Realogy Holdings Corp.

Good morning and welcome to the RealG Holdings Corp first quarter 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'd like to turn the conference over to RealG Senior Vice President Alicia Swift. Please go ahead, Alicia.

Thank you, Chris. Good morning and welcome to Realogy's first quarter 2022 earnings conference call. On the call with me today are Realogy's 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, and other uncertainties and contingencies, many of which are beyond the control of management, including, among others, constrained inventory levels, rising inflation and mortgage rates, and uncertainties related to the continued strength of the housing market and 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 are as of today, April 28th, and have not been updated subsequent to the initial earnings call. 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 filing. 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 and slides. Last, the industry data referenced during today's call is based on NAR's most recent public estimates, which are now subject to review and revision. Factors that may Impact, the comparability of our home sales statistics to NAR are outlined in our annual and quarterly reports filed with the SEC. Now I will turn the call over to our CEO and President, Ryan Schneider.

Good morning, everyone. I'm incredibly excited to be with you today to discuss our strong first quarter 2022 results. Realty continues to strategically transform our business as we move real estate to what's next. When we last spoke in February, I shared Realogy's 2021 progress as we completed the first chapter of our transformation, highlighted by profitable organic growth, substantial market share gains, a transformed balance sheet with much lower net leverage, and proven cost discipline, all driven by great talent and our increasing technology leadership. Q1 of 2022 continued that success, excluding the unseasonably high 2021, we delivered the best first quarter top and bottom line results in the company's history. Revenue was $1.6 billion and operating EBITDA was $69 million. The latter is more than double recent Q1 results, like $32 million in 2020 and $34 million in 2018. We grew our luxury and premium heavy owned brokerage business 10% year over year. substantially outperforming the industry. We saw some really powerful geographic trends with standout strength in New York City and Florida. Our franchise business volume was up 1% year over year, and overall Realogy delivered 4% year over year volume growth in the quarter, in line with the industry and our expectations, including higher prices with a bit fewer units. Our core business drivers continued to perform very well, We increased brokerage agents 6% year over year, the seventh consecutive quarter of sequential growth. We achieved incredibly high brokerage agent retention as our very strong product technology and brand value propositions increasingly attract and retain agents at tremendous scale. And our franchise business expanded. We're especially excited by the ongoing growth of our Corcoran high-end franchise brands. We fortified our balance sheet by retiring 1.1 billion of our highest coupon notes, which will lower our annual interest expense by over $40 million. We printed a three times net leverage ratio, the best Q1 result in company history. This result is right in line with our target and what we expected given the return to seasonality. Now strategically, we closed our underwriting joint venture with Centerbridge Partners in March. We received our $210 million purchase price for 70% of the business and are excited for the future upside of this growth venture, given our continued ownership stake. On another strategic topic, we are really focused on our real sure joint venture. Remember, we remain skeptical of the pure iBuying concept, but we are compelled by the power of helping consumers buy and sell their homes in an easier way. We continue to invest in RealSure, expanding our RealSure byproduct to seven cities in the quarter, and our RealSure sell product is now in 25 cities. We are pleased by what we're learning from both our direct-to-consumer and our agent marketing, and believe we are building a special thing in this part of the market. Now, the biggest challenge we saw in Q1 was in our mortgage joint venture, where we lost $8 million in the quarter. Lapping a much higher mark to market from last year, combined with very tough rate and margin trends that emerged in Q1, negatively affected both Q1 results and our mortgage outlook for the full year 2022. But overall, we are really upbeat about the Q1 results we delivered, especially versus history, and we love the momentum we continue to generate. Looking ahead for 2022, we now expect to deliver operating EBITDA in the $750 to $800 million range, with the change driven primarily by the challenges we and others are seeing in the mortgage business since we set our guidance. We will remain proactive on cost management, including the execution of the full year cost savings plan we outlined for you last quarter. And with increasing uncertainty about housing in the near term, we always try to share with you what we're seeing. So on the positive side, we continue to see very strong demand. Over 50% of our listings are selling within two weeks. multiple offers per home and sales price above list price measures are still meaningfully above historical norms in our portfolio and the premium and luxury parts of our portfolio are showing the most strength as you can see in our q1 brokerage numbers and our number of listings on 500 000 and up properties is actually up versus 2021. if we had more housing supply we could definitely sell it across all price points On the more challenging side, the combination of limited supply and rising rates is clearly hurting the lower end of the market, especially the first time home buyer. Our number of listings on properties below 300,000 in our franchise business and below 400,000 in our own brokerage business are down versus 2021. And to give you a sense of our latest data through about the third week of April, our closed transaction volume looks in line with our current forecast And our open volume is a bit below our current forecast for the month. So our volume guidance for 2022 is currently unchanged at mid single digits, but we're watching this closely and we'll keep you updated in these calls on what we're seeing. And remember the rough metric that about one percentage point of volume is worth about $15 million of operating EBITDA in our business. So when, while the near term volatility in the housing market is tough to predict, We remain convinced the medium-term outlook for housing, especially over the course of this decade, anchored in positive demographics and social trends, remains bright. So I'll now turn the call over to Charlotte to discuss Q1 in more detail.