PHH posts 52% jump in profits for 3rd quarter Hunt Valley company is expected to merge with HFS next month

February 19, 1997|By Sean Somerville | Sean Somerville,SUN STAFF

In what is likely its last earnings report as an independent company, PHH Corp. yesterday said that net income for the third quarter jumped 52 percent.

For the three-month period that ended Jan. 31, the Hunt Valley-based company with vehicle management, corporate relocation and mortgage banking services reported net income of $29.6 million -- up from $19.5 million in the year-ago period.

"Third-quarter performance reached record levels primarily through increased revenue," PHH Chairman and CEO Robert D. Kunisch said in a statement. "And it is our 21st consecutive quarter of higher earnings."

Late next month, HFS Inc. of Parsippany, N.J., is expected to complete a $1.7 billion purchase of PHH Corp. The merger, announced Nov. 11, calls for a stock swap that will give PHH shareholders $49.50 a share -- 61 percent higher than PHH's $30.75 closing price on the previous trading day.

The deal sent PHH shares to $47.50. Like other analysts, R. Bentley Offutt, of Hunt Valley-based Offutt Securities, said he strongly urged clients to sell the stock and no longer follows PHH. "Why waste my time?" he said.

PHH said quarterly earnings per share increased 46 percent, from 54 cents to 79 cents. Revenues increased 6 percent, from $586.7 million to $620.8 million.

For the nine-month period, revenues increased 6 percent, from $1.8 billion to $1.9 billion. Per share profits were up 28 percent to $2.08 and net income was up 31 percent to $75.3 million.

Vehicle management revenue increased 7 percent, to $370 million from $344.5 million. Its operating income increased about 83 percent, to $27.8 million from $15.2 million, largely because of cost controls and a joint venture with First USA Paymentech Inc.

The joint venture calls for PHH Corp. and Dallas-based First USA Paymentech to market a single credit card that will handle all the expenses of business travel.

Revenue from real estate services declined 6 percent, from $192.6 million to $181.6 million. Operating income from real estate services declined 14 percent, from $8.6 million to $7.4 million.

The division reported increases in fee-based services such as household shipments, authorizations to purchase homes, and in the average value of homes sold. But the increases were offset by an increase in operating costs and a "a 6 percent decline in the number of homes sold."

Revenue from mortgage banking services climbed about 39 percent, from $49.6 million to $69.2 million. Operating income for the segment rose 69 percent, to $15.7 million from $9.3 million, in part because of sales of mortgage servicing rights. The mortgage banking portfolio grew 19 percent, to $24.4 billion from $20.5 billion.

Pub Date: 2/19/97

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