XML 30 R20.htm IDEA: XBRL DOCUMENT v3.20.2
Segment Information
6 Months Ended
Jun. 30, 2020
Segment Information  
Segment Information

13. Segment Information

​

The Company operates under the following four operating segments: RE/MAX Franchising, Motto Franchising, Marketing Funds and booj. Due to quantitative insignificance, the booj operating segment does not meet the criteria of a reportable segment and is included in “Other”. Motto Franchising 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 2019 Annual Report on Form 10-K.

​
The following table presents revenue from external customers by segment (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30, 

​

Six Months Ended June 30, 

​

​

2020

​

2019

​

2020

​

2019

Continuing franchise fees (a)

​

$

15,795

​

$

23,978

​

$

38,672

​

$

48,095

Annual dues

​

​

8,745

​

​

8,819

​

​

17,666

​

​

17,673

Broker fees (a)

​

​

10,426

​

​

13,459

​

​

19,870

​

​

22,047

Franchise sales and other revenue

​

​

3,405

​

​

4,129

​

​

12,068

​

​

12,394

Total RE/MAX Franchising

​

​

38,371

​

​

50,385

​

​

88,276

​

​

100,209

Continuing franchise fees

​

​

943

​

​

916

​

​

2,209

​

​

1,755

Franchise sales and other revenue

​

​

127

​

​

114

​

​

319

​

​

234

Total Motto Franchising

​

​

1,070

​

​

1,030

​

​

2,528

​

​

1,989

Marketing Funds fees (a)

​

​

11,765

​

​

18,060

​

​

29,287

​

​

36,832

Other

​

​

1,001

​

​

1,906

​

​

2,388

​

​

3,529

Total revenue

​

$

52,207

​

$

71,381

​

$

122,479

​

$

142,559

(a)Continuing franchise fees and Marketing Funds fees declined primarily due to the temporary COVID-19 related financial support programs offered to franchisees. Broker fees declined primarily due to reductions in home sale transactions due to the COVID-19 pandemic.

​

The following table presents a reconciliation of Adjusted EBITDA by segment to income before provision for income taxes (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30, 

​

Six Months Ended June 30, 

​

​

2020

​

2019

​

2020

​

2019

Adjusted EBITDA: RE/MAX Franchising

​

$

19,318

​

$

30,021

​

$

40,049

​

$

54,165

Adjusted EBITDA: Motto Franchising

​

​

(741)

​

​

(719)

​

​

(1,319)

​

​

(1,460)

Adjusted EBITDA: Other

​

​

332

​

​

580

​

​

(282)

​

​

167

Adjusted EBITDA: Consolidated

​

​

18,909

​

​

29,882

​

​

38,448

​

​

52,872

Gain (loss) on sale or disposition of assets

​

​

11

​

​

16

​

​

22

​

​

(363)

Equity-based compensation expense

​

​

(2,747)

​

​

(1,796)

​

​

(4,933)

​

​

(5,847)

Acquisition-related expense (a)

​

​

(328)

​

​

(15)

​

​

(894)

​

​

(87)

Gain on reduction in tax receivable agreement liability

​

​

(500)

​

​

—

​

​

—

​

​

—

Fair value adjustments to contingent consideration (b)

​

​

(150)

​

​

(415)

​

​

355

​

​

(345)

Interest income

​

​

34

​

​

342

​

​

303

​

​

662

Interest expense

​

​

(2,187)

​

​

(3,154)

​

​

(4,869)

​

​

(6,309)

Depreciation and amortization

​

​

(6,412)

​

​

(5,541)

​

​

(12,722)

​

​

(11,099)

Income before provision for income taxes

​

$

6,630

​

$

19,319

​

$

15,710

​

$

29,484

(a)Acquisition-related expense includes legal, accounting, advisory and consulting fees incurred in connection with the acquisition and integration of acquired companies.
(b)Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liability. See Note 9, Fair Value Measurements for additional information.