Realogy. Earnings Call Q1 2018

Transcription

1 Realogy Earnings Call Q1 2018

2 Management Presenters Ryan Schneider Chief Executive Officer and President Tony Hull Executive Vice President, Chief Financial Officer & Treasurer Alicia Swift Senior Vice President, Investor Relations and Financial Planning & Analysis 2

3 Important Disclosures Forward-Looking Statements This presentation contains forward-looking statements. The Company desires to take advantage of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995 and is including this statement for the express purpose of availing itself of the protections of the safe harbor with respect to all forward-looking statements. Therefore, the Company wishes to caution each participant to consider carefully the specific factors discussed with each forward-looking statement in this presentation and other factors contained in the Company s filings with the Securities and Exchange Commission under the captions Forward-Looking Statements, Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations as such factors in some cases have affected, and in the future (together with other factors) could affect, the ability of the Company to implement its business strategy and may cause actual results to differ materially from those contemplated by the statements expressed herein. The information contained in this presentation is as of May 3, The Company assumes no obligation to update the information or the forward-looking statements contained herein, whether as a result of new information or otherwise. RECIPIENTS ARE STRONGLY ADVISED TO READ THE COMPANY S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Non-GAAP Financial Measures Certain financial measures, as used in this presentation, are supplemental measures of the Company s performance that are not Generally Accepted Accounting Principles ( GAAP ) measures. Refer to slides of this presentation and Tables 1a, 4, 5a, 5b, 6,7 and 8 of the May 3 press release announcing first quarter 2018 financial results for the definitions of these non-gaap financial measures, a reconciliation of these measures to their most comparable GAAP measures, and the Company s explanation of why it believes these non-gaap measures are useful to investors. 3

4 Realogy's Advantages in Residential Real Estate Market Note: As reported in Realogy s Annual Report on Form 10-K for fiscal year 2017, we estimate that our market share in 2017 was 15.9%, calculated in the manner set forth under Item 1. Business. 4

5 Q Key Revenue Drivers Q vs. Q Amount % Change Realogy Franchise Group Closed Homesale Sides 223,990 (1)% Average Homesale Price $292,580 6% Average Broker Commission Rate 2.50% bps NRT Closed Homesale Sides 66,097 (1)% Average Homesale Price $525,020 3% Average Broker Commission Rate 2.45% bps Cartus Initiations 37,953 4% Referrals 16,031 5% Title Resource Group Purchase Title and Closing Units 31,741 1% Refinance Title and Closing Units 5,410 (37)% Average Fee per Closing Unit $2,161 8% 5

6 Q Results Net Revenue: $1.2 billion Up 2% compared with Q Operating EBITDA 1 : $34 million Consistent with guidance Net Loss and Net Loss Per Share: $(67) million, or $(0.51) per share Compared with $(28) million, or $(0.20) per share in Q Adjusted Net Loss and Adjusted Loss Per Share 2 : Free Cash Flow 3 and Capital Return: $(49) million, or $(0.38) per share $(166) million Compared with $(23) million, or $(0.16) per share in Q Returned $111 million in share repurchases and dividends 1 See Slide 15 for a reconciliation from Net Loss attributable to the Company to Operating EBITDA 2 See Table 1a of our May 3, 2018 press release for a reconciliation from Net Loss to Adjusted Net Loss 3 See Slide 17 for a reconciliation from Net Loss to Free Cash Flow 6

7 Business Unit Revenue Net Revenue ($ in millions) Q Q $ Change % Change RFG $176 $170 $6 4% NRT % Cartus % TRG % Intercompany Eliminations (63) (61) (2) * Total Revenue $1,229 $1,203 $26 2% * Not meaningful 7

8 Business Operating EBITDA Net Revenue ($ in millions) Q Q $ Change % Change RFG $105 $102 $3 3 % NRT (before PHHHL JV Losses) (45) (17) (28) ** PHHHL JV Losses* (4) 4 ** Cartus (1) 1 (2) ** TRG (6) 2 (8) ** Corporate (19) (23) 4 ** Total Operating EBITDA $34 $61 $(27) (44)% Note: See Slides for a reconciliation of Operating EBITDA to Net Income Loss * NRT results exclude equity losses related to our former investment in PHH Home Loans LLC ( PHHHL JV Losses ), our former home mortgage joint venture with PHH Corporation ( PHH ). The current mortgage joint venture with Guaranteed Rate is reported in the TRG segment ** Not meaningful 8

9 Q Guidance Housing Metric Guidance Range Transaction Volume (both RFG and NRT) 2% to 5% Sides -2% to flat Price 4% to 5% RFG transaction volume 3 to 5% NRT transaction volume 1 to 3% Guidance is as of May 3rd,

10 Appendix

11 Existing Home Sale Transaction Volume 35% National Association of Realtors vs. Realogy % 15% 5% -5% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 NAR (sides x Average price) RFG (sides x price) NRT (sides x price) Source: National Association of Realtors, Realogy data 11

12 Capitalization Table Pricing Maturity As of March 31 Cash and Cash Equivalents $182 Revolver L+200 (1) February 2023 $302 Term Loan A L+200 (1) February 2023 $750 Term Loan B L+225 (2) February 2025 $1,077 Senior Notes 4.50% April 2019 $450 Senior Notes 5.25% December 2021 $550 Senior Notes 4.875% June 2023 $500 Net Corporate Debt (excluding securitizations) $3,447 Net Debt Leverage Ratio (3) 4.3x 1) Adjusts up or down based on the previous quarter senior secured leverage ratio as defined by the senior secured credit facilities 2) Includes 75 basis points LIBOR floor 3) Defined as net corporate debt divided by EBITDA as defined by the senior secured credit facilities. See Table 7 of our May 3, 2018 press release for a Net Debt Leverage Ratio calculation 12

13 2018 Industry Forecasts Industry Forecasts YoY % change 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% -1% 6.2% volume NAR 6.6% volume 4.4% 4.9% 5.1% FNMA Freddie Mac 6.9% volume ~6% average 4.1% volume 2.0% 1.8% 1.7% 1.8% 2.1% MBA volume increase Existing Homesale Units Existing Home Median Price NAR forecast is as of the May Outlook. FNMA, Freddie Mac and MBA forecasts are as of the April Outlook. NAR, FNMA and MBA forecasts reflect unit and median prices increases. Freddie Mac price increases are represented by their respective Home Price Indices. Freddie Mac forecasts total homesale units (new + existing), which the Company adjusts by NAR projected new homesales 13

14 Seasonal Revenue Trends $2,000 Quarterly Revenue $1,800 $1,662 $1,644 $1,793 $1,674 $1,600 $1,400 $1,200 $1,134 $1,370 $1,444 $1,203 $1,229 $ Millions $1,000 $800 $600 $400 $200 $ Q1 Q2 Q3 Q4 14

15 GAAP Reconciliation For the Three Months Ended ($ in millions) March 31, 2018 March 31, 2017 Net loss attributable to Realogy $(67) $(28) Income tax benefit (19) (9) Loss before income taxes (86) (37) Depreciation and amortization (a) Interest expense, net Restructuring costs 30 5 Loss on the early extinguishment of debt 7 4 Operating EBITDA $34 $61 (a) Depreciation and amortization for the three months ended March 31, 2018 includes $2 million of amortization expense related to Guaranteed Rate Affinity's purchase accounting included in the "Equity in losses of unconsolidated entities" line on the Condensed Consolidated Statement of Operations Note: Refer to Table 8 of the Press Release dated May 3, 2018 for the definitions of certain non-gaap financial measures and the Company s explanation of why it believes those non-gaap measures are useful to investors 15

16 GAAP Reconciliation For the Three Months Ended ($ in millions) March 31, 2018 March 31, 2017 RFG $105 $102 NRT (45) (21) Cartus (1) 1 TRG (6) 2 Corporate and Other (19) (23) Operating EBITDA Total Company $34 $61 Less: Depreciation and amortization (a) Interest expense, net Income tax benefit (19) (9) Restructuring costs (b) 30 5 Loss on the early extinguishment of debt 7 4 Net loss attributable to Realogy $(67) $(28) (a) Depreciation and amortization for the three months ended March 31, 2018 includes $2 million of amortization expense related to Guaranteed Rate Affinity's purchase accounting included in the "Equity in losses of unconsolidated entities" line on the Condensed Consolidated Statement of Operations (b) Restructuring charges incurred for the three months ended March 31, 2018 include $2 million at RFG, $17 million at NRT, $8 million at Cartus, $1 million at TRG and $2 million at Corporate and Other. Restructuring charges incurred for the three months ended March 31, 2017 include $5 million at NRT Note: Refer to Table 8 of the Press Release dated May 3, 2018 for the definitions of certain non-gaap financial measures and the Company s explanation of why it believes those non-gaap measures are useful to investors 16

17 GAAP Reconciliation For the Three Months Ended ($ in millions) March 31, 2018 March 31, 2017 Net loss attributable to Realogy ($67) ($28) Income tax benefit, net of payments (23) (11) Interest expense, net Cash interest payments (21) (24) Depreciation and amortization Capital expenditures (25) (28) Restructuring costs and former parent legacy items, net of payments 19 (3) Loss on the early extinguishment of debt 7 4 Working capital adjustments (99) (60) Relocation receivables (assets), net of securitization obligations (38) (11) Free Cash Flow $(166) $(72) Note: Refer to Table 8 of the Press Release dated May 3, 2018 for the definitions of certain non-gaap financial measures and the Company s explanation of why it believes those non-gaap measures are useful to investors 17