REALOGY REPORTS FIRST QUARTER 2022 FINANCIAL RESULTS
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):
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.
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.
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.
Table 1 - REALOGY HOLDINGS CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
TABLE 1a - REALOGY HOLDINGS CORP. NON-GAAP RECONCILIATION ADJUSTED NET (LOSS) INCOME AND ADJUSTED (LOSS) EARNINGS PER SHARE
Table 2 - REALOGY HOLDINGS CORP. CONDENSED CONSOLIDATED BALANCE SHEETS
Table 3 - REALOGY HOLDINGS CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Table 4a - REALOGY HOLDINGS CORP. 2022 vs 2021 KEY DRIVERS
Table 4b - REALOGY HOLDINGS CORP. 2021 KEY DRIVERS
Table 5 - REALOGY HOLDINGS CORP. NON-GAAP RECONCILIATION - OPERATING EBITDA THREE MONTHS ENDED MARCH 31, 2022 and 2021
Table 6a - REALOGY HOLDINGS CORP. SELECTED 2022 FINANCIAL DATA
Table 6b - REALOGY HOLDINGS CORP. SELECTED 2021 FINANCIAL DATA
Table 6c - REALOGY HOLDINGS CORP. 2021 CONSOLIDATED STATEMENTS OF OPERATIONS
Table 7 - REALOGY HOLDINGS CORP. NON-GAAP RECONCILIATION - FREE CASH FLOW THREE MONTHS ENDED MARCH 31, 2022 AND 2021
Table 8a - NON-GAAP RECONCILIATION - SENIOR SECURED LEVERAGE RATIO FOR THE FOUR-QUARTER PERIOD ENDED MARCH 31, 2022
Table 8b - NET DEBT LEVERAGE RATIO FOR THE FOUR-QUARTER PERIOD ENDED MARCH 31, 2022
Table 9 - NON-GAPP DEFINITIONS