Realogy Reports Fourth Quarter and Full Year 2020 Financial Results

2/23/21

Realogy Holdings Corp. (NYSE: RLGY), the largest full-service residential real estate services company in the United States, today reported financial results for the fourth quarter and full year ended December 31, 2020.

"Realogy had an outstanding 2020, delivering $726 million in Operating EBITDA, $555 million in free cash flow, 13% homesale transaction volume growth, and substantial capital structure improvements," said Ryan Schneider, Realogy's chief executive officer and president. "In an extraordinary year, we were able to capitalize on the dynamic housing market, accelerate our strategic progress, and capture significant incremental transaction economics. With our strategic success and strong momentum, we believe Realogy is well-positioned to lead into the future. 2021 is off to a very strong start, and we are excited as we look ahead."

"2020 was a year of tremendous operational and financial execution for Realogy," said Charlotte Simonelli, Realogy's executive vice president, chief financial officer, and treasurer. "In the year we delivered top-line growth, cost efficiencies, impressive profitability, and greater simplification while continuing to invest in the business. We seized market opportunities to improve our capital structure, including significantly reducing net debt and net leverage, which further strengthened Realogy's financial profile."

Fourth Quarter 2020 Highlights

  • Generated revenue of $1.9 billion, an increase of 36% or $497 million year-over-year.
  • Reported Net income of $18 million and basic earnings per share of $0.16, an increase of $63 million vs. prior year or $0.55 per share.
  • Generated Operating EBITDA of $206 million, an increase of $80 million year-over-year, driven by higher transaction volume, strong performance at our mortgage JV, and ongoing cost management (See Table 5a).
  • Title and mortgage continued to contribute meaningfully to our business results, generating approximately $58 million in fourth quarter Operating EBITDA (See Table 5a).
  • Combined closed transaction volume increased 45% year-over-year in the fourth quarter driving market share gains for the second consecutive quarter.
  • Generated Free Cash Flow of $268 million vs. $77 million for the corresponding quarter last year (See Table 7).

Full Year 2020 Highlights

  • Generated revenue of $6.2 billion, an increase of 6% or $351 million year-over-year.
  • Reported Net loss of $360 million and net loss per share of $3.13 includes non-cash impairment charges of $682 million largely attributable to the COVID-19 crisis.
  • Generated Operating EBITDA of $726 million, an increase of $136 million year-over-year, driven by higher transaction volume, strong performance at our mortgage JV, and strong cost management both temporary and permanent (See Table 5b).
  • Title and mortgage continued to contribute meaningfully to our business results, generating approximately $226 million in Operating EBITDA (See Table 5b).
  • Increased combined closed transaction volume 13% year-over-year with improvement across both Brokerage and Franchise businesses and held market share steady in 2020 vs. 2019.
  • Generated Free Cash Flow of $555 million, up $329 million vs. last year (See Table 7).
  • Strengthened the balance sheet reducing net debt by $493 million from December 31, 2019 with the Net Debt Leverage Ratio declining to 3.4x (See Table 8b) and senior secured leverage ratio of 1.70x (See Table 8a).
  • Grew Brokerage agents 2% year-over-year and had continued improving retention.

Q4 and Full Year 2020 Financial Highlights

The following tables set forth Realogy's financial highlights for the periods presented (in millions, except per share data) (unaudited):

Three Months Ended December 31,
20202019 Change% Change
2061268018(45)6379(18)970.16(0.39)0.550.68(0.16)0.8426877191
312,335257,524
97,93077,560
42,58634,34520,4909,294Year Ended
20202019 Change% Change
726590136(360)(188)(172)23173158(3.13)(1.65)(1.48)2.010.641.37555226329
1,090,3451,061,500
333,736325,652
149,126146,21065,32426,589146%
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Footnotes:
* not meaningful
1 See Tables 5a and 5b. Operating EBITDA is defined as net income (loss) before depreciation and amortization, interest expense, net (other than relocation services interest for securitization assets and securitization obligations), income taxes, and other items that are not core to the operating activities of the Company such as restructuring charges, former parent legacy items, gains or losses on the early extinguishment of debt, impairments, gains or losses on discontinued operations and gains or losses on the sale of investments or other assets.
2 See Table 1a. Adjusted Net income (loss) is defined as net income (loss) before mark-to-market interest rate swap adjustments, former parent legacy items, restructuring charges, (gain) loss on the early extinguishment of debt, impairments and the tax effect of the foregoing adjustments. Adjusted earnings (loss) per share is Adjusted net income (loss) divided by the weighted average common and common equivalent shares outstanding.
3 See Table 7. Free Cash Flow is defined as net income (loss) attributable to Realogy before income tax expense (benefit), net of payments, net interest expense, cash interest payments, depreciation and amortization, capital expenditures, restructuring costs and former parent legacy costs (benefits), net of payments, impairments, (gain) loss on the early extinguishment of debt, working capital adjustments and relocation receivables (assets), net of change in securitization obligations.
4 Includes all franchisees except for Realogy Brokerage Group.
5 The Company's combined homesale transaction volume growth (transaction sides multiplied by average sale price) increased 45% compared with the fourth quarter of 2019 and increased 13% compared with the year ended 2019.
The results of Cartus Relocation Services have been reclassified from discontinued operations to continuing operations within Realogy Franchise Group for all periods presented.Balance Sheet and Capital Allocation

The Company ended the year with cash and cash equivalents of $520 million*. Total corporate debt, including the short-term portion, net of cash and cash equivalents (net corporate debt), totaled $2.8 billion at December 31, 2020. The Company's Net Debt Leverage Ratio was 3.4x at December 31, 2020 (see Table 8b).

In January and February 2021, the Company issued $900 million 5.75% Senior Notes due 2029. The Company used $250 million of the proceeds from these issuances to repay a portion of outstanding borrowings under the Term Loan A Facility and $655 million of the remaining proceeds to repay a portion of outstanding borrowings under the Term Loan B Facility. Furthermore, in January 2021, the Company entered into amendments to the Senior Secured Credit Agreement and Term Loan A Agreement, which, among other things, (i) provide for the extension of the maturity of a portion of the commitments under the Revolving Credit Facility and a portion of the outstanding loans under the Term Loan A facility from 2023 to 2025, subject to certain earlier springing maturity dates, (ii) lowered the required senior secured leverage ratio level under the Senior Secured Credit Agreement and Term Loan A Agreement, including a requirement that the senior secured leverage not exceed 5.25 to 1.00 for the trailing twelve-month period ended December 31, 2020, and (iii) provided for an amortization schedule applicable to the portion of the Term Loan A Facility that was extended pursuant to the amendments (with no amortization payments required on the portion of the Term Loan A Facility that was not extended).

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

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* excludes restricted cash

About Realogy Holdings Corp.

Realogy Holdings Corp. (NYSE: RLGY) is 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'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 independent sales agents, helping them build stronger businesses and best serve today's consumers. Realogy's affiliated brokerages operate around the world with approximately 190,700 independent sales agents in the United States and nearly 130,000 independent sales agents in 115 other countries and territories. Recognized for ten consecutive years as one of the World's Most Ethical Companies, Realogy has also been designated a Great Place to Work three years in a row and one of Forbes' Best Employers for Diversity. Realogy is headquartered in Madison, New Jersey.

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