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Realogy Reports Financial Results for Full Year 2012

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Strong Fourth Quarter Results Drive 2012 Net Revenue Increase of 14% to $4.7 Billion; Overall Net Indebtedness Reduced by Approximately 42%

PARSIPPANY, NJ - (Marketwire - Feb 14, 2013) - Realogy Holdings Corp. (NYSE: RLGY) ("Realogy" or the "Company"), a global leader in residential real estate franchising and provider of real estate brokerage, relocation title and settlement services, today reported financial results for the fourth quarter and full year ended December 31, 2012, including the following:

• Realogy's net revenue for fourth quarter 2012 was $1.2 billion, a 30% increase compared to the same period in 2011. 
• The Company's Adjusted EBITDA¹ was $167 million in the fourth quarter, which was an increase of 61% year-over-year. The increase was primarily due to a 35% increase in sales volume (homesale transaction sides times average sale price) at the franchised and company-owned real estate services segments combined year-over-year for the quarter. 
• Net loss attributable to the Company in the fourth quarter was $292 million, which was after $400 million of primarily non-cash IPO-related costs, $18 million of debt extinguishment charges and $42 million of depreciation and amortization.
• Realogy's net revenue for full year 2012 was $4.7 billion, an increase of 14% compared to 2011. 
• Realogy's Adjusted EBITDA² for 2012 was $674 million, an increase of 18% compared to 2011. These improved results were due largely to an increase in sales volume (homesale transaction sides times average sale price) at the franchised and company-owned real estate services segments.
• In 2012, Realogy recorded a net loss attributable to the Company of $543 million, which was after $528 million of interest expense, $400 million of primarily non-cash IPO-related costs, $24 million of debt extinguishment charges and $173 million of depreciation and amortization.
• Based on the Company's $3.1 billion reduction of debt from its IPO, which gives effect to the expected redemption in the second quarter of $200 million of Subordinated Notes with remaining IPO proceeds, the Company expects corporate cash interest expense to total $315 to $320 million in 2013.

"The strength of the year, and in particular our strong fourth quarter results, supports the growing consensus of a housing recovery," said Richard A. Smith, Realogy's chairman, chief executive officer and president. "The favorable housing trends we experienced early in 2012 were evident in the fourth quarter, and our first quarter 2013 closed sales volume and open contracts indicate the continuation of the housing recovery."

1	See Table 6c for a reconciliation of Adjusted EBITDA for the three months ended December 31, 2012 and 2011.
2	See Table 6a and 6b for a reconciliation of Adjusted EBITDA for the years ended December 31, 2012 and 2011, respectively.

Business Driver Discussion

For full year 2012, Realogy's core business drivers all showed significant year-over-year improvement. RFG, our franchise segment and largest contributor to our EBITDA, and NRT, the operator of our company-owned brokerage offices, led the way with closed homesale sides increases of 9% and 14%, respectively. Average sales price increased 8% at RFG and 4% for NRT for 2012 compared to 2011.

In our relocation business, Cartus experienced a 3% year-over-year increase in initiations compared to 2011 and a 10% increase in broker referrals. In our title and settlement services segment, Title Resource Group (TRG) experienced a 13% increase in purchase title and closing units compared to 2011 and a 42% increase in refinance title and closing units.

In the fourth quarter alone, RFG had a year-over-year 14% increase in homesale transaction sides, while NRT had a 22% year-over-year increase. RFG's average homesale price also increased 14% in the fourth quarter, and NRT's average homesale price, which is generally twice the national average, increased 18% compared to fourth quarter 2011. Thus, overall combined transaction volume was up 35% for the fourth quarter.

"Our closed homesale transaction volume drivers outperformed our expectations in the fourth quarter, especially with respect to average sales price," said Anthony E. Hull, Realogy's executive vice president, chief financial officer and treasurer. "We believe that the fourth quarter volume increase was partially aided by tax-related selling, particularly at the high end of the market."

Hull continued: "Based on the visibility we have into the coming months from our January closed sales data and open contracts in January and early February, we expect to see an approximately 4% to 5% increase in transaction sides in the first quarter of 2013 with one less business day than we had in the first quarter of 2012. Likewise, we anticipate a combined RFG and NRT average sale price increase of approximately 8% to 9% year-over-year, which would equate to a 14% to 16% volume increase in the first quarter after adjusting out the additional business day in the first quarter of 2012."

Recent Accomplishments & Other Highlights

• Realogy's IPO and related transactions reduced our overall net indebtedness (including remaining IPO proceeds of approximately $220 million at year-end) by approximately $3.1 billion. Also as a result of the overall net debt reduction, Realogy's corporate cash interest expense is expected to decline to approximately $315 to $320 million in 2013. There were 145.4 million shares outstanding at December 31, 2012. 
• Realogy maintained its industry-leading position in terms of U.S. residential real estate market penetration, which was 26% for broker-assisted sales in 2012, based on volume. In all, Realogy was involved in approximately 1.3 million transaction sides last year -- on either the buy or sell side.
• The Realogy Franchise Group finished the year with $234 million of new franchise sales gross commission income (GCI). RFG also retained approximately 97% of its franchisee production in 2012 as measured by GCI.
• NRT retained approximately 94% of the GCI production of its first and second quartile agents in 2012.
• In 2012, Cartus signed 117 new corporate clients and expanded the scope of services provided for nearly 300 existing clients.
• TRG's underwriter reported a 22% increase in 2012 net premiums year over year. TRG's underwriting claims experience for the year was approximately 1.3%, which continues to substantially outperform the industry average loss ratio of approximately 7%.
• In January, the Company appointed Brett White, recently retired CEO of CBRE Group (NYSE:CBG), to its Board of Directors. White is now the third independent director on our eight-member board.

Balance Sheet Information as of December 31, 2012

The Company ended the year with approximately $220 million of remaining IPO proceeds out of a total cash balance of $376 million and $110 million of outstanding borrowings on its revolving credit facility under its senior secured credit agreement.

"As previously discussed, we intend to use our remaining IPO proceeds to redeem the $190 million of 12 3/8% notes at par in April as well as the $10 million of 13 3/8% extended maturity notes," said Hull. "This will fully retire all of Realogy's subordinated debt. Our next focus will be the 11.5% Senior Notes and 12% Senior Notes, which become redeemable in April 2013. We are also in the process of refinancing our senior secured credit facility, which, if completed, would lower the interest rate on such borrowings and extend the maturities of our revolving credit facility and term loan. We continue to analyze and optimize our capital structure and use our free cash flow primarily to retire debt with the ultimate goal of becoming investment grade."

A consolidated balance sheet is included as Table 2 of this press release.

As of December 31, 2012, the senior secured leverage ratio (SSLR) under the Realogy Group LLC senior secured credit agreement was 3.30 to 1, below the 4.75 to 1 maximum ratio required to be in compliance under the agreement. (See Table 8 for the definition of this non-GAAP financial measure, Adjusted EBITDA, and Table 6a, 6b, and 6c for a reconciliation of this non-GAAP measure to the most comparable GAAP financial measure, net loss attributable to the Company.)

Investor Conference Call

Today, February 14th, Realogy will hold a conference call via webcast to review its fourth quarter and full year 2012 results at 8:30 a.m. (EDT). The call will be hosted by Richard A. Smith, chairman, chief executive officer and president, and Anthony E. Hull, executive vice president, chief financial officer and treasurer, and will conclude with an investor Q&A period with management.

Investors may access the conference call with corresponding slides live via webcast at ir.realogy.com or by telephone at (888) 895-2010 (toll free); international callers should dial (706) 679-2250. A webcast replay of the call will be available at ir.realogy.com from February 14 through March 1.

About Realogy Holdings Corp.

Realogy Holdings Corp. (NYSE: RLGY) is a global leader in real estate franchising with company-owned real estate brokerage operations doing business under its franchise systems as well as relocation and title services. Realogy's brands and business units include Better Homes and Gardens® Real Estate, CENTURY 21®, Coldwell Banker®, Coldwell Banker Commercial®, The Corcoran Group®, ERA®, Sotheby's International Realty®, NRT LLC, Cartus and Title Resource Group. Collectively, Realogy's franchise system members operate approximately 13,600 offices with 238,900 independent sales associates doing business in 102 countries around the world. Realogy is headquartered in Parsippany, N.J.

Forward-Looking Statements

Certain statements in this press release constitute "forward-looking statements." Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Realogy Holdings Corp. to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates" and "plans" and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements.

Various factors that could cause actual future results and other future events to differ materially from those estimated by management include, but are not limited to: adverse developments or the absence of sustained improvement in general business, economic and political conditions; adverse developments or the absence of improvement in the residential real estate markets including but not limited to the lack of sustained improvement in the number of home sales and/or stagnant or declining in home prices, low levels of consumer confidence, the impact of slow economic growth or future recessions and related high levels of unemployment in the U.S. and abroad, continued low inventory levels, renewed high levels of foreclosures, seasonal fluctuations in the residential real estate brokerage business, and increasing mortgage rates and down payment requirements and/or constraints on the availability of mortgage financing; the Company's geographic and high-end market concentration, particularly with respect to its Company-owned brokerage operations; the Company's failure to enter into or renew franchise agreements or maintain its brands; risks relating to our substantial amount of outstanding debt and interest obligations; variable rate indebtedness which subjects the Company to interest rate risk; the Company's inability to access capital, including the inability to complete the refinancing of its senior secured credit facility; any outbreak or escalation of hostilities on a national, regional or international basis; government regulation as well as legislative, tax or regulatory changes that would adversely impact the residential real estate market, including but not limited to potential reform of the financing of the U.S. housing and mortgage markets and/or the Internal Revenue Code; the Company's inability to realize benefits from future acquisitions; the Company's inability to sustain improvements in its operating efficiency; and the final resolution or outcomes with respect to Cendant's remaining contingent liabilities.

Consideration should be given to the areas of risk described above, as well as those risks set forth under the headings "Forward-Looking Statements" and "Risk Factors" in our filings with the Securities and Exchange Commission, including our final prospectus filed with the SEC on October 11, 2012, our Annual Report on Form 10-K for the year ended December 31, 2011, as amended, our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2012 and June 30, 2012, as amended, and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 and in our other filings made from time to time, in connection with considering any forward-looking statements that may be made by us and our businesses generally. Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law.

This release includes certain non-GAAP financial measures as defined under SEC rules. As required by SEC rules, important information regarding such measures is contained in the Tables attached to this release.

Table 8
Non-GAAP Definitions

EBITDA is defined by us as net income (loss) before depreciation and amortization, interest expense, net (other than relocation services interest for relocation receivables and securitization obligations) and income taxes. Adjusted EBITDA calculated for a twelve-month period is presented to demonstrate our compliance with the senior secured leverage ratio covenant in the senior secured credit facility. Adjusted EBITDA calculated for a twelve-month period corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio. Adjusted EBITDA includes adjustments to EBITDA for merger costs, restructuring costs, former parent legacy cost (benefit) items, net, gain (loss) on the early extinguishment of debt, pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma effect of acquisitions and new franchisees, in each case calculated as of the beginning of the twelve-month period.

We present EBITDA and Adjusted EBITDA because we believe EBITDA and Adjusted EBITDA are useful as supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. Our management, including our chief operating decision maker, uses EBITDA as a factor in evaluating the performance of our business. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP.

We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results.

EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider EBITDA or Adjusted EBITDA either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are:

• these measures do not reflect changes in, or cash requirement for, our working capital needs;
• these measures do not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments on our debt;
• these measures do not reflect our income tax expense or the cash requirements to pay our taxes;
• these measures do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;
• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often require replacement in the future, and these measures do not reflect any cash requirements for such replacements; and
• other companies may calculate these measures differently so they may not be comparable.

In addition to the limitations described above, Adjusted EBITDA includes pro forma cost savings, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods.

Free Cash Flow is defined as net loss attributable to Realogy before income tax expense, net of payments, interest expense, net, depreciation and amortization, capital expenditures, restructuring costs and former parent legacy costs (benefit), net of payments, IPO related costs, cash payment related to Convertible Notes, cash payment related to Apollo management fee termination, loss on the early extinguishment of debt, working capital adjustments and relocation receivables and properties, net of change in securitization obligations. Cash Earnings Per Share is defined as Free Cash Flow divided by the weighted average basic shares outstanding. We use Free Cash Flow and Cash Earnings Per Share in our internal evaluation of operating effectiveness and decisions regarding the allocation of resources. Free Cash Flow and Cash Earnings Per Share are not defined by GAAP and should not be considered in isolation or as an alternative to net income (loss), net cash provided by (used in) operating, investing and financing activities or other financial data prepared in accordance with GAAP or as an indicator of the Company's operating performance. Free Cash Flow and Cash Earnings Per Share may differ from similarly titled measures presented by other companies.

Investor Contact:

Alicia Swift
(973) 407-4669
alicia.swift@realogy.com

Media Contact:

Mark Panus
(973) 407-7215
mark.panus@realogy.com

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