MADISON, N.J., July 29,
2021 /PRNewswire/ -- Realogy Holdings Corp. (NYSE: RLGY), the
largest full-service residential real estate services company in
the United States, today reported
financial results for the quarter ended June 30, 2021.
"Realogy delivered an outstanding second quarter. We generated
record Operating EBITDA, gained market share for the fourth
consecutive quarter, and strengthened our balance sheet to its best
position ever," said Ryan Schneider,
Realogy's chief executive officer and president. "The unmatched
power of Realogy's strategic progress, innovation through
technology, and leading presence in the luxury market, combined
with our robust growth investments, position our business to lead
into the future."
"In the second quarter, Realogy delivered phenomenal results,
significantly advanced our balance sheet, and generated impressive
free cash flow that enable us to invest in our future," said
Charlotte Simonelli, Realogy's
executive vice president, chief financial officer, and treasurer.
"Over the past year Realogy has achieved tremendous quality and
consistency in our financial performance."
Second Quarter 2021 Highlights
- Generated Revenue of $2.3
billion, an increase of 81% or $1,021
million year-over-year.
- Reported Net income of $149
million and basic earnings per share of $1.28, an increase of $163
million vs. prior year or $1.40 per share.
- Generated Operating EBITDA of $310
million, an increase of $135
million year-over-year (See Table 5a).
- Lowest ever Net Debt Leverage Ratio of 2.5x and Senior Secured
Leverage Ratio of 0.00x (See Tables
8a and 8b).
- Reported Free Cash Flow of $243
million, an improvement of $196
million versus second quarter of 2020 (See Table 7).
- Combined closed transaction volume increased 85% year-over-year
in the second quarter driving market share gains for the fourth
consecutive quarter. Our transaction volume growth was
significantly above the 53% year-over-year market volume growth
reported by the National Association of Realtors (NAR).
- Realogy Title Group contributed meaningfully to our business
results, generating approximately $55
million in second quarter Operating EBITDA, a decline of
$6 million year-over-year, including
a $27 million decrease in equity in
earnings from the Company's mortgage origination joint venture (See
Table 5a).
- Owned Brokerage agent count grew 4% year-over-year and
continued to maintain strong retention levels.
- Strong cost management with $80
million in permanent cost savings expected in 2021 with
actions taken for approximately 85% of the target savings and
$50 million realized in the income
statement through June 30, 2021.
Second Quarter 2021 Financial Highlights
The following table sets forth Realogy's financial highlights
for the periods presented (in millions, except per share data)
(unaudited):
|
Three Months Ended
June 30,
|
|
2021
|
|
2020
|
|
Change
|
|
%
Change
|
Revenue
|
$
|
2,276
|
|
|
$
|
1,255
|
|
|
$
|
1,021
|
|
|
81
|
%
|
Operating EBITDA
1
|
310
|
|
|
175
|
|
|
135
|
|
|
77
|
|
Net income (loss)
attributable to Realogy
|
149
|
|
|
(14)
|
|
|
163
|
|
|
1,164
|
|
Adjusted net income
2
|
159
|
|
|
57
|
|
|
102
|
|
|
179
|
|
Earnings (loss) per
share
|
1.28
|
|
|
(0.12)
|
|
|
1.40
|
|
|
1,167
|
|
Adjusted earnings per
share 2
|
1.36
|
|
|
0.49
|
|
|
0.87
|
|
|
178
|
|
Free Cash Flow
3
|
243
|
|
|
47
|
|
|
196
|
|
|
417
|
|
Net cash provided by
operating activities
|
$
|
223
|
|
|
$
|
115
|
|
|
$
|
108
|
|
|
94
|
%
|
|
|
|
|
|
|
|
|
Select Key
Drivers
|
|
|
|
|
|
|
|
Realogy Franchise
Group 4 5
|
|
|
|
|
|
|
|
Closed homesale
sides
|
320,463
|
|
|
238,085
|
|
|
|
|
35
|
%
|
Average homesale
price
|
$
|
430,756
|
|
|
$
|
321,308
|
|
|
|
|
34
|
%
|
Realogy Brokerage
Group 5
|
|
|
|
|
|
|
|
Closed homesale
sides
|
103,945
|
|
|
71,375
|
|
|
|
|
46
|
%
|
Average homesale
price
|
$
|
678,978
|
|
|
$
|
503,935
|
|
|
|
|
35
|
%
|
Realogy Title
Group
|
|
|
|
|
|
|
|
Purchase title and
closing units
|
47,375
|
|
|
32,028
|
|
|
|
|
48
|
%
|
Refinance title and
closing units
|
14,472
|
|
|
17,548
|
|
|
|
|
(18)
|
%
|
____________________
|
Footnotes:
|
1
|
See Tables 5a and 5b.
Operating EBITDA is defined as net income (loss) before
depreciation and amortization, interest expense, net (other than
relocation services interest for securitization assets and
securitization obligations), income taxes, and other items that are
not core to the operating activities of the Company such as
restructuring charges, former parent legacy items, gains or losses
on the early extinguishment of debt, impairments, gains or losses
on discontinued operations and gains or losses on the sale of
investments or other assets.
|
2
|
See Table 1a.
Adjusted Net income (loss) is defined as net income (loss) before
mark-to-market interest rate swap adjustments, former parent legacy
items, restructuring charges, (gain) loss on the early
extinguishment of debt, impairments and the tax effect of the
foregoing adjustments. Adjusted earnings (loss) per share is
Adjusted net income (loss) divided by the weighted average common
and common equivalent shares outstanding.
|
3
|
See Table 7.
Free Cash Flow is defined as net income (loss) attributable to
Realogy before income tax expense (benefit), net of payments, net
interest expense, cash interest payments, depreciation and
amortization, capital expenditures, restructuring costs and former
parent legacy costs (benefits), net of payments, impairments,
(gain) loss on the early extinguishment of debt, working capital
adjustments and relocation receivables (assets), net of change in
securitization obligations.
|
4
|
Includes all
franchisees except for Realogy Brokerage Group.
|
5
|
The Company's
combined homesale transaction volume growth (transaction sides
multiplied by average sale price) increased 85% compared with the
second quarter of 2020.
|
Balance Sheet and Capital Allocation
The Company ended the quarter with cash and cash equivalents of
$859 million*. Total corporate debt,
including the short-term portion, net of cash and cash equivalents
(net corporate debt), totaled $2.6
billion at June 30, 2021. The Company's Net Debt
Leverage Ratio was 2.5x at June 30, 2021 (see Table
8b).
On April 28, 2021, the Company
used cash on hand to pay down $150
million of the Term Loan B Facility, reducing the principal
amount of that facility to $240
million.
In June 2021, the Company issued
$403 million principal amount of
0.25% Exchangeable Senior Notes due 2026. The Company used a
portion of the net proceeds from this offering to pay the cost of
exchangeable note hedge transactions (with such cost partially
offset by the proceeds to the Company from the sale of
warrants). Taken together, the purchase of such exchangeable
note hedges and the sale of such warrants are intended to offset
(in whole or in part) any potential dilution and/or cash payments
upon the exchange of the Exchangeable Senior Notes, and to
effectively increase the overall exchange price from $24.49 to $30.6075
per share.
A consolidated balance sheet is included as Table 2 of this
press release.
____________________
|
* excludes restricted
cash
|
Investor Conference Call
Today, July 29, at 8:30 a.m.
(ET), Realogy will hold a conference call via webcast to
review its Q2 2021 results and provide a business update. The
webcast will be hosted by Ryan
Schneider, chief executive officer and president, and
Charlotte Simonelli, chief financial
officer, and will conclude with an investor Q&A period with
management.
Investors may access the conference call live via webcast at
ir.realogy.com or by dialing (833) 646-0499 (toll free);
international participants should dial (918) 922-3007. Please dial
in at least 5 to 10 minutes prior to start time. A webcast replay
also will be available on the website.
About Realogy Holdings Corp.
Realogy (NYSE: RLGY) is moving the real estate industry to
what's next. As the leading and most integrated provider of U.S.
residential real estate services encompassing franchise, brokerage,
relocation, and title and settlement businesses as well as a
mortgage joint venture, Realogy supported approximately 1.4 million
home transactions in 2020. The company's diverse brand portfolio
includes some of the most recognized names in real estate: Better
Homes and Gardens® Real Estate, CENTURY 21®, Coldwell
Banker®, Coldwell Banker Commercial®, Corcoran®, ERA®,
and Sotheby's International Realty®. Using innovative technology,
data and marketing products, high-quality lead generation programs,
and best-in-class learning and support services, Realogy fuels the
productivity of its approximately 194,200 independent sales agents
in the U.S. and approximately 142,700 independent sales
agents in 117 other countries and territories, helping them build
stronger businesses and best serve today's consumers. Recognized
for ten consecutive years as one of the World's Most Ethical
Companies, Realogy has also been designated a Great Place to
Work three years in a row and is one of LinkedIn's 2021 Top
Companies in the U.S.
Forward-Looking Statements
Certain statements in this press release constitute
"forward-looking statements." Such forward-looking statements
involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of
Realogy Holdings Corp. to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Statements preceded by, followed by or
that otherwise include the words "believes", "expects",
"anticipates", "intends", "projects", "estimates", "potential" and
"plans" and similar expressions or future or conditional verbs such
as "will", "should", "would", "may" and "could" are generally
forward-looking in nature and not historical facts. Any statements
that refer to expectations or other characterizations of future
events, circumstances or results are forward-looking
statements.
The following include some, but not all, of the factors that
could affect our future results and cause actual results to differ
materially from those expressed in the forward-looking statements:
adverse developments or the absence of sustained improvement in the
U.S. residential real estate markets, either regionally or
nationally, which could include, but are not limited to factors
that could impact homesale transaction volume, such as: continued
or accelerated declines in inventory or a decline in the number of
home sales, increases in mortgage rates or inflation or tightened
mortgage standards, changes in consumer preferences, including
weakening in the consumer trends that have benefited us since the
second half of 2020, reductions in housing affordability, and
stagnant or declining home prices; adverse developments or the
absence of sustained improvement in macroeconomic conditions (such
as business, economic or political conditions) on a global,
domestic or local basis, which could include, but are not limited
to economic contraction in the U.S. economy, including the impact
of recessions, slow economic growth, or a deterioration in other
economic factors (including potential consumer, business or
governmental defaults or delinquencies due to the COVID-19 crisis
or otherwise) and fiscal and monetary policies of the federal
government and its agencies, particularly those that may result in
unfavorable changes to the interest rate environment and tax
reform; The impact of evolving competitive and consumer dynamics,
which could include, but are not limited to: continued erosion of
the broker share of the commission income generated by homesale
transactions and the continued rise of the sale agent's share of
such commissions, our ability to compete against non-traditional
competitors, including but not limited to, iBuying and home swap
business models and virtual brokerages, in particular those
competitors with access to significant third-party capital that may
prioritize market share over profitability, and meaningful
decreases in the average broker commission rate; adverse impacts
from the COVID-19 crisis (due to the impact of virus mutations or
otherwise), including amplification of risks to our business and
worsening economic consequences of the crisis or the reinstatement
of significant limitations on normal business operations; our
ability to execute our business strategy and achieve growth,
including our efforts to: recruit and retain productive independent
sales agents, attract and retain franchisees or renew existing
franchise agreements without reducing contractual royalty rates or
increasing the amount and prevalence of sales incentives, compete
for real estate services business, develop or procure products,
services and technology that support our strategic initiatives,
realize the expected benefits from our non-exclusive mortgage
origination joint venture, our RealSure joint venture, or from
other existing or future strategic partnerships, achieve or
maintain a beneficial cost structure or savings and other benefits
from our cost-saving initiatives, generate a meaningful number of
high-quality leads for independent sales agents and franchisees,
complete or integrate acquisitions and joint ventures into our
existing operations, or to complete or effectively manage
divestitures or other corporate transactions; our geographic and
high-end market concentration; the operating results of affiliated
franchisees; continued consolidation among our top 250 franchisees;
difficulties in the business or changes in the licensing strategy
of the owners of the two brands we do not own; the loss of our
largest real estate benefit program client or multiple significant
relocation clients; continued reductions in corporate relocations
or relocation benefits or refinancing activity; the failure of
third-party vendors or partners to perform as expected or our
failure to adequately monitor such third-parties; interruptions in
information technology used to operate our business and maintain
our competitiveness; increases in mortgage rates, tightened
mortgage underwriting standards or reductions in refinancing
activity; actions taken by listing aggregators to monetize their
concentration and market power; industry structure changes (as a
result of new laws, regulations or administrative policies,
litigation, the rules of multiple listing services or NAR, or
otherwise) that disrupt the functioning of the residential real
estate market; adverse effects on our operations or liquidity due
to our indebtedness, including with respect to: interest
obligations and the negative covenant restrictions contained in our
debt agreements, our ability to fund our operations, invest in our
business or pursue growth opportunities, react to changes in the
economy or our industry, or incur additional borrowings under our
existing facilities, an event of default under our debt agreements,
or our ability to refinance or repay our indebtedness or incur
additional indebtedness; risks related to the issuance of our 0.25%
Exchangeable Senior Notes and exchangeable note hedge and warrant
transactions, including counterparty risk with respect to the
exchangeable note hedge transactions; our failure or alleged
failure to comply with laws, regulations and regulatory
interpretations and any changes or stricter interpretations of any
of the foregoing (whether through private litigation or
governmental action), including but not limited to: (1) state or
federal employment laws or regulations that would require
reclassification of independent contractor sales agents to employee
status, (2) privacy or data security laws and regulations, (3) the
Real Estate Settlement Procedures Act ("RESPA") or other federal or
state consumer protection or similar laws, and (4) antitrust laws
and regulations; cybersecurity incidents; impairment of our
goodwill and other long-lived assets; and severe weather events or
natural disasters, including increasing severity or frequency of
such events due to climate change or otherwise, or other
catastrophic events, including public health crises, such as
pandemics and epidemics. Consideration should be given to the areas
of risk described above, as well as those risks set forth under the
headings "Forward-Looking Statements" and "Risk Factors" in our
filings with the Securities and Exchange Commission, including our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and our Annual Report on Form 10-K
for the year ended December 31, 2020,
and our other filings made from time to time, in connection with
considering any forward-looking statements that may be made by us
and our businesses generally. We undertake no obligation to release
publicly any revisions to any forward-looking statements, to report
events or to report the occurrence of unanticipated events except
as required by law.
Non-GAAP Financial Measures
This release includes certain non-GAAP financial measures as
defined under SEC rules. As required by SEC rules,
important information regarding such measures is contained in the
Tables attached to this release. See
Tables 1a, 8a, 8b and 9 for
definitions of these non-GAAP financial measures and Tables 1a, 5a,
5b, 6a, 6b, 7, 8a and 8b
for reconciliations of the historical non-GAAP financial measures
to their most comparable GAAP terms.
NAR data referenced herein is based on NAR's most recent
public estimates, which are subject to review and revision. Factors
that may impact the comparability of the Company's homesale
statistics to NAR are outlined in the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31,
2021 and its Annual Report on Form 10-K for the year ended
December 31, 2020.
Investor
Contacts:
|
Media
Contacts:
|
Alicia
Swift
|
Trey
Sarten
|
(973)
407-4669
|
(973)
407-2162
|
alicia.swift@realogy.com
|
trey.sarten@realogy.com
|
|
|
Danielle
Kloeblen
|
Gabriella
Chiera
|
(973)
407-2148
|
(973)
407-5236
|
danielle.kloeblen@realogy.com
|
Gabriella.Chiera@realogy.com
|
Table
1
|
REALOGY HOLDINGS
CORP.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In millions,
except per share data)
|
(Unaudited)
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenues
|
|
|
|
|
|
|
|
Gross commission
income
|
$
|
1,773
|
|
|
$
|
919
|
|
|
$
|
2,927
|
|
|
$
|
1,769
|
|
Service
revenue
|
314
|
|
|
219
|
|
|
563
|
|
|
421
|
|
Franchise
fees
|
147
|
|
|
85
|
|
|
252
|
|
|
156
|
|
Other
|
42
|
|
|
32
|
|
|
81
|
|
|
77
|
|
Net
revenues
|
2,276
|
|
|
1,255
|
|
|
3,823
|
|
|
2,423
|
|
Expenses
|
|
|
|
|
|
|
|
Commission and other
agent-related costs
|
1,373
|
|
|
685
|
|
|
2,258
|
|
|
1,315
|
|
Operating
|
422
|
|
|
320
|
|
|
806
|
|
|
688
|
|
Marketing
|
66
|
|
|
41
|
|
|
124
|
|
|
100
|
|
General and
administrative
|
114
|
|
|
69
|
|
|
204
|
|
|
157
|
|
Former parent legacy
cost, net
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Restructuring costs,
net
|
5
|
|
|
18
|
|
|
10
|
|
|
30
|
|
Impairments
|
1
|
|
|
63
|
|
|
2
|
|
|
540
|
|
Depreciation and
amortization
|
51
|
|
|
46
|
|
|
102
|
|
|
91
|
|
Interest expense,
net
|
57
|
|
|
59
|
|
|
95
|
|
|
160
|
|
Loss on the early
extinguishment of debt
|
1
|
|
|
8
|
|
|
18
|
|
|
8
|
|
Other income,
net
|
(16)
|
|
|
—
|
|
|
(18)
|
|
|
—
|
|
Total
expenses
|
2,075
|
|
|
1,309
|
|
|
3,602
|
|
|
3,089
|
|
Income (loss)
before income taxes, equity in earnings and
noncontrolling
interests
|
201
|
|
|
(54)
|
|
|
221
|
|
|
(666)
|
|
Income tax expense
(benefit)
|
60
|
|
|
(5)
|
|
|
77
|
|
|
(146)
|
|
Equity in earnings of
unconsolidated entities
|
(10)
|
|
|
(36)
|
|
|
(41)
|
|
|
(45)
|
|
Net income
(loss)
|
151
|
|
|
(13)
|
|
|
185
|
|
|
(475)
|
|
Less: Net income
attributable to noncontrolling interests
|
(2)
|
|
|
(1)
|
|
|
(3)
|
|
|
(1)
|
|
Net income (loss)
attributable to Realogy Holdings
|
$
|
149
|
|
|
$
|
(14)
|
|
|
$
|
182
|
|
|
$
|
(476)
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per share attributable to Realogy Holdings
shareholders:
|
Basic earnings (loss)
per share
|
$
|
1.28
|
|
|
$
|
(0.12)
|
|
|
$
|
1.57
|
|
|
$
|
(4.14)
|
|
Diluted earnings
(loss) per share
|
$
|
1.25
|
|
|
$
|
(0.12)
|
|
|
$
|
1.52
|
|
|
$
|
(4.14)
|
|
Weighted average
common and common equivalent shares of Realogy Holdings
outstanding:
|
Basic
|
116.5
|
|
|
115.4
|
|
|
116.2
|
|
|
115.0
|
|
Diluted
|
119.3
|
|
|
115.4
|
|
|
119.4
|
|
|
115.0
|
|
Table
1a
|
REALOGY HOLDINGS
CORP.
|
NON-GAAP
RECONCILIATION
|
ADJUSTED NET
INCOME (LOSS) AND ADJUSTED EARNINGS (LOSS) PER SHARE
|
(In millions,
except per share data)
|
|
We present Adjusted
net income (loss) and Adjusted earnings (loss) per share because we
believe these measures are useful as supplemental measures in
evaluating the performance of our operating businesses and provide
greater transparency into our operating results.
|
|
Adjusted net income
(loss) is defined by us as net income (loss) before: (a)
mark-to-market interest rate swap adjustments, whose fair value is
subject to movements in LIBOR and the forward yield curve and
therefore are subject to significant fluctuations; (b) former
parent legacy items, which pertain to liabilities of the former
parent for matters prior to mid-2006 and are non-operational in
nature; (c) restructuring charges as a result of initiatives
currently in progress; (d) impairments; (e) the (gain) loss on the
early extinguishment of debt that results from refinancing and
deleveraging debt initiatives and (f) the tax effect of the
foregoing adjustments. The gross amounts for these items as
well as the adjustment for income taxes are shown in the table
below.
|
|
Adjusted earnings
(loss) per share is Adjusted net income (loss) divided by the
weighted average common and common equivalent shares
outstanding.
|
|
Set forth in the
table below is a reconciliation of Net income (loss) to
Adjusted net income (loss) for the three and six months ended
June 30, 2021 and 2020:
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net income (loss)
attributable to Realogy Holdings
|
$
|
149
|
|
|
$
|
(14)
|
|
|
$
|
182
|
|
|
$
|
(476)
|
|
Addback:
|
|
|
|
|
|
|
|
Mark-to-market
interest rate swap losses
|
6
|
|
|
8
|
|
|
(7)
|
|
|
59
|
|
Former parent legacy
cost, net
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Restructuring costs,
net
|
5
|
|
|
18
|
|
|
10
|
|
|
30
|
|
Impairments
(a)
|
1
|
|
|
63
|
|
|
2
|
|
|
540
|
|
Loss on the early
extinguishment of debt
|
1
|
|
|
8
|
|
|
18
|
|
|
8
|
|
Adjustments for tax
effect (b)
|
(4)
|
|
|
(26)
|
|
|
(6)
|
|
|
(172)
|
|
Adjusted net
income (loss) attributable to Realogy Holdings
|
$
|
159
|
|
|
$
|
57
|
|
|
$
|
200
|
|
|
$
|
(11)
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per share attributable to Realogy Holdings:
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share:
|
$
|
1.28
|
|
|
$
|
(0.12)
|
|
|
$
|
1.57
|
|
|
$
|
(4.14)
|
|
Diluted earnings
(loss) per share:
|
$
|
1.25
|
|
|
$
|
(0.12)
|
|
|
$
|
1.52
|
|
|
$
|
(4.14)
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
(loss) per share attributable to Realogy Holdings:
|
|
|
|
|
Adjusted basic
earnings (loss) per share:
|
$
|
1.36
|
|
|
$
|
0.49
|
|
|
$
|
1.72
|
|
|
$
|
(0.10)
|
|
Adjusted diluted
earnings (loss) per share:
|
$
|
1.33
|
|
|
$
|
0.49
|
|
|
$
|
1.68
|
|
|
$
|
(0.10)
|
|
|
|
|
|
|
|
|
|
Weighted average
common and common equivalent shares outstanding:
|
|
|
Basic:
|
116.5
|
|
|
115.4
|
|
|
116.2
|
|
|
115.0
|
|
Diluted:
|
119.3
|
|
|
115.4
|
|
|
119.4
|
|
|
115.0
|
|
_____________________
|
(a)
|
Non-cash impairments
for the six months ended June 30, 2020 primarily
include:
|
|
•
|
a goodwill impairment
charge of $413 million related to Realogy Brokerage
Group;
|
|
•
|
an impairment charge
of $30 million related to Realogy Franchise Group's trademarks;
and
|
|
•
|
$74 million of
impairment charges during the six months ended June 30, 2020
(while Cartus Relocation Services was held for sale) to reduce the
net assets to the estimated proceeds.
|
|
|
(b)
|
Reflects tax effect
of adjustments at the Company's blended state and federal statutory
rate.
|
Table
2
|
REALOGY HOLDINGS
CORP.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In millions,
except share data)
|
(Unaudited)
|
|
|
June
30,
2021
|
|
December
31,
2020
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
859
|
|
|
$
|
520
|
|
Restricted
cash
|
7
|
|
|
3
|
|
Trade receivables (net
of allowance for doubtful accounts of $11 and $13)
|
145
|
|
|
128
|
|
Relocation
receivables
|
206
|
|
|
139
|
|
Other current
assets
|
207
|
|
|
154
|
|
Total current
assets
|
1,424
|
|
|
944
|
|
Property and
equipment, net
|
304
|
|
|
317
|
|
Operating lease
assets, net
|
453
|
|
|
450
|
|
Goodwill
|
2,899
|
|
|
2,910
|
|
Trademarks
|
685
|
|
|
685
|
|
Franchise agreements,
net
|
1,054
|
|
|
1,088
|
|
Other intangibles,
net
|
181
|
|
|
188
|
|
Other non-current
assets
|
407
|
|
|
352
|
|
Total
assets
|
$
|
7,407
|
|
|
$
|
6,934
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
124
|
|
|
$
|
128
|
|
Securitization
obligations
|
147
|
|
|
106
|
|
Current portion of
long-term debt
|
18
|
|
|
62
|
|
Current portion of
operating lease liabilities
|
125
|
|
|
129
|
|
Accrued expenses and
other current liabilities
|
565
|
|
|
600
|
|
Total current
liabilities
|
979
|
|
|
1,025
|
|
Long-term
debt
|
3,357
|
|
|
3,145
|
|
Long-term operating
lease liabilities
|
428
|
|
|
430
|
|
Deferred income
taxes
|
343
|
|
|
276
|
|
Other non-current
liabilities
|
294
|
|
|
291
|
|
Total
liabilities
|
5,401
|
|
|
5,167
|
|
Commitments and
contingencies
|
|
|
|
Equity:
|
|
|
|
Realogy Holdings
preferred stock: $0.01 par value; 50,000,000 shares authorized,
none
issued and outstanding at June 30, 2021 and December 31,
2020
|
—
|
|
|
—
|
|
Realogy Holdings
common stock: $0.01 par value; 400,000,000 shares authorized,
116,566,078 shares issued and outstanding at June 30, 2021 and
115,457,067 shares
issued and outstanding at December 31, 2020
|
1
|
|
|
1
|
|
Additional paid-in
capital
|
4,932
|
|
|
4,876
|
|
Accumulated
deficit
|
(2,873)
|
|
|
(3,055)
|
|
Accumulated other
comprehensive loss
|
(58)
|
|
|
(59)
|
|
Total stockholders'
equity
|
2,002
|
|
|
1,763
|
|
Noncontrolling
interests
|
4
|
|
|
4
|
|
Total
equity
|
2,006
|
|
|
1,767
|
|
Total liabilities
and equity
|
$
|
7,407
|
|
|
$
|
6,934
|
|
Table
3
|
REALOGY HOLDINGS
CORP.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
millions)
|
(Unaudited)
|
|
|
Six Months
Ended
June 30,
|
|
2021
|
|
2020
|
Operating
Activities
|
|
|
|
Net income
(loss)
|
$
|
185
|
|
|
$
|
(475)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
Depreciation and
amortization
|
102
|
|
|
91
|
|
Deferred income
taxes
|
65
|
|
|
(141)
|
|
Impairments
|
2
|
|
|
540
|
|
Amortization of
deferred financing costs and debt discount (premium)
|
6
|
|
|
5
|
|
Loss on the early
extinguishment of debt
|
18
|
|
|
8
|
|
Gain on sale of
business
|
(15)
|
|
|
—
|
|
Equity in earnings of
unconsolidated entities
|
(41)
|
|
|
(45)
|
|
Stock-based
compensation
|
14
|
|
|
10
|
|
Mark-to-market
adjustments on derivatives
|
(7)
|
|
|
59
|
|
Other adjustments to
net income (loss)
|
(2)
|
|
|
—
|
|
Net change in assets
and liabilities, excluding the impact of acquisitions and
dispositions:
|
|
|
|
Trade
receivables
|
(14)
|
|
|
(3)
|
|
Relocation
receivables
|
(67)
|
|
|
11
|
|
Other
assets
|
(14)
|
|
|
(8)
|
|
Accounts payable,
accrued expenses and other liabilities
|
(63)
|
|
|
(29)
|
|
Dividends received
from unconsolidated entities
|
38
|
|
|
22
|
|
Other, net
|
(21)
|
|
|
(12)
|
|
Net cash provided
by operating activities
|
186
|
|
|
33
|
|
Investing
Activities
|
|
|
|
Property and
equipment additions
|
(50)
|
|
|
(49)
|
|
Proceeds from the
sale of business
|
15
|
|
|
—
|
|
Investment in
unconsolidated entities
|
(7)
|
|
|
(2)
|
|
Other, net
|
(9)
|
|
|
(12)
|
|
Net cash used in
investing activities
|
(51)
|
|
|
(63)
|
|
Financing
Activities
|
|
|
|
Net change in
Revolving Credit Facility
|
—
|
|
|
625
|
|
Payments for
refinancing of Term Loan A Facility and Term Loan B
Facility
|
(1,055)
|
|
|
—
|
|
Proceeds from
issuance of Senior Notes
|
905
|
|
|
—
|
|
Proceeds from
issuance of Senior Secured Second Lien Notes
|
—
|
|
|
550
|
|
Redemption of Senior
Notes
|
—
|
|
|
(550)
|
|
Proceeds from
issuance of Exchangeable Senior Notes
|
403
|
|
|
—
|
|
Payments for purchase
of Exchangeable Senior Notes hedge transactions
|
(67)
|
|
|
—
|
|
Proceeds from
issuance of Exchangeable Senior Notes warrant
transactions
|
46
|
|
|
—
|
|
Amortization payments
on term loan facilities
|
(6)
|
|
|
(19)
|
|
Net change in
securitization obligations
|
40
|
|
|
(92)
|
|
Debt issuance
costs
|
(20)
|
|
|
(8)
|
|
Cash paid for fees
associated with early extinguishment of debt
|
(11)
|
|
|
(7)
|
|
Taxes paid related to
net share settlement for stock-based compensation
|
(9)
|
|
|
(5)
|
|
Other, net
|
(18)
|
|
|
(26)
|
|
Net cash provided
by financing activities
|
208
|
|
|
468
|
|
Effect of changes in
exchange rates on cash, cash equivalents and restricted
cash
|
—
|
|
|
—
|
|
Net increase in cash,
cash equivalents and restricted cash
|
343
|
|
|
438
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
523
|
|
|
266
|
|
Cash, cash
equivalents and restricted cash, end of period
|
$
|
866
|
|
|
$
|
704
|
|
|
|
|
|
Supplemental
Disclosure of Cash Flow Information
|
|
|
|
Interest payments
(including securitization interest of $2 and $3
respectively)
|
$
|
83
|
|
|
$
|
105
|
|
Income tax payments,
net
|
13
|
|
|
—
|
|
Table
4a
|
REALOGY HOLDINGS
CORP.
|
2021 vs. 2020 KEY
DRIVERS
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
%
Change
|
|
2021
|
|
2020
|
|
%
Change
|
Realogy Franchise
Group (a)
|
|
|
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
320,463
|
|
|
238,085
|
|
|
35
|
%
|
|
565,161
|
|
|
441,273
|
|
|
28
|
%
|
Average homesale
price
|
$
|
430,756
|
|
|
$
|
321,308
|
|
|
34
|
%
|
|
$
|
414,842
|
|
|
$
|
321,841
|
|
|
29
|
%
|
Average homesale
broker commission rate
|
2.46
|
%
|
|
2.49
|
%
|
|
(3)
|
bps
|
|
2.46
|
%
|
|
2.48
|
%
|
|
(2)
|
bps
|
Net royalty per
side
|
$
|
418
|
|
|
$
|
324
|
|
|
29
|
%
|
|
$
|
402
|
|
|
$
|
321
|
|
|
25
|
%
|
Realogy Brokerage
Group
|
|
|
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
103,945
|
|
|
71,375
|
|
|
46
|
%
|
|
178,938
|
|
|
133,916
|
|
|
34
|
%
|
Average homesale
price
|
$
|
678,978
|
|
|
$
|
503,935
|
|
|
35
|
%
|
|
$
|
649,634
|
|
|
$
|
517,888
|
|
|
25
|
%
|
Average homesale
broker commission rate
|
2.43
|
%
|
|
2.43
|
%
|
|
—
|
bps
|
|
2.43
|
%
|
|
2.42
|
%
|
|
1
|
bps
|
Gross commission
income per side
|
$
|
17,053
|
|
|
$
|
12,863
|
|
|
33
|
%
|
|
$
|
16,357
|
|
|
$
|
13,206
|
|
|
24
|
%
|
Realogy Title
Group
|
|
|
|
|
|
|
|
|
|
|
|
Purchase title and
closing units
|
47,375
|
|
|
32,028
|
|
|
48
|
%
|
|
81,203
|
|
|
60,752
|
|
|
34
|
%
|
Refinance title and
closing units
|
14,472
|
|
|
17,548
|
|
|
(18)
|
%
|
|
34,939
|
|
|
26,447
|
|
|
32
|
%
|
Average fee per
closing unit
|
$
|
2,608
|
|
|
$
|
2,062
|
|
|
26
|
%
|
|
$
|
2,446
|
|
|
$
|
2,151
|
|
|
14
|
%
|
____________________
|
(a)
|
Includes all
franchisees except for Realogy Brokerage Group.
|
Table
4b
|
REALOGY HOLDINGS
CORP.
|
2020 KEY
DRIVERS
|
|
|
|
Quarter
Ended
|
|
Year
Ended
|
|
|
March
31,
2020
|
|
June
30,
2020
|
|
September
30,
2020
|
|
December
31,
2020
|
|
December
31,
2020
|
Realogy Franchise
Group (a)
|
|
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
|
203,188
|
|
|
238,085
|
|
|
336,737
|
|
|
312,335
|
|
|
1,090,345
|
|
Average homesale
price
|
|
$
|
322,465
|
|
|
$
|
321,308
|
|
|
$
|
367,095
|
|
|
$
|
389,555
|
|
|
$
|
355,214
|
|
Average homesale
broker commission rate
|
|
2.47
|
%
|
|
2.49
|
%
|
|
2.48
|
%
|
|
2.46
|
%
|
|
2.48
|
%
|
Net royalty per
side
|
|
$
|
316
|
|
|
$
|
324
|
|
|
$
|
367
|
|
|
$
|
383
|
|
|
$
|
353
|
|
Realogy Brokerage
Group
|
|
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
|
62,541
|
|
|
71,375
|
|
|
101,890
|
|
|
97,930
|
|
|
333,736
|
|
Average homesale
price
|
|
$
|
533,813
|
|
|
$
|
503,935
|
|
|
$
|
563,513
|
|
|
$
|
590,351
|
|
|
$
|
553,081
|
|
Average homesale
broker commission rate
|
|
2.41
|
%
|
|
2.43
|
%
|
|
2.44
|
%
|
|
2.42
|
%
|
|
2.43
|
%
|
Gross commission
income per side
|
|
$
|
13,597
|
|
|
$
|
12,863
|
|
|
$
|
14,315
|
|
|
$
|
14,725
|
|
|
$
|
13,990
|
|
Realogy Title
Group
|
|
|
|
|
|
|
|
|
|
|
Purchase title and
closing units
|
|
28,724
|
|
|
32,028
|
|
|
45,788
|
|
|
42,586
|
|
|
149,126
|
|
Refinance title and
closing units
|
|
8,899
|
|
|
17,548
|
|
|
18,387
|
|
|
20,490
|
|
|
65,324
|
|
Average fee per
closing unit
|
|
$
|
2,269
|
|
|
$
|
2,062
|
|
|
$
|
2,239
|
|
|
$
|
2,272
|
|
|
$
|
2,213
|
|
____________________
|
(a)
|
Includes all
franchisees except for Realogy Brokerage Group.
|
Table
5a
|
REALOGY HOLDINGS
CORP.
|
NON-GAAP
RECONCILIATION - OPERATING EBITDA
|
THREE MONTHS ENDED
JUNE 30, 2021 AND 2020
|
(In
millions)
|
|
Set forth in the
tables below is a reconciliation of Net income (loss)
attributable to Realogy Holdings to Operating EBITDA for the
three-month periods ended June 30, 2021 and 2020:
|
|
|
Three Months Ended
June 30,
|
|
2021
|
|
2020
|
Net income (loss)
attributable to Realogy Holdings
|
$
|
149
|
|
|
$
|
(14)
|
|
Income tax expense
(benefit)
|
60
|
|
|
(5)
|
|
Income (loss) before
income taxes
|
209
|
|
|
(19)
|
|
Add:
Depreciation and amortization
|
51
|
|
|
46
|
|
Interest expense,
net
|
57
|
|
|
59
|
|
Restructuring costs,
net (a)
|
5
|
|
|
18
|
|
Impairments
(b)
|
1
|
|
|
63
|
|
Former parent legacy
cost, net (c)
|
1
|
|
|
—
|
|
Loss on the early
extinguishment of debt (c)
|
1
|
|
|
8
|
|
Gain on the sale of
business (d)
|
(15)
|
|
|
—
|
|
Operating
EBITDA
|
$
|
310
|
|
|
$
|
175
|
|
The following table
reflects Revenue, Operating EBITDA and Operating EBITDA margin by
reportable segments:
|
|
|
Revenues
(e)
|
|
$
Change
|
|
%
Change
|
|
Operating
EBITDA
|
|
$
Change
|
|
%
Change
|
|
Operating EBITDA
Margin
|
|
Change
|
|
2021
|
|
2020
|
|
|
|
2021
|
|
2020
|
|
|
|
2021
|
|
2020
|
|
Realogy Franchise
Group
|
$
|
347
|
|
|
$
|
227
|
|
|
$
|
120
|
|
|
53
|
%
|
|
$
|
224
|
|
|
$
|
125
|
|
|
$
|
99
|
|
|
79
|
%
|
|
65
|
%
|
|
55
|
%
|
|
10
|
|
Realogy Brokerage
Group
|
1,791
|
|
|
933
|
|
|
858
|
|
|
92
|
|
|
70
|
|
|
15
|
|
|
55
|
|
|
367
|
|
|
4
|
|
|
2
|
|
|
2
|
|
Realogy Title Group
(f)
|
255
|
|
|
160
|
|
|
95
|
|
|
59
|
|
|
55
|
|
|
61
|
|
|
(6)
|
|
|
(10)
|
|
|
22
|
|
|
38
|
|
|
(16)
|
|
Corporate and
Other
|
(117)
|
|
|
(65)
|
|
|
(52)
|
|
|
*
|
|
(39)
|
|
|
(26)
|
|
|
(13)
|
|
|
*
|
|
|
|
|
|
|
Total
Company
|
$
|
2,276
|
|
|
$
|
1,255
|
|
|
$
|
1,021
|
|
|
81
|
%
|
|
$
|
310
|
|
|
$
|
175
|
|
|
$
|
135
|
|
|
77
|
%
|
|
14
|
%
|
|
14
|
%
|
|
—
|
|
The following table
reflects Realogy Franchise and Brokerage Groups' results before the
intercompany royalties and marketing fees, as well as on a combined
basis to show the Operating EBITDA contribution of these business
segments to the overall Operating EBITDA of the Company:
|
|
|
Revenues
|
|
$
Change
|
|
%
Change
|
|
Operating
EBITDA
|
|
$
Change
|
|
%
Change
|
|
Operating EBITDA
Margin
|
|
Change
|
|
2021
|
|
2020
|
|
|
|
2021
|
|
2020
|
|
|
|
2021
|
|
2020
|
|
Realogy Franchise
Group (g)
|
$
|
230
|
|
|
$
|
162
|
|
|
$
|
68
|
|
|
42
|
%
|
|
$
|
107
|
|
|
$
|
60
|
|
|
$
|
47
|
|
|
78
|
%
|
|
47
|
%
|
|
37
|
%
|
|
10
|
|
Realogy Brokerage
Group (g)
|
1,791
|
|
|
933
|
|
|
858
|
|
|
92
|
|
|
187
|
|
|
80
|
|
|
107
|
|
|
134
|
|
|
10
|
|
|
9
|
|
|
1
|
|
Realogy Franchise
and
Brokerage Groups Combined
|
$
|
2,021
|
|
|
$
|
1,095
|
|
|
$
|
926
|
|
|
85
|
%
|
|
$
|
294
|
|
|
$
|
140
|
|
|
$
|
154
|
|
|
110
|
%
|
|
15
|
%
|
|
13
|
%
|
|
2
|
|
____________________
|
*
|
not
meaningful.
|
(a)
|
Restructuring charges
incurred for the three months ended June 30, 2021 include $1
million at Realogy Franchise Group, $2 million at Realogy Brokerage
Group and $2 million at Corporate and Other. Restructuring
charges incurred for the three months ended June 30, 2020
include $4 million at Realogy Franchise Group, $12 million at
Realogy Brokerage Group and $2 million at Realogy Title
Group.
|
(b)
|
Impairments for the
three months ended June 30, 2021 primarily relate to lease
asset and software impairments. Non-cash impairments for the
three months ended June 30, 2020 include $44 million of
impairment charges during the three months ended June 30, 2020
(while Cartus Relocation Services was held for sale) to reduce the
net assets to the estimated proceeds and other asset impairments of
$19 million primarily related to lease asset
impairments.
|
(c)
|
Former parent legacy
items and Loss on the early extinguishment of debt are recorded in
Corporate and Other.
|
(d)
|
Gain on the sale of
business is recorded in Realogy Brokerage Group.
|
(e)
|
Includes the
elimination of transactions between segments, which consists of
intercompany royalties and marketing fees paid by Realogy Brokerage
Group of $117 million and $65 million during the three months ended
June 30, 2021 and 2020, respectively.
|
(f)
|
Realogy Title Group
(RTG) includes our title, escrow and settlement services (title
agency), title insurance underwriter and mortgage origination joint
venture businesses. Excluding the mortgage joint venture from
Operating EBITDA, title agency and title insurance underwriter
represented approximately 60% and 40%, respectively of Operating
EBITDA for the period ended June 30, 2021. The year-over-year
decline in Operating EBITDA contribution from the mortgage
origination joint venture was driven primarily by a negative $19
million related to mark-to-market adjustments on the mortgage loan
pipeline as well as margin compression and a decline in refinance
volumes, partially offset by strong purchase volume
growth.
|
(g)
|
The segment numbers
noted above do not reflect the impact of intercompany royalties and
marketing fees paid by Realogy Brokerage Group to Realogy Franchise
Group of $117 million and $65 million during the three months ended
June 30, 2021 and 2020, respectively.
|
Table
5b
|
REALOGY HOLDINGS
CORP.
|
NON-GAAP
RECONCILIATION - OPERATING EBITDA
|
SIX MONTHS ENDED
JUNE 30, 2021 AND 2020
|
(In
millions)
|
|
Set forth in the
tables below is a reconciliation of Net income (loss)
attributable to Realogy Holdings to Operating EBITDA for the
six-month periods ended June 30, 2021 and 2020:
|
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
Net income (loss)
attributable to Realogy Holdings
|
$
|
182
|
|
|
$
|
(476)
|
|
Income tax expense
(benefit)
|
77
|
|
|
(146)
|
|
Income (loss) before
income taxes
|
259
|
|
|
(622)
|
|
Add:
Depreciation and amortization
|
102
|
|
|
91
|
|
Interest expense,
net
|
95
|
|
|
160
|
|
Restructuring costs,
net (a)
|
10
|
|
|
30
|
|
Impairments
(b)
|
2
|
|
|
540
|
|
Former parent legacy
cost, net (c)
|
1
|
|
|
—
|
|
Loss on the early
extinguishment of debt (c)
|
18
|
|
|
8
|
|
Gain on the sale of
business (d)
|
(15)
|
|
|
—
|
|
Operating
EBITDA
|
$
|
472
|
|
|
$
|
207
|
|
The following table
reflects Revenue, Operating EBITDA and Operating EBITDA margin by
reportable segments:
|
|
|
Revenues
(e)
|
|
$
Change
|
|
%
Change
|
|
Operating
EBITDA
|
|
$
Change
|
|
%
Change
|
|
Operating EBITDA
Margin
|
|
Change
|
|
2021
|
|
2020
|
|
|
|
2021
|
|
2020
|
|
|
|
2021
|
|
2020
|
|
Realogy Franchise
Group
|
601
|
|
|
$
|
447
|
|
|
$
|
154
|
|
|
34
|
%
|
|
365
|
|
|
$
|
221
|
|
|
$
|
144
|
|
|
65%
|
|
61
|
%
|
|
49
|
%
|
|
12
|
|
Realogy Brokerage
Group
|
2,962
|
|
|
1,802
|
|
|
1,160
|
|
|
64
|
|
|
65
|
|
|
(36)
|
|
|
101
|
|
|
281
|
|
2
|
|
|
(2)
|
|
|
4
|
|
Realogy Title Group
(f)
|
456
|
|
|
297
|
|
|
159
|
|
|
54
|
|
|
116
|
|
|
73
|
|
|
43
|
|
|
59
|
|
25
|
|
|
25
|
|
|
—
|
|
Corporate and
Other
|
(196)
|
|
|
(123)
|
|
|
(73)
|
|
|
*
|
|
(74)
|
|
|
(51)
|
|
|
(23)
|
|
|
*
|
|
|
|
|
|
|
Total
Company
|
$
|
3,823
|
|
|
$
|
2,423
|
|
|
$
|
1,400
|
|
|
58
|
%
|
|
$
|
472
|
|
|
$
|
207
|
|
|
$
|
265
|
|
|
128%
|
|
12
|
%
|
|
9
|
%
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table
reflects Realogy Franchise and Brokerage Groups' results before the
intercompany royalties and marketing fees, as well as on a combined
basis to show the Operating EBITDA contribution of these business
segments to the overall Operating EBITDA of the Company:
|
|
|
Revenues
|
|
|
|
|
|
Operating
EBITDA
|
|
$
Change
|
|
%
Change
|
|
Operating EBITDA
Margin
|
|
|
|
2021
|
|
2020
|
|
|
$
Change
|
|
|
%
Change
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
Change
|
|
Realogy Franchise
Group (g)
|
$
|
405
|
|
|
$
|
324
|
|
|
$
|
81
|
|
|
25%
|
|
$
|
169
|
|
|
$
|
98
|
|
|
$
|
71
|
|
|
72
|
%
|
|
42
|
%
|
|
30
|
%
|
|
12
|
|
Realogy Brokerage
Group (g)
|
2,962
|
|
|
1,802
|
|
|
1,160
|
|
|
64
|
|
261
|
|
|
87
|
|
|
174
|
|
|
200
|
|
|
9
|
|
|
5
|
|
|
4
|
|
Realogy Franchise
and
Brokerage Groups Combined
|
$
|
3,367
|
|
|
$
|
2,126
|
|
|
$
|
1,241
|
|
|
58%
|
|
$
|
430
|
|
|
$
|
185
|
|
|
$
|
245
|
|
|
132
|
%
|
|
13
|
%
|
|
9
|
%
|
|
4
|
|
____________________
|
*
|
not
meaningful.
|
(a)
|
Restructuring charges
incurred for the six months ended June 30, 2021 include $3
million at Realogy Franchise Group, $4 million at Realogy Brokerage
Group and $3 million at Corporate and Other. Restructuring
charges incurred for the six months ended June 30, 2020
include $6 million at Realogy Franchise Group, $21 million at
Realogy Brokerage Group and $3 million at Realogy Title
Group.
|
(b)
|
Impairments for the
six months ended June 30, 2021 primarily relate to lease asset
and software impairments. Non-cash impairments for the six
months ended June 30, 2020 include:
|
|
•
|
a goodwill impairment
charge of $413 million related to Realogy Brokerage
Group;
|
|
•
|
an impairment charge
of $30 million related to Realogy Franchise Group's
trademarks;
|
|
•
|
$74 million of
impairment charges during the six months ended June 30, 2020
(while Cartus Relocation Services was held for sale) to reduce the
net assets to the estimated proceeds; and
|
|
•
|
other asset
impairments of $23 million primarily related to lease asset
impairments.
|
(c)
|
Former parent legacy
items and Loss on the early extinguishment of debt are recorded in
Corporate and Other.
|
(d)
|
Gain on the sale of
business is recorded in Realogy Brokerage Group.
|
(e)
|
Includes the
elimination of transactions between segments, which consists of
intercompany royalties and marketing fees paid by Realogy Brokerage
Group of $196 million and $123 million during the six months ended
June 30, 2021 and 2020, respectively.
|
(f)
|
Realogy Title Group
(RTG) includes our title, escrow and settlement services (title
agency), title insurance underwriter and mortgage origination joint
venture businesses. Excluding the mortgage joint venture from
Operating EBITDA, title agency and title insurance underwriter
represented approximately 60% and 40%, respectively of Operating
EBITDA for the year to date period ended June 30, 2021.
|
(g)
|
The segment numbers
noted above do not reflect the impact of intercompany royalties and
marketing fees paid by Realogy Brokerage Group to Realogy Franchise
Group of $196 million and $123 million during the six months ended
June 30, 2021 and 2020, respectively.
|
Table
6a
|
REALOGY HOLDINGS
CORP.
|
SELECTED 2021
FINANCIAL DATA
|
(In
millions)
|
|
|
Three Months
Ended
|
|
March
31,
|
|
June
30,
|
|
2021
|
|
2021
|
Net revenues
(a)
|
|
|
|
Realogy Franchise
Group
|
$
|
254
|
|
|
$
|
347
|
|
Realogy Brokerage
Group
|
1,171
|
|
|
1,791
|
|
Realogy Title
Group
|
201
|
|
|
255
|
|
Corporate and
Other
|
(79)
|
|
|
(117)
|
|
Total
Company
|
$
|
1,547
|
|
|
$
|
2,276
|
|
|
|
|
|
Operating
EBITDA
|
|
|
|
Realogy Franchise
Group
|
$
|
141
|
|
|
$
|
224
|
|
Realogy Brokerage
Group
|
(5)
|
|
|
70
|
|
Realogy Title
Group
|
61
|
|
|
55
|
|
Corporate and
Other
|
(35)
|
|
|
(39)
|
|
Total
Company
|
$
|
162
|
|
|
$
|
310
|
|
|
|
|
|
Non-GAAP
Reconciliation - Operating EBITDA
|
|
|
|
Total Company
Operating EBITDA
|
$
|
162
|
|
|
$
|
310
|
|
|
|
|
|
Less:
Depreciation and amortization
|
51
|
|
|
51
|
|
Interest expense,
net
|
38
|
|
|
57
|
|
Income tax
expense
|
17
|
|
|
60
|
|
Restructuring costs,
net (b)
|
5
|
|
|
5
|
|
Impairments
(c)
|
1
|
|
|
1
|
|
Former parent legacy
cost, net (d)
|
—
|
|
|
1
|
|
Loss on the early
extinguishment of debt (d)
|
17
|
|
|
1
|
|
Gain on the sale of
business (e)
|
—
|
|
|
(15)
|
|
Net income
attributable to Realogy Holdings
|
$
|
33
|
|
|
$
|
149
|
|
_______________
|
(a)
|
Transactions between
segments are eliminated in consolidation. Revenues for
Realogy Franchise Group include intercompany royalties and
marketing fees paid by Realogy Brokerage Group of $79 million and
$117 million for the three months ended March 31, 2021 and
June 30, 2021, respectively. Such amounts are eliminated
through Corporate and Other.
|
(b)
|
Includes
restructuring charges broken down by business unit as
follows:
|
|
|
|
Three Months
Ended
|
|
March
31,
|
|
June
30,
|
|
2021
|
|
2021
|
Realogy Franchise
Group
|
$
|
2
|
|
|
$
|
1
|
|
Realogy Brokerage
Group
|
2
|
|
|
2
|
|
Corporate and
Other
|
1
|
|
|
2
|
|
Total
Company
|
$
|
5
|
|
|
$
|
5
|
|
|
|
(c)
|
Impairments for the
three months ended March 31, 2021 and June 30, 2021 primarily
relate to lease asset and software impairments.
|
(d)
|
Former parent legacy
items and Loss on the early extinguishment of debt are recorded in
Corporate and Other.
|
(e)
|
Gain on the sale of
business is recorded in Realogy Brokerage Group.
|
Table
6b
|
REALOGY HOLDINGS
CORP.
|
SELECTED 2020
FINANCIAL DATA
|
(In
millions)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
June
30,
|
|
September
30,
|
|
December
31,
|
|
December
31,
|
|
2020
|
|
2020
|
|
2020
|
|
2020
|
|
2020
|
Net revenues
(a)
|
|
|
|
|
|
|
|
|
|
Realogy Franchise
Group
|
$
|
220
|
|
|
$
|
227
|
|
|
$
|
314
|
|
|
$
|
298
|
|
|
$
|
1,059
|
|
Realogy Brokerage
Group
|
869
|
|
|
933
|
|
|
1,479
|
|
|
1,461
|
|
|
4,742
|
|
Realogy Title
Group
|
137
|
|
|
160
|
|
|
213
|
|
|
226
|
|
|
736
|
|
Corporate and
Other
|
(58)
|
|
|
(65)
|
|
|
(97)
|
|
|
(96)
|
|
|
(316)
|
|
Total
Company
|
$
|
1,168
|
|
|
$
|
1,255
|
|
|
$
|
1,909
|
|
|
$
|
1,889
|
|
|
$
|
6,221
|
|
|
|
|
|
|
|
|
|
|
|
Operating
EBITDA
|
|
|
|
|
|
|
|
|
|
Realogy Franchise
Group
|
$
|
96
|
|
|
$
|
125
|
|
|
$
|
200
|
|
|
$
|
173
|
|
|
$
|
594
|
|
Realogy Brokerage
Group
|
(51)
|
|
|
15
|
|
|
61
|
|
|
23
|
|
|
48
|
|
Realogy Title
Group
|
12
|
|
|
61
|
|
|
95
|
|
|
58
|
|
|
226
|
|
Corporate and
Other
|
(25)
|
|
|
(26)
|
|
|
(43)
|
|
|
(48)
|
|
|
(142)
|
|
Total
Company
|
$
|
32
|
|
|
$
|
175
|
|
|
$
|
313
|
|
|
$
|
206
|
|
|
$
|
726
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliation - Operating EBITDA
|
|
|
|
|
|
|
|
|
|
Total Company
Operating EBITDA
|
$
|
32
|
|
|
$
|
175
|
|
|
$
|
313
|
|
|
$
|
206
|
|
|
$
|
726
|
|
|
|
|
|
|
|
|
|
|
|
Less:
Depreciation and amortization
|
45
|
|
|
46
|
|
|
43
|
|
|
52
|
|
|
186
|
|
Interest expense,
net
|
101
|
|
|
59
|
|
|
48
|
|
|
38
|
|
|
246
|
|
Income tax (benefit)
expense
|
(141)
|
|
|
(5)
|
|
|
36
|
|
|
6
|
|
|
(104)
|
|
Restructuring costs,
net (b)
|
12
|
|
|
18
|
|
|
17
|
|
|
20
|
|
|
67
|
|
Impairments
(c)
|
477
|
|
|
63
|
|
|
70
|
|
|
72
|
|
|
682
|
|
Former parent legacy
cost, net (d)
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
Loss on the early
extinguishment of debt (d)
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
Net (loss) income
attributable to Realogy Holdings
|
$
|
(462)
|
|
|
$
|
(14)
|
|
|
$
|
98
|
|
|
$
|
18
|
|
|
$
|
(360)
|
|
____________________
|
(a)
|
Transactions between
segments are eliminated in consolidation. Revenues for
Realogy Franchise Group include intercompany royalties and
marketing fees paid by Realogy Brokerage Group of $58 million, $65
million, $97 million and $96 million for the three months ended
March 31, 2020, June 30, 2020, September 30, 2020 and
December 31, 2020, respectively. Such amounts are
eliminated through Corporate and Other.
|
(b)
|
Includes
restructuring charges broken down by business unit as
follows:
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
June
30,
|
|
September
30,
|
|
December
31,
|
|
December
31,
|
|
2020
|
|
2020
|
|
2020
|
|
2020
|
|
2020
|
Realogy Franchise
Group
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
5
|
|
|
$
|
15
|
|
Realogy Brokerage
Group
|
9
|
|
|
12
|
|
|
11
|
|
|
5
|
|
|
37
|
|
Realogy Title
Group
|
1
|
|
|
2
|
|
|
—
|
|
|
1
|
|
|
4
|
|
Corporate and
Other
|
—
|
|
|
—
|
|
|
2
|
|
|
9
|
|
|
11
|
|
Total
Company
|
$
|
12
|
|
|
$
|
18
|
|
|
$
|
17
|
|
|
$
|
20
|
|
|
$
|
67
|
|
|
|
|
(c)
|
Non-cash impairments
include:
|
|
•
|
a goodwill impairment
charge of $413 million related to Realogy Brokerage Group and an
impairment charge of $30 million related to Realogy Franchise
Group's trademarks during the three months ended March 31,
2020;
|
|
•
|
$30 million, $44
million and $59 million of reserves recorded during the three
months ended March 31, 2020, June 30, 2020 and September 30, 2020,
respectively, (while Cartus Relocation Services was held for sale)
to reduce the net assets to the estimated proceeds which were
included in Impairments in connection with the reclassification of
Cartus Relocation Services as continuing operations during the
fourth quarter of 2020;
|
|
•
|
a goodwill impairment
charge of $22 million related to Cartus Relocation Services and an
impairment charge of $34 million related to Cartus Relocation
Services' trademarks during the three months ended December 31,
2020; and
|
|
•
|
$4 million, $19
million, $11 million and $16 million of other impairment charges
primarily related to lease asset impairments incurred during the
three months ended March 31, 2020, June 30, 2020, September 30,
2020 and December 31, 2020, respectively.
|
|
(d)
|
Former parent legacy
items and Loss on the early extinguishment of debt are recorded in
Corporate and Other.
|
|
Table
6c
|
REALOGY HOLDINGS
CORP.
|
2020 CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(In millions,
except per share data)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
June
30,
|
|
September
30,
|
|
December
31,
|
|
December
31,
|
|
2020
|
|
2020
|
|
2020
|
|
2020
|
|
2020
|
Revenues
|
|
|
|
|
|
|
|
|
|
Gross commission
income
|
$
|
850
|
|
|
$
|
919
|
|
|
$
|
1,458
|
|
|
$
|
1,442
|
|
|
$
|
4,669
|
|
Service
revenue
|
202
|
|
|
219
|
|
|
281
|
|
|
281
|
|
|
983
|
|
Franchise
fees
|
71
|
|
|
85
|
|
|
133
|
|
|
130
|
|
|
419
|
|
Other
|
45
|
|
|
32
|
|
|
37
|
|
|
36
|
|
|
150
|
|
Net
revenues
|
1,168
|
|
|
1,255
|
|
|
1,909
|
|
|
1,889
|
|
|
6,221
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
Commission and other
agent-related costs
|
630
|
|
|
685
|
|
|
1,105
|
|
|
1,107
|
|
|
3,527
|
|
Operating
|
368
|
|
|
320
|
|
|
380
|
|
|
405
|
|
|
1,473
|
|
Marketing
|
59
|
|
|
41
|
|
|
55
|
|
|
60
|
|
|
215
|
|
General and
administrative
|
88
|
|
|
69
|
|
|
108
|
|
|
147
|
|
|
412
|
|
Former parent legacy
cost, net
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
Restructuring costs,
net
|
12
|
|
|
18
|
|
|
17
|
|
|
20
|
|
|
67
|
|
Impairments
|
477
|
|
|
63
|
|
|
70
|
|
|
72
|
|
|
682
|
|
Depreciation and
amortization
|
45
|
|
|
46
|
|
|
43
|
|
|
52
|
|
|
186
|
|
Interest expense,
net
|
101
|
|
|
59
|
|
|
48
|
|
|
38
|
|
|
246
|
|
Loss on the early
extinguishment of debt
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
Other expense,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
(5)
|
|
|
(5)
|
|
Total
expenses
|
1,780
|
|
|
1,309
|
|
|
1,827
|
|
|
1,896
|
|
|
6,812
|
|
(Loss) income
before income taxes, equity in earnings and
noncontrolling interests
|
(612)
|
|
|
(54)
|
|
|
82
|
|
|
(7)
|
|
|
(591)
|
|
Income tax (benefit)
expense
|
(141)
|
|
|
(5)
|
|
|
36
|
|
|
6
|
|
|
(104)
|
|
Equity in earnings of
unconsolidated entities
|
(9)
|
|
|
(36)
|
|
|
(53)
|
|
|
(33)
|
|
|
(131)
|
|
Net (loss)
income
|
(462)
|
|
|
(13)
|
|
|
99
|
|
|
20
|
|
|
(356)
|
|
Less: Net income
attributable to noncontrolling interests
|
—
|
|
|
(1)
|
|
|
(1)
|
|
|
(2)
|
|
|
(4)
|
|
Net (loss) income
attributable to Realogy Holdings
|
$
|
(462)
|
|
|
$
|
(14)
|
|
|
$
|
98
|
|
|
$
|
18
|
|
|
$
|
(360)
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings
per share attributable to Realogy Holdings
shareholders:
|
|
|
Basic (loss) earnings
per share
|
$
|
(4.03)
|
|
|
$
|
(0.12)
|
|
|
$
|
0.85
|
|
|
$
|
0.16
|
|
|
$
|
(3.13)
|
|
Diluted (loss)
earnings per share
|
$
|
(4.03)
|
|
|
$
|
(0.12)
|
|
|
$
|
0.84
|
|
|
$
|
0.15
|
|
|
$
|
(3.13)
|
|
Weighted average
common and common equivalent shares of Realogy Holdings
outstanding:
|
|
|
|
|
Basic
|
114.7
|
|
|
115.4
|
|
|
115.4
|
|
|
115.5
|
|
|
115.2
|
|
Diluted
|
114.7
|
|
|
116.2
|
|
|
116.7
|
|
|
118.2
|
|
|
115.2
|
|
Table
7
|
REALOGY HOLDINGS
CORP.
|
NON-GAAP
RECONCILIATION - FREE CASH FLOW
|
THREE AND SIX
MONTHS ENDED JUNE 30, 2021 AND 2020
|
(In
millions)
|
|
A reconciliation of
net income (loss) attributable to Realogy Holdings to Free Cash
Flow is set forth in the following table:
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net income (loss)
attributable to Realogy Holdings
|
$
|
149
|
|
|
$
|
(14)
|
|
|
$
|
182
|
|
|
$
|
(476)
|
|
Income tax expense
(benefit), net of payments
|
49
|
|
|
(6)
|
|
|
64
|
|
|
(146)
|
|
Interest expense,
net
|
57
|
|
|
59
|
|
|
95
|
|
|
160
|
|
Cash interest
payments
|
(69)
|
|
|
(85)
|
|
|
(83)
|
|
|
(105)
|
|
Depreciation and
amortization
|
51
|
|
|
46
|
|
|
102
|
|
|
91
|
|
Capital
expenditures
|
(27)
|
|
|
(20)
|
|
|
(50)
|
|
|
(49)
|
|
Restructuring costs
and former parent legacy items, net of payments
|
—
|
|
|
6
|
|
|
(5)
|
|
|
5
|
|
Impairments
|
1
|
|
|
63
|
|
|
2
|
|
|
540
|
|
Loss on the early
extinguishment of debt
|
1
|
|
|
8
|
|
|
18
|
|
|
8
|
|
Gain on the sale of
business
|
(15)
|
|
|
—
|
|
|
(15)
|
|
|
—
|
|
Working capital
adjustments
|
62
|
|
|
42
|
|
|
(107)
|
|
|
(55)
|
|
Relocation
receivables (assets), net of securitization obligations
|
(16)
|
|
|
(52)
|
|
|
(27)
|
|
|
(81)
|
|
Free Cash
Flow
|
$
|
243
|
|
|
$
|
47
|
|
|
$
|
176
|
|
|
$
|
(108)
|
|
A reconciliation of
net cash provided by operating activities to Free Cash Flow is set
forth in the following table:
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net cash provided
by operating activities
|
$
|
223
|
|
|
$
|
115
|
|
|
$
|
186
|
|
|
$
|
33
|
|
Property and
equipment additions
|
(27)
|
|
|
(20)
|
|
|
(50)
|
|
|
(49)
|
|
Net change in
securitization
|
47
|
|
|
(49)
|
|
|
40
|
|
|
(92)
|
|
Effect of exchange
rates on cash and cash equivalents
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
Free Cash
Flow
|
$
|
243
|
|
|
$
|
47
|
|
|
$
|
176
|
|
|
$
|
(108)
|
|
|
|
|
|
|
|
|
|
Net cash used in
investing activities
|
$
|
(19)
|
|
|
$
|
(24)
|
|
|
$
|
(51)
|
|
|
$
|
(63)
|
|
Net cash provided
by (used in) financing activities
|
$
|
253
|
|
|
$
|
(32)
|
|
|
$
|
208
|
|
|
$
|
468
|
|
Table
8a
|
NON-GAAP
RECONCILIATION - SENIOR SECURED LEVERAGE RATIO
|
FOR THE
FOUR-QUARTER PERIOD ENDED JUNE 30, 2021
|
(In
millions)
|
|
The senior secured
leverage ratio is tested quarterly pursuant to the terms of the
senior secured credit facilities*. For the trailing
four-quarter period ended June 30, 2021, Realogy Group LLC was
required to maintain a senior secured leverage ratio not to exceed
4.75 to 1.00. The senior secured leverage ratio is measured
by dividing Realogy Group LLC's total senior secured net debt by
the trailing four quarters EBITDA calculated on a Pro Forma Basis,
as those terms are defined in the Senior Secured Credit
Agreement. Total senior secured net debt does not include the
7.625% Senior Secured Second Lien Notes, our unsecured
indebtedness, including the Unsecured Notes and Exchangeable Senior
Notes, or the securitization obligations. EBITDA calculated
on a Pro Forma Basis, as defined in the Senior Secured Credit
Agreement, includes adjustments to Operating EBITDA for retention
and disposition costs, non-cash charges and incremental
securitization interest costs, as well as pro forma cost savings
for restructuring initiatives, the pro forma effect of business
optimization initiatives and the pro forma effect of acquisitions
and new franchisees, in each case calculated as of the beginning of
the trailing four-quarter period. The Company was in
compliance with the senior secured leverage ratio covenant at
June 30, 2021 with a ratio of 0.00 to 1.00.
|
|
A reconciliation of
net (loss) income attributable to Realogy Group to Operating EBITDA
and EBITDA calculated on a Pro Forma Basis, as those terms are
defined in the Senior Secured Credit Agreement, for the
four-quarter period ended June 30, 2021 is set forth in the
following table:
|
|
|
|
|
Less
|
|
Equals
|
|
Plus
|
|
Equals
|
|
Year
Ended
|
|
Six Months
Ended
|
|
Six Months
Ended
|
|
Six Months
Ended
|
|
Twelve
Months
Ended
|
|
December 31,
2020
|
|
June
30,
2020
|
|
December 31,
2020
|
|
June
30,
2021
|
|
June
30,
2021
|
Net (loss) income
attributable to Realogy Group (a)
|
$
|
(360)
|
|
|
$
|
(476)
|
|
|
$
|
116
|
|
|
$
|
182
|
|
|
$
|
298
|
|
Income tax (benefit)
expense
|
(104)
|
|
|
(146)
|
|
|
42
|
|
|
77
|
|
|
119
|
|
(Loss) income before
income taxes
|
(464)
|
|
|
(622)
|
|
|
158
|
|
|
259
|
|
|
417
|
|
Depreciation and
amortization
|
186
|
|
|
91
|
|
|
95
|
|
|
102
|
|
|
197
|
|
Interest expense,
net
|
246
|
|
|
160
|
|
|
86
|
|
|
95
|
|
|
181
|
|
Restructuring costs,
net
|
67
|
|
|
30
|
|
|
37
|
|
|
10
|
|
|
47
|
|
Impairments
|
682
|
|
|
540
|
|
|
142
|
|
|
2
|
|
|
144
|
|
Former parent legacy
cost, net
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
2
|
|
Loss on the early
extinguishment of debt
|
8
|
|
|
8
|
|
|
—
|
|
|
18
|
|
|
18
|
|
Gain on the sale of
business
|
—
|
|
|
—
|
|
|
—
|
|
|
(15)
|
|
|
(15)
|
|
Operating
EBITDA (b)
|
726
|
|
|
207
|
|
|
519
|
|
|
472
|
|
|
991
|
|
Bank covenant
adjustments:
|
|
|
Pro forma effect of
business optimization initiatives (c)
|
|
45
|
|
Non-cash charges
(d)
|
|
26
|
|
Pro forma effect of
acquisitions and new franchisees (e)
|
|
5
|
|
Incremental
securitization interest costs (f)
|
|
3
|
|
Costs expensed related
to the disposition
|
|
(3)
|
|
EBITDA as
defined by the Senior Secured Credit Agreement*
|
|
$
|
1,067
|
|
Total senior secured
net debt (g)
|
|
$
|
(4)
|
|
Senior secured
leverage ratio*
|
|
0.00
|
x
|
____________________
|
(a)
|
Net (loss) income
attributable to Realogy consists of: (i) income of $98 million for
the third quarter of 2020, (ii) income of $18 million for the
fourth quarter of 2020, (iii) income of $33 million for the first
quarter of 2021 and (iv) income of $149 million for the second
quarter of 2021.
|
(b)
|
Operating EBITDA
consists of: (i) $313 million for the third quarter of 2020, (ii)
$206 million for the fourth quarter of 2020, (iii) $162 million for
the first quarter of 2021 and (iv) $310 million for the second
quarter of 2021.
|
(c)
|
Represents the
four-quarter pro forma effect of business optimization
initiatives.
|
(d)
|
Represents the
elimination of non-cash expenses including $43 million of
stock-based compensation expense less $9 million of other items, $5
million of foreign exchange benefits and $3 million for the change
in the allowance for doubtful accounts and notes reserves for the
four-quarter period ended June 30, 2021.
|
(e)
|
Represents the
estimated impact of acquisitions and franchise sales activity, net
of brokerages that exited our franchise system as if these changes
had occurred on July 1, 2020. Franchisee sales activity
is comprised of new franchise agreements as well as growth through
acquisitions and independent sales agent recruitment by existing
franchisees with our assistance. We have made a number of
assumptions in calculating such estimates and there can be no
assurance that we would have generated the projected levels of
Operating EBITDA had we owned the acquired entities or entered into
the franchise contracts as of July 1, 2020.
|
(f)
|
Incremental borrowing
costs incurred as a result of the securitization facilities
refinancing for the twelve months ended June 30,
2021.
|
(g)
|
Represents total
borrowings under the senior secured credit facilities (including
the Revolving Credit Facility and Term Loan B Facility) and Term
Loan A Facility and borrowings secured by a first priority lien on
our assets of $670 million plus $27 million of finance lease
obligations less $701 million of readily available cash as of
June 30, 2021. Pursuant to the terms of our senior
secured credit facilities, total senior secured net debt does not
include our securitization obligations, 7.625% Senior Secured
Second Lien Notes or unsecured indebtedness, including the
Unsecured Notes and the Exchangeable Senior Notes.
|
*
|
Our senior secured
credit facilities include the facilities under our Amended and
Restated Credit Agreement dated as of March 5, 2013, as amended
from time to time (the "Senior Secured Credit Agreement"), and the
Term Loan A Agreement dated as of October 23, 2015 (the "Term Loan
A Agreement"), as amended from time to time. Our Unsecured
Notes include our 4.875% Senior Notes due 2023, 9.375% Senior Notes
due 2027 and 5.75% Senior Notes due 2029. Exchangeable Senior
Notes refers to our 0.25% Exchangeable Senior Notes due 2026.
7.625% Senior Secured Second Lien Notes refers to our 7.625% Senior
Secured Second Lien Notes due 2025.
|
Table
8b
|
NET DEBT LEVERAGE
RATIO
|
FOR THE
FOUR-QUARTER PERIOD ENDED JUNE 30, 2021
|
(In
millions)
|
|
Net corporate debt
(excluding securitizations) divided by EBITDA calculated on a Pro
Forma Basis, as those terms are defined in the senior secured
credit facilities, for the four-quarter period ended June 30,
2021 (referred to as net debt leverage ratio) is set forth in the
following table:
|
|
|
|
As of June 30,
2021
|
Non-extended
Revolving Credit Commitment
|
|
$
|
—
|
|
Extended Revolving
Credit Commitment
|
|
—
|
|
Non-extended Term
Loan A
|
|
197
|
|
Extended Term Loan
A
|
|
236
|
|
Term Loan
B
|
|
237
|
|
7.625% Senior Secured
Second Lien Notes
|
|
550
|
|
4.875% Senior
Notes
|
|
407
|
|
9.375% Senior
Notes
|
|
550
|
|
5.75% Senior
Notes
|
|
900
|
|
0.25% Exchangeable
Senior Notes
|
|
403
|
|
Finance lease
obligations
|
|
27
|
|
Corporate Debt
(excluding securitizations)
|
|
3,507
|
|
Less: Cash and cash
equivalents
|
|
859
|
|
Net Corporate Debt
(excluding securitizations)
|
|
$
|
2,648
|
|
|
|
|
EBITDA as defined by
the Senior Secured Credit Agreement (a)
|
|
$
|
1,067
|
|
|
|
|
Net Debt
Leverage Ratio(b)
|
|
2.5
|
x
|
_______________
|
(a)
|
See Table 8a for a
reconciliation of Net (loss) income attributable to Realogy Group
to EBITDA as defined by the Senior Secured Credit
Agreement.
|
(b)
|
Net Debt Leverage
Ratio is substantially similar to Consolidated Leverage Ratio (as
defined under the indentures governing the 9.375% Notes and 7.625%
Senior Secured Second Lien Notes), except that when the
Consolidated Leverage Ratio is measured at March 31 of any given
year, the calculation includes a positive $200 million seasonality
adjustment to cash and cash equivalents.
|
Table 9
Non-GAAP Definitions
Adjusted net income (loss) is defined by us as net income (loss)
before mark-to-market interest rate swap adjustments, former parent
legacy items, restructuring charges, the (gain) loss on the early
extinguishment of debt, impairments, the tax effect of the
foregoing adjustments. The gross amounts for these items as
well as the adjustment for income taxes are presented.
Operating EBITDA is defined by us as net income (loss) before
depreciation and amortization, interest expense, net (other than
relocation services interest for securitization assets and
securitization obligations), income taxes, and other items that are
not core to the operating activities of the Company such as
restructuring charges, former parent legacy items, gains or losses
on the early extinguishment of debt, impairments, gains or losses
on discontinued operations and gains or losses on the sale of
investments or other assets. Operating EBITDA is our primary
non-GAAP measure.
We present Operating EBITDA because we believe it is useful as a
supplemental measure in evaluating the performance of our operating
businesses and provides greater transparency into our results of
operations. Our management, including our chief operating
decision maker, uses Operating EBITDA as a factor in evaluating the
performance of our business. Operating EBITDA should not be
considered in isolation or as a substitute for net income or other
statement of operations data prepared in accordance with GAAP.
We believe Operating EBITDA facilitates company-to-company
operating performance comparisons by backing out potential
differences caused by variations in capital structures (affecting
net interest expense), taxation, the age and book depreciation of
facilities (affecting relative depreciation expense) and the
amortization of intangibles, as well as other items that are not
core to the operating activities of the Company such as
restructuring charges, gains or losses on the early extinguishment
of debt, former parent legacy items, impairments, gains or losses
on discontinued operations and gains or losses on the sale of
investments or other assets, which may vary for different companies
for reasons unrelated to operating performance. We further
believe that Operating EBITDA is frequently used by securities
analysts, investors and other interested parties in their
evaluation of companies, many of which present an Operating EBITDA
measure when reporting their results.
Operating EBITDA has limitations as an analytical tool, and you
should not consider Operating EBITDA either in isolation or as a
substitute for analyzing our results as reported under GAAP.
Some of these limitations are:
- this measure does not reflect changes in, or cash required for,
our working capital needs;
- this measure does not reflect our interest expense (except for
interest related to our securitization obligations), or the cash
requirements necessary to service interest or principal payments on
our debt;
- this measure does not reflect our income tax expense or the
cash requirements to pay our taxes;
- this measure does not reflect historical cash expenditures or
future requirements for capital expenditures or contractual
commitments;
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often require
replacement in the future, and this measure does not reflect any
cash requirements for such replacements; and
- other companies may calculate this measure differently so they
may not be comparable.
Free Cash Flow is defined as net income (loss) attributable to
Realogy before income tax expense (benefit), net of payments,
interest expense, net, cash interest payments, depreciation and
amortization, capital expenditures, restructuring costs and former
parent legacy costs (benefits), net of payments, impairments,
(gain) loss on the early extinguishment of debt, working
capital adjustments and relocation receivables (assets), net
of change in securitization obligations. We use Free Cash
Flow in our internal evaluation of operating effectiveness and
decisions regarding the allocation of resources, as well as
measuring the Company's ability to generate cash. Since Free
Cash Flow can be viewed as both a performance measure and a cash
flow measure, the Company has provided a reconciliation to both net
income attributable to Realogy Holdings and net cash provided by
operating activities. Free Cash Flow is not defined by GAAP
and should not be considered in isolation or as an alternative to
net income (loss), net cash provided by (used in) operating,
investing and financing activities or other financial data prepared
in accordance with GAAP or as an indicator of the Company's
operating performance or liquidity. Free Cash Flow may differ
from similarly titled measures presented by other companies.
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SOURCE Realogy Holdings Corp.