Q1 2021 Realogy Holdings Corp Earnings Call

Good morning, and welcome to the Realogy Holdings Corp, first quarter 2021 earnings conference call via webcast of todays call is being recorded and a written transcript will be made available in the investor information section of the company's website tomorrow.

A webcast replay will also be made available on the company's website at.

At this time I would like to turn the conference over to Realogy Senior Vice President Alicia Swift. Please go ahead Alicia.

Thank you Brandy and good morning, and welcome to really keep the first quarter 2021 earnings conference call on the call with me today are really keep CEO, and President and Ryan Schneider and Chief Financial Officer, Charlotte Simonelli.

As shown on slide three of the presentation. The company will be making statements about its future results and other forward looking statements during this call.

These statements are based on the current expectations and the current economic environment.

Forward looking statements and projections are inherently subject to significant economic competitive and other uncertainties and contingencies, many of which are beyond the control of management, including among others. The ongoing COVID-19 crisis inventory level and uncertainties related to the continued strength of the housing market.

The refinancing volume.

Actual results may differ materially from those expressed or implied in the forward looking statement.

For those who listen to the rebroadcast of this presentation. We remind you that the remarks made herein are as of today April 29, and have not been updated subsequent to the initial earnings call.

Important assumptions and other important factors that could cause actual results to differ materially from those and the forward looking statements are specified in our earnings release issued today as well as and our annual and quarterly SEC filings.

And also certain non-GAAP financial measures will be discussed on this call and per SEC rule important information regarding these non-GAAP financial measures is included in our earnings press release.

Lastly, the help contextualize and he comparisons to 2020 on today's call. Just a reminder, that each of the COVID-19 crisis, we experienced a sharp decline and open and closed home sale transaction volume commencing in the final weeks of the first quarter of 2020.

And continuing into the second quarter 2020.

With open transactions turning back to positive late in the second quarter of 2020.

Taking all of the strong recovery that we have seen since that the.

The references made to April month to day and these remarks reflect data through April 23rd 2021.

And I will call the I will turn the call over to our CEO and President Ryan Schneider. Thank you Alicia good morning, everyone I'm incredibly excited to share our very powerful Q1 results, we delivered outsized topline and bottom line growth.

And substantial market share and made great balance sheet progress.

Our strategic actions, our focused execution and a strong housing market together are building momentum for our future.

Let's get straight to the highlights of an outstanding quarter.

<unk> generated $162 million of operating and EBITDA of $130 million above Q1 of 2020.

Our brokerage and franchise businesses achieved truly outsized growth.

Through close transaction volume, 44% year over year significantly above nars reported 28% year over year market volume growth.

This is now our third consecutive quarter of market share gain.

We have gained almost 100 basis points of market share since Q2 of 2020 and continue to lead the industry with 15, 7% share.

Our share gains are a combination of our strategic initiatives getting traction and our luxury market success.

And more Granularly, we outperformed the market and both our brokerage and franchise businesses as well as and both unit sales and the price appreciation.

Our title and mortgage businesses produced major bottomline growth, earning $61 million of operating EBITDA and the quarter, we strategically expanded both businesses and we are increasingly digitizing the home sale transaction.

And our balance sheet is and its best position ever with a three one times net leverage ratio and the zero six or senior secured leverage Richard.

The Q1 was an excellent quarter for Realogy, and we entered Q2 with substantial momentum.

All of our home sales metrics are showing very robust actual and future growth and the near term.

March open transaction volume was up over 70% versus 2020.

April open transaction volume month to date is up nearly 175% versus 2020 and up a very exciting 45% ish versus 2019.

And April closed transaction volume months of day is up over 80% versus 2020 and up and equally exciting about 50% five zero versus 2019.

And New York City, which has been a tough market and a drag on our brokerage business results COVID-19 debt moved to year over year positive closed transaction volume growth in March for the first time in the year, New York City is now seeing a big rebound with March open transaction volume up 120% and <unk>.

2020, and up about 35% versus 2019.

New York City April and excuse me and New York City April open transaction volume was up nearly 400% versus 2020 and up about 20% versus 2019.

The beyond the powerful near term momentum and our numbers, let me comment strategically on where we're going longer term.

We have been transforming realogy, where faster leaner and more innovative.

We are the market leader of leveraging our substantial current business to deliver results while building the products technologies integrated customer experiences and growth vectors for the future of real estate to.

To give you some color on this let me share of five important areas, where we are investing to drive future growth.

First we've delivered innovative marketing and technology and data products to help agents and franchisees be more productive and drive better economics, and we're seeing the benefits of our results productivity recruiting winning more of listings and selling homes at higher prices and market share gains and we will continue to invest and unique.

Products like listing concierge and real Vitalize transaction manager.

<unk> leads and Jen and many other super total growth and make realogy of more attractive place for agents and franchisees.

Second we are of the market leader and luxury we are.

We're growing our luxury positioning across Sotheby's International Realty Corcoran Coldwell banker, we will continue investing and luxury franchise expansion of both domestically and internationally.

And differentiated luxury products and technologies and and our unparalleled of luxury referral networks.

Third our open technology ecosystem as the competitive advantage, we continue to develop great realogy products, while expanding third party technology integrations to better support agents and franchisees. For example, we recently added the Moxie works product suite to our open ecosystem.

And it's proven core technology and strong track record of driving productivity Moxie work share of our open architecture vision, our agents and franchisees will have access to over 50 additional third party products via our marks the cloud integration.

And as I've said in the recent interview our journey as well really good engineering and internally to build great products to support our agents and franchisees will also curating and strong products from others should connect to our world.

Four we have strategically expanded our national title and mortgage businesses. Our progress is driving large increases and title and mortgage EBITDA and we are demonstrating dramatic growth and our title.

Our digital title and mortgage product adoption.

We continue to invest and these businesses for growth with the special focus creating an end to end digital home sale transaction of experience for consumers that is seamless frictionless and easy.

Finally, we really like what we're seeing from our real share of market pilots remember real share as a differentiated high volume product. It gives home sellers of the best of both worlds of guaranteed cash offer the combined with the opportunity to get and even a higher offer from the market using one of our great agents. The most.

How do you think about real share is how it is helping us win listings.

And we believe real share could be of winter and a new growth vector.

We are accelerating our real show of product for the rest of the 2021.

We and our joint venture partner of home Partners of America are expanding the 20 markets. We are growing more aggressively and our existing markets and excitingly, we're going to be beginning to go direct to consumer.

Now before I close I want to recognize our exceptional real estate agents, who are working hard and helping customers successfully buy and sell homes as customer demand increases and changes.

And I have great appreciation for Realogy as employees, most of whom are in the field supporting our customers agents and franchisees.

We are excited about our future brand and technology showcase headquarters as we pivot to a hybrid work environment and I was incredibly proud of this week to see Realogy name. So the 2021 and Linkedin top companies list to be one of 50 companies recognized for what we are doing on talent as a real lot.

And so pulling way up Realogy is off to an incredible start to 2021 and our current home sale metrics point to continued momentum as we drive outsized growth gained substantial share deliver powerful profitability and made great progress on our balance sheet. Our investments are paying off and we will continue to invest in both the existing.

And new growth vectors.

We are building on our success as we write the next chapter of our transformation and we believe Realogy is future will be even more excited with that let me turn over the Charlotte to discuss the financials.

Thank you Ryan good morning, everyone Realogy delivered a record start to 2021, achieving our highest Q1 revenue and operating EBITDA by far.

We are streamlining and simplifying our operations and continue to drive greater operating efficiency with our cost savings initiatives.

Our balance sheet is and its best position since going public and we continue to aggressively execute on deleveraging.

And that will go into more detail about our exceptional Q1 results as shown in the financial presentation.

We deliver our strong and Q1 top and bottom line in company history first.

The first quarter revenue was $1 5 billion and increase of 379 million versus 2020, and we generated 162 million and operating EBITA and increase of 130 million versus 2020.

The integrated economics from our full service business model are delivering considerable value.

Real estate brokerage group revenue was $1 2 billion up 302 million versus prior year, driven by exceptional volume growth of 37% versus prior year.

<unk> operating EBITDA was negative 5 million and increase of 46 million versus prior year.

<unk> continues to generate substantial operating EBITDA for the under price when you consider the 76 million of intercompany royalties paid to our franchise segment.

We grew our owned brokerage agent base, 3% year over year and continued to maintain strong retention levels.

We are investing and recruiting and retention and that along with interest mix and higher volume drove the commission splits of approximately 130 basis points and the corridor.

Business mix also drove a similar increase and sweat due predominantly to the exit of our property management business as well as timing and our corporate and development business.

We like the investments, we are making and our agents and they are driving impressive results.

We are also managing the bottom line and operating margins have improved our health stable for the last six quarters with the exception of Q2, 2020 amid COVID-19.

Really true franchise group revenue was 254 million up 34 million versus prior year, driven by strong franchise, the volume growth up 47% versus prior and year and net royalty per side was $382 up $66 versus prior year.

RFG operating EBITDA was 141 million and increase of 45 million versus prior year.

Our franchise business is incredibly powerful and drive the operating leverage but Q1 revenues are muted due to a decline of 18 million and other revenue driven primarily by headwinds and relocation.

Realogy title group revenue was $201 million up $64 million versus prior year, driven by strength in both refinance and purchase volume as well as significant growth and our underwriter of business.

Total operating EBITDA was 61 million and increase of $49 million versus prior year.

And title, we benefited from growth across the portfolio and our G. R. A mortgage JV contributed 21 million of the operating EBITDA increase.

J D revenue of more than doubled in the quarter and while we only recognize our share of the earnings we are working together to grow this business.

The JV grew its loan officer base by almost 30% since the beginning of 2020 and we remain focused on further expanding loan officers and our geographic footprint.

Moving on to the cost and the balance sheet.

We are not letting go of the lessons learned amid the COVID-19 crisis, which has been a catalyst for finding new and better ways to work.

As previously identified we will deliver $80 million and permanent cost savings and 2021.

We are ahead of plan and over 70% of the target has been action already realizing approximately $25 million and Q1.

Even as we realize additional permanent savings. Please recall, the $150 million and temporary COVID-19 related cost saving we executed in Q2, and Q3, 2020 with approximately two thirds of that and Q2 that will not repeat in 2020 one.

We made continued progress on our capital structure with lower net leverage at three one times and our senior secured leverage ratio was 664 times. The <unk> six four times as of March 31.

Our Q1 free cash flow improved $88 million versus prior year, and we ended the quarter with approximately $400 million of cash and zero balance on our revolver.

Our top priority is to invest and the business.

And I am very excited about what Ryan shared earlier regarding the multiple places we are investing for growth and.

As CFO I am pleased we have the cash flow to make these investments as well as the ability to use excess cash flow to delever.

And in April we paid down in increments of $150 million of our term loan debt.

To reiterate we had a phenomenal start to 2021.

We are executing well from our leadership position.

Living efficiencies deleveraging and creating value.

We have demonstrated realogy strength agility and resilience and we will continue to lead and to the future.

With that we're happy to take your questions.

At this time, if you would like to ask a question. Please press Star then the number one on your telephone keypad against that of Star then the number one.

Okay.

Your first question comes from the line of Matt Gaudioso with Compass point.

Hey, good morning, Congrats on a great start to the year.

Good morning, Thank you Matt.

Maybe just a question for Ryan to start.

You guys are clearly outperforming the market from a kind of volume standpoint, with the market share gains and both brokerage and franchise. Just wondering if you could parse out some of the underlying drivers there between segment geography contribution from Corker and franchises and then maybe comment on.

And the sustainability of those share gains just as some of the market fluctuates.

Yeah, that's sort of the.

And just like the sustainability, obviously, what we're shooting for harder to promise or predict the let's talk about what's actually happening and I tried to give you the high level and the call. So look the first is we've got a bunch of strategic initiatives are actually working you cited one right. We've gone from nothing to something material now and corporate franchise and that's adding the market share.

And we really like that especially kind of of the upscale side that it goes through and then you know I talked about some of the product things that we're seeing drive has helped us win more listings, whether its reassure or some of the other list that I gave and so if you kind of go back to some of the different strategic vector and we've talked about and brokerage we feel like we've hit our.

Stride actually and the last kind of year plus even in Q1 of last year was a very nice kind of step up from Q1 of the 19. So theres just the lift in front of the strategic progress that we're making and that we think is paying off. The other is we are absolutely benefiting from our luxury leadership position and the luxury market as you know.

Probably with the strongest part of the market right now.

And we're also in the attractive geographies right I mean, Florida is just such a powerful and that of housing and right at the moment and Thats, our third biggest geography right and.

So we're just we're both of and a nice spot with how we kind of have the company architected geographically and luxury wise and we're going to continue to grow that especially luxury.

But we're also and equally excited about the strategic initiatives that are succeeding which again there is a bit of a list of them, but you know you called out one that we've talked about before and.

Always happy to go deeper into other like real sure right like real Vitalize listing concierge et cetera. So you know.

That's kind of what's happening and leading to the outperformance and we're pretty excited about it.

Got it that's helpful color, maybe just a follow up and put a put a finer point on corker and.

Is there any way for you to size, what you view that opportunity from a market share perspective and then.

What is what has been really the driver of success and those franchise sales and clearly the team is executing there.

Yeah, well look when we've had three quarters in a row now and we've kind of grown more than the market and we're excited about that obviously corker and as part of that look you know we wouldn't have launched the franchise and made the investment that we're making and corporate if we didn't think it was.

A real opportunity to turn into something substantial just like both are Sotheby's launch and almost 20 years ago, as Don and our better homes and gardens from 15 years ago as is done.

So we have our view on that we're not going to we're not going to show that but.

It's a really really powerful brand is different than some of our other luxury brands and <unk> and cobalt banker and its kind of upscale leisure thing and it it plays really well and certain markets you know a lot of success, and California, and Chicago and.

Denver, and Florida, and and we really like it the other thing on Corker and you know who during this quarter was.

<unk> named the number one brokerage and New York City.

For 2020 by the way is the New York City is starting to come back right and that's both the corker and and of Sotheby's say and that's been a drag on our brokerage business for a year.

On a relative basis, and while it's still a little bit below the rest of brokerage to see New York City come back and both March and April from a corker and Sotheby's standpoint, we think is a really exciting thing for the future of here.

That's very helpful. Thanks, so much.

Your next question comes from the line of Ryan magazine, and <unk> with Zelman.

Hey, Thank you very much and congratulations on the the strong results.

So I wanted to partly a bit off of the previous question. So when we think about the outperformance that's going on within both the brokerage and the and the franchise side of things I guess can you pull up a little and talk to the the value proposition that you see yourselves, providing both at the agent level and also the franchisee level and of course, we hear the the products and services.

You're adding to the suite.

Of which adds to that proposition, but I guess, there's all of these you know.

The ongoing debate around how much of it is just economics and how much of it is sort of the incremental value of products or marketing et cetera that you might be providing so maybe just help us think true where we are.

And you feel you're at and that and that proposition that you are providing to the agents and and coincidentally with the with the franchise owners.

Look you know.

We're all about we've got to deliver value for agents and franchisees and that value has got to include economics, but also products technology et cetera, because we only succeed if the agency and I mean, we don't make any money if our agents and our franchisees are out there doing transactions and being successful. So we are incredibly aligned interest and.

And as you've heard us talk about for a couple of years, where we feel like we're actually having success.

Especially for the last kind of $5 five or so quarters accelerating our journey on all of those right. We have the multi brand strategy that gives people different choices and options of euro franchisee of what the brand package opportunity that you are kind of looking for is and.

And we've been adding to that ecosystem with both of our technology, but also third party technology, we keep building new products to deliver things for agents and.

And were executed on that strategy pretty substantially and then you know we remain very economically competitive right Charlie talked about our recruiting success consistent steady recruiting and growth. The previous question and talk about our franchise sales kind of success and I think the proof and the numbers.

And so we're pretty excited about kind of what we're building and you remember.

I believe this of this is a human based business, but we've got to be of great Real estate company. That's also great of technology, and Perry and the power of Great technology products. Our open architecture as a differentiator as I said in the script with great agents and franchisees has a lot of power and where.

We're seeing it and the market.

A day, but also of the market for the past however, many quarters or do you want to go back and look at our.

The improved performance and and share gain for example.

Yeah that makes sense, Thank you Ryan and and one question on the on the Moxie works announcements so.

And his team are of course grades so definitely exciting to see the headlines but can you maybe talked true.

And what the partnership entails in terms of kind of what's what's different now under the current structure versus what might have been happening previously because I believe there are certain aspects.

If their product offering like moxie present or different things that either of you were using it the brokerage or franchises, we're using the agents might be using so what exactly changes with this and but by doing it at the corporate level.

And what's kind of that flow through benefit to an agent as opposed to them, maybe going off on their own and buying.

Buying the product from them for instance, well look this is a very large change and we're very excited about again, we develop a lot of products for agents and franchisees and deliver them and we like that.

But I have a strong belief that and an independent contractor world and a geographically diverse.

And as states and a more and diverse brand thing the ability of anybody to build of technology that works for everybody. In this industry is actually a bit of a fool's errand and and we've even done that ourselves with our SaaS platform, which I'm glad we have but boy. It's so diverse out there and so we like bringing in third party products for.

People to choose from if they would rather use that then something and say we provide first party and we love Moxie works. We think it's of great product you know, it's not new to us.

I had a few things where parts of our company of touch one of their products. We had some franchisees who have their own relationship with Moxie works because I thought it was of great product and we love all of that but what we're doing here is much bigger right, we're bringing the whole product suite of not just the moxie present side, we're bringing in their website capabilities, we're bringing in the recruiting.

<unk> abilities their CRM the presentation tools every day and we're integrating that into our ecosystem so to be incredibly easy for everybody to use and it's going to be a part of our value proposition to our franchisees and again, we're still going to have first party products. So that they can choose to use and that's great. But if this is a true.

And the people we've got great feedback about it from franchisees from agents, we want to enable that kind of thing and then again, we are the one company who is really focused on this open architecture and Moxie works agrees with that they've built this thing called the Moxie cloud, where they already have 55 zero plus kind of integrations with third.

Party of products, our agents and franchisees are going and get access to those through this integration. So we're just accelerating our open architecture journey with the great product and a great partner.

And we can do it big at the corporate level and a way that none of our individual franchisees could ever do and we're really excited about it.

That's great. Thanks, so much.

Your next question comes from the line of Matthew Bouley with Barclays.

Good morning, everyone. Congrats on the results and thanks for taking the questions.

So if I could stick on the same topic of technology tools.

And you highlighted many of you know.

Full answer to the prior question and you know.

Lot with organic and acquisitions and you've built out this open ecosystem. So.

And the direct question is on the on the one hand, you know what specific tools going forward do you think you need from and agents perspective, what are the next holes you want to fill if you had a wish list and then the broader question, which is really a follow up the everything that you just mentioned with Moxie works is is there actually some value at some point.

Simplifying and streamlining with what seems to be just the wide and growing tech offering to agents.

Well, let me start and the second one look we're in a different world and we used to be and as part of that new it's been around for a few years.

You can integrate things with API, so much easier than you could even 357 10 years ago right. So we don't view of the fact that you can pick.

For more than one thing and our technology stack if youre on the agent as complex just you know no more than you pick and whatever apps you want on your on your phone you know his.

And there's some big complex problem. These days and it's not it's quite easy and intuitive people do it and so the fact that you can now architect. These open ecosystems that are much easier and simpler than they used to be means I don't worry about the wide problem. We are going to be as I said in my script curators and we're not just opening up our open ecosystem to any product.

And we got it's got to be good we got to be excited about it there's got to be demand for it.

But the power of us developing great products, and our agents, having some choice and franchisees and the technology. They use we think that's the differentiator because again I think these closed garden and ecosystems are not the right.

And are unlikely to meet the needs of agents and franchisees and the best way.

And this industry of ball. So that's my view on kind of the your second.

Second question, you're one of your first one.

I don't think we have any gaps and the products today at all but we will always want to keep making them better we want to find new things that are innovative that drive results I think reassurance of the Nice example that the product. We've now got it's pretty big and agents can use it and not everybody is going to have that and brokerage kind of thing.

So we keep one of the introduce unique products to people, but we also always want to go faster and we always want to work on the infrastructure stuff that makes the agents life easier, even if it's not a market facing product.

And then there is always the one infrastructure work, we're doing as a company. So our technology journey is nowhere near over I mean, it's in some ways, it's evergreen and we're always in the early innings of the thing.

But I'm really excited by what we're providing today, but also adding things like Moxie works and some of these other third party products and their <expletive>.

As our industry evolves and then the final thing I'll say is we're putting a lot of effort on the consumer side on technology and digitizing. The transaction right. We have you know we have a great title business. The covers the lion's share of where we do brokerage we've.

We've got a very strong mortgage joint venture we invested back in 2018 to build sort of digital products. So that you can do digital kind of closings and the space and as I told you and the last quarter. They took off massively as COVID-19 hit and they continue to take off and not because of COVID-19, but because people.

They're awesome experience as compared to the old way of doing it and so you know everybody is talking about simplifying the transaction.

We are excited to have all of these pieces and to be working and actually trying to do that and we like the momentum we're getting its shows up and our title and mortgage results and so you are all of you are going to see increasing technology focus on us, making the customer experience for you know actually closing and getting from contract.

Close on your home of better more simple integrated experience, which is the Holy Grail of lot of people are chasing but I think we're actually doing more of it the people either think or would give us credit for.

At this point and the process and I think it shows up and our results.

Got it that is very helpful color and is actually a perfect segue into what I wanted to ask Max and so on the integrated transaction.

This question is kind of like the inverse of the attach rates you scale up mortgage you have a big title footprint.

What portion of agents.

And not looking for any of the perfect number, but what portion of agents actually have access to all of the integrated and transaction offerings, because and this type of market environment, where there's clearly frictions of the process of selling and buying a home the does the ability to actually have that offering and.

And and to the extent they can advertise that actually drive volumes to the agents.

Well, we'd like it to.

Have enough proof, yes, I think from one way to power of the drum too much on that but we've done I think of really good job with our owned brokerage agents Matt.

And giving them access to this and some of that is just through the core title and mortgage.

Sure and ships and and technology that we've got we have a big on and.

And on undiscovered country still with franchisees like we do some titled Joint Ventures with franchisees.

We our franchise agents are not in the title and mortgage ecosystem. The way our owned brokerage agents are yet and that's an opportunity that we think is quite interesting and we'd like to do more of and we're working to do more of it.

The more complicated because you're obviously going to do it with the franchisees, but we feel good about where our 50000 and owned brokerage agents are and the ability to really access our title and mortgage and then the franchisees and opportunity. The last thing I'll say on this as well.

We do a lot of this title and mortgage closing of for non real estate agents and our title business and they like the technology and they can access it also and so we're not going to give the numbers but.

A good part of our title mortgage book.

<unk> actually comes from non real of the agency like what we're doing and we have you know of build relationships with the et cetera. So we're not confined and what we're doing here to just our agents on the owned brokerage side and we think we've got some growth opportunity, we think those of showing up and our numbers.

Got it no that's very helpful. If I could sneak in a quick just clarification debt.

Do you have the the contribution of of the reload business.

Broken out with and RFG.

And I don't believe we've disclosed that but what I can tell you is what I did say in my script is the revenue.

And it's down $18 million, which was predominantly due to relocation. So you can turn it back into what the EBITDA piece of that was based on historical Americans. This is the last quarter, where we're lapping pre COVID-19. So I think as we move into Q2 and beyond when we start lapping the COVID-19 period, the impact will not be as per my.

Got it.

Okay, well, thank you Charlotte and and Ryan really appreciate that all of those details. So thanks again thank.

Thank you Matthew.

Your next question comes from the line of Tommy Mcveigh wind with K B W.

Hey, good morning, guys and thanks for taking my question.

And so you've discussed some market share gains kind of broadly across the country do you of any way to think about or parse out your market share trends and and just the high end market and obviously it depends on how exactly you define it but any any way you could put some numbers around that.

Yeah, well look we know our market share of wallet by both local geography and price band everywhere.

It's <unk>.

We're we're unlikely to be disclosing like that kind of level of granularity, but you know.

As I said, we like not just the overall growth, we like what we're seeing and growth and the luxury side and you know obviously, that's a big piece of our market share gain.

And then again.

Go back to the architecture of thing a little bit of where we're at right now.

Florida, such a powerful thing right now out there of the ecosystem the suburbs around New York City are just on fire and we're incredibly strong and New Jersey and.

And at Southern Connecticut, and Westchester and long Island and so we're we're we're clearly gaining share here and we're doing it included and the luxury area.

Some of it's the.

Expansion of like the Corker and the thing that came up earlier as a piece of it but some of it also is the geography and the architecture of what we've got and where the market is and so we feel really really good about what's happening overall and our company, but we feel even better about whats happening and luxury and our company.

Okay. That's helpful.

And switching over or are you guys seeing less turnover among the agents and the industry right now I've used the agents are very busy and with the market and.

Any sense of you can think of.

I would say, it's still it's still pretty it's still pretty competitive out there and we're a part of that right. I mean, I think we're one of the people that are succeeding Charlie talked about our agent growth of our retention is.

It's definitely better kind.

The improved for.

And improve for like five quarters in a row and then it was about the same here in Q1 as it was in Q4 of 2020, which was clearly a much better place.

And how the world was operating back and like late 18, and a lot of 19 or so.

And it's still pretty competitive out there.

But.

But we like our results, obviously, better and they're showing up and our numbers.

Great. Thank you and the last one if I could just sneak it in and do you have a good run rate from what the corporate segment should be on an EBITDA basis.

Yeah. So.

I think Q1 is not a bad first start there are some timing and employee related expenses, but you can look over the past year or two and sort of average it out and I think just keep in mind, what we're lapping in the prior year is overweight in the back half of where we recognize more expenses and the back half of the year and that won't be the case of.

Sure.

It'll be more evenly paced.

Okay. That's helpful. Thank you.

Your next question comes from the line of Stephen Kim with Evercore ISI.

Thanks, very much guys.

First question relates to the title and mortgage business I know you talked a bunch of about it already and.

The way I'd look at it.

And you take put aside for a minute the the portion of the business. It is directly tied to the non of transactions that you do there seems like Theres also been.

There's obviously also a driver related to the the mortgage rates and the refi wave that the the low rate environment has created and yet you're also growing that business, making investments and doing things here to really make that business be more durable going forward no matter, what the rate environment and so when I'm, hoping you can do is maybe give us a little.

The perspective on how much do you think the current incredibly strong earnings out of that business, maybe tied to and.

Sustainable level of refinancing activity and how much of it do you think is more tied to the other words, what and what might be kind of like of core earnings level.

The level that we could expect if we were to model different.

The trajectories of mortgage rates over the next year.

Well a couple of different thoughts there you know, we've been and a very prolonged and extended resign but on the crane and maybe at the longest and history and the rates are still they stepped down below 3%. So we're optimistic about that continuing for at least the near term.

Keep in mind also we do tend to make more money on purchase transactions versus refi. So there's a mix impact as you think of the EBIT God and.

To the extent that purchase volumes remain very strong, we're making a lot more money. There. There is the third factor, which is the gain on sale of margins and that those have been there and very strong and.

US as well as I'm sure our competitors over the past year and so that's the third very important piece that will impact the profitability of this business going forward. So you know the wave of grilling loan officers will continue we're definitely getting leverage and that business and the expense side. So that will continue.

We make more on purchase yes, the refi thing.

And the high volume there had been a very favorable impact to us but the gain on sale is also a very important thing to watch.

Got it so would it be fair to say that maybe you know of half of what we saw this quarter it could be tied to you know things.

And things like gain on sale and maybe a greater refi wave.

And half of it is more from the growth and the actual underlying business things that are sort of self help initiatives.

It's not a bad benchmark, but I think youre, probably a little undercutting the the gain on sales piece and the insight.

Pete.

It's probably worth more than U S.

Estimated yeah I understand thank you for that that's helpful. Second question is a broader question about.

The the fact that were really were and are really unusually strong sellers market today and I'm wondering about the mix of your commissions that come from buy side.

Agency versus sell side agency.

I would think that in a seller's market like today more of your commissions would be tied the buy side transactions because it's just so hard to buy a house today, but longer term buyers agency is also the side of the market that many investors are tell us. They are kind of worried about you know in terms of being vulnerable to falling commissions over the long.

Term and so I'm wondering can you tell us how much buy side commissions and they have increased relative to the sell side recently and how this compares to the longer term trend.

So.

There's both some I think good thoughts, but also maybe a few misperceptions and some of the stuff that you've talked about look we get about the same for buy and sell and bluntly.

Because.

There's only one buyer and one seller you know the.

And the commissions are pretty some metrics and.

They've been symmetric and the past or is there some metric today. During this you know heavy.

Heavy demand kind of period that we're in.

And so they've been pretty symmetric you can actually see.

Our ABC are ticking up a little bit.

Which as you know.

To me coming back to the value of that the agents are delivering and you know.

And while it's a very strong market right now of that actually creates a bunch of complexity for sellers and buyers.

Where agents are probably earned and their money a lot more than you might think.

Given the intensity of the market and especially in some certain places.

So overall, we're always watching the trend and ABC are and it's drifted down a little bit and the last decade, but thats, mostly been mix that I've talked about that so many times people are probably the board from hearing it.

But but the buy and the sell again and the numbers are about the same.

Over time, and I've said this for over time.

And having the leverage of B and a seller.

And just more certain that youre going to get a commission and then working with the buyer right and and there may be a little bit of what you're getting too and so it's always I think of stronger positioned to be the the brokerage and the age of that has the listing and that's why you know we like the listings growth we've had it and helped drive some market share and you saw and are.

Our unit sales outperformed our right, we're not gaining market share of just because of price appreciation, we're gaining market share because we got more units to be installed and so from an <unk> standpoint, you are correct that.

And the listing does give you more power and the buy side the customer just competing with other buyers. So there's a little more potential for maybe disruption there, but it sure hasn't shown up and the numbers yet.

And again, we get about with our size and scale, we get about equal on both sides. So.

And we watch it closely but the the.

The the disruption people have been talking about disruption of the average broker Commission rate.

For forever and and unlike some other things that have been challenging in this industry that was actually kind of hanging in there and in fact, you know again, even in this crazy.

High demand market the the number of gradually ticking up a bit so agents add a lot of value and and we watch this closely but.

And this has not been the thing that has been challenging and for either realogy of the industry. When you look at the past however, many years.

Yeah, that's really helpful. Thanks for that Ryan I appreciate it.

And sort of following up on that just a little bit though is.

There are there's always been of a pretty significant difference between.

Your highest performing agents and those that are maybe newer and the business or not as focused on it.

And seriously and and you know we've always you've always talked about that upper slices being such an.

The important part of your business the real engine.

I was curious as to whether during this unusual passed a year that you've seen.

Any shifts in the relative productivity of the.

And the higher or versus the lower.

You know.

You know it because if you think about the hierarchy of the your agents, whether the that the higher and has or the more productive more experienced agents have actually gained share or have actually lost share to the the the less productive agents.

No great question look the higher growth agents have gained share over the last kind of 12 months.

And it shows up and our financials both in terms of.

And we like the volume that those folks are getting because they're off and gaining share at the expense of others out of the world.

But it also has been one of the things the Charlotte talked about that's been you know.

A bit of why our commission costs and gone up its been some of its been the mix change to the higher producing higher split agents and you thought the strongest.

Steven actually during the last summer when.

Some of the health and safety challenges and some of all of the economic uncertainty. It was the best highest productive agents, who power through better than the average agent and.

And you saw us over there and then it has continued.

Not as not as much of it did last summer, but it has continued.

And again in Q1 of 2020 of it didn't look much different than Q4 of 20 excuse me Q1 of 2021 and we're just talking about here.

And youre phenomenon wasn't very different than Q4 of 2020, but the acceleration of those folks did happen, but it was more of a Q2 Q3 last year kind of thing and then it's just kind of stayed there.

And that's why we think could happen by the way.

Got it that's really helpful. Thanks for that guys.

Your final question comes from the line of John Campbell with Stephens.

Good morning. This is James Holly speaking for John Campbell with Stephens.

Welcome James Hey, So my first question is for Charlotte Charlotte. So there was $80 million of cost saves there. It sounds like you've already picked up about $25 million of that but I'm curious about the phasing of the saves over the balance of the year and then if you could provide a bit of color on that and the sources of the save that'd be really helpful.

Sure the rest of it's pretty evenly phased we did over deliver a little bit and the first quarter, but the rest of it's pretty evenly sales.

And as far as where it's coming from it's all of the places that we've been talking about so it's coming from the and.

Administrative lease expense that we announced we have and annualized run rate of $20 million of reduce lease expense.

Just because we're working differently and post COVID-19. There is also of employee related expenses that are down so whether it's the number of people or whether it's how they travel.

We're doing very different things on meetings and conferences, we're getting a lot more virtually and theirs.

The lower marketing expense. So those are the areas that we continue to see it comes true.

And we're on the journey, we continue to look for more savings and so we'll continue to do that but feeling really good about the program and you have in place for this year.

Okay. Yeah, that's great and then just the other question here so on the.

The mortgage JV side, the 21 million and the quarter that was up over triple last year, but youre going up against some tough comps for the rest of the year and other you don't have a crystal ball here on the mortgage origination side of the market, but broadly how should we be thinking about the mortgage JV trends here.

No that's of Great question, and I think that goes to the previous question on what's driving the profitability of that business and the increases and so what I sort of alluded to earlier is that and sort of half of ash driven by the gain on sale margins and the refi boom so to the extent that those wane a little bit.

Definitely see an impact on a year over year basis on that component. However, the growth on the purchase side and on the operating leverage because we have increased loan officers is going to be of benefit, but you've got to sort of like Keith part of it out between what you expect per refi and gain on sale, which has the sizeable impact and James.

Just right away and the mortgage is complicated youll be able to do whats happening with refi and gain on sale as well as weekend.

Right.

I told you how excited and kind of our home sale transaction metrics for like April or in terms of the near term.

On Monday of this of this week.

Our JV had its largest day ever and its history of purchase volume loss.

So we lost more business on Monday, and this JV than we've ever done and its history now again theres refined as gain on sale of there's all kinds of things going on and lots of directions, but.

And there is some definite strong underlying strength to not just our home sale transactions, but this and then we are going to keep investing and growing loan officers and things like that so yes.

We're excited to be comparing the good results and and we look forward to do and our best and but a lot of moving pizza and mortgages, but.

The Monday purchase example, with like the equivalent of the April volume. Examples I gave you for brokerage so I wanted to pass that along.

Alright. Thank you guys appreciate the time.

Thank you. Thank you.

And this does conclude today's conference call. Thank you for your participation and you may now disconnect.

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