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April 4, 2008 |
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REALOGY CORP: CFO Hull Comments on S&P's March Outlook Action Standard & Poor's Ratings Services, on March 27, 2008, affirmed Realogy Corp.'s "B" corporate rating, but revised its outlook from "Stable" to "Negative." According to S&P credit analyst Emile Courtney, "[t]he outlook revision reflects a significantly lower expectation for EBITDA generation in 2008 than we had previously anticipated, as well as the resultant narrowing of the EBITDA cushion in the company's senior secured credit facilities leverage covenant[.]" CFO Anthony E. Hull however said that the S&P report does not explicitly mention three key factors that are important to reiterate: -- Realogy's interest cost in 2008 will be significantly less than previously expected and 2007 pro forma levels. -- Realogy's proactive cost savings and cash maximization initiatives that have been successfully implemented (including exit from the government at-risk business that will free up US$50 million of cash this year) will continue to enhance our ability to tap into our bank debt revolver. -- Due to the seasonality of the real estate market, first quarter of any year is historically our slowest quarter (not just 2008). As we are only one-quarter into the year, the company has 85% to 90% of its EBITDA opportunity ahead of it. While the revised outlook was based primarily upon the continuing downturn in the residential real estate market, the S&P report concluded with the following astute statement: "Even though a return to growth in sides and price metrics in the industry could be at least one year away (in early 2009), our expectation remains that Realogy will benefit meaningfully in terms of growth in EBITDA and cash flow generation when the cycle turns upward, and that credit measures would improve." About Realogy Corporation Headquartered in Parsippany, New Jersey, Realogy Corporation (NYSE: H)-- http://www.realogy.com/ -- is a real estate franchisor and a member of the S&P 500. The company has a diversified business model that also includes real estate brokerage, relocation, and title services. Realogy's world- renowned brands and business units include CENTURY 21(R), Coldwell Banker(R), Coldwell Banker Commercial(R), ERA(R), Sotheby's International Realty(R), NRT Incorporated, Cartus, and Title Resource Group. Realogy has more than 15,000 employees worldwide. The company operates in Australia, Brazil and France. |
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