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Jul 26, 2018

Altisource Announces Second Quarter Financial Results and Attractive Client Wins

LUXEMBOURG, July 26, 2018 (GLOBE NEWSWIRE) -- Altisource Portfolio Solutions S.A. (“Altisource” or the “Company”) (NASDAQ:ASPS) today reported financial results for the second quarter 2018.

Second quarter service revenue of $208.9 million increased by 11% compared to the first quarter of 2018, driven by growth in the buy-renovate-lease-sell, Hubzu® and property preservation and inspection businesses.  Second quarter 2018 service revenue was 12% lower than the second quarter of 2017 primarily from the reduction in size of the Ocwen Financial Corporation (“Ocwen”) servicing portfolio resulting from loan repayments, loan modifications, short sales, REO sales and other forms of resolution and Front Yard Residential Corporation’s (“RESI”) smaller portfolio of non-performing loans and REO. These declines were partially offset by non-Ocwen service revenue growth in the buy-renovate-lease-sell, property preservation and inspection, renovation management and Owners.com® businesses.

Second quarter 2018 diluted earnings per share was $0.09 and adjusted diluted earnings per share(1) was $0.60, compared to first quarter 2018 diluted loss per share of $(0.24) and adjusted diluted earnings per share(1) of $0.48.  Second quarter adjusted diluted earnings per share was higher than the first quarter of 2018 from higher service revenue, partially offset by higher interest expense.  Second quarter 2018 adjusted diluted earnings per share was 35% lower than the second quarter of 2017 primarily from higher interest expense and lower service revenue in 2018 and a gain on debt repurchase in 2017.

Second quarter 2018 adjusted diluted earnings per share(1) excludes $4.4 million of pretax loss related to the April 3, 2018 debt refinancing ($0 in the second quarter 2017) and mark-to-market pretax gain of approximately $1.5 million from our investment in RESI shares (not included in the determination of net income in 2017).

“I’m pleased with our second quarter financial performance.  Compared to the mid-point of our full year 2018 scenarios, adjusted diluted earnings per share for the first half of 2018 is 53% of the mid-point,” said Chief Executive Officer William B. Shepro.

Mr. Shepro further commented, “More importantly, we are making excellent progress on the sales front as our industry consolidates to high performing vendors.  We believe our recent wins with some of the largest financial institutions in the mortgage industry and the progress we are making onboarding these customers will provide strong diversified revenue growth.”

Second Quarter 2018 Highlights(2)

Corporate

  • Generated $27.8 million of adjusted cash flows from operating activities(1)
  • Ended the quarter with $127.8 million of cash, cash equivalents and marketable securities and $276.0 million of net debt less marketable securities(1)
  • Refinanced our Senior Secured Term Loan (“SSTL”) on April 3, 2018, extending the maturity from December 2020 to April 2024.  The new SSTL has no maintenance covenants, carries over the available baskets for restricted payments from our previous credit agreement, and reduces net debt by the lesser of the value of marketable securities and $75 million in determining whether excess cash flow sweeps are required
  • Repurchased 0.4 million shares of our common stock at an average price of $27.14 per share

Servicer Solutions

  • Received notifications from four new or existing clients that we have won their business or that they are expanding the service offerings purchased from Altisource
  • Of the four customer wins, one is to provide foreclosure and REO auction services to one of the largest institutional real estate and mortgage investors in the country; we signed the master services agreement in July and anticipate receiving foreclosure and REO auction referrals during the fourth quarter

Origination Solutions

  • Launched the Trelix end-to-end fulfillment services offering and significantly grew the sales pipeline for this offering
  • Completed the onboarding of a significant platform customer that we won in the first quarter
  • Received notification that we won an additional platform customer

Real Estate Investor Solutions

  • Grew service revenue from the buy-renovate-lease-sell business by 83% compared to the second quarter of 2017 from an increase in the number of homes sold from 46 to 83 over the same period
  • Ended the quarter with 260 homes in the buy-renovate-lease-sell business, compared to 101 homes at the end of the second quarter of 2017

Consumer Real Estate Solutions

  • Grew service revenue by 65% and the number of home purchase and sale transactions by 58% compared to the first quarter of 2018; grew service revenue by 79% and the number of home purchase and sale transactions by 66% compared to the second quarter of 2017
  • Working with approximately 4,200 clients at the end of the second quarter 2018, compared to 3,200 clients at the end of the first quarter of 2018 and 1,500 clients at the end of the second quarter of 2017

Second Quarter 2018 Results Compared to First Quarter 2018 and Second Quarter 2017:

  • Service revenue of $208.9 million, an 11% increase compared to the first quarter 2018 and a 12% decrease compared to the second quarter 2017
  • Other income (expense), net includes (1) a loss on debt refinancing of $4.4 million in the second quarter 2018 ($0 in both the first quarter 2018 and the second quarter 2017), (2) a gain on debt repurchase of $0 in the second quarter 2018 ($0 in the first quarter 2018 and $3.9 million in the second quarter 2017) and (3) a mark-to-market gain on our investment in RESI of $1.5 million in the second quarter 2018 (loss of $7.5 million in the first quarter 2018 and $0(3) in the second quarter of 2017)
  • Income (loss) before income taxes and non-controlling interests was $3.1 million for the second quarter 2018 compared to $(5.0) million for the first quarter 2018 and $12.2 million for the second quarter 2017
  • Pretax income (loss) attributable to Altisource(1) of $2.4 million for the second quarter 2018 compared to $(5.5) million for the first quarter 2018 and $11.5 million for the second quarter 2017
  • Adjusted pretax income attributable to Altisource(1) of $14.7 million, a 30% increase compared to the first quarter 2018 and a 33% decrease compared to the second quarter 2017
  • Net income (loss) attributable to Altisource of $1.6 million for the second quarter 2018 compared to $(4.1) million for the first quarter 2018 and $9.0 million for the second quarter 2017
  • Adjusted net income attributable to Altisource(1) of $10.6 million, a 23% increase compared to the first quarter 2018 and a 40% decrease compared to the second quarter 2017
  • Diluted earnings per share of $0.09 for the second quarter 2018 compared to diluted loss per share of $(0.24) for the first quarter 2018 and $0.48 for the second quarter 2017
  • Adjusted diluted earnings per share(1) of $0.60, a 25% increase compared to the first quarter 2018 and a 35% decrease compared to the second quarter 2017
  • Cash from operations of $31.8 million for the second quarter 2018 compared to $(8.6) million for the first quarter 2018 and $30.9 million for the second quarter 2017
  • Adjusted cash flows from operating activities(1) of $27.8 million for the second quarter 2018 compared to $1.3 million for the first quarter 2018 and $30.5 million for the second quarter 2017
  • Adjusted cash flows from operating activities less additions to premises and equipment(1) was $26.3 million for the second quarter 2018 compared to $0.1 million for the first quarter 2018 and $26.7 million for the second quarter 2017

________________________

 (1)     This is a non-GAAP measure that is defined and reconciled to the corresponding GAAP measure herein.
 (2)     Applies to the second quarter 2018 unless otherwise indicated.
 (3)     Effective January 1, 2018, mark-to-market adjustments of our investment in RESI are reflected in our results of operations in connection with the adoption of a new accounting principle (previously reflected in comprehensive income).
       

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, our ability to retain existing customers and attract new customers and the potential for changes in our customer relationships, including the possibility of early termination of our Cooperative Brokerage Agreement with New Residential  Investment Corp. or the possibility that we may not be successful in negotiating a satisfactory services agreement with New Residential Investment Corp.; the possibility that Ocwen Financial Corporation’s acquisition of PHH Corporation will not be completed; various risks relating to our ability to effectively manage our regulatory and contractual obligations; the adequacy of our financial resources, including our sources of liquidity and ability to repay borrowings and comply with our Credit Agreement, including the financial and other covenants contained therein; 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 second quarter.  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 an integrated service provider and marketplace for the real estate and mortgage industries.  Combining operational excellence with a suite of innovative services and technologies, Altisource helps solve the demands of the ever-changing markets we serve.  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
 June 30,		   Six months ended
 June 30,
    2018   2017   2018   2017
                 
Service revenue                
Mortgage Market   $ 169,457     $ 198,414     $ 328,612     $ 393,387  
Real Estate Market   23,664     24,347     38,467     43,536  
Other Businesses, Corporate and Eliminations   15,740     15,346     30,548     31,023  
Total service revenue   208,861     238,107     397,627     467,946  
Reimbursable expenses   9,008     11,891     17,155     21,920  
Non-controlling interests   687     687     1,212     1,302  
Total revenue   218,556     250,685     415,994     491,168  
Cost of revenue   154,198     173,502     293,245     341,426  
Reimbursable expenses   9,008     11,891     17,155     21,920  
Gross profit   55,350     65,292     105,594     127,822  
Selling, general and administrative expenses   42,924     52,470     86,048     100,171  
Income from operations   12,426     12,822     19,546     27,651  
Other income (expense), net:                
Interest expense   (7,027 )   (5,465 )   (12,890 )   (11,263 )
Unrealized gain (loss) on investment in equity securities   1,533     —     (5,968 )   —  
Other income (expense), net   (3,861 )   4,803     (2,589 )   5,518  
Total other income (expense), net   (9,355 )   (662 )   (21,447 )   (5,745 )
                 
Income (loss) before income taxes and non-controlling interests   3,071     12,160     (1,901 )   21,906  
Income tax (provision) benefit   (816 )   (2,438 )   549     (5,024 )
                 
Net income (loss)   2,255     9,722     (1,352 )   16,882  
Net income attributable to non-controlling interests   (687 )   (687 )   (1,212 )   (1,302 )
                 
Net income (loss) attributable to Altisource   $ 1,568     $ 9,035     $ (2,564 )   $ 15,580  
                 
Earnings (loss) per share:                
Basic   $ 0.09     $ 0.49     $ (0.15 )   $ 0.84  
Diluted   $ 0.09     $ 0.48     $ (0.15 )   $ 0.82  
                 
Weighted average shares outstanding:                
Basic   17,142     18,335     17,260     18,497  
Diluted   17,553     18,836     17,260     19,069  
                 
Comprehensive income (loss):                
Net income (loss)   $ 2,255     $ 9,722     $ (1,352 )   $ 16,882  
Other comprehensive income (loss), net of tax:                
Reclassification of unrealized gain on investment in equity securities,
net of income tax provision of $200, to retained earnings from the
cumulative effect of an accounting change		   —     —     (733 )   —  
Unrealized (loss) gain on investment in equity securities, net of
income tax benefit (provision) of $0, $2,593, $0, $(2,132)		   —     (6,981 )   —     5,742  
                 
Comprehensive income (loss), net of tax   2,255     2,741     (2,085 )   22,624  
Comprehensive income attributable to non-controlling interests   (687 )   (687 )   (1,212 )   (1,302 )
                 
Comprehensive income (loss) attributable to Altisource   $ 1,568     $ 2,054     $ (3,297 )   $ 21,322  
                                 

 

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
SEGMENT FINANCIAL INFORMATION
(in thousands)
(unaudited)
 
    Three months ended June 30, 2018
    Mortgage
Market		   Real Estate
Market		   Other
Businesses,
Corporate and
Eliminations		   Consolidated
Altisource
                 
Revenue                
Service revenue   $ 169,457     $ 23,664     $ 15,740     $ 208,861  
Reimbursable expenses   8,518     481     9     9,008  
Non-controlling interests   687     —     —     687  
    178,662     24,145     15,749     218,556  
Cost of revenue   115,329     28,191     19,686     163,206  
Gross profit (loss)   63,333     (4,046 )   (3,937 )   55,350  
Selling, general and administrative expenses   20,604     5,180     17,140     42,924  
Income (loss) from operations   42,729     (9,226 )   (21,077 )   12,426  
Total other income (expense), net   (4 )   12     (9,363 )   (9,355 )
                 
Income (loss) before income taxes and
non-controlling interests		   $ 42,725     $ (9,214 )   $ (30,440 )   $ 3,071  

 

    Three months ended June 30, 2017
    Mortgage
Market		   Real Estate
Market		   Other
Businesses,
Corporate and
Eliminations		   Consolidated
Altisource
                 
Revenue                
Service revenue   $ 198,414     $ 24,347     $ 15,346     $ 238,107  
Reimbursable expenses   11,094     783     14     11,891  
Non-controlling interests   687     —     —     687  
    210,195     25,130     15,360     250,685  
Cost of revenue   144,326     26,844     14,223     185,393  
Gross profit (loss)   65,869     (1,714 )   1,137     65,292  
Selling, general and administrative expenses   29,805     5,551     17,114     52,470  
Income (loss) from operations   36,064     (7,265 )   (15,977 )   12,822  
Total other income (expense), net   102     —     (764 )   (662 )
                 
Income (loss) before income taxes and
non-controlling interests		   $ 36,166     $ (7,265 )   $ (16,741 )   $ 12,160  

 

 
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
SEGMENT FINANCIAL INFORMATION
(in thousands)
(unaudited)
 
    Six months ended June 30, 2018
    Mortgage
Market		   Real Estate
Market		   Other
Businesses,
Corporate and
Eliminations		   Consolidated
Altisource
                 
Revenue                
Service revenue   $ 328,612     $ 38,467     $ 30,548     $ 397,627  
Reimbursable expenses   16,176     958     21     17,155  
Non-controlling interests   1,212     —     —     1,212  
    346,000     39,425     30,569     415,994  
Cost of revenue   226,402     46,745     37,253     310,400  
Gross profit (loss)   119,598     (7,320 )   (6,684 )   105,594  
Selling, general and administrative expenses   43,978     9,298     32,772     86,048  
Income (loss) from operations   75,620     (16,618 )   (39,456 )   19,546  
Total other income (expense), net   12     14     (21,473 )   (21,447 )
                 
Income (loss) before income taxes and
non-controlling interests		   $ 75,632     $ (16,604 )   $ (60,929 )   $ (1,901 )

 

    Six months ended June 30, 2017
    Mortgage
Market		   Real Estate
Market		   Other
Businesses,
Corporate and
Eliminations		   Consolidated
Altisource
                 
Revenue                
Service revenue   $ 393,387     $ 43,536     $ 31,023     $ 467,946  
Reimbursable expenses   20,229     1,657     34     21,920  
Non-controlling interests   1,302     —     —     1,302  
    414,918     45,193     31,057     491,168  
Cost of revenue   284,476     48,987     29,883     363,346  
Gross profit (loss)   130,442     (3,794 )   1,174     127,822  
Selling, general and administrative expenses   58,487     9,876     31,808     100,171  
Income (loss) from operations   71,955     (13,670 )   (30,634 )   27,651  
Total other income (expense), net   112     —     (5,857 )   (5,745 )
                 
Income (loss) before income taxes and
non-controlling interests		   $ 72,067     $ (13,670 )   $ (36,491 )   $ 21,906  



 

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
 
  June 30,
 2018		   December 31,
 2017
       
ASSETS
Current assets:      
Cash and cash equivalents $ 84,569     $ 105,006  
Investment in equity securities 43,185     49,153  
Accounts receivable, net 45,426     52,740  
Prepaid expenses and other current assets 70,009     64,742  
Total current assets 243,189     271,641  
       
Premises and equipment, net 58,820     73,273  
Goodwill 86,283     86,283  
Intangible assets, net 105,374     120,065  
Deferred tax assets, net 305,056     303,707  
Other assets 11,174     10,195  
       
Total assets $ 809,896     $ 865,164  
       
LIABILITIES AND EQUITY
Current liabilities:      
Accounts payable and accrued expenses $ 67,646     $ 84,400  
Current portion of long-term debt 41,200     5,945  
Deferred revenue 19,131     9,802  
Other current liabilities 5,889     9,414  
Total current liabilities 133,866     109,561  
       
Long-term debt, less current portion 354,332     403,336  
Other non-current liabilities 9,407     12,282  
       
Commitments, contingencies and regulatory matters      
       
Equity:      
Common stock ($1.00 par value; 100,000 shares authorized, 25,413 issued and 17,027
outstanding as of June 30, 2018; 100,000 shares authorized, 25,413 shares issued and
17,418 outstanding as of December 31, 2017)		 25,413     25,413  
Additional paid-in capital 116,586     112,475  
Retained earnings 596,268     626,600  
Accumulated other comprehensive income —     733  
Treasury stock, at cost (8,386 shares as of June 30, 2018 and 7,995 shares as of
December 31, 2017)		 (427,380 )   (426,609 )
Altisource equity 310,887     338,612  
       
Non-controlling interests 1,404     1,373  
Total equity 312,291     339,985  
       
Total liabilities and equity $ 809,896     $ 865,164  


 

 
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
  Six months ended
 June 30,
  2018   2017
       
Cash flows from operating activities:      
Net (loss) income $ (1,352 )   $ 16,882  
Adjustments to reconcile net (loss) income to net cash provided by operating activities:      
Depreciation and amortization 17,049     18,895  
Amortization of intangible assets 14,691     18,539  
Change in the fair value of acquisition related contingent consideration —     16  
Unrealized loss on investment in equity securities 5,968     —  
Share-based compensation expense 4,111     1,858  
Bad debt expense 1,503     2,890  
Gain on early extinguishment of debt —     (3,937 )
Amortization of debt discount 298     156  
Amortization of debt issuance costs 502     433  
Deferred income taxes (1,349 )   —  
Loss on disposal of fixed assets 558     2,798  
Loss on debt refinancing 4,434     —  
Changes in operating assets and liabilities:      
Accounts receivable 6,923     11,954  
Prepaid expenses and other current assets (5,267 )   (6,811 )
Other assets 967     523  
Accounts payable and accrued expenses (17,152 )   (10,637 )
Other current and non-current liabilities (8,631 )   (41,042 )
Net cash provided by operating activities 23,253     12,517  
       
Cash flows from investing activities:      
Additions to premises and equipment (2,756 )   (5,658 )
Net cash used in investing activities (2,756 )   (5,658 )
       
Cash flows from financing activities:      
Proceeds from issuance of long-term debt 407,880     —  
Repayments and repurchases of long-term debt (421,821 )   (24,766 )
Debt issuance costs (5,042 )   —  
Proceeds from stock option exercises 2,707     765  
Purchase of treasury shares (21,121 )   (15,531 )
Distributions to non-controlling interests (1,181 )   (1,056 )
Payment of tax withholding on issuance of restricted shares and stock option exercises (410 )   (1,089 )
Net cash used in financing activities (38,988 )   (41,677 )
       
Net decrease in cash, cash equivalents and restricted cash (18,491 )   (34,818 )
Cash, cash equivalents and restricted cash at the beginning of the period 108,843     153,421  
       
Cash, cash equivalents and restricted cash at the end of the period $ 90,352     $ 118,603  
       
Supplemental cash flow information:      
Interest paid $ 11,540     $ 10,787  
Income taxes paid, net 2,865     12,668  
       
Non-cash investing and financing activities:      
Increase (decrease) in payables for purchases of premises and equipment $ 398     $ (378 )
Increase in payables for purchases of treasury shares —     3,042  

 

 
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
NON-GAAP MEASURES
(in thousands, except per share data)
(unaudited)

Pretax income (loss) attributable to Altisource, adjusted pretax income attributable to Altisource, adjusted net income attributable to Altisource, adjusted diluted earnings per share, adjusted cash flows from operating activities, adjusted cash flows from operating activities less additions to premises and equipment and net debt less marketable securities, which are presented elsewhere in this earnings release, are non-GAAP measures used by management, existing shareholders, potential shareholders and other users of our financial information to measure Altisource’s performance and do not purport to be alternatives to income (loss) before income taxes and non-controlling interests, net income (loss) attributable to Altisource, diluted earnings (loss) per share, cash flows from operating activities and long-term debt, including current portion, as measures of Altisource’s performance.  We believe these measures are useful to management, existing shareholders, potential shareholders and other users of our financial information in evaluating operating profitability and cash flow generation more on the basis of continuing cost and cash flows as they exclude amortization expense related to acquisitions that occurred in prior periods and non-cash share-based compensation, as well as the effect of more significant non-recurring items from earnings, cash flows from operating activities and long-term debt net of cash on-hand and marketable securities.  We believe these measures are also useful in evaluating the effectiveness of our operations and underlying business trends in a manner that is consistent with management’s evaluation of business performance.  Furthermore, we believe the exclusion of more significant non-recurring items enables comparability to prior period performance and trend analysis.

It is management’s intent to provide non-GAAP financial information to enhance the understanding of Altisource’s GAAP financial information, and it should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP.  Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.  The non-GAAP financial information presented may be determined or calculated differently by other companies.  The non-GAAP financial information should not be unduly relied upon.

Pretax income (loss) attributable to Altisource is calculated by removing non-controlling interests from income (loss) before income taxes and non-controlling interests.  Adjusted pretax income attributable to Altisource is calculated by removing intangible asset amortization expense, share-based compensation expense, unrealized gain (loss) on investment in equity securities, the write-off of net discount and debt issuance costs from debt refinancing and non-controlling interests from income (loss) before income taxes and non-controlling interests.  Adjusted net income attributable to Altisource is calculated by removing intangible asset amortization expense (net of tax), share-based compensation (net of tax), the write-off of net discount and debt issuance costs from debt refinancing (net of tax) and unrealized gain (loss) on investment in equity securities (net of tax) from net income (loss) attributable to Altisource.  Adjusted diluted earnings per share is calculated by dividing net income attributable to Altisource after removing intangible asset amortization expense (net of tax), share-based compensation (net of tax), the write-off of net discount and debt issuance costs from debt refinancing (net of tax) and unrealized gain (loss) on investment in equity securities (net of tax) by the weighted average number of diluted shares.  Adjusted cash flows from operating activities is calculated by removing the cash payment related to the net litigation settlement loss and the increase (decrease) in short-term investments in real estate from cash flows from operating activities.  Adjusted cash flows from operating activities less additions to premises and equipment is calculated by removing the cash payment related to the net litigation settlement loss, the increase (decrease) in short-term investments in real estate and additions to premises and equipment from cash flows from operating activities.  Net debt less marketable securities is calculated as long-term debt, including current portion, minus cash and cash equivalents and marketable securities.

 
 

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
NON-GAAP MEASURES
(in thousands, except per share data)
(unaudited)
 
 Reconciliations of the non-GAAP measures to the corresponding GAAP measures are as follows:
  Three months ended
 June 30,		   Three months
ended
March 31,		   Six months ended
 June 30,
  2018   2017   2018   2018   2017
                   
Income (loss) before income taxes and non-controlling interests $ 3,071     $ 12,160     $ (4,972 )   $ (1,901 )   $ 21,906  
                   
Non-controlling interests (687 )   (687 )   (525 )   (1,212 )   (1,302 )
Pretax income (loss) attributable to Altisource 2,384     11,473     (5,497 )   (3,113 )   20,604  
Intangible asset amortization expense 7,544     9,393     7,147     14,691     18,539  
Share-based compensation expense 1,910     1,163     2,201     4,111     1,858  
Write-off of net discount and debt issuance costs from debt refinancing 4,434     —     —     4,434     —  
Unrealized (gain) loss on investment in equity securities (1,533 )   —     7,501     5,968     —  
                   
Adjusted pretax income attributable to Altisource $ 14,739     $ 22,029     $ 11,352     $ 26,091     $ 41,001  
                   
Net income (loss) attributable to Altisource $ 1,568     $ 9,035     $ (4,132 )   $ (2,564 )   $ 15,580  
                   
Intangible asset amortization expense, net
of tax		 5,499     7,510     5,491     10,880     14,288  
Share-based compensation expense, net
of tax		 1,392     930     1,691     3,045     1,432  
Write-off of net discount and debt issuance costs from debt refinancing, net of tax 3,232     —     —     3,232     —  
Unrealized (gain) loss on investment in equity securities, net of tax (1,134 )   —     5,551     4,416     —  
                   
Adjusted net income attributable to Altisource $ 10,557     $ 17,475     $ 8,601     $ 19,009     $ 31,300  
                   
Diluted earnings (loss) per share $ 0.09     $ 0.48     $ (0.24 )   $ (0.15 )   $ 0.82  
                   
Impact of using diluted share count instead of basic share count for a loss per share —     —     0.01     0.01     —  
Intangible asset amortization expense, net
of tax, per diluted share		 0.31     0.40     0.31     0.61     0.75  
Share-based compensation expense, net of tax, per diluted share 0.08     0.05     0.09     0.17     0.08  
Write-off of net discount and debt issuance costs from debt refinancing, net of tax, per diluted share 0.18     —     —     0.18     —  
Unrealized (gain) loss on investment in equity securities, net of tax, per diluted share (0.06 )   —     0.31     0.25     —  
                   
Adjusted diluted earnings per share $ 0.60     $ 0.93     $ 0.48     $ 1.07     $ 1.64  
                   
Calculation of the impact of intangible asset amortization expense, net of tax                  
Intangible asset amortization expense $ 7,544     $ 9,393     $ 7,147     $ 14,691     $ 18,539  
Tax benefit from intangible asset amortization (2,045 )   (1,883 )   (1,656 )   (3,811 )   (4,251 )
Intangible asset amortization expense, net
of tax		 5,499     7,510     5,491     10,880     14,288  
Diluted share count 17,553     18,836     17,881     17,717     19,069  
                   
Intangible asset amortization expense, net of tax, per diluted share $ 0.31     $ 0.40     $ 0.31     $ 0.61     $ 0.75  
                   
Calculation of the impact of share-based compensation expense, net of tax                  
Share-based compensation expense $ 1,910     $ 1,163     $ 2,201     $ 4,111     $ 1,858  
Tax benefit from share-based compensation expense (518 )   (233 )   (510 )   (1,066 )   (426 )
Share-based compensation expense, net
of tax		 1,392     930     1,691     3,045     1,432  
Diluted share count 17,553     18,836     17,881     17,717     19,069  
                   
Share-based compensation expense, net of tax, per diluted share $ 0.08     $ 0.05     $ 0.09     $ 0.17     $ 0.08  
                   
Calculation of the impact of the write-off of net discount and debt issuance costs from debt refinancing, net of tax                  
Write-off of net discount and debt issuance costs from debt refinancing $ 4,434     $ —     $ —     $ 4,434     $ —  
Tax benefit from the write-off of net discount and debt issuance costs from debt refinancing (1,202 )   —     —     (1,202 )   —  
Write-off of net discount and debt issuance costs from debt refinancing, net of tax 3,232     —     —     3,232     —  
Diluted share count 17,553     18,836     17,881     17,717     19,069  
                   
Write-off of net discount and debt issuance costs from debt refinancing, net of tax, per diluted share $ 0.18     $ —     $ —     $ 0.18     $ —  
                   
Calculation of the impact of the unrealized (gain) loss on investment in equity securities, net of tax                  
Unrealized (gain) loss on investment in equity securities $ (1,533 )   $ —     $ 7,501     $ 5,968     $ —  
Tax provision (benefit) from the unrealized (gain) loss on investment in equity securities 399     —     (1,950 )   (1,552 )   —  
Unrealized (gain) loss on investment in equity securities, net of tax (1,134 )   —     5,551     4,416     —  
Diluted share count 17,553     18,836     17,881     17,717     19,069  
                   
Unrealized (gain) loss on investment in equity securities, net of tax, per diluted share $ (0.06 )   $ —     $ 0.31     $ 0.25     $ —  
                   
Cash flows from operating activities $ 31,822     $ 30,876     $ (8,569 )   $ 23,253     $ 12,517  
Net litigation settlement loss payment —     —     —     —     28,000  
(Decrease) increase in short-term investments in real estate (4,031 )   (418 )   9,915     5,884     2,089  
Adjusted cash flows from operating activities 27,791     30,458     1,346     29,137     42,606  
Less: Additions to premises and equipment (1,498 )   (3,714 )   (1,258 )   (2,756 )   (5,658 )
                   
Adjusted cash flows from operating activities less additions to premises and equipment $ 26,293     $ 26,744     $ 88     $ 26,381     $ 36,948  
                   
  June 30,
2018		                
Term loans $ 403,760                  
Less: Cash and cash equivalents (84,569 )                
Less: Marketable securities (43,185 )                
Net debt less marketable securities $ 276,006                  

_____________________________

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

FOR FURTHER INFORMATION CONTACT:

Indroneel Chatterjee
Chief Financial Officer
T:  +352 2469 7988
E:  Indroneel.Chatterjee@altisource.com

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Source: Altisource Portfolio Solutions S.A.