222)
Interest income
159
19
178
182
Foreign currency transaction gains (losses)
(160)
(363)
20
(383)
Total other expenses, net
(4,033)
(2,468)
(7,485)
(4,423)
Income (loss) before provision for income taxes
12,876
11,074
17,026
12,785
Provision for income taxes
(2,601)
(714)
(3,806)
(662)
Net income (loss)
10,275
10,360
13,220
12,123
Less: net income (loss) attributable to non-controlling interest
4,446
5,099
5,940
5,699
Net income (loss) attributable to RE/MAX Holdings, Inc.
5,829
5,261
7,280
6,424
Net income (loss) attributable to RE/MAX Holdings, Inc. per shareof Class A common stock
Basic
0.31
0.28
0.38
0.35
Diluted
0.30
0.34
Weighted average shares of Class A common stock outstanding
18,997,397
18,719,477
18,965,911
18,608,005
19,153,349
18,941,343
19,182,477
18,904,036
Cash dividends declared per share of Class A common stock
0.23
0.46
(In thousands)
Change in cumulative translation adjustment
(1,067)
207
(585)
286
Other comprehensive income (loss), net of tax
Comprehensive income (loss)
9,208
10,567
12,635
12,409
Less: Comprehensive income (loss) attributable to non-controlling interest
3,962
5,196
5,696
5,834
Comprehensive income (loss) attributable to RE/MAX Holdings, Inc., net of tax
5,246
5,371
6,939
6,575
(In thousands, except share amounts)
Retained
Accumulated other
Class A
Class B
Additional
earnings
comprehensive
Non-
Total
common stock
paid-in
(accumulated
income (loss),
controlling
stockholders'
Shares
Amount
capital
deficit)
net of tax
interest
equity
Balances, January 1, 2022
18,806,194
1
1,451
1,494
2,945
Distributions to non-controlling unitholders
(2,894)
Equity-based compensation expense and dividend equivalents
587,283
12,215
(685)
11,530
Dividends to Class A common stockholders
(4,439)
Repurchase and retirement of common shares
(45,885)
(1,314)
Change in accumulated other comprehensive income (loss)
242
240
482
Payroll taxes related to net settled restricted stock units
(175,048)
(5,586)
Balances, March 31, 2022
19,172,544
522,072
(12,808)
892
(440,367)
69,791
(4,529)
39,002
4,123
(7)
4,116
(4,420)
(441,311)
(10,552)
(583)
(484)
(16,400)
(73)
Balances, June 30, 2022
18,753,835
Balances, January 1, 2021
18,390,691
491,422
25,628
612
(416,007)
101,657
1,163
600
1,763
(2,889)
459,330
12,679
(472)
12,207
(4,326)
79
(130,773)
(5,291)
Balances, March 31, 2021
18,719,248
498,810
21,993
653
(418,258)
103,200
(4,110)
640
4,615
(4,345)
110
97
(223)
Other
12
Balances, June 30, 2021
18,719,665
503,430
763
(417,172)
109,932
Cash flows from operating activities:
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Impairment charge - leased assets
3,735
Non-cash loss on lease termination
1,175
Bad debt expense
396
261
Equity-based compensation expense
10,172
18,307
Deferred income tax expense (benefit)
1,020
335
Fair value adjustments to contingent consideration
1,995
10
Non-cash lease expense (benefit)
(867)
(635)
Other, net
691
177
Changes in operating assets and liabilities
(10,716)
(13,893)
Net cash provided by operating activities
38,919
30,339
Cash flows from investing activities:
Purchases of property, equipment and capitalization of software
(6,144)
(7,551)
Net cash used in investing activities
Cash flows from financing activities:
Payments on debt
(2,300)
(1,253)
Distributions paid to non-controlling unitholders
(7,423)
(6,999)
Dividends and dividend equivalents paid to Class A common stockholders
(9,551)
(9,143)
Payments related to tax withholding for share-based compensation
(5,659)
(5,298)
Common shares repurchased
(11,866)
Payment of contingent consideration
(120)
Net cash used in financing activities
(36,919)
(22,693)
Effect of exchange rate changes on cash
(446)
355
Net (decrease) increase in cash, cash equivalents and restricted cash
(4,590)
450
Cash, cash equivalents and restricted cash, beginning of period
158,399
121,227
Cash, cash equivalents and restricted cash, end of period
153,809
121,677
Supplemental disclosures of cash flow information:
Cash paid for interest
7,236
3,955
Net cash paid for income taxes
3,109
9,792
Cash paid for lease termination
1,285
1. Business and Organization
RE/MAX Holdings, Inc. (“Holdings”) and its consolidated subsidiaries, including RMCO, LLC (“RMCO”), are referred to hereinafter as the “Company.”
The Company is one of the world’s leading franchisors 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 and Motto are 100% franchised—the Company does not own any of the brokerages that operate under these brands. On July 21, 2021, the Company acquired the operating companies of the North America regions of RE/MAX INTEGRA (“INTEGRA”) converting INTEGRA’s formerly Independent Regions into Company-Owned Regions.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying Condensed Consolidated Balance Sheet at December 31, 2021, which was derived from the audited consolidated financial statements at that date, and the unaudited interim condensed consolidated financial statements and notes thereto have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying condensed consolidated financial statements are presented on a consolidated basis and 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 condensed consolidated financial statements reflect all normal and recurring adjustments necessary to present fairly the Company’s financial position as of June 30, 2022 and the results of its operations and comprehensive income, cash flows and changes in its stockholders’ equity for the three and six months ended June 30, 2022 and 2021. Interim results may not be indicative of full-year performance.
These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements within the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 Annual Report on Form 10-K”). Please refer to that document for a fuller discussion of all significant accounting policies.
Use of Estimates
The preparation of the accompanying condensed consolidated 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 condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Segment Reporting
The Company operates under the following four operating segments: Real Estate, Mortgage, Marketing Funds and Other. Due to quantitative insignificance, the “Other” operating segment is comprised of operations which do not meet the criteria of a reportable segment.
Revenue Recognition
The Company generates most of its revenue from contracts with customers. The Company’s major streams of revenue are:
Deferred Revenue and Commissions Related to Franchise Sales
Deferred revenue is primarily driven by Franchise sales and Annual dues, as discussed above, and is included in “Deferred revenue” and “Deferred revenue, net of current portion” on the Consolidated Balance Sheets. Other deferred revenue is primarily related to event-based revenue. The activity consists of the following (in thousands):
Balance at
Revenue
January 1, 2022
New billings
recognized (a)
June 30, 2022
Franchise sales
26,043
3,884
(4,321)
25,606
15,020
18,557
(17,936)
15,641
5,044
12,149
(13,440)
3,753
46,107
34,590
(35,697)
45,000
(a)
Revenue recognized related to the beginning balance for Franchise sales and Annual dues were $4.1 million and $11.3 million, respectively, for the six months ended June 30, 2022.
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 Condensed Consolidated Balance Sheets) consist of the following (in thousands):
Additions to
contract cost
Expense
for new activity
recognized
Capitalized contract costs for commissions
4,010
913
(1,026)
3,897
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):
Remainder of 2022
2023
2024
2025
2026
2027
Thereafter
12,199
3,442
3,683
6,385
5,205
3,952
2,556
1,277
2,548
15,882
9,827
41,247
9
Disaggregated Revenue
In the following table, segment revenue is disaggregated by Company-Owned or Independent Regions, where applicable, by segment and by geographical area (in thousands):
U.S. Company-Owned Regions (a)
42,733
37,613
81,887
70,159
U.S. Independent Regions (a)
1,877
3,730
3,578
7,018
Canada Company-Owned Regions (a)
11,434
4,800
21,909
8,354
Canada Independent Regions (a)
715
2,364
1,418
4,569
Global
3,193
2,854
6,285
5,495
Fee revenue (b)
59,952
51,361
115,077
95,595
Franchise sales and other revenue (c)
5,824
4,930
15,436
11,850
Total Real Estate
65,776
56,291
130,513
107,445
U.S. (a)
17,641
16,359
35,200
32,541
Canada (a)
4,988
1,424
10,001
3,161
280
259
559
485
Total Marketing Funds
Mortgage (d)
3,115
2,410
6,143
4,733
Other (d)
372
503
760
1,176
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 Condensed Consolidated Balance Sheets to the amounts presented in the Condensed Consolidated Statements of Cash Flows (in thousands):
Total cash, cash equivalents and restricted cash
Services Provided to the Marketing Funds by Real Estate
Real Estate charges the Marketing Funds for various services it performs. These services primarily comprise (a) building and maintaining agent marketing technology, including customer relationship management tools, the www.remax.com website, agent, office and team websites, and mobile apps, (b) dedicated employees focused on marketing campaigns, and (c) various administrative services including customer support of technology, accounting and legal. Because these costs are ultimately paid by the Marketing Funds, they do not impact the net income (loss) of Holdings as the Marketing Funds have no reported net income (loss).
Costs charged from Real Estate to the Marketing Funds are as follows (in thousands):
Technology − operating
3,519
3,233
7,743
6,833
Technology − capital
530
224
1,161
404
Marketing staff and administrative services
1,140
1,189
2,681
2,307
4,646
11,585
9,544
Accounts and Notes Receivable
As of June 30, 2022, and December 31, 2021, the Company had allowances against accounts and notes receivable of $9.1 million and $9.6 million, respectively.
Property and Equipment
As of June 30, 2022, and December 31, 2021, the Company had accumulated depreciation of $10.6 million and $9.4 million, respectively.
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. All the Company’s material leases are classified as operating leases. The Company acts as the lessor for sublease agreements on its corporate headquarters, consisting solely of operating leases.
During the first quarter of 2022, the Company subleased a portion of its corporate headquarters. As a result, the Company performed an impairment test on the portion subleased. Based on a comparison of undiscounted cash flows to the right of use (“ROU”) asset, the Company determined that the asset was impaired, driven largely by the difference between the existing lease rate on the Company’s corporate headquarters and the sublease rates received. This resulted in an impairment charge of $3.7 million, which reflects the excess of the ROU asset carrying value over its fair value.
During the second quarter of 2022, the Company terminated its booj office lease, which is owned by an entity controlled by former employees of the Company. As a result, the Company wrote off an ROU asset of $2.7 million and derecognized $1.5 million of lease liability associated with the terminated lease. The Company also recognized a loss on termination of $2.5 million, which included a lease termination payment of $1.3 million.
Foreign Currency Derivatives
The Company is exposed to foreign currency transaction gains and losses related to certain foreign currency denominated asset and liability positions, with the Canadian dollar representing the most significant exposure primarily from an intercompany Canadian loan between RMCO and the new Canadian entity for INTEGRA. The Company uses short duration foreign currency forward contracts, generally with maturities ranging from a few days to a few months, to minimize its exposures related to foreign currency exchange rate fluctuations. None of these contracts are designated as accounting hedges as the underlying currency positions are revalued through “Foreign currency transaction gains (losses)” along with the related derivative contracts.
As of June 30, 2022, the Company had an aggregate U.S. dollar equivalent of $57.5 million notional amount of Canadian dollar forward contracts to hedge these exposures.
Recently Adopted Accounting Pronouncements
None.
11
New Accounting Pronouncements Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), which contains temporary optional expedients and exceptions to the guidance in U.S. GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). The new guidance is effective upon issuance and may be adopted on any date on or after March 12, 2020. The relief is temporary and only available until December 31, 2022, when the reference rate replacement activity is expected to have completed. The Company believes the amendments of ASU 2020-04 will not have a significant impact on the Company’s consolidated financial statements and related disclosures as the Company does not currently engage in interest rate hedging of its LIBOR based debt, nor does it believe it has any material contracts tied to LIBOR other than its Senior Secured Credit Facility, as discussed in Note 8, Debt. The Company does not expect any material adverse consequences from this transition.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets (commissions related to franchise sales) and contract liabilities (deferred revenue) acquired in a business combination in accordance with ASC 2014-09, Revenue from Contracts with Customers (Topic 606). The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. The new standard is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. The impact to future acquisitions could be material depending on the significance of future acquisitions. There would be no impact to cash flows.
3. Non-controlling Interest
Holdings is the sole managing member of RMCO and operates and controls all the business affairs of RMCO. The ownership of the common units in RMCO is summarized as follows:
December 31, 2021
Ownership %
Non-controlling interest ownership of common units in RMCO
12,559,600
40.1
%
40.0
Holdings outstanding Class A common stock (equal to Holdings common units in RMCO)
59.9
60.0
Total common units in RMCO
31,313,435
100.0
31,365,794
The weighted average ownership percentages for the applicable reporting periods are used to calculate the “Net income (loss) attributable to RE/MAX Holdings, Inc.” A reconciliation of “Income (loss) before provision for income taxes” to “Net income (loss) attributable to RE/MAX Holdings, Inc.” and “Net Income (loss) attributable to non-controlling interest” in the accompanying Condensed Consolidated Statements of Income for the periods indicated is detailed as follows (in thousands, except percentages):
Three Months Ended June 30,
RE/MAXHoldings,Inc.
Non-controllinginterest
Weighted average ownership percentage of RMCO(a)
60.2
39.8
59.8
40.2
Income (loss) before provision for income taxes(a)
7,750
5,126
6,609
4,465
(Provision) / benefit for income taxes(b)(c)
(1,921)
(680)
(1,348)
634
Six Months Ended June 30,
59.7
40.3
10,235
6,791
7,628
5,157
(Provision) / benefit for income taxes(b)(c)(d)
(2,955)
(851)
(1,204)
542
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):
Tax and other distributions
1,645
1,221
Dividend distributions
5,778
Total distributions to non-controlling unitholders
7,423
6,999
13
4. Earnings Per Share, Dividends and Repurchases
Earnings Per Share
The following is a reconciliation of the numerator and denominator used in the basic and diluted earnings per share (“EPS”) calculations (in thousands, except shares and per share information):
Numerator
Denominator for basic net income (loss) per share of Class A common stock
Denominator for diluted net income (loss) per share of Class A common stock
Add dilutive effect of the following:
Restricted stock
155,952
221,866
216,566
296,031
Weighted average shares of Class A common stock outstanding, diluted
Earnings (loss) per share of Class A common stock
Net income (loss) attributable to RE/MAX Holdings, Inc. per share of Class A common stock, basic
Net income (loss) attributable to RE/MAX Holdings, Inc. per share of Class A common stock, diluted
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 (loss) 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):
Quarter end declared
Date paid
Per share
Amount paid to Class Astockholders
Amount paid to Non-controllingunitholders
March 31
March 16, 2022
4,439
2,889
March 17, 2021
4,326
June 30
May 25, 2022
4,420
June 2, 2021
4,345
8,859
8,671
On August 2, 2022, the Company’s Board of Directors declared a quarterly dividend of $0.23 per share on all outstanding shares of Class A common stock, which was payable on August 30, 2022 to stockholders of record at the close of business on August 16, 2022.
Share Repurchases and Retirement
In January 2022, the Company’s Board of Directors authorized a common stock repurchase program of up to $100 million. During the six months ended June 30, 2022, 487,196 shares of the Company’s Class A common stock were repurchased and retired for $11.9 million excluding commissions, at an average cost of $24.36. As of June 30, 2022, $88.1 million remained available under the share repurchase program.
14
5. Acquisitions
RE/MAX INTEGRA North America Regions Acquisition
On July 21, 2021, the Company acquired the operating companies of the North America regions of INTEGRA whose territories cover five Canadian provinces (New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island) and nine U.S. states (Connecticut, Indiana, Maine, Massachusetts, Minnesota, New Hampshire, Rhode Island, Vermont, and Wisconsin) for cash consideration of approximately $235.0 million. The Company acquired these companies in order to convert these formerly Independent Regions into Company-Owned Regions, advance its ability to scale, deliver value to its affiliates and recapture the value differential of more than 19,000 agents (approximately 12,000 in Canada and 7,000 in the U.S.). The Company funded the acquisition by refinancing its Senior Secured Credit Facility (See Note 8, Debt) and using cash from operations.
The Company allocated $40.9 million of the purchase price to a loss on the pre-existing master franchise agreements with INTEGRA which were effectively settled with the acquisition. The loss represents the fair value of the difference between the historical contractual royalty rates paid by INTEGRA and the current market rate. The loss is recorded in “Settlement and impairment charges” in the Consolidated Statements of Income (Loss) in the 2021 Annual Report on Form 10-K.
The following table summarizes the allocation of the purchase price (net of settlement loss) to the fair value of assets acquired and liabilities assumed for the acquisition (in thousands):
Cash and cash equivalents and restricted cash
14,098
Accounts and notes receivable, net
6,610
494
502
Property and equipment
63
Franchise agreements (a)
92,250
Other intangible assets, net (a)
9,200
2,174
Goodwill (b)
108,606
(3,461)
(14,045)
(3,107)
(824)
(16,260)
(2,200)
Total purchase price allocated to assets and liabilities
194,100
Loss on contract settlement
40,900
Total consideration
235,000
The Company finalized its accounting for the acquisition of INTEGRA during the three months ended June 30, 2022.
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Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information reflects the consolidated results of operations of the Company as if the acquisitions of INTEGRA had occurred on January 1, 2020. The pro forma information presented below is for illustrative purposes only and 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 (in thousands).
89,296
173,517
4,262
5,734
6. 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):
Weighted
Average
As of June 30, 2022
As of December 31, 2021
Amortization
Initial
Accumulated
Net
Period
Cost
Balance
Franchise agreements
12.7
267,088
(135,105)
267,770
(123,938)
Other intangible assets:
Software (a)
4.0
48,176
(27,335)
20,841
51,368
(29,682)
21,686
Trademarks
8.3
2,361
(1,708)
2,356
(1,533)
823
Non-compete agreements
4.3
13,149
(3,332)
9,817
13,100
(4,563)
8,537
Training materials
5.0
2,400
(1,840)
560
(1,600)
800
6.6
870
(354)
516
1,670
(986)
684
Total other intangible assets
66,956
(34,569)
70,894
(38,364)
Amortization expense was $8.5 million and $6.4 million for the three months ended June 30, 2022 and 2021, respectively and was $16.8 million and $12.7 million for the six months ended June 30, 2022 and 2021, respectively.
As of June 30, 2022, the estimated future amortization expense related to intangible assets includes the estimated amortization expense associated with the Company’s intangible assets assumed with the Company’s acquisitions (in thousands):
15,631
30,878
25,591
20,640
14,606
57,024
164,370
The following table presents changes to goodwill by reportable segment (in thousands):
Real Estate
Mortgage
Balance, January 1, 2022
250,482
18,633
Purchase price adjustments
(332)
Effect of changes in foreign currency exchange rates
(729)
Balance, June 30, 2022
249,421
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7. Accrued Liabilities
Accrued liabilities consist of the following (in thousands):
Marketing Funds (a)
57,267
61,997
Accrued payroll and related employee costs
10,196
22,634
Accrued taxes
1,053
2,053
Accrued professional fees
3,254
3,660
5,117
8. Debt
Debt, net of current portion, consists of the following (in thousands):
Senior Secured Credit Facility
455,400
457,700
Less unamortized debt issuance costs
(3,852)
(4,168)
Less unamortized debt discount costs
(1,362)
(1,473)
Less current portion
(4,600)
As of June 30, 2022, maturities of debt are as follows (in thousands):
2,300
434,700
On July 21, 2021, the Company amended and restated its Senior Secured Credit Facility to fund the acquisition of INTEGRA and refinance its existing facility. The revised facility provides for a seven-year $460.0 million term loan facility which matures on July 21, 2028, and a $50.0 million revolving loan facility which must be repaid on July 21, 2026. The Senior Secured Credit Facility requires RE/MAX, LLC to repay term loans at $1.2 million per quarter.
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 0.50% plus an applicable margin of 2.50% and, provided further that such rate shall be adjusted for reserve requirements for eurocurrency liabilities, if any (the “LIBOR Rate”) or (b) the greatest of (i) the prime rate as quoted by the Wall Street Journal, (ii) the NYFRB Rate (as defined in the Senior Secured Credit Facility) plus
17
0.50% and (iii) the one-month Eurodollar Rate plus 1.00%, (such greatest rate, the “ABR”) plus, in each case, an applicable margin of 1.50%. As of June 30, 2022, the interest rate on the term loan facility was 4.2%.
A commitment fee of 0.5% per annum (subject to reductions) accrues on the amount of unutilized revolving line of credit. As of the date of this report, no amounts were drawn on the revolving line of credit.
9. 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 is described in detail in the 2021 Annual Report on Form 10-K.
A summary of the Company’s liabilities measured at fair value on a recurring basis is as follows (in thousands):
Fair Value
Level 1
Level 2
Level 3
Liabilities
Motto contingent consideration
6,500
4,530
Gadberry contingent consideration
1,155
1,250
Contingent consideration (a)
7,655
5,780
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. 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 is the assumed franchise sales count for which the forecast assumes between 80-160 franchises sold annually. This assumption is based on historical sales and an assumption of growth over time. A 10% change in the number of franchise sales would increase or 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 these liabilities each reporting period and recognizes changes in fair value, if any, in “Selling, operating and administrative expenses” in the accompanying Condensed Consolidated Statements of Income.
The table below presents a reconciliation of the contingent consideration (in thousands):
Balance at January 1, 2022
Fair value adjustments
Cash payments
Balance at June 30, 2022
The following table summarizes the carrying value and estimated fair value of the Senior Secured Credit Facility (in thousands):
CarryingAmount
Fair ValueLevel 2
450,186
407,583
452,059
454,267
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10. Income Taxes
The “Provision for income taxes” in the accompanying Condensed Consolidated Statements of Income is based on an estimate of the Company’s annualized effective income tax rate.
Uncertain Tax Positions
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 Condensed Consolidated Balance Sheets. Interest and penalties are accrued on the uncertain tax positions and included in the “Provision for income taxes” in the accompanying Condensed Consolidated Statements of Income. 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.
During 2021, in connection with the INTEGRA acquisition, the Company assumed an uncertain tax position related to certain U.S. tax matters and recorded a largely offsetting related indemnification asset. See Note 5, Acquisitions for further details.
During 2021, the Company settled uncertain tax positions related to certain foreign tax matters that were accrued in prior years. The Company also recognized additional uncertain tax positions related to the INTEGRA acquisition.
A reconciliation of the beginning and ending uncertain tax position amounts, excluding interest and penalties is as follows:
As of June 30,
Balance, January 1
1,587
5,300
Increases related to prior period tax positions
96
Decrease related to prior year tax positions
(815)
Increase related to tax positions from acquired companies
Settlements
(3,776)
Foreign currency transaction (gains) losses
380
Balance, June 30
1,896
1,185
A portion of the Company’s uncertain tax positions have a reasonable possibility of being settled within the next 12 months.
11. Equity-Based Compensation
Equity-based compensation expense under the RE/MAX Holdings, Inc. 2013 Omnibus Incentive Plan (the “Incentive Plan”), net of the amount capitalized in internally developed software, is as follows (in thousands):
Expense from time-based awards (a)
3,844
3,744
7,692
13,565
Expense from performance-based awards (b)
188
871
278
1,667
Expense from bonus to be settled in shares (c)
1,638
2,202
3,075
4,535
6,253
Time-based Restricted Stock
The following table summarizes equity-based compensation activity related to time-based restricted stock units and restricted stock awards:
Weighted averagegrant date fairvalue per share
765,813
36.84
Granted
386,926
29.25
Shares vested (including tax withholding) (a)
(302,309)
38.04
Forfeited
(70,181)
34.02
780,249
32.86
As of June 30, 2022, there was $15.5 million of total unrecognized expense. This compensation expense is expected to be recognized over the weighted-average remaining vesting period of 1.7 years.
Performance-based Restricted Stock
The following table summarizes equity-based compensation activity related to performance-based restricted stock units:
241,821
31.02
Granted (a)
160,863
29.86
Shares vested (including tax withholding) (b)
(30,893)
(89,529)
31.05
282,262
30.48
As of June 30, 2022, there was $5.0 million of total unrecognized expense. This compensation expense is expected to be recognized over the weighted-average remaining vesting period of 1.7 years.
12. Commitments and Contingencies
A number of putative class action complaints are pending against the National Association of Realtors (“NAR”), Realogy Holdings Corp., HomeServices of America, Inc., RE/MAX, LLC and Keller Williams Realty, Inc. The first was filed on March 6, 2019, by plaintiff Christopher Moehrl in the United States District Court for the Northern District of Illinois (the “Moehrl Action”). Similar actions have been filed in various federal courts. The complaints make substantially similar allegations and seek substantially similar relief. For convenience, all of these lawsuits are collectively referred to as the “Moehrl-related suits.” In the Moehrl Action, 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 added allegations regarding buyer steering and non-disclosure of buyer-broker compensation to the buyer. While similar to the Moehrl Action, the Moehrl-related suits also allege: state antitrust violations; unjust enrichment; state consumer protection statute violations; harm to home buyers rather than sellers; violations of the Missouri Merchandising Practices Act; and claims against a multiple listing service (MLS) defendant rather than NAR. In one of the Moehrl-related suits, filed by plaintiffs Scott and Rhonda Burnett and others in the Western District of Missouri, the court on April 22, 2022 granted plaintiffs’ motion for class certification and set a trial date for February 2023. Among other requested relief, plaintiffs seek damages against the defendants and injunctive relief. The Company intends to vigorously defend against all claims. The Company may become involved in additional litigation or other legal proceedings concerning the same or similar claims. We are unable to predict whether resolution of these matters would have a material effect on our financial position or results of operations.
On April 9, 2021, a putative class action claim was filed in the Federal Court of Canada against the Toronto Regional Real Estate Board (“TRREB”), The Canadian Real Estate Association (“CREA”), RE/MAX Ontario-Atlantic Canada Inc. (“RE/MAX OA”), which was acquired by the Company in July 2021 (see Note 6, Acquisitions, for additional information), Century 21 Canada Limited Partnership, Royal Lepage Real Estate Services Ltd., and many other real estate companies by the putative representative plaintiff, Mark Sunderland (the “Plaintiff”). The Plaintiff alleges that the Defendants and their co-conspirators conspired, agreed or arranged with each other to fix, maintain, increase, control, raise, or stabilize the rate of real estate buyers’ brokerages’ and salespersons’ commissions in respect of the purchase and sale of properties listed on TRREB’s multiple listing service system (the “Toronto MLS”); that the Defendants and their co-conspirators acted in furtherance of their conspiracy, agreement or arrangement to fix, maintain, increase, control, raise, or stabilize the rate of real estate buyers’ brokerages’ and salespersons’ commissions in respect of the purchase and sale of properties listed on the Toronto MLS; and violation of Part VI of the Competition Act, R.S.C. 1985, c. C-34 (“Competition Act”). On February 24, 2022, plaintiff filed a Fresh as Amended Statement of Claim. With respect RE/MAX OA, the amended claim alleges Franchisor Defendants aided and abetted their respective franchisee brokerages and their salespeople in violation of the section 45(1) of the Competition Act. Among other requested relief, Plaintiff seeks damages against the defendants and injunctive relief. RE/MAX OA denies the allegations in the claim and intends to vigorously defend the action.
13. Segment Information
The Company operates under the following four operating segments: Real Estate, Mortgage, Marketing Funds and Other. Mortgage 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 the Company’s 2021 Annual Report on Form 10-K.
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The following table presents revenue from external customers by segment (in thousands):
31,619
25,039
62,739
48,648
2,509
1,916
4,888
3,681
606
1,255
1,052
Total Mortgage
The following table presents a reconciliation of Adjusted EBITDA by segment to income before provision for income taxes (in thousands):
Adjusted EBITDA: Real Estate
36,331
31,503
67,010
55,782
Adjusted EBITDA: Mortgage
(1,164)
(733)
(3,337)
(1,883)
Adjusted EBITDA: Other
(36)
(72)
(62)
(182)
Adjusted EBITDA: Consolidated
35,131
30,698
63,611
53,717
Impairment charge - leased assets (a)
(3,735)
Loss on lease termination (b)
(2,460)
(4,535)
(6,253)
(10,172)
(18,307)
Acquisition-related expense (c)
(328)
(3,928)
(1,585)
(4,871)
Fair value adjustments to contingent consideration (d)
(1,710)
(290)
(1,995)
(10)
(236)
(202)
(1,035)
(50)
(9,113)
(6,846)
(18,098)
(13,654)
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14. Subsequent Events
On July 5, 2022, the Company entered into an agreement with InsideRE, LLC (“InsideRE”), the developers of the kvCORE platform, to provide technology to RE/MAX affiliates. The kvCORE platform will replace certain functionality currently provided by the booj platform. As a result, the Company expects to reduce its overall workforce by approximately 17% and the Company expects to incur a pretax cash charge for one-time termination benefits, which consist of severance and related costs, between approximately $5.8 million and $6.8 million in the third quarter of 2022. Additionally, on July 7, 2022, the Company issued a press release providing an update on its strategic initiatives centered on reinvigorating U.S. agent count growth, accelerating the expansion of its growing mortgage business and evaluating options regarding the ongoing operations of Gadberry Group.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements (“financial statements”) and accompanying notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and accompanying notes included in our most recent Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 Annual Report on Form 10-K”).
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are often identified by the use of words such as “believe,” “intend,” “expect,” “estimate,” “plan,” “outlook,” “project,” “anticipate,” “may,” “will,” “would” and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. Forward-looking statements include statements related to: agent count; franchise sales; our business model; cost structure; balance sheet; revenue; operating expenses; financial outlook; return of capital, including dividends and our share repurchase program; non-GAAP financial measures; uncertain tax positions; housing and mortgage market condition and trends; economic and demographic trends; competition; the anticipated benefits our technology initiatives; including our relationship with InsideRE, LLC (“InsideRE”), developers of the kvCORE platform; our anticipated sources and uses of liquidity including for potential acquisitions; capital expenditures; future litigation expenses relating to the Moehrl-related suits; our strategic and operating plans and business models including our efforts to accelerate the growth of our businesses; strategic options regarding the ongoing operations of Gadberry Group; the expected reduction of our workforce; strategic investments in the Mortgage business; and the expected impact of acquisitions.
Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily accurately indicate the times at which such performance or results may 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 materiality from those expressed in or suggested by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors,” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in Part I, Item 1A of our 2021 Annual Report on Form 10-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. Except as required by law, we do not intend, and we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
The results of operations discussed in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are those of RE/MAX Holdings, Inc. (“Holdings”) and its consolidated subsidiaries, including RMCO, LLC and its consolidated subsidiaries (“RMCO”), collectively, the “Company,” “we,” “our” or “us.”
Business Overview
We are one of the world’s leading franchisors in the real estate industry. We franchise real estate brokerages globally under the RE/MAX brand (“RE/MAX”) and mortgage brokerages in the U.S. under the Motto Mortgage brand (“Motto”). We also sell ancillary products and services, primarily technology, to our franchise networks and, in certain instances, we sell those offerings outside our franchise networks. We organize our business based on the services we provide in Real Estate, Mortgage and our collective franchise marketing operations, known as the Marketing Funds. RE/MAX and Motto are 100% franchised—we do not own any of the brokerages that operate under these brands. We focus on enabling our networks’ success by providing powerful technology, quality education and training, and valuable marketing to build the strength of the RE/MAX and Motto brands. We support our franchisees in growing their brokerages, although they fund the cost of developing their brokerages. As a result, we maintain a low fixed-cost structure which, combined with our recurring fee-based model, enables us to capitalize on the economic benefits of the franchising model, yielding high margins and significant cash flow.
Financial and Operational Highlights – Three Months Ended June 30, 2022
(Compared to the three months ended June 30, 2021, unless otherwise noted)
Our strong second quarter results demonstrate the strength and resilience of our 100% franchise model, particularly amid shifting market conditions. Rising interest rates and affordability challenges are dampening buyer demand and the number of existing homes sales while also slowing the rate of home price increases in both the U.S. and Canada.
Shortly after the end of the second quarter, we formally announced a series of strategic growth opportunities designed to increase U.S. agent count and accelerate the expansion of our growing Mortgage business. We entered into an agreement with InsideRE, developers of the kvCORE platform, to provide technology to RE/MAX affiliates, replacing certain functionality currently provided by the booj platform. In connection with these initiatives, we expect to reduce our overall workforce by approximately 120 employees, approximately 17% of our total headcount, by the end of 2022. This reduction does not include personnel we expect to hire as a result of the strategic investments in the Mortgage business. As a result of this reduction, we expect to incur a pretax cash charge for one-time termination benefits, which consist of severance and related costs, between approximately $5.8 million and $6.8 million in the third quarter of 2022. We also announced we are evaluating options regarding the ongoing operations of our legacy Gadberry Group business. We believe these initiatives position us for long-term profitable growth and may help mitigate adverse impacts of housing or broader economic downturns. We believe our 100%-franchise model, two industry-leading franchise brands, strong balance sheet and cash-generating ability provide operational and strategic flexibility, especially in a shifting housing market.
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Selected Operating and Financial Highlights
The following tables summarize several key performance indicators and our results of operations.
2022 vs. 2021
#
Agent Count:
U.S.
60,825
62,428
(1,603)
(2.6)
Canada
24,854
23,066
1,788
7.8
Subtotal
85,679
85,494
185
0.2
Outside U.S. and Canada
58,260
54,707
3,553
6.5
143,939
140,201
3,738
2.7
Motto open offices (2)
200
164
36
22.0
RE/MAX franchise sales (1)
359
395
(9.1)
Motto franchise sales (2)
Total selling, operating and administrative expenses
Adjusted EBITDA (1)
Adjusted EBITDA margin (1)
38.1
39.7
34.7
35.9
Results of Operations
Comparison of the Three Months Ended June 30, 2022 and 2021
A summary of the components of our revenue is as follows (in thousands except percentages):
Change
Favorable/(Unfavorable)
7,173
26.6
147
1.7
1,864
10.7
4,867
27.0
875
14.8
14,926
19.3
26
Revenue excluding the Marketing Funds:
Less: Marketing Funds fees
Revenue excluding the Marketing Funds
69,263
59,204
10,059
17.0
Revenue excluding the Marketing Funds increased to $69.3 million or 17.0%, which was comprised of 1.7% organic growth and 15.9% growth from acquisitions, partially offset by (0.6)% from foreign currency movements. Organic growth increased primarily due to Motto growth, Gadberry Group data services subscription revenue, increased event-based revenue and incremental revenue from fewer agent recruiting initiatives, partially offset by lower Broker fees. Revenue growth from acquisitions was attributable to revenue from the RE/MAX INTEGRA North American regions acquisition (“INTEGRA”) completed in July 2021. Consolidated revenue increased due to the aforementioned factors plus growth in Marketing Funds fees primarily from the INTEGRA acquisition.
Continuing Franchise Fees
Revenue from Continuing franchise fees increased primarily due to contributions from the acquisition of INTEGRA, Motto growth, incremental revenue from fewer agent recruiting initiatives and RE/MAX growth in Canada and Globally, partially offset by a decrease in U.S. agent count.
Broker Fees
Revenue from Broker fees increased primarily from the acquisition of INTEGRA and rising home prices, partially offset by lower average transactions per agent as compared to the prior year.
Marketing Funds Fees and Marketing Funds Expenses
Revenue from Marketing Funds fees increased primarily from the acquisition of INTEGRA, fewer agent recruiting initiatives in the current year, and RE/MAX growth in Canada, partially offset by a decrease in U.S. agent count. We recognize an equal and offsetting amount of expenses to revenue such that there is no impact to our overall profitability.
Franchise Sales and Other Revenue
Franchise sales and other revenue increased primarily due to an increase in Gadberry data services subscription revenue and event-based revenue.
Operating Expenses
A summary of the components of our operating expenses is as follows (in thousands, except percentages):
(1,965)
(5.1)
(4,867)
(27.0)
(2,267)
(33.1)
n/m
(11,559)
(18.1)
Percent of revenue
81.7
82.5
n/m - not meaningful
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Selling, operating and administrative expenses consist of personnel costs, professional fee expenses, lease costs and other expenses. Other expenses within Selling, operating and administrative expenses include certain marketing and production costs that are not paid by the Marketing Funds, including travel and entertainment costs, and costs associated with our annual conventions in the U.S. and other events and technology services.
Selling, operating and administrative expenses:
Personnel
22,888
22,683
(205)
(0.9)
Professional fees
4,271
6,617
2,346
35.5
Lease costs
1,942
2,038
4.7
11,680
7,478
(4,202)
(56.2)
44.2
50.2
Total Selling, operating and administrative expenses increased as follows:
Depreciation and Amortization
Depreciation and amortization expense increased primarily due to new amortization related to our acquisitions.
Settlement and Impairment Charges
See the discussion of the Results of Operations for the six months ended June 30, 2022 and 2021 for a discussion of the settlement and impairment charges.
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Other Expenses, Net
A summary of the components of our Other expenses, net is as follows (in thousands, except percentages):
(1,908)
(89.8)
140
736.8
203
(1,565)
(63.4)
4.4
3.2
Other expenses, net increased primarily due to an increase in interest expense because of the refinance of and increase to our Senior Secured Credit Facility (see Note 8, Debt, for more information) in the prior year and rising interest rates. Foreign currency transaction gains (losses) are primarily the result of transactions denominated in the Canadian Dollar.
Provision for Income Taxes
Our effective income tax rate increased to 20.2% from 6.4% for the three months ended June 30, 2022 and 2021, respectively, primarily driven by uncertain tax positions recorded during the three months ended June 30, 2021, which were nonrecurring in nature and resulted in an unusually low effective income tax rate during the period. Our effective income tax rate depends on many factors, including a rate benefit attributable to the fact that the portion of RMCO’s earnings attributable to the non-controlling interests are not subject to corporate-level taxes because RMCO is classified as a partnership for U.S. federal income tax purposes and therefore is treated as a “flow-through entity,” as well as annual changes in state and foreign income tax rates. See Note 3, Non-controlling Interest to the accompanying unaudited condensed consolidated financial statements for further details on the allocation of income taxes between Holdings and the non-controlling interest and see Note 10, Income Taxes for additional information.
Adjusted EBITDA
See “—Non-GAAP Financial Measures” for our definition of Adjusted EBITDA and for further discussion of our presentation of Adjusted EBITDA as well as a reconciliation of Adjusted EBITDA to net income (loss), which is the most comparable GAAP measure for operating performance.
Adjusted EBITDA was $35.1 million for the three months ended June 30, 2022, an increase of $4.4 million from the comparable prior year period. Adjusted EBITDA increased primarily due to contributions from the INTEGRA acquisition, partially offset by investments in technology and our Mortgage segment.
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Comparison of the Six Months Ended June 30, 2022 and 2021
15,298
29.2
2.3
4,996
9,573
26.5
3,373
24.0
33,635
22.5
137,416
113,354
24,062
21.2
Revenue excluding the Marketing Funds increased to $137.4 million or 21.2%, which was comprised of 6.4% organic growth and 15.0% growth from acquisitions, offset by (0.2)% from foreign currency movements. Organic growth increased primarily due to increased event-based revenue, primarily due to higher attendance at our annual RE/MAX agent convention, Motto growth, incremental revenue from fewer agent recruiting initiatives, a price increase in RE/MAX Continuing franchise fees, and increased Broker fees due to rising home prices. Revenue growth from acquisitions was attributable to revenue from the INTEGRA acquisition completed in July 2021. Consolidated revenue increased due to the aforementioned factors plus growth in Marketing Funds fees primarily from the INTEGRA acquisition.
Revenue from Continuing franchise fees increased primarily due to contributions from the acquisition of INTEGRA, Motto growth, incremental revenue from fewer agent recruiting initiatives, a price increase in RE/MAX and RE/MAX growth in Canada and Globally, partially offset by a decrease in U.S. agent count.
Revenue from Broker fees increased primarily from the acquisition of INTEGRA and rising home prices, partially offset by lower average transactions per agent compared to the prior year.
Marketing Funds Fees
Revenue from Marketing Funds fees increased primarily from the acquisition of INTEGRA, fewer agent recruiting initiatives in the current year and RE/MAX growth in Canada, partially offset by a decrease in U.S. agent count. We recognize an equal and offsetting amount of expenses to revenue such that there is no impact to our overall profitability.
Franchise sales and other revenue increased primarily due to higher attendance at our annual RE/MAX agent convention and an increase in our Gadberry data services subscription revenue.
30
(6,120)
(7.4)
(9,573)
(26.5)
(4,444)
(32.5)
(6,195)
(26,332)
(19.9)
86.6
88.5
49,598
51,016
2.8
9,059
10,871
1,812
16.7
4,270
4,121
(149)
(3.6)
25,685
16,484
(9,201)
(55.8)
48.4
55.2
Marketing Funds Expenses
We recognize an equal and offsetting amount of expenses to revenue such that there is no impact to our overall profitability.
31
Impairment Charge - Leased Assets
During the first quarter of 2022, we subleased a portion of our corporate headquarters. As a result, we performed an impairment test on the portion subleased and recognized an impairment charge of $3.7 million. See Note 2, Summary of Significant Accounting Policies for additional information about our leases.
Loss on lease termination
During the second quarter of 2022, we terminated our booj office lease, which is owned by an entity controlled by our former employees. As a result, we wrote off a right of use (“ROU”) asset of $2.7 million and derecognized $1.5 million of lease liability associated with the terminated lease. We also recognized a loss on termination of $2.6 million, of which included a lease termination payment of $1.3 million. See Note 2, Summary of Significant Accounting Policies for additional information about our leases.
(82.0)
(4)
(2.2)
403
(3,062)
(69.2)
4.1
3.0
Our effective income tax rate increased to 22.4% from 5.1% for the six months ended June 30, 2022 and 2021, respectively, primarily driven by the settlement of uncertain tax positions recorded during the six months ended June 30, 2021, which were nonrecurring in nature and resulted in an unusually low effective income tax rate during that period. Our effective income tax rate depends on many factors, including a rate benefit attributable to the fact that the portion of RMCO’s earnings attributable to the non-controlling interests are not subject to corporate-level taxes because RMCO is classified as a partnership for U.S. federal income tax purposes and therefore is treated as a “flow-through entity,” as well as annual changes in state and foreign income tax rates. See Note 3, Non-controlling Interest to the accompanying unaudited condensed consolidated financial statements for further details on the allocation of income taxes between Holdings and the non-controlling interest and see Note 10, Income Taxes for additional information.
Adjusted EBITDA was $63.6 million for the six months ended June 30, 2022, an increase of $9.9 million from the comparable prior year period. Adjusted EBITDA increased primarily due to contributions from the INTEGRA acquisition, partially offset by investments in technology and our Mortgage segment.
32
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. GAAP, such as Revenue excluding the Marketing Funds and Adjusted EBITDA and the ratios related thereto. These measures are derived on the basis of methodologies other than in accordance with U.S. GAAP.
Revenue excluding the Marketing Funds is a non-GAAP measure of financial performance that differs from the U.S. Generally Accepted Accounting Principles. Revenue excluding the Marketing Funds is calculated directly from our consolidated financial statements as Total revenue less Marketing Funds fees.
We define Adjusted EBITDA as EBITDA (consolidated net income (loss) before depreciation and amortization, interest expense, interest income and the provision for income taxes, each of which is presented in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q), adjusted for the impact of the following items that are either non-cash or that we do not consider representative of our ongoing operating performance: gain or loss on sale or disposition of assets, settlement and impairment charges, equity-based compensation expense, acquisition-related expense, gain or losses from changes in the tax receivable agreement liability, expense or income related to changes in the estimated fair value measurement of contingent consideration and other non-recurring items.
As Adjusted EBITDA omits certain non-cash items and other non-recurring cash charges or other items, we believe that it is less susceptible to variances that affect our operating performance resulting from depreciation, amortization and other non-cash and non-recurring cash charges or other items. We present Adjusted EBITDA, and the related Adjusted EBITDA margin, because we believe they are useful as supplemental measures in evaluating the performance of our operating businesses and provides greater transparency into our results of operations. Our management uses Adjusted EBITDA and Adjusted EBITDA margin as factors in evaluating the performance of our business.
Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, and you should not consider these measures either in isolation or as a substitute for analyzing our results as reported under U.S. GAAP. Some of these limitations are:
33
A reconciliation of Adjusted EBITDA to net income (loss) is set forth in the following table (in thousands):
4,032
2,124
7,683
4,222
(159)
(19)
(178)
2,601
714
3,806
662
EBITDA
25,862
20,025
42,629
30,479
Impairment charge - leased assets (1)
Loss on lease termination (2)
Acquisition-related expense (3)
328
3,928
1,585
4,871
Fair value adjustments to contingent consideration (4)
1,710
290
236
202
1,035
50
Liquidity and Capital Resources
Overview of Factors Affecting Our Liquidity
Our liquidity position is affected by the growth of our franchise networks and conditions in the real estate market. In this regard, our short-term liquidity position from time to time has been, and will continue to be, affected by several factors including agents in the RE/MAX network, particularly in Company-Owned Regions and open offices in the Motto network. Our cash flows are primarily related to the timing of:
We have satisfied these needs primarily through our existing cash balances, cash generated by our operations and funds available under our Senior Secured Credit Facility. We may also utilize our Senior Secured Credit Facility, and we may pursue other sources of capital that may include other forms of external financing, such as additional financing in the public capital markets, in order to increase our cash position and preserve financial flexibility as needs arise.
34
Financing Resources
RMCO and RE/MAX, LLC, a wholly owned subsidiary of RMCO, have a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and various lenders party thereto (the “Senior Secured Credit Facility”). On July 21, 2021, we amended and restated our Senior Secured Credit Facility to fund the acquisition of INTEGRA and refinance our existing facility. The revised facility provides for a seven-year $460.0 million term loan facility and a five-year $50.0 million revolving loan facility. The revised facility also provides for incremental facilities under which RE/MAX, LLC may request to add one or more tranches of term facilities or increase any then existing credit facility in the aggregate principal amount of up to $100 million (or a higher amount subject to the terms and conditions of the Senior Secured Credit Facility), subject to lender participation.
The Senior Secured Credit Facility requires RE/MAX, LLC to repay term loans at $1.2 million per quarter. We are also required to repay the 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% of Excess Cash Flow (or “ECF” as defined in the Senior Secured Credit Facility) at the end of the applicable fiscal year if RE/MAX, LLC’s Total Leverage Ratio (or “TLR” as defined in the Senior Secured Credit Facility) is in excess of 4.25:1. If the TLR as of the last day of such fiscal year is equal to or less than 4.25:1 but above 3.75:1, the repayment percentage is 25% of ECF and if the TLR as of the last day of such fiscal year is less than 3.75:1, no repayment from ECF is required.
The Senior Secured Credit Facility is guaranteed by RMCO and is secured by a lien on substantially all of the assets of RE/MAX, LLC and other operating companies.
The Senior Secured Credit Facility provides for customary restrictions on, among other things, additional indebtedness, liens, dispositions of property, dividends, transactions with affiliates and fundamental changes such as mergers, consolidations and liquidations. With certain exceptions, any default under any of our other agreements evidencing indebtedness in the amount of $15.0 million or more constitutes an event of default under the Senior Secured Credit Facility.
Borrowings under the term loans and revolving loans accrue interest, at our option on (a) LIBOR, provided LIBOR shall be no less than 0.50% plus an applicable margin of 2.50% and, provided further that such rate shall be adjusted for reserve requirements for eurocurrency liabilities, if any (the “LIBOR Rate”) or (b) the greatest of (i) the prime rate as quoted by the Wall Street Journal, (ii) the NYFRB Rate (as defined in the Senior Secured Credit Facility) plus 0.50% and (iii) the one-month Eurodollar Rate plus 1.00%, (such greatest rate, the “ABR”) plus, in each case, an applicable margin of 1.50%. As of June 30, 2022, the interest rate on the term loan facility was 4.2%.
A commitment fee of 0.5% per annum (subject to reductions) accrues on the amount of unutilized revolving line of credit.
As of June 30, 2022, we had $450.2 million of term loans outstanding, net of an unamortized discount and issuance costs, and no revolving loans outstanding under our Senior Secured Credit Facility.
Sources and Uses of Cash
As of June 30, 2022 and December 31, 2021, we had $118.1 million and $126.3 million, respectively, of cash and cash equivalents, of which approximately $21.7 million and $8.9 million, respectively, were denominated in foreign currencies.
35
The following table summarizes our cash flows from operating, investing, and financing activities (in thousands):
Cash provided by (used in):
Operating activities
Investing activities
Financing activities
Net change in cash, cash equivalents and restricted cash
Operating Activities
Cash provided by operating activities increased primarily as a result of:
Investing Activities
During the six months ended June 30, 2022, the change in cash (used in) provided by investing activities was primarily due to lower spend on our corporate headquarters refresh, partially offset by higher investments in technology.
Financing Activities
During the six months ended June 30, 2022, the change in cash provided by (used in) financing activities was primarily due to the allocation of capital to our share repurchase program that began in the first quarter of 2022 and an increase in principal payments on our Senior Secured Credit Facility.
Capital Allocation Priorities
Liquidity
Our objective is to maintain a strong liquidity position. We have existing cash balances, cash flows from operating activities, access to our revolving facility and incremental facilities under our Senior Secured Credit Facility available to support the needs of our business. As needs arise, we may seek additional financing in the public capital markets.
Acquisitions
As part of our growth strategy, we may pursue acquisitions of Independent Regions in the U.S. and Canada as well as additional acquisitions or investments in complementary businesses, services and technologies that would provide access to new markets, revenue streams, or otherwise complement or accelerate the growth of our existing operations. We may fund any such growth with various sources of capital including existing cash balances and cash flow from operations, as well as proceeds from debt financings including under existing credit facilities or new arrangements raised in the public capital markets.
Capital Expenditures
The total aggregate amount for purchases of property and equipment and capitalization of developed software was $6.1 million and $7.6 million during the six months ended June 30, 2022 and 2021, respectively. For the six months ended June 30, 2022, these amounts primarily relate to investments in technology and for the six months ended June 30, 2021, these amounts primarily relate to spend on our corporate headquarters refresh and investments in technology. Total capital expenditures for 2022 are expected to be between $10.0 million and $13.0 million.
Return of Capital
Return of capital to shareholders is one of our primary capital allocation priorities. Our Board of Directors declared and we paid quarterly cash dividends of $0.23 per share on all outstanding shares of Class A common stock during the first quarter of 2022. On August 2, 2022, our Board of Directors declared a quarterly cash dividend of $0.23 per share on all outstanding shares of Class A common stock, which is payable on August 30, 2022 to stockholders of record at the close of business on August 16, 2022.
During the first quarter of 2022, our Board of Directors authorized a common stock repurchase program of up to $100 million. The share repurchase program does not obligate the Company to purchase any amount of common stock and does not have an expiration date. The share repurchase program may be suspended or discontinued at any time. During the six months ended June 30, 2022, 487,196 shares of our Class A common stock were repurchased and retired for $11.9 million, excluding commissions, at a weighted average cost of $24.36 per share. As of June 30, 2022, $88.1 million remained available under the share repurchase authorization.
Future capital allocation decision with respect to return of capital either in the form of additional future dividends, and if declared, the amount of any such future dividend, or in the form of share repurchases, will be subject to our actual future earnings and capital requirements and any amounts authorized will be at the discretion of our Board of Directors.
Distributions and Other Payments to Non-controlling Unitholders by RMCO
Distributions and other payments pursuant to the RMCO, LLC Agreement and TRAs were comprised of the following (in thousands):
Distributions and other payments pursuant to the RMCO, LLC Agreement:
Pro rata distributions to RIHI as a result of distributions to RE/MAX Holdings in order to satisfy its estimated tax liabilities
Total distributions to RIHI
Payments pursuant to the TRAs
Total distributions to RIHI and TRA payments
Commitments and Contingencies
See Note 12, Commitments and Contingencies to the accompanying unaudited condensed consolidated financial statements for additional information.
Off Balance Sheet Arrangements
We have no material off balance sheet arrangements as of June 30, 2022.
Critical Accounting Judgments and Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures in the financial statements and accompanying notes. Actual results could differ from those estimates. Our Critical Accounting Judgments and Estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Judgments and Estimates” in our 2021 Annual Report on Form 10-K for which there were no material changes, included:
New Accounting Pronouncements
See Note 2, Summary of Significant Accounting Policies to the accompanying unaudited condensed consolidated financial statements for additional information.
37
Item 3. Quantitative and Qualitative Disclosures About Market Risks
We have operations within the U.S., Canada, and globally, and we are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate, foreign exchange and credit risks, as well as risks relating to changes in the general economic conditions in the countries where we conduct business. We use derivative instruments to mitigate the impact of certain of our market risk exposures. We do not use derivatives for trading or speculative purposes.
Credit Risk
We are exposed to credit risk related to receivables from franchisees. We perform quarterly reviews of credit exposure above an established threshold for each franchisee and are in regular communication with those franchisees about their balance. For significant delinquencies, we will terminate the franchise. Bad debt expense is less than 1% of revenue for the six months ended June 30, 2022 and 2021.
Interest Rate Risk
We are subject to interest rate risk in connection with borrowings under our Senior Secured Credit Facility which bear interest at variable rates. On June 30, 2022, $455.4 million in term loans were outstanding under our Senior Secured Credit Facility. We currently do not engage in any interest rate hedging activity, but given our variable rate borrowings, we monitor interest rates and if appropriate, may engage in hedging activity prospectively. The interest rate on our Senior Secured Credit Facility is currently based on LIBOR, subject to a floor of 0.50%, plus an applicable margin of 2.50%. As of June 30, 2022, the interest rate was 4.2%. If LIBOR rises such that our rate is above the floor, then each hypothetical 0.25% increase would result in additional annual interest expense of $1.1 million. To mitigate a portion of this risk, we invest our cash balances in short-term investments that earn interest at variable rates.
Currency Risk
We have a network of global franchisees in over 110 countries and territories. Fluctuations in exchange rates of the U.S. dollar against foreign currencies can result, and have resulted, in fluctuations in (a) revenue and operating income (loss) due to a portion of our revenue being denominated in foreign currencies and (b) foreign exchange transaction gains and losses due primarily to cash, accounts receivable and liability balances denominated in foreign currencies, with the Canadian dollar representing the most significant exposure. To mitigate a portion of this risk related to (b), we enter into short-term foreign currency contracts, such as forwards, to minimize exposures related to foreign currency. See Note 2, Summary of Significant Accounting Policies, for more information. In addition, we actively convert cash balances into U.S. dollars to mitigate currency risk on cash positions.
During the three and six months ended June 30, 2022, a hypothetical 5% strengthening/weakening in the value of the U.S. dollar compared to the Canadian dollar would have resulted in a decrease/increase to operating income (loss) of approximately $0.5 million and $0.9 million, respectively related to currency risk (a) above.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act), that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Our management, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that
evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that as of June 30, 2022 our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 1. Legal Proceedings
From time to time, we are involved in litigation, claims and other proceedings relating to the conduct of our business, and the disclosures set forth in Note 12, Commitments and Contingencies relating to certain legal matters is incorporated herein by reference. Such litigation and other proceedings may include, but are not limited to, actions relating to intellectual property, commercial arrangements, franchising arrangements, brokerage disputes, vicarious liability based upon conduct of individuals or entities outside of our control including franchisees and independent agents, and employment law claims. Litigation and other disputes are inherently unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur. Often these cases raise complex factual and legal issues, which are subject to risks and uncertainties and which could require significant time and resources from management. Although we do not believe any currently pending litigation will have a material adverse effect on our business, financial condition or operations, there are inherent uncertainties in litigation and other claims and regulatory proceedings and such pending matters could result in unexpected expenses and liabilities and might materially adversely affect our business, financial condition or operations, including our reputation.
Item 1A. Risk Factors
For a discussion of our potential risks and uncertainties, please see “Risk Factors” in our 2021 Annual Report on Form 10-K. There have been no material changes to the risk factors as disclosed in our 2021 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table sets forth stock repurchases of our Class A common stock for the three months ended June 30, 2022:
Approximate Dollar
Total Number of Shares
Value of Shares that
Purchased as part of
May Yet be
Publicly Announced
Average Price
Purchased Under the
Plans or Programs (a)
Paid Per Share
Plans or Programs
April 1-30
30,410
25.58
97,908,541
May 1-31
331,433
23.81
90,016,203
June 1-30
79,468
23.68
88,134,150
441,311
23.91
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
Exhibit No.
Exhibit Description
Form
FileNumber
Date ofFirst Filing
ExhibitNumber
FiledHerewith
2.1
Stock Purchase Agreement, dated June 3, 2021, by and among A La Carte U.S., LLC, A La Carte Investments Canada, Inc., RE/MAX, LLC, Brodero Holdings, Inc., and Fire-Ball Holdings Corporation, Ltd.
8-K
001-36101
6/3/2021
3.1
Amended and Restated Certificate of Incorporation
10-Q
11/14/2013
Amended and Restated Bylaws of RE/MAX Holdings, Inc.
2/22/2018
Form of RE/MAX Holdings, Inc.’s Class A common stock certificate.
S-1
333-190699
9/27/2013
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
X
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
32.1
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS
XBRL Instance Document – The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File – The cover page XBRL tags are embedded within the Inline XBRL document.
† Indicates a management contract or compensatory plan or arrangement.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
(Registrant)
Date:
August 4, 2022
By:
/s/ Stephen P. Joyce
Stephen P. Joyce
Chief Executive Officer
(Principal Executive Officer)
/s/ Karri R. Callahan
Karri R. Callahan
Chief Financial Officer
(Principal Financial Officer)
/s/ Adam W. Grosshans
Adam W. Grosshans
Chief Accounting Officer
(Principal Accounting Officer)