☒ | 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 |
Delaware |
35-2478370 |
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(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
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23975 Park Sorrento, Suite 400 Calabasas, California |
91302 |
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(Address of Principal Executive Offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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Common Stock, par value $0.0001 per share |
MMI |
New York Stock Exchange |
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☐ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
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March 31, 2022 (Unaudited) |
December 31, 2021 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | 315,695 | $ | 382,140 | ||||
Commissions receivable, net |
13,854 | 17,230 | ||||||
Prepaid expenses |
10,373 | 13,220 | ||||||
Marketable debt securities, available-for-sale |
218,988 | 183,868 | ||||||
Advances and loans, net |
5,889 | 6,403 | ||||||
Other assets |
6,027 | 5,270 | ||||||
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Total current assets |
570,826 | 608,131 | ||||||
Property and equipment, net |
23,249 | 23,192 | ||||||
Operating lease right-of-use |
77,928 | 81,528 | ||||||
Marketable debt securities, available-for-sale |
52,980 | 112,610 | ||||||
Assets held in rabbi trust |
10,916 | 11,508 | ||||||
Deferred tax assets, net |
33,470 | 33,736 | ||||||
Goodwill and other intangible assets, net |
59,434 | 48,105 | ||||||
Advances and loans, net |
139,087 | 113,242 | ||||||
Other assets |
12,273 | 13,146 | ||||||
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Total assets |
$ | 980,163 | $ | 1,045,198 | ||||
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable and other liabilities |
$ | 24,388 | $ | 24,271 | ||||
Deferred compensation and commissions |
54,994 | 114,685 | ||||||
Dividends payable |
50,694 | — | ||||||
Income tax payable |
28,042 | 17,853 | ||||||
Operating lease liabilities |
18,276 | 18,973 | ||||||
Accrued bonuses and other employee related expenses |
15,863 | 49,848 | ||||||
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Total current liabilities |
192,257 | 225,630 | ||||||
Deferred compensation and commissions |
45,603 | 53,536 | ||||||
Operating lease liabilities |
56,307 | 58,334 | ||||||
Other liabilities |
10,607 | 11,394 | ||||||
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Total liabilities |
304,774 | 348,894 | ||||||
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Commitments and contingencies |
— | — | ||||||
Stockholders’ equity: |
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Preferred stock, $0.0001 par value: |
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Authorized shares – 25,000,000; issued and outstanding shares – none at March 31, 2022 and December 31, 2021, respectively |
— | — | ||||||
Common stock, $0.0001 par value: |
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Authorized shares – 150,000,000; issued and outstanding shares – 39,795,399 and 39,692,373 at March 31, 2022 and December 31, 2021, respectively |
4 | 4 | ||||||
Additional paid-in capital |
122,782 | 121,844 | ||||||
Retained earnings |
554,193 | 573,546 | ||||||
Accumulated other comprehensive income (loss) |
(1,590 | ) | 910 | |||||
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Total stockholders’ equity |
675,389 | 696,304 | ||||||
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Total liabilities and stockholders’ equity |
$ | 980,163 | $ | 1,045,198 | ||||
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Three Months Ended March 31, |
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2022 | 2021 | |||||||
Revenues: |
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Real estate brokerage commissions |
$ | 286,909 | $ | 162,796 | ||||
Financing fees |
26,453 | 17,843 | ||||||
Other revenues |
6,102 | 3,338 | ||||||
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Total revenues |
319,464 | 183,977 | ||||||
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Operating expenses: |
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Cost of services |
196,768 | 109,103 | ||||||
Selling, general and administrative |
74,535 | 51,677 | ||||||
Depreciation and amortization |
3,911 | 2,997 | ||||||
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Total operating expenses |
275,214 | 163,777 | ||||||
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Operating income |
44,250 | 20,200 | ||||||
Other income, net |
450 | 1,044 | ||||||
Interest expense |
(160 | ) | (146 | ) | ||||
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Income before provision for income taxes |
44,540 | 21,098 | ||||||
Provision for income taxes |
11,757 | 6,086 | ||||||
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Net income |
$ | 32,783 | $ | 15,012 | ||||
Other comprehensive (loss) income: |
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Marketable debt securities, available-for-sale: |
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Change in net unrealized gains/losses |
(2,357 | ) | (621 | ) | ||||
Less: reclassification adjustment for net gains included in other income, net |
(84 | ) | — | |||||
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Net change, net of tax of $838 and $(215) for the three months ended March 31, 2022 and 2021, respectively |
(2,441 | ) | (621 | ) | ||||
Foreign currency translation gain (loss), net of tax of $0 for each of the three months ended March 31, 2022 and 2021, respectively |
(59 | ) | (113 | ) | ||||
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Total other comprehensive (loss) income |
(2,500 | ) | (734 | ) | ||||
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Comprehensive income |
$ | 30,283 | $ | 14,278 | ||||
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Earnings per share: |
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Basic |
$ | 0.82 | $ | 0.38 | ||||
Diluted |
$ | 0.81 | $ | 0.37 | ||||
Weighted average common shares outstanding: |
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Basic |
39,989 | 39,757 | ||||||
Diluted |
40,474 | 40,124 |
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 |
— | $ | — | 39,692,373 | $ | 4 | $ | 121,844 | $ | — | $ | 573,546 | $ | 910 | $ | 696,304 | ||||||||||||||||||||
Net and comprehensive income (loss) |
— | — | — | — | — | — | 32,783 | (2,500 | ) | 30,283 | ||||||||||||||||||||||||||
Stock-based award activity |
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Stock-based compensation |
— | — | — | — | 3,856 | — | — | — | 3,856 | |||||||||||||||||||||||||||
Issuance of common stock for vesting of restricted stock units |
— | — | 167,263 | — | — | — | — | — | — | |||||||||||||||||||||||||||
Shares withheld related to net share settlement of stock-based awards |
— | — | (64,237 | ) | — | (2,918 | ) | — | — | — | (2,918 | ) | ||||||||||||||||||||||||
Dividends on common stock |
— | — | — | — | — | — | (52,136 | ) | — | (52,136 | ) | |||||||||||||||||||||||||
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Balance as of March 31, 2022 |
— | $ | — | 39,795,399 | $ | 4 | $ | 122,782 | $ | — | $ | 554,193 | $ | (1,590 | ) | $ | 675,389 | |||||||||||||||||||
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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 |
— | $ | — | 39,401,976 | $ | 4 | $ | 113,182 | $ | — | $ | 431,076 | $ | 2,574 | $ | 546,836 | ||||||||||||||||||||
Net and comprehensive income |
— | — | — | — | — | — | 15,012 | (734 | ) | 14,278 | ||||||||||||||||||||||||||
Stock-based award activity |
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Stock-based compensation |
— | — | — | — | 2,288 | — | — | — | 2,288 | |||||||||||||||||||||||||||
Issuance of common stock for vesting of restricted stock units |
— | — | 149,117 | — | — | — | — | — | — | |||||||||||||||||||||||||||
Shares withheld related to net share settlement of stock-based awards |
— | — | (50,127 | ) | — | (1,733 | ) | — | — | — | (1,733 | ) | ||||||||||||||||||||||||
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Balance as of March 31, 2021 |
— | $ | — | 39,500,966 | $ | 4 | $ | 113,737 | $ | — | $ | 446,088 | $ | 1,840 | $ | 561,669 | ||||||||||||||||||||
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Three Months Ended March 31, |
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2022 | 2021 | |||||||
Cash flows from operating activities |
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Net income |
$ | 32,783 | $ | 15,012 | ||||
Adjustments to reconcile net income to net cash used in operating activities: |
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Depreciation and amortization |
3,911 | 2,997 | ||||||
Noncash lease expense |
5,961 | 6,009 | ||||||
Credit loss recovery |
(167 | ) | (146 | ) | ||||
Stock-based compensation |
3,856 | 2,288 | ||||||
Deferred taxes, net |
1,104 | 909 | ||||||
Unrealized foreign exchange (gains) losses |
(151 | ) | (157 | ) | ||||
Net realized gains on marketable debt securities, available-for-sale |
(113 | ) | (1 | ) | ||||
Other non-cash items |
11 | (49 | ) | |||||
Changes in operating assets and liabilities: |
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Commissions receivable |
3,430 | 1,776 | ||||||
Prepaid expenses |
2,850 | 74 | ||||||
Advances and loans |
(25,084 | ) | (4,440 | ) | ||||
Other assets |
(794 | ) | (1,187 | ) | ||||
Accounts payable and other liabilities |
1,308 | 2,071 | ||||||
Income tax receivable/payable |
10,189 | 4,786 | ||||||
Accrued bonuses and other employee related expenses |
(33,990 | ) | (9,362 | ) | ||||
Deferred compensation and commissions |
(65,384 | ) | (33,781 | ) | ||||
Operating lease liabilities |
(5,031 | ) | (5,275 | ) | ||||
Other liabilities |
(2,224 | ) | (1,626 | ) | ||||
Net cash flows used in operating activities |
(67,535 | ) | (20,102 | ) | ||||
Cash flows from investing activities |
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Acquisition of businesses, net of cash received |
(12,500 | ) | 229 | |||||
Purchases of marketable debt securities, available-for-sale |
(40,551 | ) | (81,264 | ) | ||||
Proceeds from sales and maturities of marketable debt securities, available-for-sale |
61,970 | 85,065 | ||||||
Issuances of employee notes receivable |
(71 | ) | (40 | ) | ||||
Payments received on employee notes receivable |
18 | 250 | ||||||
Purchase of property and equipment |
(1,883 | ) | (1,099 | ) | ||||
Net cash flows provided by investing activities |
6,983 | 3,141 | ||||||
Cash flows from financing activities |
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Taxes paid related to net share settlement of stock-based awards |
(2,918 | ) | (1,733 | ) | ||||
Principal payments on stock appreciation rights liability |
(1,761 | ) | (1,481 | ) | ||||
Principal payments on contingent and deferred consideration |
(1,264 | ) | (1,302 | ) | ||||
Net cash flows used in financing activities |
(5,943 | ) | (4,516 | ) | ||||
Effect of currency exchange rate changes on cash and cash equivalents |
50 | 33 | ||||||
Net (decrease) in cash and cash equivalents |
(66,445 | ) | (21,444 | ) | ||||
Cash and cash equivalents at beginning of period |
382,140 | 243,152 | ||||||
Cash and cash equivalents at end of period |
$ | 315,695 | $ | 221,708 | ||||
Supplemental disclosures of cash flow information |
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Interest paid during the period |
$ | 499 | $ | 697 | ||||
Income taxes paid, net |
$ | 464 | $ | 339 | ||||
1. |
Description of Business, Basis of Presentation and Recent Accounting Pronouncements |
2. |
Property and Equipment, Net |
March 31, 2022 |
December 31, 2021 |
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Computer software and hardware equipment |
$ | 35,404 | $ | 33,819 | ||||
Furniture, fixtures and equipment |
24,817 | 24,511 | ||||||
Less: accumulated depreciation and amortization |
(36,972 | ) | (35,138 | ) | ||||
$ | 23,249 | $ | 23,192 | |||||
3. |
Operating Leases |
Three Months Ended March 31, |
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2022 | 2021 | |||||||
Operating lease cost: |
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Lease cost (1) |
$ | 6,544 | $ | 6,589 | ||||
Variable lease cost (2) |
1,363 | 1,400 | ||||||
Sublease income |
(234 | ) | (33 | ) | ||||
$ | 7,673 | $ | 7,956 | |||||
(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 |
$ | 15,484 | ||
2023 |
18,311 | |||
2024 |
15,829 | |||
2025 |
13,320 | |||
2026 |
9,716 | |||
Thereafter |
7,027 | |||
Total future minimum lease payments |
79,687 | |||
Less imputed interest |
(5,104 | ) | ||
Present value of operating lease liabilities |
$ | 74,583 | ||
Three Months Ended March 31, |
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2022 | 2021 | |||||||
Operating cash flow information: |
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Cash paid for amounts included in the measurement of operating lease liabilities |
$ | 5,589 | $ | 5,862 | ||||
Noncash activity: |
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ROU assets obtained in exchange for operating lease liabilities |
$ | 2,435 | $ | 3,004 | ||||
Tenant improvements owned by lessor related to ROU assets (1) |
$ | 66 | $ | 55 |
(1) |
Reclassification from other assets current. |
March 31, 2022 | December 31, 2021 | |||||||
Weighted average remaining operating lease term |
4.44 years | 4.57 years | ||||||
Weighted average discount rate |
2.9 | % | 2.9 | % |
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 |
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Short-term investments: |
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U.S. treasuries |
$ | 101,141 | $ | — | $ | — | $ | (849 | ) | $ | 100,292 | |||||||||
Corporate debt |
118,271 | — | 7 | (193 | ) | 118,085 | ||||||||||||||
Asset-backed securities (“ABS”) and other |
603 | — | 8 | — | 611 | |||||||||||||||
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$ |
220,015 |
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$ | — | $ | 15 | $ | (1,042 | ) | $ | 218,988 | |||||||||
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Long-term investments: |
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U.S. treasuries |
$ | 12,420 | $ | — | $ | 9 | $ | (311 | ) | $ | 12,118 | |||||||||
U.S. government sponsored entities |
674 | — | — | (18 | ) | 656 | ||||||||||||||
Corporate debt |
34,300 | — | 147 | (1,141 | ) | 33,306 | ||||||||||||||
Asset-backed securities (“ABS”) and other |
7,125 | — | 5 | (230 | ) | 6,900 | ||||||||||||||
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$ | 54,519 | $ | — | $ | 161 | $ | (1,700 | ) | $ | 52,980 | ||||||||||
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December 31, 2021 | ||||||||||||||||||||
Amortized Cost |
Allowance for Credit Losses |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
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Short-term investments: |
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U.S. treasuries |
$ | 35,767 | $ | — | $ | — | $ | (34 | ) | $ | 35,733 | |||||||||
Corporate debt |
148,148 | — | 22 | (35 | ) | 148,135 | ||||||||||||||
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$ | 183,915 | $ | — | $ | 22 | $ | (69 | ) | $ | 183,868 | ||||||||||
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Long-term investments: |
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U.S. treasuries |
$ | 70,902 | $ | — | $ | 128 | $ | (263 | ) | $ | 70,767 | |||||||||
U.S. government sponsored entities |
726 | — | 22 | (3 | ) | 745 | ||||||||||||||
Corporate debt |
33,197 | — | 962 | (146 | ) | 34,013 | ||||||||||||||
ABS and other |
7,033 | — | 82 | (30 | ) | 7,085 | ||||||||||||||
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$ | 111,858 | $ | — | $ | 1,194 | $ | (442 | ) | $ | 112,610 | ||||||||||
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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 |
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U.S. treasuries |
$ | 111,232 | $ | (1,160 | ) | — | — | $ | 111,232 | $ | (1,160 | ) | ||||||||||||
U.S. government sponsored entities |
549 | (8 | ) | 105 | (10 | ) | 654 | (18 | ) | |||||||||||||||
Corporate debt |
137,510 | (1,277 | ) | 618 | (57 | ) | 138,128 | (1,334 | ) | |||||||||||||||
ABS and other |
6,181 | (230 | ) | — | — | 6,181 | (230 | ) | ||||||||||||||||
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$ | 255,472 | $ | (2,675 | ) | $ | 723 | $ | (67 | ) | $ | 256,195 | $ | (2,742 | ) | ||||||||||
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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 |
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U.S. treasuries |
$ | 103,019 | $ | (297 | ) | $ | — | $ | — | $ | 103,019 | $ | (297 | ) | ||||||||||
U.S. government sponsored entities |
115 | (3 | ) | — | — | 115 | (3 | ) | ||||||||||||||||
Corporate debt |
115,908 | (173 | ) | 146 | (8 | ) | 116,054 | (181 | ) | |||||||||||||||
ABS and other |
2,915 | (30 | ) | — | — | 2,915 | (30 | ) | ||||||||||||||||
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$ | 221,957 | $ | (503 | ) | $ | 146 | $ | (8 | ) | $ | 222,103 | $ | (511 | ) | ||||||||||
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Three Months Ended March 31, |
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2022 | 2021 | |||||||
Gross realized gains (1) |
$ | 113 | $ | 1 | ||||
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Gross realized losses (1) |
$ | — | $ | — | ||||
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(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 |
$ | 220,015 | $ | 218,988 | $ | 183,915 | $ | 183,868 | ||||||||
Due after one year through five years |
36,442 | 35,478 | 96,035 | 96,257 | ||||||||||||
Due after five years through ten years |
12,978 | 12,582 | 11,129 | 11,601 | ||||||||||||
Due after ten years |
5,099 | 4,920 | 4,694 | 4,752 | ||||||||||||
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$ | 274,534 | $ | 271,968 | $ | 295,773 | $ | 296,478 | |||||||||
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Weighted average contractual maturity |
1.4 years | 1.5 years |
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 |
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Goodwill and intangible assets: |
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Goodwill |
$ | 38,101 | $ | — | $ | 38,101 | $ | 34,071 | $ | — | $ | 34,071 | ||||||||||||
Intangible assets (1) |
32,444 | (11,111 | ) | 21,333 | 23,974 | (9,940 | ) | 14,034 | ||||||||||||||||
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$ | 70,545 | $ | (11,111 | ) | $ | 59,434 | $ | 58,045 | $ | (9,940 | ) | $ | 48,105 | |||||||||||
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(1) |
Total weighted average amortization period was 5.2 years and 4.4 years as of March 31, 2022 and December 31, 2021, respectively. |
Three Months Ended March 31, |
||||||||
2022 | 2021 | |||||||
Beginning balance |
$ | 34,071 | $ | 33,375 | ||||
Additions from acquisitions (1) |
4,030 | 671 | ||||||
Impairment losses |
— | — | ||||||
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|
|
|
|||||
Ending balance |
$ | 38,101 | $ | 34,046 | ||||
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|
|
(1) |
The 2021 addition represents a measurement period adjustment for an acquisition made in 2020. |
March 31, 2022 | ||||
Remainder of 2022 |
$ | 3,512 | ||
2023 |
4,617 | |||
2024 |
4,101 | |||
2025 |
3,881 | |||
2026 |
2,156 | |||
Thereafter |
3,066 | |||
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|
|||
$ | 21,333 | |||
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|
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 |
$ | — | $ | — | $ | 951 | $ | 1,855 | ||||||||
Security deposits |
— | — | 1,484 | 1,395 | ||||||||||||
Employee notes receivable (1) |
67 | 40 | — | — | ||||||||||||
Securities, held-to-maturity (2) |
— | — | 9,500 | 9,500 | ||||||||||||
Customer trust accounts and other |
5,960 | 5,230 | 338 | 396 | ||||||||||||
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$ | 6,027 | $ | 5,270 | $ | 12,273 | $ | 13,146 | |||||||||
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(1) |
Reduction of accrued bonuses and other employee related expenses in settlement of employee notes receivable were $0 and $10 for the three months ended March 31, 2022 and March 31, 2021, respectively. See Note 7 – “Related-Party Transactions” for additional information. |
(2) |
Securities, held-to-maturity, 1-year treasury rate. |
Three Months Ended March 31, |
||||||||
2022 | 2021 | |||||||
Beginning balance |
$ | 1,855 | $ | 1,897 | ||||
Additions |
— | 303 | ||||||
Amortization |
(904 | ) | (138 | ) | ||||
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|||||
Ending balance |
$ | 951 | $ | 2,062 | ||||
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Current | Non-Current |
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March 31, 2022 |
December 31, 2021 |
March 31, 2022 |
December 31, 2021 |
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Stock appreciation rights (“SARs”) liability (1) |
$ | 2,323 | $ | 2,241 | $ | 12,731 | $ | 14,918 | ||||||||
Commissions payable to investment sales and financing professionals |
51,195 | 110,769 | 25,082 | 31,697 | ||||||||||||
Deferred compensation liability (1) |
749 | 1,080 | 7,790 | 6,921 | ||||||||||||
Other |
727 | 595 | — | — | ||||||||||||
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|||||||||
$ | 54,994 | $ | 114,685 | $ | 45,603 | $ | 53,536 | |||||||||
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(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) |
$ | (525 | ) | $ | 333 | |||
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Increase (Decrease) in the net carrying value of the deferred compensation obligation (2) |
$ | (532 | ) | $ | 260 | |||
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(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) |
$ | 3,300 | $ | 4,689 | ||||
Contingent consideration (1) |
5,782 | 6,631 | ||||||
Dividends Payable |
1,443 | — | ||||||
Other |
82 | 74 | ||||||
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|
|||||
$ | 10,607 | $ | 11,394 | |||||
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|
(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 |
$ | 10,916 | $ | — | $ | 10,916 | $ | — | $ | 11,508 | $ | — | $ | 11,508 | $ | — | ||||||||||||||||
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Cash equivalents (1) |
||||||||||||||||||||||||||||||||
Commercial paper |
$ | 32,223 | $ | — | $ | 32,223 | $ | — | $ | 8,948 | $ | — | $ | 8,948 | $ | — | ||||||||||||||||
Money market funds |
51,403 | 51,403 | — | — | 210,985 | 210,985 | — | — | ||||||||||||||||||||||||
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$ | 83,626 | $ | 51,403 | $ | 32,223 | $ | — | $ | 219,933 | $ | 210,985 | $ | 8,948 | $ | — | |||||||||||||||||
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Marketable debt securities, available-for-sale: |
||||||||||||||||||||||||||||||||
Short-term investments: |
||||||||||||||||||||||||||||||||
U.S. treasuries |
$ | 100,292 | $ | 100,292 | $ | — | $ | — | $ | 35,733 | $ | 35,733 | $ | — | $ | — | ||||||||||||||||
U.S. government sponsored entities |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Corporate debt |
118,085 | — | 118,085 | — | — | — | — | — | ||||||||||||||||||||||||
ABS and other |
611 | — | 611 | — | 148,135 | — | 148,135 | — | ||||||||||||||||||||||||
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$ | 218,988 | $ | 100,292 | $ | 118,696 | $ | — | $ | 183,868 | $ | 35,733 | $ | 148,135 | $ | — | |||||||||||||||||
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Long-term investments: |
||||||||||||||||||||||||||||||||
U.S. treasuries |
$ | 12,118 | $ | 12,118 | $ | — | $ | — | $ | 70,767 | $ | 70,767 | $ | — | $ | — | ||||||||||||||||
U.S. government sponsored entities |
656 | — | 656 | — | 745 | — | 745 | — | ||||||||||||||||||||||||
Corporate debt |
33,306 | — | 33,306 | — | 34,013 | — | 34,013 | — | ||||||||||||||||||||||||
ABS and other |
6,900 | — | 6,900 | — | 7,085 | — | 7,085 | — | ||||||||||||||||||||||||
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$ | 52,980 | 12,118 | $ | 40,862 | $ | — | $ | 112,610 | $ | 70,767 | $ | 41,843 | $ | — | ||||||||||||||||||
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Liabilities: |
||||||||||||||||||||||||||||||||
Contingent consideration (2) |
$ | 9,363 | $ | — | $ | — | $ | 9,363 | $ | 9,312 | $ | — | $ | — | $ | 9,312 | ||||||||||||||||
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Deferred consideration (2) |
$ | 8,371 | $ | — | $ | 8,371 | $ | — | $ | 9,801 | $ | — | $ | 9,801 | $ | — | ||||||||||||||||
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Deferred compensation liability |
$ | 8,539 | $ | 8,539 | $ | — | $ | — | $ | 8,001 | $ | 8,001 | $ | — | $ | — | ||||||||||||||||
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(1) |
Included in cash and cash equivalents on the accompanying condensed consolidated balance sheets. |
(2) |
$3,581 and $2,681 of Contingent consideration and $5,071 and $5,112 of Deferred consideration are included in Accounts payable and other liabilities as of March 31, 2022 and December 31, 2021, respectively. |
Three Months Ended March 31, |
||||||||
2022 | 2021 | |||||||
Beginning balance |
$ | 9,312 | $ | 5,572 | ||||
Contingent consideration in connection with acquisitions (1) |
— | (100 | ) | |||||
Change in fair value of contingent consideration |
51 | (171 | ) | |||||
Payments of contingent consideration |
— | — | ||||||
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|
|
|||||
Ending balance |
$ | 9,363 | $ | 5,301 | ||||
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|
|
(1) |
Contingent consideration in connection with acquisitions represents a noncash investing activity. Three months ended March 31, 2021 relates to a measurement period adjustment. See Note 5 – “Acquisitions, Goodwill and Other Intangible Assets” for additional information. |
Fair Value at March 31, 2022 |
Valuation Technique |
Unobservable inputs |
Range (Weighted Average) (1) |
|||||||||
Contingent consideration |
$ | 9,363 | Discounted cash flow | Expected life of cash flows | 1.2-5.6 years (3.1 y ears) |
|||||||
Discount rate | 4.0%-4.6% (4.3%) |
|||||||||||
Probability of achievement | 22.2%-100.0% (96.6%) |
|||||||||||
Fair Value at December 31, 2021 |
Valuation Technique |
Unobservable inputs |
Range (Weighted Average) (1)
|
|||||||||
Contingent consideration |
$ | 9,312 | Discounted cash flow | Expected life of cash flows |
1.4-5.8 years (3.4 years) |
|||||||
Discount rate | 2.2%-3.5% (2.9%) |
|||||||||||
Probability of achievement | 29.0%-100.0% (95.2%) |
(1) |
Unobservable inputs were weighted by the relative fair value of the instruments. |
Fair Value at March 31, 2022 |
Valuation Technique |
Unobservable inputs |
Range (Weighted Average) (1) |
|||||||||
MSRs |
$ | 1,967 | Discounted cash flow | Constant prepayment rates | 0.0%-20.0% (10.0%) |
|||||||
Constant default rate | 0.28%-5.08% (1.28%) |
|||||||||||
Loss severity | 26.2%-31.4% (27.95%) |
|||||||||||
Discount rate |
10.0%-10.0% (10.0%) |
|||||||||||
Fair Value at December 31, 2021 |
Valuation Technique |
Unobservable inputs |
Range (Weighted Average) (1) |
|||||||||
MSRs |
$ | 2,332 | Discounted cash flow | Constant prepayment rates |
0.0%-20.0% (10.0%) |
|||||||
Constant default rate | 0.3%-4.9% (1.2%) |
|||||||||||
Loss severity |
26.2%-31.4% (28.0%) |
|||||||||||
Discount rate |
10.0%-10.0% (10.0%) |
(1) |
Weighted average is based on the 10% constant prepayment rate scenario which the Company uses as the reported fair value. |
9. |
Stockholders’ Equity |
10. |
Stock-Based Compensation Plans |
Shares | Weighted- Average Grant Date Fair Value Per Share |
|||||||
Nonvested shares at December 31, 2021 (1) |
980,936 | $ | 36.58 | |||||
Granted |
780,997 | $ | 47.29 | |||||
Vested (2) |
(176,227 | ) | $ | 36.84 | ||||
Forfeited/canceled |
(7,166 | ) | $ | 36.38 | ||||
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|
|||||||
Nonvested shares at March 31, 2022 (1) |
1,578,540 | $ | 41.85 | |||||
|
|
|||||||
Unrecognized stock-based compensation expense as of March 31, 2022 |
$ | 61,517 | ||||||
|
|
|||||||
Unrecognized compensation expense is expected to be recognized over a weighted-average period (years) of approximately |
4.22 | |||||||
|
|
|||||||
Weighted average remaining vesting period (years) as of March 31, 2022 |
4.22 | |||||||
|
|
(1) |
Nonvested RSUs will be settled through the issuance of new shares of common stock. |
(2) |
Includes vested shares delivered subsequent to March 31, 2022. |
Three Months Ended March 31, |
||||||||
2022 | 2021 | |||||||
ESPP |
$ | 56 | $ | 50 | ||||
RSUs and RSAs |
3,800 | 2,238 | ||||||
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|
|
|||||
$ | 3,856 | $ | 2,288 | |||||
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|
11. |
Income Taxes |
Three Months Ended March 31, | ||||||||||||||||
2022 | 2021 | |||||||||||||||
Amount | Rate | Amount | Rate | |||||||||||||
Income tax expense at the federal statutory rate |
$ | 9,353 | 21.0 | % | $ | 4,431 | 21.0 | % | ||||||||
State income tax expense, net of federal benefit |
2,033 | 4.6 | % | 1,048 | 5.0 | % | ||||||||||
(Windfall) shortfall tax benefits, net related to stock-based compensation |
(306 | ) | (0.7 | )% | (27 | ) | (0.1 | )% | ||||||||
Change in valuation allowance |
(104 | ) | (0.2 | )% | 180 | 0.9 | % | |||||||||
Permanent and other items (1) |
781 | 1.7 | % | 454 | 2.0 | % | ||||||||||
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|||||||||
$ | 11,757 | 26.4 | % | $ | 6,086 | 28.8 | % | |||||||||
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|
|
(1) |
Permanent items relate principally to compensation charges, qualified transportation fringe benefits and meals and entertainment. |
12. |
Earnings per Share |
Three Months Ended March 31, |
||||||||
2022 | 2021 | |||||||
Numerator (Basic and Diluted): |
||||||||
Net income |
$ | 32,783 | $ | 15,012 | ||||
Change in value for stock settled consideration |
(63 | ) | 12 | |||||
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|
|||||
Adjusted net income |
$ | 32,720 | $ | 15,024 | ||||
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|
|||||
Denominator: |
||||||||
Basic |
||||||||
Weighted average common shares issued and outstanding |
39,721 | 39,432 | ||||||
Deduct: Unvested RSAs (1) |
(13 | ) | (17 | ) | ||||
Add: Fully vested DSUs (2) |
281 | 342 | ||||||
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|
|
|
|||||
Weighted average common shares outstanding |
39,989 | 39,757 | ||||||
|
|
|
|
|||||
Basic earnings per common share |
$ | 0.82 | $ | 0.38 | ||||
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|
|
|
|||||
Diluted |
||||||||
Weighted average common shares outstanding from above |
39,989 | 39,757 | ||||||
Add: Dilutive effect of RSUs, RSAs & ESPP |
396 | 208 | ||||||
Add: Contingently issuable shares (3) |
89 | 159 | ||||||
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|
|
|
|||||
Weighted average common shares outstanding |
40,474 | 40,124 | ||||||
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|
|
|||||
Diluted earnings per common share |
$ | 0.81 | $ | 0.37 | ||||
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|
|
|
|||||
Antidilutive shares excluded from diluted earnings per common share (4) |
778 | 230 | ||||||
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|
|
(1) |
RSAs were issued and outstanding to the non-employee directors and have a one-year vesting term subject to service requirements. See Note 10 – “Stock-Based Compensation Plans” for additional information. |
(2) |
Shares are included in weighted average common shares outstanding as the shares are fully vested but have not yet been delivered. See Note 10 – “Stock-Based Compensation Plans” for additional information. |
(3) |
Relates to contingently issuable stock settled consideration. |
(4) |
Primarily pertaining to RSU grants to the Company’s employees and independent contractors. |
13. |
Commitments and Contingencies |
14. |
Subsequent Events |
• | Properties priced less than $1 million; |
• | Private client market: |
• | Middle market: |
• | Larger transaction market: |
Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||
2022 | 2021 | Change | ||||||||||||||||||||||||||||||||||
Real Estate Brokerage |
Number | Volume | Revenues | Number | Volume | Revenues | Number | Volume | Revenues | |||||||||||||||||||||||||||
(in millions) | (in thousands) | (in millions) | (in thousands) | (in millions) | (in thousands) | |||||||||||||||||||||||||||||||
<$1 million |
206 | $ | 128 | $ | 5,787 | 227 | $ | 149 | $ | 6,138 | (21 | ) | $ | (21 | ) | $ | (351 | ) | ||||||||||||||||||
Private Client Market ($1 - <$10 million) |
1,606 | 5,696 | 161,031 | 1,200 | 3,668 | 105,423 | 406 | 2,028 | 55,608 | |||||||||||||||||||||||||||
Middle Market ($10 - <$20 million) |
184 | 2,503 | 46,760 | 78 | 1,067 | 20,601 | 106 | 1,436 | 26,159 | |||||||||||||||||||||||||||
Larger Transaction Market (≥$20 million) |
141 | 8,878 | 73,331 | 83 | 3,980 | 30,634 | 58 | 4,898 | 42,697 | |||||||||||||||||||||||||||
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2,137 | $ | 17,205 | $ | 286,909 | 1,588 | $ | 8,864 | $ | 162,796 | 549 | $ | 8,341 | $ | 124,113 | ||||||||||||||||||||||
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