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Realogy Reports Financial Results For Full Year 2017

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Company Returned $325 Million in Capital to Shareholders Through Share Repurchases and Dividends Last Year; Board Approves New $350 million Share Repurchase Authorization; Declares Quarterly Dividend

MADISON, N.J. - Feb. 27, 2018 // PRNewswire // - Realogy Holdings Corp. (NYSE: RLGY), the largest full-service residential real estate services company in the United States, today reported financial results for the full year ended December 31, 2017, including the following highlights:

• Revenue was $6.1 billion, an increase of 5% compared to 2016, driven by increases in homesale transaction volume (transaction sides multiplied by average sale price).
• Realogy grew its U.S. market share of existing homesale transaction volume to 15.9%, up from 15.7% in 2016.
• Combined 2017 homesale transaction volume for Realogy increased 7% year-over-year, which exceeded the National Association of Realtors reported annual industry volume increase of 6% in 2017.
• Net income was $431 million for 2017, compared to $213 million for 2016. Basic earnings per share was $3.15 compared with basic earnings per share of $1.47 in 2016. This reflects the recognition of a $216 million tax benefit, most of which is due to the 2017 Tax Cuts and Jobs Act, which reduces Realogy's effective tax rate from an estimated 41% to an estimated 29%.
• Adjusted net income per share for 2017 was $1.59 compared with $1.64 for 2016. (See Table 1a).1
  Free Cash Flow for 2017 was $559 million compared with $456 million for 2016, an increase of $103 million. (See Table 7).3 Free Cash Flow for 2017 includes $27 million relating to the transition to a new mortgage joint venture partner.
• Operating EBITDA for 2017 was $732 million, compared with $770 million for 2016. (See Table 5).2 The 5% decline was primarily attributable to higher agent commission rates, reduced earnings in our relocation segment, and several non-recurring charges.
• In 2017, Realogy returned $325 million of capital to stockholders through share repurchases and dividends.

"Realogy is at the heart of the attractive U.S. residential real estate market, and I believe we have a compelling combination of critical and unique advantages as the market leader," said Ryan Schneider, Realogy's new chief executive officer and president. "Success requires that we deliver better business results, and we are moving quickly to drive change to enhance shareholder value. Our strategy is anchored by an aggressive focus on serving and supporting agents to help them become more successful, in large part by leveraging our technology and data scale."

"During the past three years, Realogy has generated $1.5 billion in free cash flow," said Anthony E. Hull, Realogy's executive vice president, chief financial officer and treasurer. "The majority of our strong cash flow was allocated to repurchase shares, pay dividends and reduce debt. We expect to continue this capital management strategy going forward."

In 2017, RFG and NRT's 192,000 U.S.-based affiliated sales agents helped consumers with 1.5 million homesale transactions. In aggregate, Realogy achieved homesale transaction volume of approximately $508 billion, an increase of 7% compared with 2016. NRT average homesale price increased 5% and homesale transaction sides increased 3%, while RFG reported an average homesale price increase of 6% and a homesale transaction sides increase of 1%.

In the title and settlement services sector, TRG was involved in the closing of approximately 188,000 transactions in 2017, reflecting a 4% increase in purchase units compared with 2016, and notwithstanding a 44% decrease in refinance units, which is consistent with industry trends.

In the relocation segment, Cartus' results in 2017 decreased from the prior year due to reductions in their global relocation activity and lower overall volume. Cartus continues to be an important part of the Company's value proposition, generating highly qualified leads for its network of affiliated agents and helping them to build their businesses. Cartus generated referral opportunities to agents that resulted in approximately 76,000 in-network homesale closings for Realogy and its brands in 2017.

Capital Allocation, Quarterly Dividend and New Share Repurchase Authorization

Since the share repurchase program's inception in February 2016, the Company has repurchased approximately 18 million shares at an average price of $28.60 for $515 million in the aggregate, thereby reducing its share count by 11% in that time period. As a result, Realogy had approximately 130.2 million shares of common stock outstanding as of February 23, 2018.

Realogy today announced that its Board of Directors has authorized a new share repurchase program of up to $350 million of the Company's common stock. This is in addition to the $60 million remaining under the current $300 million share repurchase authorization announced in February 2017. Repurchases may be made at management's discretion from time to time on the open market or through privately negotiated transactions. The size and timing of these repurchases will depend on price, market and economic conditions, legal and contractual requirements and other factors. The repurchase program has no time limit and may be suspended or discontinued at any time.

On February 26, 2018, the Board of Directors of the Company declared a quarterly cash dividend of $0.09 per share of the Company's common stock. This dividend payment will be made on March 26, 2018 to shareholders of record as of the close of business on March 12, 2018.

Balance Sheet

The Company ended the year with cash and cash equivalents of $227 million. Total long-term corporate debt, including the short-term portion, net of cash and cash equivalents (net corporate debt), totaled $3.2 billion at December 31, 2017. The Company's net debt leverage ratio4 was 3.9 times at December 31, 2017.

In February 2018, the Company announced that it had completed the refinancing of its senior secured credit facilities and extended its maturity dates.

Specifically, the Company made the following changes:

• increased its revolving credit facility by $350 million to a $1.4 billion total facility and extended its maturity by three years to February 2023;
• combined its existing two tranches of term loan A and term loan A-1 into a new single tranche of $750 million and
• extended the current maturities to February 2023; and
• extended the maturity of its approximately $1.1 billion term loan B by three years to February 2025.

"We have decreased our debt from $3.9 billion at the end of 2013 to $3.3 billion at the end of 2017," added Hull. "The refinancing of our term loan facilities increased our revolver capacity to $1.4 billion and furthered our capital structure strategy of creating a staggered maturity profile on our debt structure."

At year end, the Company's net operating loss carryforwards were $1.0 billion, which it expects will allow it to continue to pay minimal cash taxes through 2019.

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

Investor Conference Call

Today, February 27, at 8:30 a.m. (EDT), Realogy will hold a conference call via webcast to review its full year 2017 results. The webcast will be hosted by Ryan Schneider, 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 live via webcast at ir.realogy.com or by dialing (888) 895-3527 (toll free); international participants should dial (706) 679-2250. Please dial in at least 5 to 10 minutes prior to start time. A webcast replay also will be available on the website.

About Realogy Holdings Corp.

Realogy Holdings Corp. (NYSE: RLGY) is the leading and most integrated provider of residential real estate services that is focused on empowering independent sales agents to best serve today's consumers. Realogy delivers its services through its well-known industry brands including Better Homes and Gardens® Real Estate, CENTURY 21®, Coldwell Banker®, Coldwell Banker Commercial®, Corcoran Group®, ERA®, Sotheby's International Realty® as well as NRT, Cartus, Title Resource Group and ZapLabs, an in-house innovation and technology development lab. Realogy's fully integrated business model includes brokerage, franchising, relocation, mortgage, and title and settlement services. Realogy provides independent sales agents access to leading technology, best-in-class marketing and learning programs, and support services to help them become more productive and build stronger businesses. Realogy's affiliated brokerages operate around the world with approximately 192,000 independent sales agents in the United States and approximately 97,000 independent sales agents in more than 115 other countries and territories. Realogy is headquartered in Madison, New Jersey.

Footnotes:

1 Adjusted net income (loss) is defined as net income (loss) before mark-to-market interest rate swap adjustments, former parent legacy items, restructuring charges, the loss on the early extinguishment of debt, the tax effect of the foregoing adjustments and the impact of the 2017 Tax Cut and Jobs Act and adjustments to the reserve for uncertain tax positions.

2 Operating EBITDA is defined as EBITDA before restructuring costs, loss on the early extinguishment of debt and former parent legacy items.

3 Free Cash Flow is defined as net income (loss) attributable to Realogy before income tax expense (benefit), net of payments, net interest expense, cash interest payments, depreciation and amortization, capital expenditures, restructuring costs and former parent legacy costs (benefits), net of payments, loss on the early extinguishment of debt, working capital adjustments and relocation receivables (assets), net of change in securitization obligations.

4 Net corporate debt divided by EBITDA, as defined by the Senior Secured Credit Facility, for the twelve-month period ended December 31, 2017.

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 insufficient or excessive home inventory levels by market and price point, the lack of sustained improvement in the number of home sales and/or stagnant or declining home prices, a decrease in consumer confidence, the impact of slow economic growth, future recessions or high levels of unemployment in the U.S. and abroad, deceleration in the building of new housing and/or irregular timing or volume of new development closings, 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 potential negative impact of certain provisions of the Tax Cuts and Jobs Act on home values over time in states with high property, sales and state and local income taxes or on homeownership rates; the Company's inability to achieve independent sales agent recruiting and retention goals without continuing pressure on the share of gross commission income paid by us to such agents and the inability to increase independent sales agent productivity; increased competition; our inability to successfully develop or obtain new technologies and systems; the Company's geographic and high-end market concentration, particularly with respect to its Company-owned brokerage operations; changes in corporate relocation practices resulting in fewer employee relocations or reduced relocation benefits; the Company's failure to enter into or renew franchise agreements at current contractual royalty rates and without increasing the amount and prevalence of sales incentives; the Company's failure to maintain its brands; risks relating to our outstanding debt and interest obligations and restrictions contained in our debt agreements; variable rate indebtedness which subjects the Company to interest rate risk; the Company's inability to access capital or refinance or repay existing indebtedness, or return capital to stockholders; the Company's inability to realize the benefits from acquisitions or the Company's mortgage origination joint venture with Guaranteed Rate, Inc.; our failure or alleged failure to comply with laws, regulations and regulatory interpretations; the Company's inability to achieve anticipated cost savings from its restructuring activities; any adverse resolution of litigation, governmental or regulatory proceedings or arbitration awards; the final resolution or outcomes with respect to Cendant's (our former parent) remaining contingent liabilities; and the failure or disruption of our operations, or the compromise of our systems or data, as a result of various causes, including cybersecurity attacks.

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 Annual Report on Form 10-K for the year ended December 31, 2017, and 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.

Non-GAAP Financial Measures

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. See Tables 1a, 8 and 9 for definitions of these non-GAAP financial measures and Tables 1a, 4a, 4b, 5, 6, 7 and 8 for reconciliations of the historical non-GAAP financial measures to their most comparable GAAP terms.

For full spreadsheet report, please go to: https://www.realogy.com/news/2018/02/27/realogy-reports-financial-results-for-full-year-2017

Contacts:

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

Jennifer Halchak
Investor Relations
(973) 407-7487
jennifer.halchak@realogy.com

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

SOURCE Realogy

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