Q4 2024 Anywhere Real Estate Inc Earnings Call
Good morning, and welcome to the anywhere real estate friend 'twenty 'twenty four earnings conference call via webcast. Today's 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.
Speaker Change: At this time I would like to turn the conference over to anywhere Senior Vice President Alicia Swift. Please go ahead Alicia.
Alicia Swift: Thank you Sarah good morning, and welcome to the year end 2024 earnings conference call for anywhere real estate.
Speaker Change: On the call with me today are anywhere CEO, and President Ryan Schneider, and Chief Financial Officer, Charlotte Simonelli.
Speaker Change: 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.
Speaker Change: These statements are based on the current expectation and the current economic environment.
Speaker Change: Forward looking statements estimates and projections are inherently subject to significant economic competitive antitrust and other litigation regulatory and other uncertainties and contingencies, many of which are beyond the control of management, including among others industry and macroeconomic developments as well as uncertainty related to the California.
Speaker Change: On your wildfires.
Speaker Change: Actual results may differ materially from those expressed or implied in the forward looking statements.
Speaker Change: Effective December 31, 2024, the company updated its definition of operating EBITDA to include adjustments for noncash stock based compensation and certain legal matters.
Speaker Change: Revisions enhance comparability with industry peers and all of the figures discussed on this call and in our reported material are adjusted to reflect this change.
Speaker Change: If we include the inclusion of these adjustments does not materially affect segment, all trends or conclusions previously disclosed reconcile.
Speaker Change: Reconciliations of operating EBITDA to the most directly comparable GAAP measure are provided for all periods reported.
Speaker Change: The references made to January and these remarks are preliminary results for the month January 2025 has the same number of business days of January 2024.
Speaker Change: We have three large expected one time free cash flow headwinds in 2025, which totaled approximately $115 million.
Speaker Change: The first headwind is our approved $83 5 million litigation settlement, we have made $30 million in payments.
Speaker Change: The remaining 53 and a half will be due when the appeals are resolved.
Speaker Change: The timing of the appeals is uncertain, depending on the developments in the proceedings and we currently expect the payment to occur no earlier than mid 2025.
Speaker Change: Second the 1999 centers legacy tax matter of approximately 40 million is due shortly after the notices received and as anticipated in 2025.
Speaker Change: Third in January 2025, the company entered into a settlement of the Bumpus for T. C. P. A litigation for $20 million, we anticipate making this payment in Q3, 2025, which is subject to preliminary and final court approval for further discussion of these matters see our SEC periodic reports.
Speaker Change: The reference to core franchise in these remarks is the franchise segment, excluding relocation and leads.
Speaker Change: Important assumptions and factors that could cause actual results to differ materially from those in the forward looking statements are specified in our earnings release issued today as well as our annual and quarterly SEC filings.
Speaker Change: For those who listen to the rebroadcast of this presentation. We remind you that the remarks made herein are as of today February 13th and have not been updated subsequent to the initial earnings call now I will turn the call over to our CEO and President Brian Schneider. Thank you Alicia good morning, everyone.
Speaker Change: Recently reminded of a famous da Vinci quote it states people of accomplishment rarely sit back and let things happen to them. They go out and happened to things and this is exactly what anywhere real estate did in 2024 is going to do in 2025.
Speaker Change: 2024, we delivered industry, leading EBITDA, we helped our agents and franchisees navigate both the tough housing market and the industry practice changes with competitive edge.
Speaker Change: And we continue to invest in and accelerate our strategy enhancing our market position to fuel growth and deliver long term value for our stakeholders as we take on 2025, we're prepared to leave at the same proactive energy to power our future success.
Speaker Change: Question on our 2020 for performance, we generated $290 million of operating EBITDA up $35 million from the prior year and delivered $50 million of free cash flow $70 million, excluding our $20 million litigation settlement payment.
Speaker Change: We closed the year with strong momentum, earning $52 million of operating EBITDA in the fourth quarter up $24 million year over year with 13% closed transaction volume growth.
Speaker Change: We exceeded our cost savings target by 25%, achieving nearly $125 million in savings by simplifying and automating and streamlining our operations now looking ahead, we're focused on new technologies and automation to unlock new cost saving opportunities that really didn't exist before and we have targeted another one.
Speaker Change: <unk> million dollars for 2025, reinforcing our commitment to permanently lowering our cost base and enhancing our earnings power.
Speaker Change: And we accelerated our aggressive AI agenda deploying generative AI at scale across many parts of our business to drive better experiences faster and at lower cost.
Speaker Change: Our efforts include both customer facing examples and internal solutions that are transforming how we operate for.
Speaker Change: For example, our listing concierge product with its new AI integration drove significant adoption and was named best use of AI by our brokerage in 2024.
Speaker Change: New AI integration in our leads business does better identifying and targeting consumers most likely to become buyers. We are now able to better match. These higher quality lead with our best performing agents faster than before.
Speaker Change: These leads are seeing a 40% improvement in conversion rate.
Speaker Change: And generative AI continues to improve our operations. We currently process about 15000 documents today to support our brokerage transactions with generative AI, we have the ability to process needs with fewer than half the team in a fraction of the time with a significant reduction in error rates and in our most recent pilot we've seen air rates fall to us.
Speaker Change: So as one in 5000 documents processed.
Speaker Change: Now turning to growth, we meaningfully expanded our luxury leadership across Sotheby's International Realty Corcoran Coldwell banker global luxury.
Speaker Change: Our luxury volume was up nearly 10% for the year at approximately 20% in the fourth quarter as we gained meaningful market share here domestic.
Speaker Change: The most exciting thing about our luxury outperformance is the powerful unit growth, which grew 4% year over year for the full year and by 12% year over year in Q4, both substantially exceeding the market's unit results.
Speaker Change: We continue to lead the industry selling the most luxury homes at all luxury price points. So for example, we sold over 1010 plus million dollar homes in 2024 and have over 1000 $10 million plus listings in our current portfolio.
Speaker Change: Our Sotheby's contours auction business, where we are paid both a buyer premium and a seller commission continues to grow and had a $5 billion plus average sales price in 2024.
Speaker Change: And this luxury success is driven by our distinctive value propositions and the talented agents, who continue to flock to and stay with our great luxury brands.
Speaker Change: We grew our high margin franchise network, adding 67, new franchisees in 2024 with 28, new franchisees in Q4 and in Q4, we were especially proud of the addition of a 400 agent longtime independent family owned brokerage in the D C area to our growing Corcoran brand.
Speaker Change: We broadened our upward titled Joint venture from three to six states in 2024 with now over 20 franchise partners in place and three more states in the pipeline.
Speaker Change: We love the upward title momentum in the business because it opens new Orleans opportunities for us and our franchisees enhances our value proposition and deepens our relationship with participating franchisees.
Speaker Change: We successfully implemented complex industry practice changes, providing our network with clear guidance and innovative solutions, giving them a significant competitive edge for instance, our key signed product enables agents to effortlessly create and collect digitally signed buyer agreements by simply scanning of clients' license with their mobile device.
Speaker Change: And finally in late 2024, we launched re imagine 25.
Speaker Change: To transform how we operate as a company going forward.
Speaker Change: The new opportunities to unlocked by generative AI and other emerging technologies to deliver better experiences for our customers faster and at lower cost <unk>.
Speaker Change: <unk> 25 enables us as early adopters to jumpstart, our more innovative future and will serve as the foundation of our continued efforts to lower our cost base.
Speaker Change: Now turning to 2025 January started off much like the end of 2020 for the housing market remains challenged, especially with a lack of supply and real pressure on the number of unit transactions. However, we had a robust January with 12% closed volume growth year over year, driven by price gains and our.
Speaker Change: <unk> volume in January while softer was still positive at plus 4% also driven by price case.
Speaker Change: Now even more important for 2025, there's two industry topics I want to be clear on the first as NAR is clear cooperation policy, which requires all listings to be put on the MLS within 24 hours.
Speaker Change: Publicly marketing a property.
Speaker Change: Our position is that the rule should be relaxed to provide more flexibility to sellers. However, we oppose a blanket repeal as we believe transparency and access to all available inventory are in the best interest of both sellers and buyers.
Speaker Change: Those advocating for full repeal or primary advancing their own interests as theres clearly an opportunity for players with listing scale to create private off market listing networks, but only select agents can access, which clearly could enhance near term economics, but we believe this is bad for consumers and we think it's best to deal with it.
Speaker Change: The long term interest of the consumer.
Speaker Change: However, let me be clear, we actually have the most listings in the industry across our brands.
Speaker Change: If the market evolves to favor private off market listing networks, we are ready to capitalize and we will ensure our agents and franchisees are never disadvantaged the scale of anywhere offer significant benefits and we're prepared to leverage all of our advantages to make sure our agents and franchisees have everything they need to succeed in a private list.
Speaker Change: <unk> World.
Speaker Change: The second topic of industry consolidation, we're seeing more firms looking to sell across brokerage adjacent services on prop Tech we are well positioned to explore these opportunities not only because of our liquidity, but also due to the competitive edge that we offer we believe our assets enable us to provide unique solutions with the <unk>.
Speaker Change: <unk> synergies, the easiest integration and ready to use technology.
Speaker Change: We would be excited to augment our growth through M&A opportunities at attractive economics and to be clear we will remain.
Speaker Change: We will maintain a disciplined approach to profitability with deals that enhance the bottom line not just the top line with that let me now turn it over to Charlotte for more details on 2024.
Charlotte: Good morning, everyone.
Charlotte: Ended 2024 with numerous successes.
Charlotte: Generated meaningful operating EBITA, we over delivered on cost savings.
Charlotte: We successfully navigated through unprecedented industry uncertainty and helped our franchisees and agents implement practice changes with minimal impact to our financials.
Charlotte: We reduced and lengthened our capital structure with the repayment of our term loan a and some debt repurchases.
Charlotte: We saw agent Commission split trends continue to moderate for yet another year.
Charlotte: We prudently managed our cash and we made significant progress on our strategy and exited the year with solid momentum.
Charlotte: I will now highlight our Q4 and full year 2024 financial results.
Speaker Change: As Alicia mentioned in our opening we have revised how we report operating EBITDA to enhance comparability to industry peers and all of the figures discussed on this call and in our reported materials reflect this change.
Speaker Change: Q4 revenue was $1 4 billion up 9% versus prior year and operating EBITDA was $52 million, an increase of 86% versus prior year, primarily due to higher transaction volume and cost savings, partially offset by foreign currency impacts and relocation and some costs related.
Speaker Change: To the acquisition of Delta and our underwriter JV.
Speaker Change: Full year revenue was $5 7 billion up 1% versus prior year and operating EBITDA was $290 million, an increase of 14% versus prior year, primarily driven by higher operating margins as we continue to improve our cost structure.
Speaker Change: We realized nearly $125 million of cost savings, which was about 25% higher than our initial targets and achieved efficiencies across the enterprise with the majority coming from our owned brokerage and title businesses as we further integrate and simplify the real estate transaction.
Speaker Change: Total operating of marketing and G&A expenses for the year totaled $1, seven 1 billion down $72 million versus prior year.
Speaker Change: About 40% of our realized cost savings were offset by growth related cost and other inflationary items.
Speaker Change: Full year free cash flow was $70 million before the $20 million litigation payment made in the second quarter.
Speaker Change: Our full year free cash flow delivery was about $30 million below our target due to the timing of tax refund, which was initially expected in Q4, but now anticipated in the first half of this year.
Speaker Change: Consistent with our capital allocation priorities, we used our free cash flow to invest in our future and to pay down debt.
Speaker Change: We continue to make selective investments to drive growth, including attracting new agents and franchisees at better margins, expanding our technology platform with new products and services and streamlining our operations to deliver better experiences faster at lower cost.
Speaker Change: We also strengthened our balance sheet by pushing out maturities with no incremental interest expense and reducing overall debt by about $30 million.
Speaker Change: We will continue to opportunistically evaluate ways to improve our capital structure and I am confident in our current position with no maturities due before March 2026, and ample liquidity remaining on our revolver.
Speaker Change: It's important to highlight that this year's achievements are a continuation of our long term strategy to enhance our operating results and capital structure.
Speaker Change: Since 2019, including two of the worst years in housing and three decades, we have delivered almost $700 million of realized cost savings and reduced overall debt by $930 million.
Speaker Change: We have a proven track record of delivering on our commitments and achieving our goals.
Speaker Change: Seeding the cost saving goals, we put forth in our 2022 Investor day.
Speaker Change: On top of these accomplishments we continue to push ahead with transformation to re imagine 25, which Ryan mentioned.
Speaker Change: This ambitious multiyear transformation effort aims to set us up for greater growth and success in the future.
Speaker Change: It will contribute to our savings program for 2025, and beyond leveraging technology to reduce manual processes, and importantly, enhance our value proposition and unlock growth opportunities.
Speaker Change: One example is innovating around agent support delivery using cutting edge technology to reduce in person interactions and physical resources and instead focus on enhanced ready now support throughout the transaction.
Speaker Change: Now let me go into more detail on our full year business segment performance.
Speaker Change: Our anywhere brands business, which includes leads and relocation generated $521 million and operating EBITDA.
Speaker Change: Operating EBITDA was down $6 million, primarily due to foreign currency impacts and our relocation business.
Speaker Change: We remain confident in our core franchise business, which further expanded in the quarter and its robust margins.
Speaker Change: Our anywhere advisors operating EBITDA was negative $93 million, an increase of $42 million versus prior year, driven by higher revenue and lower operating and marketing costs.
Speaker Change: This business generated $226 million and operating EBITDA before the transfer of intercompany royalties and marketing fees paid to our franchise business.
Speaker Change: Agent Commission splits were 83% in 2024 up 14 basis points versus the prior year, representing one of the best year over year results, we've seen in a while.
Speaker Change: And our Q4 agent Commission split rate was also 83% down seven basis points year over year, and down 10 basis points sequentially from the prior year.
Speaker Change: This marks 11 consecutive quarters with our agent Commission split right about 80% and this is all despite adding over 2500 producing agents in 2020 for underscoring our strong agent value proposition.
Speaker Change: Anywhere integrated services operating EBITDA was negative $13 million, an improvement of $3 million versus prior year.
Speaker Change: Operating EBITDA benefited year over year due to increases in both purchase and refi units, partially offset by increased labor costs, and our continued investment to roll out upward title.
Speaker Change: Equity and earnings was impacted by a $5 million decrease in our underwriter JV primarily related to the Doma acquisition in Q4.
Speaker Change: Before discussing specific guidance I want to address the California wildfires.
Speaker Change: We are actively monitoring the devastating impact in the greater Los Angeles area with our primary focus on the safety of our people.
Speaker Change: Our Hearts go out to our employees affiliated agents and franchisees, who have been affected and forced to leave their homes.
Speaker Change: As of today about 1000 agents and a few of our owned brokerage and title offices in that area have been impacted.
Speaker Change: We are proud of our team's resilience and our ability to seamlessly service our clients due in part to our virtual service delivery model.
Speaker Change: And while the financial impact on this region is uncertain, we do know that the effects of this broad based devastation will be felt in Q1 and beyond.
Speaker Change: Now turning to 2025.
Speaker Change: Given what we know today, we expect operating EBITDA for the full year to be about $350 million with the biggest swing factor being the housing market itself, which is inherently volatile.
Speaker Change: We expect to deliver about $100 million in cost savings this year, which will be offset in part by inflationary pressures and investments as we look to make significant progress transforming our business.
Speaker Change: We have proven our free cash flow delivery remained strong in both good and bad markets and we anticipate our 2025 free cash flow, excluding onetime items to be similar to 2024.
Speaker Change: Free cash flow like EBITDA is driven by the overall housing market and may be impacted by additional investments, we make to drive growth and enhance our technology strategy.
Speaker Change: Our fourth quarter and full year results highlight anywhere its financial discipline, we start 2025 with determination and confidence reinforced by industry, leading profitability and solid cash flow generation.
Speaker Change: I'm proud of what we have accomplished and even more excited for the future as we truly transform our business accelerate growth and lead the industry forward.
Let me now turn the call back to Ryan for some closing remarks, Thank you Charlotte.
Speaker Change: And they were real estate has proven our ability to deliver results regardless of market conditions. In 2024, we navigated the housing market with resilience and determination generating meaningful operating EBITDA and free cash flow investing in future growth over delivering on cost savings and adapting to unprecedented industry changes in 2025 anyway.
Speaker Change: Will estate will focus on executing our strategic agenda re imagining how we operate and leveraging our competitive advantages to drive growth outperformed the market and deliver value for our agents and franchisees and shareholders. The future is full of opportunities and anywhere real estate is ready to lead the industry to what's next with that we will take your questions.
Speaker Change: Okay. Thank you if you would like to ask a question. Please press star one on your telephone keypad. If you would like to withdraw your question simply press Star one again.
Speaker Change: Please ensure that you are not on speaker phone and your phone is not on mute when called upon thank you.
Speaker Change: Your first question comes from the line of Matthew Bouley with Barclays. Your line is open.
Matthew Bouley: Good morning, everyone and thank you for taking the questions.
Speaker Change: I guess first wanted to touch on the.
Speaker Change: Operating EBITDA outlook for 2000 $25 million to $350 million.
Speaker Change: It's a simple question I'm, just sort of what are some of the underlying assumptions youre, making within that around I guess transaction volumes Commission splits commission rates, obviously, we got.
Speaker Change: The cost reductions in there, but just kind of any other pieces you can help us bridge to that EBITDA. Thank you.
Speaker Change: So as I mentioned the single biggest swing factor is going to be the housing market and there are some pretty wide ranges and industry forecasts right. Now so we've had to take a bit of a call on that we're going to watch it together, we'll update quarterly as if anything changes in our assumptions on the housing market, but because the industry forecasts are so kind of wide as.
Speaker Change: They normally are at this point in the year I don't think it's smart to peg to any specific number.
Speaker Change: But obviously, we are giving guidance for for the first time in a while and so we feel good about where we sit today. We gave the numbers on cost savings I think you can see over the last few years.
Speaker Change: About the net impact of the cost savings. So hopefully you can use some of the last year's analogs and some of the remarks I've made about what the add backs are in investments and inflation.
Speaker Change: The impact that we feel good about the splits we've had a lot of 11 consecutive quarters around 80.
Speaker Change: 80% for the Commission splits.
Speaker Change: Those will obviously vary with volume as well.
Speaker Change: But again 11 consecutive quarters as part of the reason the consistency and that that is enabling us to put a pin on some guidance for this year as far as ABC or.
Speaker Change: We were the only ones, who do report that and the numbers that we've reported have been relatively consistent since the changes in the process.
Speaker Change: If things change, we'll update things, but what we're seeing is relatively consistent on ABC are so obviously.
Speaker Change: A lot of volatility and housing in general, but I think the piece parts that we've laid out there's a lot of there that has been pretty consistent and our cost savings and commission split specifically and so we'll continue to update you as the quarters go on but I'm feeling good about where we ended the year and feeling good about our momentum as we.
Speaker Change: We start the year.
Speaker Change: Okay got it I guess, what I'm hearing is a lot of consistency in I guess correct me, if I'm wrong, but.
Speaker Change: Second question.
Speaker Change: You know the comments you made around clear cooperation.
Speaker Change: You know kind of.
Speaker Change: Just when you when you talked about.
Speaker Change: Our relaxed clear cooperation I guess my question is is kind of what is that middle ground that you'd be looking for kind of what exactly are you advocating for.
Speaker Change: And sort of how would you how are you going to approach. This in the coming weeks and months. Thank you yeah. So our our brokerage leaders, who you anika and she runs our owned or franchise brokerage and a lot of.
Speaker Change: She is the biggest jobs in real estate.
Speaker Change: She just did an editorial taking your question on exactly trying to lay out look.
Speaker Change: The most frustrating thing about the debate going on in our industry is.
Speaker Change: It's like an extreme debate either it must stay the same or it must be totally repealed and so what sue put out with some thoughts about hey.
Speaker Change: There are places, where you may want to relax it a little bit for sellers. It doesn't have to be 24 hours et cetera.
Speaker Change: But you do need to preserve the fact that over time, you want all sellers and buyers to be able to see all the inventory to both of their benefit and so.
Speaker Change: Yeah.
Speaker Change: We actually think the two extremes are both bad outcomes and so to put that out earlier. This week, we will continue to advocate for that.
Speaker Change: We're one of the only companies that has a dedicated government relations team in D C.
Speaker Change: And obviously.
Speaker Change: You know our trade group has some issues.
Speaker Change: And we got to take more leadership, but but that's kind of where we're going and I thought shoes editorial was well done Matt.
Speaker Change: And at the end of the day.
Speaker Change: Two extremes are both have some real issues with them. The current extreme in the mandatory nature is a problem.
Speaker Change: We don't like mandatory things, we've been telling people to relax mandatory rules for a number of years and some people didn't listen to us on a participation rural we we all paid dearly for that.
Speaker Change: But on the flip side again, just to kind of total repeal and moving the world to private listings network I don't think is good for the consumer so.
Speaker Change:
Speaker Change: We're in the relax not repeal world, we've laid our position out in a couple of different forums now and will continue to advocate for that but let's be very clear like we are ready.
Speaker Change: If somebody wanted to if the world goes to private listings.
Speaker Change: We have we will we will not let our agents be disadvantage and we have more listings to make into private listings than anybody does.
Speaker Change: That's a short sighted wafer or our industry to go but you know we have we have we know we've got the technology ready we have the people ready we've thought through all the issues of it and.
Speaker Change: You know what.
Speaker Change: We're ready.
Speaker Change: But it's not our recommendation.
Speaker Change: Got it well, thank you Ryan and Charlotte and good luck guys. Thank.
Matt: Thank you Matt.
Speaker Change: The next question comes from Ryan Mckenna with Zelman Your line is open.
Ryan Mckenna: Hey, Thank you guys good morning.
Ryan Mckenna: Wanted to ask on the franchise side, so it looks like.
Ryan Mckenna: The press release mentioned you added 28 franchisees in <unk> and <unk> 67 in 'twenty four.
Ryan Mckenna: I guess, maybe if you could talk to pipeline or interest from franchisees heading into 'twenty five.
Ryan Mckenna: And I guess I'm curious as the pipeline or even those who have who have joined the network.
Ryan Mckenna: Skewed towards established independent brokerages, just converting to to your brands or are these kind of new.
Ryan Mckenna: New players becoming franchisees. Thank you, yes look we like the pipeline it feels good.
Ryan Mckenna: Consistent with kind of the success we've had.
Ryan Mckenna: The combination Ryan of the litigation.
Speaker Change: In 23 of these practice changes in 24 have helped us on this dimension.
Ryan Mckenna: Alright.
Ryan Mckenna: The value proposition, we offer to franchisees has a lot of good things in it including the lead side the brand side.
Ryan Mckenna: Some of the back office stuff et cetera, but.
Ryan Mckenna: There are a lot of people who really.
Ryan Mckenna: Realize the power of <unk>.
Ryan Mckenna: Kind of being part of someone who can both take care of you better in litigation, but also help navigate industry practice changes. So we had you know.
Ryan Mckenna: A number of existing franchisees, obviously join us.
Ryan Mckenna: And that happens today, we just added some new ones in multiple states in the last two weeks that have all been public.
Ryan Mckenna: And so that's been helpful. And then others have seen things you know we've had people join us because they've liked this upward title thing that we've done right as they're looking for new opportunities. They can get into that if they are part of our ecosystem and so you know.
Ryan Mckenna: While we always have a few people who kind of start out from nothing as franchisees. When we talk about the 67 or the 28, we're talking about you know.
Ryan Mckenna: Established companies of different sizes, including the 400 agent Corcoran franchisee down in D. C. Now who have joined joined our company.
Speaker Change: That's very helpful. Thank you and sharla, just I think a clarification I kind of missed this and I'll check the transcript later, but maybe you can remind us I think you made a comment about a tax refund that was expected last year. That's now going to come this year and potentially that is a benefit to EBITDA.
Ryan Mckenna: I might have totally miss.
Ryan Mckenna: Misheard that but maybe you can revisit what that what that is.
Ryan Mckenna: The benefits of free cash flow it doesn't impact the EBITDA. So it's an explanation that like we had given guidance that we expected our free cash flow in 2024, excluding onetime items and other things to be about $100 million.
Ryan Mckenna: And the tax refund was anticipated last year and that's the reason why we now delivered free cash flow at 70, and it's just a timing thing and we've even already gotten notice from the IRS that we should expect part of that already in the first quarter. So it's just a free cash flow timing thing nothing to do with EBITDA.
Speaker Change: And on the on the guide for free cash flow. The 70, you referenced is kind of ballpark the target we should be thinking about for 25. So I did say similar to prior year. So yes.
Okay. Thank you for IDEXX, excluding those one time items that Alicia referenced in her opening remarks.
Speaker Change: Right. Okay got it thank you very much thanks sure.
Speaker Change: The next question comes from John Campbell with Stephens. Your line is open.
John Campbell: Hey, guys. Good morning, Congrats on a great close to the year.
Speaker Change: Thanks, John.
Speaker Change: Sure Ryan I appreciate your clarity in the clear message on PCP, just assuming that for some reason consumers end up being okay, what's the private networks and Theres greater fragmentation.
Speaker Change: Obviously, you called out your industry, leading number of listings. So thats, obviously, a great start.
Speaker Change: You also mentioned a second ago that you have the technology ready obviously your.
Speaker Change: The largest competitor out there pushing new consumer app and seems to be lining up the side is more of a portal.
Speaker Change: I appreciate it from a competitive standpoint, you might not want to show all your cards here, but maybe just talk high level, how you would look to leverage our leading position well look I mean.
Speaker Change: Youre right were not going to show our cards on this call will show it to our agents and franchisees first and you know that in the market.
Speaker Change: But.
Speaker Change: The world is not that complicated right. You know if you wanted to do a private listing network. It's just not that complicated. So you could map out exactly what we would you know.
Speaker Change: <unk>.
Speaker Change: Provide and have and kind of corral across our owned and franchise brokerage network and then how agents and consumers interact with us. So it's so it's not that complicated then again my thesis on my real public message is both.
Speaker Change: That's a bad way for the industry to go but if it goes there.
Speaker Change: Not only are we ready, but we.
Speaker Change: We think we do frankly pretty well relative to anybody.
Speaker Change: So.
Speaker Change: So that's a place that we're just very focused on.
Speaker Change: And you know, but again over time, if consume if buyers can't.
Speaker Change: Easily get access to all the inventory.
Speaker Change: I just think that's bad for sellers in terms of getting the best price on your house I also think there is some fair housing issues on that and if Youre a seller and you can't get access to how other homes sold at what price hurts your ability to pressure home. So again I just don't think it's a great place for the industry to go.
Speaker Change: You know, we obviously have to be prepared and my message is not only are we prepared but we've got assets that would be.
Speaker Change: Advantages on all of our competitors, we believes just starting with the number of listings.
Speaker Change: Yes, that's great color I appreciate all that and then Charlotte back to the the $350 million EBITDA guidance.
Speaker Change: You mentioned the wide dispersion and industry forecasts, we're certainly seeing that as well, but just given how tight the P&L as the housing I'm thinking you probably do have our internal forecast youre going with I'm, hoping you can maybe shed some light on that or maybe just talk to a rule of thumb sensitivity for every 100 bps or so of volume swings.
Speaker Change: Yeah, we're not really coming off of what we've said in the past around sort of like the 15 million Mark for the percentage of change and growth. It does depend on the unit volume and the lower the unit some sort of that lower the impact is because of title, but you know.
Speaker Change: If you think about.
Speaker Change: And then you can actually probably if you look through the other assumptions I've given you you could probably even come up to what our own internal forecast is within a couple of percentage points, So and John just to comment on your <unk> question here because we believe in you guys and just know that we believe in you and this is the first time Charlotte.
Speaker Change: Ever in the month of February, giving you a full year number right in the past, we've always kind of gone with the philosophy.
Speaker Change: Hey, we're going to give you as many of the piece parts as we can you put your volume forecast and do the math and you come up with a number.
Speaker Change: This year, we thought you know we've heard your feedback others, and we thought lets try something a little bit different.
Speaker Change: Which as you know, we're giving you our view you know and as Charles said, we will update it every quarter boy. This housing markets. The thing if you look back in time to kind of really changes the world between February and the full year results often but we hope this is.
Speaker Change: Interesting and helpful.
Speaker Change: And again the nice thing is we have three.
Speaker Change: Three more bites at the Apple to update you as kind of the year evolved but.
Speaker Change: It is a different approach and.
Speaker Change: It'll be very interesting your feedback on does it worked better than what we had been doing on this dimension.
Speaker Change: We're excited too.
Speaker Change: Try it but we also recognize that might leave you a teeny bit frustrated.
Speaker Change: We're not giving you every single piece to add up to it.
Speaker Change: But like.
Speaker Change: That's a little more turned it around and the old way. So anyway, we're excited and we believe you guys a little we'll do great with it.
Speaker Change: I appreciate that guys.
Speaker Change: Thanks, Sean.
Speaker Change: Once again, ladies and gentlemen, if you have a question. It is star one on your telephone keypad.
Speaker Change: Our next question comes from Tommy joined with <unk>. Your line is open.
Speaker Change: Hey, good morning, guys. Thanks for taking my questions.
Speaker Change: Yes.
Speaker Change: Yes, So Ryan last quarter, you gave some interesting commentary around homebuyers, given a choice of assigning different agent engagement agreements be it to look at one single house or part of a longer home buying journey do you have an update on any of that or any data points around that and kind of what those look.
Speaker Change: Yeah sure happy to do it and.
Speaker Change: Partly because this is a chance to say.
Speaker Change: I was a little bit wrong.
Speaker Change: We rolled out these kind of five different buyer agreements Tommy and you talk to some of them right single House multiple house.
Speaker Change: Just go on a home tour and then kind of the classic six months.
Speaker Change: We're an exclusive relationship agreement right and part of the reason we rolled out the five is we werent sure how consumers would react and you know we.
Speaker Change: We didn't want people to just have a yes no choice on one agreement we wanted them some options.
Speaker Change: And the data not just into into November when we last or excuse me October when the last time the data through January is it's almost all people signing the six month exclusive agreement.
Speaker Change: North of 80% of our buyers are signing that agreement and that just blows me away and it's awesome and so frankly, we're probably going to end up discontinuing some of the other ones that just don't get much usage or much traction because consumers aren't really interested in them and let's reduce the complexity and all that kind of stuff.
Speaker Change: And it's a testament to the power of the value that agents provide.
Speaker Change: And I don't think Thats stacked by the way is unique to anywhere I don't have any anyone else's data, but when I talk to agents at other firms and I talked to.
Speaker Change: People in our industry I think other people are are getting you know.
Speaker Change: Using those same things.
Speaker Change: More than 50% of the time and it comes back to I do think that the agents are doing a very good job articulating their value to buyers and going on that journey to kind of make these people's lives better together.
Speaker Change: And so.
Speaker Change: The data has only gotten stronger on the use of the six month exclusive since I talked to you in October.
Speaker Change: And.
Speaker Change: We looked at it through a.
Speaker Change: Mid January or so is the last time I looked at it late January data kind of thing.
Speaker Change: Hum.
Speaker Change: And so really excited by that.
Speaker Change: Still glad we were thoughtful about trying different things to be prepared you never know of the world is going to go but it's gone in a way that's really consistent with agents, adding a lot of value in communicating their value well and.
Speaker Change: And consumers are voting with their feet very excited.
Speaker Change: Got it and just on the same point.
Speaker Change: Sure, it's a bit tough to track, but do you have any sense around if consumers are shopping around a bit more maybe perhaps taking the six month exclusive agreement from anywhere agent comparing it to competitors when they're beginning this processor or any data around that I think the shopping is no different than it used to be but I think the shopping happens.
Speaker Change: Before you get to the point you are talking about right I don't think anybody's.
Speaker Change: Take I don't think a lot of people are taken to physical agreements and comparing them and then picking right.
Speaker Change: I think consumers do a lot of their agent networking and interviewing and everything before they get to that conversation.
Speaker Change: Right.
Speaker Change: And and then the people who already have relationships with agents for my talking to agents.
Speaker Change: They haven't seen it.
Speaker Change: A difference in their existing relationships.
Speaker Change: Looking at other people in terms of like.
Speaker Change: The percent of people they do repeat business with kind of thing so.
Speaker Change: Think the shopping happens, but I think the shopping happens more upstream than at the kind of <unk>.
Speaker Change: Let's negotiate and sign the buyer agreement point, Matt for Tommy excuse me.
Speaker Change: Got it okay.
Speaker Change: Then just quickly switching over.
Speaker Change: You sound a little more constructive on the acquisition opportunity in the year ahead.
Do you envision that getting funded with equity or debt or is there enough cash flow generation, you know not going toward some of those one off items and eventual debt reductions to find those opportunities.
Speaker Change: I mentioned in our liquidity.
Speaker Change: Don't think we're gonna be an equity buyer I think where we're.
Speaker Change: We're a cash buyer, if we're going to buy stuff typically.
Charlotte: We got tons of liquidity is Charlotte kind of talked about we have positive free cash flow.
Speaker Change: The other thing is remember.
Charlotte: And I referenced this.
Charlotte: When you when you look at our ability to combine with others, especially in the brokerage area.
Charlotte: We have the most synergies and those synergies have two interesting things. One is you can get a bunch of them in year one.
Charlotte: And these deals right. The other thing you know.
Charlotte: From a covenant standpoint, our covenants give us very good benefits to synergies of deals even if they are unrealized so you know.
Charlotte: They've got to be good deals of course.
Charlotte: And we've seen some deals in the market that we wouldn't do but but boy you know, yes, we think we could do some good stuff.
Charlotte: Especially as kind of the market feels like it's changing after and going into a third tough year, you can see a little more no moss happening.
Charlotte: And not just brokerage, but in some adjacent services and you can definitely see it in project I get that call.
Charlotte: Every week basically.
Charlotte: Hmm.
Charlotte: Thanks, Brian.
Charlotte: Yeah.
Charlotte: Multiple times a month.
Charlotte: Yeah.
Speaker Change: The final question comes from Matt Home Kosowsky with J P. Morgan Your line is open.
Speaker Change: Hey, guys. Thanks for taking the question.
Speaker Change: Just one on my end.
Speaker Change: And I guess going back to the guidance.
Speaker Change: How much does the adjustment.
Speaker Change: Noncash compensation and legal matters the impact.
Speaker Change: 2025 guidance of $250 million or I guess, another way to say that I guess better put is how much does that help the guide compared to the old definition. So I think what youll see in the press release is the prior two years its a relatively small number in 2023 that number was 12 I believe.
Speaker Change: On a full year in 2017 and 2024, so it's not a material impact in the past two years.
Speaker Change: The way I think about it just looking at that information in the press releases.
Speaker Change:
Speaker Change: 24 is a pretty tough housing market, but even with all of those adjustments that you mentioned.
Speaker Change: No.
Speaker Change: We were able to grow our EBITDA by $35 million and then in 'twenty five at $60 million of EBITDA growth with all of those.
Speaker Change: But it's apples to apples valves. So it's a kind of 60 million growth apples to apples on that stuff. So.
Speaker Change: So there is no.
Speaker Change: Headwind or tailwind in the sixth and the 60 million growth.
Speaker Change: Okay.
Speaker Change: Got it that makes sense. Thank you.
Speaker Change: This concludes the question and answer session and we will conclude today's conference call. Thank you for attending you may now disconnect.
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Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].