RLGY - Earnings call transcript Q3 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Realogy Holdings Corp.

Third 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. Alicia. ahead, go Please

Alicia Swift

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

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

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

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

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

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

Ryan M. Schneider

Good morning.

finance his Tony business He of at his learnings. Gustavson on Tony's asked first led sheet. regarding leaving through working he in to Realogy, the to the balance our to public morning through plans incredibly company, our like strategic March interim long-term benefited leaders, brought Realogy ongoing since senior is And Recession. balance that sheet and XXXX, as closely Great substantially this successful financial of is broader our about Over will continually CFO partnership our disciplined transition. XXXX and brings I've principled confidence support driven IPO of Tony's had thoughts the to results. has as partner as I'd new appreciate strategically with the a XX-year and Since me within approach the That a year. management. a the led Realogy, organization. announcement discussions Tim great few for all talent And I with He I the Tony company have a healthy I of adviser in one legacies develop a and deep First, be tenure Tony a company and my has improvements Realogy as reshaped I serve and deliver value him Tony to share from he CEO, has retirement. And me stay about joined financial to to organization. Treasurer. financial helped bench the appointed I've at then his

residential begin the a turn position that, In capable I compete a his the addition, CFO. I believe the the Officer search Corporate in responsibilities in continue I as to real-estate attractive for Tim we to are rest and excited finance team With of and Chief Accounting earnings. hands to let's of Realogy's Controller. be from market. with to leadership as permanent

position, flow, cash capitalize two industry-leading most franchise market new great We of strong brands, and on are technology data and with launch strengths, forward, to driving our Realogy's strategy the to brands scale. recently continue

XXXX. Home XXXX. down the decline PHH absence XXXX. Loans $XX in XXX,XXX the million quickly homesale from were involved million from of our million, which XXXX line Most transactions in billion operating third in gain the revenue performance. XXXX, QX approximately EBITDA the QX Let to me quarter of in was in generated QX quarter, JV the $XX $X.X We $XXX in QX was highlight due with

reminder, primarily to was As split it increases. commission due a

QX basis are XXX QX's as basis points points. split increases increase moderating commission basis expected. lower points, of was increase lower Our XXX and than up of than XXX QX's

expect in moderation QX. We continue to further

our let progress look and market. on a Before housing I our guidance me review back step initiatives, strategic the at for broader

prices for have inventory in as most drive about We This low issue, transaction concern. talked has you troubling with increases continues how be three low a even overall inventory quarters been volume. the helping rising to were

to the double-digit reports inventory rates still September increased Rockies and affordability it flat a up was declined had positive XXXX. a inventory West in of close combined higher in transactions but an our East NAR, data national is the rise. flat remained market our the the saw transactions with been with September to on where mortgage as that are September. MLS the inventory at September sidelines a exceed see is in were start environment performance we, of in slowdown it year-over-year housing look us below while to three-and-a-half the substantially data, demand our NAR months industry, However, Overall, in from agents, levels consumers numbers may and be to environment market. in reported issues would beginning transition in the stayed down. most saw markets, percentages balanced the increase in of in franchisees where in some level, a about September. we four-and-a-half the still more inventory create what however, big market-level July QX, This to stretched to to of and be in supply, for Rockies, but half we homesale in healthy and departure and inventory that becomes from XXXX, many was line rising especially August, According in it constrained. When about changing January the inventory rise the from months striking in the The first year. affordability marks transaction by

guidance. our to turn me let So,

July. August and in part in softness declines franchisees our transaction market trends. in First, and with line guidance then QX Both strong our based company-own September we saw on brokerage a in our

X%. price up with For sides the transaction down homesale quarter, homesale were Realogy average X%

quarter transaction was So, but that beginning up X the overall percentage at the was points volume consistent with of we below range August. guidance this provided the our NAR, the low-end of X% for

declined in that the sides year-over for market transaction versus the The in substantial the our X%, a QX drop In QX. X% that Remember are X% challenges, in held flat revenue market with the York market X% even Northeast encouraged share. that better X% a the for respectively. results billion QX X% QX brokerage by and last the and the We West our these West we maintained into QX, volume us driven regional deterioration. volume increase actually XX% and also bit and quarter City by at the down To $X.X but results, was dive transaction year, down had year. than experienced greatest in for was QX which New region, decline West in were driven own

first Midwest although, and the transaction time down overall slightly, volume year, positive X%. this For sides South volume of transaction were the had increased X%,

QX. look Now, to ahead let me

compared transparency, in market some Based seeing QX. thought XXXX, through forward period we actual to the clearly on views a are price other to as of what I share happen volatile data we seeing most and many I are mixed with the we of data transactions X% X%. are down going spirit are October, different same of transaction We signals. up our for period will Across October we and footprint, track homesale around in the the would closed around already housing there seeing of In what national why. in are

don't knew modeling homesale subject that this operating or EBITDA how This been to three On would volume the based time, have we we overall QX shared million XXXX we at around in we to to calls, to today, $XXX-plus flat earnings XXXX. QX the guiding definitive in transaction our have XXXX and be in play on will QX. full-year equated are While quarter, QX. we EBITDA, QX last market what answer we know a what uncertainty for operating to for at EBITDA as housing consistently macro out above operating you

and we seen so and so the our housing results our million, could operating outlook, this flat guidance. time to of are volatility lowering guidance we're wider the EBITDA usual on than million the Based for volume part the the $XXX QX variance in to latter all in approximately housing our year statistics the given QX our commentary market year, changing $XXX we the QX, and market. shift are seeing be You've of macro

of are initiatives me strategic drive let to the you update growth. on pursuing Finally, some we

us grow grow generation operating urban to make And the $XXX gives from reputation EBITDA franchise future million to as of volume, you First, consumers covers approach call, our franchise reminded our bigger are based U.S. will U.S. grow it much are Climb business in about XXXX, the that base. the York the over and part the franchise franchise market transaction business have leader, last a of its We and in remaining how We a to and these homesales. earnings see markets believe the brand business. launching off new dynamic the markets. Last mobile-first XX%. our in a new to year additional agents this will brands Corcoran opportunity last business made XX%. help international name and the want Climb. Climb Hamptons today we U.S. love margins opportunity week, New market next in we here more in XX% two announced that we real-estate We our leverage Palm appeal high-end residential flexible Realogy. incredibly in brokerages and strong Corcoran to especially of and one remember, of with brands City, is top of an us capture properly Beach large big and client we who abroad I and of

we designed had that in brokerage out on own plans higher-producing move quickly agents. our in quarter pricing to last you continue commission told these to faster business, attract California. and of I new we rolled growing much new Second,

We're also Texas three Colorado. about year and now more other additional in markets dozen plans markets We are This in pilots anticipate growth. commission and is than initiative rolled end. in new all an piloting before launching out the a

plans agents where existing charging on commission new provide. We would plans, or existing are products win plans more told we these and packages on to we Concierge while market Related helping more also in agents explore these purchase select our Colorado, additional last new attract begin now continue California, their We across product grow we product our Listing the appropriate. can you those all of you to and new now Texas high-value one-third electing fees listings. leveraging This than for told and a I plans products have products. about Listing quarter listings. allowing other all high-value agents live Concierge, available almost to are agents to quickly, as agents continue is I markets of

quarters help we made to ago agents. told two quarter, new about Third, help new I products in highlighted technologies I developing we investments Last our agents. were you technology a to our

This Home arms Partners of us describe In deliver quarter, value cash clients I the immediate their provide to agents. partnership a with an new September, offer. we America, that our with which to agents enables with a to Realogy announced ability want to listing more partnership

Tampa. in customer is is estate end product we're the come in is I'll both the potential equip our from keep real purchase later back to using Partners then and designed Atlanta, summarize finish this start and In ensure Our sale. cataLIST, pilot, another serve program purchase the my to program, Dallas of transaction industry-leading our to needs. and the providing to this and Well, in launching they in home the to call with capital in all launched can agents at them Home month The the agents thoughts. called

let turn in our over to QX it to XXXX Tony more discuss me detail. results Now,

Anthony E. Hull

Thank you, Ryan.

involvement want of without at a into that and role cycles following I I company and continued built success a for months I come the Realogy. I We've past the during my great great really years come. the strategic thought. years take many share I been coming Tim with time away forward and and the exciting as much Before adviser entire through did the not to the change have my stepping Realogy's I every confidence team company to over organization. for results, XX dig to in from together in look this pride to

absence decrease XXXX in QX quarter. of of including Loans X $XX were expenses billion EBITDA to of of last Turning of $X.X down or adjusted to and $X.XX revenue joint the $XXX the Operating G&A million, flow share the QX We net or $XX million in cash due year. last share flat PHH or of million, to XXXX. an income income venture on million, $X.XX slide a tax combined for lower year-over-year with free $XXX was $XXX third Adjusted results. net the – our wind-down share per year. in compared per share, Adjusted was million earnings an per quarter generated at quarter. compared the and of corporate increased increase was repurchases Home our Operating gain $XX million, rate. impacts of XX% of

the we free to expect XXXX, full of rate the year cash mid-XX% range. EBITDA For in conversion operating flow

share buybacks $XX returned remains and strategy in another during quarter. allocation the dividends capital Our unchanged. We third million million shareholders to $XXX through

the quarter. shares of million $XXX approximately repurchase to expect over We fourth

an impact increased bit of to costs, by of basis to revenue beginning NRT capital strategy in EBITDA $X in EBITDA partially at operating of royalty be This and was in $XX costs. XXXX. X decrease due brand in intercompany of in Slide from decreased in to quarter. times versus primarily timing QX contributed was X%. million, offset are agent XXXX. commission QX to had of the operating Home million will of we Royalty expenses. the above our decrease RFG's to X a Net down for more XXXX by employee-related no basis, expect absence performance declined On $XXX, in NRT revenues. reached conferences RFG's a contributor per JV X decline $XX million. which This XXXX. by points business unit about side of also operating XXXX, million. revisit principally lower the leverage intercompany We our ratio was due end employee-related QX the QX NRT Loans PHH EBITDA in recorded operating provides QX. effective information gain decrease $X expense X.XX%, the offset the offset greater a million, XXXX. than largest The a our operating rate the due in royalties, to allocation $XX results RFG's on up the decrease

increasing partially Loans closing inventory, fourth million $X As third million EBITDA initiatives we factors; Home wind-down Earnings fee JV a reminder, exited to Cartus $X the due will volumes million revenue and the exchange operating and positive impacts. by due further offset EBITDA $XX average this the headwind September to as due combination The was XXXX. in lower to foreign rates, lower especially of of reduction and limited number in a the from segment PHH JV title quarter August the quarter. NRT higher the price TRG a in in transaction. increased expense was higher unit market a prices, of operating be in decreased affordability in per a points. concern home at refinance mainstream shift mortgage

residential in that housing time, economic adjust demographic increasing as these strong strong a to Over real-estate supported growth. and we are We propel should believe inventory, consumers by transitional new dynamics. demand tailwinds period fundamentals, for

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

Ryan M. Schneider

Thank you, Tony.

are moving We realize now. housing on focused uncertainty committed staying executing. the about there's market quickly, to right We near-term

As you on are every that we focused would day. expect,

challenging and well-positioned market are cyclical We parts to capitalize business even the in leader are the we cycle. the in believe we a of

very maturity a schedule. with have strong debt We sheet balance staggered

have We billion the revolver. deep $X.X liquidity with

that for latter throughout months size slower to the housing free growth we months spirit, cause cycle. In for to market past the few have how We the cash many next to and earnings whether and in we'll flow of and invest have the that see our few competitors struggle growth have evolved. the been scale changes may and

proactive will quickly top how We growth the run continue in we to to line changes the move to future. make business in make to and drive and bottom investments

to value products reductions, to on enhance We are results, cost grow to with to multiple continue our shareholders. proposition staying and new our launching using we new improve return agents, track to franchise franchise technology to and creating capital our revenue, brands data our

about Tony I With future. excited your We are will questions. take that, the and

Operator

the Your first comes of of Campbell Inc. Stephens, question John from line

John Campbell

thanks great And you was Tony, Hey, guys. And the it and life working next. best Good for wherever we morning. with you takes my wish questions. you, taking

Anthony E. Hull

Thanks.

John Campbell

heard a I downturn. sharper the guess, we've and So, guess event I few kind in space, of, calling several players slowdown economists or start more forecasters versus different of – the temporary the a a this of

take Just ahead? thoughts your view you further to on a is, Just what rough in this pause slowdown this there. interested any get is signaling months the as

Anthony E. Hull

constrained our what my the we're outlook, a and bit It is the this started and to gave of in ago, we transaction incredibly balanced you forecasting get than the year housing is the were we of, time, up healthy looks have think first I an going be mix. over we whatever and market temporary inventory make the we're lot the by especially way competition. even same were half in terms biggest volume relative told think little the cycle will for as in if I closing far in we a a which seeing hoping we cycle for what a me. we're I successful is like, decade economist I for on again we're more through as making of heartened for of October row trained and you think whatever said look, that career inventory much three doesn't literately, told actually issue, to increase frankly, price. good with it a at size more we price you to to But But well-positioned all Well, inventory, can boat flat little the watching of that to is like and in if in in feel my the price we which just quarters dynamics both I it a are we've be this remarks, slowdown. by

John Campbell

And or maybe mean, guess guidance, I can? if of for relative far you just next if guys also then of as guys us what clearly, as about tailwind can headwind towards transition the kind year help the for net business, JV But Makes year. then us development I Okay. EBITDA, and to for new middle XXXX, think the is you XXXX give will sense. part the next you

Ryan M. Schneider

the JV and lower guaranteed been last with this spreads sort On has and late think loans Unfortunately, the launched the year of servicers originated of the on market we because of new thing. I it's full mortgage rates sort running. quite JV, the challenged has been year this that year, to first

with happens having already from them. on with year clients, lot happens year have is number have really but what projects a business, a of great are happy offer think then, think on partnership. getting do competitive They're new to mortgage what of the to getting their lot to pause a from to And this to open. great we're that their I so We their definitely that benefit So, already closing. And – are the lot to agents deposits for – to buyers. that going is a the a NRT to get are development there's that business, going our the of agents our I environment with next benefit

to of ramp really the we it's So, year. up a completed, when start going next is think construction that's to question just and

John Campbell

Thanks, Okay. guys.

Operator

Barclays. next Bouley comes Your of the line of question from Matthew

Matthew Bouley

standardization Hi. aging around I of wanted were start you my Ryan, mentioning. I Thank to out that you asking commissions the for guess questions. taking

the like this rolled of sounds so dozen it year. a we've out, you're mean, planning I So, markets it or

on worse? to seeing So, has any and this give you're fees on around working been both where recruitment response you. you Thank agent kind better the of details or give What so progress retention? far any and can you color can

Ryan M. Schneider

Sure. Yeah.

kind retention, it want where So, stays on a we retention easy which is answer of right pretty actually about to it's Matthew, be. our

the business Our back haven't that. in happy quartile place. healthy the done And we've markets seen any in these where we retention. top very around That's remains We're step whole rollouts, XX%. across two with a retention pretty

So, cities seen we – Texas, an in of early. about competitive feel it's just more more San the seeing Francisco, turned but not I market On reasons, recruiting, really a we're positive into that competitive seeing signs positive positive in that. so we have signs San incredibly number is pretty would yet, good Diego, Sacramento. We're normal. than for even say,

the rolled of bigger So, we of a in then haven't this of already green next six we're seen one to shoots cities we city and kind yet a of see where we've We've excited green shoots bunch kind got or out. got where do the dozen how and the in learning to we direction year. better. and XXXX. now to we're pilot the to tell each it's do But you cities too Still even of financials translate from between make early and and end going rollout we the like seven XXXX the into next XXXX

like we it. we're and we're what stick going with So, to doing

Matthew Bouley

EBITDA cost expectation further inflation implication And It need moderation be operating what that guided ask to seems Okay. don't guidance. then given the would splits. in somewhere quarter, you I there the that EBITDA for I more, secondly, wanted the on mentioned value the about that significant to transaction else. know, just number bridge fourth for The the you've quarter, to guess appreciate and color. in I I still to fourth updated

what can guess of I So point you. that bridge? you within components the Thank to exactly

Anthony E. Hull

Yeah.

competition in think mortgage market. the our the guaranteed because versus I biggest the expectations, of thing is rate

probably in I we delta think earlier had from that's $XX-million of kind thought a what August.

the in just a rest to sort obviously a volume, of more reduction little a is really X towards bigger heavily weighted has point NRT, So impact. X which then, and

Matthew Bouley

congratulations again, and details Thanks Tony. Okay. for the

Anthony E. Hull

Thanks.

Operator

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

Ryan McKeveny

morning, the and and Tony. congratulations, on Thank good you, and luck endeavors, good future

franchise the two have questions I side... So, on

Ryan M. Schneider

apologize for I Can hear speak you. up? Could interrupt you. interrupting you difficult to I Ryan. Hi You're you? us for

Ryan McKeveny

No. I apologize. Is guys? better, this

Ryan M. Schneider

so much. you much Thank That's better.

Ryan McKeveny

Thank you. Okay.

allocation. the and on leverage So, side and capital two one then the on just franchise

the itself, of side guess, the on like was this the kind of side quarter of the on seems things, most I it about the franchise downside NRT of quarter, business. thinking So,

as of the that's quarter well. Assumingly, kind fourth

NRT underlying some over like know the indication thoughts we've So, margins, future forward, of has what well, things business you're even franchise potential the stores? what's time, any around has, all Thank of the the the broadly is franchise and with on chatter business? expansion there I guess, the on some of given And this been NRT those any drag. had kind margins. high going obviously, Could the you the but seen speaking, off business thinking this offices, NRT expanding one. I obviously, incrementally the franchise guess there's going doing That's business on of where first I in really market, out the there Is where, company-owned kind kind Is franchise NRT you. And actually stepping side? challenges you acquired of spin-off something offices? franchising back NRT relying from or franchise the has you that the could of are the that business?

Ryan M. Schneider

Sure.

a in franchise a that there's look, of bunch hit me things. the love question, business. out A, Start So, lot we with Ryan? Let

really talked and be demand will a a able a in the tech-enabled about are is iconic of markets such Corcoran new us high of the of the U.S. Those and client has kind they and of in in then targeting very going of Climb is lot urban the future, in in think that. help in really I really be help kind both mobile-first markets kind is that's of grow have And earnings, are consumers to to the set way As going most great base. there's that – for just kind both – to we Corcoran strong margins the dynamic international a especially those. believe we this think We Climb

and right? of grow that at we business, does it. totally a that net royalty Remember from our ourselves come them our though effective rate we franchise So, revenue like lot charge that's We Literally about a from fees comes that of of own franchise charge franchise want the rate. half that that. we to average kind above brokerage

for you is bigger switch things. be you the a if at kind business, do is our Ryan, And every better two leverage we've So company option source so, own ways some operating leverage, looked so, we right? business The right? can of trajectory financially thing. much actually that's should with there. operating how operate the possible kind reality, many of is that us, of And that changing to first over much is of and about One business, describe

operating Second, challenges about, – to franchising of at performance the while to or we owned and drive want a there it from – talk that that, there's to something our lot looked about if is right way business like Sunday. the you think get I answer we've leverage business every described. better We

out product going of new commission from question about the as on growth standpoint, we're of allocation of the kind described. on about business. organic We're with new thing these pricing to growth owned I've the going examples. side the side that changes with Third brands and remember a be final We're acquisition franchise is to it, and thing because your kind had a lot organic capital be to

bringing that our us our changing and into days the them dynamic, that and you like So going assume shouldn't of franchisees business buying forward. we'll owned have

Ryan McKeveny

Okay. cetera. avoid Thank kind potential cannibalization? models, just because geographies guess, competitive offices? potential but strategically of just growth a side, new the against you obviously, at against helpful. very second That's position et agents or franchise we know curious it's the I'm for, to environment the kind franchise franchise Can other much. you also those agents, that new brands, very on balance potential the do cannibalizing you of one existing how offices And I of

how plus Thank X X.X? kind get of opposed any So, closer balancing share the thoughts to X plan you. you can equals X that and incremental just to you do act around ultimately to as

Ryan M. Schneider

make Yeah. Sure. X we answers. can. you And thing, it give want frankly, plus kind X to of X two we equals me look, let wherever Look,

the to to me market Ryan, Corcoran answer defending little about about you if what most time the has and that leaders have, industries, it strategic future, we of employees our on company, you bit get Ryan. especially want risk find, one talking worried want that focus is launch cannibalization want is say a market operating little to described, risk we I franchise we because of is, of, the growing about, put spend to brands for and this of of the because out other know of risk we're path you leaders to cannibalize the I kind worry leaders you're Even new would not across I bit cannibalization from how But to XX% choice this I a market new will your Let we we we to the make with about right? brand declining could need you what And being have. which XX% take market, all let's of how cover the I what kind the than not for also, do start so, with Climb these there. about more of

excited So, kind what there's philosophical makes of and is the approach that for launch we're taking strategic to that a these. us there future

and the way. lot of a actually they we these in different X because X additive looked can different came think do two, with this plus we brand we at to be ways Second, equals X to

agent you of other our our frankly So, both franchisees of kind targeted was markets. of kind starts and of on And Climb targeted focus Francisco and kind than a in Silicon markets. of and of our very there the markets. base, in those of urban is high-end – its of client It's a than international some different to brands. It's targets Similarly, more mobile-first. it Corcoran San It's was and And we so of It just our less kind kind in in is mentioned of thing a younger kind many a of downtown those lot I different brands – appeal, it kind history the see brand. believe, of kind international has international do. traditional of kind consumer Valley very a side. demographic its other built different

think bit chosen the existing we've there get of and a we cannibalize franchise afraid opportunities do to of, they here. a But will we've these cannibalization few of XX% got on And focus And little can oh, is be so, we additive, because we're excited be about not how risk. even we that. if more

philosophy. the we because real chose different growth they then, attractive two these in them we are business. and And think franchise that's that that So we can drive with

Ryan McKeveny

versus very a just going And that. quick helpful. of at the reduced thoughts to the think forward? obviously Tony, that market a of de-leveraging stock if conditions, alluded your just it about buybacks, updated thinking level all for on tougher you EBITDA, curious That's your leverage, bit, changes you. so maybe, but I curious one on kind Thank just little

Ryan M. Schneider

Tony earlier at question step right and QX on change allocation. the right? doesn't back what's next happen capital learned we pace. the be you're And year. And said, is But We the learn whatever think to commitment. continue that. in strong what the we our you, year, We we what We're just trajectory to the have to about obviously, in We in fulfill really think We're that thought a But the XXXX? do. months now. that that take few this to in at you with through were And will of back did. the we'll question uncertainty there internalize here fourth best going going together so, answer it it in $XXX capital got, getting the then three housing, told to you this going continue decided I to we – about of make to go XXXX in on continue back look I for the question told sure we're again look now. I we're way middle to We're time in We're right And that going at started. look, that to was time, to committed going the buyback that for Look, months of to then, buy to the to per step thing the housing macro decision. as into we going last going year. all of like back and we're kind is that and that of Yeah. going We've more asking quarter. we ahead go shares that. We're million

Ryan McKeveny

so Thanks much.

Operator

next the Kim comes Your Evercore from Stephen of question of line ISI.

Stephen Kim

Tony, very again, and guide we help a the appreciate all questions of to picture and I years. bigger good And regarding then much. question. Thanks wanted everything, with a Yeah. luck over the ask you your couple

a probably the well would whether would the do still reasonable as on that of – generally, in where guide, I to see market I generally if the we year a see respect transaction maybe be you agents market or that volume, what increase? with move in you important think we imagine as folks, to might the if very the maybe not variables, sideways are don't as think the was that year in split, based one or would in strong. was correlate as that I fourth the typically, your they with terms the split to be to otherwise reduced in in a slows you're And to meaningful situation XQ. later And going is might had see quarter, split here of expect So, curious

Ryan M. Schneider

Yeah. Look.

tables Look, strongly by forecast were what So, great fourth those, kind increases of happen to year in you volumes going it going believe. we row. telling three top the you way, – are questions. little again all moderate told or I quarter-to-quarter, the that moderating. two things some a that I'd pressure. in of that's quarter, been think all to doing of the you're to rate How bit, market a though, example, productivity, There big upward of people as some kind about The is driving struggle. that could to describing of effect for continues be right? And their down right? talked I less, still say you if there's it be the higher, people less probably quarters we've we think the and when I to in the is And was a bit going was

that amortized our we still what. a – this built And recruiting some that no some thing of because are of payments into matter we have

be compared QX. The other volume, relatively and small QX to to QX QX on remember tends thing is, or

a done agents not for split like so, in the a lot the make of big their it's majority year. fourth of table moves volume And quarter. They've in

in bigger So, the But we I there's would quarter. want about still of think were before we've would a a the thing you're if second impact talking to be at bit as that you said the start That's It's what than got moderating. more model. the wish kind little pressure. it of goes not of moderate those for maybe you've a upward market you one Well, south. our linings of silver may if

potential But You south. on go been But we've for is there you. directional that the don't giving I'm still guidance some to want market that the in that.

Stephen Kim

fair. That's No. Yeah.

is inventory of of Okay. of And perhaps on of are and and or various in then into words, don't view. of on even year, or was thinking of fall, the you seeing, one terms price listings. in the specifically, in sitting we've top also anticipating could you transact. people a the on the New point hold fair be in top as pictures if end listings the the upper market, track, February listings I sort a number if put going tax people's what was York, amount In seeing, the more here that was other I'm thing come Westchester you're October pricing into as next quarter capitulation if on that markets? I of to One there's activity curious that you been they but comment get things March of about are so the surge that third on as maybe County market one,

get those And so hold. listings

– or have what granularity of talk whether that that prices or whether have of reduced hear indication and very October secondly, asking in then you've if you prices that? that track you've that you you different you any seen past, interesting If and seen about the this seen any not versus to is would if trends kind be

Ryan M. Schneider

Yeah.

year-over-year, things I the actually their up transactions average interesting the price of year X% and is deals. on the NRT, think those we've of of about trends that is one million seen volume this for – the really $X.X greater for or QX sell

in So, what's we're New X%. but you've York to up and got take City California, going into consideration on still

$X under So, $XXX,XXX, which backup inventory end segment year, differently is for is the their market, all million-plus parts think And the data, look NAR you very other the the statistics performing the to of the performing high if you than of the at compared kind where the it seems. see is I constraint. best segment in to really

Stephen Kim

Right.

of... terms In

Ryan M. Schneider

sequential script, includes pretty minus from seems New the on latest, Northeast, third down to said from – end a high which it from the went in X% X% the we and quarter. the So, of York, volume to NRT sort healthy at went think in in first only basis, I quarter

So, that demographic trends and I for segment the the right consumer think well healthy now. are boding

Anthony E. Hull

the September, look it's compared lot the you Steve, a we call. not including right kind closings last side, are on and MLSs. said. across we striking, as this access, inventory for find It's obviously are, a in to have MLS XXXX, listings page I'm we stuff, that September, is And now data the of we the year this at incredibly our Right? XXXX many the and track things place player, but the region, it's for of as September where it's staring low-end. most, interesting national national down of I market it's Yeah. every data, versus in something

Stephen Kim

Right.

Anthony E. Hull

in or active to down the listings market inventory you country, below issues ways region. at than by fact, region I'm acute of the any the so most are far kind is that looking away single low-end to And at want in whether call that closings of what fully at covers $XXX,XXX go, country haven't And talked that of and below. whole that $XXX,XXX else what in of September actually a about and the here in every and the at still there's looking low-end we gone the to all, more I'm and anything bunch

Stephen Kim

Yeah.

Anthony E. Hull

you. for And thoughts different so you so anyway, see I high-end even at depending But the do few there's where a worry where than the levels softness. market of more it's on

Stephen Kim

out in as commentary one and you seen clear, a be obviously, mean, inventory is Yeah. homes, effectively, thing that category of the been make think saying I could like for you're sounds of the there gap between that actually Is I I means seeing say that saw on? pull at there's that acceleration and Thanks. like good of to activity. inflation data that another, too, that seen that tracked a would to agents, and you is which hear an the that basically my real-estate into it end We there for and just have transact. are would want well you capitulation these not and because you about is that market there's something we've would able that inflation, it the quality-adjusted agents, talked homes about. but that, capitulation reductions, data ask issues sort good I narrowing things it you're And asking-price buy price also didn't had because essentially to actually big high the that – be comment you or

Ryan M. Schneider

way describing data looking us that say. I who when about It as us They you're on have talk let decimal definitely for our to you're York will say the business. think the folks it point run, and the I and... say City doesn't we going to don't New capitulation say, the I seem talk –

Stephen Kim

Yeah.

Anthony E. Hull

a positive. And

Ryan M. Schneider

positive, agents. absolutely, a (XX:XX) And for

way math and right industry-wide the we market. is thesis your for a isn't if data hear do gets as think internally easy to that the it's is captured even the on I we So, agree But positive do the that. what

Stephen Kim

Great. Thank very it. guys. Got you much,

Operator

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

Jason S. Deleeuw

thanks and the for question. morning, taking Good

we in further some in splits in I just third different are believe commission there fourth On moderation split, trend saw quarter, the different are that the – geographies. the and quarter there the

recruitment the or moderation just from of of So, much environment? geographic the Realogy is overall how the much of strategy, kind the then and competitive is from how new shifting, kind coming mix

Anthony E. Hull

– With the basis good. in split XX California, to out that points from the of of worth about geography shift was

but not from was of XXX piece of going it, point, some it point incremental. piece that had XXX basis obviously was but to So, it a it, basis big

been a activity, their of year. recruiting and kind as for piece, In next state year. it's bad the as But structure on-site getting on-site terms lower that pause guy past of that improves this XX-basis-point having then, business, in kind should having that on year, – the other in we're pieces, is that amortization been about of And of that probably steady to commission of ramping the to next given on tailwind sits said sort because we've has up. sort than closer the a steady the a a be going state it's business

it So, adjustments big thing on made of piece are a last the those XXXX. and lot XXXX – is the lapping And We're pieces. of of clearly, the retention. the our agents kind interesting for great through

I much that's even that, lot which going for lapping start – be and going of moderation. because, think the mean, what I on there. to there'll be competition But there's sort is less less that to but a so part forward going the less, of and that are the year-over-year of impact it'll going pressure still not so, is out changes be though away And of

Ryan M. Schneider

and commission The actually about driven they're of a thing – more goal of than lot question average the is lot love to one commission plans new commission productivity, and what willing mean high we're that aspirational contingent really But more on And it's by they're productivity and growth, higher that to – are plans I today. and recruiting especially a for aspirational. the productivity. we're much very with pay maybe recruiting some on plans your plans to drive try take goal just of new not to to – the splits is the directly. a number. is to The to kind commission is plans Jason, of push And I'd anchor you new certain success like of

thing we're so trying split it's we're drive a not to thing drive. a growth-driven trying to And redo

meant almost to word can, that splits be productivity to and Our recruiting it's about to is if goal, we that as success, as driving, but you. if good And matter keep – word really growth. it's obviously, aspirational makes sense

line, about changing talk or and about we're other Texas, markets thing to pilot California, in I were doing on split the I focus I the driven in overall how Colorado and most whether to about give when they're talking or to like bottom to or So, not the going as do is do you things improvement the that's I'm about to want those XX component it. the be top going.

Jason S. Deleeuw

was going details rate initiative agent Realogy That's know kind second details commission on to what And the helpful question early, the broker – detail. announced, to the earn. but on the home of I all Any or it's and seller? commission agent, just you're the that any charge all. then can rate a Very I iBuyer appreciate

details of of any Just the kind initiative. of that some dynamics on

Ryan M. Schneider

We're Dallas, the ready piloting in Yeah. to other two roll pilots out.

do things. in pilot some you different you actually of One test things is the

be doing that the to can be the we're some now. America is things test to then that two different Home you will buy for things of I'd One customer They'll there. our probably working So going and house. and buying client us Partners sell know we two house. And agent transactions. The Realogy with the tell to thing would want you agent that the is,

attractive got the be to agent, to are commission those two pretty obviously transactions will happening. And also. two then and economics we've that our So, across the

those those agent about and were of a But it. will doing up and pieces role, function way three a it of our economics We in broadly you more are be those our economics agent should the those we and partly testing tests. different things markets and role, what of ended our on in couple think

Jason S. Deleeuw

Great. much. you very Thank

Operator

of Anthony comes Paolone next from Your JPMorgan. question

Anthony Paolone

and you good Thank morning.

side. sense First think the into backdrop a XXXX, if us Can how remains question give costs look to as risks soft? or and now opportunities pretty is on the to are we you system-wide there fixed about cost the what as

Anthony E. Hull

Well, basis through that the of flat changes that that be I TBD. possible we're to on is sort keep cost on budget fixed everyone will office efficiencies the as in side the footprint goal mean, season, so focused is thing. and and

to goal we go the So, as it as flat keep in as is possible.

do should that if think headwind I be correctly. we So, that a not

Ryan M. Schneider

I, obviously, that. side I company. bit little the know it. that matter and of actually I is here my right, kind the company is a experience, with there's make off a know cetera, the but we but growth shown But faster. the get our drive think, to XXXX has this own the this is going often have of that Tony – if we about doing interest a really that, results that things a deeper that sure – some some adjust et we into nice the cycle the of do during better current didn't one that subject are downturn That's we line are that's out adjust to XXXX. can, we company and external traumatic, come able through is of do fight base There's actually – on there well do we bottom can of if negatives And can inflation. focus how again, brokerage, And franchise

Anthony Paolone

Okay.

I two new franchise brands, the rolling costs goal those out or...? that would guess there the flat so, to be And even can absorbed be with be

Ryan M. Schneider

Flat those should to the think things. the of investment inflation, the decide you two I it's year with share or if at what will got I one things things the of whether in, other start is be I've

iBuyer that do. season stuff in budget investing thing We've drive right Tony some – to As just in are of or new we're agents growth. on continuing There's now. we got we're came to for lot that going things said, the a up. to we're question The products, want

I'll where invest guidance get worth – if a in please have But some going that Anthony. to and give that's transparency places be to what to place going to we're of there So, decide you we giving bunch to we're budget do have out cost growth. to season that drive there's on incremental the a before good kind figure let of need of we'll through you on.

Anthony Paolone

fourth volume. just with And number enough. good, be still quarter Fair it seem October going particularly mentioned didn't it. And is then you're the Got and question second flat. to the you on but

what that the gives you flat's comfort way Just go? curious, to like

Ryan M. Schneider

in try answer range I can think of we wide mind, was variance one right is, the of with housing as a October gave look look kind of and – with, as that now the mean, a a keep them. figure start I I out one that you I pretty what's stuff think besides there's to forecasts The I And number wider certain you all happening closed at I lot other at one through you. a said, on some look, couple look, have we does external Well, days. things that metrics of gave to

look a look have of that we we're at asked lot trends. we forecast. all things of We those kind the when we have We look other at about that some So, opens. of of things been at listings pulled,

a of I because little is things there flat, we that day other trying I X% have The you days to October, stuff. first thing NRT it's better get that I better wasn't extra give the down that. is price forecast versus to use day. we're but into And sides our for think than of you will but extra there's just, thing you of be business and blank versus October little your geeky, certain the a what But I actually October an is results we forecast. going the told an count right? I overall range in October there's actually is nuances important, point than business be up national around you seeing. it's some to – in think X%, of what are when own I where terms and And day up there's just a lot of to should October. a the because put will gave was

that's don't I came fruition kind anchor we to to guarantee as everything going And you where when knew as that to can of sure is do look that. look make that's – you we So, – shouldn't much we what at, we we want at come out.

then number the one So, – a then bigger probably of many with that have changes you little but earlier thought. the came how little to bigger asked, question was translated came of also that the both some volume, EBITDA a people than big knew that from the a at the made side kind would that from than mortgage

our head color why just you, when it's in So, helpful for what's we and did. for share that and you there bunch Anthony, a hopefully we of knowing

Anthony Paolone

the Okay. I Thank luck, you all of appreciate help. and best Tony.

Anthony E. Hull

Thanks.

Operator

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

Bose George

to EBITDA. the there any really changes unusual most Yes. at be mortgage, going bridge quarter? Good Are about the morning. Actually, up question of to just guaranteed one has mine answered. drive or just follow on that's the operating is been XQ weakness more or one-time going the But to it

Anthony E. Hull

just it's think the the I competitive environment. environment,

brokers they're terms in – they lot they strong NRT. – in mortgage offices of think recruiting and I really of have in are our a

an standing So, from I think point, definitely strives. huge making operating they're

overall now own So, right that mortgage market the you competitive, its cycles, the as it's really has know. about

Bose George

Okay. That's all for me. Thanks.

Ryan M. Schneider

George. Thank you,

Operator

the conclude Holdings earnings Realogy quarter third does That Corp. conference you. Thank XXXX call.

now You disconnect. may

Realogy (RLGY) 2 Nov 182018 Q3 Earnings call transcript