PHH Corporation Announces Second Quarter 2013 Results

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

For the quarter ended June 30, 2013, the Company reported net income attributable to PHH Corporation of $90 million or $1.58 per basic share. Core loss (after-tax)* and core loss per share* for the quarter ended June 30, 2013, were $2 million and $0.03, respectively. These results include a $21 million pre-tax loss ($0.24 per basic share after tax) related to the termination of an inactive mortgage reinsurance agreement. This transaction generated $69 million of unrestricted cash of which $30 million was received in the second quarter of 2013 and $39 million was received in the third quarter of 2013.

Tangible book value per share* was $28.14 at June 30, 2013, up 6% from $26.62 at March 31, 2013.

Glen A. Messina, president and CEO of PHH Corporation, said, “Over the past year and a half, through the execution of our strategic priorities, PHH has made significant progress in placing the company in a position of strength to deal with the cyclical and dynamic nature of the mortgage industry. In the second quarter, our financial performance reflected the impact of a rising interest rate environment, which drove an increase in the value of our mortgage servicing rights and negatively impacted our mortgage origination volume. I’m pleased with the progress the company is making in managing through this transition period to a rising interest rate environment. Our results were also impacted by a charge related to the commutation of our remaining Atrium reinsurance contract. The Fleet business continued to provide solid profitability.”

Messina added, “We are taking the necessary actions to reposition our mortgage businesses for the current interest rate and regulatory environment. We are scaling expenses to be consistent with lower expected mortgage production volumes, while maintaining our commitment to high customer service levels and accommodating the demands of the rapidly-changing regulatory environment. In part due to recent regulatory changes, we also are seeking to amend certain private label contracts to address the fundamental changes in the industry and ensure our programs are meeting our mutual objectives. Further, we are working to ensure that we have access to multiple funding sources aimed at lowering our capital needs and overall cost of capital.”
 
Summary Consolidated Results
(In millions, except per share data)    
   
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
Net revenues $ 822 $ 559 $ 1,552 $ 1,336
Income (loss) before income taxes 158 (80 ) 254 44
Net income (loss) attributable to PHH Corporation 90 (57 ) 142 18
 
Basic earnings (loss) per share attributable to PHH Corporation $ 1.58 $ (1.00 ) $ 2.48 $ 0.32
Diluted earnings (loss) per share attributable to PHH Corporation 1.40 (1.00 ) 2.18 0.31
 
Weighted-average common shares outstanding:
Basic shares (in millions) 57.321 56.804 57.285 56.730
Diluted shares (in millions) 64.822 56.804 65.301 59.401
 
Non-GAAP Results*
Core (loss) earnings (pre-tax) $ (8 ) $ 48 $ 10 $ 124
Core (loss) earnings (after-tax) (2 ) 27 10 80
 
Core (loss) earnings per share $ (0.03 ) $ 0.49 $ 0.18 $ 1.41
 
Adjusted cash flow $ 116 $ 26 $ 214 $ 295
 

* 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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