RLGY - Earnings call transcript Q3 2017

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Operator

Good morning, and welcome to the Realogy Holdings Corporation Third Quarter 2017 Earnings Conference Call via webcast. Today's call is being recorded and a written transcript will be made available in the Investor information section of the company's website later today. A webcast replay will also be made available on the company's website. At this time, I would like to turn the conference over to Realogy's Senior Vice President, Alicia Swift. Please go ahead, Alicia.

Alicia Swift

Annie. you, Thank welcome call. and third XXXX quarter Good to conference earnings morning, Realogy's

On Realogy's Schneider; today Richard me the with call are Officer, Hull. and Operating Financial Smith; Chief Chairman Officer, Chief Ryan and Tony President CEO, and

the the statements As the be current are future and based company its during statements and presentation, other shown on about X forward-looking statements current the will slide results on economic of environment. making call. expectations These

competitive, are control the Forward-looking those uncertainties subject results inherently and statements economic, which the other implied forward-looking contingencies, significant beyond may projections of of many in and expressed or from and to Actual statements. differ are materially management.

are not call. Important For to from the we statements in that of those earnings you presentation, been our financial the measures the annual listen actual this November initial filings. other release. and materially measures regarding non-GAAP this certain rebroadcast in these could well to to X, and of cause updated as results today, made subsequent have that Important earnings factors Also, rules. important who'll herein and assumptions be remind the press remarks included quarterly non-GAAP specified discussed our SEC as today, forward-looking is call will on as those our information issued earnings SEC release are per financial differ in

over Chairman CEO, and call our Richard to the turn will I Now, Smith.

Richard Smith

you this and for Thank us everyone, thank joining you, Alicia, good and morning, morning.

like recap two ago transition weeks I plan. leadership delve third announced we Before the regarding news I the results, to into quarter our would

experience and President nearly underway Ryan to growth the experience of and of of and recently Operating December of is wealth Ryan CEO. us XX rigorous Card perspective as has announce served He to in at my will The be all that retirement brings leveraging as industry will transition Ryan Capital new our joins effective Following Schneider company. analytics XX, drove so a a to leadership well technology, comprehensive new its pleased his upon Ryan directly very division, President One. XX, turn Chief four and and success. data, search, which joined appointed business He of most largest Realogy and senior Officer after we're Ryan and occur a big let bring it of December business reporting now units Ryan? the with me to transition by over the the Ryan. will balance primary years

Ryan Schneider

Richard. you, Thank

to Realogy. know services we industry estate be to by who're the the running serving team, exciting work I'm clients. leader credit and this primary results. Together, the see great and start unmatched with agents, Let saying about joining the to scale United company employees, Realogy's incredible That's who've management industry. growth to humbled new excited residential talented alongside use me real and ways both the abilities to that analytics I Realogy's ground excited Realogy's senior incredibly will I States. customers built strategy data, team resources Richard in and estate leaders serving for and and in and are to drive business agents. to to drive I'm of technology our franchisees, a committed potential enhance real a hit

Richard Smith

highlight to a of turn the of and provide in Thank faced we're We number today's summary the I'd items you, Ryan now you on to a the let's challenges quarter. to with quarter. like call. third going

we strategic and particular, we agent seen NRT company. relocation in improvement potential the constrained and the contrary X% and volume and lower experienced over National agent transaction at operating the strong NAR volume statistics October basis X% trends XXX points on growth of over initiatives improved will this several Realtors. especially of indicating of a was believe approximately our cost activity the revenue Our profitability EBITDA two homesale In retention combined for hurricanes to our that, was the third by the the absolute in quarter discussed client in low higher persistently In of what we've This our of our the quarter, than years. next it's progress said transactions for NRT solid higher the on Having in progress is RFG, investor was we recruiting reported that level Cartus. continuation at curtails volume up Association the result saw top drive quarter, commission transaction open adversely year. affected the both revenue the by employee of we affected by higher final inventory and day, at and at of which

levels to Now, attributed hurricanes, guidance and NRT NRT in point Florida domestic as of and declining market to greater the focused limiting we an let's increased corporate employee serve NRT for continues fewer splits pushed And growth and the a slightly large as across were volume expected and the volume percentage Coast. more low the we're operations incremental up we talent of effects Coast and in by and low largest at than came gains competitive Coast split East will West the Cartus's the of volume recruiting be clients we in the relates Combined volume. guidance. felt NRTs commission in to activity operations relocation intentional significant core be from in for volume number structure puts best And it than pre-storm in The commission operations, as and although challenge to relocation that and operations with result successful Hurricanes TRG. transaction TRG the the is The the splits its slowdown more a was cost NRT NRT growth Commission efforts saw returned to demand in face splits activity. the the in as than NRTs anticipated our of initiating With employee to take the of in affected business of growth board we Houston steps the below and overall takes three reasons, we level as high also the Houston, volume the and RFG higher splits than at relocation address and retention some relatively expected quarter. and agent on contributors, international of higher growth transaction efforts Coast increasing Cartus's encouraging, to particularly with Of markets assignments. expect West acquisitions. and its are addressed which Florida quarter share. lower our inventory, primary the were align XXXX, was low persistently has in effects volumes NRT overall end of a new of the end growth in higher Cartus pleased West it

strategies investor we generated is focused that clear increase on that from day, and recall it leads that work we're made you If company progressing nicely.

and long by agent strengthening existing marketing to all our training proposition. which also for our world to term agents new strengthening and agents technology a building continue program, class productivity increase value agents the We on attract designed sales tools the of and work of are

our targeted recruiting agent can count be to recruiting key last strategy X.X% Over count through that quarters, at of NRTs in of quarter, XX The sales agents. in is agent agent metrics, first delivering on exceeded third markets success which slightly grew water of more we're improving measured to retention two in and efforts we're and several committed and commitment. end XX% the agent our The curtail NRTs retention. months at mark. rate the historical key XX,XXX share last our the than second of agent the high

While compounded cost by skewed doing we're out late toward the pointed especially West the than when anticipated. increased market the we successfully which slightly geographic share mix addressing year, so, the Coast, last the more splits of concerns, is

will splits we to gains, third increasing tasked the NRTs XX.X%, the of fourth share agent rate a estimate XX.XX% tradeoff and objective is management population. of In the management rate. splits much range the to For the split the in commission company are XXXX field as our compensated and year, and NRT market with be in slowing NRTs more at between of balances productivity split favorable commission agent which curtail

site fore by use technology that our and continue to improve agents platform franchise or the performance. to to our be our year enhance proportion, their value front as is we will at eligible Zap the our On franchisees deployed business, franchisees all efforts of to help substantially end.

franchisees XX immigrated and generated new our engagement. opportunities continue in from million in our key third see deployment agents Affinity base saw the adding Relocation contributor In uplift agent in to using engaged our from suite or continues sales of related team initiatives. We Zap the application franchise homesale the XXX the thus and referral income resulted a from In recruitment actively approximately XX,XXX sales, quarter and generation lead the year-to-date and training and strategy, an closings approximately our build and Cartus to million quarter. in productivity in shift in brokers businesses gross to agents that commission to

management roles. leader Nick President Ryan In BXB Century at years real Sonders In with Zillow most our of we Vice with He President XX than senior XX in in and extensive years appointed the CEO leadership franchising, Global Capital. named Broker executive He technology. strategic Real and a Senior the Chief business Mark President XX Bailey as served Schneider NRTs over has of leadership we more focus our and addition Sales ranks. Also, in continued Nick experience experience of our was appointed development on General depth to financial to welcoming, Vice Electric brokerage, August the and Officer. Favano to recently of Roger Marketing. strengths as Cartus And in sales August, joins a team, estate adding as Estate. and Relations brings company as Group Financial mainly

invest to EBITDA the we year, operating in of continue same the While company. period underperformed growth to last compared the

strategic our We for are and strong in as count. progress, aging growing making evidenced and recruiting agent initiatives, retention solid efforts

XX.X November have XXX.X that's a bringing of of outstanding as and term, improved flow stockholders have million the our tremendous for total and dividends. volume million highlight of business. of program inception agent cash February share share to and units, Year-to-date share namely organic repurchases shares of in of our total cash higher in our characteristics we services to believe across like our our we agents in focus long drive strategic steadfast we in provide our to strengthening result flow to which are the repurchased the on repurchase million we returned of growth $XXX XXX aggregate, the will XXX of We X. productivity our shares million in affiliated in our generated growth of which each sustainable the count goals, of business Realogy. form free I'd we to and XXXX, Since, million by revenue

we by that Act to co-ordination. permit economic tax House front. The first on and many Tax to will Committee GOP introduced tax of agreement reform reaching growth the Means report, in the the move Ways steps, yesterday is and Before Tony's me comment create expected Jobs on on Cuts

at treatment a can reduction be mortgage the As written, stronger that reached to are keeps the of contributing said, industry That state a taxes. we large opposed of and ownerships the also to value position bills optimistic strong, interest but that local home economy. is the compromised

that on the pleased Tony. Means expect should over will legislation, commentary remains, deeply harder House to work to important that work in be engaged that tax much GOP Although let on legislation piece turn we the that work fully and of both legislation With me Ways support. result we Committee's it see to and in industry are Realogy and the this

Anthony Hull

Richard. Thanks

changes XXXX. I to QX our discuss guidance the address for results the let Before me

the coast guidance that estimated year-over-year, to well volume our X% X, the disasters is to EBITDA X% relative An currently of X% homesale to transaction $X natural the between at reflects range expect X% XX% on to and charge and third Leadership. to between $XXX full about $XXX million billion growth volume NRT's year-over-year, related down fourth operating This $XX and now as transaction up will Broken XXXX. of volume for initiatives between is the trained X% impact cash West with and transaction of At in to to expected global X% relocation business, sites which expected to Realogy's An to and reduction at we Slide EBITDA million in shows in fourth quarter is volume combined higher X% and will be commission year, is transaction RFG range growth. $X.XX to of have as the in incorporates On and volume full business XXXX Senior Realogy's volume in flow from X% to the changes designed million those quarters. anticipated free Our due $XXX million. Cartus. million which we transactions expect to price NRT. X% in RFG million, and to X is coming lower growth X% revenue increase QX unit attract $XXX and well the range year splits flat the and combined on X% expect to in expected and be estimated agents by greater operations grow by Slide sale volume X% X% we NRT levels, between growth $X.X increase forecasted home billion volume

and quarter is results compared third effects XXXX. in impacted mostly the income results by Operating Texas million. $XXX greater up billion share Florida compared XXXX and operating Adjusted in of quarter third EBITDA compared was Revenue our approximately $X.XX quarter $X.X $X was The to million due third review million EBITDA. XXXX. at the combined I'll X, hurricanes Slide from was Net of the $XX for $X.XX income lower in X% to per detail. of year, quarter to TRG. NRT to net XXX to the last Turning million

X point being of discussion a drivers about the business, RFG. The of X.X% size transaction to Slide growth increased for impact by points the quarter. had offset average in volume homesales X% with in X, growth year-over-year our sales X% on RFGs was overall sites Turning to volume price. transaction third in X hurricanes by decline our

to also reduction business quarter third The day period X% the had than one acquaints year, same most in size. which last

the growth site strongest the for On sites, in basis factor included during The points. volume of price and price. X% the X%, gains the Volume The a in and gain Mid the quarter. East due Florida reflects RFG, price. loss increased X% NRT the average more X%. to increase transaction had up volume hurricanes West two geographic in quarter X% followed increased have at in for in finished a sales of constraints where RFG the year. across NRT impact been continued noticeable a these Florida quarter, during were to which about derives up accounting the West its Excluding being inventory up by time the X% revenue would during of in NRT X% the most this the for a the volume markets, impact to North sites of X% mostly X% Texas in quarter, X%

West been average sites recovered Excluding quarter, have XX% stabilized the the in is grew an and up volume which hurricanes NRT's The volume year the estimate X.X year-over-year, at segment first X% in was growth. the the in increased of Houston. price was Middle we the the region sales increase North in X% RFG. South region price. flat to East of decline strong down million The X% and The above offset consists would X% on was in by high-end decrease terms X% NRT by third half XX% growth, in volume. about driven strongest California of a geographic volume The in included which region West volume, Volume market for with X%.

with RFG with for royalty continues down effect rate other for royalty previous top reflect basis success to to at X%. was was X.XX% rate X which down to franchisees in X.XX% drivers, XXX average of and the Turning rates net Net NRT or to at our and of points line quarter down below commission broker our point the ABCR estimates, X.XX%. X basis point basis X RFG ABCR was

expect rate a increased The approximately we and to split result points, XX.X%. basis X.XX%. approximately transaction heightened to like splits the of For in NRT year of to year-over-year a to splits was rate towards the retention impact volume, royalty skewed QX mix California recruiting and markets higher which XXX geographic efforts. of commission be higher business the command XXXX, increase continue full

retention operating $X detail. to the higher impact of revenues. let's royalties the $XX million, decreased of to RFGs NRT acquisitions. of rates net higher the million $XX of to in royalties, do revenues. million million the increased total. and million principally and X, down revenue X%. RFG, increased increase. the to added which EBITDA XX increased about primarily the resulted growth The XXXX, half $XX QX $XX more greater Slide to $XX year-over-year target $XX EBITDA completed $XX international the was unit Turning acquisitions which about expense, since and the million operating drove than commission of million NRT million due the recruiting in to performance business due Higher Breaking NRT X% offset of in talk to quarter increased from revenue with operating higher from domestic split of revenue. efforts second XXXX increase was volume affiliated increase At million in increased

expense Rate investments venture, supporting of completed higher quarter. greater to of completed are to accruals and PHH Guaranteed phases, Guaranteed assets cash Affinity to early relative $XX. Looking XXXX, in and particular, establishment International Loans the the decreased of revenue EBITDA proceeds the at employee costs. of primarily related was between expense. The the decreased a realize EBITDA, $XX $X with Corporate expense third quarter you've $XX debt Guaranteed underwriter, million Slide for million. TRG's to the of in has by approximately million of our interest three cash to start-up below QX, associated remaining last result to sale the employee restructuring was the revenue increase before West the will the the expected revenue venture $XX volume million by the $X full of joint of the revenue million offset for by regard partially Home including regionally development, to Home impact $XX $X year. XX% extinguishment EBITDA resell commission way, two the as be strategic due was $X The due year-over-year. and another of to joint fourth Cartus million million specific With conversation decrease operations interest of in million decrease to offset approximately lower and liquidation decreased associated technology XX EBITDA in professional Rate Loans PHH million and to and guidance first million expenses fees $X commission provides costs Affinity other of year, and partially Realogy's expense EBITDA RFG. And, items operating in whereas higher third net of lower is $XX relating with change in in was revenue. phases in than million in operating XX% five out quarter are last activity, cash the included in a joint in company higher of are million. effect Operating venture. the in in earlier in initiatives corporate the on capital driven Rate decrease increase company be of reduced PHH its $XXX TRG's Affinity. includes, re-finance Rate expected between to reminder After, expenditures giving taxes be Guaranteed in year revenue. seen reported Cash as by expected the in the be instead million a numbers venture $XX like year expects $XXX

to approximately fourth for between Finally, joint expect the year, confidence $X.X remains of we return down will operating great PHH our great intend dividends predominantly our and execute. be expected of believe $XXX investment the Based and $XX, shareholders, the Loans We the of opportunities a company which ability XXXX. our we Realogy million includes between we million the the have venture working Home and on that in in to to quarters. purchases significant laying because through EBITDA billion million expected cash cash the to range and a to capital is contributor in of use free the in our portion this $XXX of generate third market expected share and in plan, $XX $XX year flow capital

Lastly, year years. company be the last at you strong take opportunity of leadership would should I last of XX quarterly this this the ethical to for his our acknowledge and know, the and retiring to be calls. personally appearance a Richard our plus end want for on Richard Smith will

During times and did company the for company you've we the of strong the and behalf was established solid all vision, the well his finest, continued for that all working to through we It execution on years at a and Realogy our toughest of employees, accountability position his built you result growth and the great storm the to respect culture and tirelessly we is footing which foundation, us Richard Realogy ago. your the of of are today. a years thank Richard five downturn, IPO bring for back in leadership largely, financial the success. grown as positioned On upon through future. are best to the

move we'll Q&A. to Now

Operator

the [Operator from with of Merrill David line question America Ridley-Lane comes Lynch. Bank is David Instructions]Your your first of open. line

David Ridley-Lane

NOC agent Thank be overall or contribution Sure, closely talking of would I the net fair could detail earns average it be if of on of you're higher more if revenue a growth, agents? the productive productivity the think appreciate to wondering you. or those NRT bit

Richard Smith

well, agents are we more game, play productive are they These expect are at productive the end with of be very fully the so, to with, so us. high that begin to

you in your correct So, are assessment.

David Ridley-Lane

your but And know commissions early in of the split trend it's then on planning, I thoughts in XXXX? any

Richard Smith

the are we year very, for so, years, been of our are fourth catch at this, and But, about agent think played and We know, put. to that of go keep allowing as to to do the expect as up, to favorable in we hard increasing us of planning stabilizing on fully working we that probably start way splits as the were the up. as to third catch growth market agents is they we've we you underperforming Sort and that, thinking team this stabilizing quarter. regard, the the three I very look where we XXXX principally in objective rate management the agents and productivity on as of say, you possible

and the race. that high experience offsetting in We productive per thus in good more confidence increases have have we ability make regard our to degree them

David Ridley-Lane

Alright, thank very much. you

Operator

question next the John line your is comes Your from line of John Campbell. open.

John Campbell

facing that Hi maybe Cartus guys morning, it forward the side a and of I in Am great like getting it's right it with sounds all the good to bit you business looking And years business, headwind sustained driving it welcome, working next strong on you in Tony, commentary? guys and Richard conclusion the that career. and then form over year. Ryan first long was like at congrats know and sounds looking Richard to can right I you. the a of and am be

Richard Smith

No, saying just in is only seasonal, you're almost it's not and but The of exactly. there. volume out

this we cost the reduce There to structure, we'll of the going extent technology way can cost. up the we are impact engaged under a delivery. to is is, adjust have is project advantages principle big that on technology what smoothen in service processes have, are to think one fully we So, to expense decrement going

would. So, partners we Realogy just fully big address project management are we we said XX, engaged will for as above all and and

Anthony Hull

to retention agents. profitable and our most have really agents tease leads increase think You our opportunity effective the obviously from franchisees our highly coins. of of leads our those much on know, of them. That leads a XX% I'd plus recruiting business from and credits converting functions one those more after coins that substantially that that that, from the add will great And, of of larger the you amount, to is are than very come the come to leads corporate but filmy a the critical chance through partially get there's those that within are we Internet. source also And, number goal any to and is to coins. because delivering increase net They our adds agents sort filmy

that's proved gain opportunities that reason for to great incredibly our track in to it's of increase have that And, to agents. regard So, and really the that company and the franchisees future. effective immigration the in we business

Richard Smith

recruit Tony retain that, just us confirmed absolutely credit call additional assets. helps It is agents, me make franchises. There on old is and right of and one we know point. a also that agents, our us let two recruit helps

going be tool forward kit. flexible the compass. me of assets But, are down you cost to core to resize as our we and So, of going that's our key structure should just in to then right more tell one importance Cartus a going be the

John Campbell

this ran pretty businesses you about way the past. kind Okay if just this think nine same it think EBITDA and it's probably level, is looks really X in get at I XX year? margins months months revenue of year. EBITDA in then XX, the headwind last that Do I the know that year. the you that a closing head, It nine or your the that to guess on it's of acquaints back But, ran assessment. additional top you year, I or the of that that so of quarter's close XX% first margin about first next million so, to good like to of margin think of

Richard Smith

Yeah, now solid years, reliable, mainly as past assessment. the both I predictable, in think It's are spite in and predictable trends with you of downturn. right pretty the been it's looked to at contributor been revenue we've EBITDA that five a

and sessions, underway. well better it's be technology to through in So, the we improve definitely going that's can

John Campbell

missing to and this help was but XQ Okay time you Anything can the TOR I maybe XX it last include quickly what as then pieces there like know imply on got have color kind hurricane this short the transition is year? year am roll guidance to quarter of X this truly a legal cost million there about the sound over then of I million us an get us I and million doesn't of I moving is lot of else Tony, guess and of the next one and of is idea and give X conclusion get into could activity. sure kind next eventually, I am we EBITDA settlement quarter you just you this

Anthony Hull

I You some about we from rate going in wind benefit quarter, next from good joint venture. PHH the earnings our from is of there infinity feel replaced to down that's think be the year but currency know in fourth very store venture

that's again more and the then guess quarter QX and more time squash ramping third see year will comment, venture. that for of XXXX So best probably in that's we but spread as of it result maybe joint I the but think next out will year fourth up into so a I not that results one year, be little next this

So those - items two forecast. quarter in fourth in the things I things are think right, largest those of think the the note are I are two you

John Campbell

Okay thanks guys.

Anthony Hull

the XX, in yeah. A

Operator

Deleeuw Piper open. Your the Jason next comes question line from is Jason, of line with Jaffray. your

Jason Deleeuw

and Ryan, want you offer and with the morning to been it's I all my and wish congrats to to best. I with want looking Richard, Good working working just forward nice and

I operating I on RFG NRT, is X% combined declined EBITDA year-over-year the quarter. the guess the question look the at first when The results, this

that the still segments on commission looking the kind be so of should Is with had the recalibrate in requirement. kind are expect the guess accessing I commissions been EBITDA your we it I two that those kind business of strategy of kind what's for thoughts like at up segments we combined give the of at mean even here we growth kind but combined. the looking can kind how of of to splits growing in just thinking ramp So as to

Anthony Hull

I of this afterwards think flat. actually we impact. talking about those, both Mid in than was Coast of is the happened West and recruiting to We it Coast the of are anywhere because our are X were are I in quarter The markets, more else. hurricane we England on in what Yes, think XX% mean I X%. numbers reported minus a was is outperformed in benefit actually I to We they success up West flat, size in the forgetting New NRT there at this know West third year we but some terms happened the the rest

NRT those was up Xor X% know markets. You on

we kind that So West XX% or definitely, anticipated. increase Coast flattish XX XX% better up Coast the to in the of country. we so rest and being of in up, out the had for we splits again was the Coast West we than being due million did million the performed, $XX substantially West a of but

the another it performed would we and X% nice revenue you at much seen West still is of be more kind the which have So on combined and of the country way in if have saw rest the been of looking the a at great X% - is - West in the growth rest will North really growth you EBITDA Coast out the new just in which attractive of it's wouldn't Coast seen a story.

I I to we'd in favorable continue growth areas splits. think it think XX%, have like forward the future in other I but going probably see more that

quarter see that we the a going up expect the it's catch forward, but know that Coast Coast really class will that catching something for results and drives combined huge the would pressure of which to be very great skewed West West kind to again and really making high the elsewhere great take on and the are Coast up problem could we often try driving potentially for the growth. So of I is West to to it but was be splits that

Jason Deleeuw

change in of geographies any and in for split going kind thanks target? of that levels about just want thinking on it, you the there split which county Got of the is to the of terms or being to be parts strategy then recalibration offered

Richard Smith

a accomplished we've markets do in perspective. and will between market to most very be selective the splits share to being be intend question, we which as want above balance reserve, accomplished profitable of focus the and firstly what so most a on It's part good gains but would from accomplish will remark the We the a to all we we now to markets clearly grow. the split think like

and during you but XXXX, most So assure are components focused our have I profitable we the you markets. on will so performance in those monitor to

Jason Deleeuw

thank Great, you.

Richard Smith

welcome. You are

Operator

from is [indiscernible] Evercore question next ISI. Your

open. is line Your

Stephen Kim

a ISI. and lot over question Evercore to very first splits Q It's is I the you make add of bit and naturally I me right. fourth down to have sure as example I gone for the relates to much know offer can Stephen tell. Richard. thanks an sequentially Kim, this at guys congratulations also also We My never at let least far wanted in that seasonality got splits as Hi, my and a your

productive forth, to anything is think but are me I on when the hiring be that to help recently year when is some as the was you wondering the going so these the could speak weighted it process is to with your clock to on the if just sort perhaps that see and more understand make will you stable of year that in the starts to of relates seasonally commissions through continue the of trajectory back? or to split the so there P&L going splits agents timing very underwent

Anthony Hull

the to splits forecast. year that's reflecting latest to expect XX.X% we Again our XX.XX% for be and

the we that XX.X% of think half to I project to are in the that this effect increases certain due don't increases more to that full help see the the year of sort trend some see - the the year. we split you on note see what's but see why and what we be during year you expect so commissions as get back so today, of increases smooth again XX.XX% volume they of based that's try agents for to you back note impact that end you do improvements that you

Stephen Kim

Got it.

what going was sounds so trying that just like are and I dynamics Okay to next to clarify. continue those that's

XX due million, but you EBITDA all if managing $XX think I believe just Second that naturally question numbers it I your recruitments the of sure was guidance didn't in natural for markets XX from quick, cost that you was you higher I I within then million in the about wrong, quarter, of to want split make and million volumes was that XX% of sort a in will I got and passing X guess that higher million - million from $XX indicate assume with XX, of and said right? that Do but the I your costs the those transition, you expected so to have sort million due XX XX the leave was right, XX% recruitment I western markets. I of and would think for and indicated efforts this I if is commission natural million relates quite to just you where thing efforts I think disasters, last last a for pieces me correct to that splits the higher I am - disasters, roughly management quarter, the transition change Western apologize catch X some higher now

Anthony Hull

think and volume mainly for in more how board on was some XX think the Coast whatever due in that front. reduced in that - Cartus the shake was so out clients the contributed be to other we things pause, pretty to that seem from that to was reasons the I that decline. right the so on I we third exactly activity are thing you other the this They of and much across shift we seeing - I for are but see to the Washington west especially saw factor quarter activity international it's on Yeah, temporary and seeing and just to are the then year believe the

Stephen Kim

guys. Excellent. Thanks very much

Anthony Hull

Thanks.

Operator

Your next comes the Dahl of from question Michael line with Barclays.

open. is Your line

Michael Dahl

my questions Richard, congrats all Hi, and my thanks well. of for taking as

Richard Smith

you. Thank

Michael Dahl

Tony.

the bit think know in on will if beating I I is even percentage something splits to losing West because you is adding thought these the this what the where in to and truly you shift think would volume that's keep guess so a Coast negative compensation are goes clearly perception to understand of you And that where its is are still I come the transaction up, that's be lower the is west margin really higher a if absolute yes, on the you saying why you but is in but my think it price terms. you split transactions this west or now EBITDA higher value the Sorry am rate, positive this I change little the struggling dollar would average so it's what here harsh terms a you is that - coast, to money actually from that not relative

Anthony Hull

ladder it's geographic shift in the a same I we retention the at in really it's efforts. mean time as mix same place put combination, at the a It's recruiting

and the and but kind we of was our have attrition an this issue gaining got last which were stable we highest we increasing strong the effort, positive has goal behind completely of the we overall company. news start having sort combination think the way a of us of maybe road I that too but of the is I in is and completely those that to to profitability bumps revenue going ultimate so results the ready have share largely effect on it's not about desired it's again overall concerned So year to of but or the think have market altitude and is are plan well be along our that

one country we of the West because and rest didn't didn't would once is grow double that two the Coast and think a vision - I at just had impacts the the we So country, of don't as XX% statics us expect adopt Look a the hurricanes quarter. to inventory the sort forget be national soft. this was - would just it rest at think thing constraints the the constraint finally in third of inventory was we

the different we and successfully if leaps we and North been by improving would West it didn't we Mid again have results in East, bounds. very seen picture So when quarter, the different have had but the a the for happened in and East, the

its, like and position to but in revenue our the agents, the EBITDA glitch levels. to market it's heading onetime direction we and and so absolute right retention Our increase a are me of

Richard Smith

a would view one have Let holistic I comment me additional of add one, this assumption correct make with the in Tony operations. very West of his is we exceptionally sort Coast in

contributors side to services material the from are happens West in agents substantial and as You are higher paying be and the to closing remember franchise most that cost the markets also absolute business to to payments profitable there as of contribution our royalty that Coast title our to one on of far well. got as

to anticipated. that out all is the in point of take West your mix us, was profitable market much that is stronger business very for the that California Tony than account, but So right of we Coast to a

Michael Dahl

that's of past competitive recruiting plan here and altitude clearly that thought response weeds but And its the to when it setting responding doing were what this guide you to seeing California about also part, question, about you talk and I stabilizing It regarding to being of the it. related kind the that again understand profitable, these the what and is competitors I to some on what in extent change got some couple helpful. initiatives, in are we because of next over think my Right, years. of that successful you have talked have you been terms to the are why

same have are you been competitors? those what You successful, seeing from now

Anthony Hull

more honestly any giving of From to transition have I then best - our them we recruiting this this small there pain agents and incredibly NRT, to and management what to and brokerages large small, heard we from in go - their in, old but head to can - successfully doing XX all it's nerve months again and it's payment than a the get selective this past year doubled competitors is doing the after and going do versus is the really earlier. NRT of the of scale to that very attract or spotty about relatively doubled have from to our reaction us not nothing was data using just are

to So our million recruiting be $XXX this year. of we $XXX in recruiting we a have gone of going year from GCI are almost GCI normal million like

agreement us our with So with the have get stay capital with agents, we abilities our relative an the - and overall for to outlays structure three very to we years. agents minimal

to think on that year and has to investment I we do some successful and gives very fine prove of targeted we beyond, problem - life pressure we been me been get just reversed one do that tune over their recruiting the that very turned years, turned on we they the plan NRT very, the just successful, the back management this to focus and that can for to takes amortize it's themselves in some this obviously sticky So the things ago management the a really has again of to it's - but three it's during took and shown We need problem tune numbers as and effort it pay it it's it. me it XXXX things it credit severe year. of was very in dime. NRT it's, and when And contract, a around sort a one confidence around are we recruiting year very And and and things splits it to the mentioned, a off Richard are it. they able turn team and lot for on

of by management So I in it's the really NRT. impressed effort been think the

Michael Dahl

you. Okay, thank

Operator

open. line the comes Bank of from Kevin McVeigh Your from Kevin, question next is line your Securities. Deutsche

Kevin McVeigh

us here would Great, give of cause factors high low the to - want range, of can what what come versus at sense in to are? a the end a EBITDA you the

Anthony Hull

me was of just quarter. quarter job trends raving the the kind we - mean those about same at looking of RFG X in impact almost was and hitting X% all that third would feel situation lights are would that low came see flow end. we of if hit opens be things was head low now, and in in my lot we October kind on a shift think and X% we confident third that the the of see of sleepy low at if terms of up probably between not the on transaction between for NRT a forecast is and Right big don't it's on What lights and in - I quarter so terms October, the most is a cause of opens saw to volume the the I we end we the them for see the in the NRT X% opens of end to in the terms saw really fourth end pretty

don't know and I and so cancelation and play October, in - mean to to November not are December close going going going well. our I that's to what's in rates close we out what's extremely So how

So again that balance range guidance. I it's of think

Kevin McVeigh

would 'XX changes effect into uncertain given activity the Would this issue you they this and any to the that obviously Euro instant billing law not or expect guidance. tax hike in is affected in take and you would in

Anthony Hull

of be as supportive written. house to to law. board idea the the think to going what's get legislation with tax what's is as going the not industry and except have it's is in to be no passed not impossible going happen The almost as result been I we law supportive would proposed how Listen, get to the

industry So and to let's the think got assume national becomes far anything for the to suddenly don't to I think the I a don't markets waiting is economy. it also spike, more moment this. that on favorable

and - I some legislation we they have I of lot propose the till clearly and time something other how can or see response out, one but until, so don't in the we this fully you markets see spite react to think button of we I the pause hit and and process placed spend need becomes wait to over see appreciate law. think will way a to see we

Kevin McVeigh

when So buy you market for can the and can back you in then perspective? a just from just mind - Tony back

Anthony Hull

week. a In

Kevin McVeigh

you. Thank

Operator

KBW. with your line George question next line Bose, Your from Bose comes open. of the

Bose George

can you that how next in is you view thoughts any good positioned if give the update October, market overall us any continues? positive on year Hi, you morning and noted you mean think trends for how or I on

Anthony Hull

XX, put for X% looks we like earnings Whether average we our of year the in volume. the of in have deck put was October next on view as growth page forecasted five what

and we favorable franchisees, terms that's recruiting same of target mimic to do we saw, we've going to of in of RFG with which s would year this to our a their that of is, program them, So, we to NRT because this program. lost year, we are was very expect volume increases much sort a of strongly the that continuing outperform pretty sort obviously are

the of XXX points. terms up in in and technology both market, in by our value we'd whatever expect doing just that of of proposition in of we some see help to are to quarter the terms NRT exceed expect we'd us obviously aging everything into learning. like is So, growth franchisees, rolling happens so exceeded And, basis the third we also that benefits

Bose George

you forecasts in Oaky that you the if great, pretty the in of in which the has activity know constraints of over of in over be terms 'XX forecast 'XX, limiting these might been positive you expectations inventory do noted, does that. some like are you Because, like 'XX seem feel strong? 'XX terms of it overcoming

Anthony Hull

with would economists enough that of base again discussions year and I say from for some next with economists. smart these Yeah, C their not our

little to is they'll continue on in know of we are most stock price is equation next on I view they the the And is you all upside positive supply the up up to not year. go So lot what I so some at this a than because the that about. see a confidence with view will are them starting significant take, this more there the thinking that they markets. They high across that demand year. price, is think and steep that unit I'm in surprised towards, guess soar dynamic And, of still obviously consumer started pent market, of demand, makes time levels. of next There bit weight the lot up board, look I wealth the growth, year demand the

it's that's constraints, amatory outlook, they but obviously I year. their kind So, get next about a, of think they understand just the positive

Bose George

cash, your give a company, and for one does or of then that down thanks debt use specific playing to excess of excess Okay one, paying leverage? just the debt side, in one target terms how

Anthony Hull

targeting EBITDA, for to target under our we down are currently X.X go we EBITDA at over to credit NOLEX, so, use we leverage X.Xtimes are don't X agreement, It's times I our suggested to and because get EBITDA that we Yes, is times, three times. debt anymore. net as down upending calculated to are

year over more to sharing cash than towards of we at debts. be the M&A So, $XXX joint will generate of And extent, to about going are $X.X then the XXX purchases used is for million venture, so investment. is point, in new we're a dividends. to going which and million require free this to a down go to million that that's going XX for about flow. and pay About this But, $XXX billion leftover re-investing everything

Bose George

thanks. great Okay

Operator

is question with open. comes of Brandon next Blair. Brandon Your from Dobell line your line William the

Brandon Dobell

high right now? talked wishes Thanks. do or trend the a it how question Given I And is relative my factors congratulations net But, if reverse and as to think reality magnitude you market's takes there? and the how well of progressing can opportunities to share, the concentration first in the about and you about royalty think any think guess tactics of what term that near or change puts other market you so commission's is the there we do about can that well. on lot the puts. that we rate,

Richard Smith

and comment. Richard for your thanks is This

rate not franchisees royalty lower inside which help we different we in think our is a look the relative perform, You the rate get trash. a that's that how the effective performance, negative. strong positive to the Remember incentivize a

that then pressure own you is going got would a, the other, faster rate, gun. anticipate, what seed the we effective the market but that's growth much top or the one the So, if everything are outperform in top XXX and on to from at you've XXX or absolute top the they franchisees way than low steer

change little more variables we about, So, you a do Those next another and royalty think we productive that become add are franchisees we bit. now when offset, a the another about smaller you effective negative. then the as franchises as wouldn't And two rate. think see

Anthony Hull

every terms year, in qualifies kind rebate. for of is that threshold point we Another raise what of a

So, annual kind of reset so, ups. that sort that of

Brandon Dobell

a of on And one, Okay look these price that, just that take does if with you're amplifies efforts puts your Geographic's, trends from kinds maybe then what be at I Or change all it be not companies etcetera, to it that the your particular on. May think or final you about may drive a apt are but Commission like direction. splits these got going of offset dynamics that you in within in maybe a some to strategy something at. change, it. guess going region or the geographic more making point exposure are

Anthony Hull

very a as in week, we So, you couple high our we're have that. tacking announced in threshold capital, continue can return on sleep. for doing do very know we We the well acquisitions, synergistic, a so we'll this invest versed that

synergistic. look We see not continue see those be material focus don't way us any you'll will to on we don't rather tuck-ins, I everything, at you us think that doing

as attractive, us you'll stay So, as great, we that are tuck-ins that long lot operate very see in on continuing XXXX. great, continue to look of they course they leverage, the

Brandon Dobell

thanks lot. Okay a

Operator

McKeveny Your with Zelman line next Associates. question comes from Ryan Ryan & is the line of your open.

Ryan McKeveny

next targeted TCI and Two year. that the on to the Do screening add mitigate year recruitment the split likely you will goal, increasing XXX that pace? on efforts the good continuing any you XXX slowing bit this the into continues when pull I you you Saying is at back and mentioned million next thank from slightly to that split be incremental morning recruitment added if something weigh million guess, you're of sense further? if year a the I anticipate of Hi, commentary year, recruitment and that efforts you you increase same this think the can Ryan. commissions that give or congratulations, differently. rate the against this questions about on Tony the split and

Anthony Hull

would program attract attempt our we of No, are it, them. large and are love there's going we doing continue very I going join have agents, is to successful highly and rank a to to a to we continue think to that pool we have

Ryan McKeveny

on you. things it, a market California it's it's or within to last give up the same West, year market. way tread one very know competitive the California, it. know I encouraging we am I another lot, other at Got and more revolving On a with asked competitors the gains but be but to frame many a been how time may obviously compares if absolute actual year sense that of the split the split mix Thank curious this nature, there, in doing can expanding of South moving that acquisitions you so, apart verses to actually

Anthony Hull

focused it break don't very way; it obviously reasons are but we we it, that Yeah, don't publicly on out break for competitive up, we exactly.

Ryan McKeveny

say fair higher way total I guess would is any it be split? to lower, verses there that the its that directionally company similar sense

Anthony Hull

other in coast market. impact dead the and increase on of in the hide overall terms split with commission's in in split Well on increase you know retention recruiting and every the West efforts, the the company was pretty much the of

to require didn't XX% we growth West regions. the verses it increase more providing other coast are what in So, any have in the

Ryan McKeveny

it. Got

thank you. Okay,

Operator

with line Group. question Your the open. of line from your comes Will Citi Randow is Will final

Will Randow

Hi, in. me missed morning, Ryan. with stop let very working me thanks and, by you'll for good saying taking while Richard be

Richard Smith

I appreciate that.

Will Randow

guess I'll I join everyone a beating else dead horse. in

you too at split didn't I real to same XX that a side that, is, hit for is you apparently are outperform. the take the You guys taken XX hit next the of guess California going It gives year happens, grossly the what thing And speaking. because inventories confidence? other have least up? you million question if nationally when loosening on million

Anthony Hull

your this rate your do I are is of question increase year versus decrease - we year, will question? is why again next Well, you guess that the think

Will Randow

your million by that either gaining, will, Yeah, spending if on expect didn't and retaining I incrementally agents? more that XX hit you you mean that's driven

Richard Smith

Yeah, okay.

Will Randow

it And are talking the question three-year inventories is been We've next this for years mean year? tight hit doesn't if it's amortization, inventories. now. addition, tight I In a why about

Richard Smith

before payment make Yeah, target recruiting the to the we as that is start I that the kick in. we've it this effort agents of to starts revenue introduced year mean part of amortizing transition we is

at. a an on, And that building agents to we're initiatives, automatically getting made - and kind on the again improvement and also this quartile just that a the So, make do next and our it's focus in we're should be the less of offering or proposition without the agents then also, looking little program productive, kind of I make big to I'm more think various the economics think really that year existing value just I but - more more third guy of geographic the have And productive. be so it efforts it year higher terms of any the terms regions across off I impactful sort running of country working of that. see of for we're should to more fourth getting program. overall if a then And than the coaching factor we're and can there's of all slightly extent that refinement two If strategic I I'm tools I three slightly growth balanced or these a in this transactions and a can any splits. of and of any take the would - sort that do when of the paying in you'll are lower would of first pressure split street more split, the down sort of

I think see earn. that profitable part is NRT very going quickly would the being than otherwise for them of agent is to they much more

Anthony Hull

of for sort to now. by this. context remarkable management and of fairly been splits the definition. issue That they same far that to third market productive the had than turned building XX around higher one-year, So, several years making more now been a think quartiles to share has about first paying so and significant in months, energy second shifted well, any That's fourth are calendar offset the NRT the quartile. it's

confidence we're degree very our So, think against We high well year in execute model ability quite have strategy that. to we of our and they'll next do works encouraged. a and the

Will Randow

seat, Richard when Thanks questions of one asked they'll if was. talking me, your Ryan, vision the you And, what I'm allow for strategic that. taking guys sure the were you about

take it'll you Now, call more Can ramp how new specific long get very and think drive the analytics you congratulations. again And you growth. in to briefly role? you the on in to any highlighted

Ryan Schneider

technology, residential U.S., all I you. here. what's be in strategy, in I thank growth. and really week foremost I'm on other has here. opportunities think off, in technology, our I analytics echo in growing Well, to of are here Tony's analysts' and leading put real so the and my making data, opening, and second done and businesses. to here. comments build you said been first Look, to on comments I'm credibly ground and there on use been just instrumental of drive the and for this diving estate Look, company to my excited platform running I all incredibly really Realogy And the as Richard all

talent on incredibly I'm focused the areas, Realogy. most as so, And great of engaging importantly and as of meeting all those well

I to to and incredibly you I'm XXXX sharing thoughts others strategic excited and more so, look here. forward And in with be

Richard Smith

word Ryan. don't the don't So, last is to left in because of They able don't They the of going this you have people me other my earnings reach. he the someone in real that capitalize doesn't the let been the to on an me sophistication. of We've billions call and didn't have get up attract on use but that a they world. be have another this, data. company all enormous largest data spend to positioned haven't of to that's even uniquely the question, company They caliber unless to store way building last in estate part say have the contemplated, dollars

and for event our this is So, important. for critically It's industry company. transformative our

So, we're a putting to is and approach in approach process substantial. different with thought the us to his and a a a company upside new think new to we technology hands just data,

and at secretaries it's itself will lead we Again his So, thinks that. welcome industry be the going to this Ryan to and company. change the of I of believe how

Will Randow

you, two and building Well, particularly over to decades again thanks business. Richard spent guys this who

Richard Smith

much. very you Thank

Operator

This will concludes back now to session. for the over remarks. Swift Alicia I turn our closing question-and-answer call

Alicia Swift

Great. coming we and to Thank you quarter. look joining over the Thank for you the call talking today you. forward to

Operator

conference today's concludes call. This

now may disconnect. You

Realogy (RLGY) 3 Nov 172017 Q3 Earnings call transcript