MADISON, N.J., Oct. 28, 2021 /PRNewswire/ — Realogy Holdings Corp. (NYSE: RLGY), the largest full-service residential real estate services company in the United States, today reported financial results for the quarter ended September 30, 2021.

“Realogy delivered powerful third quarter results with terrific top- and bottom-line performance, market share gains for the fifth consecutive quarter, impressive free cash flow, and an even stronger capital structure,” said Ryan Schneider, Realogy’s chief executive officer and president. “We are excited by our strategic progress throughout 2021, especially across Realogy’s market-leading luxury positions, differentiated RealSure venture, and continued technology innovation as we proactively transform the future of real estate.”

“In the third quarter, Realogy drove excellent financial performance, delivering $273 million in Operating EBITDA and generating $282 million of free cash flow, as we significantly strengthened our capital structure,” said Charlotte Simonelli, Realogy’s executive vice president, chief financial officer, and treasurer. “Realogy is making incredible progress, proactively repaying $435 million of debt in September, consistently delivering quality financial results, and strategically investing to unlock additional value for shareholders.”

Third Quarter 2021 Highlights

  • Generated Revenue of $2.2 billion, an increase of 15% or $277 million year-over-year.
  • Reported Net income of $114 million and basic earnings per share of $0.98, an increase of $16 million or $0.13 per share vs. prior year.
  • Generated Operating EBITDA of $273 million, a decrease of $40 million year-over-year. The third quarter of 2020 included approximately $40 million in temporary cost savings (See Table 5a).
  • Net Debt Leverage Ratio of 2.3x and Senior Secured Leverage Ratio of negative 0.27x at September 30, 2021 (See Tables 8a and 8b).
  • Repaid $435 million of debt, including all outstanding Term Loan B and the non-extended portion of the Term Loan A.
  • Reported Free Cash Flow of $282 million in the third quarter of 2021 and $458 million year to date September 30, 2021 (See Table 7).
  • Combined closed transaction volume increased 12% year-over-year in the third quarter of 2021 driving market share gains for the fifth consecutive quarter. Our transaction volume growth was above the 9% year-over-year market volume growth reported by the National Association of Realtors (NAR).
  • Owned Brokerage agent count grew 5% year-over-year, with growth for the 5th consecutive quarter, and continued to maintain strong retention levels.
  • Strong cost management with $80 million in permanent cost savings expected in 2021 with actions taken for approximately 90% of the target savings and $70 million realized in the income statement through September 30, 2021.

Third Quarter 2021 Financial Highlights
The following table sets forth Realogy’s financial highlights for the periods presented (in millions, except per share data) (unaudited):

Three Months Ended September 30,

2021

2020

 Change

% Change

Revenue

$

2,186

$

1,909

$

277

15

%

Operating EBITDA 1

273

313

(40)

(13)

Net income attributable to Realogy

114

98

16

16

Adjusted net income 2

119

162

(43)

(27)

Earnings per share

0.98

0.85

0.13

15

Adjusted earnings per share 2

1.02

1.40

(0.38)

(27)

Free Cash Flow 3

282

395

(113)

(29)

Net cash provided by operating activities

$

303

$

385

$

(82)

(21)

%

Select Key Drivers

Realogy Franchise Group 4 5

Closed homesale sides

316,195

336,737

(6)

%

Average homesale price

$

427,052

$

367,095

16

%

Realogy Brokerage Group 5

Closed homesale sides

101,536

101,890

%

Average homesale price

$

662,006

$

563,513

17

%

Realogy Title Group

Purchase title and closing units

47,004

45,788

3

%

Refinance title and closing units

12,836

18,387

(30)

%

_______________

Footnotes:

1   See Tables 5a and 5b. Operating EBITDA is defined as net income (loss) before depreciation and amortization, interest expense, net (other than relocation services interest for securitization assets and securitization obligations), income taxes, and other items that are not core to the operating activities of the Company such as restructuring charges, former parent legacy items, gains or losses on the early extinguishment of debt, impairments, gains or losses on discontinued operations and gains or losses on the sale of investments or other assets.

2  See Table 1a. Adjusted Net income (loss) is defined as net income (loss) before mark-to-market interest rate swap adjustments, former parent legacy items, restructuring charges, (gain) loss on the early extinguishment of debt, impairments and the tax effect of the foregoing adjustments. Adjusted earnings (loss) per share is Adjusted net income (loss) divided by the weighted average common and common equivalent shares outstanding.

See Table 7. Free Cash Flow is defined as net income (loss) attributable to Realogy before income tax expense (benefit), net of payments, net interest expense, cash interest payments, depreciation and amortization, capital expenditures, restructuring costs and former parent legacy costs (benefits), net of payments, impairments, (gain) loss on the early extinguishment of debt, working capital adjustments and relocation receivables (assets), net of change in securitization obligations.

Includes all franchisees except for Realogy Brokerage Group.

The Company’s combined homesale transaction volume growth (transaction sides multiplied by average sale price) increased 12% compared with the third quarter of 2020.

Balance Sheet and Capital Allocation
The Company ended the third quarter of 2021 with cash and cash equivalents of $701 million*. Total corporate debt, including the short-term portion, net of cash and cash equivalents (net corporate debt), totaled $2.4 billion at September 30, 2021. The Company’s Net Debt Leverage Ratio was 2.3x at September 30, 2021 (see Table 8b).

On September 16, 2021, we used cash on hand to repay an aggregate of $435 million of secured debt which included approximately $197 million in principal amount of outstanding borrowings under the Term Loan A Facility (representing all of the remaining Non-Extended Term Loan A) and approximately $238 million in principal amount of outstanding borrowings under the Term Loan B Facility (representing all of the remaining Term Loan B).

A consolidated balance sheet is included as Table 2 of this press release.

______________

*      excludes restricted cash

Investor Conference Call
Today, October 28, at 8:30 a.m. (ET), Realogy will hold a conference call via webcast to review its Q3 2021 results and provide a business update. The webcast will be hosted by Ryan Schneider, chief executive officer and president, and Charlotte Simonelli, chief financial officer, and will conclude with an investor Q&A period with management.

Investors may access the conference call live via webcast at ir.realogy.com or by dialing (833) 646-0499 (toll free); international participants should dial (918) 922-3007. Please dial in at least 5 to 10 minutes prior to start time. A webcast replay also will be available on the website.

About Realogy Holdings Corp.
Realogy (NYSE: RLGY) is moving the real estate industry to what’s next. As the leading and most integrated provider of U.S. residential real estate services encompassing franchise, brokerage, relocation, and title and settlement businesses as well as a mortgage joint venture, Realogy supported approximately 1.4 million home transactions in 2020. The company’s diverse brand portfolio includes some of the most recognized names in real estate: Better Homes and Gardens® Real Estate, CENTURY 21®, Coldwell Banker®, Coldwell Banker Commercial®, Corcoran®, ERA®, and Sotheby’s International Realty®. Using innovative technology, data and marketing products, high-quality lead generation programs, and best-in-class learning and support services, Realogy fuels the productivity of its approximately 196,600 independent sales agents in the U.S. and approximately 140,800 independent sales agents in 117 other countries and territories, helping them build stronger businesses and best serve today’s consumers. Recognized for ten consecutive years as one of the World’s Most Ethical Companies, Realogy has also been designated a Great Place to Work four years in a row, named one of LinkedIn’s 2021 Top Companies in the U.S., and honored on the Forbes list of World’s Best Employers 2021.

Forward-Looking Statements
Certain statements in this press release constitute “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Realogy Holdings Corp. to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words “believes”, “expects”, “anticipates”, “intends”, “projects”, “estimates”, “potential” and “plans” and similar expressions or future or conditional verbs such as “will”, “should”, “would”, “may” and “could” are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements.

The following include some, but not all, of the factors that could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements: adverse developments or the absence of sustained improvement in the U.S. residential real estate markets, either regionally or nationally, which could include, but are not limited to factors that could impact homesale transaction volume, such as: continued or accelerated declines in inventory or a decline in the number of home sales, increases in mortgage rates or inflation or tightened mortgage standards, changes in consumer preferences, including weakening in the consumer trends that have benefited us since the second half of 2020, reductions in housing affordability, and stagnant or declining home prices; adverse developments or the absence of sustained improvement in macroeconomic conditions (such as business, economic or political conditions) on a global, domestic or local basis, which could include, but are not limited to economic contraction in the U.S. economy, including the impact of recessions, slow economic growth, or a deterioration in other economic factors (including potential consumer, business or governmental defaults or delinquencies due to the COVID-19 crisis or otherwise) and fiscal and monetary policies of the federal government and its agencies, particularly those that may result in unfavorable changes to the interest rate environment and tax reform; The impact of evolving competitive and consumer dynamics, which could include, but are not limited to: continued erosion of the broker share of the commission income generated by homesale transactions and the continued rise of the sale agent’s share of such commissions, our ability to compete against non-traditional competitors, including but not limited to, iBuying and home swap business models and virtual brokerages, in particular those competitors with access to significant third-party capital that may prioritize market share over profitability, and meaningful decreases in the average broker commission rate; adverse impacts from the COVID-19 crisis (due to the impact of virus mutations or otherwise), including amplification of risks to our business and worsening economic consequences of the crisis or the reinstatement of significant limitations on normal business operations; our ability to execute our business strategy and achieve growth, including our efforts to: recruit and retain productive independent sales agents, attract and retain franchisees or renew existing franchise agreements without reducing contractual royalty rates or increasing the amount and prevalence of sales incentives, compete for real estate services business, develop or procure products, services and technology that support our strategic initiatives, realize the expected benefits from our non-exclusive mortgage origination joint venture, our RealSure joint venture, our planned title underwriting joint venture, or from other existing or future strategic partnerships, achieve or maintain a beneficial cost structure or savings and other benefits from our cost-saving initiatives, generate a meaningful number of high-quality leads for independent sales agents and franchisees, complete or integrate acquisitions and joint ventures into our existing operations, or to complete or effectively manage divestitures or other corporate transactions; our geographic and high-end market concentration; the operating results of affiliated franchisees; continued consolidation among our top 250 franchisees; difficulties in the business or changes in the licensing strategy of, or complications in our relationships with, the owners of the two brands we do not own; the loss of our largest real estate benefit program client or multiple significant relocation clients; continued reductions in refinancing activity or corporate relocations or relocation benefits; the failure of third-party vendors or partners to perform as expected or our failure to adequately monitor such third-parties; interruptions in information technology used to operate our business and maintain our competitiveness; increases in mortgage rates, tightened mortgage underwriting standards or reductions in refinancing activity; actions taken by listing aggregators to monetize their concentration and market power; industry structure changes (as a result of new laws, regulations, consent decrees, administrative policies, litigation or other legal action, the rules of multiple listing services or NAR, or otherwise) that disrupt the functioning of the residential real estate market; adverse effects on our operations or liquidity due to our indebtedness, including with respect to: interest obligations and the negative covenant restrictions contained in our debt agreements, our ability to fund our operations, invest in our business or pursue growth opportunities, react to changes in the economy or our industry, or incur additional borrowings under our existing facilities, an event of default under our debt agreements, or our ability to refinance or repay our indebtedness or incur additional indebtedness; risks related to the issuance of our 0.25% Exchangeable Senior Notes and exchangeable note hedge and warrant transactions, including counterparty risk with respect to the exchangeable note hedge transactions; our failure or alleged failure to comply with laws, regulations and regulatory interpretations and any changes or stricter interpretations of any of the foregoing (whether through private litigation or governmental action), including but not limited to: (1) state or federal employment laws or regulations that would require reclassification of independent contractor sales agents to employee status, (2) privacy or data security laws and regulations, (3) the Real Estate Settlement Procedures Act (“RESPA”) or other federal or state consumer protection or similar laws, and (4) antitrust laws and regulations; cybersecurity incidents; impairment of our goodwill and other long-lived assets; and severe weather events or natural disasters, including increasing severity or frequency of such events due to climate change or otherwise, or other catastrophic events, including public health crises, such as pandemics and epidemics. Consideration should be given to the areas of risk described above, as well as those risks set forth under the headings “Forward-Looking Statements” and “Risk Factors” in our filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021 and our Annual Report on Form 10-K for the year ended December 31, 2020, and our other filings made from time to time, in connection with considering any forward-looking statements that may be made by us and our businesses generally. We undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events except as required by law.

Non-GAAP Financial Measures
This release includes certain non-GAAP financial measures as defined under SEC rules. As required by SEC rules, important information regarding such measures is contained in the Tables attached to this release. See Tables 1a, 8a, 8b and 9 for definitions of these non-GAAP financial measures and Tables 1a, 5a, 5b, 6a, 6b, 7, 8a and 8b for reconciliations of the historical non-GAAP financial measures to their most comparable GAAP terms.

NAR data referenced herein is based on NAR’s most recent public estimates, which are subject to review and revision. Factors that may impact the comparability of the Company’s homesale statistics to NAR are outlined in the Company’s Quarterly Report on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021 and its Annual Report on Form 10-K for the year ended December 31, 2020.

Investor Contacts:

Media Contacts:

Alicia Swift

Trey Sarten

(973) 407-4669

(973) 407-2162

alicia.swift@realogy.com

trey.sarten@realogy.com

Danielle Kloeblen

Gabriella Chiera

(973) 407-2148

(973) 407-5236

danielle.kloeblen@realogy.com

Gabriella.Chiera@realogy.com

Table 1

REALOGY HOLDINGS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)

Three Months Ended
September 30,

Nine Months Ended
 September 30,

2021

2020

2021

2020

Revenues

Gross commission income

$

1,689

$

1,458

$

4,616

$

3,227

Service revenue

315

281

878

702

Franchise fees

139

133

391

289

Other

43

37

124

114

Net revenues

2,186

1,909

6,009

4,332

Expenses

Commission and other agent-related costs

1,309

1,105

3,567

2,420

Operating

424

380

1,230

1,068

Marketing

69

55

193

155

General and administrative

120

108

324

265

Former parent legacy cost, net

1

1

1

Restructuring costs, net

4

17

14

47

Impairments

1

70

3

610

Depreciation and amortization

50

43

152

134

Interest expense, net

52

48

147

208

Loss on the early extinguishment of debt

3

21

8

Other loss (income), net

1

(17)

Total expenses

2,033

1,827

5,635

4,916

Income (loss) before income taxes, equity in earnings and
noncontrolling interests

153

82

374

(584)

Income tax expense (benefit)

48

36

125

(110)

Equity in earnings of unconsolidated entities

(11)

(53)

(52)

(98)

Net income (loss)

116

99

301

(376)

Less: Net income attributable to noncontrolling interests

(2)

(1)

(5)

(2)

Net income (loss) attributable to Realogy Holdings

$

114

$

98

$

296

$

(378)

Earnings (loss) per share attributable to Realogy Holdings shareholders:

Basic earnings (loss) per share

$

0.98

$

0.85

$

2.55

$

(3.28)

Diluted earnings (loss) per share

$

0.95

$

0.84

$

2.46

$

(3.28)

Weighted average common and common equivalent shares of Realogy Holdings outstanding:

Basic

116.6

115.4

116.3

115.2

Diluted

120.3

116.7

120.2

115.2

Table 1a

REALOGY HOLDINGS CORP.
NON-GAAP RECONCILIATION
ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE
(In millions, except per share data)

We present Adjusted net income (loss) and Adjusted earnings (loss) per share because we believe these measures are useful as supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our operating results.

Adjusted net income (loss) is defined by us as net income (loss) before: (a) mark-to-market interest rate swap adjustments, whose fair value is subject to movements in LIBOR and the forward yield curve and therefore are subject to significant fluctuations; (b) former parent legacy items, which pertain to liabilities of the former parent for matters prior to mid-2006 and are non-operational in nature; (c) restructuring charges as a result of initiatives currently in progress; (d) impairments; (e) the (gain) loss on the early extinguishment of debt that results from refinancing and deleveraging debt initiatives and (f) the tax effect of the foregoing adjustments.  The gross amounts for these items as well as the adjustment for income taxes are shown in the table below.

Adjusted earnings (loss) per share is Adjusted net income (loss) divided by the weighted average common and common equivalent shares outstanding.

Set forth in the table below is a reconciliation of Net income (loss) to Adjusted net income for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended
September 30,

Nine Months Ended
September 30,

2021

2020

2021

2020

Net income (loss) attributable to Realogy Holdings

$

114

$

98

$

296

$

(378)

Addback:

Mark-to-market interest rate swap losses

(1)

(8)

59

Former parent legacy cost, net

1

1

1

Restructuring costs, net

4

17

14

47

Impairments (a)

1

70

3

610

Loss on the early extinguishment of debt

3

21

8

Adjustments for tax effect (b)

(2)

(24)

(8)

(196)

Adjusted net income attributable to Realogy Holdings

$

119

$

162

$

319

$

151

Earnings (loss) per share attributable to Realogy Holdings:

Basic earnings (loss) per share:

$

0.98

$

0.85

$

2.55

$

(3.28)

Diluted earnings (loss) per share:

$

0.95

$

0.84

$

2.46

$

(3.28)

Adjusted earnings per share attributable to Realogy Holdings:

Adjusted basic earnings per share:

$

1.02

$

1.40

$

2.74

$

1.31

Adjusted diluted earnings per share:

$

0.99

$

1.39

$

2.65

$

1.31

Weighted average common and common equivalent shares outstanding:

Basic:

116.6

115.4

116.3

115.2

Diluted:

120.3

116.7

120.2

115.2

_______________

(a)

Non-cash impairments for the nine months ended September 30, 2020 primarily include:

•   

a goodwill impairment charge of $413 million related to Realogy Brokerage Group;

an impairment charge of $30 million related to Realogy Franchise Group’s trademarks; and

• 

$133 million of impairment charges during the nine months ended September 30, 2020 (while Cartus Relocation Services was held for sale) to reduce the net assets to the estimated proceeds.

(b)

Reflects tax effect of adjustments at the Company’s blended state and federal statutory rate.

Table 2

REALOGY HOLDINGS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

(Unaudited)

September 30,
2021

December 31,
2020

ASSETS

Current assets:

Cash and cash equivalents

$

701

$

520

Restricted cash

5

3

Trade receivables (net of allowance for doubtful accounts of $11 and $13)

140

128

Relocation receivables

185

139

Other current assets

194

154

Total current assets

1,225

944

Property and equipment, net

302

317

Operating lease assets, net

448

450

Goodwill

2,899

2,910

Trademarks

685

685

Franchise agreements, net

1,038

1,088

Other intangibles, net

175

188

Other non-current assets

421

352

Total assets

$

7,193

$

6,934

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

125

$

128

Securitization obligations

146

106

Current portion of long-term debt

9

62

Current portion of operating lease liabilities

126

129

Accrued expenses and other current liabilities

661

600

Total current liabilities

1,067

1,025

Long-term debt

2,938

3,145

Long-term operating lease liabilities

418

430

Deferred income taxes

353

276

Other non-current liabilities

289

291

Total liabilities

5,065

5,167

Commitments and contingencies

Equity:

Realogy Holdings preferred stock: $0.01 par value; 50,000,000 shares authorized, none
issued and outstanding at September 30, 2021 and December 31, 2020

Realogy Holdings common stock: $0.01 par value; 400,000,000 shares authorized,
116,586,201 shares issued and outstanding at September 30, 2021 and 115,457,067
shares issued and outstanding at December 31, 2020

1

1

Additional paid-in capital

4,939

4,876

Accumulated deficit

(2,759)

(3,055)

Accumulated other comprehensive loss

(58)

(59)

Total stockholders’ equity

2,123

1,763

Noncontrolling interests

5

4

Total equity

2,128

1,767

Total liabilities and equity

$

7,193

$

6,934

Table 3

REALOGY HOLDINGS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

Nine Months Ended
September 30,

2021

2020

Operating Activities

Net income (loss)

$

301

$

(376)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

152

134

Deferred income taxes

76

(112)

Impairments

3

610

Amortization of deferred financing costs and debt discount (premium)

12

8

Loss on the early extinguishment of debt

21

8

Gain on the sale of business, net

(14)

Equity in earnings of unconsolidated entities

(52)

(98)

Stock-based compensation

21

19

Mark-to-market adjustments on derivatives

(8)

59

Other adjustments to net income (loss)

(2)

(1)

Net change in assets and liabilities, excluding the impact of acquisitions and dispositions:

Trade receivables

(13)

(24)

Relocation receivables

(46)

2

Other assets

(12)

15

Accounts payable, accrued expenses and other liabilities

32

137

Dividends received from unconsolidated entities

49

59

Other, net

(31)

(22)

Net cash provided by operating activities

489

418

Investing Activities

Property and equipment additions

(71)

(69)

Proceeds from the sale of business

15

Investment in unconsolidated entities

(7)

(2)

Other, net

(5)

(13)

Net cash used in investing activities

(68)

(84)

Financing Activities

Net change in Revolving Credit Facility

(50)

Repayments of Term Loan A Facility and Term Loan B Facility

(1,490)

Proceeds from issuance of Senior Notes

905

Proceeds from issuance of Senior Secured Second Lien Notes

550

Redemption of Senior Notes

(550)

Proceeds from issuance of Exchangeable Senior Notes

403

Payments for purchase of Exchangeable Senior Notes hedge transactions

(67)

Proceeds from issuance of Exchangeable Senior Notes warrant transactions

46

Amortization payments on term loan facilities

(8)

(31)

Net change in securitization obligations

40

(62)

Debt issuance costs

(20)

(14)

Cash paid for fees associated with early extinguishment of debt

(11)

(7)

Taxes paid related to net share settlement for stock-based compensation

(9)

(5)

Other, net

(27)

(34)

Net cash used in financing activities

(238)

(203)

Effect of changes in exchange rates on cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

183

131

Cash, cash equivalents and restricted cash, beginning of period

523

266

Cash, cash equivalents and restricted cash, end of period

$

706

$

397

Supplemental Disclosure of Cash Flow Information

Interest payments (including securitization interest of $3 and $4 respectively)

$

121

$

133

Income tax payments (refunds), net

32

(9)

Table 4a

REALOGY HOLDINGS CORP.

2021 vs. 2020 KEY DRIVERS

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

% Change

2021

2020

% Change

Realogy Franchise Group (a)

Closed homesale sides

316,195

336,737

(6)

%

881,356

778,010

13

%

Average homesale price

$

427,052

$

367,095

16

%

$

419,223

$

341,427

23

%

Average homesale broker commission rate

2.44

%

2.48

%

(4)

 bps

2.46

%

2.48

%

(2)

 bps

Net royalty per side

$

401

$

367

9

%

$

402

$

341

18

%

Realogy Brokerage Group

Closed homesale sides

101,536

101,890

%

280,474

235,806

19

%

Average homesale price

$

662,006

$

563,513

17

%

$

654,113

$

537,602

22

%

Average homesale broker commission rate

2.42

%

2.44

%

(2)

 bps

2.43

%

2.43

%

 bps

Gross commission income per side

$

16,633

$

14,315

16

%

$

16,457

$

13,685

20

%

Realogy Title Group

Purchase title and closing units

47,004

45,788

3

%

128,207

106,540

20

%

Refinance title and closing units

12,836

18,387

(30)

%

47,775

44,834

7

%

Average fee per closing unit

$

2,675

$

2,239

19

%

$

2,524

$

2,189

15

%

_______________

(a)

Includes all franchisees except for Realogy Brokerage Group.

Table 4b

REALOGY HOLDINGS CORP.

2020 KEY DRIVERS

Quarter Ended

Year Ended

March 31,
2020

June 30,
2020

September 30,
2020

December 31,
2020

December 31,
2020

Realogy Franchise Group (a)

Closed homesale sides

203,188

238,085

336,737

312,335

1,090,345

Average homesale price

$

322,465

$

321,308

$

367,095

$

389,555

$

355,214

Average homesale broker commission rate

2.47

%

2.49

%

2.48

%

2.46

%

2.48

%

Net royalty per side

$

316

$

324

$

367

$

383

$

353

Realogy Brokerage Group

Closed homesale sides

62,541

71,375

101,890

97,930

333,736

Average homesale price

$

533,813

$

503,935

$

563,513

$

590,351

$

553,081

Average homesale broker commission rate

2.41

%

2.43

%

2.44

%

2.42

%

2.43

%

Gross commission income per side

$

13,597

$

12,863

$

14,315

$

14,725

$

13,990

Realogy Title Group

Purchase title and closing units

28,724

32,028

45,788

42,586

149,126

Refinance title and closing units

8,899

17,548

18,387

20,490

65,324

Average fee per closing unit

$

2,269

$

2,062

$

2,239

$

2,272

$

2,213

_______________

(a)

Includes all franchisees except for Realogy Brokerage Group.

Table 5a

REALOGY HOLDINGS CORP.

NON-GAAP RECONCILIATION – OPERATING EBITDA

THREE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(In millions)

Set forth in the tables below is a reconciliation of Net income attributable to Realogy Holdings to Operating EBITDA for the three-month periods ended September 30, 2021 and 2020:

Three Months Ended September 30,

2021

2020

Net income attributable to Realogy Holdings

$

114

$

98

Income tax expense

48

36

Income before income taxes

162

134

Add:  Depreciation and amortization

50

43

Interest expense, net

52

48

Restructuring costs, net (a)

4

17

Impairments (b)

1

70

Former parent legacy cost, net (c)

1

Loss on the early extinguishment of debt (c)

3

Loss on the sale of business, net

1

Operating EBITDA

$

273

$

313

The following table reflects Revenue, Operating EBITDA and Operating EBITDA margin by reportable segments:

Revenues (d)

$
Change

%

Change

Operating
EBITDA

$
Change

%
Change

Operating
EBITDA Margin

Change

2021

2020

2021

2020

2021

2020

Realogy Franchise Group

$

342

$

314

$

28

9

%

$

211

$

200

$

11

6

%

62

%

64

%

(2)

Realogy Brokerage Group

1,705

1,479

226

15

51

61

(10)

(16)

3

4

(1)

Realogy Title Group (e)

250

213

37

17

54

95

(41)

(43)

22

45

(23)

Corporate and Other

(111)

(97)

(14)

*

(43)

(43)

*

Total Company

$

2,186

$

1,909

$

277

15

%

$

273

$

313

$

(40)

(13)

%

12

%

16

%

(4)

The following table reflects Realogy Franchise and Brokerage Groups’ results before intercompany royalties and marketing fees, as well as on a combined basis to show the Operating EBITDA contribution of these business segments to the overall Operating EBITDA of the Company:

Revenues

$

Change

%

Change

Operating
EBITDA

$

Change

%

Change

Operating
EBITDA Margin

Change

2021

2020

2021

2020

2021

2020

Realogy Franchise Group (f)

$

231

$

217

$

14

6

%

$

100

$

103

$

(3)

(3)

%

43

%

47

%

(4)

Realogy Brokerage Group (f)

1,705

1,479

226

15

162

158

4

3

10

11

(1)

Realogy Franchise and Brokerage Groups Combined

$

1,936

$

1,696

$

240

14

%

$

262

$

261

$

1

%

14

%

15

%

(1)

_______________

not meaningful.

(a) 

Restructuring charges incurred for the three months ended September 30, 2021 include $1 million at Realogy Franchise Group, $2 million at Realogy Brokerage Group and $1 million at Corporate and Other.  Restructuring charges incurred for the three months ended September 30, 2020 include $4 million at Realogy Franchise Group, $11 million at Realogy Brokerage Group and $2 million at Corporate and Other.

(b)

Non-cash impairments for the three months ended September 30, 2021 primarily relate to software impairments.  Non-cash impairments for the three months ended September 30, 2020 include $59 million of impairment charges during the three months ended September 30, 2020 (while Cartus Relocation Services was held for sale) to reduce the net assets to the estimated proceeds and other asset impairments of $11 million primarily related to lease asset impairments.

(c) 

Former parent legacy items and Loss on the early extinguishment of debt are recorded in Corporate and Other.

(d) 

Includes the elimination of transactions between segments, which consists of intercompany royalties and marketing fees paid by Realogy Brokerage Group of $111 million and $97 million during the three months ended September 30, 2021 and 2020, respectively.

(e) 

Realogy Title Group (RTG) includes our title, escrow and settlement services (title agency), title insurance underwriter and mortgage origination joint venture businesses.  The title agency and title insurance underwriter businesses represented approximately 60% and 40%, respectively, of RTG’s net revenues for the three-month period ended September 30, 2021.  Excluding the mortgage origination joint venture from Operating EBITDA, title agency and title insurance underwriter represented approximately 60% and 40%, respectively of Operating EBITDA for the three-months ended September 30, 2021.  The year-over-year decline in Operating EBITDA contribution from the mortgage origination joint venture, from $11 million for the three-months ended September 30, 2021 compared to $51 million for the three-months ended September 30, 2020, was primarily driven by the impact of mark-to-market adjustments on the mortgage loan pipeline, as well as gain-on-sale margin compression and a decline in refinance volumes, partially offset by strong purchase volume growth.

(f)

The segment numbers noted above do not reflect the impact of intercompany royalties and marketing fees paid by Realogy Brokerage Group to Realogy Franchise Group of $111 million and $97 million during the three months ended September 30, 2021 and 2020, respectively.

Table 5b

REALOGY HOLDINGS CORP.

NON-GAAP RECONCILIATION – OPERATING EBITDA

NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(In millions)

Set forth in the tables below is a reconciliation of Net income (loss) attributable to Realogy Holdings to Operating EBITDA for the nine-month periods ended September 30, 2021 and 2020:

Nine Months Ended September 30,

2021

2020

Net income (loss) attributable to Realogy Holdings

$

296

$

(378)

Income tax expense (benefit)

125

(110)

Income (loss) before income taxes

421

(488)

Add:  Depreciation and amortization

152

134

Interest expense, net

147

208

Restructuring costs, net (a)

14

47

Impairments (b)

3

610

Former parent legacy cost, net (c)

1

1

Loss on the early extinguishment of debt (c)

21

8

Gain on the sale of business, net (d)

(14)

Operating EBITDA

$

745

$

520

The following table reflects Revenue, Operating EBITDA and Operating EBITDA margin by reportable segments:

Revenues (e)

$
Change

%

Change

Operating
EBITDA

$
Change

%
Change

Operating
EBITDA Margin

Change

2021

2020

2021

2020

2021

2020

Realogy Franchise Group

943

$

761

$

182

24

%

576

$

421

$

155

37

%

61

%

55

%

6

Realogy Brokerage Group

4,667

3,281

1,386

42

116

25

91

364

2

1

1

Realogy Title Group (f)

706

510

196

38

170

168

2

1

24

33

(9)

Corporate and Other

(307)

(220)

(87)

*

(117)

(94)

(23)

*

Total Company

$

6,009

$

4,332

$

1,677

39

%

$

745

$

520

$

225

43

%

12

%

12

%

The following table reflects Realogy Franchise and Brokerage Groups’ results before the intercompany royalties and marketing fees, as well as on a combined basis to show the Operating EBITDA contribution of these business segments to the overall Operating EBITDA of the Company:

Revenues

$

Change

%

Change

Operating
EBITDA

$

Change

%

Change

Operating
EBITDA Margin

Change

2021

2020

2021

2020

2021

2020

Realogy Franchise Group (g)

$

636

$

541

$

95

18

%

$

269

$

201

$

68

34

%

42

%

37

%

5

Realogy Brokerage Group (g)

4,667

3,281

1,386

42

423

245

178

73

9

7

2

Realogy Franchise and Brokerage Groups Combined

$

5,303

$

3,822

$

1,481

39

%

$

692

$

446

$

246

55

%

13

%

12

%

1

_______________

not meaningful.

(a) 

Restructuring charges incurred for the nine months ended September 30, 2021 include $4 million at Realogy Franchise Group, $6 million at Realogy Brokerage Group and $4 million at Corporate and Other.  Restructuring charges incurred for the nine months ended September 30, 2020 include $10 million at Realogy Franchise Group, $32 million at Realogy Brokerage Group, $3 million at Realogy Title Group and $2 million at Corporate and Other.

(b)

Non-cash impairments for the nine months ended September 30, 2021 primarily relate to software and lease asset impairments.  Non-cash impairments for the nine months ended September 30, 2020 include:

a goodwill impairment charge of $413 million related to Realogy Brokerage Group;

• 

an impairment charge of $30 million related to Realogy Franchise Group’s trademarks;

• 

$133 million of impairment charges during the nine months ended September 30, 2020 (while Cartus Relocation Services was held for sale) to reduce the net assets to the estimated proceeds; and

•  

other asset impairments of $34 million primarily related to lease asset impairments.

(c) 

Former parent legacy items and Loss on the early extinguishment of debt are recorded in Corporate and Other.

(d) 

Gain on the sale of business, net is primarily recorded in Realogy Brokerage Group.

(e)

Includes the elimination of transactions between segments, which consists of intercompany royalties and marketing fees paid by Realogy Brokerage Group of $307 million and $220 million during the nine months ended September 30, 2021 and 2020, respectively.

(f)  

Realogy Title Group (RTG) includes our title, escrow and settlement services (title agency), title insurance underwriter and mortgage origination joint venture businesses.  The title agency and title insurance underwriter businesses represented approximately 60% and 40%, respectively, of RTG’s net revenues for the nine-month period ended September 30, 2021.  Excluding the mortgage origination joint venture from Operating EBITDA, title agency and title insurance underwriter represented approximately 60% and 40%, respectively of Operating EBITDA for the nine-months ended September 30, 2021.  The year-over-year decline in Operating EBITDA contribution from the mortgage origination joint venture, from $49 million for the nine-months ended September 30, 2021 compared to $95 million for the nine-months ended September 30, 2020, was primarily driven by the impact of mark-to-market adjustments on the mortgage loan pipeline, as well as gain-on-sale margin compression and a decline in refinance volumes, partially offset by strong purchase volume growth.

(g) 

The segment numbers noted above do not reflect the impact of intercompany royalties and marketing fees paid by Realogy Brokerage Group to Realogy Franchise Group of $307 million and $220 million during the nine months ended September 30, 2021 and 2020, respectively.

Table 6a

REALOGY HOLDINGS CORP.

SELECTED 2021 FINANCIAL DATA

(In millions)

Three Months Ended

March 31,

June 30,

September 30,

2021

2021

2021

Net revenues (a)

Realogy Franchise Group

$

254

$

347

$

342

Realogy Brokerage Group

1,171

1,791

1,705

Realogy Title Group

201

255

250

Corporate and Other

(79)

(117)

(111)

Total Company

$

1,547

$

2,276

$

2,186

Operating EBITDA

Realogy Franchise Group

$

141

$

224

$

211

Realogy Brokerage Group

(5)

70

51

Realogy Title Group

61

55

54

Corporate and Other

(35)

(39)

(43)

Total Company

$

162

$

310

$

273

Non-GAAP Reconciliation – Operating EBITDA

Total Company Operating EBITDA

$

162

$

310

$

273

Less:   Depreciation and amortization

51

51

50

Interest expense, net

38

57

52

Income tax expense

17

60

48

Restructuring costs, net (b)

5

5

4

Impairments (c)

1

1

1

Former parent legacy cost, net (d)

1

Loss on the early extinguishment of debt (d)

17

1

3

(Gain) loss on the sale of business, net (e)

(15)

1

Net income attributable to Realogy Holdings

$

33

$

149

$

114

_______________

(a)

Transactions between segments are eliminated in consolidation.  Revenues for Realogy Franchise Group include intercompany royalties and marketing fees paid by Realogy Brokerage Group of $79 million, $117 million and $111 million for the three months ended March 31, 2021, June 30, 2021 and September 30, 2021, respectively.  Such amounts are eliminated through Corporate and Other.

(b) 

Includes restructuring charges broken down by business unit as follows:

Three Months Ended

March 31,

June 30,

September 30,

2021

2021

2021

Realogy Franchise Group

$

2

$

1

$

1

Realogy Brokerage Group

2

2

2

Corporate and Other

1

2

1

Total Company

$

5

$

5

$

4

(c)

Impairments for the three months ended March 31, 2021, June 30, 2021 and September 30, 2021 primarily relate to software and lease asset impairments.

(d)

Former parent legacy items and Loss on the early extinguishment of debt are recorded in Corporate and Other.

(e)

(Gain) loss on the sale of business, net is primarily recorded in Realogy Brokerage Group.

Table 6b

REALOGY HOLDINGS CORP.

SELECTED 2020 FINANCIAL DATA

(In millions)

Three Months Ended

Year Ended

March 31,

June 30,

September 30,

December 31,

December 31,

2020

2020

2020

2020

2020

Net revenues (a)

Realogy Franchise Group

$

220

$

227

$

314

$

298

$

1,059

Realogy Brokerage Group

869

933

1,479

1,461

4,742

Realogy Title Group

137

160

213

226

736

Corporate and Other

(58)

(65)

(97)

(96)

(316)

Total Company

$

1,168

$

1,255

$

1,909

$

1,889

$

6,221

Operating EBITDA

Realogy Franchise Group

$

96

$

125

$

200

$

173

$

594

Realogy Brokerage Group

(51)

15

61

23

48

Realogy Title Group

12

61

95

58

226

Corporate and Other

(25)

(26)

(43)

(48)

(142)

Total Company

$

32

$

175

$

313

$

206

$

726

Non-GAAP Reconciliation – Operating EBITDA

Total Company Operating EBITDA

$

32

$

175

$

313

$

206

$

726

Less:   Depreciation and amortization

45

46

43

52

186

Interest expense, net

101

59

48

38

246

Income tax (benefit) expense

(141)

(5)

36

6

(104)

Restructuring costs, net (b)

12

18

17

20

67

Impairments (c)

477

63

70

72

682

Former parent legacy cost, net (d)

1

1

Loss on the early extinguishment of debt (d)

8

8

Net (loss) income attributable to Realogy Holdings

$

(462)

$

(14)

$

98

$

18

$

(360)

_______________

(a)

Transactions between segments are eliminated in consolidation.  Revenues for Realogy Franchise Group include intercompany royalties and marketing fees paid by Realogy Brokerage Group of $58 million, $65 million, $97 million and $96 million for the three months ended March 31, 2020, June 30, 2020, September 30, 2020 and December 31, 2020, respectively.  Such amounts are eliminated through Corporate and Other.

(b)

Includes restructuring charges broken down by business unit as follows:

Three Months Ended

Year Ended

March 31,

June 30,

September 30,

December 31,

December 31,

2020

2020

2020

2020

2020

Realogy Franchise Group

$

2

$

4

$

4

$

5

$

15

Realogy Brokerage Group

9

12

11

5

37

Realogy Title Group

1

2

1

4

Corporate and Other

2

9

11

Total Company

$

12

$

18

$

17

$

20

$

67

(c)

Non-cash impairments include:

• 

a goodwill impairment charge of $413 million related to Realogy Brokerage Group and an impairment charge of $30 million related to Realogy Franchise Group’s trademarks during the three months ended March 31, 2020;

•  

$30 million, $44 million and $59 million of reserves recorded during the three months ended March 31, 2020, June 30, 2020 and September 30, 2020, respectively, (while Cartus Relocation Services was held for sale) to reduce the net assets to the estimated proceeds which were included in Impairments in connection with the reclassification of Cartus Relocation Services as continuing operations during the fourth quarter of 2020;

a goodwill impairment charge of $22 million related to Cartus Relocation Services and an impairment charge of $34 million related to Cartus Relocation Services’ trademarks during the three months ended December 31, 2020; and

• 

$4 million, $19 million, $11 million and $16 million of other impairment charges primarily related to lease asset impairments incurred during the three months ended March 31, 2020, June 30, 2020, September 30, 2020 and December 31, 2020, respectively.

(d)

Former parent legacy items and Loss on the early extinguishment of debt are recorded in Corporate and Other.

Table 6c

REALOGY HOLDINGS CORP.

2020 CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

Three Months Ended

Year Ended

March 31,

June 30,

September 30,

December 31,

December 31,

2020

2020

2020

2020

2020

Revenues

Gross commission income

$

850

$

919

$

1,458

$

1,442

$

4,669

Service revenue

202

219

281

281

983

Franchise fees

71

85

133

130

419

Other

45

32

37

36

150

Net revenues

1,168

1,255

1,909

1,889

6,221

Expenses

Commission and other agent-related costs

630

685

1,105

1,107

3,527

Operating

368

320

380

405

1,473

Marketing

59

41

55

60

215

General and administrative

88

69

108

147

412

Former parent legacy cost, net

1

1

Restructuring costs, net

12

18

17

20

67

Impairments

477

63

70

72

682

Depreciation and amortization

45

46

43

52

186

Interest expense, net

101

59

48

38

246

Loss on the early extinguishment of debt

8

8

Other expense, net

(5)

(5)

Total expenses

1,780

1,309

1,827

1,896

6,812

(Loss) income before income taxes, equity in earnings and
noncontrolling interests

(612)

(54)

82

(7)

(591)

Income tax (benefit) expense

(141)

(5)

36

6

(104)

Equity in earnings of unconsolidated entities

(9)

(36)

(53)

(33)

(131)

Net (loss) income

(462)

(13)

99

20

(356)

Less: Net income attributable to noncontrolling interests

(1)

(1)

(2)

(4)

Net (loss) income attributable to Realogy Holdings

$

(462)

$

(14)

$

98

$

18

$

(360)

(Loss) earnings per share attributable to Realogy Holdings shareholders:

Basic (loss) earnings per share

$

(4.03)

$

(0.12)

$

0.85

$

0.16

$

(3.13)

Diluted (loss) earnings per share

$

(4.03)

$

(0.12)

$

0.84

$

0.15

$

(3.13)

Weighted average common and common equivalent shares of Realogy Holdings outstanding:

Basic

114.7

115.4

115.4

115.5

115.2

Diluted

114.7

116.2

116.7

118.2

115.2

Table 7

REALOGY HOLDINGS CORP.

NON-GAAP RECONCILIATION – FREE CASH FLOW

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(In millions)

A reconciliation of net income (loss) attributable to Realogy Holdings to Free Cash Flow is set forth in the following table:

Three Months Ended
September 30,

Nine Months Ended

September 30,

2021

2020

2021

2020

Net income (loss) attributable to Realogy Holdings

$

114

$

98

$

296

$

(378)

Income tax expense (benefit), net of payments

29

45

93

(101)

Interest expense, net

52

48

147

208

Cash interest payments

(38)

(28)

(121)

(133)

Depreciation and amortization

50

43

152

134

Capital expenditures

(21)

(20)

(71)

(69)

Restructuring costs and former parent legacy items, net of payments

(3)

10

(8)

15

Impairments

1

70

3

610

Loss on the early extinguishment of debt

3

21

8

Loss (gain) on the sale of business, net

1

(14)

Working capital adjustments

73

108

(34)

53

Relocation receivables (assets), net of securitization obligations

21

21

(6)

(60)

Free Cash Flow

$

282

$

395

$

458

$

287

A reconciliation of net cash provided by operating activities to Free Cash Flow is set forth in the following table:

Three Months Ended
September 30,

Nine Months Ended
September 30,

2021

2020

2021

2020

Net cash provided by operating activities

$

303

$

385

$

489

$

418

Property and equipment additions

(21)

(20)

(71)

(69)

Net change in securitization

30

40

(62)

Effect of exchange rates on cash and cash equivalents

Free Cash Flow

$

282

$

395

$

458

$

287

Net cash used in investing activities

$

(17)

$

(21)

$

(68)

$

(84)

Net cash used in financing activities

$

(446)

$

(671)

$

(238)

$

(203)

Table 8a

NON-GAAP RECONCILIATION – SENIOR SECURED LEVERAGE RATIO
FOR THE FOUR-QUARTER PERIOD ENDED SEPTEMBER 30, 2021
(In millions)

The senior secured leverage ratio is tested quarterly pursuant to the terms of the senior secured credit facilities*.  For the trailing four-quarter period ended September 30, 2021, Realogy Group LLC was required to maintain a senior secured leverage ratio not to exceed 4.75 to 1.00.  The senior secured leverage ratio is measured by dividing Realogy Group LLC’s total senior secured net debt by the trailing four quarters EBITDA calculated on a Pro Forma Basis, as those terms are defined in the Senior Secured Credit Agreement.  Total senior secured net debt does not include the 7.625% Senior Secured Second Lien Notes, our unsecured indebtedness, including the Unsecured Notes and Exchangeable Senior Notes, or the securitization obligations.  EBITDA calculated on a Pro Forma Basis, as defined in the Senior Secured Credit Agreement, includes adjustments to Operating EBITDA for retention and disposition costs, non-cash charges and incremental securitization interest costs, as well as pro forma cost savings for restructuring initiatives, the pro forma effect of business optimization initiatives and the pro forma effect of acquisitions and new franchisees, in each case calculated as of the beginning of the trailing four-quarter period.  The Company was in compliance with the senior secured leverage ratio covenant at September 30, 2021 with a ratio of negative 0.27 to 1.00.

A reconciliation of net (loss) income attributable to Realogy Group to Operating EBITDA and EBITDA calculated on a Pro Forma Basis, as those terms are defined in the Senior Secured Credit Agreement, for the four-quarter period ended September 30, 2021 is set forth in the following table:

Less

Equals

Plus

Equals

Year Ended

Nine Months
Ended

Three Months
Ended

Nine Months
Ended

Twelve Months

Ended

December 31,
2020

September 30,
2020

December 31,
2020

September 30,
2021

September 30,
2021

Net (loss) income attributable to Realogy Group (a)

$

(360)

$

(378)

$

18

$

296

$

314

Income tax (benefit) expense

(104)

(110)

6

125

131

(Loss) income before income taxes

(464)

(488)

24

421

445

Depreciation and amortization

186

134

52

152

204

Interest expense, net

246

208

38

147

185

Restructuring costs, net

67

47

20

14

34

Impairments

682

610

72

3

75

Former parent legacy cost, net

1

1

1

1

Loss on the early extinguishment of debt

8

8

21

21

Gain on the sale of business, net

(14)

(14)

Operating EBITDA (b)

726

520

206

745

951

Bank covenant adjustments:

Pro forma effect of business optimization initiatives (c)

28

Non-cash charges (d)

26

Pro forma effect of acquisitions and new franchisees (e)

5

Incremental securitization interest costs (f)

3

EBITDA as defined by the Senior Secured Credit Agreement*

$

1,013

Total senior secured net debt (g)

$

(272)

Senior secured leverage ratio*

(0.27)

x

_______________

(a)

Net (loss) income attributable to Realogy consists of: (i) income of $18 million for the fourth quarter of 2020, (ii) income of $33 million for the first quarter of 2021, (iii) income of $149 million for the second quarter of 2021 and (iv) income of $114 million for the third quarter of 2021.

(b)

Operating EBITDA consists of: (i) $206 million for the fourth quarter of 2020, (ii) $162 million for the first quarter of 2021, (iii) $310 million for the second quarter of 2021 and (iv) $273 million for the third quarter of 2021.

(c) 

Represents the four-quarter pro forma effect of business optimization initiatives.

(d)

Represents the elimination of non-cash expenses including $41 million of stock-based compensation expense less $7 million of other items, $4 million of foreign exchange benefits and $4 million for the change in the allowance for doubtful accounts and notes reserves for the four-quarter period ended September 30, 2021.

(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 October 1, 2020.  Franchisee sales activity is comprised of new franchise agreements as well as growth through acquisitions and independent sales agent 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 Operating EBITDA had we owned the acquired entities or entered into the franchise contracts as of October 1, 2020.

(f) 

Incremental borrowing costs incurred as a result of the securitization facilities refinancing for the twelve months ended September 30, 2021.

(g) 

       Represents total borrowings under the senior secured credit facilities (including the Revolving Credit Facility) and Term Loan A Facility and borrowings secured by a first priority lien on our assets of $234 million plus $26 million of finance lease obligations less $532 million of readily available cash as of September 30, 2021.  Pursuant to the terms of our senior secured credit facilities, total senior secured net debt does not include our securitization obligations, 7.625% Senior Secured Second Lien Notes or unsecured indebtedness, including the Unsecured Notes and Exchangeable Senior Notes.

*

Our senior secured credit facilities include the facilities under our Amended and Restated Credit Agreement dated as of March 5, 2013, as amended from time to time (the “Senior Secured Credit Agreement”), and the Term Loan A Agreement dated as of October 23, 2015 (the “Term Loan A Agreement”), as amended from time to time.  Our Unsecured Notes include our 4.875% Senior Notes due 2023, 9.375% Senior Notes due 2027 and 5.75% Senior Notes due 2029.  Exchangeable Senior Notes refers to our 0.25% Exchangeable Senior Notes due 2026.  7.625% Senior Secured Second Lien Notes refers to our 7.625% Senior Secured Second Lien Notes due 2025.

Table 8b

NET DEBT LEVERAGE RATIO

FOR THE FOUR-QUARTER PERIOD ENDED SEPTEMBER 30, 2021

(In millions)

Net corporate debt (excluding securitizations) divided by EBITDA calculated on a Pro Forma Basis, as those terms are defined in the senior secured credit facilities, for the four-quarter period ended September 30, 2021 (referred to as net debt leverage ratio) is set forth in the following table:

As of September 30, 2021

Non-extended Revolving Credit Commitment

$

Extended Revolving Credit Commitment

Extended Term Loan A

234

7.625% Senior Secured Second Lien Notes

550

4.875% Senior Notes

407

9.375% Senior Notes

550

5.75% Senior Notes

900

0.25% Exchangeable Senior Notes

403

Finance lease obligations

26

Corporate Debt (excluding securitizations)

3,070

Less: Cash and cash equivalents

701

Net Corporate Debt (excluding securitizations)

$

2,369

EBITDA as defined by the Senior Secured Credit Agreement (a)

$

1,013

Net Debt Leverage Ratio(b)

2.3

x

_______________

(a)

See Table 8a for a reconciliation of Net (loss) income attributable to Realogy Group to EBITDA as defined by the Senior Secured Credit Agreement.

(b)

Net Debt Leverage Ratio is substantially similar to Consolidated Leverage Ratio (as defined under the indentures governing the 9.375% Notes and 7.625% Senior Secured Second Lien Notes), except that when the Consolidated Leverage Ratio is measured at March 31 of any given year, the calculation includes a positive $200 million seasonality adjustment to cash and cash equivalents. 

Table 9

Non-GAAP Definitions

Adjusted net income (loss) is defined by us as net income (loss) before mark-to-market interest rate swap adjustments, former parent legacy items, restructuring charges, the (gain) loss on the early extinguishment of debt, impairments, the tax effect of the foregoing adjustments.  The gross amounts for these items as well as the adjustment for income taxes are presented.

Operating EBITDA is defined by us as net income (loss) before depreciation and amortization, interest expense, net (other than relocation services interest for securitization assets and securitization obligations), income taxes, and other items that are not core to the operating activities of the Company such as restructuring charges, former parent legacy items, gains or losses on the early extinguishment of debt, impairments, gains or losses on discontinued operations and gains or losses on the sale of investments or other assets.  Operating EBITDA is our primary non-GAAP measure.

We present Operating EBITDA because we believe it is useful as a supplemental measure in evaluating the performance of our operating businesses and provides greater transparency into our results of operations.  Our management, including our chief operating decision maker, uses Operating EBITDA as a factor in evaluating the performance of our business.  Operating EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP.

We believe Operating EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, as well as other items that are not core to the operating activities of the Company such as restructuring charges, gains or losses on the early extinguishment of debt, former parent legacy items, impairments, gains or losses on discontinued operations and gains or losses on the sale of investments or other assets, which may vary for different companies for reasons unrelated to operating performance.  We further believe that Operating EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an Operating EBITDA measure when reporting their results.

Operating EBITDA has limitations as an analytical tool, and you should not consider Operating EBITDA either in isolation or as a substitute for analyzing our results as reported under GAAP.  Some of these limitations are:

  • this measure does not reflect changes in, or cash required for, our working capital needs;
  • this measure does 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;
  • this measure does not reflect our income tax expense or the cash requirements to pay our taxes;
  • this measure does 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 this measure does not reflect any cash requirements for such replacements; and
  • other companies may calculate this measure differently so they may not be comparable.

Free Cash Flow is defined as net income (loss) attributable to Realogy before income tax expense (benefit), net of payments, interest expense, net, cash interest payments, depreciation and amortization, capital expenditures, restructuring costs and former parent legacy costs (benefits), net of payments, impairments, (gain) loss on the early extinguishment of debt, working capital adjustments and relocation receivables (assets), net of change in securitization obligations.  We use Free Cash Flow in our internal evaluation of operating effectiveness and decisions regarding the allocation of resources, as well as measuring the Company’s ability to generate cash.  Since Free Cash Flow can be viewed as both a performance measure and a cash flow measure, the Company has provided a reconciliation to both net income attributable to Realogy Holdings and net cash provided by operating activities.  Free Cash Flow is not defined by GAAP and should not be considered in isolation or as an alternative to net income (loss), net cash provided by (used in) operating, investing and financing activities or other financial data prepared in accordance with GAAP or as an indicator of the Company’s operating performance or liquidity.  Free Cash Flow may differ from similarly titled measures presented by other companies.

SOURCE Realogy Holdings Corp.