QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
(Address of Principal Executive Offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
☒ | Accelerated filer | ☐ | ||||
Non-accelerated filer |
☐ | Smaller reporting company | ||||
Emerging growth company |
Page |
||||
3 | ||||
3 | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
25 | ||||
34 | ||||
35 | ||||
36 | ||||
36 | ||||
36 | ||||
36 | ||||
36 | ||||
36 | ||||
36 | ||||
March 31, 2022 (Unaudited) |
December 31, 2021 |
|||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Commissions receivable, net |
||||||||
Prepaid expenses |
||||||||
Marketable debt securities, available-for-sale |
||||||||
Advances and loans, net |
||||||||
Other assets |
||||||||
|
|
|
|
|||||
Total current assets |
||||||||
Property and equipment, net |
||||||||
Operating lease right-of-use |
||||||||
Marketable debt securities, available-for-sale |
||||||||
Assets held in rabbi trust |
||||||||
Deferred tax assets, net |
||||||||
Goodwill and other intangible assets, net |
||||||||
Advances and loans, net |
||||||||
Other assets |
||||||||
|
|
|
|
|||||
Total assets |
$ | $ | ||||||
|
|
|
|
|||||
Liabilities and stockholders’ equity |
||||||||
Current liabilities: |
||||||||
Accounts payable and other liabilities |
$ | $ | ||||||
Deferred compensation and commissions |
||||||||
Dividends payable |
||||||||
Income tax payable |
||||||||
Operating lease liabilities |
||||||||
Accrued bonuses and other employee related expenses |
||||||||
|
|
|
|
|||||
Total current liabilities |
||||||||
Deferred compensation and commissions |
||||||||
Operating lease liabilities |
||||||||
Other liabilities |
||||||||
|
|
|
|
|||||
Total liabilities |
||||||||
|
|
|
|
|||||
Commitments and contingencies |
||||||||
Stockholders’ equity: |
||||||||
Preferred stock, $ |
||||||||
Authorized shares – |
||||||||
Common stock, $ |
||||||||
Authorized shares – |
||||||||
Additional paid-in capital |
||||||||
Retained earnings |
||||||||
Accumulated other comprehensive income (loss) |
( |
) | ||||||
|
|
|
|
|||||
Total stockholders’ equity |
||||||||
|
|
|
|
|||||
Total liabilities and stockholders’ equity |
$ | $ | ||||||
|
|
|
|
Three Months Ended March 31, |
||||||||
2022 | 2021 | |||||||
Revenues: |
||||||||
Real estate brokerage commissions |
$ | $ | ||||||
Financing fees |
||||||||
Other revenues |
||||||||
|
|
|
|
|||||
Total revenues |
||||||||
|
|
|
|
|||||
Operating expenses: |
||||||||
Cost of services |
||||||||
Selling, general and administrative |
||||||||
Depreciation and amortization |
||||||||
|
|
|
|
|||||
Total operating expenses |
||||||||
|
|
|
|
|||||
Operating income |
||||||||
Other income, net |
||||||||
Interest expense |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Income before provision for income taxes |
||||||||
Provision for income taxes |
||||||||
|
|
|
|
|||||
Net income |
$ | $ | ||||||
Other comprehensive (loss) income: |
||||||||
Marketable debt securities, available-for-sale: |
||||||||
Change in net unrealized gains/losses |
( |
) | ( |
) | ||||
Less: reclassification adjustment for net gains included in other income, net |
( |
) | ||||||
|
|
|
|
|||||
Net change, net of tax of $ |
( |
) | ( |
) | ||||
Foreign currency translation gain (loss), net of tax of $ |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total other comprehensive (loss) income |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Comprehensive income |
$ | $ | ||||||
|
|
|
|
|||||
Earnings per share: |
||||||||
Basic |
$ | $ | ||||||
Diluted |
$ | $ | ||||||
Weighted average common shares outstanding: |
||||||||
Basic |
||||||||
Diluted |
Three Months Ended March 31, 2022 | ||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Additional Paid-In Capital |
Stock Notes Receivable From Employees |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Total | ||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||
Balance at December 31, 2021 |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Net and comprehensive income (loss) |
— | — | ( |
) | ||||||||||||||||||||||||||||||||
Stock-based award activity |
||||||||||||||||||||||||||||||||||||
Stock-based compensation |
||||||||||||||||||||||||||||||||||||
Issuance of common stock for vesting of restricted stock units |
||||||||||||||||||||||||||||||||||||
Shares withheld related to net share settlement of stock-based awards |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
Dividends on common stock |
— | — | — | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance as of March 31, 2022 |
$ | $ | $ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2021 | ||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Additional Paid-In Capital |
Stock Notes Receivable From Employees |
Retained Earnings |
Accumulated Other Comprehensive Income |
Total | ||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||
Balance at December 31, 2020 |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Net and comprehensive income |
— | — | ( |
) | ||||||||||||||||||||||||||||||||
Stock-based award activity |
||||||||||||||||||||||||||||||||||||
Stock-based compensation |
||||||||||||||||||||||||||||||||||||
Issuance of common stock for vesting of restricted stock units |
||||||||||||||||||||||||||||||||||||
Shares withheld related to net share settlement of stock-based awards |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance as of March 31, 2021 |
$ | $ | $ | $ | $ | $ | |
$ | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
||||||||
2022 | 2021 | |||||||
Cash flows from operating activities |
||||||||
Net income |
$ | $ | ||||||
Adjustments to reconcile net income to net cash used in operating activities: |
||||||||
Depreciation and amortization |
||||||||
Noncash lease expense |
||||||||
Credit loss recovery |
( |
) | ( |
) | ||||
Stock-based compensation |
||||||||
Deferred taxes, net |
||||||||
Unrealized foreign exchange (gains) losses |
( |
) | ( |
) | ||||
Net realized gains on marketable debt securities, available-for-sale |
( |
) | ( |
) | ||||
Other non-cash items |
( |
) | ||||||
Changes in operating assets and liabilities: |
||||||||
Commissions receivable |
||||||||
Prepaid expenses |
||||||||
Advances and loans |
( |
) | ( |
) | ||||
Other assets |
( |
) | ( |
) | ||||
Accounts payable and other liabilities |
||||||||
Income tax receivable/payable |
||||||||
Accrued bonuses and other employee related expenses |
( |
) | ( |
) | ||||
Deferred compensation and commissions |
( |
) | ( |
) | ||||
Operating lease liabilities |
( |
) | ( |
) | ||||
Other liabilities |
( |
) | ( |
) | ||||
Net cash flows used in operating activities |
( |
) | ( |
) | ||||
Cash flows from investing activities |
||||||||
Acquisition of businesses, net of cash received |
( |
) | ||||||
Purchases of marketable debt securities, available-for-sale |
( |
) | ( |
) | ||||
Proceeds from sales and maturities of marketable debt securities, available-for-sale |
||||||||
Issuances of employee notes receivable |
( |
) | ( |
) | ||||
Payments received on employee notes receivable |
||||||||
Purchase of property and equipment |
( |
) | ( |
) | ||||
Net cash flows provided by investing activities |
||||||||
Cash flows from financing activities |
||||||||
Taxes paid related to net share settlement of stock-based awards |
( |
) | ( |
) | ||||
Principal payments on stock appreciation rights liability |
( |
) | ( |
) | ||||
Principal payments on contingent and deferred consideration |
( |
) | ( |
) | ||||
Net cash flows used in financing activities |
( |
) | ( |
) | ||||
Effect of currency exchange rate changes on cash and cash equivalents |
||||||||
Net (decrease) in cash and cash equivalents |
( |
) | ( |
) | ||||
Cash and cash equivalents at beginning of period |
||||||||
Cash and cash equivalents at end of period |
$ | $ | ||||||
Supplemental disclosures of cash flow information |
||||||||
Interest paid during the period |
$ | $ | ||||||
Income taxes paid, net |
$ | $ | ||||||
1. |
Description of Business, Basis of Presentation and Recent Accounting Pronouncements |
2. |
Property and Equipment, Net |
March 31, 2022 |
December 31, 2021 |
|||||||
Computer software and hardware equipment |
$ | $ | ||||||
Furniture, fixtures and equipment |
||||||||
Less: accumulated depreciation and amortization |
( |
) | ( |
) | ||||
$ | $ | |||||||
3. |
Operating Leases |
Three Months Ended March 31, |
||||||||
2022 | 2021 | |||||||
Operating lease cost: |
||||||||
Lease cost (1) |
$ | $ | ||||||
Variable lease cost (2) |
||||||||
Sublease income |
( |
) | ( |
) | ||||
$ | $ | |||||||
(1) |
Includes short-term lease cost and ROU asset amortization. |
(2) |
Primarily relates to common area maintenance, property taxes, insurance, utilities and parking. |
March 31, 2022 | ||||
Remainder of 2022 |
$ | |||
2023 |
||||
2024 |
||||
2025 |
||||
2026 |
||||
Thereafter |
||||
Total future minimum lease payments |
||||
Less imputed interest |
( |
) | ||
Present value of operating lease liabilities |
$ | |||
Three Months Ended March 31, |
||||||||
2022 | 2021 | |||||||
Operating cash flow information: |
||||||||
Cash paid for amounts included in the measurement of operating lease liabilities |
$ | $ | ||||||
Noncash activity: |
||||||||
ROU assets obtained in exchange for operating lease liabilities |
$ | $ | ||||||
Tenant improvements owned by lessor related to ROU assets (1) |
$ | $ |
(1) |
Reclassification from other assets current. |
March 31, 2022 | December 31, 2021 | |||||||
Weighted average remaining operating lease term |
||||||||
Weighted average discount rate |
% | % |
4. |
Investments in Marketable Debt Securities, Available for Sale |
March 31, 2022 | ||||||||||||||||||||
Amortized Cost |
Allowance for Credit Losses |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
||||||||||||||||
Short-term investments: |
||||||||||||||||||||
U.S. treasuries |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
Corporate debt |
( |
) | ||||||||||||||||||
Asset-backed securities (“ABS”) and other |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ |
|
|
$ | $ | $ | ( |
) | $ | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Long-term investments: |
||||||||||||||||||||
U.S. treasuries |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
U.S. government sponsored entities |
( |
) | ||||||||||||||||||
Corporate debt |
( |
) | ||||||||||||||||||
Asset-backed securities (“ABS”) and other |
( |
) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | $ | $ | $ | ( |
) | $ | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
December 31, 2021 | ||||||||||||||||||||
Amortized Cost |
Allowance for Credit Losses |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
||||||||||||||||
Short-term investments: |
||||||||||||||||||||
U.S. treasuries |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
Corporate debt |
( |
) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | $ | $ | $ | ( |
) | $ | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Long-term investments: |
||||||||||||||||||||
U.S. treasuries |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
U.S. government sponsored entities |
( |
) | ||||||||||||||||||
Corporate debt |
( |
) | ||||||||||||||||||
ABS and other |
( |
) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | $ | $ | $ | ( |
) | $ | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
March 31, 2022 | ||||||||||||||||||||||||
Less than 12 months | 12 months or greater | Total | ||||||||||||||||||||||
Fair Value |
Gross Unrealized Losses |
Fair Value |
Gross Unrealized Losses |
Fair Value |
Gross Unrealized Losses |
|||||||||||||||||||
U.S. treasuries |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||||
U.S. government sponsored entities |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Corporate debt |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
ABS and other |
( |
) | ( |
) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
$ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2021 | ||||||||||||||||||||||||
Less than 12 months | 12 months or greater | Total | ||||||||||||||||||||||
Fair Value |
Gross Unrealized Losses |
Fair Value |
Gross Unrealized Losses |
Fair Value |
Gross Unrealized Losses |
|||||||||||||||||||
U.S. treasuries |
$ | $ | ( |
) | $ | $ | $ | $ | ( |
) | ||||||||||||||
U.S. government sponsored entities |
( |
) | ( |
) | ||||||||||||||||||||
Corporate debt |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
ABS and other |
( |
) | ( |
) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
$ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
||||||||
2022 | 2021 | |||||||
Gross realized gains (1) |
$ | $ | ||||||
|
|
|
|
|||||
Gross realized losses (1) |
$ | $ | ||||||
|
|
|
|
(1) |
Recorded in other income, net in the condensed consolidated statements of net and comprehensive income. The cost basis of securities sold were determined based on the specific identification method. |
March 31, 2022 | December 31, 2021 | |||||||||||||||
Amortized Cost |
Fair Value | Amortized Cost |
Fair Value | |||||||||||||
Due in one year or less |
$ | $ | $ | $ | ||||||||||||
Due after one year through five years |
||||||||||||||||
Due after five years through ten years |
||||||||||||||||
Due after ten years |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | $ | $ | $ | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted average contractual maturity |
5. |
Acquisitions, Goodwill and Other Intangible Assets |
March 31, 2022 | December 31, 2021 | |||||||||||||||||||||||
Gross Carrying Amount |
Accumulated Amortization |
Net Book Value |
Gross Carrying Amount |
Accumulated Amortization |
Net Book Value |
|||||||||||||||||||
Goodwill and intangible assets: |
||||||||||||||||||||||||
Goodwill |
$ | $ | — | $ | $ | $ | — | $ | ||||||||||||||||
Intangible assets (1) |
( |
) | ( |
) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
$ | $ | ( |
) | $ | $ | $ | ( |
) | $ | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Total weighted average amortization period was |
Three Months Ended March 31, |
||||||||
2022 | 2021 | |||||||
Beginning balance |
$ | $ | ||||||
Additions from acquisitions (1) |
||||||||
Impairment losses |
||||||||
|
|
|
|
|||||
Ending balance |
$ | $ | ||||||
|
|
|
|
(1) |
The 2021 addition represents a measurement period adjustment for an acquisition made in 2020. |
March 31, 2022 | ||||
Remainder of 2022 |
$ | |||
2023 |
||||
2024 |
||||
2025 |
||||
2026 |
||||
Thereafter |
||||
|
|
|||
$ | ||||
|
|
6. |
Selected Balance Sheet Data |
Current | Non-Current |
|||||||||||||||
March 31, 2022 |
December 31, 2021 |
March 31, 2022 |
December 31, 2021 |
|||||||||||||
Mortgage servicing rights (“MSRs”), net of amortization |
$ | $ | $ | $ | ||||||||||||
Security deposits |
||||||||||||||||
Employee notes receivable (1) |
||||||||||||||||
Securities, held-to-maturity (2) |
||||||||||||||||
Customer trust accounts and other |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | $ | $ | $ | |||||||||||||
|
|
|
|
|
|
|
|
(1) |
Reduction of accrued bonuses and other employee related expenses in settlement of employee notes receivable were $ |
(2) |
Securities, held-to-maturity, |
Three Months Ended March 31, |
||||||||
2022 | 2021 | |||||||
Beginning balance |
$ | $ | ||||||
Additions |
||||||||
Amortization |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Ending balance |
$ | $ | ||||||
|
|
|
|
Current | Non-Current |
|||||||||||||||
March 31, 2022 |
December 31, 2021 |
March 31, 2022 |
December 31, 2021 |
|||||||||||||
Stock appreciation rights (“SARs”) liability (1) |
$ | $ | $ | $ | ||||||||||||
Commissions payable to investment sales and financing professionals |
||||||||||||||||
Deferred compensation liability (1) |
||||||||||||||||
Other |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | $ | $ | $ | |||||||||||||
|
|
|
|
|
|
|
|
(1) |
The SARs and deferred compensation liability become subject to payout as a result of a participant no longer being considered a service provider. As a result of the retirement of certain participants, estimated amounts to be paid to the participants within the next twelve months have been classified as current. |
Three Months Ended March 31, |
||||||||
2022 | 2021 | |||||||
Increase (Decrease) in the carrying value of the assets held in the rabbi trust (1) |
$ | ( |
) | $ | ||||
|
|
|
|
|||||
Increase (Decrease) in the net carrying value of the deferred compensation obligation (2) |
$ | ( |
) | $ | ||||
|
|
|
|
(1) |
Recorded in other income, net in the condensed consolidated statements of net and comprehensive income. |
(2) |
Recorded in selling, general and administrative expense in the condensed consolidated statements of net and comprehensive income. |
Non-Current |
||||||||
March 31, 2022 |
December 31, 2021 |
|||||||
Deferred consideration (1) |
$ | $ | ||||||
Contingent consideration (1) |
||||||||
Dividends Payable |
||||||||
Other |
||||||||
|
|
|
|
|||||
$ | $ | |||||||
|
|
|
|
(1) |
Includes a measurement period adjustment in 2021 and a settlement of deferred consideration made during the three months ended March 31, 2022 and 2021, which represents a noncash investing activity. See Note 5 – “Acquisitions, Goodwill and Other Intangible Assets” for additional information. |
7 . |
Related-Party Transactions |
8. |
Fair Value Measurements |
• | Level 1: |
• | Level 2: |
• | Level 3: |
March 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
Assets: |
||||||||||||||||||||||||||||||||
Assets held in rabbi trust |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Cash equivalents (1) |
||||||||||||||||||||||||||||||||
Commercial paper |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Money market funds |
||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Marketable debt securities, available-for-sale: |
||||||||||||||||||||||||||||||||
Short-term investments: |
||||||||||||||||||||||||||||||||
U.S. treasuries |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
U.S. government sponsored entities |
||||||||||||||||||||||||||||||||
Corporate debt |
||||||||||||||||||||||||||||||||
ABS and other |
||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Long-term investments: |
||||||||||||||||||||||||||||||||
U.S. treasuries |
$ | $ | $ | $ |