Anywhere(HOUS) - 2022 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported Q3 revenue of $1.8 billion, down 17% year-over-year, consistent with the estimated transaction volume decline of 10% to 20% [8][22][30] - Operating EBITDA for Q3 was $166 million, impacted by lower transaction volume and increased legal accruals [8][22][30] - Free cash flow for the quarter was $99 million, with cash on hand at $272 million [23][29] Business Line Data and Key Metrics Changes - The Anywhere Brands business generated $202 million in operating EBITDA, with a decline primarily due to lower transaction volume [24] - The Anywhere Advisors business reported negative $1 million in operating EBITDA, with a 7% year-over-year increase in the agent base [25] - Anywhere Integrated Services delivered $9 million in operating EBITDA, down $45 million year-over-year due to lower resale and refinance volumes [28] Market Data and Key Metrics Changes - Transaction volume was down 17% year-over-year, with a more significant decline of over 25% expected in Q4 [5][30] - Geographic variations were noted, with about 25% volume declines in the West compared to high single-digit declines in the Midwest and Northeast [9] - The luxury segment showed less decline, particularly in transactions and listings above $750,000 [9][82] Company Strategy and Development Direction - The company is focused on increasing efficiency and cost reduction, targeting over $150 million in savings for the year [19][31] - Integration of brokerage, title, and mortgage services is a key strategy to enhance operational efficiency and service delivery [10][21] - The company aims to leverage its competitive differentiation to emerge stronger as the market improves [12][34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging housing market, driven by rising mortgage rates and affordability issues [6][8] - The company remains optimistic about long-term housing demand, citing positive demographics and strong consumer balance sheets [33][56] - Future guidance on EBITDA is uncertain due to macroeconomic volatility, with a focus on balancing cost efficiencies and prudent investments [31][34] Other Important Information - The company is facing several legal challenges, leading to increased legal accruals in Q3 [12][19] - The integration of brokerage and title operations will be reported together in future financial results [21] Q&A Session Summary Question: Insights on cost savings becoming permanent - Management indicated that temporary cost savings could remain if transaction volumes continue to decline, similar to past experiences during COVID [38] Question: Capital allocation priorities - The focus remains on redeeming 2023 notes, with share repurchases and selective investments considered based on market conditions [40] Question: Competitive environment and commission splits - The competitive environment has improved, leading to better recruiting dynamics and potential moderation in commission splits [46][48] Question: Sensitivity of EBITDA to transaction volume changes - Management confirmed that a 1% change in transaction volume still equates to approximately $15 million in EBITDA on an annual basis [73]