Realogy Board of Directors Authorizes Stock Repurchase Program of up to 48 Million Shares
August 23 2006 - 5:26PM
PR Newswire (US)
- Repurchase Plan for Approximately 19 Percent of Outstanding
Shares PARSIPPANY, N.J., Aug. 23 /PRNewswire-FirstCall/ -- Realogy
Corporation (NYSE:H), the world's largest real estate franchisor,
today announced that its Board of Directors has authorized the
repurchase of up to 48 million shares of its common stock, which
equates to approximately 19 percent of its 250 million total shares
outstanding. Realogy expects to fund its share repurchase program
principally from its estimated $1.4 billion share in the proceeds
from the sale of Travelport that was completed earlier today by
Cendant Corporation (NYSE:CD), Realogy's former parent company.
Approximately $1 billion of the estimated Travelport proceeds will
be for the repurchase program with any remaining proceeds being
applied to reduce Realogy's unsecured debt. "This stock repurchase
program demonstrates our confidence in the long- term growth of the
Company and our strong free cash flow," said Henry R. Silverman,
Realogy's chairman and CEO. "We believe our shares are mispriced by
the market, and the Board felt that the best investment we can make
with the Travelport proceeds is our own stock." Realogy's stock
repurchases under this program may be made through one or more open
market repurchases, accelerated share purchase programs and/or
issuer self-tender offers. Realogy anticipates that its repurchase
program will last through the end of 2006, although the timing and
actual number of shares repurchased will depend on a variety of
factors including price, corporate and regulatory requirements and
other market conditions. Realogy expects that the share repurchase
program will benefit 2007 earnings per share by 7% to 10%, although
the actual impact will depend on numerous factors including, but
not limited to: the number of shares actually repurchased; the
average price paid for such repurchased shares; the interest cost
on the debt funding the share repurchase; and the timing of such
purchases. Realogy also announced today that it is reducing its
full-year projections for 2006 (see Table 1). The 2006 full-year
revenue and EBITDA outlook is now expected to be $6.4 billion to
$6.7 billion and $800 million to $900 million, respectively. The
new EBITDA range includes five months of Realogy standalone
corporate costs and excludes 2006 separation and restructuring
costs as well as Realogy's share of residual Cendant corporate
expenses. Net income for the year on the same basis and after
giving effect to the completion of the share repurchase program
indicated above is estimated at $345 million to $415 million, or
$1.42 to $1.75 per share. Without giving effect to these
adjustments but reflecting the contemplated share repurchase, GAAP
net income for the year is estimated at $250 million to $340
million, or $1.03 to $1.43 per share. Richard A. Smith, Realogy's
Vice Chairman and President, commented: "We have now analyzed our
open contracts pipeline, which impacts closed sales volume in
August through October, and this data reflects a slower than
expected second half. This moderation is further confirmed by the
15 percent annual decline in national purchase mortgage
applications that was reported in July. As a result, we have
reduced our estimates for the remainder of 2006. "The long-term
economic fundamentals that encourage continued growth in the
residential real estate market remain intact; however, Realogy
believes that consumer concerns have weighed more heavily on the
near term housing outlook than we expected. With dramatically
increased inventory levels versus the unsustainably low levels
experienced last year, it is clear that home buyers have more
choices and are not motivated to move quickly. Likewise, sellers
continue to be reluctant to come to terms with the changing market
dynamics. This disconnect has resulted in slower sales volume
nationally, although price remains up year over year." Mr. Smith
also stated, "Realogy remains bullish on the long-term growth in
existing home sales, and we believe that we have built a company to
capitalize on the strong economic and demographic forces that will
continue to drive the growth of our business and earnings over the
foreseeable future." After giving effect to the proceeds from the
sale of Travelport and the completion of the contemplated share
repurchase program, Realogy estimates that it will have total
corporate debt outstanding of approximately $2 billion. Investor
Conference Call Realogy will host a conference call to discuss
these announcements later today -- Wednesday, August 23, 2006, at
5:00 p.m. (EDT). Investors may access the call live at
http://www.realogy.com/ or by dialing (888) 577-8991 and
referencing "Realogy;" international participants should dial (210)
234-0010. Please dial in at least 5-10 minutes prior to start time.
A web replay will be available at http://www.realogy.com/ following
the call. A telephone replay will be available from 8:00 p.m. (EDT)
on August 23, 2006 until 10:00 p.m. (EDT) on August 30, 2006 at
(888) 554-3830; international participants should dial (203)
369-3165. The pass code for the replay is 7325649. Table 1,
"Realogy's Full-Year Guidance for 2006," Follows Forward-Looking
Statements About Realogy Realogy Corporation (NYSE:H), the world's
largest real estate franchisor, has a diversified business model
that also includes real estate brokerage, relocation and title
services. Realogy's world-renowned brands and business units
include Century 21(R), Coldwell Banker(R), Coldwell Banker
Commercial(R), ERA(R), Sotheby's International Realty(R), NRT
Incorporated, Cartus and Title Resource Group. Headquartered in
Parsippany, N.J., Realogy (http://www.realogy.com/) has more than
15,000 employees worldwide. Forward-Looking Statements Certain
statements in this press release constitute "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of Realogy
Corporation ("Realogy") 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," "plans," "may
increase," "may fluctuate" 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. Various factors that could affect our
future results and could cause actual results to differ materially
from those expressed in such forward- looking statements include
but are not limited to adverse developments in general business,
economic and political conditions or any outbreak or escalation of
hostilities on a national, regional or international basis, a
decline in the number of home sales and/or prices, local and
regional conditions in the areas where our franchisees and
brokerage operations are located, our inability to access capital
and/or asset backed markets on favorable terms, and risks inherent
in Realogy's separation from Cendant and the related transactions.
The Company can give no assurance that the share repurchase program
will be completed or that Realogy will derive the benefits
contemplated by the program. In light of these risks,
uncertainties, assumptions and factors, the forward-looking events
discussed in this press release may not occur. You are cautioned
not to place undue reliance on these forward-looking statements,
which speak only as of the date stated, or if no date is stated, as
of the date of this press release. Important assumptions and other
important factors that could cause actual results to differ
materially from those in the forward looking statements are
specified in Realogy's filings with the Securities and Exchange
Commission (the "SEC"), including Realogy's Information Statement
dated July 13, 2006 and its Quarterly Report on Form 10-Q for the
three months ended June 30, 2006 under headings such as "Risk
Factors," "Forward-Looking Statements" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
Except for Realogy's ongoing obligations to disclose material
information under the federal securities laws, Realogy undertakes
no obligation to release any revisions to any forward-looking
statements, to report events or to report the occurrence of
unanticipated events unless required by law. 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 on Table 1 attached to this release. This
press release is for informational purposes only and is neither an
offer to purchase nor a solicitation of an offer to sell shares. In
the event that Realogy determines to commence any tender offer,
such tender offer would be made solely pursuant to an offer to
purchase, related letter of transmittal, and any amendments or
supplements thereto, which would be filed as exhibits to a Schedule
TO filed with the SEC. In such event, stockholders would be advised
to carefully read the Schedule TO and its exhibits, when filed,
because they would contain important information, including the
terms and conditions of any tender offer. Upon filing, stockholders
would be able to obtain copies of these documents from the SEC's
website at http://www.sec.gov/ without charge or from
http://www.realogy.com/ at no cost. TABLE 1: Realogy's Full-Year
Guidance for 2006 (Assumes share repurchase of 48 million shares at
estimated $20.23 per share) (1) Low High --- ---- Key Revenue
Drivers ------------------- Real Estate Franchise Services (RFG)
Closed Homesale Sides 1,477,700 1,576,800 Average Homesale Price
$231,000 $232,000 Company Owned Real Estate Brokerage (NRT) Closed
Homesale Sides 395,000 406,000 Average Homesale Price $491,300
$493,300 (dollars in millions, except earnings per share) Total
Realogy Revenue $6,400 $6,700 EBITDA ------ Real Estate Franchise
Services (RFG) $615 $645 Company Owned Real Estate Brokerage
Services (NRT) 50 90 Relocation Services (Cartus) 110 120 Title and
Settlement Services (TRG) 45 55 ---- ---- Total Operations 820 910
Corporate & Other (20) (10) ---- ---- Total Realogy EBITDA $800
$900 Cendant Residual Costs (2) (10) (10) ---- ---- Total EBITDA
(3) (4) $790 $890 Depreciation & Amortization (5) (160) (150)
Net Interest Expense (1) (60) (50) ---- ---- Income before income
taxes and minority interest (3) 570 690 Provision for Income Taxes
(220) (270) Minority Interest, Net of tax (5) (5) ---- ---- Net
Income (3) $345 $415 ---- ---- Earnings per Share (3) $1.42 $1.75
Fully Diluted Shares Outstanding (mm) (1)(6) 243 237 Other Items
Impacting 2006 Free Cash Flow (7)
----------------------------------------- Capital Expenditures (8)
($105) ($135) Acquisitions (225) (275) Working Capital and Other
Uses (9) (30) (60) Notes: (1) Based on repurchasing 48 million
shares at assumed share price of $20.23, which was Realogy's
closing price on August 23, 2006. Further, the repurchase is
assumed to be funded with debt with an interest cost of 6% and
assumed to be completed by December 31, 2006. (2) Cendant residual
costs include our former parent Cendant's legal, investigation and
other charges that are not related to the operations of Realogy.
(3) Excluding separation and restructuring costs estimated at
$120-$155 pretax ($75-$95 million after tax), the majority of which
are non-cash expenditures and reflected in "Working Capital and
Other Uses". (4) EBITDA represents net income before depreciation
and amortization, interest expense (other than interest expense
relating to secured obligations), income taxes and minority
interest. We believe EBITDA is useful as a supplemental measure in
evaluating performance of our operating businesses and provides
greater transparency into our combined results of operations.
EBITDA is the measure used by our management, including our chief
operating decision maker, to perform such evaluation, and it is a
factor in measuring compliance with debt covenants relating to
secured borrowing arrangements within our relocation business.
EBITDA should not be considered in isolation or as a substitute for
net income or other income statement data prepared in accordance
with generally accepted accounting principles and our presentation
of EBITDA may not be comparable to similarly titled measures used
by other companies. (5) Includes amortization of Pendings and
Listings. (6) The fully diluted share range shown here assumes the
completion of the repurchase of 48 million shares by the end of
2006 and reflects averaging the lower share count in the final
quarter of 2006 with the pre-repurchase higher share count during
the first three quarters of the year to determine the fully diluted
share count for the 2006 on an annual basis. In 2007, absent other
changes, we would expect that the fully diluted share count would
total approximately 205 million as a result of the completion of
the contemplated share repurchase program in the time frame
indicated. (7) Free Cash Flow represents Net Cash Provided by
Operating Activities adjusted to include the cash inflows and
outflows relating to (i) capital expenditures, (ii) acquisitions
and (iii) working capital and other cash uses. We believe that Free
Cash Flow is useful to management and the Company's investors in
measuring the cash generated by the Company that is currently
contemplated to be available to repurchase stock and repay debt
obligations. Free Cash Flow should not be construed as a substitute
in measuring operating results or liquidity, and our presentation
of Free Cash Flow may not be comparable to similarly titled
measures used by other companies. We do not provide a
reconciliation of Free Cash Flow to the most directly comparable
measure under GAAP (Net Cash Provided by Operating Activities), as
we do not project all of the items that would be necessary to
provide such reconciliation. (8) Capital expenditures will include
approximately $20-$25 million of restructuring and
separation-related expenditures. (9) Includes after-tax separation
and restructuring cash costs and estimated contingent Cendant
liability payments of $50-$70 million as well as adjustments to
reflect cash tax payments that are lower than our GAAP Provision
for Income Taxes and changes in secured assets and liabilities and
other cash adjustments. DATASOURCE: Realogy Corporation CONTACT:
Media - Mark Panus, +1-973-407-7215, , or Kevin Doell,
+1-973-407-6653, , or Investor Relations - Henry A. Diamond,
+1-973-407-2710, all for Realogy Corporation Web site:
http://www.realogy.com/
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