Realogy Holdings Corp. recently reported financial results for the fourth quarter and year ended December 31, 2014.
“Last year, on a combined basis, Realogy’s affiliated brokers and agents were responsible for closing approximately $420 billion of home sale transactions,” says Richard A. Smith, Realogy’s chairman, chief executive officer and president. “Realogy was involved in approximately 27 percent of U.S. existing home sale transaction volume involving a real estate brokerage firm — a full percentage point gain in market penetration compared to 2013. The key contributors to our market penetration increase were our relative strength at the high end of the housing market and our ongoing growth initiatives.”
Smith continues, “Looking ahead, we are encouraged by the more than 1.6 million new household formations reported by the U.S. Census Bureau last year, which we believe supports an increase in long-term demand for housing.”
The report includes the following highlights:
- Fourth quarter 2014 revenue of $1.3 billion increased 3 percent compared to fourth quarter 2013, driven by higher transaction volume at RFG and NRT.
- Fourth quarter 2014 Adjusted EBITDA was $167 million, compared to $151 million a year ago, a year-over-year increase of 11 percent. Net income was $21 million for the quarter.
- Net revenue for full year 2014 was $5.3 billion, up 1 percent compared to full year 2013.
- Adjusted EBITDA for 2014 was $779 million, above the guidance range of $765 million to $775 million that the Company forecasted during its third quarter investor call.
- Net income for full year 2014 was $143 million. 2014 adjusted net income excluding the reversal of the income tax valuation allowance and loss on the early extinguishment of debt was $160 million, compared to 2013 adjusted net income of $137 million.
- Basic earnings per share was $0.98 for the full year. Adjusted earnings per sharewas $1.10, compared to 2013 adjusted earnings per share of $0.94.
- Realogy generated $367 million of free cash flow for the full year, or $2.51 per share.
- For 2014, Realogy’s company-owned (NRT) and franchise (RFG) business segments’ combined home sale transaction volume (transaction sides multiplied by average sale price) increased by 5 percent compared to 2013. RFG and NRT reported average home sale price increases of 7 percent and 6 percent, year-over-year while home sale transactions declined 2 percent and 3 percent, respectively. Realogy’s overall 5 percent increase in home sale transaction volume compared favorably with the National Association of Realtors’ national average of 1 percent volume growth in 2014.
At Cartus, the Company’s relocation services segment, initiations for 2014 increased 3 percent and brokerage referrals increased 6 percent compared to 2013. At TRG, the company’s title and settlement services segment, purchase unit volume decreased 2 percent ear over year, which was consistent with NRT home sale transaction declines, however, TRG’s average fee per transaction improved 18 percent due to a shift in the mix of business to home purchase transactions from refinancing transactions. TRG’s refinance title and closing units decreased 64 percent in 2014 compared to 2013, which was expected given lower refinancing trends across the industry.
“Realogy generated $367 million of free cash flow in 2014 which reflects a $63 million, or 20 percent, reduction in cash interest expense as a result of refinancing activity,” says Anthony E. Hull, executive vice president, chief financial officer and treasurer. “We expect to continue to generate significant cash flow due to the operating characteristics of Realogy’s business. In addition, we expect cash flow in future periods will be enhanced by the utilization of our $2 billion net operating loss balance and related minimal cash taxes as well as our deleveraging and related lower cash interest requirements.”
Hull continues: “For the first quarter of 2015, based on our closed and open sales activity in January and February, we expect home sale sides to be up 2 percent to 4 percent year-over-year, and average sale price to increase 3 percent to 5 percent on a combined basis. As a result, we expect to see home sale transaction volume gains in the range of 5 percent to 9 percent year-over-year for RFG and NRT combined for the first quarter.”
The Company ended the year with a cash and cash equivalents balance of $313 million and no outstanding borrowings under its revolving credit facility. Total long-term corporate debt, including the short term portion, net of cash and cash equivalents totaled $3,597 million at December 31, 2014.
For more information, visit www.realogy.com.
