- RE/MAX execs hold first public Q&A with Wall Street.
- CEO Margaret Kelly and COO/CFO David Metzger answered questions.
- RE/MAX’s stock closed up more than 5% on Friday.
Margaret Kelly, CEO of Denver-based RE/MAX, is bullish on housing.
“Overall, we are in the early stages of a multi-year sustainable housing recovery which is based on an improving economy, increase in job growth, decrease in the unemployment rate, pent up demand for housing from all four generations, and an increase in household formation and immigration,” Kelly told Wall Street analysts on a conference call last week, the first since the company, founded in Denver, went public in October.
“So with home sales rising, affordability in check, supply starting to normalize and mortgage rates still well below the 40-year average, we believe we will continue to see positive momentum in the real estate market,” she said.
Kelly said typical agent at RE/MAX has an average of 13 years in the business and they handle an average of 17.1 transactions per agent, “by far the highest of the national brands,” Kelly said.
RE/MAX last week reported $7.7 million drop in net income in the third quarter, a 37.9 percent drop from the $12.4 million in the third quarter of 2012.
Dave Metzger, the chief operating officer and chief financial officer, said there were a number of one-time costs such as refinancing debt.
“Since there were a number of onetime expenses and non-cash items this quarter, it’s important for us to look at adjusted net income,” he said, which at $9.4 million was flat from a year earlier.
Kelly noted that the number of Realtors nationally peaked at about 1.4 million and now stands at about a million.
In the “heat of the market,” (prior to the Great Recession) “quite honestly, anybody thought they could sell a home and make a commission,” she said. “And I think people who jumped into the real estate business really didn’t understand it.”
The remaining real estate associates “are the survivors,” she said.
Kelly said that the biggest growth areas for RE/MAX recently have been Texas, Florida and California.
“Interestingly, most of those were some of the hardest hit in the recession and we are seeing the most growth come from that. Those three areas are also company-owned,” Kelly said
RE/MAX was founded in Denver 40 years ago by David and Gail Liniger. RE/MAX, with a market cap of about $850 million, trades on the New York Stock Exchange under the symbol RMAX.
To read the entire transcript, please go to Seeking Alpha.
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