RE/MAX Holdings, Inc. Class A

Good morning, and welcome to the RE-MAX Holdings First Quarter 2020 Earnings Conference Call and Webcast. My name is James, and I will be facilitating the audio portion of today's call. At this time, I'd like to turn the call over to Andy Schulz, Vice President of Investor Relations. Mr. Schulz?

Thank you, Operator. Good morning, everyone, and welcome to RE-MAX Holdings First Quarter 2020 Earnings Conference Call. Please visit the investor relations page of RE-MAX.com for all earnings-related materials and to access the live webcast and replay of the call today. If you are participating through the webcast, please note that you will need to advance the slides as we move through the presentation. Turning to slide two, our prepared remarks and answers to your questions on today's call may contain forward-looking statements. Forward-looking statements include those related to agent count, franchise sales, financial measures and outlook, Brand Expansion, Competition, Technology, Housing and Mortgage Market Conditions, including statements about recovery of those markets, capital allocation, dividends, strategic and operational plans, and business models. Forward-looking statements represent management's current estimates. RE-MAX Holdings assumes no obligation to update any forward-looking statements in the future. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ materially from those projected in forward-looking statements. These are discussed in our first quarter 2020 financial results press release and other SEC filings. Also, we will refer to certain non-GAAP measures on today's call. Please see the definitions and reconciliations of non-GAAP measures contained in our most recent quarterly financial results press release, which is available on our website. Joining me on our call today are Adam Contos, our Chief Executive Officer, Karri Callahan, our Chief Financial Officer, Ward Morrison, President of Model Mortgage, and Nick Bailey, RE-MAX Chief Customer Officer. With that, I'd like to turn the call over to RE-MAX Holdings CEO, Adam Contos.

Adam? Thank you, Andy, and thanks to everyone for joining our call today. Given the unique set of circumstances, we're going to do our earnings call a bit differently today. I'll briefly address the state of our employees, present highlights of the quarter, and provide my thoughts on the current environment. I've asked our two brand leaders, Nick Bailey and Ward Morrison, to each spend a few minutes sharing their insights about the state of their respective business lines. Lastly, Karri will briefly review Q1 and address our cost saving measures and current capital resources. Looking at slide three. The health and well-being of our employees, affiliates, customers, and communities remains our top priority. Our headquarter staff went all remote on March 16th. Due to investments we made in our business this past year, our employees are working productively from home, delivering valuable service and support to our RE-MAX and model networks every day. We've embraced and significantly augmented our use of video, digital, and social media technologies to stay connected and engaged. In fact, one of the bright spots in this experience is all the virtual face-to-face time our leadership group has spent communicating with our franchisees, agents, and loan originators. Our operational transition to a virtual work-from-home environment was relatively seamless. We plan to continue to work all remote until at least June 1st. I'm proud of our team members for their resilience, diligence, and professionalism during these challenging times. and I thank them for their terrific work delivering value to our membership and stakeholders. Turning to slide four, although we entered 2020 with momentum amid a strong housing market in the US, the rapidly evolving COVID-19 pandemic increasingly impacted our industry and operations. That said, we still posted solid first quarter results. Highlights of the first quarter included revenue of 70.3 million, adjusted EBITDA of 19.5 million, adjusted EPS of 39 cents, total RE-MAX agent count approaching 132,000 agents for the first time in our history, up 5%, and the launch of our consumer-facing app and the refreshed RE-MAX.com website. Although second quarter results are likely to reflect the full brunt of the coronavirus, some leading indicators for housing have already started to turn and we remain optimistic that housing will recover sooner than many industries. Nick will have more on that in a moment. Moving to slide five, one thing I am confident of is that we'll exit this health crisis in a position of strength. We have an enviable set of competitive advantages including our industry leading brands, entrepreneurial affiliates and skilled experienced headquarters team. The foundation under the RE-MAX Holdings family of brands is rock solid. This isn't the first downturn our organization has faced. In fact, many of our key leaders, including Ward, Nick, and myself, helped guide the company through the Great Recession a decade ago. Our chairman, Dave Liniger, has noted that RE-MAX has battled through six recessions since he and Gail founded RE-MAX almost 50 years ago. Many of the actions we're taking now are modernized versions of tactics learned while steering through challenging business cycles and market conditions in the past. Most of our affiliates have been successful for years, if not decades, and our newer affiliates benefit from the experience of their peers. Entrepreneurial spirit and the ability to pivot, adapt, and overcome challenges have become hallmarks of the RE-MAX network for nearly five decades. Remax and Model have similar cultures and are professional, productive, and collaborative, which gives us a valuable competitive edge during difficult times. We believe we have the best brands and business models in our industries, which is validated by the recognition we continue to receive from multiple well-respected third parties. For example, one leading industry report recently confirmed that Remax agents are far more productive than the norm. According to the 2020 Real Trends 500 survey, a widely followed ranking of large U.S. real estate brokerages, REMAX agents averaged twice as many transaction sides as competing agents in 2019 for the 10th consecutive year. A second source, Entrepreneur Magazine's widely respected 2020 fastest growing franchise rankings, honored REMAX for the seventh consecutive year and Motto for the second consecutive year. This is the 19th time RE-MAX made the list and the second time RE-MAX and Motto were recognized together. Earlier this year, Entrepreneur's 2020 Franchise 500 Survey named RE-MAX the number one real estate brokerage franchise for the eighth consecutive time. These types of recognition put our brand strength on display. Turning to slide six, RE-MAX was founded based on a simple premise to create an environment where productive agents would come together, share ideas, motivate each other, and see their results soar. By helping others achieve their goals, we achieve ours. Everybody wins. Almost half a century later, that original business model is still relevant and thriving all around the world. Remax agents in more than 110 countries and territories are delivering positive outcomes to buyers and sellers. Today, Remax is the worldwide leader in real estate with leading market share, leading agent productivity, leading global presence, and leading brand awareness. Nobody in the world sells more real estate than Remax based on residential transaction size. We are home to the top producer in multiple annual national big broker reports Remax agents outproduce other agents two to one. Our global footprint is unmatched, with about half of our membership outside the US. And we have the highest level of unaided brand awareness in real estate among consumers in the US and Canada, according to MMR Strategy Group. Obviously, model mortgage is at a much earlier point in its history. It's built on the same core values and is moving forward on a similar path. Motto remains the first and only national mortgage brokerage franchise in the United States. Motto is just getting started, and its future is bright. With that, I'll turn it over to Nick. Thanks, Adam.