RLGY - Earnings call transcript Q4 2019

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Operator

Good morning, and welcome to the Realogy Holdings Corp. Fourth Quarter and Full-year 2019 Earnings Conference Call and 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 XXXX welcome earnings Marcella. quarter Realogy’s and full-year conference morning you, to and fourth Thank call.

Simonelli. Chief On are the Officer, and Realogy’s today Charlotte Financial CEO and call President, Ryan with me Schneider;

will As shown on the other statements current X expectations of call. and environment. These its results Statements based economic be on and the future current the about Forward-Looking making presentation, Slide Company during statements are the

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

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

in our we segment. and noticed earnings business, release today’s our simplification operating in pending as the call have our the will turning of continuing you renamed Before efforts Ryan, to sale have part relocation legacy of

The Leads at to in Group formally formally the is The which or Group NRT, Title retain. we or Realogy Realogy Cartus broker Franchise Brokerage Realogy Franchise, Leads and will Group is The was business Realogy Title TRG which broker that Brokerage Group The or affinity or

now reported is business operations. discontinued as relocation The

we period reflect have revised financial changes. consistency, prior to these discussions For

the Leads as receive Group Realogy will closing the franchises. our that are that of The Realogy Leads continue upon transaction distributed within Brokerage will Leads given to Franchise the well. Realogy included Group to majority expect be Group We the also

included changes of these better you, the have that we To today’s assist presentation a call. accompanies hierarchy in

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

Ryan Schneider

morning. Good

you remarks than never been am December have right excited about January, and my I public in have As seen in more I may Realogy now.

past potential the I the today, feel pretty have few and as the years our in for While we about growth. leadership been good industry future here and challenging our position very sector Realogy, stand for

in of Realogy, excitement and is industry is increasingly anchored in discussing the which fourth that today. quarter our inside shared And what optimism and my about happened are outside by people we

First, in growth delivery franchisee enhance products we our the the and value to agent setting and stage accelerated propositions, future. our partnerships for new of greater

We are of moving operating fast. agility with

mix sale well-received made as relocation decisions pending strengthen business changes a and the we our series and to allocation Second, our balance company. sheet capital of such simplify

results. competitor started which and drive retention rational to we start September has of are more the better the is definitely continued. competitive Third, environment recruiting better and October QX a environments, us XXXX helping showing see and in

finally, our we like delivery in and Fourth results QX.

million headwinds cost we even XXXX and from for our Our was agent we split did $XX and growth. investments transaction solidly more than in EBITDA positive volume operations, discontinued with operating including commission are future in

continued. positive have These trends

market franchisees more retention to our the delivered launching and Our Corcoran initiatives like XX% even and quarter both we and to strategic recruiting as the our Corcoran and more January transaction and announced was volume later planned in housing with be improve, results franchisees quarter. continued up first the in signing

in remained brand both last a owned the portfolio. the player up, the away all pulling few strong leading brokerage even with we So, and in franchise challenges years, with

operating industry combined for EBITDA. this We my actions to generate substantial with future. fuels drive the fourth scale our and importantly, optimism data That the technology in foundation innovation and and we have quarter most results

good brokerage QX, including $XXX We of turn QX, and full-year. the X%. growth discontinued volume we X% So, million in owned QX up and EBITDA QX up million let In franchise operations, operating X% to above have of me had $XX brokerage year-over-year up XXXX. with

the full-year, transaction we volume. minus For X% had

and recruiting of quarter transaction delivered discontinued the operations. our cash and success year, Our environment. flow, free We benefited rational operating both volume solidly every QX improved in $XXX ending of throughout with full-year from more a the positive competitive QX $XXX retention EBITDA million including increased million and

for course business We our of by the and number franchisees. our the aggressively of grew Throughout we our XXXX, agents enhance X%. proposition organically agents value in brokerage our to delivered own

delivered technology lead launching generation marketing, Concierge, programs. national. Ad high multiple data differentiated quality while Engine Listing like also are new and Product now We Social products,

have available agents technology to We new franchisees pilots. and and in both products nationally

and Our growth, good new Program Realogy Military are quarter. program this already Rewards we AARP driving lead is our generation launching

the our improve that experience. providing with closer move by agents unique We franchisees the to and customer consumer solutions

Our Adviser in America Partners RealVitalize with a few only after Home has over markets thousands its the of cash to XX of iBuying and partnership half country in driving alternative RealSure expanded Program with is Home our months. offer requests

$XX Both optimize consumer franchisees. a more business million deployment. This us we allows $XXX debt. our our business, the sale our reduce to in change finally million listings to for we willingness simplification capital products in Realogy mix make helped relocation In positions more generated and which and destination and And attractive the for to our EBITDA win announced agents operating greater Realogy November, XXXX. of demonstrated agents

months. XX next simplification to own business has deliver The a relocation has working close million network and has big carries we the couple sale large global drive also securitization supplier operations, capital. swings a The received approximately in and dividend. annual anti-trust and will CapEx clearance of facilities and The divestiture in expect its in

optimism, address a we as XXXX few with to forward strategic me So, look let issues.

talk share First, about market let’s growth. and

XXXX, declined split market equally businesses. across As brokerage we share previous in calls, discussed our franchise and in have our

share, growing industry We are our most preserving market of our market XXXX share to profitability. for in year, regard capital the aggressive private without very focused pursuing on faced but and

to are just But, unprofitable the environment better. year, to in across the making increased scrutiny recruiting I quality go industries and we QX of results was felt told rational the retention with share. choice profitability to the And you more not economy were because our whole competitive recent market retain and companies, return on the throughout the negative different as and

better had QX. agent more our X% in agents We recruiting We We brands. returning liked and retention. QX. we had success our growth substantial had to volume We saw

XXXX, our enter about really So growth of excited as potential volume. we I’m

and a bit brokerage, ahead of with our franchise expect of We just franchise business, like in growth solid own both transaction brokerage QX volume across own XXXX.

Our substantially. is up January transaction volume

growth Our retention have initiatives recruiting to delivered more like even we the business. and franchise Corcoran continue results strategic and improve

still want when to market we growth We But the be we to losses when easy. less even was run share more at don’t agent headwinds competitive excitement. rational. competitive don’t of and in environment away much too parts from in looking or with you have environment rational a still trends our intensity, XXXX volume the expect expect share, XXXX, We competitive earlier

don’t January you overall, results. also discontinuation of we important the And the but want with run number USA But our transactions to too volume from growth, there Program. away our are Affinity an including loss optimistic our much about of of is excitement

discuss mix. business me allocation capital let Second, and

simple. pretty allocation story capital is Our

debt. remain paying Our the and investing priorities in down business

relocation with our options sale, capital. As look to we will continue different demonstrated better at our we business opportunistically pending to utilize mix

Third, the of of let the me Affinity USA our discontinuation provide business, remaining program. detail Cartus on some including implications

million $XX made business broker-to-broker operating XX,XXX and about generating while Affinity Cartus in in Our XXXX, EBITDA referrals.

material a to in we We XXXX the of realize Affinity business previously disclosed in program. that, this operating the EBITDA decline will USA loss due

substantial USAA by As largest is our a partner margin.

operating decline businesses will driven in across our previously an the have disclosed We by impact franchise brokerage of EBITDA referrals. the equivalent also we downstream reduction and

generation and programs investing overtime. in USA offset will to loss new We both the be lead existing

making marketing We including investments programs. select affinity in as high and investing new generation quality ARP in Military as existing lead programs launch Realogy will well Rewards and be

environment, to like macro business recruiting focus along on continued more for our down, on XXXX, continued Finally, like we XXXX. also our efforts on for for in debt our growth, and mix, volume our with rational QX outlook drive and the competitive momentum delivery paid progress

the improving rates and housing time remain for market. tailwind are a the are across Mortgage lows remain expected industry fundamentals at all to We seeing XXXX. throughout

that We markets are coastal is volume The strength and struggled improve XXXX. growth. in more seeing is Northeast showing in exhibiting West transaction the

still While inventory challenges New other affects of and overall macro affordability XXXX watching, Realogy. joined I tax the housing concerns are select how they especially best and changes looks since be markets, City to York your for remain in large

QX. delivery, the the about future our given closing leadership our early results our in in environment optimistic position industry, competitive and improved QX So I’m in our

Charlotte it turn discuss more detail. me Let over financials to the to in

Charlotte Simonelli

marked everyone. operationally and the driven a Ryan. strong close quarter financially across business. you The both Thank the morning Good improved to year performance fourth by

are a We competitive environment, more market a strategy. and execution our benefiting consistent on housing from better rational

thoughtful value balance briefly before drive improving strong to leverage and sheet. the highlights proposition and into to growth diving remain approach and want our deliberate simplify, We scale to details. innovate, our in recap an and profitable I some

and the growth discontinued we in achieved brokerage we operating base ongoing of We with savings. cost realize operations. million exited our volume gross the our by showing EBITDA business. We X% transaction while year moderation XXX XX million business of XXXX, owned including structure grew X%, In our split agent improved QX of of

basis We owned We million and reduced approximately basis. by increased split cash XXX despite at margin debt operating operations as as including on pressure in net cost within XXX million. well free in brokerage the XX and QX commission quarter group fourth flow a discontinued Realogy headwinds of generated like-for-like the points

finally million, our opportunistically operating de-lever All-in, $XX an and discount the on I’m with and of for and value further us improving our pleased financial repurchased bonds business. at we a enabling exited we million million trajectory, simplify relocation announced made. we business XXXX a $XXX of and divestiture creating to progress XX We both

fourth year, Brokerage X.X as versus X. transaction billion and volume revenue into move positive strong consolidated revenue quarter, well financial Realogy as was Franchise groups primarily in to prior due million Title let’s the both up XX on results the net Now Slide Realogy Realogy at our In growth the

X% the Realogy’s quarter. million discontinued year-over-year. QX with We growth and $XX revenue in up volume million, EBITDA operating increase $XXX operations was are transaction the including pleased

loss assets was driven reported in operations the as $XX Realogy relocation well of versus on associated being discontinued pending fair million sale. value The year, financial within impact million sale statements. is with tax adjustments attributable on Net sold, primarily gain by the the $XX the our to tax quarter taxable expense of as loss as the last the the

from excluded the to per times, of the in now negative have X.X ratio net as relocation year. was of Total the covenant EBITDA, at QX proceeds. relocation leverage the ahead unchanged earnings Including $X.XX prior net EBITDA ratio X.X earnings sale covenant times. share receipt compared leverage earnings would declined negative XXXX discontinued to $X.XX was are in

year-over-year comparison XX Franchise let’s to Franchise million onto $X X. increase an of Now quarter. revenue segment million Group million, and Slides royalties growth. in royalty move performance Realogy X% driven a $XXX marketing revenue in transaction due intercompany was QX, fees X volume from In up of on and by the includes revenue, brokerage

revenue which EBITDA XX back in half by XXX better solid a volume further Brokerage and in billion, year-over-year. transaction drive expect to growth XXXX. million, up aided due increase was also of to Operating increase we operating The transaction due in the million year, up was expenses was as success were Group volume revenue million recruiting volume. retention four the flat the increase in predominantly Realogy X% one will

up year, associated million versus negative with higher revenue costs to was business. million prior Group million, savings three XXX expenses driven by EBITDA across operating revenue up XX Operating was program. the lower Realogy our million, Title due XX

and due revenue Operating XX GRA JV. the mortgage million up EBITDA also million, was XX to higher

full-year operating performed GRA mortgage approximately the million approximately increase million XXXX, of contributing EBITDA, full-year For XXXX. $XX in an well JV XX from

both EBITDA, the and non-relocation QX business, Affinity broker-to-broker million XX flat includes QX prior XX related Cartus which Realogy Leads million both the Group, in relatively in delivered revenue, year. to operating former

in EBITDA specific Now, operations I which are million items the and XXXX flow in financials. the Realogy reported XX XXX for generated relocation cash business will of business we in now operating sale. are revenue, free million relocation that in pending the of XX address divesting, discontinued The million

well gain cash of level, by the XX tax the fair associated the on to Realogy of taxes loss is operations on will sale. and will as majority at when sale. assets adjustment trued-up the be discontinued sale will due mitigate adjustment of with the finalized, is sold The the majority of be which NOLs the as at value the offset expense time million The tax being tax the

QX. volumes Ryan has talked improving in about

the other a Let me impacts few to the highlight of positive P&L.

gross been XXXX savings of implemented has savings Our million. program cost realized $XX cumulative fully with

In in higher the of in office $XX workforce optimization. the fourth price. primarily driven both year Royalty quarter versus $XXX in and savings we was realized and $XXX side approximately per XX driven by full-year, $X million and an predominantly increase prior QX by respectively

In volumes. basis XXXX or XX basis basis commission up we as XX were saw retention XXX in points XXXX which XX points an points full-year were quarter increase a on and transaction basis basis points basis commission fourth or like-for-like of improving XXX splits basis and a splits basis, up like-for-like XXXX, XXX in compares on points in recruiting, points to the

proof by the QX. We are points in we delivered encouraged financial

the XXXX and let in optimism, we XXXX. to and with to and forward bigger a with business of seasonality tailwinds the reminder, be look we a as operate in-line we me expect headwinds XXXX some for address As seasonal business

These on discussed lower We that Cartus meaningful XXXX, deliver XX actioned. adjusted these plan QX on-track savings million be earnings cost the transaction. of achieve to gross previously savings and cost to to now than XX in savings XXXX XX of been have call will million as already savings in approximately we part have relocation are savings million are XXXX for that we the in

$XX with in the XXXX run XXXX efforts decline rate savings programs enterprise. were driven I be by associated the these costs majority optimization the in office and modest in anticipate million these and a simplification of Restructuring As XXXX. in across will

to the USAA of XXXX discussed. loss will Ryan biggest However, relocation the headwinds in some both the compared we XXXX earnings obvious, financial impact, do of be might have while it and for be Cartus the resets which XXXX

competition what experienced agents rational agents achieve. upward recruit more end split the QX. we improving higher of to market. in at the the commission in majority the more Remember, comes continued can the XXXX to expect continue to of and We which retain The on split trend they the similar from and XXXX albeit housing produce,

franchise. our support marketing partners. Corcoran the Rewards dollars of We investments, the launch including Launching are and growing growing select AARP Military Affinity investing G&A program, strategic Religion the other to and program,

franchisees to M&A brands providing and approaches, capped including We different fee transitioning and other for are growth this to pushing greater additional support through conversion our efforts. BH&G franchise companies model franchise growth strategic year a to capital to

will These side. the investments combined returns the per of for strategic growth fee us. pressure put choices and royalty and the for use BH&G really model capped downward on our incentives exciting like these with the We growth competitive environment on are early

an scale, in We our steady position XXXX. Now has our unlike across partnerships operating wrapping progress by we Realogy QX. delivered executed growth competitors. volume equity priorities and up, throughout margin improvement financial industry and size, leading driven brand

we financial profile build We our XXXX as leverage business. will compelling and more stronger even in for attributes in continue ways in to effective these overall

year. to to are solid the start We off a

will back some remarks. to for call closing turn the With that, Ryan I

Ryan Schneider

Thank you. Charlotte.

call me over over operating the blessed I close been have been in the I calls my count, that for on and multiple to very XX by have note. personal Let senior have years held involved roles preparing around time. earnings a

is that feels in air realize something is change a while a in how once and the And today. feel different, like you there I

few are headwinds past tailwinds. for felt the Realogy years, the For is number it like about

with and feel optimism from throughout for future positive watch excitement many feel that change higher, and higher, especially QX our from employees, more With for in we our energy. in The who industry the the the is industry is I closely. competitive environment, began the our accomplishments insiders year, combined the to

some is during to not the you I’m different easy, but ahead the and headwinds I it call, have that saying road shared the me. feel of with does

As remarks, I never about opening said Realogy I now. I more than right my excited am in been have

combined our substantial we allocation, to delivery, business XXXX and and mix and momentum changes a environments Emerging entered our industry leadership from years, EBITDA challenging to growth. substantial position. very returned couple with our accelerated All product competitive better with including a industry volume positive operating and of capital partnership

to Our and excited is about quarter good ahead. off a start I’m first year the

over I the it to that, will With operator. turn

Operator

Instructions]. [Operator

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

is line Your open.

Ryan McKeveny

good much, Hi. morning. Thanks very and

So, prop, competitive two and a value the really the environment level, part on franchisee at the level. agent both also the but

tech enhancing So, press consumer you said comments proposition rational more marketing, substantially called with your your and lead new out the et gen, the competitive environment, products, release data, value cetera.

you have a but of what terms competitive more level, we headlines in sizable of the pretty elaborate on at beginning seen the seeing can then agent environment So, franchise you some some are around the bit obviously renewal. also

environment some proposition touch franchisees also the in the you to progress and doing would feel how this, of maybe in be you regardless value on So, hear with somewhat doing the of love just what on we of elaboration might with others your with industry. competitive all are terms

Ryan Schneider

Yes.

I Ryan. So, it. thank appreciate you

QX. first excited what franchise we both we saw saw positive brands. agents better QX on look, the continued bunch our of we So into were agent those the it, off, better saw all We We a and of early and a that saw retention. side. the returning lot agent very trends are to about franchise pretty have really about excited We recruiting. renewals also part in But, saw of

really innovative doing, RealSure think data interesting, tech lot and partnerships, I our we last franchisees. the that RealVitalize products agents stuff kind within an focused that products or I that of market and are More consumer of four have for the on a the right. are is launched we are our And months that more think both side,

driving the a that, what talking is think we are I’m I success of about. so doing lot And

from more to and competitor right? also come in continued that the the of September kind then. and indications call environment last early it of since October, has I environment, you some a But the we on that rational talked of definitely is saw

And and that and franchisees. how different there at we data when see out our companies going agent the that us, offers to benefits the we market of migration benefits it in the and are look market,

with rational and of we of on excited proposition delivery more value our something that is And a environment really are combination about. the focused agents competitive so, a lot

franchisees first more with then already some this we have those launched finally And we planned. quarter have our Corcoran there of

that Another to example can something bringing to starting new future resonate think that help drive is we the are that growth. market

Ryan McKeveny

very is Ryan. question And second on pieces. moving some thanks That helpful the a and of Cartus and

within So out calls it XX the release from business. of million the earnings relocation

underlying it for fair to to a of and something level talking higher times sold is that Cartus relative then XX a and kind price the bit of business think referral sale that multiple business million being we XXX on it. business are it So about the and, the like

guess you is impact of you all of of we talk the but always I kind how a got have of be. as the question but just know, can some AARP coming far as of moving downstream out this there kind of things, about pieces is USAA USAA could big

talk it things on that of could Navy the just channels that other a it Rewards and capturing I’m of XXXX? takes maybe play affinity Military business have is out program, about about USAA. is for bit more puts whether So or federal feeling just through whether somewhat some are you gone might how otherwise how how, your the

Ryan Schneider

Sure, absolutely.

is decision. the in liked kind multiple to your of you million that. million of that. earned XXXX sale it really capital In very capital trying look the we a part think did yes be of good allocation we half on look a and And we XX stewards reallocation So first know for good it $XXX

share liked look XX our Company. going of deliver we to to are kind and multiple at creating the thing you proceeds for trading obviously is and the to Whether as leverage our or of of a those relative of it part use value shareholders we those our the numbers kind lion ratio, think

off Military in our also about That programs actually new I’m pretty ones some rewards. talked it, in latter existing you a I pretty Charlotte one and of Realogy to investing a start. we and to lead AARP right. about in there, of those. mentioned couple good from excited like invest are but Going out already called is are we generation going

overtime know, to that overtime is goal some we to quality of high that our anything one volume like be, but not are time that because and build, Because year you is going it these phenomenon long the stay lead that USA delivering going kind on replace focused very generation. to of programs are a or to share capture take

segment go look decline you group. an is the business to to farther to material know, try USAA to XXXX be you as there about in that XX% know, on the group at and go equal the disclose And at and a EBTDA owned franchise is from we that going to thing our to decline be leads that, downstream Affinity XX% brokerage a our about little on going

is economics modeling owned Most for the make group of money that. of much the we a how just downstream kind one. downstream the your franchise on opposite of because the brokerage versus an hit of in a But the hit is transaction the of

being have members the to got from its partnerships are Military the launched quarter and we really hit by we Realogy this excited we clear AARP growth that million and going keep So and to are equivalent that we but XX and getting be that there look early is are going including downstream Rewards.

Ryan McKeveny

you. is helpful thank That and

Operator

Campbell comes next from Your from Steven. of John the line question

is Your line open.

Katherine Carter

mix is on the How Hey to by geographic Real what guys, the growth of split? impact California have touch quick, kind this on in was of and John. quarter for on Carter splits? wanted did much driven

Charlotte Simonelli

Yes.

it. other definitely relatively recruiting growth commission year trends to due big is There California is improved but a of that the the increase on geography base the improving year. had retention, of as saw are the definitely in chunk low last like was and a impact piece a California prior we So, There an splits. versus some as drivers just well,

Katherine Carter

mentioned where majority Got the capital of back sale start your And from a the on quick again Cartus out to the pay you there to would will number down you allocation, specific debt targeting Charlotte. received XXX used million Is a entertain Thanks, shares? debt. buying paying to so or be dividend it. that that real

Charlotte Simonelli

No.

focus business and I investing think remains our delivering. the in

at like So, The remaining the want million we will remind some we But, also costs investing going focus which on that date. happen we that have. as to about you are XXX to XX later just XXX initially be would clear I that right versus million the we received be in now. to closing up that. million, will a business well. I do delivering remain focused on and trued

Ryan Schneider

are to incredibly below But levered be want leverage. do. topics. you we times, other we debt are until we four even to times those to will ratio considering our And you four in assume should, we clear, paying are have then, and not And on the going should to focus below until decide down we got business even we what investing

Katherine Carter

it. Got guys. Okay. Thanks

Ryan Schneider

Crater. Thanks

Operator

Realogy. comes next Your from Stephen question from of Kim one

line Your open. is

Stephen Kim

But, good about I quarter, competitive I with yet. not it mean, Charlotte. ways. cost many saves is want saying were strong the to to the environment. what encouraging Well, did guys you just hear start results in

in then, much some sense us idea million, the year, - XX that cadence through of flow would to can quarterly to million sorry, an what is and that have good up show would but a of to NRT were sort it versus we You really the how be expect a RFG? year, that and of how going of helpful XX give next

Charlotte Simonelli

Sure.

think is the heavily weighted relatively that can So, have to what it evenly auctioned, the is be remainder to said about probably going half. more XX you we back The pretty split is of is quarter-by-quarter. that already

to there substantial to into piece the a already is the of quarter, it going and fourth the Group Realogy some through of sort of can show that relates up the split the kind as you Brokerage you actioned look things can is quarter in for were a even if in. get feel fourth There this of -

variable of two the whatever remainder well be bit to actioned savings down been comes pieces that yet. haven’t just corporate. the those as a more That or It as little identified can between

XX more the XX So, remainder the be heavily XX split the approximately weighted back half. will million so quarters, evenly by to million towards

Stephen Kim

Got helpful. Yes. is it. That

Okay. volume Can certainly the The could showing well here guess little And did January. bit a talk lot we see, a market talk that in you bit we little strength. if good transaction in to XQ. a is then, of the I to housing year about Obviously, comparison easy comp, that a comp monthly within easy obviously, quarter is that particularly figure a to reason and from was about because though the XQ ago, a faced think the any January March you? but there February pretty a cadence, relative pretty for

Ryan Schneider

gets Look, how Yes. February, of kind of then before use shouldn’t March quarters. you XX%, year talked January wouldn’t run the the of last about it January, versus excitement thing forecast our I when is looked of know including the you I our January of our March to to with results. away year or and XX% quarter, some and

than February. by So, lot more March a the quarters or reality by driven is January the either

like us on market, right. look, delivery So in and We for is the the the really it we year, you both know. Corcoran early to year, things powerful products good like a of our for think and start the is franchise

over We the reasons about January liked course competitive the excited some better environment, with we year. here in the it think results, of kind for the really But growth good paid off we are of good that we January did. or but the the us said are January, the start call I quarter the the extrapolate having way wouldn’t feelings I whole year the led to from wouldn’t I be -

Stephen Kim

NAR existing quarter look? XQ, with the if specific you of I the cadence sort it within would guess look homes we look of us I’m if at reasonable could whether if provide a maybe be or that more numbers discreet Company wondering type not at or how of to sense the

Ryan Schneider

talking are for you Are Yes. XXXX?

Stephen Kim

the Yes number specific XXXX, you -. the and January March much so know, more because matters XQ,

Ryan Schneider

We are guidance not of going to give quarterly the stuff.

of know same in You our January but or think nargy first lower know, January than our quarter so of January number, the I the zip of is view was you number NAR’s code

earnings little call So are you like in probably a quarter this because of a years have just we this January. two January, far in the do by call is full a was happened and know, K we know, giving earnings the one it think I you just shared going with it but you row have actually what the we late is of cause kind actually again, so, month’s in data bit so now we you

know, far like went pretty QX the like don’t like away the temper we we tell my excitement with results. out too that specific January seeing run and of the we for to what to much. but January, So, are way we for including I my let But trends, But, not full-year. you the you the optimism

Stephen Kim

Okay Thank. fair enough.

Operator

line Your from Paolone question of comes JP Anthony from next Morgan. the

Your is open. line

Anthony Paolone

thanks. morning. Good Yes,

splits order magnitude in on of you So to comparable XQ. XXXX being mentioned

numbers, zip look and of so sort take XX bps year-over-year for being XX So at just if know that code I I we as those comfortable? that you would a of about would you three I don’t it put where range should mean up suggest in up XXXX. feel quarters

Charlotte Simonelli

agents. an on will very is the in on USAA. lot volatility business there lower split out. development Yes, impact and big. episodic on that The also some development zip of how much on falls so right things is there the is and There business that is have to our depends also that recruit is, growth a I that code. splits new is new and depending is variability point to it want ability mean and Two our retain a and I volume

split in the you keep there from Just much that, is lower downstream transactions. on a impact mind, those know,

all ballpark XXXX. why of be in like things XX it as of would higher are a of part those the is was that than in play we giving number the the guidance role why because So sort in

Anthony Paolone

Okay. And of $XX mean, on guys EBITDA USA, of was from I you USAA? I much showed that how million from mean, leads,

Charlotte Simonelli

didn’t specifically. it. said have disclose mean, a that substantial is we we Well, of piece I it

that So, people downstream guidance the in it as I is think there enables given get right the transactions is we well. recognize and to to have important other of And overtime ballpark. sort

Ryan Schneider

partners. data we have given on Yes, look honest. Anthony to be individual never Look that, on

franchisees much are specific no given we individual a on we earn large geography. matter on data given never have and how have We never in how data they

brokerage in example, side. For own the

So, business, kind are now that economics that we And this referrals. that in earlier call, is them a margin, to about of with Group, just it to in USA and clear is be it the Leads the start giving some tried the largest give about partner this our I tried where information go you more the lot of is case, more we from are. information where and

give a you everybody that So, much you number to point given kind everything stuff we plus here. number. are I I as to on to going a going to want as additional up that we don’t you know trying get of is think are the this have

in talked the be have is said tried we to from Charlotte both bluntly the a P&L be on material the split And pretty versus clear brokerage that. will on given issue hit franchise and those a that the one, there of hit piece like of part that side the leads downstream, day of and economics downstream I then bigger about being just with how

have more economics investing focused already and people are of lead And new the little in I back. on some really to won’t program of overtime to good we think, So, modeling volume is it. a that going get offset done that be on it job a some bit and those

Anthony Paolone

of York, a if have drag want not and on and perspective regulatory may your just just you But, give this. had a sneak more, variety here? I big number on regulatory one to how And I’m interested in have of changes the Okay. business changes New

Ryan Schneider

question. a It Yes. great is

let two take it parts. So, me in

So, at I kind a QX bit. that results, that headwind and in and York little QX, that in saw in New end last was QX, our clearly clearly the on came we of Tax a the and think talked for of the call have Mansion look, we about

what’s other quarter is have that to at in MLS don’t at Now, New of were has much York there, agents in kind better look is New happening top in the start, I very in the when we you off start our York January the New anecdotal been at a brokerages to because bullish business, here they the data York on and and year. have first of but some

it of a there have like of the was from again, those coming data may is is a New less of there looked that but and volume is market. when definitely it back, bit maybe my negative two QX basis kind for So, quarters on issue like But QX an view York little been there.

New And us. was then, ban to That State there the in how for it surprise got a and and of we bet market, a York look, interpretation everybody, whatever thing an New passed. Department place kind more a the tough it kind of the but zero. for been while was months Mansion York to or the after has us, is Obviously, rent of on thing not Tax, the out. including is see coming that out with that fee not plays nine injunction on as is law long-term I rental big any

it. watch are we So got to

York, a new comes market And it for the City and in Charlotte of you in business difference New lot of about us. when to then, for those live New is there P&L big development, talked development makes who happening that in new a of York

all it Anthony. it of kind of geographies, volatility types outside the those from one most the around So, probably forces, with of the is

it New because just and tax watching Tax pretty And we script impact. in so, are comment, called and I the even like York my an stuff had closely Mansion out has my

Anthony Paolone

Okay. Thank you.

Operator

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

open. is line Your

Jack Micenko

square that pretty months know, a Ryan have sort thing. of on industry commentary wanted back been to on presentations, you it some everybody. Hey morning of few some, calls you constructive around going the competition in obviously and good both these

the the split like at pressure but year. was actually it split by looks quarter mark numbers, high the looking water numbers quarter, for know fourth on split You the year-to-year,

timing trends you some just trying is also year you that well agent seeing to the and on went us if give relative I’m as your And by up the kind to and that made? as are what understand of wondering progresses agent could you number year growth number the to as I’m talk about quarter of the X%. talked you about comments count

Ryan McKeveny

Yes, let because last me question, it easier. start so your with is

growth go that back of to kind positive the look we you of started middle if our agent the about to year agent in So our calls, we pivoting effectively growth. called and

calls I of we that got think in good like XXXX was in we like the did and in kind and some felt two QX momentum thing. then of accelerated so that a

talked our throughout And didn’t got you numbers it, were the thing know, but environment. getting we quarter, market of the competitive you the second year share worse numbers our right. because ask The retention, about the as in retention better, stuff and all about retention

Because know, parts of on I there seeing part we and delivering saw one and as environment of the again, talked we of the what have that so bunch you agent side of your are had a then of big now competitors think out about, competitive there we we it too. franchise are renewal

the brands good, success. feels at recruiting in up environment actually our and lot the the right. that even our our in press, even which but and data, in returning I and some our shows kind it agents also more year, So quarter. with a our of pretty delivery just And point there success both retention here can is the you retention, see is of correlated recruiting, to Both the made of in the start fourth

splits, absolutely the troubled they On more higher it up part got a in lot we QX. the volume people, higher you the the, move a sense we higher of get quarter, got not table. but it, the split had from remember I’m this commission is we also by which in agent the that growth

So it. of that is a piece

you the last our the other was thing, smallest year-over-year. XXXX, year if increase right, But of compared QX look to

over the So came if earlier year I XXX expect basis a stepped the basis But increase you in back should some a for the think and year. of we we you, it year is year. comparison into of a comparisons the points little split ultimately bit I Right. than lower about XXX points told year of

know should that a number the we real about. thing turned there are as we be to which a turned drive financials, excited growth, was you you and real basis, is XX, so have of fees and it the the actually XX number more be phase the bit now some we is this includes inflation it was thing. of like-to-like XX on a the out, which the in I all on a little know, And out think But is the more getting,

in keep to something is that mind. so And

including you was happened other are environment thing lot quarters, multiple is things mind I do would XXXX the of two that crazier. capturing the say you The keep the in competitive when quarters first when comparison, year-over-year in a other a

came or did it back back increase XXX as or than kind those And into so the - plus troubled XXX we of code, of kind with different into probably that. XXX kind given we plus anyway, just this XXX used to in were the better not thinking we the we were that of with we year uptick But a a step by below increase, so zip the be pieces. came again, all volume

will kind we of which you in question steady that to we do of someday, But, is can’t place want better the there that, kind it a are then lot next year it state, tell somewhere. able are And at. hopefully to your be I and at a to but feel a about volume thing, we got I but be

Jack Micenko

you into mean, going military then, Okay, maybe some great. are on costs these you model and Charlotte, And to talk on cost of other the inflation, go avenues. can the I the about cost awards saves. some growing of that

to piece up that all that think percent spending net that what the XX, then I some of drops there bottom-line the percent level. of think ends all you going to factoring savings What are as franchise XXXX? XX of are in? at on for And that

Charlotte Simonelli

I you to enough and those. sort cost saves the this. a the The is combat of offsets question. It be to these Yes. things should mentioned save that tell great can you cost are

think a the where split commission lot have in I pressure. we is variability of

don’t love very the today, is how it because you doing so, feel to but number I want for net play And would splits. I see me. to a hard a comfortable I a commission few on yet, of out months that just give

the the those the of more cetera cost investments, enough we strategic business. be in But, biggest that total offset the bogie in for to you talked et that is we the that saves should things have us. inflation, That the have, about, than

Jack Micenko

on XQ Okay. guide have and And in not. the talked call you about XQ you the given reasons why past,

As together on what expect mean, are into clarity to next call get about you off the be of some all going targets is, do we at or when we transaction, guidance I USAA get talking through are of more and this just roll sort we EBITDA the backing you XXXX that point?

Ryan McKeveny

EBITDA think splits Well, kind wait because partly I of year was the and middle give you look, housing just stuff. And, volatility the other until historically practice to of kind the joined market all the about of of guidance. I the Company, before the the of

give of For in in the right infer you bluntly degrading, little was last to couple is years. guidance how previous guidance. part kind bit now, of we a definitely compared whatever years, given you a because of the QX to and And, want of to don’t can think have from that that, but we not any thing give right full-year position are we

kind going is are of of the of quarter-to-quarter for us all It I right. same is, in take probably about all So, the we would the feel kind to say to interests Company. thing what our guidance

we so, take decision probably And haven’t it yet. think I quarter-to-quarter so and we are made that about going to a of even kind

give the at of people some are there. already on you done job few USAA and of pieces you thing, open modeling, we good to that which to do very up good of today I again a But have tried information splits a the lot lot and know, a we other a with think

I never of your company for to the he advice own was long founded far kind his pieces from too the One of of worked company time person let successful who the reality. away and the a got of perception incredibly I from get

us zip of all interests of be kind to the in in for is our it know, should you So, code. same

the allocation on. Jack, But we of can the the can’t side about like, transaction. the of either the a volatile volume there enter in to excited guarantee, year, we we a have But in downside very side look, also information is and deliver the prop both then giving I’m momentum you got value lot capital to cyclical side, that business on

kind will we quarter-to-quarter And go from play so, there. the guidance and of

Jack Micenko

for Alright. questions. my Thanks taking

Operator

question the Tom McJoynt comes KBW. next line of from from Your

Your line is open.

Tom McJoynt

about the I bit share like relative more narrowed the under-performance it for ask relative there? guys, gaps seem comment was a quarter sense this do wanted were Hey my market Do driven there relative of feel you you to kind that get gains that thanks that taking to quarter. question. to NAR, some like or last geographically just or any

Ryan Schneider

in doing bit it there, Look, we January looked very of it not quarter that geographic in the really not, have been put it much more environment, we and liked so we bluntly. things a really and have little think but it when we is is our our is it competitive at is we maybe on the mix, the there

it. about pretty are we excited So

big about it We that positive to good benchmark in a we the surveys in our that end don’t we on QX, to different stuff, is but kind geographic - we so it actual use a over is is about excited January to type get shift at, don’t cause think and and of volume be we do we to volume. start year it, had and look obsess the but is print of they NAR a mix what good tend have we all, just all

that we recruiting, to less brand. is talked is great, fact things agent to reality into that excited the earnings product and more NAR about the things and it the agents generate and drove on that. us more sort turning gap turn agent that of better better are so I retention, franchise but partnership Corcoran to for our behind

Tom McJoynt

of, I I to rational? mean, touching again competitors? that competitive rational, Thanks. guess your I describe do you And to how offering more Realogy it. poach and kind landscape, or the your in is the incentives more then space word competitors try the to Got kind using the this about comments new just of applying other the like guess back financial to to recruits in or becoming improvement agents Just from are define, on marketplace. that

Ryan Schneider

So ways. two it I in look at

at is that migration single looking there month what But kind are et every XXX right. also across of the kind seeing the are out What agent doing So of kind for agents? is looking I’m we and cetera. offers of offers, reports then who are at one and is MLS recruiting

they are How structured?

cash from first We a And than a X more every saw years. you flow week offer some offers positive to little cash is will two to the we being of agents change pay for bonus one. upfront that

someone more of make like that that there. rational change, a And of fact little thing that is the so out a kind would

going it be costs competing look still after an more that intense, an profitability of regard not as market years. So But to against a been is to have business. share mean at industry couple all doesn’t for capital rational been is blunt we private intense is without it

And has the that the of stronger to see lose industry players those brokerage owned in on three definitely biggest scrutiny companies be kinds and the helped of competitive of environment money. six our

our things like all to that So of focused have kind that. helpful and make agents companies profitability and the more too, sign on fact on are there that we lower out bonuses that us, seen that it a is people to care that quality about is return

was have it but dealing with difference of XXXX. and big parts it first we there still more the not rational felt like between But it It doesn’t looks mean a overall intense, is lot rational. it is a what been in

Tom McJoynt

Got it. Thank you.

Operator

[Operator Instructions].

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

Your line is open.

Matthew Bouley

questions. had my earlier couple really to taking I questions. follow-ups the for you just some a of of Thank morning. Good

be referred seeing that those seeing curious where may acute, of it you. a So, based markets are I would you improved my it it more looking you to like are to and be in range environment, where hearing certain how is. just applies across guess relatively versus markets, guess broad sounds still little to the kind I guess competitive on follow-up what competition markets being the and hear based. wider be I how competitor Thank you of had broad the scale? It

Ryan Schneider

between or And feels again, big on thing. is two more difference challenge. the gone a competition bigger has based versus side. has doesn’t but a than Look, we a is of kind it away of mean rational irrational more or Yes. And one been difficult. always competitor I the zero one talked There or profitability it what is that broad think been look, definitely is there is

intense But environment it California Southern Chicago competitor in a thing, anybody there and Northern kind are kind especially as then of in get thing. a the zero felt an geographies, didn’t of broad it industry. where that But, is it more is and play intense based, it to or will broad base as more but and did continue franchisees be is intense or we our of it of competitor for lot not an

agent But, partnership retention, recruiting agent out to QX better it we it returning led just showed liked environment had it proposition, and more in them market. folks and Again, mentioned we doing of we and better one what then and right. but and delivery are agents of franchise our the to to franchise of transaction up the some our product together the rational value bunch and of really the environment more renewals numbers, in with positive volume receptivity of new brand, there some and as

are So we pretty excited.

Matthew Bouley

forward investing I incentives, then, and in but And going more of that. about just guess you and some on the versus successful appreciate follow the NAR continue the I wanted mentioned volume et to RFG you have specifically data, cetera. strategy Okay. I to got also just up renewals focusing

is Do volumes think in-line those a bring Thank market you measured or hear but are with sort not is? of of more it improvement of of take apples-to-apples, going bring you. market? RFG actually quite performance more be kind actually about the to guess with kind want to but thoughts on So, not share to the market I the where is in we goal growth kind I I to your would in-line like is what to going maybe growth? you saying it volumes, always as back necessarily think should grow understand is XXXX we that of to

Ryan Schneider

of we about year we vector Yes, model. a us grow and gardens compete doing in can, Better to got couple Homes and as in agent as we excited to the XXXX that had our new is the Gardens, model have a RFG at are both companies talked cat investment a much something and Corcoran - sales CAFD and give good of that. growth We kind to the right. of CAFD And, launch really fee franchise on with of better homes because look,

excited are we about So, that.

And a dynamic, competitive target will prime so, talked the look, franchisees people we for of the help is hits about and better recruiting then Sotherby’s competitive some our on especially, environment that.

we we as are get can as much excited there. But, growth to

And some some the share, proposition of going of to things franchise are on always are And right. the that, value things. again, focused profitable be new driving we

some want the business do that be whole doesn’t the This you that have others stickiness share. unprofitable make to just would

are like and We we investing share profitable AARP. Better margins International we are Homes Corcoran, be focused Sotheby’s on Realty in going investing So investing the Gardens, why is on in the to the really business franchise side. in in

of that it bring alternative markets. generation most in franchisees those also iBuying we can’t RealSure and is our just more is new it for not whether own replicate. think lead high our scale others competitors to that we the for quality with And size that something to can’t, are our are benefits And is doing is business, them partnerships

growth excited optimistic on talking on our doesn’t owned business to the too. it competitive these are in us in calls, And same time most bluntly of more there. our make spend more that apply we we the world So that about brokerage drive environment that factors

Matthew Bouley

you, that appreciate color. Ryan. I Thank all Okay.

Ryan Schneider

Alright. Thank you, Matt.

Operator

conference concludes today’s This call.

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Realogy (RLGY) 25 Feb 202019 Q4 Earnings call transcript