Third-quarter real estate franchise, brokerage and relocation services revenue at Cendant Corp. reached $1.77 billion, up 11 percent from the same quarter a year earlier, company officials announced today. Meanwhile, mortgage services quarterly revenue, at $283 million, was down 31 percent from the third quarter 2003. That compares with real estate revenue of $1.81 billion for the second quarter of this year, and second-quarter mortgage revenues of $344 million.
Last week, Cendant officials announced that the company would spin off its mortgage and fleet operations in a transaction structured as a tax-free distribution of the common stock of PHH Corp., which houses Cendant mortgage operations. The company’s mortgage business, which operates as Cendant Mortgage, is the sixth largest originator of home loans in the country.
Earlier this week, Ronald L. Nelson, Cendant chief financial officer, was named president of the corporation and will continue to serve as CFO. Henry R. Silverman, who was formerly chairman, CEO and president of Cendant Corp., will continue to serve as chairman and CEO, according to the announcement. Nelson, 52, formerly served as co-chief operating officer at DreamWorks and also served as executive vice president, CFO and director at Paramount Communications, Inc.
Also, Cendant officials hired Linda C. Coughlin, formerly president for leadership and organization development firm Linkage, Inc., as the company’s chief administrative officer. Coughlin will report to Nelson.
Cendant Corp. earnings per share were at 56 cents for the third quarter, up 19 percent from third-quarter 2003, with free cash flow of $729 million and net cash provided by operating activities at $2.4 billion. Cendant projects fourth-quarter earnings per share of 32 cents to 33 cents, and increase of 10 percent to 14 percent over earnings for fourth-quarter 2003.
Nelson said that Cendant Corp.’s pending acquisition of Orbitz will boost its online travel business operations, and the mortgage spin-off “is designed to preserve the cross-selling benefits that exist between (Cendant Mortgage) and the company’s residential real estate, relocation and settlement services businesses.” The spin-off is expected to take place in the first quarter of 2005.
Cendant’s franchise brokerages include Century 21, Coldwell Banker, Coldwell Banker Commercial and ERA. Cendant is parent company of NRT Inc., the nation’s largest residential real estate brokerage company. NRT’s corporate-owned brands include The Sunshine Group, The Corcoran Group, Coldwell Banker, Coldwell Banker Commercial, ERA and Sotheby’s. Combined the franchise and corporate-owned brokerages account for over 200,000 sales associates.
In addition to real estate, mortgage and travel operations, Cendant Corp. also has operations in the hospitality and vehicle services industries.
For the full year, Cendant is projecting real estate franchise and operations revenue between $6.13 billion to $6.18 billion, compared with actual 2003 revenue of $5.258 billion. Mortgage services, meanwhile, are projected to reach $1.1 billion to $1.16 billion for the full year, compared with $1.48 billion in 2003.
Real estate franchise royalty and marketing fund revenue jumped 15 percent from third-quarter 2003 to third-quarter 2004, “primarily due to an 11 percent increase in the average price of homes sold and an 8 percent increase in the number of homes sold,” Cendant reported. NRT-generated revenue was up 123 percent, “principally due to a 17 percent increase in average price.”
The drop in third-quarter mortgage revenues from year to year was blamed on “the industry-wide decline in mortgage refinancing volumes, as expected, and also, we believe, due to the temporary uncertainty created by our July announcement that we were considering strategic alternatives for the mortgage business,” Cendant reported.
Cendant shares (NYSE: CD) closed at $21.89 today, down 2.58 percent from Tuesday’s closing price of $22.47 a share.
Cendant will host a conference call to discuss the third-quarter results at 11 a.m. EST on Thursday, Oct. 21, 2004.
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