Second-quarter Real Estate Services revenue – which includes real estate franchise brands, brokerage operations, relocation services, settlement services and mortgage results after a Jan. 31 mortgage-origination venture with PHH Corp. — was up 7 percent in the second quarter.
The revenue increase was “primarily due to growth in royalties earned by our real estate franchise businesses, commissions earned by our NRT real estate brokerage unit, and fees earned by Cendant Mobility, our relocation services business,” Cendant announced today.
Real estate franchise royalty revenue increased 13 percent in the second quarter, primarily due to a 14 percent increase in the average price of homes sold and a 2 percent increase in closed sides volume. Revenue generated by NRT increased 7 percent due to acquisitions and growth resulting from a 13 percent increase in the average price of homes sold, partially offset by an expected 8 percent decline in closed sides volume reflecting unusually low inventories of homes for sale in the coastal regions where NRT is concentrated, the company also reported.
In addition to real estate businesses, Cendant also operates businesses in the hospitality services, timeshare resorts, vehicle rental and travel distribution services industries.
In the Real Estate Services division, Cendant is projected to reach revenues of $7.15 billion to $7.35 billion for the full year, up from $6.55 billion in 2004, while the overall company is projected to reach total revenues from $17.7 billion to $18.45 billion.
Revenue generated by Cendant Mobility increased 18 percent, reflecting higher government home sale volume and an overall increase in transaction fees. In addition, year-over-year comparisons of EBIDTA (earnings before interest, taxes, depreciation and amortization) “were negatively impacted by the absence of the previously disclosed gain on the sale of non-core assets within our settlement services business recorded in second quarter 2004; by operating costs that were borne in 2004 by PHH; and by the timing of certain marketing campaigns and certain other expense increases incurred primarily to support growth in our brokerage and relocation services businesses,” Cendant also reported.
Cendant’s overall second-quarter revenue totaled $4.7 billion, an increase of 8 percent over second quarter 2004, owing mostly to growth in its real estate and travel services businesses, the company reported. Earnings per share from Continuing Operations was $0.37 and net income was $387 million.
Cendant’s president and chief financial officer, Ronald L. Nelson, said in a statement, “During the second quarter we benefited from continuing strength in our residential real estate businesses and improving trends in our travel operations, which not only enabled us to generate record second quarter revenues in virtually all of our business units, but also caused us to exceed our earnings per share projection.
“The underlying health of each of our businesses is clearly demonstrated by their organic revenue growth during the second quarter. EBITDA growth also was strong, despite our comparison to 2004 being challenged by a number of items, including the absence of earnings from our former mortgage business, an unusually robust real estate market in second quarter 2004 and the absence of certain one-time benefits recorded in our travel content and real estate divisions in 2004. Looking ahead to the second half of 2005 and full year 2006, we expect growth to accelerate as we begin to reap the benefits of the investments we have been making in our core businesses in 2005.
“We have also announced today that, concurrent with the close of the anticipated sale of our Marketing Services Division, we intend, subject to Board approval, to increase our common stock repurchase target from $1 billion during 2005 to $2 billion over the next 18 months.”
The company’s outlook for the remainder of the year remains unchanged as the $0.02 per share of incremental earnings recorded in the second quarter is offset by a reduction in the range by $0.01 per share in each of the last two quarters, Cendant reported.
Cendant will host a conference cal at 11 a.m. Eastern Time on Tuesday, July 26 to discuss second-quarter results. Investors can access the call at www.cendant.com or by dialing (913) 981-5532. A Web replay will be available at www.cendant.com following the call. A telephone replay will be available from 2 p.m. Eastern Time until midnight on Aug. 2, at (719) 457-0820, access code: 4681275.
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