IAC, the company that operates RealEstate.com and LendingTree, among other online businesses, on Tuesday announced net income of $16.7 million in fourth-quarter 2006, down 85.2 percent compared with net income of $113.1 million in fourth-quarter 2005.
The company had a $3.8 million loss in fourth-quarter 2006 operating income compared to operating income of $190.5 million in fourth-quarter 2005. IAC’s adjusted earnings per share rose to 67 cents for the fourth quarter, compared with 50 cents in fourth-quarter 2005.
Company revenue increased 7.8 percent in fourth-quarter 2006, rising to $1.82 billion, compared with $1.69 billion in fourth-quarter 2005, and operating income before amortization rose 0.3 percent to $267.6 million in the fourth quarter compared to the prior year’s fourth quarter.
The company reported that its lending revenue “was flat during a declining mortgage market,” while operating income for the company’s lending operations increased 63 percent in the fourth quarter compared to fourth-quarter 2005, rising to $14.1 million. Also, the company reported $17.2 million in operating income before amortization for lending operations in the fourth quarter, up 23 percent compared to fourth-quarter 2005.
Revenues for IAC real estate operations dropped 1 percent, from $14.6 million in fourth-quarter 2005 to $14.5 million in fourth-quarter 2006, while real estate operating income declined 22 percent to a loss of $6.9 million in fourth-quarter 2006. The company reported a loss of $5.4 million in operating income before amortization for real estate operations in the fourth quarter, down 88 percent compared to fourth-quarter 2005.
IAC reported that its lending close rates were lower in the fourth-quarter across all product categories compared to the prior year’s quarter.
“Revenue from purchase loans grew in the double digits, primarily due to strong growth at LendingTree Loans, while revenue from refinance mortgages grew in the low single digits and revenue from home equity loans decrease at a double-digit rate,” the company reported. “Profits grew, reflecting flat marketing expenses and lower overall operating expenses.”
Meanwhile, the company reported that revenue dropped slightly for the company’s real estate business “as fewer leads led to fewer closings at the broker and builder networks, partially offset by revenue from closings in the company-owned brokerage business, which was not in the prior-year results. Losses increased due primarily to increased costs associated with the geographical expansion of the brokerage business, now operating in eight markets, and higher costs related to the development and re-launch of the RealEstate.com Web site.”
Real estate closings dropped from 3,200 units in fourth-quarter 2005 to 2,900 units in fourth-quarter 2006, while the dollar volume in real estate closings fell from $798 million in fourth-quarter 2005 to $729 million in fourth-quarter 2006.
And in the lending division, the company reported 60,100 loan closings in fourth-quarter 2006, down 16 percent from 71,900 in fourth-quarter 2005. The closings were worth $7.6 billion in fourth-quarter 2006, down 18 percent compared with $9.2 billion in fourth-quarter 2005. Loan closing statistics include loans closed by outside lenders that participate in the LendingTree exchange and those closed directly by LendingTree Loans.
For the full fiscal year in 2006, IAC reported net income of $192.6 million across all lines of business, a 77.8 percent drop compared with $868.2 billion in 2005. Revenue in 2006 increased 15.9 percent to $6.28 billion compared to the prior year.
Free cash flow generated during the 12 months of 2006 was $542 million, with $814 million in net cash provided by operating activities, the company reported, while the company’s operating income dropped 25.7 percent to $253.4 million in fiscal year 2006 compared to the prior year.
And according to generally accepted accounting principals, the company’s diluted earnings per share for the fourth quarter was 5 cents, compared with 33 cents for fourth-quarter 2005, and the diluted earnings per share was 60 cents for the full fiscal year in 2006, down from $2.46 for the full fiscal year in 2005.
IAC Chairman and CEO Barry Diller said in a statement, “As we mature, as a conglomerate of interrelated businesses, some start up, some making their way and some already established with leading positions, we will more and more accentuate the two key areas we believe most keenly demonstrate our value — free cash flow generation and earnings per share (adjusted). Our 2006 figures demonstrate our ability to drive those metrics that matter most to value creation. While everything metric counts, you will find these leading indicators will become first among equals in our future reporting and commentary.”