Shares Of Realogy Tumble Following First Quarter Results

Realogy HoldingsRLGY

on Monday reported first quarter 2014 financial results for the quarter ending on March 31, 2014. Richard A. Smith, Realogy's chairman, CEO and president commented, “Realogy achieved homesale transaction volume growth of 10% year-over-year in the first quarter, which is at the midpoint of our prior guidance range. Our volume growth was driven by a 13% increase in average sales price that was partially offset by a 3% decline in transaction sides. "We saw two opposing trends in the first quarter that caused an overall shift in Realogy's mix of business resulting in a higher average sale price and reduced transaction sides. Demand at the higher price points in markets served by our franchisees and company-owned brokerages was strong, while difficult credit standards and rapid home price appreciation, primarily caused by low inventory levels, constrained activity at the entry level of the housing market.”

Summary of First Quarter Results

Net revenue came in $1 billion, a 5 percent increase from the same period last year.
The company reported $53 million in adjusted EBITDA, down from $71 million from 1Q13. The press release noted the approximate $20 million reduction in earnings due to a decrease in refinancing activity.
Net loss totaled $46 million.
Cash and cash equivalents as of March 31 totaled $119 million and $145 million in outstanding borrowings. Realogy reported $3.9 billion in total debt.

Second Quarter Guidance

Based on April closed sales, management expects homesale sides to be down -5 percent to -7 percent year-over-year for RFG and NRT combined. Average sale price will likely increase +5 percent to +7 percent on a combined basis.
RFG transaction volume is expected to come in at or above the high end of volume guidance of -2 percent to +2 percent. NRT transaction volume is currently expected to come in at or below the low end of the range.
Realogy expects the aggregate number of homesale transaction sides to increase sequentially from 260,000 in the first quarter of 2014 to between 367,600 to 375,500 in the second quarter.

Full Year Guidance

In the company's conference call, management reported that 2014 CAPEX is expected to come in at $65 million.
2014 PHH Home Loans will add $4 million to $8 million to EBITDA.
Realogy sees annualized cash run rate at approximately $215 million.
Management sees 2014 working capital use of $20 million to $30 million.

Shares of Realogy closed at $42.66 on Friday and are currently down more than 10.4 percent at $38.19.

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