Investor Presentation May 2018
Forward-Looking Statements and Preliminary Financial Information This presentation includes “forward - looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward- looking 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 the Company’s financial outlook (including statements regarding agent count, revenue, free cash flow and Adjusted EBITDA margins), dividends, future acquisitions, franchise sales, the benefits of the acquisition of booj , the Company’s strategic and operational plans and business models, and the housing and mortgage markets. 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 r isks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Such risks and uncertainties include, without limitation, (1) the impact of the findings and recommendations of the Special Committee on the Company and its management and operations, including reputational damage to the Company and the time and expenses incurred in implementing the recommendations of the Special Committee, (2) that, while the Special Committee investigation has been completed, the full implications of the investigation on the Company and its operations are still being evaluated and there may be unanticipated adverse or negative consequences that are not identified at this time, including reputational damage to the Company as well as the time and expense incurred in implementing the recommendations of the Special Committee, (3) any legal proceedings or governmental or regulatory investigations or actions directly or indirectly related to the underlying matters of the recently completed Special Committee’s internal investigation may result in adverse findings, the imposition of fines or other penalties, increased costs and expenses, and the diversion of management’s time and resources to address such matters, any of which may have a material adverse effect on the Company, (4) the impact of recent changes to our senior management team, (5) the impact of disclosing previously undisclosed transactions between members of our management team, including the loan from David Liniger to Adam Contos, (6) the existence and identification of control deficiencies, including disclosure controls or internal controls over financial reporting, and any impact of such control deficiencies as well as the associated costs in remediating those control deficiencies, (7) changes in business and economic activity in general, (8) changes in the real estate market or interest rates and availabili ty of financing, (9) the Company’s ability to attract and retain quality franchisees, (10) the Company’s franchisees’ ability to recruit and retain real estate agents and mortgage loan originators, (11) changes in laws and regulations, (12) the Company’s ability to enhance, market, and protect the RE/MAX and Motto Mortgage brands, (13) fluctu ations in foreign currency exchange rates, and (14) the impact of the Tax Cuts and Jobs Act, as well as those risks and uncertainties described in the sections enti tled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the most recent Annual Report on Form 10 -K filed with the Securities and Exchange Commission (“SEC”) and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company’s website at www.remax.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no obligation, to update this information to reflect future events or circumstances. 2
Why Invest in RE/MAX Today? Shareholder Return Driven By Organic Growth Catalysts Return of Capital Stable recurring revenue Independent region Committed to returning acquisitions capital through dividend High margin & Strong payments over time Free Cash Flow Reinvest in the business Dividend metrics: Other acquisitions within Driven by: ~36% of FCF in 2017 1 our core competencies of – 1) Agent growth franchising and real $0.20 quarterly dividend – estate 2) Franchise sales 3) Motto Mortgage 4) Steadily improving housing market FCF Fuels Catalysts and Return of Capital to Create Shareholder Value 1 Free Cash Flow (“FCF”) = Operating Cash Flow – Capital Expenditures; $22M 2017 quarterly dividend payments / $61M 2017 FCF = 36%; see Appendix for reconciliation of non-GAAP measures 3
Housing Market Gradually Improving Opportunities Drivers Steady demand for housing First-time homebuyers entering the market Attractive mortgage rates Wage growth Housing starts improving Constrained inventory Steady jobs growth Single-family home starts Household formations Access to credit forecasted to grow 4
Strategic Acquisition of booj, a Real Estate Technology Company Proven real estate technology enabling the Talented and deep roster of real estate success of independent brokerages and technology developers and strategists agents across the U.S. Designed by and for the real estate industry, Will leverage the capabilities of booj and booj’s platforms include websites, mobile other strategic partners to deliver core apps, predictive analytics and systems for technology solutions designed for and with generating and cultivating leads RE/MAX affiliates 5
The Real Estate Franchisor 6
Hallmarks of a Successful Franchise Business Key Success Factors of Successful Franchisors Franchisors Unique product or service offering Brand name and market share Training and productivity tools Group purchasing power 7
RE/MAX is a Premium Franchisor Nobody in the world sells more Real Estate than RE/MAX 1 100% franchised business, delivering the full economic benefits of the model Dual-brand franchisor, focused on our core businesses Among the best-in-class franchisor operating margins 1 As measured by residential transaction sides 8
RE/MAX Agents Outsell Other Agents by More Than 2 to 1 at Large Brokerages in the REAL Trends 500 Survey National, Full-Service Brokerage Brands Transactions Per U.S. Transaction Brand Awareness Countries and Agent (Large Offices Worldwide Agents Worldwide Sides 2 (unaided) 3 Territories brokerages only)1 17.0 1 million+ 30.2% 100+ 7,841 119,041 11.1 Not Released 0.4% 11 500 8,000 9.4 Not Released 4.5% 1 1,400 45,000 8.8 133,225 1.3% 32 2,300 39,900 8.2 731,486 15.0% 47 3,200 94,300 7.8 417,337 21.0% 80 8,000 118,600 6.8 72,424 0.8% 3 350 11,500 6.6 122,475 2.1% 69 950 21,900 6.6 1 million+ 8.0% 30 930 177,000 5.2 10,543 0.1% 1 45 2,043 3.9 50,000 0.1% 1 127 14,500 3.8 24,655 0.1% 2 46 6,417 Realogy Brand Data is full-year or as of year-end 2017, as applicable. Except as noted, Coldwell Banker, Century 21, ERA, Sotheby’s and Better Homes and Gardens data is as reported by Realogy Corporation on SEC 10-K, Annual Report for 2017; Keller Williams, Realty Executives, Berkshire Hathaway HomeServices, Compass, HomeSmart and eXp Realty data is from company websites and industry reports. 1 Transaction sides per agent calculated by RE/MAX based on 2018 REAL Trends 500 data, citing 2017 transaction sides for the 1,752 largest participating U.S. brokerages for which agent counts were reported. Coldwell Banker includes NRT. Berkshire does not include HomeServices of America. 2 Compass and eXp Realty totals are for residential transactions only and do not include commercial transactions; totals for all other brands include commercial transactions. 3 MMR Strategy Group study of unaided awareness among buyers, sellers, and those planning to buy or sell; asked, when they think of real estate brands, which ones come to mind? 9
the Mortgage Brokerage Franchisor 10
Motto Mortgage Fact Sheet Motto Mortgage is a mortgage brokerage franchisor Franchises are independently owned and operated Motto Mortgage is not a lender and will not underwrite loans Offers potential homebuyers the opportunity to find both real estate agents and independent Motto Mortgage loan originators in offices in one location Motto Mortgage loan originators access a variety of quality loan options from multiple leading wholesalers Ward Morrison leads Motto Mortgage with an operational team that scales as Motto grows Motto Mortgage franchises are available for purchase by select qualified business professionals both within and outside of RE/MAX 11
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