Realogy Reports Second Quarter 2021 Financial Results

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MADISON, N.J., July 29, 2021 /PRNewswire/ -- Realogy Holdings Corp. (NYSE: RLGY), the largest full-service residential real estate services company in the United States, today reported financial results for the quarter ended June 30, 2021.

Realogy logo. (PRNewsFoto/Realogy Holdings Corp.)
Realogy logo. (PRNewsFoto/Realogy Holdings Corp.)

"Realogy delivered an outstanding second quarter. We generated record Operating EBITDA, gained market share for the fourth consecutive quarter, and strengthened our balance sheet to its best position ever," said Ryan Schneider, Realogy's chief executive officer and president. "The unmatched power of Realogy's strategic progress, innovation through technology, and leading presence in the luxury market, combined with our robust growth investments, position our business to lead into the future."

"In the second quarter, Realogy delivered phenomenal results, significantly advanced our balance sheet, and generated impressive free cash flow that enable us to invest in our future," said Charlotte Simonelli, Realogy's executive vice president, chief financial officer, and treasurer. "Over the past year Realogy has achieved tremendous quality and consistency in our financial performance."

Second Quarter 2021 Highlights

  • Generated Revenue of $2.3 billion, an increase of 81% or $1,021 million year-over-year.

  • Reported Net income of $149 million and basic earnings per share of $1.28, an increase of $163 million vs. prior year or $1.40 per share.

  • Generated Operating EBITDA of $310 million, an increase of $135 million year-over-year (See Table 5a).

  • Lowest ever Net Debt Leverage Ratio of 2.5x and Senior Secured Leverage Ratio of 0.00x (See Tables 8a and 8b).

  • Reported Free Cash Flow of $243 million, an improvement of $196 million versus second quarter of 2020 (See Table 7).

  • Combined closed transaction volume increased 85% year-over-year in the second quarter driving market share gains for the fourth consecutive quarter. Our transaction volume growth was significantly above the 53% year-over-year market volume growth reported by the National Association of Realtors (NAR).

  • Realogy Title Group contributed meaningfully to our business results, generating approximately $55 million in second quarter Operating EBITDA, a decline of $6 million year-over-year, including a $27 million decrease in equity in earnings from the Company's mortgage origination joint venture (See Table 5a).

  • Owned Brokerage agent count grew 4% year-over-year and continued to maintain strong retention levels.

  • Strong cost management with $80 million in permanent cost savings expected in 2021 with actions taken for approximately 85% of the target savings and $50 million realized in the income statement through June 30, 2021.

Second Quarter 2021 Financial Highlights

The following table sets forth Realogy's financial highlights for the periods presented (in millions, except per share data) (unaudited):


Three Months Ended June 30,


2021


2020


Change


% Change

Revenue

$

2,276



$

1,255



$

1,021



81

%

Operating EBITDA 1

310



175



135



77


Net income (loss) attributable to Realogy

149



(14)



163



1,164


Adjusted net income 2

159



57



102



179


Earnings (loss) per share

1.28



(0.12)



1.40



1,167


Adjusted earnings per share 2

1.36



0.49



0.87



178


Free Cash Flow 3

243



47



196



417


Net cash provided by operating activities

$

223



$

115



$

108



94

%









Select Key Drivers








Realogy Franchise Group 4 5








Closed homesale sides

320,463



238,085





35

%

Average homesale price

$

430,756



$

321,308





34

%

Realogy Brokerage Group 5








Closed homesale sides

103,945



71,375





46

%

Average homesale price

$

678,978



$

503,935





35

%

Realogy Title Group








Purchase title and closing units

47,375



32,028





48

%

Refinance title and closing units

14,472



17,548





(18)

%

____________________

Footnotes:

1

See Tables 5a and 5b. Operating EBITDA is defined as net income (loss) before depreciation and amortization, interest expense, net (other than relocation services interest for securitization assets and securitization obligations), income taxes, and other items that are not core to the operating activities of the Company such as restructuring charges, former parent legacy items, gains or losses on the early extinguishment of debt, impairments, gains or losses on discontinued operations and gains or losses on the sale of investments or other assets.

2

See Table 1a. Adjusted Net income (loss) is defined as net income (loss) before mark-to-market interest rate swap adjustments, former parent legacy items, restructuring charges, (gain) loss on the early extinguishment of debt, impairments and the tax effect of the foregoing adjustments. Adjusted earnings (loss) per share is Adjusted net income (loss) divided by the weighted average common and common equivalent shares outstanding.

3

See Table 7. Free Cash Flow is defined as net income (loss) attributable to Realogy before income tax expense (benefit), net of payments, net interest expense, cash interest payments, depreciation and amortization, capital expenditures, restructuring costs and former parent legacy costs (benefits), net of payments, impairments, (gain) loss on the early extinguishment of debt, working capital adjustments and relocation receivables (assets), net of change in securitization obligations.

4

Includes all franchisees except for Realogy Brokerage Group.

5

The Company's combined homesale transaction volume growth (transaction sides multiplied by average sale price) increased 85% compared with the second quarter of 2020.

Balance Sheet and Capital Allocation

The Company ended the quarter with cash and cash equivalents of $859 million*. Total corporate debt, including the short-term portion, net of cash and cash equivalents (net corporate debt), totaled $2.6 billion at June 30, 2021. The Company's Net Debt Leverage Ratio was 2.5x at June 30, 2021 (see Table 8b).

On April 28, 2021, the Company used cash on hand to pay down $150 million of the Term Loan B Facility, reducing the principal amount of that facility to $240 million.

In June 2021, the Company issued $403 million principal amount of 0.25% Exchangeable Senior Notes due 2026. The Company used a portion of the net proceeds from this offering to pay the cost of exchangeable note hedge transactions (with such cost partially offset by the proceeds to the Company from the sale of warrants). Taken together, the purchase of such exchangeable note hedges and the sale of such warrants are intended to offset (in whole or in part) any potential dilution and/or cash payments upon the exchange of the Exchangeable Senior Notes, and to effectively increase the overall exchange price from $24.49 to $30.6075 per share.

A consolidated balance sheet is included as Table 2 of this press release.

____________________

* excludes restricted cash

Investor Conference Call

Today, July 29, at 8:30 a.m. (ET), Realogy will hold a conference call via webcast to review its Q2 2021 results and provide a business update. The webcast will be hosted by Ryan Schneider, chief executive officer and president, and Charlotte Simonelli, chief financial officer, and will conclude with an investor Q&A period with management.

Investors may access the conference call live via webcast at ir.realogy.com or by dialing (833) 646-0499 (toll free); international participants should dial (918) 922-3007. Please dial in at least 5 to 10 minutes prior to start time. A webcast replay also will be available on the website.

About Realogy Holdings Corp.

Realogy (NYSE: RLGY) is moving the real estate industry to what's next. As the leading and most integrated provider of U.S. residential real estate services encompassing franchise, brokerage, relocation, and title and settlement businesses as well as a mortgage joint venture, Realogy supported approximately 1.4 million home transactions in 2020. The company's diverse brand portfolio includes some of the most recognized names in real estate: Better Homes and Gardens® Real Estate, CENTURY 21®, Coldwell Banker®, Coldwell Banker Commercial®, Corcoran®, ERA®, and Sotheby's International Realty®. Using innovative technology, data and marketing products, high-quality lead generation programs, and best-in-class learning and support services, Realogy fuels the productivity of its approximately 194,200 independent sales agents in the U.S. and approximately 142,700 independent sales agents in 117 other countries and territories, helping them build stronger businesses and best serve today's consumers. Recognized for ten consecutive years as one of the World's Most Ethical Companies, Realogy has also been designated a Great Place to Work three years in a row and is one of LinkedIn's 2021 Top Companies in the U.S.

Forward-Looking Statements

Certain statements in this press release constitute "forward-looking statements." Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Realogy Holdings Corp. to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "potential" and "plans" and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements.

The following include some, but not all, of the factors that could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements: adverse developments or the absence of sustained improvement in the U.S. residential real estate markets, either regionally or nationally, which could include, but are not limited to factors that could impact homesale transaction volume, such as: continued or accelerated declines in inventory or a decline in the number of home sales, increases in mortgage rates or inflation or tightened mortgage standards, changes in consumer preferences, including weakening in the consumer trends that have benefited us since the second half of 2020, reductions in housing affordability, and stagnant or declining home prices; adverse developments or the absence of sustained improvement in macroeconomic conditions (such as business, economic or political conditions) on a global, domestic or local basis, which could include, but are not limited to economic contraction in the U.S. economy, including the impact of recessions, slow economic growth, or a deterioration in other economic factors (including potential consumer, business or governmental defaults or delinquencies due to the COVID-19 crisis or otherwise) and fiscal and monetary policies of the federal government and its agencies, particularly those that may result in unfavorable changes to the interest rate environment and tax reform; The impact of evolving competitive and consumer dynamics, which could include, but are not limited to: continued erosion of the broker share of the commission income generated by homesale transactions and the continued rise of the sale agent's share of such commissions, our ability to compete against non-traditional competitors, including but not limited to, iBuying and home swap business models and virtual brokerages, in particular those competitors with access to significant third-party capital that may prioritize market share over profitability, and meaningful decreases in the average broker commission rate; adverse impacts from the COVID-19 crisis (due to the impact of virus mutations or otherwise), including amplification of risks to our business and worsening economic consequences of the crisis or the reinstatement of significant limitations on normal business operations; our ability to execute our business strategy and achieve growth, including our efforts to: recruit and retain productive independent sales agents, attract and retain franchisees or renew existing franchise agreements without reducing contractual royalty rates or increasing the amount and prevalence of sales incentives, compete for real estate services business, develop or procure products, services and technology that support our strategic initiatives, realize the expected benefits from our non-exclusive mortgage origination joint venture, our RealSure joint venture, or from other existing or future strategic partnerships, achieve or maintain a beneficial cost structure or savings and other benefits from our cost-saving initiatives, generate a meaningful number of high-quality leads for independent sales agents and franchisees, complete or integrate acquisitions and joint ventures into our existing operations, or to complete or effectively manage divestitures or other corporate transactions; our geographic and high-end market concentration; the operating results of affiliated franchisees; continued consolidation among our top 250 franchisees; difficulties in the business or changes in the licensing strategy of the owners of the two brands we do not own; the loss of our largest real estate benefit program client or multiple significant relocation clients; continued reductions in corporate relocations or relocation benefits or refinancing activity; the failure of third-party vendors or partners to perform as expected or our failure to adequately monitor such third-parties; interruptions in information technology used to operate our business and maintain our competitiveness; increases in mortgage rates, tightened mortgage underwriting standards or reductions in refinancing activity; actions taken by listing aggregators to monetize their concentration and market power; industry structure changes (as a result of new laws, regulations or administrative policies, litigation, the rules of multiple listing services or NAR, or otherwise) that disrupt the functioning of the residential real estate market; adverse effects on our operations or liquidity due to our indebtedness, including with respect to: interest obligations and the negative covenant restrictions contained in our debt agreements, our ability to fund our operations, invest in our business or pursue growth opportunities, react to changes in the economy or our industry, or incur additional borrowings under our existing facilities, an event of default under our debt agreements, or our ability to refinance or repay our indebtedness or incur additional indebtedness; risks related to the issuance of our 0.25% Exchangeable Senior Notes and exchangeable note hedge and warrant transactions, including counterparty risk with respect to the exchangeable note hedge transactions; our failure or alleged failure to comply with laws, regulations and regulatory interpretations and any changes or stricter interpretations of any of the foregoing (whether through private litigation or governmental action), including but not limited to: (1) state or federal employment laws or regulations that would require reclassification of independent contractor sales agents to employee status, (2) privacy or data security laws and regulations, (3) the Real Estate Settlement Procedures Act ("RESPA") or other federal or state consumer protection or similar laws, and (4) antitrust laws and regulations; cybersecurity incidents; impairment of our goodwill and other long-lived assets; and severe weather events or natural disasters, including increasing severity or frequency of such events due to climate change or otherwise, or other catastrophic events, including public health crises, such as pandemics and epidemics. Consideration should be given to the areas of risk described above, as well as those risks set forth under the headings "Forward-Looking Statements" and "Risk Factors" in our filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and our Annual Report on Form 10-K for the year ended December 31, 2020, and our other filings made from time to time, in connection with considering any forward-looking statements that may be made by us and our businesses generally. We undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events except as required by law.

Non-GAAP Financial Measures

This release includes certain non-GAAP financial measures as defined under SEC rules. As required by SEC rules, important information regarding such measures is contained in the Tables attached to this release. See Tables 1a, 8a, 8b and 9 for definitions of these non-GAAP financial measures and Tables 1a, 5a, 5b, 6a, 6b, 7, 8a and 8b for reconciliations of the historical non-GAAP financial measures to their most comparable GAAP terms.

NAR data referenced herein is based on NAR's most recent public estimates, which are subject to review and revision. Factors that may impact the comparability of the Company's homesale statistics to NAR are outlined in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and its Annual Report on Form 10-K for the year ended December 31, 2020.

Investor Contacts:

Media Contacts:

Alicia Swift

Trey Sarten

(973) 407-4669

(973) 407-2162

alicia.swift@realogy.com

trey.sarten@realogy.com



Danielle Kloeblen

Gabriella Chiera

(973) 407-2148

(973) 407-5236

danielle.kloeblen@realogy.com

Gabriella.Chiera@realogy.com

Table 1

REALOGY HOLDINGS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)



Three Months Ended

June 30,


Six Months Ended

June 30,


2021


2020


2021


2020

Revenues








Gross commission income

$

1,773



$

919



$

2,927



$

1,769


Service revenue

314



219



563



421


Franchise fees

147



85



252



156


Other

42



32



81



77


Net revenues

2,276



1,255



3,823



2,423


Expenses








Commission and other agent-related costs

1,373



685



2,258



1,315


Operating

422



320



806



688


Marketing

66



41



124



100


General and administrative

114



69



204



157


Former parent legacy cost, net

1





1




Restructuring costs, net

5



18



10



30


Impairments

1



63



2



540


Depreciation and amortization

51



46



102



91


Interest expense, net

57



59



95



160


Loss on the early extinguishment of debt

1



8



18



8


Other income, net

(16)





(18)




Total expenses

2,075



1,309



3,602



3,089


Income (loss) before income taxes, equity in earnings and
noncontrolling interests

201



(54)



221



(666)


Income tax expense (benefit)

60



(5)



77



(146)


Equity in earnings of unconsolidated entities

(10)



(36)



(41)



(45)


Net income (loss)

151



(13)



185



(475)


Less: Net income attributable to noncontrolling interests

(2)



(1)



(3)



(1)


Net income (loss) attributable to Realogy Holdings

$

149



$

(14)



$

182



$

(476)










Earnings (loss) per share attributable to Realogy Holdings shareholders:

Basic earnings (loss) per share

$

1.28



$

(0.12)



$

1.57



$

(4.14)


Diluted earnings (loss) per share

$

1.25



$

(0.12)



$

1.52



$

(4.14)


Weighted average common and common equivalent shares of Realogy Holdings outstanding:

Basic

116.5



115.4



116.2



115.0


Diluted

119.3



115.4



119.4



115.0


Table 1a

REALOGY HOLDINGS CORP.

NON-GAAP RECONCILIATION

ADJUSTED NET INCOME (LOSS) AND ADJUSTED EARNINGS (LOSS) PER SHARE

(In millions, except per share data)


We present Adjusted net income (loss) and Adjusted earnings (loss) per share because we believe these measures are useful as supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our operating results.


Adjusted net income (loss) is defined by us as net income (loss) before: (a) mark-to-market interest rate swap adjustments, whose fair value is subject to movements in LIBOR and the forward yield curve and therefore are subject to significant fluctuations; (b) former parent legacy items, which pertain to liabilities of the former parent for matters prior to mid-2006 and are non-operational in nature; (c) restructuring charges as a result of initiatives currently in progress; (d) impairments; (e) the (gain) loss on the early extinguishment of debt that results from refinancing and deleveraging debt initiatives and (f) the tax effect of the foregoing adjustments. The gross amounts for these items as well as the adjustment for income taxes are shown in the table below.


Adjusted earnings (loss) per share is Adjusted net income (loss) divided by the weighted average common and common equivalent shares outstanding.


Set forth in the table below is a reconciliation of Net income (loss) to Adjusted net income (loss) for the three and six months ended June 30, 2021 and 2020:



Three Months Ended June 30,


Six Months Ended June 30,


2021


2020


2021


2020

Net income (loss) attributable to Realogy Holdings

$

149



$

(14)



$

182



$

(476)


Addback:








Mark-to-market interest rate swap losses

6



8



(7)



59


Former parent legacy cost, net

1





1




Restructuring costs, net

5



18



10



30


Impairments (a)

1



63



2



540


Loss on the early extinguishment of debt

1



8



18



8


Adjustments for tax effect (b)

(4)



(26)



(6)



(172)


Adjusted net income (loss) attributable to Realogy Holdings

$

159



$

57



$

200



$

(11)










Earnings (loss) per share attributable to Realogy Holdings:








Basic earnings (loss) per share:

$

1.28



$

(0.12)



$

1.57



$

(4.14)


Diluted earnings (loss) per share:

$

1.25



$

(0.12)



$

1.52



$

(4.14)










Adjusted earnings (loss) per share attributable to Realogy Holdings:





Adjusted basic earnings (loss) per share:

$

1.36



$

0.49



$

1.72



$

(0.10)


Adjusted diluted earnings (loss) per share:

$

1.33



$

0.49



$

1.68



$

(0.10)










Weighted average common and common equivalent shares outstanding:



Basic:

116.5



115.4



116.2



115.0


Diluted:

119.3



115.4



119.4



115.0


_____________________

(a)

Non-cash impairments for the six months ended June 30, 2020 primarily include:


a goodwill impairment charge of $413 million related to Realogy Brokerage Group;


an impairment charge of $30 million related to Realogy Franchise Group's trademarks; and


$74 million of impairment charges during the six months ended June 30, 2020 (while Cartus Relocation Services was held for sale) to reduce the net assets to the estimated proceeds.



(b)

Reflects tax effect of adjustments at the Company's blended state and federal statutory rate.

Table 2

REALOGY HOLDINGS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

(Unaudited)



June 30,

2021


December 31,

2020

ASSETS




Current assets:




Cash and cash equivalents

$

859



$

520


Restricted cash

7



3


Trade receivables (net of allowance for doubtful accounts of $11 and $13)

145



128


Relocation receivables

206



139


Other current assets

207



154


Total current assets

1,424



944


Property and equipment, net

304



317


Operating lease assets, net

453



450


Goodwill

2,899



2,910


Trademarks

685



685


Franchise agreements, net

1,054



1,088


Other intangibles, net

181



188


Other non-current assets

407



352


Total assets

$

7,407



$

6,934


LIABILITIES AND EQUITY




Current liabilities:




Accounts payable

$

124



$

128


Securitization obligations

147



106


Current portion of long-term debt

18



62


Current portion of operating lease liabilities

125



129


Accrued expenses and other current liabilities

565



600


Total current liabilities

979



1,025


Long-term debt

3,357



3,145


Long-term operating lease liabilities

428



430


Deferred income taxes

343



276


Other non-current liabilities

294



291


Total liabilities

5,401



5,167


Commitments and contingencies




Equity:




Realogy Holdings preferred stock: $0.01 par value; 50,000,000 shares authorized, none
issued and outstanding at June 30, 2021 and December 31, 2020




Realogy Holdings common stock: $0.01 par value; 400,000,000 shares authorized,
116,566,078 shares issued and outstanding at June 30, 2021 and 115,457,067 shares
issued and outstanding at December 31, 2020

1



1


Additional paid-in capital

4,932



4,876


Accumulated deficit

(2,873)



(3,055)


Accumulated other comprehensive loss

(58)



(59)


Total stockholders' equity

2,002



1,763


Noncontrolling interests

4



4


Total equity

2,006



1,767


Total liabilities and equity

$

7,407



$

6,934


Table 3

REALOGY HOLDINGS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)



Six Months Ended
June 30,


2021


2020

Operating Activities




Net income (loss)

$

185



$

(475)


Adjustments to reconcile net income (loss) to net cash provided by operating activities:



Depreciation and amortization

102



91


Deferred income taxes

65



(141)


Impairments

2



540


Amortization of deferred financing costs and debt discount (premium)

6



5


Loss on the early extinguishment of debt

18



8


Gain on sale of business

(15)

...


Equity in earnings of unconsolidated entities

(41)



(45)


Stock-based compensation

14



10


Mark-to-market adjustments on derivatives

(7)



59


Other adjustments to net income (loss)

(2)




Net change in assets and liabilities, excluding the impact of acquisitions and dispositions:




Trade receivables

(14)



(3)


Relocation receivables

(67)



11


Other assets

(14)



(8)


Accounts payable, accrued expenses and other liabilities

(63)



(29)


Dividends received from unconsolidated entities

38



22


Other, net

(21)



(12)


Net cash provided by operating activities

186



33


Investing Activities




Property and equipment additions

(50)



(49)


Proceeds from the sale of business

15




Investment in unconsolidated entities

(7)



(2)


Other, net

(9)



(12)


Net cash used in investing activities

(51)



(63)


Financing Activities




Net change in Revolving Credit Facility



625


Payments for refinancing of Term Loan A Facility and Term Loan B Facility

(1,055)




Proceeds from issuance of Senior Notes

905




Proceeds from issuance of Senior Secured Second Lien Notes



550


Redemption of Senior Notes



(550)


Proceeds from issuance of Exchangeable Senior Notes

403




Payments for purchase of Exchangeable Senior Notes hedge transactions

(67)




Proceeds from issuance of Exchangeable Senior Notes warrant transactions

46




Amortization payments on term loan facilities

(6)



(19)


Net change in securitization obligations

40



(92)


Debt issuance costs

(20)



(8)


Cash paid for fees associated with early extinguishment of debt

(11)



(7)


Taxes paid related to net share settlement for stock-based compensation

(9)



(5)


Other, net

(18)



(26)


Net cash provided by financing activities

208



468


Effect of changes in exchange rates on cash, cash equivalents and restricted cash




Net increase in cash, cash equivalents and restricted cash

343



438


Cash, cash equivalents and restricted cash, beginning of period

523



266


Cash, cash equivalents and restricted cash, end of period

$

866



$

704






Supplemental Disclosure of Cash Flow Information




Interest payments (including securitization interest of $2 and $3 respectively)

$

83



$

105


Income tax payments, net

13




Table 4a

REALOGY HOLDINGS CORP.

2021 vs. 2020 KEY DRIVERS



Three Months Ended June 30,


Six Months Ended June 30,


2021


2020


% Change


2021


2020


% Change

Realogy Franchise Group (a)












Closed homesale sides

320,463



238,085



35

%


565,161



441,273



28

%

Average homesale price

$

430,756



$

321,308



34

%


$

414,842



$

321,841



29

%

Average homesale broker commission rate

2.46

%


2.49

%


(3)

bps


2.46

%


2.48

%


(2)

bps

Net royalty per side

$

418



$

324



29

%


$

402



$

321



25

%

Realogy Brokerage Group












Closed homesale sides

103,945



71,375



46

%


178,938



133,916



34

%

Average homesale price

$

678,978



$

503,935



35

%


$

649,634



$

517,888



25

%

Average homesale broker commission rate

2.43

%


2.43

%


bps


2.43

%


2.42

%


1

bps

Gross commission income per side

$

17,053



$

12,863



33

%


$

16,357



$

13,206



24

%

Realogy Title Group












Purchase title and closing units

47,375



32,028



48

%


81,203



60,752



34

%

Refinance title and closing units

14,472



17,548



(18)

%


34,939



26,447



32

%

Average fee per closing unit

$

2,608



$

2,062



26

%


$

2,446



$

2,151



14

%

____________________

(a)

Includes all franchisees except for Realogy Brokerage Group.

Table 4b

REALOGY HOLDINGS CORP.

2020 KEY DRIVERS




Quarter Ended


Year Ended



March 31,

2020


June 30,

2020


September 30,

2020


December 31,

2020


December 31,

2020

Realogy Franchise Group (a)











Closed homesale sides


203,188



238,085



336,737



312,335



1,090,345


Average homesale price


$

322,465



$

321,308



$

367,095



$

389,555



$

355,214


Average homesale broker commission rate


2.47

%


2.49

%


2.48

%


2.46

%


2.48

%

Net royalty per side


$

316



$

324



$

367



$

383



$

353


Realogy Brokerage Group











Closed homesale sides


62,541



71,375



101,890



97,930



333,736


Average homesale price


$

533,813



$

503,935



$

563,513



$

590,351



$

553,081


Average homesale broker commission rate


2.41

%


2.43

%


2.44

%


2.42

%


2.43

%

Gross commission income per side


$

13,597



$

12,863



$

14,315



$

14,725



$

13,990


Realogy Title Group











Purchase title and closing units


28,724



32,028



45,788



42,586



149,126


Refinance title and closing units


8,899



17,548



18,387



20,490



65,324


Average fee per closing unit


$

2,269



$

2,062



$

2,239



$

2,272



$

2,213


____________________

(a)

Includes all franchisees except for Realogy Brokerage Group.

Table 5a

REALOGY HOLDINGS CORP.

NON-GAAP RECONCILIATION - OPERATING EBITDA

THREE MONTHS ENDED JUNE 30, 2021 AND 2020

(In millions)


Set forth in the tables below is a reconciliation of Net income (loss) attributable to Realogy Holdings to Operating EBITDA for the three-month periods ended June 30, 2021 and 2020:



Three Months Ended June 30,


2021


2020

Net income (loss) attributable to Realogy Holdings

$

149



$

(14)


Income tax expense (benefit)

60



(5)


Income (loss) before income taxes

209



(19)


Add: Depreciation and amortization

51



46


Interest expense, net

57



59


Restructuring costs, net (a)

5



18


Impairments (b)

1



63


Former parent legacy cost, net (c)

1




Loss on the early extinguishment of debt (c)

1



8


Gain on the sale of business (d)

(15)




Operating EBITDA

$

310



$

175


The following table reflects Revenue, Operating EBITDA and Operating EBITDA margin by reportable segments:



Revenues (e)


$
Change


%

Change


Operating EBITDA


$
Change


%
Change


Operating EBITDA Margin


Change


2021


2020




2021


2020




2021


2020


Realogy Franchise Group

$

347



$

227



$

120



53

%


$

224



$

125



$

99



79

%


65

%


55

%


10


Realogy Brokerage Group

1,791



933



858



92



70



15



55



367



4



2



2


Realogy Title Group (f)

255



160



95



59



55



61



(6)



(10)



22



38



(16)


Corporate and Other

(117)



(65)



(52)



*


(39)



(26)



(13)



*







Total Company

$

2,276



$

1,255



$

1,021



81

%


$

310



$

175



$

135



77

%


14

%


14

%



The following table reflects Realogy Franchise and Brokerage Groups' results before the intercompany royalties and marketing fees, as well as on a combined basis to show the Operating EBITDA contribution of these business segments to the overall Operating EBITDA of the Company:



Revenues


$

Change


%

Change


Operating EBITDA


$

Change


%

Change


Operating EBITDA Margin


Change


2021


2020




2021


2020




2021


2020


Realogy Franchise Group (g)

$

230



$

162



$

68



42

%


$

107



$

60



$

47



78

%


47

%


37

%


10


Realogy Brokerage Group (g)

1,791



933



858



92



187



80



107



134



10



9



1


Realogy Franchise and
Brokerage Groups Combined

$

2,021



$

1,095



$

926



85

%


$

294



$

140



$

154



110

%


15

%


13

%


2


____________________

*

not meaningful.

(a)

Restructuring charges incurred for the three months ended June 30, 2021 include $1 million at Realogy Franchise Group, $2 million at Realogy Brokerage Group and $2 million at Corporate and Other. Restructuring charges incurred for the three months ended June 30, 2020 include $4 million at Realogy Franchise Group, $12 million at Realogy Brokerage Group and $2 million at Realogy Title Group.

(b)

Impairments for the three months ended June 30, 2021 primarily relate to lease asset and software impairments. Non-cash impairments for the three months ended June 30, 2020 include $44 million of impairment charges during the three months ended June 30, 2020 (while Cartus Relocation Services was held for sale) to reduce the net assets to the estimated proceeds and other asset impairments of $19 million primarily related to lease asset impairments.

(c)

Former parent legacy items and Loss on the early extinguishment of debt are recorded in Corporate and Other.

(d)

Gain on the sale of business is recorded in Realogy Brokerage Group.

(e)

Includes the elimination of transactions between segments, which consists of intercompany royalties and marketing fees paid by Realogy Brokerage Group of $117 million and $65 million during the three months ended June 30, 2021 and 2020, respectively.

(f)

Realogy Title Group (RTG) includes our title, escrow and settlement services (title agency), title insurance underwriter and mortgage origination joint venture businesses. Excluding the mortgage joint venture from Operating EBITDA, title agency and title insurance underwriter represented approximately 60% and 40%, respectively of Operating EBITDA for the period ended June 30, 2021. The year-over-year decline in Operating EBITDA contribution from the mortgage origination joint venture was driven primarily by a negative $19 million related to mark-to-market adjustments on the mortgage loan pipeline as well as margin compression and a decline in refinance volumes, partially offset by strong purchase volume growth.

(g)

The segment numbers noted above do not reflect the impact of intercompany royalties and marketing fees paid by Realogy Brokerage Group to Realogy Franchise Group of $117 million and $65 million during the three months ended June 30, 2021 and 2020, respectively.

Table 5b

REALOGY HOLDINGS CORP.

NON-GAAP RECONCILIATION - OPERATING EBITDA

SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(In millions)


Set forth in the tables below is a reconciliation of Net income (loss) attributable to Realogy Holdings to Operating EBITDA for the six-month periods ended June 30, 2021 and 2020:



Six Months Ended June 30,


2021


2020

Net income (loss) attributable to Realogy Holdings

$

182



$

(476)


Income tax expense (benefit)

77



(146)


Income (loss) before income taxes

259



(622)


Add: Depreciation and amortization

102



91


Interest expense, net

95



160


Restructuring costs, net (a)

10



30


Impairments (b)

2



540


Former parent legacy cost, net (c)

1




Loss on the early extinguishment of debt (c)

18



8


Gain on the sale of business (d)

(15)




Operating EBITDA

$

472



$

207


The following table reflects Revenue, Operating EBITDA and Operating EBITDA margin by reportable segments:



Revenues (e)


$ Change


%

Change


Operating EBITDA


$
Change


%
Change


Operating EBITDA Margin


Change


2021


2020




2021


2020




2021


2020


Realogy Franchise Group

601



$

447



$

154



34

%


365



$

221



$

144



65%


61

%


49

%


12


Realogy Brokerage Group

2,962



1,802



1,160



64



65



(36)



101



281


2



(2)



4


Realogy Title Group (f)

456



297



159



54



116



73



43



59


25



25




Corporate and Other

(196)



(123)



(73)



*


(74)



(51)



(23)



*







Total Company

$

3,823



$

2,423



$

1,400



58

%


$

472



$

207



$

265



128%


12

%


9

%


3








































The following table reflects Realogy Franchise and Brokerage Groups' results before the intercompany royalties and marketing fees, as well as on a combined basis to show the Operating EBITDA contribution of these business segments to the overall Operating EBITDA of the Company:



Revenues






Operating EBITDA


$

Change


%

Change


Operating EBITDA Margin




2021


2020



$

Change



%

Change


2021


2020



2021


2020


Change


Realogy Franchise Group (g)

$

405



$

324



$

81



25%


$

169



$

98



$

71



72

%


42

%


30

%


12


Realogy Brokerage Group (g)

2,962



1,802



1,160



64


261



87



174



200



9



5



4


Realogy Franchise and
Brokerage Groups Combined

$

3,367



$

2,126



$

1,241



58%


$

430



$

185



$

245



132

%


13

%


9

%


4


____________________

*

not meaningful.

(a)

Restructuring charges incurred for the six months ended June 30, 2021 include $3 million at Realogy Franchise Group, $4 million at Realogy Brokerage Group and $3 million at Corporate and Other. Restructuring charges incurred for the six months ended June 30, 2020 include $6 million at Realogy Franchise Group, $21 million at Realogy Brokerage Group and $3 million at Realogy Title Group.

(b)

Impairments for the six months ended June 30, 2021 primarily relate to lease asset and software impairments. Non-cash impairments for the six months ended June 30, 2020 include:


a goodwill impairment charge of $413 million related to Realogy Brokerage Group;


an impairment charge of $30 million related to Realogy Franchise Group's trademarks;


$74 million of impairment charges during the six months ended June 30, 2020 (while Cartus Relocation Services was held for sale) to reduce the net assets to the estimated proceeds; and


other asset impairments of $23 million primarily related to lease asset impairments.

(c)

Former parent legacy items and Loss on the early extinguishment of debt are recorded in Corporate and Other.

(d)

Gain on the sale of business is recorded in Realogy Brokerage Group.

(e)

Includes the elimination of transactions between segments, which consists of intercompany royalties and marketing fees paid by Realogy Brokerage Group of $196 million and $123 million during the six months ended June 30, 2021 and 2020, respectively.

(f)

Realogy Title Group (RTG) includes our title, escrow and settlement services (title agency), title insurance underwriter and mortgage origination joint venture businesses. Excluding the mortgage joint venture from Operating EBITDA, title agency and title insurance underwriter represented approximately 60% and 40%, respectively of Operating EBITDA for the year to date period ended June 30, 2021.

(g)

The segment numbers noted above do not reflect the impact of intercompany royalties and marketing fees paid by Realogy Brokerage Group to Realogy Franchise Group of $196 million and $123 million during the six months ended June 30, 2021 and 2020, respectively.

Table 6a

REALOGY HOLDINGS CORP.

SELECTED 2021 FINANCIAL DATA

(In millions)



Three Months Ended


March 31,


June 30,


2021


2021

Net revenues (a)




Realogy Franchise Group

$

254



$

347


Realogy Brokerage Group

1,171



1,791


Realogy Title Group

201



255


Corporate and Other

(79)



(117)


Total Company

$

1,547



$

2,276






Operating EBITDA




Realogy Franchise Group

$

141



$

224


Realogy Brokerage Group

(5)



70


Realogy Title Group

61



55


Corporate and Other

(35)



(39)


Total Company

$

162



$

310






Non-GAAP Reconciliation - Operating EBITDA




Total Company Operating EBITDA

$

162



$

310






Less: Depreciation and amortization

51



51


Interest expense, net

38



57


Income tax expense

17



60


Restructuring costs, net (b)

5



5


Impairments (c)

1



1


Former parent legacy cost, net (d)



1


Loss on the early extinguishment of debt (d)

17



1


Gain on the sale of business (e)



(15)


Net income attributable to Realogy Holdings

$

33



$

149


_______________

(a)

Transactions between segments are eliminated in consolidation. Revenues for Realogy Franchise Group include intercompany royalties and marketing fees paid by Realogy Brokerage Group of $79 million and $117 million for the three months ended March 31, 2021 and June 30, 2021, respectively. Such amounts are eliminated through Corporate and Other.

(b)

Includes restructuring charges broken down by business unit as follows:




Three Months Ended


March 31,


June 30,


2021


2021

Realogy Franchise Group

$

2



$

1


Realogy Brokerage Group

2



2


Corporate and Other

1



2


Total Company

$

5



$

5




(c)

Impairments for the three months ended March 31, 2021 and June 30, 2021 primarily relate to lease asset and software impairments.

(d)

Former parent legacy items and Loss on the early extinguishment of debt are recorded in Corporate and Other.

(e)

Gain on the sale of business is recorded in Realogy Brokerage Group.

Table 6b

REALOGY HOLDINGS CORP.

SELECTED 2020 FINANCIAL DATA

(In millions)



Three Months Ended


Year Ended


March 31,


June 30,


September 30,


December 31,


December 31,


2020


2020


2020


2020


2020

Net revenues (a)










Realogy Franchise Group

$

220



$

227



$

314



$

298



$

1,059


Realogy Brokerage Group

869



933



1,479



1,461



4,742


Realogy Title Group

137



160



213



226



736


Corporate and Other

(58)



(65)



(97)



(96)



(316)


Total Company

$

1,168



$

1,255



$

1,909



$

1,889



$

6,221












Operating EBITDA










Realogy Franchise Group

$

96



$

125



$

200



$

173



$

594


Realogy Brokerage Group

(51)



15



61



23



48


Realogy Title Group

12



61



95



58



226


Corporate and Other

(25)



(26)



(43)



(48)



(142)


Total Company

$

32



$

175



$

313



$

206



$

726












Non-GAAP Reconciliation - Operating EBITDA










Total Company Operating EBITDA

$

32



$

175



$

313



$

206



$

726












Less: Depreciation and amortization

45



46



43



52



186


Interest expense, net

101



59



48



38



246


Income tax (benefit) expense

(141)



(5)



36



6



(104)


Restructuring costs, net (b)

12



18



17



20



67


Impairments (c)

477



63



70



72



682


Former parent legacy cost, net (d)





1





1


Loss on the early extinguishment of debt (d)



8







8


Net (loss) income attributable to Realogy Holdings

$

(462)



$

(14)



$

98



$

18



$

(360)


____________________

(a)

Transactions between segments are eliminated in consolidation. Revenues for Realogy Franchise Group include intercompany royalties and marketing fees paid by Realogy Brokerage Group of $58 million, $65 million, $97 million and $96 million for the three months ended March 31, 2020, June 30, 2020, September 30, 2020 and December 31, 2020, respectively. Such amounts are eliminated through Corporate and Other.

(b)

Includes restructuring charges broken down by business unit as follows:


Three Months Ended


Year Ended


March 31,


June 30,


September 30,


December 31,


December 31,


2020


2020


2020


2020


2020

Realogy Franchise Group

$

2



$

4



$

4



$

5



$

15


Realogy Brokerage Group

9



12



11



5



37


Realogy Title Group

1



2





1



4


Corporate and Other





2



9



11


Total Company

$

12



$

18



$

17



$

20



$

67





(c)

Non-cash impairments include:


a goodwill impairment charge of $413 million related to Realogy Brokerage Group and an impairment charge of $30 million related to Realogy Franchise Group's trademarks during the three months ended March 31, 2020;


$30 million, $44 million and $59 million of reserves recorded during the three months ended March 31, 2020, June 30, 2020 and September 30, 2020, respectively, (while Cartus Relocation Services was held for sale) to reduce the net assets to the estimated proceeds which were included in Impairments in connection with the reclassification of Cartus Relocation Services as continuing operations during the fourth quarter of 2020;


a goodwill impairment charge of $22 million related to Cartus Relocation Services and an impairment charge of $34 million related to Cartus Relocation Services' trademarks during the three months ended December 31, 2020; and


$4 million, $19 million, $11 million and $16 million of other impairment charges primarily related to lease asset impairments incurred during the three months ended March 31, 2020, June 30, 2020, September 30, 2020 and December 31, 2020, respectively.


(d)

Former parent legacy items and Loss on the early extinguishment of debt are recorded in Corporate and Other.


Table 6c

REALOGY HOLDINGS CORP.

2020 CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)



Three Months Ended


Year Ended


March 31,


June 30,


September 30,


December 31,


December 31,


2020


2020


2020


2020


2020

Revenues










Gross commission income

$

850



$

919



$

1,458



$

1,442



$

4,669


Service revenue

202



219



281



281



983


Franchise fees

71



85



133



130



419


Other

45



32



37



36



150


Net revenues

1,168



1,255



1,909



1,889



6,221


Expenses










Commission and other agent-related costs

630



685



1,105



1,107



3,527


Operating

368



320



380



405



1,473


Marketing

59



41



55



60



215


General and administrative

88



69



108



147



412


Former parent legacy cost, net





1





1


Restructuring costs, net

12



18



17



20



67


Impairments

477



63



70



72



682


Depreciation and amortization

45



46



43



52



186


Interest expense, net

101



59