RLGY - Earnings call transcript Q4 2018

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Operator

Good morning, and welcome to the Realogy Holdings Corporation Full Year 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

[ph]. Krista you, Thank welcome full and conference XXXX call. to morning, year Realogy's earnings Good

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

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

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

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

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

Ryan Schneider

agents has cash leadership, our franchisees. and scale, We're I data for at proposition substantial better data fascinating; we're driven product changes time we're just name changes, making and Exciting and brands, you, has and Cultural these we're year. to taking when of in to because the more Thank pretty exciting changes, and here our But is year opportunity housing in CEO been of Realogy year. the talent strategy driving this XXXX challenging for and generation a those residential technology business there Realogy the Realogy. great even value exciting a with because delivering changes, is half few. entered in technology at because exciting for latter than the a been challenges, an a changes interact great Alicia. I've with better, exciting changes, agile, the now flow It's data the get because innovation at all role tough. because more We're XXXX changes been and the amazing given incredibly technology potential using time. the headwinds in with might we market you housing market industry; was optimism expect. housing and XXXX

will forward. see result strategic going incremental growth can the our our I of market where Our give We're changes housing difference the tell less finally, and exceed change for more pressure growth results our recruit what you for commission data growth technology commission we In the our agent launched world Pulling franchisees. proposition, a I'll market are agent to XXXX rising, where organic driving costs, strategic seeing agents are on from view some and must We're capital of and agents, improve focused value inside using near-term making our and the financial means that and volume path from to upward initiatives agent from trajectory way to and company we in XXXX. market wins and the enhance we're company. our in drive up, seeing for opportunity investments the allocation. innovation a our us productivity. costs

down $XXX according the plus basically XXXX in Most was December. X% in $XXX in to showed big revenue talking our market billion below the four late and months volume sites, topics this market. decline; month the The throughout XXXX. was To $XX flat by $XX The million. during of XX% in the down transaction compared X% start XXXX primarily about down with decline QX down we've in Industry in closing from X% rates main mortgage challenge declines combined very in turned volume and commission XXXX let to low tough a be especially first minus by driven in market operating $XX ended out drive XXXX; So, million, of housing. transaction volume is in XXXX. modestly XXXX. out Industry X% XXXX X.X an QX, XX.X% transaction Three generated transaction year up XX.X% we million million agent $X.X costs September, XXXX. XXXX. levels, to EBITDA QX year of challenges, residential volume housing the affordability from to NAR. higher been expanded end to me the million, million participated year for in EBITDA operating share year. the last Realogy, of XXXX transaction the housing was was drove down and challenging inventory issues rose

pressure. the only we to X% growth, volume with offset growth Second, not commission revenue have transaction did

the As in up points compared basis QX costs points pressure the year the XXX full XXX for to year, commission with we upward on XXXX signaled throughout XXXX. basis quarter moderated each

million venture $XX Third, joint have did former XXXX on not XXXX closeout. the sale gain mortgage our one-time from

to topics. I three XXXX want look and forward touch big Now, to on

an the and XXXX strategic our takeaway of important housing earnings, allocation. market capital view initiatives, progressed XXXX on for current commissions, Our

it's we for market. to we view can't future, XXXX the helpful the know we housing you think how While predict

transaction shifting the second half is weak, view is to volume the the to transaction the positive current QX especially Our of year. that in half of with growth negative have year first volume likely before growth

think transaction of a The QX data XXXX negative. very I volume first market down. we XX%. [ph] The half December mentioned, may January transaction So housing volume be also the entered and on as the volume why in year X% do trajectory down tough down shows transaction with

which also fundamentals reported that January January NAR volume down X%, transaction Our proprietary January. a our and we're challenging having just was while transaction early The MLS are a forecasters XXXX year. most rising mortgage inventory, end numbers still transaction big We're volume predicting And of present effects the analysis vary, in finally XXXX, closings. issues. of a affordability impact down is X%. XXXX also volume really made half and challenging the at year; what showed low national down and the first rates, the X% actual

So QX for example, in volume QX. in NAR down X% down is forecasting and X%

is year volume. potential However, we be the the like second of transaction forecasters, half there most substantial positive to quite for believe for

that should consumer the back XXXX. demand those consumer back of We fundamentals XXXX held especially which So later first. in are have go is the really half in the a in impact believe strong are and fundamentals we improving as positive easing. very

as rates we inventory the points XX been season. down are rising mortgage start right affordability. improves X.X% sentiment has year-over-year. basis So This about about the not to selling consumer actual The November enter about only affordability also from of but now

stable Our low macro about help of shows housing. positive the it’s inflation, interest and unlock including believe Rockies. January continue the national more in attractive US MLS the We should should all rates and for X% analysis major inventory up wage cities available is and consumer West unemployment, up up outlook XX% more low growth, demand, the the the than pent to

the are most of while predicting half numbers positive a forecasters also the second vary, so And year.

up NAR and in up QX X% in For QX. example, volume X% forecasting is

our you on update let strategic initiatives. Now me

performance settle we market. the While we line with cannot market, control in won't housing for the simply

growth First, drive in to our show via value initiatives to and We've as greater our proposition both aspects we of strategic incremental business to agent drive changed and expect revenue improve begin greater recruiting XXXX many results. productivity. our

competitive for some reasons, you While examples. too let I can't me much share give

commission positive product agents economics, I for our across First rates We are enhancing using are We enhanced using own change of More in in higher analytics examples from real drive helping the Listing home product enhance Concierge interestingly, expand prioritize them to this we're continues our Agents are business of the value high use better agent our X% listing same agent in XXXX proposition. new and sellers net is marketing more for lead product price to package, agents now impact. markets have agent compared our impact multiple new out identify like the Listing band. a like to whole to most agents new agents commission and learning growth of plus every case already purchased value in the agents machine revenue us generation today were who getting net results. call our footprint. piloting mentioned recruiting We products an compared don't brokerage our proposition. in potential this across last listings. rolling product of the One, products growth. like across Concierge are early a also having and We're new marketing growth plans and technology recruiting. our to example market our the win flat of and recruiting We to the

one to access even XX,XXX efficiency rate productivity. is owned it's and technology for use, already really of adoption trying this market party driving easy agents agents greater much architecture, offerings in An the technology adopted This [ph] our exciting our has allows by Desk few technology product And to seamless this and what recent a Another, in offerings access agent to been a symbolizes open to industry. approximately our third products though in and been Desk [ph] agents. of months, for greater we're operations deliver only way. for a

example, the our the property. the transaction gets to they early products, Data results would likely plan the listing both and Home in our America. agents win agents listings kept more and one are Partners purchase from cataLIST of with not are product how have live is Unlike gotten. we most appointments the like the of center showing at iBuying and in As otherwise agents sale other cataLIST We're cataLIST, the iBuying participating cities we three with expand. of of

the Second, side. investing strategic to practically in the strengthen the our medium on over business position term. We're

investments in launch and of Some both as marketing generation our products in Starting franchise new early suite to Corcoran partnerships our new and expanding XXXX franchisees. brand. lead value technology in proposition. a agents examples Investing and new data our include XXXX new agent for of enhance in products

back reducing cost. operations our facilities we're and office Third,

think of approximately create Similar this in year, to year these partially reductions and from you offsetting last cost should expect We costs. specific other these areas. as million inflation to savings $XX

weakness share volume important earnings, me allocation. modeling the we're of first that let upward in This continued organic the you on market expect in commission the growth the seasonal a year half expect to and not anything in operating pressure what in far transaction do We're upward positive expect year takeaways volume and volume why in headwinds growth growth of upward always XXXX negative agent broadly. broader transaction reason that reflecting to our QX On saw more rollout pressure additional compounded us full transaction pressure initiatives saw trends commission EBITDA. like for market our negative we negative how we the lead and and some XXXX. does commissions, the above on earnings negative so the half commission including we year. strategic strategic growth for focused major seasonally commissions QX by XXXX the upside also this agent look cost the the year, capital pressure initiatives XXXX, second years On our on are some QX is on has by of XXXX substantial is but a our quarter as future. on Finally, P&L. without to impact back rate as weakest drive agent and half volume

always to be shared in with Finally company technology, and on I brands, enhance the our to our year invest while above and always market. market. we products partnerships. cash flows investments that given ratio at Remember year. every I've uncertain cash flow making X.X leading in we that this leverage to ended our business and generates and additional even ratio protect position be in face times do being capital market allocation, we'll feel important leverage good year seasonality. the that to future is housing an negative QX a We the the invest priorities cash we most at flow five a and tough new expect housing some

the see first down. Given this, us on year the of debt focused you'll pay half in

closely watching be will We environment evolves. to macro how

pay debt expect the market, should weaker You down. more to look the more the housing to repurchases. the the we share look housing stronger The we market,

Now Tim turn let to financial to more our me results over discuss in details.

Tim Gustavson

you, Thank Ryan.

X Turning and to Slide X.

revenue lower was $XX $X.X XXXX due NRT. at XXXX, For than billion million which was less revenue to

joint of income Our million by million sides. price, X% in income to X% million compared per in by decrease benefit was net EBITDA XXXX. tax a Adjusted net to US decline overall million the $XXX resulting from X% home The from sale $XXX $XXX transaction a volume in XXXX, quarter decline offset of million, $X.X year-over-year XXXX the billion compared included Operating was share and to of in The the operating $X.XX rates. to investors volume in due returned XXXX corporate mortgage of home XXXX. versus $X.XX $XX In growth million income million was of flow $XXX driven $XXX mostly XXXX. of million declined increase million quarter net related was largely earnings XXXX. $XX transaction X% change revenue $XXX a fourth during share tax million transaction was EBITDA and repurchases XXXX quarter free $XXX due former and $XX fourth of absence million dividends in to the the in declined volume sale QX our $XX generates company at to sale cash the in the lower net NRT. venture. in XXXX of

Slide with to revenue $XX in years, EBITDA three unit year-over-year offset a employee than the NRT to of $X offset cost repurchases joint decrease net decreased versus absence million operating incentives. in XXXX. commission higher reduction revenue, sales information mortgage transaction RFG of about approximately as volume. Operating million $XX $XX and million. to in venture reduction the share sale XXXX largely million returned lower of $XX associated to the due increased and $X lower in due revenue decrease performance RFG billion partially X of provide XXXX the largely from former splits million decreased other related past expenses the royalties business due revenue. lower and our to million a dividends employee of increase million $XXX $XXX more million has and to to investors, the commission million to agent NRT X and and our Over by operating company EBITDA in $XXX gross $XX earnings cost. lower income

million million contributed royalties including to $XXX the an which expenses. in XXXX Corporate in to at $XX TRG look for of incremental million you and cost primarily our revenue business down $X of driven that down was to Cartus XXXX. settlement the decline $X If to million the $XX plus operating NRT, revenue. decreased legal saving TRG EBITDA of $XX EBITDA initiatives due company's expenses from in other resulting pays the in due to $X revenue. absence operating a refinancing underwriting million XXXX the for EBITDA in of NRT international decreased $XXX XXXX. in revenue Overall, the largely of CEO decline offset million RFG. decrease business of the occurred revenue related for million Operating refinancing by $X with million transition to $XX million revenue. TRG increased $X million more variable $X million. was than million the as underwriting operating in million $XX decline EBITDA cost increased revenue million core $XX title

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

Ryan Schneider

Thank you Tim.

initiatives change in of in and year get the substantial housing time driving has The As exciting - Realogy focused challenging at I market. past are We're my growth to been the shared opening and traction. organic in remarks. an many beginning

to results, take in driven midst our Tim company, that can market, far I which changes early so your we're trajectory of and of questions. we're we will With a that, housing While the the dedicated doing. give tough confidence change we're

Operator

line Deleeuw the go Your Jason of Please Instructions] comes Piper Jaffray. ahead. first from [Operator question from

Jason Deleeuw

of the full and But year to think, is costs It as saves. $XX that. inflation on the cost that sounds gains other we expect benefit like million first on The saves, about the $XX should can think cost net million EBITDA like Realogy? cost offset that we we partially

Ryan Schneider

is far year. I inflation go to comes hopefully -- the Jason. volume being volume biggest The actually a in especially out, back place hopefully of that likely half to how cost see get lot XXXX people up until the are wouldn't forecasting of the relative we're some you as get

magnitude make with it wouldn't be far inflation plays with sense to a to on than costs go takeout -- that to as but in EBITDA about less depending more a we're a investments uptick some both we on end there until some we higher volume you volume at how few so it of gain of there's volume, driven the but point happens may hopefully volume come up we what that offset other the importantly making want but talked some some out, could places. the of the I of much net them, a investments So being inflation I about, was. would more some front, the that year cost doing year have give little see this We're so talked to that cost XXXX

Jason Deleeuw

the then Great, that. thanks for for And question. second

commission give us plans we've piloted translate and agent Just that's an growth some But little organic the and the you the a more about gains into about year? these because for got the from making relative in terms update is growth on. you're looking for it to thinking sounds we help how with agent recruitment you've new should like then organic split, how growth of EBITDA the the there growth, commission for EBITDA in to any the markets then strategy, going year agent on just bit so pressure think can

Ryan Schneider

even, but pilots multiple so The of now XXXX, year, kind where stuff doing of every to that like of stay agent in point some the come there as - markets of things we pressure of trying actually amount a the the of has volume but and also A in kind those to you, of many flat independent with of at agent you can six to tend on build kind we drive. different we basis offsets started business XX pressure and markets XX growth and a with year. our may of that great about, points plans the over drive where the We market were commission to kind whatever products. the commission growth new economics to we there X% that agent so certain like we look commissions, out middle for upward of then more on want typically any lag, and agent were we're show to what side that of the doing is. in the so of new kind that’s offset happens get up, of both of easier to these they is We people as as again the think growth more months to benefit for pressure, and that kind on for it upward to couple market, we a their that be volume ignores to started

basis So But that what's or evidence grows we've a with growth, actually pretty - just shooting can a four for. percent. we've going kind market kind so last might give pay the a than market to - we're specific we’re market we're got bit, that if expect, on housing. probably EBITDA of hold you we I of been own, tough early you're that, above of off growing it's five recruiting for optimism looking you got we do – - a can the can't your kind can But you it's the some for in if again the why you an even more because guidance drive few months and

Jason Deleeuw

Thank helpful. very It's you.

Operator

comes question from the Bouley go of from next Barclays. Matt Your Please line ahead.

Matt Bouley

to Is you was of you on could Ryan, there additional an commission a by your you ability take bit some just you that. mean or half second I of that? moderating the kind what initiatives meant comment of share mentioned or are that in by upside, strategic the elaborate, if year. what market on speaking you a detail splits more about of any wondering

Ryan Schneider

we it's there, be than it's you [ph] and little that, makes the could I especially so new market in taking is, feel recruiting in splits home that for against. footprint, years. increase are and get future pressure a value like there's things question Concierge less asked. that me either fight pressure year some pilots in got we've Yes, lot are we the Listing some on to incremental up really last of upward that of because to both on on bit points their products a from thing on across think talked helps easier volume from evidence the still just got and about would go it's a share good those as would an latter. these going if they've want said pressure, can think, to more in little upward bottom the Commission help The that as been a on obviously lot whole Jason's top we and line helping to agents on much these scale whatever commission one, build of helps And me their get couple early years to or into in biggest that less I of the show there in is, seller, not our volume but that our can whole but they if drive I drive productivity that's can we traction that the economics and story enough

year recruiting and XXXX, of like in things the them show the of back this about real them XXXX. side but XXXX little the to a in compounding of recruiting in up it bit of is, a business The nice is thing. XXXX economics is a One great power

of a the them, that broadly the examples numbers got could things course that is back really traction. these difference, they got that but half the top of to this we're difference, things early that we're have incremental in more explicit making that’s in get think with so some market, think revenue we of some and confidence that's why we we've the So the going kind We're that make actually year of a - are actual we've this starting where giving over pretty call because with whatever some you rollout happens year. associated if early are on first that few we're to

Matt Bouley

that the what appreciate I you along started and I lessening off side. of of upward mentioned pressure Okay, detail, then split of kind guess, lines saying, the you this year on the

puts So there's and obviously some and in takes there.

of efforts. and some some weak, lapping Perhaps bit the California strategy. got there's being with the there retention you've geographic mix You're in a obviously new

trend So, you can is how give on of color commission think, the in XXXX. to there additional splits ballpark any

Ryan Schneider

market were like believe more has that Sure. actually catch of that we up. Yes, forces Matt of to we're we're geography. be obviously what last I now a thing that is, for but The and when personal so around, is personal basis little I holding If were going Realogy XXXX thing at and couple a but splits up our our market a of say with with. year. we the And think, not years points catch of up over there. I is, not Realogy our Right? with were where of what dealing ignore kind always flat, the Yes, the say even XXXX. was as huge Richard function a of that's headwind comes now kind that a of just splits in basically happens dealing years much the or as look XXX upward there's so version would XXXX, off with it's biggest of only just forecasting I the first price out like remember a and were we pressure, there bit said I'd three I thing dealing material said, and you

like basis. much - pressure and and/or we look will so, think more a anything of quarter think won't of on XXXX it And We XXXX. XXXX will look in the like XXXX fourth better full-year be it kind that

XXX you're that that's So the of than and we that's or it got the XXXX. fourth a with, basis offset easier the a of to feel about but and like drive when pressure quarter of the or to volume Quarterly, much year your we with and kind move pressure happens trying still when actually because line catch to will XXX whole think plus whatever stuff, mix the improve unique confronting Well, pressure is around that we confront you're up felt half minus the may and growth in stuff. challenge points. bottom deal to and Realogy XXXX

man, So in again, a and to maybe But XXXX. what feels the thing our would not great deal facing XXXX important in we issue, think it more faced a for this optimistic issue than an big still we're industry. you think, still to still with, year, critical that is what

Matt Bouley

appreciate that detail. I Thanks lot. right, All a

Operator

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

Stephen Kim

on a splits on questions the Just here. commission follow-up

the But you housing little been that split first Just year? have quarter? good degree weighed job for answer. calculation XQ really I in by us experience bit, a And down the a which thought to they or a the markets give could splits just sense particularly fourth you in are acquire may when that the the with you think slower you agents for included clarify did excluded to you

Ryan Schneider

so in When they're Yes, included. question. someone the acquire we first

thing, book, it's all kind included. So an in the they're on who's anybody of

the in split a up X% split though huge the down way in to rebate the call is did industry, their behind pay of they the highest at change housing In market quarter not quarter less the I you're of fourth bad not less basically have higher their far got has work - that parts in splits was little time a past mostly Stephen of the the split way a they've in the down market the by have And were housing, our four. earn that. way in they kind QX you people quarter the - So because But you lining of kind they earning year bit splits it's we silver third biggest or that things. told to their even fourth little the of there's there's and tables see actually the don't work work of most I housing We X%. a table. up for largest that. data and the people up the that

on little when real asked was market that we there In more So year forces. actually a the was flat. silver when year housing XXXX, in down think for which weaker same or we the experienced forces fourth better and the year, kind the lining what kind we quarter But splits. down to last it housing we a a fourth price the didn't quarter ourselves maybe think year. representative really - is margin about we of of think function the why fourth on In quarter of don't we question, are some the think be real market just is of going

Stephen Kim

clarify, quarter, in talking to the mean better And Got you growth fourth relative to about Ryan and the splits. it. when you were just by year-over-year

Ryan Schneider

Yes.

Stephen Kim

right the like a for looking on to XXX, put finer So like the you're about of something point we're talking it's split? for range XXXX, on kind it,

Ryan Schneider

be so. The I of in upward better about in the fourth is is, to you XXX, the I quarter last the signaling going XXXX points pressure as the Where say, think upward tried to what the there's tried to pressure like two just –that's basis still I've pressure. it upward give think XXX years. upward

Stephen Kim

Got it.

Ryan Schneider

that. like Something

Stephen Kim

I Yes, thought. that's what

the of question, you've had I exciting talked Second to some you've stuff. relates about done initiatives some and

thing. kind catalyst, results have Here and gotten agents winning and you of about you otherwise that concierge with talked the agent They listings. talked wouldn't

the on agent an I software. that to agents? in talking you're aren't higher those using getting correct? just you rate, rates So the about versus about our agents concierge, the are commission these want sure, For make commissions talked improvement

Ryan Schneider

about them. average broker talking I'm that improvement the rate an the in pays seller commission

and there's things you I've plan at marketing do but Concierge Listing agents, can you help them ones to of didn't expected didn't using agents do But the talk So Concierge When broker on that, market, rate I help value does bottom agents. we commission examples versus at. the fascinating split the not look we and the average it listings do trying from to you of the using individually we winning pay, when region a same negotiate lower they're statistics. is help showed not. which actually just people that across proposition we seller. I'm this to do them value got debt value to got of this potentially the overtime, like Listing on on commission commission where we because When no you me expect but don't, and them more offset the anecdotally to way at customer are kind negotiation look to I win productivity. not listing. they to going of only the pressure is we the price lets transactions when higher well is nice they to execute average deliver now is, And same real but that it's rate a but agents the agents, higher we and recruiting and when market, tries our deliver anecdotes line, help than commission the is It's initially thousands responses a think for it thing, of and of who the ones The with thousands my kind broker agents and can we more say addition band. analyze heard

Stephen Kim

Thanks great. much very that's No, guys.

Operator

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

Ryan McKeveny

couple A NRT. one and RFG on level questions, one higher of of

last pieces so first, about trend. has at to I'm going a the forward thinking we've seen for NRT. obviously years, the that's margin few RFG the the movie So specifically been nice continued expand year-over-year pressures

there may have up So owners recovery last I'm first network, you guess to due the just assuming about since the past few sense curios of franchise the that maybe secondarily how years. in plus franchises started if agreements And come about starting they're your now same strength I'm years. seven the strength is let's over of, actual thinking just that than comment feeling franchise more say I those if pressures the you on can the in think of franchisees. actual the in the

that that be you. minuses to. pluses and might and/or could any with retention franchise efforts sales talk So incremental coming Thank call out can you franchises you on due with growth

Ryan Schneider

a Ryan. of So that, lot

couple. Let me just hit a

we cycle started So coming XXXX due XXXX in franchisees and new of some have and don't like big XXXX in XXXX.

So we that of have thing, out. a smooth even just to that one kind pretty there's big no of knock spike

operators good we past gone something side, more from be technology things and of by because years came ones that's calls year I of past for our if are you which like struggling I are franchise from franchise incredibly market we've stronger I feel our be side in the owned of many the other remised, came X,XXX our remind feel previous the not the I'd because few them a market they didn't growth that share and but it said franchise like think being X,XXX people But the to leave blunt, and to in consolidated and some good one. over forces us with of for thing. same who're and smaller is, bigger the

struggling franchised So franchises like so, offer XX gone get high subject we've of to who to the our a top XX%'s as within growth, sales side, to franchise franchisees know deliver sales. early had a year our interest we driving to XXXX generation, and but that, good for here also We market technology, franchise for launching about the we're we pressure. consolidated people a pressures XXXX and and strength of etc. of we're, all-time mix who're to now them tend lot there's a the our had from of driving lead me an excuse XX% out have in franchise. but We performance same got in keep there with they're to high the our are top good Corcoran lot feel in the good we for got sales to franchise lot deal lot franchise with XX% franchisees of so which help our in

lot question, I'm the take your So in to in there's more answer a lot I follow-up. covered and a in a happy

Ryan McKeveny

Yes you for thank that you Ryan. did,

then we look concierge X.XX% listings, fourth the hear question the at So NRT if It's is, good the quarter rates but better on average for I to ABCR. you the on there. the the hear on

the lowest at basis that's quarterly of on in least data. seen think the we've history public a I

So we is forward? you. I'm commission you the curios whether are Thank sustainability disruptors, call rate starting do think And of that just moving broker it? to to how want see ultimately pressure about that you discounters from

Ryan Schneider

off, first thing in about owned a Listing only, Concierge our great is question. and a That's Yes the probably today. markets of third

of more I the we so is expect results. a it's non-Redfin we Redfin roll the overall second most is XXXX. market XXX basis, then same more moving look seen what's got appreciation data out haven't at the markets think points price broadly, last we When a would really ABCR analysis one ABCR, like that's And pretty it half down drop something drop we've the of or the basically, lot example categories and one we move the versus which so the XXX into drive it the an price of XXX band to at more of of On is it's we we in the price or two and etc. the a year million And higher years continued but that it dropping closely basically it mix. to nine as looked change was to and all eight trajectory, year that for is of in driven to people been thing that kind closely remember disruption of a you watched the to can why done in today

Higher to decline the But basis is all probably driven one more but detail. years eight or still mostly think thinking been something and over point pretty we watch And do so I is share seven to remember happy affecting of we closely, my both last a didn't today those it I'm There's be due when that so two by need kind about. kind It's to this bit phenomenon. are see of lower thoughts price mix and we disruption mix quarter have stuff, a that. of different macro looked at we more historically our but ABCR the in on just ABCR. thing, anything fourth homes and little

Ryan McKeveny

Thank you helpful. Very Ryan.

Operator

Your Jack line ahead. from next go SIG. please question of Micenko from comes the

Jack Micenko

number the if plus know, that six anybody do year. wondering and forward. move the if and think about this could anybody's four, But at ratio down end I that it's leverage How going we the the five? is market as else's. don't flat you is on that How down. on debt know a comments about - looking we view I'm sort to touch the good dependent at in point we the number would think of think that? at of about I Looking should five How as XXXX change?

Ryan Schneider

Well Jack. look previous me to call back some - let go

is the think stronger that. with year, line. the is is bottom just other flow and line happens the our definition. I our two what bottom better One cash we things free drives the obviously use The kind how housing by of

the balance things. that spread out, both of how calls size the ratio out not was of of maturities for calls, I stressed kind in those a leverage I'm I've in are strength you our little the But watching with also animal and plus in so think of I before, our four's company. so, the said given different six. range four, And fine kind said over five that's our bit revolver I've sheet, we're what of into our get when up of our

go market the we're of kind of out get stronger to and just that the so, But half The probably least and as negative more at market focus both through to where the of want leverage balance market, focused run and view. weaker think just is more - And gave it stick housing trying stronger to And for back down then in the to are I the the I hanging those half cash that of market, leverage the kind see pay we've repurchases. more to share letting with rather the of or flow, housing more I range But fours, ratio tried to then on down, down pay weaker my the away. move. debt in too far things previously we the kind shareholders tried is, share just look, markets we first of us as the flat kind pay it's opposed those capital repurchases. to the debt down of year seasonality housing you of the through debt going float same as to in return more say you're kind debt whether may on first weak year me pay to hold

Jack Micenko

quarters of that's initiations on is like the business kicking because change the that toward helpful. term improvements two row. the and job Are a health then it's looks nicely decision? now And to Is made that impactful more to up that business? a maybe moves are in it shorter less Okay, re-low Cartus, or business corporate rates I guess in

Ryan Schneider

doing the and initiations we affiliate is NRT Yes, as Cartus up place affinity year-over-year qualified proposition. to RFG. I it valuable think Bringing leads are about network part of some agents in put the so our at definitely the very of and initiatives you hold, value taking of are is well. business X% know,

Jack Micenko

thanks. Okay,

Operator

Your of next John Stephens. Please question go from ahead. the comes Campbell line from

Unidentified Analyst

from is same [ph] revenue how Trent each? over guys sales upfront This And accounting doing profit RMAX and been the Are revenue the if has client franchises. deferred in Corcoran period. you much I so, for recognizing on believe More What XXXX? replacing is sales John. Gordon franchise standpoint average the taxes price of

Ryan Schneider

Tim, franchise do on take the to you revenue question? deferred want sales

Tim Gustavson

one time? Can repeat you that more

Unidentified Analyst

and I has revenue wondering over doing just RMAX so been Yes, same. the you period guys are franchise deferred if recognizing sales was

Tim Gustavson

No we're not.

Unidentified Analyst

Okay.

Ryan Schneider

So on launched yet. hasn't Climb Climb. really

[ph]. filed haven't FTD's We even the

public, yet. you're there really about can't question the we talk it asking So isn't

is, premium Climb's X%. public. about franchise name it company purpose limited our branch brand. in $XX,XXX thing. has brand interested north Corcoran And end scale $X,XXX a start have where that. given - of $XX,XXX of out been on fee. the we kind if Its a most ready royalty massive to a a later. a and the a if of the more success that's launch top even fee kind - always royalty for and to up kind kind hold This we'll is is kind to more initial the then franchise of of So planned look launch for rate there

franchise around your and to some of those that So the get that question? does are of kind economics

Unidentified Analyst

your Yes, that's volume that? You for answers the Can came program. perfect. if Yes XQ that? iBuyer cataLIST transaction Appreciate it. And are more expectations XXXX? your have any on that percentage you example on that. expectations what through And from

Ryan Schneider

or It's mean think obviously the houses, we their kind is them what of capital powerful for we iBuying can't our renting in we where a going offer, of powerful to that the we're of unlike it's agent them, stuff and the love that's to literally people Yes, value this it's and not people position again for adding last because powerful a five of months and no think and it in light what share QX. yet piece proposition given other for the we we even, in light to who buying so Most some be three really a is of XXXX, cities us. I say our where probably do, we've cities for network where that's and houses, really the capital great not like business here of and value really transaction for side still have kind we what to our again the look the those it a it but cities iBuying but very got months think who in home be already house, who distribution that it we like we that. $X.X four then last - we very bring in transaction all three listing we're do we're the to definitely in sharing three small the they flipping We're for three and we of - would effectively small is about agents. and launched for keep highlighted partner business business their we year. offer it's but forward massively partner expand if we excited We've selling so you, it. in we we're because think one But and time agents. when the seller tell agent yet it's itself of center the to really proposition we the billion the

we'll far So very business. small we're it, keep It's X.X a posted transaction and but it you expand. in as about excited so million

Unidentified Analyst

Thanks Got guys. it, that's it.

Operator

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

Tommy McJoynt

This is in Bose. Tommy McJoynt for

relative exposures you our maybe that else? now point transaction that average. performance guys under anything attribute average you high slight to national or and price more certain report the Given to Would volumes or geographic

Ryan Schneider

joining Thanks We're all pretty on this Tommy. point. for geography much now on at

QX. we in weighted California our weak both QX into and are weak was over end, pretty remains of to those incredibly York in in relative our competitors. New

the on So and between kind that's of really five the difference head. in our mind hit four you've thing and it the

Tommy McJoynt

separately, me was then what and Guaranteed and is in then that from through the Okay contribution JV XQ XXXX? earnings for year flowing and remind Rate, the earnings full

Tim Gustavson

equity our Yes that earnings through was flowing line.

this last that lost - year So was more year. $X about million than we but

was start-up As XXXX you year. really the know

for ramp compression the So of given year. probability XXXX, rates XXXX up the but business a in movement. mortgage And of industry lot do it more a tough we was margin had kind expect in of

Tommy McJoynt

Thanks guys. it. Got

Operator

Please Point. the Compass ahead. from comes go from question Gamaitoni next Chris of Your line

Chris Gamaitoni

of your Can cash year cash expense you EBITDA? give for a your bit is flow what on free interest outlook next conversion and

Tim Gustavson

think point at year. number. interest cash disclose we're for cash that I a we'll or perspective, XXX probably that at not a perspective, so this flow next free From it's From around time

already disclosing now, numbers In the had right going as pressure we be was develops to that we've some year. For $XXX as from QX, year far for we'll how on. and last it see later million perspective expressed

Chris Gamaitoni

When brokerage? they to leading if half the not Okay. What or Just agents, their back brokerage programs you your understanding Higher proposition have strategies be into another what new with versus with? of value are to changing? or recruit heading successfully year? better level. will is existing are your What a these

Ryan Schneider

think all I across whether franchise side we're ecosystem, leverage. on side. the owned in on our talking the of brands When owned economic different about in a or it's proposition side where had value always the the good particular, a most We've

is only we're our or two has change. for commission growth One other a an Cartus agent competitive under period That recently proposition little all commission Most of of generation etc. time. a value core plans aspects. of Our lot aspirational up them proposition not package are change quite shoot that and lot more from for what hopefully. new has marketing, done is, long and very in lot brand, lead for the recruits pay can for a places support, of of setting of that recruits dedicated With well over very to but them really to technology, growth, stuff. for incent three new existing a with trying But But new commission pressure we're agents value we're split kind a these to forcing growth. we'll

much be commissions as we're more this to trying in component. aspirational so And plans one

As our have more help in do. analytics to other haven't to to person. their is improve better medium a can partnerships that, mentioned national bottom can value beyond partnerships bigger set that line scale to around we actually of brokerages I broker national another at to and We or invest presence. than marketing, because do to component help be what lead because of some to or value generation in even technology, either better or the technology, add the do things can up thing iBuying data competitors get can the we data successful proposition next agents We more small, them technology they like our been develop productivity able

just this our quarter but make And some a some medium scale, are our how we've believe we that. and pricing got there's and doing. do commission I'm the got to aspirational brokers productivity roll we give for me them of this so should do We odds on a been for control agents to is be We where of years. largest there two lot But how and even them things here to more And also more was make can't drive there pressure to more for new and on world to nationally. a lot make place of things. can reasons because to less a give environment. value early multiple these success lot size - to nationwide, that to do you early out happens you market, there's than consistent matter we each wins with been exciting to with definitely - I our deliver trying small recruiting, quarters work in control, you more where not successful like in definitely and evidence we've we have theme The competitors confidence. be having unique No we with able lot perform housing us in the what try last on now that relative can't and basis.

Chris Gamaitoni

your can Right. a there this business That NRT. you is a Is point, down the initiatives or curve to at overall is game? gets EBITDA do volume Whether it X% cost marketing? outlook kind is, final margin to really of for operating question re-imagination me my change that or to

Ryan Schneider

volume some get how the want support. into reimagining all I on. told reimaging too back back a ahead those office and we reimagining office teams. of a both I design had and don't their We facilities a get what do think But it side. I from doing to on many places, my details what talked lot going we of standpoint up out. it's about and to both own that I not the a a cost offices given our money we're to game, their but in really footprint take we've we're lot too far

and commissions other brokerage, all different than cost to that in pretty kind before. the the If you are with think processing of about ways go

our they so years. really trying the but more of are would even that. most the last leverage to focus is world and a on like part have more recruiting where do bigger or the because we're three volume trajectory agents being And terms changing the making has of margins four in productive say in I in compressed

Chris Gamaitoni

Thank you much. right. very All

Operator

Your from line Please last go Anthony JP Morgan. comes from of Paolone question ahead. the

Anthony Paolone

mandates. given landscape some still about what don't easing just, keep the further. the I pressures split robust just that of pushing you that maybe we the are it And Why like talked feel the larger kind to front? comfort of and this a It comment, comfortable see potentially seems things things have that know of in growth level seems you up competitive XXXX? lot to [ph] Can you're not read you pretty on another the it, competitors ags expect already. you going trader when step

Ryan Schneider

the at talked with the moderation market of going kind to as told year, actually up and it moderation, we that got was left our expect QX every in Well about in reason we're that so begin to that and us us last going the kind to were because the part part we XXXX that we of to At Realogy XXX numbers single quarter flat you and we what XXXX to was, aren't forces here. every of think thought look, that some also start year. was that of big and of XXX did catch the three-year and did be having over in from that of disappear all period is single from QX. in we But upward the occur quarter will of still discounting magnitude And we be we think pressure competition the there and that. specific

market XXXX we're to down relative to But than But ways higher drive XXXX the but be we anything the we used that better where are we and think to it's just So we any just fourth forces go about know in and in when share we'll will we we our it biggest like to have think, and XXXX or end our compared look, as you shutting competition assumption anybody to and it'll this XXXX in we're statement. like with - probably also what based we talk or you, of the and that that fundamentally a what show be be the competition going best the have year. in to and of relative triples XXXX, started we're thinking now we what's on changed to or We don't The that to industry we deal more or slightly it's saw have market. have down issue going subject up XXXX. to can't some that. back to in to - in it's that, make seeing numbers predict where we'll to to was of want we to compared lot quarter exactly market changes where everything the less with

Anthony Paolone

Okay and the in past, Ryan.

that and they control we think how, do consumer to mentioned business, control shifting to resources tend have kind towards end initiatives about about versus and hear You and the focus that's consumer and are, over when and market? you resources the of sort you about it's your your more path to initiatives think experience of about how Zillow taking initiatives directly that where if the agent the

Ryan Schneider

at on our at have us added on likely as think actually consumer mean the biggest consumer. our least mean and the believe change doesn't we'll to Yes, website what that. great you're Redfin the now looked it get look we I from kind of lead you in we out It same It's focused where base generation, we where no probably and it's and gets I if company's the think up. equal is all we I website leverage the add kind kind At are if brand have so performance. keep a of we they you our consumer of industry. stuff. and question. given and best strategic it it. to looking our of in think up the basing is them focus do stick total agent in operating with see We We've But

We'll would ask think back I for a and lot be like we of effort with not very to that. along focus we ourselves And is basis. near don't we to sure it, a company keep the trying say, put agent. it's news it's week. competitive so those but on it got question made And every of ourselves thing coming focused lot to regular really pretty past we into a asking to the leverage to the our a of that But stay both the thoroughly. the will quarter they in watching term. we any And with on executing a There's we're to got agent already. Zillow be But are, impressive moves. lot I where back coming the strategy stuff, digest

Anthony Paolone

thanks. Okay,

Alicia Swift

call. look quarter. us want all forward to over with That I you coming thank for and Great. concludes our the to joining speaking today you

Operator

concludes conference call. you today's This disconnect. your great you participation Have for and now day. a Thank may

Realogy (RLGY) 26 Feb 192018 Q4 Earnings call transcript