Segment Information (Tables)

12 Months Ended

Dec. 31, 2015

Schedule of Revenue of the Company's Reportable Segments

The following tables present the results of the Company’s reportable segments for the years ended December 31, 2015, 2014 and 2013, respectively:


	Revenue (a)
	Year Ended December 31,
	2015		2014		2013
	(in thousands)
Real Estate Franchise Services:
Continuing franchise fees	$	74,921	$	74,199	$	65,728
Annual dues		31,759		30,729		29,527
Broker fees		32,656		29,014		25,078
Franchise sales and other franchise revenue		25,561		23,459		23,577
Brokerage revenue		—		—		—
		164,897		157,401		143,910
Brokerages:
Continuing franchise fees		(1,171)		(1,493)		(1,263)
Annual dues		(1)		(3)		(3)
Broker fees		(322)		(329)		(267)
Franchise sales and other franchise revenue		(93)		(19)		(3)
Brokerage revenue		13,558		15,427		16,488
		11,971		13,583		14,952
Total segment reporting revenues	$	176,868	$	170,984	$	158,862

(a)

Transactions between the Real Estate Franchise Services and the Brokerages reportable segments are eliminated in consolidation. Revenues for the Real Estate Franchise Services reportable segment include intercompany amounts paid from the Company’s brokerage services business of $1,587,000, $1,844,000 and $1,536,000 for the years ended December 31, 2015, 2014 and 2013, respectively. Such amounts are eliminated through the Brokerages reportable segment.

Schedule of Adjusted EBITDA of the Company's Reportable Segments


	Adjusted EBITDA
	Year Ended December 31,
	2015		2014		2013
	(in thousands)
Real Estate Franchise Services	$	89,280	$	83,227	$	75,490
Brokerages		2,121		578		1,549
Total segment reporting adjusted EBITDA	$	91,401	$	83,805	$	77,039

Reconciliation of Adjusted EBITDA for its Reportable Segments to Consolidated Balances

A reconciliation of the Company’s Adjusted EBITDA for its reportable segments to the Company’s consolidated balances is as follows:


	Year Ended December 31,
	2015		2014		2013
	(in thousands)
Real Estate Franchise Services:
Net income	$	47,044	$	43,664	$	26,792
Depreciation and amortization		14,827		15,032		14,791
Interest expense		10,371		9,266		14,641
Interest income		(178)		(313)		(321)
Provision for income taxes		11,181		9,894		2,882
EBITDA		83,245		77,543		58,785
(Gain) loss on sale or disposition of assets and sublease		(342)		(469)		1,110
Loss on early extinguishment of debt		94		178		1,798
Non-cash straight-line rent expense		954		1,045		1,298
Equity-based compensation expense incurred prior to or in conjunction with the IPO		—		—		2,748
Chairman executive compensation		—		—		2,261
Public offering related expenses		1,097		—		6,995
Severance related expenses (a)		1,482		4,617		—
Acquisition related expenses (b)		2,750		313		495
Adjusted EBITDA	$	89,280	$	83,227	$	75,490

Brokerages:
Net income	$	4,306	$	315	$	1,460
Depreciation and amortization		297		284		375
Interest expense		42		29		6
Interest income		—		—		—
Provision (benefit) for income taxes		849		54		(38)
EBITDA		5,494		682		1,803
(Gain) loss on sale or disposition of assets and sublease		(3,308)		129		(139)
Non-cash straight-line rent expense		(65)		(233)		(115)
Adjusted EBITDA	$	2,121	$	578	$	1,549

Consolidated:
Net income	$	51,350	$	43,979	$	28,252
Depreciation and amortization		15,124		15,316		15,166
Interest expense		10,413		9,295		14,647
Interest income		(178)		(313)		(321)
Provision for income taxes		12,030		9,948		2,844
EBITDA		88,739		78,225		60,588
(Gain) loss on sale or disposition of assets and sublease		(3,650)		(340)		971
Loss on early extinguishment of debt		94		178		1,798
Non-cash straight-line rent expense		889		812		1,183
Equity-based compensation expense incurred prior to or in conjunction with the IPO		—		—		2,748
Chairman executive compensation		—		—		2,261
Public offering related expenses		1,097		—		6,995
Severance related expenses (a)		1,482		4,617		—
Acquisition related expenses (b)		2,750		313		495
Adjusted EBITDA	$	91,401	$	83,805	$	77,039

Summary of Segment Long-Lived and Total Assets

(a)

Severance related expenses include severance and other related expenses incurred in connection with the Restructuring Plan in 2014, the retirement of the Company’s former Chief Executive Officer on December 31, 2014 and subsequent organizational changes implemented during 2015, including the retirement of the Company’s former President on August 19, 2015. See Note 13, Leadership Changes and Restructuring Activities, for further details.

(b)

Acquisition related expenses include costs incurred in connection with the Company’s acquisitions of certain assets of HBN and Tails in October 2013, including legal, accounting and advisory fees as well as consulting fees for integration services. Acquisition related expenses also include a charge of $2,729,000 resulting from a judgment granted to the Defendants by the Court in the litigation concerning the net assets of HBN during the year ended December 31, 2015, as discussed in Note 14, Commitments and Contingencies.

Segment long-lived and total assets are as follows:


	As of December 31,
	2015		2014
	(in thousands)
Long-lived assets:
Real Estate Franchise Services	$	250,567	$	222,888
Brokerages (a)		—		4,673
Total long-lived assets	$	250,567	$	227,561

Total assets:
Real Estate Franchise Services	$	384,959	$	349,481
Brokerages (a)		354		8,846
Total assets	$	385,313	$	358,327

The Company sold certain operating assets related to 18 owned brokerage offices in 2015 attributable to the Brokerages reportable segment and therefore, the related assets are not reflected in total long-lived assets nor total assets as of December 31, 2015 in the accompanying Consolidated Balance Sheets. Additionally, the sale of the operating assets of RE/MAX Northwest met the criteria to be classified as held for sale and thus are reflected in “Assets held for sale” in the accompanying Consolidated Balance Sheets as of December 31, 2015. See Note 5, Acquisitions and Dispositions, for further disclosures regarding these divestitures.

Schedule of Information Concerning Company's Principal Geographic Areas

Information concerning the Company’s principal geographic areas is as follows:


	As of and for the Year Ended December 31,
	2015		2014		2013
	(in thousands)
Revenue (a):
U.S.	$	146,850	$	138,458	$	124,686
Canada		21,978		23,975		25,168
Outside U.S. and Canada		8,040		8,551		9,008
Total	$	176,868	$	170,984	$	158,862

Total long-lived assets (b):
U.S.	$	141,392	$	156,926
Canada		3,142		3,732
Outside U.S. and Canada		—		—
Total	$	144,534	$	160,658

Total assets:
U.S.	$	374,568	$	349,965
Canada		10,745		7,469
Outside U.S. and Canada		—		893
Total	$	385,313	$	358,327

(a)

Revenue recognized for fees assessed by the Company-owned brokerages for services provided to their affiliated real estate agents is entirely attributable to the Company’s U.S. operations. Revenue recognized for franchise services provided to the agents and franchisees in the Company’s network relates to operations in the U.S., Canada and outside of the U.S. and Canada.

Excludes deferred tax assets, net