Realogy Holdings Corp.

Good morning and welcome to the Realogy Holdings Corp third quarter 2020 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 Realogy Senior Vice President Alicia Swift. Please go ahead, Alicia.

Thank you, Christy. Good morning and welcome to Realogy's third quarter 2020 earnings conference call. On the call with me today are Realogy's CEO and President, Ryan Schneider, and Chief Financial Officer, Charlotte Ciminelli. 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 current expectations and the current economic environment. Forward-looking statements and projections are inherently subject to significant economic, competitive, and other uncertainties and contingencies, many of which are beyond the control of management, including any statements we make related to expectations with respect to the ongoing COVID crisis. Actual results may differ materially from those expressed or implied in the forward-looking statements. For those who listened to the rebroadcast of this presentation, we remind you that the remarks made herein or as of today, October 29th, and have not been updated subsequent to the initial earnings call. Important assumptions and other important 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. Also, certain non-GAAP financial measures will be discussed on this call and per SEC rules Important information regarding these non-GAAP financial measures is included in our earnings press release. Now I will turn the call over to CEO and President Ryan Schneider.

Good morning, and thank you for joining us today. Q3 was a tremendous quarter for Realogy. The strategic and technology progress we have been driving, combined with the strong housing market, came together to drive huge earnings delivery, substantial transaction volume growth, market share gain from the prior quarter, and material debt pay down. Our growth continues to look good based on our preliminary volume data through most of October, and we like our momentum. Realogy delivered $309 million of operating EBITDA from continuing operations in the quarter, $103 million above 2019, powered by substantial revenue growth and our cost actions. And excitingly, we are leading the strategic race to capture revenue the integrated real estate transaction economics, with nearly a third of the operating EBITDA we delivered in the quarter from our title and mortgage businesses. Revenue growth was driven by 28% closed transaction volume growth versus a year ago. This volume growth momentum improved each month in the quarter. July was plus 15% year over year. August was plus 22% year-over-year, and September was plus 50% year-over-year. It was about equally driven by increased transaction units and by increased price. Franchise was up 31%, and brokerage was up 22%, with the delta continuing to be driven by geographic differences like the brokerage headwinds in New York City. Our volume results in the quarter demonstrated market share gain, not just stabilization but gain when compared to NAR's plus 23% Q3 data. This is incredibly exciting for us because we faced market share headwinds for over a year. To see us move to positive share gain in the quarter is a very powerful testament to what we are building and delivering. We believe this success is happening from the strategic and technology progress we have been delivering combined with consumer behavior changes, housing market strength, and digital acceleration in the past months. Specifically, we are seeing our growth initiatives mature. Our consistent brokerage agent growth over the past year and improved agent retention both drove more volume in Q3. Our franchise business is very powerful. We really like the performance of our great brands, especially our Sotheby's International Realty brand, which really stood out in Q3 with its substantial growth in both transaction units and price. And we are excited by our strategic franchise growth initiatives, especially Corcoran, which recently expanded to new markets in California, New York, Hawaii, Colorado, and Arizona. And our technology efforts to digitize and virtualize the real estate transaction gained traction as the world changed in the past six months. Adoption of our digital and virtual products is up dramatically, and we believe these Realogy-driven digital and virtual products are helping agents win more business, close more transactions, and gain share. While many companies talk about digitizing the real estate transaction someday, we are living it, and it's showing up in our financial results. Finally, we remain very strong believers in the value of great agents, and they are demonstrating it during this turbulent year. We believe the combination of great agents and technology is accelerating our momentum. And it's not lost on us that others have realized the need to partner with or hire agents, whereas we start with the industry-leading agent base across multiple great brands. Shifting to our balance sheet, we made substantial progress on our leverage in Q3. We generated $344 million in free cash flow from continuing operations and reduced our net debt by $276 million versus a year ago, and ended the quarter with 4.2 times net leverage. In October, we have already paid off all of our revolver borrowings, so our revolver balance is now zero. And with our momentum going into Q4, we light the trajectory of RD leveraging. So looking ahead, preliminary Realogy closed Transaction volume data through most of October is up approximately 35% versus 2019 in both franchise and brokerage, with half or even more of that growth driven by more unit sales. And Realogy open volume through most of October is even better. It's up approximately 55% year over year, with half or more of that growth also driven by more unit sales. So based on that preliminary October data, combined with our continued cost focus, strategic progress, and market share momentum, we believe we're on track for a very strong Q4, subject to the macro COVID and competitive uncertainties. And we expect this momentum to continue as we enter 2021 with strong volume trends and positive consumer trends I will discuss later, low mortgage rates, and continued cost disciplines. Having said that, we also expect there will be headwinds in 2021 from the absence of the temporary cost savings and significant continued COVID competitive and macro uncertainties, including how long these housing and consumer trends will last. But overall, we are very excited about our progress and position. Finally, our capital allocation priorities remain unchanged. We plan to invest in the business and continue to deliver. With that, I'm going to turn the call over to Charlotte to review the third quarter financial performance in greater detail.