MADISON,
N.J., April 28, 2022 /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
first quarter ended March 31, 2022.
"Realogy demonstrated continued momentum in our strategic
transformation, delivering some of the best revenue and Operating
EBITDA results for a first quarter in company history," said
Ryan Schneider, Realogy's chief
executive officer and president. "Bolstered by our proven
performance, industry-leading talent, and technology leadership, we
continue to position Realogy for the future as we move real estate
to what's next."
"In the first quarter, Realogy once again produced impressive
results, delivering $1.6 billion of
revenue and $69 million in Operating
EBITDA," said Charlotte Simonelli,
Realogy's executive vice president, chief financial officer, and
treasurer. "This consistency of delivery, strong financial
discipline, and continued momentum reflect the strength of our core
business, positioning us to accelerate our growth and continue
delivering value as we propel our transformation forward."
First Quarter 2022 Highlights
- Generated record first quarter Revenue of $1.6 billion, an increase of 6% or $88 million year-over-year.
- Reported Net income of $23
million and basic earnings per share of $0.20, a decrease of $10
million or $0.08 per share vs.
prior year.
- Generated Operating EBITDA of $69
million, a decrease of $93
million year-over-year (See Table 5).
- Generated Free Cash Flow of negative $275 million vs. negative $67 million for the corresponding quarter last
year, with the first quarter being a seasonal use quarter for the
business (See Table 7).
- Combined closed transaction volume increased 4% year-over-year,
in-line with the market and Realogy expectations for mid-single
digit growth.
- Realogy Brokerage Group closed transaction volume increased 10%
year-over-year led by high-end performance. Realogy Franchise Group
closed transaction volume increased 1% year-over-year.
- Successfully raised $1 billion of
5.25% notes in January using the net proceeds and cash on hand to
redeem $1.1 billion of higher coupon
notes, extending maturities, and reducing the cost of capital and
annualized interest expense.
- At March 31, 2022, our Net Debt
Leverage Ratio was 3.0x (See Table 8b) and Senior Secured Leverage Ratio was
negative 0.02x (See Table 8a).
- Strong cost management with $11
million in cost savings realized in the quarter with
$70 million expected for full year
2022.
- Owned Brokerage agent count grew 6% year-over-year, the seventh
consecutive quarter of sequential growth, and continued to maintain
strong retention levels.
- Closed the sale of our title insurance underwriter in exchange
for $210 million plus a 30% equity
interest in a title insurance underwriter joint venture.
First Quarter 2022 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
March 31,
|
|
|
2022
|
|
2021
|
|
Change
|
|
%
Change
|
Revenue
|
|
$
1,635
|
|
$
1,547
|
|
$
88
|
|
6 %
|
Operating
EBITDA1
|
|
69
|
|
162
|
|
(93)
|
|
(57)
|
Net income attributable
to Realogy
|
|
23
|
|
33
|
|
(10)
|
|
(30)
|
Adjusted net (loss)
income 2
|
|
(22)
|
|
40
|
|
(62)
|
|
(155)
|
Earnings per
share
|
|
0.20
|
|
0.28
|
|
(0.08)
|
|
(29)
|
Adjusted (loss)
earnings per share 2
|
|
(0.19)
|
|
0.35
|
|
(0.54)
|
|
(154)
|
Free Cash Flow
3
|
|
(275)
|
|
(67)
|
|
(208)
|
|
(310)
|
Net cash used in
operating activities
|
|
$
(233)
|
|
$
(37)
|
|
$
(196)
|
|
(530) %
|
|
|
|
|
|
|
|
|
|
Select Key
Drivers
|
|
|
|
|
|
|
|
|
Realogy Franchise
Group4 5
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
|
217,764
|
|
244,698
|
|
|
|
(11) %
|
Average homesale
price
|
|
$ 449,250
|
|
$ 394,000
|
|
|
|
14 %
|
Realogy Brokerage
Group5
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
|
71,371
|
|
74,993
|
|
|
|
(5) %
|
Average homesale
price
|
|
$ 706,282
|
|
$ 608,960
|
|
|
|
16 %
|
Realogy Title
Group
|
|
|
|
|
|
|
|
|
Purchase title and
closing units
|
|
30,867
|
|
32,502
|
|
|
|
(5) %
|
Refinance title and
closing units
|
|
8,068
|
|
19,806
|
|
|
|
(59) %
|
_______________
Footnotes:
1 See Table 5. 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, (gain) loss on the sale of investments or other assets
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 sale
of investments or other assets, (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 4% compared with the first quarter of
2021.
2022 Financial Guidance
Realogy now expects Operating EBITDA for full year 2022 in the
range of $750 to $800 million from $800 to $850
million, with the reduction from prior guidance
predominantly attributable to the rising mortgage rate environment
and its impact on financial results at the company's mortgage
origination joint venture. This guidance is subject, among other
things, to macroeconomic and housing market uncertainties,
including those related to constrained inventory, inflation, and
rising mortgage rates.
Balance Sheet
The Company ended the quarter with cash and cash equivalents of
$306 million. Total corporate debt,
including the short-term portion, net of cash and cash equivalents
(net corporate debt), totaled $2.7
billion at March 31, 2022. The Company's Net Debt
Leverage Ratio was 3.0x at March 31, 2022 (see Table
8b).
On January 10, 2022, we issued
$1.0 billion of 5.25% Senior Notes
due in 2030. On February 4, 2022, the
Company used the net proceeds from the issuance, together with cash
on hand, to redeem in full both the $550
million of 9.375% Senior Notes and $550 million of 7.625% Senior Secured Second Lien
Notes.
A consolidated balance sheet is included as Table 2 of this
press release.
Investor Conference Call
Today, April 28, at 8:30 a.m.
(ET), Realogy will hold a conference call via webcast to
review its Q1 2022 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 (888) 330-3077 (toll free);
international participants should dial (646) 960-0674. 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
1.5 million home transactions in 2021. 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 196,200 independent sales agents in the U.S. and
approximately 136,400 independent sales agents in 118 other
countries and territories, helping them build stronger businesses
and best serve today's consumers. Recognized for eleven 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," including the information appearing
under 2022 Financial Guidance. 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 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, reductions in
housing affordability, changes in consumer preferences, including
weakening in the consumer trends that have benefited us since the
second half of 2020, 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 contraction or stagnation in the
U.S. economy; adverse developments or outcomes in current or future
litigation, in particular pending antitrust litigation; industry
structure changes that disrupt the functioning of the residential
real estate market; the impact of evolving competitive and consumer
dynamics, including that the Company's share of the commission
income generated by homesale transactions may continue to shift to
affiliated independent sales agents or otherwise erode due to
market factors and our ability to compete against traditional and
non-traditional competitors; our ability to execute our business
strategy and achieve growth, including with respect to the
recruitment and retention of productive independent sales agents,
attract and retain franchisees and develop or procure products,
services and technology that support our strategic initiatives; our
ability to realize the expected benefits from our existing or
future joint ventures or strategic partnerships, in particular, our
mortgage origination joint venture, which is impacted by increases
in mortgage rates and competitive margin compression; adverse
impacts from the COVID-19 crisis; risks related to our business
structure, including our geographic and high-end market
concentration, the operating results of our affiliated franchisees,
and the loss of our largest real estate benefit program; disruption
in the residential real estate brokerage industry related to
listing aggregator market power and concentration; risks related to
our substantial indebtedness and our ability to refinance or repay
our indebtedness; our failure or alleged failure to comply with
laws, regulations and regulatory interpretations and any changes or
stricter interpretations of any of the foregoing, including but not
limited to (1) antitrust laws and regulations, (2) the Real Estate
Settlement Procedures Act or other federal or state consumer
protection or similar laws, (3) state or federal employment laws or
regulations that would require reclassification of independent
contractor sales agents to employee status, and (4) privacy or data
security laws and regulations; cybersecurity incidents; impairment
of our goodwill and other long-lived assets; the accuracy of market
forecasts and estimates; significant fluctuation in the price of
our common stock; and the impact of share repurchase programs on
our common stock.
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 Annual Report
on Form 10-K for the year ended December 31,
2021, 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, 5,
6a, 6b, 7, 8a and 8b for reconciliations of the historical non-GAAP
financial measures to their most comparable GAAP terms.
Because of the forward-looking nature of the Company's
forecasted non-GAAP financial measure, specific quantification of
the amounts that would be required to reconcile forecasted
Operating EBITDA to forecasted net income are not determinable
without unreasonable efforts. The Company believes that there is a
degree of volatility with respect to certain of the Company's GAAP
measures which preclude the Company from providing accurate
forecasted GAAP to non-GAAP reconciliations. The Company believes
that providing estimates of the amounts that would be required to
reconcile the range of the non-GAAP measure to forecasted GAAP
measures would imply a degree of precision that would be confusing
or misleading to investors for the reasons identified
above.
NAR market 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 Annual Report on
Form 10-K for the year ended December 31,
2021.
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
March 31,
|
|
|
2022
|
|
2021
|
Revenues
|
|
|
|
|
Gross commission income
|
|
$
1,247
|
|
$
1,154
|
Service revenue
|
|
246
|
|
249
|
Franchise fees
|
|
99
|
|
105
|
Other
|
|
43
|
|
39
|
Net revenues
|
|
1,635
|
|
1,547
|
Expenses
|
|
|
|
|
Commission and other agent-related costs
|
|
988
|
|
885
|
Operating
|
|
406
|
|
384
|
Marketing
|
|
64
|
|
58
|
General and administrative
|
|
98
|
|
90
|
Restructuring costs, net
|
|
4
|
|
5
|
Impairments
|
|
—
|
|
1
|
Depreciation and amortization
|
|
51
|
|
51
|
Interest expense, net
|
|
18
|
|
38
|
Loss on the early extinguishment of debt
|
|
92
|
|
17
|
Other income, net
|
|
(131)
|
|
(2)
|
Total
expenses
|
|
1,590
|
|
1,527
|
Income before income taxes, equity in losses
(earnings) and noncontrolling interests
|
|
45
|
|
20
|
Income tax
expense
|
|
12
|
|
17
|
Equity in losses
(earnings) of unconsolidated entities
|
|
10
|
|
(31)
|
Net income
|
|
23
|
|
34
|
Less: Net income
attributable to noncontrolling interests
|
|
—
|
|
(1)
|
Net income attributable to Realogy
Holdings
|
|
$
23
|
|
$
33
|
|
|
|
|
|
Earnings per share attributable to Realogy Holdings
shareholders:
|
Basic earnings per share
|
|
$
0.20
|
|
$
0.28
|
Diluted earnings per share
|
|
$
0.19
|
|
$
0.28
|
Weighted average common and common equivalent shares
of Realogy Holdings outstanding:
|
Basic
|
|
117.1
|
|
115.9
|
Diluted
|
|
120.4
|
|
118.4
|
Table 1a
REALOGY HOLDINGS CORP.
NON-GAAP
RECONCILIATION
ADJUSTED NET (LOSS) INCOME AND ADJUSTED
(LOSS) 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; (f) the (gain) loss on the sale of
investments or other assets and (g) 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 to Adjusted net (loss) income for the three-month periods
ended March 31, 2022 and 2021:
|
|
Three Months Ended
March 31,
|
|
|
2022
|
|
2021
|
Net income
attributable to Realogy Holdings
|
|
$
23
|
|
$
33
|
Addback:
|
|
|
|
|
Mark-to-market interest rate swap gains
|
|
(26)
|
|
(13)
|
Restructuring costs, net
|
|
4
|
|
5
|
Impairments
|
|
—
|
|
1
|
Loss on the early extinguishment of debt
|
|
92
|
|
17
|
Gain on the sale of business, net
|
|
(131)
|
|
—
|
Adjustments for tax effect (a)
|
|
16
|
|
(3)
|
Adjusted net (loss)
income attributable to Realogy Holdings
|
|
$
(22)
|
|
$
40
|
|
|
|
|
|
Earnings per share
attributable to Realogy Holdings:
|
|
|
|
|
Basic earnings per share:
|
|
$
0.20
|
|
$
0.28
|
Diluted earnings per share:
|
|
$
0.19
|
|
$
0.28
|
|
|
|
|
|
Adjusted (loss)
earnings per share attributable to Realogy Holdings:
|
|
|
|
|
Adjusted basic (loss) earnings per share:
|
|
$
(0.19)
|
|
$
0.35
|
Adjusted diluted (loss) earnings per share:
|
|
$
(0.19)
|
|
$
0.34
|
|
|
|
|
|
Weighted average
common and common equivalent shares outstanding:
|
|
|
Basic:
|
|
117.1
|
|
115.9
|
Diluted:
|
|
120.4
|
|
118.4
|
_______________
|
|
|
|
|
|
|
|
|
|
(a) 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)
|
March 31,
2022
|
|
December 31,
2021
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash equivalents
|
$
306
|
|
$
735
|
Restricted cash
|
3
|
|
8
|
Trade receivables (net of allowance for doubtful accounts of
$11 for both periods presented)
|
124
|
|
123
|
Relocation receivables
|
175
|
|
139
|
Other current assets
|
195
|
|
183
|
Total current assets
|
803
|
|
1,188
|
Property and equipment,
net
|
311
|
|
310
|
Operating lease assets,
net
|
447
|
|
453
|
Goodwill
|
2,897
|
|
2,923
|
Trademarks
|
687
|
|
687
|
Franchise agreements,
net
|
1,004
|
|
1,021
|
Other intangibles,
net
|
164
|
|
171
|
Other non-current
assets
|
544
|
|
457
|
Total assets
|
$
6,857
|
|
$
7,210
|
LIABILITIES AND EQUITY
|
|
|
|
Current liabilities:
|
|
|
|
Accounts payable
|
$
119
|
|
$
130
|
Securitization obligations
|
105
|
|
118
|
Current portion of long-term debt
|
12
|
|
10
|
Current portion of operating lease liabilities
|
128
|
|
128
|
Accrued expenses and other current liabilities
|
517
|
|
666
|
Total current
liabilities
|
881
|
|
1,052
|
Long-term
debt
|
2,899
|
|
2,940
|
Long-term operating
lease liabilities
|
406
|
|
417
|
Deferred income
taxes
|
329
|
|
353
|
Other non-current
liabilities
|
185
|
|
256
|
Total liabilities
|
4,700
|
|
5,018
|
Commitments and
contingencies
|
|
|
|
Equity:
|
|
|
|
Realogy Holdings preferred
stock: $0.01 par value; 50,000,000 shares authorized, none
issued and outstanding at
March 31, 2022 and December 31, 2021
|
—
|
|
—
|
Realogy Holdings common stock:
$0.01 par value; 400,000,000 shares authorized,
118,140,076
shares issued and outstanding at March 31, 2022 and
116,588,430 shares
issued and
outstanding at December 31, 2021
|
1
|
|
1
|
Additional paid-in capital
|
4,886
|
|
4,947
|
Accumulated deficit
|
(2,684)
|
|
(2,712)
|
Accumulated other comprehensive loss
|
(49)
|
|
(50)
|
Total stockholders'
equity
|
2,154
|
|
2,186
|
Noncontrolling interests
|
3
|
|
6
|
Total equity
|
2,157
|
|
2,192
|
Total liabilities and equity
|
$
6,857
|
|
$
7,210
|
Table 3
REALOGY HOLDINGS CORP.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In
millions)
(Unaudited)
|
Three Months Ended March 31,
|
|
2022
|
|
2021
|
Operating Activities
|
|
|
|
Net income
|
$
23
|
|
$
34
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
Depreciation and amortization
|
51
|
|
51
|
Deferred income taxes
|
(6)
|
|
15
|
Impairments
|
—
|
|
1
|
Amortization of deferred financing costs and debt discount
(premium)
|
3
|
|
3
|
Loss on the early extinguishment of debt
|
92
|
|
17
|
Gain on the sale of business, net
|
(131)
|
|
—
|
Equity in losses (earnings) of unconsolidated
entities
|
10
|
|
(31)
|
Stock-based compensation
|
6
|
|
6
|
Mark-to-market adjustments on derivatives
|
(26)
|
|
(13)
|
Other adjustments to net income
|
1
|
|
(2)
|
Net
change in assets and liabilities, excluding the impact of
acquisitions and dispositions:
|
Trade receivables
|
(2)
|
|
(3)
|
Relocation
receivables
|
(35)
|
|
(4)
|
Other assets
|
(37)
|
|
(14)
|
Accounts payable, accrued
expenses and other liabilities
|
(172)
|
|
(117)
|
Dividends received from
unconsolidated entities
|
1
|
|
31
|
Other, net
|
(11)
|
|
(11)
|
Net cash used in operating
activities
|
(233)
|
|
(37)
|
Investing Activities
|
|
|
|
Property and equipment
additions
|
(29)
|
|
(23)
|
Payments for
acquisitions, net of cash acquired
|
(3)
|
|
(2)
|
Net proceeds from the
sale of businesses
|
58
|
|
2
|
Investment in
unconsolidated entities
|
(7)
|
|
(6)
|
Other, net
|
17
|
|
(3)
|
Net cash provided by (used in) investing
activities
|
36
|
|
(32)
|
Financing Activities
|
|
|
|
Repayments of Term Loan
A Facility and Term Loan B Facility
|
—
|
|
(905)
|
Proceeds from issuance
of Senior Notes
|
1,000
|
|
905
|
Redemption of Senior
Secured Second Lien Notes
|
(550)
|
|
—
|
Redemption of Senior
Notes
|
(550)
|
|
—
|
Amortization payments
on term loan facilities
|
(1)
|
|
(3)
|
Net change in
securitization obligations
|
(13)
|
|
(7)
|
Debt issuance
costs
|
(18)
|
|
(8)
|
Cash paid for fees
associated with early extinguishment of
debt
|
(80)
|
|
(11)
|
Taxes paid related to
net share settlement for stock-based
compensation
|
(16)
|
|
(8)
|
Other, net
|
(9)
|
|
(8)
|
Net cash used in financing
activities
|
(237)
|
|
(45)
|
Effect of changes in
exchange rates on cash, cash equivalents and restricted
cash
|
—
|
|
—
|
Net decrease in cash,
cash equivalents and restricted
cash
|
(434)
|
|
(114)
|
Cash, cash equivalents
and restricted cash, beginning of
period
|
743
|
|
523
|
Cash, cash equivalents and restricted cash, end
of
period
|
$
309
|
|
$
409
|
|
|
|
|
Supplemental Disclosure of Cash Flow
Information
|
|
|
|
Interest payments
(including securitization interest of $1 for both periods
presented)
|
$
58
|
|
$
14
|
Income tax payments,
net
|
2
|
|
2
|
Table 4a
REALOGY HOLDINGS CORP.
2022 vs. 2021
KEY DRIVERS
|
Three Months Ended March 31,
|
|
2022
|
|
2021
|
|
% Change
|
Realogy Franchise Group (a)
|
|
|
|
|
|
Closed homesale
sides
|
217,764
|
|
244,698
|
|
(11)
%
|
Average homesale
price
|
$ 449,250
|
|
$ 394,000
|
|
14
%
|
Average homesale broker
commission rate
|
2.43 %
|
|
2.47 %
|
|
(4) bps
|
Net royalty per
side
|
$
413
|
|
$
382
|
|
8
%
|
Realogy Brokerage Group
|
|
|
|
|
|
Closed homesale
sides
|
71,371
|
|
74,993
|
|
(5)
%
|
Average homesale
price
|
$ 706,282
|
|
$ 608,960
|
|
16
%
|
Average homesale broker
commission rate
|
2.39 %
|
|
2.43 %
|
|
(4) bps
|
Gross commission income
per side
|
$
17,475
|
|
$
15,393
|
|
14
%
|
Realogy Title Group
|
|
|
|
|
|
Purchase title and
closing units (b)
|
30,867
|
|
32,502
|
|
(5)
%
|
Refinance title and
closing units (c)
|
8,068
|
|
19,806
|
|
(59)
%
|
Average fee per closing
unit (d)
|
$ 3,033
|
|
$ 2,348
|
|
29
%
|
_______________
|
(a)
|
Includes all
franchisees except for Realogy Brokerage Group.
|
(b)
|
Purchase title and
closing units for the three months ended March 31, 2021 were
revised to reflect a decrease of 1,326 units. The change was
for the number of units only and did not impact revenue.
|
(c)
|
Refinance title and
closing units for the three months ended March 31, 2021 were
revised to reflect a decrease of 661 units. The change
was for the number of units only and did not impact
revenue.
|
(d)
|
With the change in
units noted above, Average fee per closing unit for the three
months ended March 31, 2021 was updated to reflect an
increase of $86 per closing unit.
|
Table 4b
REALOGY HOLDINGS CORP.
2021 KEY
DRIVERS
|
Quarter Ended
|
Year Ended
|
|
March 31,
2021
|
|
June 30,
2021
|
|
September 30,
2021
|
|
December 31,
2021
|
|
December 31,
2021
|
Realogy Franchise Group (a)
|
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
244,698
|
|
320,463
|
|
316,195
|
|
281,680
|
|
1,163,036
|
Average homesale
price
|
$ 394,000
|
|
$ 430,756
|
|
$ 427,052
|
|
$ 440,751
|
|
$ 424,436
|
Average homesale broker
commission rate
|
2.47 %
|
|
2.46 %
|
|
2.44 %
|
|
2.43 %
|
|
2.45 %
|
Net royalty per
side
|
$
382
|
|
$
418
|
|
$
401
|
|
$
421
|
|
$
406
|
Realogy Brokerage Group
|
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
74,993
|
|
103,945
|
|
101,536
|
|
90,661
|
|
371,135
|
Average homesale
price
|
$ 608,960
|
|
$ 678,978
|
|
$ 662,006
|
|
$ 667,188
|
|
$ 657,307
|
Average homesale broker
commission rate
|
2.43 %
|
|
2.43 %
|
|
2.42 %
|
|
2.41 %
|
|
2.42 %
|
Gross commission income
per side
|
$
15,393
|
|
$
17,053
|
|
$
16,633
|
|
$
16,573
|
|
$
16,486
|
Realogy Title Group
|
|
|
|
|
|
|
|
|
|
Purchase title and
closing units (b)
|
32,502
|
|
45,563
|
|
45,011
|
|
40,111
|
|
163,187
|
Refinance title and
closing units (c)
|
19,806
|
|
13,730
|
|
12,140
|
|
10,999
|
|
56,675
|
Average fee per closing
unit (d)
|
$ 2,348
|
|
$ 2,720
|
|
$ 2,801
|
|
$ 2,962
|
|
$ 2,709
|
_______________
|
(a)
|
Includes all
franchisees except for Realogy Brokerage Group.
|
(b)
|
Purchase title and
closing units for the quarters ended March 31, 2021, June 30, 2021
and September 30, 2021 were revised to reflect a
decrease of 1,326, 1,812 and 1,993 units, respectively. The change
was for the number of units only and did not impact
revenue.
|
(c)
|
Refinance title and
closing units for the quarters ended March 31, 2021, June 30, 2021
and September 30, 2021 were revised to reflect a
decrease of 661, 742 and 696 units, respectively. The change was
for the number of units only and did not impact revenue.
|
(d)
|
With the change in
units noted above, Average fee per closing unit for the quarters
ended March 31, 2021, June 30, 2021 and September
30, 2021 was updated to reflect an increase of $86, $112 and $126,
respectively.
|
Table 5
REALOGY HOLDINGS CORP.
NON-GAAP
RECONCILIATION - OPERATING EBITDA
THREE MONTHS ENDED
MARCH 31, 2022 AND 2021
(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 March 31, 2022 and 2021:
|
Three Months Ended
March 31,
|
|
2022
|
|
2021
|
Net income attributable
to Realogy Holdings
|
$
23
|
|
$
33
|
Income tax
expense
|
12
|
|
17
|
Income before income
taxes
|
35
|
|
50
|
Add: Depreciation
and amortization
|
51
|
|
51
|
Interest expense,
net
|
18
|
|
38
|
Restructuring costs, net
(a)
|
4
|
|
5
|
Impairments (b)
|
—
|
|
1
|
Loss on the early
extinguishment of debt (c)
|
92
|
|
17
|
Gain on the sale of business,
net (d)
|
(131)
|
|
—
|
Operating
EBITDA
|
$
69
|
|
$
162
|
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
|
|
2022
|
|
2021
|
|
|
|
2022
|
|
2021
|
|
|
|
2022
|
|
2021
|
|
Realogy Franchise
Group
|
$
267
|
|
$
254
|
|
13
|
|
5
|
|
$
138
|
|
$
141
|
|
(3)
|
|
(2)
|
|
52 %
|
|
56 %
|
|
(4)
|
Realogy Brokerage
Group
|
1,264
|
|
1,171
|
|
93
|
|
8
|
|
(40)
|
|
(5)
|
|
(35)
|
|
(700)
|
|
(3)
|
|
—
|
|
(3)
|
Realogy Title Group
(f)
|
190
|
|
201
|
|
(11)
|
|
(5)
|
|
(3)
|
|
61
|
|
(64)
|
|
(105)
|
|
(2)
|
|
30
|
|
(32)
|
Corporate and
Other
|
(86)
|
|
(79)
|
|
(7)
|
|
(e)
|
|
(26)
|
|
(35)
|
|
9
|
|
26
|
|
|
|
|
|
|
Total
Company
|
$
1,635
|
|
$
1,547
|
|
88
|
|
6
|
|
$
69
|
|
$
162
|
|
(93)
|
|
(57)
|
|
4 %
|
|
10 %
|
|
(6)
|
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
|
|
2022
|
|
2021
|
|
|
|
2022
|
|
2021
|
|
|
|
2022
|
|
2021
|
|
Realogy Franchise Group
(g)
|
$
181
|
|
$
175
|
|
6
|
|
3
|
|
$
52
|
|
$
62
|
|
(10)
|
|
(16)
|
|
29 %
|
|
35 %
|
|
(6)
|
Realogy Brokerage Group
(g)
|
1,264
|
|
1,171
|
|
93
|
|
8
|
|
46
|
|
74
|
|
(28)
|
|
(38)
|
|
4
|
|
6
|
|
(2)
|
Realogy Franchise
and
Brokerage Groups Combined
|
$ 1,445
|
|
$
1,346
|
|
99
|
|
7
|
|
$
98
|
|
$
136
|
|
(38)
|
|
(28)
|
|
7 %
|
|
10 %
|
|
(3)
|
_______________
|
(a)
|
Restructuring charges
incurred for the three months ended March 31, 2022 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 March 31, 2021 include $2
million at Realogy Franchise Group, $2 million at Realogy Brokerage
Group and $1 million at Corporate and Other.
|
(b)
|
Non-cash impairments
for the three months ended March 31, 2021 relate to lease asset
impairments.
|
(c)
|
Loss on the early
extinguishment of debt is recorded in Corporate and
Other.
|
(d)
|
Gain on the sale of
business, net is recorded in Realogy Title Group related to the
sale of the title insurance underwriter (the "Title
Underwriter").
|
(e)
|
Revenues include the
elimination of transactions between segments, which consists of
intercompany royalties and marketing fees paid by Realogy Brokerage
Group of $86 million and $79 million during the three months ended
March 31, 2022 and 2021, respectively, and are eliminated
through the Corporate and Other line.
|
(f)
|
Realogy Title Group
(RTG) includes our title, escrow and settlement services (title
agency), mortgage origination joint venture businesses and, until
the close of the sale of RTG's Title Underwriter on March 29, 2022,
its title insurance underwriter business. RTG Revenue for the first
quarter of 2022 does not include $11 million of revenue from the
title insurance underwriter due to the sale on March 29, 2022. The
year-over-year decline in Operating EBITDA contribution from the
mortgage origination joint venture, from losses of $8 million
for the three-month period ended March 31, 2022 compared to
earnings of $30 million for the three-month period ended
March 31, 2021, was primarily driven by significant
gain-on-sale margin compression due to the highly competitive
mortgage industry, lower refinancing volume and increased headcount
to grow the business and its market share.
|
(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 $86 million and $79 million during the three months ended
March 31, 2022 and 2021, respectively.
|
Table 6a
REALOGY HOLDINGS CORP.
SELECTED 2022
FINANCIAL DATA
(In millions)
|
Three Months Ended
|
|
March 31, 2022
|
Net revenues (a)
|
|
Realogy Franchise
Group
|
$
267
|
Realogy Brokerage
Group
|
1,264
|
Realogy Title
Group
|
190
|
Corporate and
Other
|
(86)
|
Total Company
|
$
1,635
|
|
|
Operating EBITDA
|
|
Realogy Franchise
Group
|
$
138
|
Realogy Brokerage
Group
|
(40)
|
Realogy Title
Group
|
(3)
|
Corporate and
Other
|
(26)
|
Total Company
|
$
69
|
|
|
Non-GAAP Reconciliation - Operating
EBITDA
|
|
Total Company Operating
EBITDA
|
$
69
|
|
|
Less:
Depreciation and amortization
|
51
|
Interest expense,
net
|
18
|
Income tax expense
|
12
|
Restructuring costs, net
(b)
|
4
|
Loss on the early
extinguishment of debt (c)
|
92
|
Gain on the sale of business,
net (d)
|
(131)
|
Net income attributable to
Realogy Holdings
|
$
23
|
_______________
|
|
(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 $86 million for the three months
ended March 31, 2022. Such amounts are eliminated through
Corporate and Other.
|
(b)
|
Includes restructuring
charges broken down by business unit as follows:
|
|
Three Months
Ended
|
|
March 31,
2022
|
Realogy Franchise
Group
|
$
1
|
Realogy Brokerage
Group
|
2
|
Corporate and
Other
|
1
|
Total
Company
|
$
4
|
(c)
|
Loss on the early
extinguishment of debt is recorded in Corporate and
Other.
|
(d)
|
Gain on the sale of
business, net is recorded in Realogy Title Group related to the
sale of the Title Underwriter.
|
Table 6b
REALOGY HOLDINGS CORP.
SELECTED 2021
FINANCIAL DATA
(In millions)
|
Three Months Ended
|
|
Year Ended
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
December 31,
|
|
2021
|
|
2021
|
|
2021
|
|
2021
|
|
2021
|
Net revenues (a)
|
|
|
|
|
|
|
|
|
|
Realogy Franchise
Group
|
$
254
|
|
$
347
|
|
$
342
|
|
$
306
|
|
$
1,249
|
Realogy Brokerage
Group
|
1,171
|
|
1,791
|
|
1,705
|
|
1,522
|
|
6,189
|
Realogy Title
Group
|
201
|
|
255
|
|
250
|
|
246
|
|
952
|
Corporate and
Other
|
(79)
|
|
(117)
|
|
(111)
|
|
(100)
|
|
(407)
|
Total Company
|
$
1,547
|
|
$
2,276
|
|
$
2,186
|
|
$
1,974
|
|
$
7,983
|
|
|
|
|
|
|
|
|
|
|
Operating EBITDA
|
|
|
|
|
|
|
|
|
|
Realogy Franchise
Group
|
$
141
|
|
$
224
|
|
$
211
|
|
$
175
|
|
$
751
|
Realogy Brokerage
Group
|
(5)
|
|
70
|
|
51
|
|
(7)
|
|
109
|
Realogy Title
Group
|
61
|
|
55
|
|
54
|
|
30
|
|
200
|
Corporate and
Other
|
(35)
|
|
(39)
|
|
(43)
|
|
(41)
|
|
(158)
|
Total Company
|
$
162
|
|
$
310
|
|
$
273
|
|
$
157
|
|
$
902
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Reconciliation - Operating
EBITDA
|
|
|
|
|
|
|
|
|
|
Total Company Operating
EBITDA
|
$
162
|
|
$
310
|
|
$
273
|
|
$
157
|
|
$
902
|
|
|
|
|
|
|
|
|
|
|
Less: Depreciation and
amortization
|
51
|
|
51
|
|
50
|
|
52
|
|
204
|
Interest expense,
net
|
38
|
|
57
|
|
52
|
|
43
|
|
190
|
Income tax expense
|
17
|
|
60
|
|
48
|
|
8
|
|
133
|
Restructuring costs, net
(b)
|
5
|
|
5
|
|
4
|
|
3
|
|
17
|
Impairments (c)
|
1
|
|
1
|
|
1
|
|
1
|
|
4
|
Former parent legacy cost, net
(d)
|
—
|
|
1
|
|
—
|
|
—
|
|
1
|
Loss on the early
extinguishment of debt (d)
|
17
|
|
1
|
|
3
|
|
—
|
|
21
|
(Gain) loss on the sale of
business, net (e)
|
—
|
|
(15)
|
|
1
|
|
3
|
|
(11)
|
Net income attributable
to Realogy Holdings
|
$
33
|
|
$
149
|
|
$
114
|
|
$
47
|
|
$
343
|
_______________
|
|
(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, $111
million and $100 million for the three months ended March 31, 2021,
June 30, 2021, September 30, 2021 and December 31, 2021,
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,
|
|
2021
|
|
2021
|
|
2021
|
|
2021
|
|
2021
|
Realogy Franchise
Group
|
$
2
|
|
$
1
|
|
$
1
|
|
$
1
|
|
$
5
|
Realogy Brokerage
Group
|
2
|
|
2
|
|
2
|
|
1
|
|
7
|
Corporate and
Other
|
1
|
|
2
|
|
1
|
|
1
|
|
5
|
Total
Company
|
$
5
|
|
$
5
|
|
$
4
|
|
$
3
|
|
$
17
|
(c)
|
Impairments for the
three months ended March 31, 2021, June 30, 2021, September 30,
2021 and December 31, 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 6c
REALOGY HOLDINGS CORP.
2021
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,
|
|
2021
|
|
2021
|
|
2021
|
|
2021
|
|
2021
|
Revenues
|
|
|
|
|
|
|
|
|
|
Gross commission income
|
$
1,154
|
|
$ 1,773
|
|
$
1,689
|
|
$
1,502
|
|
$
6,118
|
Service revenue
|
249
|
|
314
|
|
315
|
|
302
|
|
1,180
|
Franchise fees
|
105
|
|
147
|
|
139
|
|
130
|
|
521
|
Other
|
39
|
|
42
|
|
43
|
|
40
|
|
164
|
Net revenues
|
1,547
|
|
2,276
|
|
2,186
|
|
1,974
|
|
7,983
|
Expenses
|
|
|
|
|
|
|
|
|
|
Commission and other agent-related costs
|
885
|
|
1,373
|
|
1,309
|
|
1,186
|
|
4,753
|
Operating
|
384
|
|
422
|
|
424
|
|
439
|
|
1,669
|
Marketing
|
58
|
|
66
|
|
69
|
|
70
|
|
263
|
General and administrative
|
90
|
|
114
|
|
120
|
|
117
|
|
441
|
Former parent legacy cost, net
|
—
|
|
1
|
|
—
|
|
—
|
|
1
|
Restructuring costs, net
|
5
|
|
5
|
|
4
|
|
3
|
|
17
|
Impairments
|
1
|
|
1
|
|
1
|
|
1
|
|
4
|
Depreciation and amortization
|
51
|
|
51
|
|
50
|
|
52
|
|
204
|
Interest expense, net
|
38
|
|
57
|
|
52
|
|
43
|
|
190
|
Loss on the early extinguishment of debt
|
17
|
|
1
|
|
3
|
|
—
|
|
21
|
Other (income) expense, net
|
(2)
|
|
(16)
|
|
1
|
|
2
|
|
(15)
|
Total
expenses
|
1,527
|
|
2,075
|
|
2,033
|
|
1,913
|
|
7,548
|
Income before income taxes, equity in (earnings)
losses and
noncontrolling interests
|
20
|
|
201
|
|
153
|
|
61
|
|
435
|
Income tax
expense
|
17
|
|
60
|
|
48
|
|
8
|
|
133
|
Equity in (earnings)
losses of unconsolidated entities
|
(31)
|
|
(10)
|
|
(11)
|
|
4
|
|
(48)
|
Net income
|
34
|
|
151
|
|
116
|
|
49
|
|
350
|
Less: Net income
attributable to noncontrolling interests
|
(1)
|
|
(2)
|
|
(2)
|
|
(2)
|
|
(7)
|
Net income attributable to Realogy
Holdings
|
$
33
|
|
$
149
|
|
$
114
|
|
$
47
|
|
$
343
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to Realogy Holdings
shareholders:
|
|
|
Basic earnings per share
|
$ 0.28
|
|
$
1.28
|
|
$
0.98
|
|
$
0.40
|
|
$
2.95
|
Diluted earnings per share
|
$ 0.28
|
|
$
1.25
|
|
$
0.95
|
|
$
0.39
|
|
$
2.85
|
Weighted average common and common equivalent shares
of Realogy Holdings outstanding:
|
|
|
|
|
Basic
|
115.9
|
|
116.5
|
|
116.6
|
|
116.6
|
|
116.4
|
Diluted
|
118.4
|
|
119.3
|
|
120.3
|
|
120.4
|
|
120.2
|
Table 7
REALOGY HOLDINGS CORP.
NON-GAAP
RECONCILIATION - FREE CASH FLOW
THREE MONTHS ENDED
MARCH 31, 2022 AND 2021
(In millions)
A reconciliation of net income attributable to Realogy Holdings
to Free Cash Flow is set forth in the following table:
|
Three Months Ended
March 31,
|
|
2022
|
|
2021
|
Net income
attributable to Realogy Holdings
|
$
23
|
|
$
33
|
Income tax expense, net
of payments
|
10
|
|
15
|
Interest expense,
net
|
18
|
|
38
|
Cash interest
payments
|
(58)
|
|
(14)
|
Depreciation and
amortization
|
51
|
|
51
|
Capital
expenditures
|
(29)
|
|
(23)
|
Restructuring costs and
former parent legacy items, net of payments
|
—
|
|
(5)
|
Impairments
|
—
|
|
1
|
Loss on the early
extinguishment of debt
|
92
|
|
17
|
Gain on the sale of
business, net
|
(131)
|
|
—
|
Working capital
adjustments
|
(203)
|
|
(169)
|
Relocation receivables
(assets), net of securitization obligations
|
(48)
|
|
(11)
|
Free Cash
Flow
|
$
(275)
|
|
$
(67)
|
A reconciliation of net cash used in operating activities to
Free Cash Flow is set forth in the following table:
|
Three Months Ended
March 31,
|
|
2022
|
|
2021
|
Net cash used in
operating activities
|
$
(233)
|
|
$
(37)
|
Property and equipment
additions
|
(29)
|
|
(23)
|
Net change in
securitization
|
(13)
|
|
(7)
|
Effect of exchange
rates on cash and cash equivalents
|
—
|
|
—
|
Free Cash
Flow
|
$
(275)
|
|
$
(67)
|
|
|
|
|
Net cash provided by
(used in) investing activities
|
$
36
|
|
$
(32)
|
Net cash used in
financing activities
|
$
(237)
|
|
$
(45)
|
Table 8a
NON-GAAP RECONCILIATION - SENIOR SECURED
LEVERAGE RATIO
FOR THE FOUR-QUARTER PERIOD ENDED
MARCH 31, 2022
(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 March 31, 2022, 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 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
March 31, 2022 with a ratio of negative 0.02 to 1.00.
A reconciliation of net 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 March 31, 2022 is set forth in
the following table:
|
|
|
Less
|
|
Equals
|
|
Plus
|
|
Equals
|
|
Year
Ended
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
Three Months
Ended
|
|
Twelve
Months
Ended
|
|
December 31,
2021
|
|
March 31,
2021
|
|
December 31,
2021
|
|
March 31,
2022
|
|
March 31,
2022
|
Net income attributable
to Realogy Group (a)
|
$
343
|
|
$
33
|
|
$
310
|
|
$
23
|
|
$
333
|
Income tax
expense
|
133
|
|
17
|
|
116
|
|
12
|
|
128
|
Income before income
taxes
|
476
|
|
50
|
|
426
|
|
35
|
|
461
|
Depreciation and
amortization
|
204
|
|
51
|
|
153
|
|
51
|
|
204
|
Interest expense,
net
|
190
|
|
38
|
|
152
|
|
18
|
|
170
|
Restructuring costs,
net
|
17
|
|
5
|
|
12
|
|
4
|
|
16
|
Impairments
|
4
|
|
1
|
|
3
|
|
—
|
|
3
|
Former parent legacy
cost, net
|
1
|
|
—
|
|
1
|
|
—
|
|
1
|
Loss on the early
extinguishment of debt
|
21
|
|
17
|
|
4
|
|
92
|
|
96
|
Gain on the sale of
business, net
|
(11)
|
|
—
|
|
(11)
|
|
(131)
|
|
(142)
|
Operating EBITDA
(b)
|
902
|
|
162
|
|
740
|
|
69
|
|
809
|
Bank covenant
adjustments:
|
|
|
Pro
forma effect of business optimization initiatives (c)
|
|
42
|
Non-cash charges (d)
|
|
25
|
Pro
forma effect of acquisitions and new franchisees (e)
|
|
7
|
Incremental securitization interest costs (f)
|
|
3
|
EBITDA as defined
by the Senior Secured Credit Agreement*
|
|
$
886
|
Total senior secured
net debt (g)
|
|
$
(16)
|
Senior secured
leverage ratio*
|
|
(0.02)
x
|
_______________
|
|
|
(a)
|
Net income attributable
to Realogy consists of: (i) income of $149 million for the second
quarter of 2021, (ii) income of $114 million for the third quarter
of 2021, (iii) income of $47 million for the fourth quarter of 2021
and (iv) income of $23 million for the first quarter of
2022.
|
(b)
|
Operating EBITDA
consists of: (i) $310 million for the second quarter of 2021, (ii)
$273 million for the third quarter of 2021, (iii) $157 million for
the fourth quarter of 2021 and (iv) $69 million for the first
quarter of 2022.
|
(c)
|
Represents the
four-quarter pro forma effect of business optimization
initiatives.
|
(d)
|
Represents the
elimination of non-cash expenses including $29 million of
stock-based compensation expense and $1 million of foreign exchange
expense less $3 million for the change in the allowance for
doubtful accounts and notes reserves and $2 million of other items
for the four-quarter period ended March 31, 2022.
|
(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 April 1, 2021. 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 April 1, 2021.
|
(f)
|
Incremental borrowing
costs incurred as a result of the securitization facilities
refinancing for the twelve months ended March 31,
2022.
|
(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 $231
million plus $24 million of finance lease obligations less $271
million of readily available cash as of March 31, 2022. Pursuant to
the terms of our senior secured credit facilities, total senior
secured net debt does not include our securitization obligations 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, 5.75% Senior Notes due
2029 and 5.25% Senior Notes due 2030. Exchangeable Senior Notes
refers to our 0.25% Exchangeable Senior Notes due 2026.
|
|
|
Table 8b
NET DEBT LEVERAGE RATIO
FOR THE
FOUR-QUARTER PERIOD ENDED MARCH 31, 2022
(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
March 31, 2022 (referred to as net debt leverage ratio) is set
forth in the following table:
|
|
As of March 31,
2022
|
Revolving Credit
Facility
|
|
—
|
Extended Term Loan
A
|
|
231
|
4.875% Senior
Notes
|
|
407
|
5.75% Senior
Notes
|
|
900
|
5.25% Senior
Notes
|
|
1,000
|
0.25% Exchangeable
Senior Notes
|
|
403
|
Finance lease
obligations
|
|
24
|
Corporate Debt (excluding securitizations)
|
|
2,965
|
Less: Cash and cash equivalents
|
|
306
|
Net Corporate Debt
(excluding securitizations)
|
|
$
2,659
|
|
|
|
EBITDA as defined by
the Senior Secured Credit Agreement (a)
|
|
$
886
|
|
|
|
Net Debt Leverage
Ratio (b)
|
|
3.0 x
|
_______________
|
|
|
(a)
|
See Table 8a for a
reconciliation of Net 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 Unsecured Notes), except that
under the 5.75% Senior Notes and 5.25% Senior Notes 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 (gain) loss on the sale of
investments or other assets and 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 sale of investments or other assets, (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.