David Liniger - CEO, Chairman and Co-Founder Karri Callahan - CFO Adam Contos - COO Andy Schulz - Executive Director, IR.

Hayden Blair - Stephens Inc. Alan Ratner - Zelman & Associates Emil Shalmiyev - JPMorgan Allyson Boyd - Keefe, Bruyette, & Woods Joshua Lamers - William Blair.

Good morning, and welcome to the RE/MAX Holdings Fourth Quarter 2016 Earnings Conference Call and Webcast. My name is Scott, and I will be facilitating the audio portion of today's call. At this time, I would like to turn the call over to Andy Schulz, Executive Director of Investor Relations. Mr.

Schulz?.

Thank you, operator. Good morning, everyone, and welcome to RE/MAX Holdings fourth quarter and full year 2016 earnings conference call. Please visit the Investor Relations page of remax.com for all earnings related materials and to access the live webcast and the replay of the call today.

If you are participating through the webcast, please note that you will need to advance the slides as we move through the presentation. Turning to Slide 2, I would like to remind everyone that on today’s call, our prepared remarks and answers to your questions may contain forward-looking statements.

Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ materially from those discussed today.

Examples of forward-looking statements may include those related to agent count, franchise sales, housing market conditions, revenue, operating expenses, financial guidance, as well as non-GAAP financial measures. As a reminder, forward-looking statements represent management's current estimates.

RE/MAX assumes no obligation to update any forward-looking statements in the future.

We encourage listeners to review the more detailed discussions related to these forward-looking statements contained in our filings with the SEC, and the definitions and reconciliations of non-GAAP measures contained in our fourth quarter earnings release, which are available on our Web site.

Upon the conclusion of our prepared remarks by our Chief Executive Officer and Co-Founder, Dave Liniger; our Chief Operating Officer, Adam Contos; and our Chief Financial Officer, Karri Callahan, we will open the call for Q&A, at which time we will be joined by Geoff Lewis, RE/MAX's President and Ward Morrison, Motto Mortgage, President.

With that, I would like to turn the call over to RE/MAX CEO, Dave Liniger.

Dave?.

Thank you, Andy, and thanks to everyone for joining us on our call today.

Looking at Slide 3, we had a landmark year in 2016 highlighted by our total agent count which surpassed 111,000 agents, the sale of our remaining owned brokerages making us 100% franchised, the acquisition of six independent regions, the launch of Motto Mortgage and strong operational and financial performance.

Our focus on execution on strategic priorities continues to align with our three pillars of shareholder value creation; organic growth, acquisition in investment catalysts and return of capital to shareholders, all of which drove strong results for 2016 and provide a solid foundation for future success.

First, our organic revenue growth of over 5% was driven by our ongoing ability to attract and retain agents and sell franchises. Over 7,000 agents worldwide chose to join RE/MAX, our largest agent count in 10 years.

Additionally, we continued our strong momentum for franchise sales particularly in the United States and Canada where we had our best performance since 2010. We sold our remaining owned brokerages and are now 100% franchised, enabling us to generate approximately 65% of our revenue from stable recurring dues and fees based on agent count.

Our franchise model, coupled with our disciplined expense management, led to margin expansion of 200 basis points last year and generated $60 million of free cash flow. Second, our acquisition and investment catalysts contributed meaningfully to our 2016 performance and will continue to support our growth in 2017 and beyond.

In October, we launched Motto Mortgage, the first national mortgage brokerage franchise offering in the United States. During December, we closed the acquisitions of the New Jersey region and three regions which we referred to as Regional Services; Georgia, Kentucky/Tennessee and Southern Ohio.

Adding in New York and Alaska which were acquired earlier in the year, we acquired a total of six independent regions in 2016 which converted over 8,000 agents and almost 500 offices. It’s important to note we received between 15% and 30% of an independent region’s fee revenue.

By acquiring the region, we captured the additional 70% to 85% of revenue generated by the region. That is why these acquisitions are so attractive and so accretive to our business. We also continued to strategically reinvest in our business as evidenced by the implementation of our new agent and office portal during the fourth quarter.

Our ongoing focus is to increase the value we offer to our network and to provide our franchisees with the tools and resources they need to recruit and retain highly productive agents or those who aspire to be among the most productive. Our third pillar is return of capital.

Our management team and our Board are committed to creating shareholder value by balancing the ongoing needs of our business with returning capital to shareholders in a prudent and consistent manner. We began paying a quarterly dividend shortly after our initial public offering more than three years ago.

Earlier this week, RE/MAX management recommended and the Board approved a 20% increase to our quarterly dividend. Including the upcoming dividend, we have increased it by 188% since going public. Our overall strategy and priorities have remained consistent since our market debut in October of 2013, as has our execution against them.

Turning to Slide 4, you can see that for the full year 2016, we delivered strong results. Our revenue was 176.3 million, adjusted EBITDA was 94.6 million and adjusted EPS was $1.74 per diluted share.

We delivered equally impressive results for the fourth quarter of 2016, during which our revenue was $44.4 million, adjusted EBITDA was $22.4 million and our adjusted EPS was $0.41 per diluted share. Turning to Slide 5, the launch of Motto Mortgage represents the most important new initiative we have undertaken in quite some time.

Since its launch in late October, we have received a significant amount of interest in Motto from potential franchisees, loan originators, wholesalers and investors. We are delighted by this strong reception which further bolsters our belief in Motto’s potential and its contribution to our overall long-term growth.

Although it will take time to fully develop Motto, we have accomplished a great deal during our first 120 days. We have sold 19 franchises. We are now registered to see franchises in all 50 states. We held our first training session for the initial groups of franchisees and loan originators.

And we completed sales tours on both coasts during which we continued to receive a significant amount of interest from prospective franchisees. Looking ahead, we expect to see many franchises in the months and years to come.

The timing of those sales will be uneven as we continue to build our pipeline and comply with federal and state regulations governing franchise sales. Franchisors, regardless of the industry, are subject to these regulations which require us to stop selling franchises during certain filing periods.

We are scaling the Motto operational team to ensure that franchisees are receiving the highest quality customer service training, tools and support. My many thanks to the members of the Motto team who contributed to its initial success. There’s a lot of hard work to come, but we are off to a terrific start.

Now I’d like to turn the call over to our Chief Operating Officer, Adam Contos..

Thank you, Dave. Along with our emphasis on nurturing the growth and success of Motto, 2017 will be defined by our continued focus on strengthening the RE/MAX network. We made several significant technological investments in 2016.

Most notably, the refresh of remax.com, the implementation of our agent and office portal and the build out of office, agent and team Web sites. This year will be about making post implementation enhancements and training our franchisees so they can optimize these valuable tools.

Turning to Slide 6, our acquisitions of six independent regions during 2016 will support our growth in 2017 and beyond. This year, our focus will be on completing a seamless transition and enabling the ongoing success of the franchisees and agents in the acquired regions.

After closing on the New Jersey and Regional Services acquisitions last quarter, our teams have proactively engaged in discussions with our brokers and agents familiarizing themselves with the regions and strategizing on how to continue to grow.

We completed onsite visits with our franchisees in these regions to answer brokers’ questions and inform them about the transition. The key thing our franchisees expect and we intend to deliver is high-touch support and services, plus all of the benefits of our recent tech investments.

The transition is going well and we expect all of the regions we acquired last year to produce solid results in 2017. Looking at Slide 7, we continued to see healthy agent growth network-wide as our total agent count is now over 111,000 agents. In the U.S. and Canada combined, agent count grew 3.5% over the past year.

As you know, these were the markets where revenue per agent is the highest in our global network. Our agent growth in the U.S. was driven by solid agent gains in California, Florida, Michigan and Georgia. Our strong performance in Canada exceeded our expectations in 2016.

Our high market share and broad scope of services across Canada allow us to continue to have the most consumer awareness and draw quality agents to RE/MAX. Canadian agent growth was driven by gains across the board with eastern Canada having an especially strong year. Outside the U.S.

and Canada, we ended 2016 with over 29,000 agents, up almost 17% since year-end 2015. Our growth was driven by strong gains in Europe, particularly in Portugal, Turkey and Italy and in South America, most notably Argentina. With that, I’d like to turn the call over to our CFO, Karri Callahan..

Thanks, Adam. Turning to Slide 8, you will find a breakdown of our revenue streams. During the fourth quarter of 2016, revenue increased 2.7% to 44.4 million.

Organic growth increased revenue by 5.6% and the acquisitions of the independent regions added approximately 3%, partially offset by the sale of the company-owned brokerages, which negatively impacted revenue by 5.9% year-over-year. FX was flat.

Recurring revenue, which includes continuing franchisees and annual dues, increased 2.9 million or 10.7% over Q4 of last year. During the fourth quarter of 2016, recurring revenue accounted for 67.3% of total revenue, up from 62.4% last year, primarily due to the sale of our company-owned brokerages.

Non-recurring revenue, which includes broker fees and franchise sales and other franchise revenue, increased 1.3 million or 9.5% over Q4 of last year and exceeded our expectations by approximately 2 million for the fourth quarter.

Revenue from continuing franchisees was 21.5 million, an increase of 2.6 million or 13.7% compared to fourth quarter 2015, primarily due to agent count growth in the U.S. and Canada, REIT increases and our company-owned regions which were implemented on July 1, 2016, and the acquisition of independent regions.

Revenue from annual dues was 8.4 million, up 300,000 or 3.9% due to agent count growth. Revenue from broker fees was 9.1 million, an increase of approximately 1.8 million or 24% over Q4 last year, driven primarily by higher agent count in the U.S. and Canada and the independent region acquisitions.

Franchise sales and other franchise revenue was 5.4 million, down 500,000 or 8.5% compared to the prior year quarter. Breaking down this line item, franchise sales network wide were strong in Q4, up 5% in total sales dollars over Q4 2015. Other franchise revenue declined 650,000 in Q4 compared to the prior year period.

Other franchise revenue is comprised of several revenue streams which are nonrecurring in nature and can be more variable as a result. Looking at Slide 9, selling, operating and administrative expenses were 25.2 million for the fourth quarter of 2016, down 200,000 or 0.9% compared to the fourth quarter of 2015.

The reduction in operating expenses was primarily due to the sale of the company-owned brokerages which was partially offset by an increase in expenses related to the initial investment in Motto, the independent region acquisitions and the debt refinancing.

On Slide 10, you will see in the graph on the left that adjusted EBITDA increased 500,000 or 2.3% to 22.4 million for the fourth quarter compared to the same period in 2015.

The increase was primarily due to agent count growth and contributions from the acquired regions, partially offset by the sale of the company-owned brokerages and our initial investment in Motto. Additionally, our adjusted EBITDA margin decreased slightly to 50.4% in Q4, down from 50.6% in the fourth quarter of last year.

Turning to Slide 11, the graph on the left shows adjusted net income of 12.3 million for the fourth quarter, an increase of approximately 700,000 or 6.4% over the prior year period. Adjusted basic and diluted earnings per share were both $0.41 for the fourth quarter of 2016 compared to $0.38 for the fourth quarter of 2015.

Turning to Slide 12, we took advantage of favorable market conditions and refinanced our credit facility in December with improved terms. We now have greater flexibility for permitted investments, additional capacity for incremental facilities and more favorable terms governing excess cash flow payments.

We use a combination of cash on hand along with the debt to fund the Regional Services acquisition in Q4 of 2016. Looking at Slide 13, our cash position as of December 31, 2016 was 57.6 million and our strong free cash flow generation for the year was 60 million.

Earlier this week, our Board of Directors approved a 20% increase in our quarterly dividend to $0.18 per share. The quarterly dividend is payable on March 22, 2017 to shareholders of record at close of business on March 8, 2017. Now, I’d like to turn it back over to Dave to discuss the housing market..

Thanks, Karri. Turning to Slide 14, 2016 was a positive year for housing continuing the steadily improving trend from the past few years. We expect more of the same in 2017. Existing home sales finished the year at 5.5 million, the highest since 2006 and good enough for close to 4% growth year-over-year.

Solid jobs growth, historically low-mortgage rates throughout the year were strong drivers of existing home sale numbers. Interest rates are starting to increase but we don’t think slightly higher rates will keep people in the sidelines.

Pent-up demand still exists and with tight inventory, homebuyers will continue to buy at current and even marginally higher interest rates. Inventory remains the principal constraint in the market and the near-term outlook provides no apparent solution. That said, housing starts are trending upwards.

Regulatory burdens at land costs have challenged homebuilders to ramp their production levels but their outlook on 2017 remains positive and we see no reason to disagree with that sentiment.

After showing signs of momentum throughout the year, first-time homebuyers represented 35% of the market in all of 2016 according to the National Association of Realtors. We’re continually looking for more entry level home supply and stronger wage increases to help alleviate the challenges for first-time homebuyers looking to enter the market.

Additionally, we anticipate interest rates will increase in 2017 but not enough to push any homebuyers out of the market. Availability of credits has continued to improve and home prices are expected to increase at a lower rate than last year. As we move forward into 2017, our business continues to evolve.

We’re excited about the prospects for both the housing market and the mortgage industry and our ability to execute successfully in both. Now, I’ll turn it back to Karri to walk through our financial outlook..

Thanks, Dave. Turning to Slide 15, before I get to our outlook, I want to make a couple of points about Motto and an upcoming change to our guidance. First, revenue from Motto franchise sales will be recognized after we have sold the franchise and the franchisee attendance training.

We estimate that this will happen on average 60 days after each franchise agreement has been signed. Additionally, as we noted on our Q3 earnings call, Motto franchisees will pay a monthly office fee to us for training, education, technology solutions and high-touch support. This fee will not be transaction-based.

All upside related to mortgage volume will go to the franchisee and the loan originator.

Monthly office fees will be waived during the initial three months after a Motto franchisee has completed the required training and will gradually escalate to the full monthly amount over the course of the next 12 months, as the franchisee builds his or her book of business.

We believe this gradually escalating fee structure will position our Motto franchisees for initial success and help them grow vibrant businesses. As a result, the revenue we expect to recognize from Motto this year will increase as the year progresses and be backend loaded, slightly impacting our quarterly SKUs for revenue and profit.

We expect to measure our success in selling Motto franchises in the tens of units during 2017. Total revenue for Motto for full year 2017 will likely be measured in the low-single digit millions of dollars. We will invest in Motto such that related expenses will outweigh revenue resulting in a net investment in 2017.

Also, we will be making modest changes to how we calculate adjusted EBITDA and adjusted EPS starting in Q1. In light of SEC guidance released last spring on non-GAAP measures, we reevaluated our calculations to incorporate what we believe to be best practices.

Consequently, we will no longer adjust for straight line rent expense or severance expenses, but we will adjust for equity-based compensation expense. The net result retroactively was minimum. Prospectively, adjusted EBITDA and adjusted EPS will benefit from the adjustment for equity-based compensation expense.

Specifically, for Q1 2017, we expect adjusted EBITDA to benefit by approximately 600,000 and adjusted EPS to benefit by approximately $0.01 per diluted share. For full year 2017, we expect adjusted EBITDA to benefit by approximately 2.6 million and adjusted EPS to benefit by approximately $0.05 per diluted share.

The outlook which I am about to provide reflects the new methodology for calculating adjusted EBITDA.

In order to assist you with this transition, our earnings presentation includes a few slides that highlight how our non-GAAP measures would have been calculated under the new methodology for the past three years and the past eight quarters, as well as some supplementary information regarding amortization expenses. Now, onto our guidance.

The company’s first quarter 2017 outlook assumes no further currency movements, acquisitions or divestitures.

For the first quarter of 2017, RE/MAX expects agent count to increase 5.5% to 6.5% over first quarter 2016; revenue in a range of 47 million to 48.5 million; selling, operating and administrative expenses in a range of 56% to 57.5% of first quarter 2017 revenue; and adjusted EBITDA margins in a range of 45% to 46%.

Remember, higher SO&A expense as a percentage of revenue in the first quarter is expected due to expenses associated with the company’s annual convention in March, seasonality of revenue and our investment in Motto this year.

Turning to Slide 16, for the full year 2017, we expect agent count to increase by 4% to 5% over 2016; revenue in a range of 194 million to 197 million; selling, operating and administrative expenses in a range of 48% to 49.5% of 2017 revenue; and adjusted EBITDA margin in a range of 52.5% to 54%. Now, I’ll turn it back over to Dave..

Turning to Slide 17, 2016 was a great year for us in so many respects. Two prestigious industry surveys named RE/MAX the number one real estate franchise and one of the top 10 franchises overall. Agent productivity remained high with our U.S. agents doubling the competition in the industry’s two premier rankings of agents and large brokerages.

The redesign enhanced remax.com continued to be the most visited real estate franchise or Web site, and we drew over 95 million visits. And we grew significantly surpassing 111,000 agents by year end. Adding agents means more listings, more sales, more yard signs, more advertising and more competitive advantages for us.

Even better, we believe our best days are still in front of us. Our focus will continue to be growing the number one real estate network in the world and on growing Motto Mortgage into an industry leader. With that, operator, we would like to open it up for questions..

[Operator Instructions]. Your first question comes from the line of John Campbell with Stephens Inc. Your line is open..

Hi, guys. It’s Hayden Blair sitting in for John. Just wanted to dig in on annual dues here for a second. Historically, average new agents have been fairly tenured. I think it’s been something like eight years. So with the recent growth in U.S.

and Canada agents, how is that average tenure of these new agents comparing to that historical measure? And then are there going to be any expected price increases planned for annual dues in '17? And obviously then is there going to be give and take there with any waivers from the Motto program if those aren’t newer agents?.

Good morning, Hayden; Dave Liniger. We are pushing hard to get some of the younger millennial agents in. And so on those efforts, we have come down a little bit on the average tenure when they’re joining us. But that’s okay. We need the new blood.

We got over 10,000 of our agents are in their 60s now and so this is very important for us to have that new blood for us. We are anticipating a $10 dues increase in the company-operated regions I think effective July 1, 2017..

Great.

And then just any color you can give on that fully ramped monthly fee for Motto, how is that going to compare relative to say a continuing franchise fee or some other metric that we can kind of gauge what that’s going to look like longer term?.

Hi, Hayden, it’s Karri; great question. With respect to the Motto monthly fee, as we said in the scripted remarks, we’re going to give a three-month waiver of no fees until once the Motto franchisees are operational. Between month 4 and month 12, it will gradually increase.

And once they’ve been in operation for 12 months, the monthly fee will be 4,000 per month. So definitely going to be backend loaded with respect to the revenue for Motto in 2017, but think it’s really a great growth opportunity for the company..

Great. Thank you, guys. Congrats on a great quarter..

Your next question comes from the line of Alan Ratner with Zelman & Associates. Your line is open..

Hi, guys. Good morning and congrats on all of the success and exciting things going on with the company. My question – I was hoping to dig in a little bit on the broker fee line. It was much stronger than we were looking for this quarter. And as you mentioned, almost up almost 25%, which is up strong from the growth rate you had been running at.

And I know there is some benefit there from the regional acquisition.

So what I was hoping to do is just get a bit more color on how you see the composition of that 24% increase? How much of that was coming from the regional acquisitions versus just broader market transaction volume gains as well as any comments on how you see your market share trending and any gains that you might have experienced during the quarter? Thanks a lot..

Thanks so much, Alan. It’s a great question. If we look at the composition of our recurring and our nonrecurring revenue, strong beats in the nonrecurring revenue line item including broker fee. The beat for the quarter really pretty evenly spread across three factors. One, increase in agent count contributed to that beat.

We did see continued market share gains with respect to both transactions and volume through the first three quarters and that continued into the fourth quarter. And then as you noted, benefit from all of the acquired regions including the Regional Services acquisition which we closed middle of December that wasn’t included in our guidance..

I appreciate that. Thank you. And then second question if I could, Dave, just on your comments about the tight inventory situation. I think that we hear from a lot of the builders as well that that’s providing a great opportunity for them to helpfully bring more supply to the market, especially at the entry level price point.

So was curious what you’re doing as a company or maybe what your agents are doing to target the new home builder community and make sure that you’re getting a fair share of transactions there? Because one thing we do hear from builders is that they’re looking for ways to really cut out the brokerage community as a way to save commission dollars.

So was just curious how you see that put and take unfolding over the next few years. Thank you..

Alan, over the last 45 years of so, every time the market gets really hot, builders think I can save the expense of the commission and do it in-house. Every time the market gets tough, they offer full commissions, bonuses of trips to Hawaii and all kinds of things to get filters in the door.

Realistically, we depend on the new homebuilders not just for their commissions but for their inventory. Our resale market is driven dramatically by the new home market. And if there are no new homes being constructed, our residential resale really slows down.

In a place like Colorado right now where the market is so hot, people that have a $400,000 or $500,000 house are afraid to sell it because if it sells, it’s selling in a day or two. Then they’re stuck because there’s no place they can go at 700,000 or 800,000.

It used to be that the builders 10 years ago would have an inventory of six months of houses out there that people could buy and close in 30 to 45 days. So we really don’t concern ourselves too much with this ebb and flow, being paid commissions or not.

And much more important to us is for goodness sake, builders build some more property, it will help our business too..

Perfect. Thanks a lot. Good luck, guys..

Your next question comes from the line of Emil Shalmiyev with JPMorgan. Your line is open..

Hi. Good morning. Can you talk about U.S. agent growth? It looks like sequentially it saw its first decline in some time.

Is there anything specifically that contributed to it, maybe breakage from some of the transactions?.

No. Emil, this is Dave. Last quarter of the year is always seasonal for us. As a matter of fact, three of the last five years we’ve seen a slight decline in agents. Our recruiting stays about the same. Our terminations go up at the end of the year. People start reevaluating.

Is this the place for me? Should I get out of the business? Should I retire? So we’re not too terribly concerned. But you have to understand the last three months we’ve absorbed four major regions with nearly 700,000 agents plus the second brand Motto. And so our resources were stretched totally thin trying to absorb that big of a package.

And so all of our efforts were to make a smooth transition and help those hundreds of offices switch over to us. As a matter of fact, it’s turned around already. January stats and the core, up over 100 of what it was gained last year, so we had to focus back on it. It took us a while to absorb all that..

Okay. Thanks, Dave.

And in general, would you say that it’s common when you make a large acquisition where you have a lot of agents that might have got a relationship with the prior owner that kind of reevaluate their decision and decide to leave once the ownership changes?.

No. If anything, the opposite is true. The New Jersey region was extremely well run, a couple great entrepreneurs. And so we didn’t miss a stroke there. The agents are loyal to the office they work in and to the national company. If you look at some place like New York, that’s a little different story. It was not a well-managed region.

We had to go in, terminate half a dozen of the brokers that really weren’t making it work. And so the better the region, the more likely it is that nobody’s going to leave..

Thanks. And one last one for me.

Can you give us any progress on just if you’re getting closer on any of the other independent regional acquisitions?.

It’s one of those things we’ve always said are very lumpy. The four regions that we purchased last quarter all came about over dinner and a handshake agreement at our summer RE/MAX manager’s convention. I obviously have the relationship with these friends of over 30, 35 years.

We sat with Karri, worked out a handshake agreement and then obviously it takes anywhere from three to six months to do due diligence, send our teams in, fulfill all the legal obligations and do the accounting. So right now we continue to talk to two or three people but we’re quite excited about a quarter where we picked up that much work.

And right now, we’re catching our breath..

Okay. All right, thank you guys. Have a good quarter..

Your next question comes from the line of Bose George with KBW. Your line is open..

Hi. This is actually Allyson Boyd on for Bose George. And I was hoping we could talk a little bit more about Motto Mortgage.

And I was wondering how you saw that impacting the EBITDA margins in 2017?.

Hi, Allyson, it’s Karri. As we mentioned in our scripted remarks, we do think that revenue is going to ramp slightly over the course of the year, low-single digit millions of dollars and the impact to EBITDA is going to be a net investment in 2017. So there will be a slight SKU to revenue and profit both.

But again, expenses will outweigh the revenue in 2017..

Okay, great. Thank you..

[Operator Instructions]. Your next question comes from the line of Josh Lamers with William Blair. Your line is open..

Good morning, everyone. Thanks for taking my questions. Actually a couple quick ones for me.

I want to double back to agent count and just inquire if the tax spend in 2016 has given any early indication that it will increase agent productivity, or lead to better recruiting efforts in 2017 and beyond?.

This is Dave. No, not necessarily. All the major national and regional companies continue to invest in technology looking for a competitive advantage. But realistically speaking, all technology that’s out there ends up being available to everybody in the industry.

And so it really – at this time with the sophistication of it, nobody’s built the custom software that would give anyone a competitive advantage. That may change in the future and it’s certainly something that we look at continuously.

But being the largest individual franchisor in the United States, any technology opportunity that comes along always gets presented to us very early in the process for us to look at..

Got it, thank you. And then just as a quick follow up.

After a couple strong years of agent growth, should we expect over the near term the base case percentage growth in agent count to be about 4% or 5%?.

Yes, that’s correct. It’s what we’ve been doing for the last three or four years and I think that it will probably stay at that rate. That will obviously change if the industry loosened up, if more inventory came out, it would make it possible for us to recruit even more people.

But under the circumstances, right now we’re forecasting the same real estate market in '17 and '18 as we had last year, which by the way was the best year we’ve had in 10 years. So it’s working for us..

Great. All right, thanks for the input. I appreciate it..

There are no further questions at this time. I would turn the call back over to the presenters..

Thank you, operator, and thanks to all of you who have joined us today on the call and webcast. Have a great day..

This concludes today’s conference call. You may now disconnect..