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Realogy Reports Financial Results For Full Year 2016
Company Initiates New $300 Million Share Repurchase Authorization

MADISON, N.J., Feb. 24, 2017 /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 full year ended December 31, 2016, including the following highlights:

  • Revenue was $5.81 billion, an increase of 2% compared with the full year 2015, driven by organic and acquisition revenue increases at Title Resource Group (TRG).
  • The Company's combined homesale transaction volume increased 4% in the year, consisting of a 6% volume gain at the Realogy Franchise Group (RFG) and flat volume at the Company-owned brokerage segment (NRT).
  • Net income was $213 million, a 16% increase compared with $184 million in 2015. Basic earnings per share (EPS) was $1.47, a 17% increase compared with $1.26 in 2015.
  • Adjusted net income was $239 million, an 8% increase compared with $222 million in 2015. Adjusted basic EPS was $1.65, a 9% increase compared with $1.52 in 2015, (See Table 1a).
  • Operating EBITDA was $770 million, compared with $769 million in 2015. (See Table 5).2
  • The Company returned $225 million of capital to shareholders through repurchases and dividends in 2016.

"Our 2016 results continued to reflect the operating challenges of strong competition for sales agents and soft demand at the high end of the housing market for NRT," said Richard A. Smith, Realogy's chairman, chief executive officer and president. "While we still have work to do, we have made good progress. Our strategic priorities are to continue strengthening our core businesses while further investing capital to drive future growth. Reflecting our strong free cash flow, we are pleased to expand on our capital return program through an additional $300 million share repurchase authorization. We are confident that over the long term we are well-positioned to capitalize on favorable demand conditions and existing homesale volume growth within the industry."

Operational Results

Below are some of the highlights of Realogy's key strategic initiatives from 2016 and the start of 2017:

  • NRT is executing on an aggressive campaign to increase the Company's recruitment of productive independent sales agents and agent teams, and continues to enhance its existing agent retention and productivity programs.
  • Realogy formalized plans for an integrated learning institute aimed at enhancing agent and broker productivity by offering customized learning opportunities to serve new and experienced sales agents as well as brokerage managers across both NRT and RFG. 
  • The Realogy Franchise Group continues to deploy its proprietary Zap technology platform. Initial data indicates that sales agents actively using Zap are closing more transactions than those who are not.
  • On February 15, 2017, Realogy agreed to form a new mortgage origination joint venture (JV) with Guaranteed Rate, one of the largest independent retail mortgage companies in the United States. The new JV, which will operate as Guaranteed Rate Affinity, has agreed to acquire certain assets of the mortgage operations of PHH Home Loans, the existing JV between Realogy and PHH Mortgage. The transaction is expected to be completed in a series of asset sale closings subject to the satisfaction or waiver of certain closing conditions. The initial closing is expected to occur in June 2017, and the final closing is expected to occur during the fourth quarter of 2017. Once these transactions are complete, Realogy expects to realize approximately $30 million of net cash.
  • 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 realized approximately $33 million in actual savings in 2016 and is well positioned to reach its annualized run-rate savings target of approximately $70 million. The total cost to implement the program is expected to be $65 million, of which $49 million has been incurred through December 31, 2016.

In 2016, Realogy's franchise (RFG) and Company-owned (NRT) business segments achieved a combined homesale transaction volume (transaction sides multiplied by average sale price) of approximately $473 billion, an increase of 4% compared with 2015, which was within the Company's previous guidance range. RFG reported a homesale transaction sides increase of 3% and an average homesale price increase of 3%. NRT reported flat homesale transaction sides and average homesale price.

In the title and settlement services sector, TRG was involved in the closing of approximately 204,000 transactions in 2016, reflecting a 17% increase in purchase units and a 32% increase in refinance units compared with 2015. These results include the benefits of the acquisition of TitleOne, which occurred in the third quarter of 2016.

Capital Allocation and New Share Repurchase Authorization

During the fourth quarter of 2016, Realogy repurchased approximately 2.6 million shares of common stock in the open market at a weighted average market price of $25 per share for a total of $65 million. For the full year 2016, the Company returned nearly $200 million of capital to shareholders through the repurchase of approximately 7.1 million shares, or 5% of shares outstanding. The Company had approximately 140.2 million shares of common stock outstanding as of December 31, 2016.  Since year-end 2016, the Company has repurchased approximately 572,000 shares of common stock at a weighted average market price of $26.23 for a total of approximately $15 million.

Realogy today announced that its Board of Directors has authorized a new share repurchase program of up to $300 million of the Company's common stock. This is in addition to the $61 million remaining under the current $275 million share repurchase authorization announced in February 2016. Repurchases may be made at management's discretion from time to time on the open market or through privately negotiated transactions. The size and timing of these repurchases will depend on price, market and economic conditions, legal and contractual requirements and other factors. The repurchase program has no time limit and may be suspended or discontinued at any time.

On February 23, 2017, the Board of Directors of the Company declared a quarterly cash dividend of $0.09 per share of the Company's common stock. This dividend payment will be made on March 23, 2017 to shareholders of record as of the close of business on March 9, 2017.

"Our business model continues to generate significant free cash flow," said Anthony E. Hull, Realogy's executive vice president, chief financial officer and treasurer. "We expect to maintain a disciplined approach to capital allocation, balanced between returning cash to shareholders, deleveraging and strategically investing in the business to drive growth."

Balance Sheet

The Company ended the year with cash and cash equivalents of $274 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 December 31, 2016.  The Company's net debt leverage3 was 3.8 times at December 31, 2016.

In January 2017, the Company repriced its Term Loan B, thereby reducing its run-rate interest expense by approximately $8 million to $165 million on an annualized basis.

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

Investor Conference Call      

Today, February 24, at 8:30 a.m. (EST), Realogy will hold a conference call via webcast to review its full year 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 on the website.

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 14,100 offices with more than 273,200 independent sales agents conducting business in 112 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. Realogy also owns Cartus, a prominent worldwide provider of relocation services to corporate and affinity clients, Title Resource Group (TRG), a leading provider of title, settlement and underwriting services, and ZapLabs LLC, its innovation and technology development subsidiary.  Realogy is headquartered in Madison, New Jersey.

Footnotes:

1  Adjusted net income is adjusted for non-cash mark-to-market expense on interest rate swaps and restructuring charges.

2 Operating EBITDA is defined as EBITDA before restructuring costs, early extinguishment of debt and former parent legacy items.

 Net corporate debt divided by EBITDA calculated on a pro forma basis, as defined under our credit facilities, for the twelve-month period ended December 31, 2016.

Forward-Looking Statements

Certain statements in this press release constitute "forward-looking statements."  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" 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.

Various factors that could cause actual future results and other future events to differ materially from those estimated by management include, but are not limited to: adverse developments or the absence of sustained improvement in general business, economic and political conditions; adverse developments or the absence of improvement in the residential real estate markets including but not limited to the lack of sustained improvement in the number of home sales and/or stagnant or declining home prices, low levels of consumer confidence, the impact of slow economic growth or future recessions and related high levels of unemployment in the U.S. and abroad, continued low inventory levels, renewed high levels of foreclosures, seasonal fluctuations in the residential real estate brokerage business, and increasing mortgage rates and down payment requirements and/or constraints on the availability of mortgage financing; the Company's geographic and high-end market concentration, particularly with respect to its Company-owned brokerage operations; the Company's failure to enter into or renew franchise agreements or maintain its brands; risks relating to our outstanding debt and interest obligations; variable rate indebtedness which subjects the Company to interest rate risk; the Company's inability to access capital or refinance or repay existing indebtedness, or return capital to stockholders; the Company's inability to realize the benefits from acquisitions or the new mortgage origination joint venture that the Company has agreed to form with Guaranteed Rate, Inc.; any outbreak or escalation of hostilities on a national, regional or international basis; government regulation as well as legislative, tax or regulatory changes that would adversely impact the residential real estate market, including but not limited to potential reform of the financing of the U.S. housing and mortgage markets and/or the Internal Revenue Code and changes in state or federal employment laws or regulations that would require reclassification of independent contractor sales agents to employee status, and wage and hour regulations; the Company's inability to sustain improvements in its operating efficiency and to achieve anticipated cost savings from its business optimization initiatives; any adverse resolution of litigation, governmental or regulatory proceedings or arbitration awards; and the final resolution or outcomes with respect to Cendant's (our former parent) remaining contingent liabilities.

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, 2016 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.  Except for our ongoing obligations to disclose material information under the federal securities laws, 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 unless we are required to do so 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 and 8 for definitions of these non-GAAP financial measures and Tables 1a, 4a, 4b, 5, 6, and 7 for reconciliations of the historical non-GAAP financial measures to their most comparable GAAP terms.


Investor Contacts:


Media Contact:

Alicia Swift


Mark Panus

(973) 407-4669


(973) 407-7215

alicia.swift@realogy.com


mark.panus@realogy.com




Jennifer Halchak



(973) 407-7487



jennifer.halchak@realogy.com




Table 1

 

REALOGY HOLDINGS CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)



Year Ended December 31,


2016


2015


2014

Revenues






Gross commission income

$

4,277



$

4,288



$

4,028


Service revenue

955



882



802


Franchise fees

372



353



333


Other

206



183



165


Net revenues

5,810



5,706



5,328


Expenses






Commission and other agent-related costs

2,945



2,931



2,755


Operating

1,542



1,458



1,350


Marketing

241



226



214


General and administrative

321



337



293


Former parent legacy benefit, net

(2)



(15)



(10)


Restructuring costs, net

39



10



(1)


Depreciation and amortization

202



201



190


Interest expense, net

174



231



267


Loss on the early extinguishment of debt



48



47


Other income, net

(1)



(3)



(2)


Total expenses

5,461



5,424



5,103


Income before income taxes, equity in earnings and noncontrolling interests

349



282



225


Income tax expense

144



110



87


Equity in earnings of unconsolidated entities

(12)



(16)



(9)


Net income

217



188



147


Less: Net income attributable to noncontrolling interests

(4)



(4)



(4)


Net income attributable to Realogy Holdings

$

213



$

184



$

143








Earnings per share attributable to Realogy Holdings:






Basic earnings per share

$

1.47



$

1.26



$

0.98


Diluted earnings per share

$

1.46



$

1.24



$

0.97


Weighted average common and common equivalent shares of Realogy Holdings outstanding:

Basic

144.5



146.5



146.0


Diluted

145.8



148.1



147.2








Cash dividends declared per share (beginning in August 2016)

$

0.18



$



$



Table 1a

 

REALOGY HOLDINGS CORP.

Adjusted Net Income and Adjusted Earnings Per Share

(In millions, except per share data)


We present Adjusted net income and Adjusted earnings per share because we believe these measures are useful as supplemental measures in evaluating the performance of our operating businesses and provides greater transparency into our operating results.

 

Adjusted net income is defined by us as net income before: (a) mark to market interest rate swap adjustments, whose fair value is subject to movements in LIBOR and the forward yield curve and therefore are subject to significant fluctuations; (b) former parent legacy items, which pertain to liabilities of the former parent for matters prior to mid-2006 and are non-operational in nature; (c) restructuring charges, which the Company believes will be significant as a result of the business optimization initiatives currently in progress; and (d) the loss on the early extinguishment of debt that results from refinancing and deleveraging debt initiatives.  The gross amounts for these items as well as the adjustment for income taxes are shown in the table below. 

 

Adjusted income per share is Adjusted net income divided by the weighted average common and common equivalent shares outstanding.

 

Set forth in the table below is a reconciliation of Net income to Adjusted net income for the years ended December 31, 2016, 2015 and 2014:



Year Ended December 31,


2016


2015


2014

Net income attributable to Realogy Holdings

$

213



$

184



$

143


Addback:






Mark-to-market interest rate swap adjustments

6



20



32


Former parent legacy benefit, net

(2)



(15)



(10)


Restructuring costs, net

39



10



(1)


Loss on the early extinguishment of debt



48



47


Reversal of the income tax valuation allowance





(11)


Adjustments for tax effect (a)

(17)



(25)



(28)


Adjusted net income attributable to Realogy Holdings

$

239



$

222



$

172








Earnings per share






Basic earnings per share:

$

1.47



$

1.26



$

0.98


Diluted earnings per share:

$

1.46



$

1.24



$

0.97








Adjusted earnings per share






Adjusted basic earnings per share:

$

1.65



$

1.52



$

1.18


Adjusted diluted earnings per share:

$

1.64



$

1.50



$

1.17








Weighted average common and common equivalent shares outstanding:



Basic:

144.5



146.5



146.0


Diluted:

145.8



148.1



147.2


(a)     

Reflects tax effect of adjustments at an assumed tax rate of 40% for the year ended December 31, 2016 and 2015, and 41% for the year ended December 31, 2014.

 

 


Table 2

 

REALOGY HOLDINGS CORP.

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)



December 31,
 2016


December 31,
 2015



ASSETS




Current assets:




Cash and cash equivalents

$

274



$

415


Trade receivables (net of allowance for doubtful accounts of $13 and $20)

152



141


Relocation receivables

244



279


Other current assets

148



126


Total current assets

818



961


Property and equipment, net

267



254


Goodwill

3,690



3,618


Trademarks

748



745


Franchise agreements, net

1,361



1,428


Other intangibles, net

313



316


Other non-current assets

224



209


Total assets

$

7,421



$

7,531






LIABILITIES AND EQUITY




Current liabilities:




Accounts payable

$

140



$

139


Securitization obligations

205



247


Due to former parent

28



31


Current portion of long-term debt

242



740


Accrued expenses and other current liabilities

435



448


Total current liabilities

1,050



1,605


Long-term debt

3,265



2,962


Deferred income taxes

389



267


Other non-current liabilities

248



275


Total liabilities

4,952



5,109


Commitments and contingencies




Equity:




Realogy Holdings preferred stock: $.01 par value; 50,000,000 shares authorized, none issued and outstanding at December 31, 2016 and December 31, 2015




Realogy Holdings common stock: $.01 par value; 400,000,000 shares authorized, 140,227,692 shares outstanding at December 31, 2016 and 146,746,537 shares outstanding at December 31, 2015

1



1


Additional paid-in capital

5,565



5,733


Accumulated deficit

(3,062)



(3,280)


Accumulated other comprehensive loss

(40)



(36)


Total stockholders' equity

2,464



2,418


Noncontrolling interests

5



4


Total equity

2,469



2,422


Total liabilities and equity

$

7,421



$

7,531


 

 

Table 3a

 

REALOGY HOLDINGS CORP.

2016 KEY DRIVERS




Quarter Ended


Year Ended



March 31,
 2016


June 30,
 2016


September 30,
2016


December 31,
2016


December 31,
2016

RFG (a)











Closed homesale sides


218,330



319,748



323,176



274,090



1,135,344


Average homesale price


$

259,044



$

273,900



$

275,325



$

277,037



$

272,206


Average homesale broker commission rate


2.51

%


2.51

%


2.50

%


2.49

%


2.50

%

Net effective royalty rate


4.51

%


4.49

%


4.50

%


4.34

%


4.46

%

Royalty per side


$

309



$

319



$

322



$

313



$

317


NRT











Closed homesale sides


64,244



98,314



95,605



77,536



335,699


Average homesale price


$

493,125



$

485,688



$

486,343



$

495,242



$

489,504


Average homesale broker commission rate


2.46

%


2.49

%


2.46

%


2.44

%


2.46

%

Gross commission income per side


$

12,878



$

12,732



$

12,681



$

12,760



$

12,752


Cartus











Initiations


37,174



51,560



40,556



33,773



163,063


Referrals


16,893



26,138



25,495



18,751



87,277


TRG











Purchase title and closing units (b)


29,236



43,914



42,932



36,915



152,997


Refinance title and closing units (c)


9,703



11,227



15,170



14,819



50,919


Average fee per closing unit


$

1,848



$

1,919



$

1,824



$

1,907



$

1,875


 


(a)        

Includes all franchisees except for NRT.

(b)       

The amounts presented for the year ended December 31, 2016 include 18,930 purchase units as a result of the acquisitions.

(c)        

The amounts presented for the year ended December 31, 2016 include 4,469 refinance units as a result of the acquisitions.

 

 

Table 3b

 

REALOGY HOLDINGS CORP.

2015 KEY DRIVERS




Quarter Ended


Year Ended



March 31,
 2015


June 30,
 2015


September 30,
 2015


December 31,
 2015


December 31,
 2015

RFG (a) (b)











Closed homesale sides


212,139



307,293



318,873



263,028



1,101,333


Average homesale price


$

251,373



$

266,456



$

267,296



$

266,874



$

263,894


Average homesale broker commission rate


2.52

%


2.52

%


2.52

%


2.49

%


2.51

%

Net effective royalty rate


4.52

%


4.48

%


4.47

%


4.46

%


4.48

%

Royalty per side


$

302



$

312



$

312



$

309



$

309


NRT

Closed homesale sides (c)


60,187



99,435



99,789



77,333



336,744


Average homesale price (d)


$

502,597



$

493,746



$

479,874



$

487,024



$

489,673


Average homesale broker commission rate


2.43

%


2.46

%


2.48

%


2.47

%


2.46

%

Gross commission income per side


$

13,019



$

12,830



$

12,524



$

12,645



$

12,730


Cartus











Initiations


38,168



51,528



42,303



35,750



167,749


Referrals


18,022



29,033



30,010



22,466



99,531


TRG











Purchase title and closing units (e)


21,643



35,596



41,245



32,057



130,541


Refinance title and closing units (f)


9,496



9,815



9,989



9,244



38,544


Average fee per closing unit


$

1,751



$

1,795



$

1,932



$

1,928



$

1,861


 


(a)        

Includes all franchisees except for NRT.

(b)       

In April 2015, NRT acquired a large franchisee of RFG.  As a result of the acquisition, the drivers of the acquired entity shifted from RFG to NRT.  Closed homesale sides for RFG, excluding the impact of the acquisition, would have increased 5% for the year ended December 31, 2015 compared to 2014.  The acquisition did not have a significant impact on the change in average homesale price for RFG.

(c)        

Closed homesale sides for NRT, excluding the impact of larger acquisitions with an individual purchase price greater than $20 million, would have increased 2% for the year ended December 31, 2015 compared to 2014.

(d)       

Average homesale price for NRT, excluding the impact of larger  acquisitions with an individual purchase price greater than $20 million, would have increased 1% for the year ended December 31, 2015 compared to 2014.

(e)        

The amounts presented for the year ended December 31, 2015 include 13,304 purchase units as a result of the acquisition of Independence Title on July 1, 2015.

(f)        

The amounts presented for the year ended December 31, 2015 include 3,403 refinance units as a result of the acquisition of Independence Title on July 1, 2015.

 

Table 4a

 

REALOGY HOLDINGS CORP.

SELECTED 2016 FINANCIAL DATA

(In millions)



Three Months Ended


Year Ended


March 31,
 2016


June 30,
 2016


September 30,
 2016


December 31,
 2016


December 31,
 2016

Net revenues (a)










Real Estate Franchise Services

$

157



$

221



$

215



$

188



$

781


Company Owned Real Estate Brokerage Services

841



1,268



1,231



1,004



4,344


Relocation Services

83



109



116



97



405


Title and Settlement Services

111



149



164



149



573


Corporate and Other

(58)



(85)



(82)



(68)



(293)


Total Company

$

1,134



$

1,662



$

1,644



$

1,370



$

5,810












EBITDA (b)










Real Estate Franchise Services

$

92



$

149



$

153



$

122



$

516


Company Owned Real Estate Brokerage Services

(21)



78



74



6



137


Relocation Services

5



29



40



22



96


Title and Settlement Services



26



23



13



62


Corporate and Other

(21)



(19)



(20)



(18)



(78)


Total Company

$

55



$

263



$

270



$

145



$

733


Less:










Depreciation and amortization

48



48



53



53



202


Interest expense, net

73



59



37



5



174


Income tax expense (benefit)

(24)



64



74



30



144


Net income (loss) attributable to Realogy Holdings

$

(42)



$

92



$

106



$

57



$

213


 

(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 $58 million, $85 million, $82 million and $68 million for the three months ended March 31, 2016, June 30, 2016, September 30, 2016 and December 31, 2016, respectively.  Such amounts are eliminated through the Corporate and Other line.




Revenues for the Relocation Services segment include $8 million, $13 million, $12 million and $10 million of intercompany referral commissions paid by the Company Owned Real Estate Brokerage Services segment during the three months ended March 31, 2016, June 30, 2016, September 30, 2016 and December 31, 2016, respectively.  Such amounts are recorded as contra-revenues by the Company Owned Real Estate Brokerage Services segment.



(b)  

Includes a net cost of $1 million and a net benefit of $3 million of former parent legacy items for the three months ended March 31, 2016 and December 31, 2016, respectively.




Includes $9 million, $12 million, $9 million and $9 million of restructuring charges for the three months ended March 31, 2016, June 30, 2016, September 30, 2016 and December 31, 2016, respectively.




The year ended December 31, 2016 includes a net benefit of $2 million of former parent legacy items and restructuring charges of $39 million.




The amounts broken down by business unit are as follows:

 


Three Months Ended


March 31,
 2016


June 30,
 2016


September 30,
 2016


December 31,
 2016

Real Estate Franchise Services

$



$

3



$

1



$


Company Owned Real Estate Brokerage Services

2



7



6



7


Relocation Services

2



1



1




Title and Settlement Services





1




Corporate and Other

6



1





(1)


Total Company

$

10



$

12



$

9



$

6


 

 

Table 4b

 

REALOGY HOLDINGS CORP.

SELECTED 2015 FINANCIAL DATA

(In millions)



Three Months Ended


Year Ended


March 31,


June 30,


September 30,


December 31,


December 31,


2015


2015


2015


2015


2015

Net revenues (a)










Real Estate Franchise Services

$

151



$

213



$

214



$

177



$

755


Company Owned Real Estate Brokerage Services

796



1,289



1,267



992



4,344


Relocation Services

85



108



124



98



415


Title and Settlement Services

87



128



147



125



487


Corporate and Other

(57)



(87)



(84)



(67)



(295)


Total Company

$

1,062



$

1,651



$

1,668



$

1,325



$

5,706












EBITDA (b)










Real Estate Franchise Services

$

86



$

146



$

152



$

111



$

495


Company Owned Real Estate Brokerage Services

(16)



97



96



22



199


Relocation Services

7



29



47



22



105


Title and Settlement Services

(3)



20



20



11



48


Corporate and Other (c)

(16)



(27)



(6)



(72)



(121)


Total Company

$

58



$

265



$

309



$

94



$

726


Less:










Depreciation and amortization

46



52



55



48



201


Interest expense, net

68



50



70



43



231


Income tax expense (benefit)

(24)



66



74



(6)



110


Net income (loss) attributable to Realogy Holdings

$

(32)



$

97



$

110



$

9



$

184


 

(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 $57 million, $87 million, $84 million and $67 million for the three months ended March 31, 2015, June 30, 2015, September 30, 2015 and December 31, 2015, respectively.  Such amounts are eliminated through the Corporate and Other line.




Revenues for the Relocation Services segment include $8 million, $15 million, $16 million and $10 million of intercompany referral commissions paid by the Company Owned Real Estate Brokerage Services segment during the three months ended March 31, 2015, June 30, 2015, September 30, 2015 and December 31, 2015, respectively.  Such amounts are recorded as contra-revenues by the Company Owned Real Estate Brokerage Services segment.



(b)  

The three months ended June 30, 2015 includes a net benefit of $1 million for former parent legacy items.




The three months ended September 30, 2015 includes a net benefit of $14 million for former parent legacy items.




The three months ended December 31, 2015 includes $48 million related to the loss on early extinguishment of debt and restructuring charges of $10 million.




The year ended December 31, 2015 includes $48 million related to the loss on early extinguishment of debt and restructuring charges of $10 million, partially offset by a net benefit of $15 million for former parent legacy items.




The amounts broken down by business unit are as follows:

 


Three Months Ended


Year Ended


March 31,


June 30,


September 30,


December 31,


December 31,


2015


2015


2015


2015


2015

Real Estate Franchise Services

$



$



$



$



$


Company Owned Real Estate Brokerage Services







5



5


Relocation Services







1



1


Title and Settlement Services










Corporate and Other



(1)



(14)



52



37


Total Company

$



$

(1)



$

(14)



$

58



$

43


 


(c)   

The three months ended June 30, 2015 includes $6 million of costs related to the settlement of a legal matter, subject to court approval, and certain transaction costs related to acquisitions in April 2015.

 

Table 5

 

REALOGY HOLDINGS CORP.

EBITDA AND OPERATING EBITDA

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

(In millions)


Set forth in the table below is a reconciliation of net income to EBITDA and Operating EBITDA for the years ended December 31, 2016 and 2015:



Year Ended


December 31, 2016


December 31, 2015

Net income attributable to Realogy Holdings

$

213



$

184


Income tax expense

144



110


Income before income taxes

357



294


Interest expense, net

174



231


Depreciation and amortization

202



201


EBITDA

733



726


EBITDA adjustments:




Restructuring costs

39



10


Former parent legacy costs (benefit), net

(2)



(15)


Loss on the early extinguishment of debt



48


Operating EBITDA

$

770



$

769


 

 


Set forth in the table below is a reconciliation of Operating EBITDA by reportable segments to the net income for the years ended December 31, 2016 and 2015:



Revenues






Operating EBITDA






Operating EBITDA Margin




2016


2015


Change


%
Change


2016


2015


Change


% Change


2016


2015


Change

RFG

$

781



$

755



$

26



3

%


$

520



$

495



$

25



5

%


67

%


66

%


1


NRT

4,344



4,344







159



204



(45)



(22)



4



5



(1)


Cartus

405



415



(10)



(2)



100



106



(6)



(6)



25



26



(1)


TRG

573



487



86



18



63



48



15



31



11



10



1


Corporate and Other

(293)



(295)



2



*



(72)



(84)



12



*








Total Company

$

5,810



$

5,706



$

104



2

%


$

770



$

769



$

1



%


13

%


13

%



Less: Restructuring costs


39



10












  Former parent legacy benefit, net


(2)



(15)












Loss on the early extinguishment of debt




48












         Depreciation and amortization


202



201












Interest expense, net


174



231












Income tax expense


144



110












Net income attributable to Realogy Holdings


$

213



$

184












 

Table 6

 

REALOGY HOLDINGS CORP.

EBITDA AND OPERATING EBITDA

THREE MONTHS ENDED DECEMBER 31, 2016 AND 2015

(In millions)


Set forth in the table below is a reconciliation of net income to EBITDA and Operating EBITDA for the three-month periods ended December 31, 2016 and 2015:



Three Months Ended


December 31, 2016


December 31, 2015

Net income attributable to Realogy Holdings

$

57



$

9


Income tax expense

30



(6)


Income before income taxes

87



3


Interest expense, net

5



43


Depreciation and amortization

53



48


EBITDA

145



94


EBITDA adjustments:




Restructuring costs

9



10


Former parent legacy benefit, net

(3)




Loss on the early extinguishment of debt



48


Operating EBITDA

$

151



$

152


 

 

Set forth in the table below is a reconciliation of Operating EBITDA by reportable segments to the net income for the three months ended ended December 31, 2016 and 2015:



Revenues






Operating EBITDA






Operating EBITDA Margin




2016


2015


Change


%
Change


2016


2015


Change


% Change


2016


2015


Change

RFG

$

188



$

177



$

11



6

%


$

122



$

111



$

11



10

%


65

%


63

%


2


NRT

1,004



992



12



1



13



27



(14)



(52)



1



3



(2)


Cartus

97



98



(1)



(1)



22



23



(1)



(4)



23



23




TRG

149



125



24



19



13



11



2



18



9



9




Corporate and Other

(68)



(67)



(1)



*



(19)



(20)



1



*








Total Company

$

1,370



$

1,325



$

45



3

%


$

151



$

152



$

(1)



(1)

%


11

%


11

%



Less: Restructuring costs


9



10












  Former parent legacy benefit, net


(3)














Loss on the early extinguishment of debt




48












         Depreciation and amortization


53



48












Interest expense, net


5



43












Income tax expense (benefit)


30



(6)












Net income attributable to Realogy Holdings


$

57



$

9












 

Table 7

 

REALOGY HOLDINGS CORP.

 FREE CASH FLOW

FOR THE YEAR ENDED DECEMBER 31, 2016 AND 2015

(In millions)


A reconciliation of net income attributable to Realogy Holdings to free cash flow is set forth in the following table:



Year Ended December 31,


2016


2015

Net income attributable to Realogy Holdings

$

213



$

184


Income tax expense, net of payments

120



93


Interest expense, net

174



231


Cash interest payments

(181)



(244)


Depreciation and amortization

202



201


Capital expenditures

(87)



(84)


Restructuring costs and former parent legacy items, net of payments

5



(14)


Loss on the early extinguishment of debt



48


Working capital adjustments

20



32


Relocation receivables (assets), net of securitization obligations

(9)



(4)


Free Cash Flow

$

457



$

443


 

A reconciliation of net cash provided by operating activities to free cash flow is set forth in the following table:



Year Ended December 31,


2016


2015

Net cash provided by operating activities

$

587



$

550


Property and equipment additions

(87)



(84)


Net change in securitization

(40)



(21)


Effect of exchange rates on cash and cash equivalents

(3)



(2)


Free Cash Flow

$

457



$

443






Net cash used in investing activities

$

(190)



$

(209)


Net cash used in financing activities

$

(535)



$

(237)


 


Table 8

Non-GAAP Definitions

Adjusted net income (loss) is defined by us as net income (loss) before mark to market interest rate adjustments, former parent legacy items, restructuring charges and loss on the early extinguishment of debt.  The gross amounts for these items as well as the adjustment for income taxes are presented.  Adjusted income (loss) per share is Adjusted net income (loss) divided by the weighted average common and common equivalent shares outstanding.  We present Adjusted net income (loss) and Adjusted earnings (loss) per share because we believe these measures are useful as supplemental measures in evaluating the performance of our operating businesses and provides greater transparency into our operating results.

EBITDA is defined by us as net income (loss) before depreciation and amortization, interest expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes and is our primary non-GAAP measure.

Operating EBITDA is defined by us as EBITDA before restructuring, early extinguishment of debt and legacy items and is used as a supplementary financial measure.  Operating EBITDA calculated for a twelve-month period is presented because the Company believes these items do not directly affect the operating results of the Company and accordingly should be excluded in comparing operating results.

We present EBITDA and Operating EBITDA because we believe they are useful as supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations.  Our management, including our chief operating decision maker, uses EBITDA as a factor in evaluating the performance of our business.  EBITDA and Operating EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP.

We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance.  We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results.

EBITDA and Operating EBITDA have limitations as analytical tools, and you should not consider EBITDA and Operating EBITDA either in isolation or as substitutes for analyzing our results as reported under GAAP.  Some of these limitations are:

  • these measures do not reflect changes in, or cash required for, our working capital needs;
  • these measures do 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;
  • these measures do not reflect our income tax expense or the cash requirements to pay our taxes;
  • these measures do 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 these measures do not reflect any cash requirements for such replacements; and
  • other companies may calculate these measures differently so they may not be comparable.

Free Cash Flow is defined as net income (loss) attributable to Realogy before income tax expense (benefit), net of payments, interest expense, net, depreciation and amortization, capital expenditures, restructuring costs and former parent legacy costs (benefits), net of payments, loss on the early extinguishment of debt, working capital adjustments and relocation assets, net of change in securitization obligations.  We use Free Cash Flow in our internal evaluation of operating effectiveness and decisions regarding the allocation of resources, as well as measuring the Company's ability to generate cash.  Since Free Cash Flow can be viewed as both a performance measure and a cash flow measure, the Company has provided a reconciliation to both net income attributable to Realogy Holdings and net cash provided by operating activities. Free Cash Flow is not defined by GAAP and should not be considered in isolation or as an alternative to net income (loss), net cash provided by (used in) operating, investing and financing activities or other financial data prepared in accordance with GAAP or as an indicator of the Company's operating performance or liquidity.  Free Cash Flow may differ from similarly titled measures presented by other companies.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/realogy-reports-financial-results-for-full-year-2016-300412988.html

SOURCE Realogy Holdings Corp.

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