Realogy reported Thursday a net loss of $462 million in the first quarter — due in part thanks to a $447 million impairment charge related to broad-based declines in the overall market due to COVID-19. It’s a huge increase over the $99 million net loss the company posted in the first quarter of 2019.
The company fell short of the consensus estimate of a net loss of $0.59 per share, reporting a net loss of $0.67 per share.
Realogy, which is the parent company of a handful of franchise brands and company-owned brokerages under the brands of Coldwell Banker, Century 21, Better Homes and Gardens Real Estate, Corcoran, ERA Real Estate and Sotheby’s International Real Estate, reported $1.1 billion revenue in the first quarter, a 6-percent increase of $62 million year-over-year. It hit the consensus estimate of $1.1 billion.
“Realogy delivered on its operational and financial momentum in the first quarter with top line growth and margin expansion across the enterprise,” Charlotte Simonelli, Realogy’s executive vice president, chief financial officer and treasurer, said in a statement. “Our ongoing strategic execution, rigorous cost management, liquidity, and capital allocation decisions are designed to enable us to manage the challenges of the COVID-19 pandemic.”
The goodwill impairment is an accounting adjustment for the total value of a company’s assets, which had to be adjusted to reflect the current market, which the company said has changed due to COVID-19. The impairment doesn’t affect company cash flow, it’s essentially just a correction of value. The company is expected to provide more context on its earnings call Thursday morning.
The full impact of the market slowdown due to COVID-19 won’t yet be reflected, as the first quarter only runs through the end of March. And while many states were already entering lockdown in March, Realogy actually improved its transaction and volume numbers year-over-year.
The company delivered 8 percent transaction volume growth across both its company-owned and franchise businesses and say a 4 percent growth in agents at Realogy Brokerage Group with improved retention.
Realogy Title Group also delivered a strong quarter, and the company’s joint mortgage venture with Guaranteed Rate generated $9 million in operating EBITDA (earnings before interest, taxes, depreciation, and amortization), due to increased refinance volume.
“The first quarter marked strong results delivery for Realogy with 8% transaction volume growth and a $35 million increase in Operating EBITDA,” Ryan Schneider, Realogy’s CEO and president said in a statement. “In this COVID crisis, Realogy’s first priority is the health, safety, and well-being of our employees, affiliated agents, franchise owners, and customers.”
“I am very excited by the creativity our affiliated agents and employees are demonstrating to help customers safely buy and sell homes and by the corporate actions we are taking to position Realogy to navigate this crisis and emerge strong on the other side.”
Realogy, is currently locked in a legal dispute with SIRVA Worldwide over the $400 million deal to sell the relocation arm of Cartus. Realogy is arguing that SIRVA is inappropriately citing the coronavirus pandemic as a reason for pulling out of an agreed-upon sale.
Along with much of the real estate industry, Realogy saw its stock price greatly suffer in the first quarter as COVID-19 hit the United States. It reached a high of $13.04 in late February, before falling below the $3 per share range. It’s since climbed back slightly to around $3.73 as of markets close, Wednesday.
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