Anywhere Real Estate Inc.

Good morning and welcome to the Anywhere Real Estate third 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'd like to turn the conference over to Anywhere Senior Vice President Alicia Swift. Please go ahead, Alicia.

Thank you, Chris. good morning and welcome to the third quarter 2023 earnings conference call for anywhere real estate inc 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. Actual results may differ materially from those expressed or implied in the forward-looking statements. Important assumptions and other 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. For those who listened to the rebroadcast of this presentation, we remind you that the remarks made herein are as of today, October 24th, 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. Anywhere demonstrated our continued ability to lead through the tough housing market, even as it worsened in the third quarter with higher mortgage rates. We pushed forward on our strategic agenda, expanding our high-margin franchise business, strengthening our balance sheet, completing additional cost reductions, and removing litigation uncertainty, all setting us up for powerful momentum as the housing market improves. During the third quarter, we delivered $1.6 billion of revenue and generated $107 million of operating EBITDA, which includes a small top-up to our legal reserves. We reduced our debt by nearly $300 million. We realized $60 million of cost savings in the quarter and completed the actions to deliver our $200 million cost target for the year. And we settled our seller antitrust class action litigation on a nationwide basis. Our quarterly transaction volume was down 13% year over year, which looks to be in line with or even a bit better than the overall market's performance. Volumes were softer than we expected in the back half of the quarter, primarily driven by higher mortgage rates that approached 8%. Home prices continue to be resilient, with more than 80% of the country seeing price gains in our portfolio as supply limits remain the biggest issue in the market. Looking at our year over year volume results, we see variations across both geographies and market segments. Geographies like Florida and Colorado outperform the market. The luxury segment, especially million dollar plus homes, had the best performance in our portfolio, with our Sotheby's International Realty brand being close to flat versus last year. We remain very excited by our leading position in luxury As we've talked about many times, it is one of our most important strategic vectors. Now, conversely, there are geographies out there, like California and New York, that are underperforming the market. And from a segment perspective, the lower end of the market has the biggest challenges from that combination of limited supply and higher mortgage rates. Here at Anywhere Real Estate, we are clear-eyed about the challenges of the current housing market. And remember, we recognize the downturn early had it been very aggressive moving quickly on critical vectors like cost reduction and debt pay down. We are proactively executing on what we can control, laying the groundwork for substantial success, especially when the market rebounds. So first, we are excited by our progress simplifying, automating, and streamlining our operations. And we have already completed the actions that will deliver our $200 million cost savings target. And we are cautiously optimistic that we may over-deliver on this number. We'd like the opportunities to further drive permanent efficiencies in our business and how those opportunities can enhance our margins and better housing markets. Second, we remain laser-focused on debt reduction. I am so proud that we were able to reduce our debt by nearly $300 million in the quarter as we completed our bond exchange, repurchased bonds in the open market, and repaid a portion of our revolver. This builds on the tremendous work we've done over the past years to reduce our debt by nearly $900 million. Continuing debt reduction is critical and remains a top capital allocation priority. Third, we are differentiating ourselves and taking advantage of the better competitive environment. Our margin focus and commitment to profitability remains unchanged. We were excited to see our market share results in the quarter hold steady versus the latest overall NAR data, and we may actually have been a share gainer. We are recruiting agents at both better margins and with less cash out the door than we did in 2022, and we are achieving the same better results in our franchise sales and renewals. Fourth, we are pleased to have reached a nationwide settlement in the seller antitrust class action litigation. While the settlement still needs court approvals, this enables us to move past the distraction, uncertainty, and expense that comes with complex and protracted litigation. Now looking forward, we're investing substantially in our future, enabled by our scale, profitability, and free cash flow generations, unlike many of our competitors. And we like our strategic progress. We love the power of our franchise business. Even in this tough market, we see its high margin resiliency, its reliable profit generation, and the benefits of its long-term contract structure. We continue to enhance our value proposition to attract new franchisees and strengthen our existing franchise portfolio. Anywhere is helping franchisees access new economics through our national-scale title business with the launch of our Upward Title joint ventures. We already have 19 franchise partners across three states with multiple states to follow, and we're seeing strong demand, especially from some of our bigger franchisees, including luxury franchises. Anywhere is using our technology to deliver more cost-effective solutions to franchisees. One example is our new Listings Direct technology, which integrates a franchisee with MLSs and reduces their need to purchase separate solutions and or hire additional staff for MLS-related back office work. We already have over 100 franchisees using or in the pipeline to use Listings Direct. And we continue to invest in our luxury franchise power. For example, Corcoran has expanded or launched in 10 key markets this year across the Northeast, the West, and internationally. And I'm excited to announce today its latest market expansion into Houston. Now, second, we're integrating our support services across brokerage and title to digitally assist agents and consumers from contract to close. This is a win for our agents as we can provide them with high-value transaction coordination services as part of our value propositions. saving them the time and hassle of either managing this work themselves or paying hundreds of dollars per transaction for someone else to handle it so they can focus on earning new business. It's a win for consumers as we create a simpler transaction experience and a faster, more seamless closing process. And it's a win for anywhere as this makes it easier for us to capture title, mortgage, and insurance economics and allows us to aggressively simplify, standardize, and automate our operations. We're in the beginning stages of rolling this out and we like our early results. We're live in four markets with several others to be added by year end and a broader rollout in 2024. Agent satisfaction is 97% and our net promoter score here is 84%. Finally, like I shared with you last quarter, I'm excited by how we're using our industry leading data scale and generative AI to build powerful proof of concepts. For example, we have large language model proof of concepts that are improving a wide range of marketing activities around both copywriting and image generation. This area has tremendous potential given both our spend and our agents' spend on marketing activities. And by their nature, our title and brokerage operations have significant documentation requirements. We have two pilots underway to test generative AI's ability to create, assemble, and audit those documents. And given our significant spend in these areas, we're optimistic about its potential. And we see use cases from generative AI coming from everywhere. We recently launched a safe way for people in our ecosystem to access GPT-4 while protecting confidential information. And we're pleased with the number of people experimenting with these tools and their early innovation excitement. And really the challenge from here is not just building more of these exciting use cases, but most importantly, scaling them up to deliver real value. Now, I'm going to come back later with a few closing thoughts, but for now, let me turn over to Charlotte to discuss our results in more detail.