Realogy Reports Fourth Quarter And Full Year 2019 Financial Results

2/25/20

Realogy Holdings Corp. (NYSE: RLGY), the largest full-service residential real estate services company in the United States, today reported financial results for the fourth quarter and full year ended December 31, 2019.

"In 2019 we accelerated our efforts to support and grow Realogy's affiliated agents and franchisees, delivering new products and partnerships to enhance our value proposition, generate high-quality leads, and enhance the consumer experience," said Ryan Schneider, Realogy's chief executive officer and president. "Our industry leading foundation – substantial size and scale, strong brands, deep technology and data access, and solid financial engine – combined with our 2019 accomplishments, a more rational competitive environment late in the year, and improving housing market, continue to drive my excitement for Realogy in the year ahead."

"The fourth quarter marked a strong close to Realogy's year, driven by solid performance, both financially and operationally, across the business," said Charlotte Simonelli, Realogy's executive vice president, chief financial officer and treasurer. "In 2019, we demonstrated a willingness to change our business mix to optimize our capital deployment and simplify our company, and we will remain thoughtful and deliberate in our approach as we work to build a stronger overall financial profile for Realogy."

On November 7, 2019, the Company announced an agreement to sell its global employee relocation business, which we refer to as "Cartus Relocation Services" and, accordingly, this business is now reported as discontinued operations. The sale does not include "Realogy Leads Group" – the Company's affinity and broker-to-broker businesses as well as its broker network. We have noted in this release those non-GAAP metrics that include discontinued operations. The transaction is expected to close in the next couple of months, subject to the satisfaction or waiver of closing conditions.

Fourth Quarter 2019 Highlights

  • Generated Revenue of $1.3 billion, an increase of 4% year over year.
  • Delivered 6% transaction volume growth with solidly positive growth across both our owned and franchise businesses.
  • Reported a Net loss of $45 million, driven by the fair value adjustment on the assets being sold as well as tax expense associated with the tax gain on the relocation sale.
  • Generated Operating EBITDA including discontinued operations of $126 million, an increase of 19% year- over-year (See Table 4a).
  • Achieved approximately $30 million of realized cost savings.
  • Delivered Operating EBITDA margin improvement at Realogy.
  • Generated Free Cash Flow including discontinued operations of $77 million (See Table 6).

Full Year 2019 Highlights

  • Generated Revenue of $5.6 billion, a decrease of 3% year over year.
  • Reported a Net loss of $188 million due predominately to the impairment charge taken in third quarter of 2019, the tax expense associated with the tax gain on the relocation sale, and higher interest expense.
  • Generated Operating EBITDA including discontinued operations of $590 million (See Table 4b).
  • Generated Free Cash Flow including discontinued operations of $226 million (See Table 6).
  • Reduced net debt by $78 million from December 31, 2018 (See Table 7b).
  • Grew the Realogy Brokerage Group (formerly NRT) agent base by approximately 4% year-over-year to 52,200.
  • Commission split pressure continued to moderate versus 2018 and 2017.
  • Substantially enhanced our value proposition with new marketing, tech and data, and consumer products as well as new lead generation programs and partnerships.

Q4 and Full Year 2019 Financial Highlights

The following tables sets forth Realogy's financial highlights for the periods presented (in millions, except per share data) (unaudited):

Balance Sheet and Capital Allocation

The Company ended the year with cash and cash equivalents of $235 million. Total corporate debt, including the short-term portion, net of cash and cash equivalents (net corporate debt), totaled $3.3 billion at December 31, 2019. The Company's Net Debt Leverage Ratio was 5.2 times at December 31, 2019. The Net Debt Leverage Ratio is net corporate debt divided by EBITDA, as defined by the Senior Secured Credit Facility, for the four-quarter period ended December 31, 2019. Earnings from Cartus Relocation Services have been excluded from EBITDA, as defined by the Senior Secured Credit Facility, ahead of the receipt of sale proceeds. Including earnings from the relocation business of $28 million, the Company's Net Debt Leverage Ratio would have been 5.0x.

In November 2019, the Company announced the sale of Cartus Relocation Services for an initial cash payment of $375 million, subject to closing adjustments, plus a $25 million deferred cash payment. The Company intends to use a substantial portion of the net sale proceeds to pay down debt.

The Company expects to prioritize investing in its business and reducing leverage over other potential uses of cash.

A consolidated balance sheet is included as Table 2 of this press release.

About Realogy Holdings Corp.

Realogy Holdings Corp. (NYSE: RLGY) is the leading and most integrated provider of U.S. residential real estate services, encompassing franchise, brokerage, and title and settlement businesses as well as a mortgage joint venture. Realogy's diverse brand portfolio includes some of the most recognized names in real estate: Better Homes and Gardens® Real Estate, CENTURY 21®, Coldwell Banker®, Coldwell Banker Commercial®, Corcoran®, ERA®, and Sotheby's International Realty®. Using innovative technology, data and marketing products, best-in-class learning and support services, and high-quality lead generation programs, Realogy fuels the productivity of independent sales agents, helping them build stronger businesses and best serve today's consumers. Realogy's affiliated brokerages operate around the world with approximately 189,900 independent sales agents in the United States and more than 112,500 independent sales agents in 113 other countries and territories. Recognized for nine consecutive years as one of the World's Most Ethical Companies, Realogy has also been designated a Great Place to Work and one of Forbes' Best Employers for Diversity. Realogy is headquartered in Madison, New Jersey.