MADISON, N.J., Feb. 24, 2017 /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 full
year ended December 31, 2016, including the following
highlights:
- Revenue was $5.81 billion, an
increase of 2% compared with the full year 2015, driven by organic and acquisition revenue increases at
Title Resource Group (TRG).
- The Company's combined homesale
transaction volume increased 4% in the year, consisting of a 6%
volume gain at the Realogy Franchise Group (RFG) and flat volume at
the Company-owned brokerage segment (NRT).
- Net income was $213 million, a
16% increase compared with $184
million in 2015. Basic earnings per share (EPS) was
$1.47, a 17% increase compared with
$1.26 in 2015.
- Adjusted net income was $239
million, an 8% increase compared with $222 million in 2015. Adjusted basic EPS was
$1.65, a 9% increase compared with
$1.52 in 2015, (See Table 1a).
- Operating EBITDA was $770
million, compared with $769
million in 2015. (See Table 5).2
- The Company returned $225 million
of capital to shareholders through repurchases and dividends in
2016.
"Our 2016 results continued to reflect the operating challenges
of strong competition for sales
agents and soft demand at the high end of the housing
market for NRT," said Richard A.
Smith, Realogy's chairman, chief executive officer and
president. "While we still have work to do, we have made good
progress. Our strategic priorities are to continue strengthening
our core businesses while further investing capital to drive future
growth. Reflecting our strong free cash flow, we are pleased to
expand on our capital return program through an additional
$300 million share repurchase
authorization. We are confident that over the long term we are
well-positioned to capitalize on favorable demand conditions and
existing homesale volume growth within the industry."
Operational Results
Below are some of the highlights of Realogy's key strategic
initiatives from 2016 and the start of 2017:
- NRT is executing on an aggressive campaign to increase the
Company's recruitment of productive independent sales agents and
agent teams, and continues to enhance its existing agent retention
and productivity programs.
- Realogy formalized plans for an integrated learning institute
aimed at enhancing agent and broker productivity by offering
customized learning opportunities to serve new and experienced
sales agents as well as brokerage managers across both NRT and
RFG.
- The Realogy Franchise Group continues to deploy its proprietary
Zap technology platform. Initial data indicates that sales agents
actively using Zap are closing more transactions than those who are
not.
- On February 15, 2017, Realogy
agreed to form a new mortgage origination joint venture (JV) with
Guaranteed Rate, one of the largest independent retail mortgage
companies in the United States.
The new JV, which will operate as Guaranteed Rate Affinity, has
agreed to acquire certain assets of the mortgage operations of PHH
Home Loans, the existing JV between Realogy and PHH Mortgage. The
transaction is expected to be completed in a series of asset sale
closings subject to the satisfaction or waiver of certain closing
conditions. The initial closing is expected to occur in
June 2017, and the final closing is
expected to occur during the fourth quarter of 2017. Once these
transactions are complete, Realogy expects to realize approximately
$30 million of net cash.
- The Company continued to execute on its business optimization
program, improving the efficiency and effectiveness of the cost
structure of each of the Company's business units. The Company
realized approximately $33 million in
actual savings in 2016 and is well positioned to reach its
annualized run-rate savings target of approximately $70 million. The total cost to implement the
program is expected to be $65
million, of which $49 million
has been incurred through December 31,
2016.
In 2016, Realogy's franchise (RFG) and Company-owned (NRT)
business segments achieved a combined homesale transaction volume
(transaction sides multiplied by average sale price) of
approximately $473 billion, an
increase of 4% compared with 2015, which was within the Company's
previous guidance range. RFG reported a homesale transaction sides
increase of 3% and an average homesale price increase of 3%. NRT
reported flat homesale transaction sides and average homesale
price.
In the title and settlement services sector, TRG was involved in
the closing of approximately 204,000 transactions in 2016,
reflecting a 17% increase in purchase units and a 32% increase in
refinance units compared with 2015. These results include the
benefits of the acquisition of TitleOne, which occurred in the
third quarter of 2016.
Capital Allocation and New Share Repurchase
Authorization
During the fourth quarter of 2016, Realogy repurchased
approximately 2.6 million shares of common stock in the open market
at a weighted average market price of $25 per share for a total of $65 million. For the full year 2016, the Company
returned nearly $200 million of
capital to shareholders through the repurchase of approximately 7.1
million shares, or 5% of shares outstanding. The Company had
approximately 140.2 million shares of common stock outstanding as
of December 31, 2016. Since
year-end 2016, the Company has repurchased approximately 572,000 shares of common stock at a
weighted average market price of $26.23 for a
total of approximately $15
million.
Realogy today announced that its Board of Directors has
authorized a new share repurchase program of up to $300 million of the Company's common stock.
This is in addition to the $61
million remaining under the current $275
million share repurchase authorization announced in
February 2016. Repurchases may be
made at management's discretion from time to time on the open
market or through privately negotiated transactions. The size and
timing of these repurchases will depend on price, market and
economic conditions, legal and contractual requirements and other
factors. The repurchase program has no time limit and may be
suspended or discontinued at any time.
On February 23, 2017, the Board of
Directors of the Company declared a quarterly cash dividend of
$0.09 per share of the Company's
common stock. This dividend payment will be made on March 23, 2017 to shareholders of record as of
the close of business on March 9,
2017.
"Our business model continues to generate significant free cash
flow," said Anthony E. Hull,
Realogy's executive vice president, chief financial officer and
treasurer. "We expect to maintain a disciplined approach to capital
allocation, balanced between returning cash to shareholders,
deleveraging and strategically investing in the business to drive
growth."
Balance Sheet
The Company ended the year with cash and cash equivalents of
$274 million. Total long-term
corporate debt, including the short-term portion, net of cash and
cash equivalents (net corporate debt), totaled $3.3 billion at December 31, 2016. The
Company's net debt leverage3 was 3.8 times at
December 31, 2016.
In January 2017, the Company
repriced its Term Loan B, thereby reducing its run-rate interest
expense by approximately $8 million to $165
million on an annualized basis.
A consolidated balance sheet is included as Table 2 of this
press release.
Investor Conference
Call
Today, February 24, at 8:30 a.m.
(EST), Realogy will hold a conference call via webcast to
review its full year 2016 results. The call will be hosted by
Richard A. Smith, chairman, chief
executive officer and president, and Anthony E. Hull, executive vice president, chief
financial officer and treasurer, and will conclude with an investor
Q&A period with management.
Investors may access the conference call live via webcast at
www.realogy.com under "Investors" or by dialing (888) 895-3527
(toll free); international participants should dial (706)
679-2250. 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 Holdings Corp. (NYSE: RLGY) is a global leader in
residential real estate franchising and brokerage with many of the
best-known industry brands including Better Homes and Gardens® Real
Estate, CENTURY 21®, Coldwell Banker®, Coldwell Banker Commercial®,
Corcoran®, ERA®, Sotheby's International Realty® and
ZipRealty®. Collectively, Realogy's franchise system members
operate approximately 14,100 offices with more than 273,200
independent sales agents conducting business in 112 countries and
territories around the world. NRT LLC, Realogy's
company-owned real estate brokerage, is the largest residential
brokerage company in the United
States, operates under several of Realogy's brands and also
provides related residential real estate services. Realogy also
owns Cartus, a prominent worldwide provider of relocation services
to corporate and affinity clients, Title Resource Group (TRG), a
leading provider of title, settlement and underwriting services,
and ZapLabs LLC, its innovation and technology development
subsidiary. Realogy is headquartered in Madison, New Jersey.
Footnotes:
1 Adjusted net income is adjusted for
non-cash mark-to-market expense on interest rate swaps and
restructuring charges.
2 Operating EBITDA is defined as EBITDA
before restructuring costs, early extinguishment of debt and former
parent legacy items.
3 Net corporate debt
divided by EBITDA calculated on a pro forma basis, as defined under
our credit facilities, for the twelve-month period ended
December 31, 2016.
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" 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.
Various factors that could cause actual future results and
other future events to differ materially from those estimated by
management include, but are not limited to: adverse developments or
the absence of sustained improvement in general business, economic
and political conditions; adverse developments or the absence of
improvement in the residential real estate markets including but
not limited to the lack of sustained improvement in the number of
home sales and/or stagnant or declining home prices, low levels of
consumer confidence, the impact of slow economic growth or future
recessions and related high levels of unemployment in the U.S. and
abroad, continued low inventory levels, renewed high levels of
foreclosures, seasonal fluctuations in the residential real estate
brokerage business, and increasing mortgage rates and down payment
requirements and/or constraints on the availability of mortgage
financing; the Company's geographic and high-end market
concentration, particularly with respect to its Company-owned
brokerage operations; the Company's failure to enter into or renew
franchise agreements or maintain its brands; risks relating to our
outstanding debt and interest obligations; variable rate
indebtedness which subjects the Company to interest rate risk; the
Company's inability to access capital or refinance or repay
existing indebtedness, or return capital to stockholders; the
Company's inability to realize the benefits from acquisitions or
the new mortgage origination joint venture that the Company has
agreed to form with Guaranteed Rate, Inc.; any outbreak or
escalation of hostilities on a national, regional or international
basis; government regulation as well as legislative, tax or
regulatory changes that would adversely impact the residential real
estate market, including but not limited to potential reform of the
financing of the U.S. housing and mortgage markets and/or the
Internal Revenue Code and changes in state or federal employment
laws or regulations that would require reclassification of
independent contractor sales agents to employee status, and wage
and hour regulations; the Company's inability to sustain
improvements in its operating efficiency and to achieve anticipated
cost savings from its business optimization initiatives; any
adverse resolution of litigation, governmental or regulatory
proceedings or arbitration awards; and the final resolution or
outcomes with respect to Cendant's (our former parent) remaining
contingent liabilities.
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 Annual Report
on Form 10-K for the year ended December 31, 2016 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. Except for our ongoing
obligations to disclose material information under the federal
securities laws, 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 unless we are
required to do so 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 and 8 for definitions of these non-GAAP financial
measures and Tables 1a, 4a, 4b, 5, 6, and 7 for reconciliations of
the historical non-GAAP financial measures to their most comparable
GAAP terms.
|
Investor
Contacts:
|
|
Media
Contact:
|
|
Alicia
Swift
|
|
Mark Panus
|
|
(973)
407-4669
|
|
(973)
407-7215
|
|
alicia.swift@realogy.com
|
|
mark.panus@realogy.com
|
|
|
|
|
Jennifer
Halchak
|
|
|
|
(973)
407-7487
|
|
|
|
jennifer.halchak@realogy.com
|
|
|
|
Table
1
|
|
REALOGY HOLDINGS
CORP.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(In millions,
except per share data)
|
|
|
Year Ended
December 31,
|
|
2016
|
|
2015
|
|
2014
|
|
Revenues
|
|
|
|
|
|
|
Gross commission
income
|
$
|
4,277
|
|
|
$
|
4,288
|
|
|
$
|
4,028
|
|
|
Service
revenue
|
955
|
|
|
882
|
|
|
802
|
|
|
Franchise
fees
|
372
|
|
|
353
|
|
|
333
|
|
|
Other
|
206
|
|
|
183
|
|
|
165
|
|
|
Net
revenues
|
5,810
|
|
|
5,706
|
|
|
5,328
|
|
|
Expenses
|
|
|
|
|
|
|
Commission and other
agent-related costs
|
2,945
|
|
|
2,931
|
|
|
2,755
|
|
|
Operating
|
1,542
|
|
|
1,458
|
|
|
1,350
|
|
|
Marketing
|
241
|
|
|
226
|
|
|
214
|
|
|
General and
administrative
|
321
|
|
|
337
|
|
|
293
|
|
|
Former parent legacy
benefit, net
|
(2)
|
|
|
(15)
|
|
|
(10)
|
|
|
Restructuring costs,
net
|
39
|
|
|
10
|
|
|
(1)
|
|
|
Depreciation and
amortization
|
202
|
|
|
201
|
|
|
190
|
|
|
Interest expense,
net
|
174
|
|
|
231
|
|
|
267
|
|
|
Loss on the early
extinguishment of debt
|
—
|
|
|
48
|
|
|
47
|
|
|
Other income,
net
|
(1)
|
|
|
(3)
|
|
|
(2)
|
|
|
Total
expenses
|
5,461
|
|
|
5,424
|
|
|
5,103
|
|
|
Income before
income taxes, equity in earnings and noncontrolling
interests
|
349
|
|
|
282
|
|
|
225
|
|
|
Income tax
expense
|
144
|
|
|
110
|
|
|
87
|
|
|
Equity in earnings of
unconsolidated entities
|
(12)
|
|
|
(16)
|
|
|
(9)
|
|
|
Net
income
|
217
|
|
|
188
|
|
|
147
|
|
|
Less: Net income
attributable to noncontrolling interests
|
(4)
|
|
|
(4)
|
|
|
(4)
|
|
|
Net income
attributable to Realogy Holdings
|
$
|
213
|
|
|
$
|
184
|
|
|
$
|
143
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Realogy Holdings:
|
|
|
|
|
|
|
Basic earnings per
share
|
$
|
1.47
|
|
|
$
|
1.26
|
|
|
$
|
0.98
|
|
|
Diluted earnings per
share
|
$
|
1.46
|
|
|
$
|
1.24
|
|
|
$
|
0.97
|
|
|
Weighted average
common and common equivalent shares of Realogy Holdings
outstanding:
|
|
Basic
|
144.5
|
|
|
146.5
|
|
|
146.0
|
|
|
Diluted
|
145.8
|
|
|
148.1
|
|
|
147.2
|
|
|
|
|
|
|
|
|
Cash dividends
declared per share (beginning in August 2016)
|
$
|
0.18
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Table
1a
|
|
REALOGY HOLDINGS
CORP.
Adjusted Net
Income and Adjusted Earnings Per Share
(In millions,
except per share data)
|
|
|
We present Adjusted
net income and Adjusted earnings per share because we believe these
measures are useful as supplemental measures in evaluating the
performance of our operating businesses and provides greater
transparency into our operating results.
Adjusted net income
is defined by us as net income 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, which the Company believes will be significant as a result
of the business optimization initiatives currently in progress; and
(d) the loss on the early extinguishment of debt that results from
refinancing and deleveraging debt initiatives. The gross
amounts for these items as well as the adjustment for income taxes
are shown in the table below.
Adjusted income per
share is Adjusted net income divided by the weighted average common
and common equivalent shares outstanding.
Set forth in the
table below is a reconciliation of Net income to Adjusted net
income for the years ended December 31, 2016, 2015 and
2014:
|
|
|
Year Ended
December 31,
|
|
2016
|
|
2015
|
|
2014
|
|
Net income
attributable to Realogy Holdings
|
$
|
213
|
|
|
$
|
184
|
|
|
$
|
143
|
|
|
Addback:
|
|
|
|
|
|
|
Mark-to-market
interest rate swap adjustments
|
6
|
|
|
20
|
|
|
32
|
|
|
Former parent legacy
benefit, net
|
(2)
|
|
|
(15)
|
|
|
(10)
|
|
|
Restructuring costs,
net
|
39
|
|
|
10
|
|
|
(1)
|
|
|
Loss on the early
extinguishment of debt
|
—
|
|
|
48
|
|
|
47
|
|
|
Reversal of the
income tax valuation allowance
|
—
|
|
|
—
|
|
|
(11)
|
|
|
Adjustments for tax
effect (a)
|
(17)
|
|
|
(25)
|
|
|
(28)
|
|
|
Adjusted net
income attributable to Realogy Holdings
|
$
|
239
|
|
|
$
|
222
|
|
|
$
|
172
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
Basic earnings per
share:
|
$
|
1.47
|
|
|
$
|
1.26
|
|
|
$
|
0.98
|
|
|
Diluted earnings per
share:
|
$
|
1.46
|
|
|
$
|
1.24
|
|
|
$
|
0.97
|
|
|
|
|
|
|
|
|
Adjusted earnings
per share
|
|
|
|
|
|
|
Adjusted basic
earnings per share:
|
$
|
1.65
|
|
|
$
|
1.52
|
|
|
$
|
1.18
|
|
|
Adjusted diluted
earnings per share:
|
$
|
1.64
|
|
|
$
|
1.50
|
|
|
$
|
1.17
|
|
|
|
|
|
|
|
|
Weighted average
common and common equivalent shares outstanding:
|
|
|
|
Basic:
|
144.5
|
|
|
146.5
|
|
|
146.0
|
|
|
Diluted:
|
145.8
|
|
|
148.1
|
|
|
147.2
|
|
|
(a)
|
Reflects tax effect
of adjustments at an assumed tax rate of 40% for the year ended
December 31, 2016 and 2015, and 41% for the year ended
December 31, 2014.
|
|
Table
2
|
|
REALOGY HOLDINGS
CORP.
CONSOLIDATED
BALANCE SHEETS
(In millions,
except share data)
|
|
|
December 31,
2016
|
|
December 31,
2015
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
274
|
|
|
$
|
415
|
|
|
Trade receivables
(net of allowance for doubtful accounts of $13 and $20)
|
152
|
|
|
141
|
|
|
Relocation
receivables
|
244
|
|
|
279
|
|
|
Other current
assets
|
148
|
|
|
126
|
|
|
Total current
assets
|
818
|
|
|
961
|
|
|
Property and
equipment, net
|
267
|
|
|
254
|
|
|
Goodwill
|
3,690
|
|
|
3,618
|
|
|
Trademarks
|
748
|
|
|
745
|
|
|
Franchise agreements,
net
|
1,361
|
|
|
1,428
|
|
|
Other intangibles,
net
|
313
|
|
|
316
|
|
|
Other non-current
assets
|
224
|
|
|
209
|
|
|
Total
assets
|
$
|
7,421
|
|
|
$
|
7,531
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
|
140
|
|
|
$
|
139
|
|
|
Securitization
obligations
|
205
|
|
|
247
|
|
|
Due to former
parent
|
28
|
|
|
31
|
|
|
Current portion of
long-term debt
|
242
|
|
|
740
|
|
|
Accrued expenses and
other current liabilities
|
435
|
|
|
448
|
|
|
Total current
liabilities
|
1,050
|
|
|
1,605
|
|
|
Long-term
debt
|
3,265
|
|
|
2,962
|
|
|
Deferred income
taxes
|
389
|
|
|
267
|
|
|
Other non-current
liabilities
|
248
|
|
|
275
|
|
|
Total
liabilities
|
4,952
|
|
|
5,109
|
|
|
Commitments and
contingencies
|
|
|
|
|
Equity:
|
|
|
|
|
Realogy Holdings
preferred stock: $.01 par value; 50,000,000 shares authorized, none
issued and outstanding at December 31, 2016 and December 31,
2015
|
—
|
|
|
—
|
|
|
Realogy Holdings
common stock: $.01 par value; 400,000,000 shares authorized,
140,227,692 shares outstanding at December 31, 2016 and 146,746,537
shares outstanding at December 31, 2015
|
1
|
|
|
1
|
|
|
Additional paid-in
capital
|
5,565
|
|
|
5,733
|
|
|
Accumulated
deficit
|
(3,062)
|
|
|
(3,280)
|
|
|
Accumulated other
comprehensive loss
|
(40)
|
|
|
(36)
|
|
|
Total stockholders'
equity
|
2,464
|
|
|
2,418
|
|
|
Noncontrolling
interests
|
5
|
|
|
4
|
|
|
Total
equity
|
2,469
|
|
|
2,422
|
|
|
Total liabilities
and equity
|
$
|
7,421
|
|
|
$
|
7,531
|
|
|
Table
3a
|
|
REALOGY HOLDINGS
CORP.
2016 KEY
DRIVERS
|
|
|
|
Quarter
Ended
|
|
Year
Ended
|
|
|
March 31,
2016
|
|
June 30,
2016
|
|
September 30,
2016
|
|
December 31,
2016
|
|
December 31,
2016
|
|
RFG
(a)
|
|
|
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
|
218,330
|
|
|
319,748
|
|
|
323,176
|
|
|
274,090
|
|
|
1,135,344
|
|
|
Average homesale
price
|
|
$
|
259,044
|
|
|
$
|
273,900
|
|
|
$
|
275,325
|
|
|
$
|
277,037
|
|
|
$
|
272,206
|
|
|
Average homesale
broker commission rate
|
|
2.51
|
%
|
|
2.51
|
%
|
|
2.50
|
%
|
|
2.49
|
%
|
|
2.50
|
%
|
|
Net effective royalty
rate
|
|
4.51
|
%
|
|
4.49
|
%
|
|
4.50
|
%
|
|
4.34
|
%
|
|
4.46
|
%
|
|
Royalty per
side
|
|
$
|
309
|
|
|
$
|
319
|
|
|
$
|
322
|
|
|
$
|
313
|
|
|
$
|
317
|
|
|
NRT
|
|
|
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
|
64,244
|
|
|
98,314
|
|
|
95,605
|
|
|
77,536
|
|
|
335,699
|
|
|
Average homesale
price
|
|
$
|
493,125
|
|
|
$
|
485,688
|
|
|
$
|
486,343
|
|
|
$
|
495,242
|
|
|
$
|
489,504
|
|
|
Average homesale
broker commission rate
|
|
2.46
|
%
|
|
2.49
|
%
|
|
2.46
|
%
|
|
2.44
|
%
|
|
2.46
|
%
|
|
Gross commission
income per side
|
|
$
|
12,878
|
|
|
$
|
12,732
|
|
|
$
|
12,681
|
|
|
$
|
12,760
|
|
|
$
|
12,752
|
|
|
Cartus
|
|
|
|
|
|
|
|
|
|
|
|
Initiations
|
|
37,174
|
|
|
51,560
|
|
|
40,556
|
|
|
33,773
|
|
|
163,063
|
|
|
Referrals
|
|
16,893
|
|
|
26,138
|
|
|
25,495
|
|
|
18,751
|
|
|
87,277
|
|
|
TRG
|
|
|
|
|
|
|
|
|
|
|
|
Purchase title and
closing units (b)
|
|
29,236
|
|
|
43,914
|
|
|
42,932
|
|
|
36,915
|
|
|
152,997
|
|
|
Refinance title and
closing units (c)
|
|
9,703
|
|
|
11,227
|
|
|
15,170
|
|
|
14,819
|
|
|
50,919
|
|
|
Average fee per
closing unit
|
|
$
|
1,848
|
|
|
$
|
1,919
|
|
|
$
|
1,824
|
|
|
$
|
1,907
|
|
|
$
|
1,875
|
|
|
(a)
|
Includes all
franchisees except for NRT.
|
|
(b)
|
The amounts presented
for the year ended December 31, 2016 include 18,930 purchase
units as a result of the acquisitions.
|
|
(c)
|
The amounts presented
for the year ended December 31, 2016 include 4,469 refinance
units as a result of the acquisitions.
|
|
Table
3b
|
|
REALOGY HOLDINGS
CORP.
2015 KEY
DRIVERS
|
|
|
|
Quarter
Ended
|
|
Year
Ended
|
|
|
March 31,
2015
|
|
June 30,
2015
|
|
September 30,
2015
|
|
December 31,
2015
|
|
December 31,
2015
|
|
RFG (a)
(b)
|
|
|
|
|
|
|
|
|
|
|
|
Closed homesale
sides
|
|
212,139
|
|
|
307,293
|
|
|
318,873
|
|
|
263,028
|
|
|
1,101,333
|
|
|
Average homesale
price
|
|
$
|
251,373
|
|
|
$
|
266,456
|
|
|
$
|
267,296
|
|
|
$
|
266,874
|
|
|
$
|
263,894
|
|
|
Average homesale
broker commission rate
|
|
2.52
|
%
|
|
2.52
|
%
|
|
2.52
|
%
|
|
2.49
|
%
|
|
2.51
|
%
|
|
Net effective royalty
rate
|
|
4.52
|
%
|
|
4.48
|
%
|
|
4.47
|
%
|
|
4.46
|
%
|
|
4.48
|
%
|
|
Royalty per
side
|
|
$
|
302
|
|
|
$
|
312
|
|
|
$
|
312
|
|
|
$
|
309
|
|
|
$
|
309
|
|
|
NRT
|
|
Closed homesale sides
(c)
|
|
60,187
|
|
|
99,435
|
|
|
99,789
|
|
|
77,333
|
|
|
336,744
|
|
|
Average homesale
price (d)
|
|
$
|
502,597
|
|
|
$
|
493,746
|
|
|
$
|
479,874
|
|
|
$
|
487,024
|
|
|
$
|
489,673
|
|
|
Average homesale
broker commission rate
|
|
2.43
|
%
|
|
2.46
|
%
|
|
2.48
|
%
|
|
2.47
|
%
|
|
2.46
|
%
|
|
Gross commission
income per side
|
|
$
|
13,019
|
|
|
$
|
12,830
|
|
|
$
|
12,524
|
|
|
$
|
12,645
|
|
|
$
|
12,730
|
|
|
Cartus
|
|
|
|
|
|
|
|
|
|
|
|
Initiations
|
|
38,168
|
|
|
51,528
|
|
|
42,303
|
|
|
35,750
|
|
|
167,749
|
|
|
Referrals
|
|
18,022
|
|
|
29,033
|
|
|
30,010
|
|
|
22,466
|
|
|
99,531
|
|
|
TRG
|
|
|
|
|
|
|
|
|
|
|
|
Purchase title and
closing units (e)
|
|
21,643
|
|
|
35,596
|
|
|
41,245
|
|
|
32,057
|
|
|
130,541
|
|
|
Refinance title and
closing units (f)
|
|
9,496
|
|
|
9,815
|
|
|
9,989
|
|
|
9,244
|
|
|
38,544
|
|
|
Average fee per
closing unit
|
|
$
|
1,751
|
|
|
$
|
1,795
|
|
|
$
|
1,932
|
|
|
$
|
1,928
|
|
|
$
|
1,861
|
|
|
(a)
|
Includes all
franchisees except for NRT.
|
|
(b)
|
In April 2015, NRT
acquired a large franchisee of RFG. As a result of the
acquisition, the drivers of the acquired entity shifted from RFG to
NRT. Closed homesale sides for RFG, excluding the impact of
the acquisition, would have increased 5% for the year ended
December 31, 2015 compared to 2014. The acquisition did
not have a significant impact on the change in average homesale
price for RFG.
|
|
(c)
|
Closed homesale sides
for NRT, excluding the impact of larger acquisitions with an
individual purchase price greater than $20 million, would have
increased 2% for the year ended December 31, 2015 compared to
2014.
|
|
(d)
|
Average homesale
price for NRT, excluding the impact of larger acquisitions
with an individual purchase price greater than $20 million, would
have increased 1% for the year ended December 31, 2015
compared to 2014.
|
|
(e)
|
The amounts presented
for the year ended December 31, 2015 include 13,304 purchase
units as a result of the acquisition of Independence Title on July
1, 2015.
|
|
(f)
|
The amounts presented
for the year ended December 31, 2015 include 3,403 refinance
units as a result of the acquisition of Independence Title on July
1, 2015.
|
|
Table
4a
|
|
REALOGY HOLDINGS
CORP.
SELECTED 2016
FINANCIAL DATA
(In
millions)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March 31,
2016
|
|
June 30,
2016
|
|
September 30,
2016
|
|
December 31,
2016
|
|
December 31,
2016
|
|
Net revenues
(a)
|
|
|
|
|
|
|
|
|
|
|
Real Estate Franchise
Services
|
$
|
157
|
|
|
$
|
221
|
|
|
$
|
215
|
|
|
$
|
188
|
|
|
$
|
781
|
|
|
Company Owned Real
Estate Brokerage Services
|
841
|
|
|
1,268
|
|
|
1,231
|
|
|
1,004
|
|
|
4,344
|
|
|
Relocation
Services
|
83
|
|
|
109
|
|
|
116
|
|
|
97
|
|
|
405
|
|
|
Title and Settlement
Services
|
111
|
|
|
149
|
|
|
164
|
|
|
149
|
|
|
573
|
|
|
Corporate and
Other
|
(58)
|
|
|
(85)
|
|
|
(82)
|
|
|
(68)
|
|
|
(293)
|
|
|
Total
Company
|
$
|
1,134
|
|
|
$
|
1,662
|
|
|
$
|
1,644
|
|
|
$
|
1,370
|
|
|
$
|
5,810
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(b)
|
|
|
|
|
|
|
|
|
|
|
Real Estate Franchise
Services
|
$
|
92
|
|
|
$
|
149
|
|
|
$
|
153
|
|
|
$
|
122
|
|
|
$
|
516
|
|
|
Company Owned Real
Estate Brokerage Services
|
(21)
|
|
|
78
|
|
|
74
|
|
|
6
|
|
|
137
|
|
|
Relocation
Services
|
5
|
|
|
29
|
|
|
40
|
|
|
22
|
|
|
96
|
|
|
Title and Settlement
Services
|
—
|
|
|
26
|
|
|
23
|
|
|
13
|
|
|
62
|
|
|
Corporate and
Other
|
(21)
|
|
|
(19)
|
|
|
(20)
|
|
|
(18)
|
|
|
(78)
|
|
|
Total
Company
|
$
|
55
|
|
|
$
|
263
|
|
|
$
|
270
|
|
|
$
|
145
|
|
|
$
|
733
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
48
|
|
|
48
|
|
|
53
|
|
|
53
|
|
|
202
|
|
|
Interest expense,
net
|
73
|
|
|
59
|
|
|
37
|
|
|
5
|
|
|
174
|
|
|
Income tax expense
(benefit)
|
(24)
|
|
|
64
|
|
|
74
|
|
|
30
|
|
|
144
|
|
|
Net income (loss)
attributable to Realogy Holdings
|
$
|
(42)
|
|
|
$
|
92
|
|
|
$
|
106
|
|
|
$
|
57
|
|
|
$
|
213
|
|
|
(a)
|
Transactions between
segments are eliminated in consolidation. Revenues for the
Real Estate Franchise Services segment include intercompany
royalties and marketing fees paid by the Company Owned Real Estate
Brokerage Services segment of $58 million, $85 million, $82 million
and $68 million for the three months ended March 31, 2016, June 30,
2016, September 30, 2016 and December 31, 2016,
respectively. Such amounts are eliminated through the
Corporate and Other line.
|
|
|
|
Revenues for the
Relocation Services segment include $8 million, $13 million, $12
million and $10 million of intercompany referral commissions paid
by the Company Owned Real Estate Brokerage Services segment during
the three months ended March 31, 2016, June 30, 2016, September 30,
2016 and December 31, 2016, respectively. Such amounts
are recorded as contra-revenues by the Company Owned Real Estate
Brokerage Services segment.
|
|
|
|
(b)
|
Includes a net cost
of $1 million and a net benefit of $3 million of former parent
legacy items for the three months ended March 31, 2016 and
December 31, 2016, respectively.
|
|
|
|
Includes $9 million,
$12 million, $9 million and $9 million of restructuring charges for
the three months ended March 31, 2016, June 30, 2016, September 30,
2016 and December 31, 2016, respectively.
|
|
|
|
The year ended
December 31, 2016 includes a net benefit of $2 million of
former parent legacy items and restructuring charges of $39
million.
|
|
|
|
The amounts broken
down by business unit are as follows:
|
|
Three Months
Ended
|
|
March 31,
2016
|
|
June 30,
2016
|
|
September 30,
2016
|
|
December 31,
2016
|
|
Real Estate Franchise
Services
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
Company Owned Real
Estate Brokerage Services
|
2
|
|
|
7
|
|
|
6
|
|
|
7
|
|
|
Relocation
Services
|
2
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
Title and Settlement
Services
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
Corporate and
Other
|
6
|
|
|
1
|
|
|
—
|
|
|
(1)
|
|
|
Total
Company
|
$
|
10
|
|
|
$
|
12
|
|
|
$
|
9
|
|
|
$
|
6
|
|
|
Table
4b
|
|
REALOGY HOLDINGS
CORP.
SELECTED 2015
FINANCIAL DATA
(In
millions)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
June
30,
|
|
September
30,
|
|
December
31,
|
|
December
31,
|
|
2015
|
|
2015
|
|
2015
|
|
2015
|
|
2015
|
|
Net revenues
(a)
|
|
|
|
|
|
|
|
|
|
|
Real Estate Franchise
Services
|
$
|
151
|
|
|
$
|
213
|
|
|
$
|
214
|
|
|
$
|
177
|
|
|
$
|
755
|
|
|
Company Owned Real
Estate Brokerage Services
|
796
|
|
|
1,289
|
|
|
1,267
|
|
|
992
|
|
|
4,344
|
|
|
Relocation
Services
|
85
|
|
|
108
|
|
|
124
|
|
|
98
|
|
|
415
|
|
|
Title and Settlement
Services
|
87
|
|
|
128
|
|
|
147
|
|
|
125
|
|
|
487
|
|
|
Corporate and
Other
|
(57)
|
|
|
(87)
|
|
|
(84)
|
|
|
(67)
|
|
|
(295)
|
|
|
Total
Company
|
$
|
1,062
|
|
|
$
|
1,651
|
|
|
$
|
1,668
|
|
|
$
|
1,325
|
|
|
$
|
5,706
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(b)
|
|
|
|
|
|
|
|
|
|
|
Real Estate Franchise
Services
|
$
|
86
|
|
|
$
|
146
|
|
|
$
|
152
|
|
|
$
|
111
|
|
|
$
|
495
|
|
|
Company Owned Real
Estate Brokerage Services
|
(16)
|
|
|
97
|
|
|
96
|
|
|
22
|
|
|
199
|
|
|
Relocation
Services
|
7
|
|
|
29
|
|
|
47
|
|
|
22
|
|
|
105
|
|
|
Title and Settlement
Services
|
(3)
|
|
|
20
|
|
|
20
|
|
|
11
|
|
|
48
|
|
|
Corporate and Other
(c)
|
(16)
|
|
|
(27)
|
|
|
(6)
|
|
|
(72)
|
|
|
(121)
|
|
|
Total
Company
|
$
|
58
|
|
|
$
|
265
|
|
|
$
|
309
|
|
|
$
|
94
|
|
|
$
|
726
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
46
|
|
|
52
|
|
|
55
|
|
|
48
|
|
|
201
|
|
|
Interest expense,
net
|
68
|
|
|
50
|
|
|
70
|
|
|
43
|
|
|
231
|
|
|
Income tax expense
(benefit)
|
(24)
|
|
|
66
|
|
|
74
|
|
|
(6)
|
|
|
110
|
|
|
Net income (loss)
attributable to Realogy Holdings
|
$
|
(32)
|
|
|
$
|
97
|
|
|
$
|
110
|
|
|
$
|
9
|
|
|
$
|
184
|
|
|
(a)
|
Transactions between
segments are eliminated in consolidation. Revenues for the
Real Estate Franchise Services segment include intercompany
royalties and marketing fees paid by the Company Owned Real Estate
Brokerage Services segment of $57 million, $87 million, $84 million
and $67 million for the three months ended March 31, 2015, June 30,
2015, September 30, 2015 and December 31, 2015,
respectively. Such amounts are eliminated through the
Corporate and Other line.
|
|
|
|
Revenues for the
Relocation Services segment include $8 million, $15 million, $16
million and $10 million of intercompany referral commissions paid
by the Company Owned Real Estate Brokerage Services segment during
the three months ended March 31, 2015, June 30, 2015, September 30,
2015 and December 31, 2015, respectively. Such amounts
are recorded as contra-revenues by the Company Owned Real Estate
Brokerage Services segment.
|
|
|
|
(b)
|
The three months
ended June 30, 2015 includes a net benefit of $1 million for former
parent legacy items.
|
|
|
|
The three months
ended September 30, 2015 includes a net benefit of $14 million for
former parent legacy items.
|
|
|
|
The three months
ended December 31, 2015 includes $48 million related to the loss on
early extinguishment of debt and restructuring charges of $10
million.
|
|
|
|
The year ended
December 31, 2015 includes $48 million related to the loss on early
extinguishment of debt and restructuring charges of $10 million,
partially offset by a net benefit of $15 million for former parent
legacy items.
|
|
|
|
The amounts broken
down by business unit are as follows:
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March
31,
|
|
June
30,
|
|
September
30,
|
|
December
31,
|
|
December
31,
|
|
2015
|
|
2015
|
|
2015
|
|
2015
|
|
2015
|
|
Real Estate Franchise
Services
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Company Owned Real
Estate Brokerage Services
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|
Relocation
Services
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
Title and Settlement
Services
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Corporate and
Other
|
—
|
|
|
(1)
|
|
|
(14)
|
|
|
52
|
|
|
37
|
|
|
Total
Company
|
$
|
—
|
|
|
$
|
(1)
|
|
|
$
|
(14)
|
|
|
$
|
58
|
|
|
$
|
43
|
|
|
(c)
|
The three months
ended June 30, 2015 includes $6 million of costs related to
the settlement of a legal matter, subject to court approval, and
certain transaction costs related to acquisitions in April
2015.
|
|
Table
5
|
|
REALOGY HOLDINGS
CORP.
EBITDA AND
OPERATING EBITDA
FOR THE YEARS
ENDED DECEMBER 31, 2016 AND 2015
(In
millions)
|
|
|
Set forth in the
table below is a reconciliation of net income to EBITDA and
Operating EBITDA for the years ended December 31, 2016 and
2015:
|
|
|
Year
Ended
|
|
December 31,
2016
|
|
December 31,
2015
|
|
Net income
attributable to Realogy Holdings
|
$
|
213
|
|
|
$
|
184
|
|
|
Income tax
expense
|
144
|
|
|
110
|
|
|
Income before income
taxes
|
357
|
|
|
294
|
|
|
Interest expense,
net
|
174
|
|
|
231
|
|
|
Depreciation and
amortization
|
202
|
|
|
201
|
|
|
EBITDA
|
733
|
|
|
726
|
|
|
EBITDA
adjustments:
|
|
|
|
|
Restructuring
costs
|
39
|
|
|
10
|
|
|
Former parent legacy
costs (benefit), net
|
(2)
|
|
|
(15)
|
|
|
Loss on the early
extinguishment of debt
|
—
|
|
|
48
|
|
|
Operating
EBITDA
|
$
|
770
|
|
|
$
|
769
|
|
|
Set forth in the
table below is a reconciliation of Operating EBITDA by
reportable segments to the net income for the years ended
December 31, 2016 and 2015:
|
|
|
Revenues
|
|
|
|
|
|
Operating
EBITDA
|
|
|
|
|
|
Operating EBITDA
Margin
|
|
|
|
2016
|
|
2015
|
|
Change
|
|
%
Change
|
|
2016
|
|
2015
|
|
Change
|
|
%
Change
|
|
2016
|
|
2015
|
|
Change
|
|
RFG
|
$
|
781
|
|
|
$
|
755
|
|
|
$
|
26
|
|
|
3
|
%
|
|
$
|
520
|
|
|
$
|
495
|
|
|
$
|
25
|
|
|
5
|
%
|
|
67
|
%
|
|
66
|
%
|
|
1
|
|
|
NRT
|
4,344
|
|
|
4,344
|
|
|
—
|
|
|
—
|
|
|
159
|
|
|
204
|
|
|
(45)
|
|
|
(22)
|
|
|
4
|
|
|
5
|
|
|
(1)
|
|
|
Cartus
|
405
|
|
|
415
|
|
|
(10)
|
|
|
(2)
|
|
|
100
|
|
|
106
|
|
|
(6)
|
|
|
(6)
|
|
|
25
|
|
|
26
|
|
|
(1)
|
|
|
TRG
|
573
|
|
|
487
|
|
|
86
|
|
|
18
|
|
|
63
|
|
|
48
|
|
|
15
|
|
|
31
|
|
|
11
|
|
|
10
|
|
|
1
|
|
|
Corporate and
Other
|
(293)
|
|
|
(295)
|
|
|
2
|
|
|
*
|
|
|
(72)
|
|
|
(84)
|
|
|
12
|
|
|
*
|
|
|
|
|
|
|
|
|
Total
Company
|
$
|
5,810
|
|
|
$
|
5,706
|
|
|
$
|
104
|
|
|
2
|
%
|
|
$
|
770
|
|
|
$
|
769
|
|
|
$
|
1
|
|
|
—
|
%
|
|
13
|
%
|
|
13
|
%
|
|
—
|
|
|
Less: Restructuring
costs
|
|
39
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
Former parent
legacy benefit, net
|
|
(2)
|
|
|
(15)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on the early
extinguishment of debt
|
|
—
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
202
|
|
|
201
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
174
|
|
|
231
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
144
|
|
|
110
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Realogy Holdings
|
|
$
|
213
|
|
|
$
|
184
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
6
|
|
REALOGY HOLDINGS
CORP.
EBITDA AND
OPERATING EBITDA
THREE MONTHS
ENDED DECEMBER 31, 2016 AND 2015
(In
millions)
|
|
|
Set forth in the
table below is a reconciliation of net income to EBITDA and
Operating EBITDA for the three-month periods ended
December 31, 2016 and 2015:
|
|
|
Three Months
Ended
|
|
December 31,
2016
|
|
December 31,
2015
|
|
Net income
attributable to Realogy Holdings
|
$
|
57
|
|
|
$
|
9
|
|
|
Income tax
expense
|
30
|
|
|
(6)
|
|
|
Income before income
taxes
|
87
|
|
|
3
|
|
|
Interest expense,
net
|
5
|
|
|
43
|
|
|
Depreciation and
amortization
|
53
|
|
|
48
|
|
|
EBITDA
|
145
|
|
|
94
|
|
|
EBITDA
adjustments:
|
|
|
|
|
Restructuring
costs
|
9
|
|
|
10
|
|
|
Former parent legacy
benefit, net
|
(3)
|
|
|
—
|
|
|
Loss on the early
extinguishment of debt
|
—
|
|
|
48
|
|
|
Operating
EBITDA
|
$
|
151
|
|
|
$
|
152
|
|
|
Set forth in the
table below is a reconciliation of Operating EBITDA by
reportable segments to the net income for the three months ended
ended December 31, 2016 and 2015:
|
|
|
Revenues
|
|
|
|
|
|
Operating
EBITDA
|
|
|
|
|
|
Operating EBITDA
Margin
|
|
|
|
2016
|
|
2015
|
|
Change
|
|
%
Change
|
|
2016
|
|
2015
|
|
Change
|
|
%
Change
|
|
2016
|
|
2015
|
|
Change
|
|
RFG
|
$
|
188
|
|
|
$
|
177
|
|
|
$
|
11
|
|
|
6
|
%
|
|
$
|
122
|
|
|
$
|
111
|
|
|
$
|
11
|
|
|
10
|
%
|
|
65
|
%
|
|
63
|
%
|
|
2
|
|
|
NRT
|
1,004
|
|
|
992
|
|
|
12
|
|
|
1
|
|
|
13
|
|
|
27
|
|
|
(14)
|
|
|
(52)
|
|
|
1
|
|
|
3
|
|
|
(2)
|
|
|
Cartus
|
97
|
|
|
98
|
|
|
(1)
|
|
|
(1)
|
|
|
22
|
|
|
23
|
|
|
(1)
|
|
|
(4)
|
|
|
23
|
|
|
23
|
|
|
—
|
|
|
TRG
|
149
|
|
|
125
|
|
|
24
|
|
|
19
|
|
|
13
|
|
|
11
|
|
|
2
|
|
|
18
|
|
|
9
|
|
|
9
|
|
|
—
|
|
|
Corporate and
Other
|
(68)
|
|
|
(67)
|
|
|
(1)
|
|
|
*
|
|
|
(19)
|
|
|
(20)
|
|
|
1
|
|
|
*
|
|
|
|
|
|
|
|
|
Total
Company
|
$
|
1,370
|
|
|
$
|
1,325
|
|
|
$
|
45
|
|
|
3
|
%
|
|
$
|
151
|
|
|
$
|
152
|
|
|
$
|
(1)
|
|
|
(1)
|
%
|
|
11
|
%
|
|
11
|
%
|
|
—
|
|
|
Less: Restructuring
costs
|
|
9
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
Former parent
legacy benefit, net
|
|
(3)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on the early
extinguishment of debt
|
|
—
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
53
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
5
|
|
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
|
30
|
|
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Realogy Holdings
|
|
$
|
57
|
|
|
$
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
7
|
|
REALOGY HOLDINGS
CORP.
FREE CASH
FLOW
FOR THE YEAR ENDED
DECEMBER 31, 2016 AND 2015
(In
millions)
|
|
|
A reconciliation of
net income attributable to Realogy Holdings to free cash flow is
set forth in the following table:
|
|
|
Year Ended
December 31,
|
|
2016
|
|
2015
|
|
Net income
attributable to Realogy Holdings
|
$
|
213
|
|
|
$
|
184
|
|
|
Income tax expense,
net of payments
|
120
|
|
|
93
|
|
|
Interest expense,
net
|
174
|
|
|
231
|
|
|
Cash interest
payments
|
(181)
|
|
|
(244)
|
|
|
Depreciation and
amortization
|
202
|
|
|
201
|
|
|
Capital
expenditures
|
(87)
|
|
|
(84)
|
|
|
Restructuring costs
and former parent legacy items, net of payments
|
5
|
|
|
(14)
|
|
|
Loss on the early
extinguishment of debt
|
—
|
|
|
48
|
|
|
Working capital
adjustments
|
20
|
|
|
32
|
|
|
Relocation
receivables (assets), net of securitization obligations
|
(9)
|
|
|
(4)
|
|
|
Free Cash
Flow
|
$
|
457
|
|
|
$
|
443
|
|
|
A reconciliation of
net cash provided by operating activities to free cash flow is set
forth in the following table:
|
|
|
Year Ended
December 31,
|
|
2016
|
|
2015
|
|
Net cash provided
by operating activities
|
$
|
587
|
|
|
$
|
550
|
|
|
Property and
equipment additions
|
(87)
|
|
|
(84)
|
|
|
Net change in
securitization
|
(40)
|
|
|
(21)
|
|
|
Effect of exchange
rates on cash and cash equivalents
|
(3)
|
|
|
(2)
|
|
|
Free Cash
Flow
|
$
|
457
|
|
|
$
|
443
|
|
|
|
|
|
|
Net cash used in
investing activities
|
$
|
(190)
|
|
|
$
|
(209)
|
|
|
Net cash used in
financing activities
|
$
|
(535)
|
|
|
$
|
(237)
|
|
Table 8
Non-GAAP Definitions
Adjusted net income (loss) is defined by us as net income (loss)
before mark to market interest rate adjustments, former parent
legacy items, restructuring charges and loss on the early
extinguishment of debt. The gross amounts for these items as
well as the adjustment for income taxes are presented.
Adjusted income (loss) per share is Adjusted net income (loss)
divided by the weighted average common and common equivalent shares
outstanding. 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 provides greater
transparency into our operating results.
EBITDA is defined by us as net income (loss) before depreciation
and amortization, interest expense, net (other than relocation
services interest for securitization assets and securitization
obligations) and income taxes and is our primary non-GAAP
measure.
Operating EBITDA is defined by us as EBITDA before
restructuring, early extinguishment of debt and legacy items and is
used as a supplementary financial measure. Operating EBITDA
calculated for a twelve-month period is presented because the
Company believes these items do not directly affect the operating
results of the Company and accordingly should be excluded in
comparing operating results.
We present EBITDA and Operating EBITDA because we believe they
are useful as supplemental measures in evaluating the performance
of our operating businesses and provide greater transparency into
our results of operations. Our management, including our
chief operating decision maker, uses EBITDA as a factor in
evaluating the performance of our business. EBITDA and
Operating EBITDA should not be considered in isolation or as a
substitute for net income or other statement of operations data
prepared in accordance with GAAP.
We believe EBITDA facilitates company-to-company operating
performance comparisons by backing out potential differences caused
by variations in capital structures (affecting net interest
expense), taxation, the age and book depreciation of facilities
(affecting relative depreciation expense) and the amortization of
intangibles, which may vary for different companies for reasons
unrelated to operating performance. We further believe that
EBITDA is frequently used by securities analysts, investors and
other interested parties in their evaluation of companies, many of
which present an EBITDA measure when reporting their results.
EBITDA and Operating EBITDA have limitations as analytical
tools, and you should not consider EBITDA and Operating EBITDA
either in isolation or as substitutes for analyzing our results as
reported under GAAP. Some of these limitations are:
- these measures do not reflect changes in, or cash required for,
our working capital needs;
- these measures do not reflect our interest expense (except for
interest related to our securitization obligations), or the cash
requirements necessary to service interest or principal payments on
our debt;
- these measures do not reflect our income tax expense or the
cash requirements to pay our taxes;
- these measures do not reflect historical cash expenditures or
future requirements for capital expenditures or contractual
commitments;
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often require
replacement in the future, and these measures do not reflect any
cash requirements for such replacements; and
- other companies may calculate these measures differently so
they may not be comparable.
Free Cash Flow is defined as net income (loss) attributable to
Realogy before income tax expense (benefit), net of payments,
interest expense, net, depreciation and amortization, capital
expenditures, restructuring costs and former parent legacy costs
(benefits), net of payments, loss on the early extinguishment of
debt, working capital adjustments and relocation assets, net of
change in securitization obligations. We use Free Cash Flow
in our internal evaluation of operating effectiveness and decisions
regarding the allocation of resources, as well as measuring the
Company's ability to generate cash. Since Free Cash Flow can
be viewed as both a performance measure and a cash flow measure,
the Company has provided a reconciliation to both net income
attributable to Realogy Holdings and net cash provided by operating
activities. Free Cash Flow is not defined by GAAP and should not be
considered in isolation or as an alternative to net income (loss),
net cash provided by (used in) operating, investing and financing
activities or other financial data prepared in accordance with GAAP
or as an indicator of the Company's operating performance or
liquidity. Free Cash Flow may differ from similarly titled
measures presented by other companies.
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SOURCE Realogy Holdings Corp.