RMAX - Re/Max stock drops after soft guidance slower pace of buybacks ahead

Re/Max ( RMAX ) stock tumbled 16% in Friday afternoon trading after the real estate brokerage company released weaker-than-expected Q4 results, issued weak Q1 and FY2023 revenue guidance, and said it expects to slow its stock buyback activity.

For Q1 2023, the company said Thursday it expects revenue of $82.0M-87.0M, less than the consensus estimate of $87.4M. For the year, it sees $315.0M-$335.0M of revenue, vs. the consensus of $357.2M.

Re/Max ( RMAX ) had accelerated its stock repurchase activity in Q4 2022, buying back over 500K shares, Re/Max Chief Financnial Officer Karri Callahan said on the company's Q4 earnings call. For the year, it repurchased just over 1.5M shares, she said.

But with the housing market contracting as mortgage rates rise, "we expect to slow down the pace of our buyback in the near term," she said.

In addition to tamping down demand for homes, higher interest rates will also affect Re/Max's ( RMAX ) costs, increasing its net interest expense by ~$3.5M-$3.7M in Q1 2023 vs. the same quarter a year ago, she said.

Callahan said "this may be the most challenging environment in which to forecast future results that I have seen in my seven years as CFO."

The company expects Q1 adjusted EBITDA of $18.5M- $21.5M vs. Visible Alpha consensus of $24.0M. For 2023, it expects adjusted EBITDA of $95M-$105M vs. Visible Alpha estimate of $114.4M.

On Thursday, Re/Max ( RMAX ) Q4 results miss estimates as company guided Q1 2023 revenue below consensus.

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