OREANDA-NEWS. Realogy Holdings Corp. (NYSE: RLGY), the preeminent provider of residential real estate services in the United States, today reported financial results for the full year ended December 31, 2015, including the following highlights:
  • Revenue of $5.7 billion, which represents a 7% increase compared to 2014, was primarily driven by higher homesale transaction volume.
  • Net income was $184 million, a 29% increase from the prior year, and basic earnings per share was $1.26, up from $0.98 in 2014.
  • Adjusted net income for the year was $219 million, and adjusted basic earnings per share was $1.49, increases of 27% and 26%, respectively, on a comparable basis to 2014.
  • Adjusted EBITDA was $845 million, compared to $779 million in 2014, a year-over-year increase of $66 million, or 8%.
  • The Company generated $437 million of free cash flow in full-year 2015, a 19% increase compared with $367 million during 2014.
"We delivered solid results for the full year, reflecting the successful execution of our strategy to drive growth and innovation in our business, and we are optimistic about the long-term growth prospects in the housing market and confident in the strength of our platforms to capitalize on the opportunities ahead," said Richard A. Smith, Realogy's chairman, chief executive officer and president. "In particular, we are pleased to have reached the milestone of authorizing the return of capital to shareholders, which has been an important goal and underscores our confidence in the strength of our business model. Our financial strength enables us to implement this program earlier than we anticipated while maintaining the flexibility to invest in growth."

Share Repurchase Program

Realogy today announced that its Board of Directors has authorized a share repurchase program of up to $275 million of the Company's common stock. 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. The Company had approximately 146.7 million shares of common stock outstanding as of December 31, 2015.

Operational Results

In 2015, 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 $456 billion, an 8% increase compared to 2014. RFG reported a homesale transaction increase of 3% and an average homesale price increase of 5%. NRT reported a homesale transaction increase of 9% and an average homesale price decrease of 2%. The increase in NRT's transaction sides was bolstered by the strategic acquisition of the Coldwell Banker United brokerage operations in Texas, the Carolinas and Florida, which had a lower average sales price relative to the remainder of NRT's markets.

In the fourth quarter of 2015, homesale transaction volume across the industry was adversely affected by the introduction of the new advance three-day closing disclosure regulations ("TRID"), which began impacting homesale transaction closings in mid-November. Specifically at NRT, where Realogy has the most visibility into transaction timing, TRID added approximately five days on average to the time necessary between the opening and closing of a homesale contract. While this change delayed closings into 2016 and impacted Realogy's revenue and Adjusted EBITDA in the fourth quarter of 2015, the Company believes that it is a timing issue, as the time needed to close a transaction has stabilized since the end of 2015. The Company also believes that TRID did not have any noticeable impact on NRT's contract cancellation rates or homebuyer demand in the fourth quarter.

In the title and settlement services sector, TRG was involved in the closing of approximately 169,000 transactions last year, reflecting a 15% increase in purchase units and a 40% increase in refinance units compared to the prior year. A portion of those gains was related to TRG's acquisition of Independence Title in 2015.

In the relocation segment, Cartus assisted in approximately 168,000 corporate and affinity relocations in nearly 150 countries in 2015, representing a 2% decline from 2014.

Looking Ahead

For the first quarter of 2016, Realogy expects to achieve homesale transaction volume gains in the range of 6% to 9% year-over-year for RFG and NRT combined. Based on the Company's closed and open sales activity in January and February, Realogy expects first quarter homesale transaction sides to be up 3% to 5% year-over-year and average homesale price to increase 3% to 4% on a company-wide basis.

"As we look to 2016, we are well positioned to build on the strong free cash flow we generated last year," said Anthony E. Hull, executive vice president, chief financial officer and treasurer. "We are focused on business optimization initiatives to enhance our value proposition and service levels while leveraging our scale and infrastructure to improve efficiency and maximize profitability."

Realogy expects its ongoing business optimization efforts to deliver approximately $40 million of annual run-rate cost savings at the start of 2017, after incurring approximately $37 million of total restructuring costs through the end of 2016. The Company expects to realize $25 million of savings in 2016.

Balance Sheet

The Company ended the year with cash and cash equivalents of $415 million and $200 million of outstanding borrowings under its revolving credit facility.  Total long-term corporate debt, including the short-term portion, net of cash and cash equivalents, totaled $3,337 million at December 31, 2015.  The ratio of total corporate debt, net of cash and cash equivalents, to Adjusted EBITDA for the 12 months ended December 31, 2015 was 3.9x times. In May 2016, the Company expects to use cash on hand and/or borrowings under its revolving credit facility or other financing to retire the $500 million of 3.375% Senior Notes that mature at that time.

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®, The Corcoran Group®, ERA®, Sotheby's International Realty® and ZipRealty®.  Collectively, Realogy's franchise system members operate approximately 13,600 offices with more than 256,800 independent sales associates conducting business in 110 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. The Company also owns Cartus, a prominent worldwide provider of relocation services to corporate and affinity clients, and Title Resource Group (TRG), a leading provider of title, settlement and underwriting services.  Realogy is headquartered in Madison, New Jersey.