Altisource Announces First Quarter Results

April 23, 2015

LUXEMBOURG, April 23, 2015 – Altisource Portfolio Solutions S.A. ("Altisource") (Nasdaq:ASPS) today reported financial results for the first quarter 2015.

 

First Quarter 2015 Results Compared to First Quarter 2014:

 

  • Service revenue of $207.8 million, a 1% decrease
  • Net income attributable to Altisource of $3.7 million, a 91% decrease
  • Adjusted net income attributable to Altisource(1) of $11.8 million, a 76% decrease
  • Diluted earnings per share of $0.18, an 89% decrease
  • Adjusted diluted earnings per share(1) of $0.56, a 72% decrease

 

"I am pleased with our first quarter accomplishments. Not only are we executing on our growth initiatives, we are also making good progress on the cost reduction plan we implemented during the first quarter. First quarter 2015 net income included $13.6 million of expenses related to terminated employees and contractors and other out-of-the-ordinary items. Absent these items, adjusted net income attributable to shareholders would have been$24.3 million. Further, we expect to achieve higher cost savings in the second quarter from the benefit of the elimination of the data access fees, lower unit costs for outside fees and services on seasonally higher revenue and the termination of a lease on a larger facility.  As a result, we believe we are on-track to achieve the objectives we established for the year as a leaner, operational and sales focused organization," said William B. Shepro, Chief Executive Officer.

First quarter 2015 highlights include:

 

  • The average number of loans serviced by Ocwen on REALServicing® was 2.4 million for the first quarter of 2015, an increase of 27% compared to the first quarter 2014
  • The number of houses sold through Hubzu® was 8,305 for the first quarter 2015, an increase of 24% compared to the first quarter in 2014

 

(1) This is a non-GAAP measure that is defined and reconciled to the corresponding GAAP measure herein.

 

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. The Company 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 at 11:00 a.m. EDT today to discuss our first quarter results. A link to the live audio webcast will be available on Altisource's website in the Investor Relations section.  Those who want to listen to the call should go to the website at least 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)

(unaudited)

 

 

 

 

Three months ended

 

March 31,

 

2015

2014

Service revenue

 

 

Mortgage Services

$ 144,381

$147,148

Financial Services

22,313

24,257

Technology Services

51,970

46,850

Eliminations

(10,848)

(8,296)

Total service revenue

207,816

209,959

Reimbursable expenses

31,956

28,795

Non-controlling interests

710

515

Total revenue

240,482

239,269

Cost of revenue

140,870

119,010

Reimbursable expenses

31,956

28,795

Gross profit

67,656

91,464

Selling, general and administrative expenses

52,406

43,534

Income from operations

15,250

47,930

Other income (expense), net:

 

 

Interest expense

(7,160)

(4,776)

Other than temporary impairment loss on HLSS equity securities

(3,285)

--

Other income (expense), net

3

47

Total other income (expense), net

(10,442)

(4,729)

Income before income taxes and non-controlling interests

4,808

43,201

Income tax provision

(400)

(3,055)

Net income

4,408

40,146

Net income attributable to non-controlling interests

(710)

(515)

Net income attributable toAltisource

$3,698

$39,631

 

 

 

Earnings per share:

 

 

Basic

$ 0.18

$ 1.76

Diluted

$ 0.18

$ 1.61

 

 

 

Weighted average shares outstanding:

 

 

Basic

20,172

22,509

Diluted

20,995

24,662

 

 

 

Transactions with related parties included above:

 

 

Revenue

$ 148,639

$145,558

Cost of revenue

10,288

7,288

Selling, general and administrative expenses

657

(242)

 

 

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

 

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

 

 

 

 

2015
March 31,

2015
December 31,

ASSETS

 

 

 

 

 

Current assets:

 

 

Cash and cash equivalents

$105,623

$161,361

Available for sale securities - investment in HLSS

26,681

--

Accounts receivable, net

126,716

112,183

Prepaid expenses and other current assets

21,154

23,567

Deferred tax assets, net

4,987

4,987

Total current assets

285,161

302,098

Premises and equipment, net

126,521

127,759

Goodwill

90,851

90,851

Intangible assets, net

236,355

245,246

Other assets

21,793

22,267

Total assets

$760,681

$788,221

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

Current liabilities:

 

 

Accounts payable and accrued expenses

$87,845

$111,766

Current portion of long-term debt

5,945

5,945

Deferred revenue

9,289

9,829

Other current liabilities

10,407

13,227

Total current liabilities

113,486

140,767

 

 

 

Long-term debt, less current portion

581,310

582,669

Deferred tax liabilities, net

2,670

2,694

Other non-current liabilities

21,334

20,648

 

 

 

Equity:

 

 

outstanding as ofDecember 31, 2014)
Common stock ($1.00par value; 25,413 shares authorized and issued and 20,132 outstanding as ofMarch 31, 2015; 25,413 shares authorized and issued and 20,279

25,413

25,413

Additional paid-in capital

91,952

91,509

Retained earnings

369,964

367,967

Treasury stock, at cost (5,281 shares as ofMarch 31, 2015and 5,134 shares as ofDecember 31, 2014)

(446,550)

(444,495)

Altisource equity

40,779

40,394

 

 

 

Non-controlling interests

1,102

1,049

Total equity

41,881

41,443

Total liabilities and equity

$760,681

$788,221

 

 

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

 

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

 

Three months endedMarch 31,

 

2015

2014

 

 

 

Cash flows from operating activities:

 

 

Net income

$4,408

$40,146

Adjustments to reconcile net income to net cash (used in) provided by

 

 

operating activities:

 

 

Depreciation and amortization

8,826

6,246

Amortization of intangible assets

8,891

9,466

Other than temporary impairment loss on HLSS equity securities

3,285

--

Change in the fair value of acquisition related contingent consideration

148

--

Share-based compensation expense

443

658

Bad debt expense

607

1,755

Amortization of debt discount

127

46

Amortization of debt issuance costs

351

242

Deferred income taxes

(24)

461

(Gain) loss on disposal of fixed assets

(19)

96

Changes in operating assets and liabilities:

 

 

Accounts receivable

(15,140)

(22,599)

Prepaid expenses and other current assets

2,413

(1,847)

Other assets

127

(1,014)

Accounts payable and accrued expenses

(27,559)

7,695

Other current and non-current liabilities

(2,822)

(5,042)

Net cash (used in) provided by operating activities

(15,938)

36,309

 

 

 

Cash flows from investing activities:

 

 

Additions to premises and equipment

(3,931)

(12,945)

Purchase of HLSS equity securities

(29,966)

--

Other investing activities

(4)

(300)

Net cash used in investing activities

(33,901)

(13,245)

 

 

 

Cash flows from financing activities:

 

 

Repayment of long-term debt

(1,486)

(994)

Proceeds from stock option exercises

203

401

Purchase of treasury stock

(3,959)

(35,766)

Distributions to non-controlling interests

(657)

(653)

Net cash used in financing activities

(5,899)

(37,012)

 

 

 

 

 

 

Net decrease in cash and cash equivalents

(55,738)

(13,948)

Cash and cash equivalents at the beginning of the period

161,361

130,324

Cash and cash equivalents at the end of the period

$105,623

$116,376

 

 

 

Supplemental cash flow information:

 

 

Interest paid

$6,655

$4,469

Income taxes paid, net

1,520

201

 

 

 

Non-cash investing and financing activities:

 

 

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

$(3,638)

$684

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

NON-GAAP MEASURES

(in thousands, except per share data)

(unaudited)

Adjusted net income attributable to Altisource and adjusted diluted earnings per share are non-GAAP measures used by our Chief Operating Decision Maker, existing shareholders and potential shareholders to measureAltisource's performance. Adjusted net income attributable to Altisource is calculated by adding amortization of intangible assets (net of tax) to GAAP net income attributable to Altisource. Adjusted diluted earnings per share is calculated by dividing net income attributable to Altisource plus amortization of intangible assets (net of tax) by the weighted average number of diluted shares outstanding. Reconciliations of the non-GAAP measures to the corresponding GAAP measures are as follows:

 

Three months ended

 

March 31,

 

2015

2014

 

 

 

Net income attributable toAltisource

$3,698

$39,631

 

 

 

Amortization of intangible assets

8,891

9,466

Tax benefit on amortization of intangible assets

(741)

(669)

Amortization of intangible assets, net of tax

8,150

8,797

Adjusted net income attributable to Altisource

$11,848

$48,428

 

 

 

Diluted earnings per share

$0.18

$1.61

 

 

 

Amortization of intangible assets, net of tax, per diluted share

0.39

0.36

 

 

 

Adjusted diluted earnings per share

$0.56

$1.97

 

 

 

Weighted average shares outstanding - diluted

20,995

24,662