Realogy Holdings cuts debt by $460 million in two years, ends 2013 with net debt of $3.9 billion

By Lisa Kerner

Charlotte, N.C., Feb. 25 - Realogy Holdings Corp. "posted strong revenue and adjusted EBITDA gains in 2013, capitalizing on the second year of the housing recovery," said chairman, chief executive officer and president Richard Smith.

Revenue for 2013 was up 8% at $5.3 billion, while adjusted EBITDA was up 18% for the year at $796 million.

"This past year we continued to position the company for growth by adding franchisees to our brands and completing accretive acquisitions at a faster pace than we did in 2012, while reducing our debt by approximately $460 million since December of 2012," Smith said during Realogy's year-end 2013 earnings conference call on Tuesday.

Realogy ended the year with cash and cash equivalents of $236 million and no outstanding borrowings on its revolving credit facility under its senior secured credit agreement. Total long-term corporate debt, including the short-term portion, declined to $3.9 billion at Dec. 31 from $4.4 billion at the end of 2012, according to the earnings news release.

Year-end debt included a $1.9 billion term loan, $593 million of first-lien debt and $500 million of 3 3/8% senior cash notes due in May 2016, according to the earnings presentation.

"Our financial leverage, which was 5.9 times at the end of 2012, improved to 4.6 times at the end of the year," chief financial officer Tony Hull said on the call.

Hull noted that the leverage was below the 4.7 times the company had forecasted in November.

Realogy's leverage target continues to be three times.

"Volume growth along with strong free cash flow generation will allow us to delever further in 2014 to get closer to our goal of returning capital to shareholders when our net debt to adjusted EBITDA reaches three times," Hull said.

Financial highlights

The Madison, N.J.-based real estate sales and relocation services provider company reported full-year income of $438 million and basic earnings per share of $3.01.

Combined full-year home sale transaction volume (transaction sides times average sale price) increased by 18%, as compared to 2012, according to the news release.

Looking ahead, Realogy's 2014 guidance includes capital expenditures of about $65 million, cash interest expense of $240 million and working capital use of between $40 million and $60 million.

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