Matthew Erdner: Good morning, guys. Thanks for taking the question. And this is kind of an industry as a whole question based on the settlements that are going on, do you think more agents are out there kind of talking to other firms or companies and just kind of reconsidering their business and where they’re at
Stephen Joyce: Yeah. I’m going to ask Nick to comment on that fully, but I think one it’s pretty recent, but clearly, it’s going to cause people to start reviewing who’s in what position. And where they want to be long-term. And so I do think there’s going to be a fair amount of conversation and a fair amount of thinking about what is the longer term impact of all of these issues and what does it mean brand by brand company by company and therefore, and then where do they want to be. So, Nick, you want to give more on that?
Nick Bailey: Well certainly the lawsuits and the settlement are the headlines which people look to but I think it’s bigger than that. When agents really look at their career and where they want to be, I think it’s more so they’re looking at the overall market. And when you get into fourth quarter, people are reevaluating what are their goals for the next year? What’s the value prop looks? What’s the culture, what’s the company that’s going to help me achieve my goals. And so, I think even over the past year, yes, a lot of agents have been really looking to say what company, what culture, what value do I need? And I’ll point to one example. We announced our MAX/Tech powered by kvCORE. We had agents that were outspending on the retail market thousands of dollars a month in which we were able to offer something that created great savings for them as they were rightsizing their business.
And so that helps us look more attractive. And so I think the market conditions and the changes are overriding in an agent’s decision on where they want to be. Just happens to be it’s kind of the flavor of the week with the big news. But I do think that that’s secondary to how agents make decision on where we want to be.
Matthew Erdner: Yeah. That’s helpful. And then following up on the team’s initiative, I believe it’s still in the states that you originally piloted in. But have you guys had any talks of expanding it? It seems like it’s going well. And then are there any other teams from outside of those states that have kind of hit you guys up. What can you get involved with this?
Stephen Joyce: Nick.
Nick Bailey: Yes. So we did start with the five states on the initial pilot from last year. We did add a sixth state Arizona just a few months ago. And so what we’re looking at is adding that additional state to examine what our timing is and how and if we expand it further. So that’s not determined at this point. We’ll likely determine that in the months or the quarter ahead. But to answer your question yes, there are other states that are saying, when can we get this to, which is a good thing because the results are showing in the pilot states. And so it it’s a good indicator at this point, but no decisions exactly on how that’ll expand or when.
Matthew Erdner: That’s helpful. Thank you.
Operator: Your next question comes from the line of Ronald Kamdem from Morgan Stanley. Please go ahead.
Ronald Kamdem: Hey. Just a couple quick ones. So going back to the revolver restrictions, I guess the question really is, how should we think about the liquidity over the next four quarters? So is it the $90 million of cash on the balance sheet plus whatever free cash flow you generate plus $50 million, or I guess, I’m just trying to figure out, like how do we think about liquidity for the next four quarters with this restriction.
Stephen Joyce: Karri?
Karri Callahan: Yeah. So I think a couple things to know. Primarily, the cash generative nature of the business is truly a hallmark of the business. So as we think about the next four quarters, you notice the cash on the balance sheet. It is cash flow from operations, that we can generate. And then outside of the revolver for a minute, we do have the ability pursuant to the terms of our credit agreement to actually upsize the facility if we were to need to do that. And then get back into a place where if we needed to access the revolver, we could. But like I said previously, we’ve never had to or ever really wanted to access that revolver. We’ve always just had it in the instance that we needed to.
Ronald Kamdem: Got it. That’s helpful. And then sort of my second question was going to be, if I’m looking at the release it looks like the franchise offices in October went down by 3. Am I reading that correctly? The model mortgage franchises are 2.39 in October, which is down 3 since the end of the quarter. Is that right? And what happened there?
Ward Morrison: Yeah. I can answer that. This is Ward. Obviously, we always have terminations going on. Offices do close from time to time. And because the sales have been a little bit tougher this year, they are offsetting some of that. Typically, we’re growing at a faster pace and sometimes terminations this quarter. It was just a tough quarter with the changing market. We believe sales will ramp up. However, it continue to be sort of lumpy moving forward. And we’ll offset that particular number and continue to grow towards getting closer to that 2.50.
Ronald Kamdem: Great. And then just if I could dig in a quick one, what’s the update on the CEO search and when is this timing? Thanks so much.
Ward Morrison: Yeah. The search is coming to a close. Obviously, a little longer than we thought, but you should see an announcement in the next couple of weeks.
Ronald Kamdem: Thanks so much.
Operator: Your next question comes from the line of Tommy McJoynt from KBW. Please go ahead.
Thomas McJoynt-Griffith: Hi. Good morning. Seeing in RE/MAX has a global footprint. I think it’s fair to ask, what is your impression of the comparison of the US system when they were close to 90% buyer agent utilization, to the comparison to other countries where buyer agent representation is a fraction of that. Do you agree with that comparison? And then along the same lines, just higher level, do the advances in technology that are available to repeat buyers and not just the search portals, but also pre-qualification verification and automated scheduling, automated comps generation, neighborhood scoring, everything. Does all of that technology allow for a transaction where one listing agent can handle coordinating the transaction and the buyer has enough tools available to them to save 2.5% to the extent that that commission eventually comes directly out of their pocket upfront.
