Realogy (RLGY) 7 Nov 192019 Q3 Earnings call transcript

Good morning, and welcome to the Realogy Holdings Corp.

Third Quarter 2019 Earnings Conference Call via webcast. Today's call is being recorded and a written transcript will be made available in the Investor information section of the company's website later today. A webcast replay will also be made available on the company's website.

At this time, I'd like to turn the conference over to Realogy's Senior Vice President, Alicia Swift. Alicia. ahead, go Please

Good conference welcome call. Shelby. quarter Realogy's XXXX earnings morning you, to and third Thank

Officer, On Realogy's Ryan Financial CEO call and Simonelli. the with President, Schneider; me and today are Charlotte Chief

X As about the the current expectations statements results call. of shown statements future on the the based be its statements company forward-looking other and are economic presentation, and These environment. making will during current slide on

many those other of are projections subject significant uncertainties inherently control and and management. forward-looking differ contingencies implied are Forward-looking results statements and the of which economic to the expressed beyond may competitive in statements. Actual materially or from

and as For from factors initial that of assumptions to remarks have this updated important those subsequent that earnings rebroadcast differ release results is statements and in materially certain are forward-looking as the SEC other the made today measures discussed filings. measures SEC and non-GAAP our regarding the in you on listen who press presentation, our herein call. we financial Also, X earnings of and information Important non-GAAP will not could these to to been specified earnings our rules call in per the actual quarterly be remind are those financial annual issued well included cause this November today release. in important as

over CEO President, and call our Ryan to the turn will I Now Schneider.

looking call in especially that thank forward ago, to Good the competitive this recent three talked I since given really us. positive very for changes to has you morning, and the happened everything last looked environment we you, am Alicia. Q&A and the that months

improving in of partnership some agent and growth, new continued an efficiency the results We market. have new product backdrop housing launches,

a have We changes exciting discuss. couple strategic to also of

We results. in start EBITDA quarter. $XXX financial million me with our operating in QX the generated Let

than than we expected, savings expected. what Our little but revenue we expense was lower a were better

where we about thought So we would. the right quarter we ended

million free retiring flow by bonds discount. cash $XXX in $XXX generated $XX and million debt including of million a $XX million We reduced at

commitment the team sees ability confidence generating de-lever, economics debt, our to our while Charlotte and better to Given in for the opportunity down Realogy. pay latter and her

We our X% own business, in and the overall now third agent brokerage an the with agent of up our quarter growth count second in year-to-date. up delivered consecutive additional quarter X%

million positive two to years. With best two of were the agent of with achieved discussed. the September $XX and that months spoke you reductions we have share material October last recent you. on remain we changes for environment, deliver the we already that executed new in and And previously three cost in reductions since the Charlotte growth we track in the to a will competitive set XXXX XXXX expense last And we've

And is are housing rates a improvement We seeing. like overall we clearly that compared in year the for low positive environment rate environment the housing, rising of ago. especially a the the to

X% volume quarter Our in volume guided to you we from minus than the toward. less had shift X% the in quarter, to this but QX positive minus was improved

improved which from X% quarter. business franchise minus flat volume, the is on basically in Our year-over-year prior

volume by driven was in decline The select geographies continued own competitive on prior in the down particularly business brokerage year-over-year, in quarter. from Our X% improved minus was X% pressure the which California.

QX new New of which consistent markets, York changes, recent City and Much decline the especially down tax. attributed to the other our New was Another mansion headwind larger reports. QX tax of new one York industry City, was is with in substantially

gap this we had QX, and quarter basis QX approximately a in like to XXX points. Just NAR

the the York to competition less time. market really XXXX. share in share While some this over ramped agents is lion's City volume of in is our contribute a of high will up our Attrition of to much business, mix worse contribute be New this for substantial geographic that late volume/market to gotten share. the driven headwind. a has agents and QX has do volume by continue This while agents been profitability high they And e.g amount those

between of the do choose seeing results. the choice we you profitability in market and and choice market share that profitability are share, Given our impact

the Looking on near X% a bit the million growth $XXX around to other the in of to year our volume provided. QX balance the guidance EBITDA lower based Landing better ahead now between on macro and uncertainties, and end RFG. potential previously land guidance the of us operating is rest operating with subject financially having $XXX to million of to and expect we EBITDA end near lower NRT

We NAR's to from continue forecast be pressures late to since the impact we'll faced as have competitor XX% of below of headwinds volume expect current we transaction XXXX. QX experience

past one took last continued and Let XXXX me recently, August to in told recruiting XXXX headlines, of we've has step-up competitive you that the turn the one been then something but earlier in financial disruption is question is years. now challenge intense this been biggest QX a the what all in in from disruption getting large not most grabs retention environment? that through September. which competitor months the we happened this As intensity the technology really agent competitive in being summer and This with two happening year, the

we in two September XXXX compared agent competitor. competitive and in two environment. and business, the the the seemed start agent were in and the of And summer both brokerage it our year-over-year intense from substantial own three last about for intensity best years. a to months of with our recruiting of to and October most growth us October, started September profitability both decline show saw Investors up In caring in

the that while the other the in change future, to is we far cannot two will our what by biggest do this the last environment predict I And in competitive seen in companies so have years. benefit

time, not making profitable and decisions. whole focused unprofitable this on During stayed recruiting we've agents

our industry While we operate in and ours are bigger interesting big revenue headline than one revenue for has numbers profitability. no numbers

and more change the of agent the potential are products recruit So more many retain environment, agents. productivity in about we're win excited that to and help new market in positive the given listings, the introducing even we competitive drive us

websites. the past over for Ad owned the broader Exclusive marketing marketing products, including and are listings Engine new available agents new agents. multiple available all better we of brokerage public launched marketing Look, to Listing a Social to In First, XX,XXX market launched share Banker product we've our help QX, search before they Concierge and via drive Coldwell to our year,

the Given their XXXX. our the should be Coldwell in Banker size business, agents expanded and advantage. a is end competitive XX,XXX our Look domestic this of by the unique scale and year to of and approximately franchisees Exclusive national

Military we launch Amazon, for program. of recently of a franchisees. quarter, our with collaboration in TurnKey launched last an new launched in we and announced Second, we source Affinity more that the XXXX. generation QX Realogy agents as QX, And will program lead AARP lead Rewards In with generation

enter over we XXXX as three franchisees XXXX, excited time. propositions potential lead to leads look generation provide are throughout each to to our can build we great We consumers. these agents up with and and high We value and programs expect programs invest that quality deliver forward new three all in ramping to high to

in way year. Third, a been capital-light for we've iBuying few almost a in testing cities a

and own watching learnings from the three industry. from testing our have big We

we the a buying we selling and standalone like path do First, our capital and see frankly profitability, using model, skeptical to not because to don't remain about fund home risk. we a

is be there have iBuying power certainty listings. real to agents consumer Second, to we flexibility provides helpful for found and our the and it win very to

the not is see experience Third, substantial to the the iBuying pay just would commission agent typically they as discount consumer today market. fee they house in we than realize financially where higher market the their and in for the predominant good trade a a

product consumers capital-light we program America. and agents this launched in a learnings, those named with again a for Home given Partners better So quarter partnership of RealSure,

and a RealSure of for offer with financial ability market agent provides cash during all with cash home keeping time that their days the beat upside. price certainty consumer an sellers the to to the bid via that XX

same complementary to them their bid sale with allows RealSure guarantee contingencies launched RealSure home, on Mortgage cash product attractive next to funds or that to making offer, use their We a buyer. offer the in the an financing seller no

additional Realogy And win and further our agents. RealSure helps us differentiates listings.

are excited quite both quickly. XX and moving and franchisee for about RealSure are markets company-owned agents. is this already in agents, We very

sale, launched RealVitalize we Finally, funding staging from bathroom better for remodels, home at positions by product and landscaping, improvements, a including everything property with collected their closing. for repair, sellers that to payment appliance to

improvements, to approximately RealVitalize and the this XX% product already offices. is HomeAdvisor, who leverage Banker company-owned executes agent available of for differentiated home that all provides a our Coldwell offering partnership as a with organize

an in and And and In new products adjure XXXX. established product our company-owned We our operations XX across on we in to delivering both fast launched last in have anticipate moving this with expanding months been unique very partnerships. multiple franchises We've this scaling alone, way, partners. the multiple own year. brokerage

We that do, and unique differentiator substantial more providing our us a franchisees win scale that drive help products and growth. more listings only can company be to a partnerships and consumers of attract and for size will believe agents' to agents

changes I strategic Finally, want to two with share you.

business the to selling our of of we $XXX proceeds. we Cartus that today announced SIRVA part relocation for First, are million

a this transaction We lot. like

Cartus high the broker business. divesting to complex Broker are goal transactions quality five-year same to clients SIRVA. a relocation with Services from At and time, Agreement SIRVA, We network to services, signed continue our a through relocation to more also brokerage even very earn the provide the try we've non-core, with current to

X,XXX Today, SIRVA's transactions we're in our already earning about current relocation network. of

the of the and happy using accelerate very the proceeds pay We'll deal. are price debt majority with proceeds substantial of We be to the down. our

this receive dividend from also big a will simplification We transaction.

and has swings supplier Our which significant network, has working large XX operations capital. needs in requires facilities very in its business global drive capital own a countries expenditures, relocation securitization

retain broker residential Realogy's made also which agents will me. to Realogy expert the retain and from business, brokers brokerage real Cartus estate Realogy real of -- its estate residential Affinity will up delivers great services members. excuse Affinity brands network,

well and downstream to companies. earnings its provided Realogy Affinity brokerage will generate generate owned real franchise residential earnings to continue from transactions to estate as continue business as from our

is the conditions. transaction of expected close regulatory other closing half The review first XXXX, satisfaction in the of pending and to

as business de-leverage. Second, our to two the and investing we not top priorities continuing approach in changed have XXXX

shared multiple I to the are that in programs designed in new And lead win help franchisees, new we that to consumer-facing more I we growth. agents that business, listings have investing to nationally, three our expand want drive products, growth. invest to On and want for generation described

are you flow. On accelerate free dividend this million $XX both, de-leveraging our quarter. eliminating in our cash annually which about seeing business are our up we To will in free our de-leveraging, and actions investing

ample for the is have this cash we believe move we dividend, pay right a shareholders. free While flow to our

proactively accelerating four by the towards ensuring by as new our that invest And grow by we quickly long-term as shareholders our target. our driven below are possible. de-leveraging to products served view, of It's and interest best our partnerships times

the for I will performance. Charlotte into turn dive financial call deep a the to, now over

Ryan. Good everyone. you, Thank morning,

Let me more into operational a highlights start the details. with in quarter the and financial before few diving of

cash third quarter, continued generate to strong we EBITDA and operating deliver During the free flow.

business. revolver, and in repurchasing even We operational improvements on net reducing towards executed We of as we at efficiency costs. lowering market down goal significant overall reduced the unsecured And our notes leverage. greater driving open remain our debt, paying the and a laser-focused discount, work across on

than we lower anticipated. had was pressure split previously Commission

the plans we achieved have percent agent well-received so by market, far Our growth, the new NRT remain contributing this year. to three-plus commission

revenue year to results, consolidated primarily $XX in on billion Now into six. lower slide let's net the financial versus revenue. third $X.X NRT Total down due prior quarter jump million QX was our

was as quarter expectations. offset employee our the commission with were versus in benefit EBITDA $XXX and relatively Expenses costs, in QX to XXXX, helped lower Operating higher ongoing volume and and decline. the million from million $XX cost initiatives XXXX savings line expenses QX down unchanged overall

savings services flow-through at fourth related goodwill, stronger cost efforts the in segment, a the to be will quarter. reduced our In charge $XXX real took there anticipate of estate which quarter, We our we non-cash brokerage million NRT. impairment company-owned from

QX in million the $XX net loss net million expense was of predominantly due XXXX, decline of $XXX income the XXXX to $XX to a QX transaction impairment volume. interest charge in increased million, compared and

XXXX. rate was mark-to-market swaps. expense interest by benefit in had our QX $XX XXXX million million impacted a swing $X a $XX million the Interest in versus QX a loss mark-to-market on

Adjusted $X.XX earnings $X.XX per XXXX. compared an earnings of share per QX in to, adjusted was share

million $XXX to and Now, balance flow let's turn in was Free the year-to-date. and sheet. cash flow $XXX quarter, the cash million

in we the operating activities do of the in efforts. slightly increased expenditures anticipate were Capital the Cash office although working $XX ramp-up due year-to-date, higher fourth optimization capital largely from in million the expenditures to year line with prior improvements. quarter, with quarter associated footprint our

down to million. generated de-lever to unsecured revolver the continue We of execute $XXX million net by notes, $XX gains. debt and by XXXX onetime our commitment million our $XX million paid and reduced repurchased in upon We which $XX on

debt net secured and times leverage improved X.X ratio to overall respectively. Our leverage senior basis, ratios on and X sequential a times

quarter the liquidity. We third also in with billion over exited $X.X

We will reduce below using to excess actively and to leverage manage portfolio our continue remain debt flow X cash to committed our free times.

XXXX, move let's Now operating year-over-year and slide eight. performance a into of seven QX review on segment

RFG million, NRT. to $XXX flat. primarily year. RFG prior was revenue due up And volume intercompany $X down per versus from royalty was side $XXX $X million transaction royalties lower was

$X.X invest was in due billion and to $XX was technology RFG intercompany lower IT royalties transaction million, as NRT to due we predominantly costs, down stack. operating EBITDA volume. $XXX million revenue continue our to higher $X down million, primarily

but positive quarter. in partially growth the as programs expenses, EBITDA million, million, revenue volume Operating return the was to lower implemented not for transaction by was NRT down to largely savings the by improved overall date. $XX sequentially, operating driven $XX offset did decline

our up splits points to now better were basis to increase year-over-year slightly full were splits up a basis than like-for-like XXXX XX basis XX basis, by points On XX We splits XXXX. for expectations. agent QX points. commission overall year XX anticipate and

decline. underwriter $XXX million, a down $X revenue up to international decrease $X due the higher refinancing higher primarily and Operating million, primarily from million activity was million $XX revenue Cartus $XXX million was revenue. due was EBITDA units driven down by revenue. revenue in $X to closed million, TRG

EBITDA million mortgage million largely GRA Operating to due was $XX $XX $X increase earnings. million up in a JV

the JV will of We to are operating approximately fiscal XXXX. year for anticipate million $XX performance continue it pleased the GRA EBITDA and with in generate

primarily our fees. and higher Corporate expenses support QX. costs, due spending anticipate strategic health welfare in and $X initiatives million, by additional here higher to to legal We were pressure

savings initiatives X turn and I XX. now cost to will our on slides

cost of savings centered standardization. earlier simplification year in initiatives cost announced two the savings broad basically XXXX Our we consists on programs new of buckets program the activity; and and

plan. $XX of totaling original savings a XXXX in be $XXX to exceeding realized XXXX. both, million our cost As And expect in million targeting $XX to are to we realize savings million of we result now

program workforce related was consists First, announced our of earlier original XXXX footprint program savings this $XX year. This office million that cost and largely optimization.

space NRT to square improve We rightsizing and have while overall been redesigning attractiveness office footage. both functionality,

have expect of Realogy. XXXX, We actioned million already drive initiatives $XX these savings of the million XX% to incremental In target. I the carryover for $XX from an

move we a Through management decisions. $XX-plus QX Second, approach, to These and in and Realogy in executed XXXX. centralized enterprise-wide will simplify quicker structure programs drive could new redesign have team streamline processes, layers, our organization identify we savings broadly areas, teams looked of we services. structures procurement enable already to in across and to make million faster actions annualized goods further that

of our these resources. take help review Realogy's of in-depth an areas all identified enhance across agents can their took better to and spend three and scale have advantage designed grow core also We At ability owners are where our to businesses. the and affiliated we largest changes areas

split will going million like position are forward deliver in us to on business negative we and actioned while are million big step we that for towards our to to to are still have confident So These $XXX $XX USAA. identify, savings we XXXX, the summary inflation a exciting have million and million impacts for other goal. $XX $XX excited can we and we already performance increases bold offsetting and million of moves $XX commission and stronger

disappointed to total of USAA. brokerages relationship We third savings long-time and We restructuring a Affinity were sale broker $XX our costs in leads could $XX large If a our our that quarter an came with as of and their were full a by just take that of partnership our we million year USAA transactions restructuring franchise partner with The XXXX. cost they focus moment result the portion Affinity USAA business million concentrated Cartus business. highly expect conjunction as company-owned incur core in from for to in-network initiatives incurred end costs these closed of priorities the their network. on represented I on home

quarter. with continue I and across metrics up, key We Wrapping to delivered am meaningful pleased progress the operational efficiencies. steady execute

positioning are accomplished as have about what performance We Realogy goal resolute and leverage. am what we I far to so in as well for financial operational and reduce excited we improving building remain towards. we are our

remarks. to turn closing With some back for that, I'll call the Ryan

disruption EBITDA years. despite two Thank you, financial flow the the free all generating cash Charlotte. We're in last substantial and

We operating paydown. and to benefits with in both efficiency our on are our XXXX XXXX making and progress both debt

strong demonstrating are growth. count We agent

new position business. launching products are And drive changes future and partnerships We we growth. us are recruit non-core like future the win making more more agents listings strategic and a divesting to better to for

We're especially, best to our us competitive few that change by the brands, the demonstrating world in we for in products agents, more in win we drive last months moving future excited that remain in we're and combination intensity quickly up the growth. convinced, a of market partnerships by position, industry. sets and to we've scale, that strongly We're seen changes the far rational have

to business, in We have successfully grow compete financial resources the invest the and profitably.

the to over operator. it turn I'll that, With

[Operator Instructions] Stephens. John question Your first from Campbell comes of

Thanks. Good morning, guys.

Good morning.

of But which months you're on the out It you cooled the competitive that little of bit a you sustainability hear. they like last a some touched and off I attrition market the you expect tactics to how the over is recruiting hold? good there. of more and at sounds do in of seeing to couple guess, bit environment want just on dive So little the about kind I high-end. the Ryan, to feel,

the agent the time to to continued when incredibly was watch the competitors data going predict are happened but of both company you big look MLSs. we told company a XXXX what was very industry time how people anecdotally XXX across data-driven. August you recruiting I but across by a field, can't in it Well, striking. also do, that from This what huge year from We is last in watch migration using was and recruiting from our QX --

XXXX substantially dropped the half financially that more. actually it the all disruption from down high kind even And XXXX. what was of August from And October both intensity October was coming recruiting one in in drop before especially, it and given at almost and saw it compared It was end. September competitor the to two-thirds of the year of was what XXXX. We disruptive in August almost from down XXXX in

forward. a us environment think and the changed to on as So we best I don't profitability growth we're And of for far the strongly it's something know in from seizing September in I I in company whether tried had And investor it's intensity months moment. on. three that two my I said that in here to continue. our But of at it's benefit two competitive ecosystem. I standpoint -- agent we two that been October. years believe focus And going the years commented the going best and last by And

shorter there. loss. with But the it Cartus to long-term sale USA little on But, great quick of And impact two of that surprising makes when That's of sense I was value about term questions kind looming think guess, a the of kind hear. there. the I the then

AARP I business? secondly is sounds seeing. are the is guess awards reduction? and how the I it still been guys it to manage go assume military the like to proceeds relocation programs first, all to that sale debt just on better to with services but difficult And without So then those safe the I want those it understand of type you table Cartus' have guess

just stop correction. you first me because your a Let statement minor

kept partners including with Affinity not single and that business business did the you sell including So thing associated named. every sold part Cartus of Affinity the ones at we many relocation the that's Cartus we Cartus. newer We

partners, to new not but of network have So great in with it agents great our ecosystem that, one bring broker to like piece just we a do with the single brands grow and in our needed our AARP, do existing the to right? every work Cartus Affinity

make ecosystem global rid good What leads which in it business standpoint, to see actually we've in a what can everything relocation press is grow signed we with our complex leads. do some the preserve does is which even really done get and you'll a Broker as Services five-year Agreement is sure of compete provides release to for really thing us. one very also to us relocation But an we hopefully to hopefully SIRVA we

the of all as So you relocation sale a should this of Cartus part business not Cartus. of really think of

And business. consolidate always generating get business. brand. that in from out a great then leads to those think I very will our SIRVA a They of all of and value the even better our up without And on excited us for that to agents runs broker network position are owning complexity we're it integrated And transaction. have sets the better large and company focus those

have we at in area. hurt not So all that ourselves

think terms I we like tried of proceeds reduction, we're sale good and complexity we debt which to simplification this describe I like feel like go just dividend, in that also things the to primarily not forward. but there going will doing we

well would different. revenue think, too business, of to of very we disclosed about those I that Affinity profiles the XXXX what add businesses in are the I it represents XX% And as margin the

out put to that just So too. there

for Thanks clarification. Okay. the

of Just two? mix one to kind kind that of be That of as we forward. EBITDA What out was the would for on forecast helpful that. more the rough move between us

of pieces road. our and to stuff lot more that. and we've But frankly, the be you down we're reporting financials going With give on moving have like that. in just and transaction So, to never bluntly clarity there'll disclosed a things, this

today. So asking you for to Today we've what do never are won't be disclosed it. the day

guys. Thanks enough. Fair Okay.

of Associates. from comes Ryan McKeveny question next & Your Zelman

so Thank Hi. you much.

side of things. the on the follow-up just So, question Cartus last on one

be that's about there excluding that the about the flowing baseline side far XXXX? additional as there? things is of So revenue kept about how think a kind it that like USAA to TurnKey, still revenue baseline versus is Affinity relocation think the being Or cetera? think as through of any revenue with versus trying et what's to AARP just with the into of movement would or Again related best to XX% to

Yeah.

there's So of you segment different it. a of Affinity couple ways about Cartus the P&L is the combination In can XX% the all think businesses.

left relocation revenue what's So that But, happen and there are total business. a owned in a is pieces from franchise perspective other the transactions Realogy from that like go knock-on it into There's brokerages. our perspective.

it. Got

question a And Okay. separate on RFG.

So kind a two of parter.

So, market itself, segment. look loss the the total, share compare RFG would seem when in there as sides when just the quarter I through though versus it I was at -- in the some

So, to specific whether that anything may if anything any out along that big curious there's have on franchises it's call lines? those or left

affiliations We've announcements seen the changes. sure the some I'm late organizational forward Sherry outlook. of driving Simon strategic kind the more the of question then are ERA lot of with the new piece a on second of of that that of And and

moves currently give curious the big with just can of you months the you're on that few a are guys And I'm see made reorganization if overview, So, we on to how then the thinking starting going a picture RFG? maybe A, benefits And forward? you us just Thank what's you. ago? about going

I'll Ryan. take Sure that.

right. exactly it called you look So

it two drove sides. -- driven really are shorter our quarter, was did and things that the in There volume that. by it in mostly fall RFG Our

geographies So, subject the our our business. pressures, frankly one highlighting we've been especially is same franchisees, to own competitive in some especially in are

very So in life franchisees one life of our our one as than of of in Ohio. is different franchisees California

is that a piece it. so definitely of And

had very is come mutually we And independent. decided And one other full the very that's actually there. for They've part that impact of we a big to gone of franchisee drivers, low that in you calling out ways. but and worth first high the was QX for we be couldn't volume, QX. the that with margin of have enough kind the terms But in did to to time

announcements good On Better things you've the we've some and side, Homes with flip about ERA the Gardens. seen and on talked

Homes agent some competitive for we've and we're drive approaches. our bigger Gardens before, franchisees. more is Better as hopefully to recruiting drive trying talked pressure out probably sales But thing called headwind and As different an anything. franchise more than We've example overall, pricing a that

who number in. There's of small ones a leaving come well as as pretty are ecosystem usually always puts franchisees the that and new takes

And we so, that of agree pressures. have low couldn't that the both going impact, bigger those do margin then one, volume one and on. a But had we high competitive with

hopefully it my in for of how new could you heard along a want talk but -- our one franchisees are partnerships into because help are was more of well terms great in the both for lead we're be generation And Exclusive to business, even and doing, our thing many changes there. growth helpful things things like of like we that, with Ryan to also the and products that as owned also, franchisees RealSure drive Look pricing and bring things as

very much. Thanks Got it.

next Your of from question Evercore Kim comes ISI. Stephen

savings and Charlotte, a of we the in have of the show the my at up? the ask plan. margins. in from the would there much it I margins like the I you wanted NRT. already splits $XX have to the you fact effect expected seeing the regarding the see about plan was to I done. move would Thanks thanks model, Yeah. margin. But benefit all we for have least fact, the it -- I that bit expect little didn't that we're something in look in XX% see information Obviously NRT very -- see didn't that seemed looks when guys, to on And like where the that million I quarter, seen benefit weighing in the the at in

high if other margin. those come margin I'm of you offsetting and margin savings there right pressures referrals program loss thinking the of bit a talk in was which maybe some now the a I In are the on could weigh NRT or USAA in about, particular, some curious And benefits? the you lose that which so little at if are some of

just talk about that things have like may If in as numbers you could XQ we that see the them. affected

Sure.

just XX% we yet. we me actioned of let of it it, clarify have the in while P&L So realized have XX% not

So in will come biggest quarter. fourth the chunk the single

like there's the $XX-plus of So million million. $XX year-to-date

can how math do works. the So you that on

So inflation hit everybody it the actioning do in have mean P&L. We didn't generically else. it like

And so always inflation. be will to there offsets

an in three self-insured. have large and health quarter. were a did We're the large wellness. was high there We there unusually in catastrophic hit -- us that hit And claims

sort had of benefit year. a can back in on next then why because the million detail to But going achieved loaded because tried that is million get to $XX you deal one-off quarter. how from year-to-date it's to savings, into we so $XX hit much a so And back with. fourth the that's And carryforward more that's those we've give I programs

ones like then that announced that And in vast plus majority $XX script the the I actioned. that million sort the of already of been has

our XX% roll year's savings only of $XX and today. going while million but the well the of an So important that we've XX% actioned XXXX majority quarter, will to of those fourth contribute it's some We've of through because next already actioned as targets is savings in today. to distinction

to like they the with So, benefits I will you actioned. good about are very programs, the feel I But come. leave are

ran the the members all and together program close we And of care to as who in taking are thing, did through forward. of X-K off on August, the kind Stephen pipeline that normal USAA USAA going the we the of kind about just and in the thing are September

and Cartus in not USAA, impact the you're at bit both the XXXX about in downstream the up the will a has P&L USAA a talking the it But headwind from not but XXXX. affected QX quarter be did or So, show third numbers.

it. Got

good very That's very That's Okay. for much color. Thanks that. helpful.

related that. a -- question you could long to if I curious this, other of Second you're list little relative business? mention maybe in initiatives was Amazon missed talk important working across the I hear didn't but that the to I about among Turnkey. How doing initiatives that you on you the is are bit

things, the things just about. morning, and I fired excited things listed we're aren't up Stephen, I'm Well, on. we've clear just launched we're be because working this There's that to really actually

Sure.

potential we just launched I the good Amazon the customers last quality Rewards wanted launched in But pretty in the lead Amazon, XX in we It's to learnings but since Navy included that this early. up to of to Credit meet as Federal only use Amazon. that program we substantially. high mention marketing We're has source kind for have launch really then with TurnKey just a program their pivot offering to it's you, cities. talked the still Union like ramped generation and But program program great. AARP that we out collaboration the I And We did Look, They've which others. been will there Military growing think to our signed which last the quarter. We've the of been not USAA-type that an we've Realogy of part we've of QX. future. the fact needs

that So, we I about that the love and early apologies Amazon wasn't the days, script. clear in thing,

Thanks a guys. Very lot encouraging.

next Your Jason Piper comes of from Deleeuw Jaffray. question

for question. Thanks the taking

the competitive that that that experiencing? from commission pressure been has competitor, geographies? you've key intensity helping is the lessening of the And Just split across the been lessen on all

say and gave been again, really Competitive numbers I yet. national. things. at of been in was we have the real splits early we've October. pretty kind looking lag. we've are by things November, at -- that the in on been about because intensity it say like and October data, way a kind would looking of the wouldn't is talked I talking and and that other even even anything because we've These down results road I September time Charlotte here the now about a -- more affected commissions at And we've the -- looking then you I

haven't a financial overall city. certain a from kind But by We loans the turn benefit was felt qualitatively years. the the by the city it's years about apart again, is things of biggest boy, pulled direction. same our competitive same. kind disruption, fare other two But of data couple these environment far the of But I've that in again it can after of in on the field

hear. guidance. to And then good It's the on

X% there's to a pretty growth I do in end. it know just volume implies you're guiding math, try cost If the that fourth but significant quarter. saves, low big with assumes the So, can step of with you fourth the help business, quarter up but guidance know implied the the I us the just loss to the benefits growth, the Affinity a of I understand kind there.

Yes.

So just impact reiterate, does this not the it to thing Affinity year. us

to begins next us USAA of year. impact loss the So

if X% cost to to plus cost $XX in you volatility any the talking then, there's the expenses. we're hurdles million general peg growth the are that that just quarter. there. timing So But the on there's over negative our do that Ryan spoke saves the hit of And other -- saves, math is about. some And on of not going and

look was And kind look use a you growth. down mean I quarter. year we -- QX big Yes. of last

people of comparison want for relative might that don't about. -- of little cumulative want try of but you the isn't some to it's number mix kind huge just if that we'll math. is pressure talking bit both kind clear the X% and of If number X% how just we then a of the may that to much that market stuff disingenuous bigger like it's kind clear is we're kind that's hey above anchoring than given below is be I the doing that it's the are So, of We kind how we you be and there. X% be the And be see to to of we'll do -- helpful it really number. our been But with be If goes, just better. we've to, clear what how we're a that trying around be on forecasting but performance QX thought where in just clarity that's get risk. weird a

So that's it.

you. Thank helpful. That’s

Paolone of Your next JPMorgan. comes question Anthony from

Thank you.

just contribution EBITDA? think EBITDA you in it on the sense way XXXX what USAA. of versus would question Cartus much NRT And RFG to through come us how a a give first Is So, there from that is? program

So day to make we've I the core doing just the we've divested, money Cartus And just Affinity start be relos also we we've think of our business. But that the never out don't that will with obviously, P&L. relo on the both business -- that. the the like on subparts -- but never today broken

hit a I I partner our that and think -- the impact Cartus is color margin, that gets bit frankly I'd Affinity is probably directly told was look, give that concentrated little you was from -- brokerage its an So right? of equal have on the transactions was the owned getting have parts or USAA kind the question About to of XX% Stephen's About different of RFG. on Cartus of downstream transactions in XX% biggest told right? our we USAA to Affinity you you and those P&L, but typically NRT. from go material highly to business earlier. in kind reasonable to by as business be about gone our gone going there's is to a that

more downstream when stuff Today give of either far is a as as downstream And hit historical gone biggest that is again given the thing. USAA be concentrated we've XX% And today. go we've day our divestiture, it's between And day. before. we're a XX-XX before. or RFG, again, split ever NRT. it There probably the you decide direct done the we've between highly so kind to than and clarity to going far And the That's on come hit. future never partner. XX% lot we a won't But in -- may

hopefully but how I model a that seen -- wide range -- because people pretty impact So of in have XXXX.

All Right.

about it this the you being EBITDA Cartus just maybe have net two wouldn't trying we the all then understand multiple a numbers, we your the so at for four quarters is it selling if the what of net debt-to-EBITDA really Because effectively It it'd look same relocation the if EBITDA now Like last kind did have $XXX to know just de-leveraging. in and so effect of the you're of just piece think we of million shrink you asking effect could and be just you in Cartus business. from Like sold on about piece leverage. is $XX sold And and would sale? debt-to-EBITDA terms much your on kind million. as do of of that it do at the

Sure. Sure.

like much while on So is as question a earlier the a of piped Cartus more less in It's the XX% business on the revenue I EBITDA basis on that, basis. P&L.

certainly chunk relatively numbers, exact an good rest into because It I'm give can the a you basically it's you from the to de-leveraging going all on sizable back So, I chunk the not It's direct a of sort our of to it. of transaction. de-leveraging. neutral. us you'll then but not number gives

should headcount the revenue if may know then those think about growth to NRT match one nature growth And all the there. and gears and if to of the Okay. I over last the perfectly and just recruiting. to don't Just one I understand in trying shifting one. in things one How recruiting profit? versus growth we agents and

don't. They

a you're thoughts for. that have detail few you none like me just give Let looking and are to the of them going

agent we So and they're talk agents growth first recruit off, profitable. about when we

doing. to continue time profitable we've for of will something and So we're a in agents business grow and done especially recruiting try the agents here long

just to We are agents bring volume. not to negative making out offers in

in one So you keep that should that's mind. thing

second thing and lot them like think want kind a them about to The said. hunting. may I the We We there pay bring of we right? in X-figure whale is you to that don't as don't do grow of bonus

QX The you've in the XXXX, and it up their some of in you things forward QX shows agent volumes which numbers. lost kind thing going we are is the second lose fighting cumulative of past of an your though effect kind QX, competitive of is if of

may as takes them. big an grow of bring time to in agent actually it who a the whale be You not at time

bit little a a there. thing of there's So timing

clearly to a We the right people growth combination keeping of base just we means thing over words And you agent But not good to market profitable thing best keep is three is be the for had. of growing share. of The choosing we're unprofitable and what or in agent our But doing. the making the going months company. and look October recruiting at two September profitability kind retention. had happened we've agent when then the growth believe

of control our is benefit. which if agent those we continue. like in we environment going that both better guarantee to positivity best don't three to that we different it's feels why it's leading competitive to best of the even time the So of or like happening sure got the growth two during that and -- months the and can what's It

Your next of Micenko from question comes Jack SIG.

sharper on a HI, to I wanted good debt of the little a bit pencil put morning. reduction.

Is So expect million sale. guess I or gross a implication the what's on be that. we've million we basis got any the tax loans. And there's $XXX from on guess then number $XX should the of going I net there got to We've got dividend. debt? you've term

paid down some revolver. You

don't kind do can't we think on -- the XX. Where Where of you sources can anything the and and away uses? do that see I does chip on leverage? You expect nine that to

Sure.

absorbing majority our of be we'll will that the tax-free, So first of we be all, -- because NOLs.

closing will majority million us. of as far come as We And There's closing $XX to and $XXX the that of bit a So of later. get sort at million timing. like something will sure. from things And not material. but our term loan it's some there's hugely other It that's commitment to of for requirement and first a there, covenants. go our costs

have chose do the so. we the able to business reinvest So to in But first place the do that's to of some if that that will go. it be capacity we

leads next Okay. question. And bigger me the picture. Ryan to then

about you on about balance offset an balance leverage how maintaining whales do you versus and new splits the de-leveraging? previously share? there business and market that I of chase talked spending and overall, and the You share when thing. initiatives commission you additional market call you guess between think don't do How growth there's and sort obviously and

question. great a It's Yes.

is all felt great cash And still which lot disruption the our invest our generate we of over in a business, the last company priority time. of with the this free I things think years financial One have we're ability top flow, about in markets the couple the actually like to I of on never even is right? constrained in

business. focus does in need the us so to dividend a more in to do partnerships either the grow on or on we we never to give to de-leveraging. invest little need bit And and invest ability actually new or the so things felt the I've The that focus whatever business can change starve de-leveraging the

I uses dividend are higher it. paying a than on think those

And itself, just do isn't in time so the the between flow. in we business the that's cash any given good we've one had to that de-leveraging recently trade-off and in -- investing make generate free

of two consumer things on front really to company. clear our thought the So products. in And when to kind us I we're more drive for invest to to was be in we've the this want never got And a transaction dividend the of highest time -- but piggybacking seemed good growth these actually de-leveraging partnerships the when calling on those like on. and opportunity be right going we focused

agents. share by big but we growth -- bringing about in business. but over we're that out right? like feel don't not our trading got basis I profitability. it. daily with recruiting the could year. offers we're and profitability, focused making on market a excited again, go And there investing de-leveraging grow profitable out and we're And And this off volume, And We going But on stay I'm X% to on

how line? expansion $XX to bottom million, initiatives? unclear. of that $XX should million, X see turnaround is Okay. numbers And drops the of looking can in I more majority the kind Or of go at we just on that million in. of guess of -- to of slide how just -- that I'm the there's these one of the sneak Charlotte some I a a lot much I'm net, Of much $XXX

question And business. think -- Yes, a a I get moving about the It's have question. I great the because I pieces it in to pieces, it's you time. all to there's think

we bottom bla the the offset? bla. So line. these perspective, they merit splits. what savings increases on will There's all drop commission ongoing do inflation, is from pressure And to so The bla have our question

the foremost. it. can volume. a you on you is those of what first to will that bottom decent about think of of drop things are then percentage of that's top it I those portion terms so definitely absorb may in think Then sort pure and But And a And if that back line. into

is of makes So a volume assume solve down. that each to assume That's commission you assume or fall or increase volume things through up the if split those less. we what flat inflation more and other it sort you degree and

Okay. Thanks for taking my questions.

from Your Barclays. next question of Matthew comes Bouley

Good taking you my morning. Thank for questions.

been tracking a back I asked ways. competitive around about obviously you're know wanted commentary. some go color But there that. the few I some how So just to to great of different it's

with it sounds and count market you're course. your like kind of agent linking of that share growth own So

or what we resulting environment? go-forward Thank your kind how line do, would So you. October count versus of predicting in should the will saw agent impact in and -- you Ryan of you we of think what's market volumes about if growth of How competitor the flat sort kind there? what that without kind of type

Yes.

retention we we So are again, talked talked about the going look pretty market share so that encompasses existing of clear. lag the I that NAR And numbers a again agent in challenge. near thing cumulative that's Like growth, from of some it's very the stuff doing we're in with both retention term, been caused partly a aggressive a we're because about. bit quarters, the to recruiting it competitor agents. previous little and And

to good it's year. first will we're grow been us. goes competitive that's way it our continue X% the back we that agents. up thing as of for way this was But us of profitable the do and So environment life to then on is if the pool not kind And for got the

things will just way can't little imply the more if right? headwind been rational period and the there, and how out so feels that's Over it years And second a a that us disruption time. headwind, But qualitatively cumulatively more cumulatively two in last of October say we financial positive a thing if a time can agent we've a it us, little cumulative will growth. an the we industry we having rational retention then it. the positive, challenge driving of if right? saw. the turn again, And that different thing for higher time in But And environment a keep been were for they stays bit longer and given like quantitatively felt become world is, the does over are the as they that's for a lived our control with same like

secondly, a Got I plus as would it. on minus. I points That's year-over-year around of the side, step-up helpful. productivity sort think of very guide then or XXX split just so seasonally. QX those simply basis And reach agents that's the or tiers And guess higher imply commission kind presumably just

how one these splits would just, you've imply XXXX? of new a that number step-down there rolled be we into So should I of Does out programs? as then sort about now greater-than-usual the that think QX seasonality of guess

the as of secondly, like do on have annual ongoing rate kind see on market update And you like Thank an an you splits, of what basis? you.

Yeah.

efforts. get step-up recruiting largely actually driven to QX, some -- QX a for it's assumptions So higher to on in by

a piece Yes, there the is as rate. market on up commission their new a it like not agents it's of split grids. higher So get

But on our like have they're there's And in they are don't split. Those material deals go. always there impact split can basis, different big that P&L happen lower then, development rate. a or our rate, timing if a a deals, because at overall at actually much go

have Or have whether we them. not. overlapping we or some or don't them So, we're

real the for QX reasons are uptick. the those So,

QX As up ongoing it of as efforts recruiting can goes, on well. really sort far is our drive as dependent things that

the little not of difference by up in that on some rates will it's end but material. a year commission There hurt USAA, those of bit because loss is next being we the of transactions, the

XXXX, question pretty -- of and earlier question the other what thing environment, in is kind right? for happens is what XXXX to so, that's happens with the And with The competitive correlated. and by back the biggest way splits that just the commission

the with for that and we're XXXX very environment at But to able plus XX get thing the we we we're even eight to in basis the XXXX. the And of tough that kind a for least XXX was increases talking get to the about. out XX year actually nice XXXX first with plus months of is showed point kind of dealt competitive of

give -- changes. happens what but what We'll And of months positive couple of recent this trend probably to But few it's still I a to better again months. with over what a be year. it's recent us, to you next watching admittedly for competitive of a the is, as environment, more some see actual going sense opposed only

again. right, thanks All it, got

Your next Compass question comes from of Chris Point. Gamaitoni

kind Charlotte, of Good follow-up morning. on saves. wanted the to cost inflation cost offset I of

your Just on, rate typical cost what's your inflation? fixed of base,

Well.

X% there's normal So in a like to is inflation nominal X%. general

However, ways. the trying that look at both you initiatives after, base, of help lower you to we're if some when the cost you go overall

lower help you the inflation. base. have then cost you So today's And less

So we're more the today. the targeting inefficiencies both inflation in are really that just will drive But spaces also future.

Okay.

to benefit double We're there. a trying get just

much to it get you partnership kind capital to working ramp cost as wanted updated with up? Okay. going that's how front-loading assuming That's RealVitalize your consume to helpful. the you any HomeAdvisor, think cap you're on I And the of thoughts of contribution do

repayment partners. the to the consumer a partnership going working Yeah. sell like timing to their ultimate related the We We're very the house. when performed program's of work to they the They're good lot. capital, fund

working we our material don't total boy, it answer But the over different moment, We'd be becomes the free don't to But We And program. free at about we're anticipate time. our anticipate excited a you. total flow. to be cash that flow. material to capital need tell cash to the

much. so you thank right, All

with Your George Bose final question from KBW. comes

morning. Hey! Good

improvement On showed in the data it California realtor September.

was -- see I trends there? segment. a you Did of on what So basis just monthly in NRT sort did wondering you the

national. We Yeah. the than California improve also saw less improved. still did California

versus mix market geographic a So from a that number. the us hurts standpoint, bit

though California the competitive been thing other pressure. has The is most had we've where

back once a California. little bit. so, comes in somebody then And And you've lost California

very don't California. You But out you trend us, a for positive profitable with that It's California. big we because comeback, still for business like that get you have the very in person don't anymore. business,

still it relative California saw better again, a what the data. so was little in was California than to we U.S., And, But That's been. our weaker. had

share bit of of gap a kind gap a NAR a So, market headwind.

that rooting months. a accumulation strong big of we're we for us, stuff. of Again business a got But for XX profitable last lot in the a a But competition still of just place California. the also competitive

there being we could sense, corporate expenses sort the just Makes Okay. sort Cartus, the the segment of of see, one And at -- thanks. sale? as on actually that any a is result unallocated of removed

will sure here to looking we and of the advantage make be said, is that simplification a that across Yeah. there Like take full we for network. sure Ryan dividend

Okay. But that you'll quantify in future? the

back come more XXXX. a lot We'll in There's moving Yeah. here. broadly of pieces

want it we get we out clearly. make So all sure laid to

And -- that way, try We simplification the by we to pieces this there. really dividend. a having it this quantify, lot. without And of when really know we it's Yeah. all we transaction did to the even like transaction like

transaction, economically been we on benefit taking focused is thing which employees proceeds as care this talking an and of there. that like We've of is. the you're the our in The economics about additional is

business even case that But not into put But to tried lot the of we a have the yet. examples I make of. listed

work We've excited. though got So, we're really still. to do

Okay, great, thanks.

questions other no in are There queue.

today's you So with you participation. that, conclude we'll call. your Thank disconnect. And for may conference now