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As Of Filer Filing For·On·As Docs:Size 8/08/19 Realogy Holdings Corp. 8-K:2,9 8/08/19 13:1.3M Realogy Group LLC |
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Exhibit |
• | Generated Operating EBITDA of $245 million (See Table 4a). |
• | Delivered net income of $69 million and Adjusted net income of $95 million (See Table 1a).
|
• | Tracking to achieve $70 million of realized cost savings with 60% of actions already completed toward this target. Through Q2 2019, $22 million of the $70 million in cost savings identified for 2019 have been realized through the income statement. |
• | Reduced net corporate debt by $113 million from March 31, 2019 (See Table 7b). |
• | Increased
agent engagement with Social Ad Engine, the marketing product we launched with Facebook/Instagram in the first quarter of 2019. Thousands of marketing campaigns have already delivered over 85,000 leads for our agents. |
• | Expanded Listing Concierge to about 60% of the NRT footprint with agents continuing to achieve higher commission rates from home sellers compared to agents who do not use the product. |
• | Continued moderation in commission split pressure, up only 21 basis points year-over-year. |
• | Grew
the NRT agent base approximately 2% to 51,000 in the second quarter of 2019. |
Three
Months Ended June 30, | ||||||||||||||
2019 | 2018 | Change | % Change | |||||||||||
Revenue | $ | 1,735 | $ | 1,820 | $ | (85 | ) | (5 | )% | |||||
Operating
EBITDA 1 | $ | 245 | $ | 276 | $ | (31 | ) | (11 | %) | |||||
Net
Income | $ | 69 | $ | 123 | $ | (54 | ) | (44 | )% | |||||
Adjusted
Net Income 2 | $ | 95 | $ | 127 | $ | (32 | ) | (25 | )% | |||||
Earnings
Per Share | $ | 0.60 | $ | 0.97 | $ | (0.37 | ) | (38 | )% | |||||
Adjusted
Earnings per Share 2 | $ | 0.83 | $ | 1.00 | $ | (0.17 | ) | (17 | )% | |||||
Free
Cash Flow 3 | $ | 147 | $ | 192 | $ | (45 | ) | (23 | )% | |||||
Net
Cash provided by operating activities | $ | 159 | $ | 139 | $ | 20 | 14 | % | ||||||
Select
Key Drivers | ||||||||||||||
RFG 4 5 | ||||||||||||||
Closed
homesale sides | 301,377 | 313,278 | (4 | %) | ||||||||||
Average homesale price | $ | 318,799 | $ | 312,087 | 2 | % | ||||||||
NRT
5 | ||||||||||||||
Closed homesale sides | 95,251 | 100,745 | (5 | %) | ||||||||||
Average
homesale price | $ | 540,725 | $ | 537,748 | 1 | % | ||||||||
Cartus | ||||||||||||||
Initiations | 50,586 | 53,230 | (5 | %) | ||||||||||
Referrals | 24,141 | 25,562 | (6 | %) | ||||||||||
TRG | ||||||||||||||
Purchase
title and closing units | 42,202 | 46,189 | (9 | %) | ||||||||||
Refinance title and closing units | 5,270 | 4,782 | 10 | % |
Three
Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenues | |||||||||||||||
Gross
commission income | $ | 1,310 | $ | 1,388 | $ | 2,109 | $ | 2,290 | |||||||
Service
revenue | 253 | 263 | 441 | 460 | |||||||||||
Franchise fees | 112 | 114 | 182 | 193 | |||||||||||
Other | 60 | 55 | 117 | 106 | |||||||||||
Net
revenues | 1,735 | 1,820 | 2,849 | 3,049 | |||||||||||
Expenses | |||||||||||||||
Commission
and other agent-related costs | 955 | 1,009 | 1,530 | 1,654 | |||||||||||
Operating | 390 | 392 | 770 | 784 | |||||||||||
Marketing | 69 | 69 | 138 | 136 | |||||||||||
General
and administrative | 82 | 75 | 177 | 164 | |||||||||||
Restructuring costs, net | 9 | 6 | 21 | 36 | |||||||||||
Impairment | 2 | — | 3 | — | |||||||||||
Depreciation
and amortization | 50 | 49 | 99 | 97 | |||||||||||
Interest expense, net | 81 | 46 | 144 | 79 | |||||||||||
Loss
on the early extinguishment of debt | — | — | 5 | 7 | |||||||||||
Total expenses | 1,638 | 1,646 | 2,887 | 2,957 | |||||||||||
Income
(loss) before income taxes, equity in (earnings) losses and noncontrolling interests | 97 | 174 | (38 | ) | 92 | ||||||||||
Income tax expense (benefit) | 34 | 52 | (1 | ) | 33 | ||||||||||
Equity
in (earnings) losses of unconsolidated entities | (7 | ) | (2 | ) | (8 | ) | 2 | ||||||||
Net income (loss) | 70 | 124 | (29 | ) | 57 | ||||||||||
Less:
Net income attributable to noncontrolling interests | (1 | ) | (1 | ) | (1 | ) | (1 | ) | |||||||
Net income (loss) attributable to Realogy Holdings | $ | 69 | $ | 123 | $ | (30 | ) | $ | 56 | ||||||
Earnings
(loss) per share attributable to Realogy Holdings: | |||||||||||||||
Basic earnings (loss) per share | $ | 0.60 | $ | 0.97 | $ | (0.26 | ) | $ | 0.44 | ||||||
Diluted
earnings (loss) per share | $ | 0.60 | $ | 0.96 | $ | (0.26 | ) | $ | 0.43 | ||||||
Weighted
average common and common equivalent shares of Realogy Holdings outstanding: | |||||||||||||||
Basic | 114.3 | 126.5 | 114.1 | 128.4 | |||||||||||
Diluted | 114.9 | 127.6 | 114.1 | 129.7 |
Three Months Ended June 30, | Six
Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income (loss) attributable to Realogy Holdings | $ | 69 | $ | 123 | $ | (30 | ) | $ | 56 | ||||||
Addback: | |||||||||||||||
Mark-to-market
interest rate swap losses (gains) | 24 | — | 38 | (12 | ) | ||||||||||
Restructuring costs, net | 9 | 6 | 21 | 36 | |||||||||||
Impairment | 2 | — | 3 | — | |||||||||||
Loss
on the early extinguishment of debt | — | — | 5 | 7 | |||||||||||
Adjustments for tax effect (a) | (9 | ) | (2 | ) | (18 | ) | (8 | ) | |||||||
Adjusted
net income attributable to Realogy Holdings | $ | 95 | $ | 127 | $ | 19 | $ | 79 | |||||||
Earning
per share | |||||||||||||||
Basic earnings (loss) per share: | $ | 0.60 | $ | 0.97 | $ | (0.26 | ) | $ | 0.44 | ||||||
Diluted
earnings (loss) per share: | $ | 0.60 | $ | 0.96 | $ | (0.26 | ) | $ | 0.43 | ||||||
Adjusted
earnings per share | |||||||||||||||
Adjusted basic earnings per share: | $ | 0.83 | $ | 1.00 | $ | 0.17 | $ | 0.62 | |||||||
Adjusted
diluted earnings per share: | $ | 0.83 | $ | 1.00 | $ | 0.17 | $ | 0.61 | |||||||
Weighted
average common and common equivalent shares outstanding: | |||||||||||||||
Basic: | 114.3 | 126.5 | 114.1 | 128.4 | |||||||||||
Diluted: | 114.9 | 127.6 | 114.1 | 129.7 |
(a) | Reflects
tax effect of adjustments at the Company's blended state and federal statutory rate. |
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 270 | $ | 225 | |||
Restricted
cash | 8 | 13 | |||||
Trade receivables (net of allowance for doubtful accounts of $12 and $9) | 185 | 146 | |||||
Relocation receivables | 290 | 231 | |||||
Other
current assets | 157 | 153 | |||||
Total current assets | 910 | 768 | |||||
Property and equipment, net | 311 | 304 | |||||
Operating
lease assets, net | 536 | — | |||||
Goodwill | 3,712 | 3,712 | |||||
Trademarks | 749 | 749 | |||||
Franchise
agreements, net | 1,193 | 1,227 | |||||
Other intangibles, net | 240 | 254 | |||||
Other non-current assets | 303 | 276 | |||||
Total
assets | $ | 7,954 | $ | 7,290 | |||
LIABILITIES AND EQUITY | |||||||
Current
liabilities: | |||||||
Accounts payable | $ | 198 | $ | 147 | |||
Securitization obligations | 204 | 231 | |||||
Current
portion of long-term debt | 364 | 748 | |||||
Current portion of operating lease liabilities | 131 | — | |||||
Accrued expenses and other current liabilities | 383 | 401 | |||||
Total
current liabilities | 1,280 | 1,527 | |||||
Long-term debt | 3,325 | 2,800 | |||||
Long-term operating lease liabilities | 465 | — | |||||
Deferred
income taxes | 385 | 389 | |||||
Other non-current liabilities | 246 | 259 | |||||
Total liabilities | 5,701 | 4,975 | |||||
Commitments
and contingencies | |||||||
Equity: | |||||||
Realogy Holdings preferred stock: $.01 par value; 50,000,000 shares authorized, none issued and outstanding at June 30, 2019 and December 31, 2018 | — | — | |||||
Realogy
Holdings common stock: $.01 par value; 400,000,000 shares authorized, 114,303,786 shares issued and outstanding at June 30, 2019 and 114,620,499 shares issued and outstanding at December 31, 2018 | 1 | 1 | |||||
Additional paid-in capital | 4,837 | 4,869 | |||||
Accumulated
deficit | (2,537 | ) | (2,507 | ) | |||
Accumulated other comprehensive loss | (51 | ) | (52 | ) | |||
Total stockholders' equity | 2,250 | 2,311 | |||||
Noncontrolling
interests | 3 | 4 | |||||
Total equity | 2,253 | 2,315 | |||||
Total liabilities and equity | $ | 7,954 | $ | 7,290 |
Three
Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
2019 | 2018 | % Change | 2019 | 2018 | %
Change | |||||||||||||||||
RFG (a) | ||||||||||||||||||||||
Closed
homesale sides | 301,377 | 313,278 | (4 | %) | 504,039 | 537,268 | (6 | %) | ||||||||||||||
Average
homesale price | $ | 318,799 | $ | 312,087 | 2 | % | $ | 310,581 | $ | 303,955 | 2 | % | ||||||||||
Average
homesale broker commission rate | 2.47 | % | 2.48 | % | (1 | ) bps | 2.47 | % | 2.49 | % | (2 | )
bps | ||||||||||
Net royalty per side (b) | $ | 331 | $ | 336 | (1 | %) | $ | 320 | $ | 325 | (2 | %) | ||||||||||
NRT | ||||||||||||||||||||||
Closed
homesale sides | 95,251 | 100,745 | (5 | %) | 155,693 | 166,842 | (7 | %) | ||||||||||||||
Average
homesale price | $ | 540,725 | $ | 537,748 | 1 | % | $ | 529,543 | $ | 532,706 | (1 | %) | ||||||||||
Average
homesale broker commission rate | 2.41 | % | 2.43 | % | (2 | ) bps | 2.41 | % | 2.44 | % | (3 | )
bps | ||||||||||
Gross commission income per side | $ | 13,758 | $ | 13,804 | — | % | $ | 13,546 | $ | 13,750 | (1 | %) | ||||||||||
Cartus | ||||||||||||||||||||||
Initiations | 50,586 | 53,230 | (5 | %) | 89,070 | 91,183 | (2 | %) | ||||||||||||||
Referrals | 24,141 | 25,562 | (6 | %) | 39,020 | 41,088 | (5 | %) | ||||||||||||||
TRG | ||||||||||||||||||||||
Purchase
title and closing units | 42,202 | 46,189 | (9 | %) | 70,246 | 77,930 | (10 | %) | ||||||||||||||
Refinance
title and closing units | 5,270 | 4,782 | 10 | % | 9,281 | 10,192 | (9 | %) | ||||||||||||||
Average
fee per closing unit | $ | 2,356 | $ | 2,282 | 3 | % | $ | 2,320 | $ | 2,231 | 4 | % |
(a) | Includes
all franchisees except for NRT. |
(b) | The year-over-year decline of $5 in net royalty per side for the three-month period ended June 30, was primarily driven by three factors: (i) strategic growth initiatives, including the launch of a "capped fee model" in January 2019 for our Better Homes and Gardens® Real Estate franchise business, (ii) our increased utilization of incentives to attract new franchisees, grow franchisees or extend existing franchise agreements; and (iii) an increase in the concentration of homesale transaction volume in our top 250 franchisees. |
Quarter
Ended | Year Ended | |||||||||||||||||||
RFG (a) | ||||||||||||||||||||
Closed
homesale sides | 223,990 | 313,278 | 308,917 | 257,672 | 1,103,857 | |||||||||||||||
Average
homesale price | $ | 292,580 | $ | 312,087 | $ | 305,398 | $ | 301,345 | $ | 303,750 | ||||||||||
Average
homesale broker commission rate | 2.50 | % | 2.48 | % | 2.47 | % | 2.47 | % | 2.48 | % | ||||||||||
Net
royalty per side | $ | 310 | $ | 336 | $ | 322 | $ | 317 | $ | 323 | ||||||||||
NRT | ||||||||||||||||||||
Closed
homesale sides | 66,097 | 100,745 | 94,241 | 75,723 | 336,806 | |||||||||||||||
Average
homesale price | $ | 525,020 | $ | 537,748 | $ | 513,403 | $ | 515,452 | $ | 523,426 | ||||||||||
Average
homesale broker commission rate | 2.45 | % | 2.43 | % | 2.44 | % | 2.42 | % | 2.43 | % | ||||||||||
Gross
commission income per side | $ | 13,666 | $ | 13,804 | $ | 13,227 | $ | 13,162 | $ | 13,458 | ||||||||||
Cartus | ||||||||||||||||||||
Initiations | 37,953 | 53,230 | 42,718 | 37,541 | 171,442 | |||||||||||||||
Referrals | 15,526 | 25,562 | 24,769 | 18,641 | 84,498 | |||||||||||||||
TRG | ||||||||||||||||||||
Purchase
title and closing units | 31,741 | 46,189 | 43,836 | 35,462 | 157,228 | |||||||||||||||
Refinance
title and closing units | 5,410 | 4,782 | 4,264 | 4,039 | 18,495 | |||||||||||||||
Average
fee per closing unit | $ | 2,161 | $ | 2,282 | $ | 2,229 | $ | 2,227 | $ | 2,230 |
(a) | Includes
all franchisees except for NRT. |
Three Months Ended | |||||||
Net income attributable to Realogy Holdings | $ | 69 | $ | 123 | |||
Income tax expense | 34 | 52 | |||||
Income
before income taxes | 103 | 175 | |||||
Add: Depreciation and amortization | 50 | 49 | |||||
Interest expense, net | 81 | 46 | |||||
Restructuring
costs, net (a) | 9 | 6 | |||||
Impairment | 2 | — | |||||
Operating EBITDA | $ | 245 | $ | 276 |
Revenues
(b) | $ Change | % Change | Operating EBITDA | $ Change | % Change | Operating EBITDA Margin | Change | |||||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||||||
RFG | $ | 234 | $ | 237 | $ | (3 | ) | (1 | )% | $ | 163 | $ | 173 | $ | (10 | ) | (6 | )% | 70 | % | 73 | % | (3 | ) | ||||||||||||||
NRT | 1,331 | 1,408 | (77 | ) | (5 | ) | 47 | 61 | (14 | ) | (23 | ) | 4 | 4 | — | |||||||||||||||||||||||
Cartus | 97 | 105 | (8 | ) | (8 | ) | 27 | 34 | (7 | ) | (21) | 28 | 32 | (4 | ) | |||||||||||||||||||||||
TRG | 160 | 162 | (2 | ) | (1 | ) | 32 | 31 | 1 | 3 | 20 | 19 | 1 | |||||||||||||||||||||||||
Corporate
and Other | (87 | ) | (92 | ) | 5 | * | (24 | ) | (23 | ) | (1 | ) | * | |||||||||||||||||||||||||
Total
Company | $ | 1,735 | $ | 1,820 | $ | (85 | ) | (5 | )% | $ | 245 | $ | 276 | $ | (31 | ) | (11 | %) | 14 | % | 15 | % | (1 | ) |
Revenues | $ Change | %
Change | Operating EBITDA | $ Change | % Change | Operating EBITDA Margin | Change | |||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||||
RFG
(c) | $ | 147 | $ | 145 | 2 | 1 | % | $ | 76 | $ | 81 | (5 | ) | (6 | )% | 52 | % | 56 | % | (4 | ) | |||||||||||||||
NRT
(c) | 1,331 | 1,408 | (77 | ) | (5 | ) | 134 | 153 | (19 | ) | (12 | ) | 10 | 11 | (1 | ) | ||||||||||||||||||||
RFG
and NRT Combined | $ | 1,478 | $ | 1,553 | (75 | ) | (5 | )% | $ | 210 | $ | 234 | (24 | ) | (10 | )% | 14 | % | 15 | % | (1 | ) |
* | not meaningful. |
(a) | Restructuring charges incurred for the three months ended June 30, 2019 include $6 million at NRT, $1 million at Cartus, $1 million at TRG and $1 million at Corporate and Other. Restructuring charges incurred for the three months ended June 30,
2018 include $4 million at NRT, $1 million at Cartus and $1 million at TRG. |
(b) | Includes the elimination of transactions between segments, which consists of intercompany royalties and marketing fees paid by NRT of $87 million and $92 million during the three months ended June 30, 2019 and 2018,
respectively. |
(c) | The RFG and NRT segment numbers noted above do not reflect the impact of intercompany royalties and marketing fees paid by NRT to RFG of $87 million and $92 million during the three months ended June 30, 2019 and 2018, respectively. |
Six Months Ended | |||||||
Net
(loss) income attributable to Realogy Holdings | $ | (30 | ) | $ | 56 | ||
Income tax (benefit) expense | (1 | ) | 33 | ||||
Income
before income taxes | (31 | ) | 89 | ||||
Add: Depreciation and amortization (a) | 99 | 99 | |||||
Interest expense, net | 144 | 79 | |||||
Restructuring
costs, net (b) | 21 | 36 | |||||
Impairment | 3 | — | |||||
Loss on the early extinguishment of debt (c) | 5 | 7 | |||||
Operating
EBITDA | $ | 241 | $ | 310 |
Revenues
(d) | $ Change | % Change | Operating EBITDA | $ Change | % Change | Operating EBITDA Margin | Change | |||||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||||||
RFG | $ | 397 | $ | 413 | $ | (16 | ) | (4 | )% | $ | 253 | $ | 278 | $ | (25 | ) | (9 | )% | 64 | % | 67 | % | (3 | ) | ||||||||||||||
NRT | 2,147 | 2,325 | (178 | ) | (8 | ) | (15 | ) | 16 | (31 | ) | (194 | ) | (1 | ) | 1 | (2 | ) | ||||||||||||||||||||
Cartus | 173 | 184 | (11 | ) | (6 | ) | 29 | 33 | (4 | ) | (12) | 17 | 18 | (1 | ) | |||||||||||||||||||||||
TRG | 274 | 282 | (8 | ) | (3 | ) | 23 | 25 | (2 | ) | (8) | 8 | 9 | (1 | ) | |||||||||||||||||||||||
Corporate
and Other | (142 | ) | (155 | ) | 13 | * | (49 | ) | (42 | ) | (7 | ) | * | |||||||||||||||||||||||||
Total
Company | $ | 2,849 | $ | 3,049 | $ | (200 | ) | (7 | )% | $ | 241 | $ | 310 | $ | (69 | ) | (22 | %) | 8 | % | 10 | % | (2 | ) |
Revenues | $ Change | %
Change | Operating EBITDA | $ Change | % Change | Operating EBITDA Margin | Change | |||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||||
RFG
(e) | $ | 255 | $ | 258 | (3 | ) | (1 | )% | $ | 111 | $ | 123 | (12 | ) | (10 | )% | 44 | % | 48 | % | (4 | ) | ||||||||||||||
NRT
(e) | 2,147 | 2,325 | (178 | ) | (8 | ) | 127 | 171 | (44 | ) | (26 | ) | 6 | 7 | (1 | ) | ||||||||||||||||||||
RFG
and NRT Combined | $ | 2,402 | $ | 2,583 | (181 | ) | (7 | )% | $ | 238 | $ | 294 | (56 | ) | (19 | )% | 10 | % | 11 | % | (1 | ) |
* | not meaningful. |
(a) | Depreciation and amortization for the six months ended June 30, 2018 includes $2 million of amortization expense related to Guaranteed Rate Affinity's purchase accounting included in the "Equity in (earnings) losses of unconsolidated entities" line on the Condensed Consolidated Statement of Operations. |
(b) | Restructuring
charges incurred for the six months ended June 30, 2019 include $10 million at NRT, $4 million at Cartus, $2 million at TRG and $5 million at Corporate and Other. Restructuring charges incurred for the six months ended June 30, 2018 include $2 million at RFG, $21 million at NRT, $9 million at Cartus, $2 million
at TRG and $2 million at Corporate and Other. |
(c) | Loss on the early extinguishment of debt is recorded in the Corporate and Other segment. |
(d) | Includes the elimination of transactions between segments, which consists of intercompany royalties and marketing fees paid by NRT of $142 million and $155 million during the six months ended
June 30, 2019 and 2018, respectively. |
(e) | The RFG and NRT segment numbers noted above do not reflect the impact of intercompany royalties and marketing fees paid by NRT to RFG of $142 million and $155 million during the three months ended June 30, 2019 and 2018, respectively. |
Three Months Ended | |||||||
March
31, | |||||||
2019 | 2019 | ||||||
Net revenues (a) | |||||||
Real Estate Franchise Services | $ | 163 | $ | 234 | |||
Company
Owned Real Estate Brokerage Services | 816 | 1,331 | |||||
Relocation Services | 76 | 97 | |||||
Title and Settlement Services | 114 | 160 | |||||
Corporate
and Other | (55 | ) | (87 | ) | |||
Total Company | $ | 1,114 | $ | 1,735 | |||
Operating
EBITDA | |||||||
Real Estate Franchise Services | $ | 90 | $ | 163 | |||
Company Owned Real Estate Brokerage Services | (62 | ) | 47 | ||||
Relocation
Services | 2 | 27 | |||||
Title and Settlement Services | (9 | ) | 32 | ||||
Corporate and Other | (25 | ) | (24 | ) | |||
Total
Company | $ | (4 | ) | $ | 245 | ||
Non-GAAP Reconciliation - Operating EBITDA | |||||||
Total
Company Operating EBITDA | $ | (4 | ) | $ | 245 | ||
Less: Depreciation and amortization | 49 | 50 | |||||
Interest
expense, net | 63 | 81 | |||||
Income tax (benefit) expense | (35 | ) | 34 | ||||
Restructuring costs, net (b) | 12 | 9 | |||||
Impairment | 1 | 2 | |||||
Loss
on the early extinguishment of debt (c) | 5 | — | |||||
Net income (loss) attributable to Realogy Holdings | $ | (99 | ) | $ | 69 |
(a) | Transactions
between segments are eliminated in consolidation. Revenues for the Real Estate Franchise Services segment include intercompany royalties and marketing fees paid by the Company Owned Real Estate Brokerage Services segment of $55 million and $87 million for the three months ended March 31, 2019 and June 30, 2019, respectively. Such amounts are eliminated through the Corporate and Other line. |
Three
Months Ended | |||||||
March 31, | |||||||
2019 | 2019 | ||||||
Real Estate Franchise Services | $ | — | $ | — | |||
Company
Owned Real Estate Brokerage Services | 4 | 6 | |||||
Relocation Services | 3 | 1 | |||||
Title and Settlement Services | 1 | 1 | |||||
Corporate
and Other | 4 | 1 | |||||
Total Company | $ | 12 | $ | 9 |
(c) | Loss
on the early extinguishment of debt is recorded in the Corporate and Other segment. |
Three
Months Ended | Year Ended | ||||||||||||||||||
March 31, | June 30, | September 30, | December 31, | ||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2018 | |||||||||||||||
Net
revenues (a) | |||||||||||||||||||
Real Estate Franchise Services | $ | 176 | $ | 237 | $ | 221 | $ | 186 | $ | 820 | |||||||||
Company
Owned Real Estate Brokerage Services | 917 | 1,408 | 1,268 | 1,014 | 4,607 | ||||||||||||||
Relocation
Services | 79 | 105 | 108 | 86 | 378 | ||||||||||||||
Title
and Settlement Services | 120 | 162 | 162 | 136 | 580 | ||||||||||||||
Corporate
and Other | (63 | ) | (92 | ) | (83 | ) | (68 | ) | (306 | ) | |||||||||
Total
Company | $ | 1,229 | $ | 1,820 | $ | 1,676 | $ | 1,354 | $ | 6,079 | |||||||||
Operating
EBITDA | |||||||||||||||||||
Real Estate Franchise Services | $ | 105 | $ | 173 | $ | 161 | $ | 125 | $ | 564 | |||||||||
Company
Owned Real Estate Brokerage Services | (45 | ) | 61 | 43 | (15 | ) | 44 | ||||||||||||
Relocation
Services | (1 | ) | 34 | 39 | 14 | 86 | |||||||||||||
Title
and Settlement Services | (6 | ) | 31 | 20 | 4 | 49 | |||||||||||||
Corporate
and Other | (19 | ) | (23 | ) | (21 | ) | (22 | ) | (85 | ) | |||||||||
Total
Company | $ | 34 | $ | 276 | $ | 242 | $ | 106 | $ | 658 | |||||||||
Non-GAAP
Reconciliation - Operating EBITDA | |||||||||||||||||||
Total Company Operating EBITDA | $ | 34 | $ | 276 | $ | 242 | $ | 106 | $ | 658 | |||||||||
Less:
Depreciation and amortization (b) | 50 | 49 | 49 | 49 | 197 | ||||||||||||||
Interest
expense, net | 33 | 46 | 41 | 70 | 190 | ||||||||||||||
Income
tax (benefit) expense | (19 | ) | 52 | 40 | (8 | ) | 65 | ||||||||||||
Restructuring
costs, net (c) | 30 | 6 | 9 | 13 | 58 | ||||||||||||||
Former
parent legacy cost, net (d) | — | — | — | 4 | 4 | ||||||||||||||
Loss
on the early extinguishment of debt (d) | 7 | — | — | — | 7 | ||||||||||||||
Net
income (loss) attributable to Realogy Holdings | $ | (67 | ) | $ | 123 | $ | 103 | $ | (22 | ) | $ | 137 |
(a) | Transactions
between segments are eliminated in consolidation. Revenues for the Real Estate Franchise Services segment include intercompany royalties and marketing fees paid by the Company Owned Real Estate Brokerage Services segment of $63 million, $92 million, $83 million and $68 million for the three months ended March 31, 2018, June 30, 2018, September 30, 2018 and December 31, 2018, respectively. Such amounts are eliminated through the Corporate and Other line. |
(b) | Depreciation and amortization for the three months ended March 31, 2018 includes $2 million of amortization expense related to our mortgage origination joint venture Guaranteed Rate Affinity's purchase accounting included in the "Equity in losses (earnings) of unconsolidated entities" line on the Condensed Consolidated Statement of Operations. |
(c) | Includes
restructuring charges broken down by business unit as follows: |
Three Months Ended | Year Ended | ||||||||||||||||||
March
31, | June 30, | September 30, | December 31, | ||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2018 | |||||||||||||||
Real
Estate Franchise Services | $ | 2 | $ | — | $ | 1 | $ | — | $ | 3 | |||||||||
Company
Owned Real Estate Brokerage Services | 17 | 4 | 8 | 8 | 37 | ||||||||||||||
Relocation
Services | 8 | 1 | — | 2 | 11 | ||||||||||||||
Title
and Settlement Services | 1 | 1 | — | 2 | 4 | ||||||||||||||
Corporate
and Other | 2 | — | — | 1 | 3 | ||||||||||||||
Total
Company | $ | 30 | $ | 6 | $ | 9 | $ | 13 | $ | 58 |
(d) | Former
parent legacy items and loss on the early extinguishment of debt are recorded in the Corporate and Other segment. |
Three Months Ended | Six Months Ended | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net
income (loss) attributable to Realogy Holdings | $ | 69 | $ | 123 | $ | (30 | ) | $ | 56 | ||||||
Income
tax expense (benefit), net of payments | 29 | 48 | (7 | ) | 25 | ||||||||||
Interest expense, net | 81 | 46 | 144 | 79 | |||||||||||
Cash
interest payments | (59 | ) | (66 | ) | (99 | ) | (87 | ) | |||||||
Depreciation and amortization | 50 | 49 | 99 | 97 | |||||||||||
Capital
expenditures | (30 | ) | (24 | ) | (54 | ) | (49 | ) | |||||||
Restructuring costs and former parent legacy items, net of payments | (2 | ) | (3 | ) | (2 | ) | 16 | ||||||||
Impairment | 2 | — | 3 | — | |||||||||||
Loss
on the early extinguishment of debt | — | — | 5 | 7 | |||||||||||
Working capital adjustments | 56 | 28 | 2 | (71 | ) | ||||||||||
Relocation
receivables (assets), net of securitization obligations | (49 | ) | (9 | ) | (86 | ) | (47 | ) | |||||||
Free Cash Flow | $ | 147 | $ | 192 | $ | (25 | ) | $ | 26 |
Three Months Ended | Six Months Ended | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net
cash provided by operating activities | $ | 159 | $ | 139 | $ | 56 | $ | 9 | |||||||
Property
and equipment additions | (30 | ) | (24 | ) | (54 | ) | (49 | ) | |||||||
Net change in securitization | 18 | 78 | (27 | ) | 67 | ||||||||||
Effect
of exchange rates on cash and cash equivalents | — | (1 | ) | — | (1 | ) | |||||||||
Free Cash Flow | $ | 147 | $ | 192 | $ | (25 | ) | $ | 26 | ||||||
Net
cash used in investing activities | $ | (39 | ) | $ | (36 | ) | $ | (62 | ) | $ | (45 | ) | |||
Net
cash (used in) provided by financing activities | $ | (88 | ) | $ | (51 | ) | $ | 46 | $ | 42 |
Less | Equals | Plus | Equals | ||||||||||||||||
Year
Ended | Six Months Ended | Six Months Ended | Six Months Ended | Twelve Months Ended | |||||||||||||||
Net income (loss) attributable to Realogy Group (a) | $ | 137 | $ | 56 | $ | 81 | $ | (30 | ) | $ | 51 | ||||||||
Income
tax expense (benefit) | 65 | 33 | 32 | (1 | ) | 31 | |||||||||||||
Income
(loss) before income taxes | 202 | 89 | 113 | (31 | ) | 82 | |||||||||||||
Depreciation
and amortization (b) | 197 | 99 | 98 | 99 | 197 | ||||||||||||||
Interest
expense, net | 190 | 79 | 111 | 144 | 255 | ||||||||||||||
Restructuring
costs, net | 58 | 36 | 22 | 21 | 43 | ||||||||||||||
Impairment | — | — | — | 3 | 3 | ||||||||||||||
Former
parent legacy cost, net | 4 | — | 4 | — | 4 | ||||||||||||||
Loss
on the early extinguishment of debt | 7 | 7 | — | 5 | 5 | ||||||||||||||
Operating
EBITDA (c) | 658 | 310 | 348 | 241 | 589 | ||||||||||||||
Bank
covenant adjustments: | |||||||||||||||||||
Pro forma effect of business optimization initiatives (d) | 28 | ||||||||||||||||||
Non-cash charges (e) | 33 | ||||||||||||||||||
Pro forma effect of acquisitions and new franchisees (f) | 3 | ||||||||||||||||||
Incremental
securitization interest costs (g) | 3 | ||||||||||||||||||
EBITDA as defined by the Senior Secured Credit Agreement | $ | 656 | |||||||||||||||||
Total senior secured net debt (h) | $ | 1,991 | |||||||||||||||||
Senior
secured leverage ratio | 3.04 | x |
(a) | Net income (loss) attributable to Realogy consists of: (i) income of $103 million for the third quarter of 2018, (ii) loss of $22 million for the fourth quarter of 2018, (iii) a loss of $99 million for the first quarter of 2019 and (iv) income of $69 million
for the second quarter of 2019. |
(b) | Depreciation and amortization for the year ended December 31, 2018 and the first quarter of 2018 includes $2 million of amortization expense related to Guaranteed Rate Affinity's purchase accounting included in the "Equity in (earnings) losses of unconsolidated entities" line on the Condensed Consolidated Statement of Operations during those periods. |
(c) | Operating EBITDA consists of: (i) $242 million
for the third quarter of 2018, (ii) $106 million for the fourth quarter of 2018, (iii) negative $4 million for the first quarter of 2019 and (iv) $245 million for the second quarter of 2019. |
(d) | Represents the four-quarter pro forma effect of business optimization initiatives. |
(e) | Represents the elimination of non-cash expenses including $34 million
of stock-based compensation expense partially offset by $1 million of other items for the four-quarter period ended June 30, 2019. |
(f) | 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 July 1, 2018. 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 |
(g) | Incremental borrowing costs incurred
as a result of the securitization facilities refinancing for the four-quarter period ended June 30, 2019. |
(h) | Represents total borrowings under the senior secured credit facilities and borrowings secured by a first priority lien on our assets of $2,121 million plus $33 million of finance lease obligations less $163 million of readily available cash as of June 30, 2019. 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. |
* | Our senior secured credit facilities include the 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, as amended from time to time. Our Unsecured Notes include our 5.25% Senior Notes due 2021, our 4.875% Senior Notes due 2023 and our 9.375% Senior Notes due 2027. |
As
of June 30, 2019 | ||||
Revolver | $ | 330 | ||
Term Loan A | 727 | |||
Term Loan B | 1,064 | |||
5.25%
Senior Notes | 550 | |||
4.875% Senior Notes | 500 | |||
9.375% Senior Notes | 550 | |||
Finance lease obligations | 33 | |||
Corporate
Debt (excluding securitizations) | 3,754 | |||
Less: Cash and cash equivalents | 270 | |||
Net Corporate Debt (excluding securitizations) | $ | 3,484 | ||
EBITDA
as defined by the Senior Secured Credit Agreement (a) | $ | 656 | ||
Net Debt Leverage Ratio (b) | 5.3 | x |
(a) | See
Table 7a for a reconciliation of Net income (loss) 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 indenture governing the 9.375% Notes), except that 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. |
• | 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. |
This ‘8-K’ Filing | Date | Other Filings | ||
---|---|---|---|---|
Filed on / For Period end: | 8/8/19 | 10-Q | ||
6/30/19 | 10-Q | |||
3/31/19 | 10-Q | |||
12/31/18 | 10-K, PRE 14A | |||
9/30/18 | 10-Q | |||
7/1/18 | ||||
6/30/18 | 10-Q | |||
3/31/18 | 10-Q | |||
10/23/15 | 8-K | |||
3/5/13 | 8-K | |||
List all Filings |