PHH Corporation

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PHH Corporation

11333 McCormick Road
Hunt Valley, Maryland 21031
(410) 771-3600
Fax: (410) 771-2841

Public Company
Incorporated: 1953 as Peterson, Howell & Heather, Inc.
Employees: 4,589
Sales: $2.03 billion
Stock Exchanges: New York London Toronto

PHH Corporation is the worlds largest provider of vehicle fleet management services, with operations in the United States, Canada, and Europe. It has retained all of its major fleet management clients since its founding. PHHs other services are employee relocation and real estate management.

The company originated in 1946, when Duane Peterson, Harley Howell, and Dick Heather formed a partnership to manage corporate automobile fleets. They signed management agreements with two companies in their first year: Gibson Art Company and Johnson & Johnson. The assumption was that corporations would save money by hiring a group that specialized in running car fleets, rather than supervising the car rentals and management themselves. The idea was advanced at the time when postwar cars were just beginning to be produced, and the firm prospered. It was incorporated in 1953 as Peterson, Howell & Heather. By 1955 a Canadian branch had been formed. The first public offering of stock took place three years later. The client list grew to include Honeywell and Du Pont.

After a decade of steady growth, the company was ready to expand and diversify its services. PHH acquired National Truckers Service (NTS) of Texas in 1969 and acquired Horn-equity, Inc., of Connecticut in 1971. This latter marked PHHs entry into relocation and real estate management services.

Homequity was then the nations largest provider of such services, which include the appraisal and purchase of homes from workers being transferred, with the homes subsequent resale. The building of company headquarters in Hunt Valley, Maryland, began in 1972. In 1978 the company name was changed to PHH Group, Inc.

During the 1980s, PHH continued its expansion, especially in European markets. In 1980 the company purchased AllStar Petrol Card Ltd. of London. That same year, Jerome W. Geckle, then president and CEO, succeeded John Lalley as chairman. Geckle oversaw a decade of explosive growth. In 1981 PHH International was formed to manage the companys European operations. The following year, business services grew to include aviation management, and over the next several years, PHH acquired Aviation Information Services; Aviation Consulting, Inc.; Beckett Flight Management; and Ryan Aviation Corporation. Despite the recession of the early 1980s, PHH had 2,000 corporate clients in 1982 and a record of 24 consecutive years of increased earnings.

Relocation services were expanded in 1984 with the purchase of Transamerica Corporations relocation service, which was then ranked as the United Statess fourth-largest relocater of corporate personnel. PHH also acquired US Mortgage Corporation that year, adding the related service of mortgage lending to the relocation segment. Fleet management thrived in the United Kingdom, where the countrys tax structure encouraged such corporate perquisites as company-provided cars. PHH was listed on the London Stock Exchange in 1984 and the Toronto Stock Exchange in 1986.

PHH signed about 100 new fleet clients in 1984, involving almost 50,000 vehicles. The following year, 78 more clients signed on. At this time, just more than half the companys profits came from fleet services. Aviation management was showing a slight return on investment by 1985. The company orchestrated 29,000 corporate relocations in 1985.

While PHHs major competitorGelco Corporationbranched out into containers and truck leasing, PHH broadened only into closely related services, such as credit cards for fuel, tire, and battery purchases, and vehicle expense and maintenance control. In addition to scale economies, PHH offered clients the advantages of its close attention to vehicle prices and values, while handling all the tax, title, and insurance paperwork. In 1985 PHH still ranked among the 100 fastest-growing and most profitable major U.S. companies, despite the fact that falling interest rates had reduced its earnings growth rate in 1983.

In 1986 PHH acquired the Avis Leasing domestic fleet operations from Wesray Capital Corporation for about $136 million. Avis added 35,000 cars to PHHs 281,000 cars in the United States and Canada. More than three-quarters of Aviss business was within 200 miles of New York City, but PHH soon widened the range. Also in 1986, PHH formed an office resources management business segment. These services were to include choosing design, construction, and telecommunications firms and sites for new offices and overseeing the purchase and resale of office equipment. To this new segment were added the 1986 acquisitions of Avenue Group, Inc., of Chicago, and Philadelphias Interspace, Inc.both office design firms.

PHH continued expansion in Europe in the late 1980s. It acquired CashCard GmbH in 1987, thus moving into fuel management services in Germany. The company also opened offices in Dublin and Paris. The companys name was changed to PHH Corporation in 1988. The following year, profits rose again, despite hard economic times for both the auto and housing industries. PHH sold its aviation management services business this same year.

Company growth slowed considerably during 1988 and 1989, but profits were steady. Longtime chairman Geckle retired in 1990 and was succeeded by Robert D. Kunisch. The company picked up important new fleet management clients in 1990, including Coca Cola Enterprises and Smith Kline Beecham. PHH Relocation and Real Estate Management Services USA was formed the same year to oversee the PHH businesses in that area. Also formed were the used vehicle service and card service divisions, to complement fleet management services. Profits dipped slightly in the fiscal year that ended in April 1991, largely due to the worldwide recession. PHH put off geographic expansion of its fleet services in Europe until the economy recovered.

PHH officials decided in 1990 to exit the facilities management services operations because the required investments of assets and time were too great. PHH seemed to know and build on its strengths as a streamlined provider of certain management services.

Principal Subsidiaries

PHH Fleet America; PHH Financial Services, Inc.; NTS, Inc.; PHH Vehicle Management Services, Canada; PHH Deutschland, Inc.; PHH AllStar, Ltd. (U.K.); PHH Homequity Corp.; PHH Fantus; Homequity Canada, Inc.; PHH Homequity Ltd. (U.K.); PHH US Mortgage Corporation; PHH France S.A.R.L.; PHH Network Services; PHH Destination Services.

Further Reading

Cook, James, The PHH Factor, Forbes, November 4, 1985; Forty-Five Years of PHH Quality, Hunt Valley, Maryland, PHH Corporation, [1990].

Carol I. Keeley