Exhibit 99.1

 

LOGO

MARCUS & MILLICHAP, INC. REPORTS FIRST QUARTER

2015 FINANCIAL RESULTS

- First Quarter Revenue Increased 27.9% -

- First Quarter Sales Volume Increased 29.5% to $8.1 billion -

CALABASAS, Calif.—(BUSINESS WIRE)— Marcus & Millichap, Inc. (the “Company”, “Marcus & Millichap”) (NYSE: MMI), a leading national brokerage firm specializing in commercial real estate investment sales, financing, research and advisory services, today reported financial results for the first quarter ended March 31, 2015. Highlights include:

First Quarter 2015 Results Compared to First Quarter 2014

 

    Revenue increased 27.9% to $146.5 million, with real estate brokerage commissions up 28.1%.

 

    Sales volume grew 29.5% to $8.1 billion.

 

    Number of transactions increased by 14.6%.

 

    Net income increased to $13.7 million compared to $6.8 million in the first quarter of the prior year.

 

    Earnings per common share increased more than twofold to $0.35 (Basic and Diluted), as compared to $0.17 in the first quarter of the prior year (Basic and Diluted).

 

    Adjusted EBITDA was $26.3 million, compared to $13.5 million in the first quarter of the prior year.

“We are very pleased with our first quarter 2015 results, reflecting the Company’s leading market position in the private client segment and capturing the benefits of our growth plan execution and our management team’s unwavering support of our brokers and clients,” stated John Kerin, President and CEO. “The market environment continues to be favorable even as the rate of growth in transactions returns to more normalized levels. We continue to observe ongoing improvement in property fundamentals and low interest rates and believe that the anticipation of rising interest rates later this year resulted in the acceleration of some transactions into the first quarter. In addition, our operating metrics were supported by higher productivity of tenured brokers as well as positive results from our experienced broker hiring. Our average brokerage transaction size grew by 19% during the quarter, largely due to these factors.” Mr. Kerin added.

First Quarter 2015 Results Compared to First Quarter 2014

Total revenues for the first quarter of 2015 were $146.5 million, compared to $114.6 million for the same period in the prior year, an increase of $32.0 million, or 27.9%. The increase in total revenues is primarily a result of increases in revenues from real estate brokerage commissions which increased to $134.2 million for the three months ended March 31, 2015 from $104.7 million for the same period in the prior year, an increase of $29.4 million or 28.1%. This was driven by an increase in the number of investment sales transactions, as well as the average commission earned per transaction. The average commission rate decreased during the first quarter of 2015 due primarily to an increase in the proportion of commissions earned from larger transactions, which generate lower commission rates. The rise in larger transactions is a reflection of our emerging agents and focus on hiring experienced sales and financing professionals. Growth in financing fees and other revenues contributed the remaining increase in total revenues.

 

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Total operating expenses for the first quarter of 2015 were $122.8 million, compared to $102.5 million for the same period in the prior year, an increase of $20.2 million, or 19.7%. The increase was primarily driven by a $17.8 million or 26.0% increase in cost of services, which are variable commissions paid to the Company’s investment sales professionals and compensation-related costs in connection with our financing activities. Cost of services as a percent of total revenues decreased to 58.8% compared to 59.7% for the same period in the prior year primarily due to an increase in the proportion of transactions closed by our newer team members who are compensated at lower commission rates.

Selling, general and administrative expense increased by $2.5 million, or 7.4% during the first quarter of 2015 as compared to the same period in the prior year. The increase was primarily due to (i) sales and promotional expenses from our annual sales recognition event and marketing expenses to support sales activity; (ii) management performance related compensation driven by our operating results; (iii) stock-based compensation expense resulting from an increase in the Company’s stock price as RSU grants to the Company’s independent contractors are required to be measured at fair value, and stock-based compensation expense for incremental stock-based awards granted since the first quarter of 2014; and (iv) salaries and related benefits related to higher headcount in corporate support in connection with our growth. The increases were partially offset by a decrease in legal costs due to settlement with an insurance carrier and settlement of outstanding litigation.

Net income for the first quarter of 2015 was $13.7 million or $0.35 per common share (Basic and Diluted) compared to net income of $6.8 million or $0.17 per common share (Basic and Diluted) for the same period in the prior year. Adjusted EBITDA for the first quarter of 2015 was $26.3 million compared to adjusted EBITDA of $13.5 million for the same period in the prior year.

Business Outlook

Commenting on the Company’s business outlook, Mr. Kerin said “Moving forward, we expect to drive continued growth in revenue and earnings, benefiting from our national platform, proven system of creating value for real estate investors, and ability to grow our sales force, combined with a more normalized but still-healthy market environment.” “Our successes, particularly in expanding our presence in specialty brokerage groups and financing services, give us further confidence in our growth strategies, which are tailored to the highly active private client market segment,” he added.

Conference Call Details

Marcus & Millichap will host a conference call today to discuss its results at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time. To participate in the conference call, callers from the United States and Canada should dial (877) 407-4018 ten minutes prior to the scheduled call time. International callers should dial + 1 (201) 689-8471. For those unable to participate during the live broadcast, a telephonic replay of the call will also be available from 5:00 p.m. Pacific Time/8:00 p.m. Eastern Time on Thursday, May 7, 2015 through 8:59 p.m. Pacific Time/11:59 p.m. Eastern Time on Thursday, May 21, 2015 by dialing (877) 870-5176 in the United States and Canada or +1 (858) 384-5517 internationally and entering passcode 13606961.

About Marcus & Millichap, Inc.

Marcus & Millichap, Inc. is a leading national brokerage firm specializing in commercial real estate investment sales, financing, research, and advisory services. As of March 31, 2015, the Company has nearly 1,500 investment sales and financial professionals in 78 offices who provide investment brokerage and financing services to sellers and buyers of commercial real estate. The Company also offers market research, consulting and advisory services to our clients. Marcus & Millichap closed 7,667 transactions in 2014, with a sales volume of approximately $33.1 billion. For additional information, please visit www.MarcusMillichap.com.

 

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MARCUS & MILLICHAP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF NET

AND COMPREHENSIVE INCOME

(dollar and share amounts in thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended
March 31,
 
     2015     2014  

Revenues:

    

Real estate brokerage commissions

   $ 134,193      $ 104,748   

Financing fees

     8,031        6,100   

Other revenues

     4,317        3,742   
  

 

 

   

 

 

 

Total revenues

  146,541      114,590   

Operating expenses:

Cost of services

  86,158      68,396   

Selling, general, and administrative expense

  35,829      33,357   

Depreciation and amortization expense

  780      775   
  

 

 

   

 

 

 

Total operating expenses

  122,767      102,528   
  

 

 

   

 

 

 

Operating income

  23,774      12,062   

Other income (expense), net

  125      (61

Interest expense

  (583   (404
  

 

 

   

 

 

 

Income before provision for income taxes

  23,316      11,597   

Provision for income taxes

  9,647      4,815   
  

 

 

   

 

 

 

Net income

  13,669      6,782   

Other comprehensive income:

Unrealized gain on marketable securities, net of tax of $126 and $0 for the three months ended March 31, 2015 and 2014, respectively

  188      —     

Foreign currency translation gain, net of tax of $117 and $30 for the three months ended March 31, 2015 and 2014, respectively

  173      42   
  

 

 

   

 

 

 

Total other comprehensive income

  361      42   
  

 

 

   

 

 

 

Comprehensive income

$ 14,030    $ 6,824   
  

 

 

   

 

 

 

Earnings per share:

Basic

$ 0.35    $ 0.17   

Diluted

$ 0.35    $ 0.17   

Weighted average common shares outstanding:

Basic

  39,029      38,847   

Diluted

  39,152      38,907   

 

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MARCUS & MILLICHAP, INC.

KEY OPERATING METRICS SUMMARY

(Unaudited)

Total sales volume was $8.1 billion for the three months ended March 31, 2015, encompassing 1,877 transactions consisting of $6.1 billion for real estate brokerage (1,374 transactions), $0.9 billion for financing (311 transactions) and $1.1 billion in other transactions, including consulting and advisory services (192 transactions). As of March 31, 2015, the Company had 1,415 investment sales professionals and 81 financing professionals. Key metrics for Real Estate Brokerage and Financing are as follows:

 

     Three Months Ended
March 31,
 

Real Estate Brokerage

   2015      2014  

Average Number of Sales Professionals

     1,424         1,236   

Average Number of Transactions per Sales Professional

     1.0         1.0   

Average Commission per Transaction

   $ 97,666       $ 88,694   

Average Transaction Size

   $ 4,464,483       $ 3,746,384   

Total Number of Transactions

     1,374         1,181   

Total Sales Volume (in millions)

   $ 6,134       $ 4,424   
     Three Months Ended
March 31,
 

Financing

   2015      2014  

Average Number of Financing Professionals

     83         76   

Average Number of Transactions per Financing Professional

     3.7         3.8   

Average Fee per Transaction

   $ 25,823       $ 21,181   

Average Transaction Size

   $ 2,826,275       $ 2,160,611   

Total Number of Transactions

     311         288   

Total Dollar Volume (in millions)

   $ 879       $ 622   

 

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MARCUS & MILLICHAP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollar amounts in thousands, except per share amounts)

 

     March 31,
2015

(Unaudited)
    December 31,
2014
 

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 124,060      $ 149,159   

Commissions receivable

     4,591        3,412   

Employee notes receivable

     76        216   

Prepaid expenses

     4,187        7,536   

Income tax receivable

     446        1,711   

Deferred tax assets, net

     12,228        13,600   

Other assets, net

     3,501        2,839   
  

 

 

   

 

 

 

Total current assets

  149,089      178,473   

Prepaid rent

  3,713      3,645   

Property and equipment, net

  8,038      7,693   

Employee notes receivable

  142      162   

Marketable securities, available for sale

  25,331      14,752   

Investments held in rabbi trust

  5,631      4,332   

Deferred tax assets, net

  21,089      21,265   

Other assets

  4,296      3,282   
  

 

 

   

 

 

 

Total assets

$ 217,329    $ 233,604   
  

 

 

   

 

 

 

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable and accrued expenses

$ 10,529    $ 9,488   

Accounts payable and accrued expenses – related party, net

  273      97   

Notes payable to former stockholders

  894      894   

Commissions payable

  17,640      28,932   

Accrued bonuses and other employee related expenses

  8,543      27,793   
  

 

 

   

 

 

 

Total current liabilities

  37,879      67,204   

Deferred compensation and commissions

  34,048      36,581   

Notes payable to former stockholders

  10,610      10,610   

Other liabilities

  2,332      2,400   
  

 

 

   

 

 

 

Total liabilities

  84,869      116,795   

Stockholders’ equity:

Preferred stock, $0.0001 par value:

Authorized shares – 25,000,000; issued and outstanding shares – none at March 31, 2015 and December 31, 2014

  —        —     

Common Stock $0.0001 par value:

Authorized shares – 150,000,000; issued and outstanding shares – 37,072,155 and 36,918,442 at March 31, 2015 and December 31, 2014, respectively

  4      4   

Additional paid-in capital

  76,679      75,058   

Stock notes receivable from employees

  (4   (4

Retained earnings

  55,261      41,592   

Accumulated other comprehensive income

  520      159   
  

 

 

   

 

 

 

Total stockholders’ equity

  132,460      116,809   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

$ 217,329    $ 233,604   
  

 

 

   

 

 

 

 

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MARCUS & MILLICHAP, INC

ADJUSTED EBITDA RECONCILIATION

(Unaudited)

Adjusted EBITDA, which the Company defines as net income before interest income/expense, taxes, net realized gains on marketable securities, available for sale, depreciation and amortization and stock-based compensation is a non-GAAP financial measure. The Company uses Adjusted EBITDA in its business operations to, among other things, evaluate the performance of its business, develop budgets and measure its performance against those budgets. The Company also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate its overall operating performance. However, Adjusted EBITDA has material limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under U.S. generally accepted accounting principles (“U.S. GAAP”). The Company finds Adjusted EBITDA as a useful tool to assist in evaluating performance because it eliminates items related to capital structure and taxes and non-cash stock-based compensation charges. In light of the foregoing limitations, the Company does not rely solely on Adjusted EBITDA as a performance measure and also considers its U.S. GAAP results. Adjusted EBITDA is not a measurement of the Company’s financial performance under U.S. GAAP and should not be considered as an alternative to net income, operating income or any other measures derived in accordance with U.S. GAAP. Because Adjusted EBITDA is not calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies.

A reconciliation of the most directly comparable GAAP financial measure, net income, to Adjusted EBITDA is as follows (in thousands):

 

     Three Months Ended
March 31,
 
     2015      2014  

Net Income

   $ 13,669       $ 6,782   

Adjustments:

     

Interest income and other (1)

     (335      (3

Interest expense

     583         404   

Provision for income taxes

     9,647         4,815   

Depreciation and amortization

     780         775   

Stock-based compensation

     1,907         717   
  

 

 

    

 

 

 

Adjusted EBITDA

$ 26,251    $ 13,490   
  

 

 

    

 

 

 

 

(1)  Other for the three months ended March 31, 2015 includes $74,000 of net realized gains on marketable securities, available for sale.

 

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