Price Graph
Price
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Large accelerated
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Accelerated
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Non-accelerated filer
(Do not check if a smaller reporting company)
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Smaller reporting
company
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Emerging growth company
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Realogy Holdings Corp.
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þ
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Realogy Group LLC
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Page
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PART I
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FINANCIAL INFORMATION
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 1.
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Item 2.
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Item 5.
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Item 6.
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•
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risks related to general business, economic, employment and political conditions and the U.S. residential real estate markets, either regionally or nationally, including but not limited to:
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◦
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a lack of improvement or a decline in the number of homesales, stagnant or declining home prices and/or a deterioration in other economic factors that particularly impact the residential real estate market and the business segments in which we operate;
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◦
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increasing mortgage rates and/or constraints on the availability of mortgage financing;
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◦
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insufficient or excessive home inventory levels by market and price point;
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◦
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a decrease in consumer confidence;
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◦
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the impact of recessions, slow economic growth, disruptions in the U.S. government or banking system, disruptions in a major geoeconomic region, or equity or commodity markets and high levels of unemployment in the U.S. and abroad, which may impact all or a portion of the housing markets in which we and our franchisees operate;
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◦
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legislative, tax or regulatory changes (including changes in regulatory interpretations or enforcement practices) that would adversely impact the residential real estate market, including changes relating to the Real Estate Settlement Procedures Act ("RESPA"), potential reforms of Fannie Mae and Freddie Mac, immigration reform, and potential tax code reform;
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◦
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a decrease in housing affordability;
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◦
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high levels of foreclosure activity;
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◦
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changing attitudes towards home ownership, particularly among potential first-time homebuyers who may delay, or decide not to, purchase a home, as well as the potential impact of decisions to rent versus purchase a home; and
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◦
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the inability or unwillingness of current homeowners to purchase their next home due to various factors, including limited or negative equity in their current home, difficult mortgage underwriting standards, attractive rates on existing mortgages and the lack of available inventory in their market;
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•
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increased competition whether through traditional competitors or competitors with alternative business models, including companies employing technologies intended to disrupt the traditional brokerage model, as well as eliminating brokers or agents from, or minimizing the role they play in, the homesale transaction;
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•
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competition for more productive sales associates, sales associate teams, and manager talent may continue to impact the ability of our company owned brokerage business and our affiliated franchisees to attract and retain independent sales associates, either individually or as members of a team, without significantly impacting the commission split rates currently paid by our company owned brokerages and our affiliated franchisees;
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•
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our geographic and high-end market concentration, particularly with respect to our company owned brokerage operations;
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•
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our inability to enter into franchise agreements with new franchisees at current net effective royalty rates, or to realize royalty revenue growth from them;
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•
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our inability to renew existing franchise agreements at current net effective royalty rates or without increasing the amount and prevalence of non-standard incentives, or to maintain or enhance our value proposition to franchisees;
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•
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the lack of revenue growth or declining profitability of our franchisees and company owned brokerage operations, including the impact of lower average broker commission rates;
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•
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disputes or issues with entities that license us their tradenames for use in our business that could impede our franchising of those brands;
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•
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actions by our franchisees that could harm our business or reputation, non-performance of our franchisees, controversies with our franchisees or actions against us by their independent sales associates or employees or third parties with which our franchisees have business relationships;
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•
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loss, attrition or changes among our senior executives, other key employees or our inability to recruit top talent;
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•
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our inability to achieve or maintain cost savings and other benefits from our restructuring activities;
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•
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our inability to realize the benefits from acquisitions due to the loss of key personnel or productive agents of the acquired companies, as well as the possibility that expected benefits and synergies of the transactions may not be achieved in a timely manner or at all;
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•
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our failure or alleged failure to comply with laws, regulations and regulatory interpretations and any changes in laws and regulations or stricter interpretations of regulatory requirements, including but not limited to (1) state or federal employment laws or regulations that would require reclassification of independent contractor sales associates to employee status, (2) RESPA or state consumer protection or similar laws and (3) privacy or data security laws and regulations;
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any adverse resolution of litigation, governmental or regulatory proceedings or arbitration awards as well as any adverse impact of decisions to voluntarily modify business arrangements or enter into settlement agreements to avoid the risk of protracted and costly litigation or other proceedings;
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our inability to obtain new technologies and systems, to replace or introduce new technologies and systems as quickly as our competitors and in a cost-effective manner or to achieve the benefits anticipated from new technologies or systems;
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•
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the failure or significant disruption of our operations from various causes related to our critical information technologies and systems including cybersecurity threats to our data and customer, franchisee and independent sales associate data as well as reputational or financial risks associated with a loss of any such data;
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•
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risks related to our international operations, including compliance with the Foreign Corrupt Practices Act and similar anti-corruption laws as well as risks relating to the master franchisor model that we deploy internationally;
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risks associated with our substantial indebtedness and interest obligations and restrictions contained in our debt agreements, including risks relating to having to dedicate a significant portion of our cash flows from operations to service our debt;
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•
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risks relating to our ability to refinance or repay our indebtedness, incur additional indebtedness or return capital to stockholders;
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•
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changes in corporate relocation practices resulting in fewer employee relocations, reduced relocation benefits or the loss of one or more significant affinity clients;
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•
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an increase in the claims rate of our title underwriter and an increase in mortgage rates could adversely impact the revenue of our title and settlement services segment;
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our inability to securitize certain assets of our relocation business, which would require us to find an alternative source of liquidity that may not be available, or if available, may not be on favorable terms;
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•
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risks that could materially adversely impact our equity investment in our mortgage origination joint venture, including increases in mortgage rates, the impact of joint venture operational or liquidity risks, the impact of a transition from our current joint venture to our new joint venture, regulatory changes, litigation, investigations and inquiries or any termination of the venture;
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any remaining resolutions or outcomes with respect to contingent liabilities of our former parent, Cendant Corporation ("Cendant"), under the Separation and Distribution Agreement and the Tax Sharing Agreement (each as described in our Annual Report on Form 10-K for the year ended December 31, 2016, the "
2016
Form 10-K"), including any adverse impact on our future cash flows; and
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•
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new types of taxes or increases in state, local or federal taxes that could diminish profitability or liquidity.
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Three Months Ended
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March 31,
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2017
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2016
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Revenues
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Gross commission income
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$
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881
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$
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826
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Service revenue
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194
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190
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Franchise fees
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75
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69
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Other
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53
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49
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Net revenues
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1,203
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1,134
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Expenses
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Commission and other agent-related costs
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605
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558
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Operating
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376
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367
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Marketing
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62
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58
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General and administrative
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96
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86
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Former parent legacy costs, net
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—
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1
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Restructuring costs
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5
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9
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Depreciation and amortization
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50
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48
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Interest expense, net
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39
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73
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Loss on the early extinguishment of debt
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4
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—
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Total expenses
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1,237
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1,200
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Loss before income taxes, equity in losses and noncontrolling interests
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(34
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)
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(66
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)
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Income tax benefit
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(9
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)
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(24
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)
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Equity in losses of unconsolidated entities
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3
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—
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Net loss
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(28
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)
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(42
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)
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Less: Net income attributable to noncontrolling interests
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—
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—
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Net loss attributable to Realogy Holdings and Realogy Group
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$
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(28
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)
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$
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(42
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)
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Loss per share attributable to Realogy Holdings:
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Basic loss per share
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$
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(0.20
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)
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$
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(0.29
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)
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Diluted loss per share
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$
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(0.20
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)
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$
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(0.29
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)
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Weighted average common and common equivalent shares of Realogy Holdings outstanding:
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Basic
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139.7
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146.5
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Diluted
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139.7
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146.5
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Cash dividends declared per share (beginning in August 2016)
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$
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0.09
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$
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—
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Three Months Ended
|
||||||
|
|
March 31,
|
||||||
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|
2017
|
|
2016
|
||||
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Net loss
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$
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(28
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)
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$
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(42
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)
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Currency translation adjustment
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1
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—
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||
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Other comprehensive income, before tax
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1
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—
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|
||
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Income tax expense related to items of other comprehensive income
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—
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—
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Other comprehensive income, net of tax
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1
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—
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Comprehensive loss
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(27
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)
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(42
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)
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||
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Less: comprehensive income attributable to noncontrolling interests
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—
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—
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||
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Comprehensive loss attributable to Realogy Holdings and Realogy Group
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$
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(27
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)
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$
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(42
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)
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|
|
March 31,
2017 |
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December 31,
2016 |
||||
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||||||
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ASSETS
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|
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|
||||
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Current assets:
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|
||||
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Cash and cash equivalents
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$
|
205
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$
|
274
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Trade receivables (net of allowance for doubtful accounts of $12 and $13)
|
147
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|
|
152
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||
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Relocation receivables
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223
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|
|
244
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|
||
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Other current assets
|
158
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|
|
148
|
|
||
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Total current assets
|
733
|
|
|
818
|
|
||
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Property and equipment, net
|
270
|
|
|
267
|
|
||
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Goodwill
|
3,691
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|
|
3,690
|
|
||
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Trademarks
|
748
|
|
|
748
|
|
||
|
Franchise agreements, net
|
1,344
|
|
|
1,361
|
|
||
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Other intangibles, net
|
304
|
|
|
313
|
|
||
|
Other non-current assets
|
240
|
|
|
224
|
|
||
|
Total assets
|
$
|
7,330
|
|
|
$
|
7,421
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
|
Current liabilities:
|
|
|
|
||||
|
Accounts payable
|
$
|
125
|
|
|
$
|
140
|
|
|
Securitization obligations
|
172
|
|
|
205
|
|
||
|
Due to former parent
|
29
|
|
|
28
|
|
||
|
Current portion of long-term debt
|
355
|
|
|
242
|
|
||
|
Accrued expenses and other current liabilities
|
400
|
|
|
435
|
|
||
|
Total current liabilities
|
1,081
|
|
|
1,050
|
|
||
|
Long-term debt
|
3,256
|
|
|
3,265
|
|
||
|
Deferred income taxes
|
379
|
|
|
389
|
|
||
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Other non-current liabilities
|
239
|
|
|
248
|
|
||
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Total liabilities
|
4,955
|
|
|
4,952
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|
||
|
Commitments and contingencies (Notes 8 and 10)
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|
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|
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Equity:
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|
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|
||||
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Realogy Holdings preferred stock: $.01 par value; 50,000,000 shares authorized, none issued and outstanding at March 31, 2017 and December 31, 2016
|
—
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|
—
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Realogy Holdings common stock: $.01 par value; 400,000,000 shares authorized, 138,733,646 shares outstanding at March 31, 2017 and 140,227,692 shares outstanding at December 31, 2016
|
1
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|
|
1
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||
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Additional paid-in capital
|
5,499
|
|
|
5,565
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|
||
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Accumulated deficit
|
(3,090
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)
|
|
(3,062
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)
|
||
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Accumulated other comprehensive loss
|
(39
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)
|
|
(40
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)
|
||
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Total stockholders' equity
|
2,371
|
|
|
2,464
|
|
||
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Noncontrolling interests
|
4
|
|
|
5
|
|
||
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Total equity
|
2,375
|
|
|
2,469
|
|
||
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Total liabilities and equity
|
$
|
7,330
|
|
|
$
|
7,421
|
|
|
|
|||||||
|
|
Three Months Ended March 31,
|
||||||
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|
2017
|
|
2016
|
||||
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Operating Activities
|
|
|
|
||||
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Net loss
|
$
|
(28
|
)
|
|
$
|
(42
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
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Depreciation and amortization
|
50
|
|
|
48
|
|
||
|
Deferred income taxes
|
(10
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)
|
|
(27
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)
|
||
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Amortization of deferred financing costs and discount
|
4
|
|
|
4
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|
||
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Loss on the early extinguishment of debt
|
4
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|
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—
|
|
||
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Equity in losses of unconsolidated entities
|
3
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|
|
—
|
|
||
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Stock-based compensation
|
12
|
|
|
12
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|
||
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Mark-to-market adjustments on derivatives
|
(1
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)
|
|
31
|
|
||
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Other adjustments to net loss
|
(1
|
)
|
|
(1
|
)
|
||
|
Net change in assets and liabilities, excluding the impact of acquisitions and dispositions:
|
|
|
|
||||
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Trade receivables
|
4
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|
|
3
|
|
||
|
Relocation receivables
|
22
|
|
|
(9
|
)
|
||
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Other assets
|
(24
|
)
|
|
(10
|
)
|
||
|
Accounts payable, accrued expenses and other liabilities
|
(44
|
)
|
|
(71
|
)
|
||
|
Due to former parent
|
—
|
|
|
1
|
|
||
|
Dividends received from unconsolidated entities
|
1
|
|
|
—
|
|
||
|
Other, net
|
(4
|
)
|
|
(3
|
)
|
||
|
Net cash used in operating activities
|
(12
|
)
|
|
(64
|
)
|
||
|
Investing Activities
|
|
|
|
||||
|
Property and equipment additions
|
(28
|
)
|
|
(22
|
)
|
||
|
Payments for acquisitions, net of cash acquired
|
(1
|
)
|
|
(13
|
)
|
||
|
Investment in unconsolidated entities
|
(3
|
)
|
|
—
|
|
||
|
Change in restricted cash
|
2
|
|
|
2
|
|
||
|
Other, net
|
(1
|
)
|
|
(1
|
)
|
||
|
Net cash used in investing activities
|
(31
|
)
|
|
(34
|
)
|
||
|
Financing Activities
|
|
|
|
||||
|
Net change in revolving credit facility
|
110
|
|
|
(200
|
)
|
||
|
Amortization payments on term loan facilities
|
(10
|
)
|
|
(10
|
)
|
||
|
Proceeds from issuance of Senior Notes
|
—
|
|
|
250
|
|
||
|
Net change in securitization obligations
|
(33
|
)
|
|
(27
|
)
|
||
|
Debt issuance costs
|
(6
|
)
|
|
(2
|
)
|
||
|
Repurchase of common stock
|
(57
|
)
|
|
(33
|
)
|
||
|
Dividends paid on common stock
|
(13
|
)
|
|
—
|
|
||
|
Proceeds from exercise of stock options
|
1
|
|
|
—
|
|
||
|
Taxes paid related to net share settlement for stock-based compensation
|
(10
|
)
|
|
(4
|
)
|
||
|
Payments of contingent consideration related to acquisitions
|
(4
|
)
|
|
(4
|
)
|
||
|
Other, net
|
(5
|
)
|
|
(4
|
)
|
||
|
Net cash used in financing activities
|
(27
|
)
|
|
(34
|
)
|
||
|
Effect of changes in exchange rates on cash and cash equivalents
|
1
|
|
|
—
|
|
||
|
Net decrease in cash and cash equivalents
|
(69
|
)
|
|
(132
|
)
|
||
|
Cash and cash equivalents, beginning of period
|
274
|
|
|
415
|
|
||
|
Cash and cash equivalents, end of period
|
$
|
205
|
|
|
$
|
283
|
|
|
Supplemental Disclosure of Cash Flow Information
|
|
|
|
||||
|
Interest payments (including securitization interest of $1 for both periods presented)
|
$
|
24
|
|
|
$
|
28
|
|
|
Income tax payments, net
|
2
|
|
|
2
|
|
||
|
1.
|
BASIS OF PRESENTATION
|
|
Level Input:
|
|
Input Definitions:
|
|
|
|
|
|
Level I
|
|
Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the
measurement date.
|
|
|
|
|
|
Level II
|
|
Inputs other than quoted prices included in Level I that are observable for the asset or liability through
corroboration with market data at the measurement date.
|
|
|
|
|
|
Level III
|
|
Unobservable inputs that reflect management’s best estimate of what market participants would use in
pricing the asset or liability at the measurement date.
|
|
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||
|
Interest rate swaps (included in other current and non-current liabilities)
|
$
|
—
|
|
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
27
|
|
|
Deferred compensation plan assets (included in other non-current assets)
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
|
Contingent consideration for acquisitions (included in accrued expenses and other current liabilities and non-current liabilities)
|
—
|
|
|
—
|
|
|
45
|
|
|
45
|
|
||||
|
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||
|
Interest rate swaps (included in other non-current liabilities)
|
$
|
—
|
|
|
$
|
33
|
|
|
$
|
—
|
|
|
$
|
33
|
|
|
Deferred compensation plan assets (included in other non-current assets)
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
|
Contingent consideration for acquisitions (included in accrued expenses and other current liabilities and non-current liabilities)
|
—
|
|
|
—
|
|
|
50
|
|
|
50
|
|
||||
|
|
|
Level III
|
||
|
Fair value of contingent consideration at December 31, 2016
|
|
$
|
50
|
|
|
Additions: contingent consideration related to acquisitions completed during the period
|
|
—
|
|
|
|
Reductions: payments of contingent consideration (reflected in the financing section of the Consolidated Statement of Cash Flows)
|
|
(4
|
)
|
|
|
Changes in fair value (reflected in the Consolidated Statement of Operations)
|
|
(1
|
)
|
|
|
Fair value of contingent consideration at March 31, 2017
|
|
$
|
45
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
Debt
|
Principal Amount
|
|
Estimated
Fair Value (a) |
|
Principal Amount
|
|
Estimated
Fair Value (a) |
||||||||
|
Senior Secured Credit Facility:
|
|
|
|
|
|
|
|
||||||||
|
Revolving Credit Facility
|
$
|
310
|
|
|
$
|
310
|
|
|
$
|
200
|
|
|
$
|
200
|
|
|
Term Loan B
|
1,092
|
|
|
1,097
|
|
|
1,094
|
|
|
1,100
|
|
||||
|
Term Loan A Facility:
|
|
|
|
|
|
|
|
||||||||
|
Term Loan A
|
408
|
|
|
408
|
|
|
413
|
|
|
414
|
|
||||
|
Term Loan A-1
|
348
|
|
|
349
|
|
|
351
|
|
|
351
|
|
||||
|
4.50% Senior Notes
|
450
|
|
|
463
|
|
|
450
|
|
|
461
|
|
||||
|
5.25% Senior Notes
|
550
|
|
|
571
|
|
|
550
|
|
|
562
|
|
||||
|
4.875% Senior Notes
|
500
|
|
|
490
|
|
|
500
|
|
|
483
|
|
||||
|
Securitization obligations
|
172
|
|
|
172
|
|
|
205
|
|
|
205
|
|
||||
|
(a)
|
The fair value of the Company's indebtedness is categorized as Level I.
|
|
Notional Value (in millions)
|
Commencement Date
|
Expiration Date
|
|
$225
|
July 2012
|
February 2018
|
|
$200
|
January 2013
|
February 2018
|
|
$600
|
August 2015
|
August 2020
|
|
$450
|
November 2017
|
November 2022
|
|
Liability Derivatives
|
|
Fair Value
|
||||||||
|
Not Designated as Hedging Instruments
|
|
Balance Sheet Location
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
|
Interest rate swap contracts
|
|
Other current and non-current liabilities
|
|
$
|
27
|
|
|
$
|
33
|
|
|
Derivative Instruments Not Designated as Hedging Instruments
|
|
Location of (Gain) or Loss Recognized for Derivative Instruments
|
|
(Gain) or Loss Recognized on Derivatives
|
||||||
|
Three Months Ended March 31,
|
||||||||||
|
|
2017
|
|
2016
|
|||||||
|
Interest rate swap contracts
|
|
Interest expense
|
|
$
|
(1
|
)
|
|
$
|
31
|
|
|
Foreign exchange contracts
|
|
Operating expense
|
|
—
|
|
|
—
|
|
||
|
2.
|
ACQUISITIONS
|
|
3.
|
INTANGIBLE ASSETS
|
|
|
Real Estate
Franchise
Services
|
|
Company
Owned
Brokerage
Services
|
|
Relocation
Services
|
|
Title and
Settlement
Services
|
|
Total
Company
|
||||||||||
|
Gross goodwill as of December 31, 2016
|
$
|
3,315
|
|
|
$
|
1,051
|
|
|
$
|
641
|
|
|
$
|
469
|
|
|
$
|
5,476
|
|
|
Accumulated impairment losses
|
(1,023
|
)
|
|
(158
|
)
|
|
(281
|
)
|
|
(324
|
)
|
|
(1,786
|
)
|
|||||
|
Balance at December 31, 2016
|
2,292
|
|
|
893
|
|
|
360
|
|
|
145
|
|
|
3,690
|
|
|||||
|
Goodwill acquired
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
|
Balance at March 31, 2017
|
$
|
2,292
|
|
|
$
|
894
|
|
|
$
|
360
|
|
|
$
|
145
|
|
|
$
|
3,691
|
|
|
|
As of March 31, 2017
|
|
As of December 31, 2016
|
||||||||||||||||||||
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
|
Amortizable—Franchise agreements (a)
|
$
|
2,019
|
|
|
$
|
675
|
|
|
$
|
1,344
|
|
|
$
|
2,019
|
|
|
$
|
658
|
|
|
$
|
1,361
|
|
|
Indefinite life—Trademarks (b)
|
$
|
748
|
|
|
|
|
$
|
748
|
|
|
$
|
748
|
|
|
|
|
$
|
748
|
|
||||
|
Other Intangibles
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Amortizable—License agreements (c)
|
$
|
45
|
|
|
$
|
9
|
|
|
$
|
36
|
|
|
$
|
45
|
|
|
$
|
9
|
|
|
$
|
36
|
|
|
Amortizable—Customer relationships (d)
|
550
|
|
|
318
|
|
|
232
|
|
|
550
|
|
|
312
|
|
|
238
|
|
||||||
|
Indefinite life—Title plant shares (e)
|
18
|
|
|
|
|
18
|
|
|
18
|
|
|
|
|
18
|
|
||||||||
|
Amortizable—Pendings and listings (f)
|
6
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|
5
|
|
|
1
|
|
||||||
|
Amortizable—Other (g)
|
33
|
|
|
15
|
|
|
18
|
|
|
33
|
|
|
13
|
|
|
20
|
|
||||||
|
Total Other Intangibles
|
$
|
652
|
|
|
$
|
348
|
|
|
$
|
304
|
|
|
$
|
652
|
|
|
$
|
339
|
|
|
$
|
313
|
|
|
(b)
|
Primarily relates to the Century 21
®
, Coldwell Banker
®
, ERA
®
, Corcoran
®
, Coldwell Banker Commercial
®
and Cartus tradenames, which are expected to generate future cash flows for an indefinite period of time.
|
|
(c)
|
Relates to the Sotheby’s International Realty
®
and Better Homes and Gardens
®
Real Estate agreements which are being amortized over
50
years (the contractual term of the license agreements).
|
|
(d)
|
Relates to the customer relationships at the Relocation Services segment, the Title and Settlement Services segment, the Real Estate Franchise Services segment and our Company Owned Real Estate Brokerage Services segment. These relationships are being amortized over a period of
2
to
20
years.
|
|
(e)
|
Ownership in a title plant is required to transact title insurance in certain states. The Company expects to generate future cash flows for an indefinite period of time.
|
|
(f)
|
Generally amortized over a period of
5 months
.
|
|
(g)
|
Consists of covenants not to compete which are amortized over their contract lives and other intangibles which are generally amortized over periods ranging from
5
to
10
years.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
Franchise agreements
|
$
|
17
|
|
|
$
|
17
|
|
|
License agreements
|
—
|
|
|
—
|
|
||
|
Customer relationships
|
6
|
|
|
7
|
|
||
|
Pendings and listings
|
1
|
|
|
—
|
|
||
|
Other
|
2
|
|
|
2
|
|
||
|
Total
|
$
|
26
|
|
|
$
|
26
|
|
|
4.
|
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
|
Accrued payroll and related employee costs
|
$
|
85
|
|
|
$
|
138
|
|
|
Accrued volume incentives
|
29
|
|
|
40
|
|
||
|
Accrued commissions
|
37
|
|
|
31
|
|
||
|
Restructuring accruals
|
12
|
|
|
14
|
|
||
|
Deferred income
|
67
|
|
|
69
|
|
||
|
Accrued interest
|
31
|
|
|
13
|
|
||
|
Contingent consideration for acquisitions
|
20
|
|
|
24
|
|
||
|
Other
|
119
|
|
|
106
|
|
||
|
Total accrued expenses and other current liabilities
|
$
|
400
|
|
|
$
|
435
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
|
Senior Secured Credit Facility:
|
|
|
|
||||
|
Revolving Credit Facility
|
$
|
310
|
|
|
$
|
200
|
|
|
Term Loan B
|
1,069
|
|
|
1,069
|
|
||
|
Term Loan A Facility:
|
|
|
|
||||
|
Term Loan A
|
406
|
|
|
411
|
|
||
|
Term Loan A-1
|
345
|
|
|
347
|
|
||
|
4.50% Senior Notes
|
440
|
|
|
439
|
|
||
|
5.25% Senior Notes
|
545
|
|
|
545
|
|
||
|
4.875% Senior Notes
|
496
|
|
|
496
|
|
||
|
Total Short-Term & Long-Term Debt
|
$
|
3,611
|
|
|
$
|
3,507
|
|
|
Securitization obligations:
|
|
|
|
||||
|
Apple Ridge Funding LLC
|
$
|
160
|
|
|
$
|
192
|
|
|
Cartus Financing Limited
|
12
|
|
|
13
|
|
||
|
Total securitization obligations
|
$
|
172
|
|
|
$
|
205
|
|
|
|
Interest
Rate |
|
Expiration
Date |
|
Principal Amount
|
|
Unamortized Discount and Debt Issuance Costs
|
|
Net Amount
|
||||||
|
Senior Secured Credit Facility:
|
|
|
|
|
|
|
|
|
|
||||||
|
Revolving Credit Facility (1)
|
(2)
|
|
October 2020
|
|
$
|
310
|
|
|
$ *
|
|
|
$
|
310
|
|
|
|
Term Loan B
|
(3)
|
|
July 2022
|
|
1,092
|
|
|
23
|
|
|
1,069
|
|
|||
|
Term Loan A Facility:
|
|
|
|
|
|
|
|
|
|
||||||
|
Term Loan A
|
(4)
|
|
October 2020
|
|
408
|
|
|
2
|
|
|
406
|
|
|||
|
Term Loan A-1
|
(5)
|
|
July 2021
|
|
348
|
|
|
3
|
|
|
345
|
|
|||
|
Senior Notes
|
4.50%
|
|
April 2019
|
|
450
|
|
|
10
|
|
|
440
|
|
|||
|
Senior Notes
|
5.25%
|
|
December 2021
|
|
550
|
|
|
5
|
|
|
545
|
|
|||
|
Senior Notes
|
4.875%
|
|
June 2023
|
|
500
|
|
|
4
|
|
|
496
|
|
|||
|
Securitization obligations: (6)
|
|
|
|
|
|
|
|
|
|
||||||
|
Apple Ridge Funding LLC (7)
|
|
|
June 2017
|
|
160
|
|
|
*
|
|
|
160
|
|
|||
|
Cartus Financing Limited (8)
|
|
|
August 2017
|
|
12
|
|
|
*
|
|
|
12
|
|
|||
|
Total (9)
|
$
|
3,830
|
|
|
$
|
47
|
|
|
$
|
3,783
|
|
||||
|
*
|
The debt issuance costs related to our Revolving Credit Facility and securitization obligations are classified as a deferred financing asset within other assets.
|
|
(1)
|
As of
March 31, 2017
, the Company had
$1,050 million
of borrowing capacity under its Revolving Credit Facility, leaving
$740 million
of available capacity. The revolving credit facility expires in October 2020, but is classified on the balance sheet as current due to the revolving nature of the facility. The outstanding borrowings and capacity are the same as of May 3, 2017.
|
|
(2)
|
Interest rates with respect to revolving loans under the Senior Secured Credit Facility at
March 31, 2017
are based on, at the Company's option, (a) adjusted
LIBOR
plus an additional margin or (b)
ABR
plus an additional margin, in each case subject to adjustment based on the then current senior secured leverage ratio. Based on the previous quarter senior secured leverage ratio, the
LIBOR
margin was
2.00%
and the
ABR
margin was
1.00%
for the three months ended
March 31, 2017
.
|
|
(3)
|
The Term Loan B provides for quarterly amortization payments totaling
1%
per annum of the original principal amount. The interest rate with respect to term loans under the Term Loan B is based on, at the Company’s option, (a) adjusted
LIBOR
plus
2.25%
(with a
LIBOR
floor of
0.75%
) or (b) JPMorgan Chase Bank, N.A.’s prime rate ("
ABR
") plus
1.25%
(with an
ABR
floor of
1.75%
).
|
|
(4)
|
The Term Loan A provides for quarterly amortization payments, which commenced March 31, 2016, totaling per annum
5%
,
5%
,
7.5%
,
10.0%
and
12.5%
of the original principal amount of the Term Loan A in 2016, 2017, 2018, 2019 and 2020, respectively. The interest rates with respect to term loans under the Term Loan A are based on, at the Company's option, (a) adjusted
LIBOR
plus an
|
|
(5)
|
The Term Loan A-1 provides for quarterly amortization payments, which commenced on September 30, 2016, totaling per annum
2.5%
,
2.5%
,
5%
,
7.5%
and
10.0%
of the original principal amount of the Term Loan A-1, with the last amortization payment made on June 30, 2021. The interest rates with respect to term loans under the Term Loan A-1 are based on, at the Company's option, (a) adjusted
LIBOR
plus an additional margin or (b)
ABR
plus an additional margin, in each case subject to adjustment based on the then current senior secured leverage ratio. Based on the previous quarter senior secured leverage ratio, the
LIBOR
margin was
2.00%
and the
ABR
margin was
1.00%
for the three months ended
March 31, 2017
.
|
|
(6)
|
Available capacity is subject to maintaining sufficient relocation related assets to collateralize these securitization obligations.
|
|
(7)
|
As of
March 31, 2017
, the Company had
$325 million
of borrowing capacity under the Apple Ridge Funding LLC securitization program leaving
$165 million
of available capacity.
|
|
(8)
|
Consists of a
£10 million
revolving loan facility and a
£5 million
working capital facility. As of
March 31, 2017
, the Company had
$19 million
of borrowing capacity under the Cartus Financing Limited securitization program leaving
$7 million
of available capacity.
|
|
(9)
|
Not included in this table, the Company had
$126 million
of outstanding letters of credit at
March 31, 2017
under the Unsecured Letter of Credit Facility with a weighted average rate of
2.93%
. At
March 31, 2017
, the capacity of the facility was
$131 million
.
|
|
Year
|
|
Amount
|
||
|
Remaining 2017 (a)
|
|
$
|
341
|
|
|
2018
|
|
57
|
|
|
|
2019
|
|
527
|
|
|
|
2020
|
|
357
|
|
|
|
2021
|
|
836
|
|
|
|
(a)
|
The current portion of long-term debt consists of remaining 2017 amortization payments totaling
$16 million
,
$7 million
and
$8 million
for the Term Loan A, Term Loan A-1 and Term Loan B facilities, respectively, as well as
$310 million
of revolver borrowings under the revolving credit facility which expires in October 2020, but are classified on the balance sheet as current due to the revolving nature of the facility.
|
|
(a)
|
a Term Loan B issued in the original aggregate principal amount of
$1,100 million
with a maturity date of July 2022. The Term Loan B has quarterly amortization payments totaling
1%
per annum of the initial aggregate principal amount. The interest rate with respect to term loans under the Term Loan B is based on, at Realogy Group's option, adjusted
LIBOR
plus
2.25%
(with a
LIBOR
floor of
0.75%
) or
ABR
plus
1.25%
(with an
ABR
floor of
1.75%
); and
|
|
(b)
|
a
$1,050 million
Revolving Credit Facility with a maturity date of October 23, 2020, which includes (i) a
$125 million
letter of credit subfacility and (ii) a swingline loan subfacility. The interest rate with respect to revolving loans under the Revolving Credit Facility is based on, at Realogy Group's option, adjusted
LIBOR
or
ABR
plus an
|
|
Senior Secured Leverage Ratio
|
|
Applicable LIBOR Margin
|
|
Applicable ABR Margin
|
|
Greater than 3.50 to 1.00
|
|
2.50%
|
|
1.50%
|
|
Less than or equal to 3.50 to 1.00 but greater than or equal to 2.50 to 1.00
|
|
2.25%
|
|
1.25%
|
|
Less than 2.50 to 1.00
|
|
2.00%
|
|
1.00%
|
|
Senior Secured Leverage Ratio
|
|
Applicable LIBOR Margin
|
|
Applicable ABR Margin
|
|
Greater than 3.50 to 1.00
|
|
2.50%
|
|
1.50%
|
|
Less than or equal to 3.50 to 1.00 but greater than or equal to 2.50 to 1.00
|
|
2.25%
|
|
1.25%
|
|
Less than 2.50 to 1.00
|
|
2.00%
|
|
1.00%
|
|
Senior Secured Leverage Ratio
|
|
Applicable LIBOR Margin
|
|
Applicable ABR Margin
|
|
Greater than 3.50 to 1.00
|
|
2.50%
|
|
1.50%
|
|
Less than or equal to 3.50 to 1.00 but greater than or equal to 2.50 to 1.00
|
|
2.25%
|
|
1.25%
|
|
Less than 2.50 to 1.00 but greater than or equal to 2.00 to 1.00
|
|
2.00%
|
|
1.00%
|
|
Less than 2.00 to 1.00
|
|
1.75%
|
|
0.75%
|
|
Capacity (in millions)
|
Expiration Date
|
|
$65
|
September 2018
|
|
$66
|
December 2019
|
|
6.
|
RESTRUCTURING COSTS
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
Personnel-related costs (1)
|
$
|
5
|
|
|
$
|
2
|
|
|
Facility-related costs (2)
|
—
|
|
|
2
|
|
||
|
Accelerated depreciation on asset disposals
|
—
|
|
|
—
|
|
||
|
Other restructuring costs (3)
|
—
|
|
|
5
|
|
||
|
Total restructuring charges
|
$
|
5
|
|
|
$
|
9
|
|
|
(1)
|
Personnel-related costs consist of severance costs provided to employees who have been terminated and duplicate payroll costs during transition.
|
|
(2)
|
Facility-related costs consist of costs associated with planned facility closures such as contract termination costs, lease payments that will continue to be incurred under the contract for its remaining term without economic benefit to the Company and other facility and employee relocation related costs.
|
|
(3)
|
Other restructuring costs consist of costs related to professional fees, consulting fees and other costs associated with restructuring activities which are primarily included in the Corporate and Other business segment.
|
|
|
Personnel-related costs
|
|
Facility-related costs
|
|
Accelerated depreciation on asset disposal
|
|
Other restructuring costs
|
|
Total
|
||||||||||
|
Balance at December 31, 2016
|
$
|
9
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16
|
|
|
Restructuring charges
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|||||
|
Costs paid or otherwise settled
|
(6
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|||||
|
Balance at March 31, 2017
|
$
|
8
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
|
Total amount expected to be incurred
|
|
Amount incurred to date
|
|
Total amount remaining to be incurred
|
||||||
|
Personnel-related costs
|
$
|
34
|
|
|
$
|
30
|
|
|
$
|
4
|
|
|
Facility-related costs
|
17
|
|
|
13
|
|
|
4
|
|
|||
|
Accelerated depreciation related to asset disposals
|
3
|
|
|
1
|
|
|
2
|
|
|||
|
Other restructuring costs
|
11
|
|
|
10
|
|
|
1
|
|
|||
|
Total
|
$
|
65
|
|
|
$
|
54
|
|
|
$
|
11
|
|
|
|
Total amount expected to be incurred
|
|
Amount incurred to date
|
|
Total amount remaining to be incurred
|
||||||
|
Real Estate Franchise Services
|
$
|
5
|
|
|
$
|
4
|
|
|
$
|
1
|
|
|
Company Owned Real Estate Brokerage Services
|
39
|
|
|
32
|
|
|
7
|
|
|||
|
Relocation Services
|
5
|
|
|
5
|
|
|
—
|
|
|||
|
Title and Settlement Services
|
1
|
|
|
1
|
|
|
—
|
|
|||
|
Corporate and Other
|
15
|
|
|
12
|
|
|
3
|
|
|||
|
Total
|
$
|
65
|
|
|
$
|
54
|
|
|
$
|
11
|
|
|
7.
|
STOCK-BASED COMPENSATION
|
|
|
2017 RTSR PSU
|
||
|
Weighted average grant date fair value
|
$
|
27.98
|
|
|
Weighted average expected volatility
|
29.0
|
%
|
|
|
Weighted average volatility of XHB
|
18.4
|
%
|
|
|
Weighted average correlation coefficient
|
0.53
|
|
|
|
Weighted average risk-free interest rate
|
1.5
|
%
|
|
|
Weighted average dividend yield
|
—
|
|
|
|
|
Restricted
Stock Units |
|
Weighted Average Grant Date Fair Value
|
|||
|
Unvested at January 1, 2017
|
1.4
|
|
|
$
|
37.53
|
|
|
Granted
|
0.9
|
|
|
27.69
|
|
|
|
Vested (a)
|
(0.5
|
)
|
|
40.63
|
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
|
Unvested at March 31, 2017
|
1.8
|
|
|
$
|
31.41
|
|
|
(a)
|
The total fair value of RSUs which vested during the
three months ended
March 31, 2017
was
$23 million
.
|
|
|
Performance Share Units (a)
|
|
Weighted Average Grant Date Fair Value
|
|||
|
Unvested at January 1, 2017
|
1.0
|
|
|
$
|
36.71
|
|
|
Granted
|
0.7
|
|
|
27.70
|
|
|
|
Vested
|
—
|
|
|
—
|
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
|
Unvested at March 31, 2017
|
1.7
|
|
|
$
|
32.74
|
|
|
(a)
|
The PSU amounts in the table are shown at the target amount of the award.
|
|
|
2017 Options
|
||
|
Weighted average grant date fair value
|
$
|
8.00
|
|
|
Weighted average expected volatility
|
30.7
|
%
|
|
|
Weighted average expected term (years)
|
6.25
|
|
|
|
Weighted average risk-free interest rate
|
2.1
|
%
|
|
|
Weighted average dividend yield
|
1.3
|
%
|
|
|
|
Options
|
|
Weighted Average
Exercise Price
|
|||
|
Outstanding at January 1, 2017
|
3.3
|
|
|
$
|
31.73
|
|
|
Granted
|
0.4
|
|
|
27.56
|
|
|
|
Exercised
|
—
|
|
|
—
|
|
|
|
Forfeited/Expired
|
—
|
|
|
—
|
|
|
|
Outstanding at March 31, 2017 (a)
|
3.7
|
|
|
$
|
31.31
|
|
|
(a)
|
Options outstanding at
March 31, 2017
have an intrinsic value of
$7 million
and have a weighted average remaining contractual life of
6.2 years
.
|
|
8.
|
TRANSACTIONS WITH FORMER PARENT AND SUBSIDIARIES
|
|
10.
|
COMMITMENTS AND CONTINGENCIES
|
|
•
|
that the Company is vicariously liable for the acts of franchisees under theories of actual or apparent agency;
|
|
•
|
by former franchisees that franchise agreements were breached including improper terminations;
|
|
•
|
concerning claims for alleged RESPA or state real estate law violations including but not limited to claims challenging the validity of sales associates indemnification, and administrative fees;
|
|
•
|
that residential real estate sales associates engaged by NRT—under certain state or federal laws—are potentially employees instead of independent contractors, and they or regulators therefore may bring claims against NRT for breach of contract, wage and hour classification claims, wrongful discharge, unemployment and workers' compensation and could obtain benefits, back wages, overtime, indemnification, penalties related to classification practices and expense reimbursement available to employees;
|
|
•
|
concerning claims generally against the company owned brokerage operations for negligence, misrepresentation or breach of fiduciary duty in connection with the performance of real estate brokerage or other professional services as well as other brokerage claims associated with listing information and property history;
|
|
•
|
concerning claims generally against the title company contending that, as the escrow company, the company knew or should have known that a transaction was fraudulent or concerning other title defects or settlement errors; and
|
|
•
|
concerning information security and cyber crime.
|
|
11.
|
SEGMENT INFORMATION
|
|
|
Revenues (a) (b)
|
||||||
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
Real Estate Franchise Services
|
$
|
170
|
|
|
$
|
157
|
|
|
Company Owned Real Estate Brokerage Services
|
897
|
|
|
841
|
|
||
|
Relocation Services
|
77
|
|
|
83
|
|
||
|
Title and Settlement Services
|
120
|
|
|
111
|
|
||
|
Corporate and Other (c)
|
(61
|
)
|
|
(58
|
)
|
||
|
Total Company
|
$
|
1,203
|
|
|
$
|
1,134
|
|
|
(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
$61 million
and
$58 million
for the
three months ended
March 31, 2017
and
2016
, respectively. Such amounts are eliminated through the Corporate and Other line.
|
|
(b)
|
Revenues for the Relocation Services segment include intercompany referral commissions paid by the Company Owned Real Estate Brokerage Services segment of
$8 million
for both the
three months ended
March 31, 2017
and
2016
. Such amounts are recorded as contra-revenues by the Company Owned Real Estate Brokerage Services segment. There are no other material intersegment transactions.
|
|
(c)
|
Includes the elimination of transactions between segments.
|
|
|
EBITDA
|
||||||
|
|
Three Months Ended March 31,
|
||||||
|
|
2017 (a)
|
|
2016 (b)
|
||||
|
Real Estate Franchise Services
|
$
|
102
|
|
|
$
|
92
|
|
|
Company Owned Real Estate Brokerage Services
|
(26
|
)
|
|
(21
|
)
|
||
|
Relocation Services
|
1
|
|
|
5
|
|
||
|
Title and Settlement Services
|
2
|
|
|
—
|
|
||
|
Corporate and Other (c)
|
(27
|
)
|
|
(21
|
)
|
||
|
Total Company
|
$
|
52
|
|
|
$
|
55
|
|
|
Less:
|
|
|
|
||||
|
Depreciation and amortization
|
$
|
50
|
|
|
$
|
48
|
|
|
Interest expense, net
|
39
|
|
|
73
|
|
||
|
Income tax benefit
|
(9
|
)
|
|
(24
|
)
|
||
|
Net loss attributable to Realogy Holdings and Realogy Group
|
$
|
(28
|
)
|
|
$
|
(42
|
)
|
|
(a)
|
Includes restructuring charges of
$5 million
in the Company Owned Real Estate Brokerage Services segment and
$4 million
related to the loss on the early extinguishment of debt
for the three months ended
March 31, 2017
.
|
|
(b)
|
Includes
$9 million
of restructuring charges as follows:
$2 million
in the Company Owned Real Estate Brokerage Services segment,
$2 million
in the Relocation Services segment and
$5 million
in Corporate and Other, and a net cost of
$1 million
of former parent legacy items
for the three months ended
March 31, 2016
.
|
|
(c)
|
Includes the elimination of transactions between segments.
|
|
•
|
Real Estate Franchise Services
(known as Realogy Franchise Group or RFG)—franchises the Century 21
®
, Coldwell Banker
®
, Coldwell Banker Commercial
®
, ERA
®
, Sotheby's International Realty
®
and Better Homes and Gardens
®
Real Estate brand names. As of
March 31, 2017
, our franchise systems had approximately
14,200
franchised and company owned offices and approximately
274,500
independent sales associates operating under our franchise and proprietary brands in the U.S. and
112
other countries and territories around the world, which included more than
780
of our company owned and operated brokerage offices with more than
48,100
independent sales associates.
|
|
•
|
Company Owned Real Estate Brokerage Services
(known as NRT)—operates a full-service real estate brokerage business principally under the Coldwell Banker
®
, Corcoran
®
, Sotheby’s International Realty
®
, ZipRealty
®
and Citi Habitats
SM
brand names in more than
50
of the
100
largest metropolitan areas in the U.S. This segment also includes the Company's share of earnings for our PHH Home Loans venture.
|
|
•
|
Relocation Services
(known as Cartus
®
)—primarily offers clients employee relocation services such as homesale assistance, providing home equity advances to transferees (generally guaranteed by the client), home finding and other destination services, expense processing, relocation policy counseling and consulting services, arranging household goods moving services, coordinating visa and immigration support, intercultural and language training and group move management services. In addition, we provide home buying and selling assistance to members of affinity clients.
|
|
•
|
Title and Settlement Services
(known as Title Resource Group or TRG)—provides full-service title and settlement services to real estate companies, affinity groups, corporations and financial institutions with many of these services provided in connection with the Company's real estate brokerage and relocation services business.
|
|
|
Total amount expected to be incurred
|
|
Amount incurred to date
|
|
Total amount remaining to be incurred
|
||||||
|
RFG
|
$
|
5
|
|
|
$
|
4
|
|
|
$
|
1
|
|
|
NRT
|
39
|
|
|
32
|
|
|
7
|
|
|||
|
Cartus
|
5
|
|
|
5
|
|
|
—
|
|
|||
|
TRG
|
1
|
|
|
1
|
|
|
—
|
|
|||
|
Corporate and Other
|
15
|
|
|
12
|
|
|
3
|
|
|||
|
Total
|
$
|
65
|
|
|
$
|
54
|
|
|
$
|
11
|
|
|
|
|
|
2017 vs. 2016
|
|
||||||||||||||
|
Number of Existing Homesales
|
Full Year
2016 vs. 2015 |
|
First
Quarter |
|
Second
Quarter Forecast |
|
Third
Quarter Forecast |
|
Fourth
Quarter Forecast |
|
Full Year
Forecast 2017 vs. 2016 |
|
||||||
|
Industry
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
NAR
|
4
|
%
|
(a)
|
5
|
%
|
(a)
|
5
|
%
|
(b)
|
3
|
%
|
(b)
|
1
|
%
|
(b)
|
3
|
%
|
(b)
|
|
Fannie Mae (c)
|
4
|
%
|
|
6
|
%
|
|
1
|
%
|
|
3
|
%
|
|
—
|
%
|
|
2
|
%
|
|
|
Realogy
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
RFG and NRT Combined
|
2
|
%
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
||||
|
RFG
|
3
|
%
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
||||
|
NRT
|
—
|
%
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
||||
|
(a)
|
Historical existing homesale data is as of the most recent NAR press release, which is subject to sampling error.
|
|
(b)
|
Forecasted existing homesale data, on a seasonally adjusted basis, is as of the most recent NAR forecast.
|
|
(c)
|
Forecasted existing homesale data, on a seasonally adjusted basis, is as of the most recent Fannie Mae press release.
|
|
|
|
|
2017 vs. 2016
|
|
||||||||||||||
|
Price of Existing Homes
|
Full Year
2016 vs. 2015 |
|
First
Quarter |
|
Second
Quarter Forecast |
|
Third
Quarter Forecast |
|
Fourth
Quarter Forecast |
|
Full Year
Forecast 2017 vs. 2016 |
|
||||||
|
Industry
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
NAR
|
4
|
%
|
(a)
|
5
|
%
|
(a)
|
5
|
%
|
(b)
|
5
|
%
|
(b)
|
4
|
%
|
(b)
|
5
|
%
|
(b)
|
|
Fannie Mae (c)
|
5
|
%
|
|
6
|
%
|
|
6
|
%
|
|
5
|
%
|
|
5
|
%
|
|
6
|
%
|
|
|
Realogy
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
RFG and NRT Combined
|
2
|
%
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
||||
|
RFG
|
3
|
%
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
||||
|
NRT
|
—
|
%
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
||||
|
(a)
|
Historical homesale price data is for existing homesale average price and is as of the most recent NAR press release.
|
|
(b)
|
Forecasted homesale price data is for median price and is as of the most recent NAR forecast.
|
|
(c)
|
Existing homesale price data is for median price and is as of the most recent Fannie Mae press release.
|
|
•
|
higher mortgage rates due to increases in long-term interest rates as well as reduced availability of mortgage financing;
|
|
•
|
insufficient inventory levels and lack of building of new housing leading to lower unit sales;
|
|
•
|
changing attitudes towards home ownership, particularly among potential first-time homebuyers who may delay, or decide not to, purchase homes;
|
|
•
|
potential homebuyers with a low credit rating or inability to afford down payments;
|
|
•
|
the impact of limited or negative equity of current homeowners, as well as the lack of available inventory may limit their proclivity to purchase an alternative home;
|
|
•
|
reduced affordability of homes;
|
|
•
|
unsustainable economic recovery in the U.S. or a weak recovery resulting in only modest economic growth;
|
|
•
|
a decline in home ownership levels in the U.S.;
|
|
•
|
geopolitical and economic instability; and
|
|
•
|
legislative or regulatory reform, including but not limited to reform that adversely impacts the financing of the U.S. housing market or amends the Internal Revenue Code in a manner that negatively impacts home ownership such as reform that reduces the amount that certain taxpayers would be allowed to deduct for home mortgage interest.
|
|
•
|
they use survey data and estimates in their historical reports and forecasting models, which are subject to sampling error, whereas we use data based on actual reported results;
|
|
•
|
there are geographical differences and concentrations in the markets in which we operate versus the national market. For example, many of our company owned brokerage offices are geographically located where average homesale prices are generally higher than the national average and therefore NAR survey data will not correlate with NRT's results;
|
|
•
|
comparability is also impaired due to NAR’s utilization of seasonally adjusted annualized rates whereas we report actual period-over-period changes and their use of median price for their forecasts compared to our average price;
|
|
•
|
NAR historical data is subject to periodic review and revision and these revisions have been, and could be material in the future; and
|
|
•
|
NAR and Fannie Mae generally update their forecasts on a monthly basis and a subsequent forecast may change materially from a forecast that was previously issued.
|
|
|
Three Months Ended March 31,
|
|||||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
|
RFG (a)
|
|
|
|
|
|
|||||
|
Closed homesale sides
|
225,250
|
|
|
218,330
|
|
|
3
|
%
|
||
|
Average homesale price
|
$
|
275,828
|
|
|
$
|
259,044
|
|
|
6
|
%
|
|
Average homesale broker commission rate
|
2.50
|
%
|
|
2.51
|
%
|
|
(1) bps
|
|
||
|
Net effective royalty rate
|
4.44
|
%
|
|
4.51
|
%
|
|
(7) bps
|
|
||
|
Royalty per side
|
$
|
322
|
|
|
$
|
309
|
|
|
4
|
%
|
|
NRT
|
|
|
|
|
||||||
|
Closed homesale sides
|
66,570
|
|
|
64,244
|
|
|
4
|
%
|
||
|
Average homesale price
|
$
|
509,197
|
|
|
$
|
493,125
|
|
|
3
|
%
|
|
Average homesale broker commission rate
|
2.45
|
%
|
|
2.46
|
%
|
|
(1) bps
|
|
||
|
Gross commission income per side
|
$
|
13,261
|
|
|
$
|
12,878
|
|
|
3
|
%
|
|
Cartus
|
|
|
|
|
|
|||||
|
Initiations
|
36,515
|
|
|
37,174
|
|
|
(2
|
%)
|
||
|
Referrals
|
15,203
|
|
|
16,893
|
|
|
(10
|
%)
|
||
|
TRG
|
|
|
|
|
|
|||||
|
Purchase title and closing units (b)
|
31,297
|
|
|
29,236
|
|
|
7
|
%
|
||
|
Refinance title and closing units (c)
|
8,533
|
|
|
9,703
|
|
|
(12
|
%)
|
||
|
Average fee per closing unit
|
$
|
2,001
|
|
|
$
|
1,848
|
|
|
8
|
%
|
|
(a)
|
Includes all franchisees except for NRT.
|
|
(b)
|
The amount presented for the
three months ended
March 31, 2017
includes
1,972
purchase units as a result of acquisitions completed prior to the first quarter of 2017.
|
|
(c)
|
The amount presented for the
three months ended
March 31, 2017
includes
523
refinance units as a result of the acquisitions completed prior to the first quarter of 2017.
|
|
|
Three Months Ended March 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
Change
|
||||||
|
Net revenues
|
$
|
1,203
|
|
|
$
|
1,134
|
|
|
$
|
69
|
|
|
Total expenses (1)
|
1,237
|
|
|
1,200
|
|
|
37
|
|
|||
|
Loss before income taxes, equity in losses and noncontrolling interests
|
(34
|
)
|
|
(66
|
)
|
|
32
|
|
|||
|
Income tax benefit
|
(9
|
)
|
|
(24
|
)
|
|
15
|
|
|||
|
Equity in losses of unconsolidated entities
|
3
|
|
|
—
|
|
|
3
|
|
|||
|
Net loss
|
(28
|
)
|
|
(42
|
)
|
|
14
|
|
|||
|
Less: Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Net loss attributable to Realogy Holdings and Realogy Group
|
$
|
(28
|
)
|
|
$
|
(42
|
)
|
|
$
|
14
|
|
|
(1)
|
Total expenses
for the three months ended
March 31, 2017
includes
$5 million
of restructuring charges and
$4 million
related to loss on the early extinguishment of debt. Total expenses
for the three months ended
March 31, 2016
includes
$9 million
of restructuring charges and a net cost of
$1 million
of former parent legacy items.
|
|
•
|
a
$47 million
increase
in commission and other sales associate-related costs due to an increase in homesale transaction volume at NRT;
|
|
•
|
a
$19 million
increase
in operating and general and administrative expenses primarily driven by:
|
|
◦
|
$10 million
of additional employee-related costs associated with acquisitions;
|
|
◦
|
a
$7 million
increase in other expenses including professional fees and occupancy costs; and
|
|
◦
|
a
$3 million
increase
in variable operating costs at TRG primarily related to volume increases;
|
|
•
|
a
$4 million
increase in marketing expense; and
|
|
•
|
$4 million
related to the loss on the early extinguishment of debt as a result of the refinancing transaction completed during the first quarter of 2017.
|
|
•
|
a
$34 million
net
decrease
in interest expense to
$39 million
in the first quarter of 2017 from
$73 million
in the first quarter of 2016. Before the mark-to-market adjustments for our interest rate swaps, interest expense
decrease
d
$2 million
to
$40 million
in the first quarter of 2017 from
$42 million
in the first quarter of 2016 as a result of a reduction in total outstanding indebtedness and a lower weighted average interest rate. Mark-to-market adjustments for our interest rate swaps resulted in gains of
$1 million
in the first quarter of 2017 compared to losses of
$31 million
in the same period of 2016; and
|
|
•
|
$5 million
in restructuring costs related to the Company's business optimization plan in the
first quarter
of 2017 compared to
$9 million
in the same period in
2016
.
|
|
|
Revenues (a)
|
|
%
Change
|
|
EBITDA (b)
|
|
%
Change
|
|
EBITDA Margin
|
|
Change
|
|||||||||||||||||||
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||||||||||
|
RFG
|
$
|
170
|
|
|
$
|
157
|
|
|
8
|
%
|
|
$
|
102
|
|
|
$
|
92
|
|
|
11
|
%
|
|
60
|
%
|
|
59
|
%
|
|
1
|
|
|
NRT
|
897
|
|
|
841
|
|
|
7
|
|
|
(26
|
)
|
|
(21
|
)
|
|
(24
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
(1
|
)
|
||||
|
Cartus
|
77
|
|
|
83
|
|
|
(7
|
)
|
|
1
|
|
|
5
|
|
|
(80
|
)
|
|
1
|
|
|
6
|
|
|
(5
|
)
|
||||
|
TRG
|
120
|
|
|
111
|
|
|
8
|
|
|
2
|
|
|
—
|
|
|
*
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
|
Corporate and Other
|
(61
|
)
|
|
(58
|
)
|
|
*
|
|
|
(27
|
)
|
|
(21
|
)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
||||
|
Total Company
|
$
|
1,203
|
|
|
$
|
1,134
|
|
|
6
|
%
|
|
$
|
52
|
|
|
$
|
55
|
|
|
(5
|
)%
|
|
4
|
%
|
|
5
|
%
|
|
(1
|
)
|
|
Less: Depreciation and amortization
|
|
50
|
|
|
48
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Interest expense, net
|
|
39
|
|
|
73
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Income tax benefit
|
|
(9
|
)
|
|
(24
|
)
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Net loss attributable to Realogy Holdings and Realogy Group
|
|
$
|
(28
|
)
|
|
$
|
(42
|
)
|
|
|
|
|
|
|
|
|
||||||||||||||
|
*
|
not meaningful
|
|
(a)
|
Includes the elimination of transactions between segments, which consists of intercompany royalties and marketing fees paid by NRT of
$61 million
and
$58 million
during the
three months ended
March 31, 2017
and
March 31, 2016
, respectively.
|
|
(b)
|
EBITDA
for the three months ended
March 31, 2017
includes
$5 million
of restructuring charges in NRT and
$4 million
related to loss on the early extinguishment of debt.
|
|
|
Three Months Ended March 31,
|
|
|
|||||||||||||||
|
|
2017
|
|
2016
|
|
|
|||||||||||||
|
|
EBITDA
|
|
Restructuring Charges
|
|
EBITDA Before Restructuring
|
|
EBITDA Before Restructuring
|
|
%
Change |
|||||||||
|
Real Estate Franchise Services
|
$
|
102
|
|
|
$
|
—
|
|
|
$
|
102
|
|
|
$
|
92
|
|
|
11
|
%
|
|
Company Owned Real Estate Brokerage Services
|
(26
|
)
|
|
5
|
|
|
(21
|
)
|
|
(19
|
)
|
|
(11
|
)%
|
||||
|
Relocation Services
|
1
|
|
|
—
|
|
|
1
|
|
|
7
|
|
|
(86
|
)%
|
||||
|
Title and Settlement Services
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
*
|
|
||||
|
Corporate and Other
|
(27
|
)
|
|
—
|
|
|
(27
|
)
|
|
(16
|
)
|
|
*
|
|
||||
|
Total Company
|
$
|
52
|
|
|
$
|
5
|
|
|
$
|
57
|
|
|
$
|
64
|
|
|
(11
|
)%
|
|
*
|
not meaningful
|
|
|
Revenues (a)
|
|
%
Change
|
|
EBITDA Before Restructuring (b)
|
|
%
Change
|
|
Margin
|
|
Change
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|||||||||||||||
|
RFG and NRT Combined
|
$
|
1,006
|
|
|
$
|
940
|
|
|
7
|
%
|
|
$
|
81
|
|
|
$
|
73
|
|
|
11
|
%
|
|
8
|
%
|
|
8
|
%
|
|
—
|
|
(a)
|
Excludes transactions between segments, which consists of intercompany royalties and marketing fees paid by NRT to RFG of
$61 million
and
$58 million
during the
three months ended
March 31, 2017
and
March 31, 2016
, respectively.
|
|
(b)
|
EBITDA for the combined RFG and NRT segments excludes
$5 million
and
$2 million
of restructuring charges for the three months ended
March 31, 2017
and
March 31, 2016
,
respectively.
|
|
•
|
a
$47 million
increase
in commission expenses paid to independent sales associates from
$558 million
in the
first quarter
of 2016 to
$605 million
in the
first quarter
of 2017. The
increase
in commission expense is due to an
increase
of
$37 million
by our existing brokerage operations and a
$10 million
increase
related to acquisitions;
|
|
•
|
$5 million
in restructuring costs related to the Company's business optimization plan in the
first quarter
of 2017 compared to
$2 million
in the same period in
2016
;
|
|
•
|
$4 million
in losses for our equity method investment in PHH Home Loans;
|
|
•
|
a
$3 million
increase
in royalties paid to RFG from
$56 million
in the
first quarter
of 2016 to
$59 million
in the
first quarter
of 2017;
|
|
•
|
a
$2 million
increase
in occupancy costs primarily related to acquisitions;
|
|
•
|
a
$2 million
increase
in employee-related costs due to a
$6 million
increase attributable to acquisitions, partially offset by a
$4 million
decrease due to expense reduction initiatives; and
|
|
•
|
a
$1 million
increase
in marketing expenses related to acquisitions.
|
|
|
March 31, 2017
|
|
December 31, 2016
|
|
Change
|
||||||
|
Total assets
|
$
|
7,330
|
|
|
$
|
7,421
|
|
|
$
|
(91
|
)
|
|
Total liabilities
|
4,955
|
|
|
4,952
|
|
|
3
|
|
|||
|
Total equity
|
2,375
|
|
|
2,469
|
|
|
(94
|
)
|
|||
|
|
Three Months Ended March 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
Change
|
||||||
|
Cash used in:
|
|
|
|
|
|
||||||
|
Operating activities
|
$
|
(12
|
)
|
|
$
|
(64
|
)
|
|
$
|
52
|
|
|
Investing activities
|
(31
|
)
|
|
(34
|
)
|
|
3
|
|
|||
|
Financing activities
|
(27
|
)
|
|
(34
|
)
|
|
7
|
|
|||
|
Effects of change in exchange rates on cash and cash equivalents
|
1
|
|
|
—
|
|
|
1
|
|
|||
|
Net change in cash and cash equivalents
|
$
|
(69
|
)
|
|
$
|
(132
|
)
|
|
$
|
63
|
|
|
•
|
$57 million
for the repurchase of our common stock;
|
|
•
|
$33 million
net decrease in securitization borrowings;
|
|
•
|
$13 million
of dividend payments;
|
|
•
|
$10 million
of quarterly amortization payments on the term loan facilities;
|
|
•
|
$10 million
of tax payments related to net share settlement for stock-based compensation;
|
|
•
|
$6 million
of debt issuance costs;
|
|
•
|
$5 million
of other financing payments primarily related to capital leases and interest rate swaps; and
|
|
•
|
$4 million
for payments of contingent consideration;
|
|
•
|
$110 million
of additional borrowings under the Revolving Credit Facility.
|
|
•
|
repayment of $200 million of borrowings under the Revolving Credit Facility;
|
|
•
|
$33 million for the repurchase of our common stock;
|
|
•
|
$27 million decrease in net securitization obligation borrowings;
|
|
•
|
$10 million of quarterly amortization payments on the term loan facilities;
|
|
•
|
$4 million for payments of contingent consideration;
|
|
•
|
$4 million of other financing payments primarily related to interest rate swaps; and
|
|
•
|
$4 million of tax payments related to net share settlement for stock-based compensation;
|
|
|
Interest
Rate |
|
Expiration
Date |
|
Principal Amount
|
|
Unamortized Discount and Debt Issuance Costs
|
|
Net Amount
|
||||||
|
Senior Secured Credit Facility:
|
|
|
|
|
|
|
|
|
|
||||||
|
Revolving Credit Facility (1)
|
(2)
|
|
October 2020
|
|
$
|
310
|
|
|
$ *
|
|
|
$
|
310
|
|
|
|
Term Loan B
|
(3)
|
|
July 2022
|
|
1,092
|
|
|
23
|
|
|
1,069
|
|
|||
|
Term Loan A Facility:
|
|
|
|
|
|
|
|
|
|
||||||
|
Term Loan A
|
(4)
|
|
October 2020
|
|
408
|
|
|
2
|
|
|
406
|
|
|||
|
Term Loan A-1
|
(5)
|
|
July 2021
|
|
348
|
|
|
3
|
|
|
345
|
|
|||
|
Senior Notes
|
4.50%
|
|
April 2019
|
|
450
|
|
|
10
|
|
|
440
|
|
|||
|
Senior Notes
|
5.25%
|
|
December 2021
|
|
550
|
|
|
5
|
|
|
545
|
|
|||
|
Senior Notes
|
4.875%
|
|
June 2023
|
|
500
|
|
|
4
|
|
|
496
|
|
|||
|
Securitization obligations: (6)
|
|
|
|
|
|
|
|
|
|
||||||
|
Apple Ridge Funding LLC (7)
|
|
|
June 2017
|
|
160
|
|
|
*
|
|
|
160
|
|
|||
|
Cartus Financing Limited (8)
|
|
|
August 2017
|
|
12
|
|
|
*
|
|
|
12
|
|
|||
|
Total (9)
|
$
|
3,830
|
|
|
$
|
47
|
|
|
$
|
3,783
|
|
||||
|
*
|
The debt issuance costs related to our Revolving Credit Facility and securitization obligations are classified as a deferred financing asset within other assets.
|
|
(1)
|
As of
March 31, 2017
, the Company had
$1,050 million
of borrowing capacity under its Revolving Credit Facility leaving
$740 million
of available capacity. The revolving credit facility expires in October 2020, but is classified on the balance sheet as current due to the revolving nature of the facility. The outstanding borrowings and capacity are the same as of May 3, 2017.
|
|
(2)
|
Interest rates with respect to revolving loans under the Senior Secured Credit Facility at
March 31, 2017
are based on, at the Company's option, (a) adjusted
LIBOR
plus an additional margin or (b)
ABR
plus an additional margin, in each case subject to adjustment based on the then current senior secured leverage ratio. Based on the previous quarter senior secured leverage ratio, the
LIBOR
margin was
2.00%
and the
ABR
margin was
1.00%
for the three months ended
March 31, 2017
.
|
|
(3)
|
The Term Loan B provides for quarterly amortization payments totaling
1%
per annum of the original principal amount. The interest rate with respect to term loans under the Term Loan B is based on, at the Company’s option, (a) adjusted
LIBOR
plus
|
|
(4)
|
The Term Loan A provides for quarterly amortization payments, which commenced March 31, 2016, totaling per annum
5%
,
5%
,
7.5%
,
10.0%
and
12.5%
of the original principal amount of the Term Loan A in 2016, 2017, 2018, 2019 and 2020, respectively. The interest rates with respect to term loans under the Term Loan A are based on, at the Company's option, (a) adjusted
LIBOR
plus an additional margin or (b)
ABR
plus an additional margin, in each case subject to adjustment based on the then current senior secured leverage ratio. Based on the previous quarter senior secured leverage ratio, the
LIBOR
margin was
2.00%
and the
ABR
margin was
1.00%
for the three months ended
March 31, 2017
.
|
|
(5)
|
The Term Loan A-1 provides for quarterly amortization payments, which commenced on September 30, 2016, totaling per annum
2.5%
,
2.5%
,
5%
,
7.5%
and
10.0%
of the original principal amount of the Term Loan A-1, with the last amortization payment made on June 30, 2021. The interest rates with respect to term loans under the Term Loan A-1 are based on, at the Company's option, (a) adjusted
LIBOR
plus an additional margin or (b)
ABR
plus an additional margin, in each case subject to adjustment based on the then current senior secured leverage ratio. Based on the previous quarter senior secured leverage ratio, the
LIBOR
margin was
2.00%
and the
ABR
margin was
1.00%
for the three months ended
March 31, 2017
.
|
|
(6)
|
Available capacity is subject to maintaining sufficient relocation related assets to collateralize these securitization obligations.
|
|
(7)
|
As of
March 31, 2017
, the Company had
$325 million
of borrowing capacity under the Apple Ridge Funding LLC securitization program leaving
$165 million
of available capacity.
|
|
(8)
|
Consists of a
£10 million
revolving loan facility and a
£5 million
working capital facility. As of
March 31, 2017
, the Company had
$19 million
of borrowing capacity under the Cartus Financing Limited securitization program leaving
$7 million
of available capacity.
|
|
(9)
|
Not included in this table, the Company had
$126 million
of outstanding letters of credit at
March 31, 2017
under the Unsecured Letter of Credit Facility with a weighted average rate of
2.93%
. At
March 31, 2017
, the capacity of the facility was
$131 million
.
|
|
•
|
incur or guarantee additional debt or issue disqualified stock or preferred stock;
|
|
•
|
pay dividends or make distributions to Realogy Group’s stockholders, including Realogy Holdings;
|
|
•
|
repurchase or redeem capital stock;
|
|
•
|
make loans, investments or acquisitions;
|
|
•
|
incur restrictions on the ability of certain of Realogy Group's subsidiaries to pay dividends or to make other payments to Realogy Group;
|
|
•
|
enter into transactions with affiliates;
|
|
•
|
create liens;
|
|
•
|
merge or consolidate with other companies or transfer all or substantially all of Realogy Group's and its material subsidiaries' assets;
|
|
•
|
transfer or sell assets, including capital stock of subsidiaries; and
|
|
•
|
prepay, redeem or repurchase subordinated indebtedness.
|
|
•
|
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.
|
|
|
|
|
Less
|
|
Equals
|
|
Plus
|
|
Equals
|
||||||||||
|
|
Year Ended
|
|
Three Months Ended
|
|
Nine Months
Ended |
|
Three Months Ended
|
|
Twelve Months
Ended |
||||||||||
|
|
December 31,
2016 |
March 31,
2016 |
December 31,
2016 |
March 31,
2017 |
March 31,
2017 |
||||||||||||||
|
Net income (loss) attributable to Realogy Group (a)
|
$
|
213
|
|
|
$
|
(42
|
)
|
|
$
|
255
|
|
|
$
|
(28
|
)
|
|
$
|
227
|
|
|
Income tax expense / (benefit)
|
144
|
|
|
(24
|
)
|
|
168
|
|
|
(9
|
)
|
|
159
|
|
|||||
|
Income before income taxes
|
357
|
|
|
(66
|
)
|
|
423
|
|
|
(37
|
)
|
|
386
|
|
|||||
|
Interest expense, net
|
174
|
|
|
73
|
|
|
101
|
|
|
39
|
|
|
140
|
|
|||||
|
Depreciation and amortization
|
202
|
|
|
48
|
|
|
154
|
|
|
50
|
|
|
204
|
|
|||||
|
EBITDA (b)
|
733
|
|
|
55
|
|
|
678
|
|
|
52
|
|
|
730
|
|
|||||
|
EBITDA adjustments:
|
|
|
|||||||||||||||||
|
Restructuring costs
|
|
35
|
|
||||||||||||||||
|
Former parent legacy cost (benefit), net
|
|
(3
|
)
|
||||||||||||||||
|
Loss on the early extinguishment of debt
|
|
4
|
|
||||||||||||||||
|
Operating EBITDA
|
|
766
|
|
||||||||||||||||
|
Bank covenant adjustments:
|
|
|
|||||||||||||||||
|
Pro forma effect of business optimization initiatives (c)
|
|
30
|
|
||||||||||||||||
|
Non-cash charges (d)
|
|
46
|
|
||||||||||||||||
|
Pro forma effect of acquisitions and new franchisees (e)
|
|
19
|
|
||||||||||||||||
|
Incremental securitization interest costs (f)
|
|
4
|
|
||||||||||||||||
|
Adjusted (Covenant) EBITDA
|
|
$
|
865
|
|
|||||||||||||||
|
Total senior secured net debt (g)
|
|
$
|
2,033
|
|
|||||||||||||||
|
Senior secured leverage ratio
|
|
2.35
|
x
|
||||||||||||||||
|
(a)
|
Net income (loss) attributable to Realogy consists of: (i) income of
$92 million
for the second quarter of 2016, (ii) income of
$106 million
for the third quarter of 2016, (iii) income of
$57 million
for the fourth quarter of 2016 and (iv) a loss of
$28 million
for the first quarter of 2017.
|
|
(b)
|
EBITDA consists of: (i)
$263 million
for the second quarter of 2016, (ii)
$270 million
for the third quarter of 2016, (iii)
$145 million
for the fourth quarter of 2016 and (iv)
$52 million
for the first quarter of 2017.
|
|
(c)
|
Represents the twelve-month pro forma effect of business optimization initiatives.
|
|
(d)
|
Represents the elimination of non-cash expenses, including
$57 million
of stock-based compensation expense less
$8 million
for the change in the allowance for doubtful accounts and notes reserves,
$2 million
of foreign exchange benefit and
$1 million
of other items from
April 1, 2016
through
March 31, 2017
.
|
|
(e)
|
Represents the estimated impact of acquisitions and franchise sales activity, net of brokerages that exited our franchise system as if these changes had occurred on
April 1, 2016
. Franchisee sales activity is comprised of new franchise agreements as well as growth through acquisitions and independent sales associate recruitment by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimates and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of
April 1, 2016
.
|
|
(f)
|
Incremental borrowing costs incurred as a result of the securitization facilities refinancing for the twelve months ended
March 31, 2017
.
|
|
(g)
|
Represents total borrowings under the Senior Secured Credit Facility and borrowings secured by a first priority lien on our assets of
$2,158 million
plus
$27 million
of capital lease obligations less
$152 million
of readily available cash as of
March 31, 2017
. Pursuant to the terms of our Senior Secured Credit Facility and Term Loan A Facility, total senior secured net debt does not include our securitization obligations or unsecured indebtedness, including the Unsecured Notes.
|
|
|
Three Months Ended
|
||||||
|
|
March 31, 2017
|
|
March 31, 2016
|
||||
|
Net loss attributable to Realogy
|
$
|
(28
|
)
|
|
$
|
(42
|
)
|
|
Income tax benefit
|
(9
|
)
|
|
(24
|
)
|
||
|
Loss before income taxes
|
(37
|
)
|
|
(66
|
)
|
||
|
Interest expense, net
|
39
|
|
|
73
|
|
||
|
Depreciation and amortization
|
50
|
|
|
48
|
|
||
|
EBITDA
|
52
|
|
|
55
|
|
||
|
EBITDA adjustments:
|
|
|
|
||||
|
Restructuring costs
|
5
|
|
|
9
|
|
||
|
Former parent legacy cost, net
|
—
|
|
|
1
|
|
||
|
Loss on the early extinguishment of debt
|
4
|
|
|
—
|
|
||
|
Operating EBITDA
|
$
|
61
|
|
|
$
|
65
|
|
|
Notional Value (in millions)
|
Commencement Date
|
Expiration Date
|
|
$225
|
July 2012
|
February 2018
|
|
$200
|
January 2013
|
February 2018
|
|
$600
|
August 2015
|
August 2020
|
|
$450
|
November 2017
|
November 2022
|
|
(a)
|
Realogy Holdings Corp. ("Realogy Holdings") maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its filings under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to its management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Realogy Holdings' management, including the Chief Executive Officer and the Chief Financial Officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
|
|
(b)
|
As of the end of the period covered by this quarterly report on Form 10-Q, Realogy Holdings has carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and
|
|
(c)
|
There has not been any change in Realogy Holdings' internal control over financial reporting during the period covered by this quarterly report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
|
|
(a)
|
Realogy Group LLC ("Realogy Group") maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its filings under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to its management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Realogy Group's management, including the Chief Executive Officer and the Chief Financial Officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
|
|
(b)
|
As of the end of the period covered by this quarterly report on Form 10-Q, Realogy Group has carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that Realogy Group's disclosure controls and procedures are effective at the "reasonable assurance" level.
|
|
(c)
|
There has not been any change in Realogy Group's internal control over financial reporting during the period covered by this quarterly report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
|
|
(c)
|
The following table sets forth information relating to repurchase of shares of our common stock during the quarter ended
March 31, 2017
:
|
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of a Publicly Announced Programs
(1)
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs
(1)
|
||||
|
January 1-31, 2017
|
|
310,647
|
|
|
$26.00
|
|
310,647
|
|
|
$
|
68,327,017
|
|
|
February 1-28, 2017
|
|
261,206
|
|
|
$26.50
|
|
261,206
|
|
|
$
|
361,405,058
|
|
|
March 1 - 31, 2017
(2)
|
|
1,585,008
|
|
|
$28.39
|
|
1,585,008
|
|
|
$
|
316,406,681
|
|
|
(1)
|
In February 2016, the Company's Board of Directors authorized a share repurchase program of up to
$275 million
of the Company’s common stock. As of
March 31, 2017
, approximately
$16 million
remained available for repurchase under this
|
|
(2)
|
Includes
226,352
of shares purchased for which the trade date occurred in late March 2017 while settlement occurred in April 2017.
|
|
10.1
|
Fourth Amendment, dated as of January 23, 2017, to the Amended and Restated Credit Agreement, dated as of March 5, 2013, as amended, among Realogy Intermediate Holdings LLC, Realogy Group LLC, the several lenders parties thereto from time to time, JPMorgan Chase Bank, N.A., as administrative agent for the lenders, and the other agents parties thereto (Incorporated by reference to Exhibit 10.1 to Registrants' Current Report on Form 8-K filed on January 23, 2017).
|
|
10.2
|
Incremental Assumption Agreement, dated as of January 23, 2017, among Realogy Intermediate Holdings LLC, Realogy Group LLC, the financial institutions party thereto, and JPMorgan Chase Bank, N.A., as administrative agent (Incorporated by reference to Exhibit 10.2 to Registrants' Current Report on Form 8-K filed on January 23, 2017).
|
|
10.3
|
Employment Agreement dated March 13, 2017, between Realogy Holdings Corp. and Richard A. Smith (Incorporated by reference to Exhibit 10.1 to Registrants' Current Report on Form 8-K filed on March 17, 2017).
|
|
10.4
|
Letter Agreement dated February 23, 2017, between Realogy Holdings Corp. and Alexander E. Perriello (Incorporated by reference to Exhibit 10.20 to Registrants' Form 10-K for the year ended December 31, 2017).
|
|
15.1*
|
Letter Regarding Unaudited Interim Financial Statements.
|
|
31.1*
|
Certification of the Chief Executive Officer of Realogy Holdings Corp. pursuant to Rules 13(a)-14(a) and 15(d)-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
|
|
31.2*
|
Certification of the Chief Financial Officer of Realogy Holdings Corp. pursuant to Rules 13(a)-14(a) and 15(d)-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
|
|
31.3*
|
Certification of the Chief Executive Officer of Realogy Group LLC pursuant to Rules 13(a)-14(a) and 15(d)-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
|
|
31.4*
|
Certification of the Chief Financial Officer of Realogy Group LLC pursuant to Rules 13(a)-14(a) and 15(d)-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
|
|
32.1*
|
Certification for Realogy Holdings Corp. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2*
|
Certification for Realogy Group LLC pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS ^
|
XBRL Instance Document.
|
|
101.SCH ^
|
XBRL Taxonomy Extension Schema Document.
|
|
101.CAL^
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
101.DEF ^
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
101.LAB ^
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
101.PRE ^
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
*
|
Filed herewith.
|
|
^
|
Furnished electronically with this report.
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|