RLGY - Earnings call transcript Q1 2018

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Operator

Good morning, and welcome to the Realogy Holdings Corporation First Quarter 2018 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

Shelby. you, Thank welcome and first XXXX year Good to call. conference morning Realogy's

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

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

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

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

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

Ryan M. Schneider

Alicia. you, Thank

demographic that future. its because residential growing heart cash As I strengths, with flow, in Realogy my housing close given attracted in of compete bode market powerful this scale. especially especially data well technology of to and shared trends position for position, positive market, I estate you quarter, brands, and last to leadership industry-leading I'm to excited and the real $XX-billion-plus great strong was from a the attractive

discuss QX a strategic me results, share let Before few I our thoughts.

of as the great attractive market. is it see see this out to an industry this and who players number in First, of

capital invest brokerage brokerage the continues large invest and the other outside outside market, are continues the capitalize environment, traditional in Outside our the meant with we volume players that and For to disrupt example, competitive to market, revenue are in meant Berkshire Hathaway curation this example. capital excited grew generation models; to to share on lead We in current services prominent continues most the seeing excitement models about this and transaction attractive market. new again in market to we invest like about capital and in QX. encouraged once highly

trade we both latter. or national of on plan We the owned XXX,XXX-plus one our they technology a quantity Second, as through the position like the reach and typically markets, growth will brokerage, using and defensive our go and success. on long-term us, paths: foundation believe two franchise brokerage increasingly offence, would scale agents, critical clearly leaders U.S.-based industry over footprint, time. our leader like down to scale in and winning go for their as We long-term in not data it. be industry-leading competitive battle; Industry

and products, access have unique be insights, engine, our Similarly, impact. economic stronger we industry national unmatched even which geographic have these For example, should power network, distribute to generation will our given opportunity believe reach. technology unique as leading develop able we we data scale best requiring we to lead across any

results. our leverage Third, we expect know need to strengths. move better I shareholders quickly to

line our in let are saw time. what with QX pace me not With on we XXXX. results expect to the $XX we of in operating the guidance uncertainty, macro be our trajectory than to was call. improving better said same continue we QX of about half first operating aggregate or on in the today last EBITDA that, we the fast line subject we QX and know what overnight, demonstrating While committed profitability XXXX, to Based quarter. change discuss a EBITDA change will in period of and million, QX as to with to over XXXX

rates, what expected XX of basis the expect delivering continued pressure XXXX. will substantially of market agent fewer increases in upward outperformed we we in upward for transactions. transactions from substantially February, year-over-year XXXX year-over-year, guidance our quarterly that We Consistent rates points with rates the a rate last commission in impact said on moderate NAR's increase new volume versus EBITDA while up development quarter QX over volume be transactions. of change the we fewer on quarter, of of fewer X% QX expect were up increased for explains transaction XXX operating to with transaction QX new that commission the the NRT X%. QX, up relative basis QX the we including was even transaction share to quarter. in X% commission from while business. development development we on rest approximately points This up in volume year-over-year, As XXXX. commission the new lion's with RFG headwind X%, said our

some Let color for me NRT. provide geographic you

price saw West, up those markets. XX% volume, growth in First, the in in XX% in volume by sides driven South both up strength each growth and we the and of

X% in was Second, by volume, growth. up driven price the Midwest

was up in with both exclude in growth York Northeast the equal price. you X% Hamptons, City the and New if volume sides and Third,

broader overall remains New When are read, City Hamptons concern. However, QX, as now. you've Pulling York volume New X%. probably greatest market and the in right was in actually on challenging the down NRT's our City Northeast York included inventory is numbers, the the market up

harder. three positive healthy while dominant reform, for growth be we're to And it appears a on watching mainstream supply isn't rates is what sides perspective issue. impact in the the Inventory has currently market housing supply and makes months, close from tax closely that there we're price, all-time demand. just is near for to hovering and the That this is effect seeing lows. meet mortgage the not While to a

it to I turn Tony, thoughts want last mentioned few share strategic to I I on areas over Before call. in our a

to de-emphasizing on and in repurchase We shareholders quarter, $XX the remains M&A $XXX approximately during First, first to $XX in same. market million to the quarter, and our another buybacks growth. capital dividends to focus allocation share expect we million million conditions. through shares in subject strategy We're organic the second returned

While our back know first we we do the quarter, buy leverage to intend increased to leverage ratio increase in not stock. generally

for the the off year, We stock the our buyback our run will ratio outlook leverage based after rate price. for of the and year re-evaluate QX balance share our

product technology products. To to incredibly meant are that that data increase efficiency. agent good insights. technology increasingly enterprise our data data days, We've focused value I'm producing agents technology new established and will drive in Success and and leaders excited products important to new will how also platform for be accelerate better we end, that data to an enhancing business with on Second, productivity in developed and new our beta past for an share ability Realogy. and implement four development agent XX generate proposition value the we by and our

results let Tony the end to back my discuss QX in While XXXX call more now thoughts, the summarize at turn to detail. me to of over I'll our come

Anthony E. Hull

you, Ryan. Thank

XXXX. first NRT XXXX in to presentation, homesale an for Turning This revenue was earnings volume billion the in up and X% increase $X.XX to of in results, growth was transaction the to quarter QX RFG. slide attributable X compared

first tough $X at Ryan loss operating with of technology generate typical $XXX an is flow a to million The on million generation. million is had terms $XX down EBITDA initiatives. are during our This obligations in these our Our securitization our cost of X cash year due we we million adjusted We It net free trends as approach. our cash lowest Qs of to million the share XXXX. compared $XX agent what in initiatives million guided was which development of earned business, new as we free last This during was NRT. the was We charges of franchisees comparisons $XX relating shift quarter cash royalties net consisting call. EBITDA of $XX our our impairment our the paid with of per change rebates million compensate result in software through facilities from and use our Adjusted the discussed. prior of to actions or $X.XX per from quarter approximately rising from achieve in seasonal We're $XX development and first line personnel had or on is quarter were this $XX the bulk in $XX loss periods. volume decline million. year-over-year restructuring as other $X.XX earnings also of flow quarter, of Restructuring and and a to of X. share, rates on the with and quickly a largely year-over-year in commission track million saving $XX million a was

For XXXX flow operating continue whole, free a from be conversion as cash to EBITDA to a to of expect rate XX%. we at

times was Our X.X leverage at ratio XX. debt March net

year. to this the expect end We moderate by the of

higher was we cash RFG increased agent agent retention growth, increase, by net with improved our revenues. due NRT new volume X decreased be in to due $XX was negative royalties, was was $XX recruiting million information quarter, As revenue XXXX be $X saw operating as operating the agent corporate $XXX increased commission driven business splits and approximately XXXX. the continued and that development the QX quarter and a approximately million performance transaction the expect increased about in higher growth, of volume than revenue million one-third in EBITDA affiliate but unit Slide million the due first activity. of to challenged. from $XX operating price. provide revenues EBITDA growth principally remainder domestic X% Of expense. million of to in average increase X due commission NRT operating $XX due EBITDA reminder, to half to revenue expense and million revenue about interest by NRT to more year. higher Its $XX this RFG's sales million, offset and to to

a in of quarter in related we will our forward. call, show both million our operating then impact will we because first XX% Refi affinity approximately last QX in you up investments business first new equity for profit. to told offset fluctuations. negative less in EBITDA flat and will million agent of that of the Operating exchange million. ramp-up numbers less than $X quarter beginning revenue split down number $X operating JV had growth going QX, million loss impacted EBITDA the of the be but volume. EBITDA, primarily million Corporate in don't $X quarter our in from development second revenue. for factor by of rate $XX that commission gains in EBITDA the the decrease In continue rate and a a of of lower a revenue now will in operating in show TRG reminder, due quarter operating realized from an the joint this Loans of the JV segment XXXX. $X Rate benefited the first the XXXX, expect from one-time the increase EBITDA of remainder to Home items and in wind better Retail $X was Cartus Affinity. decreased headwind. costs EBITDA In half quarter, to that NRT venture year. QX, million increased the QX include absence refinance effect a QX. also a other Its and first year from partially will a $X decreased decline be year. transaction this NRT Guaranteed revenue Just was a NRT's million activity. It's the TRG's last first of the mortgage the last was PHH similar in to in earnings

appreciation. As Ryan which today more offset �� factor is has pressing most by has limited growth, faced slows the been inventory, price than sides but than transaction mentioned, more

in RFG increase X% X% flat transaction on slide from volume Realogy's to coming guidance at sides X% forecast NRT. X% growth and range Moving for to to X% business to at quarter, and we sale to transaction unit, we Broken growth that second transaction expect home down price. down volume growth to combined the X% X, X% with will of by year-over-year, X% X% the volume our

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

Ryan M. Schneider

be to profitability Tony. Realogy's up you, technology data all the Look, incredibly four continue leveraging Thank forward look improve way time. our leadership, after pulling to market I geographic strengths by excited reach, scale over months, and to and

of pace not in I we change; overnight, will about are good the trajectory feel direction. results our While I change am our right confident headed that

in to we competitive market our We while are commission continue a volume approach. agent recalibrate growing and revenue

data structure quickly are that, enhance to your multiple technology proposition. and producing capital and take driving are our We We're and shareholders. cost in With products we I substantial will beta to our questions. Tony efficiencies value returning

Operator

Your first of Bouley question comes Barclays. from Matthew

Matthew Bouley

my taking the for out with a the here you Thank moving I questions. commission to Hi. wanted question splits second quarter. into on start

typically that still quarter normal leave which first see year-over-year Just a on EBITDA. would up off you seasonality, sequentially, potentially of thinking a on level, significant headwind step

– and you from have new still So out, just away obviously called mix as you development. shift this

to more should we clarity just some So, term Thank get think you. how wanted splits? near on about

Ryan M. Schneider

Yeah.

second described, scenarios seasonality for in the quarter There's you Matthew, bluntly, have moderation we've So still lot thank a we've the and headwinds that of the a the new they year-over-year incorporating all scenarios lot pressure. upward increase. of looked at – a for Look, at you, development trends the question. substantial looked

there in the you saw compared or XXX year-over-year you should QX it in increase point third out subtract basis still you so And expect QX. development, substantially and you and to in fourth second increase XXX, want in to But the the to point and in quarter, the will the XX the moderate quarter. of points basis expect point XXX compared the that basis QX saw quarter we basis be increase to those increase range, if new XXX

substantial, the your is So, point even seasonal should fact I there account. but into you pressure, want taking the upward be to moderation don't lose that still

Matthew Bouley

readily that of I more I'd thinking to and and now just Okay, Thank months, back, your on you second just Ryan, that. costs. brands brand of generation taking about a an in out, has spread costs in is guess lead kind lot broader a be you. about of for And of more been kind to environment of And kind of value available and understood. Thank an to think do kind agent the seat you be given that specifically, question is pertains retention you've how may step where something switching thoughts a then hear the that boost how ability kind information just diminishing? there where curious environment few and just switching been Realogy's for Realogy's

Ryan M. Schneider

Yeah.

brands what brands. and matter, think for what a advantage and on they brand a to of leads Look, closed kind delivers of for brand in thoughts I deliver legitimacy the something the So people from in of a of can different across but couple think terms for that. of delivery for can terms of the XX,XXX got brands brokerage, really our matter I consumers with their terms relocation stand business we've Cartus support, our standpoint agents, affinity transactions in the and

of the So people of we using have. of switching part that's of kind in going with It in that's all going a giving the environment power I there's an productive, terms with of it the can make to bar we agents innovations brands harder want, to of different as terms make that. for and a costs raises them lot delivery be make kind in leave. But future of if forward, grow powerful them in think them them operating bit. them both the making more the that for data, sticky kind brands, of going also to things we technology can to a do easy technology, that create it more

building want our And so, keep to we brands.

against want part attracting productivity, those be building But brands into that but agents not putting are brands, agent-facing but need for not our we people just we be Realogy that by delivering brand. do can it. to in The money not help things that retaining against those brands. their to them We a invest will just to of brands,

standpoint. retention And got and We so agent to brands. I'm excited recruiting from them, Realogy off great an has especially that building want keep

Matthew Bouley

very you Thank Great. much.

Operator

Your Deleeuw Jaffray. from of next Jason question Piper comes

Jason S. Deleeuw

believe handling split of split approach. thinking the was Yes. mention on get I was commission details Good just you're the Thank more of recalibrating going forward. hoping there strategy you. commission how morning. to I

Ryan M. Schneider

Yes.

about talked call. And you me for a competitive let little believe be question, kind to bit appropriate just of great wouldn't the things kind going part be of three reasons, Jason. of different just future on that this So, this. I a some to share last there's but give themes I that publicly are on the

more agents, we the strong little a our Matthew's enhance going value more more engine So, deliver That's answer help commissions on making products to I agent and in our build support can question, to agents. that lead delivering one to bit have can talked proposition, to continue us and just and productive. more with the is, especially before technology generation we vis-à-vis them already value we value data to more today by the

yet, to of to started approach more then last being changing through bit, kind done in mentioned different target profile, third the recruiting ownership this time And Second, the call of decision that a last commissions. our the frankly starting approach some but field, we it, data-driven build – in around of do driven commissions a have a again more more a and is data kind making analytic a we're the little opposed commission more We analytics. decisioning of home/office. in, to more by big start talked into the I the agent individual around we I a talked analytics more is use make of decisions, business and I works muscles some opportunity of to to today. data-driven individual home/office of analytics kind to kind negotiation insights much around our – time, share that, insights of take to agent frameworks and how won't which the as the take using

recruiting was those target. up The powerful, Over using did recruiting that the NRT. said, net there's we good productivity analytic some and XXXX first hey, a agents company, been I things We about like work that and we at like can a some agents, of different did quite as quarter, were we has pretty really actually good. XXXX profile tools in X,XXX AI their think different

to a little some that has of that mix to but things good a be that the pause likely in a different we more targeting right dynamics. our do, probably so, of impact took And was on and next-generation now notice analytically-driven, you'll bit going of a slightly all little commission more that's

So, make to we which changes three over but about. been areas, kind all approach I also believe, need we've both to in some of helps topic, on those time, our more of the agents to recalibrate make this using that productive,

Jason S. Deleeuw

for market the a obviously agent press efforts key agents. for just profitability which then talk over improving while and environment time, the competitive Thanks thing about share that. here, in to Great. And the manage given is trying trends, there's the release, recruitment

guess, the kind the I goal also to goal this market while Realogy what's So share improving maintain that high-level for forward, the profitability? going point? and that is achievable; goal of grow at Is Is here?

Ryan M. Schneider

Yeah.

we we listening drive our show cetera, a Jason, of down actually to the can So, of goal a on we NRT bit What Period. losing kind given talk if learned XXXX talk I go et and an about, was back I integrated we in we agents have is, we on needs you though net can would off history kind like the look company kind look to an of basis fairway market in important. RFG, about violence the of we investors, actually, lost to choices as can at goal goal. and and transition, just margins, profitability. EBITDA losing That's can most of $X it's that operating were lot rates, across bit different different in the back basis, leverage, million the just relatively the split straight and a think is growth. of here easy of of even commission share. when we But terms And the We Realogy et kind to the a to, to cetera. little judge a time kind of over whereas we come commission going P&L, XXXX, what's talk through losing think of history integrated on of how and have that There's some made we $XX on painful lot was improve that basis, kind transition. million. There's were we about things of

magic about being both realized integrated no and off We've I on about think market also demographic and this but the the market And our alternative probably have but looked real actually market another scale got kind trying there because some X.X% trends that the better comments, the of at so, RFG commissions of with future my there we've mentioned covers benefits we're in the on versus got past, are I for that we're because of market. economics that us share better the number, think is in share to bullish grow market market. housing. we for good the NRT. XX% I of the of share

there. it. end and going a purely But of more the huge we have amount we grow we're the it, our in in the profitability. at than day, there's I And believe we to we'd we can power of the judged if think improve on be believe rather because feel demographics profitably can I less So, out

about biased there's trends the though targets the think more focused to that, going growing for so, we we At moment, but are that's we're share because of part nothing And share kind market what that's improving we the I market in the scale, given our of believe demographic our because like on. be profitability we do magical future mentioned. or again, and statements, about

Jason S. Deleeuw

Thank helpful. you. Very

Operator

question John Stephens, Inc. Campbell of comes from next Your

Ryan M. Schneider

John?

John Campbell

NRT for thanks the trends. Hey, regional around the color

bit are higher of guessing guys you right? others. four I'm look regions? that kind a could good across splits like the Is hash As than the what out, the West best is region

Anthony E. Hull

tradition of costs broker those marketing of versus West borne the stands Yeah. by I'd are markets just the out paid. where agents because say

we in split significantly, so, California, in bit profit the little sort versus strength of they especially performance and happy gross up little very as a are. whole. the a bit, yes, year-over-year And market contributed But we're nicely with great definitely the And not pressure. but California was saw to a very our the

trend. So that we're encouraged by

John Campbell

there some then to pretty Zillow are And moving was you the buying looks guys with big obviously, news industry with into partner (XX:XX). high It them. going the Okay. like

So And the maybe if guys you thoughts bit then on move? could little could move a light Zillow of that shed time? relationship whether your you needle can on over be actually the additive to

Ryan M. Schneider

Yeah.

got long got can we're offers we've to Zillow our agents a Zillow. a long our to our are serve do agents whatever succeed, with successful. here we've so So we there. agents. that do succeed, relationship many succeed. If agents partnership And we helping And and things make We

of We back, watching phenomenon the strategically I continue relatively if watch that. I kind We we're step (XX:XX) closely. buyer

certain far cities. constructions the very bands, kinds price of in only confined been cities, to a So narrow few very it's

radar partner we with So change it screens fact choosing they're but Zillow look, kind sort of are it And of would we watching that to being really anything hasn't We that franchisees. love the yes, fact size one that is important closely. our love the hit innovative. most any of doing, we're that

agents. the excited for customers, our is about which franchisees good again for they center So, that transaction at agents partner in Asian is We're Las our and important it's of excited fact about Vegas, process, of the most their the we're that. are also one good their keeping

and them, you to with launch. in one work their And direct look important your questions it should that most very we they there, of so, forward we're – Vegas specific but are partnership to continuing to our our franchisees chose Las about obviously excited

John Campbell

Okay, great. Thanks, guys.

Operator

of comes Ridley-Lane question Merrill from Bank David of America next Your Lynch.

David E. Ridley-Lane

decline metrics, market coming days ...the pretty it's on it's good the inventory, in on... fresh it's inventory,

Ryan M. Schneider

not sorry, of side. David. late at least did interrupt your you? loaded you our on a Hey, start I David can question, little bit hear the I'm We

David E. Ridley-Lane

Okay. Sure.

Ryan M. Schneider

repeating me? you Would your question over mind for

David E. Ridley-Lane

Sure.

Ryan M. Schneider

Thank you.

David E. Ridley-Lane

days the that on also lot be metric, fresh to market inventory decline the but technology is made least declines, the an inventory increase a at and of on, coming that's the that's speed there's this So, transactions. made should argument good in on, the of been it's inventory coming has

how you market, those wondering decline you do inventory, it I'm an technology market? of arguments days any that are issue and the So, for is the buy potentially less seeing much and in on of impact on an of making the

Anthony E. Hull

there's you you is data David, – unit from significantly, go of it it's was most actually flat, their NAR agree get or point, some and was rates sort with some sort look the the inventory of pretty sides improving, type in pressing it of being see and up up point more up, to driver decline, absorption as sort the declines it's we're that of you being still the are number. and of you significantly in below, more sort $XXX,XXX I that Inventory issue sides if it the, most still main where mid-teens overall can of price the and at but was – of March really price of whereas to $XXX,XXX above price most

more taxes, than than their sitting website. web go inventory. you definitely more more two season spring here weather, more – is relevant Street, us to so affecting Wall into definitely the The REALTORS Association than than rates, months inventory, mortgage Massachusetts stock So most today volatility, if factor In inventory it's of right is of going has – market their Massachusetts

So Massachusetts, issue. for an not Massachusetts it's San in but I and really that – Francisco, expect

David E. Ridley-Lane

wondering the going out that to are this there grow segment hear is EBITDA, costs to here all I NRT, splits? in basis is further on then or And goal could that either come be per if Okay. about office on commission a

Ryan M. Schneider

where that can the at absolutely P&L there is happen thing dominant kind part of cost ways. changing the violence of split to and in is be the because the And the commission been. a multiple Well, moment cost base just that's in But future. has going the

can example, like, we So how office we to the are for of square to exploring – with X,XXX got the that, does what a lot cost deliver help We X,XXX changes now. actually be that but and square right that got base. offices foot and looks great agents something foot

the to got want cost our data not into delivering NRT. side. to hit We've we've and and lead So on more deliver more on we hit We got just to got productive. and people side, to NRT agent that it close up make generation leads help more products commission the technology

that business so transparency right And have no come at there's for one you silver where me that intensity are this confronting. we're focused and of factor on from multiple incredibly watching and levers much to a the for keep most And going it's violence the all there, recently, we splits because much most competition, an and on this market is giving to bullet thing been moment. the important important has with has

that be little be this. emphasized part I a cost, though got has future over of may even than that more why cost So probably to our on

David E. Ridley-Lane

Thank very All much. you right.

Ryan M. Schneider

you, Thank David.

Operator

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

Ryan McKeveny

Hi. Thanks morning. and good

commission – agents. consumers the of moving just discussion good flowing picture and point a and mentioned your entrants commission it you're the pressure sector, could be your curious commission environment, that on some the at you the see So NRT it's in thinking "disruptors" big for the the can kind of whether you of on Ryan, just the kind the of RFG are into the give for newer future. was in seems and But because the focused rate there over money of forward, It's about year-over-year. what rate, obviously paying competitive to actually what flat both the rate some industry obviously several to beginning if prepared thoughts into remarks, are

do be maybe seeing and ultimately some markets may you have any curious do others value your consumers? hear just kind about actual front you So just of if less be on would that that so pressures and what proposition versus Thanks. where between the you're agents

Ryan M. Schneider

understand a and ABCR Great the the – me into one – and Yeah. Ryan. into it. for role made surprise, for also this but want been of now sure really that four kind being question, stability has head has Both the in make scratch of months, my both, this strategically to pleasant coming role we here

I back I watching I'm you most is, happening competition, so struck what's by brokers, something – out to that's The look probably so if with at those And go Berkshire. if you about pretty closely. called thing we're that traditional talked places

you that If amount the flowing into investing that people brokerage into that you like are the meant this flowing in market than look in the money curation, at people generation to look or of phenomenally larger at money the services target target who traditional are the amount and are investing trying to lead of things is ABCR. the lead

just we've the as is around of And so doing we're about talking in intense incredibly and business by well been the the competition way. that the rest

for and has than pretty dramatically, from I have pretty so, And success markets decade an them across long others, going you this ABCR has a they've And and look on time thing actually for then down ABCR And if after stability find Redfin maybe had, judged we've would grown gone you of its housing a that be interesting interestingly, going the price has that they've that, and or two of impressive. around point time. kind substantially. a total to actual up has coexisted lower had times so whatever pretty a been but look, a return price ABCR, transaction little strategically. some after consumer with moves And that during the – while been are year,

think capital serving comes like is doing and kind it's right. going doing, one in their financial day, brokerage of getting time. over discount truly price people back the investing me someone that for chance the b) the important the So, for the commission to And and for agent of financial incredibly like side agents, important and right the process, on life is of people value is that I the the are just the whole transaction. transaction in on guidance from them can actually of – an people that best willing it a basically, may to traditional have the delivers that, get we most end XX% coming for at why just to not value of helping this like not necessarily trade betting the the price to on what shepherd agents is agents all Berkshire is – they navigate be just best the which the them deliver real through And is believe a) increasingly kind I'm outside that strategy what

Ryan McKeveny

out helpful. comment curious my times. you. it. that the envision you. debt this long-term there's forward? more thought the always One but end on of just guess leverage X think for phone for with second, things I around a And very about like cut been the how moving Thank That's the of you two by I've times, Got Tony, just but a side of did at because X.X you target year, make I

So...

Anthony E. Hull

Yes.

Ryan McKeveny

how moving kind the updated seeing what And much. then but was it Just related for on be on the there view comments tax updated any when thoughts would question thoughts so just, of of made You quarter newer very second that? some helpful kind thing, later reform? you of you're Thanks reform? any a tax kind cycle, you in last to

Anthony E. Hull

Sure.

think in the – leverage because a normal quarter of we leverage we increased see combination we the the of year. good quarter gains return the of cash stock the use continue free that in fact the capital of the So, first And value. is flow because that our every a

continue end, of that, we away term where we'll longer So, at lower to remains we end think by numbers. to at least our year at And be goal the year to it to to chip unchanged were back get XXXX.

– really basis. to would terms improve an that absolute help of think in which think on our be – would to what help I get goal And Ryan I our levels EBITDA talked big that a obviously is that ratio. is about,

just, to over intend expenses, that regardless still interest decrease ratio we think also of leverage is I our out million. interest I $XXX burn time. ratio So, that on the pointed And our rate annual

to maturities debt. strong, up, It's the EBITDA, sideways. all – down, coverage out is we relative our our on it's the very pushed So,

the still the – I the tax pressing think end. higher declines suggests in March again that data intention So, most reform, at to On much delever time. and we're at inventory they end lower higher over the earlier, is our I much but were is besides and anyways as the more mentioned what we're issue, and seeing

disconnect you'd such if see is kind reform really you So, big factors. expect of other that tax between those affecting swamping wouldn't of inventory sort two, were it's a

weather, not just thing want call it's we reform, the rates thing even to first mortgage just didn't here. was Northeast only sort see with quarter the and before also New that But it's impacted. we number really York and not So, tax obviously could X% it's still inventory also one it's factor that, – the of because in being was, it of happens the out same said it – always because up weather was some City having is it's

Ryan McKeveny

you. Thank Great.

Ryan M. Schneider

states, the happened. look our the and reform sides add too. If West Tony having – and in just numbers, you out I'm get on can some with to to reason reform growth they you of I I've been just color strong that's mortgage tax watching to we're tax kind look part geographic give wanted you struck just I – from by price high to even both Ryan, inventory. all give with I it's had closely, we're guys watching is that which of XXX% hear closely, me tax was

was There's New way. seeing there to a if pretty a rest City side percent price big the market. growth, at percent high component of growth Northeast, at that, the between some New the high has we're York a And the interesting some obviously that me. couple went tax which then Northeast, and buyers tax disconnect the look and clearly you the which If and also opposite sellers, especially you states of York, couple exclude end had to like

couldn't to yet, why mean But see just doesn't of some the the tax going it places New it regions a that there, of see not So, the reform a in I it in we bunch the and data geographic to just it's – impact. in didn't of it call show tax or we're the out City doesn't that's a probably doesn't color. It puzzle country. it some be strength be The piece watch, higher interesting want York expected was lot mean quite to mean something. of to couldn't

Ryan McKeveny

Very helpful. Thanks, guys.

Operator

Kim Evercore of question ISI. next comes Your from Stephen

Stephen Kim

much, very Thanks guys.

Sorry. help couple about I of it data was you to has or and data data that's aid a products and was therefore to to or was valuable. think four relevant efficiency. attributes I the data mining. you development productivity these if back it what us about for had types Realogy key And these unique your And said bit, break uniquely little beta agent that new pulling the could data had particularly attributes data if questions that a curious wondering of versus you of be commentary I you related guess, applicable. broadly that brokerage more possible are between are I might agency down maybe think

you may have from that started, So, meant helpful and negotiation. I brokerage, I I for around And could more was instance, a would to. beyond timely access then than of know perspective, accurate don't? wondering think and along. that probably you more are And I what that get others is you brokerage would productivity perhaps commission to sort far, have other data data-wise you'd assume it thus I But to agent continue the in think data the mentioned, things be data that that access you have your there. you folks that ABCR other think if

Ryan M. Schneider

Sure.

of commissions, couple number can of as intended in ways and to kind you kind terms mentioned, two but might and get of just or believe access agents I the So in we that. our see, Look, negotiations lot we at that with that thing The be geographic things. a whatever. have the to that does use benefit way, just insights either I unique. but market we those I to the commission XX% our X% to be agents franchisees of lot – what from a tactics at my recruiting market we just of kind business Realogy our just et RFG, that's out look go way, the what can data, of data the mine One scale we for think of reach on and a differentiation et it if data I there's agents, thing have MLSs on is title just use even with give So, of out insights the transactions of then that NRT A from agent scale commission them is that cetera, number for of has. that right? and way not our a what was sorry, cetera, communicate ABCR, it, non-affiliated-to-us at there's of going in that mistake or Realogy by with or what not quantity transactions from then or stuff, of there, one, at the – you

we have what little come our harder for the real-time vector the I with our that biggest the have there's deliver again – work ability on to right, of which customer a use agents these So, And we data on we XX,XXX franchise how economics thing the think which franchisee who can of you is have the succeeds basically, XX,XXX we NRT, of of second one in next just owned and insights any and ability agents, real-time. a little is differently scale time is that. to a the right? to do learn The and to business these touched from agents, doesn't that's who bit, we most side, get way, brokerage we from, that by those thing, to see so and there, a through that and, in data things access where but test because the lot for example, to do

to a aspect we agents we that then the of to and also our could think talk so our insights can to use for then we which distribute about. data big and ourselves, that brokers, that we lot and for a kind component of on for like obviously But is how a And real-time our part generate insights of just think a that and And P&L for them. a there's I actually commissions it's agents, amount got negotiate there's do. to also testing scale pay I

recruiting aspects think there're to I it.

within both productive expand also think and versions customers we that. are that their is I winning I those listings things be with like can that, network, as and there company's helpful being in to but of generation our think there things then agents lead this,

So, start. two the that's I'm ways stuff, go happy are And thing the but because scale probably thing probably where to in kind of come I it, Stephen, deeper the this geek real-time it. I'm and offline, at a I'd on

Stephen Kim

a – much somewhat be going at as period you was data things curious But long and whether for that the more can the helpful. Thanks. really I many on end the actually the productivity efficiency that skewed lower do That's more And the that's talked you at assume to this about is end think access that have you to think would as on inventory you data you others the the or severe very here curious if at force that I'm to of with whether intractable call is other be end. don't, than at the of fairly different you end it thought I calls shortage time. lower and fact the is high the talked if across a have low lower the the at and it end. sort to at market to you – end, than improving more valuable higher even

Ryan M. Schneider

thing two in to right, you've like range couple months Massachusetts more north inventory it inventory great – thought of a market is I Look, you're in haven't that right, because of is and have got more in about the the current of a think very the world kind million where in question. that months in a dollar mainstream That's opportunity where or totally impact upper-end. the way year, often. I three

the be only on about normalizes, persists, that us. stuff. reactions, right today's that. a question. the probably be spectrum much not I've will that just you're would into got I good But that's But spent you're it which if time environment, think Those to we've about. this strength there a a of price something because markets, ton point, end, to So, Over right cetera, be so our market NRT architected plays in insight think if for higher in across more average of we've there's I value immediate more the higher good et are higher-end the time, thinking

Stephen Kim

Well, much, Okay. Thanks very great. guys.

Operator

question comes Anthony of next from Paolone Your JPMorgan.

Anthony Paolone

the the principal specifically Las make like cuts Okay. work the Thanks. Can Vegas, have typical the you with work? taking how you like X% are into that talk they or you to about venture of transaction kind in ABCR Zillow gave does example in risk the whether

Ryan M. Schneider

in partnership on one is our our actually So of them with franchisees. Vegas

brokerage owned an not it's So thing.

you're going need the one to the direct to to how specifics Zillow. restructuring is so that And of of

make that We keeping are from so agents agents. their most of the which, though they are transaction, again, they excited economics in –

one Vegas incredibly just one partner that they're excited Vegas keeping benefit our franchise I'm the Hamrick, that thought in that our We're in transaction Las to incredibly that'll they've with. lucky best to and So excited successful brokerage was good the I'm who franchisee. to best our wife they're leads or in them. agents, agents and Las with, was partner his the have Bob Molly,

you're or to that. have agent we're around one I our they know how they're excited ask economics work answer So ABCR, the the about to that We're them, wanted franchisees, making choices component. of the excited and their to doing to going don't what with they're

Anthony Paolone

But about a being as that being talked see splits open broader of taking you or than billion profits be you at area do look $XX issue? the that that will, on see lots to risk, (XX:XX) at you when using you that? as the mean, it's Do (XX:XX) them factor Okay. moment. for others pot, whether kind ABCR doors a you principal might if cushion of I

Ryan M. Schneider

(XX:XX) money thing, time market Well, at trying folks shift just it us I of principal from tight homes risk and taking plain when, mean, them. interesting. been to it and they're incredibly I per narrow so some look, in a Again, is quickly. a inventory they're yeah, a Stephen's to they're doing agents that question, sell clearly brokers and like – it's there's that find

this, inventory on data more focused going even at the we models can really kind the I'm see, obviously, more, a at right, on service given buy that opinion from fee in or looks what equivalent the thinking which strategic our a those that's at they a normal few do we is months to of they happen level through As what's they and downturn. a charge or Anthony, Look, houses, later. a agent commission sell a at they're one as them discount these the man's bunch price of to like reality

And on their that subset of will time, pretty the work is so, transaction. least over think can at consumers TBD. different house in liquidity they or it looks avoid big How haircut that like keeps puts there take need much believe a risk obviously and a of market the Zillow is the transaction, must who a who to at showing And that. economics is trying the way for I agent the the

if radar strategic on even these any about curious I'm how have different point this yet. models And it to screen our watch specifically out. play share at So don't news is this I actually to

Anthony Paolone

then it. just for maybe Tony. question Okay. Got And a

was the You in for restructuring restructuring of might full mentioned million cash. looks in what Do an you cash have it estimate it look quarter, the I the like first think charges year? $XX $XX million like

Anthony E. Hull

we've I spent is there restructuring XX-Q. to year. it's what the the and going I to-date $XX It's in a spend. for cost the we're what number believe full schedule There's on that the recall. $XX million million,

Anthony Paolone

last in. sneak one more, I could one If Okay.

mentioned investing Just is a you're curious, Zap that in? hadn't in guys while, you still something

Ryan M. Schneider

got Yeah. platform. using is think agents the – we've We glad XXX,XXX are it's XXX,XXX agents or We're excited, platform we're it. I the really got deployed, Zap at about about

are as reality agents actually that believe it data tight are in great. we'd productive, shows franchisees using the And data who not we others that platform a we have to the While is the our free is, the industry for be, it offer to don't. it's as is we more like technology which

really glad doing it technology got just of franchise outside not given NRT product franchisees, data delivery of network, like But the we're great, expand leverage sure our on but with there. make focused and spirit with and the economic Zap's the really development we to in it's which there. been improved and just our driving So we've we're profitability, and

XX agent things And days even talk hey, do shown this why help we and can you efficiency. hope about, NRT call we few so will me productivity that in that's hear some we've drive on at a

data scale, that that. because journey why so, will broader there NRT, But going challenge is or on and better And need that, to it's in help insights so not our all business be with it, we frankly Zap that especially part it, of than make journey be to decisions to we're and commissions, about much of to needs And it There important our more can the don't less on, substantially succeeding of heard data of proud data I et little agents just an or think that not recruiting, to XXXX. be about on and technology than kind better on be you've like future, be, have product. probably that be excited with plus to going right, also is of going we cetera. more we needs to are use productive we Zap, a technology just use that's think need the but

Operator

from KBW. of George question Your final comes Bose

Unknown Speaker

This guys. Bose. for is Hey, (XX:XX) on Tommy

spread the pointed year. you the year? kind gets remind or focused $XX breakdown really out costs the the of full just the then to that's on? that for that initiatives Just in quickly, you second kind really segment restructuring that million quarter, throughout Could this is back rest the evenly of year, like just does for the of of And the and heavy the us to

Anthony E. Hull

$XX is million the in we year. I So, million, the the have corrected, total quarter. first And been spent $XX for

remaining the rationalization And for mostly the mostly for in so, $XX again, it's be it of this second and will rationalization facility quarter, HR those spend. – So, quarter. in million that or

Unknown Speaker

of you it's not that then something due that you not is pretty is the with to capital in the high whether being to And kind that acquisition return market, in it like your or side flip the there? at, seeing opportunities limited the level Okay. say coming price see that just fair is of

Ryan M. Schneider

of Well, there's of versions that. couple different a

up. going has So, one is, you mentioned pricing, been pricing

months. five kind been market XX intel I least synergies multiple are of Realogy's think had, that at in at from after trading we've doing the is of and than levels kind history much lot deals kind higher the to last of of that deals six there's a

than I new just acquisitions go any that markets, we belief And in. are be has be enter need attractive we like things little need we definitely are More to price. power we be And some come incredibly that It's with some hadn't So, from there have in. of the are it's I'm while (XX:XX) acquisitions maybe translated in go given the team deliver, to in and to excited bigger massive more could that strategically, think that general, scale, But and to don't less growth. a of the on demand growth almost of to recruiting approach, – I a we an we'd the that journey. that in not Realogy you strong an the that like that really had into we profitability want returns – for kind success right expect Carolinas acquisition-heavy to improved organic XXXX much just of the background, markets higher we right? organic

probably expect look keep use for then, to organic to will kind away time. happen. capital where that at So, it's about our want chip I and return will over is, the there capital of to growth, things going use you kind at of leverage we want of ratio around really be occasion, we'd But our it still to we're philosophy been that invest we'll capital think to things on still small shouldn't acquisitions. we material our And shareholders, want for

Unknown Speaker

Got it. Thanks, guys.

Operator

other queue. are no There questions in

Ryan M. Schneider

Thank you, Shelby.

Alicia Swift

and Shelby. concludes over we This the forward our you, look with call, speaking you coming quarter. Thank to

Operator

This concludes call. today's conference

disconnect. You may now

Realogy (RLGY) 3 May 182018 Q1 Earnings call transcript