Realogy Holdings Corp. (NYSE:RLGY), the largest full-service residential real estate services company in the United States, today reported financial results for the third quarter ended September 30, 2016, including the following highlights
| • | Revenue of $1.64 billion, a 1% decrease as compared to the third quarter of 2015, was primarily driven by lower homesale transaction volume at NRT along with lower referral revenue at Cartus, and partially offset by higher purchase and refinance closing unit volume at Title Resource Group (TRG). |
| • | The Company’s combined homesale transaction volume increased 2% in the quarter, consisting of a 4% volume gain at the Realogy Franchise Group (RFG) and a 3% decline in volume at NRT. |
| • | Net income for the period was $106 million, compared to $110 million in the third quarter of 2015. Basic earnings per share (EPS) was $0.74, compared to $0.75in third quarter of 2015 (See Table 1). |
| • | Adjusted net income was $108 million and adjusted basic EPS was $0.75, decreases of 3% and 1%, respectively, compared to the third quarter of 2015 (See Table 1a).1 |
| • | Operating EBITDA was $279 million, compared to $295 million in the third quarter of 2015, a year-over-year decrease of 5% (See Table 6).2 |
| • | During the third quarter, Realogy repurchased approximately 2.5 million shares of Realogy’s common stock in the open market at a weighted average market price of $27 per share for a total of $67 million. Year-to-date, the Company has repurchased $134 million, or approximately 4.5 million shares, of common stock in the open market. |
| • | As previously announced, the Company declared a quarterly cash dividend of $0.09 per share of the Company’s common stock. The dividend payment was made on Aug. 31, 2016 to shareholders of record as of the close of business on Aug. 17, 2016. The next dividend payment will be made on Dec. 1, 2016 to shareholders of record as of the close of business on Nov. 17, 2016. |
| • | The Company continued to execute on its business optimization program, improving the efficiency and effectiveness of the cost structure of each of the Company’s business units. The Company expects to realize over $30 million in actual savings in 2016 and is on track to reach its annualized run-rate savings target of $60 million in 2017. The total cost to implement the program is $69 million, of which $40 million has been incurred to date. |
“While our third quarter results reflect continued pressure on NRT as expected, we have moved aggressively to improve the business and enhance NRT’s competitiveness with an infusion of talent and new growth initiatives,” said Richard A. Smith, Realogy’s chairman, chief executive officer and president. “We expect these initiatives to put near-term pressure on margins, but anticipate that the resulting increase in revenue will deliver improved financial results over time and position us well to achieve our long-term goals and drive shareholder value.”
Operational Results
In the third quarter of 2016, Realogy’s franchise (RFG) and Company-owned (NRT) business segments achieved a combined homesale transaction volume (transaction sides multiplied by average sale price) increase of 2% as compared to the third quarter of 2015, which was within the Company’s previous guidance range. RFG reported a homesale transaction sides increase of 1% and an average homesale price increase of 3%. NRT reported a homesale transaction sides decrease of 4% and an average homesale price increase of 1%.
In the title and settlement services sector, TRG was involved in the closing of approximately 58,000 transactions during the quarter, reflecting a 4% increase in purchase units and a 52% increase in refinance units as compared to the third quarter of 2015. These results include the benefits of the acquisition of TitleOne in the third quarter.
Looking Ahead
For the fourth quarter of 2016, Realogy expects to achieve overall homesale transaction volume gains in the range of 3% to 5% year-over-year. RFG’s fourth quarter transaction volume is expected to increase 4% to 6% and NRT transaction volume is expected to increase 1% to 3%.
For the full year 2016, the Company expects homesale transaction volume gains in the range of 3% to 4% year-over-year. Realogy also expects to deliver Operating EBITDA of between $750 million and $770 million, yielding approximately $425 million to $450 million of free cash flow.
“Our business model continues to generate significant free cash flow, which enabled us to accelerate share repurchases during the third quarter,” said Anthony E. Hull, Realogy’s executive vice president, CFO and treasurer. “We will continue to be thoughtful about deploying our free cash flow, with a balanced approach to delevering, acquisitions and returning capital to shareholders.”
Balance Sheet
The Company ended the quarter with cash and cash equivalents of $224 million. Total long-term corporate debt, including the short-term portion, net of cash and cash equivalents (net corporate debt), totaled $3.3 billion at September 30, 2016. Our net debt leverage3 was 3.8 times at September 30, 2016.
A consolidated balance sheet is included as Table 2 of this press release.
Investor Conference Call
Today, November 4, at 8:30 a.m. (EDT), Realogy will hold a conference call via webcast to review its third quarter 2016 results. The call will be hosted by Richard A. Smith, chairman, chief executive officer and president, and Anthony E. Hull, executive vice president, chief financial officer and treasurer, and will conclude with an investor Q&A period with management.
Investors may access the conference call live via webcast at www.realogy.com under “Investors” or by dialing (888) 895-3527 (toll free); international participants should dial (706) 679-2250. Please dial in at least 5 to 10 minutes prior to start time. A webcast replay also will be available from November 4 through November 18, 2016.
About Realogy Holdings Corp.
Realogy Holdings Corp. (NYSE:RLGY) is a global leader in residential real estate franchising and brokerage with many of the best-known industry brands including Better Homes and Gardens® Real Estate, CENTURY 21®, Coldwell Banker®, Coldwell Banker Commercial®, Corcoran®, ERA®, Sotheby’s International Realty® and ZipRealty®. Collectively, Realogy’s franchise system members operate approximately 13,650 offices with more than 268,000 independent sales associates conducting business in 111 countries and territories around the world. NRT LLC, Realogy’s company-owned real estate brokerage, is the largest residential brokerage company in the United States, operates under several of Realogy’s brands and also provides related residential real estate services.
