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PHH Corporation Announces Third Quarter 2013 Results

Stocks in this article: PHH

PHH Corporation (NYSE: PHH) (“PHH” or the “Company”) today announced financial results for the quarter ended September 30, 2013.

For the quarter ended September 30, 2013, the Company reported a net loss attributable to PHH Corporation of $52 million or $0.90 per basic share. Core loss (after-tax)* and core loss per share* for the quarter ended September 30, 2013, were $45 million and $0.78, respectively. These results include a $54 million pre-tax loss ($0.57 per basic share after tax) related to the early repayment of Senior notes due 2016 and $9 million ($0.10 per basic share after tax) in pre-tax severance costs related to capacity reductions for the current mortgage origination environment.

Tangible book value per share* was $27.33 at September 30, 2013, down 3% from $28.14 at June 30, 2013.

Glen A. Messina, president and CEO of PHH Corporation, said, “In the third quarter, our Fleet business delivered a 14% increase in segment profit over the prior year; however, our Mortgage business generated a loss due to lower total loan margins, lower lock volume, and severance costs related to our recent capacity reduction actions. We are taking swift and decisive action in our Mortgage business to reduce capacity, lower fixed costs, and reposition the business for a smaller, home purchase driven market. During the third quarter, we saw home purchase related mortgage applications increase by 21% over the prior year quarter and mortgage quality related costs decline 86% from the prior year quarter. We expect our mortgage capacity reduction actions taken to date to generate at least $60 million in annualized expense savings compared to our second quarter run rate, absent an increase in volumes.”

Messina added, “Through the successful execution of our strategic priorities over the past two years, we have significantly improved our liquidity position, capital structure and operating execution, and as a result, we are in a much better position to deal with the cyclical and dynamic nature of the mortgage industry. We are pleased with the progress we have made toward our vision for PHH as a more capital-light business, with greater scale, less volatile cash flows, and greater operational and capital efficiency.”

 
Summary Consolidated Results
(In millions, except per share data)    
   
Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
Net revenues $ 615 $ 624 $ 2,167 $ 1,960
(Loss) income before income taxes (74 ) (56 ) 180 (12 )
Net (loss) income attributable to PHH Corporation (52 ) (42 ) 90 (24 )
 
Basic (loss) earnings per share attributable to PHH Corporation $ (0.90 ) $ (0.74 ) $ 1.58 $ (0.42 )
Diluted (loss) earnings per share attributable to PHH Corporation (0.90 ) (0.74 ) 1.38 (0.42 )
 
Weighted-average common shares outstanding:
Basic shares (in millions) 57.383 56.842 57.318 56.768
Diluted shares (in millions) 57.383 56.842 65.503 56.768
 
Non-GAAP Results*
Core (loss) earnings (pre-tax) $ (69 ) $ 67 $ (59 ) $ 191
Core (loss) earnings (after-tax) (45 ) 42 (35 ) 122
 
Core earnings (loss) per share $ (0.78 ) $ 0.74 $ (0.61 ) $ 2.15
 
Adjusted cash flow $ 40 $ 120 $ 254 $ 415
 

* Non-GAAP Financial Measures

Core earnings or loss (pre-tax), core earnings or loss (after-tax), core earnings or loss per share, adjusted cash flow, tangible book value and tangible book value per share are financial measures that are not in accordance with U.S. generally accepted accounting principles (GAAP). See the “Note Regarding Non-GAAP Financial Measures” below for a detailed description of these and certain other Non-GAAP financial measures and reconciliations of such Non-GAAP financial measures to their most directly comparable GAAP financial measures as required by Regulation G.

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