Altisource Announces Fourth Quarter and Full Year Results

March 02, 2015

LUXEMBOURG, March 2, 2015 – Altisource Portfolio Solutions S.A. ("Altisource") (Nasdaq:ASPS) today reported financial results for the fourth quarter and full year 2014.

Full Year 2014 Results Compared to 2013:

 

  • Service revenue of $938.7 million, a 42% increase
  • Net income attributable to Altisource of $134.5 million, a 3% increase
  • Diluted earnings per share of $5.69, a 10% increase
  • Adjusted diluted earnings per share of $7.17, a 15% increase
  • Cash from operations of $197.5 million, a 6% increase

 

Fourth Quarter 2014 Results Compared to Fourth Quarter 2013:

 

  • Service revenue of $217.8 million, a 13% increase
  • Net loss attributable to Altisource of $1.5 million compared to net income attributable to Altisource of $35.5 million in the fourth quarter 2013
  • Diluted loss per share of $0.08 compared to diluted earnings per share of $1.42 in the fourth quarter 2013
  • Adjusted diluted earnings per share of $0.30, an 83% decrease
  • Cash from operations of $71.8 million, a 41% increase

 

Outside of the discontinuation of the lender placed insurance brokerage line of business, the fourth quarter 2014 net loss was from higher costs than in the fourth quarter of 2013, partially as a result of expenses to support anticipated business growth. To quickly address the change in expectations for Ocwen's growth, the Company has begun to execute on a plan that includes eliminating non-revenue generating businesses, reducing vendor fees and eliminating staff to reduce costs.

 

"Our 2014 performance was driven by strong revenue growth. During 2014, our earnings grew at a lower rate than our revenue as we incurred expenses for people and infrastructure to support a larger Ocwen and certain longer-term initiatives that had no revenue associated with them. We developed and are implementing a plan to reduce costs and eliminate certain of these initiatives to be a leaner, more focused organization," said Chief Executive Officer William B. Shepro.

Full year and fourth quarter 2014 highlights include:

 

  • The average number of loans serviced by Ocwen on REALServicing® totaled 2.2 million, a 91% increase compared to the year ended December 31, 2013 and 2.4 million for the fourth quarter 2014, a 59% increase compared to the fourth quarter 2013
  • On November 21, 2014, we acquired certain assets and assumed certain liabilities of Owners Advantage, LLC ("Owners.com"), a leading self-directed online real estate marketplace, for an initial purchase price of $19.8 million plus contingent earn out consideration of up to an additional $7.0 million over two years, subject to Owners.com achieving annual performance targets
  • On September 12, 2014, we completed the acquisition of certain assets and assumed certain liabilities of Mortgage Builder Software, Inc. ("Mortgage Builder"), a provider of mortgage loan origination and servicing software systems, for an initial purchase price of $15.7 million plus contingent earn out consideration of up to an additional $7.0 million over three years, subject to Mortgage Builder achieving annual performance targets
  • On August 1, 2014, we amended our senior secured term loan agreement and increased our borrowings by $200.0 million.

 

William Shepro commented further, "We have begun 2015 very focused on our customer and product diversification initiatives while continuing to support Ocwen, a very important and strategic customer to us."

Forward-Looking Statements

This press release contains forward-looking statements that involve a number of risks and uncertainties. Those forward-looking statements include all statements that are not historical fact, including statements about management's beliefs and expectations. Forward-looking statements are based on management's beliefs as well as assumptions made by and information currently available to management. Because such statements are based on expectations as to future economic performance and are not statements of historical fact, actual results may differ materially from those projected. Altisource undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to: Altisource's ability to retain existing customers and attract new customers; general economic and market conditions; governmental regulations, taxes and policies; availability of adequate and timely sources of liquidity; and other risks and uncertainties detailed in the "Forward-Looking Statements," "Risk Factors" and other sections of the Company's Form 10-K and other filings with the Securities and Exchange Commission.

 

Webcast

 

Altisource will host a webcast on Wednesday, March 4, 2015 at 11:00 a.m. EST to discuss our fourth quarter and full year results. A link to the live audio webcast will be available on Altisource's website through the Investor Relations home page. Those who want to listen to the call should go to the website fifteen minutes prior to the call to register, download and install any necessary audio software. A replay of the conference call will be available via the website approximately two hours after the conclusion of the call and will remain available for approximately 30 days.

 

About Altisource

 

Altisource Portfolio Solutions S.A. is a premier marketplace and transaction solutions provider for the real estate, mortgage and consumer debt industries offering both distribution and content. Altisource leverages proprietary business process, vendor and electronic payment management software and behavioral science based analytics to improve outcomes for marketplace participants. Altisource has been named to Fortune's fastest growing global companies two years in a row. Additional information is available at www.Altisource.com.

 

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

 

 

 

 

 

 

Three months ended

Years ended

 

December 31,

December 31,

 

2014

2013

2014

2013

 

 

 

 

 

Service revenue

 

 

 

 

Mortgage Services

$145,037

$139,752

$650,026

$490,333

Financial Services

21,816

26,220

98,312

92,479

Technology Services

63,154

33,702

230,367

103,891

Eliminations

(12,163)

(7,233)

(40,026)

(24,644)

 

217,844

192,441

938,679

662,059

Reimbursable expenses

37,414

29,417

137,634

102,478

Non-controlling interests

629

727

2,603

3,820

Total revenue

255,887

222,585

1,078,916

768,357

Cost of revenue

149,238

114,868

569,546

390,002

Reimbursable expenses

37,414

29,417

137,634

102,478

Gross profit

69,235

78,300

371,736

275,877

Selling, general and administrative expenses

61,979

33,783

201,282

113,810

Income from operations

7,256

44,517

170,454

162,067

Other income (expense), net:

 

 

 

 

Interest expense

(7,323)

(5,989)

(23,363)

(20,291)

Other income (expense), net

39

28

174

557

Total other income (expense), net

(7,284)

(5,961)

(23,189)

(19,734)

Income (loss) before income taxes and non-controlling interests

(28)

38,556

147,265

142,333

Income tax provision

(878)

(2,313)

(10,178)

(8,540)

Net income (loss)

(906)

36,243

137,087

133,793

Net income attributable to non-controlling interests

(629)

(727)

(2,603)

(3,820)

Net income (loss) attributable toAltisource

$(1,535)

$35,516

$134,484

$129,973

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

Basic

$(0.08)

$1.56

$6.22

$5.63

Diluted

$(0.08)

$1.42

$5.69

$5.19

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

Basic

20,306

22,734

21,625

23,072

Diluted

20,306

25,005

23,634

25,053

 

 

 

 

 

Transactions with related parties:

 

 

 

 

Revenue

$164,064

$147,198

$666,800

$502,087

Cost of revenue

10,706

6,024

38,610

19,983

Selling, general and administrative expenses

196

240

(268)

569

Other income

--

--

--

773

 

 

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

 

 

 

 

December 31,

 

2014

2013

ASSETS

 

 

 

 

 

Current assets:

 

 

Cash and cash equivalents

$161,361

$130,324

Accounts receivable, net

112,183

104,787

Prepaid expenses and other current assets

23,567

10,996

Deferred tax assets, net

4,987

2,837

Total current assets

302,098

248,944

 

 

 

Premises and equipment, net

127,759

87,252

Deferred tax assets, net

--

622

Goodwill

90,851

99,414

Intangible assets, net

245,246

276,162

Other assets

22,267

17,658

 

 

 

Total assets

$788,221

$730,052

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

Current liabilities:

 

 

Accounts payable and accrued expenses

$111,766

$84,706

Current portion of long-term debt

5,945

3,975

Deferred revenue

9,829

36,742

Other current liabilities

13,227

10,131

Total current liabilities

140,767

135,554

 

 

 

Long-term debt, less current portion

582,669

391,281

Deferred tax liabilities, net

2,694

--

Other non-current liabilities

20,648

45,476

 

 

 

Equity:

 

 

Common stock ($1.00par value; 25,413 shares authorized and issued,
and 20,279 outstanding, as ofDecember 31, 2014; 100,000 shares authorized,
25,413 issued and 22,629 outstanding as ofDecember 31, 2013)

25,413

25,413

Additional paid-in capital

91,509

89,273

Retained earnings

367,967

239,561

Treasury stock, at cost (5,134 shares as ofDecember 31, 2014
and 2,784 shares as ofDecember 31, 2013)

(444,495)

(197,548)

Altisourceequity

40,394

156,699

 

 

 

Non-controlling interests

1,049

1,042

Total equity

41,443

157,741

 

 

 

Total liabilities and equity

$788,221

$730,052

 

 

 

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

 

Years endedDecember 31,

 

2014

2013

 

 

 

Cash flows from operating activities:

 

 

Net income

$137,087

$133,793

Adjustments to reconcile net income to net cashprovided by operating activities:

 

 

Depreciation and amortization

29,046

19,056

Amortization of intangible assets

37,680

28,176

Change in the fair value of Equator Earn Out

(37,924)

--

Goodwill impairment

37,473

--

Share-based compensation expense

2,236

2,400

Equity in losses of investment in affiliate

--

176

Bad debt expense

16,257

2,549

Amortization of debt discount

317

223

Amortization of debt issuance costs

1,151

958

Deferred income taxes

1,166

2,015

Loss on disposal of fixed assets

184

1,309

Changes in operating assets and liabilities, net of acquisitions:

 

 

Accounts receivable

(22,492)

(5,602)

Prepaid expenses and other current assets

(12,501)

(2,817)

Other assets

(1,750)

(1,586)

Accounts payable and accrued expenses

24,285

7,381

Other current and non-current liabilities

(14,722)

(2,557)

Net cash provided by operating activities

197,493

185,474

 

 

 

Cash flows from investing activities:

 

 

Additions to premises and equipment

(64,846)

(34,134)

Acquisition of businesses, net of cash acquired

(34,720)

(267,946)

Proceeds from loan to Ocwen

--

75,000

Proceeds from sale of equity affiliate

--

12,648

Other investing activities

(300)

(50)

Change in restricted cash

(1,402)

(1,462)

Net cash used in investing activities

(101,268)

(215,944)

 

 

 

Cash flows from financing activities:

 

 

Repayment of long-term debt and payments on capital lease obligations

(4,959)

(3,729)

Proceeds from issuance of long-term debt

198,000

200,502

Debt issuance costs

(2,608)

(3,200)

Proceeds from stock option exercises

2,688

6,885

Purchases of treasury stock

(255,713)

(141,018)

Contributions from non-controlling interests

--

28

Distributions to non-controlling interests

(2,596)

(4,176)

Net cash (used in) provided by financing activities

(65,188)

55,292

 

 

 

Net increase in cash and cash equivalents

31,037

24,822

Cash and cash equivalents at the beginning of the period

130,324

105,502

 

 

 

Cash and cash equivalents at the end of the period

$161,361

$130,324

 

 

 

Supplemental cash flow information:

 

 

Interest paid

$21,829

$19,325

Income taxes paid, net

13,340

3,671

 

 

 

Non-cash investing and financing activities:

 

 

(Decrease) increase in payables for purchases of premises and equipment

$(2,328)

$4,552

Decrease in acquisition of businesses from subsequent working capital true-ups

(3,711)

(2,039)