Altisource Announces Strong First Quarter Results

April 28, 2016

LUXEMBOURG, April 28, 2016 – Altisource Portfolio Solutions S.A. ("Altisource") (NASDAQ:ASPS) today reported strong financial results for the first quarter 2016, generating the highest first quarter revenue and service revenue in Altisource's history.  Compared to the first quarter of 2015, revenue growth was driven by a higher volume of property inspection and preservation referrals and growth in the number of non-Ocwen homes sold on Hubzu.

 

Diluted earnings per share of $0.92 and Adjusted diluted earnings per share(1) of $1.47 for the first quarter of 2016 were significantly higher than the first quarter of 2015 primarily from service revenue growth coupled with the benefit of the 2015 cost reduction initiative.

 

First Quarter 2016 Results Compared to First Quarter 2015:

Service revenue of $234.3 million, a 13% increase

Net income attributable to Altisource of $18.5 million, a 400% increase

Adjusted net income attributable to Altisource(1) of $29.4 million, a 148% increase

Diluted earnings per share of $0.92, a 411% increase

Adjusted diluted earnings per share(1) of $1.47, a 163% increase

Cash from operations of $29.0 million compared to cash used in operations of $(15.9) million

"I am very pleased with our first quarter financial results.  We continue to make strong gains to diversify and grow our customer base.  Service revenue unrelated to Ocwen for the first quarter of 2016 was 22% higher than the fourth quarter of 2015 and 38% higher than the first quarter of 2015," said Chief Executive Officer William B. Shepro.

Shepro further commented, "First quarter 2016 service revenue of $234.3 million is 26% of the mid-point of our full year 2016 scenarios and adjusted diluted earnings per share of $1.47 is 25% of the mid-point.  Given the fact that the 2nd and 3rd quarters have historically been our seasonally strongest of the year, we believe we are well positioned to achieve the mid-point of our 2016 financial scenarios."

First quarter 2016 highlights include:

Initiatives

Launched the Owners.com® buyer rebate program in Atlanta and South Florida

Supported Altisource Residential Corporation's acquisition of more than 600 properties

Completed the integration work for our new top-4 bank customer and plan to commence property inspection and preservation services in early May 2016

Launched VendorlyTM, a vendor oversight platform for Lenders One members

Capital Allocation

Repurchased $11.7 million of our common stock (0.5 million shares at an average price of $25.17 per share)

Purchased 2.5 million shares of Altisource Residential Corporation's common stock for $29.4 million in the open market

On April 6, 2016, we repurchased $28.0 million of our senior secured term loan for $24.3 million (a 13.1% discount)

__________________________

(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.  These forward-looking statements include all statements that are not historical fact, including statements about management's beliefs and expectations.  These statements may be identified by words such as "anticipate," "intend," "expect," "may," "could," "should," "would," "plan," "estimate," "seek," "believe," "potential" and similar expressions.  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 the future and are not statements of historical fact, actual results may differ materially from what is contemplated by the forward-looking statements.  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 integrate acquired businesses, retain key executives or employees, retain existing customers and attract new customers, general economic and market conditions, behavior of customers, suppliers and/or competitors, technological developments, 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 Altisource'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.  Altisource's proprietary business processes, vendor and electronic payment management software and behavioral science-based analytics improve outcomes for marketplace participants.  Additional information is available at www.Altisource.com

 

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(in thousands, except per share data)

(unaudited)

 

 

 

Three months ended March 31,

 

 

2016

 

2015

 

 

 

 

 

Service revenue

 

 

 

 

Mortgage Services

 

$

183,162

 

 

$

144,381

 

Financial Services

 

20,076

 

 

22,313

 

Technology Services

 

40,647

 

 

51,970

 

Eliminations

 

(9,605

)

 

(10,848

)

Total service revenue

 

234,280

 

 

207,816

 

Reimbursable expenses

 

15,454

 

 

31,956

 

Non-controlling interests

 

398

 

 

710

 

Total revenue

 

250,132

 

 

240,482

 

Cost of revenue

 

153,409

 

 

140,870

 

Reimbursable expenses

 

15,454

 

 

31,956

 

Gross profit

 

81,269

 

 

67,656

 

Selling, general and administrative expenses

 

53,616

 

 

52,406

 

Income from operations

 

27,653

 

 

15,250

 

Other income (expense), net:

 

 

 

 

Interest expense

 

(6,541

)

 

(7,160

)

Other than temporary impairment loss on securities

 

 

 

(3,285

)

Other income (expense), net

 

(27

)

 

3

 

Total other income (expense), net

 

(6,568

)

 

(10,442

)

 

 

 

 

 

Income before income taxes and non-controlling interests

 

21,085

 

 

4,808

 

Income tax provision

 

(2,193

)

 

(400

)

 

 

 

 

 

Net income

 

18,892

 

 

4,408

 

Net income attributable to non-controlling interests

 

(398

)

 

(710

)

 

 

 

 

 

Net income attributable toAltisource

 

$

18,494

 

 

$

3,698

 

 

 

 

 

 

Earnings per share:

 

 

 

 

Basic

 

$

0.98

 

 

$

0.18

 

Diluted

 

$

0.92

 

 

$

0.18

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

Basic

 

18,855

 

 

20,172

 

Diluted

 

20,040

 

 

20,995

 

 

 

 

 

 

Comprehensive income:

 

 

 

 

Net income

 

$

18,892

 

 

$

4,408

 

Other comprehensive income, net of tax:

 

 

 

 

Unrealized gain on securities, net of income tax expense of
$289and$0

 

699

 

 

 

 

 

 

 

 

Comprehensive income, net of tax

 

19,591

 

 

4,408

 

Comprehensive income attributable to non-controlling interests

 

(398

)

 

(710

)

 

 

 

 

 

Comprehensive income attributable toAltisource

 

$

19,193

 

 

$

3,698

 

 

 

 

 

 

 

 

 

 

 

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

SEGMENT FINANCIAL INFORMATION

(in thousands)

(unaudited)

 

 

 

Three months ended March 31, 2016

 

 

Mortgage
Services

 

Financial
Services

 

Technology
Services

 

Corporate
Itemsand
Eliminations

 

Consolidated
Altisource

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

Service revenue

 

$

183,162

 

 

$

20,076

 

 

$

40,647

 

 

$

(9,605

)

 

$

234,280

 

Reimbursable expenses

 

15,426

 

 

28

 

 

 

 

 

 

15,454

 

Non-controlling interests

 

398

 

 

 

 

 

 

 

 

398

 

 

 

198,986

 

 

20,104

 

 

40,647

 

 

(9,605

)

 

250,132

 

Cost of revenue

 

121,518

 

 

14,258

 

 

41,893

 

 

(8,806

)

 

168,863

 

Gross profit (loss)

 

77,468

 

 

5,846

 

 

(1,246

)

 

(799

)

 

81,269

 

Selling, general and administrative expenses

 

26,969

 

 

4,309

 

 

6,558

 

 

15,780

 

 

53,616

 

Income (loss) from operations

 

50,499

 

 

1,537

 

 

(7,804

)

 

(16,579

)

 

27,653

 

Other income (expense), net

 

14

 

 

13

 

 

7

 

 

(6,602

)

 

(6,568

)

 

 

 

 

 

 

 

 

 

 

 

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

 

$

50,513

 

 

$

1,550

 

 

$

(7,797

)

 

$

(23,181

)

 

$

21,085

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2015

 

 

Mortgage
Services

 

Financial
Services

 

Technology
Services

 

Corporate
Itemsand
Eliminations

 

Consolidated
Altisource

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

Service revenue

 

$

144,381

 

 

$

22,313

 

 

$

51,970

 

 

$

(10,848

)

 

$

207,816

 

Reimbursable expenses

 

31,915

 

 

41

 

 

 

 

 

 

31,956

 

Non-controlling interests

 

710

 

 

 

 

 

 

 

 

710

 

 

 

177,006

 

 

22,354

 

 

51,970

 

 

(10,848

)

 

240,482

 

Cost of revenue

 

114,804

 

 

15,103

 

 

52,723

 

 

(9,804

)

 

172,826

 

Gross profit (loss)

 

62,202

 

 

7,251

 

 

(753

)

 

(1,044

)

 

67,656

 

Selling, general and administrative expenses

 

20,561

 

 

4,715

 

 

7,315

 

 

19,815

 

 

52,406

 

Income (loss) from operations

 

41,641

 

 

2,536

 

 

(8,068

)

 

(20,859

)

 

15,250

 

Other income (expense), net

 

(4

)

 

(12

)

 

1

 

 

(10,427

)

 

(10,442

)

 

 

 

 

 

 

 

 

 

 

 

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

 

$

41,637

 

 

$

2,524

 

 

$

(8,067

)

 

$

(31,286

)

 

$

4,808

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

 

 

 

March 31,

 

December 31,

 

 

2016

 

2015

ASSETS

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

159,705

 

 

$

179,327

 

Available for sale securities

 

30,417

 

 

 

Accounts receivable, net

 

97,645

 

 

105,023

 

Prepaid expenses and other current assets

 

26,721

 

 

21,751

 

Total current assets

 

314,488

 

 

306,101

 

 

 

 

 

 

Premises and equipment, net

 

116,937

 

 

119,121

 

Goodwill

 

82,801

 

 

82,801

 

Intangible assets, net

 

184,792

 

 

197,003

 

Deferred tax assets, net

 

3,330

 

 

3,619

 

Other assets

 

13,246

 

 

13,153

 

 

 

 

 

 

Total assets

 

$

715,594

 

 

$

721,798

 

 

 

 

 

 

LIABILITIES AND EQUITY

Current liabilities:

 

 

 

 

Accounts payable and accrued expenses

 

$

80,768

 

 

$

91,871

 

Current portion of long-term debt

 

5,945

 

 

5,945

 

Deferred revenue

 

12,634

 

 

15,060

 

Other current liabilities

 

18,276

 

 

16,266

 

Total current liabilities

 

117,623

 

 

129,142

 

 

 

 

 

 

Long-term debt, less current portion

 

521,185

 

 

522,233

 

Other non-current liabilities

 

14,821

 

 

18,153

 

 

 

 

 

 

Equity:

 

 

 

 

Common stock ($1.00par value; 25,413 shares authorized and issued and 18,603 outstanding as ofMarch 31, 2016; 25,413 shares authorized and issued and 19,021 outstanding as ofDecember 31, 2015)

 

25,413

 

 

25,413

 

Additional paid-in capital

 

98,198

 

 

96,321

 

Retained earnings

 

385,452

 

 

369,270

 

Accumulated other comprehensive income

 

699

 

 

 

Treasurystock, at cost (6,810 shares as ofMarch 31, 2016and 6,392 shares as ofDecember 31, 2015)

 

(449,039

)

 

(440,026

)

Altisourceequity

 

60,723

 

 

50,978

 

 

 

 

 

 

Non-controlling interests

 

1,242

 

 

1,292

 

Total equity

 

61,965

 

 

52,270

 

 

 

 

 

 

Total liabilities and equity

 

$

715,594

 

 

$

721,798

 

 

 

 

 

 

 

 

 

 

 

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

Three months endedMarch 31,

 

2016

 

2015

 

 

 

 

Cash flows from operating activities:

 

 

 

Net income

$

18,892

 

 

$

4,408

 

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

 

 

 

Depreciation and amortization

9,208

 

 

8,826

 

Amortization of intangible assets

12,211

 

 

8,891

 

Other than temporary impairment loss onHLSSsecurities

 

 

3,285

 

Change in the fair value of acquisition related contingent consideration

96

 

 

148

 

Share-based compensation expense

1,877

 

 

443

 

Bad debt expense

876

 

 

607

 

Amortization of debt discount

116

 

 

127

 

Amortization of debt issuance costs

322

 

 

351

 

Deferred income taxes

 

 

(24

)

Gain on disposal of fixed assets

(10

)

 

(19

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

6,502

 

 

(15,140

)

Prepaid expenses and other current assets

(4,970

)

 

2,413

 

Other assets

(109

)

 

127

 

Accounts payable and accrued expenses

(12,133

)

 

(27,559

)

Other current and non-current liabilities

(3,844

)

 

(2,822

)

Net cash provided by (used in) operating activities

29,034

 

 

(15,938

)

 

 

 

 

Cash flows from investing activities:

 

 

 

Additions to premises and equipment

(5,984

)

 

(3,931

)

Purchase of available for sale securities

(29,429

)

 

(29,966

)

Other investing activities

16

 

 

(4

)

Net cash used in investing activities

(35,397

)

 

(33,901

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Repayment of long-term debt

(1,486

)

 

(1,486

)

Proceeds from stock option exercises

366

 

 

203

 

Purchase of treasury stock

(11,691

)

 

(3,959

)

Distributions to non-controlling interests

(448

)

 

(657

)

Net cash used in financing activities

(13,259

)

 

(5,899

)

 

 

 

 

Net decrease in cash and cash equivalents

(19,622

)

 

(55,738

)

Cash and cash equivalents at the beginning of the period

179,327

 

 

161,361

 

 

 

 

 

Cash and cash equivalents at the end of the period

$

159,705

 

 

$

105,623

 

 

 

 

 

Supplemental cash flow information:

 

 

 

Interest paid

$

6,104

 

 

$

6,655

 

Income taxes paid, net

3,830

 

 

1,520

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

Increase (decrease) in payables for purchases of premises and equipment

$

1,030

 

 

$

(3,638

)

 

 

 

 

 

 

 

 

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

NON-GAAP MEASURES

(in thousands, except per share data)

(unaudited)

 

Adjusted net income attributable toAltisourceand adjusted diluted earnings per share are non-GAAP measures used by management, existing shareholders and potential shareholders to measure Altisource's performance. Adjusted net income attributable toAltisourceis calculated by adding intangible asset amortization expense (net of tax) to GAAP net income attributable to Altisource. Adjusted diluted earnings per share is calculated by dividing net income attributable toAltisourceplus intangible asset amortization expense (net of tax) to GAAP net income attributable toAltisourceby the weighted average number of diluted shares. Reconciliations of the non-GAAP measures to the corresponding GAAP measures are as follows:

 

 

Three months endedMarch 31,

 

2016

 

2015

 

 

 

 

Net income attributable toAltisource

$

18,494

 

 

$

3,698

 

 

 

 

 

Amortization of intangible assets

12,211

 

 

8,891

 

Tax benefit on amortization of intangible assets

(1,270

)

 

(741

)

Amortization of intangible assets, net of tax

10,941

 

 

8,150

 

 

 

 

 

Adjusted net income attributable toAltisource

$

29,435

 

 

$

11,848

 

 

 

 

 

Diluted earnings per share

$

0.92

 

 

$

0.18

 

 

 

 

 

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

0.55

 

 

0.39

 

 

 

 

 

Adjusted diluted earnings per share

$

1.47

 

 

$

0.56

 

 

 

 

 

Weighted average shares outstanding - diluted

20,040

 

 

20,995

 

_____________________

 

 

 

 

 

Note: Amounts may not add to the total due to rounding.