Anywhere Real Estate Inc, formerly known as Realogy Holdings Corp., posted a second-quarter net income of $88 million and basic earnings per share of $0.76 on Thursday, a decrease of $61 million or $0.52 per share versus the previous year.
The New Jersey-based, billion-dollar company, whose brands include Better Homes and Gardens® Real Estate, CENTURY 21®, Coldwell Banker®, Corcoran®, ERA®, and Sotheby’s International Realty®, raked in revenue of $2.1 billion, a reduction of 6% or $134 million year-over-year.
The company largely attributed the dip in earnings to the absence of revenue from their former title underwriter business, which was sold to an investment management firm in the first quarter of 2022, in addition to a recent unfavorable shift in economic conditions that has plagued businesses nationwide.
“Record increases in mortgage rates, to nearly double what they were a few months ago, combined with rising inflation and broader macroeconomic concerns, has substantially changed buyer affordability, buyer demand and seller expectations. And we saw that mostly later in the quarter, especially in June,” said Ryan Schneider, Anywhere’s chief executive officer and president, who has helmed the company since 2017, on an earnings call yesterday.
Despite the downstream effects of the decelerating housing market, Schneider maintained that Anywhere delivered much-desired “solid profitability and free cash flow” to its investors. However, the company generated significantly less free cash flow, over three times less, than in the second quarter of 2021. Additionally, Anywhere reported operating earnings before interest, taxes, depreciation and amortization (EBITDA) of $202 million, a decrease of $108 million year-over-year.
In response to these reductions in earnings and cash flow, Charlotte Simonelli, Anywhere’s executive vice president, chief financial officer and treasurer, emphasized on the earnings call that the second quarter of 2021 was “unseasonably strong,” and reminded investors that the company is not “immune to the challenges in the market.”
Simonelli added that the company has taken several critical steps in order to bolster itself against current and future economic headwinds. Namely, Anywhere is cutting costs across the board, reducing their retail office footprint, which is already down substantially since 2020, and streamlining their administrative support structure by implementing greater automation.
While navigating a sea of subpar metrics on the earnings call, Simonelli steered to safe harbor by making mention of several positive developments, including Anywhere’s recent Moody’s upgrade. The credit rating agency revised Anywhere’s outlook from stable to positive in late June, despite the anticipation of declining revenue in 2022.
“Looking ahead, the housing market volatility, the pace of change and additional Fed actions together make it pretty tough to forecast the rest of the year,” concluded Scheider.
The Federal Reserve announced a 75-basis-point rate increase on Wednesday, which, coupled with hikes earlier in the year, represent the most aggressive monetary contraction in decades. Additional increases are also expected.
Shares of Anywhere Real Estate company were down 7.25% before the end of trading Thursday (press time) and down by 42.54% year-to-date.
Brendan Rascius is RISMedia’s associate editor. Email him your story ideas at brascius@rismedia.com.
