RISMEDIA, August 4, 2011—Realogy Corporation, a global leader in real estate and relocation services, has reported results for the second quarter ended June 30, 2011. Realogy’s net revenue for the second quarter was $1.2 billion, a decrease of 6% compared to the second quarter of 2010. According to the company, this was largely attributable to a decrease in transaction volume in the franchised and company-owned real estate services segments in line with reported industry trends. EBITDA before restructuring and other items for the quarter was $178 million, a decrease of $56 million, or 24%, year-over-year. Realogy’s reported EBITDA for the quarter was $187 million. For the quarter, Realogy recorded a net loss attributable to the Compa ny of $22 million.
“We had anticipated that the first quarter weakness in home sales would continue into the second quarter of 2011 and that Realogy’s average homesale price would increase compared to the second quarter of 2010, both of which happened as expected,” said Richard A. Smith, Realogy’s chief executive officer. “The comparative weakness in the second quarter of 2011 was primarily related to the unfavorable year-over-year comparisons to the second quarter of 2010, which experienced a significant spike in unit sales directly related to the Homebuyer Tax Credit. Sluggish macroeconomic conditions such as weak GDP growth, continued high unemployment rates and low consumer confidence also contributed to a suppressed demand for housing this past quarter.”
Looking at Realogy’s core business drivers, Realogy Franchise Group (RFG) and NRT, the company-owned brokerage unit, both had year-over-year 13% decreases in the number of homesale sides. These results were consistent with the 13% decrease in nationwide existing homesale units reported by the National Association of Realtors (NAR) for the quarter. The decline in sides at Realogy was partially offset by increases at both RFG and NRT in average sales price. Both NRT and RFG outperformed the national market in terms of average sales price. The average homesale price increased 2% at RFG and 5% at NRT in the second quarter of 2011, compared to the flat average home price reported by NAR for the quarter. Cartus experienced a 1% increase in relocation initiations with a 7% decrease in broker referrals, while Title Resource Group experienced a 4% increase in refinance title and closing units and a 4% increase in the average price per closing unit, which partially offset a 13% decreas e in purchase title and closing units. The decrease in Cartus broker referrals and TRG purchase units was directly correlated to the downward national trend in existing homesale units in the second quarter.
“Looking ahead to the third quarter of 2011, the results we experienced in July indicate strong increases in homesale sides and average sales price to be flat on a comparative basis to third quarter 2010,” said Anthony E. Hull, Realogy’s chief financial officer. “The gains in unit sales anticipated in Q3 2011 are again a reflection of the impact of the 2010 Homebuyer Tax Credit, which caused homesales to drop dramatically in Q3 2010 — thus the difference in year-over-year swings between the second and third quarters. Although we expect the third quarter of 2011 to show year-over-year improvement, we do not believe it will be as significant as we had anticipated earlier in the year because of a stalling economy and regulatory and legislative risks that seem to be delaying or dampening further improvement in the housing market.”
Balance Sheet Information and Covenant Compliance as of June 30, 2011
The Company ended the quarter with $117 million of readily available cash and $180 million outstanding on its revolving credit facility under its senior secured credit agreement. The Company expects approximately two-thirds of these borrowings to be repaid by the end of the third quarter.
As of June 30, 2011, the Company’s senior secured leverage ratio (SSLR) was 4.38 to 1, which is below the 4.75 to 1 maximum ratio required to be in compliance with its senior secured credit agreement. The SSLR is determined by dividing Realogy’s senior secured net debt of $2.5 billion at June 30, 2011 by the Company’s Adjusted EBITDA of $578 million for the 12 months ended June 30, 2011. (Please see Table 8 for the definition of non-GAAP financial measures, Adjusted EBITDA and EBITDA before restructuring and other items and Tables 6 and 7 for a reconciliation of these non-GAAP measures to their most comparable GAAP financial measure, net loss attributable to Realogy.)
For more information, visit www.realogy.com.
