Realogy Holdings Corp. recently reported financial results for the first quarter ended March 31, 2017, including the following highlights:
- Revenue was $1.20 billion, an increase of 6 percent as compared with the first quarter in 2016, driven by transaction volume increases at the company-owned brokerage segment (NRT) and Realogy Franchise Group (RFG).
- The company’s combined home-sale transaction volume increased 9 percent compared with the first quarter of 2016, consisting of a 10 percent volume gain at RFG and a 7 percent volume gain at NRT.
- Net loss was $28 million compared with net loss of $42 million in the first quarter of 2016. Basic loss per share was $0.20 compared with basic loss per share of $0.29 in the first quarter of 2016.
- Adjusted net loss was $23 million compared with adjusted net loss of $17 million in the first quarter of 2016. Adjusted net loss per share was $0.16 compared with adjusted net loss per share of $0.12 in first quarter of 2016.
- Operating EBITDA was $61 million, compared with $65 million in the first quarter of 2016.
- The company returned $73 million of capital to shareholders through repurchases and dividends.
“The housing market proved stronger than we expected in the first quarter, and we saw early signs of stabilization in our high-end markets,” says Richard A. Smith, Realogy’s chairman, CEO and president. “We also made good progress on our recruiting initiatives intended to increase the number of productive sales agents at NRT and retain a higher percentage of our top-quartile agents. While these actions will result in near-term moderate pressure on margins, we anticipate that over the medium term they will be additive to revenue and earnings at NRT as well as other Realogy business units that benefit from NRT’s transaction volume. Overall, we are encouraged by the progress we are making as we execute on our strategic growth initiatives.”
In the first quarter of 2017, RFG and NRT achieved a combined home-sale transaction volume (transaction sides multiplied by average sale price) of approximately $96 billion, an increase of 9 percent compared with the first quarter of 2016, which exceeded the company’s guidance range based on stronger than expected results in March. RFG reported a home-sale transaction sides increase of 3 percent and an average home-sale price increase of 6 percent. NRT reported a home-sale transaction sides increase of 4 percent and an average home-sale price increase of 3 percent.
In the title and settlement services sector, TRG was involved in the closing of approximately 40,000 transactions in the first quarter of 2017, reflecting a 7 percent increase in purchase units and a 12 percent decrease in refinance units compared with the first quarter of 2016.
In the relocation segment, Cartus generated over 15,000 referrals to agents that closed in the first quarter and initiated over 36,000 moves. Over the last 12 months, approximately 86,000 closed transaction sides resulted from Cartus referrals, primarily involving Realogy’s network of affiliated agents.
Capital Allocation
The company returned $73 million of capital to shareholders through repurchases and dividends in Q1 2017. During the first quarter of 2017, Realogy repurchased approximately 2.2 million shares of common stock in the open market at a weighted average market price of $27.82 per share for a total of $60 million and returned an additional $13 million through a quarterly cash dividend paid to stockholders. The company had approximately 138.7 million shares of common stock outstanding as of March 31, 2017.
“We remain on track to continue to generate significant free cash flow in 2017,” says Anthony E. Hull, Realogy’s EVP, CFO and treasurer. “Since the inception of the company’s share repurchase program in February 2016, Realogy has used a substantial portion of free cash flow to repurchase a total of 10 million of our outstanding shares. We will continue to strategically deploy capital to enhance shareholder value.”
Balance Sheet
The company ended the quarter with cash and cash equivalents of $205 million. Total long-term corporate debt, including the short-term portion, net of cash and cash equivalents (net corporate debt), totaled $3.5 billion at March 31, 2017. The company’s net debt leverage was 4.0 times at March 31, 2017.
For more information, please visit www.realogy.com.
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