Exhibit 99.1

 

LOGO

MARCUS & MILLICHAP, INC. REPORTS SECOND QUARTER

2015 FINANCIAL RESULTS

- Second Quarter Revenue Increased 29.2% -

- Second Quarter Sales Volume Increased 31.8% to $9.4 billion -

CALABASAS, Calif., August 6, 2015 –(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 second quarter ended June 30, 2015. Highlights include:

Second Quarter 2015 Results Compared to Second Quarter 2014

 

    Revenue increased 29.2% to $173.5 million, with real estate brokerage commissions up 30.0%.

 

    Sales volume grew 31.8% to $9.4 billion.

 

    Number of transactions increased by 13.6%.

 

    Net income increased to $17.6 million ($0.45 per common share – Basic and Diluted) compared to $12.8 million ($0.33 per common share – Basic and Diluted) in the second quarter of the prior year.

 

    Adjusted EBITDA was $33.0 million, compared to $24.0 million in the second quarter of the prior year.

Six Months 2015 Results Compared to Six Months 2014

 

    Revenue increased 28.6% to $320.0 million compared to the first half of the prior year, with real estate brokerage commissions up 29.1%.

 

    Sales volume grew 30.7% to $17.5 billion compared to the first half of the prior year.

 

    Net income increased to $31.2 million ($0.80 per common share – Basic and Diluted) compared to $19.6 million ($0.50 per common share – Basic and Diluted) in the first half of the prior year.

“We are pleased with our second quarter results, which reflects continuation of healthy expansion in all of our business groups, driven by our growth plan and management initiatives implemented over the past few years. While we achieved significant growth rates in our specialty property types such as self-storage and senior housing, major transactions and mortgage brokerage business, our core, private client business also continued to expand at a solid pace, further increasing our industry dominance in this sector. We also continued to benefit from favorable market conditions despite a slow-down in the pace of year-over-year sales growth, in-line with the market normalization we had anticipated going into 2015,” stated John Kerin, president and CEO. “The number of our sales transactions grew 11.5% over the prior year in the second quarter while our average transaction size expanded 18.4%, as a result of increases in real estate values, maturing of our sales professionals and increased hiring of experienced brokers,” he added.

Second Quarter 2015 Results Compared to Second Quarter 2014

Total revenues for the second quarter of 2015 were $173.5 million, compared to $134.3 million for the same period in the prior year, an increase of $39.2 million, or 29.2%. The increase in total revenues is primarily a result

 

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of increases in revenues from real estate brokerage commissions which increased to $160.2 million for the three months ended June 30, 2015 from $123.3 million for the same period in the prior year, an increase of $36.9 million or 30.0%. This was driven by a combination of the increase in the number of investment sales transactions and the average transaction size. The rise in average transaction size is a reflection of the maturing of our agents, focus on hiring experienced sales professionals and the rise in real estate values. Growth in financing fees, partially offset by a decrease in other revenues, contributed the remaining increase in total revenues.

Total operating expenses for the second quarter of 2015 were $144.0 million, compared to $112.5 million for the same period in the prior year, an increase of $31.4 million, or 27.9%. The increase was primarily driven by a $26.0 million or 32.6% 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 increased to 60.8% compared to 59.3% for the same period in the prior year primarily due to an increase in the proportion of transactions closed by our more senior investment sales professionals who are compensated at higher commission rates.

Selling, general and administrative expense increased by $5.5 million, or 17.0% during the second quarter of 2015 as compared to the same period in the prior year. The increase was primarily due to (i) management performance related compensation driven by our operating results; (ii) stock-based compensation expense resulting from an increase in the Company’s stock price, which impacted stock-based compensation expense of RSU grants to the Company’s independent contractors, which are required to be measured at fair value, incremental stock-based awards granted since the second quarter of 2014 and immediate vesting of certain RSU awards under provisions of the RSU agreement; (iii) sales and promotional expenses driven by marketing expenses to support increased sales activity; and (iv) salaries and related benefits related to higher headcount to support our growth. The increases were partially offset by a decrease in legal costs and related accruals.

Net income for the second quarter of 2015 was $17.6 million or $0.45 per common share (Basic and Diluted) compared to net income of $12.8 million or $0.33 per common share (Basic and Diluted) for the same period in the prior year. Adjusted EBITDA for the second quarter of 2015 was $33.0 million compared to adjusted EBITDA of $24.0 million for the same period in the prior year.

Six Months 2015 Results Compared to Six Months 2014

Total revenues for the six months ended June 30, 2015 were $320.0 million, compared to $248.9 million for the same period in the prior year, an increase of $71.2 million, or 28.6%. Operating expenses for the six months ended June 30, 2015 were $266.7 million compared to $215.1 million for the same period in the prior year, representing an increase of $51.7 million, or 24.0%. Cost of services as a percent of total revenues increased to 59.9% compared to 59.5% for the same period in the prior year. The Company reported net income for the six months ended June 30, 2015 of $31.2 million compared with net income of $19.6 million for the same period in the prior year. Adjusted EBITDA for the six months ended June 30, 2015 was $59.3 million, which represents an increase of $21.8 million, or 58.1%, as compared to $37.5 million in the prior year.

Business Outlook

Commenting on the Company’s business outlook, Mr. Kerin said “As we continue to execute on our growth plan, we expect real estate fundamentals and the overall operating environment to remain healthy in the foreseeable future. Despite the potential increase in interest rates, commercial real estate yields and growth prospects continue to attract investors to commercial real estate. We believe we’re well-positioned in the market place with plenty of growth opportunity in all of our business groups.”

 

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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, August 6, 2015 through 8:59 p.m. Pacific Time/11:59 p.m. Eastern Time on Thursday, August 20, 2015 by dialing (877) 870-5176 in the United States and Canada or +1 (858) 384-5517 internationally and entering passcode 13614376.

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 June 30, 2015, the Company has nearly 1,500 investment sales and financing professionals in 79 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
June 30,
    Six Months Ended
June 30,
 
     2015     2014     2015     2014  

Revenues:

    

Real estate brokerage commissions

   $ 160,221      $ 123,278      $ 294,414      $ 228,026   

Financing fees

     11,150        8,384        19,181        14,484   

Other revenues

     2,111        2,603        6,428        6,345   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     173,482        134,265        320,023        248,855   

Operating expenses:

        

Cost of services

     105,557        79,601        191,715        147,997   

Selling, general, and administrative expense

     37,589        32,127        73,418        65,484   

Depreciation and amortization expense

     807        811        1,587        1,586   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     143,953        112,539        266,720        215,067   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     29,529        21,726        53,303        33,788   

Other income (expense), net

     362        330        487        269   

Interest expense

     (386     (401     (969     (805
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before provision for income taxes

     29,505        21,655        52,821        33,252   

Provision for income taxes

     11,949        8,859        21,596        13,674   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     17,556        12,796        31,225        19,578   

Other comprehensive (loss) income:

        

Unrealized (loss) on marketable securities, net of tax of $332, $0, $206 and $0 for the three months ended June 30, 2015 and 2014 and the six months ended June 30, 2015 and 2014, respectively

     (493     —          (305     —     

Foreign currency translation (loss) gain, net of tax of $31, $28, $86 and $2 for the three months ended June 30, 2015 and 2014 and the six months ended June 30, 2015 and 2014, respectively

     (46     (39     127        3   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive (loss) income

     (539     (39     (178     3   
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 17,017      $ 12,757      $ 31,047      $ 19,581   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share:

        

Basic

   $ 0.45      $ 0.33      $ 0.80      $ 0.50   

Diluted

   $ 0.45      $ 0.33      $ 0.80      $ 0.50   

Weighted average common shares outstanding:

        

Basic

     38,870        38,847        38,858        38,847   

Diluted

     39,057        38,926        39,006        38,917   

 

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MARCUS & MILLICHAP, INC.

KEY OPERATING METRICS SUMMARY

(Unaudited)

Total sales volume was $9.4 billion for the three months ended June 30, 2015, encompassing 2,166 transactions consisting of $7.4 billion for real estate brokerage (1,552 transactions), $1.2 billion for financing (415 transactions) and $0.8 billion in other transactions, including consulting and advisory services (199 transactions). Total sales volume was $17.5 billion for the six months ended June 30, 2015, encompassing 4,043 transactions consisting of $13.5 billion for real estate brokerage (2,926 transactions), $2.1 billion for financing (726 transactions) and $1.9 billion in other transactions, including consulting and advisory services (391 transactions). As of June 30, 2015, the Company had 1,407 investment sales professionals and 83 financing professionals. Key metrics for Real Estate Brokerage and Financing are as follows:

 

     Three Months Ended
June 30,
     Six Months Ended
June 30,
 

Real Estate Brokerage

   2015      2014      2015      2014  

Average Number of Sales Professionals

     1,410         1,265         1,417         1,251   

Average Number of Transactions per Sales Professional

     1.1         1.1         2.1         2.1   

Average Commission per Transaction

   $ 103,235       $ 88,562       $ 100,620       $ 88,622   

Average Transaction Size

   $ 4,731,545       $ 3,997,137       $ 4,606,138       $ 3,882,042   

Total Number of Transactions

     1,552         1,392         2,926         2,573   

Total Sales Volume (in millions)

   $ 7,343       $ 5,564       $ 13,477       $ 9,988   
     Three Months Ended
June 30,
     Six Months Ended
June 30,
 

Financing

   2015      2014      2015      2014  

Average Number of Financing Professionals

     84         78         83         77   

Average Number of Transactions per Financing Professional

     4.9         4.5         8.7         8.3   

Average Fee per Transaction

   $ 26,867       $ 24,024       $ 26,420       $ 22,738   

Average Transaction Size

   $ 3,008,581       $ 2,571,936       $ 2,930,486       $ 2,385,968   

Total Number of Transactions

     415         349         726         637   

Total Dollar Volume (in millions)

   $ 1,249       $ 898       $ 2,128       $ 1,520   

 

 

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MARCUS & MILLICHAP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollar amounts in thousands, except per share amounts)

 

     June 30,
2015

(Unaudited)
    December 31,
2014
 

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 84,198      $ 149,159   

Commissions receivable

     5,131        3,412   

Employee notes receivable

     164        216   

Prepaid expenses

     6,506        7,536   

Income tax receivable

     —          1,711   

Marketable securities, available for sale

     51,070        —     

Deferred tax assets, net

     11,841        13,600   

Other assets, net

     3,092        2,839   
  

 

 

   

 

 

 

Total current assets

     162,002        178,473   

Prepaid rent

     5,336        3,645   

Property and equipment, net

     8,593        7,693   

Employee notes receivable

     141        162   

Marketable securities, available for sale

     51,794        14,752   

Assets held in rabbi trust

     5,627        4,332   

Deferred tax assets, net

     21,941        21,265   

Other assets

     5,198        3,282   
  

 

 

   

 

 

 

Total assets

   $ 260,632      $ 233,604   
  

 

 

   

 

 

 

Liabilities and stockholders’ equity

    

Current liabilities:

    

Accounts payable and accrued expenses

   $ 9,696      $ 9,488   

Accounts payable and accrued expenses – related party, net

     88        97   

Notes payable to former stockholders

     939        894   

Commissions payable

     21,812        28,932   

Income tax payable

     9,697        —     

Accrued bonuses and other employee related expenses

     16,112        27,793   
  

 

 

   

 

 

 

Total current liabilities

     58,344        67,204   

Deferred compensation and commissions

     36,401        36,581   

Notes payable to former stockholders

     9,671        10,610   

Other liabilities

     3,483        2,400   
  

 

 

   

 

 

 

Total liabilities

     107,899        116,795   

Stockholders’ equity:

    

Preferred stock, $0.0001 par value:

    

Authorized shares – 25,000,000; issued and outstanding shares – none at June 30, 2015 and December 31, 2014

     —          —     

Common Stock $0.0001 par value:

    

Authorized shares – 150,000,000; issued and outstanding shares – 37,107,516 and 36,918,442 at June 30, 2015 and December 31, 2014, respectively

     4        4   

Additional paid-in capital

     79,935        75,058   

Stock notes receivable from employees

     (4     (4

Retained earnings

     72,817        41,592   

Accumulated other comprehensive (loss) income

     (19     159   
  

 

 

   

 

 

 

Total stockholders’ equity

     152,733        116,809   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 260,632      $ 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 calculated 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
June,
     Six Months Ended
June 30,
 
     2015      2014      2015      2014  

Net Income

   $ 17,556       $ 12,796       $ 31,225       $ 19,578   

Adjustments:

           

Interest income and other (1)

     (339      (1      (674      (4

Interest expense

     386         401         969         805   

Provision for income taxes

     11,949         8,859         21,596         13,674   

Depreciation and amortization

     807         811         1,587         1,586   

Stock-based compensation

     2,675         1,141         4,582         1,858   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 33,034       $ 24,007       $ 59,285       $ 37,497   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)  Other for the three and six months ended June 30, 2015 consists of $56,000 and $130,000 of net realized gains on marketable securities, available for sale, respectively.

 

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