Realogy Holdings Corp. recently reported financial results for the first quarter ended March 31, 2016. Revenue of $1.1 billion, a 7 percent increase as compared to the first quarter of 2015, was primarily driven by higher home sale transaction volume.
Net loss for the period was $42 million, compared to $32 million in the first quarter of 2015. Basic loss per share was $0.29, compared to $0.22 in first quarter of 2015.
Adjusted net loss was $17 million, and adjusted basic loss per share was $0.12, improvements of 29 percent and 25 percent respectively, on a comparable basis to the first quarter of 2015. Adjusted net loss is adjusted for non-cash mark to market expense on interest rate swaps and restructuring charges.
Adjusted (Covenant) EBITDA was $77 million, compared to $70 million in the first quarter of 2015, a year-over-year increase of 10 percent.
The company repurchased $33 million, or 1 million shares, of Realogy’s common stock in the open market at a weighted average market price of $33.45 per share, all under the $275 million repurchase plan announced in February 2016.
The company implemented business optimization initiatives and remains on track to reach its annualized run-rate savings target of $40 million, of which $25 million is expected to be realized in 2016.
“During the quarter, we delivered solid revenue growth, and made progress on our key priorities to enhance the efficiency of our operations, strengthen our technology offerings and maximize the profitability of our integrated business model,” says Richard A. Smith, Realogy’s chairman, chief executive officer and president. “The spring selling season is shaping up in line with industry forecasts for sales volume, and we are encouraged by the level of demand we are seeing in this inventory-constrained market. We are confident that our differentiated technology platform, and the continued investments we are making to enhance our value proposition, position us well to capitalize on an improving housing market.”
Operational Results
In the first quarter of 2016, Realogy’s franchise (RFG) and company-owned (NRT) business segments achieved a combined homesale transaction volume (transaction sides multiplied by average sale price) increase of 6 percent as compared to the first quarter of 2015. RFG reported a homesale transaction sides increase of 3 percent and an average homesale price increase of 3 percent. NRT reported a homesale transaction sides increase of 7 percent and an average homesale price decrease of 2 percent.
In the title and settlement services sector, TRG was involved in the closing of approximately 39,000 transactions during the quarter, reflecting a 35 percent increase in purchase units and a 2 percent increase in refinance units as compared to the first quarter of 2015. These results include the benefits of the acquisition of Independence Title late last year.
Looking Ahead
For the second quarter of 2016, Realogy expects to achieve homesale transaction volume gains in the range of 3 percent to 7 percent year-over-year. Based on the Company’s closed and open sales activity in April and the first several days of May, Realogy expects second quarter homesale transaction sides to be up 3 percent to 5 percent year-over-year and average homesale price to be flat to up 2 percent on a company-wide basis. Realogy’s guidance is in line with industry forecasts that expect an average of 5 percent transaction volume growth for the second quarter. In the current market environment, the Company is on track to continue to generate significant free cash flow for full year 2016.
“We continue to make significant progress toward our strategic financial objectives — optimizing our cost structure, executing our share repurchase program and delivering the balance sheet, which is the strongest it has been since we went public,” says Anthony E. Hull, executive vice president, chief financial officer and treasurer.
For more information, visit www.realogy.com.
