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Realogy Holdings generates strong free cash flow in Q3, to retire $300 million debt in early 2015
By Lisa Kerner
Charlotte, N.C., Nov. 5 – Realogy Holdings Corp. ended its third quarter on Sept. 30 with cash and cash equivalents of $268 million, no borrowings under its revolving credit facility and total long-term corporate debt, including the short-term portion, of $3.7 billion, according to its earnings news release.
For the full year, Realogy’s cash and cash equivalents are expected to total about $400 million.
The company expects to retire $300 million of its 7 7/8% debt early next year, said chief executive officer and president Richard Smith during the company’s earnings conference call on Wednesday.
Smith said he was pleased with the results for the quarter, which produced strong cash flow.
Chief financial officer Tony Hull said Realogy generated $234 million of free cash flow in the third quarter, a 17% increase over the prior year.
“We intend to use our free cash flow primarily to retire our debt and invest in the growth of our business,” Hull said on the call.
When asked about debt reduction during the question-and-answer period of the call, Hull said Realogy’s senior secured debt is the “most restrictive” and is callable in 2016. The company is looking at retiring that debt in the ’15-’16 time frame. The governor on that debt is a leverage of less than four times. According to Hull, as the company generates free cash flow and gets closer to a leverage of three times, it will get closer to returning capital to shareholders.
The company’s third-quarter net income was $100 million, and its net debt-to-adjusted EBITDA was 4.8 times at Sept. 30.
Realogy reported a 1% year-over-year decrease in net revenue for the quarter of $1.5 billion.
Adjusted EBITDA was up $1 billion from the prior-year quarter at $287 million.
Realogy is a Madison, N.J.-based real estate sales and relocation services provider company.
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