[Introductory Note](index=3&type=section&id=Introductory%20Note) Realogy Holdings Corp. and its subsidiaries are consolidated, presenting identical financial positions, results, and cash flows - Realogy Holdings Corp., Realogy Intermediate Holdings LLC, and Realogy Group LLC are consolidated, meaning their financial positions, results of operations, and cash flows are identical[11](index=11&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section outlines forward-looking statements and key risks, such as market cycles, macroeconomic conditions, and litigation, that could cause actual results to differ materially - Forward-looking statements are identified by words like 'believe,' 'expect,' 'anticipate,' and similar expressions, and are subject to numerous risks and uncertainties[13](index=13&type=chunk) - Key risks include adverse developments in the U.S. residential real estate markets (e.g., declines in inventory, increased mortgage rates, reduced affordability), macroeconomic conditions (e.g., U.S. economy contraction, unfavorable interest rates), and outcomes in current or future litigation (e.g., antitrust)[14](index=14&type=chunk) - Other significant risks involve industry structure changes, evolving competitive and consumer dynamics, challenges in executing business strategy (e.g., agent recruitment/retention, franchisee attraction), potential impacts from the COVID-19 crisis, substantial indebtedness, and legal/regulatory compliance[14](index=14&type=chunk)[17](index=17&type=chunk) [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents unaudited condensed consolidated financial statements and management's analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents unaudited condensed consolidated financial statements, including key financial statements, notes, and accounting policies [Report of Independent Registered Public Accounting Firm for Realogy Holdings Corp.](index=6&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20for%20Realogy%20Holdings%20Corp.) PricewaterhouseCoopers LLP reviewed Realogy Holdings Corp.'s interim financial statements, confirming GAAP conformity and fair statement of the December 31, 2021 balance sheet - PricewaterhouseCoopers LLP found no material modifications needed for Realogy Holdings Corp.'s interim financial statements to conform with GAAP[21](index=21&type=chunk) - The consolidated balance sheet information as of December 31, 2021, was fairly stated in all material respects[22](index=22&type=chunk) [Report of Independent Registered Public Accounting Firm for Realogy Group LLC](index=7&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20for%20Realogy%20Group%20LLC) PricewaterhouseCoopers LLP reviewed Realogy Group LLC's interim financial statements, finding no material modifications for GAAP conformity and confirming the December 31, 2021 balance sheet - PricewaterhouseCoopers LLP found no material modifications needed for Realogy Group LLC's interim financial statements to conform with GAAP[26](index=26&type=chunk) - The consolidated balance sheet information as of December 31, 2021, was fairly stated in all material respects[27](index=27&type=chunk) [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20three%20months%20ended%20March%2031%2C%202022%20and%202021) Net income decreased to $23 million in Q1 2022, despite higher revenues, primarily due to increased expenses and a significant loss on early debt extinguishment Condensed Consolidated Statements of Operations (in millions, except per share data) | Metric | 3 Months Ended March 31, 2022 | 3 Months Ended March 31, 2021 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net revenues | $1,635 | $1,547 | | Total expenses | $1,590 | $1,527 | | Income before income taxes, equity in losses (earnings) and noncontrolling interests | $45 | $20 | | Income tax expense | $12 | $17 | | Equity in losses (earnings) of unconsolidated entities | $10 | ($31) | | Net income | $23 | $34 | | Net income attributable to Realogy Holdings and Realogy Group | $23 | $33 | | Basic earnings per share | $0.20 | $0.28 | | Diluted earnings per share | $0.19 | $0.28 | - Net revenues increased by **$88 million (6%)** year-over-year, primarily driven by gross commission income[31](index=31&type=chunk) - Total expenses increased by **$63 million (4%)** year-over-year, largely due to a **$92 million loss on early extinguishment of debt** in 2022 (vs. $17 million in 2021) and higher commission costs[31](index=31&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20for%20the%20three%20months%20ended%20March%2031%2C%202022%20and%202021) Comprehensive income attributable to Realogy Holdings and Realogy Group decreased to $24 million in Q1 2022 from $33 million, primarily reflecting lower net income Condensed Consolidated Statements of Comprehensive Income (in millions) | Metric | 3 Months Ended March 31, 2022 | 3 Months Ended March 31, 2021 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net income | $23 | $34 | | Other comprehensive income, net of tax | $1 | $0 | | Comprehensive income | $24 | $34 | | Comprehensive income attributable to Realogy Holdings and Realogy Group | $24 | $33 | [Condensed Consolidated Balance Sheets](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20March%2031%2C%202022%20and%20December%2031%2C%202021) Total assets decreased to $6,857 million and total liabilities to $4,700 million by March 31, 2022, primarily due to reduced cash and accrued expenses Condensed Consolidated Balance Sheets (in millions) | Metric | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :-------------- | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $306 | $735 | | Total current assets | $803 | $1,188 | | Goodwill | $2,897 | $2,923 | | Total assets | $6,857 | $7,210 | | **LIABILITIES AND EQUITY** | | | | Total current liabilities | $881 | $1,052 | | Long-term debt | $2,899 | $2,940 | | Total liabilities | $4,700 | $5,018 | | Total equity | $2,157 | $2,192 | | Total liabilities and equity | $6,857 | $7,210 | - Cash and cash equivalents decreased significantly from **$735 million** at December 31, 2021, to **$306 million** at March 31, 2022[35](index=35&type=chunk) - Total liabilities decreased by **$318 million**, primarily due to a **$149 million decrease in accrued expenses** and other current liabilities and a **$39 million net decrease in corporate debt**[35](index=35&type=chunk)[227](index=227&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20three%20months%20ended%20March%2031%2C%202022%20and%202021) Net cash decreased by $434 million in Q1 2022, driven by increased cash usage in operating and financing activities, partially offset by investing activities Condensed Consolidated Statements of Cash Flows (in millions) | Activity | 3 Months Ended March 31, 2022 | 3 Months Ended March 31, 2021 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | ($233) | ($37) | | Net cash provided by (used in) investing activities | $36 | ($32) | | Net cash used in financing activities | ($237) | ($45) | | Net decrease in cash, cash equivalents and restricted cash | ($434) | ($114) | | Cash, cash equivalents and restricted cash, end of period | $309 | $409 | - Operating activities used **$233 million** in cash in Q1 2022, a substantial increase from **$37 million** in Q1 2021, primarily due to higher operating results, increased payments for accounts payable, accrued expenses, and other liabilities, and reduced dividends from unconsolidated entities[37](index=37&type=chunk)[240](index=240&type=chunk) - Financing activities used **$237 million** in cash in Q1 2022, largely due to **$198 million for debt refinancing** (issuance of new notes and redemption of old ones) and tax payments for stock-based compensation[37](index=37&type=chunk)[241](index=241&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures for the financial statements, covering basis of presentation, assets, liabilities, equity, and segment information [1. BASIS OF PRESENTATION](index=13&type=section&id=1.%20BASIS%20OF%20PRESENTATION) This note clarifies consolidated reporting, details the Title Underwriter sale, covers fair value measurements, and explains the adoption of ASU 2020-06 - Realogy Holdings Corp. and its subsidiaries (Realogy Intermediate and Realogy Group) are consolidated, meaning their financial statements are identical[40](index=40&type=chunk) - On March 29, 2022, the Company sold its Title Underwriter for **$210 million cash** and a **30% equity stake** in a new joint venture, recognizing a net gain of **$131 million**[44](index=44&type=chunk) Fair Value Measurements at March 31, 2022 (in millions) | Item | Level I | Level II | Level III | Total | | :----------------------------------- | :------ | :------- | :-------- | :---- | | Deferred compensation plan assets | $1 | — | — | $1 | | Interest rate swaps | — | $15 | — | $15 | | Contingent consideration for acquisitions | — | — | $11 | $11 | - The Company adopted ASU 2020-06 on January 1, 2022, reclassifying Exchangeable Senior Notes as a single liability, resulting in a **$65 million increase to Long-term debt**, a **$53 million reduction to Additional paid-in capital**, and a **$17 million reduction to Deferred tax liabilities**, with a **$5 million reduction to Accumulated deficit**[64](index=64&type=chunk)[65](index=65&type=chunk) Net Revenues by Segment (in millions) | Segment | 3 Months Ended March 31, 2022 | 3 Months Ended March 31, 2021 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Realogy Franchise Group | $267 | $254 | | Realogy Brokerage Group | $1,264 | $1,171 | | Realogy Title Group | $190 | $201 | | Corporate and Other | ($86) | ($79) | | **Total Net Revenues** | **$1,635** | **$1,547** | [2. GOODWILL AND INTANGIBLE ASSETS](index=18&type=section&id=2.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) Goodwill decreased by $26 million to $2,897 million due to the Title Underwriter sale, while amortizable intangible assets also saw a net decrease from amortization Goodwill by Reporting Unit (in millions) | Reporting Unit | December 31, 2021 | March 31, 2022 | | :----------------------------------- | :---------------- | :-------------- | | Realogy Franchise Group | $2,506 | $2,506 | | Realogy Brokerage Group | $259 | $264 | | Realogy Title Group | $158 | $127 | | **Total Company** | **$2,923** | **$2,897** | * Goodwill reduction of **$32 million** due to the sale of the Title Underwriter Intangible Assets (Net Carrying Amount, in millions) | Intangible Asset | December 31, 2021 | March 31, 2022 | | :----------------------------------- | :---------------- | :-------------- | | Franchise agreements | $1,021 | $1,004 | | Trademarks | $687 | $687 | | Other Intangibles | $171 | $164 | | **Total** | **$1,879** | **$1,855** | * Amortization expense for Q1 2022 was **$24 million** (vs. $23 million in Q1 2021) [3. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES](index=19&type=section&id=3.%20ACCRUED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) Accrued expenses and other current liabilities decreased by $149 million to $517 million, primarily due to lower accrued payroll, volume incentives, and interest Accrued Expenses and Other Current Liabilities (in millions) | Item | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :-------------- | :---------------- | | Accrued payroll and related employee costs | $142 | $284 | | Accrued volume incentives | $50 | $60 | | Accrued commissions | $60 | $49 | | Accrued interest | $31 | $42 | | **Total** | **$517** | **$666** | * Total accrued expenses and other current liabilities decreased by **$149 million** [4. SHORT AND LONG-TERM DEBT](index=20&type=section&id=4.%20SHORT%20AND%20LONG-TERM%20DEBT) Total indebtedness decreased slightly to $2,911 million due to new senior notes issuance and debt redemption, resulting in a $92 million extinguishment loss Total Indebtedness (in millions) | Debt Type | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :-------------- | :---------------- | | Extended Term Loan A | $230 | $231 | | 7.625% Senior Secured Second Lien Notes | — | $542 | | 4.875% Senior Notes | $406 | $406 | | 9.375% Senior Notes | — | $545 | | 5.75% Senior Notes | $899 | $898 | | 5.25% Senior Notes | $983 | — | | 0.25% Exchangeable Senior Notes | $393 | $328 | | **Total Short-Term & Long-Term Debt** | **$2,911** | **$2,950** | | Total Securitization Obligations | $105 | $118 | - On January 10, 2022, the Company issued **$1,000 million of 5.25% Senior Notes** due 2030. Proceeds were used to redeem **$550 million of 9.375% Senior Notes** and **$550 million of 7.625% Senior Secured Second Lien Notes** on February 4, 2022[80](index=80&type=chunk) - A loss of **$92 million on the early extinguishment of debt** was recorded in Q1 2022, including **$80 million in make-whole premiums**[98](index=98&type=chunk) Debt Maturities (in millions) as of March 31, 2022 | Year | Amount | | :----------------------------------- | :----- | | Remaining 2022 | $9 | | 2023 | $423 | | 2024 | $22 | | 2025 | $184 | | 2026 | $403 | [5. EQUITY METHOD INVESTMENTS](index=24&type=section&id=5.%20EQUITY%20METHOD%20INVESTMENTS) Equity method investments increased to $205 million, driven by a new joint venture, while equity in losses from unconsolidated entities significantly declined Equity Method Investments (in millions) | Investment | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :-------------- | :---------------- | | Guaranteed Rate Affinity | $86 | $94 | | Title Insurance Underwriter Joint Venture | $78 | — | | Realogy Title Group other equity method investments | $8 | $8 | | Realogy Brokerage Group equity method investments | $33 | $29 | | **Total equity method investments** | **$205** | **$131** | - Equity in losses from unconsolidated entities was **$10 million** in Q1 2022, a **$41 million decrease** from **$31 million in earnings** in Q1 2021[31](index=31&type=chunk)[204](index=204&type=chunk) - Guaranteed Rate Affinity's equity earnings declined by **$38 million**, from **$30 million** in Q1 2021 to an **$8 million loss** in Q1 2022, due to significant gain-on-sale margin compression, lower refinancing volume, and increased headcount[101](index=101&type=chunk)[170](index=170&type=chunk) [6. EQUITY](index=25&type=section&id=6.%20EQUITY) Total equity decreased by $35 million to $2,157 million, primarily due to ASU 2020-06 adjustments to paid-in capital and accumulated deficit Changes in Realogy Holdings Equity (in millions, except shares) | Metric | December 31, 2021 | ASU 2020-06 Adjustment | March 31, 2022 | | :----------------------------------- | :---------------- | :--------------------- | :-------------- | | Common Stock (shares) | 116.6 | — | 118.1 | | Common Stock (amount) | $1 | — | $1 | | Additional Paid-In Capital | $4,947 | ($53) | $4,886 | | Accumulated Deficit | ($2,712) | $5 | ($2,684) | | Accumulated Other Comprehensive Loss | ($50) | — | ($49) | | Noncontrolling Interests | $6 | — | $3 | | **Total Equity** | **$2,192** | **($48)** | **$2,157** | * Net income for Q1 2022 was **$23 million** - Stock-based compensation expense was **$6 million** for the three months ended March 31, 2022[107](index=107&type=chunk)[109](index=109&type=chunk) [7. EARNINGS PER SHARE](index=26&type=section&id=7.%20EARNINGS%20PER%20SHARE) Basic and diluted EPS decreased in Q1 2022, with Exchangeable Senior Notes not dilutive as the stock price remained below the initial exchange price Earnings Per Share Attributable to Realogy Holdings Shareholders | Metric | 3 Months Ended March 31, 2022 | 3 Months Ended March 31, 2021 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net income attributable to Realogy Holdings shareholders (in millions) | $23 | $33 | | Weighted average common shares outstanding (Basic, in millions) | 117.1 | 115.9 | | Dilutive effect of stock-based compensation awards (in millions) | 3.3 | 2.5 | | Weighted average common shares outstanding (Diluted, in millions) | 120.4 | 118.4 | | **Basic earnings per share** | **$0.20** | **$0.28** | | **Diluted earnings per share** | **$0.19** | **$0.28** | - The Exchangeable Senior Notes were not dilutive as of March 31, 2022, because the common stock closing price was below the initial exchange price of **$24.49 per share**[111](index=111&type=chunk) [8. COMMITMENTS AND CONTINGENCIES](index=27&type=section&id=8.%20COMMITMENTS%20AND%20CONTINGENCIES) The Company is involved in various unpredictable legal proceedings, including antitrust and worker classification claims, which could materially impact financial condition - The Company is a defendant in multiple antitrust class action lawsuits (Sitzer, Moehrl, Leeder, Nosalek) alleging anticompetitive policies related to buyer broker compensation, with the Sitzer case recently granted class certification[119](index=119&type=chunk)[120](index=120&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk) - Worker classification litigation (Whitlach v. Premier Valley, Inc.) alleges misclassification of independent real estate agents as independent contractors, potentially leading to claims under the California Labor Code and PAGA[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) - The Company has contingent liabilities from its 2006 separation from Cendant, totaling **$20 million** at March 31, 2022, for remaining tax liabilities and potential liabilities from terminated/divested businesses[133](index=133&type=chunk)[134](index=134&type=chunk) - The Company administers **$1,399 million** in escrow and trust deposits as of March 31, 2022, for which it remains contingently liable, though these are not company assets[136](index=136&type=chunk) [9. SEGMENT INFORMATION](index=31&type=section&id=9.%20SEGMENT%20INFORMATION) The Company reports across three segments, with Q1 2022 showing increased revenues but decreased Operating EBITDA across all segments Revenues by Segment (in millions) | Segment | 3 Months Ended March 31, 2022 | 3 Months Ended March 31, 2021 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Realogy Franchise Group | $267 | $254 | | Realogy Brokerage Group | $1,264 | $1,171 | | Realogy Title Group | $190 | $201 | | Corporate and Other | ($86) | ($79) | | **Total Company** | **$1,635** | **$1,547** | Operating EBITDA by Segment (in millions) | Segment | 3 Months Ended March 31, 2022 | 3 Months Ended March 31, 2021 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Realogy Franchise Group | $138 | $141 | | Realogy Brokerage Group | ($40) | ($5) | | Realogy Title Group | ($3) | $61 | | Corporate and Other | ($26) | ($35) | | **Total Company** | **$69** | **$162** | * Operating EBITDA margin for Total Company decreased from **10% to 4%** YoY - Realogy Title Group's Operating EBITDA decreased significantly by **$64 million**, primarily due to a **$38 million decrease in equity earnings** from Guaranteed Rate Affinity[141](index=141&type=chunk)[224](index=224&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial condition, operations, and cash flows, detailing strategic developments, industry trends, and key drivers [OVERVIEW](index=33&type=section&id=OVERVIEW) Realogy Holdings Corp. is a global residential real estate services provider operating through Franchise, Brokerage, and Title Group segments, supported by a technology organization - Realogy operates three core business segments: Realogy Franchise Group (franchising, lead generation, relocation), Realogy Brokerage Group (full-service brokerage), and Realogy Title Group (title, escrow, settlement, mortgage origination JV)[146](index=146&type=chunk)[148](index=148&type=chunk) - As of March 31, 2022, Realogy Franchise Group had approximately **332,600 independent sales agents** worldwide and **21,000 offices** globally[148](index=148&type=chunk) - Realogy Brokerage Group operates approximately **680 owned and operated brokerage offices** with **56,800 independent sales agents**[148](index=148&type=chunk) [RECENT DEVELOPMENTS](index=33&type=section&id=RECENT%20DEVELOPMENTS) Recent developments include the Title Underwriter sale for $210 million cash and a 30% equity stake, and the issuance of new senior notes to redeem existing debt - On March 29, 2022, the Title Underwriter was sold for **$210 million cash** and a **30% equity stake** in a new joint venture[147](index=147&type=chunk) - The Company issued **$1,000 million of 5.25% Senior Notes** due 2030 on January 10, 2022, and subsequently redeemed **$550 million of 9.375% Senior Notes** and **$550 million of 7.625% Senior Secured Second Lien Notes** on February 4, 2022[149](index=149&type=chunk) [CURRENT BUSINESS AND INDUSTRY TRENDS](index=34&type=section&id=CURRENT%20BUSINESS%20AND%20INDUSTRY%20TRENDS) Q1 2022 saw a 4% increase in homesale transaction volume due to higher prices, despite lower transactions and significant impacts from rising mortgage rates - Combined homesale transaction volume for Realogy Franchise and Brokerage Groups increased **4%** in Q1 2022 YoY, driven by a **15% increase in average homesale price**, despite a **10% decrease in existing homesale transactions**[151](index=151&type=chunk)[159](index=159&type=chunk)[163](index=163&type=chunk) - Mortgage rates on a 30-year fixed-rate mortgage averaged **5.10%** by April 28, 2022, a nearly **210 basis point increase** YoY, impacting Realogy Title Group with a **59% decline in refinancing title and closing units** and a **$38 million decrease in equity earnings** from Guaranteed Rate Affinity[155](index=155&type=chunk)[156](index=156&type=chunk)[168](index=168&type=chunk)[170](index=170&type=chunk)[172](index=172&type=chunk) - Housing inventory remains low, with **2.0 months of supply** as of March 2022, significantly below historical averages, contributing to higher homesale prices but also declining homesale transactions[177](index=177&type=chunk)[179](index=179&type=chunk) - Housing affordability decreased, with NAR's index falling from **170 in February 2021 to 135 in February 2022**, the lowest since 2018[180](index=180&type=chunk) - Recruitment and retention of independent sales agents remain challenging due to aggressive competition, putting upward pressure on agent commission shares and potentially impacting operating margins[181](index=181&type=chunk)[182](index=182&type=chunk) [KEY DRIVERS OF OUR BUSINESSES](index=40&type=section&id=KEY%20DRIVERS%20OF%20OUR%20BUSINESSES) Operating performance is measured by segment-specific metrics including homesale sides, average price, commission rates, and title/closing units, with declines potentially impacting results - Key operating metrics for Realogy Franchise and Brokerage Groups include closed homesale sides, average homesale price, and average homesale broker commission rate[187](index=187&type=chunk) - Realogy Title Group's performance is driven by purchase and refinance title and closing units, and average fee per closing unit[190](index=190&type=chunk) Key Business Drivers (3 Months Ended March 31) | Metric | 2022 | 2021 | % Change | | :----------------------------------- | :----- | :----- | :------- | | **Realogy Franchise Group** | | | | | Closed homesale sides | 217,764 | 244,698 | (11)% | | Average homesale price | $449,250 | $394,000 | 14 % | | Average homesale broker commission rate | 2.43 % | 2.47 % | (4) bps | | Net royalty per side | $413 | $382 | 8 % | | **Realogy Brokerage Group** | | | | | Closed homesale sides | 71,371 | 74,993 | (5)% | | Average homesale price | $706,282 | $608,960 | 16 % | | Average homesale broker commission rate | 2.39 % | 2.43 % | (4) bps | | Gross commission income per side | $17,475 | $15,393 | 14 % | | **Realogy Title Group** | | | | | Purchase title and closing units | 30,867 | 32,502 | (5)% | | Refinance title and closing units | 8,068 | 19,806 | (59)% | | Average fee per closing unit | $3,033 | $2,348 | 29 % | - The average homesale broker commission rate declined by **4 basis points** in Q1 2022 due to price and geographic mix, consistent with a long-term trend of approximately one basis point annual decline[195](index=195&type=chunk) [RESULTS OF OPERATIONS](index=42&type=section&id=RESULTS%20OF%20OPERATIONS) Consolidated net revenues increased by $88 million, but net income decreased by $11 million due to higher expenses, a debt extinguishment loss, and reduced equity earnings Consolidated Results of Operations (in millions) | Metric | 3 Months Ended March 31, 2022 | 3 Months Ended March 31, 2021 | Change ($) | Change (%) | | :----------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Net revenues | $1,635 | $1,547 | $88 | 6% | | Total expenses | $1,590 | $1,527 | $63 | 4% | | Income before income taxes, equity in losses (earnings) and noncontrolling interests | $45 | $20 | $25 | 125% | | Net income attributable to Realogy Holdings and Realogy Group | $23 | $33 | ($10) | (30)% | * Net revenues increased due to higher homesale transaction volume and prices - Total expenses increased primarily due to a **$103 million rise in commission and other agent-related costs** and a **$92 million loss on early extinguishment of debt**, partially offset by a **$131 million gain on the sale of a business**[203](index=203&type=chunk) - Equity in losses shifted from **$31 million in earnings** in Q1 2021 to **$10 million in losses** in Q1 2022, mainly from Guaranteed Rate Affinity[204](index=204&type=chunk) Operating EBITDA by Segment (in millions) | Segment | 3 Months Ended March 31, 2022 | 3 Months Ended March 31, 2021 | Change ($) | Change (%) | | :----------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Realogy Franchise Group | $138 | $141 | ($3) | (2)% | | Realogy Brokerage Group | ($40) | ($5) | ($35) | (700)% | | Realogy Title Group | ($3) | $61 | ($64) | (105)% | | Corporate and Other | ($26) | ($35) | $9 | 26% | | **Total Company** | **$69** | **$162** | **($93)** | **(57)%** | * Total Company Operating EBITDA margin decreased from **10% to 4%** [FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES](index=46&type=section&id=FINANCIAL%20CONDITION%2C%20LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Total assets and liabilities decreased, with liquidity primarily from operations and joint venture distributions, and a new share repurchase program authorized Financial Condition Summary (in millions) | Metric | March 31, 2022 | December 31, 2021 | Change ($) | | :----------------------------------- | :-------------- | :---------------- | :--------- | | Total assets | $6,857 | $7,210 | ($353) | | Total liabilities | $4,700 | $5,018 | ($318) | | Total equity | $2,157 | $2,192 | ($35) | - Total assets decreased by **$353 million**, mainly due to a **$429 million decrease in cash and cash equivalents** (driven by debt redemption, incentive compensation payments, and the absence of $152 million in statutory reserves from the Title Underwriter sale)[226](index=226&type=chunk) - Total liabilities decreased by **$318 million**, primarily from a **$149 million decrease in accrued expenses** and other current liabilities and a **$39 million net decrease in corporate debt**[227](index=227&type=chunk) - The Board authorized a **$300 million share repurchase program** on February 16, 2022[233](index=233&type=chunk) Cash Flow Summary (in millions) | Activity | 3 Months Ended March 31, 2022 | 3 Months Ended March 31, 2021 | Change ($) | | :----------------------------------- | :----------------------------- | :----------------------------- | :--------- | | Operating activities | ($233) | ($37) | ($196) | | Investing activities | $36 | ($32) | $68 | | Financing activities | ($237) | ($45) | ($192) | | **Net change in cash, cash equivalents and restricted cash** | **($434)** | **($114)** | **($320)** | [LIBOR Transition and Covenants](index=50&type=section&id=LIBOR%20Transition) The Company's primary market risk is LIBOR fluctuations on variable rate debt, managed by interest rate swaps, with debt covenants met as of March 31, 2022 - The Company's primary interest rate exposure is to LIBOR fluctuations on variable rate borrowings under its Senior Secured Credit Facility and Term Loan A Facility[244](index=244&type=chunk)[260](index=260&type=chunk) - Interest rate swaps with a notional value of **$1,000 million** are used to manage exposure to interest rate changes, with fixed rates ranging from **2.07% to 3.11%**[244](index=244&type=chunk)[264](index=264&type=chunk) - Debt covenants limit Realogy Group's ability to incur debt, pay dividends, repurchase stock, make investments, and other actions[245](index=245&type=chunk)[246](index=246&type=chunk) - The senior secured leverage ratio covenant (not to exceed **4.75 to 1.00**) was met as of March 31, 2022[247](index=247&type=chunk) [Non-GAAP Financial Measures](index=51&type=section&id=Non-GAAP%20Financial%20Measures) Operating EBITDA is a non-GAAP measure used to evaluate business performance by excluding non-core items, though it has limitations regarding working capital and debt service - Operating EBITDA is a non-GAAP measure defined as net income (loss) before depreciation, amortization, net interest expense (excluding relocation services interest), income taxes, and other non-core items[249](index=249&type=chunk) - Operating EBITDA is used by management and is believed to be useful for investors to compare operating performance by excluding variations in capital structures, taxation, and non-core items[250](index=250&type=chunk)[251](index=251&type=chunk) - Limitations of Operating EBITDA include not reflecting working capital changes, debt service, income tax expense, capital expenditures, or asset replacement costs[252](index=252&type=chunk) [Critical Accounting Estimates](index=52&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates involve goodwill and intangible asset impairment, assessed annually using discounted cash flow and relief from royalty methods - Critical accounting estimates involve goodwill and indefinite-lived intangible asset impairment, assessed annually or when circumstances change[255](index=255&type=chunk) - Fair value for reporting units is estimated using a discounted cash flow method, and for indefinite-lived intangibles using the relief from royalty method, based on management's best estimates of future revenues, expenses, market conditions, discount rates, and growth rates[256](index=256&type=chunk) - Significant negative industry or economic trends, business disruptions, or a sustained decline in stock price could lead to material impairment of these assets[258](index=258&type=chunk) [Recently Issued Accounting Pronouncements](index=52&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) Recently issued accounting standards are expected to have minimal impact, except for ASU 2020-06, adopted January 1, 2022, impacting Exchangeable Senior Notes accounting - Recently issued accounting standards were assessed and are expected to have minimal impact on the Company's financial position or results, except for ASU 2020-06[62](index=62&type=chunk)[259](index=259&type=chunk) - ASU 2020-06, 'Accounting for Convertible Instruments and Contracts in an Entity's Own Equity,' was adopted on January 1, 2022, using the modified retrospective method, impacting the accounting for Exchangeable Senior Notes[63](index=63&type=chunk)[64](index=64&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risks](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risks) The Company's primary market risk is interest rate fluctuations on variable rate debt, with a 0.25% LIBOR increase raising annual interest expense by $1 million - Primary market risk is from interest rate fluctuations (LIBOR) on variable rate senior secured debt[260](index=260&type=chunk) - A **0.25% increase in LIBOR** would increase annual interest expense by approximately **$1 million**[263](index=263&type=chunk) - The Company uses interest rate swaps with a notional value of **$1,000 million** to manage variable rate borrowing exposure, with a fair value liability of **$15 million** at March 31, 2022[264](index=264&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated disclosure controls and procedures for both Realogy entities as effective at a 'reasonable assurance' level, with no material changes to internal control - Realogy Holdings Corp.'s disclosure controls and procedures were evaluated and deemed effective at the 'reasonable assurance' level as of March 31, 2022[266](index=266&type=chunk) - Realogy Group LLC's disclosure controls and procedures were also evaluated and deemed effective at the 'reasonable assurance' level as of March 31, 2022[269](index=269&type=chunk) - No material changes to internal control over financial reporting occurred for either entity during the quarter[266](index=266&type=chunk)[269](index=269&type=chunk) [PART II. OTHER INFORMATION](index=55&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section details legal proceedings and lists exhibits filed with the Quarterly Report on Form 10-Q [Item 1. Legal Proceedings](index=55&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in various unpredictable legal proceedings, including antitrust and worker classification claims, which could materially impact financial condition - The Company is involved in various legal proceedings, including antitrust litigation, worker classification claims, and company-initiated lawsuits[271](index=271&type=chunk) - Litigation outcomes are unpredictable and could result in judgments or settlements materially exceeding accrued amounts, potentially having a material adverse effect on financial condition, results of operations, or cash flows[272](index=272&type=chunk) [Item 6. Exhibits](index=56&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including debt indentures, equity award agreements, executive certifications, and iXBRL financial information - Exhibits include indentures for **5.250% Senior Notes due 2030**, forms of equity award agreements, and certifications from the CEO and CFO for both Realogy Holdings Corp. and Realogy Group LLC[274](index=274&type=chunk) - Financial information is also provided in iXBRL format[274](index=274&type=chunk) [Signatures](index=57&type=section&id=Signatures) The report was signed on May 4, 2022, by the EVP & CFO and the SVP, Chief Accounting Officer & Controller - The report was signed by Charlotte C. Simonelli (EVP & CFO) and Timothy B. Gustavson (SVP, CAO & Controller) on May 4, 2022[276](index=276&type=chunk)

Realogy Holdings Corp. (RLGY) Q1 2022 Earnings Conference Call April 28, 2022 8:30 AM ET Company Participants Alicia Swift – Senior Vice President-Financial Planning and Investor Relations Ryan Schneider – Chief Executive Officer and President Charlotte Simonelli – Executive Vice President, Chief Financial Officer and Treasurer Conference Call Participants Ryan McKeveny – Zelman & Associates Anthony Paolone – J.P. Morgan John Campbell – Stephens Matthew Bouley – Barclays Tommy McJoynt – KBW Justin Ages – Be ...

& REALOGY REAL ESTATE SERVICES EARNINGS CALL Q1 2022 the REALOGY Sotheby's REALOGY real sure corcoran ERA CENTURY 21 TITLE GROUP INSURANCE AGENCY guaranteed & REALOGY CARTU AFFINITY LEADS GROUP MANAGEMENT PRESENTERS RYAN SCHNEIDER Chief Executive Officer and President CHARLOTTE SIMONELLI Executive Vice President and Chief Financial Officer ALICIA SWIFT Senior Vice President, Investor Relations and Financial Planning & Analysis 2 IMPORTANT DISCLOSURES Forward-Looking Statements This presentation contains for ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ___________________________ FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ REALOGY HOLDINGS CORP. REALOGY GROUP LLC (Exact name of registrant as specified in its charter) (Exact name of re ...

Financial Performance - Full year 2021 Operating EBITDA reached $902 million[16], compared to $726 million in 2020[34] - Free cash flow for the full year 2021 was $553 million[16], slightly less than the $555 million in 2020[50] - Net revenue for the full year 2021 was approximately $7.983 billion[31], an increase of $1.762 billion compared to $6.221 billion in 2020[31] - Realogy reduced net debt by approximately $900 million since 2019[13] Transaction Volume and Pricing - Realogy Franchise Group closed 1,163,036 homesale sides in 2021[17], a 7% increase year-over-year[17] - Realogy Brokerage Group closed 371,135 homesale sides in 2021[17], an 11% increase year-over-year[17] - The average homesale price for Realogy Franchise Group in 2021 was $424,436[17], a 19% increase year-over-year[17] - The average homesale price for Realogy Brokerage Group in 2021 was $657,307[17], a 19% increase year-over-year[17] 2022 Outlook - Realogy anticipates a full year 2022 Operating EBITDA range of $800 to $850 million[14] - The company expects mid-single digit homesale transaction volume growth in 2022[14]

Realogy Holdings Corp. (RLGY) Q4 2021 Earnings Conference Call February 17, 2022 4:30 PM ET Company Participants Alicia Swift – Senior Vice President Ryan Schneider – Chief Executive Officer and President Charlotte Simonelli – Chief Financial Officer Conference Call Participants Tommy McJoynt – KBW Ashley Kim – Barclays Anthony Paolone – JPMorgan Dennis McGill – Zelman & Associates A.J. Hayes – Stephens Inc. Justin Ages – Berenberg Kwaku Abrokwah – Goldman Sachs Operator Good afternoon, and welcome to the R ...

[Introductory Note](index=3&type=section&id=Introductory%20Note) This section clarifies the company's legal entity definitions and confirms identical consolidated financial reporting across its holding and operating entities - The terms "we," "us," "our," "our company," "Realogy," "Realogy Holdings" and the "Company" refer to Realogy Holdings Corp. and its consolidated subsidiaries, including Realogy Intermediate Holdings LLC and Realogy Group LLC[11](index=11&type=chunk) - Realogy Holdings and Realogy Intermediate do not conduct operations other than direct or indirect ownership of Realogy Group, resulting in **identical consolidated financial positions, results of operations, and cash flows** across the entities[11](index=11&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements subject to inherent risks and uncertainties, particularly concerning market conditions, macroeconomic factors, and competitive dynamics - The report contains forward-looking statements, particularly in "Management's Discussion and Analysis of Financial Condition and Results of Operations," which are based on management's current plans and expectations but involve **inherent risks and uncertainties**[13](index=13&type=chunk) - Key risks and uncertainties that could materially affect future results include adverse developments in the residential real estate market (e.g., declines in inventory, increased mortgage rates, reduced affordability), macroeconomic conditions (e.g., U.S. economy contraction, fiscal/monetary policies), evolving competitive and consumer dynamics (e.g., erosion of broker commission share, non-traditional competitors), and the company's ability to execute its business strategy (e.g., recruit/retain agents, attract/retain franchisees, compete for ancillary services)[14](index=14&type=chunk)[16](index=16&type=chunk) - Additional risks include the impact of the COVID-19 crisis, business structure risks (e.g., geographic concentration, franchisee operating results), listing aggregator market power, industry structure changes, substantial indebtedness, risks related to Exchangeable Senior Notes, legal and regulatory matters (e.g., antitrust, RESPA, worker classification), cybersecurity incidents, goodwill impairment, and severe weather/catastrophic events[16](index=16&type=chunk)[19](index=19&type=chunk) [PART I - FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis of the company's financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Realogy Holdings Corp. and Realogy Group LLC for the periods ended September 30, 2021, and December 31, 2020. It includes statements of operations, comprehensive income (loss), balance sheets, and cash flows, along with detailed notes on accounting policies, fair value measurements, debt, equity, and segment information [Report of Independent Registered Public Accounting Firm for Realogy Holdings Corp.](index=6&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20for%20Realogy%20Holdings%20Corp.) This report confirms PricewaterhouseCoopers LLP's review of Realogy Holdings Corp.'s interim financial statements, finding no material modifications needed for GAAP conformity - PricewaterhouseCoopers LLP reviewed the interim financial statements of Realogy Holdings Corp. and its subsidiaries for the periods ended September 30, **2021** and **2020**, and found **no material modifications needed for conformity with GAAP**[23](index=23&type=chunk) - The firm previously issued an **unqualified opinion** on the Company's consolidated financial statements as of December 31, **2020**, and confirmed that the accompanying consolidated balance sheet information as of December 31, **2020**, is **fairly stated** in relation to the audited statements[24](index=24&type=chunk) [Report of Independent Registered Public Accounting Firm for Realogy Group LLC](index=7&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20for%20Realogy%20Group%20LLC) This report confirms PricewaterhouseCoopers LLP's review of Realogy Group LLC's interim financial statements, finding no material modifications needed for GAAP conformity - PricewaterhouseCoopers LLP reviewed the interim financial statements of Realogy Group LLC and its subsidiaries for the periods ended September 30, **2021** and **2020**, and found **no material modifications needed for conformity with GAAP**[28](index=28&type=chunk) - The firm previously issued an **unqualified opinion** on Realogy Group LLC's consolidated financial statements as of December 31, **2020**, and confirmed that the accompanying consolidated balance sheet information as of December 31, **2020**, is **fairly stated** in relation to the audited statements[29](index=29&type=chunk) [Condensed Consolidated Statements of Operations (in millions)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section presents the unaudited condensed consolidated statements of operations, detailing revenues, expenses, and net income (loss) for specified periods Condensed Consolidated Statements of Operations (in millions) | (Unaudited) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | | | | | | Gross commission income | **$1,689** | **$1,458** | **$4,616** | **$3,227** | | Service revenue | **315** | **281** | **878** | **702** | | Franchise fees | **139** | **133** | **391** | **289** | | Other | **43** | **37** | **124** | **114** | | **Net revenues** | **2,186** | **1,909** | **6,009** | **4,332** | | **Expenses** | | | | | | Commission and other agent-related costs | **1,309** | **1,105** | **3,567** | **2,420** | | Operating | **424** | **380** | **1,230** | **1,068** | | Marketing | **69** | **55** | **193** | **155** | | General and administrative | **120** | **108** | **324** | **265** | | Former parent legacy cost, net | — | **1** | **1** | **1** | | Restructuring costs, net | **4** | **17** | **14** | **47** | | Impairments | **1** | **70** | **3** | **610** | | Depreciation and amortization | **50** | **43** | **152** | **134** | | Interest expense, net | **52** | **48** | **147** | **208** | | Loss on the early extinguishment of debt | **3** | — | **21** | **8** | | Other loss (income), net | **1** | — | **(17)** | — | | **Total expenses** | **2,033** | **1,827** | **5,635** | **4,916** | | Income (loss) before income taxes, equity in earnings and noncontrolling interests | **153** | **82** | **374** | **(584)** | | Income tax expense (benefit) | **48** | **36** | **125** | **(110)** | | Equity in earnings of unconsolidated entities | **(11)** | **(53)** | **(52)** | **(98)** | | **Net income (loss)** | **116** | **99** | **301** | **(376)** | | Less: Net income attributable to noncontrolling interests | **(2)** | **(1)** | **(5)** | **(2)** | | **Net income (loss) attributable to Realogy Holdings and Realogy Group** | **$114** | **$98** | **$296** | **$(378)** | | **Earnings (loss) per share attributable to Realogy Holdings shareholders:** | | | | | | Basic earnings (loss) per share | **$0.98** | **$0.85** | **$2.55** | **$(3.28)** | | Diluted earnings (loss) per share | **$0.95** | **$0.84** | **$2.46** | **$(3.28)** | | **Weighted average common and common equivalent shares of Realogy Holdings outstanding:** | | | | | | Basic | **116.6** | **115.4** | **116.3** | **115.2** | | Diluted | **120.3** | **116.7** | **120.2** | **115.2** | [Condensed Consolidated Statements of Comprehensive Income (Loss) (in millions)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section presents the unaudited condensed consolidated statements of comprehensive income (loss), including net income (loss) and other comprehensive income components Condensed Consolidated Statements of Comprehensive Income (Loss) (in millions) | (In millions) (Unaudited) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | **$116** | **$99** | **$301** | **$(376)** | | Currency translation adjustment | — | — | **(1)** | **(1)** | | Defined benefit pension plan—amortization of actuarial loss to periodic pension cost | — | **1** | **2** | **2** | | Other comprehensive income, before tax | — | **1** | **1** | **1** | | Income tax expense (benefit) related to items of other comprehensive income amounts | — | — | — | — | | Other comprehensive income, net of tax | — | **1** | **1** | **1** | | Comprehensive income (loss) | **116** | **100** | **302** | **(375)** | | Less: comprehensive income attributable to noncontrolling interests | **(2)** | **(1)** | **(5)** | **(2)** | | **Comprehensive income (loss) attributable to Realogy Holdings and Realogy Group** | **$114** | **$99** | **$297** | **$(377)** | [Condensed Consolidated Balance Sheets (in millions, except share data)](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the unaudited condensed consolidated balance sheets, detailing assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheets (in millions, except share data) | (In millions, except share data) (Unaudited) | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **ASSETS** | | | | Current assets: | | | | Cash and cash equivalents | **$701** | **$520** | | Restricted cash | **5** | **3** | | Trade receivables (net of allowance for doubtful accounts of **$11** and **$13**) | **140** | **128** | | Relocation receivables | **185** | **139** | | Other current assets | **194** | **154** | | **Total current assets** | **1,225** | **944** | | Property and equipment, net | **302** | **317** | | Operating lease assets, net | **448** | **450** | | Goodwill | **2,899** | **2,910** | | Trademarks | **685** | **685** | | Franchise agreements, net | **1,038** | **1,088** | | Other intangibles, net | **175** | **188** | | Other non-current assets | **421** | **352** | | **Total assets** | **$7,193** | **$6,934** | | **LIABILITIES AND EQUITY** | | | | Current liabilities: | | | | Accounts payable | **$125** | **$128** | | Securitization obligations | **146** | **106** | | Current portion of long-term debt | **9** | **62** | | Current portion of operating lease liabilities | **126** | **129** | | Accrued expenses and other current liabilities | **661** | **600** | | **Total current liabilities** | **1,067** | **1,025** | | Long-term debt | **2,938** | **3,145** | | Long-term operating lease liabilities | **418** | **430** | | Deferred income taxes | **353** | **276** | | Other non-current liabilities | **289** | **291** | | **Total liabilities** | **5,065** | **5,167** | | Commitments and contingencies (Note 8) | | | | Equity: | | | | Realogy Holdings preferred stock: **$0.01** par value; **50,000,000** shares authorized, none issued and outstanding at September 30, **2021** and December 31, **2020** | — | — | | Realogy Holdings common stock: **$0.01** par value; **400,000,000** shares authorized, **116,586,201** shares issued and outstanding at September 30, **2021** and **115,457,067** shares issued and outstanding at December 31, **2020** | **1** | **1** | | Additional paid-in capital | **4,939** | **4,876** | | Accumulated deficit | **(2,759)** | **(3,055)** | | Accumulated other comprehensive loss | **(58)** | **(59)** | | **Total stockholders' equity** | **2,123** | **1,763** | | Noncontrolling interests | **5** | **4** | | **Total equity** | **2,128** | **1,767** | | **Total liabilities and equity** | **$7,193** | **$6,934** | [Condensed Consolidated Statements of Cash Flows (in millions)](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the unaudited condensed consolidated statements of cash flows, categorizing cash movements into operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in millions) | (In millions) (Unaudited) | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | **Operating Activities** | | | | Net income (loss) | **$301** | **$(376)** | | Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | Depreciation and amortization | **152** | **134** | | Deferred income taxes | **76** | **(112)** | | Impairments | **3** | **610** | | Amortization of deferred financing costs and debt discount (premium) | **12** | **8** | | Loss on the early extinguishment of debt | **21** | **8** | | Gain on the sale of business, net | **(14)** | — | | Equity in earnings of unconsolidated entities | **(52)** | **(98)** | | Stock-based compensation | **21** | **19** | | Mark-to-market adjustments on derivatives | **(8)** | **59** | | Other adjustments to net income (loss) | **(2)** | **(1)** | | Net change in assets and liabilities, excluding the impact of acquisitions and dispositions: | | | | Trade receivables | **(13)** | **(24)** | | Relocation receivables | **(46)** | **2** | | Other assets | **(12)** | **15** | | Accounts payable, accrued expenses and other liabilities | **32** | **137** | | Dividends received from unconsolidated entities | **49** | **59** | | Other, net | **(31)** | **(22)** | | **Net cash provided by operating activities** | **489** | **418** | | **Investing Activities** | | | | Property and equipment additions | **(71)** | **(69)** | | Proceeds from the sale of business | **15** | — | | Investment in unconsolidated entities | **(7)** | **(2)** | | Other, net | **(5)** | **(13)** | | **Net cash used in investing activities** | **(68)** | **(84)** | | **Financing Activities** | | | | Net change in Revolving Credit Facility | — | **(50)** | | Repayments of Term Loan A Facility and Term Loan B Facility | **(1,490)** | — | | Proceeds from issuance of Senior Notes | **905** | — | | Proceeds from issuance of Senior Secured Second Lien Notes | — | **550** | | Redemption of Senior Notes | — | **(550)** | | Proceeds from issuance of Exchangeable Senior Notes | **403** | — | | Payments for purchase of Exchangeable Senior Notes hedge transactions | **(67)** | — | | Proceeds from issuance of Exchangeable Senior Notes warrant transactions | **46** | — | | Amortization payments on term loan facilities | **(8)** | **(31)** | | Net change in securitization obligations | **40** | **(62)** | | Debt issuance costs | **(20)** | **(14)** | | Cash paid for fees associated with early extinguishment of debt | **(11)** | **(7)** | | Taxes paid related to net share settlement for stock-based compensation | **(9)** | **(5)** | | Other, net | **(27)** | **(34)** | | **Net cash used in financing activities** | **(238)** | **(203)** | | Effect of changes in exchange rates on cash, cash equivalents and restricted cash | — | — | | **Net increase in cash, cash equivalents and restricted cash** | **183** | **131** | | Cash, cash equivalents and restricted cash, beginning of period | **523** | **266** | | **Cash, cash equivalents and restricted cash, end of period** | **$706** | **$397** | | **Supplemental Disclosure of Cash Flow Information** | | | | Interest payments (including securitization interest of **$3** and **$4** respectively) | **$121** | **$133** | | Income tax payments (refunds), net | **32** | **(9)** | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanatory notes supporting the condensed consolidated financial statements, covering accounting policies, debt, equity, and segment information [1. BASIS OF PRESENTATION](index=13&type=section&id=1.%20BASIS%20OF%20PRESENTATION) This note outlines the basis for preparing the financial statements, including company structure, GAAP compliance, and key accounting policies - Realogy Holdings Corp. is a global provider of residential real estate services through its consolidated subsidiaries, with Realogy Holdings and Realogy Intermediate serving as holding companies for Realogy Group LLC, resulting in **identical consolidated financial statements**[43](index=43&type=chunk) - The financial statements are prepared in accordance with GAAP and Article **10** of Regulation S-X, with interim results potentially not indicative of full-year performance due to seasonal variations[45](index=45&type=chunk) Fair Value Measurements (September 30, 2021) | | Level I | Level II | Level III | Total | | :--- | :--- | :--- | :--- | :--- | | Deferred compensation plan assets | **$1** | **$—** | **$—** | **$1** | | Interest rate swaps | — | **57** | — | **57** | | Contingent consideration for acquisitions | — | — | **3** | **3** | Equity Earnings from Unconsolidated Entities (Nine Months Ended September 30) | Entity | 2021 (in millions) | 2020 (in millions) | | :--- | :--- | :--- | | Guaranteed Rate Affinity, LLC | **$49** | **$95** | | Other equity method investments | **$3** | **$3** | Income Tax Expense (Benefit) | Period | 2021 (in millions) | 2020 (in millions) | | :--- | :--- | :--- | | Three Months Ended Sep 30 | **$48** | **$36** | | Nine Months Ended Sep 30 | **$125** | **$(110)** | - The Company uses interest rate swaps with an aggregate notional value of **$1,000 million** to **manage exposure to variable rate borrowings**, with changes in fair value recorded in the Condensed Consolidated Statements of Operations as **hedge accounting is not utilized**[58](index=58&type=chunk)[59](index=59&type=chunk) Net Revenues by Segment (Three Months Ended September 30) | Segment | 2021 (in millions) | 2020 (in millions) | | :--- | :--- | :--- | | Realogy Franchise Group | **$342** | **$314** | | Realogy Brokerage Group | **$1,705** | **$1,479** | | Realogy Title Group | **$250** | **$213** | | Corporate and Other | **$(111)** | **$(97)** | | **Total Net Revenues** | **$2,186** | **$1,909** | Net Revenues by Segment (Nine Months Ended September 30) | Segment | 2021 (in millions) | 2020 (in millions) | | :--- | :--- | :--- | | Realogy Franchise Group | **$943** | **$761** | | Realogy Brokerage Group | **$4,667** | **$3,281** | | Realogy Title Group | **$706** | **$510** | | Corporate and Other | **$(307)** | **$(220)** | | **Total Net Revenues** | **$6,009** | **$4,332** | - Revenue is recognized upon the **transfer of control of promised services**, with gross commission income and title/escrow fees recognized at the closing of a homesale transaction, and franchise fees recognized when underlying franchisee revenue is earned[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) - The Company adopted the new standard on Simplifying the Accounting for Income Taxes effective January 1, **2021**, which **did not impact its consolidated financial statements upon adoption**[67](index=67&type=chunk) - The Company plans to adopt the new standard on Accounting for Convertible Instruments and Contracts in an Entity's Own Equity on January 1, **2022**, using the modified retrospective approach, and is **currently evaluating its impact**[69](index=69&type=chunk) [2. GOODWILL AND INTANGIBLE ASSETS](index=19&type=section&id=2.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) This note details the company's goodwill and intangible assets, including their carrying amounts, changes, and amortization expenses by reporting unit and asset type Goodwill by Reporting Unit (in millions) | Reporting Unit | Balance at Dec 31, 2020 | Goodwill Acquired | Goodwill Reduction for Sale of Business | Balance at Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Realogy Franchise Group | **$2,509** | **$—** | **$(3)** | **$2,506** | | Realogy Brokerage Group | **$245** | **$—** | **$(10)** | **$235** | | Realogy Title Group | **$156** | **$2** | **$—** | **$158** | | **Total Company** | **$2,910** | **$2** | **$(13)** | **$2,899** | Intangible Assets (Net Carrying Amount, in millions) | Intangible Asset | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Franchise agreements | **$1,038** | **$1,088** | | Trademarks | **$685** | **$685** | | License agreements | **$31** | **$32** | | Customer relationships | **$117** | **$133** | | Title plant shares | **$25** | **$20** | | Other | **$2** | **$3** | | **Total Other Intangibles** | **$175** | **$188** | Intangible Asset Amortization Expense (in millions) | Asset Type | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Franchise agreements | **$16** | **$17** | **$50** | **$51** | | License agreements | **$1** | **$1** | **$1** | **$1** | | Customer relationships | **$5** | **$—** | **$16** | **$1** | | Other | **$1** | **$1** | **$2** | **$3** | | **Total** | **$23** | **$19** | **$69** | **$56** | - Expected amortization expense for amortizable intangible assets is approximately **$23 million** for the remainder of **2021**, **$90 million** for **2022**, **$89 million** for **2023**, **$89 million** for **2024**, **$89 million** for **2025**, and **$808 million** thereafter[76](index=76&type=chunk) [3. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES](index=20&type=section&id=3.%20ACCRUED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) This note provides a breakdown of accrued expenses and other current liabilities, including payroll, advances, commissions, and restructuring accruals Accrued Expenses and Other Current Liabilities (in millions) | Category | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Accrued payroll and related employee costs | **$253** | **$239** | | Advances from clients | **$29** | **$65** | | Accrued volume incentives | **$51** | **$46** | | Accrued commissions | **$54** | **$48** | | Restructuring accruals | **$12** | **$16** | | Deferred income | **$57** | **$46** | | Accrued interest | **$58** | **$18** | | Current portion of finance lease liabilities | **$12** | **$13** | | Due to former parent | **$19** | **$19** | | Other | **$116** | **$90** | | **Total** | **$661** | **$600** | [4. SHORT AND LONG-TERM DEBT](index=20&type=section&id=4.%20SHORT%20AND%20LONG-TERM%20DEBT) This note details the company's short and long-term debt, including senior secured credit facilities, senior notes, exchangeable senior notes, and securitization obligations Total Indebtedness (in millions) | Debt Type | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Senior Secured Credit Facility: | | | | Term Loan B | **$—** | **$1,036** | | Term Loan A Facility: | | | | Extended Term Loan A | **$233** | **$—** | | **7.625%** Senior Secured Second Lien Notes | **$542** | **$540** | | **4.875%** Senior Notes | **$406** | **$406** | | **9.375%** Senior Notes | **$544** | **$544** | | **5.75%** Senior Notes | **$898** | **$—** | | **0.25%** Exchangeable Senior Notes | **$324** | **$—** | | **Total Short-Term & Long-Term Debt** | **$2,947** | **$3,207** | | Securitization Obligations: | | | | Apple Ridge Funding LLC | **$144** | **$102** | | Cartus Financing Limited | **$2** | **$4** | | **Total Securitization Obligations** | **$146** | **$106** | Combined Aggregate Maturities for Long-Term Borrowings (in millions) | Year | Amount | | :--- | :--- | | Remaining 2021 | **$1** | | 2022 | **$10** | | 2023 | **$423** | | 2024 | **$22** | | 2025 | **$735** | - In September **2021**, the Company repaid all remaining Term Loan A Facility (**$197 million**) and Term Loan B Facility (**$238 million**) using cash on hand[87](index=87&type=chunk) - The **2021** Amendments extended the maturity of a portion of the Term Loan A Facility and Revolving Credit Facility from February **2023** to February **2025**, with a springing maturity clause tied to the **4.875%** Senior Notes[88](index=88&type=chunk) - Realogy Group issued **$403 million** of **0.25%** Exchangeable Senior Notes due **2026** in June **2021**, with an initial exchange rate of **40.8397 shares** per **$1,000** principal amount[103](index=103&type=chunk)[104](index=104&type=chunk)[108](index=108&type=chunk) - The Exchangeable Senior Notes are redeemable by Realogy Group on or after June **20**, **2024**, if the common stock price exceeds **130% of the exchange price** for a specified period[110](index=110&type=chunk) - The Company entered into exchangeable note hedge transactions (**$67 million** cost) and warrant transactions (**$46 million** proceeds) to **offset potential dilution and/or cash payments** upon exchange of the Exchangeable Senior Notes, **effectively increasing the overall exchange price** from **$24.49** to **$30.6075 per share**[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - Securitization obligations through Apple Ridge Funding LLC (**$144 million** utilized, **$56 million** available) and Cartus Financing Limited (**$2 million** utilized, **$18 million** available) are collateralized by relocation receivables and classified as current liabilities[120](index=120&type=chunk)[121](index=121&type=chunk)[125](index=125&type=chunk) - The Company recorded a **$21 million** loss on early extinguishment of debt during the nine months ended September 30, **2021**, due to refinancing transactions and debt paydowns[127](index=127&type=chunk) [5. RESTRUCTURING COSTS](index=28&type=section&id=5.%20RESTRUCTURING%20COSTS) This note outlines the company's restructuring charges, detailing personnel and facility-related costs associated with efficiency programs Restructuring Charges (in millions) | Category | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Personnel-related costs | **$1** | **$5** | **$5** | **$13** | | Facility-related costs | **$3** | **$12** | **$9** | **$34** | | **Total restructuring charges** | **$4** | **$17** | **$14** | **$47** | - The Company initiated a Facility and Operational Efficiencies Program in Q1 **2019**, expanding in late **2019** and **2020**, to **reduce storefront costs, centralize operational support, optimize workforce, and reevaluate office space needs** due to remote work[131](index=131&type=chunk)[132](index=132&type=chunk) Expected and Incurred Costs for Facility and Operational Efficiencies Program (in millions) | Cost Type | Total Expected | Incurred to Date | Remaining | | :--- | :--- | :--- | :--- | | Personnel-related costs | **$57** | **$55** | **$2** | | Facility-related costs | **$105** | **$70** | **$35** | | Other restructuring costs | **$1** | **$1** | **$—** | | **Total** | **$163** | **$126** | **$37** | [6. EQUITY](index=29&type=section&id=6.%20EQUITY) This note provides information on the company's equity, including details on restricted stock units and performance stock units granted - Realogy Holdings Corp. granted **0.9 million** restricted stock units (weighted average fair value **$14.10**) and **0.6 million** performance stock units (weighted average fair value **$11.55**) in Q1 **2021**, with time-based awards vesting ratably over three years[140](index=140&type=chunk) [7. EARNINGS (LOSS) PER SHARE](index=31&type=section&id=7.%20EARNINGS%20(LOSS)%20PER%20SHARE) This note presents the calculation of basic and diluted earnings (loss) per share attributable to Realogy Holdings shareholders Earnings (Loss) Per Share Attributable to Realogy Holdings Shareholders | (in millions, except per share data) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) attributable to Realogy Holdings shareholders | **$114** | **$98** | **$296** | **$(378)** | | Weighted average common shares outstanding (basic) | **116.6** | **115.4** | **116.3** | **115.2** | | Dilutive effect of stock-based compensation | **3.7** | **1.3** | **3.9** | **—** | | Dilutive effect of Exchangeable Senior Notes and warrants | — | — | — | — | | Weighted average common shares outstanding (diluted) | **120.3** | **116.7** | **120.2** | **115.2** | | Basic earnings (loss) per share | **$0.98** | **$0.85** | **$2.55** | **$(3.28)** | | Diluted earnings (loss) per share | **$0.95** | **$0.84** | **$2.46** | **$(3.28)** | - The computation of diluted EPS for the three and nine months ended September 30, **2021**, excluded **3.8 million** and **3.6 million shares**, respectively, of common stock issuable for incentive equity awards due to their **anti-dilutive effect**[141](index=141&type=chunk) - For the nine months ended September 30, **2020**, incentive equity awards were excluded from diluted loss per share computation as the Company was in a **net loss position, making their inclusion anti-dilutive**[141](index=141&type=chunk) [8. COMMITMENTS AND CONTINGENCIES](index=32&type=section&id=8.%20COMMITMENTS%20AND%20CONTINGENCIES) This note details the company's involvement in various claims, legal proceedings, governmental inquiries, and contingent liabilities - The Company is involved in various claims, legal proceedings, and governmental inquiries, including those related to antitrust, worker classification (e.g., Whitlach v. Premier Valley, Inc.), RESPA, intellectual property, and data privacy[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - Real estate industry litigation, such as Moehrl, Sitzer, Leeder, and Bauman, alleges antitrust violations related to NAR and MLS rules concerning buyer broker compensation, with ongoing discovery and motions[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk) - The Company initiated litigation against Urban Compass, Inc. and Compass, Inc. for alleged misappropriation of trade secrets, tortious interference, and unfair competition, with counterclaims filed by Compass[153](index=153&type=chunk)[154](index=154&type=chunk) - Escrow and trust deposits, totaling **$1,016 million** at September 30, **2021**, are administered by the Company but are not its assets, though it remains **contingently liable for their disposition**[160](index=160&type=chunk) [9. SEGMENT INFORMATION](index=36&type=section&id=9.%20SEGMENT%20INFORMATION) This note provides financial information by reportable segment, including revenues and Operating EBITDA for Realogy Franchise, Brokerage, and Title Groups - The Company's reportable segments are Realogy Franchise Group, Realogy Brokerage Group, and Realogy Title Group, with **performance evaluated based on revenue and Operating EBITDA**[162](index=162&type=chunk) Revenues by Segment (in millions) | Segment | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Realogy Franchise Group | **$342** | **$314** | **$943** | **$761** | | Realogy Brokerage Group | **$1,705** | **$1,479** | **$4,667** | **$3,281** | | Realogy Title Group | **$250** | **$213** | **$706** | **$510** | | Corporate and Other | **$(111)** | **$(97)** | **$(307)** | **$(220)** | | **Total Company** | **$2,186** | **$1,909** | **$6,009** | **$4,332** | Operating EBITDA by Segment (in millions) | Segment | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Realogy Franchise Group | **$211** | **$200** | **$576** | **$421** | | Realogy Brokerage Group | **$51** | **$61** | **$116** | **$25** | | Realogy Title Group | **$54** | **$95** | **$170** | **$168** | | Corporate and Other | **$(43)** | **$(43)** | **$(117)** | **$(94)** | | **Total Company** | **$273** | **$313** | **$745** | **$520** | - Operating EBITDA is defined as net income (loss) before depreciation and amortization, net interest expense (excluding relocation services interest), income taxes, and non-core items like restructuring charges, impairments, and gains/losses on debt extinguishment or asset sales[162](index=162&type=chunk) [10. SUBSEQUENT EVENTS](index=37&type=section&id=10.%20SUBSEQUENT%20EVENTS) This note discloses significant events occurring after the balance sheet date, including a strategic joint venture agreement for title insurance underwriting - On October 6, **2021**, Realogy announced a strategic agreement with Centerbridge Partners, L.P. to form a title insurance underwriter joint venture[169](index=169&type=chunk) - Centerbridge funds will acquire a **70% equity stake** in the joint venture (preferred units) for **$210 million** in cash, while Realogy will retain a **30% equity stake** (common units) in Title Resources Guaranty Company[170](index=170&type=chunk) - The transaction is **subject to regulatory approvals and customary closing conditions**, with an **expected close in Q1 2022**, after which Realogy's share of equity earnings/losses will be reported in Realogy Title Group[171](index=171&type=chunk)[172](index=172&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, and cash flows, discussing key business segments, recent developments, industry trends, and critical accounting policies. It highlights the strong recovery in the residential real estate market, driven by high demand and prices, but also addresses challenges such as low inventory, competitive pressures, and the impact of rising interest rates [OVERVIEW](index=38&type=section&id=OVERVIEW) This section provides an overview of Realogy's global residential real estate services, detailing its three core business segments: Franchise, Brokerage, and Title Groups - Realogy is a global provider of residential real estate services, operating through three business segments: Realogy Franchise Group, Realogy Brokerage Group, and Realogy Title Group[175](index=175&type=chunk) - Realogy Franchise Group franchises major real estate brands (e.g., Century 21, Coldwell Banker) with approximately **337,400 independent sales agents** worldwide and **21,100 offices**, also including lead generation and global relocation services[175](index=175&type=chunk) - Realogy Brokerage Group operates a full-service real estate brokerage with approximately **660 owned offices** and **55,100 independent sales agents**, primarily under Coldwell Banker, Corcoran, and Sotheby's International Realty brands[175](index=175&type=chunk) - Realogy Title Group provides full-service title, escrow, and settlement services, including title underwriting through Title Resources Guaranty Company, and includes the Company's equity earnings from its mortgage origination joint venture, Guaranteed Rate Affinity[175](index=175&type=chunk) [RECENT DEVELOPMENTS](index=38&type=section&id=RECENT%20DEVELOPMENTS) This section outlines recent significant events, including the formation of a title insurance underwriter joint venture and substantial debt repayments - Realogy Title Group LLC will form a title insurance underwriter joint venture with Centerbridge Partners, L.P., where Centerbridge funds will acquire a **70% equity stake** for **$210 million** in cash, and Realogy will hold a **30% stake**[176](index=176&type=chunk)[177](index=177&type=chunk) - The Company repaid approximately **$197 million** of Term Loan A Facility and **$238 million** of Term Loan B Facility in September **2021** using cash on hand[180](index=180&type=chunk) [CURRENT BUSINESS AND INDUSTRY TRENDS](index=39&type=section&id=CURRENT%20BUSINESS%20AND%20INDUSTRY%20TRENDS) This section discusses prevailing trends in the residential real estate market, including recovery drivers, mortgage rate impacts, inventory levels, affordability, and competitive dynamics - The residential real estate market experienced a **strong recovery** from Q2 **2020**, driven by **high demand, favorable mortgage rates, remote work, and millennial home-buying trends**, leading to **increased average homesale prices**[181](index=181&type=chunk)[182](index=182&type=chunk) Homesale Transaction Volume Growth (YoY) | Period | Realogy Franchise & Brokerage Groups Combined | Realogy Franchise Group | Realogy Brokerage Group | | :--- | :--- | :--- | :--- | | Nine Months Ended Sep 30, 2021 vs 2020 | **+41%** | **+39%** | **+45%** | | Three Months Ended Sep 30, 2021 vs 2020 | **+12%** | **+9%** | **+17%** | - NAR reported a **27% increase** in homesale transaction volume for the nine months ended September 30, **2021**, compared to **2020**, and a **35% increase** compared to **2019**[185](index=185&type=chunk) - Equity in earnings at Guaranteed Rate Affinity **declined significantly**, from **$51 million** in Q3 **2020** to **$11 million** in Q3 **2021**, primarily due to **mark-to-market adjustments on the mortgage loan pipeline, gain-on-sale margin compression, and lower refinance volumes**, despite strong purchase volume growth[202](index=202&type=chunk) - Mortgage rates, while increasing from late **2020** lows, **remain below the 10-year average**, but rising rates **could negatively impact refinancing, housing affordability, and homesale transaction volume**[203](index=203&type=chunk)[205](index=205&type=chunk) - **Low housing inventory levels persist**, with U.S. existing homes for sale decreasing by **13% YoY** to **1.3 million** as of September **2021**, leading to **rapid turnover and potential constraints on homesale transaction volume**[207](index=207&type=chunk)[208](index=208&type=chunk) - **Housing affordability decreased**, with the NAR index falling from **166** in August **2020** to **151** in August **2021**, potentially impacted by inflation, rising mortgage rates, and average homesale prices[209](index=209&type=chunk) - **Agent recruitment and retention remain challenging** due to **aggressive competition, leading to upward pressure on agent commission shares and potential impacts on operating margins and royalty fees**[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) - **Non-traditional market participants, including iBuying, home swap models, and virtual brokerages, are disrupting the industry** and **competing for gross commission income and ancillary services**, potentially impacting brokerages and agents[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk) - **Listing aggregators' market power creates disruption** by **setting up competing brokerages, expanding ancillary offerings, charging fees, and leveraging data**, which can **reduce earnings and dilute relationships for traditional brokerages**[217](index=217&type=chunk) [KEY DRIVERS OF OUR BUSINESSES](index=45&type=section&id=KEY%20DRIVERS%20OF%20OUR%20BUSINESSES) This section identifies and analyzes the primary metrics and factors influencing the performance of Realogy's Franchise, Brokerage, and Title Group segments - Key operating metrics include closed homesale sides, average homesale price, and average homesale broker commission rate for Realogy Franchise and Brokerage Groups[224](index=224&type=chunk) - Realogy Franchise Group also uses net royalty per side, which accounts for royalty rates, homesale price, broker commission rates, and incentives[225](index=225&type=chunk) - Realogy Brokerage Group uses gross commission income per side, with a royalty fee of approximately **6%** paid to Realogy Franchise Group, and the remainder split between the broker and independent sales agent[226](index=226&type=chunk) - Realogy Title Group's performance is evaluated by purchase title and closing units, refinance title and closing units, and average fee per closing unit[228](index=228&type=chunk) Key Business Drivers (Three Months Ended September 30) | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | **Realogy Franchise Group** | | | | | Closed homesale sides | **316,195** | **336,737** | **(6)%** | | Average homesale price | **$427,052** | **$367,095** | **16%** | | Average homesale broker commission rate | **2.44%** | **2.48%** | **(4) bps** | | Net royalty per side | **$401** | **$367** | **9%** | | **Realogy Brokerage Group** | | | | | Closed homesale sides | **101,536** | **101,890** | **—%** | | Average homesale price | **$662,006** | **$563,513** | **17%** | | Average homesale broker commission rate | **2.42%** | **2.44%** | **(2) bps** | | Gross commission income per side | **$16,633** | **$14,315** | **16%** | | **Realogy Title Group** | | | | | Purchase title and closing units | **47,004 units** | **45,788 units** | **3%** | | Refinance title and closing units | **12,836 units** | **18,387 units** | **(30)%** | | Average fee per closing unit | **$2,675** | **$2,239** | **19%** | Key Business Drivers (Nine Months Ended September 30) | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | **Realogy Franchise Group** | | | | | Closed homesale sides | **881,356** | **778,010** | **13%** | | Average homesale price | **$419,223** | **$341,427** | **23%** | | Average homesale broker commission rate | **2.46%** | **2.48%** | **(2) bps** | | Net royalty per side | **$402** | **$341** | **18%** | | **Realogy Brokerage Group** | | | | | Closed homesale sides | **280,474** | **235,806** | **19%** | | Average homesale price | **$654,113** | **$537,602** | **22%** | | Average homesale broker commission rate | **2.43%** | **2.43%** | **— bps** | | Gross commission income per side | **$16,457** | **$13,685** | **20%** | | **Realogy Title Group** | | | | | Purchase title and closing units | **128,207 units** | **106,540 units** | **20%** | | Refinance title and closing units | **47,775 units** | **44,834 units** | **7%** | | Average fee per closing unit | **$2,524** | **$2,189** | **15%** | - A decline in homesale transactions or prices, reduced broker commission rates, or increased agent/franchisee incentives could **adversely affect operating results**[231](index=231&type=chunk) - Royalty fees are **volume-based, with rates subject to reduction based on volume incentives**, and other models exist (e.g., flat royalty, capped fee, tiered royalty)[233](index=233&type=chunk)[234](index=234&type=chunk) [RESULTS OF OPERATIONS](index=47&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes the company's consolidated and segment-specific financial performance, detailing changes in revenues, expenses, and operating EBITDA for the reported periods - Consolidated net revenues increased by **$277 million (15%)** for the three months ended September 30, **2021**, and by **$1,677 million (39%)** for the nine months ended September 30, **2021**, driven by higher homesale transaction volume and prices[240](index=240&type=chunk)[257](index=257&type=chunk) - Total expenses increased by **$206 million (11%)** for the three months and **$719 million (15%)** for the nine months ended September 30, **2021**, primarily due to higher commission and agent-related costs, and increased operating/G&A expenses due to the absence of prior year's temporary cost savings[241](index=241&type=chunk)[259](index=259&type=chunk) - Equity in earnings **declined significantly**, from **$53 million** to **$11 million** for the three months, and from **$98 million** to **$52 million** for the nine months ended September 30, **2021**, mainly due to Guaranteed Rate Affinity's performance impacted by **mark-to-market adjustments, margin compression, and lower refinance volumes**[241](index=241&type=chunk)[259](index=259&type=chunk) - Realogy Franchise Group's revenues increased by **$28 million (9%)** and Operating EBITDA by **$11 million (6%)** for the three months, and revenues by **$182 million (24%)** and Operating EBITDA by **$155 million (37%)** for the nine months ended September 30, **2021**, driven by increased homesale transaction volume[248](index=248&type=chunk)[249](index=249&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk) - Realogy Brokerage Group's revenues increased by **$226 million (15%)** for the three months, and by **$1,386 million (42%)** for the nine months ended September 30, **2021**, due to higher homesale transaction volume and prices[251](index=251&type=chunk)[270](index=270&type=chunk) - Realogy Brokerage Group's Operating EBITDA decreased by **$10 million (16%)** for the three months but increased by **$91 million (364%)** for the nine months ended September 30, **2021**, impacted by higher agent commission costs and the absence of temporary cost savings[250](index=250&type=chunk)[253](index=253&type=chunk)[269](index=269&type=chunk)[271](index=271&type=chunk) - Realogy Title Group's revenues increased by **$37 million (17%)** for the three months and **$196 million (38%)** for the nine months ended September 30, **2021**, due to increased purchase unit activity and higher homesale prices[254](index=254&type=chunk)[255](index=255&type=chunk)[272](index=272&type=chunk) - Realogy Title Group's Operating EBITDA decreased by **$41 million (43%)** for the three months but increased by **$2 million (1%)** for the nine months ended September 30, **2021**, primarily due to the decline in equity earnings from Guaranteed Rate Affinity and increased operating costs[254](index=254&type=chunk)[256](index=256&type=chunk)[271](index=271&type=chunk)[273](index=273&type=chunk) [FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES](index=56&type=section&id=FINANCIAL%20CONDITION,%20LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section assesses the company's financial position, liquidity sources, and capital management strategies, including changes in assets, liabilities, equity, and cash flows Financial Condition Summary (in millions) | Category | September 30, 2021 | December 31, 2020 | Change | | :--- | :--- | :--- | :--- | | Total assets | **$7,193** | **$6,934** | **$259** | | Total liabilities | **$5,065** | **$5,167** | **$(102)** | | Total equity | **$2,128** | **$1,767** | **$361** | - Total assets increased by **$259 million**, primarily due to a **$181 million** increase in cash and cash equivalents, a **$109 million** increase in other current/non-current assets, and a **$58 million** increase in receivables[274](index=274&type=chunk) - Total liabilities decreased by **$102 million**, mainly due to a **$260 million** net decrease in corporate debt and a **$15 million** decrease in operating lease liabilities, partially offset by increases in deferred tax liabilities, accrued expenses, and securitization obligations[274](index=274&type=chunk) - Total equity increased by **$361 million**, driven by **$296 million** in net income and a **$63 million** increase in additional paid-in capital from the Exchangeable Senior Notes issuance[274](index=274&type=chunk) - Primary liquidity sources are cash flows from operations, Revolving Credit Facility, and securitization facilities, with a focus on business investment and debt reduction in **2021**[275](index=275&type=chunk) - Total debt (excluding securitization obligations) was **$3,044 million** at September 30, **2021**, down from **$3,239 million** at December 31, **2020**, following significant debt repayments and refinancing activities[276](index=276&type=chunk)[277](index=277&type=chunk) - The Company was in compliance with the senior secured leverage ratio covenant at September 30, **2021**, and expects to meet cash flow needs for the next twelve months[279](index=279&type=chunk) Cash Flows Summary (Nine Months Ended September 30, in millions) | Activity | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Operating activities | **$489** | **$418** | **$71** | | Investing activities | **$(68)** | **$(84)** | **$16** | | Financing activities | **$(238)** | **$(203)** | **$(35)** | | **Net change in cash, cash equivalents and restricted cash** | **$183** | **$131** | **$52** | - Cash provided by operating activities increased by **$71 million**, primarily due to **higher operating results, partially offset by increased cash used for accounts payable, accrued expenses, and other liabilities**[286](index=286&type=chunk) - Cash used in financing activities increased by **$35 million**, mainly due to **$234 million** in **debt repayments (Term Loan A and B), partially offset by proceeds from Exchangeable Senior Notes and a net increase in securitization borrowings**[287](index=287&type=chunk) [Non-GAAP Financial Measures](index=62&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and explains the use of non-GAAP financial measures, such as Operating EBITDA, for evaluating performance and providing transparency - Operating EBITDA is defined as net income (loss) before depreciation and amortization, net interest expense (excluding relocation services interest), income taxes, and non-core items such as restructuring charges, former parent legacy items, gains/losses on early debt extinguishment, impairments, and gains/losses on asset sales[304](index=304&type=chunk)[305](index=305&type=chunk) - Operating EBITDA is presented as a supplemental measure to **evaluate operating performance and provide transparency**, used by management and frequently by securities analysts and investors[306](index=306&type=chunk)[307](index=307&type=chunk) - **Limitations of Operating EBITDA include not reflecting changes in working capital, cash requirements for debt service or taxes, capital expenditures, or asset replacements, and potential incomparability with other companies' measures**[308](index=308&type=chunk) [Critical Accounting Policies](index=63&type=section&id=Critical%20Accounting%20Policies) This section discusses the significant accounting policies requiring management's judgment and estimates, particularly concerning goodwill and intangible asset impairment testing - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts, particularly for future events, and **significant unfavorable changes could materially impact financial condition or operating performance**[309](index=309&type=chunk) - Goodwill and other indefinite-lived intangible assets (**$2,899 million** and **$710 million**, respectively, at Sep 30, **2021**) are subject to **annual impairment testing, comparing carrying values to fair values estimated using income approaches (discounted cash flow, relief from royalty method)**[311](index=311&type=chunk)[312](index=312&type=chunk) - **Significant negative industry or economic trends, business disruptions, or a sustained decline in stock price could lead to material impairment** of goodwill or other indefinite-lived intangible assets[313](index=313&type=chunk) - The SEC's amendments to MD&A, Selected Financial Data, and Supplementary Financial Information, effective February 10, **2021**, will **require compliance starting with the 2021 Annual Report on Form 10-K**[314](index=314&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risks](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risks) This section discusses the company's exposure to market risks, primarily interest rate fluctuations (LIBOR), and the strategies used to manage these risks, including sensitivity analysis and interest rate swaps. It also addresses the ongoing LIBOR transition and its potential impact - The Company's **primary market risk exposure is to interest rate fluctuations, specifically LIBOR**, due to its impact on variable rate borrowings under the Senior Secured Credit Facility and Term Loan A Facility[291](index=291&type=chunk)[316](index=316&type=chunk) - The **ongoing LIBOR transition to alternative reference rates like SOFR introduces uncertainty**; if successor rates are higher, it **could increase the cost of variable rate indebtedness**[290](index=290&type=chunk) - As of September 30, **2021**, the Company had **$234 million** in variable interest rate long-term debt (excluding securitization obligations) with a weighted average interest rate of **1.83%**[318](index=318&type=chunk) - A sensitivity analysis estimates that a **0.25% increase in LIBOR** would result in an approximately **$1 million impact** on annual interest expense[318](index=318&type=chunk) - The Company uses interest rate swaps with a notional value of **$1,000 million** to manage interest rate exposure, with fixed rates ranging from **2.07% to 3.11%**. A **0.25% increase** in the LIBOR yield curve would increase the fair value of these swaps by **$7 million** and decrease interest expense[319](index=319&type=chunk) [Item 4. Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the disclosure controls and procedures for Realogy Holdings Corp. and Realogy Group LLC, confirming their effectiveness at a reasonable assurance level and reporting no material changes in internal control over financial reporting during the period - Realogy Holdings Corp.'s management, including the CEO and CFO, evaluated the effectiveness of its disclosure controls and procedures as of September 30, **2021**, and concluded they are effective at the "reasonable assurance" level[321](index=321&type=chunk) - There have been **no material changes in Realogy Holdings Corp.'s internal control over financial reporting** during the period covered by this quarterly report[321](index=321&type=chunk) - Realogy Group LLC's management, including the CEO and CFO, also concluded that its disclosure controls and procedures are effective at the "reasonable assurance" level as of September 30, **2021**[324](index=324&type=chunk) - There have been **no material changes in Realogy Group LLC's internal control over financial reporting** during the period covered by this quarterly report[324](index=324&type=chunk) [PART II - OTHER INFORMATION](index=67&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides updates on legal proceedings, risk factors, and a list of exhibits filed with the quarterly report [Item 1. Legal Proceedings](index=67&type=section&id=Item%201.%20Legal%20Proceedings) This section provides an update on ongoing legal proceedings, including worker classification and real estate industry litigation, and discusses the broader legal and regulatory environment impacting the company. It highlights increased scrutiny from regulators like the DOJ and FTC on industry practices - The Company is involved in various legal proceedings and believes it has **adequately accrued for probable and estimable legal matters**, but **outcomes are inherently unpredictable and could materially affect financial results**[326](index=326&type=chunk)[327](index=327&type=chunk) - The real estate industry is highly regulated and subject to shifts in public policy, statutory interpretation, and enforcement priorities, with **increased scrutiny from federal and state regulators**[328](index=328&type=chunk)[330](index=330&type=chunk) - The Department of Justice (DOJ) **withdrew its consent to a proposed settlement** with the National Association of Realtors (NAR) in July **2021**, indicating a **broader investigation** into NAR's rules and conduct, which **could disrupt the Company's business**[331](index=331&type=chunk)[336](index=336&type=chunk) - The Federal Trade Commission (FTC) and the executive branch are also **increasing focus on competition across industries**, including real estate brokerage, with **potential for further investigations or actions**[332](index=332&type=chunk)[333](index=333&type=chunk)[334](index=334&type=chunk)[336](index=336&type=chunk) - **Worker classification litigation, particularly in New Jersey and California, continues to evolve**, with potential impacts on real estate agents' employment status and related claims[335](index=335&type=chunk) [Item 1A. Risk Factors](index=63&type=section&id=Item%201A.%20Risk%20Factors) This section updates specific risk factors, including those related to the planned title underwriting joint venture with Centerbridge Partners and the potential effects of the exchangeable note hedge and warrant transactions on the company's common stock value and counterparty risk - The planned sale of a controlling interest in the title underwriting business to Centerbridge is **subject to closing conditions, including antitrust waiting periods and regulatory approvals, with no assurance of timely completion or anticipated benefits**[338](index=338&type=chunk)[339](index=339&type=chunk) - Risks associated with the title underwriting joint venture include **unexpected costs, operational disruptions, adverse effects on employee retention, and potential for lower business volume than historical levels**[340](index=340&type=chunk)[341](index=341&type=chunk) - The exchangeable note hedge and warrant transactions **may affect the value of the common stock**, with **warrant transactions potentially having a dilutive effect if the market price exceeds the strike price**[342](index=342&type=chunk)[343](index=343&type=chunk) - The Company is **exposed to counterparty risk** with the Option Counterparties for the exchangeable note hedge transactions, as a default would make Realogy an **unsecured creditor with potential adverse tax consequences and dilution**[345](index=345&type=chunk) [Item 6. Exhibits](index=64&type=section&id=Item%206.%20Exhibits) This section refers to the Exhibit Index for a comprehensive list of documents filed as part of the Form 10-Q - A **detailed list of exhibits filed with the Quarterly Report on Form 10-Q** is provided in the Exhibit Index[346](index=346&type=chunk) [SIGNATURES](index=65&type=section&id=SIGNATURES) This section contains the official signatures of the company's executive officers, certifying the accuracy of the report - The report is signed by Charlotte C. Simonelli, Executive Vice President and Chief Financial Officer, and Timothy B. Gustavson, Senior Vice President, Chief Accounting Officer and Controller, on behalf of Realogy Holdings Corp. and Realogy Group LLC, dated November 3, **2021**[349](index=349&type=chunk) [EXHIBIT INDEX](index=66&type=section&id=EXHIBIT%20INDEX) This section provides a comprehensive list of all exhibits filed with the Quarterly Report on Form 10-Q, including certifications and financial data - The Exhibit Index lists various documents filed with the Form **10-Q**, including **certifications from the CEO and CFO** for both Realogy Holdings Corp. and Realogy Group LLC, and **financial information in iXBRL format**[351](index=351&type=chunk)[354](index=354&type=chunk)

& REALOGY REAL ESTATE SERVICES EARNINGS CALL Q3 2021 l BS CENTURY 21 ERA Sotheby's & REALOGY @ BESOURCES' & REALOGY guarantood Rate @ REALOGY CARTUS. corcoran RYAN SCHNEIDER Chief Executive Officer and President 2 MANAGEMENT PRESENTERS CHARLOTTE SIMONELLI Executive Vice President and Chief Financial Officer ALICIA SWIFT Senior Vice President, Investor Relations and Financial Planning & Analysis IMPORTANT DISCLOSURES Forward-Looking Statements This presentation contains forward-looking statements. The Compan ...

Financial Data and Key Metrics Changes - Realogy reported a 12% year-over-year growth in transaction volume, outpacing NAR's 9% growth [9] - Revenue increased by $277 million to $2.2 billion, with operating EBITDA at $273 million, flat compared to the previous year after adjusting for temporary cost savings [10][29] - Free cash flow reached $282 million for the quarter, contributing to a total of $458 million year-to-date [31] Business Line Data and Key Metrics Changes - Realogy Brokerage Group revenue was $1.7 billion, up $226 million year-over-year, with transaction volume growth of 17% [32] - Realogy Franchise Group revenue increased by $28 million to $342 million, with transaction volume growth of 9% [34] - Realogy Title Group revenue rose by $37 million to $250 million, driven by growth in both agency and underwriter businesses [36] Market Data and Key Metrics Changes - The luxury segment saw Sotheby's International Realty volume increase over 50% year-to-date, with Corcoran doubling its volume [16] - The overall housing market remains strong, with demand driven by remote work and low mortgage rates, although supply issues are leading to price appreciation [21] Company Strategy and Development Direction - Realogy is focused on simplifying the home sale transaction and enhancing its capital structure through debt reduction and strategic partnerships [8][10] - The company is investing in technology and product innovation, with a focus on its RealSure initiative to provide guaranteed offers to homeowners [12][18] - A new title underwriting venture with Centerbridge aims to unlock future growth and return capital for reinvestment [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the housing market, despite expectations of slightly lower volume in Q4 2021 compared to the strong Q4 2020 [22][23] - The company anticipates continued growth in transaction volumes, supported by its market-leading position and strategic initiatives [41] Other Important Information - Realogy has been recognized for its workplace culture, being named one of the World's Best Employers by Forbes [11] - The company has made significant progress in reducing debt, with a net leverage ratio of 2.3 times and $700 million in cash [31][39] Q&A Session All Questions and Answers Question: Can you discuss the go-to-market strategy for RealSure? - The product is distributed through agents and also marketed directly to consumers, generating additional listings for Realogy [51] Question: What is driving the increase in mortgage and title volumes? - The increase is attributed to aggressive recruitment of loan officers and geographic expansion [53] Question: What are the strategic benefits of partnering with Centerbridge for the title underwriter? - The partnership is expected to unlock growth potential and separate the agency and settlement business, which is critical to transactions [58] Question: What is the company's appetite for additional debt? - The company is monitoring the market and evaluating options for higher-cost debt, with plans to enhance its balance sheet [60] Question: Can you elaborate on the average broker commission rates? - The slight decrease in commission rates is common and not a cause for concern, especially after a period of high price appreciation [86] Question: How is market share trending across different segments? - Realogy has gained market share in the luxury segment and is performing well, although it has been more aligned with the overall market in lower price points [88]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ___________________________ FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ (I.R.S. Employer Identification Number) (I.R.S. Employer Identification Number) Commission File No. 001-35674 ...