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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.
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ALTISOURCE PORTFOLIO SOLUTIONS S.A. |
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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME |
||||||||
|
(in thousands, except per share data) |
||||||||
|
(unaudited) |
||||||||
|
|
||||||||
|
|
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Three months ended March 31, |
||||||
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2016 |
|
2015 |
||||
|
|
|
|
|
|
||||
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Service revenue |
|
|
|
|
||||
|
Mortgage Services |
|
$ |
183,162 |
|
|
$ |
144,381 |
|
|
Financial Services |
|
20,076 |
|
|
22,313 |
|
||
|
Technology Services |
|
40,647 |
|
|
51,970 |
|
||
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Eliminations |
|
(9,605 |
) |
|
(10,848 |
) |
||
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Total service revenue |
|
234,280 |
|
|
207,816 |
|
||
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Reimbursable expenses |
|
15,454 |
|
|
31,956 |
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Non-controlling interests |
|
398 |
|
|
710 |
|
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Total revenue |
|
250,132 |
|
|
240,482 |
|
||
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Cost of revenue |
|
153,409 |
|
|
140,870 |
|
||
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Reimbursable expenses |
|
15,454 |
|
|
31,956 |
|
||
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Gross profit |
|
81,269 |
|
|
67,656 |
|
||
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Selling, general and administrative expenses |
|
53,616 |
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|
52,406 |
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Income from operations |
|
27,653 |
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|
15,250 |
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Other income (expense), net: |
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|
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Interest expense |
|
(6,541 |
) |
|
(7,160 |
) |
||
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Other than temporary impairment loss on securities |
|
— |
|
|
(3,285 |
) |
||
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Other income (expense), net |
|
(27 |
) |
|
3 |
|
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Total other income (expense), net |
|
(6,568 |
) |
|
(10,442 |
) |
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|
|
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Income before income taxes and non-controlling interests |
|
21,085 |
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|
4,808 |
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Income tax provision |
|
(2,193 |
) |
|
(400 |
) |
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|
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Net income |
|
18,892 |
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|
4,408 |
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Net income attributable to non-controlling interests |
|
(398 |
) |
|
(710 |
) |
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Net income attributable toAltisource |
|
$ |
18,494 |
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$ |
3,698 |
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Earnings per share: |
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Basic |
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$ |
0.98 |
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$ |
0.18 |
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Diluted |
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$ |
0.92 |
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$ |
0.18 |
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Weighted average shares outstanding: |
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||||
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Basic |
|
18,855 |
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|
20,172 |
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Diluted |
|
20,040 |
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20,995 |
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Comprehensive income: |
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Net income |
|
$ |
18,892 |
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|
$ |
4,408 |
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Other comprehensive income, net of tax: |
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Unrealized gain on securities, net of income tax expense
of |
|
699 |
|
|
— |
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|
|
|
|
|
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Comprehensive income, net of tax |
|
19,591 |
|
|
4,408 |
|
||
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Comprehensive income attributable to non-controlling interests |
|
(398 |
) |
|
(710 |
) |
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|
|
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Comprehensive income attributable toAltisource |
|
$ |
19,193 |
|
|
$ |
3,698 |
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ALTISOURCE PORTFOLIO SOLUTIONS S.A. |
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SEGMENT FINANCIAL INFORMATION |
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(in thousands) |
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(unaudited) |
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Three months ended March 31, 2016 |
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Mortgage |
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Financial |
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Technology |
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Corporate |
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Consolidated |
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Revenue |
|
|
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|
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|
|
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|
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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 |
|
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Gross profit (loss) |
|
77,468 |
|
|
5,846 |
|
|
(1,246 |
) |
|
(799 |
) |
|
81,269 |
|
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Selling, general and administrative expenses |
|
26,969 |
|
|
4,309 |
|
|
6,558 |
|
|
15,780 |
|
|
53,616 |
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Income (loss) from operations |
|
50,499 |
|
|
1,537 |
|
|
(7,804 |
) |
|
(16,579 |
) |
|
27,653 |
|
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Other income (expense), net |
|
14 |
|
|
13 |
|
|
7 |
|
|
(6,602 |
) |
|
(6,568 |
) |
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|
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|
|
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|
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Income (loss) before income taxes and |
|
$ |
50,513 |
|
|
$ |
1,550 |
|
|
$ |
(7,797 |
) |
|
$ |
(23,181 |
) |
|
$ |
21,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Three months ended March 31, 2015 |
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|
|
|
Mortgage |
|
Financial |
|
Technology |
|
Corporate |
|
Consolidated |
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|
|
|
|
|
|
|
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|
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|
||||||||||
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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 |
) |
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|
|
|
|
|
|
|
|
|
|
|
||||||||||
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Income (loss) before income taxes and |
|
$ |
41,637 |
|
|
$ |
2,524 |
|
|
$ |
(8,067 |
) |
|
$ |
(31,286 |
) |
|
$ |
4,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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ALTISOURCE PORTFOLIO SOLUTIONS S.A. |
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CONSOLIDATED BALANCE SHEETS |
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(in thousands, except per share data) |
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(unaudited) |
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|
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March 31, |
|
December 31, |
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|
2016 |
|
2015 |
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ASSETS |
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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 |
|
|
|
|
|
|
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LIABILITIES AND EQUITY |
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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 |
|
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|
|
|
|
|
|
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|
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 |
|
|
|
|
|
|
|
|
|
|
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|
ALTISOURCE PORTFOLIO SOLUTIONS S.A. |
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(in thousands) |
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(unaudited) |
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|
|||||||||||||||
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|
Three months endedMarch 31, |
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|
|
2016 |
|
2015 |
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|
|
|
|
|
||||||||||||
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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, |
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. |
|
|
|
|
|
||||||||||