RLGY - Earnings call transcript Q4 2017

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Operator

Good morning and welcome to the Realogy Holdings Corporation's Full Year 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

Jack. you, Thank welcome call. and full XXXX year Good to conference earnings morning Realogy's

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

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

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

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

Schneider. turn will Ryan I the Now, President, our call to and over CEO

Ryan M. Schneider

results. advantages let my successful make before share of everyone. I thoughts real good attractive believe webcast billion-plus in it market. U.S. critical at Alicia, a well-positioned you, Realogy and has for XXXX it to us. be CEO, because I'm discuss a this be estate morning, and $XX residential you me the our to we combination that first Thank joining unique Since as Realogy's Thank is few excited

a are industry-leading up and spending starting XX.X% XX.X% in market has position in Competitors XXXX, share. market XXXX. national Realogy of market dollars I replicate scale of trying from position transaction to of an to volume our national Realogy's scale. love with fraction millions achieve a scale of First, share from only

Second, brands. a advantage spend competitive established build substantially to well-known has to Realogy versus and brands, having

a is the billion as growth past technology the millions succeed, competition, ways our technology do. $X.X near technology scale. efficiently which in sheet or of balance the Realogy financial flow maturities, Realogy leverage cash access help Fourth, same Realogy engine. our years all free $XXX we Realogy been MLS access, to with powerful We've the robust to information in million and technology, neither Third, we debt new and of term have generated billion in transactions little have and more rising who capacity. portfolio data three data strong spend on We and annually of to involved. agents has including over has opportunity data data has a exposure believe cannot a huge on nor operate revolver and historical scale to to in $X.X and data to to has drive our company develop homesale rates interest and products, better nearly

results. Realogy's however, clearly am an estate shareholders, best better our strength. I to real is and competitive positions Realogy convinced is compete market, for the residential place While Success from requires intensely business of

you what to forward. going be different expect Here's should

to us annualized create and efficient other the from will changes executed $XX speed agent, strategic quickly early execution. and more savings to We additional initiatives to and for in investments. approximately our recruited technology restructuring made industry. and in Realogy cost-saving leadership and XXXX, early faster. create funding outside February, we of move technology already We've in we quickly both expect First make which January is million leadership

capital capital our M&A to shareholders growth approximately shifting which on increasingly be on million through has returning years the allocation organic will $XXX and past to focus we been away three additional over from Second, buybacks. share

Our $XXX board just share million has buyback authorized program. a

at run you still rate. should a acquisitions, will lower M&A expect we look While

Third, enhancing by data agent our producing for products. be proposition new we will and value technology

will and products be goal the in Our market. to develop quickly test

of agent economics. to new for we should us of to expect agents You and value strategy an see releases including products increasing how Realogy. that is our be our and drive commission disclose beta product rate for for around conversation part Fourth our

approach in we strategic seen different past months. clarity have rise rates providing are choices. the commission of competitive this use agent Where our XX will forces, including implications substantially issue and XXXX, the You over to market greater to a we subject our you

detail talk market more losing From more agent just with Starting XX.X%. on of about mentioned. me rates held agent in from to I point mostly XXXX, share XXXX XXXX Realogy while the X point to commission commission to late rates percentage XXXX XX.X% are substantially constant last commission but XX.X% agent QX XXX QX XXXX with you've rates shifted, numbers. share our are Realogy seen that XXX market year-over-year. basis points points rates year, increased of and year-over-year XXXX, in up up growing basis Let

cycle the the currently face project commission of of on QX and factors of impact in volume While Both impact inherently our in of rates approach operating from substantially short operating strategic term, will XXXX has our QX rates commission QX these to development year-over-year rising million. upward will in be expect EBITDA increases which timing. One-third commission business, affect new rate with XXXX, moderate after the We of we figures. results. show rate about EBITDA, our very will was QX QX comes year-over-year comes which XXXX. this completion to however, from comparative XXXX XXXX pressure we one-third $XX continue lower irregular closing agent expect substantially In long the times a half

said, full outlook year, reasons. early significant this of year. would wish will that market the our a the That to rise for but our from of for in I indicative moderate housing commission our you could make in extrapolate outlook. of hard certain be agent factors full-year QX headwinds mistake often results is to XXXX The know, substantially a it you and the rates macroeconomic over As do rest in not forecast QX full-year give XXXX QX the uncertainty I XXXX. following

there same but the QX. the in still XXXX. in see be have impact will QX agent QX While and we less QX expect you'll the will upward two pressure less you've will development then be and on in also to quarters negative magnitude, business about the QX in in commission The from new effect at magnitude seen exist rates, than last

products benefit continued efficiencies, over growth and And data organic success, and you recruiting from know realization over years, quarter. QX productivity of already time. expect increasingly prior agent through XXXX and new planned our improving to from We executed smallest from as is operating by technology far

beyond. end the be at of last we for call momentum results. XXXX not will and of the to the we We the to of year extrapolate for remainder to be our the operating QX on XXXX year. we same XXXX Based back QX should better our today up, XXXX overall the used headwinds know build or the in Well, and thoughts. year subject following QX balance EBITDA full to be pulling moderate So summarize what macro uncertainty, expect and as into believe positive trajectory come than my I'll period line

discuss Tony it XXXX year Now, over let to me full turn to our results.

Anthony E. Hull

Ryan. Thank you,

in Turning increase to was Revenue up homesale to $X.X was combined compared X RFG. attributable the transaction year the XXXX. of year growth for at results. to and slide full directly billion volume NRT XXXX full X% This

of by approximately CEO to Our at due operating EBITDA higher Free and modestly $XXX the significant charges, million. with increases. revenue by X%. down income cash impacts, offset Tax of and Net grew This to Act settlement, to XXXX $XXX was benefit hurricane litigation by to Realogy. reduced Jobs Cuts rates million. Cartus the flow transition partially and $XXX commission increased million The XX% is along was earnings

tax of in minimal reflect effective would by cash our a going XXXX. reduced $X.XX billion, compared mostly was approximately cash tax earnings million our the level, XXXX. $XX look to have earnings resulting XX% to rate year rate in as per The we $XXX per estimated our when through $X.XX corporate continue rate. greater which U.S. income new taxpayer us taxes becoming current even million, at to in The tax At cash will share from is from impact XXXX Our increase was one-time dramatic liability, benefit net to expect economic taxes and XX% tax year-end, $X a deferred our of the earnings pay from NOL reduce change allow a XXXX. to increase. Adjusted our we

our of the slide to a Turning discussion full-year business. of X drivers for

in wind a year X% transaction in average its volume RFG's in was year. was operating and to royalties in sales Our RFG with average overall as And joint X% increase, transaction million X% and team was was by $XX X% greater sales and driven and volume million $XXX to offset million At was our venture increased of unit million $XX increased net well higher NRT $XX organic domestic X%. information The $XXX paid RFG's focus. also higher due as a recruiting revenues. or rates million about to both The in revenue performance XXXX. down mainly increase in $XX provides other million RFG, our X agent or increased contributed of and was size up our $XX due of transaction transaction to homesale increase average EBITDA growth price our a million EBITDA due to $XXX principally a about – more increases sales size the commission million X% as from against than royalties NRT business increased expenses. finished price. increase increased which and by growth by revenue growth X% higher million year-over-year. incremental higher NRT. to increase with operating operating price. last million in expense due EBITDA royalties volume affiliate growth increased mortgage commission Slide X% million of $XX and volume decreased in $XX X% acquisitions, operating revenue from higher XXXX revenue PHH $XX of

market If and share. NRT EBITDA a PHH year excluding operating combined X% in the in revenue you million rebuilding look $X impact the their JV by improved increased RFG at aggregate, of and

agent to through and as improved As for NRT's recruiting company EBITDA to to result we the continue see whole. we expect a combined the grow deliver growth productivity, revenue

professional aligned to legacy, as $X and as in RFG partially $XX the resale $X offset a Rate a Affinity. Cartus $X Operating international technology, XXXX a strategic by CEO Although, result were will our includes settlement decreased investments with also $X in million XXXX EBITDA the million expenses an Corporate broader the offset million legal XX% TRG's optimization initiatives, was due fees the in than Cartus an earlier. before in results our partially transition quarter costs. $X million much costs. be $X company-wide XXXX, operating near-term. impacted reduction business early an restructuring, by of related higher as the well debt the from of progress $XX reductions decrease expenses mentioned was primarily million in move. fees, revenue decreased revenue to employee-related lower decrease million decreased in by operations revenue, year-over-year. per revenue. mortgage cost revenue share relating million costs targeted lower of joint development, million due Operating first extinguishment in to to greater decreased and apparent million EBITDA which XXXX, $XX in segment refinance of reduced startup efforts earnings decline of Guaranteed activity, and and of affected EBITDA of in higher in The venture revenue also supporting

to some like comments. I'd broader Now, make

represents of million free flow. conversion in company EBITDA cash free operating which the flow First, to generated cash of XXXX, $XXX XX% a

More that free how allocated importantly is flow. we cash

majority capital As used strategy, repurchase debt. to part of our reduce shares we management the to and

$XXX cash through company return million and capital able in repurchases flow, the was Specifically, because to to our of shareholders dividends of share XXXX. strong

the to of XX%. to expect other EBITDA wind-down be flow would capital the we from don't joint to expect see favorable to This year, venture we the benefited and operating rate in movements that closer approximately of flow XXXX. PHH cash free cash free XXXX prevalent XXXX conversion Our working from

strong balance sheet. We have a

structure approximately decreased at has billion the average XXX $X.X strengthen sheet. February, XXXX, and the of by weighted rate to our to balance of at In we billion from points interest our Our due of efforts the our constant a of our beginning end XXXX completed declined to end the also increased refinancing a debt basis $X.X of of the capital of further debt. and on execution extension maturity XXXX to of profile the for billion. revolver creating outlook capacity including and staggered quarter. extension maturities our first $X.X our their facilities The our loan XXXX term strategy discussed maturities the EBITDA is Ryan to

coming Looking of X% we forecast for flat by unit, volume to volume RFG, expectation to Sides in and the range X% combined in business growth year-over-year transaction between we Price. at homesale X%, that the flat and our with up volume first X% will to Broken X% growth contributing in the NRT quarter. transaction transaction expect to period, Realogy's at increase X% and growth X% down X% from at

volume forecasters grow this yet to housing between we've for enter to in homesale X% the transaction calling year, many activity and Although existing prime X% period are for XXXX.

the or but backdrop which there in for year difficult band supply, purchase market levels, beyond this forecasts macro consumers, of are home factors sales mortgage for in and and challenges on current housing market environment, home prospects house our the evaluate point. could – be affordability we against in the outstrips where on remains these for far are the at the XXXX suppressed predict mainstream elevated industry consumer existing challenges wide constructive Regardless both to the at being by which housing the the factors optimistic While to the influences are behavior. opportunities for impact is a and demand positive year. These inventory and XXXX the of evident to rising Three faced levels. Act ahead Tax on are are XXXX, rates,

a homeownership change marks from households formed entirely This from XXXX was from trend. was as million encouraging rate. of we benefit parity term, XX% that gain In an XXXX in positive rate XXXX to Longer millennials a industry home U.S. expect what demographic there homeownership improve of addition, net with we not X.X U.S. the trends will is current and XX% through which saw attributable rentals. huge toward purchases, the their overall

positive are the enhanced the why cannot such proposition containment. among momentum is related and drivers control we in While macro-environment, share, market And improvement profitable there reasons coming as optimistic the an we're control years. agent those cost believe we we value about do the to many

to me let for over it Now, turn Ryan some remarks. closing

Ryan M. Schneider

A I ever so is these after Pulling months best two this positions am than strengths. place share more with from the Realogy's few Tony. you, to convinced up, in compete role, from market Thank way that you observations to of early days.

center over the most really pretty longer much by over the agents, across competitors by actually trends the demographic much the remains and that the how market in how by spending, how excited process gotten favor are spoke to First, the individual housing the both I'm a I'm of offers capture And excited Tony I'm to small the market. potentially, have overall strong average agent surprised I share commission about am importantly, term. transaction the attacking disruptors industry. by buying at by broker rate little our home of encouraged years.

As I and well-positioned remarks, scale. market is to my with its national and position, in Realogy great industry-leading said succeed technology data brands opening

view Our is powerful half to financial extrapolate balance significant XXXX XXXX and operating that generates is And cash be XXXX financial delivering engine QX we XXXX do likely sheet should year returning results. challenging flow, EBITDA. expect We substantial of will not the capital our free be to used are QX shareholders. QX full strong

positive for the on be and to As operating the expect in after said year line balance to with XXXX will uncertainty, subject last our I the our for we know year. or and remainder based period earlier, what of moderate macro we headwinds same trajectory XXXX overall momentum the today EBITDA QX beyond. be We build of QX we and that than into as believe better

on what Finally, let be me hang out shingle our different. will

data through strategy. you us phone to results see successful provide Q&A. clarity to the and open make value return better are capital improving commission that, will that more and quickly, technology drive requires more our You proposition for With moving more strive and will lines execute rate change. shareholders, we our agent agents deliver rapidly Success by business greater we products, about to we

Operator

Thank you.

line Your Deutsche of with Kevin first question Bank. comes from McVeigh the

Your open. line is

Kevin McVeigh

to your we get down you Great. commissions better of get help of you way just rates welcome agents top or the kind Thanks, start less more of as technology, Can quartile the kind clarity and us they how the spins a the and all of of as balance how kind Ryan. aboard, on down sense and strategic over leverage come that from those enterprise XXXX? the

Ryan M. Schneider

question, Kevin. Great Yeah.

bit little it. Let back a me just and about step talk

see in also said QX are basis quarters for rates the of going basis a of the QX that the another And shift commission XXXX up highlighted kind XXXX I similar in to about in I you you're I tell XXXX as XXX kind you strategic year-over-year of I up saw But large did commission all increase Kevin, XXXX. a average earlier similar from And points in at the reasonably about the QX. to year-over-year and on rates basis substantially basis. expect to here's So, strategic in year-over-year believe as And average in increases that our points a call, the to why get I'd XXXX are call, moderate your increases said and answer the Kevin. XXX year-over-year few question, in then to XXXX. of I the end on after

have we it, on And with data on increases that out ways actually commissions. was were the XXXX in me obviously some other implies substantial, year to Realogy's back worked. reset the price actually the there that looking reset while and a off, agents first So, kind of

agents. retention retaining at top to through about two agents, our of demographic, agent second lot this much seeing you're And our at XXXX recruiting agents rate losing the rate. at grew the the which scenario quartile that's important in we top rate We're actually NRT we part of that by led of increases higher with two kind XX% versus So, in X,XXX a in kind top among we're the at two for quartile were where is, an all-time success quartiles of environment with after the of had higher of agents in rates. And kind of we high of doing reset XXXX thing our example, that count commission commission kind about a new is most agent one.

So, we've Kevin, this overall think, to I look price our we've of subject still and at kind to data, kind okay, that up market. and the But rate commission of kind caught on market up effectively. forces of caught We're works. reset we've how

us. do do first we So, let forces inertia the market or Well, going carry the just is what of answer forward? of carry don't kind kind we from us let here

there's think differently. that things actually three we I doing start

some there. the the their side, helping the value cetera, on hopefully. way, We to we and priority the can about network and helping high time quality you making have agents. that that price et the leads, data to efficient, the unique for assets other which So, proposition would And kind translates side, to technology the to we delivered with more that agents enhancing rate have a we a if think haven't even commission agents think are actually leads pretty give Kevin, them it's than our and time, real also, or prioritize the we give else we the keep more don't provide of some products lead by proposition, get products in them us focus today data to things out our replicate first of better for to actually on to can ability our when the the to to whether substantially. is that keep to things and them support use that can that, I lower over data And agents value adding both enable affiliate asset got it's actually opportunity a we better yet have. our we industry agents tech need both and value more with agents technology anybody We've whether highest

data-driven The second how is our do to commissions take we much a thing differently we agents. more can approach do with

that that explore. the different and us can XX trying you still get we've kind successful growth you in how kind last looking each the we that recruiting unique. XX,XXX giving dynamics you to on going the different having commission in what'll agents XX,XXX the plus. very change own while them months. data. think Each price some have at and of recruiting earlier. population, and have to more we're scale data crew our massive with year. different the of agents' opportunity we So, it's markets. actually there trajectory. agent doing real yet be different growth split last and of be And to and over of some described we greater make forward kind the almost different And They has we dynamics, can have They're a think, a their area, in agent have And – has targeted in think third, there's Each can I about set is in They're to help and of in But decisions can quote will we way that GCI and if much that profile brokerage set there place data more our in our go They of effectively there. been I we've targeted there we we targeted us results should is own that done couple that pricing their the agents to before think see of leverage is different months management about a population. we actually been way segmentation our then, do team spoken kind

here, be three we're kind reset. again, doing market still around that going are market different subject differently while of forces so, those change done this our that us. to part use we've different just our kind hopper dynamic other are strategic of approach going to that let things for And have hopefully to And wherever going we we yet competitive take to now in and these us to we're things actually not can to will forces they primetime plus things those that carry the a We're market. take aren't of ready the be this

Kevin McVeigh

super That's helpful. of that that all then in quick comes is helpful, and just and XXXX then partially And follow-up, into one million saves, $XX the cost how we that my XXXX course some in the that more very in do the – get or any over of again is year? XXXX? And sense

Anthony E. Hull

been actions think, if of during guess, year. the $XX we we'll full the of I had guess. see think, think, fourth Many get I more we'll it prominently, But have I get third, in second, so the taken I quarter, to bulk already I should the for the the But year. it million

Ryan M. Schneider

Yeah. Yeah.

kind with I goal actions the for Kevin, number there, in the quickly. get the the in focus we as The I as can very first to with We weeks six answer, we much agree itself. as took move on the totally pace important but is literally Tony's to thing of much year the you me wanted XXXX. of as

Kevin McVeigh

Understood. Thanks again.

Operator

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

Your line is open.

Bose George

morning. Good guys. Hey,

on So, the I just to clarify split. wanted

or you XXXX? are increases just and done the towards expecting the and some reflecting still what of over are XXXX, year-over-year the that's you've just really year-end is stable into course kind of increase splits going over rolling So,

Ryan M. Schneider

with going you see remarks, a at QX the I large year-over-year look So, in you're consistent numbers. to my couple quarters. in increase quarter what be when you've QX That will said seen as the last in

that, that. to still As going pressure be after upward see will you're there

a of going this So, split there. from pressure the year-over-year But moderation in expect substantially chose upward you like start in increase business substantial and QX will in there's kind hard to is and down I large rates of because market forces not going term. But it's a longer then uncertainty bluntly, it's and the should as forecast words anything. were that the or to moderate, always

Bose George

– characterize great. you And Okay. Thanks. be landscape, terms multiple actually you sort being would Great. then, in that? competitive it just can of of by If just color there driven Is competitors? the any

Ryan M. Schneider

market leave other of us often ask agents them. answer our is and agents when of lose most most all People lose – our kind we is to, I the competitor do intensely it's one there's often we those the Look, market is intense driving But small the geographies. intense think, market. parts whether ones. It's is competition, is I really competitive the business. all it and competitive local the who and only actually and competitive kind look, it's talking no the of name you're everybody. an intensity of across about this hyper of incredibly incredibly or And part brokers the of the regional one where comes an kind is they to local That and say city, across national brokers from and of category board would big which hyper equal

Bose George

And just more if one Thanks. – you Okay. me. from

there focus? that sort of to the of in how decision internal change an Just much in versus is the out of terms over focus in sort capital change M&A, of return market the what's

Ryan M. Schneider

enter are be to need we'll U.S. do always if lower. position. look I but mean, lot We still mix, of run around bolster a a the national I don't step markets I I rate like markets things, said, at the acquisitions things these our of in and back, kind I scale or Look, the think, share to we've a got expect

us. going And of for got we've that so, kind

is that's to think the the market are some for side for on there the going than of us better pricing, organic the growth and be like sense a acquisition are some the the the of because lot in used lot a we seeing multiples better trading we're to returns current We higher with in multiples get what old past they a Second, than example, recruiting, we at. at when compared trade to it's that ones. as out see the been of what to things opposed we

focus think we capital, look but on So, actually growth it with while side. an returning evolution, we more we'll you And would things, use say, to I still all the way that along this expect best shareholders. that's our at organic is the to should

Bose George

Yeah. you. sense. Makes Thank

Operator

comes Anthony JPMorgan. Paolone the with question next Your line from of

Your open. line is

Anthony Paolone

Can just that us of too that a you of enough, lot morning. sense you think a the about in time being Good Thanks. talking Yeah. spending? happening technology front, because you right core what's spent give on Whether to $XXX some as little, to initiatives. your as that's or million

Ryan M. Schneider

Yeah.

year. but likely is there'll history my be view I past, One technology technology we if and changes some happen. is So, that I it priorities personally as disclosed think probably the of the how has. in the and shows that as it different the the that's I expect, two spend the potential will that scale where $XXX sense out. spend that given that an truly to different my million is the both right, for has understand Realogy, be the asset future is world changing enough, it, strategic in than the you'll And laying awesome I'm the think be Day got place in Investor last I company our

is, you do to about then, second, more for some And companies our parts And so, reallocate invest I other in of so do one in of to cost when in that business I as America think think trend I ways you mentioned can us your technology. reduction, happening opportunities across I talked there'll costs money. be find reduce how

cash there taking technology in being I flow other we'll be from just if they'll itself. places. to more incremental free think, of us and diverting it dollars, so, are in technology efficient don't spend think more And I come and our

to reallocation I money think, what long efficiency we term. that of the find occasionally more it with reinvest try a to plays today spend for some be will

Anthony Paolone

you have industry time and interesting, being is selling as around might see positioning maybe then, where And my things initial being Okay. the about think more get your how over here those of about and of out spent Realogy's give Can you on agents where buttons into things the some you time, you technologies goes business in second a talking any rates question over what those homes hot views go estate like emerging teams us that excited like other as become real robust, some on are that. and sense the there years? several you commission

Ryan M. Schneider

we both in be to that of itself the also it of work working term. is subject that Yeah. call a that by off strategy – kicked are whole could some we on near and here and the That's part the

along do the more from, in me it's services, Let just think phenomenally came an well industry. than some technology the I change whole has a say technology think opportunity is I this change, think others. financial that as is industry both for industry as as farther which I a I exciting

opportunities lot of are of those. the that so, the go lot trends through on And other real a I technology a still the for side, there industry think you've go seen industries through to estate

of where focus think my be a to lot I excitement. is that's going and my

if in our leads that in owned business, brokerage it, so, it. franchise industry the those the of agents of we time how our as our and we probably do tens a when And from be because hundreds of we just I've do change, it. have players and business that one disproportionate of to thousands can about have we that benefit is can scale journey the spent thinking And part thousands of and do we that goal things to

of you So, thinking. the of spending place time all been the my most that's strategic things said I've

presentation a of the forum. have one-on-one time on While or should think I I thoughts period a defer I time to either longer kind another when we those others, have (XX:XX)

Anthony Paolone

Thank it. Got you.

Operator

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

Your open. line is

Ryan McKeveny

you Thank Hi. good and morning.

of brokerage have industry, control kind of obviously Zap over NRT more the the and to business. piece tech then on side, of so data focus the relates franchise you the side the direct as things, it and On

the kind So, brokerage color where business? just additional the any the in and up tech of around of Thank on you. might the show that segments initial data, emphasis and

Ryan M. Schneider

the products. to to successful. got agent but a we're Ryan. only be Thanks we we what in are if sure to Yeah. is they're Today, make need a And successful part own of brokerages, of and wherever use brokerage party we both that going successful area, for of our and they directly enable own they deliver that question, lot meet be we because they've also third to because your need number support our products

and an Realogy-only also is future easy for we sure think be going to are not don't going open things get going solutions them just in than That's help think And APIs software new what to of kind have it's as we're provided. to incredibly technology more agents that other do closed example a think make really our And to build has products think of that develop third-party to hasn't much and the make to much What of integrateable have use incredibly And to use. done it's going Realogy technology today, as is where plug so, of both that necessarily wants in be where an that to have different from not some I like to using change environment, easily our successful. dimension. software room e.g., we industries. we I a have I we standard But to an but to to easy the that, are open building journey to things agent I that. place any industry that's kind

help of the agents about of We've then individual strategic into those could a be they're just data on talk Those Many of them we massive build likely an that a can And the parts and from delivered take to whether going agent's a to different be we're be wait we've the franchisees standpoint doing on then, lot delivered kind system. span products basis or our that's integrated hit dimension. value started, kind they on we ecosystem. our to what in And to of some don't are of going deliver but got of and, great actually we'll where They to be can market. again, that plugged chain. can have when so, them products, that to got products successful. kind technology

Ryan McKeveny

Perfect.

Anthony E. Hull

with going the just to, you're affect thing Ryan's good one to point owned answer it it's agents. I supplement, one through network whole productivity, change, get a I really it's your really and to another in because then with which question, thing that A, do when franchisees influence the brokerage franchise with and challenge to would their Ryan, change and think your a is you raised the agent's a

from sort magically a the So, then had head that doing influence just that's think of to something it'll sort anybody effectively you our we're so that competitors I have out rollout. agents. It's start a there on trying franchisees and think they're do our on we're happen. their thing, learnings prepared we've I through like Zap is, that not we other easy – oh, that three-year third our and many just And when and – better much we'll of this, to and party

we're that than think, at better much now of I competitors. any our

have area. in that a of we lot experience So,

Ryan McKeveny

Thanks, split. Tony. the That's helpful. really on And commission one

mentioned to is or those So, I and bonuses or additional it what of agent is average sense the where the instead in is kind producing forward? same between of three-year that, of efforts same lower two are in instance recruiting lower been moderation if that the some you recruitment happening, volume, step high lines of think extremely of a the two and kind split, by a agreements, of maybe that that read kind see slightly way things volume color split, the maybe you like the of how so any shift of but for terms splits that in get to back have a aggregate in the agents recruiting that's we after in the going about it on an one super get some that recruiting should the going high trends maybe

Ryan M. Schneider

Yeah.

probably that your the that. on it thinking kind of reasons, leave closer to is want be competitive what that for to don't our I Ryan, future know, but likely just answer on and You just latter one, to say too one in is I'll much at

Ryan McKeveny

so you much. Thank Okay.

Operator

comes Your Citigroup. question Will next with the Randow from line of

Your line open. is

Will Randow

questions. for morning, Hey, and good you taking my thank

Ryan M. Schneider

Hey, Will.

Will Randow

with I capital us walk how price your guess, shareholders, or is I capital returns, with the a to focus on you forward, while process looking through underpinning to precedent you agree greater got richness have M&A that multiples, of on any and increased and definitely you that returning analytics? thought stock can tied focus might to

Anthony E. Hull

the I combination it's and think, our board believes of that two, Clearly, undervalued. significantly is believe stock we Will. the a

the a buy lower much than So, multiple current in stock acquisitions at our environment. we we can at could do

even and other to use accretive best you look our and we So, the so the if or repurchasing most doing and it It's to best. and – right the you think allocation not debt so it's things, without risk attendant now. just acquisitions, disruption compare the if retirement is capital, plus M&A the of shares

Will Randow

mean Understood. to like you financial Can services and services to going through that real if XX that real going years? one issue compared financial see And you're definitely room agree dealing overall efficiency estate there's you you But services Ryan, And with services, talk us to in is I what precedent compressed. is gains. have next we're over commissions estate thought the look I process? for the in believe

Ryan M. Schneider

Yeah.

analogy with anything services working trying of financial business-to-business kind direct question. side and to credit more So, consumer the card because advisor was my draw on brokerage the Will, or I not for That is to of actually background not the thanks was of partly kind financial some financial stuff, in the services.

data trying draw The great or my those estate then may analogy scale agents of one assume analogy observations so is of I opportunity, was area. throw utilization thinking. of delivery that it's I services as that and of really and not at real that exciting, the whether trying there's draw please to and because experiences weight all, So, industry was that for thought technologies in don't was especially which of means what financial the for joining be a Realogy's technology with create kind to on And then bit of a I here, was I pace customers. to that ahead new company the was the

to was the commissions. not draw. to was I trying analogy trying that So a was around analogy at draw I competitive all

Anthony E. Hull

not industry-wide commission to XXXX just very And I an remained to They continue be basis, Realogy. stable just on in would add rates that stable. have that

So, of change future, speculate. going and evidence it really to like the speculation that. that's in there's don't And requires to think we to no

fact, any getting who share traction don't our who of be some competitors – that. of teaser rates to to – kind In our seem any offer aren't competitors build market offer on getting

day, at of and think, consumers. by – I the great value it's provided agents the justifies that they the our that charge it's really end pricing So, the maintains

We of So, the any and grows of see think the agent real given change the complexity value don't just we that estate the as time on. goes of grows transaction.

Will Randow

Thanks, guys, luck good in and XXXX.

Operator

the Your with America. of Bank line Ridley-Lane from of next question David comes

Your line open. is

David E. Ridley-Lane

indexed potentially areas. tax seen Do any higher impact on or the particularly Sure. seen tax reform and you're of areas. sites? of pricing be of if have state in in local or know, over you've early think those signs I signs NRT you the I'm you there would pressure wondering to

Ryan M. Schneider

Hey, David. Thanks the for question.

overall just months out indicate our first would one I impact. have very my not want two thing the beneficial of the is reiterate the to law is weeks year, anything in pointed OPMs in of in an Realogy, So, it's year, that tax seen prepared the we that change seven first as I I remarks, the to and having the guess, in

So, it's so really early. far,

predict individual but it's looks they'll for payment. forget have have we to the negatives, positives. But potential rates new put home they to families have difficult greater too to individuals. available, to negatives, are positive And and at They any funds prices. and lower consumers at it's any Everyone pay of we now the home what the it. purchase a more side, take-home impact the will down think look tax judgments. make and early impact on from so towards tax most provisions transactions far, on homesale not or – it's the don't So, see impact But

So, those are the positives.

a impact caps of taxes, will own it the and major state for caps standard remain have of property nothing it complicated relates these financial it's families of to along side, Since deduction, caps what don't deductions the transactions. you on number a become taxes, and unknown on this that driver incentive we a higher homeowners. on the but brought state deductions, a believe on impact local reduce or home, else on mortgage factors. and up with tax sliver to and On If is could principal to it's as by local on

homeowners in foremost, high living states, tax all provision families and and impacts renters alike. First the

it's thing So, affects live that not all families that affects business. tax It a in high states. our

a anything as state schools, So, increase. tax the rate resulting – to from than and deductions. they property that jobs, We of place I for rather And when families' guess were already a consider family folks other community would trickle in in – tax capping then a have avoid grand in their to state view law move under on were change to number tax activity their Those that already a that in of thing in scale. – tax need and that they're themselves taxes. order their to about the uproot and the lower the the is a local deductions tax tax old side in law to result change minimum to thinking this alternative

and on change state local and impact lessens So, if that law, doesn't materially, deduction. it cap post the tax tax the of this pre

early tell. So, it's anyway, to

We but keep haven't yet, think carefully. we'll it we seen anything watching

David E. Ridley-Lane

Great. And then, the NRT just a quick recruiting. on follow-up

you commission $XXX I think million income. had in gross in XXXX, agents recruited that

figure in You year have the comparable XXXX? for ended where the you

Anthony E. Hull

million over of about is just done last months. think, the revenue I the recruiting we've total over XX $XXX

David E. Ridley-Lane

over And line? to the time months, something XX those that in become productive XX would agents next

Anthony E. Hull

probably them running, seeing up we come did year last to the productive as us. impact but results positive three we're our the doing soon recruiting definitely and get we're so in of expect takes as and We'd probably or months Within it they – currently. with the recruiting to begin

David E. Ridley-Lane

Thank much. very you

Operator

Stephens. Your of with next Campbell the comes from line John question

Your line is open.

John Campbell

Hey, guys. Good morning.

Ryan M. Schneider

Hey, John.

John Campbell

million, can through a into that business reduction $XX And through the back expense $XX the and it first to back just Ryan, did are of taken savings rate first, kind you back but some I back million what the secondly, needed those of curious, question. six you two-part a year, of run guess, actions the came from? just walk and you've weeks then, sounds of technology? or you where First, is like saves. net the lot you into investing a already cost

Ryan M. Schneider

Yeah.

So, this your to let I me start the remarks. thing, with in say and second tried

So, efficient. the two be one more goals here, is

to create is initiatives. of and some in and strategy agents technology, goal Second our kind funds reinvest

But So, part mix quickly purpose. three it capture were XXXX. so much it moved it's pretty million, every of we big Really, There with things, Yeah. things primarily company. people example I'd vendors tail you Those the and and in three a those a could those two not smaller procurement. then of as worth reasonable could as is $XX pretty that's the hit some big different The closings for reductions, real have big buckets. move just estate of three for are things were of focus tried office – into. buckets We the that on. the is to things going we the

John Campbell

NRT to then percent of how idea Maybe then out Okay. what That's for and office is type helpful. And what your kind this across of could costs today? location of much as of of or provide footprint occupancy Tony, that that. follow-up NRT kind any but facility the you a you or saturation have if maybe is costs,

Anthony E. Hull

in utilization terms Saturation or of office the space of saturation...

John Campbell

That's right.

Anthony E. Hull

or It's probably capacity like it's X think but points, it's utilization. Oh, X don't materially. changed up I point XX%

offices. year agents that because I didn't So, adding – last improved add with obviously think, it's we

longer see that footprint source place that's short our So, in not don't term term – more think that's term, a obviously we current of longer But agents an is if leverage. it can area I but operating beneficial. we'll

John Campbell

guys. Thanks, Great. Okay.

Operator

next question Deleeuw from the Jason with of line comes Your Piper Jaffray.

Your line open. is

Jason S. Deleeuw

good you morning. Thank and

share with a agent for the guidance soft. shift the guidance Just little quarter, the the the expect we given trends market wondering looked should first strategic volume on NRT recruitment the and commission splits, that

kind should is guidance? I'm trends an so, wondering market the market we of what there impact more terms And industry of overall share on of just just first be expecting or in quarter

Anthony E. Hull

are of than line Well, given that are demographics the being incredible quarter, gaining I want say known. term to that coming the err we longer share market would down on the much the side first that

less. a terms that's taking want to market are in share new NRT's and first price. quarter, quarter in pretty such about quarter X% NRT in And volume more small the headwinds err than referenced It's – such sales offset of and side we'd a rather the numbers new NRT. the of it's development developments Ryan the the because So, first in high first on the quarter, average to small some

So, without first X% for the up – in be the NRT that headwind, quarter. would

number So, close depends And in in it a it's really good that and is very are new XXXX development which again, number a we Jason, XXXX. when close episodic and on the had really closing. projects good

great will in closing We that pipeline start a XXXX. have

So, it's XXXX. a just pause in

Jason S. Deleeuw

technology Thanks transaction I relationship recruitment the is how other agent the the or and recruitment the And is for is becoming managing investments, is to and then just more important that. technology on the about and Good. is question side retention, retention. it technology for mean, process? more on thinking important? of the going more And generation is kind – on be lead it important it

Ryan M. Schneider

that, more technology, an make the months that people of it's also my world to it's of more after to successful. become So, important changes on the kind that be a view and – have important is it access can as going data just increasing couple that but as side amazingly plus it to key both we only

leads you to us, powerful to And are we technology think, we agents through think, the leads are hopefully loyalty more year, incredibly I to both an I for us, happening agent higher provide. helping provide, make is the cetera. anything quality paths deal important. products data paths uniquely that help scale more economics we a I see one also both mean, both also only to can our close to see and with that can that through technology you positioned that can and do can et happen

out both part can even to laid future So be I paths to important should agents. keep the enhancing our and proposition be value past, than and we you improve – that how is in of overall and I our are more in value both our topic think, going incredibly the the think

Jason S. Deleeuw

Great. you. Thank

Operator

Mike last Barclays. from question line the with of Dahl The comes

is open. line Your

Michael Dahl

the fitting all Hi. Thanks around just color. of two-part Appreciate on the for focus, the to comments me some I question in. wanted guide.

for year or part around about is, with is of the XQ simple better, $XXX that's I think guide line in first balance if the and So, of the the then full million comments year. math

the and a guess, get to B, rates be there starting I the to I that want so, can appreciate comments look you are the it including a the us moderate a for if ballpark more implies but I give you And us it that to number And me if bit. really as about? because around bit A, year is bridge bps. that understand split then, to well, at seems up rates hoping restructuring of – north XXX split all that of benefits thinking still

we other should any and year comments? be puts So the in balance the thinking about takes of

Anthony E. Hull

you greater that said the we reason the that so we the to because said balance equal took equal to the than the was of We than. will or – things. couple think as A approach. be opposed greater to year And

in of have in you to of is and reason volume. range is what wide the we going of selling because year terms X% X% for total the it's the spring so for year season say the like, to So, that forecast early that the be

said are but split kind moderate, yes, But a it year-over-year, that of that's be it's up So it's think for we you will them continue increases on give that. I think – overall. sort And, we range one going be headwind still a to to to expect of we to early and so XXXX thing.

Michael Dahl

buckets, enough but out the yeah, the the than, equal other on there. fair have versus the still just greater as guess commentary I on you the of part taking And equal

even – about it trying to if take – flatter. sounds than, beyond if I'm split that XXXX kind spend? I headwinds positive going relative in approach you understand the if additional are of a core know, or are we be there greater – spend, I we are be just or that So tech buckets talked but other the like that the anything that's still TRG to XXXX. even side, should in of about with kind transactional more guess to there Cartus of there's of are kind to thinking

Anthony E. Hull

what the headwind which Sure. Sure. is Well, the savings is inflation, cost first offset. to we something use

quarters. $XX first Ryan development, that which new is specifically of each one million – two the sort second is The to headwind pointed in in to of million $XX each

last headwind. joint of a PHH obviously from a the replacing we've and So, we're our joint stage. a that liquidating the asset, in benefited Then, it, which new is $XX with year million is one major so venture ramp-up And was taking then, it on there venture, just that. gain

So, headwinds I is which sort the major think, one in are those splits. for brought year addition of to you the up the

Michael Dahl

you. helpful. Thank That's Okay.

Ryan M. Schneider

Thank you, Mike.

Operator

the conference call. earnings thank you concludes Realogy We for This XXXX participation. all your

disconnect. now may You

Realogy (RLGY) 27 Feb 182017 Q4 Earnings call transcript