Realogy Holdings Corp, last week, reported financial results for the second quarter ended June 30, 2020.
“Realogy delivered substantial operating EBITDA in the quarter as we made rapid moves to navigate through the turbulent environment,” said Ryan Schneider, Realogy’s chief executive officer and president. “We continued to enhance our digital technology offerings, invest in strategic priorities and improve our balance sheet. We believe that progress, combined with recent positive market data, positions us well for the future.”
“We were agile and efficient throughout the second quarter and successfully managed costs, which helped generate substantial Operating EBITDA and positive Free Cash Flow in the quarter,” said Charlotte Simonelli, Realogy’s executive vice president, chief financial officer and treasurer. “We took proactive steps to strengthen our balance sheet.”
Second Quarter 2020 Highlights
– Generated revenue of $1.2 billion, a decrease of 27 percent or $457 million year-over-year.
– Reported net income of $28 million from continuing operations and a net loss of $14 million including discontinued operations.
– Generated operating EBITDA from continuing operations of $172 million, a decrease of $63 million year-over-year driven by lower transaction volume primarily due to COVID-19, partially offset by cost savings and strong performance at the GRA mortgage JV.
– Combined closed transaction volume declined 24 percent in the second quarter. Closed transaction volume improved meaningfully in June to negative 8 percent year-over-year after reaching a bottom in May 2020.
– Delivered substantial cost reductions in the quarter due to mix of temporary and permanent savings.
– The GRA mortgage JV continued to contribute meaningfully to our business results, generating $35 million in operating EBITDA in the second quarter.
– Generated free cash flow from continuing operations of $106 million vs. $178 million for the corresponding quarter last year and $47 million including discontinued operations vs. $147 million for the corresponding quarter last year.
– Strengthened the balance sheet and improved our debt maturity profile by refinancing our 2021 unsecured notes with new 2025 senior secured second lien notes.
Balance Sheet and Capital Allocation
The company ended the quarter with cash and cash equivalents of $686 million. Total corporate debt, including the short-term portion, net of cash and cash equivalents (net corporate debt), totaled $3.4 billion at June 30, 2020. The company’s net debt leverage ratio was 5.6x at June 30, 2020.
The company expects to continue to prioritize investing in its business and reducing leverage over other potential uses of cash.
During the investor webcast, Schneider told attendees that the company “pivoted rapidly to support housing transactions, frankly more than you may be expecting, and we took quick actions to proactively position Realogy to navigate this crisis and emerge strong on the other side.”
On the transaction side, Schneider said new open transaction volume appeared to reach its peak decline in mid-April. And on the consumer side, he said demand still appears to be there, with some of it possibly pent up, but searches on Realogy’s websites and other public-facing housing websites have increased “substantially.”
Schneider wrapped up the presentation with the following statement:
“So, pulling way up, we’re in one of the most uncertain economic environments in recent history. We’re watching the data closely. We’re making aggressive corporate decisions early and we’re using substantial creativity in the housing market to support agents and customers. We’re doing all this to set up Realogy to navigate this uncertain economic environment, both if the housing market comes back quicker as a few market watchers like NAR and Fannie Mae are predicting or if the recovery takes longer. We remain laser focused on moving quickly on the things in our control to ensure we weather this storm and emerge strong. And at a higher level, one of the things I’ve learned from past crises is that there’s often both a flight to scale businesses and to quality brands like ours. Crises also often expose unprofitable business models or unprofitable attempts of disruption, creating new opportunities for established players. So, we’re working hard to be a beneficiary of both of those phenomena, especially given our demonstrative Q1 momentum. We look forward to navigating this crisis and to taking advantage of opportunities that will occur in our industry.”
For more information, please visit www.realogy.com.