Anywhere(US:HOUS)2024-05-02 11:27PART I PART I - FINANCIAL INFORMATION Details the company's unaudited financial performance, condition, market risks, and internal controls for the period Financial Statements (Unaudited) Presents the unaudited condensed consolidated financial statements, highlighting key financial performance and position for the period Condensed Consolidated Statements of Operations Presents the unaudited condensed consolidated statements of operations, detailing revenues, expenses, and net loss for the period Condensed Consolidated Statements of Operations (in millions, except per share data) | | Three Months Ended March 31, | | :--- | :--- | :--- | | | 2024 | 2023 | | Net revenues | $1,126 | $1,131 | | Total expenses | $1,254 | $1,313 | | Loss before income taxes | $(128) | $(182) | | Net loss attributable to Anywhere | $(101) | $(138) | | Diluted loss per share | $(0.91) | $(1.26) | Condensed Consolidated Balance Sheets Provides the unaudited condensed consolidated balance sheets, outlining assets, liabilities, and equity at the period end Condensed Consolidated Balance Sheet Highlights (in millions) | | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total current assets | $597 | $580 | | Goodwill | $2,499 | $2,499 | | Total assets | $5,799 | $5,839 | | Total current liabilities | $1,475 | $1,207 | | Long-term debt | $2,053 | $2,235 | | Total liabilities | $4,219 | $4,158 | | Total stockholders' equity | $1,578 | $1,679 | Condensed Consolidated Statements of Cash Flows Details the unaudited condensed consolidated statements of cash flows, summarizing cash movements from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in millions) | | Three Months Ended March 31, | | :--- | :--- | :--- | | | 2024 | 2023 | | Net cash used in operating activities | $(122) | $(113) | | Net cash used in investing activities | $(16) | $(5) | | Net cash provided by financing activities | $134 | $26 | | Net decrease in cash, cash equivalents and restricted cash | $(4) | $(92) | | Cash, cash equivalents and restricted cash, end of period | $115 | $126 | Notes to Condensed Consolidated Financial Statements Provides detailed notes on the financial statements, covering segments, debt, restructuring, and significant legal contingencies - The company operates in three business segments: Anywhere Brands (Franchise Group), Anywhere Advisors (Owned Brokerage Group), and Anywhere Integrated Services (Title Group)44 Total Indebtedness as of March 31, 2024 (in millions) | Debt Instrument | Net Amount | | :--- | :--- | | Revolving Credit Facility | $438 | | Term Loan A Facility | $201 | | 7.00% Senior Secured Second Lien Notes | $628 | | 5.75% Senior Notes | $576 | | 5.25% Senior Notes | $451 | | 0.25% Exchangeable Senior Notes | $398 | | Total Short-Term & Long-Term Debt | $2,692 | - The company has a proposed nationwide settlement for the Burnett and Moehrl antitrust cases, agreeing to pay $83.5 million and implement practice changes. The settlement received preliminary approval and a final approval hearing is scheduled for May 9, 2024102101 - Restructuring charges for Q1 2024 were $11 million, primarily related to the ongoing Operational Efficiencies Plan aimed at optimizing operations and reducing office footprint80 Management's Discussion and Analysis of Financial Condition and Results of Operations Analyzes the company's financial performance and condition within the challenging real estate market, discussing key trends, segment results, and liquidity management Recent Developments Highlights significant recent events, including industry-wide and company-specific legal settlements and ongoing regulatory developments - The National Association of Realtors (NAR) announced a settlement that will eliminate the requirement for listing agents to offer compensation to buyer brokers on the MLS149150 - Anywhere's own nationwide settlement in the Burnett antitrust litigation, for $83.5 million, is subject to a final court approval hearing scheduled for May 9, 2024152 - On April 5, 2024, the D.C. Circuit Court of Appeals ruled in favor of the DOJ, allowing the agency to reopen its antitrust investigation of NAR155 Current Business and Industry Trends Analyzes current residential real estate market and industry trends, including transaction volumes, mortgage rates, and agent count impacts - The residential real estate market is at historic lows, with NAR reporting a 3% YoY decrease in existing homesale transactions in Q1 2024156157 - High mortgage rates, peaking at 7.79% in Q4 2023 and remaining elevated, continue to negatively impact homesale volume and affordability164166 - The company realized approximately $30 million in cost savings in Q1 2024, about half of which related to specific restructuring activities162 - Independent sales agents affiliated with company-owned brokerages declined 5% YoY as of March 31, 2024, consistent with a broader market trend of agents leaving the industry171 Key Drivers of Our Businesses Identifies key operating metrics and drivers influencing performance across the company's Franchise, Owned Brokerage, and Title segments Key Operating Metrics - Q1 2024 vs Q1 2023 | Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Franchise Group | | | | | Closed homesale sides | 144,775 | 150,491 | (4)% | | Average homesale price | $470,119 | $437,964 | 7% | | Owned Brokerage Group | | | | | Closed homesale sides | 50,513 | 53,797 | (6)% | | Average homesale price | $709,506 | $663,223 | 7% | | Title Group | | | | | Purchase title and closing units | 21,325 | 21,749 | (2)% | | Refinance title and closing units | 2,025 | 2,198 | (8)% | Results of Operations Presents a detailed analysis of the company's operating results, including segment performance and key factors impacting profitability Operating EBITDA by Segment (in millions) | Segment | Q1 2024 | Q1 2023 | $ Change | | :--- | :--- | :--- | :--- | | Franchise Group | $89 | $97 | $(8) | | Owned Brokerage Group | $(59) | $(75) | $16 | | Title Group | $(15) | $(17) | $2 | | Corporate and Other | $(32) | $(57) | $25 | | Total Company | $(17) | $(52) | $35 | - Total expenses decreased by $59 million (4%) YoY, primarily due to a $37 million net decrease in operating and G&A expenses, a $15 million decrease in former parent legacy costs, and $14 million in lower restructuring costs193 - Franchise Group revenue decreased $7 million, mainly from a $9 million decline in relocation and leads business revenue200 - Owned Brokerage Group Operating EBITDA improved by $16 million, driven by a $10 million decrease in operating costs and a $4 million decrease in marketing expense from cost-saving initiatives202 Financial Condition, Liquidity and Capital Resources Assesses the company's financial position, liquidity sources, capital resources, and plans for managing debt maturities and future cash obligations - Total liabilities increased by $61 million in Q1 2024, driven by a $150 million net increase in corporate debt, primarily from additional borrowings under the Revolving Credit Facility206 - The company plans to extend, refinance, replace or repay its Term Loan A Facility by November 2024212 - Material future cash uses include the remaining $73.5 million for the antitrust settlement and a $39 million legacy tax assessment, both anticipated to be payable in 2024213214 - The company was in compliance with its senior secured leverage ratio covenant of 4.75 to 1.00 as of March 31, 2024227 Quantitative and Qualitative Disclosures about Market Risks Details the company's exposure to market risks, primarily interest rate fluctuations affecting its variable-rate debt - The company's main market risk is exposure to interest rate fluctuations, specifically SOFR, on its variable-rate debt238 - As of March 31, 2024, the company had $640 million of variable interest rate debt outstanding240 - A sensitivity analysis indicates that a 0.25% increase in SOFR would result in an approximate $2 million impact on annual interest expense240 Controls and Procedures Confirms the effectiveness of the company's disclosure controls and procedures, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures are effective at the 'reasonable assurance' level as of the end of the period242246 - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls243 PART II PART II - OTHER INFORMATION Covers significant legal proceedings, other required disclosures, and a list of filed exhibits Legal Proceedings Outlines significant legal proceedings, including antitrust class actions and a proposed nationwide settlement, along with other material litigation - The company is defending against multiple class action antitrust lawsuits (e.g., Burnett, Moehrl, Batton, Nosalek) that challenge industry rules for buyer-broker commissions93248 - A proposed nationwide settlement for the Burnett and Moehrl cases has been reached for $83.5 million plus injunctive relief, which is pending final court approval102 - The company is also a defendant in the Bumpus v. Realogy Holdings Corp. class action, which alleges violations of the Telephone Consumer Protection Act (TCPA)118119 Other Information Confirms no director or officer adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - During Q1 2024, no director or officer adopted, modified, or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement251 Exhibits Lists all exhibits filed with the Form 10-Q, including key agreements, auditor letters, and required certifications - Key filed exhibits include CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906255 - Financial statements formatted in iXBRL (Inline eXtensible Business Reporting Language) are included as Exhibit 101255