Anywhere(US:HOUS)2023-05-04 00:38Financial Data and Key Metrics Changes - Q1 2023 revenue was $1.1 billion, down 31% year-over-year, aligning with the decline in transaction volume [13][73] - Operating EBITDA for Q1 was negative $52 million, a decrease from the previous year, primarily due to lower transaction volume and higher agent commission costs [13][73] - Cash on hand at the end of Q1 was $122 million, with Q1 free cash flow being negative $120 million, which is better than typical for the seasonally slow first quarter [13][73] Business Segment Performance Changes - Anywhere Brands business generated $97 million in operating EBITDA, down $41 million year-over-year due to lower revenue from transaction volume declines [6] - Anywhere Advisors had an operating EBITDA of negative $75 million, down $35 million year-over-year, attributed to lower volume and higher agent commission costs [6] - Anywhere Integrated Services reported negative $17 million in operating EBITDA, a decline of $14 million year-over-year due to lower purchase and refinance volumes [40] Market Data and Key Metrics Changes - The housing market is facing significant challenges, with forecasts predicting home sales in the low 4 million range, marking one of the worst years in a long time [63] - Transaction volume is expected to decline by 15% to 20% year-over-year, consistent with industry forecasts [41] - The company anticipates Q2 closed volumes to be down about 25% compared to the prior year [41] Company Strategy and Development Direction - The company is focused on achieving $200 million in cost savings for 2023, with $50 million realized in Q1 [66] - There is a strategic emphasis on integrating operations between title and brokerage to enhance efficiency and improve the transaction experience [38][66] - The company aims to capture benefits from a recovering housing market by positioning itself for share growth, particularly in the franchise business and luxury segments [4][8] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the housing market improving throughout the year, despite current challenges [8][63] - The company is focused on innovation and simplifying the agent and consumer transaction experience to capture additional economics [64] - Management acknowledges the impact of legal accruals on financial results but highlights positive trends in open transaction volume metrics [23][27] Other Important Information - The company has reduced its headcount by 11% since June 2022 as part of its cost-saving initiatives [66] - The integration of the One Click Title feature has seen approximately 30% of Coldwell Banker Realty agents using it, indicating progress in simplifying the title ordering process [12] - The company was named one of Fortune's most Innovative Companies for the first time, reflecting its commitment to innovation [37] Q&A Session Summary Question: Have you seen any early indications of a slowdown in available jumbo mortgage credit impacting the luxury housing market? - Management indicated that while the housing market is tough due to the rate environment, the pullback in mortgage credit is not a significant driver of their results [18][45] Question: Can you quantify the meaningful legal accruals affecting G&A spend? - Management acknowledged the impact of legal accruals on EBITDA but refrained from providing specific numbers, emphasizing transparency about their significance [20][21] Question: How do your agents participate in new single-family construction? - Management noted that agent involvement in new construction varies with market conditions, but resale markets remain the primary focus [25] Question: What is the outlook for commission splits given the expected transaction volume decline? - Management expects commission splits to be down about 100 basis points for the full year, influenced by prior recruiting and retention payments [78]