PHH Corp's CEO Discusses Q1 2012 Results - Earnings Call Transcript

PHH Corporation (PHH)

Q1 2012 Earnings Call

May 2, 2012 10:00 am ET


Glenn Messina – President and Chief Executive Officer

David Coles – Interim Executive Vice President and Chief Financial Officer

Robert Crowl – Executive Vice President

George Kilroy – Executive Vice President of Fleet

Smriti Popenoe – Chief Risk Officer and Interim President of Mortgage

Jim Ballan – Vice President of Investor Relations

John Erdmann – Vice President and Controller


Richard Eckert – B. Riley & Co.

Paul Miller – FBR

Bose George – KBW

Henry Coffey – Sterne Agee

Jim Fowler – Harvest Capital

Joe Galzerano – Muzinich

Jordan Hymowitz – Philadelphia Financial

Michael Kim – CRT



Good morning ladies and gentlemen. Welcome to the PHH Corporation first quarter 2012 earnings conference call. (Operator instructions)

Today’s call is also being webcast and recorded for replay purposes. The audio replay can be accessed either on the company’s Web site at or by telephone at 719-457-0820 or 888-203-1112 using conference ID 4407247 beginning shortly after the conclusion of the call. It will be available until May 16, 2012. This access information is also described in the company’s earnings release and I will repeat it again at the end of our session.

At this time, Jim Ballan, Vice President of Investor Relations will proceed with the introductions.

Jim Ballan

Good morning and welcome to the PHH Corporation’s first quarter 2012 earnings conference call. Please note that statements made during this conference call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as further described in slide three of our first quarter 2012 investor presentation of supplemental schedules. Such forward-looking statements represent only our current beliefs regarding future events and are not guarantees of performance or results.

Actual results, performance or achievements may differ materially from those expressed or implied in such forward-looking statements due to a variety of factors including, but not limited to, the factors under the headings Cautionary Note regarding forward-looking statements and Risk Factors in our periodic reports filed with the US Securities and Exchange Commission, including our most recent annual report on Form 10-K and quarterly reports on Form 10-Q, which are available in the Investor section of our Web site at and are also available at Investors are cautioned not to place undue reliance on such forward-looking statements.

We will also be discussing various non-GAAP financial measures, including core earnings pre-tax, core earnings after-tax, core earnings per share, adjusted cash flow, tangible book value, and tangible book value per share.

Please refer to our earnings release and accompanying investor presentation of supplemental schedules for a description of these non-GAAP financial measures, as well as a reconciliation of such measures to their respective most directly comparable GAAP financial measures.

The earnings release we issued yesterday may be accessed from our Web site or you may request a faxed or a mailed copy by calling our investor hotline at 856-917-7405. In addition, the investor presentation of supplemental schedules is posted in the Investors section of our Web site under Webcasts and Presentations.

Speaking on the call today will be Glenn Messina, President and Chief Executive Officer, David Coles, Interim Chief Financial Officer, and Rob Crowell, Executive Vice President.

George Kilroy, President of Fleet, and Smriti Popenoe, Chief Risk Officer and Interim President of Mortgage, are also are also with us today and will be available to take your questions.

First, Glenn will discuss the company’s performance in the first quarter and strategic objectives. Then, David will review our financial results and provide an update on our liquidity position, after which we will take questions.

With that, I will turn the call over to Glenn Messina.

Glenn Messina

Thank you, Jim. Good morning, everyone, and thank you for your interest in PHH. Before I get into the quarter, I’d like to introduce Rob Crowl, who will be assuming the duties of Chief Financial Officer of PHH Corporation.

As we announced on April 20 th, Rob joins us with more than 25 years of management and senior level mortgage and banking experience and will be responsible for leading PHH’s financial and reporting functions.

Welcome, Rob.

Robert Crowl

Thanks, Glenn. I’m very pleased to join PHH. I look forward to working with Glenn, the board, our finance team and our shareholders.

Glenn Messina

Thanks, Rob. Rob will succeed David Coles, who’s been serving as our Interim CFO. We are grateful that David has agreed to stay on for a brief transition and we thank him for the great job that he has done for our company.

Overall in the quarter, we had solid operating performance in both our Mortgage and Fleet businesses and we made good progress on executing the four key strategies I laid out for our company earlier this year.

First, we demonstrated solid growth in our three franchise platforms. Retail mortgage applications were up 87% and Fleet delivered 50% growth in segment profit, both as compared to the first quarter of 2011.

Second, on operational excellence, we are making progress around quantifying defects. On Slide 19 of our supplemental schedules, we have disclosed our mortgage quality related costs. This schedule reveals that our potential earnings and returns are far greater than what we achieved this quarter. Reducing defect costs for operational excellence is where I believe we have a meaningful opportunity to drive value creation for our shareholders.

Third, we are committed to customer service. We have increased our level of engagement with our clients and customers and we’ve identified a number of opportunities to enhance the service experience we deliver. We are focusing our teams on the key operating and relationship elements to serve our clients and customers better and capture market opportunities.

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