Delaware | 001-35674 | 20-8050955 | ||||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Delaware | 333-148153 | 20-4381990 | ||||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
(d) | Exhibits |
Exhibit No. | Description | |
99.1 | Press Release dated February 27, 2018. |
REALOGY HOLDINGS CORP. | ||
By: | /s/ Anthony E. Hull | |
Anthony E. Hull, Executive Vice President, Chief Financial Officer and Treasurer |
REALOGY GROUP LLC | ||
By: | /s/ Anthony E. Hull | |
Anthony E. Hull, Executive Vice President, Chief Financial Officer and Treasurer |
Exhibit No. | Exhibit | |
99.1 |
• | Revenue was $6.1 billion, an increase of 5% compared to 2016, driven by increases in homesale transaction volume (transaction sides multiplied by average sale price). |
• | Realogy grew its U.S. market share of existing homesale transaction volume to 15.9%, up from 15.7% in 2016. |
• | Combined 2017 homesale transaction volume for Realogy increased 7% year-over-year, which exceeded the National Association of Realtors reported annual industry volume increase of 6% in 2017. |
• | Net income was $431 million for 2017, compared to $213 million for 2016. Basic earnings per share was $3.15 compared with basic earnings per share of $1.47 in 2016. This reflects the recognition of a $216 million tax benefit, most of which is due to the 2017 Tax Cuts and Jobs Act, which reduces Realogy's effective tax rate from an estimated 41% to an estimated 29%. |
• | Adjusted net income per share for 2017 was $1.59 compared with $1.64 for 2016. (See Table 1a).1 |
• | Free Cash Flow for 2017 was $559 million compared with $456 million for 2016, an increase of $103 million. (See Table 7).3 Free Cash Flow for 2017 includes $27 million relating to the transition to a new mortgage joint venture partner. |
• | Operating EBITDA for 2017 was $732 million, compared with $770 million for 2016. (See Table 5).2 The 5% decline was primarily attributable to higher agent commission rates, reduced earnings in our relocation segment, and several non-recurring charges. |
• | In 2017, Realogy returned $325 million of capital to stockholders through share repurchases and dividends. |
• | increased its revolving credit facility by $350 million to a $1.4 billion total facility and extended its maturity by three years to February 2023; |
• | combined its existing two tranches of term loan A and term loan A-1 into a new single tranche of $750 million and extended the current maturities to February 2023; and |
• | extended the maturity of its approximately $1.1 billion term loan B by three years to February 2025. |
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 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
2017 | 2016 | 2015 | 2017 | 2016 | 2015 | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
Gross commission income | $ | 1,071 | $ | 989 | $ | 978 | $ | 4,576 | $ | 4,277 | $ | 4,288 | |||||||||||
Service revenue | 228 | 240 | 218 | 938 | 955 | 882 | |||||||||||||||||
Franchise fees | 100 | 92 | 84 | 396 | 372 | 353 | |||||||||||||||||
Other | 45 | 49 | 45 | 204 | 206 | 183 | |||||||||||||||||
Net revenues | 1,444 | 1,370 | 1,325 | 6,114 | 5,810 | 5,706 | |||||||||||||||||
Expenses | |||||||||||||||||||||||
Commission and other agent-related costs | 768 | 689 | 669 | 3,230 | 2,945 | 2,931 | |||||||||||||||||
Operating | 382 | 384 | 369 | 1,544 | 1,542 | 1,458 | |||||||||||||||||
Marketing | 66 | 60 | 55 | 261 | 241 | 226 | |||||||||||||||||
General and administrative | 95 | 87 | 82 | 364 | 321 | 337 | |||||||||||||||||
Former parent legacy benefit, net | — | (3 | ) | — | (10 | ) | (2 | ) | (15 | ) | |||||||||||||
Restructuring costs, net | 3 | 9 | 10 | 12 | 39 | 10 | |||||||||||||||||
Depreciation and amortization | 49 | 53 | 48 | 198 | 202 | 201 | |||||||||||||||||
Interest expense, net | 31 | 5 | 43 | 158 | 174 | 231 | |||||||||||||||||
Loss on the early extinguishment of debt | — | — | 48 | 5 | — | 48 | |||||||||||||||||
Other expense (income), net | 1 | — | — | 1 | (1 | ) | (3 | ) | |||||||||||||||
Total expenses | 1,395 | 1,284 | 1,324 | 5,763 | 5,461 | 5,424 | |||||||||||||||||
Income before income taxes, equity in earnings and noncontrolling interests | 49 | 86 | 1 | 351 | 349 | 282 | |||||||||||||||||
Income tax (benefit) expense | (196 | ) | 30 | (6 | ) | (65 | ) | 144 | 110 | ||||||||||||||
Equity in earnings of unconsolidated entities | (11 | ) | (2 | ) | (3 | ) | (18 | ) | (12 | ) | (16 | ) | |||||||||||
Net income | 256 | 58 | 10 | 434 | 217 | 188 | |||||||||||||||||
Less: Net income attributable to noncontrolling interests | (1 | ) | (1 | ) | (1 | ) | (3 | ) | (4 | ) | (4 | ) | |||||||||||
Net income attributable to Realogy Holdings | $ | 255 | $ | 57 | $ | 9 | $ | 431 | $ | 213 | $ | 184 | |||||||||||
Earnings per share attributable to Realogy Holdings: | |||||||||||||||||||||||
Basic earnings per share | $ | 1.91 | $ | 0.40 | $ | 0.06 | $ | 3.15 | $ | 1.47 | $ | 1.26 | |||||||||||
Diluted earnings per share | $ | 1.89 | $ | 0.40 | $ | 0.06 | $ | 3.11 | $ | 1.46 | $ | 1.24 | |||||||||||
Weighted average common and common equivalent shares of Realogy Holdings outstanding: | |||||||||||||||||||||||
Basic | 133.4 | 141.9 | 146.7 | 136.7 | 144.5 | 146.5 | |||||||||||||||||
Diluted | 135.2 | 143.2 | 148.2 | 138.4 | 145.8 | 148.1 | |||||||||||||||||
Cash dividends declared per share (beginning in August 2016) | $ | 0.09 | $ | 0.09 | $ | — | $ | 0.36 | $ | 0.18 | $ | — |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
2017 | 2016 | 2015 | 2017 | 2016 | 2015 | ||||||||||||||||||
Net income attributable to Realogy Holdings | $ | 255 | $ | 57 | $ | 9 | $ | 431 | $ | 213 | $ | 184 | |||||||||||
Addback: | |||||||||||||||||||||||
Mark-to-market interest rate swap (gains) losses | (8 | ) | (34 | ) | (7 | ) | (4 | ) | 6 | 20 | |||||||||||||
Former parent legacy benefit, net | — | (3 | ) | — | (10 | ) | (2 | ) | (15 | ) | |||||||||||||
Restructuring costs | 3 | 9 | 10 | 12 | 39 | 10 | |||||||||||||||||
Loss on the early extinguishment of debt | — | — | 48 | 5 | — | 48 | |||||||||||||||||
Adjustments for tax effect (a) | 1 | 11 | (20 | ) | (1 | ) | (17 | ) | (25 | ) | |||||||||||||
Impact of 2017 Tax Act and a reduction in the reserve for uncertain tax positions (b) | (216 | ) | (3 | ) | (2 | ) | (216 | ) | (2 | ) | (1 | ) | |||||||||||
Adjusted net income attributable to Realogy Holdings | $ | 35 | $ | 37 | $ | 38 | $ | 217 | $ | 237 | $ | 221 | |||||||||||
Earnings per share | |||||||||||||||||||||||
Basic earnings per share: | $ | 1.91 | $ | 0.40 | $ | 0.06 | $ | 3.15 | $ | 1.47 | $ | 1.26 | |||||||||||
Diluted earnings per share: | $ | 1.89 | $ | 0.40 | $ | 0.06 | $ | 3.11 | $ | 1.46 | $ | 1.24 | |||||||||||
Adjusted earnings per share | |||||||||||||||||||||||
Adjusted basic earnings per share: | $ | 0.26 | $ | 0.26 | $ | 0.26 | $ | 1.59 | $ | 1.64 | $ | 1.51 | |||||||||||
Adjusted diluted earnings per share: | $ | 0.26 | $ | 0.26 | $ | 0.26 | $ | 1.57 | $ | 1.63 | $ | 1.49 | |||||||||||
Weighted average common and common equivalent shares outstanding: | |||||||||||||||||||||||
Basic: | 133.4 | 141.9 | 146.7 | 136.7 | 144.5 | 146.5 | |||||||||||||||||
Diluted: | 135.2 | 143.2 | 148.2 | 138.4 | 145.8 | 148.1 |
(a) | Reflects tax effect of adjustments at the Company's blended state and federal statutory rate. |
(b) | The three months ended and year ended December 31, 2017, reflect the $184 million income tax rate change on the Company's net deferred tax liability as a result of the 2017 Tax Act resulting in a smaller net liability and a $32 million change in the reserve for uncertain tax positions. |
December 31, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 227 | $ | 274 | |||
Restricted cash | 7 | 7 | |||||
Trade receivables (net of allowance for doubtful accounts of $11 and $13) | 153 | 152 | |||||
Relocation receivables | 223 | 244 | |||||
Other current assets | 179 | 141 | |||||
Total current assets | 789 | 818 | |||||
Property and equipment, net | 289 | 267 | |||||
Goodwill | 3,710 | 3,690 | |||||
Trademarks | 749 | 748 | |||||
Franchise agreements, net | 1,294 | 1,361 | |||||
Other intangibles, net | 284 | 313 | |||||
Other non-current assets | 222 | 224 | |||||
Total assets | $ | 7,337 | $ | 7,421 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 156 | $ | 140 | |||
Securitization obligations | 194 | 205 | |||||
Current portion of long-term debt | 127 | 242 | |||||
Accrued expenses and other current liabilities | 478 | 463 | |||||
Total current liabilities | 955 | 1,050 | |||||
Long-term debt | 3,221 | 3,265 | |||||
Deferred income taxes | 327 | 389 | |||||
Other non-current liabilities | 212 | 248 | |||||
Total liabilities | 4,715 | 4,952 | |||||
Commitments and contingencies | |||||||
Equity: | |||||||
Realogy Holdings preferred stock: $.01 par value; 50,000,000 shares authorized, none issued and outstanding at December 31, 2017 and December 31, 2016 | — | — | |||||
Realogy Holdings common stock: $.01 par value; 400,000,000 shares authorized, 131,636,870 shares issued and outstanding at December 31, 2017 and 140,227,692 shares issued and outstanding at December 31, 2016 | 1 | 1 | |||||
Additional paid-in capital | 5,285 | 5,565 | |||||
Accumulated deficit | (2,631 | ) | (3,062 | ) | |||
Accumulated other comprehensive loss | (37 | ) | (40 | ) | |||
Total stockholders' equity | 2,618 | 2,464 | |||||
Noncontrolling interests | 4 | 5 | |||||
Total equity | 2,622 | 2,469 | |||||
Total liabilities and equity | $ | 7,337 | $ | 7,421 |
Quarter Ended | Year Ended | ||||||||||||||||||||
March 31, 2017 | June 30, 2017 | September 30, 2017 | December 31, 2017 | December 31, 2017 | |||||||||||||||||
RFG (a) | |||||||||||||||||||||
Closed homesale sides | 225,250 | 322,745 | 318,961 | 277,261 | 1,144,217 | ||||||||||||||||
Average homesale price | $ | 275,828 | $ | 291,355 | $ | 292,000 | $ | 293,216 | $ | 288,929 | |||||||||||
Average homesale broker commission rate | 2.50 | % | 2.50 | % | 2.49 | % | 2.49 | % | 2.50 | % | |||||||||||
Net royalty per side (b) | $ | 298 | $ | 316 | $ | 316 | $ | 316 | $ | 313 | |||||||||||
NRT | |||||||||||||||||||||
Closed homesale sides | 66,570 | 101,043 | 95,236 | 81,597 | 344,446 | ||||||||||||||||
Average homesale price | $ | 509,197 | $ | 528,518 | $ | 506,418 | $ | 511,683 | $ | 514,685 | |||||||||||
Average homesale broker commission rate | 2.45 | % | 2.44 | % | 2.45 | % | 2.44 | % | 2.44 | % | |||||||||||
Gross commission income per side | $ | 13,261 | $ | 13,625 | $ | 13,142 | $ | 13,152 | $ | 13,309 | |||||||||||
Cartus | |||||||||||||||||||||
Initiations | 36,515 | — | 50,798 | 39,608 | 34,834 | 161,755 | |||||||||||||||
Referrals | 15,203 | 25,284 | 23,905 | 19,286 | 83,678 | ||||||||||||||||
TRG | |||||||||||||||||||||
Purchase title and closing units (c) | 31,297 | 47,008 | 43,764 | 37,044 | 159,113 | ||||||||||||||||
Refinance title and closing units (d) | 8,533 | 6,324 | 6,513 | 7,194 | 28,564 | ||||||||||||||||
Average fee per closing unit | $ | 2,001 | $ | 2,139 | $ | 2,115 | $ | 2,092 | $ | 2,092 |
(a) | Includes all franchisees except for NRT. |
(b) | Net royalty per side amounts include the effect of volume incentives and non-standard incentives granted to franchisees. |
(c) | The amounts presented for the year ended December 31, 2017 include 8,351 purchase units as a result of acquisitions. |
(d) | The amounts presented for the year ended December 31, 2017 include 1,858 refinance units as a result of acquisitions. |
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 royalty per side (b) | $ | 287 | $ | 303 | $ | 305 | $ | 295 | $ | 299 | ||||||||||
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 (c) | 29,236 | 43,914 | 42,932 | 36,915 | 152,997 | |||||||||||||||
Refinance title and closing units (d) | 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) | Net royalty per side amounts include the effect of volume incentives and non-standard incentives granted to franchisees. |
(c) | The amounts presented for the year ended December 31, 2016 include 18,930 purchase units as a result of acquisitions. |
(d) | The amounts presented for the year ended December 31, 2016 include 4,469 refinance units as a result of acquisitions. |
Three Months Ended | Year Ended | ||||||||||||||||||
March 31, 2017 | June 30, 2017 | September 30, 2017 | December 31, 2017 | December 31, 2017 | |||||||||||||||
Net revenues (a) | |||||||||||||||||||
Real Estate Franchise Services | $ | 170 | $ | 237 | $ | 224 | $ | 199 | $ | 830 | |||||||||
Company Owned Real Estate Brokerage Services | 897 | 1,392 | 1,267 | 1,087 | $ | 4,643 | |||||||||||||
Relocation Services | 77 | 102 | 111 | 92 | $ | 382 | |||||||||||||
Title and Settlement Services | 120 | 157 | 154 | 139 | $ | 570 | |||||||||||||
Corporate and Other | (61 | ) | (95 | ) | (82 | ) | (73 | ) | $ | (311 | ) | ||||||||
Total Company | $ | 1,203 | $ | 1,793 | $ | 1,674 | $ | 1,444 | $ | 6,114 | |||||||||
EBITDA (b) | |||||||||||||||||||
Real Estate Franchise Services | $ | 102 | $ | 166 | $ | 159 | $ | 132 | $ | 559 | |||||||||
Company Owned Real Estate Brokerage Services | (26 | ) | 77 | 62 | 13 | $ | 126 | ||||||||||||
Relocation Services | 1 | 27 | 37 | 20 | $ | 85 | |||||||||||||
Title and Settlement Services | 2 | 26 | 21 | 9 | $ | 58 | |||||||||||||
Corporate and Other | (27 | ) | (18 | ) | (25 | ) | (33 | ) | $ | (103 | ) | ||||||||
Total Company | $ | 52 | $ | 278 | $ | 254 | $ | 141 | $ | 725 | |||||||||
Non-GAAP Reconciliation - EBITDA | |||||||||||||||||||
Total Company EBITDA | $ | 52 | $ | 278 | $ | 254 | $ | 141 | $ | 725 | |||||||||
Less: Depreciation and amortization (c) | 50 | 49 | 51 | 51 | $ | 201 | |||||||||||||
Interest expense, net | 39 | 47 | 41 | 31 | $ | 158 | |||||||||||||
Income tax (benefit) expense | (9 | ) | 73 | 67 | (196 | ) | $ | (65 | ) | ||||||||||
Net income (loss) attributable to Realogy Holdings | $ | (28 | ) | $ | 109 | $ | 95 | $ | 255 | $ | 431 |
(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 $61 million, $95 million, $82 million and $73 million for the three months ended March 31, 2017, June 30, 2017, September 30, 2017 and December 31, 2017, respectively. Such amounts are eliminated through the Corporate and Other line. |
(b) | Includes restructuring charges of $5 million, $2 million, $2 million and $3 million for the three months ended March 31, 2017, June 30, 2017, September 30, 2017 and December 31, 2017, respectively. |
Three Months Ended | Year Ended | ||||||||||||||||||
March 31, | June 30, | September 30, | December 31, | December 31, | |||||||||||||||
2017 | 2017 | 2017 | 2017 | 2017 | |||||||||||||||
Real Estate Franchise Services | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | |||||||||
Company Owned Real Estate Brokerage Services | 5 | 1 | 2 | 1 | 9 | ||||||||||||||
Relocation Services | — | — | — | — | — | ||||||||||||||
Title and Settlement Services | — | — | — | 1 | 1 | ||||||||||||||
Corporate and Other | 4 | (3 | ) | 2 | 9 | 12 | |||||||||||||
Total Company | $ | 9 | $ | (1 | ) | $ | 4 | $ | 11 | $ | 23 |
(c) | Depreciation and amortization includes $1 million and $2 million for the three months ended September 30, 2017 and December 31, 2017, respectively, of amortization expense related to our mortgage origination joint venture Guaranteed Rate Affinity's purchase accounting included in the "Equity in earnings of unconsolidated entities" line on the Consolidated Statement of Operations. |
Three Months Ended | Year Ended | ||||||||||||||||||
March 31, | June 30, | September 30, | December 31, | December 31, | |||||||||||||||
2016 | 2016 | 2016 | 2016 | 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 | |||||||||
Non-GAAP Reconciliation - EBITDA | |||||||||||||||||||
Total Company EBITDA | 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. |
(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. |
Three Months Ended | Year Ended | ||||||||||||||||||
March 31, | June 30, | September 30, | December 31, | December 31, | |||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | |||||||||||||||
Real Estate Franchise Services | $ | — | $ | 3 | $ | 1 | $ | — | $ | 4 | |||||||||
Company Owned Real Estate Brokerage Services | 2 | 7 | 6 | 7 | 22 | ||||||||||||||
Relocation Services | 2 | 1 | 1 | — | 4 | ||||||||||||||
Title and Settlement Services | — | — | 1 | — | 1 | ||||||||||||||
Corporate and Other | 6 | 1 | — | (1 | ) | 6 | |||||||||||||
Total Company | $ | 10 | $ | 12 | $ | 9 | $ | 6 | $ | 37 |
Year Ended | |||||||
December 31, 2017 | December 31, 2016 | ||||||
Net income attributable to Realogy | $ | 431 | $ | 213 | |||
Income tax (benefit) expense | (65 | ) | 144 | ||||
Income before income taxes | 366 | 357 | |||||
Interest expense, net | 158 | 174 | |||||
Depreciation and amortization (a) | 201 | 202 | |||||
EBITDA | 725 | 733 | |||||
EBITDA adjustments: | |||||||
Restructuring costs | 12 | 39 | |||||
Former parent legacy benefit, net | (10 | ) | (2 | ) | |||
Loss on the early extinguishment of debt | 5 | — | |||||
Operating EBITDA | $ | 732 | $ | 770 |
(a) | Depreciation and amortization for the year ended December 31, 2017 includes $3 million of amortization expense related to Guaranteed Rate Affinity's purchase accounting included in the "Equity in earnings of unconsolidated entities" line on the Consolidated Statement of Operations. |
Revenues (a) | Change | % Change | Operating EBITDA (b) | Change | % Change | Operating EBITDA Margin | Change | |||||||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||||||||||||||
RFG | $ | 830 | $ | 781 | $ | 49 | 6 | % | $ | 560 | $ | 520 | $ | 40 | 8 | % | 67 | % | 67 | % | — | |||||||||||||||||
NRT | 4,643 | 4,344 | 299 | 7 | 135 | 159 | (24 | ) | (15 | ) | 3 | 4 | (1 | ) | ||||||||||||||||||||||||
Cartus | 382 | 405 | (23 | ) | (6 | ) | 85 | 100 | (15 | ) | (15 | ) | 22 | 25 | (3 | ) | ||||||||||||||||||||||
TRG | 570 | 573 | (3 | ) | (1 | ) | 59 | 63 | (4 | ) | (6 | ) | 10 | 11 | (1 | ) | ||||||||||||||||||||||
Corporate and Other | (311 | ) | (293 | ) | (18 | ) | * | (107 | ) | (72 | ) | (35 | ) | * | ||||||||||||||||||||||||
Total Company | $ | 6,114 | $ | 5,810 | $ | 304 | 5 | % | $ | 732 | $ | 770 | $ | (38 | ) | (5 | %) | 12 | % | 13 | % | (1 | ) | |||||||||||||||
Less: Restructuring costs | 12 | 39 | ||||||||||||||||||||||||||||||||||||
Former parent legacy benefit, net | (10 | ) | (2 | ) | ||||||||||||||||||||||||||||||||||
Loss on the early extinguishment of debt | 5 | — | ||||||||||||||||||||||||||||||||||||
Depreciation and amortization (c) | 201 | 202 | ||||||||||||||||||||||||||||||||||||
Interest expense, net | 158 | 174 | ||||||||||||||||||||||||||||||||||||
Income tax (benefit) expense | (65 | ) | 144 | |||||||||||||||||||||||||||||||||||
Net income attributable to Realogy Holdings | $ | 431 | $ | 213 |
* | not meaningful. |
(a) | Includes the elimination of transactions between segments, which consists of intercompany royalties and marketing fees paid by NRT of $311 million and $293 million during the years ended December 31, 2017 and 2016, respectively. |
(b) | Operating EBITDA for Corporate and Other includes an $8 million expense related to the settlement of the Strader legal matter and an $8 million expense related to the transition of the Company's CEO during the year ended December 31, 2017. In addition, the Company believes that 2017 Operating EBITDA was also negatively impacted by an estimated $8 million due to natural disasters in the third and fourth quarters. |
(c) | Depreciation and amortization for the year ended December 31, 2017 includes $3 million of amortization expense related to Guaranteed Rate Affinity's purchase accounting included in the "Equity in earnings of unconsolidated entities" line on the Consolidated Statement of Operations. |
Three Months Ended | |||||||
December 31, 2017 | December 31, 2016 | ||||||
Net income attributable to Realogy | $ | 255 | $ | 57 | |||
Income tax (benefit) expense | (196 | ) | 30 | ||||
Income before income taxes | 59 | 87 | |||||
Interest expense, net | 31 | 5 | |||||
Depreciation and amortization (a) | 51 | 53 | |||||
EBITDA | 141 | 145 | |||||
EBITDA adjustments: | |||||||
Restructuring costs | 3 | 9 | |||||
Former parent legacy benefit, net | — | (3 | ) | ||||
Operating EBITDA | $ | 144 | $ | 151 |
(a) | Depreciation and amortization for the three months ended December 31, 2017 includes $2 million of amortization expense related to Guaranteed Rate Affinity's purchase accounting included in the "Equity in earnings of unconsolidated entities" line on the Consolidated Statement of Operations. |
Revenues (a) | Change | % Change | Operating EBITDA (b) | Change | % Change | Operating EBITDA Margin | Change | |||||||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||||||||||||||
RFG | $ | 199 | $ | 188 | $ | 11 | 6 | % | $ | 132 | $ | 122 | $ | 10 | 8 | % | 66 | % | 65 | % | 1 | |||||||||||||||||
NRT | 1,087 | 1,004 | 83 | 8 | 14 | 13 | 1 | 8 | 1 | 1 | — | |||||||||||||||||||||||||||
Cartus | 92 | 97 | (5 | ) | (5 | ) | 20 | 22 | (2 | ) | (9 | ) | 22 | 23 | (1 | ) | ||||||||||||||||||||||
TRG | 139 | 149 | (10 | ) | (7 | ) | 10 | 13 | (3 | ) | (23 | ) | 7 | 9 | (2 | ) | ||||||||||||||||||||||
Corporate and Other | (73 | ) | (68 | ) | (5 | ) | * | (32 | ) | (19 | ) | (13 | ) | * | ||||||||||||||||||||||||
Total Company | $ | 1,444 | $ | 1,370 | $ | 74 | 5 | % | $ | 144 | $ | 151 | $ | (7 | ) | (5 | %) | 10 | % | 11 | % | (1 | ) | |||||||||||||||
Less: Restructuring costs | 3 | 9 | ||||||||||||||||||||||||||||||||||||
Former parent legacy benefit, net | — | (3 | ) | |||||||||||||||||||||||||||||||||||
Depreciation and amortization (c) | 51 | 53 | ||||||||||||||||||||||||||||||||||||
Interest expense, net | 31 | 5 | ||||||||||||||||||||||||||||||||||||
Income tax (benefit) expense | (196 | ) | 30 | |||||||||||||||||||||||||||||||||||
Net income attributable to Realogy Holdings | $ | 255 | $ | 57 |
* | not meaningful. |
(a) | Includes the elimination of transactions between segments, which consists of intercompany royalties and marketing fees paid by NRT of $73 million and $68 million during the three month ended December 31, 2017 and 2016, respectively. |
(b) | Operating EBITDA for Corporate and Other includes an $8 million expense related to the transition of the Company's CEO in the fourth quarter of 2017. |
(c) | Depreciation and amortization for the three months ended December 31, 2017 includes $2 million of amortization expense related to Guaranteed Rate Affinity's purchase accounting included in the "Equity in earnings of unconsolidated entities" line on the Consolidated Statement of Operations. |
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
Net income attributable to Realogy Holdings | $ | 431 | $ | 213 | |||
Income tax (benefit) expense, net of payments | (77 | ) | 120 | ||||
Interest expense, net | 158 | 174 | |||||
Cash interest payments | (172 | ) | (181 | ) | |||
Depreciation and amortization | 198 | 202 | |||||
Capital expenditures | (99 | ) | (87 | ) | |||
Restructuring costs and former parent legacy items, net of payments | (19 | ) | 5 | ||||
Loss on the early extinguishment of debt | 5 | — | |||||
Working capital adjustments | 122 | 19 | |||||
Relocation receivables (assets), net of securitization obligations | 12 | (9 | ) | ||||
Free Cash Flow | $ | 559 | $ | 456 |
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
Net cash provided by operating activities | $ | 667 | $ | 586 | |||
Property and equipment additions | (99 | ) | (87 | ) | |||
Net change in securitization | (11 | ) | (40 | ) | |||
Effect of exchange rates on cash and cash equivalents | 2 | (3 | ) | ||||
Free Cash Flow | $ | 559 | $ | 456 | |||
Net cash used in investing activities | $ | (146 | ) | $ | (191 | ) | |
Net cash used in financing activities | $ | (570 | ) | $ | (534 | ) |
For the Year Ended December 31, 2017 | ||||
Net income attributable to Realogy Group | $ | 431 | ||
Income tax benefit | (65 | ) | ||
Income before income taxes | 366 | |||
Interest expense, net | 158 | |||
Depreciation and amortization (a) | 201 | |||
EBITDA | 725 | |||
EBITDA adjustments: | ||||
Restructuring costs | 12 | |||
Former parent legacy benefit, net | (10 | ) | ||
Loss on the early extinguishment of debt | 5 | |||
Operating EBITDA | 732 | |||
Bank covenant adjustments: | ||||
Pro forma effect of business optimization initiatives (b) | 21 | |||
Non-cash charges (c) | 40 | |||
Pro forma effect of acquisitions and new franchisees (d) | 8 | |||
Incremental securitization interest costs (e) | 3 | |||
EBITDA as defined by the Senior Secured Credit Facilities | $ | 804 | ||
Total senior secured net debt (f) | $ | 1,764 | ||
Senior secured leverage ratio | 2.19 | x |
(a) | Depreciation and amortization for the year ended December 31, 2017 includes $3 million of amortization expense related to Guaranteed Rate Affinity's purchase accounting included in the "Equity in earnings of unconsolidated entities" line on the Consolidated Statement of Operations. |
(b) | Represents the twelve-month pro forma effect of business optimization initiatives. |
(c) | Represents the elimination of non-cash expenses, including $52 million of stock-based compensation expense less $11 million for the change in the allowance for doubtful accounts and notes reserves and $1 million of foreign exchange benefits for the twelve months ended December 31, 2017. |
(d) | 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 January 1, 2017. 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 assumptions in calculating such estimates and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of January 1, 2017. |
(e) | Incremental borrowing costs incurred as a result of the securitization facilities refinancing for the twelve months ended December 31, 2017. |
(f) | Represents total borrowings under the senior secured credit facilities and borrowings secured by a first priority lien on our assets of $1,886 million plus $29 million of capital lease obligations less $151 million of readily available cash as of December 31, 2017. 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, and the Term Loan A Agreement dated as of October 23, 2015, as amended, which was amended and restated in its entirety as of February 8, 2018. Our Unsecured Notes include our 4.50% Senior Notes due 2019, our 5.25% Senior Notes due 2021 and our 4.875% Senior Notes due 2023. |
As of December 31, 2017 | ||||
Revolver | $ | 70 | ||
Term Loan A | 391 | |||
Term Loan A-1 | 342 | |||
Term Loan B | 1,083 | |||
Senior Notes | 450 | |||
Senior Notes | 550 | |||
Senior Notes | 500 | |||
Total Debt (excluding securitizations) | $ | 3,386 | ||
Less: Cash and Cash Equivalents | 227 | |||
Net Corporate Debt | $ | 3,159 | ||
EBITDA as defined by the Senior Secured Credit Facility | $ | 804 | ||
Net Debt Leverage Ratio | 3.9 | x |
• | 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. |
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