Anywhere(US:HOUS)2020-10-30 07:41Financial Data and Key Metrics Changes - Realogy reported Q3 revenue of $1.9 billion, a 20% increase year-over-year, marking the largest Q3 on record [21] - Operating EBITDA from continuing operations increased by $103 million year-over-year to $309 million, with operating margins expanding by 335 basis points [21][22] - The company generated $344 million in free cash flow from continuing operations and reduced net debt by $276 million compared to the previous year, ending the quarter with a net leverage ratio of 4.2x [15][32] Business Line Data and Key Metrics Changes - Closed transaction volume grew by 28% year-over-year, with franchise volume up 31% and brokerage volume up 22% [10][21] - The mortgage business contributed $51 million in operating EBITDA, up $46 million from last year, while the title business contributed $44 million, an increase of $18 million [23][24] - The relocation business, reported in discontinued operations, generated $4 million of operating EBITDA in the quarter [25] Market Data and Key Metrics Changes - Realogy's closed transaction volume data for October showed a 35% increase compared to 2019, with open volume up approximately 55% year-over-year [16][39] - The company gained market share in Q3, outperforming the National Association of Realtors (NAR) data, which reported a 23% increase in transactions [11][20] Company Strategy and Development Direction - Realogy is focused on integrating technology into real estate transactions, with significant investments in digital and virtual tools to enhance the customer experience [13][45] - The company aims to capture a greater share of real estate transaction economics through its mortgage and title businesses, which contributed significantly to EBITDA [43][44] - Strategic initiatives include expanding the Corcoran brand into new markets and enhancing the RealSure program to support agents [12][49] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the housing market, citing low mortgage rates and shifts in consumer behavior as drivers for continued growth [17][40] - There are expectations of headwinds in 2021 due to the absence of temporary cost savings and ongoing COVID-related uncertainties, but the company remains confident in its strategic position [18][40] - The management emphasized the importance of great agents in driving business success and the need to support them with technology [14][46] Other Important Information - The company expects to deliver approximately $80 million in permanent cost savings for 2020, with ongoing efforts to drive efficiencies into 2021 [26][27] - Realogy has no debt maturities until 2023, indicating a stronger balance sheet compared to the previous year [33] Q&A Session Summary Question: Inquiry about commission splits and their potential changes - Management indicated that commission splits increased due to higher transaction volumes, and if volumes had been flat, splits would still have risen due to agent mix [58][62] Question: Outlook on mortgage and title operations - Management highlighted digital acceleration and strategic expansion as key factors driving success in mortgage and title businesses [75][78] Question: Discussion on the relocation business outlook - The corporate relocation market has not bounced back as strongly as housing, but the company remains committed to investing in technology for this segment [88][90] Question: Update on new affinity partnerships - Management reported positive early returns from the Realogy Military Rewards program and the AARP program, indicating growth potential [92] Question: Thoughts on iBuying and competition - Management views iBuying as a simplified transaction model but believes it may not be beneficial for consumers due to higher fees [48][109]