MADISON, N.J., Oct. 28, 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 September 30, 2021.
"Realogy delivered powerful third quarter results with terrific
top- and bottom-line performance, market share gains for the fifth
consecutive quarter, impressive free cash flow, and an even
stronger capital structure," said Ryan
Schneider, Realogy's chief executive officer and president.
"We are excited by our strategic progress throughout 2021,
especially across Realogy's market-leading luxury positions,
differentiated RealSure venture, and continued technology
innovation as we proactively transform the future of real
estate."
"In the third quarter, Realogy drove excellent financial
performance, delivering $273 million
in Operating EBITDA and generating $282
million of free cash flow, as we significantly strengthened
our capital structure," said Charlotte
Simonelli, Realogy's executive vice president, chief
financial officer, and treasurer. "Realogy is making incredible
progress, proactively repaying $435
million of debt in September, consistently delivering
quality financial results, and strategically investing to unlock
additional value for shareholders."
Third Quarter 2021 Highlights
- Generated Revenue of $2.2
billion, an increase of 15% or $277
million year-over-year.
- Reported Net income of $114
million and basic earnings per share of $0.98, an increase of $16
million or $0.13 per share vs.
prior year.
- Generated Operating EBITDA of $273
million, a decrease of $40
million year-over-year. The third quarter of 2020 included
approximately $40 million in
temporary cost savings (See Table 5a).
- Net Debt Leverage Ratio of 2.3x and Senior Secured Leverage
Ratio of negative 0.27x at September 30,
2021 (See Tables 8a and
8b).
- Repaid $435 million of debt,
including all outstanding Term Loan B and the non-extended portion
of the Term Loan A.
- Reported Free Cash Flow of $282
million in the third quarter of 2021 and $458 million year to date September 30, 2021 (See Table 7).
- Combined closed transaction volume increased 12% year-over-year
in the third quarter of 2021 driving market share gains for the
fifth consecutive quarter. Our transaction volume growth was above
the 9% year-over-year market volume growth reported by the National
Association of Realtors (NAR).
- Owned Brokerage agent count grew 5% year-over-year, with growth
for the 5th consecutive quarter, 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 90% of the target savings and
$70 million realized in the income
statement through September 30,
2021.
Third 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
September 30,
|
|
2021
|
|
2020
|
|
Change
|
|
%
Change
|
Revenue
|
$
|
2,186
|
|
|
$
|
1,909
|
|
|
$
|
277
|
|
|
15
|
%
|
Operating EBITDA
1
|
273
|
|
|
313
|
|
|
(40)
|
|
|
(13)
|
|
Net income
attributable to Realogy
|
114
|
|
|
98
|
|
|
16
|
|
|
16
|
|
Adjusted net income
2
|
119
|
|
|
162
|
|
|
(43)
|
|
|
(27)
|
|
Earnings per
share
|
0.98
|
|
|
0.85
|
|
|
0.13
|
|
|
15
|
|
Adjusted earnings per
share 2
|
1.02
|
|
|
1.40
|
|
|
(0.38)
|
|
|
(27)
|
|
Free Cash Flow
3
|
282
|
|
|
395
|
|
|
(113)
|
|
|
(29)
|
|
Net cash provided by
operating activities
|
$
|
303
|
|
|
$
|
385
|
|
|
$
|
(82)
|
|
|
(21)
|
%
|
|
|
|
|
|
|
|
|
Select Key
Drivers
|
|
|
|
|
|
|
|
Realogy Franchise
Group 4 5
|
|
|
|
|
|
|
|
Closed homesale
sides
|
316,195
|
|
|
336,737
|
|
|
|
|
(6)
|
%
|
Average homesale
price
|
$
|
427,052
|
|
|
$
|
367,095
|
|
|
|
|
16
|
%
|
Realogy Brokerage
Group 5
|
|
|
|
|
|
|
|
Closed homesale
sides
|
101,536
|
|
|
101,890
|
|
|
|
|
—
|
%
|
Average homesale
price
|
$
|
662,006
|
|
|
$
|
563,513
|
|
|
|
|
17
|
%
|
Realogy Title
Group
|
|
|
|
|
|
|
|
Purchase title and
closing units
|
47,004
|
|
|
45,788
|
|
|
|
|
3
|
%
|
Refinance title and
closing units
|
12,836
|
|
|
18,387
|
|
|
|
|
(30)
|
%
|
_______________
|
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 12%
compared with the third quarter of 2020.
|
Balance Sheet and Capital Allocation
The Company ended
the third quarter of 2021 with cash and cash equivalents of
$701 million*. Total corporate debt,
including the short-term portion, net of cash and cash equivalents
(net corporate debt), totaled $2.4
billion at September 30, 2021. The Company's Net Debt
Leverage Ratio was 2.3x at September 30, 2021 (see Table
8b).
On September 16, 2021, we used
cash on hand to repay an aggregate of $435
million of secured debt which included approximately
$197 million in principal amount of
outstanding borrowings under the Term Loan A Facility (representing
all of the remaining Non-Extended Term Loan A) and approximately
$238 million in principal amount of
outstanding borrowings under the Term Loan B Facility (representing
all of the remaining Term Loan B).
A consolidated balance sheet is included as Table 2 of this
press release.
______________
|
* excludes restricted
cash
|
Investor Conference Call
Today, October 28, at
8:30 a.m. (ET), Realogy will hold a
conference call via webcast to review its Q3 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 196,600 independent sales agents in the U.S. and
approximately 140,800 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 four years in a row,
named one of LinkedIn's 2021 Top Companies in the U.S., and honored
on the Forbes list of World's Best Employers 2021.
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, our planned
title underwriting 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, or complications
in our relationships with, 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
refinancing activity or corporate relocations or relocation
benefits; 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,
consent decrees, administrative policies, litigation or other legal
action, 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 quarters ended March 31, 2021 and June
30, 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 quarters ended March 31,
2021 and June 30, 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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenues
|
|
|
|
|
|
|
|
Gross commission
income
|
$
|
1,689
|
|
|
$
|
1,458
|
|
|
$
|
4,616
|
|
|
$
|
3,227
|
|
Service
revenue
|
315
|
|
|
281
|
|
|
878
|
|
|
702
|
|
Franchise
fees
|
139
|
|
|
133
|
|
|
391
|
|
|
289
|
|
Other
|
43
|
|
|
37
|
|
|
124
|
|
|
114
|
|
Net
revenues
|
2,186
|
|
|
1,909
|
|
|
6,009
|
|
|
4,332
|
|
Expenses
|
|
|
|
|
|
|
|
Commission and other
agent-related costs
|
1,309
|
|
|
1,105
|
|
|
3,567
|
|
|
2,420
|
|
Operating
|
424
|
|
|
380
|
|
|
1,230
|
|
|
1,068
|
|
Marketing
|
69
|
|
|
55
|
|
|
193
|
|
|
155
|
|
General and
administrative
|
120
|
|
|
108
|
|
|
324
|
|
|
265
|
|
Former parent legacy
cost, net
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Restructuring costs,
net
|
4
|
|
|
17
|
|
|
14
|
|
|
47
|
|
Impairments
|
1
|
|
|
70
|
|
|
3
|
|
|
610
|
|
Depreciation and
amortization
|
50
|
|
|
43
|
|
|
152
|
|
|
134
|
|
Interest expense,
net
|
52
|
|
|
48
|
|
|
147
|
|
|
208
|
|
Loss on the early
extinguishment of debt
|
3
|
|
|
—
|
|
|
21
|
|
|
8
|
|
Other loss (income),
net
|
1
|
|
|
—
|
|
|
(17)
|
|
|
—
|
|
Total
expenses
|
2,033
|
|
|
1,827
|
|
|
5,635
|
|
|
4,916
|
|
Income (loss)
before income taxes, equity in earnings and
noncontrolling interests
|
153
|
|
|
82
|
|
|
374
|
|
|
(584)
|
|
Income tax expense
(benefit)
|
48
|
|
|
36
|
|
|
125
|
|
|
(110)
|
|
Equity in earnings of
unconsolidated entities
|
(11)
|
|
|
(53)
|
|
|
(52)
|
|
|
(98)
|
|
Net income
(loss)
|
116
|
|
|
99
|
|
|
301
|
|
|
(376)
|
|
Less: Net income
attributable to noncontrolling interests
|
(2)
|
|
|
(1)
|
|
|
(5)
|
|
|
(2)
|
|
Net income (loss)
attributable to Realogy Holdings
|
$
|
114
|
|
|
$
|
98
|
|
|
$
|
296
|
|
|
$
|
(378)
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per share attributable to Realogy Holdings
shareholders:
|
Basic earnings (loss)
per share
|
$
|
0.98
|
|
|
$
|
0.85
|
|
|
$
|
2.55
|
|
|
$
|
(3.28)
|
|
Diluted earnings
(loss) per share
|
$
|
0.95
|
|
|
$
|
0.84
|
|
|
$
|
2.46
|
|
|
$
|
(3.28)
|
|
Weighted average
common and common equivalent shares of Realogy Holdings
outstanding:
|
Basic
|
116.6
|
|
|
115.4
|
|
|
116.3
|
|
|
115.2
|
|
Diluted
|
120.3
|
|
|
116.7
|
|
|
120.2
|
|
|
115.2
|
|
Table 1a
REALOGY HOLDINGS CORP.
NON-GAAP
RECONCILIATION
ADJUSTED NET INCOME AND ADJUSTED EARNINGS
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 for the three and nine months
ended September 30, 2021 and 2020:
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net income (loss)
attributable to Realogy Holdings
|
$
|
114
|
|
|
$
|
98
|
|
|
$
|
296
|
|
|
$
|
(378)
|
|
Addback:
|
|
|
|
|
|
|
|
Mark-to-market
interest rate swap losses
|
(1)
|
|
|
—
|
|
|
(8)
|
|
|
59
|
|
Former parent legacy
cost, net
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Restructuring costs,
net
|
4
|
|
|
17
|
|
|
14
|
|
|
47
|
|
Impairments
(a)
|
1
|
|
|
70
|
|
|
3
|
|
|
610
|
|
Loss on the early
extinguishment of debt
|
3
|
|
|
—
|
|
|
21
|
|
|
8
|
|
Adjustments for tax
effect (b)
|
(2)
|
|
|
(24)
|
|
|
(8)
|
|
|
(196)
|
|
Adjusted net
income attributable to Realogy Holdings
|
$
|
119
|
|
|
$
|
162
|
|
|
$
|
319
|
|
|
$
|
151
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per share attributable to Realogy Holdings:
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share:
|
$
|
0.98
|
|
|
$
|
0.85
|
|
|
$
|
2.55
|
|
|
$
|
(3.28)
|
|
Diluted earnings
(loss) per share:
|
$
|
0.95
|
|
|
$
|
0.84
|
|
|
$
|
2.46
|
|
|
$
|
(3.28)
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
per share attributable to Realogy Holdings:
|
|
|
|
|
Adjusted basic
earnings per share:
|
$
|
1.02
|
|
|
$
|
1.40
|
|
|
$
|
2.74
|
|
|
$
|
1.31
|
|
Adjusted diluted
earnings per share:
|
$
|
0.99
|
|
|
$
|
1.39
|
|
|
$
|
2.65
|
|
|
$
|
1.31
|
|
|
|
|
|
|
|
|
|
Weighted average
common and common equivalent shares outstanding:
|
|
|
Basic:
|
116.6
|
|
|
115.4
|
|
|
116.3
|
|
|
115.2
|
|
Diluted:
|
120.3
|
|
|
116.7
|
|
|
120.2
|
|
|
115.2
|
|
|
|
_______________
|
(a)
|
Non-cash impairments
for the nine months ended September 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
|
|
•
|
$133 million of
impairment charges during the nine months ended September 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)
|
|
|
September
30,
2021
|
|
December
31,
2020
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
701
|
|
|
$
|
520
|
|
Restricted
cash
|
5
|
|
|
3
|
|
Trade receivables (net
of allowance for doubtful accounts of $11 and $13)
|
140
|
|
|
128
|
|
Relocation
receivables
|
185
|
|
|
139
|
|
Other current
assets
|
194
|
|
|
154
|
|
Total current
assets
|
1,225
|
|
|
944
|
|
Property and
equipment, net
|
302
|
|
|
317
|
|
Operating lease
assets, net
|
448
|
|
|
450
|
|
Goodwill
|
2,899
|
|
|
2,910
|
|
Trademarks
|
685
|
|
|
685
|
|
Franchise agreements,
net
|
1,038
|
|
|
1,088
|
|
Other intangibles,
net
|
175
|
|
|
188
|
|
Other non-current
assets
|
421
|
|
|
352
|
|
Total
assets
|
$
|
7,193
|
|
|
$
|
6,934
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
125
|
|
|
$
|
128
|
|
Securitization
obligations
|
146
|
|
|
106
|
|
Current portion of
long-term debt
|
9
|
|
|
62
|
|
Current portion of
operating lease liabilities
|
126
|
|
|
129
|
|
Accrued expenses and
other current liabilities
|
661
|
|
|
600
|
|
Total current
liabilities
|
1,067
|
|
|
1,025
|
|
Long-term
debt
|
2,938
|
|
|
3,145
|
|
Long-term operating
lease liabilities
|
418
|
|
|
430
|
|
Deferred income
taxes
|
353
|
|
|
276
|
|
Other non-current
liabilities
|
289
|
|
|
291
|
|
Total
liabilities
|
5,065
|
|
|
5,167
|
|
Commitments and
contingencies
|
|
|
|
Equity:
|
|
|
|
Realogy Holdings
preferred stock: $0.01 par value; 50,000,000 shares authorized,
none
issued and outstanding at September 30, 2021 and
December 31, 2020
|
—
|
|
|
—
|
|
Realogy Holdings
common stock: $0.01 par value; 400,000,000 shares authorized,
116,586,201 shares issued and outstanding at September 30,
2021 and 115,457,067
shares issued and outstanding at December 31, 2020
|
1
|
|
|
1
|
|
Additional paid-in
capital
|
4,939
|
|
|
4,876
|
|
Accumulated
deficit
|
(2,759)
|
|
|
(3,055)
|
|
Accumulated other
comprehensive loss
|
(58)
|
|
|
(59)
|
|
Total stockholders'
equity
|
2,123
|
|
|
1,763
|
|
Noncontrolling
interests
|
5
|
|
|
4
|
|
Total
equity
|
2,128
|
|
|
1,767
|
|
Total liabilities
and equity
|
$
|
7,193
|
|
|
$
|
6,934
|
|
Table
3
|
|
REALOGY HOLDINGS
CORP.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In
millions)
(Unaudited)
|
|
|
|
Nine Months
Ended
September 30,
|
|
2021
|
|
2020
|
Operating
Activities
|
|
|
|
Net income
(loss)
|
$
|
301
|
|
|
$
|
(376)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
Depreciation and
amortization
|
152
|
|
|
134
|
|
Deferred income
taxes
|
76
|
|
|
(112)
|
|
Impairments
|
3
|
|
|
610
|
|
Amortization of
deferred financing costs and debt discount (premium)
|
12
|
|
|
8
|
|
Loss on the early
extinguishment of debt
|
21
|
|
|
8
|
|
Gain on the sale of
business, net
|
(14)
|
|
|
—
|
|
Equity in earnings of
unconsolidated entities
|
(52)
|
|
|
(98)
|
|
Stock-based
compensation
|
21
|
|
|
19
|
|
Mark-to-market
adjustments on derivatives
|
(8)
|
|
|
59
|
|
Other adjustments to
net income (loss)
|
(2)
|
|
|
(1)
|
|
Net change in assets
and liabilities, excluding the impact of acquisitions and
dispositions:
|
|
|
|
Trade
receivables
|
(13)
|
|
|
(24)
|
|
Relocation
receivables
|
(46)
|
|
|
2
|
|
Other
assets
|
(12)
|
|
|
15
|
|
Accounts payable,
accrued expenses and other liabilities
|
32
|
|
|
137
|
|
Dividends received
from unconsolidated entities
|
49
|
|
|
59
|
|
Other, net
|
(31)
|
|
|
(22)
|
|
Net cash provided
by operating activities
|
489
|
|
|
418
|
|
Investing
Activities
|
|
|
|
Property and
equipment additions
|
(71)
|
|
|
(69)
|
|
Proceeds from the
sale of business
|
15
|
|
|
—
|
|
Investment in
unconsolidated entities
|
(7)
|
|
|
(2)
|
|
Other, net
|
(5)
|
|
|
(13)
|
|
Net cash used in
investing activities
|
(68)
|
|
|
(84)
|
|
Financing
Activities
|
|
|
|
Net change in
Revolving Credit Facility
|
—
|
|
|
(50)
|
|
Repayments of Term
Loan A Facility and Term Loan B Facility
|
(1,490)
|
|
|
—
|
|
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
|
(8)
|
|
|
(31)
|
|
Net change in
securitization obligations
|
40
|
|
|
(62)
|
|
Debt issuance
costs
|
(20)
|
|
|
(14)
|
|
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
|
(27)
|
|
|
(34)
|
|
Net cash used in
financing activities
|
(238)
|
|
|
(203)
|
|
Effect of changes in
exchange rates on cash, cash equivalents and restricted
cash
|
—
|
|
|
—
|
|
Net increase in cash,
cash equivalents and restricted cash
|
183
|
|
|
131
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
523
|
|
|
266
|
|
Cash, cash
equivalents and restricted cash, end of period
|
$
|
706
|
|
|
$
|
397
|
|
|
|
|
|
Supplemental
Disclosure of Cash Flow Information
|
|
|
|
Interest payments
(including securitization interest of $3 and $4
respectively)
|
$
|
121
|
|
|
$
|
133
|
|
Income tax payments
(refunds), net
|
32
|
|
|
(9)
|
|
Table
4a
|
|
REALOGY HOLDINGS
CORP.
2021 vs. 2020 KEY
DRIVERS
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2021
|
|
2020
|
|
%
Change
|
|
2021
|
|
2020
|
|
%
Change
|
Realogy Franchise
Group (a)
|
|
|
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
316,195
|
|
|
336,737
|
|
|
(6)
|
%
|
|
881,356
|
|
|
778,010
|
|
|
13
|
%
|
Average homesale
price
|
$
|
427,052
|
|
|
$
|
367,095
|
|
|
16
|
%
|
|
$
|
419,223
|
|
|
$
|
341,427
|
|
|
23
|
%
|
Average homesale
broker commission rate
|
2.44
|
%
|
|
2.48
|
%
|
|
(4)
|
bps
|
|
2.46
|
%
|
|
2.48
|
%
|
|
(2)
|
bps
|
Net royalty per
side
|
$
|
401
|
|
|
$
|
367
|
|
|
9
|
%
|
|
$
|
402
|
|
|
$
|
341
|
|
|
18
|
%
|
Realogy Brokerage
Group
|
|
|
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
101,536
|
|
|
101,890
|
|
|
—
|
%
|
|
280,474
|
|
|
235,806
|
|
|
19
|
%
|
Average homesale
price
|
$
|
662,006
|
|
|
$
|
563,513
|
|
|
17
|
%
|
|
$
|
654,113
|
|
|
$
|
537,602
|
|
|
22
|
%
|
Average homesale
broker commission rate
|
2.42
|
%
|
|
2.44
|
%
|
|
(2)
|
bps
|
|
2.43
|
%
|
|
2.43
|
%
|
|
—
|
bps
|
Gross commission
income per side
|
$
|
16,633
|
|
|
$
|
14,315
|
|
|
16
|
%
|
|
$
|
16,457
|
|
|
$
|
13,685
|
|
|
20
|
%
|
Realogy Title
Group
|
|
|
|
|
|
|
|
|
|
|
|
Purchase title and
closing units
|
47,004
|
|
|
45,788
|
|
|
3
|
%
|
|
128,207
|
|
|
106,540
|
|
|
20
|
%
|
Refinance title and
closing units
|
12,836
|
|
|
18,387
|
|
|
(30)
|
%
|
|
47,775
|
|
|
44,834
|
|
|
7
|
%
|
Average fee per
closing unit
|
$
|
2,675
|
|
|
$
|
2,239
|
|
|
19
|
%
|
|
$
|
2,524
|
|
|
$
|
2,189
|
|
|
15
|
%
|
|
_______________
|
(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
SEPTEMBER 30, 2021 AND 2020
(In
millions)
|
|
Set forth in the
tables below is a reconciliation of Net income attributable to
Realogy Holdings to Operating EBITDA for the three-month periods
ended September 30, 2021 and 2020:
|
|
|
Three Months Ended
September 30,
|
|
2021
|
|
2020
|
Net income
attributable to Realogy Holdings
|
$
|
114
|
|
|
$
|
98
|
|
Income tax
expense
|
48
|
|
|
36
|
|
Income before income
taxes
|
162
|
|
|
134
|
|
Add:
Depreciation and amortization
|
50
|
|
|
43
|
|
Interest expense,
net
|
52
|
|
|
48
|
|
Restructuring costs,
net (a)
|
4
|
|
|
17
|
|
Impairments
(b)
|
1
|
|
|
70
|
|
Former parent legacy
cost, net (c)
|
—
|
|
|
1
|
|
Loss on the early
extinguishment of debt (c)
|
3
|
|
|
—
|
|
Loss on the sale of
business, net
|
1
|
|
|
—
|
|
Operating
EBITDA
|
$
|
273
|
|
|
$
|
313
|
|
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
|
|
2021
|
|
2020
|
|
|
|
2021
|
|
2020
|
|
|
|
2021
|
|
2020
|
|
Realogy Franchise
Group
|
$
|
342
|
|
|
$
|
314
|
|
|
$
|
28
|
|
|
9
|
%
|
|
$
|
211
|
|
|
$
|
200
|
|
|
$
|
11
|
|
|
6
|
%
|
|
62
|
%
|
|
64
|
%
|
|
(2)
|
|
Realogy Brokerage
Group
|
1,705
|
|
|
1,479
|
|
|
226
|
|
|
15
|
|
|
51
|
|
|
61
|
|
|
(10)
|
|
|
(16)
|
|
|
3
|
|
|
4
|
|
|
(1)
|
|
Realogy Title Group
(e)
|
250
|
|
|
213
|
|
|
37
|
|
|
17
|
|
|
54
|
|
|
95
|
|
|
(41)
|
|
|
(43)
|
|
|
22
|
|
|
45
|
|
|
(23)
|
|
Corporate and
Other
|
(111)
|
|
|
(97)
|
|
|
(14)
|
|
|
*
|
|
|
(43)
|
|
|
(43)
|
|
|
—
|
|
|
*
|
|
|
|
|
|
|
|
Total
Company
|
$
|
2,186
|
|
|
$
|
1,909
|
|
|
$
|
277
|
|
|
15
|
%
|
|
$
|
273
|
|
|
$
|
313
|
|
|
$
|
(40)
|
|
|
(13)
|
%
|
|
12
|
%
|
|
16
|
%
|
|
(4)
|
|
|
The following table
reflects Realogy Franchise and Brokerage Groups' results before
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 (f)
|
$
|
231
|
|
|
$
|
217
|
|
|
$
|
14
|
|
|
6
|
%
|
|
$
|
100
|
|
|
$
|
103
|
|
|
$
|
(3)
|
|
|
(3)
|
%
|
|
43
|
%
|
|
47
|
%
|
|
(4)
|
|
Realogy Brokerage
Group (f)
|
1,705
|
|
|
1,479
|
|
|
226
|
|
|
15
|
|
|
162
|
|
|
158
|
|
|
4
|
|
|
3
|
|
|
10
|
|
|
11
|
|
|
(1)
|
|
Realogy Franchise and
Brokerage Groups Combined
|
$
|
1,936
|
|
|
$
|
1,696
|
|
|
$
|
240
|
|
|
14
|
%
|
|
$
|
262
|
|
|
$
|
261
|
|
|
$
|
1
|
|
|
—
|
%
|
|
14
|
%
|
|
15
|
%
|
|
(1)
|
|
|
_______________
|
*
|
not
meaningful.
|
(a)
|
Restructuring charges
incurred for the three months ended September 30, 2021 include
$1 million at Realogy Franchise Group, $2 million at Realogy
Brokerage Group and $1 million at Corporate and Other.
Restructuring charges incurred for the three months ended
September 30, 2020 include $4 million at Realogy Franchise
Group, $11 million at Realogy Brokerage Group and $2 million at
Corporate and Other.
|
(b)
|
Non-cash impairments
for the three months ended September 30, 2021 primarily relate
to software impairments. Non-cash impairments for the three
months ended September 30, 2020 include $59 million of
impairment charges during the three months ended September 30,
2020 (while Cartus Relocation Services was held for sale) to reduce
the net assets to the estimated proceeds and other asset
impairments of $11 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)
|
Includes the
elimination of transactions between segments, which consists of
intercompany royalties and marketing fees paid by Realogy Brokerage
Group of $111 million and $97 million during the three months ended
September 30, 2021 and 2020, respectively.
|
(e)
|
Realogy Title Group
(RTG) includes our title, escrow and settlement services (title
agency), title insurance underwriter and mortgage origination joint
venture businesses. The title agency and title insurance
underwriter businesses represented approximately 60% and 40%,
respectively, of RTG's net revenues for the three-month period
ended September 30, 2021. Excluding the mortgage origination
joint venture from Operating EBITDA, title agency and title
insurance underwriter represented approximately 60% and 40%,
respectively of Operating EBITDA for the three-months ended
September 30, 2021. The year-over-year decline in Operating
EBITDA contribution from the mortgage origination joint venture,
from $11 million for the three-months ended September 30, 2021
compared to $51 million for the three-months ended September 30,
2020, was primarily driven by the impact of mark-to-market
adjustments on the mortgage loan pipeline, as well as gain-on-sale
margin compression and a decline in refinance volumes, partially
offset by strong purchase volume growth.
|
(f)
|
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 $111 million and $97 million during the three months ended
September 30, 2021 and 2020, respectively.
|
Table
5b
|
|
REALOGY HOLDINGS
CORP.
NON-GAAP
RECONCILIATION - OPERATING EBITDA
NINE MONTHS ENDED
SEPTEMBER 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
nine-month periods ended September 30, 2021 and
2020:
|
|
|
Nine Months Ended
September 30,
|
|
2021
|
|
2020
|
Net income (loss)
attributable to Realogy Holdings
|
$
|
296
|
|
|
$
|
(378)
|
|
Income tax expense
(benefit)
|
125
|
|
|
(110)
|
|
Income (loss) before
income taxes
|
421
|
|
|
(488)
|
|
Add:
Depreciation and amortization
|
152
|
|
|
134
|
|
Interest expense,
net
|
147
|
|
|
208
|
|
Restructuring costs,
net (a)
|
14
|
|
|
47
|
|
Impairments
(b)
|
3
|
|
|
610
|
|
Former parent legacy
cost, net (c)
|
1
|
|
|
1
|
|
Loss on the early
extinguishment of debt (c)
|
21
|
|
|
8
|
|
Gain on the sale of
business, net (d)
|
(14)
|
|
|
—
|
|
Operating
EBITDA
|
$
|
745
|
|
|
$
|
520
|
|
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
|
943
|
|
|
$
|
761
|
|
|
$
|
182
|
|
|
24
|
%
|
|
|
576
|
|
|
$
|
421
|
|
|
$
|
155
|
|
|
37
|
%
|
|
61
|
%
|
|
55
|
%
|
|
6
|
|
Realogy Brokerage
Group
|
4,667
|
|
|
3,281
|
|
|
1,386
|
|
|
42
|
|
|
|
116
|
|
|
25
|
|
|
91
|
|
|
364
|
|
|
2
|
|
|
1
|
|
|
1
|
|
Realogy Title Group
(f)
|
706
|
|
|
510
|
|
|
196
|
|
|
38
|
|
|
|
170
|
|
|
168
|
|
|
2
|
|
|
1
|
|
|
24
|
|
|
33
|
|
|
(9)
|
|
Corporate and
Other
|
(307)
|
|
|
(220)
|
|
|
(87)
|
|
|
*
|
|
|
|
(117)
|
|
|
(94)
|
|
|
(23)
|
|
|
*
|
|
|
|
|
|
|
|
Total
Company
|
$
|
6,009
|
|
|
$
|
4,332
|
|
|
$
|
1,677
|
|
|
39
|
%
|
|
|
$
|
745
|
|
|
$
|
520
|
|
|
$
|
225
|
|
|
43
|
%
|
|
12
|
%
|
|
12
|
%
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
$
|
636
|
|
|
$
|
541
|
|
|
$
|
95
|
|
|
18
|
%
|
|
$
|
269
|
|
|
$
|
201
|
|
|
$
|
68
|
|
|
34
|
%
|
|
|
42
|
%
|
|
37
|
%
|
|
5
|
|
Realogy Brokerage
Group (g)
|
4,667
|
|
|
3,281
|
|
|
1,386
|
|
|
42
|
|
|
423
|
|
|
245
|
|
|
178
|
|
|
73
|
|
|
|
9
|
|
|
7
|
|
|
2
|
|
Realogy Franchise and
Brokerage Groups Combined
|
$
|
5,303
|
|
|
$
|
3,822
|
|
|
$
|
1,481
|
|
|
39
|
%
|
|
$
|
692
|
|
|
$
|
446
|
|
|
$
|
246
|
|
|
55
|
%
|
|
|
13
|
%
|
|
12
|
%
|
|
1
|
|
|
_______________
|
*
|
not
meaningful.
|
(a)
|
Restructuring charges
incurred for the nine months ended September 30, 2021 include
$4 million at Realogy Franchise Group, $6 million at Realogy
Brokerage Group and $4 million at Corporate and Other.
Restructuring charges incurred for the nine months ended
September 30, 2020 include $10 million at Realogy Franchise
Group, $32 million at Realogy Brokerage Group, $3 million at
Realogy Title Group and $2 million at Corporate and
Other.
|
(b)
|
Non-cash impairments
for the nine months ended September 30, 2021 primarily relate
to software and lease asset impairments. Non-cash impairments
for the nine months ended September 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;
|
|
•
|
$133 million of
impairment charges during the nine months ended September 30,
2020 (while Cartus Relocation Services was held for sale) to reduce
the net assets to the estimated proceeds; and
|
|
•
|
other asset
impairments of $34 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, net is primarily 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 $307 million and $220 million during the nine months ended
September 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. The title agency and title insurance
underwriter businesses represented approximately 60% and 40%,
respectively, of RTG's net revenues for the nine-month period ended
September 30, 2021. Excluding the mortgage origination joint
venture from Operating EBITDA, title agency and title insurance
underwriter represented approximately 60% and 40%, respectively of
Operating EBITDA for the nine-months ended September 30,
2021. The year-over-year decline in Operating EBITDA
contribution from the mortgage origination joint venture, from $49
million for the nine-months ended September 30, 2021 compared to
$95 million for the nine-months ended September 30, 2020, was
primarily driven by the impact of mark-to-market adjustments on the
mortgage loan pipeline, as well as gain-on-sale 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 $307 million and $220 million during the nine months ended
September 30, 2021 and 2020, respectively.
|
Table
6a
|
|
REALOGY HOLDINGS
CORP.
SELECTED 2021
FINANCIAL DATA
(In
millions)
|
|
|
Three Months
Ended
|
|
March
31,
|
|
June
30,
|
|
September
30,
|
|
2021
|
|
2021
|
|
2021
|
Net revenues
(a)
|
|
|
|
|
|
Realogy Franchise
Group
|
$
|
254
|
|
|
$
|
347
|
|
|
$
|
342
|
|
Realogy Brokerage
Group
|
1,171
|
|
|
1,791
|
|
|
1,705
|
|
Realogy Title
Group
|
201
|
|
|
255
|
|
|
250
|
|
Corporate and
Other
|
(79)
|
|
|
(117)
|
|
|
(111)
|
|
Total
Company
|
$
|
1,547
|
|
|
$
|
2,276
|
|
|
$
|
2,186
|
|
|
|
|
|
|
|
Operating
EBITDA
|
|
|
|
|
|
Realogy Franchise
Group
|
$
|
141
|
|
|
$
|
224
|
|
|
$
|
211
|
|
Realogy Brokerage
Group
|
(5)
|
|
|
70
|
|
|
51
|
|
Realogy Title
Group
|
61
|
|
|
55
|
|
|
54
|
|
Corporate and
Other
|
(35)
|
|
|
(39)
|
|
|
(43)
|
|
Total
Company
|
$
|
162
|
|
|
$
|
310
|
|
|
$
|
273
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliation - Operating EBITDA
|
|
|
|
|
|
Total Company
Operating EBITDA
|
$
|
162
|
|
|
$
|
310
|
|
|
$
|
273
|
|
|
|
|
|
|
|
Less:
Depreciation and amortization
|
51
|
|
|
51
|
|
|
50
|
|
Interest expense,
net
|
38
|
|
|
57
|
|
|
52
|
|
Income tax
expense
|
17
|
|
|
60
|
|
|
48
|
|
Restructuring costs,
net (b)
|
5
|
|
|
5
|
|
|
4
|
|
Impairments
(c)
|
1
|
|
|
1
|
|
|
1
|
|
Former parent legacy
cost, net (d)
|
—
|
|
|
1
|
|
|
—
|
|
Loss on the early
extinguishment of debt (d)
|
17
|
|
|
1
|
|
|
3
|
|
(Gain) loss on the
sale of business, net (e)
|
—
|
|
|
(15)
|
|
|
1
|
|
Net income
attributable to Realogy Holdings
|
$
|
33
|
|
|
$
|
149
|
|
|
$
|
114
|
|
|
_______________
|
(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, $117
million and $111 million for the three months ended March 31, 2021,
June 30, 2021 and September 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,
|
|
September
30,
|
|
2021
|
|
2021
|
|
2021
|
Realogy Franchise
Group
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Realogy Brokerage
Group
|
2
|
|
|
2
|
|
|
2
|
|
Corporate and
Other
|
1
|
|
|
2
|
|
|
1
|
|
Total
Company
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
4
|
|
|
|
(c)
|
Impairments for the
three months ended March 31, 2021, June 30, 2021 and
September 30, 2021 primarily relate to software and lease
asset impairments.
|
(d)
|
Former parent legacy
items and Loss on the early extinguishment of debt are recorded in
Corporate and Other.
|
(e)
|
(Gain) loss on the
sale of business, net is primarily 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 NINE
MONTHS ENDED SEPTEMBER 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
September 30,
|
|
Nine Months
Ended
September
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net income (loss)
attributable to Realogy Holdings
|
$
|
114
|
|
|
$
|
98
|
|
|
$
|
296
|
|
|
$
|
(378)
|
|
Income tax expense
(benefit), net of payments
|
29
|
|
|
45
|
|
|
93
|
|
|
(101)
|
|
Interest expense,
net
|
52
|
|
|
48
|
|
|
147
|
|
|
208
|
|
Cash interest
payments
|
(38)
|
|
|
(28)
|
|
|
(121)
|
|
|
(133)
|
|
Depreciation and
amortization
|
50
|
|
|
43
|
|
|
152
|
|
|
134
|
|
Capital
expenditures
|
(21)
|
|
|
(20)
|
|
|
(71)
|
|
|
(69)
|
|
Restructuring costs
and former parent legacy items, net of payments
|
(3)
|
|
|
10
|
|
|
(8)
|
|
|
15
|
|
Impairments
|
1
|
|
|
70
|
|
|
3
|
|
|
610
|
|
Loss on the early
extinguishment of debt
|
3
|
|
|
—
|
|
|
21
|
|
|
8
|
|
Loss (gain) on the
sale of business, net
|
1
|
|
|
—
|
|
|
(14)
|
|
|
—
|
|
Working capital
adjustments
|
73
|
|
|
108
|
|
|
(34)
|
|
|
53
|
|
Relocation
receivables (assets), net of securitization obligations
|
21
|
|
|
21
|
|
|
(6)
|
|
|
(60)
|
|
Free Cash
Flow
|
$
|
282
|
|
|
$
|
395
|
|
|
$
|
458
|
|
|
$
|
287
|
|
|
A reconciliation of
net cash provided by operating activities to Free Cash Flow is set
forth in the following table:
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net cash provided
by operating activities
|
$
|
303
|
|
|
$
|
385
|
|
|
$
|
489
|
|
|
$
|
418
|
|
Property and
equipment additions
|
(21)
|
|
|
(20)
|
|
|
(71)
|
|
|
(69)
|
|
Net change in
securitization
|
—
|
|
|
30
|
|
|
40
|
|
|
(62)
|
|
Effect of exchange
rates on cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Free Cash
Flow
|
$
|
282
|
|
|
$
|
395
|
|
|
$
|
458
|
|
|
$
|
287
|
|
|
|
|
|
|
|
|
|
Net cash used in
investing activities
|
$
|
(17)
|
|
|
$
|
(21)
|
|
|
$
|
(68)
|
|
|
$
|
(84)
|
|
Net cash used in
financing activities
|
$
|
(446)
|
|
|
$
|
(671)
|
|
|
$
|
(238)
|
|
|
$
|
(203)
|
|
Table 8a
NON-GAAP RECONCILIATION - SENIOR SECURED
LEVERAGE RATIO
FOR THE FOUR-QUARTER PERIOD ENDED
SEPTEMBER 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 September 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 September 30, 2021 with a ratio of negative 0.27 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 September 30,
2021 is set forth in the following table:
|
|
|
Less
|
|
Equals
|
|
Plus
|
|
Equals
|
|
Year
Ended
|
|
Nine Months
Ended
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
Twelve
Months
Ended
|
|
December 31,
2020
|
|
September
30,
2020
|
|
December 31,
2020
|
|
September
30,
2021
|
|
September
30,
2021
|
Net (loss) income
attributable to Realogy Group (a)
|
$
|
(360)
|
|
|
$
|
(378)
|
|
|
$
|
18
|
|
|
$
|
296
|
|
|
$
|
314
|
|
Income tax (benefit)
expense
|
(104)
|
|
|
(110)
|
|
|
6
|
|
|
125
|
|
|
131
|
|
(Loss) income before
income taxes
|
(464)
|
|
|
(488)
|
|
|
24
|
|
|
421
|
|
|
445
|
|
Depreciation and
amortization
|
186
|
|
|
134
|
|
|
52
|
|
|
152
|
|
|
204
|
|
Interest expense,
net
|
246
|
|
|
208
|
|
|
38
|
|
|
147
|
|
|
185
|
|
Restructuring costs,
net
|
67
|
|
|
47
|
|
|
20
|
|
|
14
|
|
|
34
|
|
Impairments
|
682
|
|
|
610
|
|
|
72
|
|
|
3
|
|
|
75
|
|
Former parent legacy
cost, net
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
Loss on the early
extinguishment of debt
|
8
|
|
|
8
|
|
|
—
|
|
|
21
|
|
|
21
|
|
Gain on the sale of
business, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(14)
|
|
|
(14)
|
|
Operating
EBITDA (b)
|
726
|
|
|
520
|
|
|
206
|
|
|
745
|
|
|
951
|
|
Bank covenant
adjustments:
|
|
|
Pro forma effect of
business optimization initiatives (c)
|
|
28
|
|
Non-cash charges
(d)
|
|
26
|
|
Pro forma effect of
acquisitions and new franchisees (e)
|
|
5
|
|
Incremental
securitization interest costs (f)
|
|
3
|
|
EBITDA as
defined by the Senior Secured Credit Agreement*
|
|
$
|
1,013
|
|
Total senior secured
net debt (g)
|
|
$
|
(272)
|
|
Senior secured
leverage ratio*
|
|
(0.27)
|
x
|
|
_______________
|
(a)
|
Net (loss) income
attributable to Realogy consists of: (i) income of $18 million for
the fourth quarter of 2020, (ii) income of $33 million for the
first quarter of 2021, (iii) income of $149 million for the second
quarter of 2021 and (iv) income of $114 million for the third
quarter of 2021.
|
(b)
|
Operating EBITDA
consists of: (i) $206 million for the fourth quarter of 2020, (ii)
$162 million for the first quarter of 2021, (iii) $310 million for
the second quarter of 2021 and (iv) $273 million for the third
quarter of 2021.
|
(c)
|
Represents the
four-quarter pro forma effect of business optimization
initiatives.
|
(d)
|
Represents the
elimination of non-cash expenses including $41 million of
stock-based compensation expense less $7 million of other items, $4
million of foreign exchange benefits and $4 million for the change
in the allowance for doubtful accounts and notes reserves for the
four-quarter period ended September 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 October 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 October 1, 2020.
|
(f)
|
Incremental borrowing
costs incurred as a result of the securitization facilities
refinancing for the twelve months ended September 30,
2021.
|
(g)
|
Represents total
borrowings under the senior secured credit facilities (including
the Revolving Credit Facility) and Term Loan A Facility and
borrowings secured by a first priority lien on our assets of $234
million plus $26 million of finance lease obligations less $532
million of readily available cash as of September 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
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 SEPTEMBER 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
September 30, 2021 (referred to as net debt leverage ratio) is
set forth in the following table:
|
|
|
|
As of September
30, 2021
|
Non-extended
Revolving Credit Commitment
|
|
$
|
—
|
|
Extended Revolving
Credit Commitment
|
|
—
|
|
Extended Term Loan
A
|
|
234
|
|
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
|
|
26
|
|
Corporate Debt
(excluding securitizations)
|
|
3,070
|
|
Less: Cash and cash
equivalents
|
|
701
|
|
Net Corporate Debt
(excluding securitizations)
|
|
$
|
2,369
|
|
|
|
|
EBITDA as defined by
the Senior Secured Credit Agreement (a)
|
|
$
|
1,013
|
|
|
|
|
Net Debt
Leverage Ratio(b)
|
|
2.3
|
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.