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Table of Contents
     
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM
10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     
Commission File Number:
001-36155
 
MARCUS & MILLICHAP, INC.
(Exact name of registrant as specified in its Charter)
 
Delaware
 
35-2478370
(State or Other Jurisdiction
of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
     
23975 Park Sorrento, Suite 400
Calabasas, California
 
91302
(Address of Principal Executive Offices)
 
(Zip Code)
(818)
212-2250
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
Common Stock, par value $0.0001 per share
 
MMI
 
New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  
    No  
Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be su
bmitte
d pursuant to Rule 405 of Regulation
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter time period that the registrant was required to submit such files).    Yes  
    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
Large accelerated filer
 
 
Accelerated filer
 
             
Non-accelerated filer
 
 
Smaller reporting company
 
             
Emerging growth company
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).    Yes  
    No  
Number of shares of common stock, par value $0.0001 per share, of the registrant issued and outstanding as of
October
 
31
, 2019 was 39,132,236 shares.
     
 

Table of Contents
MARCUS & MILLICHAP, Inc.
TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
Page
 
 
 
 
 
 
 
 
3
 
 
 
 
 
 
 
 
4
 
 
 
 
 
 
 
 
5
 
 
 
 
 
 
 
 
7
 
 
 
 
 
 
 
 
8
 
 
 
 
 
 
 
 
25
 
 
 
 
 
 
 
 
38
 
 
 
 
 
 
 
 
38
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
39
 
 
 
 
 
 
 
 
39
 
 
 
 
 
 
 
 
39
 
 
 
 
 
 
 
 
39
 
 
 
 
 
 
 
 
39
 
 
 
 
 
 
 
 
39
 
 
 
 
 
 
 
 
40
 
 
 
 
 
 
 
 
41
 
 
2
 

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MARCUS & MILLICHAP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for shares and par value)
 
September 30,
2019
(Unaudited)
   
December 31,
2018
 
Assets
   
     
 
Current assets:
   
     
 
Cash and cash equivalents
  $
226,081
    $
214,683
 
Commissions receivable
   
6,316
     
4,948
 
Prepaid expenses
   
9,330
     
7,904
 
Income tax receivable
   
7,786
     
  
 
Marketable securities,
available-for-sale
   
124,475
     
137,436
 
Other assets, net
   
12,352
     
6,368
 
                 
Total current assets
   
386,340
     
371,339
 
Prepaid rent
   
  
     
13,892
 
Property and equipment, net
   
21,609
     
19,550
 
Operating lease
right-of-use
assets, net
   
90,165
     
  
 
Marketable securities,
available-for-sale
   
70,785
     
83,209
 
Assets held in rabbi trust
   
9,102
     
8,268
 
Deferred tax assets, net
   
18,513
     
22,959
 
Goodwill and other intangible assets, net
   
14,647
     
15,385
 
Other assets
   
53,432
     
31,778
 
                 
Total assets
  $
664,593
    $
566,380
 
                 
Liabilities and stockholders’ equity
   
     
 
Current liabilities:
   
     
 
Accounts payable and other liabilities
  $
11,003
    $
11,035
 
Notes payable to former stockholders
   
6,564
     
1,087
 
Deferred compensation and commissions
   
32,450
     
47,910
 
Income tax payable
   
  
     
4,486
 
Operating lease liabilities
   
17,500
     
  
 
Accrued bonuses and other employee related expenses
   
16,964
     
28,338
 
                 
Total current liabilities
   
84,481
     
92,856
 
Deferred compensation and commissions
   
41,695
     
49,887
 
Notes payable to former stockholders
   
  
     
6,564
 
Operating lease liabilities
   
64,316
     
  
 
Deferred rent and other liabilities
   
2,001
     
7,499
 
                 
Total liabilities
   
192,493
     
156,806
 
                 
Commitments and contingencies
   
  
     
  
 
Stockholders’ equity:
   
     
 
Preferred stock, $0.0001 par value:
   
     
 
Authorized shares – 25,000,000; issued and outstanding shares – none at September 30, 2019 and December 31, 2018, respectively
   
  
     
  
 
Common stock, $
0.0001
par value:
   
     
 
Authorized shares – 150,000,000; issued and outstanding shares –
39,132,236
and
38,814,464
at September 30, 2019 and December 31, 2018, respectively
   
4
     
4
 
Additional
paid-in
capital
   
102,142
     
97,458
 
Stock notes receivable from employees
   
(4
)    
(4
)
Retained earnings
   
367,550
     
311,341
 
Accumulated other comprehensive income
   
2,408
     
775
 
                 
Total stockholders’ equity
   
472,100
     
409,574
 
                 
Total liabilities and stockholders’ equity
  $
664,593
    $
566,380
 
                 
See accompanying notes to condensed consolidated financial statements.
 
3
 

Table of Contents
MARCUS & MILLICHAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET AND COMPREHENSIVE INCOME
(in thousands, except per share amounts)
(Unaudited)
                                 
 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
 
2019
   
2018
   
2019
   
2018
 
Revenues:
 
     
     
 
Real estate brokerage commissions
  $
 
 
180,198
    $
 
 
191,980
    $
 
 
513,815
    $
 
 
536,145
 
Financing fees
   
16,013
     
15,947
     
47,487
     
41,234
 
Other revenues
   
2,009
     
2,663
     
7,218
     
7,154
 
                                 
Total revenues
   
198,220
     
210,590
     
568,520
     
584,533
 
                                 
Operating expenses:
   
     
     
     
 
Cost of services
   
124,147
     
132,896
     
343,682
     
354,414
 
Selling, general and administrative expense
   
48,091
     
48,659
     
149,845
     
145,792
 
Depreciation and amortization expense
   
1,910
     
1,651
     
5,674
     
4,529
 
                                 
Total operating expenses
   
174,148
     
183,206
     
499,201
     
504,735
 
                                 
Operating income
   
24,072
     
27,384
     
69,319
     
79,798
 
Other income (expense), net
   
2,573
     
2,127
     
9,067
     
5,060
 
Interest expense
   
(329
)    
(342
)    
(1,018
)    
(1,054
)
                                 
Income before provision for income taxes
   
26,316
     
29,169
     
77,368
     
83,804
 
Provision for income taxes
   
7,024
     
8,315
     
21,159
     
22,772
 
                                 
Net income
   
19,292
     
20,854
     
56,209
     
61,032
 
                                 
Other comprehensive income (loss):
   
     
     
     
 
Marketable securities,
available-for-sale:
   
     
     
     
 
Change in unrealized gains (losses)
   
160
     
(115
)    
1,874
     
(779
)
Less: reclassification adjustment for net (gains) losses included in other income (expense), net
   
(23
)    
  
     
(41
)    
8
 
                                 
Net change, net of tax of $
46
, $(38), $617 and $(259) for the three and nine months
ended September 30, 2019 and 2018, respectively
   
137
     
(115
)    
1,833
     
(771
)
Foreign currency translation gain (loss), net of tax of $0 for each of the three and nine
months ended September 30, 2019 and 2018
   
114
     
(29
)    
(200
)    
44
 
                                 
Total other comprehensive income (loss)
   
251
     
(144
)    
1,633
     
(727
)
                                 
Comprehensive income
  $
19,543
    $
20,710
    $
57,842
    $
60,305
 
                                 
Earnings per share:
   
     
     
     
 
Basic
  $
0.49
    $
0.53
    $
1.43
    $
1.56
 
Diluted
  $
0.49
    $
0.53
    $
1.42
    $
1.55
 
Weighted average common shares outstanding:
   
     
     
     
 
Basic
   
39,441
     
39,191
     
39,383
     
39,147
 
Diluted
   
39,550
     
39,484
     
39,527
     
39,359
 
 
 
 
 
 
 
 
See accompanying notes to condensed consolidated financial statements.
 
4
 

Table of Contents
MARCUS & MILLICHAP, Inc.
CONDENSED Consolidated StatementS of Stockholders’ Equity
(in thousands, except for shares)
(Unaudited)
                                                                         
 
Three Months Ended September 30, 2019
 
 
 
 
 
 
 
 
Additional
Paid-In
 
 
Stock Notes
Receivable
From
 
 
Retained
 
 
Accumulated
Other
Comprehensive
 
 
 
 
 
Preferred Stock
 
 
Common Stock
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Capital
 
 
Employees
 
 
Earnings
 
 
Income
 
 
Total
 
Balance at June 30, 2019
 
 
  
 
 
$
  
 
 
 
39,090,861
 
 
$
4
 
 
$
100,098
 
 
$
(4
)
 
$
 
 
348,258
 
 
$
2,157
 
 
$
 
 
450,513
 
Net and comprehensive income
 
 
—  
 
 
 
  
 
 
 
—  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
19,292
 
 
 
251
 
 
 
19,543
 
Stock-based award activity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
2,114
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
2,114
 
Shares issued pursuant to employee stock purchase plan
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
Issuance of common stock
for vesting of restricted stock units
 
 
  
 
 
 
  
 
 
 
41,257
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
Issuance of common stock
for unvested restricted stock awards
 
 
  
 
 
 
  
 
 
 
2,264
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
Shares withheld related to
net share settlement of stock-based awards
 
 
  
 
 
 
  
 
 
 
(2,146
)
 
 
  
 
 
 
(70
)
 
 
  
 
 
 
  
 
 
 
  
 
 
 
(70
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of September 30, 2019
 
 
  
 
 
$
  
 
 
 
39,132,236
 
 
$
4
 
 
$
102,142
 
 
$
(4
)
 
$
367,550
 
 
$
2,408
 
 
$
472,100
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                         
 
Three Months Ended September 30, 2018
 
 
Preferred Stock
 
 
Common Stock
 
 
Additional
Paid-In
 
 
Stock Notes
Receivable
From
 
 
Retain
ed
 
 
Accumulated
Other
Comprehensive
 
 
 
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Capital
 
 
Employees
 
 
Earnings
 
 
Income (Loss)
 
 
Total
 
Balance at June 30, 2018
 
 
  
 
 
$
  
 
 
 
38,621,712
 
 
$
4
 
 
$
 
 
94,291
 
 
$
(4
)
 
$
 
 
264,262
 
 
$
344
 
 
$
 
 
358,897
 
Net and comprehensive income
 
 
—  
 
 
 
  
 
 
 
—  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
20,854
 
 
 
(144
)
 
 
20,710
 
Stock-based award activity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
3,147
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
3,147
 
Issuance of common stock
for vesting of restricted stock units
 
 
  
 
 
 
  
 
 
 
31,235
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
Shares withheld related to
net share settlement of stock-based awards
 
 
  
 
 
 
  
 
 
 
(1,587
)
 
 
  
 
 
 
(63