Realogy Holdings Corp., this week reported financial results for the first quarter ended March 31, 2020.
“The first quarter marked strong results delivery for Realogy with 8 percent transaction volume growth and a $35 million increase in Operating EBITDA,” said Ryan Schneider, Realogy’s chief executive officer and president. “In this COVID crisis, Realogy’s first priority is the health, safety and well-being of our employees, affiliated agents, franchise owners and customers. I am very excited by the creativity our affiliated agents and employees are demonstrating to help customers safely buy and sell homes and by the corporate actions we are taking to position Realogy to navigate this crisis and emerge strong on the other side.”
“Realogy delivered on its operational and financial momentum in the first quarter with top line growth and margin expansion across the enterprise,” said Charlotte Simonelli, Realogy’s executive vice president, chief financial officer and treasurer. “Our ongoing strategic execution, rigorous cost management, liquidity and capital allocation decisions are designed to enable us to manage the challenges of the COVID-19 pandemic.”
First Quarter 2020 Highlights
– Generated Revenue of $1.1 billion, an increase of 6 percent or $62 million year-over-year.
– Reported a Net loss of $462 million driven primarily by a $447 million impairment charge related to broad based declines in the overall market due to COVID-19, and a $38 million net increase in interest expense due to the mark-to-market adjustments on interest rate swaps.
– Generated Operating EBITDA of $37 million, an increase of $35 million year-over-year.
– Achieved Operating EBITDA margin expansion of 300 basis points year-over-year driven by cost savings hitting the bottom line.
– Delivered 8 percent transaction volume growth across both our owned and franchise businesses.
– Grew agents 4 percent year-over-year at Realogy Brokerage Group along with improved retention.
– Delivered a significant quarter at Realogy Title Group driven in part by an increase in refinance volumes versus prior year. The GRA mortgage JV continued to contribute meaningfully to our business results, generating $9 million in Operating EBITDA this quarter.
– Generated Free Cash Flow from continuing operations of negative $112 million vs. negative $115 million last year.
Balance Sheet and Capital Allocation
The company ended the quarter with cash and cash equivalents of $628 million. Total corporate debt, including the short-term portion, net of cash and cash equivalents (net corporate debt), totaled $3.4 billion at March 31, 2020. The Company’s Net Debt Leverage Ratio was 5.2 times at March 31, 2020. The Net Debt Leverage Ratio is net corporate debt divided by EBITDA, as defined by the Senior Secured Credit Facility, for the four-quarter period ended March 31, 2020. Earnings from Cartus Relocation Services are included in discontinued operations and have been excluded from EBITDA, as defined by the Senior Secured Credit Facility.
Cartus Relocation Services remained in discontinued operations for the first quarter of 2020 in accordance with GAAP notwithstanding our initiation of litigation on April 27, 2020 related to the sale of this business. In the first quarter of 2020, we consolidated Realogy Leads Group into Realogy Franchise Group. Based upon developments in our litigation related to the sale of Cartus Relocation Services, the Company may reassess segment classification in future periods.
The Company expects to prioritize investing in its business and reducing leverage over other potential uses of cash.
For more information, please visit www.realogy.com.