Anywhere Real Estate Inc.

Good morning. Welcome to the Anywhere Real Estate second quarter 2023 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, Brianna. Good morning and welcome to the second quarter 2023 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 expectation and the current economic environment. Forward-looking statements, estimates, 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 and the incurrence of liabilities that are in excess of amounts accrued or payments made 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 our annual and quarterly SEC filings. Note that nothing we say today should be construed as an offer or solicitation to purchase, sell, or tender any securities. For those who listened to the rebroadcast of this presentation, we remind you that the remarks made herein are as of today, July 25th. 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. In the midst of a challenging housing market, we delivered results in line with our expectations and continued to invest to set Anywhere Real Estate up for an even stronger future. During the second quarter, we delivered $1.7 billion of revenue and generated $126 million of operating EBITDA. Our closed transaction volume was in line with our estimates, and we are on track to deliver $200 million of cost savings this year. And our agent commission results came in better than expected, with some of the best year-over-year results we've seen in a long time. We remain focused on improving our capital structure, especially our priority to deleverage our balance sheet. And today we announced a debt exchange transaction with one of our bondholders, and our intention to conduct a broader exchange offering on similar terms. And importantly, we continue investing to drive our strategic agenda, which includes growing our high-margin franchise business, expanding our luxury leadership position, simplifying and integrating the consumer transaction experience, and further transforming our cost base as we position Anywhere Real Estate to both benefit from a stronger housing market and to lead into the future. starting with the housing market we remain in a tough part of the cycle with six months of the year behind us it looks like our industry is heading toward 4.2 to 4.3 million annual unit transactions which would be by far the lowest level in over a decade and if you look past the great recession we've not seen unit transactions this low since the mid 90s but we planned for a challenging 2023 took aggressive actions in both cost reductions and investing for the future, and we are seeing our volume metrics come in consistent with our expectations that we shared with you. Q2 transaction volume was down 23% year over year. The decline was almost all unit driven, and we saw unit volume declines be pretty consistent across our markets. Our home prices were basically flat year over year, as we've all seen incredibly tight inventory creating supply challenges, even in this higher mortgage rate environment. However, we see significant geographic variation in price trends in our results. Across about two-thirds of the country, including large states like Texas and Florida, we saw price increases on average by about 3% versus last year. But a few of the bigger markets, in particular California and New York, we saw prices down in the mid single digits, consistent with our first quarter trends. And in Q2, the more positive detailed trends in our portfolio have persisted. Open volume compared to prior year continues to look better than closed volume compared to prior year each month in the quarter. And volume comparisons to 2022 improved each month in the quarter, both as the market has a little more positivity and as the 2022 comparisons get easier. And all of this is consistent with our quarterly and full-year guidance. Now, the challenging housing market affects the entire industry, and we like the fact that it establishes a level playing field, because anywhere real estate's best positioned to prosper because of some of our unique advantages, including our high-octane industry-leading franchise business with six nationally recognized brands, our opportunities from having end-to-end national assets in brokerage, title, mortgage, and insurance, our powerful lead generation at a time when quality lead generation is more important than ever, and our high-impact technology and data scale. And we're harnessing these advantages, even in a tough market, to charge ahead on our strategic priorities and position anywhere for long-term success. Some examples of that include, first, we are laser-focused on changing how we operate to deliver efficiencies that help simplify, automate, and streamline our operations. We continue to make considerable progress in our cost transformation and expect to take $200 million of costs out of our business in 2023, and Charlotte will share more on this shortly. Second, we are integrating our national brokerage and title support operations to make the real estate transaction simpler for the agent and consumer, to make it easier for us to capture title and mortgage economics, and to be more cost effective as we streamline those businesses. Third, we love and put significant effort into growing our powerful franchise business. Beyond the recent record years of franchise sales success, Anywhere Brands is further strengthening its value proposition by providing new and innovative offerings to franchisees. As one example, Anywhere is now using our technology and data scale to help our franchisees achieve better results via our recently launched Affiliate Insights product. This new product helps individual franchisees run their business better by drawing on Anywhere's extensive internal and external data to provide them actionable insights on growth, on their cost base, on agent migration opportunities, and on other critical topics. And I love the demand I'm hearing from our franchisees. Anywhere is an innovative technology provider and we're the industry analytics leader leveraging our unique data scale. We are finding exciting opportunities using generative AI and large language models, and we're committed to being on the forefront of this new world in our industry. Now, if you look backwards, we like the analytic and the machine learning insights we've been using to enhance our business. And so, for example, the agent recruiting machine learning model you've heard me talk about with you before. But today and going forward, we are seeing large language models have real power for real estate's future. For example, augmenting real estate marketing, including designing and executing marketing campaigns. And I'm personally very intrigued by photo and image-based AI innovations like virtual renovations, as well as this, the whole opportunity to simplify the transactions. And we are starting multiple proofs of concept to explore these and other opportunities. Now, these new technologies are also already helping us run our company differently. E.g., our software engineers are using these technologies to code more efficiently. E.g., we have a few early pilots where large language models are providing support to our employees. And we're really excited about these new analytic opportunities, even in these early days. We still have people looking at the output of our generative AI experiments, given the importance of ensuring accuracy. And we have a lot of work to do to both train and tune these models on our specific data and on real estate industry data more broadly. But we're really excited about it. We know these new technologies will change how every company operates, and we're committed to being at the forefront of that journey. So I'm going to come back later with a few closing thoughts, but for now, I'm going to turn it over to Charlotte to discuss our results in more detail.