MADISON, N.J., July 30,
2020 /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 second quarter ended June 30,
2020.
"Realogy delivered substantial Operating EBITDA in the quarter
as we made rapid moves to navigate through the turbulent
environment," said Ryan Schneider,
Realogy's chief executive officer and president. "We continued to
enhance our digital technology offerings, invest in strategic
priorities, and improve our balance sheet. We believe that
progress, combined with recent positive market data, positions us
well for the future."
"We were agile and efficient throughout the second quarter and
successfully managed costs, which helped generate substantial
Operating EBITDA and positive Free Cash Flow in the quarter," said
Charlotte Simonelli, Realogy's
executive vice president, chief financial officer and treasurer.
"We took proactive steps to strengthen our Balance Sheet."
Second Quarter 2020 Highlights
- Generated Revenue of $1.2
billion, a decrease of 27% or $457
million year-over-year.
- Reported Net Income of $28 million from continuing
operations and a Net Loss of $14
million including discontinued operations.
- Generated Operating EBITDA from continuing operations of
$172 million, a decrease of
$63 million year-over-year driven by
lower transaction volume primarily due to COVID-19, partially
offset by cost savings and strong performance at the GRA mortgage
JV. (See Table 5a).
- Combined closed transaction volume declined 24% in the second
quarter. Closed transaction volume improved meaningfully in June to
negative 8% year-over-year after reaching a bottom in May 2020.
- Delivered substantial cost reductions in the quarter due to mix
of temporary and permanent savings.
- The GRA mortgage JV continued to contribute meaningfully to our
business results, generating $35
million in Operating EBITDA in the second quarter.
- Generated Free Cash Flow from continuing operations of
$106 million vs. $178 million
for the corresponding quarter last year and $47 million including discontinued operations vs.
$147 million for the corresponding
quarter last year (See Table 7).
- Strengthened the balance sheet and improved our debt maturity
profile by refinancing our 2021 unsecured notes with new 2025
senior secured second lien notes.
Second Quarter 2020 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,
|
|
2020
|
|
2019
|
|
Change
|
|
%
Change
|
|
Revenue
|
$
|
1,207
|
|
|
$
|
1,664
|
|
|
$
|
(457)
|
|
|
(27)
|
%
|
|
Operating EBITDA
1
|
172
|
|
|
235
|
|
|
(63)
|
|
|
*
|
|
|
Operating EBITDA
including discontinued operations 1
|
175
|
|
|
245
|
|
|
(70)
|
|
|
*
|
|
|
Net (loss) income
attributable to Realogy
|
(14)
|
|
|
69
|
|
|
(83)
|
|
|
(120)
|
|
|
Adjusted net income
2
|
54
|
|
|
94
|
|
|
(40)
|
|
|
(43)
|
|
|
Basic (loss) earnings
per share
|
(0.12)
|
|
|
0.60
|
|
|
(0.72)
|
|
|
(120)
|
|
|
Adjusted earnings per
share 2
|
0.47
|
|
|
0.82
|
|
|
(0.35)
|
|
|
(43)
|
|
|
Free Cash Flow
3
|
106
|
|
|
178
|
|
|
(72)
|
|
|
(40)
|
|
|
Free Cash Flow
including discontinued operations 3
|
47
|
|
|
147
|
|
|
(100)
|
|
|
(68)
|
|
|
Net cash provided by
operating activities
|
$
|
115
|
|
|
$
|
159
|
|
|
$
|
(44)
|
|
|
(28)
|
%
|
|
|
|
|
|
|
|
|
|
Select Key
Drivers
|
|
|
|
|
|
|
|
|
Realogy Franchise
Group 4 5
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
238,085
|
|
|
301,377
|
|
|
|
|
(21)
|
%
|
|
Average homesale
price
|
$
|
321,308
|
|
|
$
|
318,799
|
|
|
|
|
1
|
%
|
|
Realogy Brokerage
Group 5
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
71,375
|
|
|
95,251
|
|
|
|
|
(25)
|
%
|
|
Average homesale
price
|
$
|
503,935
|
|
|
$
|
540,725
|
|
|
|
|
(7)
|
%
|
|
Realogy Title
Group
|
|
|
|
|
|
|
|
|
Purchase title and
closing units
|
32,028
|
|
|
42,202
|
|
|
|
|
(24)
|
%
|
|
Refinance title and
closing units
|
17,548
|
|
|
5,270
|
|
|
|
|
233
|
%
|
|
|
|
|
|
|
Footnotes:
|
|
* not
meaningful
|
|
1
See Tables 5a and 5b. Operating EBITDA is defined as net
income (loss) before depreciation and amortization, interest
expense, net, 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 including
discontinued operations is defined as Operating EBITDA, as defined
above plus the Operating EBITDA contribution from discontinued
operations on the same basis.
|
|
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, the tax effect of the
foregoing adjustments and net income (loss) from discontinued
operations. Adjusted loss per share is Adjusted net 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 and
working capital adjustments. Free Cash Flow including discontinued
operations is defined as Free Cash Flow, as defined above plus the
Free Cash Flow contribution from discontinued operations on the
same basis.
|
|
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) decreased 24%
compared with the second quarter of 2019.
|
Cartus Relocation Services remained in discontinued operations
for the second quarter of 2020 in accordance with GAAP.
Balance Sheet and Capital Allocation
The Company ended the quarter with cash and cash equivalents of
$686 million. Total corporate
debt, including the short-term portion, net of cash and cash
equivalents (net corporate debt), totaled $3.4 billion at June 30, 2020. The
Company's Net Debt Leverage Ratio was 5.6x at June 30, 2020
(see Table 8b).
The Company expects to continue to prioritize investing in its
business and reducing leverage over other potential uses of
cash.
Improved Debt Maturity Profile in Second Quarter 2020
In June 2020, the Company redeemed
its outstanding $550 million 5.25%
Senior Notes due 2021 using the net proceeds from its issuance of
$550 million 7.625% Senior Secured
Second Lien Notes due 2025, together with cash on hand. As a
result, the Company's nearest debt maturity is not until early 2023
(other than amortization payments under its senior secured credit
facilities).
Amendments to Senior Secured Credit and Term Loan A
Agreements
The Company's senior secured leverage ratio at June 30, 2020 was 3.29x (see Table 8a), well
within the 4.75 to 1 ratio required as of that date for it to
maintain compliance under its secured credit facilities. As
an example of our continued commitment to proactively and prudently
manage our balance sheet, we opportunistically amended our senior
secured credit agreement and term loan A agreement on July 24, 2020. Under the amendments, Realogy must
maintain a senior secured leverage ratio not to exceed 6.50 to 1.00
commencing with the third quarter of 2020 through and including the
second quarter of 2021. The required ratio thereafter will step
down on a quarterly basis to 4.75 to 1.00 (the level applicable
prior to the amendments) on and after the second quarter of
2022. Unless terminated earlier by us or pursuant to the
terms of the amendments, certain negative covenants are tightened
until we deliver our covenant compliance certificate to the lenders
for the third quarter of 2021. The amendments leave unchanged the
commitments and pricing under the agreements.
A consolidated balance sheet is included as Table 2 of this
press release.
Investor Conference Call
Today, July 30, at 5:00 p.m.
(ET), Realogy will hold a conference call via webcast to
review its Q2 2020 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 Holdings Corp. (NYSE: RLGY) is the leading and most
integrated provider of U.S. residential real estate services,
encompassing franchise, brokerage, and title and settlement
businesses as well as a mortgage joint venture. Realogy'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, best-in-class learning and support
services, and high-quality lead generation programs, Realogy fuels
the productivity of independent sales agents, helping them build
stronger businesses and best serve today's consumers. Realogy's
affiliated brokerages operate around the world with approximately
187,500 independent sales agents in the
United States and more than 130,800 independent sales agents
in 114 other countries and territories. Recognized for nine
consecutive years as one of the World's Most Ethical Companies,
Realogy has also been designated a Great Place to Work and one of
Forbes' Best Employers for Diversity. Realogy is headquartered in
Madison, New Jersey.
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.
Additionally, many of these risks and uncertainties are currently
amplified by and will continue to be amplified by, or in the future
may be amplified by, the coronavirus disease (COVID-19) pandemic:
the extent, duration and severity of the spread of the COVID-19
pandemic and economic consequences stemming from the COVID-19
crisis (including a potential significant economic contraction) as
well as related risks and the impact of any of the foregoing on our
business, results of operations and liquidity; adverse developments
or the absence of sustained improvement in general business,
economic or political conditions or the U.S. residential real
estate markets, either regionally or nationally, including but not
limited to a decline in consumer confidence or spending, weak
capital, credit and financial markets and/or the instability of
financial institutions, economic stagnation or 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), continued
or accelerated declines in home inventory levels, increased levels
of unemployment and/or declining wages or stagnant wage growth in
the U.S., an increase in potential homebuyers with low credit
ratings, inability to afford down payments, or other mortgage
challenges due to disrupted earnings, including constraints on the
availability of mortgage financing, an increase in foreclosure
activity, a decline or lack of improvement in the number of
homesales, stagnant or declining home prices, a reduction in the
affordability of housing, a lack of improvement or deceleration in
the building of new housing, the potential negative impact of
certain provisions of the Tax Cuts and Jobs Act of 2017 (the "2017
Tax Act") on home values over time in states with high property,
sales and state and local income taxes or on homeownership rates,
and/or geopolitical and economic instability; risks associated with
our substantial indebtedness, interest obligations and the
restrictions contained in our debt agreements, including risks
relating to our ability to comply with the financial covenant under
the Senior Secured Credit Facility and Term Loan A Facility and
generate sufficient cash flows to service our debt (in particular
if the COVID-19 crisis continues for a prolonged period) as well as
risks relating to our having to dedicate a significant portion of
our cash flows from operations to service our debt and our ability
to refinance or repay our indebtedness or incur additional
indebtedness; risks related to disruptions in the securitization
markets, including in connection with the COVID-19 crisis, which
may adversely impact our ability to continue to securitize certain
of the relocation assets of Cartus Relocation Services or increase
our cost of funding; the impact of increased competition in the
industry for clients, for the affiliation of independent sales
agents and for the affiliation of franchisees on our results of
operations and market share; the impact of disruption in the
residential real estate brokerage industry, and on our results of
operations and financial condition, as a result of listing
aggregator concentration and market power; continuing pressure on
the share of gross commission income paid by our company owned
brokerages and affiliated franchisees to affiliated independent
sales agents and sales agent teams; our inability to develop
products, technology and programs (including our company-directed
affinity programs) that support our business strategy; our
geographic and high-end market concentration; our inability to
enter into franchise agreements with new franchisees or renew
existing franchise agreements without reducing contractual royalty
rates or increasing the amount and prevalence of sales incentives;
the lack of revenue growth or declining profitability of our
franchisees and company owned brokerage operations or declines in
other revenue streams; increases in uncollectible accounts
receivable and note reserves as a result of the adverse financial
effects of the COVID-19 crisis on our franchisees and relocation
clients; the potential impact of negative industry or business
trends (including further declines in our market capitalization) on
our valuation of goodwill and intangibles; the extent of the
negative impact of the discontinuation of the USAA affinity program
on our revenues and profits derived from affinity program referrals
(including downstream revenue); the loss of our next largest
affinity client or multiple significant relocation clients; risks
related to our ongoing litigation with affiliates of Madison
Dearborn Partners, LLC and SIRVA Worldwide, Inc. regarding the
planned sale of Cartus Relocation Services, including that such
transaction will not close; changes in corporate relocation
practices resulting in fewer employee relocations, reduced
relocation benefits and/or increasing competition in corporate
relocation; an increase in the experienced claims losses of our
title underwriter; 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 (i) state or federal employment laws or regulations that
would require reclassification of independent contractor sales
agents to employee status, (ii) privacy or data security laws and
regulations, (iii) the Real Estate Settlement Procedures Act
(RESPA) or other federal or state consumer protection or similar
laws and (iv) antitrust laws and regulations; risks related to the
impact on our operations and financial results that may be caused
by any future meaningful changes in industry operations or
structure as a result of governmental pressures (including
pressures for lower brokerage commission rates), the actions of
certain competitors, the introduction or growth of certain
competitive models, changes to the rules of the multiple listing
services, or otherwise; and risks and growing costs related to both
cybersecurity threats to our data and customer, franchisee,
employee and independent sales agent data, as well as those related
to our compliance with the growing number of laws, regulations and
other requirements related to the protection of personal
information.
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, 2020 and our Annual Report on Form 10-K
for the year ended December 31, 2019,
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 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.
|
Investor
Contacts:
|
|
|
|
Media
Contact:
|
|
Alicia
Swift
|
|
|
|
Trey
Sarten
|
|
(973)
407-4669
|
|
|
|
trey.sarten@realogy.com
|
|
alicia.swift@realogy.com
|
|
|
|
|
|
|
|
|
|
|
Danielle
Kloeblen
|
|
|
|
|
|
(973)
407-2148
|
|
|
|
|
|
danielle.kloeblen@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,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Revenues
|
|
|
|
|
|
|
|
|
Gross commission
income
|
$
|
919
|
|
|
$
|
1,310
|
|
|
$
|
1,769
|
|
|
$
|
2,109
|
|
|
Service
revenue
|
172
|
|
|
183
|
|
|
323
|
|
|
312
|
|
|
Franchise
fees
|
85
|
|
|
112
|
|
|
156
|
|
|
182
|
|
|
Other
|
31
|
|
|
59
|
|
|
75
|
|
|
115
|
|
|
Net
revenues
|
1,207
|
|
|
1,664
|
|
|
2,323
|
|
|
2,718
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
Commission and other
agent-related costs
|
685
|
|
|
955
|
|
|
1,315
|
|
|
1,530
|
|
|
Operating
|
286
|
|
|
343
|
|
|
611
|
|
|
673
|
|
|
Marketing
|
40
|
|
|
69
|
|
|
99
|
|
|
137
|
|
|
General and
administrative
|
59
|
|
|
68
|
|
|
133
|
|
|
148
|
|
|
Restructuring costs,
net
|
14
|
|
|
9
|
|
|
25
|
|
|
18
|
|
|
Impairments
|
7
|
|
|
2
|
|
|
454
|
|
|
3
|
|
|
Depreciation and
amortization
|
46
|
|
|
43
|
|
|
91
|
|
|
84
|
|
|
Interest expense,
net
|
59
|
|
|
80
|
|
|
160
|
|
|
143
|
|
|
Loss on the early
extinguishment of debt
|
8
|
|
|
—
|
|
|
8
|
|
|
5
|
|
|
Total
expenses
|
1,204
|
|
|
1,569
|
|
|
2,896
|
|
|
2,741
|
|
|
Income (loss) from
continuing operations before income taxes, equity in earnings and
noncontrolling interests
|
3
|
|
|
95
|
|
|
(573)
|
|
|
(23)
|
|
|
Income tax expense
(benefit) from continuing operations
|
11
|
|
|
33
|
|
|
(121)
|
|
|
1
|
|
|
Equity in earnings of
unconsolidated entities
|
(36)
|
|
|
(7)
|
|
|
(45)
|
|
|
(8)
|
|
|
Net income (loss)
from continuing operations
|
28
|
|
|
69
|
|
|
(407)
|
|
|
(16)
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from
discontinued operations, net of tax
|
(9)
|
|
|
1
|
|
|
(14)
|
|
|
(13)
|
|
|
Estimated loss on the
sale of discontinued operations, net of tax
|
(32)
|
|
|
—
|
|
|
(54)
|
|
|
—
|
|
|
Net (loss) income
from discontinued operations
|
(41)
|
|
|
1
|
|
|
(68)
|
|
|
(13)
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
(13)
|
|
|
70
|
|
|
(475)
|
|
|
(29)
|
|
|
Less: Net income
attributable to noncontrolling interests
|
(1)
|
|
|
(1)
|
|
|
(1)
|
|
|
(1)
|
|
|
Net (loss) income
attributable to Realogy Holdings
|
$
|
(14)
|
|
|
$
|
69
|
|
|
$
|
(476)
|
|
|
$
|
(30)
|
|
|
|
|
|
|
|
|
|
|
Basic (loss)
earnings per share attributable to Realogy Holdings
shareholders:
|
|
|
|
|
|
Basic earnings (loss)
per share from continuing operations
|
$
|
0.23
|
|
|
$
|
0.59
|
|
|
$
|
(3.55)
|
|
|
$
|
(0.15)
|
|
|
Basic (loss) earnings
per share from discontinued operations
|
(0.35)
|
|
|
0.01
|
|
|
(0.59)
|
|
|
(0.11)
|
|
|
Basic (loss) earnings
per share
|
$
|
(0.12)
|
|
|
$
|
0.60
|
|
|
$
|
(4.14)
|
|
|
$
|
(0.26)
|
|
|
Diluted (loss)
earnings per share attributable to Realogy Holdings
shareholders:
|
|
|
|
|
|
Diluted earnings
(loss) per share from continuing operations
|
$
|
0.23
|
|
|
$
|
0.59
|
|
|
$
|
(3.55)
|
|
|
$
|
(0.15)
|
|
|
Diluted (loss)
earnings per share from discontinued operations
|
(0.35)
|
|
|
0.01
|
|
|
(0.59)
|
|
|
(0.11)
|
|
|
Diluted (loss)
earnings per share
|
$
|
(0.12)
|
|
|
$
|
0.60
|
|
|
$
|
(4.14)
|
|
|
$
|
(0.26)
|
|
|
Weighted average
common and common equivalent shares of Realogy Holdings
outstanding:
|
|
Basic
|
115.4
|
|
|
114.3
|
|
|
115.0
|
|
|
114.1
|
|
|
Diluted
|
116.2
|
|
|
114.9
|
|
|
115.0
|
|
|
114.1
|
|
|
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 provides
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) the (gain) loss on the early
extinguishment of debt that results from refinancing and
deleveraging debt initiatives; (e) impairments; (f) the tax effect
of the foregoing adjustments and (g) net (income) loss from
discontinued operations. 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 (loss) income to
Adjusted net income (loss) for the three and six months ended
June 30, 2020 and 2019:
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Net (loss) income
attributable to Realogy Holdings
|
$
|
(14)
|
|
|
$
|
69
|
|
|
$
|
(476)
|
|
|
$
|
(30)
|
|
|
Addback:
|
|
|
|
|
|
|
|
|
Mark-to-market
interest rate swap losses
|
8
|
|
|
24
|
|
|
59
|
|
|
38
|
|
|
Restructuring costs,
net
|
14
|
|
|
9
|
|
|
25
|
|
|
18
|
|
|
Impairments
(a)
|
7
|
|
|
2
|
|
|
454
|
|
|
3
|
|
|
Loss on the early
extinguishment of debt
|
8
|
|
|
—
|
|
|
8
|
|
|
5
|
|
|
Adjustments for tax
effect (b)
|
(10)
|
|
|
(9)
|
|
|
(147)
|
|
|
(17)
|
|
|
Net loss (income) from
discontinued operations
|
41
|
|
|
(1)
|
|
|
68
|
|
|
13
|
|
|
Adjusted net
income (loss) attributable to Realogy Holdings
|
$
|
54
|
|
|
$
|
94
|
|
|
$
|
(9)
|
|
|
$
|
30
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings
per share attributable to Realogy Holdings:
|
|
|
|
|
|
|
|
|
Basic (loss) earnings
per share:
|
$
|
(0.12)
|
|
|
$
|
0.60
|
|
|
$
|
(4.14)
|
|
|
$
|
(0.26)
|
|
|
Diluted (loss)
earnings per share:
|
$
|
(0.12)
|
|
|
$
|
0.60
|
|
|
$
|
(4.14)
|
|
|
$
|
(0.26)
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
(loss) per share attributable to Realogy Holdings:
|
|
|
|
|
|
|
|
Adjusted basic
earnings (loss) per share:
|
$
|
0.47
|
|
|
$
|
0.82
|
|
|
$
|
(0.08)
|
|
|
$
|
0.26
|
|
|
Adjusted diluted
earnings (loss) per share:
|
$
|
0.46
|
|
|
$
|
0.82
|
|
|
$
|
(0.08)
|
|
|
$
|
0.26
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common and common equivalent shares outstanding:
|
|
|
|
Basic:
|
115.4
|
|
|
114.3
|
|
|
115.0
|
|
|
114.1
|
|
|
Diluted:
|
116.2
|
|
|
114.9
|
|
|
115.0
|
|
|
114.1
|
|
|
|
|
|
|
|
(a)
Impairments for the six months ended
June 30, 2020 primarily include a goodwill impairment charge
of $413 million, which reduced the net carrying value of
Realogy Brokerage Group by $314 million after accounting for
the related income tax benefit of $99 million, and an
impairment charge of $30 million which reduced the carrying
value of trademarks at Realogy Franchise Group.
|
|
(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,
2020
|
|
December
31,
2019
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
686
|
|
|
$
|
235
|
|
|
Trade receivables (net
of allowance for doubtful accounts of $14 and $11)
|
92
|
|
|
79
|
|
|
Other current
assets
|
173
|
|
|
147
|
|
|
Current assets - held
for sale
|
631
|
|
|
750
|
|
|
Total current
assets
|
1,582
|
|
|
1,211
|
|
|
Property and
equipment, net
|
293
|
|
|
308
|
|
|
Operating lease
assets, net
|
491
|
|
|
515
|
|
|
Goodwill
|
2,887
|
|
|
3,300
|
|
|
Trademarks
|
643
|
|
|
673
|
|
|
Franchise agreements,
net
|
1,126
|
|
|
1,160
|
|
|
Other intangibles,
net
|
70
|
|
|
72
|
|
|
Other non-current
assets
|
341
|
|
|
304
|
|
|
Total
assets
|
$
|
7,433
|
|
|
$
|
7,543
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
|
86
|
|
|
$
|
84
|
|
|
Current portion of
long-term debt
|
868
|
|
|
234
|
|
|
Current portion of
operating lease liabilities
|
121
|
|
|
122
|
|
|
Accrued expenses and
other current liabilities
|
332
|
|
|
350
|
|
|
Current liabilities -
held for sale
|
231
|
|
|
356
|
|
|
Total current
liabilities
|
1,638
|
|
|
1,146
|
|
|
Long-term
debt
|
3,175
|
|
|
3,211
|
|
|
Long-term operating
lease liabilities
|
455
|
|
|
467
|
|
|
Deferred income
taxes
|
249
|
|
|
390
|
|
|
Other non-current
liabilities
|
291
|
|
|
233
|
|
|
Total
liabilities
|
5,808
|
|
|
5,447
|
|
|
Commitments and
contingencies
|
|
|
|
|
Equity:
|
|
|
|
|
Realogy Holdings
preferred stock: $0.01 par value; 50,000,000 shares authorized,
none issued and outstanding at June 30, 2020 and
December 31, 2019
|
—
|
|
|
—
|
|
|
Realogy Holdings
common stock: $0.01 par value; 400,000,000 shares authorized,
115,424,033 shares issued and outstanding at June 30, 2020 and
114,355,519 shares issued and outstanding at December 31,
2019
|
1
|
|
|
1
|
|
|
Additional paid-in
capital
|
4,847
|
|
|
4,842
|
|
|
Accumulated
deficit
|
(3,171)
|
|
|
(2,695)
|
|
|
Accumulated other
comprehensive loss
|
(56)
|
|
|
(56)
|
|
|
Total stockholders'
equity
|
1,621
|
|
|
2,092
|
|
|
Noncontrolling
interests
|
4
|
|
|
4
|
|
|
Total
equity
|
1,625
|
|
|
2,096
|
|
|
Total liabilities
and equity
|
$
|
7,433
|
|
|
$
|
7,543
|
|
|
Table
3
|
|
|
REALOGY HOLDINGS
CORP.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In
millions)
(Unaudited)
|
|
|
|
Six Months
Ended
June 30,
|
|
2020
|
|
2019
|
|
Operating
Activities
|
|
|
|
|
Net loss
|
$
|
(475)
|
|
|
$
|
(29)
|
|
|
Net loss from
discontinued operations
|
68
|
|
|
13
|
|
|
Net loss from
continuing operations
|
(407)
|
|
|
(16)
|
|
|
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
91
|
|
|
84
|
|
|
Deferred income
taxes
|
(117)
|
|
|
(2)
|
|
|
Impairments
|
454
|
|
|
3
|
|
|
Amortization of
deferred financing costs and debt discount
|
5
|
|
|
5
|
|
|
Loss on the early
extinguishment of debt
|
8
|
|
|
5
|
|
|
Equity in earnings of
unconsolidated entities
|
(45)
|
|
|
(8)
|
|
|
Stock-based
compensation
|
10
|
|
|
14
|
|
|
Mark-to-market
adjustments on derivatives
|
59
|
|
|
38
|
|
|
Other adjustments to
net loss
|
—
|
|
|
(2)
|
|
|
Net change in assets
and liabilities, excluding the impact of acquisitions and
dispositions:
|
|
|
|
|
Trade
receivables
|
(13)
|
|
|
(43)
|
|
|
Other
assets
|
(9)
|
|
|
(13)
|
|
|
Accounts payable,
accrued expenses and other liabilities
|
(15)
|
|
|
48
|
|
|
Dividends received
from unconsolidated entities
|
22
|
|
|
1
|
|
|
Other, net
|
(8)
|
|
|
(1)
|
|
|
Net cash provided
by operating activities from continuing operations
|
35
|
|
|
113
|
|
|
Net cash used in
operating activities from discontinued operations
|
(2)
|
|
|
(57)
|
|
|
Net cash provided
by operating activities
|
33
|
|
|
56
|
|
|
Investing
Activities
|
|
|
|
|
Property and
equipment additions
|
(41)
|
|
|
(50)
|
|
|
Payments for
acquisitions, net of cash acquired
|
(1)
|
|
|
(1)
|
|
|
Investment in
unconsolidated entities
|
(2)
|
|
|
(10)
|
|
|
Other, net
|
(11)
|
|
|
3
|
|
|
Net cash used in
investing activities from continuing operations
|
(55)
|
|
|
(58)
|
|
|
Net cash used in
investing activities from discontinued operations
|
(8)
|
|
|
(4)
|
|
|
Net cash used in
investing activities
|
$
|
(63)
|
|
|
$
|
(62)
|
|
|
Financing
Activities
|
|
|
|
|
Net change in
Revolving Credit Facility
|
$
|
625
|
|
|
$
|
60
|
|
|
Proceeds from
issuance of Senior Secured Second Lien Notes
|
550
|
|
|
—
|
|
|
Proceeds from
issuance of Senior Notes
|
—
|
|
|
550
|
|
|
Redemption of Senior
Notes
|
(550)
|
|
|
(450)
|
|
|
Amortization payments
on term loan facilities
|
(19)
|
|
|
(15)
|
|
|
Debt issuance
costs
|
(8)
|
|
|
(9)
|
|
|
Cash paid for fees
associated with early extinguishment of debt
|
(7)
|
|
|
(4)
|
|
|
Repurchase of common
stock
|
—
|
|
|
(20)
|
|
|
Dividends paid on
common stock
|
—
|
|
|
(21)
|
|
|
Taxes paid related to
net share settlement for stock-based compensation
|
(5)
|
|
|
(6)
|
|
|
Payments of
contingent consideration related to acquisitions
|
—
|
|
|
(2)
|
|
|
Other, net
|
(15)
|
|
|
(13)
|
|
|
Net cash provided
by financing activities from continuing operations
|
571
|
|
|
70
|
|
|
Net cash used in
financing activities from discontinued operations
|
(103)
|
|
|
(24)
|
|
|
Net cash provided
by financing activities
|
468
|
|
|
46
|
|
|
Effect of changes in
exchange rates on cash, cash equivalents and restricted
cash
|
—
|
|
|
—
|
|
|
Net increase in cash,
cash equivalents and restricted cash
|
438
|
|
|
40
|
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
266
|
|
|
238
|
|
|
Cash, cash
equivalents and restricted cash, end of period
|
704
|
|
|
278
|
|
|
Less cash, cash
equivalents and restricted cash of discontinued operations, end of
period
|
18
|
|
|
18
|
|
|
Cash, cash
equivalents and restricted cash of continuing operations, end of
period
|
$
|
686
|
|
|
$
|
260
|
|
|
|
|
|
|
Supplemental
Disclosure of Cash Flow Information
|
|
|
|
|
Interest payments for
continuing operations
|
$
|
102
|
|
|
$
|
95
|
|
|
Income tax payments
for continuing operations, net
|
—
|
|
|
6
|
|
|
Table
4a
|
|
|
REALOGY HOLDINGS
CORP.
2020 vs. 2019 KEY
DRIVERS
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2020
|
|
2019
|
|
%
Change
|
|
2020
|
|
2019
|
|
%
Change
|
|
Realogy Franchise
Group (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
238,085
|
|
|
301,377
|
|
|
(21)
|
%
|
|
441,273
|
|
|
504,039
|
|
|
(12)
|
%
|
|
Average homesale
price
|
$
|
321,308
|
|
|
$
|
318,799
|
|
|
1
|
%
|
|
$
|
321,841
|
|
|
$
|
310,581
|
|
|
4
|
%
|
|
Average homesale
broker commission rate
|
2.49
|
%
|
|
2.47
|
%
|
|
2
|
bps
|
|
2.48
|
%
|
|
2.47
|
%
|
|
1
|
bps
|
|
Net royalty per
side
|
$
|
324
|
|
|
$
|
331
|
|
|
(2)
|
%
|
|
$
|
321
|
|
|
$
|
320
|
|
|
—
|
%
|
|
Realogy Brokerage
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
71,375
|
|
|
95,251
|
|
|
(25)
|
%
|
|
133,916
|
|
|
155,693
|
|
|
(14)
|
%
|
|
Average homesale
price
|
$
|
503,935
|
|
|
$
|
540,725
|
|
|
(7)
|
%
|
|
$
|
517,888
|
|
|
$
|
529,543
|
|
|
(2)
|
%
|
|
Average homesale
broker commission rate
|
2.43
|
%
|
|
2.41
|
%
|
|
2
|
bps
|
|
2.42
|
%
|
|
2.41
|
%
|
|
1
|
bps
|
|
Gross commission
income per side
|
$
|
12,863
|
|
|
$
|
13,758
|
|
|
(7)
|
%
|
|
$
|
13,206
|
|
|
$
|
13,546
|
|
|
(3)
|
%
|
|
Realogy Title
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase title and
closing units
|
32,028
|
|
|
42,202
|
|
|
(24)
|
%
|
|
60,752
|
|
|
70,246
|
|
|
(14)
|
%
|
|
Refinance title and
closing units
|
17,548
|
|
|
5,270
|
|
|
233
|
%
|
|
26,447
|
|
|
9,281
|
|
|
185
|
%
|
|
Average fee per
closing unit
|
$
|
2,062
|
|
|
$
|
2,356
|
|
|
(12)
|
%
|
|
$
|
2,151
|
|
|
$
|
2,320
|
|
|
(7)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Includes all franchisees except for
Realogy Brokerage Group.
|
|
Table
4b
|
|
|
REALOGY HOLDINGS
CORP.
2019 KEY
DRIVERS
|
|
|
|
|
Quarter
Ended
|
|
Year
Ended
|
|
|
March 31,
2019
|
|
June 30,
2019
|
|
September
30,
2019
|
|
December
31,
2019
|
|
December
31,
2019
|
|
Realogy Franchise
Group (a)
|
|
|
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
|
202,662
|
|
|
301,377
|
|
|
299,937
|
|
|
257,524
|
|
|
1,061,500
|
|
|
Average homesale
price
|
|
$
|
298,361
|
|
|
$
|
318,799
|
|
|
$
|
314,984
|
|
|
$
|
322,713
|
|
|
$
|
314,769
|
|
|
Average homesale
broker commission rate
|
|
2.48
|
%
|
|
2.47
|
%
|
|
2.47
|
%
|
|
2.46
|
%
|
|
2.47
|
%
|
|
Net royalty per
side
|
|
$
|
303
|
|
|
$
|
331
|
|
|
$
|
329
|
|
|
$
|
338
|
|
|
$
|
327
|
|
|
Realogy Brokerage
Group
|
|
|
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
|
60,442
|
|
|
95,251
|
|
|
92,399
|
|
|
77,560
|
|
|
325,652
|
|
|
Average homesale
price
|
|
$
|
511,922
|
|
|
$
|
540,725
|
|
|
$
|
509,425
|
|
|
$
|
523,024
|
|
|
$
|
522,282
|
|
|
Average homesale
broker commission rate
|
|
2.41
|
%
|
|
2.41
|
%
|
|
2.41
|
%
|
|
2.39
|
%
|
|
2.41
|
%
|
|
Gross commission
income per side
|
|
$
|
13,212
|
|
|
$
|
13,758
|
|
|
$
|
13,000
|
|
|
$
|
13,147
|
|
|
$
|
13,296
|
|
|
Realogy Title
Group
|
|
|
|
|
|
|
|
|
|
|
|
Purchase title and
closing units
|
|
28,044
|
|
|
42,202
|
|
|
41,619
|
|
|
34,345
|
|
|
146,210
|
|
|
Refinance title and
closing units
|
|
4,011
|
|
|
5,270
|
|
|
8,014
|
|
|
9,294
|
|
|
26,589
|
|
|
Average fee per
closing unit
|
|
$
|
2,267
|
|
|
$
|
2,356
|
|
|
$
|
2,288
|
|
|
$
|
2,267
|
|
|
$
|
2,297
|
|
|
|
|
|
(a)
Includes all franchisees except for
Realogy Brokerage Group.
|
|
Table
5a
|
|
|
REALOGY HOLDINGS
CORP.
NON-GAAP
RECONCILIATION - OPERATING EBITDA AND
OPERATING EBITDA
INCLUDING DISCONTINUED OPERATIONS
THREE MONTHS ENDED
JUNE 30, 2020 AND 2019
(In
millions)
|
|
|
Set forth in the
tables below is a reconciliation of Net (loss) income
attributable to Realogy Holdings to Operating EBITDA and Operating
EBITDA including discontinued operations for the three-month
periods ended June 30, 2020 and 2019:
|
|
|
Three Months Ended
June 30,
|
|
2020
|
|
2019
|
|
Net (loss) income
attributable to Realogy Holdings
|
$
|
(14)
|
|
|
$
|
69
|
|
|
Less: Net (loss)
income from discontinued operations
|
(41)
|
|
|
1
|
|
|
Add: Income tax
expense from continuing operations
|
11
|
|
|
33
|
|
|
Income from
continuing operations attributable to Realogy Holdings before
income taxes
|
38
|
|
|
101
|
|
|
Add:
Depreciation and amortization
|
46
|
|
|
43
|
|
|
Interest expense,
net
|
59
|
|
|
80
|
|
|
Restructuring costs,
net (a)
|
14
|
|
|
9
|
|
|
Impairments
(b)
|
7
|
|
|
2
|
|
|
Loss on the early
extinguishment of debt (c)
|
8
|
|
|
—
|
|
|
Operating
EBITDA
|
172
|
|
|
235
|
|
|
Contribution from
discontinued operations
|
3
|
|
|
10
|
|
|
Operating EBITDA
including discontinued operations
|
$
|
175
|
|
|
$
|
245
|
|
|
|
The following table
reflects Revenue, Operating EBITDA and Operating EBITDA margin by
reportable segments:
|
|
|
Revenues
(d)
|
|
$
Change
|
|
%
Change
|
|
Operating
EBITDA
|
|
$
Change
|
|
%
Change
|
|
Operating
EBITDA Margin
|
|
Change
|
|
2020
|
|
2019
|
|
|
|
2020
|
|
2019
|
|
|
|
2020
|
|
2019
|
|
|
Realogy Franchise
Group
|
$
|
179
|
|
|
$
|
260
|
|
|
$
|
(81)
|
|
|
(31)
|
%
|
|
$
|
122
|
|
|
$
|
180
|
|
|
$
|
(58)
|
|
|
(32)
|
%
|
|
68
|
%
|
|
69
|
%
|
|
(1)
|
|
|
Realogy Brokerage
Group
|
933
|
|
|
1,331
|
|
|
(398)
|
|
|
(30)
|
|
|
15
|
|
|
47
|
|
|
(32)
|
|
|
(68)
|
|
|
2
|
|
|
4
|
|
|
(2)
|
|
|
Realogy Title
Group
|
160
|
|
|
160
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|
32
|
|
|
29
|
|
|
91
|
|
|
38
|
|
|
20
|
|
|
18
|
|
|
Corporate and
Other
|
(65)
|
|
|
(87)
|
|
|
22
|
|
|
*
|
|
(26)
|
|
|
(24)
|
|
|
(2)
|
|
|
*
|
|
|
|
|
|
|
|
|
Total
|
$
|
1,207
|
|
|
$
|
1,664
|
|
|
$
|
(457)
|
|
|
(27)
|
%
|
|
$
|
172
|
|
|
$
|
235
|
|
|
$
|
(63)
|
|
|
(27)
|
%
|
|
14
|
%
|
|
14
|
%
|
|
—
|
|
|
Contribution from
discontinued operations
|
|
3
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
Total including
discontinued operations
|
|
$
|
175
|
|
|
$
|
245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
units to the overall Operating EBITDA of the Company:
|
|
Revenues
|
|
$
Change
|
|
%
Change
|
|
Operating
EBITDA
|
|
$
Change
|
|
%
Change
|
|
Operating
EBITDA Margin
|
|
Change
|
|
2020
|
|
2019
|
|
|
|
2020
|
|
2019
|
|
|
|
2020
|
|
2019
|
|
|
Realogy Franchise
Group (e)
|
$
|
114
|
|
|
$
|
173
|
|
|
$
|
(59)
|
|
|
(34)
|
%
|
|
$
|
57
|
|
|
$
|
93
|
|
|
$
|
(36)
|
|
|
(39)
|
%
|
|
50
|
%
|
|
54
|
%
|
|
(4)
|
|
|
Realogy Brokerage
Group (e)
|
933
|
|
|
1,331
|
|
|
(398)
|
|
|
(30)
|
|
|
80
|
|
|
134
|
|
|
(54)
|
|
|
(40)
|
|
|
9
|
|
|
10
|
|
|
(1)
|
|
|
Realogy Franchise and
Brokerage Groups Combined
|
$
|
1,047
|
|
|
$
|
1,504
|
|
|
$
|
(457)
|
|
|
(30)
|
%
|
|
$
|
137
|
|
|
$
|
227
|
|
|
$
|
(90)
|
|
|
(40)
|
%
|
|
13
|
%
|
|
15
|
%
|
|
(2)
|
|
|
|
|
|
|
|
*not meaningful.
|
|
(a)
Restructuring charges incurred for the
three months ended June 30, 2020 include $12 million at
Realogy Brokerage Group and $2 million at Realogy Title
Group. Restructuring charges incurred for the three months
ended June 30, 2019 include $1 million at Realogy Franchise
Group, $6 million at Realogy Brokerage Group, $1 million at Realogy
Title Group and $1 million at Corporate and Other.
|
|
(b)
Impairments for the three months ended
June 30, 2020 and 2019 relate to lease asset
impairments.
|
|
(c) Loss on the
early extinguishment of debt is recorded in Corporate and
Other.
|
|
(d)
Includes the elimination of transactions
between segments, which consists of intercompany royalties and
marketing fees paid by Realogy Brokerage Group of $65 million and
$87 million during the three months ended June 30, 2020 and
2019, respectively.
|
|
(e)
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 $65
million and $87 million during the three months ended June 30,
2020 and 2019, respectively.
|
|
Table
5b
|
|
|
REALOGY HOLDINGS
CORP.
NON-GAAP
RECONCILIATION - OPERATING EBITDA AND
OPERATING EBITDA
INCLUDING DISCONTINUED OPERATIONS
SIX MONTHS ENDED
JUNE 30, 2020 AND 2019
(In
millions)
|
|
|
Set forth in the
tables below is a reconciliation of Net loss attributable to
Realogy Holdings to Operating EBITDA and Operating EBITDA including
discontinued operations for the six-month periods ended
June 30, 2020 and 2019:
|
|
|
Six Months Ended
June 30,
|
|
2020
|
|
2019
|
|
Net loss attributable
to Realogy Holdings
|
$
|
(476)
|
|
|
$
|
(30)
|
|
|
Less: Net loss from
discontinued operations
|
(68)
|
|
|
(13)
|
|
|
Add: Income tax
(benefit) expense from continuing operations
|
(121)
|
|
|
1
|
|
|
Loss from continuing
operations attributable to Realogy Holdings before income
taxes
|
(529)
|
|
|
(16)
|
|
|
Add:
Depreciation and amortization
|
91
|
|
|
84
|
|
|
Interest expense,
net
|
160
|
|
|
143
|
|
|
Restructuring costs,
net (a)
|
25
|
|
|
18
|
|
|
Impairments
(b)
|
454
|
|
|
3
|
|
|
Loss on the early
extinguishment of debt (c)
|
8
|
|
|
5
|
|
|
Operating
EBITDA
|
209
|
|
|
237
|
|
|
Contribution from
discontinued operations
|
(2)
|
|
|
4
|
|
|
Operating EBITDA
including discontinued operations
|
$
|
207
|
|
|
$
|
241
|
|
|
|
The following table
reflects Revenue, Operating EBITDA and Operating EBITDA margin by
reportable segments:
|
|
|
Revenues
(d)
|
|
$
Change
|
|
%
Change
|
|
Operating
EBITDA
|
|
$
Change
|
|
%
Change
|
|
Operating
EBITDA Margin
|
|
Change
|
|
2020
|
|
2019
|
|
|
|
2020
|
|
2019
|
|
|
|
2020
|
|
2019
|
|
|
Realogy Franchise
Group
|
$
|
347
|
|
|
$
|
439
|
|
|
$
|
(92)
|
|
|
(21)
|
%
|
|
$
|
223
|
|
|
$
|
278
|
|
|
$
|
(55)
|
|
|
(20)
|
%
|
|
64
|
%
|
|
63
|
%
|
|
1
|
|
|
Realogy Brokerage
Group
|
1,802
|
|
|
2,147
|
|
|
(345)
|
|
|
(16)
|
|
|
(36)
|
|
|
(15)
|
|
|
(21)
|
|
|
(140)
|
|
|
(2)
|
|
|
(1)
|
|
|
(1)
|
|
|
Realogy Title
Group
|
297
|
|
|
274
|
|
|
23
|
|
|
8
|
|
|
73
|
|
|
23
|
|
|
50
|
|
|
217
|
|
25
|
|
|
8
|
|
|
17
|
|
|
Corporate and
Other
|
(123)
|
|
|
(142)
|
|
|
19
|
|
|
*
|
|
(51)
|
|
|
(49)
|
|
|
(2)
|
|
|
*
|
|
|
|
|
|
|
|
Total
|
$
|
2,323
|
|
|
$
|
2,718
|
|
|
$
|
(395)
|
|
|
(15)
|
%
|
|
$
|
209
|
|
|
$
|
237
|
|
|
$
|
(28)
|
|
|
(12)
|
%
|
|
9
|
%
|
|
9
|
%
|
|
—
|
|
|
Contribution from
discontinued operations
|
|
(2)
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
Total including
discontinued operations
|
|
$
|
207
|
|
|
$
|
241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
units to the overall Operating EBITDA of the Company:
|
|
|
Revenues
|
|
$
Change
|
|
%
Change
|
|
Operating
EBITDA
|
|
$
Change
|
|
%
Change
|
|
Operating
EBITDA Margin
|
|
Change
|
|
2020
|
|
2019
|
|
|
|
2020
|
|
2019
|
|
|
|
2020
|
|
2019
|
|
|
Realogy Franchise
Group (e)
|
$
|
224
|
|
|
$
|
297
|
|
|
$
|
(73)
|
|
|
(25)
|
%
|
|
$
|
100
|
|
|
$
|
136
|
|
|
$
|
(36)
|
|
|
(26)
|
%
|
|
45
|
%
|
|
46
|
%
|
|
(1)
|
|
|
Realogy Brokerage
Group (e)
|
1,802
|
|
|
2,147
|
|
|
(345)
|
|
|
(16)
|
|
|
87
|
|
|
127
|
|
|
(40)
|
|
|
(31)
|
|
|
5
|
|
|
6
|
|
|
(1)
|
|
|
Realogy Franchise and
Brokerage Groups Combined
|
$
|
2,026
|
|
|
$
|
2,444
|
|
|
$
|
(418)
|
|
|
(17)
|
%
|
|
$
|
187
|
|
|
$
|
263
|
|
|
$
|
(76)
|
|
|
(29)
|
%
|
|
9
|
%
|
|
11
|
%
|
|
(2)
|
|
|
|
|
|
|
|
* not meaningful.
|
|
(a)
Restructuring charges incurred for the
six months ended June 30, 2020 include $1 million at Realogy
Franchise Group, $21 million at Realogy Brokerage Group and $3
million at Realogy Title Group. Restructuring charges
incurred for the six months ended June 30, 2019 include
$1 million at Realogy Franchise Group, $10 million at Realogy
Brokerage Group, $2 million at Realogy Title Group and $5 million
at Corporate and Other.
|
|
(b)
Impairments for the six months ended
June 30, 2020 include a goodwill impairment charge of $413
million, which reduced the net carrying value of Realogy Brokerage
Group by $314 million after accounting for the related income tax
benefit of $99 million, an impairment charge of $30 million, which
reduced the carrying value of trademarks at Realogy Franchise
Group, and $11 million related to lease asset impairments.
Impairments for the six months ended June 30, 2019 relate to
lease asset impairments.
|
|
(c)
Loss on the early extinguishment of debt
is recorded in Corporate and Other.
|
|
(d)
Includes the elimination of transactions
between segments, which consists of intercompany royalties and
marketing fees paid by Realogy Brokerage Group of $123 million and
$142 million during the six months ended June 30, 2020 and
2019, respectively.
|
|
(e)
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 $123
million and $142 million during the six months ended June 30,
2020 and 2019, respectively.
|
|
Table
6a
|
|
|
|
|
REALOGY HOLDINGS
CORP.
SELECTED 2020
FINANCIAL DATA
(In
millions)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
June
30,
|
|
|
2020
|
|
2020
|
|
Net revenues
(a)
|
|
|
|
|
|
Realogy Franchise
Group
|
|
$
|
168
|
|
|
$
|
179
|
|
|
Realogy Brokerage
Group
|
|
869
|
|
|
933
|
|
|
Realogy Title
Group
|
|
137
|
|
|
160
|
|
|
Corporate and
Other
|
|
(58)
|
|
|
(65)
|
|
|
Total
|
|
$
|
1,116
|
|
|
$
|
1,207
|
|
|
|
|
|
|
|
Operating
EBITDA
|
|
|
|
|
|
Realogy Franchise
Group
|
|
$
|
101
|
|
|
$
|
122
|
|
|
Realogy Brokerage
Group
|
|
(51)
|
|
|
15
|
|
|
Realogy Title
Group
|
|
12
|
|
|
61
|
|
|
Corporate and
Other
|
|
(25)
|
|
|
(26)
|
|
|
Total
|
|
$
|
37
|
|
|
$
|
172
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliation - Operating EBITDA
|
|
|
|
|
|
Operating
EBITDA
|
|
$
|
37
|
|
|
$
|
172
|
|
|
Contribution from
discontinued operations
|
|
(5)
|
|
|
3
|
|
|
Operating EBITDA
including discontinued operations
|
|
32
|
|
|
175
|
|
|
|
|
|
|
|
Less:
Depreciation and amortization
|
|
45
|
|
|
46
|
|
|
Interest expense,
net
|
|
101
|
|
|
59
|
|
|
Income tax (benefit)
expense
|
|
(132)
|
|
|
11
|
|
|
Restructuring costs,
net (b)
|
|
11
|
|
|
14
|
|
|
Impairments
(c)
|
|
447
|
|
|
7
|
|
|
Loss on the early
extinguishment of debt (d)
|
|
—
|
|
|
8
|
|
|
Adjustments
attributable to discontinued operations (e)
|
|
22
|
|
|
44
|
|
|
Net loss attributable
to Realogy Holdings
|
|
$
|
(462)
|
|
|
$
|
(14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 and
$65 million for the three months ended March 31, 2020 and
June 30, 2020, respectively. Such amounts are eliminated
through Corporate and Other.
|
|
|
Revenues for Realogy
Franchise Group include $2 million and $3 million of intercompany
referral commissions related to Realogy Advantage Broker
Network paid by Realogy Brokerage Group during the three months
ended March 31, 2020 and June 30, 2020, respectively.
Such amounts are recorded as contra-revenues by Realogy Brokerage
Group.
|
|
|
(b) Includes
restructuring charges broken down by business unit as
follows:
|
|
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
June
30,
|
|
|
2020
|
|
2020
|
|
Realogy Franchise
Group
|
|
$
|
1
|
|
|
$
|
—
|
|
|
Realogy Brokerage
Group
|
|
9
|
|
|
12
|
|
|
Realogy Title
Group
|
|
1
|
|
|
2
|
|
|
Total
Company
|
|
$
|
11
|
|
|
$
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Impairments
for the three months ended March 31, 2020 include a goodwill
impairment charge of $413 million, which reduced the net
carrying value of Realogy Brokerage Group by $314 million
after accounting for the related income tax benefit of
$99 million, an impairment charge of $30 million which
reduced the carrying value of trademarks at Realogy Franchise
Group. In addition, the three months ended March 31,
2020 and June 30, 2020 include charges primarily related to
lease asset impairments of $4 million and $7 million,
respectively.
|
|
(d) Loss on the
early extinguishment of debt is recorded in Corporate and
Other.
|
|
(e) Includes
depreciation and amortization, interest expense, income tax and
restructuring charges related to discontinued operations. In
addition, includes the adjustment to record assets and liabilities
held for sale at the lower of carrying value or fair value less any
costs to sell based on the estimated net purchase price.
|
|
Table
6b
|
|
|
REALOGY HOLDINGS
CORP.
SELECTED 2019
FINANCIAL DATA
(In
millions)
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
June
30,
|
|
September
30,
|
|
December
31,
|
|
December
31,
|
|
2019
|
|
2019
|
|
2019
|
|
2019
|
|
2019
|
|
Net revenues
(a)
|
|
|
|
|
|
|
|
|
|
|
Realogy Franchise
Group
|
$
|
179
|
|
|
$
|
260
|
|
|
$
|
240
|
|
|
$
|
207
|
|
|
$
|
886
|
|
|
Realogy Brokerage
Group
|
816
|
|
|
1,331
|
|
|
1,222
|
|
|
1,040
|
|
|
4,409
|
|
|
Realogy Title
Group
|
114
|
|
|
160
|
|
|
170
|
|
|
152
|
|
|
596
|
|
|
Corporate and
Other
|
(55)
|
|
|
(87)
|
|
|
(82)
|
|
|
(69)
|
|
|
(293)
|
|
|
Total
|
$
|
1,054
|
|
|
$
|
1,664
|
|
|
$
|
1,550
|
|
|
$
|
1,330
|
|
|
$
|
5,598
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
EBITDA
|
|
|
|
|
|
|
|
|
|
|
Realogy Franchise
Group
|
$
|
98
|
|
|
$
|
180
|
|
|
$
|
170
|
|
|
$
|
140
|
|
|
$
|
588
|
|
|
Realogy Brokerage
Group
|
(62)
|
|
|
47
|
|
|
31
|
|
|
(12)
|
|
|
4
|
|
|
Realogy Title
Group
|
(9)
|
|
|
32
|
|
|
31
|
|
|
14
|
|
|
68
|
|
|
Corporate and
Other
|
(25)
|
|
|
(24)
|
|
|
(26)
|
|
|
(23)
|
|
|
(98)
|
|
|
Total
|
$
|
2
|
|
|
$
|
235
|
|
|
$
|
206
|
|
|
$
|
119
|
|
|
$
|
562
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliation - Operating EBITDA
|
|
|
|
|
|
|
|
|
|
|
Operating
EBITDA
|
$
|
2
|
|
|
$
|
235
|
|
|
$
|
206
|
|
|
$
|
119
|
|
|
$
|
562
|
|
|
Contribution from
discontinued operations
|
(6)
|
|
|
10
|
|
|
17
|
|
|
7
|
|
|
28
|
|
|
Operating EBITDA
including discontinued operations
|
(4)
|
|
|
245
|
|
|
223
|
|
|
126
|
|
|
590
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
Depreciation and amortization
|
41
|
|
|
43
|
|
|
42
|
|
|
43
|
|
|
169
|
|
|
Interest expense,
net
|
63
|
|
|
80
|
|
|
66
|
|
|
40
|
|
|
249
|
|
|
Income tax (benefit)
expense
|
(32)
|
|
|
33
|
|
|
(23)
|
|
|
—
|
|
|
(22)
|
|
|
Restructuring costs,
net (b)
|
9
|
|
|
9
|
|
|
11
|
|
|
13
|
|
|
42
|
|
|
Impairments
(c)
|
1
|
|
|
2
|
|
|
240
|
|
|
6
|
|
|
249
|
|
|
Former parent legacy
cost, net (d)
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
Loss (gain) on the
early extinguishment of debt (d)
|
5
|
|
|
—
|
|
|
(10)
|
|
|
—
|
|
|
(5)
|
|
|
Adjustments
attributable to discontinued operations (e)
|
8
|
|
|
9
|
|
|
9
|
|
|
69
|
|
|
95
|
|
|
Net (loss) income
attributable to Realogy Holdings
|
$
|
(99)
|
|
|
$
|
69
|
|
|
$
|
(113)
|
|
|
$
|
(45)
|
|
|
$
|
(188)
|
|
|
|
(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 $55 million, $87 million, $82 million and $69 million for
the three months ended March 31, 2019, June 30, 2019, September 30,
2019 and December 31, 2019, respectively. Such amounts
are eliminated through Corporate and Other.
|
|
Revenues for Realogy
Franchise Group include $3 million, $5 million, $6 million and $4
million of intercompany referral commissions related to Realogy
Advantage Broker Network paid by Realogy Brokerage Group during the
three months ended March 31, 2019, June 30, 2019, September 30,
2019 and December 31, 2019, respectively. Such amounts
are recorded as contra-revenues by Realogy Brokerage
Group.
|
|
(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,
|
|
2019
|
|
2019
|
|
2019
|
|
2019
|
|
2019
|
|
Realogy Franchise
Group
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
Realogy Brokerage
Group
|
4
|
|
|
6
|
|
|
8
|
|
|
7
|
|
|
25
|
|
|
Realogy Title
Group
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
3
|
|
|
Corporate and
Other
|
4
|
|
|
1
|
|
|
1
|
|
|
4
|
|
|
10
|
|
|
Total
Company
|
$
|
9
|
|
|
$
|
9
|
|
|
$
|
11
|
|
|
$
|
13
|
|
|
$
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Impairments
for the three months ended September 30, 2019 and the year ended
December 31, 2019 include a goodwill impairment charge of $237
million which reduced the net carrying value of Realogy Brokerage
Group by $180 million after accounting for the related income
tax benefit of $57 million. In addition, the three months
ended March 31, 2019, June 30, 2019, September 30, 2019 and
December 31, 2019 include charges primarily related to lease asset
impairments of $1 million, $2 million, $3 million and $6
million, respectively.
|
|
(d) Former
parent legacy items and Loss (gain) on the early extinguishment of
debt are recorded in Corporate and Other.
|
|
(e) Includes
depreciation and amortization, interest expense, income tax and
restructuring charges related to discontinued operations. In
addition, the three months and year ended December 31, 2019
includes the estimated loss on the sale of discontinued operations
of $22 million and the related tax expense of
$38 million.
|
|
Table
6c
|
|
|
REALOGY HOLDINGS
CORP.
2019 CONSOLIDATED
STATEMENTS OF OPERATIONS
(In millions,
except per share data)
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
June
30,
|
|
September
30,
|
|
December
31,
|
|
December
31,
|
|
2019
|
|
2019
|
|
2019
|
|
2019
|
|
2019
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Gross commission
income
|
$
|
799
|
|
|
$
|
1,310
|
|
|
$
|
1,201
|
|
|
$
|
1,020
|
|
|
$
|
4,330
|
|
|
Service
revenue
|
129
|
|
|
183
|
|
|
191
|
|
|
170
|
|
|
673
|
|
|
Franchise
fees
|
70
|
|
|
112
|
|
|
108
|
|
|
96
|
|
|
386
|
|
|
Other
|
56
|
|
|
59
|
|
|
50
|
|
|
44
|
|
|
209
|
|
|
Net
revenues
|
1,054
|
|
|
1,664
|
|
|
1,550
|
|
|
1,330
|
|
|
5,598
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
Commission and other
agent-related costs
|
575
|
|
|
955
|
|
|
875
|
|
|
751
|
|
|
3,156
|
|
|
Operating
|
330
|
|
|
343
|
|
|
343
|
|
|
329
|
|
|
1,345
|
|
|
Marketing
|
68
|
|
|
69
|
|
|
63
|
|
|
62
|
|
|
262
|
|
|
General and
administrative
|
80
|
|
|
68
|
|
|
69
|
|
|
71
|
|
|
288
|
|
|
Former parent legacy
cost, net
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
Restructuring costs,
net
|
9
|
|
|
9
|
|
|
11
|
|
|
13
|
|
|
42
|
|
|
Impairments
|
1
|
|
|
2
|
|
|
240
|
|
|
6
|
|
|
249
|
|
|
Depreciation and
amortization
|
41
|
|
|
43
|
|
|
42
|
|
|
43
|
|
|
169
|
|
|
Interest expense,
net
|
63
|
|
|
80
|
|
|
66
|
|
|
40
|
|
|
249
|
|
|
Loss (gain) on the
early extinguishment of debt
|
5
|
|
|
—
|
|
|
(10)
|
|
|
—
|
|
|
(5)
|
|
|
Total
expenses
|
1,172
|
|
|
1,569
|
|
|
1,700
|
|
|
1,315
|
|
|
5,756
|
|
|
(Loss) income from
continuing operations before income taxes, equity in earnings and
noncontrolling interests
|
(118)
|
|
|
95
|
|
|
(150)
|
|
|
15
|
|
|
(158)
|
|
|
Income tax (benefit)
expense from continuing operations
|
(32)
|
|
|
33
|
|
|
(23)
|
|
|
—
|
|
|
(22)
|
|
|
Equity in earnings of
unconsolidated entities
|
(1)
|
|
|
(7)
|
|
|
(7)
|
|
|
(3)
|
|
|
(18)
|
|
|
Net (loss) income
from continuing operations
|
(85)
|
|
|
69
|
|
|
(120)
|
|
|
18
|
|
|
(118)
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from
discontinued operations, net of tax
|
(14)
|
|
|
1
|
|
|
8
|
|
|
(2)
|
|
|
(7)
|
|
|
Estimated loss on the
sale of discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(60)
|
|
|
(60)
|
|
|
Net (loss) income
from discontinued operations
|
(14)
|
|
|
1
|
|
|
8
|
|
|
(62)
|
|
|
(67)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
(99)
|
|
|
70
|
|
|
(112)
|
|
|
(44)
|
|
|
(185)
|
|
|
Less: Net income
attributable to noncontrolling interests
|
—
|
|
|
(1)
|
|
|
(1)
|
|
|
(1)
|
|
|
(3)
|
|
|
Net (loss) income
attributable to Realogy Holdings
|
$
|
(99)
|
|
|
$
|
69
|
|
|
$
|
(113)
|
|
|
$
|
(45)
|
|
|
$
|
(188)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss)
earnings per share attributable to Realogy Holdings
shareholders:
|
|
|
|
Basic (loss) earnings
per share from continuing operations
|
$
|
(0.75)
|
|
|
$
|
0.59
|
|
|
$
|
(1.06)
|
|
|
$
|
0.15
|
|
|
$
|
(1.06)
|
|
|
Basic (loss) earnings
per share from discontinued operations
|
(0.12)
|
|
|
0.01
|
|
|
0.07
|
|
|
(0.54)
|
|
|
(0.59)
|
|
|
Basic (loss) earnings
per share
|
$
|
(0.87)
|
|
|
$
|
0.60
|
|
|
(0.99)
|
|
|
(0.39)
|
|
|
(1.65)
|
|
|
Diluted (loss)
earnings per share attributable to Realogy Holdings
shareholders:
|
|
|
|
Diluted (loss)
earnings per share from continuing operations
|
$
|
(0.75)
|
|
|
$
|
0.59
|
|
|
$
|
(1.06)
|
|
|
$
|
0.15
|
|
|
$
|
(1.06)
|
|
|
Diluted (loss)
earnings per share from discontinued operations
|
(0.12)
|
|
|
0.01
|
|
|
0.07
|
|
|
(0.54)
|
|
|
(0.59)
|
|
|
Diluted (loss) earnings
per share
|
$
|
(0.87)
|
|
|
$
|
0.60
|
|
|
$
|
(0.99)
|
|
|
$
|
(0.39)
|
|
|
$
|
(1.65)
|
|
|
Weighted average
common and common equivalent shares of Realogy Holdings
outstanding:
|
|
|
|
|
|
|
|
Basic
|
114.0
|
|
|
114.3
|
|
|
114.3
|
|
|
114.3
|
|
|
114.2
|
|
|
Diluted
|
114.0
|
|
|
114.9
|
|
|
114.3
|
|
|
114.3
|
|
|
114.2
|
|
|
Table
7
|
|
|
REALOGY HOLDINGS
CORP.
NON-GAAP
RECONCILIATION - FREE CASH FLOW AND
FREE CASH FLOW
INCLUDING DISCONTINUED OPERATIONS
THREE AND SIX
MONTHS ENDED JUNE 30, 2020 AND 2019
(In
millions)
|
|
|
A reconciliation of
net (loss) income attributable to Realogy Holdings to Free Cash
Flow and Free Cash Flow including discontinued operations is set
forth in the following table:
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Net (loss) income
attributable to Realogy Holdings
|
$
|
(14)
|
|
|
$
|
69
|
|
|
$
|
(476)
|
|
|
$
|
(30)
|
|
|
Less: Net (loss)
income from discontinued operations
|
(41)
|
|
|
1
|
|
|
(68)
|
|
|
(13)
|
|
|
Net income (loss)
from continuing operations attributable to Realogy
Holdings
|
27
|
|
|
68
|
|
|
(408)
|
|
|
(17)
|
|
|
Income tax expense
(benefit), net of payments
|
11
|
|
|
28
|
|
|
(121)
|
|
|
(5)
|
|
|
Interest expense,
net
|
59
|
|
|
80
|
|
|
160
|
|
|
143
|
|
|
Cash interest
payments
|
(84)
|
|
|
(58)
|
|
|
(102)
|
|
|
(95)
|
|
|
Depreciation and
amortization
|
46
|
|
|
43
|
|
|
91
|
|
|
84
|
|
|
Capital
expenditures
|
(17)
|
|
|
(28)
|
|
|
(41)
|
|
|
(50)
|
|
|
Restructuring costs
and former parent legacy items, net of payments
|
4
|
|
|
(1)
|
|
|
5
|
|
|
(1)
|
|
|
Impairments
|
7
|
|
|
2
|
|
|
454
|
|
|
3
|
|
|
Loss on the early
extinguishment of debt
|
8
|
|
|
—
|
|
|
8
|
|
|
5
|
|
|
Working capital
adjustments
|
45
|
|
|
44
|
|
|
(52)
|
|
|
(4)
|
|
|
Free Cash
Flow
|
106
|
|
|
178
|
|
|
(6)
|
|
|
63
|
|
|
Contribution from
discontinued operations
|
(59)
|
|
|
(31)
|
|
|
(102)
|
|
|
(88)
|
|
|
Free Cash Flow
including discontinued operations
|
$
|
47
|
|
|
$
|
147
|
|
|
$
|
(108)
|
|
|
$
|
(25)
|
|
|
|
A reconciliation of
net cash (used in) provided by operating activities to Free Cash
Flow and Free Cash Flow including discontinued operations is set
forth in the following table:
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Net cash provided
by operating activities
|
$
|
115
|
|
|
$
|
159
|
|
|
$
|
33
|
|
|
$
|
56
|
|
|
Less: Net cash used
in operating activities from discontinued operations
|
(7)
|
|
|
(47)
|
|
|
(2)
|
|
|
(57)
|
|
|
Net cash provided by
operating activities from continuing operations
|
122
|
|
|
206
|
|
|
35
|
|
|
113
|
|
|
Property and
equipment additions
|
(17)
|
|
|
(28)
|
|
|
(41)
|
|
|
(50)
|
|
|
Effect of exchange
rates on cash and cash equivalents
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Free Cash
Flow
|
106
|
|
|
178
|
|
|
(6)
|
|
|
63
|
|
|
Contribution from
discontinued operations
|
(59)
|
|
|
(31)
|
|
|
(102)
|
|
|
(88)
|
|
|
Free Cash Flow
including discontinued operations
|
$
|
47
|
|
|
$
|
147
|
|
|
$
|
(108)
|
|
|
$
|
(25)
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
investing activities
|
$
|
(24)
|
|
|
$
|
(39)
|
|
|
$
|
(63)
|
|
|
$
|
(62)
|
|
|
Net cash (used in)
provided by financing activities
|
$
|
(32)
|
|
|
$
|
(88)
|
|
|
$
|
468
|
|
|
$
|
46
|
|
|
Table
8a
|
|
|
NON-GAAP
RECONCILIATION - SENIOR SECURED LEVERAGE RATIO
FOR THE
FOUR-QUARTER PERIOD ENDED JUNE 30, 2020
(In
millions)
|
|
|
The senior secured
leverage ratio is tested quarterly and may not exceed 4.75 to 1.00
pursuant to the terms of the senior secured credit
facilities*. 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*, 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,
2020 with a ratio of 3.29 to 1.00.
|
|
|
A reconciliation of
net loss attributable to Realogy Group to Operating EBITDA
including discontinued operations 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,
2020 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,
2019
|
|
June 30,
2019
|
|
December
31,
2019
|
|
June 30,
2020
|
|
June 30,
2020
|
|
Net loss attributable
to Realogy Group (a)
|
$
|
(188)
|
|
|
$
|
(30)
|
|
|
$
|
(158)
|
|
|
$
|
(476)
|
|
|
$
|
(634)
|
|
|
Income tax (benefit)
expense
|
(22)
|
|
|
1
|
|
|
(23)
|
|
|
(121)
|
|
|
(144)
|
|
|
Loss before income
taxes
|
(210)
|
|
|
(29)
|
|
|
(181)
|
|
|
(597)
|
|
|
(778)
|
|
|
Depreciation and
amortization
|
169
|
|
|
84
|
|
|
85
|
|
|
91
|
|
|
176
|
|
|
Interest expense,
net
|
249
|
|
|
143
|
|
|
106
|
|
|
160
|
|
|
266
|
|
|
Restructuring costs,
net
|
42
|
|
|
18
|
|
|
24
|
|
|
25
|
|
|
49
|
|
|
Impairments
|
249
|
|
|
3
|
|
|
246
|
|
|
454
|
|
|
700
|
|
|
Former parent legacy
cost, net
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
(Gain) loss on the
early extinguishment of debt
|
(5)
|
|
|
5
|
|
|
(10)
|
|
|
8
|
|
|
(2)
|
|
|
Income statement
impact of discontinued operations
|
95
|
|
|
17
|
|
|
78
|
|
|
66
|
|
|
144
|
|
|
Operating
EBITDA including discontinued operations (b)
|
590
|
|
|
241
|
|
|
349
|
|
|
207
|
|
|
556
|
|
|
Bank covenant
adjustments:
|
|
|
|
Operating EBITDA for
discontinued operations (c)
|
|
(22)
|
|
|
Pro forma effect of
business optimization initiatives (d)
|
44
|
|
|
Non-cash charges
(e)
|
|
29
|
|
|
Pro forma effect of
acquisitions and new franchisees (f)
|
|
6
|
|
|
Costs expensed related
to the disposition
|
|
3
|
|
|
EBITDA as
defined by the Senior Secured Credit Agreement
|
|
$
|
616
|
|
|
Total senior secured
net debt (g)
|
|
$
|
2,026
|
|
|
Senior secured
leverage ratio
|
|
3.29
|
x
|
|
|
|
|
|
|
|
(a) Net loss
attributable to Realogy consists of: (i) loss of $113 million for
the third quarter of 2019, (ii) loss of $45 million for the fourth
quarter of 2019, (iii) loss of $462 million for the first quarter
of 2020 and (iv) loss of $14 million for the second quarter of
2020.
|
|
(b) Consists of
Operating EBITDA including discontinued operations of: (i) $223
million for the third quarter of 2019, (ii) $126 million for the
fourth quarter of 2019, (iii) $32 million for the first quarter of
2020 and (iv) $175 million for the second quarter of
2020.
|
|
(c) Represents
the Operating EBITDA for Cartus Relocation. If the Operating
EBITDA of Cartus Relocation were to be included in EBITDA as
defined by the Senior Secured Credit Agreement, the Senior Secured
Leverage Ratio would improve to 3.18x from 3.29x.
|
|
(d) Represents
the four-quarter pro forma effect of business optimization
initiatives.
|
|
(e) Represents
the elimination of non-cash expenses including $24 million of
stock-based compensation expense and $5 million for the change
in the allowance for doubtful accounts and notes reserves for the
four-quarter period ended June 30, 2020.
|
|
(f) 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, 2019. 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, 2019.
|
|
(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 $2,571 million plus $34
million of finance lease obligations less $579 million of readily
available cash as of June 30, 2020. 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.
|
|
* 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, as amended from
time to time. Our Senior Secured Second Lien Notes include
our 7.625% Senior Secured Second Lien Notes due 2025. Our
Unsecured Notes include our 4.875% Senior Notes due 2023 and our
9.375% Senior Notes due 2027.
|
|
Table
8b
|
|
|
NET DEBT LEVERAGE
RATIO
FOR THE
FOUR-QUARTER PERIOD ENDED JUNE 30, 2020
(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,
2020 (referred to as net debt leverage ratio) is set forth in the
following table:
|
|
|
|
As of
June 30, 2020
|
|
Revolver
|
|
$
|
815
|
|
|
Term Loan
A
|
|
703
|
|
|
Term Loan
B
|
|
1,053
|
|
|
7.625% Senior Secured
Second Lien Notes
|
|
550
|
|
|
4.875% Senior
Notes
|
|
407
|
|
|
9.375% Senior
Notes
|
|
550
|
|
|
Finance lease
obligations
|
|
34
|
|
|
Corporate Debt
(excluding securitizations)
|
|
4,112
|
|
|
Less: Cash and cash
equivalents
|
|
686
|
|
|
Net Corporate Debt
(excluding securitizations)
|
|
$
|
3,426
|
|
|
|
|
|
EBITDA as defined by
the Senior Secured Credit Agreement (a)
|
|
$
|
616
|
|
|
|
|
|
Net Debt
Leverage Ratio(b)
|
|
5.6
|
x
|
|
|
|
|
|
|
|
(a) See Table
8a for a reconciliation of Net loss 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 and net income (loss) from discontinued
operations. 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, 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.
Operating EBITDA including discontinued operations includes
Operating EBITDA, as defined above plus the Operating EBITDA
contribution from discontinued operations on the same basis.
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 and working
capital adjustments. Free Cash Flow including
discontinued operations includes Free Cash Flow, as defined above
plus the Free Cash Flow contribution from discontinued operations
on the same basis. 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.
We present Operating EBITDA including discontinued operations
and Free Cash Flow including discontinued operations to facilitate
period over period results, however, these non-GAAP terms are
subject to the same limitations noted above for Operating EBITDA
and Free Cash Flow and, in addition, include the add-back of
earnings and cash from discontinued operations, which is not
indicative of the results of our continuing operations.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/realogy-reports-second-quarter-2020-financial-results-301103489.html
SOURCE Realogy Holdings Corp.