Anywhere Real Estate Inc.

Good morning and welcome to the Anywhere Real Estate Year-End 2022 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 tomorrow. A webcast replay will also be made available on the company's website. At this time, I would like to turn the conference over to Anywhere Senior Vice President, Alicia Swift. Please go ahead, Alicia.

Thank you, Dennis. Good morning and welcome to the year-end 2022 earnings conference call for Anywhere Real Estate. On the call with me today are Anywhere CEO and President, Ryan Schneider, and Chief Financial Officer, Charlotte Simonelli. As shown on slide three of the presentation, the company will be making statements about its future results and other forward-looking statements during this call. These statements are based on the current expectations and the current economic environment. forward-looking statements and projections are inherently subject to significant economic, competitive, litigation, regulatory, and other uncertainties and contingencies, many of which are beyond the control of management, including, among others, industry and macroeconomic developments, the impact of such developments on consumer demand, and the incurrence of liabilities that are in excess of amounts accrued in connection with pending litigation. Actual results may differ materially from those expressed or implied in the forward-looking statements. Important assumptions and factors that could cause actual results to differ materially from those in the forward-looking statements are specified in our earnings release issued today, as well as in our annual and quarterly SEC filings. In October 2022, the company initiated a plan to integrate own brokerage group and title group. However, based on industry and business developments during the fourth quarter of 2022, the company has determined that its reportable segments will remain consistent at December 31st, 2022 with prior periods. For those who listened to the rebroadcast of this presentation, we remind you that the remarks made herein are as of today, February 23rd, and have not been updated subsequent to the initial earnings call. Now I will turn the call over to our CEO and President, Ryan Schneider.

Thank you, Alicia. Good morning, everyone. Over the past few years, Anywhere has made powerful progress on our transformations. We entered 2022 with real momentum, and even as the housing market worsened in the year, we leveraged our unique advantages, stayed focused on our priorities, and took quick actions that enabled us to deliver $6.9 billion of revenue and $449 million in operating EBITDA. We accelerated our cost reductions from a target of $70 million to realize over $150 million of cost savings in the year. We rigorously prioritized our growth investments in CapEx, and we capitalized on the improving competitive environment. We remain committed to growing our advantage positions in our existing businesses, especially franchise, luxury, and transaction services, along with simplifying the transaction for agents and consumers. Now, looking back on 2022, it was a rapidly changing year for housing with substantial declines in the market that got worse every single quarter. Effectively, all the market decline was from a drop in unit transactions. culminating with Q4 market volume down more than 30%. Higher mortgage rates continue to put pressure on affordability, and these higher mortgage rates are hurting this new supply of inventory, as many homeowners are locked into their current home with low mortgage rates. I've been incredibly proud how our great agents and franchisees have taken care of customers, even in the midst of this tough housing market, as they continue to demonstrate their value in the marketplace. 2023 looks like a volatile year. where the housing market will be meaningfully lower than 2022, driven by a substantial drop in unit transactions. Industry 2023 forecasts for transactions are typically in the 4 to 4.5 million unit range, down 10 to 20% from 2022. And remember, unit transaction declines have a disproportionate impact on our business, as unit declines also impact our mortgage and title opportunities. And we'll see what happens on the price side of the volume equation. Now we expect Q1 2023 market volume to be down around 30% versus 2022. But we expect those year over year quarterly in comparisons to improve throughout the year. And I still believe the outlook for housing over the decade is strong. And most importantly and potentially excitingly, right now we may be at or near a bottom already. We are all seeing a number of the housing indicators in the macro economy exhibit more stability. In our book, From December 2021 to November 2022, our year-over-year volume comparisons all showed open volume lower than our closed volume, effectively showing housing results decelerating. That flipped in December 2022. Both in December 2022 and January 2023, our open volume comparisons were higher than our closed volumes. So even with a tough and likely volatile 2023 market ahead, I'm increasingly optimistic about our position and the opportunities in front of us. So first, we are laser focused on changing how we operate our company to deliver greater efficiency and enhance our value proposition. We realized $150 million in cost savings in 2022, and later in this call, Charlotte will share the equally powerful efficiencies we are expected to drive in 2023. And our excitement in this area is not just about lower costs. It's about re-architecting our business for greater success in the future. We are re-imagining our real estate brokerage offices to be more efficient, flexible, and integrated with transaction services like title and mortgage, which means we can provide fewer but more impactful agent and consumer support costs. Building on our past investments to digitize our operations, we are automating processes across brokerage and title. removing work and friction for agents and consumers. And while we've lowered our marketing spend for 2023 given market conditions, we are excited how we're using a more digital marketing mix to deliver greater value for agents and franchisees. Second, we are rigorously prioritizing our growth investments, which include continuing to expand our powerful franchise business, leaning into our luxury leadership position, and driving innovation in our nationally scaled title and mortgage business. Most importantly, we like the better competitive environments that we have seen evolve in 2022 and the competitive differentiation we are achieving. We believe our results demonstrate a flight to quality and that there will be growth benefits for us when the market rebounds. We experienced record franchise sales in 2022, bringing in substantial new companies and helping our existing companies grow via M&A and agent recruiting. We continue to have strong growth in our Anywhere Advisors agent base, up 4% year over year organically. And most excitingly, in this better competitive environment, we're able to recruit at better economics than in the past few years. And as we've been sharing with you throughout the year, we continue to have record high agent retention in our own brokerage business. Finally, we've recently brought to market a new innovative multi-franchisee title called joint venture opportunity as part of our franchise value proposition and are in the process of launching the first three in Florida and California. So even in a challenging market, we like the flight to quality that we're seeing in the better competitive environment and our growth vectors, which together we believe will pay substantial dividends for us when the market recovers. Now I will turn over to Charlotte to discuss our results in more detail.