Realogy reports $110 million in earnings for Q2 2017

It looks like some of the changes Realogy made to help ignite its growth are starting to show results.

In the company’s quarterly earnings results for the second quarter of 2017 (Q2 ’17), it reported 8 percent year-over-year growth in revenue and 9 percent year-over-year growth in homesale transaction volume, and an overall profit of $109 million for the quarter.

However, neither Realogy Franchise Group (RFG, the business unit that manages Realogy’s many franchise brands) nor NRT (the business unit that operates company-owned real estate business segments) reported significant growth in closed homesale sides.

“We delivered another quarter of strong results,” said Richard A. Smith, Realogy’s chairman, CEO and president, in a statement. “Our residential real estate business outperformed our expectations during the second quarter, driven by stronger average homesale price gains and the strengthening of high end markets across the nation.”

In an earnings call for investors, he attributed the increases to some strategic changes to support agents that Realogy has made, as well as increasing home sale prices.

He also said that inventory shortages were a partial cause of lower growth in transaction sides.

“If price continues to go up the way it’s going up, then it’ll release some inventory,” he predicted, adding that there are about “20 other things that have to happen.”

“We are pleased with the progress we are making on our strategic initiatives, the most important of which are designed to strengthen the recruitment and retention of sales agents at NRT. We remain focused on maintaining our business momentum and continuing to generate sustainable organic growth,” Smith added in the statement

The numbers

Realogy reported overall company revenue of $1.8 billion, up 8 percent from its Q2 ’16 results. Expenses of about $1.6 billion, plus income tax expenses, meant the company netted $109 million in Q2 profit, up from $92 million in 2016.

It also reported that it increased its homesale transaction volume by 9 percent year-over-year — 12 percent at NRT and 7 percent at RFG.

And its operating EBITDA (earnings before interest, taxes, deductions and amortizations) was $269 million, down from $275 million in Q2 ’16. “The $269 million includes an $8 million reserve to settle a pending legal matter,” Realogy said in its statement. “Excluding the reserve, Operating EBITDA would have been up $2 million year-over-year.”

NRT increased its transaction sides by 3 percent, and RFG reported a 1 percent increase. However, home sale price was up more for each group — 9 percent at NRT and 6 percent at RFG.

What’s next?

Realogy reported it would likely achieve 4 percent to 7 percent transaction volume gains in Q3 ’17 and that sides would increase between 0 percent and 2 percent for its units.

Year-over-year, it expects RFG transaction volume to increase between 4 percent and 7 percent, and NRT volume to increase between 5 percent and 7 percent.

All told in 2017, Realogy expects to bring in between $6.1 billion and $6.2 billion in revenue.

“We are encouraged by the success of NRT’s strategic initiatives and the strengthening we are seeing at the high end of the market, combined with the benefits of our earlier business optimization initiatives,” said Anthony E. Hull, Realogy’s executive vice president, chief financial officer and treasurer, in the statement.

About Realogy

Realogy Holdings Corporation owns the following real estate business units:

• Better Homes and Gardens Real Estate
• Century 21
• Coldwell Banker
• Coldwell Banker Commercial
• The Corcoran Group
• ERA
• Sotheby’s International Realty
• ZipRealty
• NRT LLC
• Cartus
• Title Resource Group
• ZapLabs, Realogy’s technology development subsidiary

Its NRT business unit operates Realogy’s company-owned real estate business segments, which also include some of Realogy’s franchise and agency brands:

• Climb Real Estate
• Coldwell Banker
• Sotheby’s
• Corcoran Group
• ZipRealty

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